Shares of Alexion Pharmaceuticals (NASDAQ:ALXN), a drug developer that focuses on treatments for rare and ultra-rare diseases, surged by 13% in October, based on data from S&P Capital IQ, thanks to two positive catalysts.

First, on Oct. 23, Alexion announced that the Food and Drug Administration approved Strensiq (previously asfotase alfa) for the treatment of patients with perinatal-, infantile- and juvenile-onset hypophosphatasia, or HPP. Strensiq is an enzyme replacement therapy designed to curb or slow this genetic bone disease, which can result in life-threatening complications if untreated.

Less than two weeks prior to its approval, Alexion released new data from an open-label phase 2 extension study showing that taking Strensiq led to improvement in skeletal mineralization and physical function that was sustained over a period of at least five years.

Image source: Alexion Pharmaceuticals.

The other major catalyst for Alexion Pharmaceuticals was the release of its third-quarter earnings report near the end of October. For the quarter, Alexion recorded $666.6 million in sales, a 20% year-over-year increase thanks to growth in Soliris. Exclusive of negative currency translation, Alexion's operational growth clocked in at 29%. Adjusted EPS dropped on a year-over-year basis to $1.16 compared to $1.27 in Q3 2014. Comparatively, Alexion's revenue met Wall Street's estimate; however, its EPS was a clean $0.16 higher than expected.

Adding icing to the cake, Alexion updated its full-year EPS guidance on the heels of strong Soliris sales to a fresh range of $4.92 to $4.97 from a prior forecast of $4.70 to $4.80.

Considering Alexion's new FDA approval and its upped EPS guidance, should you still consider this high-flying stock a buy? I'd suggest yes, but would add two important caveats.

First, it's important that Alexion continues to work to diversify away from Soliris. Despite Soliris' success, relying on a single blockbuster drug can be devastating when its patent expires, or if safety issues and/or competition arise. Investors in Alexion should want to own this stock over the long-term, and Alexion needs to do a better job demonstrating that it has a complete enough pipeline to support growing sales and profits for years (or decades) to come.

Secondly, keep your eyes and ears open for prescription drug reform. Most talk of reform thus far has targeted more common diseases, which is not what Alexion specializes in. However, this isn't to say that Congress may not tackle prescription drug reform at some point in the future inclusive of ultra-orphan drugs. Considering that Soliris has a wholesale cost of around $537,000 in the U.S., it could be a clear target of possible reforms.

But I see no reason to yell "fire" until there are reasons to worry. In the meantime, Alexion remains a stock to consider for growth-seeking investors with a high tolerance for risk.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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