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Questcor Pharmaceuticals, Inc. (QCOR)

The 30th Annual J.P. Morgan Healthcare Conference

January 12, 2012, 13:00 p.m. ET

Executives

Don Bailey - President and CEO

Mike Mulroy - SVP, CFO, General Counsel and Corporate Secretary

Analyst

Dewey Steadman - JP Morgan

Presentation

Dewey Steadman - JP Morgan

Good morning. I’m Dewey Steadman with the U.S. pharmaceuticals team here at JP Morgan. And we are pleased to have today Questcor Pharmaceuticals. And from Questcor we are going to have Don Bailey, President and CEO. And also Mike Mulroy, CFO presenting. After today’s presentation the breakout will be across the hall, and with that I will turn it over to Don.

Don Bailey

Thanks Dewey. Yesterday we had an unusual event here, we had an attack from a short community and we put out a statement and I’d like Mike Mulroy our Chief Financial Officer and General Counsel to comment on this. I really don’t want to get distracted with this particular issue. We don’t know anything more than what these people put out. And so we are here today to talk about Questcor and its value proposition for investors. So, let me get this out of the way and then we will start with the presentation.

Mike Mulroy

I’m just going to read the release we went on yesterday. I’m assuming many of you saw for people on the webcast well. Questcor believes that its marketing and business practices are consistent, its regulatory requirements and industry’s standard practices. We market Acthar Gel for the treatment of acute exacerbations of MS in adults for treatment on the product syndrome and the treatment of infantile spasms in children under two years of age. These are all indications on the approved label for Acthar.

The company maintains a compliance program which is led by an experienced compliance officer, and includes the active participation of Questcor’s executive management team. Questcor attributes the success to the ability of Acthar to potentially address the unmet medical need associated with MS exacerbations and their product syndrome.

The company is committed to providing access to Acthar, the patients who need, and marketing Acthar in accordance with regulatory requirements and industry standard practices. Questcor plans to speak with a publication to discuss the company and its marketing and business practices. Thank you.

Don Bailey

Okay, let’s move forward, then naturally we have a Safe Harbor statement; most of our risks are associated with potential competition in the future and with oversight from regulatory agencies and attack from short communities. So, I guess (inaudible).

Questcor is basically a single product company, it's a biopharmaceutical product, therefore, we are a biopharmaceutical company. Our main product is called Acthar. Acthar helps patients with serious difficult to treat mostly autoimmune medical conditions. Acthar is a product with 19 approved indications as a result of our review with the FDA about 15 months ago. The key market, the key current markets for Acthar are multiple sclerosis, the flares of multiple sclerosis, nephrotic syndrome specifically idiopathic membranous nephropathy and FSGS, and infantile spasms. The markets that we are looking at here, just these markets are several billion dollars that does not include the markets with the rest of the approved in patients.

Our strategy is very straight forward, Questcor is a commercial operation, we are commercially focused. We are trying to grow Acthar sales in each of these key markets, and develop other of the on label markets for Acthar. Questcor is profitable, cash flow positive and has $200 million in cash and is debt free.

So, what I want to do is walk down these major markets, multiple sclerosis, nephrotic syndrome, infantile spasms and then we are going to talk about lupus because that’s the next on label indication that we are looking to pursue commercially.

With MS, Acthar used to treat relapses for patients who do not get complete response to steroids. So, as this chart shows over half of patients who take steroids do not get complete relief, complete relief means they get back to the quality of life they had before they had with flare. When a patient has a flare it's a sudden worsening of their symptoms that are natural with associated with multiple sclerosis.

So, there is a huge target for Acthar, the sales for Acthar has gone very nicely in multiple sclerosis. These are actually the number of prescriptions that we receive at our reimbursement center. These are paid prescriptions, so we exclude any Medicaid prescriptions for which we don’t get paid. The numbers at the top of the bar are the actual number of prescriptions. The yellow numbers inside the bar are the number of Acthar representatives. We have calling on MS doctors and you can see these numbers are just going out nicely overtime. So, this is about a three year history.

The same data here is shown monthly, so the prior chart was quarterly. This data is monthly and you can see in the fourth quarter we had sales that are pretty much trending up a little bit. But if you look at this entire time period, sales have trended upward except for March and in this time period and late in the summer. In March we attribute that big jump to the productivity of these sales rep that came in and took a little while to figure out what to do and then when they get. And then in this time period it was due to some focused marketing efforts that we apply. So, we are going to expand this sales force yet again in 2012 and hopefully that will spur further growth.

Read the rest of this transcript for free on seekingalpha.com