Alexion Pharmaceuticals Inc (NASDAQ:ALXN)
ALXN News And Technicals
Before the market opened today, shares of Alexion Pharmaceuticals slipped in reaction to news that the company will be changing their executive team including CEO David Hallal who resigned for personal reasons and the CFO. ALXN named board member David Brennan as interim-CEO and David Anderson has joined the as the CFO.
Shares gapped down big with an opening print of $118.61 after closing Friday at $132.07, marking just over a 10% drop in price. Shares remained heavy for most of the morning, reaching a current low of $109.80. Look for shares to form a base to trade against, as these shares can be volatile so you’ll want a clear area of support before taking any longs. Shares are well below their 200-day moving average, currently sitting at $132.48 and with this gap, they are now below their 50-day moving average at $122.94. Expect shares to remain volatile over the coming days.
Chairman Comments
Leonard Bell, M.D., Chairman of the Board of Directors, said,
This leadership transition comes during a period of great strength and momentum. The fundamentals of Alexion are very strong. We have three highly effective therapies and a robust rare disease pipeline. We are well-positioned for sustainable growth. Moreover, we have a clear strategy to continue our mission to develop and deliver transformative therapies for patients with devastating and rare diseases. – BusinessWire
Analyst Notes
We would expect shares to be down at least 10-15% based on what looks like a massive shake up at Alexion after an investigation that commenced on sales in early Nov right before our Credit Suisse healthcare conference. We are very surprised by the Alexion announcement removing CEO and long-time CFO. Based on this news, it would lead us to believe that former CEO Hallal (who ran commercial) before was involved. We note that David Hallal had joined Alexion in 2006. We were especially surprised by Vikas leaving as well.
From our conversations, we think many had hoped Lenny Bell might come back as CEO. We don’t know if that is out of the question but seems like a no since they have an interim search underway. The company has appointed an interim CEO who was on the board and was previously at AZ as CEO. The company reiterated the need for no restatement historically. We don’t know how this impacts revenues going forward. The company expects to file their 10Q in January 2017 or earlier so that may help to answer the question.
With this type of shake up, we would guess a question will be what is the company worth if they were to be acquired. Understanding what a M&A valuation for the company here is hard to say, based not fully on knowing impact to revenues going forward. Our back of the envelope M&A valuation suggests $167-$200/share. If we keep our base case and apply 10% cuts to R&D and SG&A, our Alexion M&A valuation is $200 (meaning those cuts add $35/sh in synergies).
However, we model 1210 separately and assume 75% success on $2.8B in 1210 revenues. We also include some credit for NMO (25% POS on $870M revs), MPSIIIB (25% POS on $370M revs). If we remove these pipeline items (ex 1210 and MG at 50%), our Alexion M&A valuation is $183. If we remove MG but keep OpEx cuts our DCF is $167. – CreditSuisse
Alexion Pharmaceuticals Profile
Alexion Pharmaceuticals, Inc. is a biopharmaceutical company, which focuses on serving patients with devastating and ultra-rare disorders through the innovation, development and commercialization of life-transforming therapeutic products. Its products include soliris, strensiq and kanuma. The company was founded by Joseph A. Madri, David W. Keiser, Stephen P. Squinto and Leonard Bell in January 1992 and is headquartered in New Haven, CT.