Why Is Horizon Pharma (HZNP) Down 9.9% Since Last Earnings Report?

It has been about a month since the last earnings report for Horizon Pharma (HZNP). Shares have lost about 9.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Horizon Pharma due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Horizon Pharma's Stock Up on Q4 Earnings & Sales Beat

Horizon Pharma reported better-than-expected results for the fourth quarter of 2018. 

The company reported fourth-quarter adjusted earnings of 67 cents per share, which beat the Zacks Consensus Estimate of 54 cents and were higher than 29 cents reported in the year-ago quarter.

The company reported record quarterly sales of $355.5 million, up 30% year over year. The top line also beat the Zacks Consensus Estimate of $333.8 million.

Quarter in Detail

The company realigned structure to operate its strategic growth business, orphan and rheumatology, separately, from its primary care business. Thus, with effect from the second quarter of 2018, the company is reporting financial results as two separate segments — the orphan and rheumatology segment, and the primary care segment. Horizon Pharma expects the new structure to help the company better allocate resources in developing products for unmet treatment needs of patients with rare diseases.

Sales of the orphan and rheumatology segment were $237.6 million, up 33% from the prior-year quarter’s figure, driven by continued strong growth of Krystexxa, Ravicti, Procysbi and Rayos. Krystexxa sales increased 90% year over year to $83.3 million. The company is making significant investments in the commercial expansion of Krystexxa, which is expected to drive future net sales growth and expand margins over time.

On Dec. 28, 2018, the company sold the rights to Ravicti and Ammonaps outside of North America and Japan to Medical Need Europe AB for $35 million. In addition, effective Jan. 1, 2019, the Rayos  and Lodotra license and supply agreements were amended, including the transfer of Lodotra to Vectura Group plc, the current third-party supplier. Beginning in 2019, the company will no longer recognize revenue from Ravicti and Ammonaps sales outside of North America and Japan, or from sales of Lodotra. Ammonaps is known as Buphenyl and Lodotra is known as Rayos in the United States.

Fourth-quarter 2018 net sales of the primary care segment were $117.9 million, up 23% year over year.

Adjusted research and development (R&D) expenses were 5.3% of net sales, and adjusted SG&A expenses were 41.4% of the same.

2018 Results

Earnings came in at $1.83 per share, up 55% year over year, surpassing the Zacks Consensus Estimate of $1.68

Sales increased 14% to $1.21 billion, beating the Zacks Consensus Estimate of $1.19 billion.

2019 Guidance

Horizon Pharma expects sales to be $1.23-$1.25 billion.

Other Updates

The company’s pipeline candidate teprotumumab is being developed for the treatment of thyroid eye disease (TED). The company announced positive top-line results from its phase III confirmatory study, OPTIC, evaluating teprotumumab for the treatment of active TED. The study met its primary endpoint of improving proptosis, or bulging of the eye compared to placebo, with 82.9% of patients showing improvement compared to 9.5% of placebo patients. The study also succeeded in meeting secondary endpoints and the safety profile was consistent with the phase II study of teprotumumab in TED. The company is expecting to submit a biologics license application to the FDA in mid-2019.

The company plans to initiate a clinical trial in the second half of 2019, evaluating the effect of Krystexxa on serum uric acid levels in kidney transplant patients with uncontrolled gout.

In December 2018, the company received the FDA approval for Ravicti to expand the age range for chronic management of urea cycle disorders to new born or older from the previous age range of two months of age or older.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 41.33% due to these changes.

VGM Scores

Currently, Horizon Pharma has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Horizon Pharma has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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