Questcor Pharmaceuticals (QCOR) 8-K JP Morgan 2013 Healthcare Conference

January 2013

January 2013

NASDAQ:

QCOR

NASDAQ:

QCOR

JP Morgan 2013 Healthcare Conference

Steve Cartt

Chief Operating Officer

Exhibit 99.1

1

Safe Harbor Statement

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,"

“remain,”

"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

Rheumatology,

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;

The

results

of

any

pending

or

future

litigation,

investigations

or

claims,

including

with

respect

to

the

investigation

by

the

United

States

Attorney’s

Office

for

the

Eastern

District

of

Pennsylvania

regarding

the

Company’s

promotional

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

sales

forces,

and

our

reliance

on

key

personnel;

Risks

associated

with

our

pending

acquisition

of

BioVectra

Inc.;

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

breaches;

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.

.

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,"

“remain,”

"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

Rheumatology,

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;

The

results

of

any

pending

or

future

litigation,

investigations

or

claims,

including

with

respect

to

the

investigation

by

the

United

States

Attorney’s

Office

for

the

Eastern

District

of

Pennsylvania

regarding

the

Company’s

promotional

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

sales

forces,

and

our

reliance

on

key

personnel;

Risks

associated

with

our

pending

acquisition

of

BioVectra

Inc.;

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

breaches;

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.

.

2

A biopharmaceutical company focused on the

treatment of patients with serious, difficult-to-

treat autoimmune and inflammatory disorders

A biopharmaceutical company focused on the

treatment of patients with serious, difficult-to-

treat autoimmune and inflammatory disorders

Questcor

3

Flagship Product:

Flagship Product:

•

Profitable, positive cash flow, strong balance sheet

•

Profitable, positive cash flow, strong balance sheet

•

19 approved indications

•

19 approved indications

Key Therapeutic Areas:

Key Therapeutic Areas:

•

Nephrotic Syndrome, Multiple Sclerosis Relapse, Infantile

Spasms, Dermatomyositis/Polymyositis

•

Significant areas of unmet need; large growth potential

•

Nephrotic Syndrome, Multiple Sclerosis Relapse, Infantile

Spasms, Dermatomyositis/Polymyositis

•

Significant areas of unmet need; large growth potential

Strategy:

Strategy:

•

Expand awareness, appropriate use of Acthar in key specialties

•

Develop Rheumatology and other on-label indications

•

Expand awareness, appropriate use of Acthar in key specialties

•

Develop Rheumatology and other on-label indications

Financials:

Financials:

*In

this

presentation,

the

terms

“Nephrotic

Syndrome,”

“Multiple

Sclerosis

Relapse,”

“Dermatomyositis,”

“Polymyositis,”

and

“Infantile

Spasms,”

and

their

abbreviations,

refer

to

on-label

indications

for

Acthar

associated

with

such

conditions.

Investors

should

refer

to

the

FDA

approved

Acthar

label,

which

can

be

found

at

Questcor Overview

4

http://www.acthar.com/files/Acthar-PI.pdf

19 Approved Acthar Indications Provide

Strong Growth Potential

Key Indications:

5

Nephrotic Syndrome (NS)

(2 Indications)

Multiple Sclerosis Relapses (MS)

Infantile Spasms (IS)

Rheumatology-Related Conditions

( 6 Indications)

Acthar Usage Expanding Rapidly

Vials per Quarter

6,000

5,000

4,000

3,000

2,000

1,000

0

6

Strong Net Sales Growth

Net Sales per Quarter

160

140

120

100

80

60

40

20

-

7

Estimated Allocation of Acthar Net Sales

Note: Questcor sells Acthar to a distributor and does not have complete data with

respect to end-use; allocation based on internal estimates (Q3 2012).

Infantile

Spasms ~9%

Other ~3%

Syndrome

45-47%

MS

Relapse

40-44%

8

Nephrotic

•

MDs typically reserve Acthar for when another FDA-

approved treatment alternative is needed, usually

after first-line therapy

–

Serious, difficult-to-treat medical conditions

•

Coverage decisions are determined on a case-by-case

basis, considering patient condition, disease severity,

and treatment history

•

Consistent level of insurance coverage over last

several years

–

Prior authorizations and close payer scrutiny continue to be the

norm

•

MDs typically reserve Acthar for when another FDA-

approved treatment alternative is needed, usually

after first-line therapy

–

Serious, difficult-to-treat medical conditions

•

Coverage decisions are determined on a case-by-case

basis, considering patient condition, disease severity,

and treatment history

•

Consistent level of insurance coverage over last

several years

–

Prior authorizations and close payer scrutiny continue to be the

norm

Stable Reimbursement Environment

9

Increasing Support of Questcor-Sponsored

and Independent Research Projects

10

R&D Spending

Clinical & Preclinical Studies

30

25

20

15

10

5

0

2007

2008

2009

2010

2011

9m

2012

80

70

60

50

40

30

20

10

0

2007

2008

2009

2010

2011

9m

2012

65

34

33

20

2

0

22.1

16.8

10.9

9.7

10.6

4.8

Nephrotic Syndrome (NS)

Characterized by excessive spilling of protein

from the kidneys into the urine (proteinuria)

Caused by a number of underlying types of kidney

disease (eg, iMN, FSGS, IgA nephropathy, etc.)

Can result in end-stage renal disease (ESRD), dialysis,

transplant

Significant unmet need; few treatment options

Acthar is indicated 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

Characterized by excessive spilling of protein

from the kidneys into the urine (proteinuria)

Caused by a number of underlying types of kidney

disease (eg, iMN, FSGS, IgA nephropathy, etc.)

Can result in end-stage renal disease (ESRD), dialysis,

transplant

Significant unmet need; few treatment options

Acthar is indicated 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

11

Multiple Sclerosis (MS) Relapse

1

Lublin et al. Neurology

12

•

•

•

Relapses can range from mild to severe, and can cause

a range of symptoms, from loss of sensation in the

extremities, to loss of vision and the ability to walk

Research indicates that relapses have a measurable

and sustained effect on disability in MS patients

1

•

Typically employed by MDs as a therapeutic alternative for MS

relapse, if one is needed, after steroid treatment

–

MS is a neurodegenerative disease occurring in about

400,000 patients in the US (>100,000 relapses/year)

Acthar is indicated for the treatment of acute

exacerbations (relapses) of multiple sclerosis in adults

2003

•

Devastating, ultra-rare form of childhood epilepsy

•

Can cause permanent developmental disabilities,

increased mortality

•

Acthar

is

often

considered

the

“gold

standard”

and

is

currently used to treat 40-50% of IS patients

•

Devastating, ultra-rare form of childhood epilepsy

•

Can cause permanent developmental disabilities,

increased mortality

•

Acthar

is

often

considered

the

“gold

standard”

and

is

currently used to treat 40-50% of IS patients

Infantile Spasms (IS)

13

4 key indications on the Acthar label*

–

Dermatomyositis/Polymyositis (DM/PM)

–

Systemic lupus erythematosus (Lupus)

–

Psoriatic arthritis

–

Rheumatoid arthritis

Each can pose a serious health risk if not adequately

controlled

Some cases difficult to manage;  Acthar is an FDA-

approved treatment alternative for select patients

Positive initial uptake; expanding Rheum sales force

4 key indications on the Acthar label*

–

Dermatomyositis/Polymyositis (DM/PM)

–

Systemic lupus erythematosus (Lupus)

–

Psoriatic arthritis

–

Rheumatoid arthritis

Each can pose a serious health risk if not adequately

controlled

Some cases difficult to manage;  Acthar is an FDA-

approved treatment alternative for select patients

Positive initial uptake; expanding Rheum sales force

Rheumatology

14

*See

for specific label information.

http://www.acthar.com/files/Acthar-PI.pdf

How Does Acthar Work?

Treats autoimmune conditions across a variety of organ systems

Appears to modulate the immune system and associated

inflammatory response through binding to melanocortin receptors

Activity extends beyond steroidogenesis

–

Acthar binds to all 5 melanocortin receptors (MC1R-5R) found on immune cells

and cells in many of the targeted tissues (e.g., kidney podocytes)

1,3,5,6,8,9

–

Acthar also triggers the production of cortisol and other adrenal compounds

through binding to MC2R receptors found in the adrenal cortex

Acthar components have yet to be fully characterized

–

ACTH is the primary active component in Acthar, but there may be

others

Mechanism(s) of action not yet fully understood

Treats autoimmune conditions across a variety of organ systems

Appears to modulate the immune system and associated

inflammatory response through binding to melanocortin receptors

Activity extends beyond steroidogenesis

–

Acthar binds to all 5 melanocortin receptors (MC1R-5R) found on immune cells

and cells in many of the targeted tissues (e.g., kidney podocytes)

1,3,5,6,8,9

–

Acthar also triggers the production of cortisol and other adrenal compounds

through binding to MC2R receptors found in the adrenal cortex

Acthar components have yet to be fully characterized

–

ACTH is the primary active component in Acthar, but there may be

others

Mechanism(s) of action not yet fully understood

1

Arnason et al. Mult Sclerosis J. 2012;

2

Arya et al. J Child Neuro

2012;

3

Bomback et al. Amer J. Neph

2012;

4

Levine, Drug Design, Dev & Therapy, 2012.

5

Catania, et al. Pharmacol Rev. 2004;

6

Stafstrom, et

al. J Child Neuro

2011;

7

Manna SK, J Immunol. 1998;

8

Gong R. Nat Rev Nephrol. 2011;

9

Bohm et al.

Endocrine Reviews

2012;

10

H.P. Acthar Gel package insert. Questcor Pharmaceuticals, Inc., 2011.

1-4

1,5-9

1,5-9

10

15

Receptor

Prevalent Tissue/Cells with Receptor

MC1R

Podocytes, Renal Mesangial Cells,

Endothelial Cells, Tubular Epithelial Cells,

Macrophages, Melanocytes, Immune/Inflammatory

Cells, Kerantinocytes, CNS

MC2R

Adrenal Cortex (Steroidogenesis), Adipocytes

MC3R

CNS, Macrophages

MC4R

Podocytes, Renal Mesangial Cells (?)

Endothelial Cells, Tubular Epithelial Cells, CNS

MC5R

CNS, Exocrine Glands, Lymphocytes, Podocytes

Adapted from Gong 2011, Catania 2004, Schioth 1997

Acthar Binds to Melanocortin Receptors

16

•

Grow the body of Acthar evidence for on-label indications

•

Examples of ongoing projects: lupus, dermatomyositis/polymyositis,

idiopathic membranous nephropathy

•

Better understand the biological properties of Acthar

Specific biochemical pathways, cells, and tissues

Immunomodulation and anti-inflammatory effects

•

Explore possible new indications

Diabetic nephropathy, ALS identified as possible therapeutic targets

Other possible autoimmune/inflammatory conditions

•

Grow the body of Acthar evidence for on-label indications

•

Examples of ongoing projects: lupus, dermatomyositis/polymyositis,

idiopathic membranous nephropathy

•

Better understand the biological properties of Acthar

Specific biochemical pathways, cells, and tissues

Immunomodulation and anti-inflammatory effects

•

Explore possible new indications

Diabetic nephropathy, ALS identified as possible therapeutic targets

Other possible autoimmune/inflammatory conditions

Understanding The Science Behind Acthar

–

–

–

–

17

•

Complex formulation and pharmacology, with 

multiple receptor binding properties

–

Slow release gel formulation

–

Complex and not well characterized (research is ongoing)

•

Formulation and manufacturing trade secrets inherent

with Acthar

•

Synthetic competitor may be possible, but in specific

indication

–

Clinical trial(s) and other development work likely required

–

Multi-year pathway; challenging IP landscape

•

Complex formulation and pharmacology, with 

multiple receptor binding properties

–

Slow release gel formulation

–

Complex and not well characterized (research is ongoing)

•

Formulation and manufacturing trade secrets inherent

with Acthar

•

Synthetic competitor may be possible, but in specific

indication

–

Clinical trial(s) and other development work likely required

–

Multi-year pathway; challenging IP landscape

Biosimilar Pathways Highly Challenging

18

Financial Trends

19

Net Sales

EPS

400

350

300

250

200

150

100

50

0

2008

2009

2010

2011

2012

9m

2008

2009

2010

2011

2012

9m

$2.50

$2.00

$1.50

$1.00

$0.50

$0.00

95

88

115

218

349

0.49

0.40

0.54

1.21

2.12

Cash Flow from Operations

ROE

150

125

100

75

50

25

0

2007

2008

2009

2010

2011

2012

9m

2008

2009

2010

2011

2012

9m

10

64

40

37

86

135

106

47

35

37

57

110%

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

20

Financial Trends

Record Net Sales (up 135%) and EPS (up 160%)

Q3-2012 Financial Results

21

Net Sales ($M)

Gross Profit ($M)

Operating Income ($M)

Fully Diluted, GAAP EPS

Cash flow from operations (YTD $M)

Diluted shares outstanding

Q3 –

2012

Q3 –

2011

$140.3

$132.8

$83.4

$0.91

$135

61.4

$59.8

$56.1

$33.6

$0.35

$54

66.0

•

Identifying and expanding Acthar therapeutic role in existing

and new indications

•

Long term investment in R&D

--

doubled R&D spending YOY

•

Highly selective, strategic diversification

•

Have already returned $322 million to shareholders through

share repurchases

–

21.4 million shares repurchased

•

Further expanded share repurchase program to 7 million shares

•

Initiated quarterly dividend in third quarter 2012 ($0.20 per

share)

*Data

as

of

9/30/12

•

Identifying and expanding Acthar therapeutic role in existing

and new indications

•

Long term investment in R&D

--

doubled R&D spending YOY

•

Highly selective, strategic diversification

•

Have already returned $322 million to shareholders through

share repurchases

–

21.4 million shares repurchased

•

Further expanded share repurchase program to 7 million shares

•

Initiated quarterly dividend in third quarter 2012 ($0.20 per

share)

*Data

as

of

9/30/12

Committed to Creating Long Term Value for 

Shareholders*

22

•

Questcor Pharmaceuticals Acquiring BioVectra Inc.

–

Acthar Active Pharmaceutical Ingredient (API) manufacturer

•

Further secures Acthar

®

API supply and manufacturing

trade secrets 

•

Provides Questcor with third party manufacturing

capabilities

•

Expected to be accretive to future financial results

•

Terms:  C$50 million upfront cash, plus potential for

up to an additional C$50 million depending on future

performance of the BioVectra business

•

Questcor Pharmaceuticals Acquiring BioVectra Inc.

–

Acthar Active Pharmaceutical Ingredient (API) manufacturer

•

Further secures Acthar

®

API supply and manufacturing

trade secrets 

•

Provides Questcor with third party manufacturing

capabilities

•

Expected to be accretive to future financial results

•

Terms:  C$50 million upfront cash, plus potential for

up to an additional C$50 million depending on future

performance of the BioVectra business

Strategic Acquisition:  BioVectra Inc.

23

Acthar: A Sustainable Engine for Growth

24

Five Year Plan

•

Continue to expand usage in MS relapse, NS indications

•

Build and expand usage in Rheumatology indications

•

Continue to serve IS patient population and child neurologists

•

Evaluate therapeutic potential in other remaining on-label indications

•

Further characterize components, MOA, and unique characteristics

of Acthar

•

Actively pursue new indications for Acthar

Longer Term Plan

•

Launch new Acthar indications

•

Develop new formulations and products related to Acthar to help address additional

Five Year Plan

•

Continue to expand usage in MS relapse, NS indications

•

Build and expand usage in Rheumatology indications

•

Continue to serve IS patient population and child neurologists

•

Evaluate therapeutic potential in other remaining on-label indications

•

Further characterize components, MOA, and unique characteristics

of Acthar

•

Actively pursue new indications for Acthar

Longer Term Plan

•

Launch new Acthar indications

•

Develop new formulations and products related to Acthar to help address additional

autoimmune and inflammatory conditions with high unmet medical need

Acthar has a unique therapeutic role and

sustainable competitive advantages

Acthar is approved for 19 indications, many

in markets with sizable unmet need

Sales in NS and MS have increased, yet

market penetration remains modest

Questcor is increasingly capable of funding

significant R&D investments

Profitable, strong cash flow and balance

sheet

Investment Highlights

25

NASDAQ:

QCOR

NASDAQ:

QCOR

January 2013

26