- 3Q19 total revenues of $1,263.1 million, a 23 percent increase
over 3Q18 and a 23 percent volume increase
- 3Q19 GAAP diluted EPS of $2.08; non-GAAP diluted EPS of
$2.79
- Received 2 recent regulatory approvals - ULTOMIRIS®
(ravulizumab-cwvz) for atypical hemolytic uremic syndrome (aHUS) in
the U.S. and SOLIRIS® (eculizumab) for adults with neuromyelitis
optica spectrum disorder (NMOSD) in the EU
- Announced agreement to acquire Achillion Pharmaceuticals
- Continued disciplined business development execution with Eidos
and Stealth BioTherapeutics collaborations
- Increased revenues and EPS guidance to reflect strong business
and continued growth
Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) today announced
financial results for the third quarter of 2019. Total revenues in
the third quarter were $1,263.1 million, a 23 percent increase
compared to the same period in 2018. The negative impact of foreign
currency on total revenues year-over-year was less than 1 percent,
or $2.5 million, inclusive of hedging activities. On a GAAP basis,
diluted EPS in the quarter was $2.08, a 41 percent increase versus
the prior year. Non-GAAP diluted EPS for the third quarter of 2019
was $2.79, a 38 percent increase versus the third quarter of
2018.
"With consistent and strong execution, we have delivered another
record performance in the third quarter, building on our momentum
from the first half of 2019. Our teams continued to demonstrate
launch excellence across the globe, with very rapid starts to the
German and Japanese ULTOMIRIS PNH launches, where conversion is
progressing ahead of the best-in-class U.S. launch at the same time
points, as well as a strong start to the SOLIRIS NMOSD launch in
the U.S.," said Ludwig Hantson, Ph.D., Chief Executive Officer of
Alexion. "We also continued to expand our portfolio with two
additional approvals - ULTOMIRIS for atypical HUS in the U.S. and
SOLIRIS for NMOSD in the EU - and three new business development
transactions that further diversify our pipeline, including an
agreement to acquire Achillion. By continuing to deliver on the
ambitious transformation plan we laid out two-and-a-half years ago,
we have successfully established a strong foundation for the future
and look forward to building on this progress as we advance our
mission of delivering life-changing therapies to people with rare
diseases."
Third Quarter 2019 Financial
Highlights
- Total net product sales were $1,263.1 million in the third
quarter of 2019, compared to $1,026.5 million in the third quarter
of 2018.
- SOLIRIS® (eculizumab) net product sales were $990.5 million,
compared to $888.0 million in the third quarter of 2018,
representing a 12 percent increase. SOLIRIS volume increased 11
percent year-over-year.
- ULTOMIRIS® (ravulizumab-cwvz) net product sales were $89.9
million in the third quarter of 2019.
- STRENSIQ® (asfotase alfa) net product sales were $154.3
million, compared to $113.2 million in the third quarter of 2018,
representing a 36 percent increase. STRENSIQ volume increased 36
percent year-over-year.
- KANUMA® (sebelipase alfa) net product sales were $28.4 million,
compared to $25.3 million in the third quarter of 2018,
representing a 12 percent increase. KANUMA volume increased 16
percent year-over-year.
- GAAP cost of sales was $95.2 million, compared to $90.6 million
in the third quarter of 2018. Non-GAAP cost of sales was $91.8
million, compared to $87.3 million in the third quarter of
2018.
- GAAP R&D expense was $232.9 million, compared to $174.8
million in the third quarter of 2018. Non-GAAP R&D expense was
$186.1 million, compared to $162.3 million in the third quarter of
2018.
- GAAP SG&A expense was $299.3 million, compared to $258.7
million in the third quarter of 2018. Non-GAAP SG&A expense was
$260.4 million, compared to $224.5 million in the third quarter of
2018.
- GAAP income tax expense was $67.9 million, compared to $11.2
million in the third quarter of 2018. Non-GAAP income tax expense
was $82.5 million, compared to $75.8 million in the third quarter
of 2018.
- GAAP diluted EPS was $2.08, compared to $1.47 in the third
quarter of 2018. Non-GAAP diluted EPS was $2.79, compared to $2.02
in the third quarter of 2018.
Research and Development
PHASE 3
- SOLIRIS - Neuromyelitis Optica Spectrum Disorder
(NMOSD): In August 2019, the European Commission approved
SOLIRIS for adults with anti-aquaporin-4 (AQP4) auto
antibody-positive NMOSD. An application for approval in Japan is
under review. Alexion plans to initiate a Phase 3 study in children
and adolescents with NMOSD by the end of 2019.
- SOLIRIS - Generalized Myasthenia Gravis (gMG): A Phase 3
study of SOLIRIS in children and adolescents with gMG is
underway.
- ULTOMIRIS - Paroxysmal Nocturnal Hemoglobinuria (PNH): A
Phase 3 study of ULTOMIRIS in children and adolescents with PNH is
underway.
- ULTOMIRIS - Atypical Hemolytic Uremic Syndrome (aHUS):
In October 2019, the U.S. Food and Drug Administration (FDA)
approved ULTOMIRIS for the treatment of aHUS to inhibit
complement-mediated thrombotic microangiopathy (TMA) for adults and
children one month and older. Applications for approval in the EU
and Japan are under review. A Phase 3 study of ULTOMIRIS in
children and adolescents with aHUS is underway.
- ULTOMIRIS - Subcutaneous: A single, PK-based Phase 3
study of ULTOMIRIS delivered subcutaneously once per week is
underway to support registration in PNH and aHUS. Data are expected
in the first half of 2020.
- ULTOMIRIS - gMG: A Phase 3 study of ULTOMIRIS in adults
with gMG is underway.
- ULTOMIRIS - NMOSD: Alexion plans to initiate a Phase 3
study of ULTOMIRIS in NMOSD by the end of 2019.
- ULTOMIRIS - Hematopoietic Stem Cell Transplant-Associated
Thrombotic Microangiopathy (HSCT-TMA): Alexion plans to
initiate a Phase 3 study of ULTOMIRIS in HSCT-TMA in the first half
of 2020, pending regulatory feedback.
- ULTOMIRIS - Amyotrophic Lateral Sclerosis (ALS):
Alexion plans to initiate a Phase 2/3 study for ULTOMIRIS in ALS in
early 2020, pending regulatory feedback.
- ALXN1840 (WTX101) - Wilson Disease: A Phase 3 study of
ALXN1840 (WTX101) in Wilson disease is underway. Enrollment is
expected to complete in early 2020.
- CAEL-101 - Caelum Biosciences: Alexion is collaborating
with Caelum Biosciences to develop CAEL-101 for light chain (AL)
amyloidosis, a rare systemic disorder that causes misfolded
immunoglobulin light chain protein to build up in and around
tissues, resulting in progressive and widespread organ damage. A
pivotal Phase 2/3 study investigating CAEL-101 as an add-on to
current standard-of-care therapy is planned to begin in the first
half of 2020. In October 2019, the European Commission granted
orphan drug designation to CAEL-101 for the treatment of AL
amyloidosis.
- AG10 - Eidos: In September 2019, Alexion announced an
agreement with Eidos for an exclusive license to develop and
commercialize AG10 in Japan. AG10 is a small molecule designed to
treat the root cause of transthyretin amyloidosis (ATTR) –
destabilized and misfolded transthyretin (TTR) protein – by binding
and stabilizing TTR in the blood. Eidos is currently evaluating
AG10 in a Phase 3 study in the U.S. and Europe for ATTR
cardiomyopathy (ATTR-CM) – a progressive, fatal disease caused by
the accumulation of misfolded TTR amyloid in the heart – and plans
to begin a Phase 3 study in ATTR polyneuropathy (ATTR-PN) – a
progressive, fatal disease caused by the accumulation of misfolded
TTR amyloid in the peripheral nervous system. Alexion plans to
expand the AG10 program into Japan in 2020, pending regulatory
feedback.
- Elamipretide - Stealth: In October 2019, Alexion
announced an agreement with Stealth BioTherapeutics for an option
to co-develop and commercialize elamipretide for mitochondrial
diseases. Currently being evaluated in a Phase 3 study in people
with primary mitochondrial myopathy (PMM) - a genetic mitochondrial
disease - elamipretide is a novel, potential first-in-class therapy
that targets mitochondrial dysfunction. Alexion will have the
opportunity to exercise the option following the delivery of
results from the Phase 3 PMM study, which are expected in the first
quarter of 2020. If exercised, the option also provides for
co-development and commercialization of elamipretide in Barth
syndrome, Leber’s hereditary optic neuropathy (LHON) and geographic
atrophy associated with dry age-related macular degeneration
(GA).
PHASE 1/2
- ALXN1830 (SYNT001): Alexion plans to initiate a Phase 2
study of ALXN1830 (SYNT001) in warm autoimmune hemolytic anemia
(WAIHA) in early 2020. In addition, Alexion plans to initiate a
Phase 1 study of a subcutaneous formulation of ALXN1830 in healthy
volunteers in early 2020. Pending results from the Phase 1 study,
Alexion plans to initiate a Phase 2 study of subcutaneous ALXN1830
in gMG in the second half of 2020.
- Danicopan (ACH-4471) & ACH-5228 - Achillion: In
October 2019, Alexion announced an agreement to acquire Achillion.
Pending approval of Achillion shareholders, satisfaction of
customary closing conditions and approval from relevant regulatory
agencies, including clearance under the HSR Act, the acquisition is
expected to close in the first half of 2020. The acquisition will
add two oral Factor D inhibitors to treat rare diseases associated
with the complement alternative pathway to Alexion's clinical-stage
pipeline - danicopan (ACH-4471) and ACH-5228. Danicopan is
currently in Phase 2 development as an add-on therapy to eculizumab
for PNH in patients with clinical extravascular hemolysis (EVH) and
for C3 glomerulopathy, and ACH-5228 is currently in Phase 1
development.
- ULTOMIRIS - Primary Progressive Multiple Sclerosis
(PPMS): Alexion plans to initiate an exploratory clinical
study of ULTOMIRIS in PPMS.
- ALXN1810 - Subcutaneous: Alexion has completed a Phase 1
study of subcutaneous ALXN1210 co-administered with Halozyme's
ENHANZE® drug-delivery technology, recombinant human hyaluronidase
enzyme (rHuPH20), a next-generation subcutaneous formulation called
ALXN1810. Strategic planning for the best development path for
ALXN1810 is ongoing.
- Affibody AB - ABY-039: Alexion is partnering with
Affibody AB to co-develop ABY-039 for rare Immunoglobulin G
(IgG)-mediated autoimmune diseases. Currently in Phase 1
development, ABY-039 is a bivalent antibody-mimetic that targets
the neonatal Fc receptor (FcRn).
- ALXN1720: In September 2019, Alexion began a Phase 1
study of ALXN1720, a novel anti-C5 albumin-binding bi-specific
mini-body that binds and prevents activation of human C5, in
healthy volunteers.
PRE-CLINICAL
- Zealand Pharma A/S: Alexion is collaborating with
Zealand Pharma A/S to discover and develop novel peptide therapies
for up to four targets in the complement pathway. Peptides offer a
number of advantages, including being highly selective and potent,
allowing low dosage volumes for ease of administration, and having
the potential to treat a broad range of complement-mediated
diseases.
- Dicerna - GalXCTM: Alexion is collaborating with Dicerna
Pharmaceuticals to jointly discover and develop up to four
subcutaneously delivered GalXCTM RNA interference (RNAi)
candidates, currently in pre-clinical development, for the
treatment of complement-mediated diseases.
- Complement Pharma - CP010: Alexion is collaborating with
Complement Pharma to co-develop CP010, a pre-clinical C6 inhibitor
that has the potential to treat multiple neurological
disorders.
- Immune Pharma - anti-eotaxin-1 antibody: Alexion has
entered into an asset purchase agreement with Immune Pharma to
acquire an anti-eotaxin-1 antibody for potential development in
inflammatory diseases. The agreement is pending completion of
bankruptcy proceedings, which are expected to conclude by the first
quarter of 2020.
Share Repurchase
Authorization
In October 2019, the Board of Directors approved a new share
repurchase authorization of $1 billion. The repurchase program does
not have an expiration date and we are not obligated to acquire a
particular number of shares of common stock.
2019 Financial Guidance
Alexion is increasing revenues and EPS guidance. Full guidance
updates are outlined below.
Previous (as of July 24,
2019)
Updated (as of October 23,
2019)
Total revenues
$4,750 to $4,800 million
$4,860 to $4,890 million
SOLIRIS/ULTOMIRIS revenues
$4,095 to $4,130 million
$4,180 to $4,200 million
Metabolic revenues
$655 to $670 million
$680 to $690 million
R&D (% total revenues)
GAAP
17% to 19%
17% to 18%
Non-GAAP
14% to 16%
14% to 15%
SG&A (% total revenues)
GAAP
23% to 24%
24% to 25%
Non-GAAP
20% to 21%
21% to 22%
Operating margin
GAAP
42% to 43%
41% to 42%
Non-GAAP
55% to 56%
55% to 56%
Earnings per share
GAAP
$8.13 to $8.41
$8.58 to $8.78
Non-GAAP
$9.65 to $9.85
$10.25 to $10.40
Updated 2019 financial guidance assumes a GAAP effective tax
rate of 5 to 6 percent and a non-GAAP effective tax rate of 13 to
14 percent for the year.
Updated guidance excludes the financial impact of the recently
announced agreement to acquire Achillion as it is anticipated to
close in the first half of 2020.
Alexion’s financial guidance is based on current foreign
exchange rates net of hedging activities and does not include the
effect of acquisitions, license and collaboration agreements,
intangible asset impairments, litigation charges, changes in fair
value of contingent consideration or restructuring and related
activity outside of the previously announced activities that may
occur after the issuance of this press release.
Conference Call/Webcast Information:
Alexion will host a conference call/audio webcast to discuss the
third quarter 2019 results today at 8:00 a.m. Eastern Time. To
participate in the call, dial 866-762-3111 (USA) or 210-874-7712
(International), conference ID 6281803 shortly before 8:00 a.m.
Eastern Time. A replay of the call will be available for a limited
period following the call. The audio webcast can be accessed on the
Investor page of Alexion’s website at: http://ir.alexion.com.
About Alexion
Alexion is a global biopharmaceutical company focused on serving
patients and families affected by rare diseases through the
discovery, development and commercialization of life-changing
therapies. As the global leader in complement biology and
inhibition for more than 20 years, Alexion has developed and
commercializes two approved complement inhibitors to treat patients
with paroxysmal nocturnal hemoglobinuria (PNH) and atypical
hemolytic uremic syndrome (aHUS), as well as the first and only
approved complement inhibitor to treat anti-acetylcholine receptor
(AchR) antibody-positive generalized myasthenia gravis (gMG) and
neuromyelitis optica spectrum disorder (NMOSD). Alexion also has
two highly innovative enzyme replacement therapies for patients
with life-threatening and ultra-rare metabolic disorders,
hypophosphatasia (HPP) and lysosomal acid lipase deficiency
(LAL-D). In addition, the company is developing several
mid-to-late-stage therapies, including a second complement
inhibitor, a copper-binding agent for Wilson disease and an
anti-neonatal Fc receptor (FcRn) antibody for rare Immunoglobulin G
(IgG)-mediated diseases as well as several early-stage therapies,
including one for light chain (AL) amyloidosis and a second
anti-FcRn therapy. Alexion focuses its research efforts on novel
molecules and targets in the complement cascade and its development
efforts on the core therapeutic areas of hematology, nephrology,
neurology and metabolic disorders. Alexion has been named to the
Forbes' list of the World’s Most Innovative Companies seven years
in a row and is headquartered in Boston, Massachusetts’ Innovation
District. The company also has offices around the globe and serves
patients in more than 50 countries. This press release and further
information about Alexion can be found at: www.alexion.com.
[ALXN-E]
Forward-Looking Statement
This press release contains forward-looking statements,
including statements related to: guidance regarding anticipated
financial results for 2019 (and the assumptions related to such
guidance); the strength of our business and continued growth; plans
to expand the Company's pipeline; Company's goal of continuing to
build on momentum as the year progresses; future plans for, and the
timing for, the commencement of future clinical trials and the
expected timing of the receipt of results of certain clinical
trials and studies, including clinical programs for ULTOMIRIS in
aHUS, NMOSD, HSCT-TMA, ALS, PPMS and a subcutaneous administration
in PNH and aHUS and for ALXN1830 in WAIHA and gMG; potential
benefits of current products and products under development and in
clinical trials; plans for development programs with third parties
including, Eidos, Affibody, Dicerna, Zealand, Stealth and
Complement Pharma; the potential to treat a broad range of
complement mediated diseases with the product to be developed with
Zealand; the anticipated closings of the Achillion acquisition and
the Immune Pharma asset acquisition; and Alexion's future clinical,
regulatory, and commercial plans for ULTOMIRIS and other products
and product candidates. Forward-looking statements are subject to
factors that may cause Alexion's results and plans to differ
materially from those forward-looking statements, including for
example: our dependence on sales from our principal product
(SOLIRIS); our ability to facilitate the timely conversion from
SOLIRIS to ULTOMIRIS; payer, physician and patient acceptance of
ULTOMIRIS as an alternative to SOLIRIS; appropriate pricing for
ULTOMIRIS; future competition from biosimilars and novel products;
decisions of regulatory authorities regarding the adequacy of our
research, marketing approval or material limitations on the
marketing of our products; delays or failure of product candidates
to obtain regulatory approval; delays or the inability to launch
product candidates due to regulatory restrictions, anticipated
expense or other matters; 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; results in early stage clinical trials
may not be indicative of full results or results from later stage
or larger clinical trials (or broader patient populations) and do
not ensure regulatory approval; the possibility that results of
clinical trials are not predictive of safety and efficacy and
potency of our products (or we fail to adequately operate or manage
our clinical trials) which could cause us to halt trials, delay or
prevent us from making regulatory approval filings or result in
denial of approval of our product candidates; unexpected delays in
clinical trials; unexpected concerns that may arise from additional
data or analysis obtained during clinical trials; future product
improvements may not be realized due to expense or feasibility or
other factors; uncertainty of long-term success in developing,
licensing or acquiring other product candidates or additional
indications for existing products; inability to complete planned
acquisitions due to failure of regulatory approval or material
changes in target or otherwise; inability to complete acquisitions
and investments due to increased competition for technology; the
possibility that current rates of adoption of our products are not
sustained; the adequacy of our pharmacovigilance and drug safety
reporting processes; failure to protect and enforce our data,
intellectual property and proprietary rights and the risks and
uncertainties relating to intellectual property claims, lawsuits
and challenges against us (including intellectual property lawsuits
relating to ULTOMIRIS brought by third parties against Alexion and
inter partes review petitions submitted by third parties); 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; failure to realize the benefits and
potential of investments, collaborations, licenses and
acquisitions; the possibility that expected tax benefits will not
be realized; assessment of impact of recent accounting
pronouncements; potential declines in sovereign credit ratings or
sovereign defaults in countries where we sell our products; delay
of collection or reduction in reimbursement due to adverse economic
conditions or changes in government and private insurer regulations
and approaches to reimbursement; uncertainties surrounding legal
proceedings, company investigations and government investigations,
including investigations of Alexion by the U.S. Securities and
Exchange Commission (SEC) and U.S. Department of Justice; the risk
that estimates regarding the number of patients with PNH, aHUS,
gMG, NMOSD, HPP and LAL-D and other future indications we are
pursuing are inaccurate; the risks of changing foreign exchange
rates; risks relating to the potential effects of the Company's
restructuring; risks related to the acquisition of companies and
co-development and collaboration efforts; 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 June 30, 2019
and in our other filings with the SEC. Alexion disclaims any
obligation 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 (see reconciliation
tables below for additional information): share-based compensation
expense, fair value adjustment of inventory acquired, amortization
of purchased intangible assets, changes in fair value of contingent
consideration, restructuring and related expenses, upfront payments
related to licenses and collaborations, acquired in-process
research and development assets, impairment of intangible assets,
change in value of strategic equity investments, litigation
charges, gain or loss on sale of a business or asset and certain
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 2019 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
nine month periods ended September 30, 2019 and 2018 and projected
twelve months ending December 31, 2019.
(Tables Follow)
ALEXION PHARMACEUTICALS,
INC.
TABLE 1: CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share
amounts)
(unaudited)
Three months ended
Nine months ended
September 30,
September 30,
2019
2018
2019
2018
Net product sales
$
1,263.1
$
1,026.5
$
3,605.8
$
3,001.6
Other revenue
—
—
1.0
0.8
Total revenues
1,263.1
1,026.5
3,606.8
3,002.4
Cost of sales
95.2
90.6
280.2
277.5
Operating expenses:
Research and development
232.9
174.8
616.4
524.8
Selling, general and
administrative
299.3
258.7
880.1
793.1
Acquired in-process research
and development
—
—
(4.1
)
803.7
Amortization of purchased
intangible assets
75.6
80.0
235.7
240.1
Change in fair value of
contingent consideration
29.8
53.5
7.2
110.9
Restructuring expenses
0.3
10.3
11.9
26.4
Total operating expenses
637.9
577.3
1,747.2
2,499.0
Operating income
530.0
358.6
1,579.4
225.9
Other income and expense:
Investment income
23.0
5.9
50.6
119.4
Interest expense
(17.9
)
(24.6
)
(56.1
)
(73.7
)
Other income and (expense)
0.4
2.2
2.9
3.5
Income before income taxes
535.5
342.1
1,576.8
275.1
Income tax expense
67.9
11.2
61.5
152.5
Net income
$
467.6
$
330.9
$
1,515.3
$
122.6
Earnings per common share
Basic
$
2.09
$
1.48
$
6.77
$
0.55
Diluted
$
2.08
$
1.47
$
6.72
$
0.55
Shares used in computing earnings per
common share
Basic
223.3
222.9
223.8
222.5
Diluted
224.5
224.6
225.4
224.2
ALEXION PHARMACEUTICALS,
INC.
TABLE 2: RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL RESULTS
(in millions, except per share
amounts)
(unaudited)
Three months ended
Nine months ended
September 30,
September 30,
2019
2018
2019
2018
GAAP net income
$
467.6
$
330.9
$
1,515.3
$
122.6
Before tax adjustments:
Cost of sales:
Share-based compensation
3.4
3.3
10.7
12.2
Restructuring related expenses (1)
—
—
—
5.8
Research and development expense:
Share-based compensation
16.7
12.5
45.9
42.5
Upfront payments related to licenses and
collaborations (2)
30.1
—
76.3
—
Restructuring related expenses (1)
—
—
—
0.1
Selling, general and administrative
expense:
Share-based compensation
38.9
29.8
120.1
96.2
Restructuring related expenses (1)
—
7.9
—
18.0
Litigation charges
—
—
0.1
7.1
Gain on sale of asset
—
(3.5
)
—
(3.5
)
Acquired in-process research and
development (3)
—
—
(4.1
)
803.7
Amortization of purchased intangible
assets
75.6
80.0
235.7
240.1
Change in fair value of contingent
consideration (4)
29.8
53.5
7.2
110.9
Restructuring expenses (1)
0.3
10.3
11.9
26.4
Investment income:
Change in value of strategic equity
investments (5)
(12.0
)
—
(20.6
)
(100.8
)
Other income:
Restructuring related expenses (1)
—
—
—
(0.1
)
Adjustments to income tax expense (6)
(14.6
)
(64.6
)
(212.1
)
(68.9
)
Non-GAAP net income
$
635.8
$
460.1
$
1,786.4
$
1,312.3
GAAP earnings per common share -
diluted
$
2.08
$
1.47
$
6.72
$
0.55
Non-GAAP earnings per common share -
diluted
$
2.79
$
2.02
$
7.83
$
5.78
Shares used in computing diluted earnings
per common share (GAAP)
224.5
224.6
225.4
224.2
Shares used in computing diluted earnings
per common share (non-GAAP)
227.7
227.4
228.2
227.0
(1) The following table summarizes the total restructuring and
related expenses recorded by type of activity and the
classification within the Reconciliation of GAAP to non-GAAP
Financial Results:
Three months ended September
30,
Three months ended September
30,
2019
2018
Employee Separation
Costs
Asset- Related Charges
Other
Total
Employee Separation
Costs
Asset- Related Charges
Other
Total
Cost of sales
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Research and development
—
—
—
—
—
—
—
—
Selling, general and administrative
—
—
—
—
—
7.9
—
7.9
Restructuring expense
(2.8
)
—
3.1
0.3
2.8
—
7.5
10.3
Other (income) expense
—
—
—
—
—
—
—
—
$
(2.8
)
$
—
$
3.1
$
0.3
$
2.8
$
7.9
$
7.5
$
18.2
Nine months ended September
30,
Nine months ended September
30,
2019
2018
Employee Separation
Costs
Asset- Related Charges
Other
Total
Employee Separation
Costs
Asset- Related Charges
Other
Total
Cost of sales
$
—
$
—
$
—
$
—
$
—
$
5.8
$
—
$
5.8
Research and development
—
—
—
—
—
0.1
—
0.1
Selling, general and administrative
—
—
—
—
—
18.0
—
18.0
Restructuring expense
8.7
—
3.2
11.9
6.9
—
19.5
26.4
Other (income) expense
—
—
—
—
—
—
(0.1
)
(0.1
)
$
8.7
$
—
$
3.2
$
11.9
$
6.9
$
23.9
$
19.4
$
50.2
(2) During the three months ended September 30, 2019, we
recorded an upfront license payment of $30.1 million in connection
with an agreement that we entered into with Eidos Therapeutics,
Inc. (Eidos). During the nine months ended September 30, 2019, we
recorded upfront license payments of $76.3 million in connection
with agreements that we entered into with Eidos, Affibody AB and
Zealand Pharma A/S.
(3) In connection with the agreement of the final working
capital adjustment for the Syntimmune acquisition, we recognized a
benefit of $4.1 million associated with previously acquired
in-process research and development in the second quarter of
2019.
(4) Changes in the fair value of contingent consideration
expense for the three and nine months ended September 30, 2019
include the impact of changes in the expected timing of achieving
contingent milestones, in addition to the interest component
related to the passage of time. For the three and nine months ended
September 30, 2018, changes in the fair value of contingent
consideration expense was primarily due to amending certain
contingent milestone payments due under our prior merger agreement
with Enobia Pharma Corp. in September 2018 as well as due to
increases in the likelihood and anticipated timing of payments for
contingent consideration.
(5) During the three and nine months ended September 30, 2019,
we recognized an unrealized gain of $12.0 million and $20.6
million, respectively, in investment income to adjust our strategic
equity investments to fair value. The nine months ended September
30, 2018 included the recognition of an unrealized gain of $100.8
million on our investment in Moderna Therapeutics, Inc. following
the completion of a new round of equity financing in the first
quarter 2018.
(6) Alexion's non-GAAP income tax expense for the three and nine
months ended September 30, 2019 and 2018 excludes the tax effect of
pre-tax adjustments to GAAP profit. Non-GAAP income tax expense for
the three and nine months ended September 30, 2019 excludes a
one-time tax expense of $10.2 million related to the July 1, 2019
integration of Wilson Therapeutics intellectual property into the
Alexion corporate structure. Non-GAAP income tax expense for the
nine months ended September 30, 2019 also excludes certain one-time
tax benefits of $95.7 million and $30.3 million associated with a
tax election made with respect to intellectual property of Wilson
Therapeutics and a release of an existing valuation allowance,
respectively. Non-GAAP income tax expense for the three and nine
months ended September 30, 2018 excludes adjustments to provisional
estimates of the impact of Tax Cuts and Jobs Act we recorded in
fourth quarter 2017.
ALEXION PHARMACEUTICALS,
INC.
TABLE 3: RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL GUIDANCE
(in millions, except per share
amounts and percentages)
(unaudited)
Twelve months ending
December 31, 2019
Low
High
GAAP net income
$
1,926
$
1,970
Before tax adjustments: Share-based compensation
251
234
Upfront payments related to licenses and collaborations
96
96
Acquired in-process research and development
(4
)
(4
)
Amortization of purchased intangible assets
309
309
Change in fair value of contingent consideration
12
12
Restructuring expenses
20
20
Change in value of strategic equity investments
(21
)
(21
)
Adjustments to income tax expense
(257
)
(250
)
Non-GAAP net income
$
2,332
$
2,366
Diluted GAAP earnings per common share
$
8.58
$
8.78
Diluted non-GAAP earnings per common share
$
10.25
$
10.4
Operating expense and margin (% total revenues)
GAAP research and development expense
18
%
17
%
Share-based compensation
1
%
1
%
Upfront payments related to licenses and collaborations
2
%
2
%
Non-GAAP research and development expense
15
%
14
%
GAAP selling, general and administrative expense
25
%
24
%
Share-based compensation
3
%
3
%
Non-GAAP selling, general and administrative expense
22
%
21
%
GAAP operating margin
41
%
42
%
Share-based compensation
5
%
5
%
Upfront payments related to licenses and collaborations
2
%
2
%
Acquired in-process research and development
0
%
0
%
Amortization of purchased intangible assets
6
%
6
%
Change in fair value of contingent consideration
0
%
0
%
Restructuring expenses
0
%
0
%
Non-GAAP operating margin
55
%
56
%
Income tax expense (% of income before income taxes)
GAAP income tax expense
6
%
5
%
Tax effect of pre-tax adjustments to GAAP net income and other
one-time items associated with intellectual property
8
%
8
%
Non-GAAP income tax expense
14
%
13
%
Amounts may not foot due to rounding.
ALEXION PHARMACEUTICALS,
INC.
TABLE 4: NET PRODUCT SALES BY
GEOGRAPHY
(in millions)
(unaudited)
Three months ended
Nine months ended
September 30,
September 30,
2019
2018
2019
2018
SOLIRIS
United States
$
496.8
$
404.5
$
1,456.8
$
1,136.3
Europe
255.5
262.1
800.2
766.3
Asia Pacific
118.0
98.2
329.2
277.3
Rest of World
120.2
123.2
347.1
406.4
Total Soliris
$
990.5
$
888.0
$
2,933.3
$
2,586.3
ULTOMIRIS
United States
$
65.1
$
—
$
143.9
$
—
Europe
21.1
—
21.1
—
Asia Pacific
3.7
—
3.7
—
Rest of World
—
—
—
—
Total Ultomiris
$
89.9
$
—
$
168.7
$
—
STRENSIQ
United States
$
118.0
$
86.6
$
323.7
$
275.7
Europe
19.0
16.6
56.0
47.0
Asia Pacific
14.0
7.2
36.0
19.2
Rest of World
3.3
2.8
10.0
7.1
Total Strensiq
$
154.3
$
113.2
$
425.7
$
349.0
KANUMA
United States
$
16.0
$
13.7
$
45.1
$
38.6
Europe
6.3
4.7
19.4
16.4
Asia Pacific
1.3
0.8
3.4
2.9
Rest of World
4.8
6.1
10.2
8.4
Total Kanuma
$
28.4
$
25.3
$
78.1
$
66.3
Net Product Sales
United States
$
695.9
$
504.8
$
1,969.5
$
1,450.6
Europe
301.9
283.4
896.7
829.7
Asia Pacific
137.0
106.2
372.3
299.4
Rest of World
128.3
132.1
367.3
421.9
Total Net Product Sales
$
1,263.1
$
1,026.5
$
3,605.8
$
3,001.6
ALEXION PHARMACEUTICALS,
INC.
TABLE 5: CONDENSED
CONSOLIDATED BALANCE SHEETS
(in millions)
(unaudited)
September 30,
December 31
2019
2018
Cash and cash equivalents
$
2,171.3
$
1,365.5
Marketable securities
44.4
198.3
Trade accounts receivable, net
1,116.3
922.3
Inventories
576.7
472.5
Prepaid expenses and other current assets
(1)
432.5
426.4
Property, plant and equipment, net (1)
1,148.0
1,471.5
Intangible assets, net
3,410.1
3,641.3
Goodwill
5,037.4
5,037.4
Right of use operating assets (1)
206.9
—
Other assets
671.4
396.7
Total assets
$
14,815.0
$
13,931.9
Accounts payable and accrued expenses
$
868.2
$
698.2
Revolving credit facility
—
250.0
Current portion of long-term debt
126.6
93.8
Current portion of contingent
consideration
—
97.6
Other current liabilities (1)
96.4
34.4
Long-term debt, less current portion
2,406.7
2,501.7
Contingent consideration
188.0
183.2
Facility lease obligations (1)
—
361.0
Deferred tax liabilities
314.7
391.1
Noncurrent operating lease liabilities
(1)
166.8
—
Other liabilities (1)
280.4
155.6
Total liabilities
4,447.8
4,766.6
Total stockholders' equity (1)
10,367.2
9,165.3
Total liabilities and stockholders'
equity
$
14,815.0
$
13,931.9
(1) In February 2016, the Financial Accounting Standards Board
issued a new standard that requires lessees to recognize leases
on-balance sheet. We adopted the new standard on January 1, 2019
using the modified retrospective approach. The September 30, 2019
condensed consolidated balance sheet is presented under the new
standard, while the December 31, 2018 condensed consolidated
balance sheet is not adjusted and continues to be reported under
the accounting standards in effect for that period. Upon adoption
of the new lease standard, we derecognized $472.8 million of
property, plant and equipment and other assets and $372.2 million
of facility lease obligations associated with previously existing
build-to-suit arrangements which resulted in a decrease of $90.3
million to retained earnings, net of tax. In addition, we
capitalized $326.1 million and $255.3 million of right of use
assets and lease liabilities, respectively, within our condensed
consolidated balance sheet upon adoption.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191023005211/en/
Alexion: Media Megan
Goulart, 857-338-8634 Senior Director, Corporate Communications
Investors Susan Altschuller, Ph.D., 857-338-8788 Vice
President, Investor Relations
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