Alexion Pharmaceuticals, Inc.

ALXN Details

Release of Phase 2 Data for CAEL-101: Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) is a global biopharmaceutical company focused on the development and commercialisation of life-changing medicines. Along with Caelum Biosciences, ALXN recently released new Phase 2 safety and tolerability data for CAEL-101, a potentially first-in-class monoclonal antibody (mAb) designed to improve organ function. Notably, the phase 2 data further strengthened the safety and tolerability profile of CAEL-101 and suggested possible cardiac disease improvements and renal response among patients. The company has commenced Phase 3 clinical program to evaluate CAEL-101 in combination with SoC therapy in AL amyloidosis.

FDA Approval of ULTOMIRIS® for Children and Adolescents:  On 7^th June 2021, the company announced that it has received approval from U.S. Food and Drug Administration (FDA) for the expanded use of ULTOMIRIS® to include children and adolescents with paroxysmal nocturnal hemoglobinuria (PNH). 

Q1FY21 Result Highlights: For Q1FY21, the company reported revenue of $1,636.5 million, up 13% on pcp. SOLIRIS net product sales for Q1FY21 stood at $1,027.6 million, slightly up by 0.5% on pcp. During the quarter, the company completed enrollment in Phase 3 studies of ULTOMIRIS® (ravulizumab) in NMOSD and ALS. GAAP diluted EPS for Q1FY21 stood at $2.86, up 14% on pcp.

Revenue Trend (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to the risks related to COVID-19 pandemic as it has caused restrictions on the initiation of new trials and patient visits to protect both site staff and patients from possible COVID-19 exposure. The company is also exposed to the risks related to potential interruptions in supply to patients' customary site-of-care locations.

Outlook: Looking ahead, the company is focused on advancing its LEAD-EXPAND-DIVERSIFY strategy to progress its commercial portfolio as well as its many development programs. In May 2021, the company’s shareholders gave approval for acquisition by AstraZeneca. As per the definitive agreement signed between AstraZeneca and ALXN, the shareholders of ALXN will receive $60 in cash and 2.1243 AstraZeneca American Depositary Shares (ADSs) for each ALXN share. It is expected that the transaction will close in Q3FY21.

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock has provided a return of 64.02% in the last one year and 21.42% in the last three months. The stock is currently trading close to its 52-weeks high price of $186.52. The stock has a support of ~$170.43 and resistance of ~$189.41. We have valued the stock using P/E multiple based illustrative relative valuation method and arrived at a target price with a downside of single-digit (in % terms). We believe that the company can trade at a slight premium to its peers, considering the rise in Q1FY21 revenue, supportive Phase 2 Data for CAEL-101, and also taking into consideration that the company has been commanding a premium in the past 3-years over its peer average. We have taken peers like Amgen Inc (NASDAQ: AMGN), Abbvie Inc (NASDAQ: ABBV), and Pfizer Inc (NYSE: PFE). Considering the stock’s decent returns in the last three months, current trading level, and valuation, we suggest investors to book profit and give a “Sell” rating on the stock at the closing price of $186.28, up by 0.64% as on 2 July 2021.

ALXN Daily Technical Chart, Data Source: REFINITIV

Rigel Pharmaceuticals, Inc.

RIGL Details

NIH Conducting Trial of Fostamatinib: Rigel Pharmaceuticals, Inc. (NASDAQ: RIGL) is a biotechnology company focused on the treatment of patients with hematologic disorders, cancer and rare immune diseases. The company’s novel oral spleen tyrosine kinase (SYK) inhibitor, fostamatinib, is currently being studied in Phase 3 clinical trial for the treatment of warm autoimmune hemolytic anemia. On 29 June 2021, the company announced that fostamatinib had been selected for a National Institutes of Health (NIH) ACTIV-4 trial in hospitalized patients with COVID-19. The trial will be coordinated by Vanderbilt University Medical Center (VUMC), which along with team NIH, will study the fostamatinib's potential to treat and prevent conditions caused by an overactive immune system in COVID-19 patients.

Q1FY21 Result Highlights: For Q1FY21, the company reported net product sales of $12.4 million, down by 2% on pcp. Total revenue for Q1FY21 stood at $81 million. Due to an increase in personnel-related costs, stock-based compensation expense, and research and development costs, the company’s total costs and expenses grew to $39.3 million in Q1FY21, compared to $34.7 million in pcp. As at 31 March 2021, the company had cash, cash equivalents and short-term investments of $39.3 million.

Revenue Trend (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to the risks related to the failure of clinical trials. It is also exposed to the risks and uncertainties associated with the commercialization and marketing of TAVALISSE.

Outlook: Looking ahead, the company is focused on advancing the development of its IRAK1/4 program. The company is currently conducting Phase 3 pivotal trial of TAVALISSE in patients with warm autoimmune hemolytic anemia. RIGL believes that TAVALISSE has the potential to be the first to market therapy for patients with wAIHA. 

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock has provided a return of 75% in the last nine months and 32.03% in the last three months. The stock is currently trading higher than the average 52-week price level range of $5.5 -$1.77. On the technical analysis front, the stock has a support level of ~$4.14 and resistance of ~$4.93. We have valued the stock using EV/Sales multiple based illustrative relative valuation method and arrived at a target price with a downside of low single-digit (in % terms). We believe that the company can trade at a slight discount to its peers, considering the decline in net product sales in Q1FY21, rise in debt-to-equity ratio, and increase in total cost and expenses. We have taken peers like Regeneron Pharmaceuticals Inc (NASDAQ: REGN), Neurocrine Biosciences Inc (NASDAQ: NBIX), Bristol-Myers Squibb Co. (NYSE: BMY). Considering the company’s decent returns in the last three and nine months, current trading levels, risks and uncertainties associated with the commercialization and marketing of TAVALISSE, and valuation, we suggest investors to book profit and give a “Sell” rating on the stock at the closing price of $4.41, down by 2% on 2 July 2021.

RIGL Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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