[Ip-health] For Alexion, Third Time's The Charm...new drug, Soliris, to treat a rare blood disorder called paroxysmal nocturnal hemoglobinuria (PNH).

[Joana Ramos]

http://www.forbes.com/2007/03/16/alexion-drug-approval-biz-cx_mh_0316fda.html

For Alexion, Third Time's The Charm
Matthew Herper, 03.16.07, 2:45 PM ET

<snip>
> The U.S. Food and Drug Administration has approved a new drug,
> Soliris, to treat a rare blood disorder called paroxysmal nocturnal
> hemoglobinuria (PNH). It could eventually have sales of as much as
> $500 million a year, because it will cost hundreds of thousands of
> dollars to treat a single patient. This path to profit, one of the
> oldest and most successful in biotech, could become increasingly
> controversial as the debate about high drug costs intensifies.

<snip>
> An estimated 8,000 people in the U.S. and Europe have PNH, which is
> caused by a genetic mutation that occurs during a patient's lifetime
> and cannot be passed on to children. But Alexion had said it expects
> to charge between $100,000 to $200,000 per patient per year. Some
> analysts expect it may charge as much as $300,000.



Alexion Pharmaceuticals, a money-losing Connecticut biotech company, has
faced a string of disappointments and failures since it was founded in
1992 by a cardiologist who hoped to turn revolutionary technologies like
gene therapy into new treatments.

Now Alexion can finally taste success. The U.S. Food and Drug
Administration has approved a new drug, Soliris, to treat a rare blood
disorder called paroxysmal nocturnal hemoglobinuria (PNH). It could
eventually have sales of as much as $500 million a year, because it will
cost hundreds of thousands of dollars to treat a single patient. This
path to profit, one of the oldest and most successful in biotech, could
become increasingly controversial as the debate about high drug costs
intensifies.

Currently, the exact price of the drug, a key concern for investors, is
still unknown. The FDA decision was not expected by many analysts until
next Tuesday. Expectations for Soliris had already given Alexion a
market capitalization of $1.3 billion. Minutes after news of the FDA
action, the stock surged another 6% to $40.

Leonard Bell, Alexion's CEO and co-founder, says that a price will be
available before the commercial launch of the drug, which should happen
by the end of the month. Alexion will at the same time describe a
program to make sure sick patients have access to Soliris. "We recognize
our obligation to make sure we can ensure access to patients," Bell says.

In PNH, the immune system destroys red blood cells, causing darkened
urine, pain in the head, back and abdomen and an increased risk of blood
clots that can lead to death by causing heart attacks and other
complications. Most patients live 10 years after their diagnosis.
Soliris does cause an increased risk of infection in these patients,
while reducing the risk of blood clots.

An estimated 8,000 people in the U.S. and Europe have PNH, which is
caused by a genetic mutation that occurs during a patient's lifetime and
cannot be passed on to children. But Alexion had said it expects to
charge between $100,000 to $200,000 per patient per year. Some analysts
expect it may charge as much as $300,000.

Most of the debate about Alexion's value relates to questions about how
high it can price Soliris and how many PNH patients it can get to take
the drug, according to Rachel McMinn, an analyst at Piper Jaffray. In a
Feb. 26 note, Morgan Stanley analysts attributed weakness in Alexion
shares to a decrease in the expected price of Soliris. Shares have
slumped 19% from a peak of $45.73 last year.

The Morgan Stanley analysts, led by Sapna Srivastava, argued that this
weakness was "an attractive entry point" because they believed Soliris
would be priced at more than $200,000 and that this could develop PNH
into a $500 million dollar market.

The strategy of treating a very rare disease with an incredibly
expensive biotech medicine has been around at least since Genzyme
(nasdaq: GENZ - news - people ) received approval to sell its Ceredase
for Gaucher's disease in 1991 at a widely reported cost of $150,000 a
year. Genzyme has become one of the biggest and most profitable biotech
companies partly because of its drugs to treat rare diseases, although
it has branched out into other areas. More recently, BioMarin of Novato,
Calif., and Shire (nasdaq: SHPGY - news - people ) of Basingstoke, U.K.,
have launched medicines that follow this model.

Bell initially focused on broader markets. Soliris has been tested in
rheumatoid arthritis, but it is as a PNH drug that it is likely to make
it to market. An attempt at developing a medicine that would help
patients following heart bypass surgery failed. Even if Soliris is
approved, profitability is still probably several years away.

"It's very much like a startup," Bell says of his 15-year-old company.
"I would have gotten here a little faster, perhaps, but it's better to
get here than not."

--
Joana Ramos, MSW
Cancer Resources & Advocacy
7303 23rd Ave. NE
Seattle, WA  98115
206-229-2420
http://ramoslink.info/