CHESHIRE, Conn. (TheStreet) -- Alexion Pharmaceuticals (ALXN) shares fell 8% Wednesday over investor concerns about the planned $8.4 billion acquisition of Synageva BioPharma (GEVA). At that price, the deal carries one of the highest takeout premiums in Wall Street history, which a lot of people believe is too rich even if it does expand Alexion's pipeline of drugs to treat rare, inherited diseases.
But here's another theory to at least partially explain Alexion's Wednesday selloff: Company executives are worried about a third company and a competitive threat to its Soliris ultra-orphan blockbuster franchise. Investors see Alexion's willingness to write a huge check for Synageva as a tacit acknowledgment that Soliris' long-term future might be more at risk than the company lets on.
That third company is Alnylam Pharmaceuticals (ALNY), the maker of drugs based on gene silencing technology known as RNA interference. Alnylam is developing a drug which if successful would compete directly against Soliris as a treatment for rare, inherited blood disorders.
Soliris sales grew 44% to more than $2.2 billion last year. Buying Synageva and its orphan disease drugs in development will bolster Alexion's revenue and profits, but only if it can also maintain the blockbuster sales of its Soliris franchise.
Alnylam is not an imminent threat to Alexion. The company's drug, ALN-CC5, just entered the first stage of human clinical testing in healthy volunteers. But if ALN-CC5 passes this initial test, the drug will be advanced into studies enrolling patients with paroxysmal nocturnal hemoglobinuria (PNH), one of two rare blood disorders which Alexion relies on for the bulk of Soliris sales.