Update on Alexion's Voluntary Recall

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Alexion Pharmaceuticals, Inc. (ALXN) provided additional information on its voluntary recall of two lots of the company’s sole marketed product Soliris. Alexion stated that this voluntary move was prompted by the presence of visible particles in vials in the two lots of the drug. Alexion believes these have the potential to affect the safety of patients in two broad areas: immunogenicity and thromboembolic events.

Alexion said that it has issued instructions to hospitals as well as users to return unused vials of Soliris from both the affected lots . Last month, Alexion had given similar instructions but they were limited to the distributor level.

Soliris is available for the treatment of paroxysmal nocturnal hemoglobinuria and atypical hemolytic uremic syndrome (aHUS). Japanese approval for Soliris in the aHUS indication came in Sep 2013.

Alexion believes the voluntary recall will not impact the supply of Soliris. Though current supplies of Soliris may not be interrupted, we believe further slipups regarding Soliris will impact the drug’s supplies. This will be catastrophic for the company since it is entirely dependent on Soliris for growth.

We note that this is not the first setback for Alexion regarding Soliris this year. In March, the U.S. Food and Drug Administration (:FDA) issued a warning letter to Alexion as the company did not comply with the current Good Manufacturing Practices (cGMP) at its manufacturing facility at Rhode Island. Alexion manufactures Soliris at the facility. An FDA re-inspection is scheduled in the first half of 2014. We believe that any slip on the company’s part to comply with the FDA’s quality control requirements will invite strict action from the agency. Such an action will affect the supplies of Soliris.

Alexion, a biopharmaceutical company, carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the biopharma space include Actelion Ltd. (ALIOF), Jazz Pharmaceuticals (JAZZ) and Vanda Pharmaceuticals Inc. (VNDA). All these stocks carry a Zacks Rank #1 (Strong Buy).

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