Player Avatar zzlangerhans (99.85) Submitted: 2/22/2010 2:23:22 PM : Underperform Start Price: $25.00 ALXN Score: -220.00

Alexion is one of the most bizarre stories in biotech, building a 4.4B cap on the back of a single medication for a disease that only an estimated 10000 people in the entire world suffer from. By charging an enormous 400K/yr premium they have established a theoretical limit of 4B/yr in revenue. Their projected revenues for 2010 are 500M and the market clearly expects them to proceed northward from there, having awarded them a P/E of 30 based on estimated 2010 earnings.

However, there are some signs of shakiness at these lofty levels as the share price actually dipped briefly after the company reported their 2010 projections. While 4B/yr is a theoretical limit, it is doubtful that Soliris sales will ever come close to that number given the substantial portion of the PNH population that lives in the third world. In China, India, and Africa few lives are worth 400K/yr to the powers that determine the provision of health care resources. And even in the US and Europe, it's unclear if Alexion really pulls in the full 400K per patient or if they are subsidizing the treatment costs somehow.

At some point skepticism has to set in and the market cap must stop growing unless Alexion can come up with a second act for Soliris, which seems unlikely in the near future. Of course, given the lack of data at hand for the current number of patients under treatment with Soliris, that point remains uncertain.

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Member Avatar HealthcareGuy (99.59) Submitted: 4/7/2010 2:25:10 PM
Recs: 0

Valuation is def lofty, however ALXN has yet to enter Japan (large pnh population) and are seeking an aHus indication to Soliris label. Estimates are not yet including these to sizable growth drivers.

Member Avatar jsgant13 (99.18) Submitted: 9/29/2010 4:59:44 PM
Recs: 0

why do you think analysts are so in love with this stock? and why has the stock done so well recently? any insight?

btw, zz- i really enjoy all your writeups and have learned a lot through your pitches. i am also a harvard grad (although definitely not magna cum laude). thanks again for all your contributions.

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