Updated from 9:57 a.m. with stock price.
Horizon Pharma(HZNP) - Get Report shares are poised for volatility after the Irish specialty pharma company revealed the failure of a late-phase trial for a key drug and called it quits on the associated program.
The stock plunged about 15.4% to $16.40 prior to the market's open on Thursday. The stock was down 19.3% to $15.65 as of 10:45 a.m.
The company's phase III Steadfast trial of Actimmune in Friedreich's Ataxia, a genetic condition affecting the nervous system, failed to show efficacy on its primary endpoint of improvement or any secondary endpoints.
As a result, Horizon said it will opt out of the Friedreich's Ataxia program in its entirety.
Irina Koffler of Mizuho wrote in a Thursday note that the early timing of the announcement came as a surprise, though she added that her firm had been relatively negative on the study from its start, assigning it a 30% probability of success.
The discontinued program could result in cost savings. However, investors' disappointment in the trial as well as the lack of certainty around an Express Scripts (ESRX) contracting agreement is likely to create significant volatility in the stock on Thursday, Koffler said.
"The stock should therefore plateau today at the very minimum, rather than continue to drop, in our view," she wrote.
Horizon Phama on Sept. 30 announced that it had agreed to pay Express Scripts $65 million to settle litigation related to after-market rebates for three of its drugs. Whether Horizon will reach a new contracting deal with the pharmacy benefit manager is yet to be seen.