- 2Q17 Total Revenues of $912 Million, a
21 Percent Increase Over 2Q16
- 2Q17 GAAP EPS of $0.73 Per Share, a 38
Percent Increase Year-Over-Year and Non-GAAP EPS of $1.56 Per
Share, a 38 Percent Increase Year-Over-Year
- Positive CHMP Opinion Received for
Soliris in Patients with Refractory gMG in the EU
- Completed Enrollment in the ALXN1210
Phase 3 PNH Study in Complement Inhibitor Treatment-Naive
Patients
- Increasing 2017 Revenue Guidance to
$3.450 to $3.525 Billion; Narrowing GAAP EPS Guidance to $2.82 to
$3.12 Per Share and Increasing Non-GAAP EPS Guidance to $5.40 to
$5.55 Per Share
- Alexion to Provide Strategy Update on
Conference Call
Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) today announced
financial results for the second quarter of 2017. Total revenues in
the quarter were $912 million, a 21 percent increase compared to
the same period in 2016. Second quarter revenue reflected a benefit
of approximately $35 million due to favorable timing of orders
compared to our prior forecast. The negative impact of foreign
currency on total revenue year-over-year was 2 percent or $12
million, net of hedging activities. On a GAAP basis, diluted
earnings per share (EPS) in the quarter was $0.73 per share,
compared to $0.53 per share in the second quarter of 2016. Non-GAAP
diluted EPS for the second quarter of 2017 was $1.56 per share,
compared to $1.13 per share in the second quarter of 2016.
"Alexion delivered strong performance in the second quarter of
2017 while also executing on several initiatives to position the
company for the future, including strengthening the Soliris patent
portfolio, reaching a funding agreement for Strensiq in England,
advancing the late-stage pipeline, enhancing compliance and culture
and building a strong leadership team," said Ludwig Hantson, Chief
Executive Officer of Alexion. "Our strategy for the next phase of
growth will focus on our strengths to deliver sustainable long-term
performance and increased value for shareholders. We will achieve
this by growing our rare disease business, leveraging our expertise
in complement, pursuing disciplined business development to expand
the pipeline, and taking steps to optimize our infrastructure and
operating model."
Second Quarter 2017 Financial
Highlights
- Soliris® (eculizumab) net product sales
were $814 million, compared to $701 million in the second quarter
of 2016, representing a 16 percent increase. Soliris volume
increased 18 percent year-over-year.
- Strensiq® (asfotase alfa) net product
sales were $83 million, compared to $45 million in the second
quarter of 2016, representing an 84 percent increase.
- Kanuma® (sebelipase alfa) net product
sales were $15 million, compared to $7 million in the second
quarter of 2016, representing a 114 percent increase.
- GAAP R&D expense was $199 million,
compared to $180 million in the same quarter last year. Non-GAAP
R&D expense was $179 million, compared to $165 million in the
same quarter last year.
- GAAP SG&A expense was $265 million,
compared to $232 million in the same quarter last year. Non-GAAP
SG&A expense was $227 million, compared to $200 million in the
same quarter last year.
- GAAP diluted EPS was $0.73 per share,
compared to $0.53 per share in the same quarter last year. Non-GAAP
diluted EPS was $1.56 per share, compared to $1.13 per share in the
second quarter of 2016.
Research and Development
Alexion is redefining the Company’s Research & Development
(R&D) strategy to create greater efficiency and focus on its
expertise in complement biology and core therapeutic areas of
hematology, nephrology, neurology, and metabolic disorders. To
optimize and align R&D investments and development efforts with
the Company's redefined strategy, Alexion is de-prioritizing the
ALXN1101 (cPMP replacement therapy) and ALXN6000 (samalizumab)
clinical development programs and will seek to out-license these
assets. Alexion is also discontinuing its preclinical programs with
mRNA therapies as well as other preclinical programs that are
outside of the complement franchise, and is therefore terminating
its partnerships with Moderna Therapeutics, Blueprint Medicines and
Arbutus Biopharma.
Complement Portfolio Updates
- Eculizumab- Refractory Generalized
Myasthenia Gravis (gMG): Alexion has submitted applications in
the U.S., EU and Japan to extend the indication for eculizumab as a
potential treatment for patients with refractory gMG who are
AChR-positive. Alexion received a positive opinion from the
Committee for Medicinal Products for Human Use (CHMP) of the
European Medicines Agency (EMA) in the second quarter and a final
decision from the European Commission (EC) is anticipated in the
third quarter of 2017. Alexion's application in the U.S. has been
accepted for review by the U.S. Food and Drug Administration (FDA)
and the FDA has set a Prescription Drug User Fee Act (PDUFA) date
of October 23, 2017.
- Eculizumab- Relapsing Neuromyelitis
Optica Spectrum Disorder (NMOSD): Alexion expects to complete
enrollment in the PREVENT study, a single, multinational,
placebo-controlled Phase 3 trial of eculizumab in patients with
relapsing NMOSD, in 2017 and to report data in 2018.
- ALXN1210- PNH: Enrollment is
complete in a Phase 3 trial comparing ALXN1210 administered
intravenously every eight weeks to Soliris in complement inhibitor
treatment-naive patients with PNH. Alexion expects to report data
from this study in the second quarter of 2018. Alexion initiated a
Phase 3 PNH Switch study of ALXN1210 administered intravenously
every eight weeks compared to patients currently treated with
Soliris in the second quarter of 2017. The Company expects to
complete enrollment in this study in the third quarter of
2017.
- ALXN1210- aHUS: Patients are
being dosed in a Phase 3 trial with ALXN1210 administered
intravenously every eight weeks in complement inhibitor
treatment-naive adolescent and adult patients with aHUS. Enrollment
is expected to be complete in early 2018. Alexion expects to
initiate a Phase 3 trial of ALXN1210 in pediatric patients with
aHUS in the third quarter of 2017.
- ALXN1210- Subcutaneous: Initial
pharmacokinetic and tolerability data from the Phase I study in
healthy volunteers support progressing the development of a
subcutaneous formulation of ALXN1210.
2017 Financial Guidance
Alexion is increasing its revenue guidance, narrowing its GAAP
EPS guidance and increasing its non-GAAP EPS guidance. Further
guidance updates are outlined below.
Updated GAAP Updated Non-GAAP
Prior Non-GAAP
Guidance Prior GAAP Guidance
Guidance Guidance Total revenues $3,450 to $3,525 million
$3,400 to $3,500 million $3,450 to $3,525 million $3,400 to $3,500
million Soliris revenues $3,075 to $3,125 million $3,025 to $3,100
million $3,075 to $3,125 million $3,025 to $3,100 million Metabolic
revenues $375 to $400 million $375 to $400 million $375 to $400
million $375 to $400 million R&D (% total revenues) 23% to 25%
24% to 26% 21% to 22% 22% to 23% SG&A (% total revenues) 29% to
30% 28% to 30% 25% to 26% 25% to 26% Operating margin 23% to 26%
25% to 28% 43% to 44% 43% to 44% Earnings per share $2.82 to $3.12
$2.80 to $3.20 $5.40 to $5.55 $5.10 to $5.30
Updated 2017 financial guidance assumes the following:
- Foreign currency headwinds of $40 to
$50 million versus prior assumption of $50 to $60 million
- Soliris revenue impact of $70 to $100
million from ALXN1210 and other clinical trial recruitments versus
prior assumption of $70 to $110 million
Alexion’s financial guidance is based on current foreign
exchange rates net of hedging activities and does not include the
effect of business combinations, license and collaboration
agreements, asset acquisitions, intangible asset impairments,
changes in fair value of contingent consideration or restructuring
activity that may occur after the day prior to the date of this
press release.
Conference Call/Webcast Information:
Alexion will host a conference call/audio webcast to discuss the
second quarter 2017 results, at 10:00 a.m. Eastern Time. To
participate in the call, dial 877-852-6543 (USA) or 719-325-4789
(International), passcode 2566061 shortly before 10:00 a.m. Eastern
Time. A replay of the call will be available for a limited period
following the call. The replay number is 888-203-1112 (USA) or
719-457-0820 (International), passcode 2566061. The audio webcast
can be accessed on the Investor page of Alexion’s website at:
http://ir.alexionpharm.com.
About Alexion
Alexion is a global biopharmaceutical company focused on
developing and delivering life-transforming therapies for patients
with devastating and rare disorders. Alexion is the global leader
in complement inhibition and has developed and commercializes the
first and only approved complement inhibitor to treat patients with
paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic
uremic syndrome (aHUS), two life-threatening ultra-rare disorders.
In addition, Alexion’s metabolic franchise includes two highly
innovative enzyme replacement therapies for patients with
life-threatening and ultra-rare disorders, hypophosphatasia (HPP)
and lysosomal acid lipase deficiency (LAL-D). Alexion is advancing
its rare disease pipeline with highly innovative product candidates
in multiple therapeutic areas. This press release and further
information about Alexion can be found at: www.alexion.com.
[ALXN-E]
This press release contains forward-looking statements,
including statements related to guidance regarding anticipated
financial results for 2017, assessment of the Company's
commercialization efforts and commercial potential for Soliris,
Strensiq and Kanuma, medical and commercial potential of each of
Alexion's product candidates, launch expectations for Strensiq and
Kanuma, and plans for regulatory filings and clinical programs for
our product candidate, and anticipated changes to the Company’s
R&D strategy. 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 the adequacy of our research, marketing
approval or material limitations on the marketing of our products,
delays, interruptions or failures in the manufacture and supply of
our products and our product candidates, failure to satisfactorily
address matters raised by the FDA and other regulatory agencies,
the possibility that results of clinical trials are not predictive
of safety and efficacy results of our products in broader patient
populations, the possibility that current rates of adoption of
Soliris in PNH, aHUS or other diseases are not sustained, the
possibility that clinical trials of our product candidates could be
delayed, the adequacy of our pharmacovigilance and drug safety
reporting processes, the risk that third party payors (including
governmental agencies) will not reimburse or continue to reimburse
for the use of our products at acceptable rates or at all, risks
regarding government investigations, including investigations of
Alexion by the U.S. Securities and Exchange Commission (SEC) and
U.S. Department of Justice, the risk that anticipated regulatory
filings are delayed, the risk that estimates regarding the number
of patients with PNH, aHUS, HPP and LAL-D are inaccurate, the risks
of changing foreign exchange rates, and a variety of other risks
set forth from time to time in Alexion's filings with the SEC,
including but not limited to the risks discussed in Alexion's
Quarterly Report on Form 10-Q for the period ended March 31, 2017
and in our other filings with the SEC. 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 press release also contains non-GAAP financial measures
that Alexion believes, 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. The non-GAAP results
exclude the impact of the following GAAP items: share-based
compensation expense, fair value adjustment of inventory acquired,
amortization of purchased intangible assets, changes in fair value
of contingent consideration, acquisition-related costs,
restructuring expenses, upfront and milestone payments related to
licenses and collaborations, impairment of intangible assets and
adjustments to income tax expense. 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 Reconciliations of GAAP to non-GAAP Financial
Results and GAAP to non-GAAP 2017 Financial Guidance for
explanations of the amounts adjusted to arrive at non-GAAP net
income and non-GAAP earnings per share amounts for the three and
six month periods ended June 30, 2017 and 2016 and projected
twelve months ended December 31, 2017.
(Tables Follow)
ALEXION PHARMACEUTICALS, INC.
TABLE 1: CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts) (unaudited)
Three months ended Six months ended June
30 June 30 2017 2016 2017
2016 Net product sales $ 912 $ 753 $ 1,781 $ 1,453
Other revenue — — 1 1 Total revenues
912 753 1,782 1,454 Cost of sales 84 60 153 119 Operating
expenses: Research and development 199 180 418 356 Selling, general
and administrative 265 232 527 465 Amortization of purchased
intangible assets 80 80 160 160 Change in fair value of contingent
consideration 24 5 28 (10 ) Acquisition-related costs — 1 — 2
Restructuring expenses 3 — 27 1 Impairment of intangible assets 31
— 31 — Total operating expenses 602
498 1,191 974 Operating income
226 195 438 361 Other income and expense: Investment income
4 2 8 3 Interest expense (24 ) (24 ) (48 ) (48 ) Other income
(expense) — (3 ) 2 (3 ) Income before income
taxes 206 170 400 313 Income tax expense (1) 41 50 65 101
Net income $ 165 $ 120 $
335 $ 212 Earnings per common share Basic $
0.74 $ 0.54 $ 1.49 $ 0.94 Diluted $ 0.73 $ 0.53 $ 1.49 $ 0.94
Shares used in computing earnings per common share Basic 224
224 225 225 Diluted 225 226 225 226 (1) In March 2016, the
FASB issued a new standard intended to simplify certain aspects of
the accounting for employee share-based payments. We elected to
early adopt this standard in the third quarter of 2016. The
standard requires restatement of previously reported results in the
year following adoption, as if the new standard was adopted
effective January 1, 2016, and accordingly, we have reflected
additional tax benefits of $5 for the three and six months ended
June 30, 2016 in our consolidated statement of operations.
ALEXION PHARMACEUTICALS, INC. TABLE 2: RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL RESULTS (in millions, except per
share amounts) (unaudited) Three months
ended Six months ended June 30 June 30
2017 2016 2017 2016 GAAP
net income $ 165 $ 120 $ 335 $ 212 Before tax adjustments: Cost of
sales: Share-based compensation 3 2 5 5 Fair value adjustment in
inventory acquired 3 1 5 2 Research and development expense:
Share-based compensation 20 15 36 30 Upfront and milestone payments
related to licenses and collaborations — — 9 3 Selling, general and
administrative expense: Share-based compensation 38 32 74 70
Amortization of purchased intangible assets 80 80 160 160 Change in
fair value of contingent consideration 24 5 28 (10 )
Acquisition-related costs — 1 — 2 Restructuring expenses (1) 3 — 27
1 Impairment of intangible assets (2) 31 — 31 — Adjustments to
income tax expense (12 ) 2 (39 ) 10 Non-GAAP net
income $ 355 $ 258 $ 671 $ 485
GAAP earnings per common share - diluted $ 0.73 $ 0.53 $ 1.49 $
0.94 Non-GAAP earnings per common share - diluted $ 1.56 $ 1.13 $
2.94 $ 2.12 Shares used in computing diluted earnings per
common share (GAAP) 225 226 225 226 Shares used in computing
diluted earnings per common share (non-GAAP) 228 228 228 229 (1)
Restructuring expenses were $3 million and $27 million for
the three and six months ended June 30, 2017, respectively, related
to the company-wide restructuring initiated in the first quarter
2017. (2)
In the second quarter 2017, we recognized
an impairment charge of $31 million, which fully impaired SBC-103,
the acquired in-process research and development asset, due to
clinical trial results.
ALEXION PHARMACEUTICALS, INC. TABLE 3:
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL GUIDANCE (in
millions, except per share amounts and percentages)
(unaudited) Twelve months ended December
31, 2017 Low High GAAP net income $ 640 $
708 Before tax adjustments: Share-based compensation 246 219
Fair value adjustment in inventory acquired 5 5 Upfront and
milestone payments related to licenses and collaborations 10 9
Amortization of purchased intangible assets 320 320 Change in fair
value of contingent consideration 36 36 Restructuring expenses 37
27 Impairment of intangible assets 31 31 Adjustments to income tax
expense (88 ) (84 ) Non-GAAP net income $ 1,237
$ 1,271 Diluted GAAP earnings per common share
$ 2.82 $ 3.12 Diluted non-GAAP earnings per common share $ 5.40 $
5.55 Operating expense and margin (% total revenues)
GAAP research and development expense 25 % 23 % Share-based
compensation (2 )% (2 )% Upfront and milestone payments related to
licenses and collaborations (1 )% 0 % Non-GAAP
research and development expense 22 % 21 %
GAAP selling, general and administrative expense 30 % 29 %
Share-based compensation (4 )% (4 )% Non-GAAP
selling, general and administrative expense 26 % 25 %
GAAP operating margin 23 % 26 % Share-based compensation 7 %
6 % Fair value adjustment in inventory acquired 0 % 0 % Upfront and
milestone payments related to licenses and collaborations 1 % 0 %
Amortization of purchased intangible assets 9 % 9 % Change in fair
value of contingent consideration 1 % 1 % Restructuring expenses 1
% 1 % Impairment of intangible assets 1 % 1 %
Non-GAAP operating margin 43 % 44 %
ALEXION PHARMACEUTICALS, INC. TABLE 4: NET PRODUCT SALES
BY GEOGRAPHY (in millions) (unaudited)
Three months ended Six months ended June 30
June 30 2017 2016 2017
2016
Soliris
United States $ 318 $ 261 $ 606 $ 498 Europe 249 239 490 463 Asia
Pacific 81 74 160 143 Rest of World 166 127 341
262 Total Soliris $ 814 $ 701 $ 1,597 $
1,366
Strensiq
United States $ 70 $ 40 $ 133 $ 67 Europe 8 2 14 4 Asia Pacific 4 3
8 6 Rest of World 1 — 2 1
Total Strensiq
$ 83 $ 45 $ 157 $ 78
Kanuma
United States $ 11 $ 5 $ 20 $ 6 Europe 3 2 5 3 Asia Pacific 1 — 1 —
Rest of World — — 1 — Total Kanuma $ 15
$ 7 $ 27 $ 9
Net Product
Sales
United States $ 399 $ 306 $ 759 $ 571 Europe 260 243 509 470 Asia
Pacific 86 77 169 149 Rest of World 167 127 344
263 Total Net Product Sales $ 912 $ 753 $
1,781 $ 1,453
ALEXION PHARMACEUTICALS,
INC. TABLE 5: CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions) (unaudited) June 30
December 31 2017 2016 Cash and cash
equivalents $ 542 $ 966 Marketable securities 902 327 Trade
accounts receivable, net 710 650 Inventories 410 375 Prepaid
expenses and other current assets (1) 225 260 Property, plant and
equipment, net 1,233 1,036 Intangible assets, net 4,112 4,303
Goodwill 5,037 5,037 Other assets 318 299 Total assets $
13,489 $ 13,253 Accounts payable and accrued expenses
$ 613 $ 572 Deferred revenue 14 37 Current portion of long-term
debt 167 167 Current portion of contingent consideration 25 24
Other current liabilities 37 23 Long-term debt, less current
portion 2,804 2,888 Contingent consideration 156 129 Facility lease
obligation 277 233 Deferred tax liabilities 387 396 Other
liabilities 134 90 Total liabilities 4,614 4,559
Total stockholders' equity (1) 8,875 8,694 Total liabilities
and stockholders' equity $ 13,489 $ 13,253 (1) In
October 2016, the FASB issued a new income tax standard that
eliminates the exception for an intra-entity asset transfer other
than inventory. We elected to early adopt this standard in the
first quarter 2017. As a result of the adoption, we recorded a $19
million decrease in retained earnings, primarily resulting from the
elimination of previously recorded prepaid tax assets.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170727005411/en/
Alexion
Contacts:MediaStephanie Fagan, 475-230-3777Senior
Vice President, Corporate CommunicationsorKim Diamond,
475-230-3775Executive Director, Corporate
CommunicationsorInvestorsElena Ridloff, CFA,
475-230-3601Vice President, Investor RelationsorCatherine Hu,
475-230-3599Director, Investor Relations
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