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Executives

Doug Sherk - IR

Don M. Bailey - President, Chief Executive Officer, Director

Gary M. Sawka - Chief Financial Officer, Senior Vice President - Finance

Stephen L. Cartt - Executive Vice President - Corporate Development

Analysts

Yale Gen – Maxim Group

John Newman - Oppenheimer

Brian Cooney (ph) - Unidentified Company Name

John Glim (ph) - Villa Capital (ph)

Harper Stevens - Harper Stevens Asset Management

Presentation

Questcor Pharmaceuticals, Inc. (QCOR) Q3 2009 Earnings Call November 2, 2009 4:30 PM ET

Operator

Good afternoon, ladies and gentlemen. Welcome to the Questcor Pharmaceuticals third quarter 2009 financial results conference call. (Operator's Instructions) I would now like to turn the conference over to Doug Sherk. Please go ahead, sir.

Doug Sherk

Thank you, operator, and good afternoon, everyone. Thank you for joining us today for the Questcor Pharmaceuticals third quarter conference call. This afternoon at market close Questcor issued its third quarter financial results. The release is posted on the company's website at www.questcor.com. In addition, we have arranged for a taped replay after this call which will be available approximately one hour after the call's conclusion and will remain available for seven days. The operator will provide the replay instructions at the end of the call. The call is also being broadcast live today November 2nd, 2009. To access the webcast go to Questcor's website at www.questcor.com.

Before we get started I would like to remind you that during the course of this conference call the company will make projections or other forward looking statements regarding future events. We encourage you to review the company's past and future filings with the SEC, including without limitation, the company's Forms 10-Q and 10-K which identify specific factors that may cause actual results or events to differ materially from those prescribed in these forward looking statements. With that I would like to turn the call over to Don Bailey, President and Chief Executive Officer of Questcor Pharmaceuticals.

Don M. Bailey

Thanks, Doug, and good afternoon, everyone. Thank you for joining us today to review our third quarter of 2009. On the call from the management team are Steve Cartt, our EVP, Dave Medeiros, our SVP of Pharmaceutical Operations, Gary Sawka our CFO, and Eldon Mayer, our Vice President of Commercial Sales.

This is the first call for David Young. Unfortunately he is not available to be with us today on this call, but David Young has left our board of directors to join our management team and he will be leading our efforts to obtain an approval from the FDA for Acthar for the treatment of IS.

Our third quarter financial performance was a disappointment, but we made excellent progress on the MS front and submitted our SNDA for Acthar for the treatment of IS. Our net sales were impacted by a combination of unanticipated historic Medicaid rebates and lower infantile spasms shift in paid prescriptions. These factors resulted in lower earnings and cash generated from operations.

I'll go through the specifics that led to the third quarter financial performance in a few minutes, however, we believe it is important to note that the quarter's development also illustrate that our growth strategy is a sound one and that Questcor has the potential to generate significant increasing returns in the future.

The growth strategy is focused on diversifying the uses of our principle drug Acthar to meet the unmet clinical needs for patients, thus increasing the amount of non-IS net sales and reducing the impact of IS variability on our earnings.

The first component of our diversification strategy is to expand the number of patients treated by Acthar for MS exacerbations. We are targeting patients who have failed the only other principle treatment for MS exacerbations. We believe this target market, which we call the refractory MS exacerbation market, represents about 5%-10% of the total annual number of exacerbations in MS patients or about 10,000 to 20,000 cases per year.

This refractory market for Acthar treatment compares with approximately 2,000 infants diagnosed with infantile spams annually. So there are five to 10 times the number of MS exacerbations refractory patients as there are IS patients and therefore the MS market is a bigger market as the IS prescription typically uses about five vials and MS prescription typically uses about two vials.

The results from our efforts in the MS market continue to be encouraging. New shift in paid Acthar prescriptions for the treatment of MS exacerbations continue to grow sequentially and are nearly tripled the level from a year ago. We have expanded our MS sales organization to 38 representatives who are all now fully deployed.

During the third quarter we shipped 161 new paid Acthar prescriptions to MS patients to our reimbursement support center, a 14-percent increase over the second quarter of 2009 and a188% increase over the third quarter of 2008.

Our efforts to explain to neurologists the benefits of using Acthar to treat select MS exacerbation patients have led to the marked increase in MS sales. And importantly, due to the different demographics of the MS patient population, Medicaid rebates are a significantly lower percentage of sales in MS than for IS. As compared to the young children with IS being treated with Acthar, far more MS patients are covered by private insurance rather than being enrolled in state Medicaid programs. In fact, we currently estimate that fewer that 10% of MS patients being prescribed Acthar are covered by Medicare, compared to a much larger percentage of children being treated with Acthar for IS.

While we anticipate further growth in our MS sales, we cannot predict the exact trajectory of this growth curve. We are not aware of a similar precedent in the pharmaceutical industry to help us and to help you predict this growth pattern. We believe that we currently have less than 10% market share in this refractory MS exacerbation segment, with only light competition for the remaining 90% share.

Now let us turn to the IS market for the third quarter. Total paid Acthar prescriptions for IS processed through our reimbursement support center dropped during the third quarter of 2009 to 119 from 161 in the second quarter of 2009. However, Medicaid and other government entity shipments didn't experience the same drop and remained relatively flat sequentially in the third quarter. We believe these changes in the overall level of IS business and the mix of payers resulted from a combination of the normal variability in prescription activity in the very small IS patient population, a lower national birth rate in the 2008-2009 timeframe, an increasing number of families losing employer-paid health care insurance, an easing of Medicaid eligibility requirements in five states including New York, and the possible use of alternate therapies in the treatment of IS.

We believe that achieving FDA approval to market Acthar for the treatment of infantile spasms will allow us to begin growing the number of paid prescriptions for IS treatment. Approval will also permit us to provide dosing protocol information to doctors. With that goal in mind, on October 15th we submitted our SNDA for Acthar for the treatment of IS. Our submission follows the completion by the company of additional statistical analyses requested by the FDA.

It is our understanding that the next important step in the SNDA review process will be an FDA decision on whether to formally accept our application. We anticipate this decision will take placed within 60 days of our submission or by the end of the year.

Further, sometime in the coming month the FDA will most likely schedule an advisory panel meeting in order to get expert independent advice on specific aspects of the filing. We believe that our filing qualifies for priority review which implies that FDA has an internal goal to conclude the review within six months.

Aside from our efforts to meet the needs of patients afflicted with MS and IS, we have been funding clinical and preclinical studies to explore potential new uses for Acthar. To help support this effort we have recently expanded our senior management team and in the process, significantly expanded our research and drug development capability, as well as our regulatory expertise.

Dr. David Young, who is very familiar with Questcor due to his several years of service as a member of our board, has joined us as Chief Scientific Officer. And Dr. Sian Bigora has joined us as Vice President of Regulatory Affairs. David and Sian have distinguished careers in strategic drug development, preclinical and clinical research, and regulatory affairs. At Questcor they will oversee the research, development, regulatory affairs, and life cycle management of our products. In addition, David and Sian will support Steve Cart, our Executive Vice President of Corporate Development, in activities surrounding potential therapeutic extensions of our key drug Acthar, as well as business and corporate development efforts.

I'd like to now turn the call over to Steve Cartt to elaborate on our commercial activities, including our October business trends and some of the efforts we have under way to explore the many potential uses that we have identified for Acthar.

Stephen L. Cartt

Thanks, Don. I'd like to add a few comments to what Don mentioned earlier about our continuing progress in the MS market. This effort is still at an early stage and we view the MS market as an attractive long-term opportunity for Acthar. Despite it being early we're quite encouraged by the growth we are already generating with our expanded sales force. Over time, more and more MS specialists are developing a new perspective on Acthar, specifically that despite it being an older drug, Acthar can be a quite useful tool in their MS treatment arsenal, and more importantly, the data confirms that more of these doctors are starting to act on this newfound perspective by writing their first Acthar prescription.

On the IS side of the business, while sales were soft during the quarter, insurance coverage for Acthar continues to be very strong with over 95% of IS cases being covered by private insurance and Medicaid. In addition, the Acthar Patient Assistance Program supported by Questcor to provide free drug with commercial value of over $37 million to uninsured and under insured patients in the last few years, and also through the full rebates for Acthar that we extend the state Medicaid programs, we have essentially provided free drug to Medicaid patients totalling over $60 million since late 2007. In summary, the total commercial value of all Acthar provided free of charge by Questcor since August 2007 is quickly approaching $100 million.

I'll now take a minute to provide a brief update on the preliminary results of our commercial efforts during the month of October. MS sales trends continued to be positive during the month of October and we're pleased to see these further modest gains as we now head into the sometimes weaker holiday season. For IS, October prescription volume remained below our long-term monthly average, however, there was a potentially positive signal in that October was stronger for IS prescription volume than in any of the three months of the third quarter. Importantly, we continued to see the same very high levels of insurance coverage for IS during October as well.

Now let's touch on possible future opportunities for Acthar. Questcor is now funding 25 clinical and preclinical studies to explore potential new uses for Acthar and to better under the drug's apparent multiple mechanisms of action. In total, we expect to provide about $3 million in funding for these research projects during 2010. Through these efforts we are working to identify new uses either on label or off label for Acthar. Our efforts in partnership with a number of the nation's leading research institutions are focused on addressing some of the medical community's toughest treatment challenges and we are now funding research projects in a variety of diseases and disorders having high unmet medical need.

A number of these studies are examining various aspects of the use of Acthar in the treatment of nephrotic syndrome, an on-label indication for Acthar. We're also funding studies in related kidney disorders with very high unmet medical need such as diabetic nephropathy. Overall, interest in Acthar among the top kidney experts remains high and we look forward to seeing initial results from our first studies in this field during 2010.

Turning to the MS field we have recently begun funding several studies exploring not only the possible mechanisms of action of Acthar in neurological disorders such as MS, but also potential new uses for Acthar in the management of MS patients. While Acthar is already approved for the treatment of MS exacerbations, there remains a continued need for additional treatment options in order to better control the underlying disease itself.

As a better understanding of Acthar's multiple mechanisms of action begin to emerge, some experts now recognize that Acthar may have potential for expanded usage in the overall management of MS patients, possibly in combination with certain disease modifying drugs, for example, not just in the short-term management treatment of exacerbations where Acthar is currently being used. We are excited by the concept of the potentially expanded role for Acthar in MS and look forward to progress on these studies during 2010 and 2011.

In addition to IS and MS, we are now beginning to support some very early research into other neurological disorders through exploratory basic research projects in partnership with key medical research institutions. Two areas for new exploration for Acthar we have identified in conjunction with researchers are amyotrophic lateral sclerosis, also known as ALS or Lou Gehrig's disease, and traumatic brain injury. These are two conditions having devastating consequences where there are few, if any, useful treatment options. Because Acthar is believed to potentially have an effect on both neuroinflammation and nerve regeneration, key researchers have recommended conducting preliminary assessments of Acthar in preclinical models of these conditions.

We look forward to updating you on the progress of these intriguing projects in late 2010 or early 2011. We've also now begun to directly support an increased effort to educate the medical community about infantile spasms. Most clinicians believe IS is under diagnosed and often misdiagnosed leading to delayed treatment, and research clearly indicates that early detection and aggressive treatment leads to significantly better long-term treatment outcomes for the children afflicted with this devastating disorder.

In mid October the Child Neurology Foundation, or CNF, announced the launch of a new educational website centered on infantile spasms. The website, www.infantilespasmsinfo.org is an educational resource developed by the CNF as one of the key inaugural components of Infantile Spasms Awareness Week which took place for ht first time the week of October 12th, 2009.

The goal of IS Awareness Week is to provide pediatricians, child neurologists, parents, and caregivers, with objective educational tools which will increase awareness and understanding of infantile spasms. It is widely recognized that early and aggressive treatment of IS can impact the prognosis of infants diagnosed with IS.

In addition to the launch of the new website, the CNF is making available a new educational brochure and DVD intended to help parents, caregivers, and physicians, to better understand IS. Questcor is fully committed to improving the diagnosis and treatment of children with IS and we were the sole source of funding for CNF in support of this first Infantile Spasms Awareness Week. Feedback for physicians and caregivers regarding this initial effort has been extremely positive and we look forward to supporting CNF and their efforts to increase awareness about IS in the coming months and years.

And with that I'd like to turn the call over to Gary Sawka our CFO to review some of the financial highlights of the quarter. Gary?

Gary M. Sawka

Thanks, Steve. Given that Don and Steve have touched on the revenue side of our financial performance today, I'd like to focus my comments today on some of our other financial details during the quarter. While Don will discuss the third quarter Medicaid rebate issue in more detail in a minute, I wanted to discuss the rebate impact on our margins.

Under GAAP, Medicaid rebate including other government program reimbursements are subtracted from gross sales to reach net sales. So the one-time accruals totalling $5 million for Medicaid and TRICARE reduce our reported net sales for the quarter. As a result, current quarter results may not be a good indicator of future performance.

Naturally, the decrease in sales is also significantly impacted our margins. As of September 30th we have a total of 7.6 million sales authorized under our open market repurchase program and 64.2 million common shares outstanding. Cash, cash equivalents, and short-term investments as of last Friday totalled approximately $71 million.

At this time I'd like to turn the call back over to Don.

Don M. Bailey

Thanks, Gary. Before we open the call to questions I'd like to take a few moments to review the unanticipated historical Medicaid rebates that impacted our third quarter performance. About three or four months after we fill an Acthar Medicaid prescription we receive an invoice from the state for a rebate for that prescription. So the rebate bills we receive in September were for Acthar usage in April to June.

However, during the recent rebate invoice cycle we noted that many of the rebates were for usage prior to April. Also for IS, there has been a shift in mix of payers towards Medicaid due to the economic recession and political sea change. We have moved quickly to increase our level of attention to this new behavior. We have adjusted our accrual for Medicaid rebates going forward and we are now systemically seeking the detail behind each state Medicaid invoice. Then we are matching this detail to prescription records provided by one major specialty pharmacy who handles almost 80% of our Acthar Medicaid prescriptions. Further we are beginning to challenge some of these state billings and have had some success with this effort.

As a result of the state by state complexity of the Medicaid system and the time lag in receiving invoices, the determination of our Medicaid accrual necessarily involves estimates. We believe our Medicaid rebate reserve now more accurately reflects our liability as we've come to understand it with the third quarter developments.

We also reassessed our reserve related to a regulation affecting reimbursement for the Department of Defense pharmacy network called TRICARE. DOD and an industry coalition are currently involved in a legal dispute regarding various aspects of this regulation. The colation is challenging the regulatory process and the substance. While the coalition has a recent track record of winning, we have established a partial reserve for this potential liability.

Looking ahead our outlook is as follows; we are hopeful that our sales for the treatment of MS will continue to increase as we now have 38 sales reps on board dedicated to this effort. Our new marketing campaign for MS centered on the concept of select Acthar for select patients is well under way and being well received.

We've updated the other guidance we provided earlier this year in today's release. The guidance includes the reality that net sales of Acthar will continue to be difficult to predict to the significant quarter to quarter variability in the occurrence of the company's small patient populations and various national economic factors that we've discussed earlier today.

We expect full year gross margin will be approximately 91 to 93%, operating expenses will be in the range of $40-$42 million, and for financial reporting purposes, income tax expense will be reported at a combined federal and state tax rate of approximately 34%-38%. Diluted weighted average shares will be in the range of 65-67 million.

We continue to move in an agile, but thorough manner, as we determine additional disease states for Acthar that may provide a new treatment alternative to patients. We look forward to keeping you apprised of our progress in the future.

Operator, we are now ready for questions.

Question-and-Answer Session

Operator

Thank you, sir. We will now begin the question-and-answer session. (Operator's Instruction)You’re your first question comes from the line of Yale Gen.

Yale Gen – Maxim Group

Good afternoon, how are you? Thanks for taking the questions. It is certainly a little bit of a disappointing quarter and I would just like to get a little bit more color on that. The first one is for the IS, have you seen the erosion in terms of the competitors (inaudible) script number or anything increase as you sort of surveyed the field?

Don M. Bailey

Well yeah, we're handcuffed in this situation because we are off label for IS so we are restricted in a lot of the questions we might normally ask of our physician community. But it's possible that it's impacting our sales, however, we note that our sales are up a little bit, up modestly, which comes almost immediately after their launch. So I think it is just too early to tell if that's a factor or whether it's more likely just the normal variability of the IS patient population.

Yale Gen – Maxim Group

And you mentioned earlier that in the scripts statement that you said the fourth quarter typically will be a lighter sales season. Is that mostly for the IS or is that the case?

Don M. Bailey

No. That is not the case. For IS there is no impact from holiday seasons. If a patient contracts IS they are going to get help because it is an acute condition. MS is a little bit different. Some MS exacerbations are mild enough that patients might postpone going to see the doctor which is why we had to caution about possible holiday weakness with MS.

Yale Gen – Maxim Group

Okay, great. And lastly, you mentioned that in the MS you are looking forward to seeing additional exploratory studies in terms of whether the Acthar can be used as a broader management of the MS. First of all, was that on the label or do you potentially need any clinical studies to explore that? How should we see that?

Stephen L. Cartt

Yale, this is Steve. I'll take that one. These are initial exploratory studies where we have discussed Acthar with researchers and they've gone back and really taken a detailed look at the literature. And there was kind of a scattering of studies looking at mechanism of Acthar in the literature and they have been intrigued enough by the different discussions of possible mechanisms. They think that the drug is worth looking at beyond just a treatment for flares.

So these are initial exploratory studies in a basically kind of a disease modifying context and we would need to see if in fact there is a positive signal from those and then at that point, depending on how strong the signal might be, we could think about pursuing another indication, but this would be something that is completely different than MS flares. It is basically treatment of the underlying disease. But again, these are initial exploratory studies, but there is obviously some interest among researchers in this topic.

Yale Gen – Maxim Group

And that's not specifically as a potential disease modifying agent, so far it has not been indicated, right?

Stephen L. Cartt

Right. It is not currently indicated.

Yale Gen – Maxim Group

And the last question is that in terms of ALS and traumatic brain injury, were there any other indications indicated or is that something you need to be (inaudible)?

Stephen L. Cartt

Yeah. These are not labeled indications; ALS and traumatic brain injury. But again, in discussions with some of the leading experts in these areas, there's enough interest looking at the mechanisms. And these are really related to the effect that Acthar is believed to have on neuroinflammation that there could be a role for the drug. And again, these are really, really early concepts. We don't have any data any on them, but there is enough interest that we have some interesting preclinical concepts we're going to be pursuing in these.

Yale Gen – Maxim Group

Okay. Thanks a lot. I'll head back into the queue.

Operator

Thank you very much. And our next question comes from the line of John Newman with Oppenheimer.

John Newman - Oppenheimer

Hi, guys. Thanks for taking the questions. I just wondered what percent of the Medicaid rebates were prior to April and would you expect the trend to continue going forward in terms of more Medicaid rebates from an earlier time period being included? And also, in terms of the update to the reserve, should we view this as sort of a one-time adjustment or will you be adjusting up or down each quarter? Thanks.

Don M. Bailey

Well naturally we believe that the reserve that se set is adequate for the total liability. About 20% of the reserve in the quarter was for prior period old usage, although we did specify an exact number in the press release. I think it was $4.6 million and $9.5 million was for the recent — so that's actually more than 20% of whatever that works out to be.

And we have seen greater Medicaid enrolment or Medicaid usage in IS, but on a percentage basis, but we have not seen that in the MS. So our assumption is that more babies are being covered by Medicaid whereas that that phenomena is not impacting adults.

John Newman - Oppenheimer

Okay. And could we expect to see the reserve decreased at any point or is it something where you would increase it as needed and then just maintain that level going forward?

Don M. Bailey

Oh we think we've increased it as needed. You don't do this gradually. You have to set a reserve equal to what you anticipate your current liability is. So we believe that we've taken care of the past — any (inaudible) old kind of bills that come in regards (inaudible) plus or minus in that estimate because it's just an estimate, but we think we've set the right number from the data we have.

So going forward I think the key factors to look at are the mix of MS business that we have, because obviously as our MS business grows our realized average price there is much higher as IS business either recovers or doesn't recover. That business has Medicaid usage that's over 40% now.

John Newman - Oppenheimer

Um-hum. And what is the average Medicaid rebate cost in relation to an Acthar script in IS? We assume that it effectively sort of nets it out, is it slightly higher or is it pretty much —

Don M. Bailey

Our rebate per vial is $25,625, so it's higher — about 10% higher than the amount of money we take in. So the Medicaid system has a quirk in it that our rebate is 110% of our price. So when Steve says we provide Acthar free of charge to Medicaid, it is actually the government making a profit on is.

John Newman - Oppenheimer

Right, um-hum. Okay great, thank you.

Operator

And our next question comes from the line of Brian Cooney (ph) with (Inaudible) Capital.

Brian Cooney - Unidentified Company Name

Good afternoon. Thanks for taking the call. I was wondering if you can comment on the current MS flares sales initiatives and specifically going back to 2006-2007 when the sales force was reduced. But I guess prior to that level the headcount for the sales force was about mid thirties, I guess where you're currently at, if you can speak to anything that we can use as guidance for targets based on those historical numbers, anything specifically different in your sales initiatives that you have going on right now?

Stephen L. Cartt

Yeah. I'll take that question. It's actually quite different now the way we're positioning the drug. Back in 2006 and early 2007 the company was really attempting to go head to head against IV corticosteroids as a first-line treatment and I think we quickly found that the doctors were fairly resistant to having their standard of care dislodged and so it was a very tough haul trying to get prescriptions with that kind of a positioning approach.

What we're doing now and what we've been doing at an ever increasing level of effort since early 2008 is to position the drug really as a second line therapy for refractory patients and we're really going after patients who either can't respond to IV corticosteroids or they can't tolerate IV corticosteroids and the doctors have been much more open to that role for Acthar in MS and consequently we've been seeing some nice growth over the last several quarters.

So the whole positioning and the role of the drug is being addressed in a much different way than it was back in those earlier years.

Don M. Bailey

Brian, there's another way you can view this and that is we're in a market segment as a second line treatment for which there really aren't a lot of other choices if the patient fails that first line IV corticosteroid. And we believe that market size is in the $400-$800 million range, and our current run rate is about $30 million, annualized run rate, approximately, give or take a little bit. So we think we have a lot of open potential here.

Brian Cooney - Unidentified Company Name

So just in terms of guidance in number of prescriptions for MS flares, you think it's going to be bigger than it was peak 2006-2007?

Stephen L. Cartt

Yeah. Well, in terms of revenues right now it's clearly multiples of where it was then largely due to our pricing. But over time the plan, like Don mentioned, is to expand into this larger market that we have now which is the refractory market, and so far we're seeing some good results.

Don M. Bailey

Since the positioning is different we really can't compare it on a number of scripts now versus before because this was not the positioning before. On the dollar basis we're already at five or six times the dollar volume we were three years ago.

Brian Cooney - Unidentified Company Name

Okay. Thank you.

Operator

Thank you very much. And our next question comes from the line of John Glim (ph) with Villa Capital (ph).

John Glim - Villa Capital

Hi, good afternoon and thank you for taking my call. I have one quick general question and then a followup. First, regarding your cash and short-term investment, it's been growing the past two quarters and you have the stock buyback program which you didn't take use of this quarter. Do you have plans in the next few quarters to either accelerate that or have you ever in the recent few quarters or now been looking in the M&A market for the current level of cash being necessary as you expand your sales force and have a significant number of research projects and other business activities now?

Don M. Bailey

That's a good question, John. First of all we will always be in the repurchase market. I have said before and it's still our basic objective, which is to return approximately half of our free cash flow to shareholders through the repurchase program and we've done that since the program's inception. There's only a few time periods when we're allowed to repurchase. We have to be in an open period and then of course like you we're price sensitive.

And as far as funding the ongoing expansion of the MS sales force and research projects, we can do that within our operating cash flow and in fact still have some excess cash flow above that.

With respect to your question about M&A, we are looking to diversify our sole asset risk since we're basically a one asset company of Acthar, but we're just getting started in that and we're going to be extremely picky in whatever we do and we're just starting to look at that problem and develop some criteria.

I've done a number of acquisitions in my history and I'm not overly enamored with them. It's not a way to get rich quick, it's a way to get hurt quick. So we'll be extremely careful before we do that, but we do think it's important to look at it since we have a — we're looking at a situation of having a one asset company.

John Glim - Villa Capital

Um-hum. Great, thanks. And lastly, are there any new developments in your search for a partner on the QSC001 development project?

Don M. Bailey

We're in the process of divesting that product line so we are looking for a buyer or somebody to out license it to.

John Glim - Villa Capital

Okay, thank you.

Operator

(Operator's Instructions) And we have a followup from Yale Gen.

Yale Gen – Maxim Group

Hey, Don. Just trying to get a little bit of color on the nephrotic syndrome clinical studies, is there any update you can share with us?

Don M. Bailey

Yeah. Yale, probably not at this point. The first couple of studies are under way. We have some preclinical work we're doing, as well as looking at the mechanism of action which appears to be a direct effect from what we're seeing so far, but the timing on clinical data is going to be some time during 2010, hopefully earlier rather than later, but it all depends on how quickly the last patients are enrolled and treatment is completed. So we don't have any updates right now, but we do have studies ongoing and we expect to have some additional studies, probably a total of at least four started by the end of the year.

Yale Gen – Maxim Group

So you anticipate to start one or two studies possibly during the remaining of the year?

Don M. Bailey

Yeah. We have a couple of studies that are already in progress enrolling patients and we expect to have a couple more studies started by the end of this calendar year.

Yale Gen – Maxim Group

Okay great, thanks.

Don M. Bailey

Yale, I will add one little piece of color. This isn't something you can put any type of a projection around, but we did have a meeting in November of 2008 with nine of the company's top nephrologists and we invited those nine back last week to a meeting of our advisory board and expanded that to 18. And all nine of the original members of the board stayed on the board so they clearly are happy with the progress they're seeing from the company and with the various studies, but we can't really comment on any individual study. But if we weren't making progress, you might imagine that some of those doctors would drop out of the picture. It has gone from nine to 18 so they've each brought a friend and we're happy to see that. Next year we hope we don't go to 36, but I guess that wouldn't be so bad.

Yale Gen – Maxim Group

Okay great. Thanks for the color. That's helpful definitely.

Operator

Thank you. And our next question comes from the line of Harper Stevens with Harper Stevens Asset Management.

Harper Stevens - Harper Stevens Asset Management

Hi, sorry. I jumped on the call a little late. I was wondering if you all had touched on maybe some of your thoughts about insurance reimbursement going forward with Pelosi Care or Obama Care, whatever you want to call it. If you've already touched on that I apologize and I'll catch it on the replay, but any thoughts on that and Washington going forward?

Don M. Bailey

Sure. We did not comment on that and that's an excellent question, Harper. There's quite a few proposals. The Baucus bill is 1,500 pages. The Pelosi bill is just as big and they've got to merge those two and I hate to see whose hands can shuffle those two stacks of paper, but it's going to be quite a process.

Everything boils down to private pay and Medicaid. So anything that expands the Medicaid program is going to be adverse to our interests and anything that expands private pay that moves uninsured people to becoming insured will be beneficial to us. When we examine these proposals, they're just too complicated to tell exactly how that all fares out, but so far as best we can tell, most of these bills tend to be somewhat neutral. There is some negative and some positive and they end up being fairly neutral.

Harper Stevens - Harper Stevens Asset Management

Okay. Well, if you figure out what they actually say let me know. A lot of people would like to know what they actually say. Thanks so much.

Don M. Bailey

Right.

Operator

There are no further questions at this time. I would like to turn the call back to management.

Don M. Bailey

Thank you, operator, and thanks, everyone, for attending. We will be at the Oppenheimer Health Care Conference on Wednesday and are available this afternoon if you have any questions. Good-bye.

Operator

Ladies and gentlemen, this concludes the Questcor Pharmaceuticals third quarter 2009 financial results conference call. If you'd like to listen to a replay of today's conference please dial 1-303-590-3030 or toll free 1-800-406-7325. You will use access code 4169702. Again, the acces code is 4169702. Thank you for your participation, you may now disconnect.

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Source: Questcor Pharmaceuticals Q3 2009 Earnings Call Transcript
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