Alexion Pharmaceuticals (ALXN) develops novel anti-body therapeutics targeting the severe disease states, including autoimmune and cardiovascular disorders, inflammation and cancer. Alexion is a one-drug biotech firm and is currently riding high on the performance of Soliris (eculizumab), a monoclonal antibody for the treatment of Paroxysmal Nocturnal Hemoglobinuria (PNH). In 2007, the company received FDA approval and European Commission's marketing approval for Soliris to treat all patients with PNH.
We expect Solaris to achieve blockbuster status. However, with no other candidate in clinical development, we maintain our Hold rating on the stock with a target price of $78.
Soliris is the only approved product for PNH and we estimate peak sales for the drug in excess of $1 billion. The tremendous revenue potential is sufficient to drive a company of Alexion's size to strong probability. One problem which Alexion is struggling with at the moment is the lack of any pipeline products. The company suffered a major blow when Proctor & Gamble (PG) terminated the commercialization and development agreement for the company's phase III candidate, pexelizumab.
We arrive at our $78 target price by applying a P/S ratio of 12.1x to our 2011 estimated total revenue of $568.8 million, discounted at 25% for three years. Upside to our target price could come from an earlier than expected ramp up in sales and market approval of Soliris in other markets while reimbursement problem with private payers and Medicare for the higher price of Soliris could represent the downside risk to our target price.
Read the full analyst report on ALXN.
Read the full analyst report on PG.
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