ANAHEIM, Calif., April 26, 2011 /PRNewswire/ -- Questcor Pharmaceuticals, Inc. (NASDAQ: QCOR) today reported financial results for its first quarter ended March 31, 2011. Net sales totaled a record $36.8 million for the quarter compared to $26.2 million for the quarter ended March 31, 2010, and$29.3 million for the quarter ended December 31, 2010.

The Company's financial performance was driven by a 120% year-over-year increase in the number of new paid prescriptions of H.P. Acthar® Gel (Acthar) for the treatment of multiple sclerosis (MS) exacerbations. In the first quarter, paid Acthar prescriptions for the treatment of nephrotic syndrome (NS) increased to 18 while prescriptions for the treatment of infantile spasms (IS) were 89, which is within the historic range for IS.

"Our strategy to expand the sales force is clearly paying off," said Don M. Bailey, President and CEO of Questcor. "Paid MS prescriptions are up sharply from last quarter. March was a particularly strong month and this momentum has continued so far in April. We believe that Acthar is filling an increasingly important role in the treatment of exacerbations associated with MS and, looking forward, we expect to continue to grow sales in this important therapeutic area."

Mr. Bailey added, "We are also encouraged by the early positive results from our small, dedicated nephrology sales team, which initiated selling efforts at the beginning of March. The number of nephrologists who are using Acthar to treat patients with nephrotic syndrome is increasing. In addition, during the second quarter we will initiate a company-sponsored Phase IV trial to study Acthar in the treatment of NS associated with idiopathic membranous nephropathy. 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'."

Non-GAAP and GAAP Net Income

Non-GAAP net income for the quarter ended March 31, 2011 was $12.8 million, or $0.20 per diluted common share. Non-GAAP net income for the quarter ended March 31, 2010 was $8.6 million, or $0.14 per diluted common share. 

On a GAAP basis, net income for the first quarter of 2011 was $11.2 million or $0.17 per diluted common share. Net income for the first quarter of 2010 was $7.9 million, or $0.12 per diluted common share.

The Company believes it is important to share these non-GAAP financial measures with shareholders as they represent the ongoing economics of the business and reflect how we manage the business. Accordingly, management believes investors' understanding of the Company's financial performance is enhanced as a result of our disclosing these non-GAAP financial measures. Non-GAAP net income should not be viewed in isolation, or as a substitute for, or as superior to, reported GAAP net income. The reconciliation between GAAP and non-GAAP net income is provided with the financial tables included with this release.

Prescription Trend Information for MS, NS and IS

During the first quarter of 2011, Questcor shipped 2,010 vials of Acthar compared to 1,446 vials in the first quarter of 2010. The Company's quarterly vial shipments continue to be subject to significant variation due to the size and timing of individual orders from our distributor, and the timing of these orders can significantly affect net sales and net income in any particular quarter. For this reason, as well as other factors causing quarter-to-quarter variability in Questcor's operating results, the Company believes that investors should consider the Company's results over several quarters when analyzing the Company's performance.

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, Questcor is able to monitor trends in payer mix and areas of therapeutic use for new Acthar prescriptions based on data it receives from its reimbursement support center. Questcor estimates that over 90% of new Acthar prescriptions are processed by this support center, but believes that very few refill prescriptions are processed there.

"Our expanded sales force is gaining traction in the MS market faster than we expected," commented Steve Cartt, Executive Vice President and Chief Business Officer. "We believe the increased physician call activity, as well as further productivity gains by our sales personnel will drive continued MS sales growth throughout 2011."

"During March, we initiated a limited selling effort in nephrology and a peer-reviewed journal published the first clinical data supporting the use of Acthar in the treatment of nephrotic syndrome. Our NS sales team has generated encouraging early Acthar prescription activity and we are now beginning to explore options for increasing our sales effort in this market," concluded Mr. Cartt.

Questcor's sales reserves during the quarter ended March 31, 2011, including the Company's reserves for Medicaid rebates, represented 24.3% of Gross Sales of $48.6 million for the quarter ended March 31, 2011.

As required by federal regulations, Questcor provides rebates to state Medicaid programs for Acthar dispensed to Medicaid patients covered underMedicaid rebate-eligible insurance plans. Since the Company does not receive rebate claims from the various state Medicaid agencies until well after the close of the quarter in which the underlying sales took place, the Company establishes reserves for expected rebate claims on a quarterly basis. As a result of the adoption of health care reform, for periods after March 23, 2010, the Company has also included in this reserve an estimate for the liability due to states related to prescriptions of Acthar for patients covered under state Medicaid Managed Care Organizations (Medicaid MCO), which prescriptions were not previously rebate eligible. 

Operating expenses were $18.6 million for the quarter ended March 31, 2011, compared to $12.2 million for the quarter ended March 31, 2010. The year-over-year growth in expenses was principally due to increased headcount-related costs, including sales commissions, and expenses associated with marketing programs. In addition, the Company incurred an expense of approximately $0.3 million for the write-off of goodwill associated with a 1999 acquisition. 

The Company expects operating expenses to continue to increase during 2011, due to increased spending associated with its Phase IV clinical study of the use of Acthar in the treatment of NS associated with idiopathic membranous nephropathy and increased selling and marketing expenses.

As of April 22, 2011, Questcor's cash, cash equivalents and short-term investments totaled $128 million.

During the first quarter, the Company used $11.5 million to repurchase 884,300 shares of its common stock in open market transactions. These repurchases brought the total expenditures for the repurchase of common and preferred shares to over $78 million since this effort began in 2008. As of March 31, 2011, Questcor had 61.7 million shares of common stock outstanding, with 4.3 million shares remaining under its common stock repurchase program.

( Source: Questcor Pharmaceutical Inc )