Factors behind Horizon Pharma’s Volatility in December

With the failure of its Phase 3 STEADFAST[1. Safety, Tolerability and Efficacy of Actimmune Dose Escalation in Friedreich’s Ataxia] trial, Horizon Pharma (HZNP) stock fell 22.5% on December 8, 2016.

A week later, on December 15, Horizon announced a rebate agreement with Express Scripts, securing a formulary status for its four major drugs—Duexis, Vimovo, Pennsaid 2%, and Rayos. The agreement will cover these four drugs beginning January 1, 2017. Earlier, Duexis and Vimovo were part of Express Scripts’ exclusion list.

Of the four drugs that secured formulary status with Express Scripts, Duexis, Vimovo, and Pennsaid 2% fall under Horizon’s Primary Care portfolio. These Primary Care products compete with offerings from Pfizer (PFE), Johnson & Johnson (JNJ), and Endo International (ENDP).

During the third quarter of 2016, HZNP’s Primary Care portfolio rose 10.0% annually to $161.8 million. If you want more information on the Primary Care portfolio and its projected performance in 2017, please refer to What Are the Prospects for Horizon’s Primary Care Segment?

With the Express Scripts agreement, Horizon’s net sales in 2017 are expected to rise. The probability of a top-line expansion boosted investor sentiment and led to a 10.1% rise in HZNP stock on December 16, 2016.

If you want to avoid the risk associated with Horizon but at the same time take advantage of the benefits of exposure to the stock, you could invest in ETFs. The Global X Guru Index ETF (GURU) holds 1.4% in Horizon, which would give you limited exposure to Horizon.

In the next part of this series, we’ll be taking a detailed look at Horizon’s 3Q16 performance.