It has been about a month since the last earnings report for Horizon Pharma (HZNP - Free Report) . Shares have lost about 9.2% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Horizon Pharma Q3 Earnings & Sales Beat
Horizon Pharmareported better-than-expected results for the third quarter of 2018. Following the news, the company’s shares went up 16%.
The company reported third-quarter adjusted earnings of 65 cents per share, which beat the Zacks Consensus Estimate of 50 cents and were higher than 26 cents reported in the year-ago quarter.
The company reported record quarterly sales of $325.3 million, up 20% year over year. The top line also beat the Zacks Consensus Estimate of $315 million.
Quarter in Detail
The company 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 better allocate resources in developing products for unmet treatment needs of patients with rare diseases.
Sales of the orphan and rheumatology segment were $219.9 million, up 25.3% from the prior-year quarter, driven by continued strong growth of Krystexxa, Ravicti and Procysbi. Krystexxa sales increased 64% year over year to $70.2 million. The company is making significant investments in the commercial expansion of Krystexxa, which is expected to drive future net sales growth and margin expansion over time.
Third-quarter 2018 net sales of the primary care segment were $105.4 million, up 10% year over year.
Adjusted research and development (R&D) expenses were 5.9% of net sales, and adjusted SG&A expenses were 39.3% of the same.
2018 Guidance Increased
Horizon Pharma expects sales to be $1.17-$1.2 billion.
The company expects Krystexxa sales to increase more than 65% year over year in 2018.
The company’s pipeline candidate teprotumumab is being developed for the treatment of thyroid eye disease (TED). The phase III confirmatory study, OPTIC, evaluating teprotumumab for the treatment of moderate-to-severe active TED, completed enrollment on Sep 4, 2018, and the top-line results are expected in the second quarter of 2019.
Horizon Pharma also presented a new phase II teprotumumab data that underscore the durable efficacy observed in thyroid eye disease.
The company is also working to maximize the role of Krystexxa to help more patients, including adapting its MIRROR immunomodulation study based on promising recent data to support potential for registration. The company expects to begin enrolling patients into the adapted protocol in the second quarter of 2019.
The company is pursuing two development programs — HZN-003 and PASylated uricase technology — for next-generation biologics for uncontrolled gout, to support and sustain the company’s market leadership in uncontrolled gout.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -8.57% due to these changes.
At this time, Horizon Pharma has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Horizon Pharma has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.