Questcor Reports First Quarter Financial Results

               Questcor Reports First Quarter Financial Results

- Net Sales Increase 41% Year Over Year; Down Sequentially -

- April Vial Shipments Rebound Significantly Establishing a New Monthly

- Prescription Levels in Rheumatology Increasing -

- Phase 2 Clinical Trial of Acthar in ALS to Start under FDA Accepted IND -

PR Newswire

ANAHEIM, Calif., April 30, 2013

ANAHEIM, Calif., April 30, 2013 /PRNewswire/ --Questcor Pharmaceuticals, Inc.
(NASDAQ: QCOR) today reported financial results for the first quarter ended
March 31, 2013.Financial results include BioVectra Inc. since January 18,

                  Three Months Ended       Three Months Percentage Change
                 03/31/13                   Ended 03/31/12
Net Sales        $135.1 Million             $96.0 Million   41%
GAAP Diluted EPS $0.65                      $0.58           12%
Non-GAAP Diluted $0.76                      $0.61           25%

Net sales for the first quarter of 2013 were $135.1 million, with BioVectra
contributing $8.4 million. Year-over-year net sales grew 41 percent from $96.0
million in the first quarter of 2012. Net sales growth was driven by the
expanded usage of H.P. Acthar^® Gel (repository corticotropin injection) by
nephrologists in the treatment of nephrotic syndrome (NS) and by
rheumatologists in the treatment of dermatomyositis, polymyositis, systemic
lupus erythematosus, and rheumatoid arthritis, as well as continued
prescribing by neurologists in the treatment of multiple sclerosis (MS)
exacerbations and infantile spasms (IS).

Net sales in the first quarter of 2013 were negatively impacted by the effects
of several transitional events, including: distribution channel disruptions
associated with implementing the Medicaid rebate change, the timing of Acthar
orders that were received and filled at the end of fourth quarter 2012 and the
introduction of a new reimbursement support center. This was partially offset
by the positive impact of a lower Medicaid rebate rate and the acquisition of
BioVectra. Based on its analysis of prescription trends, Questcor believes
that the decline in its net sales from the fourth quarter of 2012 to the first
quarter of 2013 reflected these transitional issues, as well as a reduction in
the number of prescriptions of Acthar to treat MS exacerbations. The Company
believes that insurance coverage for Acthar continues to remain favorable,
when Acthar is prescribed for on-label indications for patients in need of an
additional FDA-approved treatment alternative.

Questcor shipped 4,830 vials of Acthar during the first quarter of 2013
compared to 4,111 vials in the first quarter of 2012 and 6,330 vials in the
fourth quarter of 2012. The Company shipped 2,550 vials of Acthar to its
distributor in April 2013, which is a record number of vials shipped in a
single month. The Company believes this strong demand primarily reflects the
transitional nature of the factors that negatively impacted first quarter net
sales. As the Company has previously disclosed, monthly and quarterly vial
shipments are subject to significant variation due to the size and timing of
individual orders received from Questcor's distributor.The timing of when
these orders are received and filled can significantly affect net sales and
net income in any particular quarter. For example, in late December 2012,
Questcor received and shipped two orders that represented 360 vials of Acthar.
The Company believes that investors should consider the Company's results over
several quarters when analyzing the Company's performance.

GAAP earnings for the first quarter of 2013 were $0.65 per diluted common
share, compared to $0.58 per diluted common share for last year's comparable
quarter.Non-GAAP earnings for the quarter ended March 31, 2013 were $0.76 per
diluted common share and exclude non-cash share-based compensation expense,
impairment of purchased technology, foreign currency transaction losses,
interest expense related to our contingent consideration in conjunction with
our acquisition of BioVectra, non-cash compensation expense and depreciation
and amortization expense. Non-GAAP earnings for the year ago quarter were
$0.61 per diluted common share. The reconciliation between GAAP and Non-GAAP
financial measures are provided with the financial tables included with this

"Our first quarter results were below our expectations," said Don M. Bailey,
President and CEO of Questcor. "However, vial shipment activity and
prescription levels in MS and rheumatology in late March and throughout April
appear to indicate that positive sales momentum has returned. In particular,
we note that our newest initiative related to the promotion of Acthar for
dematomyositis and polymyositis is off to a strong start."

Mr. Bailey continued, "In the first quarter, we made several operational
changes aimed at ensuring and improving the delivery of Acthar for patients
who rely on this important drug. We continue to seek to improve our business
operations in order to benefit both Acthar patients and our shareholders by
establishing a solid foundation for potential additional growth."

"Total new paid prescriptions for Acthar were approximately 1,725 to 1,750 in
the first quarter, an increase of about 16% year-over-year and a decrease of
about 9% sequentially," commented Steve Cartt, Chief Operating Officer of
Questcor. "New paid prescriptions for NS, which represent about half of our
Acthar business, were about 385-395 in the quarter, up about 56%
year-over-year and up about 5% over the fourth quarter of 2012. New paid
prescriptions for MS, which represent about a quarter of our Acthar business,
were about 1,015 to 1,025, roughly flat year-over-year and down 17% from the
prior quarter. New paid prescriptions for IS were 155 to 165. Net sales
related to IS were positively influenced by the reduction of the Medicaid
rebate in the quarter. New paid prescriptions for the on-label rheumatology
indications were 140-150, up about 58% sequentially."

Mr. Cartt continued, "Consistent with the level of our vial sales in April,
new paid prescription activity in April has been robust. While the second
quarter is only about one-third complete, NS continues to grow, MS is on track
to recover from first quarter softness, and rheumatology may well be up
sharply from the first quarter."

To allow comparable analysis, the company has defined new paid prescriptions
in the above paragraphs to include prescriptions covered by commercial
carriers, Medicare, Medicaid and Tricare in all periods regardless of the
rebate percentage applicable in those periods. The numbers do not include
prescriptions filled through the Acthar free drug program.

Research and Development Programs

Questcor's continued strong financial performance has enabled the Company to
increase investment in research programs to further clarify the potential
immune-modulating properties of Acthar and identify Acthar mechanisms of
action applicable to other inflammatory and auto-immune diseases with high
unmet medical need. The Company is also in the process of identifying new
patient populations in which to evaluate Acthar through clinical studies.
Additionally, Questcor has funded or has approved funding for approximately
70 other research projects, including company-sponsored clinical and
pre-clinical studies and independent physician sponsored studies.

Label Enhancement Strategy:

  oAmyotrophic Lateral Sclerosis (ALS): Questcor has reached an agreement
    with the U.S. Food and Drug Administration (FDA) on a Phase 2 clinical
    trial of Acthar for the treatment of amyotrophic lateral sclerosis (ALS),
    often referred to as Lou Gehrig's disease. ALS is a life-threatening,
    progressive neurodegenerative disease that affects nerve cells in the
    brain and the spinal cord. The Company expects to initiate the Phase 2
    study in the second quarter of 2013 and has submitted a request for Orphan
    Designation to FDA.
  oDiabetic Nephropathy: Enrollment continues in a company-sponsored Phase 2
    IND trial to evaluate the efficacy and safety of Acthar in patients with
    diabetic nephropathy, one of the most common causes of end-stage renal
    disease in the United States.

Research Regarding Approved Indications:

  oIdiopathic Membranous Nephropathy: Enrollment continues in a
    company-sponsored Phase 4 trial in idiopathic membranous nephropathy.
    Patients enrolled in this study are refractory, or non-responsive, to
    current standard therapies or have relapsed after partial remission on
    current standard therapies.
  oLupus: Enrollment is underway in a company-sponsored multi-site Phase 4
    company-sponsored clinical trial to evaluate the efficacy and safety of
    daily Acthar administration over a 6-month period in patients with
    persistently active lupus.
  oLupus Exacerbations: Questcor is providing grant support for a
    prospective independent investigator initiated study evaluating Acthar in
    the treatment of lupus exacerbations. The Company has recently been
    informed by the investigator that enrollment for this study has been
    completed and that the study should be completed by the end of the second

Cash, Share Repurchase Program and Dividends

As of April 19, 2013, Questcor's cash, cash equivalents and short-term
investments totaled $156.3 million. There were no share repurchases during the
first quarter of 2013 and Questcor had 6.3 million remaining authorized shares
under its common stock repurchase plan. Shares outstanding at March 31, 2013,
were 59.6 million shares, a decrease of 3.5 million shares from March 31,

The Company issued its second quarter cash dividend of$0.25per share to all
shareholders of record at the close of business onApril 22, 2013. The
dividend is scheduled to be paid on or aboutApril 30, 2013. Questcor
currently intends to pay regular quarterly cash dividends for the foreseeable

Acthar Label Information

The product label for Acthar includes 19 FDA-approved indications.
Substantially all of the Company's net sales currently result from Acthar
prescriptions for the following on-label indications of:

  oNephrotic Syndrome (NS): "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." NS can result from several
    underlying conditions, and prescribing physicians indicate that Acthar is
    most commonly being prescribed for patients who suffer from NS due to
    idiopathic membranous nephropathy, focal segmental glomerulosclerosis
    (FSGS), IgA nephropathy, minimal change disease and lupus nephritis.
  oMultiple Sclerosis (MS): "for the treatment of acute exacerbations of
    multiple sclerosis in adults. Clinical controlled trials have shown H.P.
    Acthar Gel to be effective in speeding the resolution of acute
    exacerbations of multiple sclerosis. However, there is no evidence that it
    affects the ultimate outcome or natural history of the disease." When
    Acthar is used, it is typically prescribed as second line treatment for
    patients with MS exacerbations.
  oInfantile Spasms (IS): "as monotherapy for the treatment of infantile
    spasms in infants and children under 2 years of age."
  oCollagen Diseases: "during an exacerbation or as maintenance therapy in
    selected cases of: systemic lupus erythematosus, systemic dermatomyositis
  oRheumatic Disorders: "as adjunctive therapy for short-term administration
    (to tide the patient over an acute episode or exacerbation) in: Psoriatic
    arthritis, Rheumatoid arthritis, including juvenile rheumatoid arthritis
    (selected cases may require low-dose maintenance therapy), Ankylosing

Non-GAAP Financial Measures

The Company believes it is important to share non-GAAP financial measures with
shareholders as these measures may better 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 the disclosure of these non-GAAP financial measures.
Non-GAAP financial measures should not be viewed in isolation, or as a
substitute for, or as superior to, reported GAAP financial measures. The
reconciliation between GAAP and Non-GAAP financial measures are provided with
the financial tables included with this release.

Conference Call and Webcast Details

The Company will host a conference call and slide presentation via webcast
today, April 30, 2013, at 4:30 p.m. ET/ 1:30 p.m. PT. The call can be accessed
three ways:

  oBy webcast: At Questcor's investor relations website,
  oBy telephone: For both "listen-only" participants and those participants
    who wish to take part in the question-and-answer portion of the call, the
    dial-in number in the U.S. is (877) 354-0215. For participants outside the
    U.S., the dial-in number is (253) 237-1173.
  oBy audio replay: A replay of the conference call will be available for
    seven business days following conclusion of the live call. The telephone
    dial-in number for U.S. participants is (855) 859-2056. For participants
    outside the U.S., the replay dial-in number is (404) 537-3406. The replay
    access code for all callers is 34200996.

About Questcor

Questcor Pharmaceuticals, Inc. is a biopharmaceutical company focused on the
treatment of patients with serious, difficult-to-treat autoimmune and
inflammatory disorders. Questcor also provides specialty contract
manufacturing services to the global pharmaceutical industry through its
wholly-owned subsidiary BioVectra Inc. Questcor's primary product is H.P.
Acthar^® Gel (repository corticotropin injection), an injectable drug that is
approved by the FDA for the treatment of 19 indications. Of these 19
indications, Questcor currently generates substantially all of its net sales
from the following on-label indications: the treatment of proteinuria in the
nephrotic syndrome of the idiopathic type, or NS, the treatment of acute
exacerbations of multiple sclerosis, or MS, in adults, the treatment of
infantile spasms, or IS, in infants and children under two years of age, and
the treatment of certain rheumatology related conditions, including the
treatment of the rare and closely related neuromuscular disorders
dermatomyositis and polymyositis. With respect to nephrotic syndrome, the FDA
has approved Acthar 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. Questcor is also exploring the possibility of developing
markets for other on-label indications and the possibility of pursuing FDA
approval of additional indications not currently on the Acthar label where
there is high unmet medical need. For more information about Questcor, please

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," "ensuring," "estimates," "expects," "growth," "may,"
"momentum," "plans," "potential," "remain," "should," "start," "substantial,"
"sustainable" 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:

  oOur reliance on Acthar for substantially all of our net sales and profits;
  oReductions in vials used per prescription resulting from changes in
    treatment regimens by physicians or patient compliance with physician
  oOur ability to receive high reimbursement levels from third party payers;
  oThe complex nature of our manufacturing process and the potential for
    supply disruptions or other business disruptions;
  oThe lack of patent protection for Acthar; and the possible FDA approval
    and market introduction of competitive products;
  oOur ability to continue to generate revenue from sales of Acthar to treat
    on-label indications associated with NS, MS, IS or rheumatology-related
    conditions, and our ability to develop other therapeutic uses for Acthar;
  oResearch and development risks, including risks associated with Questcor's
    work in the area of NS and Lupus, our reliance on third-parties to conduct
    research and development, and the ability of research and development to
    generate successful results;
  oThe 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 and litigation brought by certain
    shareholders arising from the federal securities laws, currently pending
    in the United States District Court for the Central District of
  oOur ability to comply with federal and state regulations, including
    regulations relating to pharmaceutical sales and marketing practices;
  oRegulatory 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;
  oAn increase in the proportion of our Acthar unit sales comprised of
    Medicaid-eligible patients and government entities;
  oOur 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;
  oOur ability to effectively manage our growth, including the expansion of
    our sales forces, and our reliance on key personnel;
  oOur ability to integrate the BioVectra business with our business and to
    manage, and grow, a contract manufacturing business;
  oOur ability to comply with foreign regulations related to the operation of
    BioVectra's business;
  oThe impact to our business caused by economic conditions;
  oOur ability to protect our proprietary rights;
  oThe risk of product liability lawsuits;
  oUnforeseen business interruptions and security breaches;
  oVolatility in Questcor's monthly and quarterly Acthar shipments, estimated
    channel inventory, and end-user demand, as well as volatility in our stock
  oOur ability and willingness to continue to pay our quarterly dividend or
    make future increases in our quarterly dividend; and
  oOther risks discussed in Questcor's annual report on Form 10-K for the
    year ended December 31, 2012 as filed with the Securities and Exchange
    Commission, or SEC, on February 27, 2013, 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

Questcor undertakes no obligation to publicly release the result of any
revisions to these forward-looking statements, which may be made to reflect
events or circumstances after the date of this release.

For more information, please visit or



(In thousands, except net income per share data)

                                                         Three Months Ended
                                                         2013        2012
Pharmaceutical net sales                                 $ 126,771   $ 95,968
Contract manufacturing net sales                         8,358       —
Total net sales                                          135,129     95,968
Cost of sales (exclusive of amortization of purchased    16,189      5,520
Gross profit                                             118,940     90,448
Operating expenses:
Selling and marketing                                    35,461      21,716
General and administrative                               12,548      5,442
Research and development                                 10,793      5,665
Depreciation and amortization                            1,070       290
Impairment of purchased technology                       719         —
Total operating expenses                                 60,591      33,113
Income from operations                                   58,349      57,335
Interest and other (expense) income, net                 (342)       216
Foreign currency transaction loss                        (488)       —
Income before income taxes                               57,519      57,551
Income tax expense                                       18,455      19,008
Net income                                               $ 39,064    $ 38,543
Change in unrealized gains or losses on
available-for-sale securities, net of related tax        (1,194)     91
effects and changes in foreign currency translation
Comprehensive income                                     $ 37,870    $ 38,634
Net income per share:
Basic                                                    $ 0.68      $ 0.61
Diluted                                                  $ 0.65      $ 0.58
Shares used in computing net income per share:
Basic                                                    57,857      63,491
Diluted                                                  60,271      66,471
Dividends declared per share of common stock             $ 0.25      $ —

Reconciliation of Non-GAAP Adjusted
                                       Three Months Ended
                                       March 31,
                                       2013                2012
Adjusted net income                    $      45,832 $      40,610
Share-based compensation expense (1)   (4,162)             (1,550)
Depreciation and amortization expense  (1,447)             (196)
Interest expense associated with       (196)               0
contingent consideration (3)
Compensation expense associated with   (146)               0
BV Trust (4)
Foreign currency transaction loss (5)  (330)               0
Tax adjustments (6)                    0                   (321)
Impairment of purchased technology (7) (487)               -
Net income - GAAP                      $      39,064 $      38,543
Adjusted net income per share - basic  $            $       
                                       0.79                0.64
Share-based compensation expense (1)   (0.07)              (0.02)
Depreciation and amortization expense  (0.03)              (0.00)
Interest expense associated with       (0.00)              —
contingent consideration (3)
Compensation expense associated with   (0.00)              —
BV Trust (4)
Foreign currency transaction loss (5)  (0.01)              —
Tax adjustments (6)                    —                   (0.01)
Impairment of purchased technology (7) (0.01)              —
Net income per share - basic           $            $       
                                       0.68                0.61
Adjusted net income per share -        $            $       
diluted                                0.76                0.61
Share-based compensation expense (1)   (0.07)              (0.02)
Depreciation and amortization expense  (0.02)              (0.00)
Interest expense associated with       (0.00)              —
contingent consideration (3)
Compensation expense associated with   (0.00)              —
BV Trust (4)
Foreign currency transaction loss (5)  (0.01)              —
Tax adjustments (6)                    —                   (0.00)
Impairment of purchased technology (7) (0.01)              —
Net income per share - diluted         $            $       
                                       0.65                0.58
Net sales - Questcor                   $     126,771   $      95,968
Net sales - BioVectra                  8,358               —
Consolidated net sales                 $     135,129   $      95,968

Net income per share – basic and diluted may not foot due to rounding.
Use of Non-GAAP Financial Measures
Our "non-GAAP adjusted net income" excludes the following items from GAAP net
1. Share-based compensation expense.
2. Depreciation and amortization expense, including amortization expense on
our purchased intangibles.
3. Interest expense associated with the net present value adjustment on our
contingent consideration.
4. Compensation expense associated with the BV Trust agreement.
5. Foreign currency transaction loss.
6. Tax adjustment primarily relate to write-off of 1997-2000 Federal R&D tax
7. Impairment of purchased technology related to our acquisition of Doral.



(In thousands, except share information)

                                                    March31,   December31,
                                                    2013        2012
Current assets:
Cash and cash equivalents                           $ 75,404    $   80,608
Short-term investments                              78,020      74,705
Total cash, cash equivalents and short-term         153,424     155,313
Accounts receivable, net of allowances for doubtful
accounts of $379 and $0 at March 31, 2013 and       59,278      61,417
December 31, 2012, respectively
Inventories, net of allowances of $1,205 and $52 at 16,786      9,909
March 31, 2013 and December 31, 2012, respectively
Prepaid expenses and other current assets           6,485       4,900
Deferred tax assets                                 5,464       5,737
Total current assets                                241,437     237,276
Property and equipment, net                         35,742      2,073
Purchased technology, net                           700         1,493
Goodwill                                            20,597      —
Intangibles, net                                    33,992      —
Deposits and other assets                           1,766       70
Deferred tax assets                                 11,519      11,519
Total assets                                        $ 345,753   $   252,431
Current liabilities:
Accounts payable                                    $ 14,630    $   13,069
Accrued compensation                                6,089       21,300
Sales-related reserves                              25,830      37,376
Dividend payable                                    14,751      —
Current portion of contingent consideration         4,485       —
Income taxes payable                                13,003      7,360
Current portion of long-term debt                   1,680       —
Other accrued liabilities                           13,827      11,294
Total current liabilities                           94,295      90,399
Long-term debt, less current portion                16,062      —
Contingent consideration                            25,747      —
Non current deferred tax liability                  11,736      —
Other non current liabilities                       2,211       203
Total liabilities                                   150,051     90,602
Shareholders' equity:
Preferred stock, no par value, 5,334,285 shares     —           —
authorized; none outstanding
Common stock, no par value, 105,000,000 shares
authorized, 59,554,198 and 58,544,206 shares issued 26,692      15,938
and outstanding at March 31, 2013 and December31,
2012, respectively
Retained earnings                                   170,164     145,851
Accumulated other comprehensive (loss) income       (1,154)     40
Total shareholders' equity                          195,702     161,829
Total liabilities and shareholders' equity          $ 345,753   $   252,431



(In thousands)

                                                          Three Months Ended
                                                          2013       2012
Net income                                                $ 39,064   $ 38,543
Adjustments to reconcile net income to net cash provided
by operating activities:
Share-based compensation expense                          6,148      2,296
Deferred income taxes                                     411        67
Amortization of investments                               182        546
Depreciation and amortization                             2,137      290
Impairment of purchased technology and goodwill           719        —
Loss on disposal of property and equipment                21         —
Changes in operating assets and liabilities, net of
business acquisition:
Accounts receivable                                       8,718      (13,557)
Inventories                                               4,637      (298)
Prepaid income taxes                                      —          760
Prepaid expenses and other current assets                 (198)      (272)
Accounts payable                                          (384)      1,985
Accrued compensation                                      (15,211)   (6,519)
Sales-related reserves                                    (11,546)   (354)
Income taxes payable                                      5,643      17,556
Contingent consideration                                  505        —
Other accrued liabilities                                 538        (13)
Other non-current liabilities                             68         (120)
Net cash flows provided by operating activities           41,452     40,910
Purchase of property and equipment                        (562)      (302)
Purchase of short-term investments                        (33,539)   (71,074)
Proceeds from maturities of short-term investments        30,038     32,235
Acquisition of BioVectra, net of cash received            (46,692)   —
Deposits and other assets                                 —          4
Net cash flows used in investing activities               (50,755)   (39,137)
Repayment of funded long-term debt                        (304)      —
Repayment of other long-term debt                         (119)      —
Income tax benefit realized from share-based compensation 1,991      1,380
Issuance of common stock, net                             2,615      956
Repurchase of common stock                                —          (28,987)
Net cash flows provided by / (used in) financing          4,183      (26,651)
Effect of cash on changes in exchange rates               (84)       —
Decrease in cash and cash equivalents                     (5,204)    (24,878)
Cash and cash equivalents at beginning of period          80,608     88,469
Cash and cash equivalents at end of period                $ 75,404   $ 63,591
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest                                    $ 182      $ 7
Cash paid for income taxes                                $ 9,707    $ 32
Supplemental Disclosures of Investing and Financing
Dividend payable                                          $ 14,751   $ —
In conjunction with the acquisition of BioVectra at
January 18, 2013:
Incremental fair value of assets acquired, net            $ 80,698
Less: fair value of contingent consideration              (30,383)
Loss on foreign exchange rate                             488
Total cash paid for acquisition of BioVectra              $ 50,803

SOURCE Questcor Pharmaceuticals, Inc.

Contact: EVC Group, Gregory Gin/Patty Eisenhaur, 646-445-4801/951-316-0577,
Doug Sherk, 415-652-9100, Janine McCargo, 646-688-0425
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