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Investment idea - Hyperion Therapeutics (HPTX)

Hyperion Therapeutics is a commercial-stage biopharmaceutical company focused on the development of novel therapeutics to treat disorders in the areas of orphan diseases and hepatology. It is a company with market cap of $521,13 mln. Their financials for the 2q2013 mainly increased due to the exercise of the option to acquire rights for BUPHENYL® and AMMONUL® from Ucyclyd Pharma, a subsidiary of Valeant Pharmaceuticals International: net payment of $11mn was received from Ucyclyd's exercise of its option to retain AMMONUL. The 2nd quarter was the first quarter commercializing RAVICTI, new treatment for UCD (urea cycle disorder). The Company was pleased with RAVICTI launch and generated their first positive net sales amounted $6,2mn from RAVICTI and $1,1mn from BUPHERNYL for the three months ended June 30, 2013. Thus, the key treatment for UCD is RAVICTI, whereas BUPHENYL doesn’t have a restriction for use in patients under 2 years old. The Company now is shipping BUPHENYL worldwide through their third-part distributors in Canada, Europe, Japan, parts of South America and some markets in Asia. Hyperion hopes to support ex-U.S. commercialization of RAVICTI by this distribution network gained in the acquisition.

As for the 2q2013 results, R&D expenses for the quarter decreased by 3,7% y/y to $2,6mn, SG&A expenses significantly increased 4,6 times y/y due to launch of RAVICTI as well as new hires and consulting fees.  Net income for the 2q2013 was $25mn compared to $7,1mn loss for the same period in 2012.

However, Hyperion does not expect near-term future quarters to be profitable: adjusted net loss for the 1H2013 amounted $12,9mn as opposed to $18,7mn in the previous year. To sum up, Hyperion Therapeutics is a fast-growing innovating company with great potential, however it still generates adjusted net loss and is evaluated as a very risky stock like most of innovative pharmaceutical companies.

Consensus target price is $33,75, upside risk – 25,1%, short-term goal - $30.