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Understanding Alexion’s Share Price Performance since Its Previous Earnings

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Share price performance

Alexion Pharmaceuticals (ALXN) announced earnings for the first quarter of fiscal 2016 on April 28, 2016. The company reported a revenue decline of 1.5% and an earnings decline of 2.2%, which surprised investors and led to a 6% fall in its share price.

On April 29, Alexion’s closing share price fell to $139.3 from the closing price of $161.4 on April 21. While maintaining its total revenue guidance, Alexion lowered its sales outlook for Soliris in fiscal 2016. This was probably another reason for the company’s share price decline. The contribution from the metabolic portfolio is expected to offset the comparatively lower sales from Soliris.

Understanding Alexion's Share Price Performance since Earnings

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Recent events that supported the share price

On March 28, 2016, Kanuma, Alexion’s innovative ERT (enzyme replacement therapy), received approval from Japan’s Ministry of Health, Labour, and Welfare for the indication of lysosomal acid lipase deficiency.

On April 4, 2016, Alexion’s ongoing, open-label Phase 2 trial of Strensiq supported the finding that “children with perinatal- and infantile-onset HPP (hypophosphatasia) treated with Strensiq had statistically significant improvements in bone healing as assessed radiographically, which were sustained through 3.5 years of treatment.”

These two events might have caused the company’s share price surge in April.

Share prices of peers

Over the past year, Alexion’s share price has fallen by 19%. Shire (SHPG) and BioMarin (BMRN) have tumbled by 23.8% and 26.4%, respectively. Amgen (AMGN) declined marginally by 1.4%. Recent events over the past couple of weeks, such as pricing pressure from the US government and the Valeant turmoil, also contributed to the general slump in the biotechnology industry.

As it’s often risky to invest directly in a biotech company, investors can choose to diversify through an ETF like the First Trust NYSE Arca Biotechnology Index Fund (FBT), which holds 3.1% of its total holdings in Alexion Pharmaceuticals.

In the next part, we’ll discuss Alexion’s product performance during 1Q16.

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