Questcor Pharma (QCOR) Weakens as Einhorn Said Short

(Updated - July 25, 2014 12:56 PM EDT)

Questcor Pharma (NASDAQ: QCOR) seeing some weakness as David Einhorn said to be short.

NOTE: QCOR is in an merger deal with Mallinckrodt plc (NYSE: MNK).

UPDATE: In its Q2 letter, Greenlight noted it bought a media-sized stake in Mallinckrodt plc at an average price of $63.17 after the deal with Questcor was announced. Subsequently, they spoke to MNK's CEO and "ascertained that he is blowing smoke over his evaluation of the many risks facing H.P. Acthar Gel. Most notablly, he said that a bilogial test, rather than a chemical test, is the proper way to evaluate the activity of the drug. We believe this misses the point since QCOR has admitted that H.P. Acthar Gel only contains deamidiated Acthar, which is not the compound indicated on the FDA-approved label, and therefor an untested, unapproved drug." Einhorn said he has since dumped MNK.

Given that QCOR is larger than MNK, and MNK is going to lever-up to buy QCOR, they believe that MNK is setting itself up to be a "very attractive short sale candidate" if the merger is completed.

Greenlight's short on QCOR was the only significant loser in the quarter, advancing from $64.93 to $92.49.

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