Cantor Fitzgerald Downgrades Hyperion After Acquisition

Cantor Fitzgerald on Tuesday issued a company update on Hyperion Therapeutics Inc (NASDAQ: HPTX) after Horizon Pharma PLC (NASDAQ: HZNP) announced that it plans to acquire Hyperion for $46 per share in cash. Cantor Fitzgerald downgraded Hyperion to Hold and increased its price target from $35 to $46.

Analysts Irina Koffler and Monica Gorman wrote, "While it is possible to realize approximately $50-60 million in 2015-2018 R&D savings by terminating the Ravicti hepatic encephalopathy Phase III trial, we note that the buyer will still need to fund Hyperion's post-marketing commitment studies, which include a pediatric trial, a trial in treatment-naive patients, and the ongoing patient registry trial that is expected to conclude in 2026.

"We are not expecting any financing issues to adversely impact this transaction. Horizon has a commitment letter for $900 million in senior secured term loans from Citigroup and Jefferies to help finance this transaction."

Horizon Pharmaceuticals discussed that it can generate over $50 million in cost synergies from the acquisition of Hyperion. The savings in research and development expenses can provide the company with much needed cash flow to further develop its product line. Analysts believe that drug price increases may be possible as the two companies would have more leverage in the market.

Shares of Hyperion Therapeutics closed Monday at $45.98.