The biotechnology space is renowned for its ability to throw out surprise developments and, in many cases, these developments can be rewarding events for traders – especially those that are happy to take on a bit of risk in the space. This week, we’ve got one such surprise, with Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) announcing an update as to the progress of its lead development asset towards commercialization in the US.

Specifically, the company announced on Tuesday that the Food and Drug Administration (FDA) in the US has greenlighted its Soliris asset. This is a drug that the company has been trying to get approved in a target indication of what’s called generalized myasthenia gravis, which is a rare long-term condition that causes muscle weakness that comes and goes in episodes and most commonly affects the muscles that control the eyes, as well as other areas of the face. Right now, treatment options are extremely limited and patients have no real choice but to undergo what’s probably best referred to as responsive treatment, in the sense that they wait until an episode occurs and then try to treat the situation as it plays out.

With Soliris, Alexion was trying to add a much-needed option to the portfolio of treatment options in the sector and – as per the latest development – the company has been successful in doing exactly that.

So why is this a surprise?

Well, the phase III trial that underpinned the company’s application to the FDA failed against its primary endpoint – technically. We say technically because the drug did induce a degree of improvement as demonstrated by the data, but the improvement was deemed to be not statistically significant based on a p-value of 0.0698. A p-value of <0.05 is generally deemed as the threshold for statistical significance, so the fact that this one came in at just shy of 0.07 means that the company wasn’t able to claim that its drug hit against the endpoint in question.

Anyway, regardless of this seeming failure, the FDA has given the drug a go-ahead for commercialization in its target population.

And that’s not the only surprising element of this situation.

When Alexion initially put forward its application, expectations were that the drug, if it was to get approved, would do so as a second line therapy for patients with myasthenia gravis. That is, patients would have needed to have received and failed to respond to an alternative therapy before becoming eligible for treatment with Soliris.

This is a pretty rare condition, so the limitations associated with a second line therapy label would have had some pretty serious implications for the revenue potential of the asset in question. As it turns out, the FDA has approved the drug as a first-line therapy, which totally removes the limitations that a second line label might have put in place.

On this note, what are the expected sales levels of this asset?

Analysts initially expected Soliris to generate somewhere in the region of $660 million dollars annually at peak sales. For a company the size of Alexion, which is currently valued at a market capitalization of $30 billion, this isn’t a dramatic amount but it’s still substantial in terms of long-term value potential.

The latest development, however, the FDA approving the drug for treatment as a first-line therapy in the MG indication, means that these revenue expectations increase to somewhere in the region of $900 million. That’s a pretty stark jump and it’s one that makes this asset a potential winner for Alexion going forward.

Add in the fact that this treatment is going to be one of the only real cure-type assets on the market in this indication, meaning the company likely isn’t going to have to push too hard (and, by proxy, spend too much money) to gain market share, and the program looks even more attractive.

Markets are responding to the news positively, with the company currently trading at a couple of percentage points premium to its preannouncement market capitalization. That doesn’t seem substantial but given that Alexion is a healthcare behemoth, it’s a pretty strong response.

We expect the company will continue to appreciate as the week matures to its latter stages.