Originally Posted On: https://financhill.com/blog/investing/achillion-pharmaceuticals-stock-forecast
Achillion Pharmaceuticals Stock Forecast: When you think of pharmaceutical companies, you may imagine Big Pharma companies with vast portfolios of drugs on the market and massive pipelines of new products under development.
However, biopharmaceutical companies rarely look like that. They tend to be much smaller, choosing instead of focus on a single platform for drug development or treatments for a specific range of conditions.
They tend to be highly specialized, and that presents an interesting issue. In many ways, biopharmaceutical companies are like tech companies.
It is easier for a larger company to buy a smaller one that has the technology, expertise, or other asset it wants instead of developing it. That is exactly what happened with Achillion Pharmaceuticals [NASDAQ: ACHN].On January 28, 2020, Alexion Pharmaceuticals [NASDAQ: ALXN] announced that it purchased Achillion.
In the press release announcing the acquisition, CEO of Alexion, Ludwig Hantson, explained: “We look forward to the expertise the Achillion team brings to Alexion, which, combined with our own complement biology and rare disease development and commercialization experience, will enable us to collectively accelerate progress of the development programs.”
Trading for Achillion halted at that point.What Does Achillion Pharmaceuticals Do?
Achillion was a biopharma company that focuses on clinical stage development. It developed factor D inhibitors.
These treatments effectively control alternative pathways (AP) in the body through small molecules. AP plays a critical role in immunological diseases, so inhibiting or controlling the AP could be a promising treatment for autoimmune conditions.
Alexion [NASDAQ: ALXN] purchased Achillion because of its Factor D work. “The acquisition of Achillion adds two clinical-stage Factor D inhibitors to our growing pipeline, representing important continued momentum in expanding and diversifying our portfolio and advancing our mission of transforming the lives of people with rare diseases,” said Hanston.
“We believe oral Factor D inhibition holds great promise in treating people with multiple rare, complement-mediated diseases, providing the opportunity to significantly expand our portfolio into new therapeutic areas and to help many more patients.”Is Alexion Pharmaceuticals a Buy?
Investing in Alexion is effectively a bet on the drugs Achillion was developing, but there is more to Alexion than the Achillion Pharmaceuticals [NASDAQ: ACHN] acquisition.
The company has been around for more than 20 years. In that time, it has focused on novel molecules and therapies that complement or leverage those findings.The bulk of Alexion treatments center on hematology, metabolic disorder, nephrology, and neurology.
Per its annual report, Alexion is “the global leader in complement inhibition and have developed and commercialize the only two approved complement inhibitors to treat patients with paroxysmal nocturnal hemoglobinuria (PNH), as well as the first and only approved complement inhibitor to treat atypical hemolytic uremic syndrome (aHUS) and anti-acetylcholine receptor (AchR) antibody-positive generalized myasthenia gravis (gMG).”
The company also has two enzyme replacement therapies for two metabolic disorders that are getting good traction.
Alexion has four primary marketed products:
– KANUMA: Also called sebelipase alfa, this drug is very unique. It is the only enzyme-replacement therapy for patients with Lysosomal Acid Lipase Deficiency (LAL-D) and it carries that distinction in the US as well as Europe and Japan.
– SOLIRIS: This drug is also called eculizumab. It is used to treat autoimmune and inflammatory conditions, primarily a rare genetic blood disorder called Paroxysmal Nocturnal Hemoglobinuria (PNH).
– STRENSIQ: This drug, asfotase alfa, is a targeted enzyme replacement therapy. It is approved to treat Hypophosphatasia (HPP) and it is the only drug that leverages this science to treat that condition.
– ULTOMIRIS: Also called ALXN1210 or ravulizumab-cwvz, this drug treats patients with PNH. It has Orphan Drug Designation (ODD). This effectively means that the company qualifies for certain financial incentives.
Alexion also has several drugs and indications in development within its pipeline. In addition to new uses for its existing portfolio, there is also the Wilson disease-treatment ALXN1840, the WAIHA-treatment ALXN1830, and the platform that the Achillion acquisition brings to the table.
Many of these drugs will receive ODD or other favorable designations that produce additional benefits for Alexion.What are the Risks of Buying Alexion Pharmaceuticals?
Alexion [NASDAQ: ALXN] works in a very specific niche and it has been able to develop novel treatments for the conditions in which it has chosen to specialize. However, the market for those conditions is limited. They are, after all, rare. Right now, most of the company’s success depends on SOLIRIS.
However, pharma companies do not have permanent exclusive rights to the drugs they develop. Alexion’s patents on its existing portfolio will eventually expire.
KANUMA is covered until 2031, but SOLIRIS patents expire in 2027, STRENSIQ in 2026, and ULTOMIRIS in 2035.
Alexion will need to make sure that it has new drugs in place and developed before those exclusivity rights expire or the company could take a hit.
ULTOMIRIS will help the void caused by the expiring SOLIRIS patents, but only if patients make the switch.
Further, ULTOMIRIS is only approved in the US right now. If the drug does not receive broader approval, it may not benefit Alexion as much as the company might hope.
Buying Achillion Pharmaceuticals [NASDAQ: ACHN] may help, but any acquisition opens the company up to the potential for failure. Alexion will need to integrate Achillion into its operations and leverage its technology effectively enough to develop revenue from those products.
There may be some synergies possible, but Achillion had used a unique drug development platform so such opportunities may be limited, if they exist at all.
Also, if the products Achillion had under development fail or the platform itself lacks efficacy, Alexion will be stuck needing to make up for the cost of the acquisition.Alexion Pharmaceuticals Stock Forecast Summary
The combination is tenuous, but not impossible. After all, Alexion [NASDAQ: ALXN] has been around for more than two decades and it has successfully brought several products to market.
This suggests the company knows how to effectively market the drugs it develops, but it still has the Achillion acquisition to incorporate.
Before investing in this company, do your research and make sure you are aware of any potential issues Alexion is facing.