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Shares of Horizon Pharma (NASDAQ: HZNP) soared up to 16.8% higher before noon EST today after announcing -- through an SEC filing only -- that it had reached a rebate agreement with Express Scripts for four of its products beginning on the first day of 2017.
The rebate agreement removes Duexis and Vimovo, Horizon Pharma's second and fourth best-selling products, respectively, from the Express Scripts exclusion list. The two products combined for $212 million in sales in the first nine months of 2016, or 31% of the company's total revenue. However, that's down from $249 million in combined sales during the same period last year, or 48% of total revenue.
While Horizon Pharma has managed to grow total sales 31% in the year-over-year period, it would have performed substantially better without sliding sales of Duexis and Vimovo. The company admitted in its latest 10-Q that although both products have enjoyed higher prescription volumes in 2016, any benefit was more than offset by "lower net pricing resulting from higher co-pay and other patient assistance." Investors are hoping that the new deal with the nation's largest pharmacy benefit company will reverse that.
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The news comes days after Horizon Pharma shares plunged 20% on a failed late-stage trial in Friedreich's ataxia, so jumpy investors may simply be overreacting and turning today's good news into great news. Short-term emotional roller coasters aside, the new rebate agreement for four of the company's products -- including three of the top four best-selling products -- will be a boon to growth in 2017.
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