Insys Therapeutics is having a bad run. The Arizona-based pharmaceutical company’s stock is down 50 percent from its peak in August. In that time, sales have slumped by tens of millions of dollars—and the company’s stock took another double-digit dive late last month.
Rejoice! This is a good thing. Insys Therapeutics is not a good company. You can feel good when they fail. And for once, you can be happy about the feds making someone’s life more difficult, as the DEA did for Insys last month.
As you may recall, Insys is the manufacturer and marketer of a drug based on fentanyl, the powerful and deadly synthetic opioid, which donated $500,000 towards the opposition campaign when Arizona voters were deciding on marijuana legalization this fall. Insys made the contribution after recognizing—in a company financial statement—the threat legal cannabis posed to its business.
Meanwhile, Insys was developing a drug called Syndros. What’s Syndros? It’s a form of dronabinol, which is synthetic THC. That’s right: a pharmaceutical company working to patent and market fake weed is also doing what it can to keep weed illegal.
Some karmic payback arrived March 23, in the form of an announcement from the DEA that Syndros is a Schedule II drug. Schedule II drugs can’t be as easily prescribed. They require a physical signature from a doctor, rather than a faxed one, and they also can’t be as easily refilled—meaning they can’t be sold in incredible, investor-pleasing volume.
As the Motley Fool reported, that’s a setback that caused Insys stock to plummet 16.4 percent.
As we noted, dronabinol has been on the market as a treatment for AIDS and cancer-related nausea and vomiting for some time, but patients have reported limited success. Real marijuana, with all of its component cannabinoids, seems to work much better—something the company acknowledged in an SEC filing this week.
In addition, literature has been published arguing the benefits of natural cannabis, or marijuana, over dronabinol, and there are a number of states that have already enacted laws legalizing medicinal and recreational marijuana. There is some support in the United States for further legalization of marijuana. We also cannot assess the extent to which patients utilize marijuana illegally to alleviate [chemotherapy-induced nausea and vomiting], instead of using prescribed therapies such as approved dronabinol products…
Please do keep in mind as well that all this is happening after six former Insys employees, including its CEO, were indicted for racketeering charges in December. Federal prosecutors allege that Insys was so desperate to drum up sales of Subsys, its fentanyl-based painkiller, that it was willing to resort to kickbacks.
It may soon get much worse for Insys.
Attorneys general in 13 states have subpoenaed the company, which also received a subpoena from the California Insurance Commissioner, regarding its marketing of Subsys. To date, the company has agreed to pay fines totaling more than $3.5 million to Oregon and to New Hampshire.
And on March 28, Sen. Claire McCaskill, the ranking member of the Senate Committee on Homeland Security and Governmental Affairs, asked Insys for its marketing materials related to Subsys in an effort to ascertain how intense marketing of pharmaceutical opiates has exacerbated the country’s ongoing epidemic.
Couldn’t happen to a better bunch of people.