Reuters: Global Markets: Drug maker Questor down on short-seller comments

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Drug maker Questor down on short-seller comments Jul 10th 2012, 17:39 Tue Jul 10, 2012 1:39pm EDT (Reuters) - Shares of Questcor Pharmaceuticals Inc (QCOR.O) fell as much 15 percent after well-known short-seller Citron Research raised questions about the marketing of the biopharmaceutical company's flagship multiple sclerosis drug, Acthar. Among several allegations, Citron said the company had used the orphan drug status that Questor had received from regulators for Acthar to treat infantile spasms to aggressively expand the use of the drug for other indications. Citron, run by California-based investor and notable short-seller Andrew Left, said the company used "questionable tactics" to market Acthar. Questor executives were not immediately available to comment. The U.S. Food and Drug Administration assigns orphan drug status to treatments targeting a population of less than 200,000 and gives the company a marketing exclusivity of seven years from the approval date. "The infantile spasms condition that induced the FDA to grant the orphan drug protection to Questcor, now accounts for 6 percent to 10 percent of the company's revenues," Citron said. Questioning the company's business model, Citron also said Questor's market for the drug was threatened by a low barrier to entry by generic versions of the drug, and that the stock could ultimately "retreat to single-digits". About 30 percent of Questcor's free float was shorted as of mid-June, according to the Nasdaq Stock Market. The company had a market value of $3.6 billion at the close of trading on Monday. By afternoon Tuesday, the stock had already experienced its most active day of trading since January 11. The stock was trading at $50.25 in early afternoon trading, down 12.75 percent. Thomson Reuters StarMine puts an intrinsic value of $46.68 on the stock, based on expected growth rates over the next decade. (Reporting by Shailesh Kuber in Bangalore; Editing by Ted Kerr) Link this Share this Digg this Email Reprints

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