What: Shareholders of rare-disease-focused Alexion Pharmaceuticals (NASDAQ:ALXN) are having a rough day. The stock is down more than 11% as of 12:30 a.m. EDT after the company released top-line results from a phase 3 clinical study.
So what: Yesterday, Alexion released top-line results from its phase 3 REGAIN study, testing its drug eculizumab's (Soliris) ability to treat patients with refractory generalized myasthenia gravis, or gMG. Refractory gMG is an ultra-rare disease that causes muscle weakness throughout the whole body, resulting in slurred speech, double vision, respiratory muscle weakness, and a huge number of other undesirable outcomes.
The primary endpoint of the REGAIN study was a change in the baseline in Myasthenia Gravis-Activities of Daily Living Profile (MG-ADL) total score for patients using eculizumab compared to those using a placebo. Unfortunately, findings from the study showed that eculizumab failed to deliver a statistically signifiant result. The primary endpoint from the study showed a p-value of 0.0698 at week 26, slightly above the 0.05 threshold that is needed to claim statistical significance.
However, the study did show that eculizumab was able to meet several of its secondary endpoints when compared to placebo. This included the change from baseline in Quantitative Myasthenia Gravis total score; the proportion of patients with at least a three-point reduction in MG-ADL total score and no rescue therapy from baseline; and the proportion of patients with at least a five-point reduction in QMG total score and no rescue therapy from baseline.
Still, these secondary endpoints hold much less meaning than the study's primary endpoint, so traders are selling off shares.
Now what: Dr. Martin Mackay, Alexion's global head of research and development, did his best to give investors hope that all is not lost for this label expansion opportunity, stating:
Today, patients with refractory gMG continue to suffer severe disease-related morbidities that often lead to hospital visits and ICU stays, despite currently available therapies. We look forward to discussing the results with regulators in the U.S. and Europe, and working together to address the urgent needs of patients with this devastating disease.
While the market is reacting harshly to this news, at least one analyst doesn't believe that these results will stop Alexion from winning regulatory approval to treat Refractory gMb. Piper Jaffray analyst Joshua Schimmer issued a note to investors, saying that he believes that this data still supports an accelerated approval, believing that the five-point reduction in Quantitative Myasthenia Gravis total score data will be seen as a "meaningful benefit" to patients. Schimmer even reiterated his rating and his $212 price target, implying meaningful upside from today's sub-$140 share price.
It's also worth remembering that Alexion's future isn't completely dependent on winning a label expansion claim for Refractory gMg. The company is still in the very early stages of rolling out its new metabolic drugs -- Strensiqu and Kanuma -- and it's also in advanced clinical trials for three other potential indications for eculizumab.
It's possible that shares are selling off so harshly today since biotech stocks in general are having a tough day. For example, shares of the iShares Nasdaq Biotechnology Index ETF (NASDAQ:IBB), are currently down more than 2% while the S&P 500 is up.
While today's share price movement stings, investors should remember that Alexion is forecasting that its revenue will exceed $3 billion this year, up strongly from the $2.6 billion that it produced last year. In addition, there is still a chance that the company could win approval for treating Refractory gMg.
I continue to believe that Alexion has a bright future ahead, so I'm more inclined to look at this drop as a buying opportunity rather than a reason to panic. If you agree and have a stomach for risk, then it might be a good day to give this stock a hard look.
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