Categories Analysis, Health Care

Alexion’s long-term prospects remain intact amid continued focus on rare diseases

Aims to generate revenues in the range of $9 billion to $10 billion by 2025 on an annualized basis and achieve significant margin growth

Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) has stood out in the crowded pharmaceuticals marketplace by developing effective treatments for certain rare health conditions. The strategy is expected to come in handy for navigating the virus-induced uncertainty that has put the healthcare sector under severe stress. The management is counting on the broad pipeline to achieve the growth goals.


Read analysts/managements’ comments on quarterly reports


The company is scheduled to publish its fourth-quarter results on January 28, before the opening bell. Market watchers predict a 7% drop in earnings to $2.52 per share on revenues of $1.51 billion, which represents a 10% year-over-year increase. It is estimated that near-term performance would be slightly impacted by a dip in prescriptions due to the ongoing uncertainty.

From Alexion’s third-quarter 2020 earnings conference call:

For the first time this year, we saw demand return consistent with pre-COVID levels as access to medical care has reopened more broadly and people have started to return to more active lifestyles. Outside of the U.S., we also achieved a significant milestone by securing reimbursement in the U.K. for GI-related bleeds.”

Investing in ALXN

If the bullish outlook is any indication, Alexion’s stock is probably headed for a rebound, thanks to the company’s pioneering achievements in the development of therapies for rare diseases like Atypical Hemolytic Uremic Syndrome and Hypophosphatasia. While the favorable valuation makes the stock attractive, analysts call for caution citing the disruption caused by the pandemic. It needs to be noted that the performance of the stock in the past few years has been disappointing.

Strong Q3

The Boston, Massachusetts-based firm reported double-digit growth for third-quarter revenues and earnings. The results also came in above analysts’ consensus estimate, continuing the long-term trend. Sales of Alexion’s flagship product Soliris grew 5%, while those of PNH drug Ultomiris rose three-fold. Encouraged by the positive results, the management revised up its full-year guidance.

The highlights of the first half of the fiscal year so far have been the FDA nod for a new formulation of Ultomiris in the U.S. and regulatory approval in Japan for the treatment of atypical hemolytic uremic syndrome. Also, enrollment in an advanced stage trial on Ultomiris-GMG is progressing fast.

Pipeline

When it comes to the pipeline, the immediate goal is to develop seven potential top franchises — expanding the presence in Hematology, Nephrology, Metabolics, Neurology, and Acute Care — while also venturing into new areas like Ophthalmology and Cardiology. Recently, the management claimed to be on track to achieve its ambitious goals of 10 launches by 2023.


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“Over the last three years, we have transformed this company, establishing a strong foundation for sustainable long-term growth and delivering significant value for patients and shareholders. Driven by our long-term value-creation strategy, we see sustainable growth ahead and a clear path to revenues of $9 billion to $10 billion by 2025 and continuous best-in-class operating margins. Beyond this, we see even greater value within our current pipeline of more than $10 billion in peak sales potential,” said Alexion’s chief executive officer Ludwig Hantson during his interaction with analysts on the third-quarter earnings conference call.

Stock Performance

Alexion’s shares recovered quickly from the weakness seen early this year — when market sentiment took a beating from the virus outbreak — and bounced back to the pre-selloff levels. The stock, which has gained about 6% in the past six months, traded slightly lower during Wednesday’s regular session.

Looking for more insights?

Read the full conference call transcript here. It’s free!

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