This week, this biotech reported that its full-year 2020 net sales exceeded the high end of the company’s guidance range of $2.12 billion to $2.14 billion, growing more than 65%. And its full-year 2020 adjusted EBITDA exceeded the high end of the company’s guidance range of $920 million to $940 million, rising more than 95%.
Horizon Therapeutics Public Limited Company (HZNP)
From BI Research
Horizon Therapeutics is a profitable biopharmaceutical company primarily focused on rare diseases. 80% of revenues come from its orphan drug segment where the two biggest drivers are Tepezza for the treatment of thyroid eye disease (TED) and Krystexxa for the treatment of chronic gout that is unresponsive to other treatments.
Tepezza has sales of over $800 million in its first year (2020) with peak sales estimated at $3 billion in the U.S. alone. TED is a progressive, vision-threatening, autoimmune disease that can cause bulging of the eyeball, pain, the inability to close the eyelid, double vision and even blindness. Krystexxa, has sales of about $375 million with peak U.S. sales alone estimated at $1 billion. International rollout is already in the planning stages. So, plenty of upside for both.
However, recent trails have shown that when combined with another gout treatment, Krystexxa’s effectiveness doubles which should give sales growth a nice boost. The company has about 10 products in all with sales this year expected to be $2.1 billion, up from $1.3 billion last year (+61%). So, this is not a one trick pony.
Horizon’s Q3 results topped estimates (by 70% for EPS). Results were miles ahead of last year; it raised guidance, and the conference call was upbeat and positive, with lots of good irons in the fire. EPS in 2017 was $1.17, by 2019, EPS was $1.94.
My original projection for 2020 was $2.80, but based on the strong Q3 results, the consensus for 2020 has now come up to $3.60, with analysts originally looking for further strong growth in 2021 to $4.92.
Then came our opening to get into HZNP at a good price: The company announced that due to the demands put on its producer of Tepezza for COVID-19 production, it expected a “short term disruption in Tepezza supplies” in Q1. Not good, but just as investors soon looked past the COVID market collapse in March to better days ahead, so too will more forward thinking investors who can look past this short term hic-up be rewarded.
Accordingly, analysts are likely to be back to projecting future EPS of around $5 a share in short order (a PE of 14). Analysts project the 5-year growth rate at 30%. The shares have a BI Rank of 13, which is about as high as I’ve seen.
Tom Bishop, BI Research, biresearch.com, January 4, 2021