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Horizon Therapeutics' (HZNP) Q1 Earnings Beat Estimates

Zacks Equity Research

Horizon Therapeutics plc HZNP, previously known as Horizon Pharma plc, reported first-quarter adjusted earnings of 30 cents per share, which beat the Zacks Consensus Estimate of 10 cents and increased from 3 cents reported in the year-ago quarter.

The company reported quarterly sales of $280.4 million, up 25% year over year. The top line also beat the Zacks Consensus Estimate of $237 million.

On May 2, 2019, shareholders of the company approved the change of the company’s name to Horizon Therapeutics. This move caters to the company’s long-term strategy to develop and commercialize innovative medicines addressing rare diseases with very few effective treatment options.

Horizon Therapeutics’ share price surged 44.8% year to date compared with the industry’s growth of 3.4%. 


Quarter in Detail

The company realigned structure to operate two separate businesses. Thus, with effect from the second quarter of 2018, the company has been reporting financial results in two separate segments — the orphan and rheumatology segment, and the primary care segment. Horizon Therapeutics expects the new structure to help it better allocate resources to develop products for unmet treatment needs of patients with rare diseases.

Sales of the orphan and rheumatology segment were $185.9 million, up 8% from the prior-year quarter’s figure, driven by continued strong growth of Krystexxa, Ravicti, Procysbi and Rayos. Krystexxa sales increased 12% year over year to $52.3 million. Beginning January 2019, the company no longer recognizes certain ex-U.S. sales of Ravicti, Buphenyl and Lodotra following the divestiture of those rights in 2018. 

First-quarter 2019 net sales of the primary care segment were $94.5 million, up 83% year over year.

Adjusted research and development (R&D) expenses were 6.1% of net sales, and adjusted SG&A expenses were 52.3% of the same.

2019 Guidance

The company now expects 2019 net sales of $1.26-$1.28 billion, an increase from the previous guidance of $1.23-$1.25 billion

Other Updates

The company’s pipeline candidate teprotumumab is being developed for the treatment of thyroid eye disease (TED). The company announced positive top-line results from the phase III confirmatory study, OPTIC, evaluating teprotumumab for the treatment of active TED. The study met its primary endpoint of improving proptosis or bulging of the eye compared to placebo, with 82.9% of patients showing improvement compared to 9.5% of placebo patients.

The study also succeeded in meeting secondary endpoints and the safety profile was consistent with the phase II study of teprotumumab in TED. Share price of the company rallied about 26% in pre-market trading on Feb 28 in response to the encouraging study results. The company intends to submit a biologics license application to the FDA in mid-2019.

Horizon Therapeuticsis evaluating the use of methotrexate to enhance the response rate to Krystexxa through the MIRROR studyin adults living with uncontrolled gout. The MIRROR study is designed to support the potential for registration of Krystexxa, and expected to begin in June.

The company plans to initiate a clinical trial in the second half of 2019, evaluating the effect of Krystexxa on serum uric acid levels in kidney transplant patients with uncontrolled gout.

The company used the net proceeds from an underwritten public equity offering in March together with cash in hand to repay $550 million of its $1.993-billion total principal amount of debt outstanding as of Dec 31, 2018. The debt level was $1.443 billion as of May 1, 2019.

Horizon Pharma Public Limited Company Price, Consensus and EPS Surprise

Horizon Pharma Public Limited Company Price, Consensus and EPS Surprise | Horizon Pharma Public Limited Company Quote

 Zacks Rank & Stocks to Consider

Horizon Therapeutics currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks are Gilead Sciences Inc. GILD, Fibrocell Science Inc. FCSC, and Genmab A/S GNMSF. All the stocks carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Gilead’s earnings per share estimates have increased from $6.65 to $6.72 for 2019 and from $7.00 to $7.03 for 2020 in the past 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters, the average being 6.86%.

Fibrocell’s loss per share estimates have narrowed from $2.68 to $1.15 for 2019 and from $2.55 to 97 cents for 2020 in the past 60 days. The company delivered a positive earnings surprise in two of the trailing four quarters, the average being 28.30%.

Genmab’s earnings per share estimates have increased from $2.69 to $2.79 for 2019 and from $4.91 to $5.08 for 2020 in the past 60 days.

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