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Alexion (ALXN) Stock Up 30.7% YTD: Will the Momentum Stay?

Zacks Equity Research

Alexion Pharmaceuticals, Inc. ALXN is a biopharmaceutical company that focuses on the development and commercialization of life-transforming drugs for the treatment of patients with ultra-rare disorders. Shares of the company have rallied 30.7% in the year so far compared with the industry’s growth of 0.3%.

 

The company’s lead drug, Soliris, is approved for the treatment of two severe and ultra-rare disorders resulting from chronic uncontrolled activation of the complement component of the immune system — paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS). The drug is performing well and driving momentum for the company.

Alexion is working on expanding Soliris’ label into additional indications to boost sales further.

The FDA had also approved the drug for the treatment of refractory generalized myasthenia gravis (gMG) in patients, who are anti-acetylcholine receptor antibody-positive. The drug was approved in Europe as well for this indication. Growth of Soliris in this indication has been strong in the United States, driven by robust patient demand. The company is looking to expand the drug’s label for the treatment of neuromyelitis optica spectrum disorder (NMOSD). The FDA has accepted for review a supplemental Biologics License Application (sBLA) for Soliris for this indication. The agency has granted priority review to the sBLA and set a Prescription Drug User Fee Act (PDUFA) action date of Jun 28, 2019.

Alexion received a significant boost with the FDA approval of its long-acting C5 complement inhibitor, Ultomiris, for the treatment of adult patients with PNH. The company has already launched Ultomiris in the United States, ahead of schedule. Initial conversion rates of Soliris patients have been encouraging. Applications for approval in the EU and Japan are currently under review. The approval has strengthened Alexion's PNH franchise. The company is also working to expand the drug’s label into the indications of gMG, NMOSD, Amyotrophic Lateral Sclerosis (ALS) and Primary Progressive Multiple Sclerosis (PPMS).

Concurrently, Alexion is looking to strengthen its pipeline with acquisitions and collaborations. It acquired Sweden-based Wilson Therapeutics for $855 million. The acquisition added a late-stage candidate, ALXN1840 (formerly WTX101), to Alexion’s pipeline. The company also acquired a clinical-stage biotechnology company, Syntimmune, for $1.2 billion in the fourth quarter of 2018. It also entered a partnership with Complement Pharma to co-develop the preclinical C6 complement inhibitor, CP010, for neurodegenerative disorders.

In January 2019, Alexion entered a collaboration with Caelum Biosciences to develop CAEL-101 for AL amyloidosis, a rare systemic disorder that causes misfolded immunoglobulin light chain protein to build up in and around tissues, resulting in progressive and widespread organ damage. A phase I study of subcutaneous ALXN1210 co-administered with Halozyme's HALO ENHANZE drug-delivery technology, PH20, has completed dosing.

Recently, Alexion reported strong results for the first quarter, wherein both earnings and sales beat estimates. The company also raised its annual guidance for earnings and sales. This, in turn, boosted investors’ sentiments.

While overdependence on Soliris for growth is a concern, we are highly impressed with the company’s efforts to expand the label of approved drugs and develop a broad revenue base, which should drive further growth.

Zacks Rank & Other Key Picks

Alexion currently carries a Zacks Rank #2 (Buy). A couple of other attractive stocks in the healthcare sector include Celgene Corporation CELG and Gilead Sciences, Inc. GILD. Both the stocks carry the same rank as Alexion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Celgene’s earnings estimates have moved up by 3 cents to $10.74 over the past 30 days.

Gilead Sciences’ earnings per share estimates have increased from $6.62 to $6.90 for 2019 over the past 30 days.

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