Shares of Insys Therapeutics (INSY -17.7%) continue their drop in heavy volume after Friday's 17% plunge. Investors are apparently heading for the exits in response to a bearish blog post by Bronte Capital questioning the firm's incentive sales tactics regarding its main product Subsys, a sublingual version of the opiate fentanyl. The company has delivered triple-digit sales growth over the past four quarters despite it being a "me-too" product. Bronte cites a Michigan doctor who is responsible for 20% of Subsys sales and is under a federal investigation for Medicare fraud. It seems the good doctor billed the agency almost $7M over a 5-year period for procedures he didn't do while writing 6x more Subsys prescriptions than the next highest prescriber in the U.S. This appears to reinforce the dubious effects of the incentive-laden compensation scheme for the company's sales force.
Bronte believes Insys is significantly overvalued due to the "me-too" nature of Subsys plus the fact that its other commercial product, Drobinol, is merely marijuana extract.