questcor pharmaceuticals, inc nga tran. outline healthcare sector overview questcor overview ...
TRANSCRIPT
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Questcor Pharmaceuticals, Inc Nga Tran
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Outline
Healthcare sector overview Questcor Overview Financial Statement Analysis Valuation analysis Risks Recent news Recommendation
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Healthcare Sector Overview
18.3
15.8
12.211.7
11.2
10.6
10.3
3.63.4 2.9
S&P 500 Industry Weight %
Information Technology
Financials
Health Care
Consumer Discretionary
Energy
Consumer Staples
Industrials
Materials
Utilities
Telecommunication Services
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Healthcare Sector Overview
Health CareHealth Care Equipment &Services
Health Care Providers
Medical Equipment
Medical Supplies
Pharmaceuticals & Biotechnology
Industry
Sector
Sub-Sector
• 52 companies in S&P 500 Healthcare Index
• Major players in the Pharmaceuticals & Biotechnology Sector
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Healthcare Sector Overview
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Healthcare Sector Overview
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Healthcare Sector Overview• Porter’s Five Forces • Growth Drivers
Technology & Innovation Product differentiation Population demand Governmental Regulation
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Questcor Overview
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Questcor Overview • Founded in 1990, headquartered in Anaheim,
California
• A leading biopharmaceutical company, focused on the treatment of patients with serious, difficult-to-treat autoimmune and inflammatory disorders
• Its primary product is H.P. Acthar Gel, or Acthar, an injectable drug that is approved by the FDA, for treatment of 19 special indications.
• The company sells Doral, a secondary drug product to pharmaceutical wholesalers.
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Questcor Overview • Nephrotic Syndrom (NS)
• Multiple Sclerosis Relap (MS)
• Infantile Spasm (IS)
• Rheumatology
• Sarcoidois
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Questcor Overview • Nephrotic Syndrom (NS)
- Excessive protein spilling from the kidney to the urine, can results in dangerous problems.
- Significant need unmet, few FDA approved options
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Questcor Overview • Multiple Sclerosis Relap
(MS)
- Neurodegenrative desease
- 400,000 patients in the US (>100,000 relapses a year)
- Lost sensation, vision, mobility
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Questcor Overview • Infantile Spasm (IS)
- Development disability
- Acthar is the “golden standard”, and is being used by 40% - 50% patient
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Questcor Overview • Other unmet need:
- Lupus: ~63k patients
- Rheumatoid Arithritis: ~65k patients
- PsA: ~ 45k patient
- Questcor estimates that Acthar can build on markets of $500 million in MS, $100 million for infantile spasms, and over $1 billion for kidney diseases
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Key Strategy • “Grow sales in each of these [current] markets
and then add other markets.”
• Expand use to International market
• Focus on Research & Development
- The evaluation of the use of Acthar for certain on-label indications
- The investigation of other potential uses of Acthar for indications not FDA approved
- The expansion of its understanding of how Acthar works in the human body
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Competition
•Main supplier of Acthar
•Subsititute: Steroid Medication
•Acquired Synacthen
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Consumer, Distributions & Manufacture• Questcor’s exclusive customer for Acthar is
CuraScript SD
• Integrated Commercialization Services, Inc. (ICS) to act as its exclusive agent for commercial shipment of its products to its customers
•Supply agreement with Cangene bioPharma, Inc. (Cangene) to manufacture commercial quantities of Acthar finished product
•Acquired Bio Vectra
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SWOT Analysis
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Earning Analysis
Year Ending Revenue Revenue Change EPS ($) Change P/E
2015 E 1285.93 23.91% 7.13 8.85% 8.81
2014 E 1037.26 30% 6.55 34.22% 9.59
2013 E 800.52 57.17% 4.88 55.41% 12.87
2012 A 509.29 133.45% 3.14 147.24% ~
2011 A 218.2 89.56% 1.27 126.78% ~
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Earning Analysis
Source: Capital IQ
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Cashflow Analysis
Source: Capital IQ
400% growth in Operating Cashflow in 5 years
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Ratio Analysis
Source: Capital IQ
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Valuation AnalysisSource: MorningStar
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Valuation AnalysisSource: MorningStar
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Performance Comparision
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Recent news
•Acquired the rights to Synacthen, a drug from Novartis, that is sold in Europe but not in the United States. Synacthen is similar to Questcor’s drug, so the company has eliminated one competitor
•Expasion of Management Team: Vice President Regulatory Affairs
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Risks• Investigation by the U.S. Attorney's office in
Philadelphia for its promotional practices. Investors had blown this off as the stock continued to escalate to new highs. However, on Oct. 30 in its conference call and 10-Q filing, it disclosed another attorney's office investigation and the SEC joined in an expanded investigation, so this might be a serious sign.
• FDA approval and Aetna limitation for Acthar usage can have negative impacts on investors.
• Limited product pipelines makes the company completely dependent of the sales result of one product
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Outlook
•The company will continue to grow!!
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Investment Summary
•Unique product, sustainable advantage•Approved for 19 indications of unmet –
need market•Sales increasing rapidly, despite slow &
limited market penetration•Focused in R&D•Profitable, strong Cashflow & Balance
Sheet
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BUY!