3 Reasons This Marijuana Stock Could Be Ready to Rebound

There could be a light at the end of the tunnel for Insys Therapeutics. But maybe not.

Could the worst be over for Insys Therapeutics (NASDAQ:INSY)? The cannabinoid-focused biotech has been singing the blues for quite a while. Government investigations into its sales and marketing practices, plunging sales for its top product, and a major pipeline setback just a few days ago have caused the stock to sink.

Two recent announcements from Insys, however, just might hint at better days ahead for the beleaguered biotech. On Wednesday morning, Insys announced a significant development with the U.S. Department of Justice (DOJ) investigation into its past promotional practices for opioid drug Syndros. Insys also reported its second-quarter results after the market closed on Wednesday.

Based on these two announcements, there are three reasons that this marijuana stock could be ready to rebound. However, there’s also one big reason why Insys could continue to flounder…

1. A pending settlement with the DOJ

Insys stock soared 17% on Wednesday after the company announced that it had reached an agreement in principle with the DOJ to settle the civil and criminal investigation into past sales and marketing practices for Subsys. A settlement has been a long time coming: The DOJ began investigating Insys in late 2013. 

Perhaps the best news about the pending settlement is that Insys agreed to pay $150 million over five years. That’s exactly the amount that the company already put aside in the third quarter of 2017. Because Insys has already taken the financial hit, the DOJ deal shouldn’t affect the biotech’s financial results very much.

There could still be a negative financial impact, though. Insys said that it could also have to make contingency-based payments “associated with certain events” of up to $75 million. If the settlement agreement is finalized, though, the company should be able to move past the issue that has been a major distraction for management.

2. Market share gains for Subsys

The drug at the center of the DOJ investigation, Subsys, continues to drag down Insys’ overall revenue. However, there was some good news about Subsys in the company’s Q2 results…

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