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Traded on the NASDAQ, Alexion (ALXN) stock has risen from a low of $5 a share in 2003 to the present price of $61. Sales have increased from $1.6 million in 2006 to an estimated $530 million in 2010. Share net, meanwhile, should reach $1.65 this year, and increase to $1.85 in 2011. With negligible debt, almost $250 million in cash on the balance sheet, and a whopping return on total capital of 43% in 2009, this is a fast-growing company that has great potential.

Revenue growth is being driven by additional penetration of flagship treatment Soliris into existing territories in Europe and North America, as well as initial penetration in the Japanese market. Estimated Japanese market opportunity for Soliris of $130 million in sales is conservative. With over 1,500 PNH patients in Japan, an anticipated 30% penetration rate, and a $350,000 annual treatment cost, the company could be looking at more like $150 million in sales. Management has indicated that Japan could be the #1 or #2 PNH market for Soliris. Furthermore, Soliris was recently granted regulatory and reimbursement approvals in Canada, Australia, Latin America, Switzerland and South Korea (there appears to be greater incidence of PNH in Asian countries). Alexion expects to double the insured lives that have access to Soliris from 750 million to 1.5 billion over the next three to five years. It is certainly striking while the iron is hot. There are no competitors in sight. And even if there were, ALXN has market exclusivity for Soliris for seven years in the U.S. and 10 years in Europe.

But wait, there’s more. Alexion also has an anti-CD200 antibody in development for the treatment of hematologic and solid tumors, as well as variations on Soliris for the treatment of other rare neuropathic, hematological, and renal disorders.  All said, we think investors should seriously considered this equity, particularly since there is always the possibility of it being acquired by a large drug company seeking additional top-line growth opportunities, like Novartis (NVS), Merck (MCK), or GlaxoSmithKlyne (GSK).