Potential in Alexion Pharmaceuticals

Posted: May 31, 2012 at 9:16 am

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By George Liu - May 30, 2012 | Tickers: ALXN | 0 Comments

George is a member of The Motley Fool Blog Network -- entries represent the personal opinions of our bloggers and are not formally edited.

The Overview

On May 24, 2012, Alexion Pharmaceuticals(NASDAQ: ALXN) became the latest company to be included in the S&P 500 index, replacing Motorola Mobility (which has been acquired by Google). Upon news of this selection, Alexion's stock gained 5.2%, an increase which follows a long string of successes for the company and its stock. In fact, Alexion Pharmaceuticals has seen its stock price rise 29.3% YTD on positive developments such as its 2012 first quarter results.

On Tuesday, April 24, Alexion Pharmaceuticals announced its 2012 first quarter results. Its EPS handily beat estimates by $0.07 while its revenue of $245M beat estimates by $4M and constituted a 47.3% YOY gain. Net profit also increased 69% to $45.4M. These results show the continued strength of Alexion Pharmaceutical's core business and are positive indicators of Alexion Pharmaceutical's ability to grow and develop in the future.

The Niche

Alexion Pharmaceuticals is abiopharmaceutical company with a $17.28B market cap that generates revenues through its development of "orphan drugs" for ultra-rare and severe disorders. Orphan drugs, as mentioned on my analysis of Salix Pharmaceuticalshere, arepharmaceutical agents developed specifically to treat rare medical conditions. These drugs gain special exclusivity rights from the government; companies that successfully develop orphan drugs can usually market them for seven years without market competition. Alexion Pharmaceutical's orphan drug and key profit-driver is a drug known as Soliris.

Soliris is a drug approved in the US, EU, and Japan for patients with a rare blood disease known as PNH. Moreover, it is also approved in the US and EU as the first and, currently, only treatment for patients with a genetic disease known as aHUS. Soliris is the bread-and-butter for Alexion Pharmaceuticals, and it seen significant demand. In fact, in the first quarter of 2012, Alexion reported net product sales of Soliris increasing 47% YOY to $244.7M. The number of patients using Soliris for PNH continue to rise, especially in Alexion's core territories of the US, Western Europe, and Japan. The sales of Soliris will also be positively affected by of another significant catalyst:Alexion expects to begin serving aHUS patients with Soliris in initial European countries later in 2012. This will mark the opening up of an entirely new market of aHUS patients that will greatly benefit from Soliris.Moreover, other areas of treatment Soliris could be utilized for are currently being explored; recently published studies in theNew England Journal of Medicinehighlighted the success of Soliris in treating rare kidney diseases.

Although Soliris is Alexion's marquee drug, Alexion is currently expanding its other avenues of profitability, mainly through acquisitions and research. On December 28, Alexion agreed to acquire biotech firm Enobia for $1.08B. With its purchase of Enobia, Alexion gained full worldwide development and commercial rights to Enobia's lead product candidate, asfotase alfa. This treatmentwas awarded orphan drug designation in the U.S. and EU in 2008 and Fast Track status in the U.S. in 2009. Current clinical trials of asfotase alfa, which is in Phase II clinical development, show positive results. Alexion also currently has "lead development programs underway with five highly innovative therapeutics, including eculizumab (Soliris), being investigated across eight severe and ultra-rare disorders beyond PNH and aHUS." These trials as well as the acquisition of Enobia stand to significantly expand Alexion's pipeline and decrease its dependence on its flagship drug Soliris.

The Results

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Potential in Alexion Pharmaceuticals

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May 31st, 2012 at 9:16 am