Horizon Therapeutics Stock Analysis: On August 6, 2020, Dublin-based pharmaceutical company Horizon Therapeutics (NASDAQ:HZNP) announced a public offering of 11.8 million shares giving the company around $800 million in value.
Although based in Ireland, the company’s drug treatments for rheumatic diseases are largely sold (approximately 97%) in the United States.
Unlike most biopharmaceutical stocks, this one’s not focused on the COVID-19 novel coronavirus. Also unlike those treatments, however, Horizon has approval from the Food and Drug Administration (FDA) for its offerings.
The company also so massive gains in the wake of the pandemic. This Horizon Therapeutics stock analysis will examine why the U.S. public offering is priced how it is and whether the company can maintain its meteoric ascent. Or will investors’ bubbles burst if this company can’t maintain its current revenue growth rates?
Let’s start by examining exactly what this business does.
Horizon Therapeutics Treats Inflammatory Diseases
Horizon Therapeutics has a drug portfolio focused on treating inflammatory diseases, thyroid eye disease (TED), gout, and other rare diseases.
It most recently got FDA approval for Tepezza (Teprotumumab) ahead of schedule in January 2020, based on evidence gathered from two clinical trials.
This makes it the first FDA-approved TED treatment, and it joins Krystexxa, Actimmune, and more as marketable labels, each of which it plans to expand clinical uses for by the end of 2020.
Duexis (ibuprofen and famotidine) is FDA approved for oral treatment of Osteoarthritis, Rheumatoid Arthritis, and NSAID-induced Ulcer Prophylaxis). Ravicti (glycerol phenylbutyrate) is FDA-approved as a nitrogen-binding agent for chronic UCD treatment.
Procysbi (cysteamine bitartrate) is an FDA-approved ingestible tablet to manage nephropathic cystinosis. Each medicine is in the pipeline for further dosage and treatments options in clinical trials.
In addition, Horizon acquired Curzion Pharmaceuticals, Inc. in April 2020, broadening its drug pipeline to help increase profits. Each of these new revenue streams has the company forecasting 60% growth through 2021, leading to the question of whether you should buy into Horizon Therapeutics.
Is HZNP Stock A Buy?
The current consensus among Wall Street analysts is to Buy Horizon Therapeutics stock. This is because the company has a proven track record of developing, distributing, and marketing its biopharmaceutical offerings.
And the company’s headquarters in Ireland was for tax haven purposes – its main operations and sales are still in the U.S. It spent the 2010s in aggressive mergers and acquisitions, buying companies and drugs to expand its portfolio and revenue streams.
Because TED has no other approved treatments, the potential profits are enormous. This is a major reason why so many are rushing to pick up the stock, however it won’t be cheap.
The price has nearly tripled since the beginning of 2020, and the price is leveling off heading into the fall. Picking it up under $80 could still be a deal, as it could reach over $100 in 2021. There are risks associated with purchasing this stock though.
Risks of Buying Horizon Therapeutics Stock
Horizon Therapeutics is treating an autoimmune disease that commonly affects patients suffering from Graves’ disease.
Approximately one out of every four people suffering from Graves’ disease develop TED, which occurs when your body’s immune system attacks the tissue surrounding the eyes.
The market around this disease alone is over $300 million, but the first-mover advantage will only last so long. Meanwhile, the company is dedicating resources to constant clinical trials sure to drain its cash reserves.
Although Horizon Therapeutics is recession resistant, it’s not immune. As COVID-19 cases rose around the country, hospital visits sharply declined.
Whether coronavirus-related or not, the inpatient statistics at hospitals around the world aren’t matching up with the actual illnesses.
This can lead to fewer eligible patients for man of Horizon’s treatments, as it already led to furloughs in the medical community during a medical crisis.
Can Horizon Therapeutics Competitors Win?
While it may be the first to market with a TED treatment, Horizon has plenty of competition in its business, including Opiant Pharmaceuticals, Mylan, and Strongbridge Biopharma. These competitors have their own R&D and can easily muscle their way into the TED market and others that could chip away at Horizon’s profit margins.
However, its tax breaks from relocating outside the U.S., along with the acquisitions it made with its cash reserves, give Horizon Therapeutics a healthy defense against the competition.
There are also non-pharmaceutical treatments, like eye muscle and eyelid surgery. Steroids are also often used in treatment, even when using Tepezza.
The company also paid off all $400 million of its senior notes, giving it a strong cash balance to buy its way out of any trouble that may arise. This makes it a formidable opponent for any possible competitors.
Should You Invest In Horizon Stock?
Horizon Therapeutics is a hot biopharmaceutical stock in 2020, despite not having much to do with COVID-19 at all.
Instead, its treatments focus on chronic and rare illnesses, including thyroid eye disease (TED). As the first FDA-approved TED treatment, the company tapped into a potentially large revenue stream. It’s not putting all its eggs into one biopharmaceutical basket though.
The company has multiple drugs in its pipeline, and it’s expanding in every direction to increase profitability. The consensus among top financial analysts is this stock is a Buy.
That’s because of its strong financials and steady revenue growth for the remainder of 2020 and 2021. This continued growth may not be sustainable beyond five years, but it has strong numbers heading into the end of the year.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.