Insys is struggling with a bad reputation in the medical market that could crush its marijuana pharmaceutical
Not every cannabis stock can be a winner in the long run. One stock that showed promise earlier this year, Insys Therapeutics, is currently going up in smoke. Though the company was in a high place just four years ago, the challenges it currently faces make its stock a bad buy.
Insys is the maker of the fentanyl-based drug Subsys, which was a breakthrough treatment for cancer pain when it was introduced four years ago. The company was also testing oral dronabinol, the synthetic version of tetrahydrocannabinol, or THC.
Insys’ experimental therapy using dronabinol for the treatment of chemotherapy-induced nausea and AIDS patients is known as Syndros. The drug received Food and Drug Administration approval last year but has hardly made headway with the drug due to legal complications with Subsys.
Subsys was allegedly prescribed for off-label use 80 percent of the time. Insys allegedly incentivized physicians to prescribe the drug for these off-label uses in a way that would keep the drug covered by insurance companies. In the end, Insys was forced to settle with the Justice Department for $150 million for wrongdoing.
Following the settlement, sales of Subsys fell from $90 million each quarter to $17.7 million in the third quarter. The company now refers to its experience with Subsys as a dark chapter in its history and says it is looking to sell all its opioid-tied products.
Meanwhile, Syndros is not living up to its early performance estimates. The drug made only $976,000 in sales in the third quarter, only slightly up from the same period last year. It is Syndros sales failed to grow but part of the reason could be poor public and physician response due to the company’s reputation.