Refilling Alexion’s cupboard

Why Wilson takeout is a smart but small step towards filling Alexion’s pipeline

The first deal by Alexion Pharmaceuticals Inc.’s freshly rebuilt management team serves to amplify its biggest challenge -- it needs many more external assets to break its Soliris eculizumab dependence, and it may not have the financial firepower to buy them.

On April 11, the rare disease company announced it will acquire Swedish biotech Wilson Therapeutics AB for $855 million in cash, gaining access to a single asset, Decuprate bis-choline tetrathiomolybdate (WTX101) to treat Wilson’s disease.

With data expected in 2H19, the compound should be a much needed near-term revenue generator. Sellside analysts have viewed the deal favorably and expect the candidate to contribute nearly $500 million in net sales by the mid-2020s.

But Alexion’s shares have drifted down 2% since the announcement, likely because the deal consumes more than half the company’s cash and doesn’t materially change the composition of its longer-term revenues.

Even if the deal ends up being a home run, the company is going to have to deepen its portfolio of clinical stage candidates. But its balance sheet doesn’t appear capable of such a feat, as the biotech is saddled with $2.9 billion of gross debt following the prior management team’s 2015 acquisition of Synageva BioPharma Corp. for $9.5 billion.

Alexion declined BioCentury’s interview request, and management hasn’t articulated a financing strategy that would enable it to acquire the most highly sought after targets.

Management will have to find a way to string together a series of deals if it wants to solve its Soliris problem. Its options seem limited to small takeouts or partnership deals -- especially in light of M&A values and premiums year-to-date.

The Baxalta band

The Wilson takeout is the first significant deal by CEO Ludwig Hantson since he took the helm last March, but it follows a flurry of moves that sharpened Alexion’s operational and

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