More Alexion turbulence could flush out a buyer

News that Alexion’s new chief executive has cleared out its management team is on the face of it the latest in a long line of disruptions for the company. Shares fell 9% yesterday on the news, though in the longer term the move could help the group distance itself from previous missteps.

Alexion has long been rumoured to be an acquisition target, and could find itself falling prey to a low-ball offer unless its share price rallies. Its market cap has slumped 49% since a mid-2015 peak, and at $23.5bn is not too far off its net present value of $19.4bn, according to EvaluatePharma consensus (see table below). Meanwhile, a major catalyst looms in October in the form of an FDA decision on its top product, Soliris, in myasthenia gravis.

The net present value of Alexion’s assets
Product Mechanism 2022e sales ($m) Today's NPV ($m) NPV as % of share price
Marketed Soliris Anti-complement factor C5 MAb 4,625 13,626 58%
Strensiq Tissue nonspecific alkaline phosphatase 1,069 3,508 15%
Kanuma Lysosomal acid lipase 421 1,098 5%
Fuzeon HIV fusion inhibitor - 25 0%
Total 6,115 18,256 78%
Phase III ALXN1210 Anti-complement factor C5 MAb 543 1,008 4%
ALXN1101 Molybdenum cofactor precursor 48 137 1%
Pre-clinical SBC-105 Enzyme replacement therapy 1 5 0%
Total R&D 593 1,151 5%
Total Alexion 6,708 19,407 83%
Source: EvaluatePharma.

Myasthenia gravis represents 22% of Soliris’s 2022 sellside forecast, but approval is far from certain. Alexion’s supplemental biologics licence application is based on the Regain study, which did not meet its primary endpoint (Regain pain for Alexion’s Soliris, June 7, 2016). 

The company hopes that the FDA will be convinced by the total data package. Regain did hit secondary endpoints, and Alexion could also be helped by the fact that refractory myasthenia gravis is a rare disease with few treatment options. The FDA is due to make a decision by October 23.

The current approved indications for Soliris, haemolytic uremic syndrome and paroxysmal nocturnal haemoglobinuria (PNH) account for 38% and 36% of 2022 consensus sales forecasts respectively. Looking further ahead, Alexion has the Soliris follow-on ALXN1210, a longer-acting anti-C5 antibody, in phase III.

Beyond this the company’s chief executive, Ludwig Hantson, who took over from the interim leader David Brennan in March, has said he sees little excitement in Alexion’s pipeline, according to Leerink analysts.

Brand power

Perhaps this would not matter to any potential acquirer, with Soliris being the main draw – highlighting parallels between Alexion and Actelion, the subject of the biggest takeout of the year so far.

“Actelion showed the power of a brand and a dominant franchise – Alexion is in a similar position,” says David Pinniger, a biotech fund manager at Polar Capital. “Soliris has very strong pricing power. The only thing that will change that is competition.”

Competition is already on the horizon, however; Ra Pharma has a complement factor C5 inhibitor, RA101495, in phase II development that it believes could reduce the risk of breakthrough haemolysis compared with Soliris. Being subcutaneous, RA101495 should also be more convenient than Soliris, which is given intravenously.

For now, though, Alexion has the market to itself. Shire, which has made no secret of its desire to be the leader in rare diseases, could be a possible suitor, and there is another link: Alexion’s Mr Hantson was heading up Baxalta at the time of the Shire buyout. Meanwhile Gilead, under pressure to acquire, has also been connected with Alexion.

With recent upheavals, including claims of fraudulent sales practices, still fresh in the mind, any interested parties will be wary of more turbulence to come. It should soon become apparent whether the management shake-up is just the case of a new broom sweeping clean, or if more trouble is brewing.

Project Study Trial ID
ALXN1210 Phase III trial vs Soliris in PNH NCT02946463
ALXN1210 Phase III trial in aHUS NCT02949128
RA101495 Phase II trial in PNH NCT03078582
RA101495 Phase II trial in PNH in Soliris inadequate responders NCT03030183

To contact the writer of this story email Madeleine Armstrong or Amy Brown in London at news@epvantage.com or follow @ByMadeleineA or @ByAmyBrown on Twitter

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