Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) has had another misfortune in the UK. The country’s public health watchdog, NICE (the National Institute for Health and Care Excellence) declined to recommend Alexion’s Kanuma as a treatment for an ultra-rare disease called lysosomal acid lipase deficiency (LAL).
The refusal by NICE to recommend Kanuma comes shortly after the same agency issued a restricted approval for Alexion’s other drug called Strensiq. NICE only approved Strensiq to be used for treating certain indications of hypophosphatasia disorder, limiting the market for the drug.
In both Kanuma and Strensiq, NICE acted the way it did because it felt the drugs are highly priced. Kanuma costs more than $614,000 for a year’s treatment, while Strensiq costs $392,000 for the same duration of treatment.
Alexion had agreed to offer discounts on the drug, but still NICE felt the prices after taking the discounts into consideration remained prohibitive. That led it to decline to recommend Kanuma and only issue limited recommendation for Strensiq.
Alexion described the development as disappointing, and that is understandable. When the company paid $8.4 billion in 2015 to Synageva Biopharma so it could get its hands on Kanuma, it told investors that paying a premium price for the acquisition was justified because Kanuma would be a billion-dollar product. But NICE’s action is threatening to frustrate Alexion’s goal.
Tepid quarterly earnings
Alexion also disappointed investors with its 4Q16 results that missed expectations at both top and bottom line levels. EPS of $1.07 came short of $1.10 that analysts were expecting on the average. Revenue of $831 million missed the consensus estimate of $837 million.
Alexion hopes 2017 will be a better year.
“We are focused on driving operational efficiencies and productivity to expand our operating margin, and have announced today that we’ve increased our share repurchase authorization to $1 billion,” said CEO David Brennan.
Shares of Alexion dived more than 1.2% to $130.39 in the last session, and are up 6% since a year ago.