Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) (Alexion or the
Company) today announced financial results for the three and nine
months ended September 30, 2012. Alexion reported net product sales
of Soliris® (eculizumab) of $294.1 million in the third quarter of
2012, compared to $204.0 million for the same period in 2011.
Revenue performance for the quarter reflected steady additions
of new patients with paroxysmal nocturnal hemoglobinuria (PNH)
commencing Soliris therapy in Alexion's core territories of the US,
Western Europe and Japan, as well as in new countries. Revenues
were further augmented by an increasing number of new patients with
atypical hemolytic uremic syndrome (aHUS) commencing Soliris
treatment.
Soliris is approved for patients with PNH in the US (2007),
European Union (2007), Japan (2010) and other territories as the
first and only treatment indicated for patients with this
ultra-rare, debilitating and life-threatening blood disease.
Soliris is also approved in the US (September 2011) and in the
European Union (November 2011) as the first and only treatment for
patients with aHUS, an ultra-rare life-threatening genetic
disease.
Alexion's non-GAAP operating results are equal to GAAP operating
results adjusted for the impact of share-based compensation, costs
associated with acquisitions, taxes that are not payable in cash,
taxes related to acquisition structuring, impact of intellectual
property settlements and intangible asset impairments. A full
reconciliation of non-GAAP results is included later in this press
release.
Third Quarter 2012 Non-GAAP Financial Results:
The Company reported non-GAAP net income of $120.7 million, or
$0.60 per share, in the third quarter of 2012, compared to non-GAAP
net income of $72.6 million, or $0.37 per share, in the third
quarter of 2011.
As noted above, non-GAAP EPS in Q3 2012 excludes the $0.13 per
share net benefit attributable to the intellectual property
settlement and intangible asset impairment that occurred in Q3
2012. Non-GAAP EPS in Q3 2011 excludes the $0.09 per share benefit
attributable to tax credits.
Alexion's non-GAAP operating expenses for Q3 2012 were $130.9
million, compared to $103.5 million for Q3 2011. Non-GAAP research
and development (R&D) expenses for Q3 2012 were $50.6 million,
compared to $34.1 million for Q3 2011. Non-GAAP selling, general
and administrative (SG&A) expenses for Q3 2012 were $80.3
million, compared to $69.5 million for Q3 2011.
Third Quarter 2012 GAAP Financial Results:
Alexion reported GAAP net income of $92.2 million, or $0.46 per
share, in the third quarter of 2012, compared to GAAP net income of
$65.6 million, or $0.34 per share, in the third quarter of
2011.
On a GAAP basis, operating expenses for Q3 2012 were $171.6
million, compared to $114.5 million for Q3 2011. GAAP R&D
expenses for Q3 2012 were $54.3 million, compared to $36.6 million
for Q3 2011. GAAP SG&A expenses were $90.0 million for Q3 2012,
compared to $77.6 million for Q3 2011. Q3 2012 GAAP results were
negatively impacted by a $26.3 million impairment of an intangible
asset related to a previously acquired pre-clinical age-related
macular degeneration (AMD) program. Q3 2012 GAAP results were
positively impacted by the terms of a patent settlement and license
agreement, for which the Company recognized a gain of $53.4 million
in cost of sales, net of the effect of an upfront payment. During
Q3 2011, the Company recorded a GAAP tax benefit from the impact of
tax credits of $16.3 million.
Balance Sheet:
As of September 30, 2012, the Company had $905.5 million in cash
and cash equivalents, compared to $806.2 million at June 30, 2012.
The Company also reduced total debt to $161.0 million at September
30, 2012 from $228.0 million at June 30, 2012.
“In the third quarter, a substantial number of new patients with
PNH started on Soliris in our core territories and new countries,
while Soliris therapy also commenced for a growing number of new
patients with aHUS,” said Leonard Bell, M.D., Chief Executive
Officer of Alexion. “In the final quarter of 2012, we will drive to
serve an increasing number of patients with PNH and aHUS while
accelerating our eight lead development programs with five highly
innovative therapeutic candidates. Our steadfast focus across our
global organization will continue to bring life-transforming
innovation to more patients with severe and ultra-rare
disorders.”
Research and Development Programs:
Alexion currently has lead development programs underway with
five highly innovative therapeutics, including eculizumab
(Soliris), which are being investigated across eight severe and
ultra-rare disorders beyond PNH and aHUS.
Ultra-Rare Disease Programs With
Eculizumab
- Nephrology: STEC-HUS and Kidney
Transplant: Data from the full cohort of 198 enrolled patients
in the Company-sponsored Shiga-toxin-producing E. coli hemolytic
uremic syndrome (STEC-HUS) trial will be presented at the American
Society of Nephrology (ASN) meeting on November 3rd. Separately,
enrollment is ongoing in Company-sponsored, multi-national,
living-donor and deceased-donor kidney transplant trials in
patients at elevated risk of Acute Humoral Rejection (AHR), also
known as antibody mediated rejection.
- Neurology: NMO and MG: Data from
the investigator-initiated Phase 2 clinical trial of eculizumab in
severe and relapsing neuromyelitis optica (NMO) were presented
at the American Neurological Association (ANA) meeting earlier this
month. The study met its primary efficacy endpoint with high
degrees of both clinical and statistical significance. Clinically
and statistically significant improvements were also observed in
key secondary endpoints. Separately, Alexion continues to work with
investigators to design the next clinical trial to evaluate
eculizumab as a treatment for patients with severe and refractory
myasthenia gravis (MG).
Ultra-Rare Disease Programs With Highly
Innovative Therapeutic Candidates Beyond Eculizumab
- Asfotase Alfa: The natural
history study in infants with hypophosphatasia (HPP), an
ultra-rare, inherited and life-threatening metabolic disease, is
on-going.
- cPMP Replacement Therapy: The
Company expects to complete pre-IND toxicology studies in early
2013 required to commence clinical studies in normal volunteers
with its cPMP replacement therapy for the treatment of patients
with Molybdenum Cofactor Deficiency Type A, a severe, ultra-rare
and genetic metabolic disorder that is fatal in newborns.
- ALXN1102/ALXN1103: Enrollment
continues in a Phase I study to characterize the mechanism of
action and develop initial safety data for ALXN1102 and ALXN1103,
intravenous and sub-cutaneous versions, respectively, of one of
Alexion’s novel complement inhibitors.
- ALXN1007: Enrollment continues
in a Phase I study of ALXN1007, a novel anti-inflammatory antibody,
to evaluate the safety, tolerability, pharmacokinetics and
pharmacodynamics of this therapeutic candidate in healthy
volunteers.
2012 Financial Guidance:
Alexion today announced that it is raising its 2012 revenue
guidance from the previous range of $1.110 to $1.125 billion, now
to the higher and narrower range of $1.120 to $1.130 billion. The
upward revision reflects continued global growth of Soliris in PNH
and growth from the ongoing launch of Soliris in aHUS. 2012
guidance for non-GAAP SG&A is being decreased from the previous
range of $360 to $370 million, now to $345 to $355 million. 2012
non-GAAP R&D guidance is being reduced from the previous range
of $220 to $230 million, now to the lower range of $210 to $220
million. 2012 guidance for cost of sales is being reduced from
approximately 12 percent to approximately 11 percent. Guidance for
the Company’s non-GAAP tax rate is being reduced from the previous
range of 8 to 10 percent, now to the lower and narrower range of 7
to 8 percent. Guidance for 2012 non-GAAP earnings per share is
being raised, from the previous range of $1.78 to $1.88 per share,
now to the higher and narrower range of $1.99 to $2.04 per share.
Shares outstanding are expected to be approximately 204 million in
the fourth quarter and 201 million for the full year.
Conference Call/Web Cast Information:
Alexion will host a conference call/webcast to discuss matters
mentioned in this release. The call is scheduled for today, October
24, at 10:00 a.m., Eastern Time. To participate in this call, dial
888-211-4495 (USA) or 913-312-9330 (International), confirmation
code 4576472 shortly before 10:00 a.m., Eastern Time. A replay of
the call will be available for a limited period following the call,
beginning at 1:00 p.m. Eastern Time. The replay number is
888-203-1112 (USA) or 719-457-0820 (International), confirmation
code 4576472. The audio webcast can be accessed at
www.alexionpharma.com.
About Soliris:
Soliris is a first-in-class terminal complement inhibitor
developed from the laboratory through regulatory approval and
commercialization by Alexion. Soliris is approved in the US,
European Union, Japan and other countries as the first and only
treatment for patients with paroxysmal nocturnal hemoglobinuria
(PNH), a debilitating, ultra-rare and life-threatening blood
disorder, characterized by complement-mediated hemolysis
(destruction of red blood cells). Soliris is indicated to reduce
hemolysis. Soliris is also approved in the US and the European
Union as the first and only treatment for patients with atypical
hemolytic uremic syndrome (aHUS), a debilitating, ultra-rare and
life-threatening genetic disorder characterized by
complement-mediated thrombotic microangiopathy, or TMA (blood clots
in small vessels). Soliris is indicated to inhibit
complement-mediated TMA. The effectiveness of Soliris in aHUS is
based on the effects on TMA and renal function. Prospective
clinical trials in additional patients are ongoing to confirm the
benefit of Soliris in patients with aHUS. Soliris is not indicated
for the treatment of patients with Shiga toxin E. coli related
hemolytic uremic syndrome (STEC-HUS). For the breakthrough
innovation in complement inhibition, Alexion and Soliris have
received the pharmaceutical industry's highest honors: the 2008
Prix Galien USA Award for Best Biotechnology Product with broad
implications for future biomedical research and the 2009 Prix
Galien France Award in the category of Drugs for Rare Diseases.
More information including the full prescribing information on
Soliris is available at www.soliris.net.
About Alexion:
Alexion Pharmaceuticals, Inc. is a biopharmaceutical company
focused on serving patients with severe and ultra-rare disorders
through the innovation, development and commercialization of
life-transforming therapeutic products. Alexion is the global
leader in complement inhibition and has developed and markets
Soliris® (eculizumab) as a treatment for patients with PNH and
aHUS, two debilitating, ultra-rare and life-threatening disorders
caused by chronic uncontrolled complement activation. Soliris is
currently approved in more than 40 countries for the treatment of
PNH, and in the United States and European Union for the treatment
of aHUS. Alexion is evaluating other potential indications for
Soliris and is developing four other highly innovative
biotechnology product candidates, which are being investigated
across eight severe and ultra-rare disorders beyond PNH and aHUS.
This press release and further information about Alexion
Pharmaceuticals, Inc. can be found at: www.alexionpharma.com.
[ALXN-E]
This news release contains forward-looking statements, including
statements related to guidance regarding anticipated financial
results for 2012, assessment of the Company's financial position
and commercialization efforts, medical benefits and commercial
potential for Soliris for PNH and aHUS and other potential
indications, expansion of clinical and commercial operations to
additional countries, medical and commercial potential of Alexion's
complement-inhibition technology and other technologies, plans for
clinical programs for each of our product candidates and progress
in developing commercial infrastructure. Forward-looking statements
are subject to factors that may cause Alexion's results and plans
to differ from those expected, including for example, decisions of
regulatory authorities regarding marketing approval or material
limitations on the marketing of Soliris for PNH and aHUS and other
potential indications, delays in arranging satisfactory
manufacturing capabilities and establishing commercial
infrastructure, the possibility that results of clinical trials are
not predictive of safety and efficacy results of Soliris in broader
patient populations in the disease studied or other diseases, the
risk that acquisitions will not result in short-term or long-term
benefits, the possibility that current results of commercialization
are not predictive of future rates of adoption of Soliris in PNH,
aHUS or other diseases, the risk that third parties will not agree
to license any necessary intellectual property to Alexion on
reasonable terms or at all, the risk that third party payors
(including governmental agencies) will not reimburse or continue to
reimburse for the use of Soliris at acceptable rates or at all, the
risk that estimates regarding the number of patients with PNH, aHUS
or other disorders are inaccurate, and a variety of other risks set
forth from time to time in Alexion's filings with the US Securities
and Exchange Commission, including but not limited to the risks
discussed in Alexion's Quarterly Report on Form 10-Q for the period
ended June 30, 2012 and in our other filings with the US Securities
and Exchange Commission. Alexion does not intend to update any of
these forward-looking statements to reflect events or circumstances
after the date hereof, except when a duty arises under law.
In addition to financial information prepared in accordance with
GAAP, this news release also contains non-GAAP financial measures
that we believe, when considered together with the GAAP
information, provide investors and management with supplemental
information relating to performance, trends and prospects that
promote a more complete understanding of our operating results and
financial position during different periods. These non-GAAP
financial measures are not intended to be considered in isolation
or as a substitute for, or superior to, the financial measures
prepared and presented in accordance with GAAP and should be
reviewed in conjunction with the relevant GAAP financial measures.
Please refer to the attached Reconciliation of GAAP to Non-GAAP Net
Income for explanations of the amounts adjusted to arrive at
non-GAAP net income and non-GAAP earnings per share amounts for the
three and nine month periods ended September 30, 2012 and 2011.
ALEXION PHARMACEUTICALS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except
per share amounts) (unaudited)
Three months ended Nine months ended
September 30 September 30 2012 2011
2012 2011 Net product sales $ 294,136 $
204,047 $ 813,588 $ 555,872 Cost of sales 33,186 23,369
93,067 64,342 Gain on intellectual property settlement (53,377 ) -
(53,377 ) - Total cost of sales
(20,191 ) 23,369 39,690 64,342
Research and development 54,280 36,567 159,323 103,023
Selling, general and administrative 89,957 77,572 272,054 221,609
Impairment of acquired in-process research and development 26,300 -
26,300 - Acquisition-related costs 1,071 340 19,759 11,442
Total operating expenses 171,608
114,479 477,436 336,074
Operating income 142,719 66,199 296,462 155,456 Interest and
other income (expense) (1,954 ) (522 ) (6,165
) 134 Income before income taxes 140,765 65,677
290,297 155,590 Income tax provision 48,586 107 116,446
28,445 Net income $ 92,179 $
65,570 $ 173,851 $ 127,145 Earnings per common
share Basic $ 0.48 $ 0.36 $ 0.92 $ 0.70
Diluted $ 0.46 $ 0.34 $ 0.88 $ 0.66
Shares used in computing earnings per common share Basic
193,353 183,706 189,219
182,805 Diluted 201,142 192,161
197,635 191,267
ALEXION PHARMACEUTICALS, INC.
RECONCILIATION OF GAAP TO NON-GAAP NET
INCOME
(in thousands, except per share amounts) (unaudited)
Three months ended Nine
months ended September 30 September 30
2012 2011 2012
2011
GAAP net income $ 92,179 $ 65,570 $ 173,851 $ 127,145
Share-based compensation expense
(1)
14,015 11,261 40,322 34,426 Acquisition-related costs (2) 1,071 340
19,759 11,442 Non-cash taxes (3) 40,550 (4,597 ) 74,207 12,608 Tax
related to acquisition structuring (3) - - 21,812 - Gain on
intellectual property settlement (4) (53,377 ) - (53,377 ) -
Impairment of acquired in-process research
and development asset (5)
26,300 - 26,300 - Non-GAAP net income $
120,738 $ 72,574 $ 302,874 $ 185,621
Shares used in computing diluted earnings per share (GAAP) 201,142
192,161 197,635 191,267 Shares used in computing diluted earnings
per share (non-GAAP) 202,377 193,889 198,953 193,041 GAAP
earnings per share - diluted $ 0.46 $ 0.34 $ 0.88
$ 0.66 Non-GAAP earnings per share - diluted $ 0.60 $
0.37 $ 1.52 $ 0.96 (1) The following
table summarizes the share-based compensation expense for each
expense category in our condensed consolidated statements of
operations:
Three months ended Nine
months ended September 30 September 30
2012 2011 2012 2011
Share-based compensation expense: Cost of sales $ 664 $ 645
$ 1,939 $ 1,762 Research and development 3,643 2,511 10,373 7,489
Selling, general and administrative 9,708
8,105 28,010 25,175 $ 14,015 $ 11,261 $ 40,322
$ 34,426 (2) The following table summarizes
acquisition-related costs:
Three months ended Nine
months ended September 30 September 30
2012 2011 2012 2011
Acquisition-related costs:
Transaction and separation costs $ 1,509 $ - $ 15,114 $ 10,047
Contingent consideration (542 ) 236 4,333 1,117 Amortization of
purchased technology 104 104 312
278 $ 1,071 $ 340 $ 19,759 $ 11,442 (3)
Non-cash taxes represent the adjustment
for GAAP tax expense that is not payable in cash due to the
utilization of our US net operating losses.
In the third quarter of 2011, we elected
to claim foreign tax and orphan drug credits resulting in a tax
benefit of $16,300. The non-cash tax adjustment for the periods
ended September 30, 2011 include these tax benefits which were
recognized in the GAAP tax provision and were not received in
cash.
The tax provision for the nine months
ended September 30, 2012 also includes tax expense of $21,812
related to the structuring of the Enobia acquisition.
(4)
In October 2012, we entered into a
settlement and license agreement which included an upfront payment.
The Company recognized a gain of $53,377 in cost of sales which was
the result of a reversal of a portion of the accrued liability, net
of the effect of the upfront payment.
(5) During the three months ended September 30, 2012, we
recorded an impairment of an acquired in-process research and
development asset of $26,300 related to a preclinical AMD program.
ALEXION PHARMACEUTICALS,
INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in
thousands) (unaudited) September 30
December 31, 2012 2011 Cash and cash
equivalents $ 905,526 $ 540,865 Trade accounts receivable, net
311,369 244,288 Inventories, net 90,049 81,386 Deferred tax assets,
current 19,177 19,132 Other current assets 84,270 55,599 Property,
plant and equipment, net 165,047 165,852 Deferred tax assets,
noncurrent 14,509 103,868 Intangible assets, net 648,306 91,604
Goodwill 253,839 79,639 Other noncurrent assets 13,516
12,518 Total assets $ 2,505,608 $ 1,394,751 Accounts
payable and accrued expenses $ 269,847 $
199,653
Current portion of long-term debt 48,000 - Other current
liabilities 44,095 28,132 Long-term debt 113,000 - Contingent
consideration 139,453 18,120 Other noncurrent liabilities
18,778
14,354
Total liabilities 633,173 260,259 Total
stockholders' equity 1,872,435 1,134,492 Total
liabilities and stockholders' equity $ 2,505,608 $ 1,394,751
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