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Horizon (HZNP) Sells European Rights for Procysbi & Quinsair
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Horizon Pharma plc recently announced that it has signed an agreement with Chiesi Farmaceutici S.p.A. to sell its European subsidiary that owns the marketing rights to Procysbi (cysteamine bitartrate) delayed-release capsules and Quinsair (levofloxacin inhalation solution) in Europe, the Middle East and Africa (EMEA) regions. The deal is valued at an upfront payment of $70 million along with milestone payments.
However, Horizon will maintain control of manufacturing supply in the EMEA regions through its third-party supplier. The company also continues to own marketing rights for Procysbi and Quinsair in the U.S., Canada and Latin America. The divested subsidiary has facilities in the Netherlands, France and Germany and has approximately 40 employees.
The transaction is expected to close in the second quarter of 2017. As a result of the divestment, Horizon projects a reduction of approximately $15 million in the annual revenue guidance. The company now expects sales in 2017 to come around $985 million to $1.020 billion.
We note that both Procysbi and Quinsair were added to Horizon’s portfolio as a result of the Raptor Pharmaceutical Corp., in Oct 2016 to strengthen its U.S. orphan business, and expand into Europe and other key international markets. However, following an evaluation of the commercial infrastructure required to provide Procysbi and Quinsair in Europe, the Middle East and Africa, the company decided to divest the rights in Europe.
Horizon’s share price movement year to date shows that the stock has underperformed the Zacks classified Medical-Biomedical/Genetics industry. The stock is down 37.5% compared with the industry’s gain of 0.2%.
Horizon’s primary care business unit results were significantly below expectations in the first quarter due to the implementation of a new commercial model, where the company is contracting with pharmacy benefit managers and payers to help patients have an access to its medicines. The company plans to overcome this underperformance by reducing certain costs in the primary care business unit in order to align its cost structure with the lower-than-expected sales. In this context, the company trimmed its outlook for 2017.
Zacks Rank & Stocks to Consider
Horizon currently has a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the health care sector include VIVUS, Inc. , Aldeyra Therapeutics, Inc. (ALDX - Free Report) and Zoetis Inc. (ZTS - Free Report) . While VIVUS sports a Zacks Rank #1 (Strong Buy), both Aldeyra and Zoetis carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks Rank #1 stocks here
VIVUS’ loss per share estimates narrowed from 50 cents to 39 cents for 2017 over the last 30 days. The company posted positive earnings surprises in all of the four trailing quarters, with an average beat of 233.69%.
Aldeyra’s loss per share estimates narrowed from $1.79 to $1.69 cents for 2017 over the last 60 days. The company posted positive earnings surprises in three of the four trailing quarters, with an average beat of 7.8%.
Zoetis’ earnings per share estimates increased from $2.32 to $2.34 for 2017 over the last 30 days. The company posted positive earnings surprises in all of the four trailing quarters, with an average beat of 9.82%.
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Horizon (HZNP) Sells European Rights for Procysbi & Quinsair
Horizon Pharma plc recently announced that it has signed an agreement with Chiesi Farmaceutici S.p.A. to sell its European subsidiary that owns the marketing rights to Procysbi (cysteamine bitartrate) delayed-release capsules and Quinsair (levofloxacin inhalation solution) in Europe, the Middle East and Africa (EMEA) regions. The deal is valued at an upfront payment of $70 million along with milestone payments.
However, Horizon will maintain control of manufacturing supply in the EMEA regions through its third-party supplier. The company also continues to own marketing rights for Procysbi and Quinsair in the U.S., Canada and Latin America. The divested subsidiary has facilities in the Netherlands, France and Germany and has approximately 40 employees.
The transaction is expected to close in the second quarter of 2017. As a result of the divestment, Horizon projects a reduction of approximately $15 million in the annual revenue guidance. The company now expects sales in 2017 to come around $985 million to $1.020 billion.
We note that both Procysbi and Quinsair were added to Horizon’s portfolio as a result of the Raptor Pharmaceutical Corp., in Oct 2016 to strengthen its U.S. orphan business, and expand into Europe and other key international markets. However, following an evaluation of the commercial infrastructure required to provide Procysbi and Quinsair in Europe, the Middle East and Africa, the company decided to divest the rights in Europe.
Horizon’s share price movement year to date shows that the stock has underperformed the Zacks classified Medical-Biomedical/Genetics industry. The stock is down 37.5% compared with the industry’s gain of 0.2%.
Horizon’s primary care business unit results were significantly below expectations in the first quarter due to the implementation of a new commercial model, where the company is contracting with pharmacy benefit managers and payers to help patients have an access to its medicines. The company plans to overcome this underperformance by reducing certain costs in the primary care business unit in order to align its cost structure with the lower-than-expected sales. In this context, the company trimmed its outlook for 2017.
Zacks Rank & Stocks to Consider
Horizon currently has a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the health care sector include VIVUS, Inc. , Aldeyra Therapeutics, Inc. (ALDX - Free Report) and Zoetis Inc. (ZTS - Free Report) . While VIVUS sports a Zacks Rank #1 (Strong Buy), both Aldeyra and Zoetis carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks Rank #1 stocks here
VIVUS’ loss per share estimates narrowed from 50 cents to 39 cents for 2017 over the last 30 days. The company posted positive earnings surprises in all of the four trailing quarters, with an average beat of 233.69%.
Aldeyra’s loss per share estimates narrowed from $1.79 to $1.69 cents for 2017 over the last 60 days. The company posted positive earnings surprises in three of the four trailing quarters, with an average beat of 7.8%.
Zoetis’ earnings per share estimates increased from $2.32 to $2.34 for 2017 over the last 30 days. The company posted positive earnings surprises in all of the four trailing quarters, with an average beat of 9.82%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana. Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>