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Article #1: $HZNP FDA Run-Up Trade on the Horizon for this Summer
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Written by Mike Havrilla--Horizon Pharma (NASDAQ:HZNP) is focused on the development of novel formulations of approved drugs for the treatment of pain and inflammation associated with conditions such as arthritis. The Company plans to build a build a sales force of up to 160 reps to support marketing of its drugs primarily to relevant specialist doctors (e.g. orthopedic surgeons, rheumatologists and pain specialists) in the US market while seeking licensing and/or distribution agreements outside of the US. Below is a summary of the Company’s two lead products.
1.) RAYOS (low-dose, delayed release prednisone formulation)--FDA Decision (NDA)
$HZNP has a PDUFA decision goal date of 7/26/12 under a standard 10-month review seeking FDA approval for a novel formulation of the approved steroid drug prednisone for the treatment of rheumatoid arthritis. The drug was approved in Europe in early 2009 as LODOTRA, and Mundipharma is the distribution partner for Europe, Latin America and the Asia-Pacific region.
2.) DUEXIS (ibuprofen and famotidine combination)--MAA (Updated Filing to National Procedure in UK) Decision
In FEB 2012, $HZNP announced a modification to its Marketing Authorization Application (MAA) to include a recently approved Valeant Pharmaceuticals (NYSE:VRX) manufacturing site in Quebec that also serves as the primary site for supplying the US market (DUEXIS has already received FDA approval) with an expected decision on the updated MAA filing during 2H12.
In late March, $HZNP filed a patent infringement lawsuit to counter Par Pharma's (NYSE
RX) generic filing (following a Paragraph IV patent challenge notification in mid-FEB 2012) for DUEXIS based on its FDA Orange Book listed patent through JUL 2026 and the Company also reported 4Q11 and full-year financial results, including the following highlights:
- ended 2011 w/ $18 million (M) in cash/equivalents and subsequently completed debt ($60M) and equity offerings ($50.8M) for combined net proceeds of $81.7M after fees and repayment of previous debt facilities of approx. $19.4M—resulting in $82.5M in cash/equivalents (which is adequate to fund planned operations into 2H13) as of mid-MAR 2012 w/ 33.7M shares of common stock outstanding
- reported total revenue of $6.9M during 2011 w/ a net loss of $113.3M (primarily due to a non-cash/intangible impairment charge of $69.6 recorded during 4Q11 reflecting the significant decline in the Company’s stock price since the initial public offering (IPO) was completed in AUG 2011 on NASDAQ for the sale of 5.5M shares of common stock at $9/share
$HZNP has a good chance of receiving FDA approval (I estimate 70/30 odds of first-pass approval) for RAYOS as a new formulation of a widely used steroid drug that is widely available in cheap generic formulations. I also expect the updated MAA filing will receive approval and expect shares of $HZNP to be a strong candidate for a run-up to the mid single digits (i.e. $5-6/share), depending on whether the overall bullish market conditions remain into the summer.
While major questions exist over whether the Company can successfully market the drugs on its own as new combinations / formulations of widely used generic drugs; the pending FDA decision for RAYOS is still likely to generate a share price run-up going into the late July PDUFA decision date due to the low share price, low average trading volumes/share float count, and the potential for a rebound following a sharp decline from the IPO last summer at $9/share.
Uncertainty over the ability of the Company to successfully market the drugs (assuming FDA approval for RAYOS) may lead to a run-down trading opportunity depending on the valuation, share price and overall market conditions at the time of the expected FDA decision in late July.
Disclosure: No positions
Article #2:
A couple of months ago, Horizon Pharma Inc. (NASDAQ:HZNP) wasn't at the top of anybody's buy list. Shares had been crushed in the last few months of 2011, and though the freefall was over by February, there was still little to be excited about.
A funny thing happened in the shadow of disaster though.... HZNP started to recover. It was subtle to be sure, but still evident. The stock started to spend more time above the 20-day and 50-day moving average lines. In fact, the 20-day line is now above the 50-day line, and the chart's started to make higher lows. Volume hasn't been bad on the way up either.
Investors have seen this before though... a stock gets a temporary reprieve, just to start the next round of selling right when it seems like the coast is clear. Horizon Pharma may be an exception to that all-too-familiar pattern though, as the company is actually backing up the new bullish effort with underlying corporate progress.
HZNP is a pain-relief drug manufacturer. Its DUEXIS treats pain associated with rheumatoid arthritis and osteoarthritis, while its LODOTRA - or RAYOS - is aimed at the same. However, LODOTRA is also being tested very specifically for polymyalgia rheumatica; that study is in Phase II trials right now. The anticipated yay/nay date from the FDA is July 26, 2012.
So what's driving buyers into Horizon Pharma Inc. that wasn't before? The potential approval is one obvious (potential) driver. There's more to it than just some speculation about an approval although. There's actually been a ton of insider buying since the recent multi-year low - and double bottom - of $3.05. In fact, nearly 8 million shares of HZNP were purchased by insiders last quarter... with no sales. It's a strong suggestion that the people on the inside are confident in the drug's approval.
All that being said, while the market has focused on the pending approval of LODOTRA for its current study, trader shouldn't lose sight of the fact that Horizon Pharma Inc. already has two approved drugs under its belt, and though revenue hasn't been phenomenal, both are slowly penetrating their respective markets. DUEXIS only launched in December of last year, and the $3.5 million increase in the company's Q4 top line stemmed from a $2.1 million increase in LODOTRA's sales after the product was unveiled in Europe. For comparison, the company produced $3.5 million in total sales that quarter.
It's all good news. And though it hasn't carried HZNP over the hurdle of the 100-day moving average line (gray) at $4.09, that looks to be the shape of things to come. Small cap speculators will want to put this one on their radar... especially it works its way above the 100-day average line.
Article #3:
(RTTNews.com) - Rheumatoid arthritis, which is a chronic inflammatory disease, is estimated to affect about 1.8 million Americans. A number of effective treatments have been approved by the FDA for treating rheumatoid arthritis and drugs like Orencia, Remicade, Enbrel, Humira and Actemra are just to name a few.
At the altar, awaiting the FDA decision is a new drug for rheumatoid arthritis - Rayos, a delayed-release formulation of low-dose prednisone, developed by Horizon Pharma Inc. (HZNP). This drug is approved for rheumatoid arthritis in 16 European countries under the brand name Lodotra and is marketed in Europe by the company's distribution partner, Mundipharma International Corp. Ltd.
For readers who are new to Horizon Pharma, here's a brief overview of its business and the upcoming events to watch out for...
Horizon Pharma is involved in developing medicines to treat arthritis, pain and inflammatory diseases. The company has two marketed drugs - Duexis, approved by the FDA last year for signs and symptoms of osteoarthritis and rheumatoid arthritis, and Lodotra approved in Europe in 2009 for rheumatoid arthritis.
Horizon Pharma has sought approval for Duexis in United Kingdom and a modified Marketing Authorization Application to this effect was submitted in February of this year. The company anticipates a decision on the updated application in the second half of 2012.
Late last month, Horizon Pharma filed a patent infringement lawsuit in the United States District Court for the District of Delaware seeking to block Par Pharmaceutical Inc. from marketing a generic version of Duexis. The patent on Duexis expires July 18, 2026, according to the FDA's Orange Book.
Lodotra, the company's lead product, is marketed in Europe for the treatment of moderate to severe, active rheumatoid arthritis in adults when accompanied by morning stiffness. This drug, known as Rayos in the U.S., is under FDA review.
Lodotra/Rayos was developed utilizing SkyePharma's proprietary GeoClock and GeoMatrix technologies, for which Horizon Pharma holds an exclusive worldwide license for the delivery of corticosteroids.
Horizon Pharma submitted the New Drug Application for Rayos last September based on results from a pivotal, 12-week, double-blind, placebo-controlled phase III trial involving 350 rheumatoid arthritis patients. The NDA for Rayos was accepted by the FDA last November with a decision date set for July 26, 2012.
Lodotra/Rayos is also being investigated as a potential treatment for polymyalgia rheumatica, or PMR, an inflammatory disorder involving aching and stiffness in patients over the age of 50 typically affecting the shoulders and arms, in a phase II study. Beginning in the second half of 2012, a separate clinical trial for Lodotra/Rayos for the potential treatment for PMR, mostly a phase III study, is expected to be conducted by Horizon Pharma's distribution partner Mundipharma.
The company also has a couple of preclinical drug candidates in its pipeline namely, TRUNOC for pain-related diseases and HZN-602 for mild to moderate pain and arthritis. However, Horizon Pharma currently has no plans to further develop these products on its own.
A quick look at the company's balance sheet...
Since inception in June 2005, the company has incurred significant operating losses, and as of December 31, 2011, had an accumulated deficit of $220.3 million. The company recognizes revenue from up-front license fees, milestone receipts and product deliveries.
Net loss for the year ended December 31, 2011, was $113.3 million or $12.56 per share compared to a net loss of $27.1 million or $21.16 per share in the prior year, hurt largely by a $69.6 million intangible impairment charge recorded during the fourth quarter of 2011. The annual revenue in 2011 increased to $6.9 million from $2.37 million in 2010.
The company ended the year 2011 with $18.0 million in cash. Subsequent to the end of the year, in February and March 2012, the company completed debt and equity offerings raising combined net proceeds of $81.7 million. As a result, Horizon Pharma had $82.5 million in cash on hand as of March 16, 2012.
Horizon Pharma went public in July 2011, offering its shares at $9 each. The stock has thus far hit a low of $3.05 and a high of $9.34. HZNP lost over 7.5% on Tuesday to close the day's trading at $3.55.
