Why Is Horizon Therapeutics (HZNP) Up 13.2% Since Last Earnings Report?

A month has gone by since the last earnings report for Horizon Therapeutics (HZNP). Shares have added about 13.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Horizon Therapeutics due for a pullback? 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 drivers.

Horizon Therapeutics' Q1 Earnings Beat Estimates

Horizon Therapeutics reported first-quarter 2020 adjusted earnings of 44 cents per share, which comprehensively beat the Zacks Consensus Estimate of 23 cents. Moreover, the figure came head of the year-ago bottom line of 30 cents per share.

Quarterly sales of $355.9 million were up 27% year over year. The top line also beat the Zacks Consensus Estimate of $284 million.

In May 2019, the company’s shareholders approved the change in its name to Horizon Therapeutics.

Quarter in Detail

The company realigned its structure to operate two separate businesses beginning second-quarter 2018. It reports financial results under two separate segments, namely orphan and rheumatology, and Inflammation (previously known as the primary care segment). Notably, from the first quarter of 2020 onward, the orphan and rheumatology segment was renamed as the orphan segment.

Sales of the orphan segment, the company’s strategic growth unit, were $245.4 million, up 47% from the prior-year figure, driven by continued growth of Krystexxa, Ravicti and the launch of Tepezza. Krystexxa sales soared 78% year over year to $93.3 million.

Tepezza generated net sales worth $23.5 million in the first quarter, exceeding management’s expectations. Per the company, this strong start for Tepezza was owing to significantly higher number of patients taking therapy than what was initially expected.

First-quarter 2020 net sales of the Inflammation segment were $110.5 million, down 3% year over year.

Adjusted R&D and SG&A expenses were 5.8% and 69.6% of net sales, respectively, during the quarter.

2020 Guidance

Per the company, on the back of a strong uptake of Tepezza and its substantially higher revenues that more than offset the expected adversity from the COVID-19 pandemic, Horizon Therapeutics raised its full-year net sales guidance. The updated view assumes that healthcare activity will be resumed in the second half of 2020.

The company now expects 2020 net sales between $1.40 billion and $1.45 billion, which were earlier projected in the $1.40-$1.42 billion range. Tepezza’s full-year net sales are estimated to be more than $200 million, indicating a rise from its previous outlook of $30-$40 million.

Other Pipeline Updates

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

In April, the company announced that Procysbi, currently available in the United States, can be ordered in 75 mg and 300 mg dosage strengths for adults and children aged one year and above, suffering nephropathic cystinosis.

Also, in April, Horizon Therapeutics acquired the privately-held biopharma company Curzion Pharmaceuticals, Inc. and its development-stage oral selective lysophosphatidic acid 1 receptor (LPAR1) antagonist, CZN001 (renamed HZN-825), for treating diffuse cutaneous systemic sclerosis (dcSSc). The company expects to begin a pivotal phase IIb study on the same in the first half of 2021.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month. The consensus estimate has shifted -10.92% due to these changes.

VGM Scores

Currently, Horizon Therapeutics has a poor Growth Score of F, however its Momentum Score is doing a lot 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 D. 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 #2 (Buy). We expect an above average return from the stock in the next few months.

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