Alexion Pharmaceuticals (ALXN) has been a recent recommendation of mine, and though the company only has a single drug on the market at present, it occupies a strong and defensible niche. That drug, Soliris, is used to treat PNH, a blood disorder, and aHUS, a genetic disease. Rare though they may be (affecting only a few dozens of thousands of people globally), these syndromes are life threatening, and Soliris is the only drug (with orphan status, which means it targets small patient populations) on the market. That means the company has been able to log annual sales of more than $1.5 billion.
The company has been rapidly moving beyond its current markets to find new indications for Soliris. In January, European regulatory authorizes approved the drug for use as a treatment for kidney transplant complications. And in late January, the FDA granted orphan status to the drug for treatment of complications in renal transplant patients.
The expanded indications are indeed encouraging, but it should be noted that ALXN is also looking for new drug candidates to flesh out its portfolio beyond its current drug. ALXN has secured options to buy nearly a dozen novel biotech discovery candidates. Company management has been sanguine about this drug development pipeline, and has projected that it can get as many as half a dozen new drug programs to the FDA over the next few years.
And in the meantime, the days of heady Soliris growth are far from over, as management re-confirmed October guidance 2013 for 36% revenue and 41% earnings growth. Looking ahead to the current year the company could see nearly 30% sales growth coupled with double digit earnings growth, and given the number of new indications that are on the table for Soliris, even those rates may prove conservative. Look for the stock to move up on new indications and even a buyout rumor, which tends to swirl around single drug companies as larger pharma players prefer to “buy rather than build” pipelines.