We are upgrading
Alexion Pharmaceuticals
(
ALXN
) to Outperform from Neutral on valuation grounds - we believe that
there is significant scope for upside from current levels.
In February 2012, Alexion Pharma announced encouraging fourth
quarter and full year 2011 results. Alexion Pharma earned $0.36 per
share in the final quarter of 2011, beating the Zacks Consensus
Estimate by $0.07 thanks to strong Soliris sales. Soliris,
Alexion's sole marketed product, is available in the US, EU, Japan
and many other countries for the treatment of paroxysmal nocturnal
hemoglobinuria - a rare genetic blood disorder.
The label of the drug was expanded in 2011, in the US and EU for
treating children and adults suffering from atypical hemolytic
uremic syndrome (aHUS), an ultra-rare genetic disorder. This is the
first drug for the indication to be cleared in both markets. The
absence of competition bodes well for the initial sales ramp of
Soliris for the new indication.
The successful label expansion of Soliris has boosted the sales
potential of the drug. We expect Soliris to continue performing
well in 2012. Consequently, we have increased our revenue estimate
for 2012 and expect Soliris sales to exceed $1 billion in 2012.
Alexion is studying Soliris for additional indications as well,
such as acute humoral rejection, myasthenia gravis and STEC-HUS.
Currently, there are no approved treatments for any of these
disorders and the successful development of Soliris for one or more
of these indications will further help expand the market potential
of the drug.
We are also encouraged by the company's strategy of pursuing
acquisitions/signing deals to expand its pipeline beyond Soliris.
The acquisitions of Taligen Therapeutics, Enobia Pharma and the
purchase of the patents and assets from Orphatec Pharmaceuticals
are aimed towards fulfilling this objective.
Moreover, the strong balance sheet at Alexion (cash, cash
equivalents and marketable securities of $540.9 million and no
long-term debt at the end of 2011) gives it the opportunity to make
further acquisitions/deals to develop its pipeline and expand its
product portfolio.
In view of these positives, we have upgraded the stock to
Outperform. Our long-term recommendation is in line with the Zacks
#1 Rank ("Strong Buy" rating) carried by the stock in the short
run.
ALEXION PHARMA (
ALXN
): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research