Why Questcor Pharmaceuticals' Shares Were Crushed -- Again

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of biopharmaceutical company Questcor Pharmaceuticals (NAS: QCOR) are getting throttled, down as much as 34%, following a press release from the company that the U.S. government is probing its marketing practices.

So what: The past few days have been an exceptionally ugly stretch for Questcor. Last week, the company lost nearly half its value in a single day after reporting that Aetna (NYS: AET) would discontinue coverage on all indications of its lead product, Acthar, save for one indication. Questcor countered the news by noting that Aetna only comprises about 5% of all sales, and that the news should be a non-factor.

However, today's news of a government investigation of its promotional practices is genuinely disconcerting, because it puts the spotlight back on Citron Research which raised questions regarding Questcor's marketing practices months ago.

Now what: Now I think you avoid Questcor like the plague until we have some sort of resolution from the U.S. government's investigation. More often than not, companies targeted by Citron wind up heading lower, and Questcor's premium price for its Acthar, more than $20,000 per treatment, is bound to rile up the skeptics. Don't be fooled by a single-digit forward P/E or a high growth rate in the meantime.

Craving more input? Start by adding Questcor Pharmaceuticals to your free and personalized Watchlist so you can keep up on the latest news with the company.

The article Why Questcor Pharmaceuticals' Shares Were Crushed -- Again originally appeared on Fool.com.

Fool contributorSean Williamshas no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, track every pick he makes under the screen nameTrackUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.