Roche is very lucky: ALXN just went on sale trading in the low 100's coming from $ 120 three weeks ago after Bloomberg reported Roche was shopping for financing with banks to purchase Alexion. The biotech index BTK first dragged ALXN down in low volumes, and today the announcement of a recall on a batch of faulty vials of Soliris(visible particules in a limited number of vials) is not helping ! Bottom line: ALXN is now on sale at $ 103 and change ! It is now obvious that most Funds holding ALXN may consider selling to Roche at $ 129 when 3 weeks ago they would have not entertained any offer less than $ 150 !
One has to just look at the mulitple of book value that Amgen just paid for Oynx pharm....about 8x. So use that as a starting point for this stock....and the price is in the 90s. Thats the starting point. You adjust from there depending on trend of sales and profits, new blockbuster drugs, etc... Its priced about right here.
First everybody agrees that the Amgen purchase of ONYX was a steal at $ 125 !
Second and most important to understand the valuation, ALXN is not in the same league as Onyx: they are an oncology company; Alexion specializes on Orphan and Ultra rare deseases: the margins are mucher higher than in any other pharma or even biotech company, and the protection from future generic substitutes much greater!
Third, ONYX had already sold distribution rights for its best drug to Bayer. Alexion controls distribution of Soliris from A to Z.
Four, ONYX put themselves for sale in june. To the best of my knowledge ALXN is not for sale. We all know that if ione is interested in purchasing something which is not for sale, a high premium will be needed to have the shareholders and the board consider a merger...among other considerations.
Then we could be talking about $ 145-149 with a total tab of $ 25 B, which will also be a steal with such a pipeline.