Can anything stop Aralez Pharmaceuticals Inc (NASDAQ:ARLZ) and ARLZ stock? Aralez stock is surging in the early trading session Tuesday, climbing more than 8% after the global specialty pharmaceutical announced it will acquire the U.S. rights to Toprol-XL (metoprolol succinate) and its authorized generic drug from AstraZeneca plc (ADR) (NYSE:AZN).
ARLZ stock, which at one point was down 15% on the year, has almost recovered all of its losses. So how much runway does it have left?
Headquartered in Canada, Aralez is looking to dominate the cardioselective beta-blocker market. And Aralez believes acquiring Toprol-XL from AstraZeneca will help it do just that.
Last year, combined with its authorized generic drug, AstraZeneca recorded some $90 million in U.S. net revenues from Toprol-XL. Plus, AstraZeneca has already posted more than $53 million in revenue this year through June.
Why is that important for Aralez Pharmaceuticals and ARLZ stock? Consider total 2016 consolidated revenue for Aralez is expected to just $53 million this year, which is the equivalent of what AstraZeneca has recorded alone from Toprol-XL sales in the first half of the year.
Toprol-XL is a cardioselective beta-blocker that is used to treat hypertension and, in some cases, help prevent heart failure. It was first approved in the U.S. in 1992.
Aralez expects the transaction, which is expected to be completed in the fourth quarter of this year, to be immediately EBITDA accretive and to move profitability forward to 2017. Aralez Pharmaceuticals and ARLZ stock are now on a roll, given that this is now the second stock-moving news it has enjoyed within two weeks.
On Sept. 15, the company announced that the Food and Drug Administration had approved its heart medication Yosprala, which is a combination of aspirin and omeprazole (the generic version of Prilosec). With an approval in hand for Yosprala, Aralez Pharmaceuticals is armed with a drug that can treat an estimated 26.2 million adults in the U.S. at risk for secondary cardiovascular events.
Bottom Line for ARLZ Stock
Assuming Aralez Pharmaceuticals can secure a decent fraction of that market, the company has established a strong pipeline to grow revenue for years to come. As it stands, current consensus estimates call for Aralez to grow fiscal 2017 revenue by about 24% to $66 million. But these estimates should now go higher, given the company’s new drug assets.
And this explains why ARLZ stock has a consensus buy rating and an average analyst 12-month price target of $10.50, suggesting an 84% premium from current levels.
As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.