With its billionaire founder headed for the exit, troubled painkiller maker Insys Therapeutics has to step up its search for new leadership at a time when it's facing government investigations, revenue shortfalls and a declining stock price.
Chairman and CEO John Kapoor is retiring effective immediately, Insys announced Monday, to be replaced on an interim basis by current Chief Medical Officer Santosh Vetticaden. That’s a change of plans from the company’s previous statement in September, when Kapoor planned to serve until Insys could identify a replacement.
Steven Meyer, a board member since 2010, will step into the chairman's role and will help a committee look for a permanent CEO. Insys shares were down 5% on the news Monday morning to $9.77, significantly lower than their price one year ago of $24.87.
Kapoor took the CEO reins at Insys back in November 2015 with the departure of Michael Babich, who had led Insys for six years. Babich was recently indicted by federal authorities for his role in alleged Subsys mismarketing.
Along with other former execs, Babich is accused of leading a “nationwide conspiracy” to boost scripts of the powerful painkiller through bribes to doctors. The sublingual spray is FDA-approved specifically to treat cancer-related pain, but many scripts weren’t for cancer patients, prosecutors contend.
Authorities say Insys' top brass set up a scheme with 10 healthcare practitioners in Alabama, Michigan, Texas, Arkansas and elsewhere, pushing sales staff to offer hundreds of thousands of dollars in “bribes and kickbacks” to doctors to increase scripts.
When the charges against Babich and others were filed last month, the company said it “continues to cooperate with all relevant authorities in its ongoing investigations and is committed to complying with laws and regulations that govern our products and business practices.” Insys itself is under a Department of Justice investigation for Subsys marketing.
Before prosecutors made their way to top management with the case, they charged two former sales managers back in June for bribing docs to build sales. A third was arrested in October.
All of the legal attention hasn't been good for Insys' image, and meanwhile, its business is suffering. The company in the third quarter reported a 39.5% decrease in revenue versus the same period last year because of lower Subsys volumes and "continued pressure from third-party payers."
Vetticaden, who joined Insys in April 2015, said in a statement that “in many ways” sees the Arizona-based company as an “R&D company with our corporate efforts primarily focused on developing a promising pipeline of products aimed at benefitting patients in need.”
In the short term, he said he looks forward to “executing on the anticipated launch” of Syndros, an orally administered liquid formulation of the nausea med dronabinol.