Zacks_Analysts' Blog : Alexion Takes Over Enobia Pharma - Analyst Blog

Alexion Pharmaceuticals, Inc. (ALXN), a US-based biopharmaceutical company, which focuses on developing drugs to treat patients suffering from ultra-rare, severe and life-threatening diseases, announced recently that it has completed the acquisition of privately-held biotech company Enobia Pharma Corporation.

At the time of announcing the deal in December 2011, Alexion Pharma had announced that the all-cash deal could be worth up to $1.08 billion. At that time Alexion Pharma had further stated that it intends to finance the deal, for which Goldman Sachs & Company (GS) was the financial advisor, through its available cash balance and committed bank debt worth $300 million.

The acquisition of Enobia has added ENB-0040 (asfotase alfa), an enzyme-replacement therapy being developed to treat patients suffering from hypophosphatasia (HPP), to Alexion Pharma’s pipeline. HPP refers to an ultra-rare, genetic metabolic disorder currently devoid of any approved therapies. Alexion Pharma expects ENB-0040 to be approved in the second half of 2014.

We believe that the move is aimed at reducing the dependence of Alexion Pharma on its sole marketed product Soliris. Soliris is marketed to treat paroxysmal nocturnal hemoglobinuria, a rare genetic blood disorder -- apart from atypical hemolytic uremic syndrome, an ultra-rare genetic disorder.

Our Take

Even though we believe that Alexion Pharma’s acquisition of Enobia is a step in the right direction, the approval of ENB-0040 is still a long way away. We believe that Alexion Pharma needs to introduce more products in the market as it is overly dependent on Soliris.

We do not expect significant upside potential from current levels until Alexion Pharma is successful in expanding its product portfolio beyond Soliris. Consequently, we have a long-term Neutral recommendation on Alexion Pharma. The stock carries a Zacks #2 Rank (Buy rating) in the short-run.