$36! TODAY "Insys in hot water over marketing practices
Insys Therapeutics (NASDAQ: INSY ) is down nearly 20% pre-market this morning after word hit the Street late yesterday about the company being investigated for its marketing practices for Subsys.
Subsys was approved by the Food and Drug Administration in 2012 as a sublingual spray used for pain relief in opioid-tolerate cancer patients. Since coming on the market last year, sales have now risen nearly 1,000% , pushing Insys shares up an eye-popping 500% year to date. According to the company's statement on the matter, it's cooperating with the investigation.
Is this drop panic-worthy? My take is that the market is getting ready to overreact again to another investigation into marketing practices that may or may not result in anything. Similar allegations have been hanging over Questcor Pharmaceuticals for over a year now, and there are lessons from that case that can be applied to Insys today.
Firstly, these investigations typically take years to resolve. And in my experience, they generally result in a fine that isn't a major issue for drugs churning out hundreds of millions in sales. Although I'd like to see more details of the investigation before making a final call, Foolish investors should dig deeper into this legal matter to see if today's drop is creating a good buying opportunity. Buying fear is often a great long-term investing strategy."MOTLEY FOOL
