Through M&A, These 2 Biotechs Could Help a Refreshed Alexion Build Its Pipeline

Published: Sep 14, 2017

Through M&A, These 2 Biotechs Could Help a Refreshed Alexion Build Its Pipeline September 13, 2017
By Alex Keown, Breaking News Staff

NEW HAVEN, Conn. – Could a series of acquisitions help Alexion regain its footing?

That’s what BMO Capital Markets Corp. analyst M. Ian Somaiya believes. In a note published Tuesday, Somaiya said Alexion could benefit by setting its sight on Sage Therapeutics and Ra Pharmaceuticals.

Somaiya’s thoughts, first reported by The Street, came one day After Alexion announced it was looking for a fresh start. On Tuesday, the company said it was laying off 20 percent of its staff, shuttering some sites and planning to relocate its headquarters from Connecticut to Boston. Alexion said the restructuring and changes will save the company approximately $500 million in GAAP and non-GAAP pre-tax savings yearly by 2019. Those savings are expected to be reinvested in its R&D efforts and other investment opportunities.

Ludwig Hantson, Alexion’s chief executive officer, said the streamlining of company resources will create a leaner organization with greater financial flexibility.

In his note, Somaiya said Alexion will need to prioritize on rebuilding its pipeline, which could include acquisitions focused on an expansion into orphan and ultra-rare diseases. Somaiya expects that Alexion will consider Ra Pharmaceuticals due to its diversified complement pipeline and Sage due to its diverse pipeline, The Street noted.

The same day Somaiya suggested Sage, that company saw a stunning failure when its epilepsy drug Brexanolone failed to help patients with a severe form of the disease. Phase III data from that trial showed Brexanolone failed to statistically differentiate itself from placebo. While Brexanolone does not appear to benefit epilepsy patients diagnosed with the severe form of super-refractory status epilepticus, the drug is showing promise in the treatment of postpartum depression. Earlier this year, it snagged Breakthrough Therapy Designation by the U.S. Food and Drug Administration.

Ra Pharmaceuticals also received a promising designation from the FDA earlier this year. In July, the FDA granted Orphan Drug Designation to RA101495, the company’s lead clinical candidate, for the treatment of paroxysmal nocturnal hemoglobinuria (PNH). RA101495 is currently in Phase II development as a self-administered subcutaneous injection for PNH, a rare and life-threatening blood disorder where red blood cells are attacked and destroyed by the complement system.

In addition to PNH, RA101495 is also being developed for treatment of refractory generalized myasthenia gravis (rMG), and lupus nephritis (LN). The drug is also undergoing preclinical testing for treatment of Escherichia coli sepsis.

Alexion is not only looking at rebuilding its pipeline, but is also dealing with the shadow of past controversies. The company continues to grapple with allegations of improper sales practices for Soliris – allegations that lead to the resignation of the former CEO of the former CEO David Hallal, as well as Vikas Sinha, the company’s chief financial officer. In January of this year, Alexion admitted that unnamed members of its senior management team used “inappropriate business tactics” to market Soliris. In January, the company said some revenues pulled in 2015 and 2016 were “realized by employee actions that involved inappropriate business conduct, including violations of company policies and procedures.”

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