[Biotech&Pharma] This Biotech Just Topped Alexion's Biggest Moneymaker — And Rocketed

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Shares of Apellis Pharmaceuticals (APLS) rocketed to a record high Tuesday after the biotech company's experimental drug outperformed Alexion Pharmaceuticals' (ALXN) blockbuster, Soliris, in a head-to-head test.




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On the stock market today, Apellis stock jumped 28.3%, to 38.73, in massive volume. In after-hours trading, however, shares slipped nearly 1% after the biotech company filed plans for a shelf offering of company shares. During the regular session, Alexion stock rose a fraction, to 106.85.

The biotech company tested its drug, dubbed pegcetacoplan, in patients with a blood disorder called paroxysmal nocturnal hemoglobinuria, or PNH. A rare disorder, PNH destroys red blood cells and blood clots, and impairs bone marrow function.

At week 16 of the study, patients who received pegcetacoplan showed a stronger increase in hemoglobin vs. those who took Soliris, biotech company Apellis said in a news release. A red protein, hemoglobin transports oxygen in the blood.

“Pegcetacoplan is the first and only investigational therapy to demonstrate superiority compared to (Soliris) on hemoglobin levels,” Chief Medical Officer Federico Grossi said in a written statement. “We are also excited to see 85% of patients treated with pegcetacoplan were transfusion free.”

Biotech Company Enters Profit Zone

Earlier this month, Apellis shares broke out of a consolidation with a buy point at 31.57. Now, shares of the biotech company extend roughly 22.7% beyond that point. Investors are advised to take some profits when a stock rises 20%-25% above its buy point.

The biotech company is banking on taking some share from Alexion's Soliris, a successful drug that, in 2018, generated $3.56 billion. Soliris treats a variety of rare diseases, including PNH.

Over the course of 16 weeks, patients who took Apellis' pegcetacoplan showed a hemoglobin increase of 3.8 grams per deciliter. That was a statistically significant improvement and topped Alexion's Soliris, the biotech company said.

“Going into the study, our most optimistic expectation was to see a 2 gram per deciliter or more change in hemoglobin and a trend on the key secondary (goals),” Apellis Chief Executive Cedric Francois said in a written statement. “Needless to say, we are thrilled with these results.”

Some Caveats To Apellis' Study

There are some caveats to the biotech company's study, Evercore ISI analyst Umer Raffat said in a note to clients. He noted the study specifically recruited PNH patients who were taking Soliris, but still anemic. Also, every patient received pegcetacoplan on top of Soliris for one month, he said.

Still, the improvement on hemoglobin is “excellent data,” he said.

SVB Leerink analyst Dae Gon Ha noted the biotech company has late-stage tests in PNH and geographic atrophy — an eye disease — as well as several mid-to-late stage efforts, and $430 million in cash. He initiated coverage of Apellis stock with a market perform rating and a price target of 30.

“Apellis could be an intriguing name for investors,” Ha said. “However, we see several reasons that, on balance, warrant a more cautious view.”

Ha expects the biotech company to ultimately gain $306 million in peak sales for pegcetacoplan in PNH patients. It will face competition from Alexion's Soliris. Meanwhile, Alexion is quickly moving patients to Ultomiris, its next-generation version of Soliris.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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