A month has gone by since the last earnings report for Horizon Therapeutics . Shares have lost about 6.7% 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 Therapeutics due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Horizon Q3 Earnings Top Estimates, Tepezza Drives Sales
Horizon reported third-quarter 2020 adjusted earnings of $1.74 per share, which increased from the year-ago quarterly earnings of 64 cents. The earnings also beat the Zacks Consensus Estimate of $1.
Quarterly sales of $636.4 million were up 90% year over year. The top line also beat the Zacks Consensus Estimate of $559 million. Sales were driven by the strong launch of Tepezza.
Quarter in Detail
The company reports financial results under two separate segments —Orphan and Rheumatology, and Inflammation (previously known as the primary care segment). Notably, first-quarter 2020 onward, the Orphan and Rheumatology segment was renamed the Orphan segment.
Sales inthe Orphan segment were $534.8 million, up 131% from the prior-year figure, driven by continued growth of drugs like Tepezza, Krystexxa, Ravicti and Procysbi.
Krystexxa sales increased9% year over year to $108.5 million. Tepezza generated net sales worth $286.9 million in the third quarter,up from $165.9 million in the prior quarter. In January 2020, the FDA approved Tepezza for the treatment of thyroid eye disease (TED).
Ravicti sales were $64.6 million in the quarter, up 8% year over year.
Third-quarter 2020 net sales inthe Inflammation segment were $101.6 million, down 2.7% year over year.
Adjusted R&D expenses were $27.7 million, up from $19.5 million in the year-ago quarter. Adjusted SG&A expenses were $194.4 million, up from $155.1 million in the year-ago quarter.
2020 Guidance
Owing to the strong uptake of Tepezza, Horizon Therapeutics significantly raised its full-year sales expectations from Tepezza and correspondingly the net sales guidance.
The company now expects 2020 net sales of $2.12-$2.14 billion, an increase from the previous guidance range of $1.85-$1.90 billion.The company now expects Tepezza’s2020 net sales to bemorethan $800 million compared with the previous guidance of greater than $650 million. The company expects low-double-digit Krystexxa net sales growth.
Other Pipeline Updates
In July 2020, the company announced top-line results from its OPTIC-X open-label clinical study, an extension study of OPTIC, which is the Tepezza phase III pivotal confirmatory study, as well as data from the OPTIC 48-week off-treatment follow-up period. OPTIC-X results demonstrated that 89% of patients who received placebo during OPTIC and then entered OPTIC-X and received Tepezza achieved the primary endpoint of 2 mm or more reduction in proptosis at Week 24.
The results of the OPTIC 48-week off-treatment follow-up period demonstrated that the majority of Tepezza patients who were proptosis responders at Week 24 in OPTIC maintained their response at Week 72, nearly a year off treatment.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -10.15% due to these changes.
VGM Scores
At this time, Horizon Therapeutics has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Horizon Therapeutics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Horizon Therapeutics (HZNP) Down 6.7% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Horizon Therapeutics . Shares have lost about 6.7% 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 Therapeutics due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Horizon Q3 Earnings Top Estimates, Tepezza Drives Sales
Horizon reported third-quarter 2020 adjusted earnings of $1.74 per share, which increased from the year-ago quarterly earnings of 64 cents. The earnings also beat the Zacks Consensus Estimate of $1.
Quarterly sales of $636.4 million were up 90% year over year. The top line also beat the Zacks Consensus Estimate of $559 million. Sales were driven by the strong launch of Tepezza.
Quarter in Detail
The company reports financial results under two separate segments —Orphan and Rheumatology, and Inflammation (previously known as the primary care segment). Notably, first-quarter 2020 onward, the Orphan and Rheumatology segment was renamed the Orphan segment.
Sales inthe Orphan segment were $534.8 million, up 131% from the prior-year figure, driven by continued growth of drugs like Tepezza, Krystexxa, Ravicti and Procysbi.
Krystexxa sales increased9% year over year to $108.5 million. Tepezza generated net sales worth $286.9 million in the third quarter,up from $165.9 million in the prior quarter. In January 2020, the FDA approved Tepezza for the treatment of thyroid eye disease (TED).
Ravicti sales were $64.6 million in the quarter, up 8% year over year.
Third-quarter 2020 net sales inthe Inflammation segment were $101.6 million, down 2.7% year over year.
Adjusted R&D expenses were $27.7 million, up from $19.5 million in the year-ago quarter. Adjusted SG&A expenses were $194.4 million, up from $155.1 million in the year-ago quarter.
2020 Guidance
Owing to the strong uptake of Tepezza, Horizon Therapeutics significantly raised its full-year sales expectations from Tepezza and correspondingly the net sales guidance.
The company now expects 2020 net sales of $2.12-$2.14 billion, an increase from the previous guidance range of $1.85-$1.90 billion.The company now expects Tepezza’s2020 net sales to bemorethan $800 million compared with the previous guidance of greater than $650 million. The company expects low-double-digit Krystexxa net sales growth.
Other Pipeline Updates
In July 2020, the company announced top-line results from its OPTIC-X open-label clinical study, an extension study of OPTIC, which is the Tepezza phase III pivotal confirmatory study, as well as data from the OPTIC 48-week off-treatment follow-up period. OPTIC-X results demonstrated that 89% of patients who received placebo during OPTIC and then entered OPTIC-X and received Tepezza achieved the primary endpoint of 2 mm or more reduction in proptosis at Week 24.
The results of the OPTIC 48-week off-treatment follow-up period demonstrated that the majority of Tepezza patients who were proptosis responders at Week 24 in OPTIC maintained their response at Week 72, nearly a year off treatment.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -10.15% due to these changes.
VGM Scores
At this time, Horizon Therapeutics has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Horizon Therapeutics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.