- Associated Press - Thursday, November 5, 2015

Michael L. Babich has resigned as president and CEO of Insys Therapeutics, a specialty drugmaker under investigation over sales of its powerful painkiller Subsys.

Shares of the Chandler, Arizona, company jumped almost 10 percent Thursday morning as the company also announced third-quarter earnings that trumped analyst expectations and said it was buying back some stock.

The drugmaker disclosed before the market opened that it has named Chairman John N. Kapoor as its new president and CEO. It offered no explanation for the departure of Babich, who became president in November 2010 and CEO the following March.

Insys Therapeutics Inc.’s net income more than doubled to $26.1 million in the third quarter. Adjusted earnings of 50 cents per share were twice what analysts expected, according to FactSet.

Insys generates nearly all of its revenue from Subsys, a spray designed to provide quick pain relief for cancer patients who are already taking opioid pain medicines around the clock or have developed a tolerance for them. Sales of the painkiller climbed 57 percent in the third-quarter to $91.1 million.

In late 2013, Insys said it had received a subpoena from the Department of Health and Human Services asking for documents tied to the commercialization of Subsys. Nearly a year later, it received a subpoena requesting documents tied to sales and marketing practices behind Subsys from the U.S. Attorney’s office for the District of Massachusetts.

Insys said in August that it is cooperating with these investigations.

The drugmaker also announced Thursday that its board adopted a new stock repurchase program that authorizes up to $50 million in buybacks, effective immediately.

Companies often say share repurchases help shareholders, because theoretically they cut down on the total number of shares and thus boost earnings per share. But critics say that repurchases don’t usually lower the number of shares outstanding because companies can also issue more, and buybacks also divert money that might be spent on new infrastructure or hiring.

Insys shares rose $2.61, or 9.9 percent, to $29.99 in Thursday morning trading.

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