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Horizon Pharma (HZNP) Q2 Earnings & Sales Beat, Shares Rise

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Horizon Pharma plc (HZNP - Free Report) reported better-than-expected results for the second quarter of 2018.  Following the news, the company’s shares went up 10.7%. Horizon Pharma’s stock price has increased 37.8% year to date against the industry’s fall of 4.6%.

The company reported second-quarter adjusted earnings of 48 cents per share, which beat the Zacks Consensus Estimate of 29 cents and were higher than 41 cents reported in the year-ago quarter.

Sales in the second quarter were up 4.6% year over year to $302.8 million and beat the Zacks Consensus Estimate of $278 million.

Quarter in Detail

The company has realigned its 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 its financial results as two separate segments: the orphan and rheumatology segment and the primary care segment. The company expects the new structure to help it in better allocation of resources in developing products for unmet treatment needs of patients with rare diseases.

Sales of the orphan and rheumatology segment were $201.7 million, up 17.2% from the prior year’s quarter, driven by continued strong Krystexxa growth as well as growth of Ravicti and Procysbi. Krystexxa sales increased 53% year over year to $58.6 million. The company is making significant investments in the commercial expansion of Krystexxa which is expected to continue to drive future net sales growth and margin expansion over time

Second-quarter 2018 net sales of the primary care segment were $101.1 million, down 14% year over year.

Adjusted research and development (R&D) expenses were 6.7% of net sales, and adjusted SG&A expenses were 45% of net sales.

2018 Guidance Increased

Horizon Pharma continues to expect sales in the range of $1.17-$1.2 billion.

The company expects Krystexxa sales to increase 65% year over year in 2018.

Other Updates

The company’s pipeline candidate, -teprotumumab which is being developed for the treatment of thyroid eye disease (TED), completed its target enrolment significantly ahead of schedule in the phase III OPTIC study.

The company plans to initiate a new study of Krystexxa to continue exploring a broader clinical profile of this medicine, the only FDA-approved treatment for uncontrolled gout. Enrollment is expected to begin in the fourth quarter of 2018.

Zacks Rank & Stocks to Consider

Horizon Pharma has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the biotech sector are Gilead Sciences Inc. (GILD - Free Report) , Vertex Pharmaceuticals (VRTX - Free Report) and Seattle Genetics (SGEN - Free Report) . While Gilead carriess a Zacks Rank #1 (Strong Buy), Vertex and Seattle carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Gilead’s earnings per share estimates have increased from $6.12 to $6.57 for 2018 and from $6.36 to $6.48 for 2019 over the past 30 days. The company delivered a positive earnings surprise in three of the trailing four quarters with an average beat of 6.43%. The stock has rallied 7.3% so far this year.

Vertex’s earnings per share estimates moved up from $3.16 to $3.74 for 2018 and from $4.33 to $4.59 for 2019 in the last 30 days. The company delivered a positive earnings surprise in all of the trailing four quarters with an average beat of 27.5%. Share price of the company has increased 16.9% in a year.

Seattle Genetics’ 2018 loss per share estimates narrowed from $1.81 to 83 cents for  2018 and from 81 cents to 39 cents for 2019 in the last 30 days. The company delivered a positive earnings surprise in three of the trailing four quarters, with an average beat of 12.93%. The company’s shares have rallied 34.8% year to date.

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