In rare conditions, "it's very difficult to see an opportunity when there's such a lack of awareness for the disease," CEO David Hallal said, but Alexion Pharmaceutical Inc.'s established expertise lets the firm "evaluate all the medical literature and connect the dots" in order to find a market worth growing.

Doing just that led to the firm's $8.4 billion cash-and-stock buyout of Synageva Biopharma Corp., in which Alexion, of Cheshire, Conn., is paying a premium $115 in cash plus 0.6581 shares for each share of Lexington, Mass.-based Synageva. The price equates to a share value of $230 based on the nine-day average closing price of Alexion as of Tuesday.

Shares of Synageva (NASDAQ:GEVA) closed Tuesday at $203.39, up $107.52, or 112 percent on the news. Alexion's stock (NASDAQ:ALXN) ended the day at $155.01, down $13.54.

In the tie-up – which has long been cited as intriguing, given the potentially complementary nature of the two firms – Synageva adds to Alexion's metabolic franchise Kanuma (sebelipase alfa) for lysosomal acid lipase deficiency (LAL-D), expected to launch this year. That's also when Alexion's Strensiq (asfotase alfa) for hypophosphatasia should reach the market. In the combined pipeline are eight product candidates in the clinic for 11 indications.

Speaking to investors during a conference call, Hallal said the company has no doubt about the potential market for Kanuma. "We all recognize that physicians are much more eager to be aware of a disease and the diagnostic pathways to identify patients with a rare disease when they know there is a meaningful life-transforming treatment option that is available," he said.

Kanuma is under priority review with the FDA, and has won accelerated consideration of its marketing authorization application by the EMA. U.S. regulators also have designated the drug a breakthrough therapy for LAL-D in infants. Regulatory decisions in the U.S. and Europe are expected in the second half of the year.

In January, Alexion reported fast-rising sales of its sole approved product, Soliris (eculizumab), noting that it's providing Soliris to an increasing number of patients with paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome in 50 countries, driving net product sales up about 36 percent to $599.5 million during the fourth quarter of last year, up from $441.9 million the previous year. Since its launch in 2007, Soliris has grown to more than $2 billion in revenues in 2014. (See BioWorld Today, Jan. 30, 2015.)

"It is really going to be our privilege to be able to bring this treatment to patients suffering from LAL-D around the world," Hallal said. "Looking at epidemiology studies and a prevalence that is similar to PNH or even, frankly, higher than PNH, we are confident that Kanuma in LAL-D represents a blockbuster, billion-[dollar]-plus opportunity. It's something we have such great confidence and conviction in, because we've done it in the past and we're now preparing to do it again."

Alexion said it expects cost synergies starting this year, growing to at least $150 million in 2017, thanks to a transaction that is predicted to become accretive to non-GAAP earnings per share in 2018.

PiperJaffray analyst Joshua Schimmer liked the deal for several reasons. "The more Alexion can move beyond dependence of Soliris, given the theoretical longer-term threats to the franchise (especially biosimilars) the better," he wrote in a research report. "As much as investors might want to ignore this risk, we're glad Alexion isn't." Schimmer regards "the parallels between Kanuma and Soliris for PNH [as] fairly obvious. Given Alexion's experience in the field, we think it's safe to assume that they did due diligence on the market opportunity far more comprehensively than any analyst could. The company's core competency is in this space, and they aren't ones to overspend. We're comfortable giving them the benefit of the doubt," he wrote.

"Most of the value for the deal can be ascribed to Kanuma," in Schimmer's view, "but [Synageva] pipeline programs such as SBC-103 for MPS3b, SBC-105 for GACI and potential central nervous system-targeting protein technology could, over the longer term, make deal terms appear extremely cheap."

In January, Waltham, Mass.-based Synageva priced its public offering of 3 million shares at $94.19 each to pull down about $282.5 million, having garnered $211.5 million the previous March. Last summer saw top-line phase III data proving that Kanuma, also known as SBC-102, met its primary endpoint and several secondary endpoints in testing for the LAL-D indication. (See BioWorld Today, March 7, 2014, July 2, 2014, and Jan. 8, 2015.)

"We're very confident that the valuation is appropriate," Hallal said, noting that Alexion intends to approach the newly broadened pipeline "with our playbook, which we started to write back in 2006," when Soliris was approved. (See BioWorld Today, Sept. 22, 2006.)