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Alexion: 2 Global Drug Rollouts, But Upside Already Priced In

Cheryl%20image%20touched%20croppedBy Cheryl Swanson

MOSSEL BAY, SOUTH AFRICA - APRIL 2014: A great white shark breaches from the water in Mossel Bay, South Africa. GREAT white sharks are one of the few species known to regularly poke their heads above the surface to survey the scene. And this huge female is no exception as she rises from the water in front of a cage of stunned divers. The image was captured by British photographer Dale Morris in Mossel Bay, South Africa. PHOTOGRAPH BY Dale Morris / Barcroft Media UK Office, London. T +44 845 370 2233 W USA Office, New York City. T +1 212 796 2458 W Indian Office, Delhi. T +91 11 4053 2429 W







Published in Seeking Alpha Pro

Launching a rare disease drug usually comes with a big payoff for the company’s investors.

So you might think that’s what’s ahead for Alexion Pharmaceutical’s (NASDAQ: ALXN), with the company approaching global launch with not just one, but two ultra-rare disease drugs. On October 23, Alexion nailed FDA approval for rare disease drug Strensiq. The FDA’s final decision on another drug – Kanuma, PDUFA date, December 8 – is likely in the bag.

While Kanuma’s FDA decision was put off in September, the drug seems destined to sail through this time. The drug’s solid clinical trial data earned the oft-tougher nod from the EU commission this fall. Pivotal data published in the New England Journal of Medicine about Kanuma showed it meeting the primary endpoint of alanine aminotransferase (ALT) normalization compared with placebo (31% vs. 7%, p=0.03) as well as six secondary endpoints.

But regulatory approval is simply an open door to an even riskier stage – commercialization. The risks faced in the clinic and with regulatory approval are well known, but the risks of drug launches get ignored. Not a good idea, because launches can fall well short of the rosy expectations created by the companies and the analysts who follow them. That’s particularly true in rare diseases, where you just do not transform drugs into billions of revenue overnight. Rare disease launches require a notoriously slow build-up over time. The company has to scour the planet for patients and handhold them into treatment initiation.

Thus far, Alexion has managed to achieve that with its rare disease drug Soliris. But Alexon’s stock has been on a monster run on the merits of massively profitable cash cow Soliris for a long time – smashing the returns of the S&P over the past ten years. And that’s precisely the problem. The stock is way ahead of itself.

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Read entire article at Seeking Alpha here.