Ahead of the Express Scripts formulary decision, the next significant catalyst for Horizon Pharma PLC (NASDAQ:HZNP), Mizuho analyst Irina Rivkind Koffler makes a sharp move to the sidelines. It turns out that HZNP has found failure in its ACTIMMUNE Phase 3 trial in Friedreich’s Ataxia (FA), where the drug did not meet its primary endpoint of a statistically significant change from baseline in the modified FA rating scale at 26 weeks, with secondary endpoints also failing to meet statistical significance.

Koffler questions, “What do we do from here?” speculating, “HZNP fell apart after announcing termination of its FA program, even though expectations of success were believed to be modest. The bigger questions are what to do with this stock in front of a formulary decision from Express Scripts, and introduction of 2017 guidance, while its investor base churns.”

As such, the analyst downgrades from a Buy to a Neutral rating on shares of HZNP while cutting the price target more than half from $30 to $14, which represents a close to 6% downside from current levels.

From the analyst’s standpoint, “There may be additional negative follow-through in HZNP as estimates come down, and we fear an unexpected Express formulary decision could adversely impact investor sentiment and introduce additional uncertainty about the durability of the primary care business.”

On a more positive note, Koffler does find 2017 guidance to continue to be “relatively stable, which may be tempting to investors.” With bolstered patient penetration in Chronic Granulomatous Disease (CGD), the HZNP management team maintains hopes that Actimmune can grow in the financial year of 2017, anticipating non-consequential impact to EU sales revenue projected at $3 million for next year. HZNP reiterated its 2020 goal to hit $2 billion in sales on back of acquiring Crealta and Raptor. However, the analyst models less than $1.6 billion.

“If Express continues to exclude Horizon’s drugs, it could erode investor confidence in Horizon management, especially after a negative FA readout. For these reasons we prefer to wait it out and will re-consider our view on the other side of this decision,” Koffler concludes.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Irina Rivkind Koffler is ranked #178 out of 4,274 analysts. Koffler has a 44% success rate and gains 13.7% in her annual returns. However, when recommending HZNP, Koffler loses 10.6% in average profits on the stock.

TipRanks analytics demonstrate HZNP as a Strong Buy. Our of 10 analysts polled in the last 3 months by TipRanks, 90% are bullish on Horizon stock and 10% remain sidelined. With a return potential of 100%, the stock’s consensus target price stands at $29.44.

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