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Horizon (HZNP) to Acquire Raptor for $800M, Stock Soars
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Ireland-domiciled Horizon Pharma plc announced its intention of acquiring California-based biopharmaceutical company Raptor Pharmaceuticals Corp. – focused on the development and commercialization of treatments targeting rare and debilitating diseases – in an all-cash transaction valued at about $800 million or 9.00 per share. The offer price represents a significant premium (21%) over Raptor’s Sep 9 closing price.
While Raptor’s shares jumped 20.5% on the news, Horizon’s shares gained 9.4%.
Horizon intends to fund the transaction using $675 million of external debt as well as with cash on hand.
With the proposed Raptor acquisition, Horizon will gain global rights to two orphan drugs Procysbi and Quinsair. Procysbi is approved in both the U.S. and EU for the treatment of nephropathic cystinosis (rare and life-threatening metabolic disorder) in adults and children aged 2 years and above. Horizon expects Procysbi, which has long patent life running until 2034, to generate peak sales of more than $300 million.
Quinsair (inhaled formulation of levofloxacin), on the other hand, is approved in the EU and Canada for the management of chronic pulmonary infections due to Pseudomonas aeruginosa in adult patients with cystic fibrosis (rare, life-threatening, genetic disease).
The acquisition of Procysbi and Quinsair is expected to expand and diversify Horizon’s rare disease portfolio from the currently marketed 9 products to 11 products across the company’s three business units – Orphan, Rheumatology and Primary Care. In addition, the Raptor acquisition is expected to strengthen Horizon’s U.S. orphan business, and expand its footprint in Europe and other key international markets.
The acquisition, which is slated to close in the fourth quarter of 2016, is expected to be accretive to adjusted EBITDA in 2017. The acquisition is also anticipated to boost revenue growth. Horizon expects to provide 2017 net sales and adjusted EBITDA guidance in the first quarter of 2017.
Our Take
We believe the Raptor acquisition is in line with Horizon’s strategy of strengthening rare disease portfolio. Horizon’s rare disease portfolio currently consists of Actimmune, Ravicti, Buphenyl and Krystexxa. Post closing of the acquisition, more than half of Horizon’s products will treat orphan diseases (6 of 11 products). Note that Quinsair is not approved in the U.S. and a regulatory nod would be a positive for Horizon.
Horizon has been actively pursuing acquisitions to expand and diversify its portfolio. Earlier this year (Jan 2016), Horizon acquired Crealta Holdings and added Migergot and Krystexxa to its portfolio. While Ravicti and Buphenyl became part of company’s portfolio through the May 2015 Hyperion Therapeutics acquisition.
Mergers and acquisitions in the health care space show no signs of slowing down and we expect to see even more buyouts through the remainder of the year.
While Horizon is a Zacks Rank #3 (Hold) stock, Raptor carries a Zacks Rank #2 (Buy). A couple of better-placed stocks in the health care sector are Geron Corp. (GERN - Free Report) and Anika Therapeutics Inc. (ANIK - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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Horizon (HZNP) to Acquire Raptor for $800M, Stock Soars
Ireland-domiciled Horizon Pharma plc announced its intention of acquiring California-based biopharmaceutical company Raptor Pharmaceuticals Corp. – focused on the development and commercialization of treatments targeting rare and debilitating diseases – in an all-cash transaction valued at about $800 million or 9.00 per share. The offer price represents a significant premium (21%) over Raptor’s Sep 9 closing price.
While Raptor’s shares jumped 20.5% on the news, Horizon’s shares gained 9.4%.
Horizon intends to fund the transaction using $675 million of external debt as well as with cash on hand.
RAPTOR PHARMACT Price
RAPTOR PHARMACT Price | RAPTOR PHARMACT Quote
How Will Horizon Benefit?
With the proposed Raptor acquisition, Horizon will gain global rights to two orphan drugs Procysbi and Quinsair. Procysbi is approved in both the U.S. and EU for the treatment of nephropathic cystinosis (rare and life-threatening metabolic disorder) in adults and children aged 2 years and above. Horizon expects Procysbi, which has long patent life running until 2034, to generate peak sales of more than $300 million.
Quinsair (inhaled formulation of levofloxacin), on the other hand, is approved in the EU and Canada for the management of chronic pulmonary infections due to Pseudomonas aeruginosa in adult patients with cystic fibrosis (rare, life-threatening, genetic disease).
The acquisition of Procysbi and Quinsair is expected to expand and diversify Horizon’s rare disease portfolio from the currently marketed 9 products to 11 products across the company’s three business units – Orphan, Rheumatology and Primary Care. In addition, the Raptor acquisition is expected to strengthen Horizon’s U.S. orphan business, and expand its footprint in Europe and other key international markets.
The acquisition, which is slated to close in the fourth quarter of 2016, is expected to be accretive to adjusted EBITDA in 2017. The acquisition is also anticipated to boost revenue growth. Horizon expects to provide 2017 net sales and adjusted EBITDA guidance in the first quarter of 2017.
Our Take
We believe the Raptor acquisition is in line with Horizon’s strategy of strengthening rare disease portfolio. Horizon’s rare disease portfolio currently consists of Actimmune, Ravicti, Buphenyl and Krystexxa. Post closing of the acquisition, more than half of Horizon’s products will treat orphan diseases (6 of 11 products). Note that Quinsair is not approved in the U.S. and a regulatory nod would be a positive for Horizon.
Horizon has been actively pursuing acquisitions to expand and diversify its portfolio. Earlier this year (Jan 2016), Horizon acquired Crealta Holdings and added Migergot and Krystexxa to its portfolio. While Ravicti and Buphenyl became part of company’s portfolio through the May 2015 Hyperion Therapeutics acquisition.
Mergers and acquisitions in the health care space show no signs of slowing down and we expect to see even more buyouts through the remainder of the year.
HORIZON PHARMA Price
HORIZON PHARMA Price | HORIZON PHARMA Quote
While Horizon is a Zacks Rank #3 (Hold) stock, Raptor carries a Zacks Rank #2 (Buy). A couple of better-placed stocks in the health care sector are Geron Corp. (GERN - Free Report) and Anika Therapeutics Inc. (ANIK - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>