Citron Research Drops White-Paper Bomb on Questcor

Citron Research, a stock-commentary website, has dropped a (another) bomb on Questcor Pharmaceuticals (QCOR). According to Citron’s latest research, QCOR’s flagship (and only) drug Acthar* is not what it’s claimed to be–a gel containing ACTH, or corticotropin. To be delivered IM, Acthar is currently indicated for, among other conditions, infantile spasms and MS relapses, although clinical evidence supporting the preferred use of Acthar for these indications is not rock solid.

In a lengthy white paper, released today, Citron claims that Acthar contains almost no detectable ACTH, but instead, degradation products of ACTH (“deamidated corticotropin”). Citron says that its concerns about the laboratory-tested make-up of Acthar were presented to the FDA in early December of last year. Citron also implies that Questcor is aware of the purported mysterious make-up of Acthar and has been attempting to clarify it and determine its therapeutic significance for some time. Although the company has also used the mystery of the drug’s make-up in a promotional angle–touting it as a sort of a therapeutic “secret sauce.”

The FDA website (drugs@fda.gov) indicates that Acthar was originally approved on April 29, 1952; but the website does not offer documentation to clarify for what. This approval predates the Kefauver-Harris Drug Amendments of 1962, which stipulated that drug manufacturers must prove the efficacy of their drugs for specified conditions before they can be sold. Consequently (and the drug law is murky here, at least to me) QCOR can market Acthar for any number of conditions, without jumping through the necessary hoops to prove its efficacy. In essence, the drug has been “grandfathered” into the drug market, albeit one that resembles the first half of the 20th century. As the New York Times reported in 2012,

But Questcor did almost no research or development to bring Acthar to market, merely buying the rights to the drug from its previous owner for $100,000 in 2001. And while the manufacturing of Acthar is complex, it accounts for only about 1 cent of every dollar that Questcor charges for the drug.

Before long, Questcor began marketing the drug for multiple sclerosis, nephrotic syndrome and rheumatologic conditions [in addition to infantile spasms], even though there is little evidence that Acthar is more effective for those other conditions than alternatives that are far cheaper. And the company did so without being required to prove that the drug actually works. That is because Acthar was approved for use in 1952, before the Food and Drug Administration required clinical trials to show a drug is effective for a particular disease. Acthar is essentially grandfathered in.

In providing further background on Acthar, the NYT also wrote,

In 1952, Armour won approval from the F.D.A. for H.P. Acthar Gel, or “highly purified” ACTH mixed with gelatin (another animal byproduct) to make it last longer in the body and require fewer injections. The label said the drug could be used to treat about 50 diseases.

What potentially started this ongoing investigation into QCOR and Acthar was the company’s move in 2007 to jack up the price of its one-and-only product to astronomical heights, from $2,062.79 per vial to an estimated $23,000 per vial. As Gettig et al wrote in 2009, “This increase in price has led clinicians to question the therapeutic value of H.P. Acthar Gel, especially as it compares with lower-priced and potentially therapeutically equivalent alternatives such as cosyntropin and corticosteroids.” Given their review of the clinical data at the time, they concluded, “In most situations, ACTH should be reserved for patients who have not responded to treatment or who cannot tolerate corticosteroids and cosyntropin.”

Their conclusion, of course, resided on the assumption that Acthar actually contained ACTH.

* Presumably the trade name comes from ACTH and the first two letters of its original developer, Armour.

Photo of atomic bomb blast on Nagasaki, August 9, 1945.

03-01-14 update: Since the release of Citron’s white paper, alleging that Acthar is not what it’s professed to be, shares of QCOR dropped from a high of 72.72 on February 27th to a closing price of 60.75 at EOD February 28th (16%). This follows a continuing downward trend in share price beginning on February 26th. QCOR’s peak share price this calendar year was 80.15 on February 24th, after a roaring ascent.