Despite the apparent death of the AMGN/ALXN merger, this stock continues to be a prime candidate for acquisition.
Alexion Pharmaceuticals, Inc. (ALXN)
From Cabot Undervalued Stocks Advisor
A Spanish news outlet, Intereconomia.com, is reporting that biotech company Amgen (AMGN) is in talks to buy Alexion Pharmaceuticals, Inc. (ALXN) for close to $200 per share. Alexion is featured in our Buy Low Opportunities Portfolio.
I consider the rumor to be reasonable (as opposed to outlandish). It’s fairly common for investment firms to speculate within their research reports that Amgen would be interested in acquisitions, and Alexion is routinely mentioned as a desirable target. In addition, the potential $200 buyout price has been bandied about before by a famous investment firm that I follow.
This potential M&A activity presents an exciting capital gain opportunity. I’ve always thought that Alexion made an attractive takeover target. I would like to present some risks, however, so that if you decide to buy ALXN stock or call options, you can be aware of the downside.
Alexion and Amgen are on opposite sides of an upcoming Sept. 6 decision by the U.S. Patent Trial and Appeal Board (USPTAB). Amgen is seeking an interparty review of Alexion’s Soliris IP protection, which was previously extended from 2021 through 2027. A decision in favor of Amgen would implement a year-long process during which USPTAB would decide whether to revoke the current Soliris patent extension.
In addition, on September 5, the European Patent Office will listen to oral arguments on whether new Soliris patents are issuable, extending patent protection from 2021 to 2027.
ALXN is an undervalued growth stock. The share price shot up to 124 yesterday amid excitement over the takeover rumor. If no takeover materializes, the stock will likely meet short-term upside resistance around 134. It’s possible that ALXN could receive a buyout offer from AMGN in the coming days. If that happens, hold your shares, and I’ll update everybody on how to proceed. (There will be no need to sell quickly.)
Nancy’s note: Shares of ALXN retreated after Amgen announced it will buy Celgene Corporation’s (CELG) plaque psoriasis and psoriatic arthritis drug, Otezla. However, Alexion received great news this week when the European Commission (EC) approved the extension of the current marketing authorization of SOLIRIS to include the treatment of neuromyelitis optica spectrum disorder (NMOSD) in adult patients who are anti-aquaporin-4 (AQP4) antibody-positive with a relapsing course of the disease. SOLIRIS is the first and only approved medication for NMOSD in Europe.
Strong Buy.
Crista Huff, Cabot Undervalued Stocks Advisor, www.cabotwealth.com, 978-745-5532, August 23, 2019