Regeneron Pharmaceuticals Inc (REGN), Alexion Pharmaceuticals, Inc. (ALXN): Is This Biopharmaceutical Company Ahead Of Its Time?

The One-Product, Multi-Indication Approach

Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) and most orphan-focused companies base their entire future on the shoulders of just one product. Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) markets and develops Soliris, a drug for genetic diseases, which has returned revenue of $1.23 billion over the last 12 months.

However, Soliris could never earn this revenue with just one indication alone. Therefore, Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) markets the drug to treat various diseases — Soliris is being tested in five clinical studies — and the accumulative use of the drug is what creates blockbuster sales.

Regeneron Pharmaceuticals Inc (NASDAQ:REGN) doesn’t have to rely on just one product’s success. Sure, Regeneron has Eylea, but it also has two other drugs, and 12 clinical products in its pipeline. Eylea in particular has peak sales potential north of $3 billion globally; the company’s Phase 3 product to manage cholesterol called alirocumab has peak global sales over $7 billion. Therefore, Regeneron is a company that could produce countless billions in annual sales, both in treating orphan and common diseases.

Vulnerable To Failure

To me, Regeneron presents a far better option versus other companies that are labeled as orphan developers. Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), trading at 17 times current sales, is particularly vulnerable to the possibility of Soliris failing in one or more of its clinical studies, which would jeopardize its potential of reaching $4 billion in peak sales.

Regeneron is not as vulnerable because it doesn’t rely entirely on future clinical trials to support its valuation. At 16 times sales, Regeneron looks expensive, but its outlook and diversity makes it enticing. Thus, Regeneron is set apart from others in the space, valued like an orphan developer but operationally more like Big Pharma, which makes it a company ahead of its time.

Sherrie Stone owns Celldex. The Motley Fool has no position in any of the stocks mentioned. Sherrie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Is This Biopharmaceutical Company Ahead Of Its Time? originally appeared on Fool.com is written by Sherrie Stone.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.