It pays to watch those insider trades closely over at Yahoo Finance, especially for those pharmaceuticals companies who can scream higher or astoundingly lower when a drug is approved or a drug is no longer accepted by a big insurance company.
That’s just what happened to Questcor, as the stock was slammed down over 40%, and eventually halted for a period of time, on news that its drug was no longer being paid for by insurance company Aetna.
What’s interesting though is on September 12th, about a week ago, CEO Don Bailey of Questcor sold $40,000 shares at $50.08 – a value of $2,003,200. I guess he knew something about health insurer Aetna’s plan to limit coverage of one of Questcor’s drugs, the H.P. Acthar medicine for multiple sclerosis and infant seizures.
Questcor’s stock is now trading for under $30 a share. And at one point the stock was trading for $22 a share. Nice trade Mr. Bailey. I bet he’ll get back in soon since his stock has been hammered. Heck, maybe Mr. Bailey got in at $22. Here are the details from Bloomberg:
Questcor plunged 37 percent to $31.67 at 11:21 a.m. New York time, after dropping 56 percent in its biggest intraday decrease since June 1993. The shares of the Anaheim, California- based company had risen 22 percent this year through yesterday.
Questcor’s second-quarter sales more than doubled to $112.5 million, primarily reflecting expanded use of Acthar, the company said in a July 24 statement. Aetna, the third-biggest U.S. health insurer, said on its website that studies suggest the drug is “medically necessary” only for West syndrome, a condition that causes infantile spasms. For indications including multiple sclerosis, the gel hasn’t been shown to work better than current treatments or hasn’t been proven effective.
Janine McCargo, a Questcor spokeswoman, didn’t immediately respond to a message seeking comment.
The coverage decision was revised on Sept. 14, according to Aetna’s website. The insurer generally reimburses drugs only when they’re deemed medically necessary, said Cynthia Michener, a spokeswoman at Hartford, Connecticut-based Aetna, in a telephone interview.
Questcor also sells the drug Doral for insomnia, according to its website. (Bloomberg)
I’m sure Don Bailey won’t lose any sleep over this if he’s hurt any long term stock holders. Plus, if he does have trouble getting some sleep he can just pop some of his Questcor’s insomnia drug, Doral. Problem solved for him as he counts his money instead of sheep while trying to get to sleep.
Here’s the one day chart for Questcor – yes, took a dive close to $20 a share at one point: