Alexion Pharmaceuticals (ALXN) develops novel antibody 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).
The launch of Soliris in Australia and Japan in 2009, coupled with approval in one or more multiple rare blood disorders, should fuel future top line growth. Alexion is investigating the potential of Soliris in a wide range of rare diseases, and approval of Soliris for one or more of these indications will further the market potential of this blockbuster product. Additionally, lower cost of goods sold (COGS) will provide bottom-line growth. However, with no other candidate in clinical development, we maintain our Hold rating on the stock with a target price of $77.
We arrive at our $77 target price by applying a P/S ratio of 11.7x to our 2011 estimated total revenue of $578.8 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.
Varun Parwal contributed to this report.
Read the full analyst report on ALXN.
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