Funny Money

AstraZeneca will acquire Alexion Pharmaceuticals for $39.4 billion of which approximately $13.5 billion will be paid in cash and the rest in shares of the Anglo-Swedish pharmaceutical company.

The purchase price reflects a 45% premium to Alexion’s stock price as of Dec. 11, 2020. At the end, Alexion shareholders will receive somewhere around 15% of the combined entity.

The deal is expected to close in the third quarter of 2021.

  • Regulators in the US, Canada, Brazil, and Russia have already approved the deal. Regulators in the UK, EU, and Japan are still to wait for the verdict.
  • The green light turned on by the US Federal Trade Commission (FTC) is a good sign because in March 2021 the FTC announced a tightening of the review process for mergers and acquisitions among pharmaceutical companies as such transactions often lead to anticompetitive effects resulting in steep increases in drug prices.
  • In late May 2021, the U.K. competition regulator began reviewing the deal between AstraZeneca and Alexion due to concerns that it could lead to less competition in the market. A decision will be made by the end of July.
  • In early July 2021, the European Commission approved the deal between AstraZeneca and Alexion.
  • In mid-July 2021, the British regulator issued a positive verdict.
  • At the end of July 2021, AstraZeneca finally closed its takeover of Alexion.

The takeover of U.S.-based Alexion, which earned $6.07 billion in 2020, will, first, strengthen AstraZeneca’s position in the United States and, second, allow Alexion to more aggressively promote its drugs in China where AstraZeneca is doing well.

Alexion, which focuses on the treatment of rare diseases, will form a separate division within AstraZeneca headed by Alexion’s current executives.

Drugs for orphan diseases are a very hot topic. They attract pharmaceutical manufacturers because such drugs, first, do not require large teams of sales representatives and, second, allow to charge huge prices, which insurance companies are willing to easily pay back because their coverage is limited to only a handful of patients. Of over 7,000 rare and ultra-rare diseases, only around 5% have FDA-approved therapies.

  • Earlier it was speculated that Alexion’s owners could begin to persist in processing the deal by demanding at least $200 for each share of the company thereby bringing its value to $45 billion; against the $175 offered by AstraZeneca. It was predicted that there would be wishes to increase the proportion of cash payments. It was not ruled out that there would be other players in the pharmaceutical industry willing to acquire Alexion.

If Alexion backed out of the deal with AstraZeneca, agreeing to sell to another pharmaceutical company, it would have to pay a penalty of $1.2 billion. If AstraZeneca backs out, its payoff will be $1.4 billion.

For AstraZeneca, the Alexion takeover would be the largest agreement of its kind since its founding in 1999 when Sweden’s Astra and Britain’s Zeneca merged into one company.

In June 2020, it was rumored that AstraZeneca intended to merge with Gilead Sciences, the value of such a fantastic deal would exceed $200 billion.

In May 2020, the hedge fund Elliott Associates, which owns a certain share of Alexion, repeated its December appeal to the company’s management saying that it was being mismanaged which reduced its investment value, and therefore the company should be sold immediately. The worry is understandable because without looking back at Alexion’s steady earnings growth, its share price has not increased in any way since mid-2016.


Promises Are Like Piecrust

In May 2014, Pascal Soriot, the CEO of AstraZeneca, who took over in October 2012, promised investors that by 2023 the company’s revenues would grow to $45 billion. This was done on the wave of attempts by Pfizer to take over AstraZeneca for $117 billion (in cash and stock). After a couple of years, earnings forecasts were lowered to $40–41 billion, due to the strengthening of the dollar.

In March 2013, when Soriot unveiled an updated strategy to return AstraZeneca to stronger growth, it was said that 2018 earnings would substantially exceed the $21.5 billion consensus forecast. In 2018, 2019, and 2020, it was able to reach earnings of $22.1 billion, $24.4 billion, and $26.6 billion.

As we can see, AstraZeneca is not doing well as planned; the business is scaling too slowly. Although the Anglo-Swedish pharmaceutical company is trying hard to reformat its activities, focusing clearly on three priority and obviously profitable areas for its business goals: cancer diseases; cardiovascular, renal and metabolic disorders; respiratory and immunological conditions. It also shares commercial activity with partners to focus on innovation.

In parallel, AstraZeneca has been selling off its extensive drug portfolio for years, mostly drugs that have lost patent protection or are no longer of interest to it, investing the proceeds in the development of brand-new drugs. In the period 2014–2020 on such deals to get rid of “old drugs” AstraZeneca earned (including future payments and estimated royalties) an approximate 15 billion dollars.

The main money makers for AstraZeneca are anticancer drugs Tagrisso (osimertinib), Imfinzi (durvalumab) and Lynparza (olaparib), antidiabetic Farxiga/Forxiga (dapagliflozin), antiaggregant Brilinta (ticagrelor), antiasthmatics Symbicort (budesonide + formoterol), Pulmicort (budesonide) and Fasenra (benralizumab). They contribute two-thirds of its revenue.


New Owner of Soliris

The jewel in Alexion’s crown is Soliris (eculizumab), one of the most expensive drugs on the planet; on average, it costs $650,000 a year to treat one American patient.

Soliris, a humanized monoclonal antibody against complement component (C5), focuses on the treatment of rare autoimmune complement-mediated diseases: paroxysmal nocturnal hemoglobinuria (PNH), atypical hemolytic uremic syndrome (aHUS), generalized myasthenia gravis (gMG) with autoantibodies to acetylcholine receptor (AChR), neuromyelitis optica spectrum disorder (NMOSD) with autoantibodies to aquaporin-4 (AQP4).

A clinical evaluation of Soliris for the treatment of Guillain–Barré syndrome (GBS) is planned.

Due to the imminent expiration of patent protection for eculizumab, Alexion is conducting an orderly switch of patients to Ultomiris (ravulizumab), which, working similarly to Soliris (and with a price tag reduced to $485,000), is made in an improved formulation that allows for less frequent intravenous infusions of the drug; every two months instead of every two weeks.

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Ultomiris, a humanized monoclonal antibody against C5, is already being used in PNH and aHUS therapy; in the future, the spectrum of indications will include gMG and NMOSD thereby making it similar to Soliris. Ravulizumab is also being tested in the therapy of diseases not covered by eculizumab: hematopoietic stem cell transplant-associated thrombotic microangiopathy (HSCT-TMA), complement-mediated thrombotic microangiopathy (CM-TMA), dermatomyositis (DM), IgA nephropathy (IgAN), lupus nephritis (LN), amyotrophic lateral sclerosis (ALS).

Based on the ENHANZE drug delivery technology by Halozyme Therapeutics, an even more optimized formulation of ravulizumab is being developed; subcutaneous injections at home every two weeks or even every month.

Halozyme: Elegant Transformation of Drugs From Intravenous to Subcutaneous

Easy and quick administration of biological drugs. All for the convenience of patient care.

In preparation is ALXN1720, a long-acting anti-C5 albumin-binding bispecific minibody optimized for subcutaneous delivery that binds and prevents activation of complement component 5 (C5). ALXN1720 will be examined in the treatment of gMG and DM, and immediately in pivotal phase 3 clinical trials.


Niche Drugs

Alexion has a trio of commercialized drugs targeting very specific disorders:

  • Andexxa/Ondexxya (andexanet alfa). The first antidote to neutralize the effects of the anticoagulants Xarelto (rivaroxaban) or Eliquis (apixaban) when life-threatening or uncontrollable bleeding has to be stopped. Andexxa/Ondexxya was obtained by Alexion in its $1.41 billion acquisition of Portola Pharmaceuticals in July 2020.
  • Strensiq (asfotase alfa). For the treatment of hypophosphatasia manifesting in perinatal, infantile, or juvenile age. Strensiq was taken over by Alexion following its $1.08 billion purchase by Canada’s Enobia Pharma in February 2012.
  • Kanuma (sebelipase alfa). For the treatment of lysosomal acid lipase (LAL) deficiency, also known as Wolman disease. Alexion got hold of Kanuma by swallowing Synageva BioPharma for $8.4 billion in May 2015.


Vast Experiments

Alexion’s pipeline is well stocked with drug candidates and experimental molecules.

First, it is working on the treatment of Wilson’s disease, a rare autosomal recessive pathology associated with abnormal metabolism of copper, which, being toxic, accumulates in the liver (leading to cirrhosis), nerve and kidney tissues, and the cornea. To that end, Sweden’s Wilson Therapeutics was bought in May 2018 for 7.1 billion kroner ($855 million) and its Decuprate (bis-choline tetrathiomolybdate), with final clinical trial results due in the first half of 2021.

Second, Syntimmune’s $1.2 billion takeover in November 2018 plugged the expertise of monoclonal antibodies against the neonatal Fc receptor (FcRn) to treat autoimmune diseases mediated by IgG antibodies. The development of drugs against warm autoimmune hemolytic anemia (WAIHA) and gMG is underway.

Third, Achillion Pharmaceuticals, acquired for $930 million in January 2020, has provided oral complement factor D inhibitors that will treat autoimmune diseases in a substantially more convenient way than injectable monoclonal antibodies. Thus, danicopan (ALXN2040, ACH-4471) is being trialed for PNH with extravascular hemolysis as an add-on therapy and for geographic atrophy (GA), and ALXN2050 (ACH-5228) is being tested in PNH monotherapy and treatment of C3 glomerulopathy (C3G).

Finally, Alexion is probing forces with acoramidis (ALXN2060, AG10), transthyretin stabilizer, for therapy of transthyretin amyloidosis (ATTR) with cardiomyopathy (ATTR-CM) or polyneuropathy (ATTR-PN); CAEL-101, chimeric fibril-reactive monoclonal antibody, for amyloid light-chain (AL) amyloidosis (also known as primary amyloidosis); cerdulatinib, dual spleen tyrosine kinase and Janus kinases (SYK/JAK) inhibitor, for oncohematology.


Alexion’s Near Future

Alexion expects its revenue to grow to $9–10 billion in 2025 from the current $6 billion.

To achieve this goal, it will have to significantly expand the pool of patients in the US covered by Alexion drugs. While Alexion drugs were prescribed to 2,588 patients in 2020, in 2025 they are projected to be taken by ~7500 patients.

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The main growth driver for this will be the expansion of the Ultomiris indication list: clinical trials phase 3 results for gMG and NMOSD treatment will be available in H2 2021 and H2 2022, respectively.

Filing for once-weekly version of Ultomiris, that patients can subcutaneously self-administer, is expected in Q3 2021.

The market launch of ALXN1720, the third generation of anti-C5-drugs by Alexion, is scheduled for 2025.

There are 10 drug launches planned by 2023, which is pretty good considering Lynparza, Farxiga/Forxiga and Brilinta will start losing patent protection sometime in 2024.


Soliris and Competitors

Soliris, which debuted in March 2007, has firmly established itself in the complement-mediated autoimmune disease sector. And its commercial success has spawned many who want to compete with it, as Soliris has earned nearly $30 billion since its launch. The first serious rivals of Soliris will begin to appear in 2021.


Empaveli: Powerful New Drug for Paroxysmal Nocturnal Hemoglobinuria

Pegcetacoplan is more effective in treating paroxysmal nocturnal hemoglobinuria when compared to Soliris.



AstraZeneca. Accelerating AstraZeneca’s strategic and financial development. AstraZeneca to acquire Alexion. 12 December, 2020. [PDF]

Alexion Pharmaceuticals. 39th Annual J.P. Morgan Healthcare Conference. January 12, 2021. [PDF]

Alexion Pharmaceuticals. Fourth quarter & full year 2020 earnings. February 4, 2021. [PDF]

Alexion Pharmaceuticals. Fourth quarter & full year 2020 earnings. Public Q&A. February 3, 2021. [PDF]

Alexion Pharmaceuticals. Virtual Investor Day. October 6 , 2020. [PDF]

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