Questcor Pharmaceuticals, Inc Nga Tran

Outline Healthcare sector overview Questcor Overview Financial Statement Analysis Valuation analysis Risks Recent news Recommendation

Healthcare Sector Overview

Healthcare Sector Overview Health 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

Healthcare Sector Overview

Healthcare Sector Overview

Healthcare Sector Overview Porter’s Five Forces Growth Drivers Technology & Innovation Product differentiation Population demand Governmental Regulation

Questcor Overview + The company is one of only a few worldwide broad-line manufactures of welding, cutting and

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.

Questcor Overview Nephrotic Syndrom (NS) Multiple Sclerosis Relap (MS) Infantile Spasm (IS) Rheumatology Sarcoidois

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

Questcor Overview Multiple Sclerosis Relap (MS) Neurodegenrative desease 400,000 patients in the US (>100,000 relapses a year) Lost sensation, vision, mobility

Questcor Overview Infantile Spasm (IS) Development disability Acthar is the “golden standard”, and is being used by 40% - 50% patient

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

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

Competition Main supplier of Acthar Subsititute: Steroid Medication Acquired Synacthen brazing products + In 1911, the company introduced the first variable voltage, single operator, portable welding machine to the world. + Another innovation is the flux, which cleans and protects the surface of the steel.

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 brazing products + In 1911, the company introduced the first variable voltage, single operator, portable welding machine to the world. + Another innovation is the flux, which cleans and protects the surface of the steel.

SWOT Analysis brazing products + In 1911, the company introduced the first variable voltage, single operator, portable welding machine to the world. + Another innovation is the flux, which cleans and protects the surface of the steel.

Earning Analysis Year Ending Revenue Revenue Change EPS ($) Change P/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%

Earning Analysis Source: Capital IQ

Cashflow Analysis 400% growth in Operating Cashflow in 5 years The company is one of only a few worldwide broad-line manufactures of welding, cutting and brazing products Source: Capital IQ

Ratio Analysis Source: Capital IQ The company is one of only a few worldwide broad-line manufactures of welding, cutting and brazing products Source: Capital IQ

Valuation Analysis Source: MorningStar

Valuation Analysis Source: MorningStar

Performance Comparision

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

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

Outlook The company will continue to grow!!

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

BUY!