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Alexion Reportedly Being Investigated by HHS, Shares Slip

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Shares of Alexion Pharmaceuticals, Inc. were down more than 3% on Thursday after a Bloomberg report stated that it is under investigation by the U.S. Department of Health and Human Services’ (HHS) Office of Inspector General (OIG).

In fact, so far this year, shares of Alexion have declined 1%, against an increase of 8.1% registered by the Zacks classified Biomed/Genetics industry during this period.

The HHS has reportedly said it is conducting an "open and ongoing investigation" into the biotech, though it did not specify what it was about.  The investigation is reportedly related to Alexion’s support of charitable organizations that provide financial assistance to Medicare patients who take drugs sold by the company.

We remind investors that in an SEC filing in January this year, the company disclosed that in Dec 2016, it had received a subpoena from the U.S. Attorney’s Office for the District of Massachusetts requesting documents related to Alexion’s support for the above mentioned charities. At that time, the company said that other companies have also disclosed similar inquiries and it is cooperating with this inquiry.

The HHS OIG is responsible for investigating abuse, waste and fraud in U.S. government health programs like Medicare and Medicaid.

Investigations into its sales practices are not new for Alexion. Last year in December, Alexion’s Chief Executive Officer (CEO), David Hallal, and Chief Financial Officer (CFO), Vikas Sinha resigned unexpectedly during an internal investigation into the sales practices related to its key drug, Soliris. Shares of the company touched a 52-week low in response.

Alexion carries a Zacks Rank #3 (Hold). Better-ranked stocks in the sector include Enzo Biochem, Inc. (ENZ - Free Report) , Aduro BioTech, Inc. and Agenus Inc. (AGEN - Free Report) . While Enzo Biochem has a Zacks #1 Rank (Strong Buy), the other two companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Enzo Biochem’s loss per share estimates for 2017 narrowed by almost 42% in the last 60 days. The company delivered a trailing four-quarter average positive earnings surprise of 55.83%. Shares have risen42.8% in the past three months.

Aduro BioTech’s loss per share estimates for 2017 narrowed by 9.3% in the last 60 days. The company delivered a trailing four-quarter average positive earnings surprise of 36.28%. Shares have increased 35.9% in the past three months.

Agenus delivered a trailing four-quarter average positive earnings surprise of 8.8%. Shares of Agenus have risen21.4% in the past three months.

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