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Shares of Horizon Therapeutics (NASDAQ:HZNP) were up about 28% in the morning trading session on November 30 on takeover interest from large pharma companies.
The biopharmaceutical company announced that it is in preliminary discussions with Amgen (NASDAQ:AMZN), Johnson & Johnson’s (NYSE:JNJ) Janssen Global Services, and Sanofi (NASDAQ:SNY). However, it is uncertain whether these companies will make an offer for the company’s entire share capital.
Horizon Therapeutics has transformed into a powerhouse that develops drugs for treating rare and immune diseases. The company’s growth can be attributed mainly to the success of its thyroid eye disease drug Tepezza.
In Q3, Tepezza delivered net sales of $490.9 million. Moreover, the company stated that Tepezza would record net sales growth in the high teens in 2022. Also, it increased Tepezza’s ex-U.S. peak annual net sales guidance to over $1 billion from $500 million, reflecting opportunities in the international market and its Europe launch. It reiterated the U.S. peak annual net sales expectations of greater than $3 billion.
Given the success of Tepezza and the growing sales of Krystexxa, its drug used for gout treatment, Horizon Therapeutics commands a market cap of $17.85 billion. Moreover, it ended Q3 with cash and cash equivalents of $2.13 billion.
Horizon’s drug, Tepezza is facing rising competition from another biotech firm, Viridian Therapeutics’ (VRDN) thyroid eye disease candidate called VRDN-001. VRDN soared by around 14% in morning trading on Wednesday in reaction to the takeover news talk for HZNP.
According to the Wall Street Journal report, Horizon would get a big deal that could exceed $20 billion in value.
Is HZNP a Buy?
Wells Fargo analyst Derek Archila commented on the deal talks, “this doesn’t mean a deal will get done, but we are not incredibly surprised about the interest, given the meaningful discount we think shares currently trade.”
By Archila’s estimate, a potential bid of $135 per share would be a fair value for the stock. Shares of HZNP have declined by 27% this year. The analyst rates the stock as Buy and has a $118 price target.
However, Stifel Nicolaus analyst Annabel Samimy was surprised by the takeover talks as she believes that HZNP is undergoing a “transitionary period” with Tepezza “and the still-unrealized tangible opportunities over the next several years.”
Samimy has a Buy rating and a Street high price target of $138 on the stock.
HZNP stock has a Strong Buy consensus rating on TipRanks. Nine of 11 analysts have recommended a Buy, while two have a Hold recommendation on HZNP stock. Analysts’ average price target of $97.45 implies 23.7% upside potential based on its closing price of $78.76 on November 29.
Horizon Therapeutics stock also commands an Outperform Smart Score of eight on TipRanks’ Smart Scoring system.
