By Nate Raymond
BOSTON (Reuters) – Insys Therapeutics posted a bigger-than-expected quarterly loss on Thursday due to soft demand for its flagship product Subsys, an opioid cancer pain medication at the center of a federal probe of the company.
Last week, John Kapoor, Insys’ billionaire founder and majority shareholder, was arrested on charges that he participated in a scheme to bribe doctors to prescribe Subsys. Kapoor resigned from the company’s board on Sunday.
Shares of Insys were up 0.6 percent at $5.12. They have fallen 44 percent since the beginning of the year.
Chandler, Arizona-based Insys reported a third-quarter net loss of $166.3 million, or $2.30 per share, compared with year-earlier net income of $2.9 million, or 4 cents per share.
The drugmaker said the loss included $150 million that it recorded on Sunday as its best estimate of the minimum amount it would have to pay over five years to settle a U.S. Department of Justice probe involving Subsys.
Chief Financial Officer Andrew Long stressed on a conference call that the company had no deal with the Justice Department yet and said there was no guarantee it could reach one.
“We will continue to cooperate with the DOJ’s investigation and are working diligently to put this matter behind the company as soon as possible,” he said.
Third-quarter net revenue fell to $30.7 million from $57.8 million a year earlier amid a decline in the number of prescriptions of Subsys, an under-the-tongue spray for cancer patients that contains fentanyl, a synthetic opioid.
Excluding one-time items, Insys lost 21 cents per share. Analysts on average had expected a loss of 16 cents, according to Thomson Reuters I/B/E/S.
The charges against Kapoor, 74, marked a major escalation of Subsys investigations as part of efforts by U.S. authorities to combat a national opioid addiction epidemic.
Kapoor was added as a defendant in a case that was initially filed in December in federal court in Boston against six former Insys executives and managers, including former Chief Executive Michael Babich.
The indictment said that beginning in 2012, Kapoor, Babich and others devised a scheme to pay speaker fees and other bribes to medical practitioners to prescribe Subsys and to defraud insurers into approving payment for it.
Kapoor’s lawyer has said his client is innocent. Babich and the other five defendants have previously pleaded not guilty.
(Reporting by Nate Raymond in Boston and Manas Mishra in Bengaluru; Editing by Sai Sachin Ravikumar and Lisa Von Ahn)