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Alexion Pharmaceuticals (ALXN) |
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WIKI ANALYSIS
Alexion Pharmaceuticals (NASDAQ:ALXN), formed in 1992, focuses on a strong scientific and product development base to develop novel antibody therapeutics targeting the treatment of patients with a wide array of severe disease states, including autoimmune and cardiovascular disorders, inflammation and cancer. Alexion is dedicated to developing effective and safe treatments for human diseases for which treatment options are either non-existent or inadequate. The company's clinical efforts have focused on treating disease by blocking formation of the terminal components of complement. Complement is an important and natural part of the human immune system that is comprised of a cascade of proteins, one protein leading to formation of the next. The earlier-formed components of the "complement cascade" are generally beneficial, but the later-formed, or terminal, components can have significant and deleterious effects. Alexion's sole marketed drug Soliris remains the only drug specifically indicated as a treatment for paroxysmal nocturnal hemoglobinuria (PNH)(as of April 2011).[1] Soliris is highly sought after by PNH patients because there aren't many useful alternatives; The fatal effects of the disease are blood clots which spread rapidly throughout the body, blood vessels become blocked; the blocked vessels cause damage to organs downstream.[2] On September 23, 2011 it was announced that Soliris was approved by the U.S. Food and Drug Administration for the treatment of all pediatric and adult patients with atypical hemolytic-uremic syndrome (aHUS) (rare genetic disease that affects vital organs especially the kidney, killing more than half of the people who have it, the atypical cases account for roughly 10% all HUS cases). According to the Director of Pediatric Nephrology at Emory University and Children’s Healthcare of Atlanta the FDA's decision "marks the most important advance that has been made for patients and families with this disease".[3]
Alexion's lead FDA approved product, Soliris (eculizumab), is a humanized monoclonal antibody complement inhibitor. Specifically, eculizumab blocks cleavage of the C5 component of the complement system, thereby preventing the final stages of complement activation. Alexion developed Soliris for the treatment of Paroxysmal Nocturnal Hemoglobinuria (PNH). PNH is a rare blood disorder characterized by the onset of severe hemolytic anemia, chronic fatigue and intermittent episodes of dark colored urine, known as hemoglobinuria. PNH is a chronic disease where a portion of a patient's oxygen-carrying red blood cells are missing the normally present complement inhibitors and are therefore abnormally fragile and inadvertently destroyed by normal complement activation. PNH has been identified more commonly among patients with disorders of bone marrow, including aplastic anemia (AA, is an anemia of all three blood cells types because the bone marrow isn't producing enough to replenish the body) and myelodysplastic syndromes (MDS). Underlying bone marrow dysfunction can complicate the clinical course of PNH, contributing to anemia, a greater dependence on transfusion support, an increased risk of infection and life-threatening hemorrhage. Other than Soliris, currently there is no drug specifically available for treatment of patients with PNH. At present (2011) Soliris is approved for use in at least 35 countries. With the acquisition of Enobia Pharma Alexion will be a more diversified pharmaceutical company with key therapeutic drugs used in treating patients with aHUS (organs) and hypophosphatasia (skeleton).
2011 was a big year for approvals: In September Soliris received approval in the US for use in patients with aHUS, followed by the European Union in November. The only other place that has approved Soliris is Japan, that approval was received in 2010.
Trends
Alexion offers $400,000 Soliris prescription free of charge to E coli victims in Germany
Since 2010 Alexion Pharmaceuticals has been providing European victims of a rare form of Enterohaemorrhagic Escherichia coli (a fatal form that produces the Shiga toxin which damages the liver by affecting blood cells) with Soliris for free through its German subsidiary. Alexion's act of charity benefits the company itself by allowing it to bypass expensive clinical trials required by regulators to prove the drug safe and effective.[4] In June 2011 it was confirmed that the Food and Drug Administration (FDA) did indeed speed up the review of Soliris.[5]
Acquisitions
In 2000 the company acquired Proliferon Inc (based out of San Diego) for about $41 million in Alexion stock. Proliferon's ability to produce anti bodies at an exceptional rate was its most attractive element, according to Alexion CEO.
In February 2011 Alexion acquired patents and other assets relating to investigational therapy/molybdenum cofactor deficiency from Germany-based Orphatec Pharmaceuticals (causes brain damage, currently there is no treatment for it but the investigational therapy is successful in replenishing deficient cPMP which enables the body to rid itself of toxic sulfite). The deal cost Alexion $3 million and other contingent payments.[6]
On January 31, 2011 Alexion completed the takeover of Cambridge, Massachussets based privately held biotechnology company Taligen Therapeutics, Inc for $111 million and contingent payments. The contingent payments are to be earned based on when and if the company reaches a certain level of product efficacy and approval for use in the USA and Europe. The acquisition enhances Alexion's complement inflammatory pathways research (the drugs are used as a treatment for patients with rare disorders and age-related macular degeneration).[6] Along with Orphatec the new assets enhance the company's profile as a developer of rare disease treatments.
Enobia Pharma
On December 29, 2011 both parties agreed to buyout by Alexion in the amount of $1.08B ($310m cash, $300m assumption of bank debt, $470m in more cash pending sales and regulatory approvals - key drug asfotase alpha in the second of three trials needed to pass FDA approval). Enobia is focused on therapies treating patients with ultra-rare, life-threatening genetic disorders. A strong showing the second phase is one of the reasons Alexion was attracted to the company.[7]
Business and Financials
The company pays no dividend however that could change in the future given that earnings are expected to grow by 36.1% in 2012 and 36.6% in 2013.[8]
| $US mil exc. unit values | 2011 | 9M11 | (2010 2009) | 2010[6] | 2009 | 2008 | 2007 |
|---|---|---|---|---|---|---|---|
| total revenue' | 783.431 | 555.88 | 39.9% | 540.957 | 386.800 | 259.1 | 72.04 |
| operating income | 230.83 | 155.45 | 73.03% | 150.64 | 87.06 | 34.61 | (99.76) |
| ebitda | 230.05 | 155.72 | 78.86% | 149.01 | 83.31 | 34.73 | (93.03) |
| net income | 175.315 | 127.14 | (67.13)% | 97.03 | 295.17 | 33.15 | (92.29) |
| earnings per share diluted | 0.97 | 0.71 | (68.1)% | 1.04 | 3.26 | 0.39 | (1.27) |
| total assets | 1,394.75 | 1,305.04 | 28.69% | 1,012.04 | 786.4 | 477.55 | 334.36 |
2011 Fourth Quarter
The Enobia Acquisition was completed on February 7, 2012 and so the cash equivalents that Alexion used to acquire it (over $300 million) has since further reduced the company's cash and cash equivalents which was listed at $540.9 million at the end of the quarter. That's important to note since cash equivalents + securities account for 49.59% of the change in total assets since December 31, 2010. Operating expenses (GAAP) totaled $459.5 million in 2011 (up 40.99% on the year). $39 million of the $133.6 million increase in expenses are attributable to changes in R&D spending ($98.4 to $137.4 million). In 2012 the company plans to "accelerate investigation of Soliris and four additional highly innovative compounds across eight severe and ultra-rare indications."[9]
2011 was a big year for approvals: In September Soliris received approval in the US for use in patients with aHUS, followed by the European Union in November.
International patients were responsible for most of the increase in sales of Soliris.
2011 Third Quarter
Diluted earnings per share were unusually high in the quarter at 34 cents. That compares to an average of 16.5 cents in the previous four quarters (19c, 18c, 14c, 15c respectively). Total revenue for the nine month period ended September 2011 was $555.88 million up 44.4% from $384.98 made during the nine month period ended September 2010. 36.7% of the nine month revenue ($204.05) and 51.6% of the net income ($65.57 million) was made in the third quarter when total assets rose 10.65% quarter to quarter ($117m of the $125m increase in assets came from current assets) consequently total debt fell to $1.72 million after being as high as $65.23 million at the end of March 2011.
2011 (general)
As of November 6, 2011 Alexion has a p/e ratio of just over 80 which is extremely high indicating that investors are recognizing its strong upside potential. P/E ratio for Merck is 23.29, for Pfizer it's just over 15. The company received a strong vote of confidence in late September when Soliris became the first and only treatment approved by the U.S. Food and Drug Administration for the treatment of all pediatric and adult patients with atypical hemolytic-uremic syndrome (aHUS) (makes up less than 10% of all HUS cases, aHUS is a rare genetic disease that affects vital organs especially the kidney, killing more than half of the people who have it). According to the Director of Pediatric Nephrology at Emory University and Children’s Healthcare of Atlanta the FDA's decision "marks the most important advance that has been made for patients and families with this disease".[3]
2010 fiscal year ended December 31
Revenue was USD 540.957 million (up 39.8% year on year, 650.9% higher than in 2007) with net earnings of $97.03 million (down 67.1% despite operating income being 72.9% higher year on year). Total assets were 1,012 million (up 28.7% due entirely to a 73% increase in current assets on the year (from $373.46 to $646.56), 68% of the increase in current assets came from cash and short term investments (up $185 million to $361.61).[6] Earnings per share were down markedly in 2010 mostly due to poor net income results in the 4th quarter (down to 28 cents). 2010 net product sales of Soliris totaled $156 million, 41.04% higher than the year before ($110.6 million).
2010 was the year Soliris was approved for use in Japan.
References
- ↑ STUDY TO BE PUBLISHED IN BLOOD JOURNAL REINFORCES EFFICACY OF ONLY AVAILABLE PNH TREATMENT (2011-04-08).
- ↑
- ↑ 3.0 3.1 Soliris® (eculizumab) Approved by FDA for All Patients with Atypical Hemolytic Uremic Syndrome (aHUS) (September 23, 2011).
- ↑ Alexion treating Europe's E coli victims (2011-05-31).
- ↑ FDA speeds up new review of Alexion's Soliris (2011-06-01).
- ↑ 6.0 6.1 6.2 6.3 Alexion Pharmaceuticals 2010 end of year and fourth quarter results (2011-02-11).
- ↑ Alexion buys Enobia
- ↑ Tracking 5 Jim Cramer Picks From Jan 5th and 6th (January 24, 2012).
- ↑ Alexion Reports Fourth Quarter and Full Year 2011 Results (February 9, 2012).
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