Risks Remain For Alexion Even As Early Internal Investigation Results Seem Positive

Shares of Alexion Pharmaceuticals, Inc. ALXN plunged more than 15 percent Monday morning and hit a new 52-week low of $109.80 after the company's board of directors announced CEO David Hallal will leave the company amid an ongoing audit and finance committee investigation.

The company's chief financial officer Vikas Sinha will also leave the company to pursue opportunities.

Management Changes

A CNBC report suggested that the board lost confidence in both Hallal and Sinha although it is unclear why.

In a brief research report on Monday Heather Behanna of Wedbush noted that Alexion's audit and finance Committee announcement that it has not yet identified any facts that would require an update to its prior financial results could be seen as a "positive" — especially since eculizumab generates more than 90 percent of the company's top-line revenues.

Accordingly, the analyst believes that there will be no revenue adjustment, which in turn has no affect on her prior stock rating of Neutral and $135 price target.

Remaining Risks

Behanna reiterated that prior risks on the stocks remain in place, including:

1. Clinical risk that eculizumab will fail to demonstrate efficacy in other diseases driven by upstream complement dysfunction.
2. The possibility that Alexion's pipeline candidates fails to move forward in development.
3. Regulatory risk that the company may not be able to obtain approval for its compounds.
4. Commercial risk that the company may not be able to demonstrate organic top-line growth of its commercialized therapies.
5. Competitive risks include other companies who can come to the market and take share.
6. There is also the risk that the company may need to reduce its reported eculizumab revenues pending the outcome of the investigation.

Alexion shares were down 15.36 percent at $111.70 at last check.