After taking eteplirsen, patients in a phase 2 study saw a 62.4 meter improvement in walking distance in the six-minute walk, compared to placebo. While the presentation of this data has led to Sarepta Therapeutics Inc (NASDAQ:SRPT) being the best performing biotech stock since January 2012, the stock is currently trading at just 1.4 times peak sales — analysts project $700 million in peak revenue for eteplirsen.
In an industry that awards companies treating rare diseases, Sarepta Therapeutics Inc (NASDAQ:SRPT) is cheap long term, especially compared to Alexion. Not to mention, Sarepta has a pipeline of products using the same technology to treat other diseases.
An industry-leading pipeline
Regeneron Pharmaceuticals Inc (NASDAQ:REGN) is often compared to Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), as a $23 billion biotech, trading at 12.8 times sales. While the two may appear similar, the difference lies in pipeline development, as Regeneron has 12 clinical products with several having blockbuster potential.
In particular, Regeneron Pharmaceuticals Inc (NASDAQ:REGN)’s phase 3 cholesterol drug, alircumab, and its Phase 2 asthma drug, dupilumab, could create peak worldwide sales of $12 billion combined. Alircumab lowers bad cholesterol and was proven to be significantly better than Lipitor in phase 2 testing. Dupilumab prevents asthma attack and did so in 94% of treated patients compared to just 56% using placebo in a 12-week, 104-patient study.
Therefore, if continued success is realized, and both drugs meet their potential, Regeneron Pharmaceuticals Inc (NASDAQ:REGN), combined with its blockbuster drug Eylea, could earn sales of $15 billion globally, making it trade at 1.5 times its peak potential. Compared to Alexion, this valuation is much more favorable, and impressively, we only addressed two of the company’s 12 products.
Final thoughts
Looking ahead, I see little to no value in shares of Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN). Sure, Soliris is a great product that commands premium pricing and has no competition, but Alexion’s growth is already decelerating and the company’s valuation leaves little room for fundamental error.
Regeneron Pharmaceuticals Inc (NASDAQ:REGN) or Sarepta Therapeutics Inc (NASDAQ:SRPT) look to be better options in the orphan space. Both have large pipelines in addition to their core products. In biotechnology, the presence of value creates opportunity, and in the case of Alexion, there really isn’t any value left.
The article Is There Any Remaining Value in This Industry Leader? originally appeared on Fool.com and is written by Brian Nichols.
Brian Nichols is long Regeneron Pharmaceuticals. The Motley Fool has no position in any of the stocks mentioned.
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