Barclays Cuts Alexion Pharmaceuticals Target From $180 To $165

Barclays has cut the estimates and price target of Alexion Pharmaceuticals, Inc.

after its phase 3 data for Soliris in myasthenia gravis (gMG) missed statistical significance on the primary endpoint. The brokerage have conservatively eliminated all MG sales from its model, thus reducing its Soliris estimates by $25 million, $62 million, $91 million, and $132 million over 2017-2020. Barclays, which has an Equal Weight rating on the stock, also cut its 2017 EPS view to $6.15 from $6.25. Barclays trimmed its price target to $165 from $180. This reflects valuation of $138/share for Soliris (down from $151), $17 for Strensiq (down from $19), and $20 for Kanuma (down from $21) and net debt of (-$10). "In our view, the robust statistical analysis on the primary/secondary endpoint is impressive and the rationale for the miss (worst rank statistical analysis which was impacted by Soliris discontinuations) makes sense," analyst Geoff Meacham wrote in a note. Meacham noted that the focus will be on the acute unmet medical need in MG, totality of the phase 3 data and the fact that 10/12 analyses statistically favored Soliris. "That said, it is hard to ignore recent regulatory developments for other orphan diseases such as Duchenne muscular dystrophy (DMD) where FDA and EMA took a stricter view on statistical analysis," the analyst continued. Against that backdrop, the analyst said growth looks modestly lower with 2016-2018 estimated revenue and EPS CAGRs of 18 percent and 23 percent compared to 19 percent and 24 percent previously (with MG). On the call, Alexion noted plans to engage with regulators highlighting that the totality of the data and unmet need could still support approval. "We don't disagree but the timelines and path is much more uncertain, in our view," Meacham added. At the time of writing, shares of Alexion plunged 10.56 percent to $138.63.