Brean Reiterates Buy On Horizon Pharma, Likes Crealta Deal

On Monday Brean Capital issued a company update on Horizon Pharma PLC HZNP after the pharmaceutical company announced the acquisition of Crealta Holdings LLC. Currently Brean rates Horizon as a Buy and raised their price target from $31 to $32.

Difel Yang, an analyst at Brean Capital, wrote, “ Horizon Pharma agreed to acquire Crealta Holdings LLC and its lead product, Krystexxa for $510M in cash...we thought the re-positioning of Krystexxa by Crealta to target gout refractory patients as a last line therapy made logical sense and, given Horizon's track record in execution, we view the deal favorably.”

Brean Capital believes that the acquisition is accretive for 3 reasons:
1. Crealta is expected to bring in $70-80 million in revenue and $45-50 million in EBITDA for 2016.
2. Sales and margins may improve due to Crealta expanding Horizon’s orphan business unit.
3. The Creata merger will allow Horizon to integrate a new rheumatology sales force.
4. The deal increases the diversification of Horizon’s product portfolio.

In a statement Timothy P. Walbert, chairman, president and CEO of Horizon Pharma said, “The Crealta acquisition further diversifies our portfolio of medicines and aligns with our focus of acquiring value-enhancing, clinically differentiated, long-life medicines that treat orphan diseases. We have a proven track record of strong commercial execution and the ability to generate volume growth for clinically differentiated medicines.”

The deal is expected to close in the first quarter of 2016.

Horizon Pharma closed Friday at $18.99, down 6.91 percent.