Company Investigates Its Sales Practices
By Mitchell Young
NEW HAVEN: Alexion Pharmaceuticals [Nasdaq: Alxn] moved into a new global corporate headquarters in downtown New Haven at the beginning of the year and that was big news for New Haven. The news for Alexion hasn’t stopped, however, and although much of it is very good, some recently not quite so much.
In early November, shares were halted in Alexion as the company announced an “internal” investigation into some sales practices to determine if they met the “policies and procedures and the related disclosure and other considerations raised by such practices.”
The company declined to release its 10Q report on time and said that the release would be delayed beyond a few days.
The allegations about the sales practices were raised by a former employee of the company involving the company’s flagship Soliris product. Soliris, first approved in 2007 for Paroxysmal Nocturnal Hemoglobinuria [PNH], a rare blood disorder, had annual sales of more than $2.5 billion in 2015.
Soliris has been the basis of the company’s growth and financial strength to date and is now also approved for another rare disease, Atypical Hemolytic-uremic Syndrome, a disease that primarily affects kidney function, causing abnormal blood clots in small blood vessels in the kidneys that may block blood flow.
Other uses for Soliris are in clinical trials. The “listed” price of the drug for an annual treatment is $480,000 per year, but the company offers a variety of methods to reduce that cost, including grants where necessary for patients.
With the announcement of the investigation, a host of law firms have announced “investigations” with the potential goal of shareholder lawsuits.
Alexion has said that its investigation continues, but has not found any information to date requiring the company to update its previously reported sales.
In spite of the investigation, many stock analysts remain positive on the company, perhaps because its what could best be described as a terrible year for the stock.
Goldman Sachs and seven other analysts have maintained “buy” recommendation for the stock. At the start of the year, Alexion shares were trading at more than $180 per share and along with many other bio-techs, it has seen a huge drop in share price, for Alexion, to the vicinity of $120 per share.
Boosting the company is the integration of its acquisition, for $8.4 billion in June 2015, of Synageva of Lexington, MA.
The merger brought important new approved drugs to Alexion’s portfolio, an expansion of its own development efforts with several drugs in advanced clinical trials, and Synageva’s “proprietary” drug development platform. Synageva, like Alexion, focused on rare diseases, including the approved drug Kanuma. A previous acquisition in 2012 of Enobia in Montreal, Canada, for a $610 million up-front payment with the potential for royalties, brought the drug Strensiq.
Kanuma treats Lysosomal Acid Lipase Deficiency, [LAL Deficiency], a disease that prevents the body from adequately disposing of fatty acids, leading to problems in the liver, spleen, and blood vessels. Until the drug was approved in 2015, there were no treatments for the disease.
Stensiq was approved by the FDA in 2015 and treats Perinatal, Infantile and Juvenile-onset Hypophosphatasia (HPP). Hypophosphatasia is an inherited rare metabolic bone disease that disrupts bone mineralization. Symptoms include weakening and softening of the bones that cause skeletal abnormalities. Hypophosphatasia affects an estimated 1 in 100,000 newborns.
The market for the two acquired drugs is estimated to have a potential of nearly $2 billion annually.