TABLE OF CONTENTS

	Item 2.02. Results of Operations and Financial Condition.
	Item 9.01. Financial Statements and Exhibits.
SIGNATURES
EXHIBIT INDEX
EXHIBIT 99.1

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Table of Contents

 

Date: March 9, 2006	QUESTCOR PHARMACEUTICALS, INC.
		By:	/s/ JAMES L. FARES
			James L. Fares
			President and Chief Executive Officer

 

 

 

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Total operating costs and expenses decreased by $262,000, or 6%, to $4,364,000 in the fourth quarter of 2005 as compared to $4,626,000 in the same period in 2004. The decrease was due primarily to lower amortization expense and lower cost of product sales offset by an increase in selling, general and administrative expenses. Questcor eliminated the unamortized balance of its Nascobal purchased technology upon the divestment of Nascobal in October 2005 and accordingly no amortization expense of purchased technology was recognized in the fourth quarter of 2005. Cost of product sales for the fourth quarter of 2005 decreased as compared to the same period of 2004 due to lower direct costs, primarily due to the sale of the non-core products in October 2005 and the inclusion of VSL#3 direct costs in the fourth quarter of 2004, and lower royalty and distribution expense. These decreases were partially offset by higher routine Acthar stability testing costs and reserves for obsolete inventory. The decreases in amortization expense and cost of product sales were partially offset by an increase in selling, general and administrative expenses resulting from expenses associated with a sublease.

For the year ended December 31, 2005, operating costs and expenses decreased $2,319,000, or 12%, to $16,351,000 as compared to $18,670,000 in 2004. 2004 included $1,290,000 of costs incurred related to the promotion of VSL#3 and $920,000 in severance-related charges associated with the departure of Questcor’s former CEO. Lower marketing expenses in 2005 also contributed to the lower expenses as compared to 2004.

Deemed Dividend on Redemption of Series B Convertible Preferred Stock

In November 2005, Questcor announced its intent to redeem all outstanding shares of its Series B Convertible Preferred Stock on January 3, 2006. Prior to redemption, holders of Series B Preferred Stock could convert their shares into Questcor common stock. In connection with this process, Questcor issued 1,328,091 shares of Questcor common stock in the fourth quarter of 2005 to Series B stockholders who converted prior to redemption and made a total payment of $7,841,000 on January 3, 2006 to redeem the remaining Series B Preferred Stock. Questcor recorded the Series B Preferred Stock at its redemption amount at December 31, 2005, and classified it as a current liability. Questcor also recorded a deemed dividend of $1,361,000 in the fourth quarter of 2005 representing the difference between the required redemption amount and the carrying value of the Series B Preferred Stock.

Year ended December 31, 2005 Conference Call

Questcor will be hosting a conference call to discuss these results on Thursday, March 9, 2006 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time). Please call the following numbers to participate: (800) 741-6056 (domestic) or (706) 679-3280 (international) and use conference ID number 5973468. Participants are asked to call the above numbers 5-10 minutes prior to the starting time.

This call is being webcast by Thomson/CCBN and can be accessed at Questcor’s website at www.questcor.com. The webcast is also being distributed through the Thomson StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at www.earnings.com, Thomson/CCBN’s individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson’s password-protected event management site, StreetEvents (www.streetevents.com).

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A telephonic replay of this call will be available from 2:00 p.m. Eastern Time on Thursday, March 9, 2006 through 11:59 p.m. Eastern Time on Thursday, March 16, 2006. Please call (800) 642-1687 (domestic) or (706) 645-9291 (international) and use conference ID number 5973468.

About Questcor
Questcor Pharmaceuticals, Inc.^® (AMEX: QSC) is a specialty pharmaceutical company that develops and commercializes novel therapeutics for the treatment of neurological disorders. Questcor currently markets H.P. Acthar^® Gel (repository corticotropin injection), an injectable drug indicated for the treatment of exacerbations associated with Multiple Sclerosis. For more information, please visit www.questcor.com.

Note: Except for the historical information contained herein, this press release contains forward-looking statements that involve risks and uncertainties. Such statements are subject to certain factors, which may cause Questcor’s results to differ from those reported herein. Factors that may cause such differences include, but are not limited to, Questcor’s ability to accurately forecast and create the demand for its product, the gross margin achieved from the sale of its product, Questcor’s ability to enforce its product returns policy, the accuracy of the prescription data purchased from independent third parties by Questcor, the sell-through by Questcor’s distributors, the inventories carried by Questcor’s distributors, and the expenses and other cash needs for the upcoming periods, Questcor’s ability to obtain finished goods from its sole source contract manufacturer on a timely basis if at all, Questcor’s potential future need for additional funding, Questcor’s ability to utilize its net operating loss carry forwards to reduce income taxes on the sale of its products, uncertainties regarding Questcor’s intellectual property and other research, development, marketing and regulatory risks, and to the ability of Questcor to implement its strategy and acquire products and, if acquired, to market them successfully as well as the risks discussed in Questcor’s quarterly report on Form 10-Q for the quarter ended September 30, 2005 and other documents filed with the Securities and Exchange Commission. The risk factors and other information contained in these documents should be considered in evaluating Questcor’s prospects and future financial performance.

Questcor undertakes no obligation to publicly release the result of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Table to follow on next page.

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