Alexion Targets Soliris Expansion

Alexion Pharma (ALXN - Analyst Report) is looking for label expansion of its only marketed product Soliris. At present, Soliris is used for treating a chronic disease Paroxysmal Nocturnal Hemoglobinuria (PNH) where red blood cells are destroyed causing severe anemia and blood clots.

In an attempt to expand the scope of Soliris for other diseases, ALXN is conducting trials for the treatment of patients with atypical Hemolytic Uremic Syndrome (aHUS) and kidney transplant patients. Estimates put the aHUS market at $400 million to $550 million annually, while the kidney transplant market could be worth $250 million annually.

aHUS is a rare disorder in which patients are deficient in normally occurring complement regulatory proteins, leading to chronic inflammation, hemolysis and blood clots, ultimately resulting in kidney failure. The case reports of the patients showed that Soliris reduced hemolysis and platelet consumption, as well as improved kidney function in these patients.

ALXN is currently initiating four clinical trials of Soliris as a treatment for adult and adolescent patients with aHUS. These studies are expected to continue throughout 2009. ALXN mainly concentrates on rare diseases, as a first drug for any rare disease ultimately pays off very well and eliminates competition for 7 years (under the Orphan Drug Act), during which period the company can keep the prices of the drug high.

The preliminary findings from a study at the Mayo Clinic found that treatment with Soliris leads to greater acceptance for kidney transplant patients who have a high risk of organ rejection.

Soliris is expected to gain approval in Japan this year for PNH, in addition to the markets of US, Europe, Canada and Australia. Soliris is assured of a market free of competition for 7 years (Soliris approval date March 2007), being the first approved drug for PNH. We estimate peak sales for the drug in excess of $1 billion.

Soliris recorded sales of $259.1 million for 2008, and our estimate for 2009 is $366.8 million. Success for any additional indications will further enhance the market potential of this blockbuster product. As a result, maintain our Hold recommendation.