Alexion investigates Soliris sales fraud allegations from former employee


Alexion sells the world’s most expensive medicine in Soliris. And one former employee now says it’s done so using some questionable methods.

The Connecticut drugmaker is investigating claims from that erstwhile worker that it used fraudulent sales practices to hawk its leading med. The company didn’t share many details, but it did say its Audit and Finance Committee is leading the probe in conjunction with some outside advisers.

As of now, that committee hasn’t turned up any instances where Soliris orders “were not placed by customers for patients,” Alexion said in a regulatory filing. But as Leerink Partners analyst Geoffrey Porges pointed out in a research note, the resolution of the investigation “will take potentially weeks rather than days.”

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For now, the company is holding off on making its Q3 regulatory filing with the Securities and Exchange Commission, and its response “inevitably” raises questions about its past revenue and the possibility of an earnings restatement, Porges noted.

But Porges wrote on Monday that the “situation has not impaired material fundamental value drivers” for the company, including sales for other drugs, the development of rare disease med ALXN-1210, and a potential Soliris label expansion.

"Further, while the chance of a material restatement has not been ruled out, the duration of the current investigation leads us to believe that any material impact would have been uncovered in time to disclose on the non-timely 10-Q disclosure," Porges wrote.

RBC Capital Markets analyst Simos Simeonidis said the signs point to significant fallout if the allegations prove true. Alexion’s board opted to do a full investigation before filing the 10Q--instead of filing it and including disclosures about the investigation’s existence, Simeonidis wrote in his own investor note.

For that reason, Simeonidis and his RBC colleagues “believe that this is not a trivial matter.” Luckily for Alexion, however, “what investors care about the most is the health of the Soliris franchise,” Simeonidis noted.

While the company’s rep would take a hit if it digs up anything shady in the sales department, Simeonidis doesn’t think shares would be hurt too badly. The orphan drug grew 10% year-over-year in the third quarter, and it may be getting another boost in the not-too-distant future: In next year’s first quarter, Alexion plans to file in the U.S. and Europe for a new indication in generalized myasthenia gravis.

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