Insys Therapeutics, Inc. (NASDAQ: INSY) is a specialty pharmaceutical company that develops and commercializes innovative drugs and novel drug delivery systems of therapeutic molecules. INSYS currently markets one product, SUBSYS® (fentanyl sublingual spray), CII, and has received approval for the marketing of SYNDROS™ (dronabinol) oral solution, CII, a proprietary, orally administered liquid formulation of dronabinol. SUBSYS® and SYNDROS™ are trademarks of Insys Development Company, Inc., a subsidiary of Insys Therapeutics, Inc.
Recent negative headlines continue to impinge the business risk profile & brand image of the company. Elizabeth Gurrieri, a former manager of reimbursement services for Arizona-based Insys, will plead guilty to one count of wire fraud conspiracy, prosecutors said in a letter filed in Boston federal court. The filing is part of the criminal case against six ex-Insys executives and managers including former Chief Executive Michael Babich, who, prosecutors say, participated in a scheme to bribe doctors to prescribe the drug, Subsys. Gurrieri would become the second former Insys employee nationally to plead guilty in connection with Subsys, an under-the-tongue spray containing fentanyl, a highly addictive and regulated synthetic opioid.
Recently, Insys issued a response to the recent media reports that highlight concerns with the Company’s past commercial practices and former employees. Wherein, the company reiterated its commitment towards maintaining the highest ethical standards and compliance around all its activities and business practices and complying with governing laws and regulations & cooperating with relevant governmental authorities in ongoing investigations.
Management also highlighted that Insys intends to play a meaningful role in providing solutions to address the opioid epidemic by developing innovative products. These potential product solutions include cannabidiol (a novel, non-opioid) for the treatment of opioid dependence, cannabidiol for the treatment of pain and naloxone nasal spray for the treatment of opioid overdose.
On the brighter side, the Food and Drug Administration (FDA) approved the final labeling for Syndros (dronabinol oral solution, a pharmaceutical version of THC), which may classify the drug as a Schedule II (CII) controlled substance. Insys Therapeutics expects to launch the product in August 2017. Syndros is indicated for the treatment of anorexia associated with weight loss in patients with AIDS, and in the treatment of nausea and vomiting associated with cancer chemotherapy in patients who have failed to respond adequately to conventional antiemetic treatments. Syndros will be a direct competitor to Marinol, a product offered by Abbvie (ABBV) in pill form. Since Syndros is a liquid, it should be easier to swallow and can be administered in prescribed dosages. If the drug launches as a Schedule III drug, Insys anticipates annual sales of $200 million to $300 million. A Schedule II designation would trim that by an estimated 20% to 25%. Dronabinol was approved by the FDA decades ago as a treatment option for cancer patients. Today, the potential applications for dronabinol, including sleep apnea, epilepsy, and opioid dependency, could catapult dronabinol into annual sales in the billions.
On May 9th, The Company announced financial results for the three-month period ended March 31, 2017. Net revenue totaled $36.0 million, compared to $60.4 million for the first quarter of 2016. Gross margin was 87% for the first quarter of 2017 compared with 92% for the first quarter of 2016. During the first quarter, gross margin was impacted by a $2.1 million charge for excess and obsolete Subsys inventory. Going forward, the company is expected to report revenue in between $38.25 Million and $31.29 Million with an average of $36.02 Million.
INSYS Therapeutics, Inc. is being covered by a number of analysts. Recently, 2 rated the stock as Buy, 2 rated Outperform, 2 rated Hold, 0 gave an Underperform and 0 rated sell. With the recent developments, we believe the company stock is categorized as ‘BUY’, as the company is reflecting reasonable bullish signs and has a medium-term average price target of $16.40 from analysts.
About the company:
Insys Therapeutics is a specialty pharmaceutical company that develops and commercializes innovative drugs and novel drug delivery systems of therapeutic molecules that improve the quality of life of patients. Using proprietary sublingual spray technology and capabilities to develop pharmaceutical cannabinoids, INSYS is developing a pipeline of products intending to address unmet medical needs and the clinical shortcomings of existing commercial products. INSYS currently markets one product, SUBSYS® (fentanyl sublingual spray), CII, and has received approval for the marketing of SYNDROS™ (dronabinol) oral solution, CII, a proprietary, orally administered liquid formulation of dronabinol that INSYS believes has distinct advantages over the current formulation of dronabinol in soft gel capsule. INSYS is committed to developing medications for potentially treating addiction to opioids, opioid overdose, epilepsy, and other disease areas with a significant unmet need.
SUBSYS® and SYNDROS™ are trademarks of Insys Development Company, Inc., a subsidiary of Insys Therapeutics, Inc.
On May 16th, 2017, Insys announced that Darryl S. Baker, the Company’s Chief Financial Officer (“CFO”), will transition from the role of CFO when a successor is hired.
Insys has engaged an executive search firm to support the recruitment of a new CFO. Mr. Baker will continue to work closely with the management team, including the new CFO, to facilitate a smooth and successful transition of his responsibilities.
Revenue analysis for the first quarter of 2017:
Net revenue totaled $36.0 million, compared to $60.4 million for the first quarter of 2016.
Rationale for decline in revenue: The decrease in net revenue was attributable to a decrease in net revenue of SUBSYS®, which was the result of a 35.5% decrease in SUBSYS® shipments to pharmaceutical wholesalers and specialty pharmaceutical retailers for the three months ended March 31, 2017 due primarily to reduced demand for SUBSYS®, as compared to the three months ended March 31, 2016, combined with a 5.0% decrease in net sales price due to changes in mix of prescribed dosages and changes in provisions for wholesaler discounts, patient discounts, rebates, and returns.
Insys intends to remain committed to supporting its substantial R&D program and optimizing the performance of current approved assets as it focus on providing much needed relief to the patients for whom products are being developed.
This year, the Company is focusing on growing its commercial portfolio from one to two products, filing an NDA for buprenorphine, and significantly advancing its pipeline of products across both sublingual spray and cannabinoid platforms.
Its goal is to continue to focus on working towards a resolution in the DOJ investigation, stabilizing Subsys sales, successfully launching Syndros, and advancing its pipeline as it positions itself for future growth.
Profitability: Gross margin was 87% for the first quarter of 2017 compared with 92% for the first quarter of 2016. During the first quarter, gross margin was impacted by a $2.1 million charge for excess and obsolete Subsys inventory. Net loss for the first quarter of 2017 was $6.5 million, or $(0.09) per basic and diluted share, compared to net income of $2.3 million, or $0.03 per basic and diluted share, for the first quarter of 2016.
Liquidity: The Company had $218.5 million in cash, cash equivalents, short-term and long-term investments, no debt, and $267.8 million in stockholders’ equity as of March 31, 2017.
Net cash used in operating activities was $16.7 million for the three months ended March 31, 2017, as compared to net cash provided by operating activities of $12.2 million for the three months ended March 31, 2016. The net cash used during the three months ended March 31, 2017 primarily reflects the net loss for the period driven by a reduction in SUBSYS® net sales, adjusted in part by depreciation and amortization and stock-based compensation expense, and is also impacted by changes in working capital and payments in connection with the settlement of the investigation by the State of New Hampshire.
The company’s cash flows for 2017 and beyond will depend on a variety of factors, including sales of SUBSYS® and anticipated launch of SYNDROS™, regulatory approvals, investments in manufacturing and production, capital equipment, and research and development. The management, expect net cash flows from operating activities to fluctuate with the sales of SUBSYS® and SYNDROS™, partially offset by anticipated expansion in research and development, manufacturing, and general and administrative expenses.
Key risk factors and potential stock drivers:
Company’s cash flows have been declining and the financial flexibility of the company is going to depend on newer drugs or additional pipelines that the company is going to have to acquire.
From the recent PR and public perception standpoint it is relatively difficult for the company to see an aggressive valuation or optimistic multiple over the near term.
Insys performance and future success are dependent upon a number of factors, including their approved product sales, investments in infrastructure and growth, and their ability to successfully develop product candidates, and complete related regulatory processes. In addition, their ability to ensure that their products, policies, and practices adhere to the extensive national, state, and local regulations applicable to the industry is critical to their success
On Tuesday, June 13th, 2017, INSY shares declined by 0.73% to $10.87 on an average volume of 682,631.00 shares exchanging hands. Market capitalization is 747.81M. The current RSI is 33.82.
At $10.87, shares of INSY are trading below its 50-day moving average (MA) at $11.68 and below its 200-day MA at $11.51.
The present support and resistance levels for the stock are at $10.64 & $11.23 respectively.
Traders News Source is a wholly owned subsidiary of Traders News Source LLC, herein referred to as TNS LLC.
Traders News Source has not been compensated for this report by anyone and the opinions if any are that of the author Vikas Agrawal, CFA. Author’s Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I, wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in the article.
This web site, published by TNS LLC, and is an investment newsletter that is built on the premise of assisting individual investors in learning about investing. Our goal as publishers of financial information is to provide research and analysis of investments to our subscribers. TNS LLC does not give buy or sell recommendations. We do purchase distribution rights from analyst, financial writers and bloggers for a fee that may be licensed to issue price targets and recommendations. Furthermore, we encourage you to speak to a licensed professional prior to making an investment in any type of publicly traded security.
We do sell advertising to other companies including brokerage firms, web sites, publicly traded issuers, investor relations firms, and investment publications, among others. TNS LLC makes no warranty as to the policies of these organizations, and in no way endorses their offers, services, or the content of their advertisements.
When an advertiser is a publicly traded company or a third party acting on behalf of a public company, we fully disclose all compensation in the email advertisement. Such disclosure is included in a disclosure statement in each of the advertisements sent via email.
Our reports/releases are a commercial advertisement and are for general information purposes ONLY. We are engaged in the business of marketing and advertising companies for monetary compensation. Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. The disclaimer is to be read and fully understood before using our services, joining our site or our email/blog list as well as any social networking platforms we may use.
PLEASE NOTE WELL: TNS LLC and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever.
Release of Liability: Through use of this website viewing or using you agree to hold TNS LLC, its operator’s owners and employees harmless and to completely release them from any and all liability due to any and all loss (monetary or otherwise), damage (monetary or otherwise), or injury (monetary or otherwise) that you may incur. The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. TNS LLC encourages readers and investors to supplement the information in these reports with independent research and other professional advice. All information on featured companies is provided by the companies profiled, or is available from public sources and TNS LLC makes no representations, warranties or guarantees as to the accuracy or completeness of the disclosure by the profiled companies. None of the materials or advertisements herein constitute offers or solicitations to purchase or sell securities of the companies profiled herein and any decision to invest in any such company or other financial decisions should not be made based upon the information provide herein. Instead TNS LLC strongly urges you conduct a complete and independent investigation of the respective companies and consideration of all pertinent risks. Readers are advised to review SEC periodic reports: Forms 10-Q, 10K, Form 8-K, insider reports, Forms 3, 4, 5 Schedule 13D.
TNS LLC is compliant with the Can Spam Act of 2003. TNS LLC does not offer such advice or analysis, and TNS LLC further urges you to consult your own independent tax, business, financial and investment advisors. Investing in micro-cap and growth securities is highly speculative and carries an extremely high degree of risk. It is possible that an investor’s investment may be lost or impaired due to the speculative nature of the companies profiled.
The Private Securities Litigation Reform Act of 1995 provides investors a ‘safe harbor’ in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be “forward looking statements”. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as “projects”, “foresee”, “expects”, “will”, “anticipates”, “estimates”, “believes”, “understands”, or that by statements indicating certain actions & quote; “may”, “could”, or “might” occur.
Understand there is no guarantee past performance will be indicative of future results. In preparing this publication, TNS LLC has relied upon information supplied by its customers, publicly available information and press releases which it believes to be reliable; however, such reliability cannot be guaranteed. Investors should not rely on the information contained in this website. Rather, investors should use the information contained in this website as a starting point for doing additional independent research on the featured companies. The advertisements in this website are believed to be reliable, however, TNS LLC and its owners, affiliates, subsidiaries, officers, directors, representatives and agents disclaim any liability as to the completeness or accuracy of the information contained in any advertisement and for any omissions of materials facts from such advertisement. TNS LLC is not responsible for any claims made by the companies advertised herein, nor is TNS LLC responsible for any other promotional firm, its program or its structure.