Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Morning Movers in Biotech: Actavis plc, DepoMed, Inc. and Horizon Pharma, Inc.

By George Budwell - Mar 13, 2014 at 9:08AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Today's top stories in healthcare and biotech.

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

Let's take a look at the top stories in biotech and health care this morning -- keep an eye out for Actavis plc ( AGN ), DepoMed ( ASRT -4.25% ) and Horizon Pharma ( HZNP -3.75% )

Actavis to sell generic Celebrex
After a court ruling yesterday, Pfizer's ( PFE 2.32% ) fourth best-selling drug Celebrex may now come off of patent protection as early as this May, although Pfizer ( PFE 2.32% ) will appeal the ruling. And Actavis ( AGN ) plans on being among the first to offer a generic version of the megablockbuster painkiller. Although Celebrex saw sales of approximately $3 billion last year, generic manufacturers, like Actavis ( AGN ), will face stiff competition. Specifically, five companies have already been identified as players in the race to manufacture generic Celebrex. So, although Actavis ( AGN ) will certainly benefit from the court's decision to invalidate a patent that would have extended the drug's patent protection until 2016, it's hard to see how any one company will necessarily be gaining a lion's share of the generic Celebrex pie. As such, I don't think this news will be a major event for Actavis ( AGN ) moving forward.  

DepoMed continues to rally after earnings? 
Shares of DepoMed ( ASRT -4.25% ) are up over 6% in premarket this morning after management provided some color on the company's stronger than expected fourth quarter earnings report. Specifically, DepoMed ( ASRT -4.25% ) crushed the Street's estimates yesterday for both earnings and revenue. Revenue beat estimates by over 100% and earnings per share beat by 27%.

Although better than expected sales of Gralise and Zipsor contributed to the beat, the bulk of it can be attributed to a deal with PDL Biopharma ( PDLI ) for future royalty and milestone payments in the company's diabetes franchise. Per the terms of the deal, DepoMed ( ASRT -4.25% ) received $240.5 million in exchange for interests in future royalty and milestone payments in the Type 2 diabetes therapeutic area. DepoMed ( ASRT -4.25% ) recognized $18.1 million of non-cash revenues and $4.5 million in non-cash interest expense under this arrangement in the fourth quarter.

What really stands out in this earnings report, however, is the company's strong 2014 guidance. Namely, DepoMed ( ASRT -4.25% ) expects total revenues to increase by over 400% this year, mostly due to the deal with PDL Biopharma ( PDLI ). So, there is good reason to keep tabs on DepoMed going forward. 

Horizon beats on revenue but misses on earnings
Shares of Horizon Pharma ( HZNP -3.75% ) are down almost 5% in premarket this morning after the company missed revenue estimates by $2.08 million, or 6%. The company did beat on earnings by $0.04 due to the early termination of a senior loan facility in the fourth quarter related to the acquisition of Vimovo from AstraZeneca.

What investors are keying in on this morning are sales of Horizon's ( HZNP -3.75% ) flagship arthritis drug Duexis. Despite gross sales growing by 548% year over year, analysts expected slightly higher revenue in the fourth quarter. A closer look at the press release shows that this lower revenue from Duexis sales is tied to service fees paid to wholesale distributors in the quarter, which were higher than anticipated.

Looking ahead, Horizon ( HZNP -3.75% ) is expected to grow net revenue by a notable 80% to 100% in 2014, thereby achieving profitability on a non-GAAP basis. So, even though Horizon ( HZNP -3.75% ) shares are up 510% in the past year, there is good reason to believe this stock could continue to climb even higher. As such, you might want to dig deeper into this rising biopharma. 

 
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Allergan plc Stock Quote
Allergan plc
AGN
Horizon Therapeutics Public Limited Company Stock Quote
Horizon Therapeutics Public Limited Company
HZNP
$99.84 (-3.75%) $-3.89
Depomed, Inc. Stock Quote
Depomed, Inc.
ASRT
$1.35 (-4.25%) $0.06
Pfizer Inc. Stock Quote
Pfizer Inc.
PFE
$54.27 (2.32%) $1.23
PDL BioPharma, Inc. Stock Quote
PDL BioPharma, Inc.
PDLI

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
624%
 
S&P 500 Returns
141%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/04/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.