Horizon Therapeutics (HZNP) Down 16.6% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Horizon Therapeutics (HZNP). Shares have lost about 16.6% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Horizon Therapeutics' Q4 Earnings Beat Estimates

Horizon reported fourth-quarter 2019 adjusted earnings of 56 cents per share, which beat the Zacks Consensus Estimate of 43 cents but declined from 67 cents reported in the year-ago quarter.

The company reported quarterly sales of $363.5 million, up 2.3% year over year. The top line also beat the Zacks Consensus Estimate of $352 million.

On May 2, its shareholders approved the change of the company’s name to Horizon Therapeutics..

Quarter in Detail

The company realigned its structure to operate two separate businesses, effective second-quarter 2018. The company reports financial results in two separate segments — orphan and rheumatology, and Inflammation (previously known as the primary care segment).

Sales of the orphan and rheumatology segment were $269.8 million, up 14% from the prior-year figure, driven by continued growth of Krystexxa and Ravicti. Krystexxa sales soared 33% year over year to $110.7 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.

Fourth-quarter 2019 net sales of the Inflammation segment were $93.7 million, down 21% year over year.

Adjusted R&D and SG&A expenses were 7.3% and 44.3% of net sales, respectively.

2019 Results

The company’s earnings came in at $1.94 per share compared with $1.83 in 2018.

It reported revenues of $1.3 billion, up 7.7% year over year.

2020 Guidance

The company expects full-year 2020 net sales between $1.40 billion and $1.42 billion. Krystexxa full-year net sales growth is expected to be more than 25%. Tepezza full-year net sales are estimated in the band of $30-$40 million.

Other Pipeline Updates

In February 2020, the FDA approved Procysbi delayed-release oral granules in packets for adults and children one year of age and older living with nephropathic cystinosis. This new dosage form provides another administration option for patients, in addition to the currently available Procysbi capsules. This new dosage form provides another administration option for patients, in addition to the currently available Procysbi capsules.

On Jan 21, 2020, the FDA approved teprotumumab-trbw for the treatment of thyroid eye disease (TED), well ahead of the action date of Mar 8, 2020. Teprotumumab will be marketed under the brand name Tepezza. Tepezza is the first and only FDA-approved medicine for the treatment of TED - a serious, progressive and vision-threatening rare autoimmune disease.

In January 2020, the company announced top-line results from the MIRROR open-label trial, which evaluated the use of the immunomodulator methotrexate with Krystexxa to increase the complete response rate of Krystexxa. The results showed that 79%, or 11 of 14 patients enrolled, achieved a complete response at month 6. The 79% response rate is nearly double the 42% response rate in the Krystexxa phase III clinical program, which evaluated Krystexxa alone.

Other

In February 2020, the company closed the acquisition of its new U.S. headquarters in Deerfield, Ill. In line with the company's significant growth over the past three years, the new location will provide the company the flexibility to accommodate its current U.S. operations as well as its anticipated future growth.

How Have Estimates Been Moving Since Then?

Estimates review followed a downward path over the past two months. The consensus estimate has shifted -30.47% due to these changes.

VGM Scores

At this time, Horizon Therapeutics has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Horizon Therapeutics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.