Horizon Pharma Gears Up for Sales of First Products

Apr 12 2012

CHICAGO, IL — Horizon Pharma Inc. has secured more than $80 million in new funding as the Deerfield-based firm ramps up marketing of its first drug, a pain reliever, and gets ready to roll out another product later this year.

The startup, which is backed by Palo Alto, Calif.-based Essex Woodlands Health Ventures Inc., netted $81.7 million after a series of moves in February and March, the company said in filings with the U.S. Securities and Exchange Commission.

The company is stocking up on cash to spend on marketing two new drugs intended for arthritis sufferers. Horizon said it plans to double its U.S. salesforce to 160 workers, among other initiatives.

Late last year, the company started marketing Duexis in the U.S., a drug that mixes ibuprofen and the stomach-acid inhibitor famotidine. The U.S. Food and Drug Administration approved the drug in April 2011.

“Early indications from the Duexis launch show that our key messages are resonating with physicians and our market research indicates a strong level of physician awareness and intent to prescribe Duexis,” CEO and Chairman Timothy Walbert said in an email.

The number of Duexis prescriptions has shot up to 80,000 nationwide by March, from zero in the fall, according to a report issued last month by San Francisco-based investment firm JMP Securities.

Meanwhile, Horizon is expecting to win FDA approval later this year of Rayos, an anti-inflammatory that is already sold outside the United States under the name Lodotra.

Like many pharmaceutical startups, Horizon has racked up losses as it push its products to market.

The company reported $7 million in revenue and a $113 million net loss in 2011, including a $70 million one-time impairment charge due to a drop in the company’s share price. The company’s cumulative deficit reached nearly $220.3 million on Dec. 31, according to a filing on Tuesday with the SEC.

Still, Horizon ended 2011 with $18 million in cash, more than triple the $5.4 million it had in 2010. In February, the company took out a $60 million loan from an undisclosed group of lenders. The deal netted Horizon $34 million in cash, after the company spent $22.4 million to pay down other debt and $3.6 million on fees.

In March, the company received $47.7 million after selling existing investors 14 million shares and warrants to buy 3.5 million shares later.

Analysts, despite Horizon’s short-term financial results, are buoyant on the company’s 2012 prospects.

“Duexis and Lodotra both have strong differentiating characteristics that distinguish them from the competitive landscape,” wrote Edward Nash, an analyst at New York-based Cowen & Co. LLC. “These are key to grabbing the attention of doctors and thereby increasing market share and formulary penetration.”

Horizon was formed in April 2010 after a merger between Horizon Therapeutics Inc. and Nitec Pharma A.G., a Swiss company. The company has 160 employees, including 80 U.S. sales representative selling Duexis.

By Andrew L. Wang, Crain’s Chicago Business