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Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 6, 2012

 

 

QUESTCOR PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

 

California   001-14758   33-0476164

(State or Other Jurisdiction

of Incorporation)

  

(Commission

File Number)

  

(I.R.S. Employer

Identification No.)

1300 Kellogg Drive, Suite D,

Anaheim, California

   92807
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (714) 786-4200

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 7.01. Regulation FD Disclosure.

Commencing on June 6, 2012, Questcor Pharmaceuticals, Inc. (the “Company”) will utilize an updated presentation for investor relations purposes. A copy of the updated presentation is attached hereto as Exhibit 99.1 and incorporated herein by reference.

The Company is providing the following update regarding key operating metrics and its share repurchase program. The operating metrics discussed below relate to the Company’s primary product, H.P. Acthar® Gel (repository corticotropin injection) (“Acthar”), and are based on the most recent data available to the Company at the time of this filing:

Paid Acthar Prescriptions

 

     Paid Prescriptions  
     April 2012      May 2012  

Nephrotic Syndrome (NS)

      94         100-110   

Multiple Sclerosis (MS)

      339         360-370   

Infantile Spasms (IS)

      31         30-35   

The Company has completed the expansion of its Nephrology Sales Force from 28 to 58 representatives, with all of the new representatives trained and in the field as of May 29, 2012. Additionally, Questcor has begun the process of expanding its Neurology Sales Force from 77 to 109 representatives, with hiring and training expected to be completed in August 2012. The Company believes these expansions will enable it to further broaden physician awareness of Acthar and its appropriate role in the treatment of both Nephrotic Syndrome and MS relapses. Furthermore, the Company’s efforts to initiate a pilot commercial effort in rheumatology by the end of 2012 are running ahead of schedule.

Insurance coverage continued to remain favorable for Acthar during May 2012.

Shipped Acthar Vials

Net sales of Acthar are predominately derived from the Company’s sales of vials to CuraScript Specialty Distributor (“CuraScript SD”). During May 2012, Questcor shipped a total of 1,560 vials of Acthar to CuraScript SD, for a combined total of 2,910 vials for the period April and May 2012. This figure includes vials for which the Company established reserves for future Medicaid and other government program rebates and chargebacks, but does not include vials related to the Company’s patient assistance program. The relationship between vials shipped, net sales and prescriptions can change from period to period due to several factors including:

 

  •  

changes in the Company’s reserve percentage for Medicaid and other government programs. The Company’s total sales reserve percentage is primarily driven by its Medicaid reserve percentage, which exhibits significant quarterly volatility.

 

  •  

changes in distribution channel inventory levels from period to period. While higher than normal at March 31, 2012 and April 30, 2012, the Company believes that the amount of Acthar inventory in its distribution channel has returned to within its normal historic range as of May 31, 2012. The Company’s monthly and quarterly vial shipments continue to be subject to significant variation due to the size and timing of individual orders received from Questcor’s distributor. The timing of when these orders are received and filled can significantly affect net sales and net income in any particular quarter. For example, on the last day of March 2012, Questcor filled an order for 180 vials, which resulted in channel inventory being higher than normal. The Company believes that investors should consider the Company’s results over several quarters when analyzing the Company’s performance.

 

  •  

changes in the number of vials per script for each indication, the number of vials shipped in the most recent period in connection with prescriptions written in previous periods, and the number of vials that could be shipped in future periods in connection with prescriptions written in the most recent period.

Share Repurchase Program and Balance Sheet Information

 

  •  

During the second quarter of 2012 through June 4, 2012, the Company used $156.1 million in cash to repurchase 3,730,069 shares of its common stock in open market transactions, at an average price of $41.85 per share.

  •  

Year to date through June 4, 2012, the Company used $185.1 million in cash to repurchase 4,528,354 shares of its common stock in open market transactions, at an average price of $40.87 per share, representing approximately 8% of total outstanding common stock.

 

  •  

Since the repurchase program began in 2008, the Company has returned $263.6 million in cash to shareholders though the repurchase of its common and preferred stock, representing approximately 87% of the Company’s operating cash flow during that period.

 

  •  

As of June 4, 2012, Questcor had approximately 59.6 million shares of common stock outstanding, approximately 62.6 million shares of common stock outstanding on a diluted basis using the treasury method, and had repurchased a total of 19.9 million shares of common and preferred stock, at an average price of $13.23 per share, with 4.7 million shares remaining under its common stock repurchase program.

The Company is also providing the following unaudited balance sheet information as of June 4, 2012:

 

  •  

Cash, cash equivalents and short-term investments: $121.5 million; current balance does not reflect the use of $2.6 million to settle the Company’s most recent repurchase transactions.

 

  •  

Accounts receivable: $47.5 million.

Important Information Regarding Prescriptions and Net Sales

End-user demand for Acthar results from physicians writing prescriptions to patients, primarily for the treatment of NS, MS and IS. The number of paid prescriptions for Acthar in each therapeutic area is volatile and the Company believes that investors should consider the Company’s results over several quarters when analyzing its performance. Physicians do not purchase Acthar for resale to patients. Instead, patients purchase Acthar directly from specialty pharmacies after receiving a prescription and, typically, arranging for third party reimbursement (government or commercial insurance) – often after satisfying a prior authorization requirement imposed by their insurance carrier.

Net sales of Acthar are predominately derived from the Company’s sales of vials to CuraScript SD, which in turn sells Acthar primarily to specialty pharmacies. These specialty pharmacies place orders to CuraScript SD based on their respective levels of prescription filling activity related to Acthar and their respective inventory practices.

Recommended treatment regimens among physicians prescribing Acthar vary within each therapeutic area. Due to various factors, including inventory levels at both the specialty pharmacies and at CuraScript SD, the duration of treatment regimens and the timing of the placement of refill prescription orders, there is typically a delay between changes in prescription levels and changes in the levels of orders the Company receives from CuraScript SD. Additionally, physician-recommended treatment regimens, and patient compliance with treatment regimens, may vary over time.

The Company’s ability to accurately determine the number of prescriptions is subject to the following important notes:

(1) Because Acthar prescriptions are filled at specialty pharmacies, the Company does not receive complete information regarding either the number of prescriptions or the number of vials by therapeutic area for all of the patients being treated with Acthar. However, the Company is able to monitor trends in payer mix and areas of therapeutic use for new (non-refill) Acthar prescriptions based on data the Company receives from its reimbursement support center. The Company estimates that over 90% of new Acthar prescriptions are processed by this support center, but believes that very few refill prescriptions are processed there.

(2) In this Form 8-K, the terms “Nephrotic Syndrome,” “Multiple Sclerosis,” “Infantile Spasms,” and “Rheumatology,” and their abbreviations, refer to the on-label indications for Acthar associated with such conditions. Investors should refer to the FDA approved Acthar label, which can be found at http://www.acthar.com/files/Acthar-PI.pdf. Prescription figures include related conditions for each therapeutic area. Related conditions are diagnoses that are either alternative descriptions of the medical condition or are closely related to the medical condition referenced above. For example, a prescription for “Demyelinating disease of the central nervous system” would be included as an MS-related condition for purpose of the prescription information provided above. About 5% of the prescriptions referenced are for related conditions.

(3) A new prescription may or may not represent a new patient or a new therapy for the patient receiving the prescription. The Company uses business rules to determine whether a prescription should be classified as new for counting purposes. From time to time, the Company may modify these rules.

Quarterly Paid Prescriptions by Therapeutic Area

 

     Paid Prescriptions            Paid Prescriptions  
     Multiple
Sclerosis (MS)		      Quarterly
Year over
Year Growth
MS Paid Rx		     Nephrotic
Syndrome (NS)		      Infantile
Spasms (IS)		  

Q1-10

      231         196 %      11         89   

Q2-10

      304         145 %      4         95   

Q3-10

      323         129 %      8         92   

Q4-10

      354         66 %      7         91   

Q1-11

      508         120 %      18         89   

Q2-11

      751         147 %      45         106   

Q3-11

      886         174 %      60         112   

Q4-11

      945         167 %      146         120   

Q1-12

      1,000         97 %      238         112   

Monthly Paid Prescriptions by Therapeutic Area

 

     Paid Prescriptions  
      Multiple Sclerosis (MS)      Nephrotic Syndrome (NS)      Infantile Spasms (IS)  

Jan-10

      67         6         26   

Feb-10

      72         4         30   

Mar-10

      92         1         33   

Apr-10

      107         0         34   

May-10

      90         2         28   

Jun-10

      107         2         33   

Jul-10

      101         3         27   

Aug-10

      119         2         31   

Sep-10

      103         3         34   

Oct-10

      107         0         23   

Nov-10

      119         4         25   

Dec-10

      128         3         43   

Jan-11

      114         4         31   

Feb-11

      157         6         28   

Mar-11

      237         8         30   

Apr-11

      245         9         34   

May-11

      239         15         32   

Jun-11

      267         21         40   

Jul-11

      241         12         31   

Aug-11

      303         19         37   

Sep-11

      342         29         44   

Oct-11

      297         39         33   

Nov-11

      326         46         56   

Dec-11

      322         61         31   

Jan-12

      338         72         48   

Feb-12

      316         73         39   

Mar-12

      346         93         25   

Apr-12

      339         94         31   

May-12*

      360-370         100-110         30-35   

 

* Preliminary; subject to adjustment.

Quarterly Shipped Vials**

 

     Shipped Vials      Quarterly
Year over Year Growth		  

Q1-10

      1,446         1 % 

Q2-10

      1,680         7 % 

Q3-10

      1,890         40 % 

Q4-10

      1,680         3 % 

Q1-11

      2,010         39 % 

Q2-11

      2,430         45 % 

Q3-11

      2,910         54 % 

Q4-11

      3,360         100 % 

Q1-12

      4,111         105 % 

Monthly Shipped Vials**

 

     Shipped Vials  

Jan-10

      424   

Feb-10

      392   

Mar-10

      630   

Apr-10

      510   

May-10

      660   

Jun-10

      510   

Jul-10

      690   

Aug-10

      600   

Sep-10

      600   

Oct-10

      600   

Nov-10

      450   

Dec-10

      630   

Jan-11

      480   

Feb-11

      870   

Mar-11

      660   

Apr-11

      810   

May-11

      660   

Jun-11

      960   

Jul-11

      960   

Aug-11

      840   

Sep-11

      1,110   

Oct-11

      900   

Nov-11

      1,170   

Dec-11

      1,290   

Jan-12

      1,440   

Feb-12

      1,140   

Mar-12

      1,530 ** 

Apr-12

      1,350   

May-12

      1,560   

 

** The Company’s monthly and quarterly vial shipments continue to be subject to significant variation due to the size and timing of individual orders received from Questcor’s distributor. The timing of when these orders are received and filled can significantly affect net sales and net income in any particular quarter. For example, on the last day of March 2012, Questcor filled an order for 180 vials. The Company believes that investors should consider the Company’s results over several quarters when analyzing the Company’s performance.

In accordance with General Instruction B.2. of Form 8-K, the information in Item 7.01 of this Current Report on Form 8-K, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 9.01. Financial Statements and Exhibits.

 

  (d) Exhibits.

 

Exhibit
Number

   

Description

99.1    Questcor Pharmaceuticals, Inc. Investor Presentation dated June 6, 2012

SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: June 6, 2012     QUESTCOR PHARMACEUTICALS, INC.
    By:  

/s/ Michael H. Mulroy

      Michael H. Mulroy
      Senior Vice President, Chief Financial Officer and
General Counsel

EXHIBIT INDEX

 

Exhibit
No.

   

Description

99.1    Questcor Pharmaceuticals, Inc. Investor Presentation dated June 6, 2012
Questcor Pharmaceuticals, Inc. Investor Presentation
June 6, 2012
Jeffries
NASDAQ:
QCOR
NASDAQ:
QCOR
Exhibit 99.1
1

2
Safe Harbor Statement
2
Note: Except for the historical information contained herein, this press release contains forward-looking statements that
have been made pursuant to the Private Securities Litigation Reform Act of 1995. These statements relate to future events
or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as
"believes," "continue," "could," "estimates," "expects," "growth," "may," "plans," "potential," "should," "substantial" or
"will" or the negative of such terms and other comparable terminology. These statements are only predictions. Actual
events or results may differ materially. Factors that could cause or contribute to such differences include, but are not limited
to, the following: Our reliance on Acthar for substantially all of our net sales and profits; Reductions in vials used per
prescription resulting from changes in treatment regimens by physicians or patient compliance with physician
recommendations; The complex nature of our manufacturing process and the potential for supply disruptions or other
business disruptions; The lack of patent protection for Acthar; and the possible FDA approval and market introduction of
competitive products; Our ability to continue to generate revenue from sales of Acthar to treat on-label indications
associated with NS, and our ability to develop other therapeutic uses for Acthar; Research and development risks, including
risks associated with Questcor's work in the area of NS and potential work in the area of Lupus, and our reliance on third-
parties to conduct research and development and the ability of research and development to generate successful results;
Our ability to comply with federal and state regulations, including regulations relating to pharmaceutical sales and
marketing practices; Regulatory changes or other policy actions by governmental authorities and other third parties in
connection with U.S. health care reform or efforts to reduce federal and state government deficits; Our ability to receive
high reimbursement levels from third party payers; An increase in the proportion of our Acthar unit sales comprised of
Medicaid-eligible patients and government entities; Our ability to estimate reserves required for Acthar used by
government entities and Medicaid-eligible patients  and the impact that unforeseen invoicing of historical Medicaid
prescriptions may have upon our results; Our ability to effectively manage our growth, including the expansion of our NS
selling effort, and our reliance on key personnel; The impact to our business caused by economic conditions; Our ability to
protect our proprietary rights; The risk of product liability lawsuits; Unforeseen business interruptions and security breache
Volatility in Questcor's monthly and quarterly Acthar shipments, estimated channel inventory and end-user demand, as well
as volatility in our stock price; and Other risks discussed in Questcor's annual report on Form 10-K for the year ended
December 31, 2011 as filed with the Securities and Exchange Commission, or SEC, on February 22, 2012, and other
documents filed with the SEC.
The risk factors and other information contained in these documents should be considered in evaluating Questcor's
prospects and future financial performance.

3
A biopharmaceutical company whose
product, Acthar, helps patients with serious,
difficult-to-treat medical conditions
A biopharmaceutical company whose
product, Acthar, helps patients with serious,
difficult-to-treat medical conditions
Questcor
3

4
Flagship Product:
Flagship Product:
•
Profitable, cash flow positive, $122M** in cash, debt-free
•
Profitable, cash flow positive, $122M** in cash, debt-free
•
19 approved indications
•
19 approved indications
Key Markets*:
Key Markets*:
•
Nephrotic Syndrome, Multiple Sclerosis, Infantile Spasms
•
Several billion dollar market opportunity
•
Nephrotic Syndrome, Multiple Sclerosis, Infantile Spasms
•
Several billion dollar market opportunity
Strategy:
Strategy:
•
Continue to grow Acthar sales in each key market
•
Develop Rheumatology and other on-label markets for Acthar
•
Continue to grow Acthar sales in each key market
•
Develop Rheumatology and other on-label markets for Acthar
Financials:
Financials:
*In
this
presentation,
the
terms
“Nephrotic
Syndrome,”
“Multiple
Sclerosis,”
and
“Infantile
Spasms,”
and
their
abbreviations,
refer
to
the
on-label
indications
for
Acthar
associated
with
such
conditions.
Investors
should
refer
to
the
FDA
approved
Acthar
label,
which
can
be
found
at
http://www.acthar.com/files/Acthar-PI.pdf
.
**As
of
6/4/12
Questcor Overview
4

5
5
Questcor
Strategy
-
Pursue
Acthar
Markets
Nephrotic Syndrome (NS)
Multiple Sclerosis (MS)
Infantile Spasms (IS)
Rheumatology

•
Characterized by excessive spilling of protein
from the kidneys into the urine (proteinuria)
•
Can result in end-stage renal disease (ESRD),
dialysis, transplant
•
Acthar is approved “to induce a diuresis or a
remission of proteinuria in the nephrotic syndrome
without uremia of the idiopathic type or that due to
lupus erythematosus”
•
Significant unmet need
–
Few treatment options
–
Goal of therapy is the significant reduction
of proteinuria
Acthar and Nephrotic Syndrome (NS)
6

Paid Rxs
Paid Rxs
5
NS Scripts-Strong Continued Growth
7
28
Notes: Historical trend information is not necessarily indicative of future results.  Acthar is marketed for the on-label indication of
nephrotic syndrome, though the chart includes "Related Conditions" - diagnoses that are either alternative descriptions of the
condition or are closely related to the medical condition which is the focus of the chart. About 5% of the prescriptions in the tables are
for related conditions. Yellow numbers in the  bars show the number of NS sales representatives making calls for the majority of the
quarter.Q3 ‘11 included expansion and training of new sales people.

Neurodegenerative disorder
Acute treatment for relapses
Neurodegenerative disorder
Acute treatment for relapses
Acthar and Multiple Sclerosis (MS)
Potential
target for
8
43% get better or
much better
27% get only a
little better
30% stay the same
or get worse
ACTHAR is approved for MS exacerbations, without reference to first line or second line use but is generally positioned as
second
line
as
a
matter
of
marketing
strategy.
See
http://www.acthar.com/files/Acthar-PI.pdf
for
specific
label
information.
*Nickerson, et al (2011)

Notes: Historical trend information is not necessarily indicative of future results. Acthar is marketed for the on-label indication of MS
exacerbations
in
adults,
though
the
chart
includes
"Related
Conditions"
-
diagnoses
that
are
either
alternative
descriptions
of
the
condition
or
are closely related to the medical condition which is the focus of the chart. About 5% of the prescriptions in the tables are for related conditions.
Yellow numbers in the  bars show the number of MS sales representatives making calls for the majority of the quarter.
Notes: Historical trend information is not necessarily indicative of future results. Acthar is marketed for the on-label indication of MS
exacerbations
in
adults,
though
the
chart
includes
"Related
Conditions"
-
diagnoses
that
are
either
alternative
descriptions
of
the
condition
or
are closely related to the medical condition which is the focus of the chart. About 5% of the prescriptions in the tables are for related conditions.
Yellow numbers in the  bars show the number of MS sales representatives making calls for the majority of the quarter.
77
77
30
30
38
38
MS Scripts-Record of Consistent Growth
Paid Rxs
9

•
Devastating, refractory form of childhood epilepsy
•
Unsuccessful treatment may leave infant with
permanent developmental disabilities
•
Ultra-rare orphan disorder
•
Acthar currently used to treat 40-50% of IS patients
•
Targeting select institutions
•
Devastating, refractory form of childhood epilepsy
•
Unsuccessful treatment may leave infant with
permanent developmental disabilities
•
Ultra-rare orphan disorder
•
Acthar currently used to treat 40-50% of IS patients
•
Targeting select institutions
Acthar and Infantile Spasms (IS)
10

•
4 key indications on the Acthar label*
–
Systemic lupus erythematosus (Lupus)
–
Polymyositis/Dermatomyositis (PM/DM)
–
Psoriatic arthritis
–
Rheumatoid arthritis
•
High unmet need; difficult to treat
•
Serious health risk if unsuccessfully treated
•
Significant patient population (multi $B opportunity)
•
4 key indications on the Acthar label*
–
Systemic lupus erythematosus (Lupus)
–
Polymyositis/Dermatomyositis (PM/DM)
–
Psoriatic arthritis
–
Rheumatoid arthritis
•
High unmet need; difficult to treat
•
Serious health risk if unsuccessfully treated
•
Significant patient population (multi $B opportunity)
Rheumatology
11
*See
http://www.acthar.com/files/Acthar-PI.pdf
for
specific
label
information.

Profitable
Profitable
Debt Free
Debt Free
Cash Flow Positive
Cash Flow Positive
Financials
12

Growth in Shipped Vials
13
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Q1-10
Q2-10
Q3-10
Q4-10
Q1-11
Q2-11
Q3-11
Q4-11
Q1-12
Shipped Vials

Q1 –
2012
Q1 –
2011
Net Sales ($M)
$96.0
$36.8
Gross Margin
94%
95%
Operating Income ($M)
$57.3
$16.4
Fully Diluted, GAAP EPS
$0.58
$0.17
Q1-2012 Financial Results
•
First quarter vials shipped: 4,111
•
First quarter cash flow from operations: $40.9M
•
Medicaid reserves continue to appear adequate
•
798,285 shares repurchased during Q1-2012
Record Net Sales (up 161%) and Solid Earnings (EPS up 241%)
Record Net Sales (up 161%) and Solid Earnings (EPS up 241%)
14

•
Paid Rxs April and May 2012 (estimated)
•
Shipped 1,560 vials in May 2012
–
Compares to 1,350 vials in April 2012 and 4,111 vials in Q1-12
–
Channel inventory level in the normal range on 5/31/2012
•
Operating expenses expected to be up about $10 million in  
Q2-2012 over Q1-2012 and another $5 million in Q3-2012
•
Paid Rxs April and May 2012 (estimated)
•
Shipped 1,560 vials in May 2012
–
Compares to 1,350 vials in April 2012 and 4,111 vials in Q1-12
–
Channel inventory level in the normal range on 5/31/2012
•
Operating expenses expected to be up about $10 million in  
Q2-2012 over Q1-2012 and another $5 million in Q3-2012
April-May 2012 Metrics
Notes:
Paid
Rx
information
based
on
internal
estimates.
The
table
includes
"Related
Conditions"
-
diagnoses
that
are
either
alternative
descriptions of the condition or are closely related to the medical condition which is the focus of the chart. About 5% of the prescriptions in the
tables are for related conditions.
Notes:
Paid
Rx
information
based
on
internal
estimates.
The
table
includes
"Related
Conditions"
-
diagnoses
that
are
either
alternative
descriptions of the condition or are closely related to the medical condition which is the focus of the chart. About 5% of the prescriptions in the
tables are for related conditions.
DX
April 2012
May 2012
NS
94
100-110
MS
339
360-370
IS
31
30-35
15

•
2.2 Million Preferred share buyback
•
17.7 Common share buyback
•
$264 million returned to shareholders in stock buybacks
–
Average repurchase price per share: $13.23
•
59.6
million shares currently outstanding
•
5.0 million share added to buyback authorization
•
4.7 million shares remain on buyback authorization
•
2.2 Million Preferred share buyback
•
17.7 Common share buyback
•
$264 million returned to shareholders in stock buybacks
–
Average repurchase price per share: $13.23
•
59.6
million shares currently outstanding
•
5.0 million share added to buyback authorization
•
4.7 million shares remain on buyback authorization
Share Repurchases: 19.9 Million Shares
Note: all information as of 6/4/12
16

•
4.5M shares repurchased during 2012, driven by:
–
Sales/EPS increase
–
NS market traction
–
Sales force expansion
–
Rheumatology opportunity
•
4.5M shares repurchased during 2012, driven by:
–
Sales/EPS increase
–
NS market traction
–
Sales force expansion
–
Rheumatology opportunity
2012 Repurchase Activity
Repurchased shares significantly improved EPS
Q1-2012 EPS accretion from share repurchase through 3/31/2012: 24%
17

How Does Acthar Work?
•
Acthar treats autoimmune conditions across a variety of organ systems (CNS,
kidney, etc.)
•
Acthar appears to modulate the immune system and associated inflammatory
response through binding to melanocortin receptors
•
The
primary
melanocortin
peptide
(ACTH)
in
Acthar
binds
to
all
5
melanocortin
receptors (MCR1-5); other active peptides are in Acthar as well
–
Indirect effect:  Acthar triggers the production of cortisol and
other adrenal
compounds through binding to MCR2 receptors
–
Direct effect:  Acthar acts directly at the cellular level by binding to melanocortin
receptors on immune cells and cells in the targeted tissues (e.g., kidney podocytes)
•
All the active ingredients of Acthar have yet to be fully characterized and the
mechanism of action and pharmacokinetic profile of Acthar are not fully known
•
Acthar treats autoimmune conditions across a variety of organ systems (CNS,
kidney, etc.)
•
Acthar appears to modulate the immune system and associated inflammatory
response through binding to melanocortin receptors
•
The
primary
melanocortin
peptide
(ACTH)
in
Acthar
binds
to
all
5
melanocortin
receptors (MCR1-5); other active peptides are in Acthar as well
–
Indirect effect:  Acthar triggers the production of cortisol and
other adrenal
compounds through binding to MCR2 receptors
–
Direct effect:  Acthar acts directly at the cellular level by binding to melanocortin
receptors on immune cells and cells in the targeted tissues (e.g., kidney podocytes)
•
All the active ingredients of Acthar have yet to be fully characterized and the
mechanism of action and pharmacokinetic profile of Acthar are not fully known
18

•
Difficult/impossible to reverse engineer ACTHAR
–
Not well characterized
•
Complex pharmacology
–
Not well characterized
•
Clinical trial(s) required
•
Difficult/impossible to reverse engineer ACTHAR
–
Not well characterized
•
Complex pharmacology
–
Not well characterized
•
Clinical trial(s) required
Biosimilar Pathway Difficult/Impossible
19

Market
Rx Value
Market Size*
MS
$40-50K
$1B+
NS
$150-250K
$1B+
IS
$100-125K
$100M
Rheumatology
Various
$1B+
Other
Various
Unknown
Total
$3B+
Acthar Market Opportunity
*Based on company estimates
20

21
Market
Approximate
Annualized Net Sales
Run Rate*
Approximate
Annualized Level of
Business**
MS
$160-175M
$160-175M
NS
$125-140M
$165-180M
IS
$40-50M
$40-50M
NS Business Already Significant
Note: Figures do not represent actual net sales ranges for the quarter ended March 31, 2012
* Figures
based
on
estimates
of
vials
shipped
to
patients
within
each
therapeutic
area
in
the
quarter,
multiplied
by
4.
** Figures represent Q1-2012 new paid prescriptions times estimated vials per script over treatment regimen, multiplied by 4.

22
•
Expand NS promotion effort
•
Expand MS promotion effort
•
Maintain IS promotion effort
•
Initiate pilot rheumatology promotion activity
•
Develop other markets for Acthar
•
No unrelated business development efforts planned
•
Expand NS promotion effort
•
Expand MS promotion effort
•
Maintain IS promotion effort
•
Initiate pilot rheumatology promotion activity
•
Develop other markets for Acthar
•
No unrelated business development efforts planned
Strategic Plan-
Focus on the Embedded Pipeline in Acthar
–
Acthar is its own pipeline with many other on-label indications
and many possible other therapeutic uses
–
Further define and develop the unique characteristics of Acthar

23
Rheumatology Sales Pilot
Neuro Hiring
& Training
From 77 to
109 reps
Neuro
Sizing &
Alignment
Neph Hiring &
Training
From 28 to 58
reps
Neph Sizing &
Alignment
Sales Force Expansion-
Outlook for 2012
Q1-12
Q1-12
Q2
Q2
Q3
Q3
Q4
Q4
Q1-13
Q1-13

24
•
Generating more data
for on-label indications
–
NS
–
MS
–
IS
–
Rheumatology
•
Generating more data
for on-label indications
–
NS
–
MS
–
IS
–
Rheumatology
•
Investigating Acthar in
potential new indications
–
Diabetic nephropathy
–
Autism
–
Traumatic brain injury
–
ALS
–
Migraine
•
Investigating Acthar in
potential new indications
–
Diabetic nephropathy
–
Autism
–
Traumatic brain injury
–
ALS
–
Migraine
Over 40 Acthar R&D and Investigator
Initiated Research Studies
Understanding Acthar:
Understanding Acthar:
the science of how it works
the science of how it works

25
Acthar has sustainable competitive
advantages-without FDA approval risk
Acthar is approved for 19 indications-many
in large markets with sizable unmet need
Sales in NS and MS are growing,
yet market penetration is low
Developing new vertical market -
Rheum
High margins provide good
operating leverage
Profitable, cash flow positive, no debt
Investment Highlights
25

June 6, 2012
Jeffries
NASDAQ:
QCOR
26

27
Pro-opiomelanocortin (POMC) in the Pituitary
ACTH is a Melanocortin Peptide Derived from

28
MCR
Prevalent Tissue/Cells with Receptor
MC1R
Podocytes
Renal Mesangial Cells
Endothelial Cells (Glomerular, Tubular, Vascular)
Tubular Epithelial Cells
Macrophages
Melanocytes
Immune/Inflammatory Cells
Kerantinocytes
CNS
MC2R
Adrenal Cortex (Steroidogenesis), Adipocytes
Adapted from Gong 2011, Catania 2004, Schioth 1997
Affinity of Melanocortin Peptides and
Distribution of Receptor Subtypes

29
MCR
Prevalent Tissue/Cells with Receptor
MC3R
CNS
Macrophages
MC4R
Podocytes
Renal Mesangial Cells (?)
Endothelial Cells (Glomerular, Tubular)
Tubular Epithelial Cells
CNS
MC5R
CNS
Exocrine Glands
Lymphocytes
Podocytes
Adapted from Gong 2011, Catania 2004, Schioth 1997
Affinity of Melanocortin Peptides and
Distribution of Receptor Subtypes

MOA of
Acthar in NS
Adapted From Gong 2011
Acthar,
Melanocortin Peptides
Acthar,
Melanocortin Peptides

31
15-30
reps
30-38
reps
38-77
reps
Monthly MS Scripts History
Notes: Historical trend information is not necessarily indicative of future results. Acthar is marketed for the on-label indication of MS
exacerbations
in
adults,
though
the
chart
includes
"Related
Conditions"
-
diagnoses
that
are
either
alternative
descriptions
of
the
condition
or
are closely related to the medical condition which is the focus of the chart. About 5% of the prescriptions in the tables are for related conditions.
Notes: Historical trend information is not necessarily indicative of future results. Acthar is marketed for the on-label indication of MS
exacerbations
in
adults,
though
the
chart
includes
"Related
Conditions"
-
diagnoses
that
are
either
alternative
descriptions
of
the
condition
or
are closely related to the medical condition which is the focus of the chart. About 5% of the prescriptions in the tables are for related conditions.
250
300
350
400
0
50
100
150
200
250
300
350
400
0
50
100
150
200