According to Bloomberg News, Alexion Pharmaceuticals, Inc. (ALXN) is being eyed by Roche (RHHBY). People familiar with the situation, who declined to be identified, commented that Roche is seeking funds to finance the deal. Alexion Pharma, with a market cap of around $20 billion, surged more than 12% in Friday trading on the Nasdaq following rumors of the potential sale.
However, according to Reuters, Alexion Pharma's expensive valuation could prevent the transaction from materializing. Based on 2013 earnings estimates, Alexion is trading at 42.9x compared to the S&P average of 15.6x.
Roche is aiming to diversify its product portfolio through this potential takeover. The Swiss drugmaker boasts of a strong oncology portfolio. The acquisition of Alexion Pharma, if it materializes, would give Roche access to Alexion Pharma’s sole marketed drug Soliris.
Soliris is available for the treatment of paroxysmal nocturnal hemoglobinuria (PNH), a rare genetic disorder. In Sep 2011, the US Food and Drug Administration (FDA) cleared Soliris for treating children and adults suffering from atypical hemolytic uremic syndrome, an ultra-rare genetic disorder.
In Nov 2011, a similar approval for the drug was granted in the EU. Soliris is being studied for additional indications. The drug recorded sales of $1.13 billion in 2012, up 45%.
Strong Soliris sales for the PNH indication have helped the company achieve profitability since the second quarter of 2008. Sales of the drug have been boosted further by its label expansion into the aHUS indication.
Apart from rumors regarding Alexion Pharma’s potential takeover, Onyx Pharmaceuticals, Inc. (ONXX) is another stock in the biopharma space which is in the news as an acquisition target.
Alexion Pharma currently carries a Zacks Rank #3 (Hold). Jazz Pharmaceuticals (JAZZ) appears to be more attractive with a Zacks Rank #1 (Strong Buy).
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