Horizon Pharma plc HZNP announced that its affiliate has entered into a definitive agreement under which it will acquire the worldwide rights to interferon gamma-1b from Boehringer Ingelheim International GmbH. Interferon gamma-1b is commercialized by Boehringer Ingelheim in an estimated 30 countries primarily in Europe and the Middle East under the trade names Imukin, Imukine, Immukin and Immukine.

Per the agreement terms, Horizon Pharma paid €5 million to Boehringer Ingelheim upon signing and will pay €20 million upon closing for the rights to interferon gamma-1b in all territories outside the U.S, Canada and Japan. The transaction is expected to close by the end of 2016.

We note that Horizon Pharma currently owns the rights to interferon gamma-1b, which is marketed by the company in the U.S., Canada, and Japan, under the trade name Actimmune.

Horizon Pharma said that it will immediately start investing in related manufacturing, supply chain, regulatory and commercial activities for interferon gamma-1b. Owing to this, the company now expects a reduction of approximately $10 million from the prior 2016 EBITDA guidance. The company had earlier guided 2016 adjusted EBITDA in the range of $505 million to $520 million.

Meanwhile, Horizon Pharma has licensed the U.S., European and Canadian intellectual property rights to interferon gamma-1b for the treatment of Friedreich's ataxia under the terms of a separate agreement with an undisclosed third party.

We note that Actimmune is the only FDA-approved treatment for chronic granulomatous disease and severe, malignant osteopetrosis. Horizon Pharma is currently working on expanding the drug’s label further. Earlier this month, patient enrolment in a randomized, double-blind, placebo-controlled phase III study (STEADFAST) on Actimmune for the treatment of Friedreich's ataxia was completed. Top-line data is anticipated by the end of 2016.

Actimmune is also being evaluated in combination with a PD-1 checkpoint inhibitor, Bristol-Myers Squibb Company’s BMY Opdivo, in an investigator-initiated phase I study for the treatment of both kidney and bladder cancer.

Horizon Pharma’s shares were down 4.7% following the announcement. Nevertheless, we are pleased with the company acquiring global rights to Actimmune. Moreover, label expansion of the drug will boost its commercial potential further.

Horizon Pharma is currently a Zacks Rank #3 (Hold) stock. A couple of better-ranked stocks in the health care sector are ANI Pharmaceuticals, Inc. ANIP and Retrophin, Inc. RTRX, each sporting a Zacks Rank #1 (Strong Buy).

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