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Questcor Pharmaceuticals Inc. reported second quarter 2014 earnings per share of $1.71, up from the year-ago earnings of $1.25 per share. Excluding share- based compensation expense, one-time items and non-cash expenses, earnings stood at $1.85 per share.

Excluding share-based compensation expense, earnings came in at $1.76 per share. The Zacks Consensus Estimate was $1.93.

 

 

Second quarter 2014 revenues climbed 51% to $278.8 million, easily beating the Zacks Consensus Estimate of $264 million.

Quarter in Detail

Higher revenues were driven by increased use of H.P. Acthar Gel in patients suffering from rheumatoid arthritis, systemic lupus erythematosus, dermatomyositis, polymyositis, nephrotic syndrome, multiple sclerosis exacerbations, infantile spasms and symptomatic sarcoidosis.

We note that Acthar, an injectable drug, has been approved by the U.S. Food and Drug Administration for as many as 19 indications. Questcor shipped 8,850 vials of Acthar during the second quarter of 2014, up 26.0% year over year.

In the reported quarter, Acthar’s new paid prescriptions were about 2,775 to 2,800, up 23% from the year-ago quarter.

Research and development (R&D) expenses were $22.0 million in the reported quarter, up 79.8% year over year. General and administrative expenses came in at $26.8 million, up 104.5% and selling and marketing expenses were $57.0 million, up 49.8%.

Questcor is working to expand Acthar’s label further for the indications of amyotrophic lateral sclerosis (ALS), diabetic nephropathy and acute respiratory distress syndrome (ARDS).

Acquisition by Mallinckrodt

In Apr 2014, Questcor agreed to merge with Mallinckrodt (MNK - Snapshot Report). As per the terms of the agreement, shareholders of Questcor will receive $30.00 per share in cash and 0.897 Mallinckrodt shares for each Questcor share held. Based on the closing price of Mallinckrodt on Jul 18, 2014, the total value comes to $6.3 billion. Mallinckrodt expects to complete the transaction in Aug 2014.

Post-merger, Mallinckrodt shareholders will own approximately 50.5% while former Questcor shareholders will own approximately 49.5% of the combined company's stock.

Questcor carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the healthcare sector include Salix Pharmaceuticals (SLXP - Analyst Report) and Ironwood Pharmaceuticals (IRWD - Analyst Report). While Salix Pharma carries a Zacks Rank #1 (Strong Buy), Irownood Pharma is a Zacks Rank #2 (Buy) stock.

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