Insys Therapeutics Inc (INSY) Tanks On Poor Earnings and is down about 20 percent at the time of this writing – Now regular readers will be familiar with this company. Roddy Boyd of SIRF who is a ValueWalk contributor has done some investigative journalism into the company and has found what he alleges to be pretty damning practices. Basically, Boyd alleges (and the company denies) that INSDY pressures its employees to mislead insurance companies into granting coverage to patients prescribed its drug Subsys. With the latest earnings report disappointing here is what the sell side analysts are saying.

On a recent conference call management stated:

In 2002 when we launched Subsys, the FDA had just recently implemented a mandatory REMS program for the entire TIRF class. And so, we launched under that REMS program. Prior to the REMS having been implemented, the TIRF class scripts were well in excess of 20,000 scripts per month. By the time the REMS was implemented, that market had gone down to about 10,000 scripts per month. Fast forward to today, the TIRF market remains at — the market size of 10,000 scripts or less per month.

So as we entered this TIRF market, again, the market was down, we believe the REMS program was an effective control for this particular class of medication. But we had tremendous success with Subsys and continue to have great success with that product. It currently has over 40% share of the TIRF market, and Subsys is a sublingual spray fentanyl. It has five-minute time to onset and we believe has captured the majority share in this class as a result of the product characteristics and the clinical profile.

So, going back to the original formation of Insys of being based on the belief that we could come up with a better way to deliver Marinol, we are on the verge of hopefully, potentially this year, realizing that vision. Our next commercial product is scheduled for an April 1, 2016, PDUFA date and we intend to call that product Syndros, which is a dronabinol oral solution, would be administered orally, and is a product that we believe will have many clinical benefits versus the existing form of Marinol.

So, that’s a high-level overview of Insys, where we have been, where we are. We are also, in addition to the pending launch of Syndros this year, focused on a development of a variety of other products, and we now look at our Company as a two platform company, one being the sublingual spray delivery.

Insys Therapeutics Inc – analysts react

RBC Capital opines:

Insys announced this morning that its 1Q Subsys revenue will come in at $61-62 million reflecting a decline in demand as well as lower wholesale inventory levels of roughly $7 million. This is well below us/consensus at $86 million with the Street range $82 million to $90 million. INSY pointed to the heightened publicity surrounding the “national opioid epidemic” resulting in a sensitivity by some physicians to prescribe opioids though sees the script decline as close to stabilizing. INSY expects to remain profitable and will continue to pursue all research and development projects.

RBC had opined before earnings – INSY (Subsys): The view by our physician was that the entire TIRF market will see headwinds as reimbursement continues to be a challenge. He did not see any Subsys specific concerns nor was the negative headline around selling practices and DOJ investigation a factor in his view of the drug.

Jefferies noted in a recent report

Insys Therapeutics Inc: Subsys volume declined sequentially (737 TRxs, -4.4% W/W, -26.0% Y/Y) and assuming an $8-8.5K net price/TRx, Q1 sales are apparently annualizing at $78-83M (vs $82M JEF).

 

Insys Therapeutics Inc (INSY)
Sources: IMS Health, FDA FAERS data through June 30, 2015