Strongbridge Biopharma plc (NASDAQ: SBBP) had a pretty strong start in the pre-market, flying on news that it has entered into an agreement with Novo Nordisk. Unfortunately, the excitement is starting to taper off as fears set in associated with the company’s financial results and guidance. Today, we’ll talk about:
- The agreement with Novo Nordisk;
- the SBBP earnings report;
- what we’re seeing from the stock; and
- what we’ll be watching for ahead.
SBBP Announces Agreement With Novo Nordisk
The news that led to the dramatic gains in Strongbridge Biopharma the pre-market this morning was associated with a deal the company entered into with Novo Nordisk. In a press release, the company said that under a new agreement, Novo Nordisk will acquire the rights to MACRILEN in the U.S. and Canada.
Under the terms of the agreement, SBBP will receive an upfront payment of $145 million at closing. From there, the company is eligible to receive tiered royalties on the sales of the drug through the year 2027. Novo Nordisk has also agreed to purchase 5,242,000 ordinary shares of SBBP at a price of $7 per share, resulting in gross proceeds of $36.7 million.
In a statement, Matthew Pauls, President and CEO at SBBP, had the following to offer:
We are proud to enter into this MACRILEN agreement with Novo Nordisk, a global leader in endocrinology, as it aligns with our strategic objective to maximize the potential of MACRILEN while we continue to prepare for the potential regulatory approval of RECORLEV™ (levoketoconazole)… The upfront payment and equity investment from Novo Nordisk will significantly strengthen the Company’s overall financial position and marks a tremendous step forward in Strongbridge’s continued evolution as a company dedicated to rare diseases.
Here’s Why Strongbridge Biopharma Is Falling
While the agreement between SBBP and Novo Nordisk is great news, the company also released earnings today. Unfortunately, that didn’t prove to be as positive. At the end of the day, KEVEYIS is missing the mark. The company generated $4.2 million in revenue from the product and $5.3 million in overall revenue. Unfortunately, this led the company to revise its guidance. Previously, SBBP was expecting for KEVEYIS revenue to come in between $18 and $20 million. Now, the company is expecting for the product to generate between $16 and $17 million throughout the full 2018 year.
What We’re Seeing From The Stock
While the Strongbridge had a great start in the pre-market, the gains seem to be falling off as investors focus on earnings. As is just about always the case, our partners at Trade Ideas were the first to alert us to the movement. At the moment (9:51), SBBP is trading at $5.46 per share after a gain of $1.41 per share or 34.90% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on SBBP. In particular, we’re interested in seeing if the agreement how the agreement with Novo Nordisk affects revenue over the long run. We’re also interested in following the company’s continued work to commercialize KEVEYIS. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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