Horizon Therapeutics says it is considering potential offers from three Big Pharma stalwarts, sending HZNP stock soaring more than 25% early Wednesday.
The board is engaged in "highly preliminary discussions" with Amgen, Johnson & Johnson's Janssen division and Sanofi. There is no guarantee an offer will come to fruition, Horizon said in a news release.
Each of the suitors is required to announce an offer by no later than Jan. 10 in accordance with Irish Takeover Rules. Horizon is headquartered in Dublin. SVB Securities analyst David Risinger sees a potential acquisition price of $101-$117 per share of Horizon stock.
On today's stock market, HZNP stock roared 27.3% higher to 100.29. Amgen stock rose 1.6% to 286.40, as Sanofi lost 1.1%, closing at 45.35. J&J shares advanced 1.1% to 178.
HZNP Stock: Tepezza, Krystexxa Key
The biotech company makes a number of treatments for rare diseases, including Tepezza, a treatment for thyroid eye disease. Horizon is also known for Krystexxa, which treats severe gout, and Uplizna, a treatment for an inflammatory disorder that impacts the optic nerves and spinal cord.
"Horizon would offer an acquirer compelling revenue growth, efficiency opportunities and pipeline potential," SVB's Risinger said in a note to clients. "We think that an acquirer could help drive ex-U.S. rollouts of certain products, including pipeline candidates."
Risinger expects Horizon's sales to grow to $4 billion in 2023 and for adjusted earnings to come in at $5.51 per share. Both projections top the average estimate of analysts polled by FactSet.
In the September quarter, Tepezza sales toppled 20% to $490.9 million. But that beat expectations for $486.7 million. Tepezza sales fell due to supply chain challenges amid the pandemic. But the company reiterated expectations for Tepezza sales to grow by a high-teens percentage this year. Horizon expects global annual sales of the drug to peak at $4 billion.
Total sales also topped expectations at $925.5 million. Adjusted profit of $1.25 per share was above HZNP stock analyst forecasts.
J&J, Amgen Face Looming Erosion
Among the potential acquirers, J&J just announced its $16.6 billion plan to acquire Abiomed. But buying Horizon would help offset the upcoming loss of patent protection for Stelara, a treatment for plaque psoriasis and psoriatic arthritis.
"We model $7 billion in Stelara revenue eroding from a $10 billion 2023 peak through 2028," Risinger said. "Horizon's Krystexxa (for chronic gout) could fit into J&J's immunology franchise."
For Sanofi and Amgen, Horizon could fit into the companies' immunology and inflammation divisions as well as their rare diseases focuses. But, for Sanofi, the "appetite is unclear," he said. Amgen also just recently acquired ChemoCentryx for a rare autoimmune disease.
Though "Horizon could help drive revenue and profit growth mid-late decade when Amgen faces generic and biosimilar pressures on key franchises," Risinger said.
He kept his outperform rating on HZNP stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
