1. Questcor Pharmaceuticals, Inc
Nga Tran

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

3. Healthcare Sector Overview

4. 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

5. Healthcare Sector Overview

6. Healthcare Sector Overview

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

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

9. 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.

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

11. 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

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

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

14. 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

15. 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

16. 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.

17. 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.

18. 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.

19. Earning Analysis Year Ending Revenue Revenue Change EPS ($) Change P/E
23.91%
7.13
8.85%
8.81
2014 E
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%

20. Earning Analysis
Source: Capital IQ

21. 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

22. 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

23. Valuation Analysis
Source: MorningStar

24. Valuation Analysis
Source: MorningStar

25. Performance Comparision

26. 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

27. 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

28. Outlook
The company will continue to grow!!

29. 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

30. BUY!