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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2021
or
Transition report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
For the transition period from              to             
Commission file number: 0-27756
  ALXN-20210331_G1.JPG
ALEXION PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 13-3648318
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
121 Seaport Boulevard, Boston Massachusetts 02210
(Address of Principal Executive Offices) (Zip Code)
475-230-2596
(Registrant’s telephone number, including area code)
N/A
(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock $0.0001 par value ALXN NASDAQ Stock Market LLC
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x  No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x   No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer  x   Accelerated filer   Non-accelerated filer  
Smaller reporting company   Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  x
Common Stock  $0.0001 par value 221,019,230
Class Outstanding as of April 28, 2021



 
Alexion Pharmaceuticals, Inc.
Table of Contents

 
Page
PART I.
Item 1.
2
3
4
5
6
8
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 5.
Item 6.
SIGNATURES



Alexion Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(amounts in millions, except per share amounts)
  March 31, December 31,
  2021 2020
Assets
Current Assets:
Cash and cash equivalents $ 3,429.6  $ 2,964.5 
Marketable securities 39.7  34.9 
Trade accounts receivable, net 1,473.0  1,409.3 
Inventories 803.9  775.7 
Prepaid expenses and other current assets 706.4  648.6 
Total current assets 6,452.6  5,833.0 
Property, plant and equipment, net 1,244.8  1,238.8 
Intangible assets, net 3,048.3  3,002.4 
Goodwill 5,100.1  5,100.1 
Right of use operating assets 216.8  223.1 
Deferred tax assets 2,140.6  2,199.4 
Other assets 447.0  506.2 
Total assets $ 18,650.2  $ 18,103.0 
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 125.3  $ 118.6 
Accrued expenses 910.7  1,084.7 
Current portion of long-term debt 143.2  142.4 
Current portion of contingent consideration 120.0  114.9 
Other current liabilities 127.0  164.1 
Total current liabilities 1,426.2  1,624.7 
Long-term debt, less current portion 2,388.8  2,419.6 
Contingent consideration 303.5  299.4 
Deferred tax liabilities 1,639.1  1,632.2 
Noncurrent operating lease liabilities 170.8  177.1 
Other liabilities 290.8  298.8 
Total liabilities 6,219.2  6,451.8 
Commitments and contingencies (Note 17)
Stockholders' Equity:
Common stock, $0.0001 par value; 290.0 shares authorized; 242.3 and 240.9 shares issued at March 31, 2021 and December 31, 2020, respectively
—  — 
Additional paid-in capital 9,243.3  9,152.9 
Treasury stock, at cost, 21.4 shares at March 31, 2021 and December 31, 2020
(2,620.5) (2,620.3)
Accumulated other comprehensive loss (85.2) (124.6)
Retained earnings 5,879.2  5,243.2 
Total Alexion stockholders' equity 12,416.8  11,651.2 
Noncontrolling interest 14.2  — 
Total stockholders' equity 12,431.0  11,651.2 
Total liabilities and stockholders' equity $ 18,650.2  $ 18,103.0 

The accompanying notes are an integral part of these condensed consolidated financial statements.
2


Alexion Pharmaceuticals, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(amounts in millions, except per share amounts)
  Three months ended March 31,
  2021 2020
Net product sales $ 1,635.7  $ 1,444.6 
Other revenue 0.8  0.2 
Total revenues 1,636.5  1,444.8 
Costs and expenses:
Cost of sales (exclusive of amortization of purchased intangible assets) 125.4  111.7 
Research and development 289.1  200.9 
Selling, general and administrative 342.9  319.9 
Amortization of purchased intangible assets 53.2  73.7 
Change in fair value of contingent consideration 9.2  5.8 
Acquired in-process research and development 193.3  — 
Acquisition-related costs 13.2  38.1 
Restructuring expenses (0.7) (0.8)
Gain on sale of assets (25.3) — 
Total costs and expenses 1,000.3  749.3 
Operating income 636.2  695.5 
Other income and expense:
Investment expense, net (7.0) (5.2)
Interest expense (27.1) (25.8)
Other income and (expense) 0.5  (0.9)
Income before income taxes 602.6  663.6 
Income tax expense 113.4  106.0 
Net income 489.2  557.6 
Net loss attributable to noncontrolling interest 146.8  — 
Net income attributable to Alexion $ 636.0  $ 557.6 
Earnings per common share attributable to Alexion:
Basic $ 2.89  $ 2.52 
Diluted $ 2.86  $ 2.50 
Shares used in computing earnings per common share attributable to Alexion:
Basic 220.1  221.6 
Diluted 222.6  222.6 

The accompanying notes are an integral part of these condensed consolidated financial statements.
3


Alexion Pharmaceuticals, Inc.
Condensed Consolidated Statements of Comprehensive Income
(unaudited)
(amounts in millions)
Three months ended March 31,
2021 2020
Net income $ 489.2  $ 557.6 
Other comprehensive income (loss), net of tax:
Foreign currency translation (13.1) (8.0)
Unrealized losses on debt securities —  (0.2)
Unrealized gains (losses) on hedging activities, net of tax expense (benefit) of $15.8 and $(8.2), respectively
52.5  (26.5)
Other comprehensive income (loss), net of tax 39.4  (34.7)
Comprehensive income $ 528.6  $ 522.9 
Comprehensive loss attributable to noncontrolling interest 146.8  — 
Comprehensive income attributable to Alexion $ 675.4  $ 522.9 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


Alexion Pharmaceuticals, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(unaudited)
(amounts in millions)
Three months ended March 31, 2021 Common Stock Additional Paid-In Capital Treasury Stock at Cost Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Alexion Stockholders' Equity Noncontrolling Interest Total Stockholders’ Equity
Shares Issued Amount Shares Amount
Balances, December 31, 2020 240.9  $ —  $ 9,152.9  21.4  $ (2,620.3) $ (124.6) $ 5,243.2  $ 11,651.2  $ —  $ 11,651.2 
VIE noncontrolling interest upon consolidation —  —  —  —  —  —  —  —  161.0  161.0 
Issuance of common stock under stock option and stock purchase plans 0.1  —  14.2  —  —  —  —  14.2  —  14.2 
Issuance of restricted common stock 1.3  —  —  —  —  —  —  —  —  — 
Share-based compensation expense —  —  76.2  —  (0.2) —  —  76.0  —  76.0 
Net income (loss) —  —  —  —  —  —  636.0  636.0  (146.8) 489.2 
Other comprehensive income —  —  —  —  —  39.4  —  39.4  —  39.4 
Balances, March 31, 2021 242.3  $ —  $ 9,243.3  21.4  $ (2,620.5) $ (85.2) $ 5,879.2  $ 12,416.8  $ 14.2  $ 12,431.0 

Three months ended March 31, 2020 Common Stock Additional Paid-In Capital Treasury Stock at Cost Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Alexion Stockholders' Equity Noncontrolling Interest Total Stockholders’ Equity
Shares Issued Amount Shares Amount
Balances, December 31, 2019 237.8  $ —  $ 8,804.7  16.5  $ (2,105.9) $ (66.8) $ 4,639.8  $ 11,271.8  $ —  $ 11,271.8 
Repurchase of common stock —  —  —  1.3  (107.1) —  —  (107.1) —  (107.1)
Issuance of common stock under stock option and stock purchase plans 0.1  —  2.8  —  —  —  —  2.8  —  2.8 
Issuance of restricted common stock 1.0  —  —  —  —  —  —  —  —  — 
Share-based compensation expense —  —  57.4  —  —  —  —  57.4  —  57.4 
Net income —  —  —  —  —  —  557.6  557.6  —  557.6 
Other comprehensive loss —  —  —  —  —  (34.7) —  (34.7) —  (34.7)
Balances, March 31, 2020 238.9  $ —  $ 8,864.9  17.8  $ (2,213.0) $ (101.5) $ 5,197.4  $ 11,747.8  $ —  $ 11,747.8 

The accompanying notes are an integral part of these condensed consolidated financial statements.
5


Alexion Pharmaceuticals, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(amounts in millions)
  Three months ended March 31,
  2021 2020
Cash flows from operating activities:
Net income $ 489.2  $ 557.6 
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization 75.6  89.3 
Change in fair value of contingent consideration 9.2  5.8 
Share-based compensation expense 76.6  57.6 
Consolidation of Caelum, including non-cash expense for acquired IPR&D and cash acquired 210.2  — 
Deferred taxes 52.9  49.0 
Unrealized foreign currency loss 10.9  7.1 
Unrealized gain on forward contracts (19.3) (15.0)
Unrealized loss on strategic equity investments 9.6  9.2 
Gain on sale of assets (25.3) — 
Other 2.8  13.7 
Changes in operating assets and liabilities, excluding the effect of acquisitions:
Accounts receivable (87.9) (120.9)
Inventories (inclusive of inventories reported in other assets) (59.5) 37.3 
Prepaid expenses, right of use operating assets and other assets 11.0  (72.9)
Accounts payable, accrued expenses, lease liabilities and other liabilities (118.4) (68.2)
Net cash provided by operating activities 637.6  549.6 
Cash flows from investing activities:
Purchases of available-for-sale debt securities —  (19.4)
Proceeds from maturity or sale of available-for-sale debt securities —  141.4 
Purchases of mutual funds related to nonqualified deferred compensation plan (7.0) (6.9)
Proceeds from sale of mutual funds related to nonqualified deferred compensation plan 3.3  3.3 
Purchases of intangible assets (110.0) — 
Purchases of property, plant and equipment (20.2) (12.2)
Payment for acquisition of businesses, net of cash and restricted cash acquired —  (837.7)
Purchases of strategic equity investments and options —  (34.5)
Net cash used in investing activities (133.9) (766.0)
Cash flows from financing activities:
Payments on term loan (32.6) (32.6)
Repurchases of common stock —  (107.1)
Net proceeds from issuance of common stock under share-based compensation arrangements 15.2  2.8 
Other (1.3) (1.3)
Net cash used in financing activities (18.7) (138.2)
Effect of exchange rate changes on cash and cash equivalents and restricted cash (13.1) (13.2)
Net change in cash and cash equivalents and restricted cash 471.9  (367.8)
Cash and cash equivalents and restricted cash at beginning of period 3,034.6  2,723.6 
Cash and cash equivalents and restricted cash at end of period $ 3,506.5  $ 2,355.8 

6





  Three months ended March 31,
  2021 2020
Supplemental non-cash flow disclosures from investing and financing activities:
Contingent consideration issued in acquisitions $ —  $ 155.0 
Exchange of intellectual property rights for strategic equity investments $ 5.0  $ — 
Operating ROU lease assets obtained in exchange for operating lease liabilities $ 1.5  $ 3.7 
Accounts payable and accrued expenses for purchases of property, plant and equipment and intangible assets $ 5.4  $ 13.0 
The following provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the total of such amounts shown in the condensed consolidated statements of cash flows:
  Three months ended March 31,
  2021 2020
Cash and cash equivalents $ 3,429.6  $ 2,315.0 
Restricted cash included in other current assets 76.9  40.7 
Restricted cash included in other noncurrent assets —  0.1 
Total cash and cash equivalents and restricted cash reported in the condensed consolidated statement of cash flows $ 3,506.5  $ 2,355.8 

Restricted cash included in other current assets and other noncurrent assets was $70.0 and $0.1, respectively, as of December 31, 2020. Amounts included in restricted cash primarily represent funds placed in escrow as a result of the judicial order issued by the Federal Court of Canada related to SOLIRIS pricing (refer to Note 17, Commitments and Contingencies).

The accompanying notes are an integral part of these condensed consolidated financial statements.
7

Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)

1.Business
Business
Alexion Pharmaceuticals, Inc. (Alexion, the Company, we, our or us) is a global biopharmaceutical company focused on serving patients and families affected by rare diseases and devastating conditions through the discovery, development and commercialization of life-changing medicines.
As a leader in rare diseases for more than 25 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) in patients who are anti-aquaporin-4 (AQP4) antibody positive. Alexion also has two highly innovative enzyme replacement therapies and the first and only approved therapies for patients with life-threatening and ultra-rare metabolic disorders, hypophosphatasia (HPP) and lysosomal acid lipase deficiency (LAL-D) as well as the first and only approved Factor Xa inhibitor reversal agent for patients treated with rivaroxaban or apixaban when reversal of anticoagulation is needed due to life-threatening or uncontrolled bleeding.
In addition to our marketed therapies, we have a diverse pipeline resulting from internal innovation and business development. 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, metabolic disorders, cardiology, ophthalmology and acute care. We were incorporated in 1992 under the laws of the State of Delaware.
Merger Agreement with AstraZeneca
On December 12, 2020, we entered into an Agreement and Plan of Merger (the Merger Agreement) with AstraZeneca PLC, a public limited company incorporated under the laws of England and Wales (AstraZeneca), Delta Omega Sub Holdings Inc., a Delaware corporation and a wholly owned subsidiary of AstraZeneca (Bidco), Delta Omega Sub Holdings Inc. 1, a Delaware corporation and a direct, wholly owned subsidiary of Bidco (Merger Sub I) and Delta Omega Sub Holdings LLC 2, a Delaware limited liability company and a direct, wholly owned subsidiary of Bidco (Merger Sub II). The Merger Agreement provides, among other things, that subject to the satisfaction or waiver of the conditions set forth therein (1) Merger Sub I will merge with and into Alexion (the “First Merger”), with Alexion surviving the First Merger as a wholly owned subsidiary of Bidco, and (2) immediately following the effective time of the First Merger (the Effective Time), Alexion will merge with and into Merger Sub II (the Second Merger and, together with the First Merger, the Mergers), with Merger Sub II surviving the Second Merger as a wholly owned subsidiary of Bidco and an indirect wholly owned subsidiary of AstraZeneca.
Under the Merger Agreement, at the Effective Time (as defined in the Merger Agreement), each share of common stock, par value $0.0001 per share, of Alexion issued and outstanding immediately prior to the Effective Time (other than certain excluded shares as described in the Merger Agreement) will be converted into the right to receive (1) 2.1243 American depositary shares of AstraZeneca (or, at the election of the holder thereof, a number of ordinary shares of AstraZeneca equal to the number of underlying ordinary shares represented by such American depositary shares) and (2) $60.00 in cash, without interest (collectively, the Merger Consideration).
The boards of directors of both companies have unanimously approved the acquisition.
The respective obligations of Alexion and AstraZeneca to consummate the transactions contemplated by the Merger Agreement are subject to the satisfaction or waiver of a number of customary conditions, including: (1) the adoption of the Merger Agreement by Alexion’s stockholders; (2) approval of the transactions contemplated by the Merger Agreement by AstraZeneca’s shareholders; (3) the absence of any law or order prohibiting consummation of the Mergers; (4) AstraZeneca’s registration statement on Form F-4 having been declared effective by the Securities and Exchange Commission; (5) AstraZeneca’s shareholder circular (or, if required, prospectus) having been approved by the U.K. Financial Conduct Authority; (6) the American depository shares of AstraZeneca issuable in the Mergers (and the ordinary shares of AstraZeneca represented thereby) having been approved for listing on the Nasdaq; (7) the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the approval of the Mergers under the antitrust and foreign investment laws of other specified jurisdictions; (8) accuracy of the other party’s representations and warranties, subject to certain materiality standards set forth in the Merger Agreement and (9) compliance by the other party in all material respects with such other party’s obligations under the Merger Agreement.
8

Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
Without limiting the generality of the foregoing, we are subject to a variety of specified restrictions under the Merger Agreement. Unless we obtain AstraZeneca’s prior written consent (which consent may not be unreasonably withheld, conditioned or delayed) and except (i) as required or expressly contemplated by the Merger Agreement, (ii) as required by applicable law or (iii) as set forth in the confidential disclosure schedule delivered by Alexion to AstraZeneca, we may not, among other things and subject to certain exceptions and aggregate limitations, incur additional indebtedness, issue additional shares of our common stock outside of our equity incentive plans, repurchase our common stock, pay dividends, acquire assets, securities or property, dispose of businesses or assets, enter into material contracts or make certain additional capital expenditures.
Under the Merger Agreement, Alexion will be required to make a payment to AstraZeneca equal to $1,180.0 if the Merger Agreement is terminated in certain circumstances, including because the Alexion board of directors has changed its recommendation in favor of the Mergers or we terminated the Merger Agreement in order to enter into an agreement providing for a Company Superior Proposal (as defined in the Merger Agreement), and Alexion will be required to make a payment to AstraZeneca equal to $270.0 if the Merger Agreement is terminated because Alexion’s stockholders fail to adopt the Merger Agreement. AstraZeneca will be required to make a payment to Alexion equal to $1,415.0 if the Merger Agreement is terminated in certain circumstances, including because the AstraZeneca board of directors has changed its recommendation in favor of the Mergers or because AstraZeneca’s shareholders fail to approve the transactions contemplated by the Merger Agreement.
The acquisition is expected to close during the third quarter 2021.
2.Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These accounting principles were applied on a basis consistent with those of the consolidated financial statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2020. In our opinion, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of our financial statements for interim periods presented in accordance with accounting principles generally accepted in the United States. The condensed consolidated balance sheet as of December 31, 2020 was derived from audited annual financial statements but does not include all disclosures required by accounting principles generally accepted in the United States. These interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2020 included in our Annual Report on Form 10-K for the year ended December 31, 2020. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year or any other future periods.
Our significant accounting policies are described in Note 1 of the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 and updated, as necessary in this report.
The financial statements of our subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars using period-end exchange rates for assets and liabilities, historical exchange rates for stockholders' equity and weighted average exchange rates for operating results. Translation gains and losses are included in accumulated other comprehensive income (loss), net of tax, in stockholders' equity. Foreign currency transaction gains and losses are included in the results of operations in other income and expense.
The accompanying unaudited condensed consolidated financial statements include the accounts of Alexion Pharmaceuticals, Inc. and its subsidiaries, including Caelum Biosciences (Caelum), a variable interest entity (VIE) for which we are the primary beneficiary, refer to Note 10, Caelum Biosciences. All intercompany balances and transactions have been eliminated in consolidation.
We assess whether we are the primary beneficiary of a VIE at the inception of the arrangement and at each reporting date. This assessment is based on our power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and our obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. For the consolidation of Caelum, we record net income (loss) attributable to noncontrolling interest in our consolidated statements of operations based on the ownership interest retained by the respective noncontrolling parties.
9

Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
New Accounting Pronouncements
ASU 2020-04, “Reference Rate Reform, Facilitation of the Effects of Reference Rate Reform on Financial Reporting": In response to concerns about structural risks of interbank offered rates, and, particularly, the risk of cessation of the London Interbank Offered Rate (LIBOR), regulators around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction-based and less susceptible to manipulation. In March 2020, the Financial Accounting Standards Board (FASB) issued a new standard that provides optional guidance for a limited time to ease the potential burden in accounting for the effects of reference rate reform, including optional expedients and exceptions for the accounting implications of contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.
The amendments in this new standard only apply to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the standard do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. We are currently reviewing our contracts impacted by reference rate reform and are assessing the impact of this standard on our financial condition and results of operations.
Recently Adopted Accounting Pronouncements
Accounting Standards Update (ASU) 2019-12, “Income Taxes: Simplifying the Accounting for Income Taxes”: In December 2019, the FASB issued a new standard intended to simplify the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for annual periods beginning after December 15, 2020 and interim periods within, with early adoption permitted. Adoption of the standard requires certain changes to be made prospectively, with some changes to be made retrospectively. We adopted the new standard on January 1, 2021. The adoption of this standard did not have an impact on our financial condition and results of operations.
ASU 2020-01, “Investments - Equity Securities, Investments - Equity Method and Joint Ventures, and Derivatives and Hedging - Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815”: In January 2020, the FASB issued a new standard intended to clarify the interactions between Accounting Standards Codification (ASC) 321, ASC 323 and ASC 815. The new standard addresses accounting for the transition into and out of the equity method and measurement of certain purchased options and forward contracts to acquire investments. The standard is effective for annual and interim periods beginning after December 15, 2020, with early adoption permitted. Adoption of the standard requires changes to be made prospectively. We adopted the new standard on January 1, 2021. The adoption of this standard did not have an impact on our financial condition and results of operations.
3.Acquisitions
Business Combinations
Achillion Pharmaceuticals, Inc.
In October 2019, Alexion entered into a definitive agreement to acquire Achillion Pharmaceuticals, Inc. (Achillion), a clinical-stage biopharmaceutical company focused on the development of oral Factor D inhibitors. Achillion was developing oral small molecule Factor D inhibitors to treat people with complement alternative pathway-mediated rare diseases, such as PNH and C3 glomerulopathy (C3G). Achillion had two clinical stage medicines in development, including danicopan (ACH-4471/ALXN2040) and ACH-5228 (ALXN2050).
The acquisition of Achillion closed on January 28, 2020. Under the terms of the agreement, we acquired all outstanding common stock of Achillion for $6.30 per share, or an aggregate of $926.2, inclusive of the settlement of Achillion's outstanding equity awards. The acquisition was funded with cash on hand. The transaction includes the potential for additional consideration in the form of non-tradeable contingent value rights (CVRs), which will be paid to Achillion shareholders if certain clinical and regulatory milestones are achieved within specified periods. These include $1.00 per share for the U.S. Food and Drug Administration (FDA) approval of danicopan and $1.00 per share for the initiation of a Phase III clinical trial in ACH-5228.
10

Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
The transaction was accounted for as a business combination. The following table summarizes the total consideration transferred to acquire Achillion and the estimated fair value of the identified assets acquired and liabilities assumed at the acquisition date:
Consideration
Upfront payment to shareholders and option holders $ 926.2 
Upfront payment, fair value of equity compensation attributable to the post-combination service period (20.0)
Upfront cash paid, net 906.2 
Contingent consideration 160.7 
Contingent consideration, fair value of equity compensation attributable to the post-combination service period (5.7)
Total consideration $ 1,061.2 
Assets Acquired and Liabilities Assumed
Cash and cash equivalents $ 68.5 
Marketable securities 106.1 
In-process research & development assets (IPR&D) 918.0 
Goodwill 37.8 
Deferred tax liabilities, net (62.9)
Other assets and liabilities, net (6.3)
Total net assets acquired $ 1,061.2 

Our accounting for this acquisition was finalized during the second quarter of 2020. Measurement period adjustments increased goodwill by $3.1 during the second quarter of 2020 due to purchase price allocation increases to deferred tax liabilities, net. Measurement period adjustments were recorded as a result of studies completed during the second quarter of 2020 to determine the tax deductibility of certain acquisition-related costs and the valuation of historical net operating loss and income tax credit carryforwards.
The initial fair value estimate of the contingent consideration in the form of non-tradeable CVRs was $160.7, which was recorded as a noncurrent liability in our condensed consolidated balance sheets, including $5.7 related to compensation attributable to the post-combination service period. We determined the fair value of these milestone-related payment obligations using various estimates, including probabilities of success prior to expiration of the specified period, discount rates and the amount of time until the conditions of the milestone payments are expected to be met. This fair value measurement was based on significant inputs not observable in the market, representing Level 3 measurements within the fair value hierarchy. The resulting probability-weighted cash flows were discounted using a cost of debt rate ranging from 2.1% to 2.3%. The range of estimated milestone payments upon closing of the acquisition was from zero, if no milestones are achieved for any product, to $306.3 if certain development and regulatory milestones are achieved.
Subsequent to the acquisition date, we have adjusted the contingent consideration to fair value with changes in fair value recognized in operating earnings. Changes in fair values reflect new information about the probability and timing of meeting the conditions of the milestone payments. In the absence of new information, changes in fair value will only reflect the interest component of contingent consideration related to changes in the discount rates and the passage of time as development work progresses towards the potential achievement of the milestones. As of March 31, 2021, the fair value of the contingent consideration for the Achillion acquisition was $212.8 based on the probability-weighted cash flows, discounted using a cost of debt ranging from 2.5% to 3.0%. Changes in fair value of the contingent consideration associated with the Achillion acquisition for the three months ended March 31, 2021 and 2020, was $2.2 and $1.7, respectively.
The aggregate fair value of equity compensation attributable to the post-combination service period was $25.7. This amount was excluded from the total consideration transferred and was recognized as a charge to acquisition-related costs in our condensed consolidated statements of operations during the first quarter 2020. These amounts were associated with the accelerated vesting of stock options previously granted to Achillion employees. Excluding the $5.7 of contingent consideration related to equity compensation attributable to the post-combination service period, such amounts were paid during the first quarter 2020.
11

Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
Intangible assets associated with IPR&D relate to two development-stage programs, ACH-4471 (ALXN2040) and ACH-5228 (ALXN2050). The estimated fair value of $918.0 was determined using the excess earnings valuation method, a variation of the income valuation approach. The excess earnings valuation method estimates the value of an intangible asset equal to the present value of the incremental after-tax cash flows attributable to that intangible asset. Some of the more significant assumptions utilized in our asset valuations included the estimated net cash flows for each asset, including net revenues, cost of sales, research and development and other operating expenses, the potential regulatory and commercial success rates, competitive trends impacting the assets, and tax rates. The fair value using the excess earnings valuation method was determined using an estimated weighted average cost of capital for Achillion of 11.5%, which represents a rate of return that a market participant would expect for these assets. These fair value measurements were based on significant inputs not observable in the market and thus represent Level 3 fair value measurements. In the second quarter 2020, we recognized an impairment charge of $11.0 to write off our ACHN-4471 (ALXN2040) IPR&D asset due to clinical results received during the quarter.
The excess of purchase price over the fair value of the assets acquired and liabilities assumed represents the goodwill resulting from the acquisition. The goodwill, which is not tax-deductible, has been recorded as a noncurrent asset and is not amortized, but is subject to an annual review for impairment. The factors that contributed to the recognition of goodwill include the value of the acquired workforce, synergies that are specific to our business and not available to market participants, and early research in preclinical Factor D inhibitors, as well as the effects of the establishment of a deferred tax liability for the acquired IPR&D intangible assets, which has no tax basis.
We recorded a net deferred tax liability of $62.9, inclusive of measurement period adjustments recorded during the second quarter 2020. This amount was primarily comprised of $205.3 of deferred tax liabilities relating to the IPR&D acquired, offset by $142.4 of deferred tax assets related to net operating loss carryforwards (NOLs), income tax credits, and other temporary differences.
Achillion's results of operations are included in the condensed consolidated financial statements from the date of acquisition. For the three months ended March 31, 2020, we recorded $13.9 of pre-tax operating losses associated with the operations of Achillion in our condensed consolidated statements of operations. We also recorded acquisition-related costs in connection with the acquisition during the three months ended March 31, 2020 as presented below. No revenues were recorded in the results of operations for the three months ended March 31, 2020 as neither ALXN2040 nor ALXN2050 has been approved for commercial sale by any regulatory agency.
Portola Pharmaceuticals, Inc.
In May 2020, Alexion entered into a definitive merger agreement to acquire Portola Pharmaceuticals, Inc. (Portola), a commercial-stage biopharmaceutical company focused on life-threatening blood-related disorders. Portola’s commercialized medicine, ANDEXXA®, marketed as ONDEXXYA® in Europe, is the first and only approved Factor Xa inhibitor reversal agent, and has demonstrated transformative clinical value by rapidly reversing the anticoagulant effects of Factor Xa inhibitors rivaroxaban and apixaban in severe and uncontrolled bleeding. The acquisition provides the opportunity to grow Alexion's commercial portfolio and is a strategic fit with our existing expertise in acute care, hematology and neurology.
Alexion completed the acquisition through a tender offer and subsequent merger of Portola which closed on July 2, 2020. Under the terms of the tender offer and merger agreement, Alexion purchased all outstanding common stock of Portola for $18.00 per share, or an aggregate of approximately $1,380.8, including the settlement of certain of Portola's outstanding equity awards but excluding shares of Portola stock held by Alexion at closing. The acquisition was funded by cash on hand.
Prior to the acquisition of Portola, in March 2020 and April 2020, we purchased $14.5 and $3.6, respectively, of common stock of Portola, which we recorded at fair value. Upon the closing of the acquisition of Portola, the fair value of the equity investment of $47.8 was derecognized and included in the fair value of consideration transferred. For additional information on our Portola equity investment, refer to Note 11, Other Investments.
The aggregate fair value of equity compensation attributable to the post-combination service period was $11.1. This amount was excluded from the total consideration transferred and was recognized as a charge to acquisition-related costs in our condensed consolidated statements of operations during the third quarter of 2020. These amounts were primarily associated with the accelerated vesting of stock options previously granted to Portola employees and were paid during the third quarter 2020.
12

Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
We issued $41.5 of equity compensation replacement awards, of which the portion attributable to services performed prior to the acquisition date, or $7.2, was allocated to purchase consideration. The remaining fair value is attributable to future services and will be expensed as share-based compensation over the remaining service periods. Expense associated with the accelerated-vesting of the replacement awards in connection with employee terminations will be recognized as acquisition-related employee separation costs.
In connection with the acquisition, Alexion also paid $196.9 to settle certain debt held by Portola that was subject to preexisting change of control provisions.
The transaction was accounted for as a business combination. The following table summarizes the total consideration transferred to acquire Portola and the estimated fair value of the identified assets acquired and liabilities assumed at the acquisition date:

Consideration
Upfront payment to shareholders and equity holders $ 1,380.8 
Upfront payment, fair value of equity compensation attributable to the post-combination service period (11.1)
Upfront cash paid, net 1,369.7 
Fair value of equity shares held by Alexion at closing 47.8 
Fair value of replacement equity awards attributable to the pre-combination period 7.2 
Total consideration to acquire outstanding equity, net 1,424.7 
Total consideration to settle preexisting debt 196.9
  Total consideration $ 1,621.6 
Assets Acquired and Liabilities Assumed
Cash and cash equivalents $ 288.5 
Marketable securities 17.8 
Inventories, including noncurrent portion of $169.1 and validation batches of $60.9
362.5 
Intangible assets 1,051.0 
Goodwill 24.9 
Deferred tax assets, net 116.6 
Other assets 41.9 
Accounts payable and accrued expenses (75.6)
Long-term debt, including current portion of $7.7
(182.0)
Other liabilities (24.0)
Total net assets acquired $ 1,621.6 

Our accounting for this acquisition was finalized during the fourth quarter of 2020. Measurement period adjustments decreased goodwill by $0.6 during the fourth quarter of 2020 due to purchase price allocation increases to deferred tax assets, net. Measurement period adjustments were recorded as a result of studies completed during the fourth quarter of 2020 to determine the tax deductibility of certain acquisition-related costs and the valuation of historical net operating loss and income tax credit carryforwards.
We acquired $362.5 of ANDEXXA inventory, inclusive of $60.9 of validation batches manufactured under processes which are subject to regulatory approval and expected to be commercially saleable following approval. The estimated fair value of raw material inventory was valued at replacement cost, which is equal to the value a market participant would pay to acquire the inventory. The estimated fair value of work-in-process and finished goods inventory was based on the expected selling price of the inventory, adjusted for incremental costs to complete the
13

Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
manufacturing process, for direct selling efforts, and for a normal profit on the remaining manufacturing and selling costs. Additionally, as the inventory acquired, inclusive of validation batches, is expected to be realized over a period of approximately 3 years, the fair value of the inventory was determined using a discount rate of 17.5%, representing the rate of return that a market participant would expect for the inventory, which shares risk that is similar to the underlying intellectual property. These fair value measurements were based on significant inputs not observable in the market and thus represent Level 3 fair value measurements. The acquired inventory, inclusive of the acquisition-date fair value step-up, will be expensed within cost of sales as the inventory is sold to customers. We classified the ANDEXXA inventory that is expected to be utilized beyond our normal operating cycle as a long-term asset. The fair value of the non-current portion of inventory, in addition to the validation batches, are classified within other assets in our condensed consolidated balance sheets.
Intangible assets consist of purchased technology of $1,036.0 and IPR&D of $15.0. The purchased technology intangible asset relates to Portola's lead product ANDEXXA. The estimated fair value was determined using the excess earnings valuation method, a variation of the income valuation approach. The excess earnings valuation method estimates the value of an intangible asset equal to the present value of the incremental after-tax cash flows attributable to that intangible asset. Some of the more significant assumptions utilized in our asset valuation included the estimated net cash flows for ANDEXXA, including net revenues, cost of sales, research and development and other operating expenses, the potential regulatory and commercial success rates associated with ANDEXXA's current conditional approval status and planned extension into the urgent surgery setting, competitive trends impacting the assets, and tax rates. The fair value using the excess earnings valuation method was determined using a discount rate commensurate with the risks of ANDEXXA of 17.5%, which represents a rate of return that a market participant would expect for the asset. The acquired purchased technology intangible asset is being amortized over an estimated useful life of approximately 10 years. IPR&D relates to the cerdulatinib development-stage asset. The estimated fair value of the IPR&D asset was determined using a relief from royalty (RFR) method, a variation of the income approach that is based on the cost savings that accrue to the owner of an intangible asset who would otherwise have to pay royalties on revenues earned through the use of the asset. The RFR method was modified to reflect the cash flow forecast of Portola's pre-existing in-license of cerdulatinib from Astellas Pharma, Inc. The acquired fair value of $15.0 represents an increase in the value of the asset relative to when it was initially in-licensed by Portola. Some of the more significant assumptions utilized in the IPR&D asset valuation included the estimated net revenue, royalty rate, and tax rates. The fair value using the RFR method was determined using an estimated discount rate commensurate with the risks of cerdulatinib of 17.5%, which represents a rate of return that a market participant would expect for the asset. These fair value measurements were based on significant inputs not observable in the market and thus represent Level 3 fair value measurements.
In connection with the acquisition, we assumed royalty-based debt which requires repayment through tiered royalties on future net worldwide sales of ANDEXXA. Total potential royalty payments are capped at $290.6, of which $13.7 were paid by Portola prior to the acquisition. The fair value of the remaining $276.9 in royalty-based payments as of the date of acquisition was $182.0. The estimated fair value was measured using Level 3 inputs and was calculated using a real options method, which runs simulations using various estimates, including probability-weighted net sales of ANDEXXA and volatility. Using the simulation results, the fair value was calculated based on the expected probability-weighted risk-neutral royalties, discounted at our estimated cost of debt, ranging from 3.3% to 7.1%, commensurate with the cost of debt at each period in which the royalty-based payments are estimated to be made.
We recorded net deferred tax assets of $116.6, inclusive of measurement period adjustments recorded during the fourth quarter 2020. This amount was primarily comprised of $301.6, $41.8, $42.4 and $39.3 of deferred tax assets relating to net operating loss carryforwards (NOLs), income tax credits, royalty-based debt, and other temporary differences, respectively, offset by $245.1 and $63.4 of deferred tax liabilities relating to intangible assets acquired and inventory fair value adjustments, respectively.
The excess of purchase price over the fair value of the assets acquired and liabilities assumed represents the goodwill resulting from the acquisition. The goodwill, which is not tax-deductible, has been recorded as a noncurrent asset and is not amortized, but is subject to an annual review for impairment. The factors that contributed to the recognition of goodwill primarily include the value of the acquired workforce and the effects of the establishment of a deferred tax liability for the fair value step-up of acquired inventory and intangible assets which exceed the incremental book value of acquired deferred tax assets over their fair value.
14

Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
Pro forma financial information (unaudited)
The following unaudited pro forma information presents the combined results of Alexion and Achillion as if the acquisition of Achillion had been completed on January 1, 2019, with adjustments to give effect to pro forma events that are directly attributable to the acquisition. The unaudited pro forma results do not reflect operating efficiencies or potential cost savings that may have resulted from the consolidation of operations. Accordingly, the unaudited pro forma financial information is not necessarily indicative of the results of operations had we completed the transaction on January 1, 2019.

  Three months ended March 31,
  2020 2019
Pro forma revenue $ 1,444.8  $ 1,140.4 
Pro forma net income $ 574.9  $ 515.7 

The unaudited pro forma consolidated results include pro forma adjustments related to non-recurring activity. Alexion and Achillion acquisition-related costs of $53.3, net of tax, were excluded from income for the three months ended March 31, 2020. These expenses were included in net income for the three months ended March 31, 2019.
Acquisition-Related Costs
Acquisition-related costs recorded within the condensed consolidated statements of operations associated with our acquisitions of Achillion and Portola and our definitive merger agreement with AstraZeneca for the three months ended March 31, 2021 and 2020 include the following:
  Three months ended March 31
  2021 2020
Transaction costs (1)
$ 5.4  $ 1.4 
Integration costs 4.1  0.1 
Fair value of equity compensation attributable to the post-combination service period —  25.7 
Employee costs (2)
3.7  10.9 
$ 13.2  $ 38.1 

(1) Transaction costs primarily include legal fees. First quarter 2020 transaction costs also include costs to effectuate the settlement of the Achillion outstanding options
(2) Employee separation costs include severance payments and costs associated with one-time short-term retention awards

Acquisition-related costs attributable to the Merger Agreement with AstraZeneca for the three months ended March 31, 2021 were $8.2. Acquisition-related costs attributable to the Portola acquisition for the three months ended March 31, 2021 were $5.0. Acquisition-related costs attributable to the Achillion acquisition for the three months ended March 31, 2020 were $38.1.

15

Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
4.Inventories
The components of inventory are as follows:
  March 31, December 31,
  2021 2020
Raw materials $ 97.8  $ 91.2 
Work-in-process 324.7  260.8 
Finished goods 489.6  510.3 
Total inventories $ 912.1  $ 862.3 
Balance Sheet Classification:
Inventories $ 803.9  $ 775.7 
Other assets $ 108.2  $ 86.6 

The acquired ANDEXXA inventory includes the acquisition-date fair value step-up, which is expensed within cost of sales as the inventory is sold to customers. For additional information on our acquisition of Portola, please refer to Note 3, Acquisitions.
We classify our inventory as long-term when we expect to utilize the inventory beyond our normal operating cycle and include these costs in other assets in our condensed consolidated balance sheets. Inventories classified as long-term relate to ULTOMIRIS 100mg/ml inventory and ANDEXXA inventory, including inventory acquired in connection with the Portola acquisition.
As of March 31, 2021 and December 31, 2020, the carrying value of capitalized inventory manufactured at production facilities and through manufacturing processes that have not yet received regulatory approval was $86.1 and $39.8, respectively. All such inventory as of March 31, 2021 received regulatory approval in April 2021.
5.Intangible Assets and Goodwill
The following table summarizes the carrying amount of our intangible assets and goodwill, net of accumulated amortization and impairment charges: 
March 31, 2021 December 31, 2020
Estimated
Life (years)
Cost Accumulated
Amortization
Net Cost Accumulated
Amortization
Net
Licensing rights
3-8
$ 57.0  $ (39.4) $ 17.6  $ 57.0  $ (38.5) $ 18.5 
Patents 7 10.5  (10.5) —  10.5  (10.5) — 
Purchased technology
6-16
5,746.5  (3,737.9) (a) 2,008.6  5,746.5  (3,684.7) (a) 2,061.8 
Other intangibles 5 0.4  (0.3) 0.1  0.4  (0.3) 0.1 
Priority review voucher Indefinite 100.0  —  100.0  —  —  — 
Acquired IPR&D Indefinite 922.0  —  922.0  922.0  —  922.0 
Total $ 6,836.4  $ (3,788.1) $ 3,048.3  $ 6,736.4  $ (3,734.0) $ 3,002.4 
Goodwill Indefinite $ 5,103.0  $ (2.9) $ 5,100.1  $ 5,103.0  $ (2.9) $ 5,100.1 
(a) Includes an impairment charge of $2,042.3 recognized during the second quarter 2020 related to the KANUMA intangible asset
In January 2021, we entered into a definitive asset purchase agreement with Rhythm Pharmaceuticals, Inc. (“Rhythm”) to acquire its Rare Pediatric Disease Priority Review Voucher (PRV) for $100.0, inclusive of transaction costs. The acquisition of the PRV closed on February 17, 2021. As there is probable future economic benefit from the PRV, we capitalized the $100.0 payment as an indefinite-lived intangible asset.
Amortization expense for the three months ended March 31, 2021 and 2020 was $54.1 and $74.7, respectively. As of March 31, 2021, assuming no changes in the gross cost basis of intangible assets, the total estimated amortization expense for finite-lived intangible assets is $162.4 for the nine months ending December 31, 2021, and approximately $216.0 for each of the years ending December 31, 2022 through December 31, 2026.
16

Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
6.Debt
Credit Agreement
On June 7, 2018, we entered into an Amended and Restated Credit Agreement (the Credit Agreement), with Bank of America, N.A. as Administrative Agent. The Credit Agreement amended and restated our credit agreement dated as of June 22, 2015 (the Prior Credit Agreement).
The Credit Agreement provides for a $1,000.0 revolving credit facility and a $2,612.5 term loan facility. The revolving credit facility and the term loan facility mature on June 7, 2023. Beginning with the quarter ended June 30, 2019, we are required to make payments of 5.0% of the original principal amount of the term loan facility annually, payable in equal quarterly installments.
In connection with entering into the Credit Agreement and the Prior Credit Agreement, we paid an aggregate of $53.1 in financing costs in 2018. Financing costs are amortized as interest expense over the life of the debt. Amortization expense associated with deferred financing costs for the three months ended March 31, 2021 and 2020 was $1.2. Remaining unamortized deferred financing costs as of March 31, 2021 and December 31, 2020 were $9.9 and $11.1, respectively.
We made principal payments of $32.6 on the term loan during the three months ended March 31, 2021, and as of March 31, 2021, we had $2,351.3 outstanding on the term loan. We had no outstanding borrowings under the revolving credit facility as of March 31, 2021. As of March 31, 2021, we had open letters of credit of $1.0 that offset our availability in the revolving facility.
The amount outstanding under the term loan of $2,351.3 as of March 31, 2021 is subject to variable interest rates, which are based on current market rates, and as such, the Company believes the carrying amount of the obligation approximates fair value.
We were in compliance with all applicable covenants under the Credit Agreement as of March 31, 2021. In connection with the planned merger with AstraZeneca, we evaluated the terms of the Credit Agreement and determined the agreement could require acceleration of payments upon a change of control.
Royalty-based Financing
In connection with our acquisition of Portola during the third quarter 2020, we assumed royalty-based debt relating to a royalty sales agreement Portola had entered into with HealthCare Royalty Partners (HCR) whereby HCR acquired a tiered royalty interest in future worldwide net sales of ANDEXXA. Portola received $50.0 upon closing of the agreement in February 2017 and an additional $100.0 following the U.S. regulatory approval of ANDEXXA in May 2018. Tiered royalties ranging from 4.2% to 8.5% are required to be paid to HCR based on net worldwide sales of ANDEXXA. The applicable rate decreases as worldwide net annual sales levels increase above defined thresholds. Total potential royalty payments are capped at 195.0% of the funding received less certain transaction expenses, or $290.6. As of the date of acquisition, the remaining due to HCR was $276.9 in royalty-based payments.
We recorded the HCR debt at its fair value of $182.0 upon closing of the acquisition, representing an initial debt discount of $94.9. We have also recognized a deferred tax asset of $42.4 related to the royalty-based debt as of the acquisition date. For additional information on our acquisition of Portola, please refer to Note 3, Acquisitions. Interest expense is recognized using the effective interest rate method over the estimated period the related debt will be paid. This requires estimation of the timing and amount of future royalty payments to be generated from future sales of ANDEXXA. We reassess the expected royalty payments each reporting period and account for any changes through an adjustment to the effective interest rate on a prospective basis. The assumptions used in determining the expected repayment term of the debt require that we make estimates that could impact the short and long term classification of the debt carrying values.
Each period, we amortize the initial debt discount using the effective interest rate implied from the projected timing of royalty payments to HCR. The effective interest rate for the HCR royalty-based debt as of March 31, 2021 was 11.4%. During the three months ended March 31, 2021, we recognized interest expense associated with the amortization of the debt discount of $5.0. We made royalty-based debt payments of $3.3 during the three months ended March 31, 2021. As of March 31, 2021, the carrying value of the royalty-based debt includes approximately $2.5 of royalty payments on first quarter sales of ANDEXXA which will be paid during the second quarter of 2021.
As of March 31, 2021, the carrying value of the HCR royalty-based debt was $188.7, of which $16.3 was recorded within current portion of long-term debt and $172.4 was recorded within long-term debt, less current portion on our condensed consolidated balance sheets. As of December 31, 2020, the carrying value of the HCR royalty-
17

Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
based debt was $187.0, of which $15.5 was recorded within current portion of long-term debt and $171.5 was recorded within long-term debt, less current portion on our condensed consolidated balance sheets.
Our payment obligations for HCR royalty-based debt are as follows:
Three Months Ended March 31, 2021
Total repayment obligation as of December 31, 2020
$ 271.9 
Less: Interest to be accreted in future periods (79.9)
Less: Payments made (3.3)
Carrying value as of March 31, 2021
$ 188.7 

The carrying value of the royalty-based debt as of March 31, 2021 approximates fair value.
7.Earnings Per Common Share
Basic earnings per common share (EPS) is computed by dividing net income attributable to Alexion by the weighted-average number of shares of common stock outstanding attributable to Alexion. For purposes of calculating diluted EPS, the denominator reflects the potential dilution that could occur if stock options, unvested restricted stock units or other contracts to issue common stock were exercised or converted into common stock, using the treasury stock method.
The following table summarizes the calculation of basic and diluted EPS for the three months ended March 31, 2021 and 2020:
Three months ended
  March 31,
  2021 2020
Net income attributable to Alexion $ 636.0  $ 557.6 
Shares used in computing earnings per common share attributable to Alexion —basic 220.1  221.6 
Weighted-average effect of dilutive securities:
Stock awards 2.5  1.0 
Shares used in computing earnings per common share attributable to Alexion —diluted 222.6  222.6 
Earnings per common share attributable to Alexion:
Basic $ 2.89  $ 2.52 
Diluted $ 2.86  $ 2.50 

We exclude from EPS the weighted-average number of securities whose effect is anti-dilutive. Excluded from the calculation of EPS for the three months ended March 31, 2021 and 2020 were 0.8 and 3.2 shares of Alexion common stock, respectively, because their effect is anti-dilutive.
8.Marketable Securities
The proceeds from maturities and sales of available-for-sale debt securities and resulting realized gains and losses are summarized below. In the second quarter of 2020 we liquidated all of our available-for-sale securities and in the third quarter of 2020 we liquidated all available-for-sale debt securities acquired in connection with the Portola acquisition.
18

Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
Three months ended
March 31,
2021 2020
Proceeds from maturities and sales (1)
$ —  $ 812.5 
Realized gains $ —  $ — 
Realized losses $ —  $ — 
 (1) Proceeds from maturities and sales of available-for-sale debt securities include securities previously classified as cash and cash equivalents and marketable securities in the condensed consolidated balance sheets.
We utilize the specific identification method in computing realized gains and losses.
As a result of our liquidation of all available-for-sale debt securities during 2020, we have no remaining available-for-sale debt securities as of March 31, 2021 and December 31, 2020.
We sponsor a nonqualified deferred compensation plan which allows certain highly compensated employees to elect to defer income to future periods. Participants in the plan earn a return on their deferrals based on several investment options, which mirror returns on underlying mutual fund investments. We choose to invest in the underlying mutual fund investments to offset the liability associated with our nonqualified deferred compensation plan. These mutual fund investments are valued at net asset value per share and are carried at fair value with gains and losses included in investment income. The changes in the underlying liability to the employee are recorded in operating expenses. As of March 31, 2021 and December 31, 2020, the fair value of these investments was $39.7 and $34.9, respectively.
9.Derivative Instruments and Hedging Activities
We operate internationally and, in the normal course of business, are exposed to fluctuations in foreign currency exchange rates. The exposures result from portions of our revenues, as well as the related receivables, and expenses that are denominated in currencies other than the U.S. dollar, primarily the Euro and Japanese Yen. We are also exposed to fluctuations in interest rates on outstanding borrowings under our revolving credit facility, if any, and term loan facility. We manage these exposures within specified guidelines through the use of derivatives. All of our derivative instruments are utilized for risk management purposes, and we do not use derivatives for speculative trading purposes.
We enter into foreign exchange forward contracts to hedge exposures resulting from portions of our forecasted revenues, including intercompany revenues that are denominated in currencies other than the U.S. dollar. Revenue foreign exchange forward contracts in effect as of March 31, 2021 had durations of up to 23 months. The purpose of these hedges is to reduce the volatility of exchange rate fluctuations on our operating results. These hedges are designated as cash flow hedges upon contract inception. As of March 31, 2021, we had open revenue related foreign exchange forward contracts with notional amounts totaling $853.3 that qualified for hedge accounting with current contract maturities through June 2022.
To achieve a desired mix of floating and fixed interest rates on our term loan, we enter into interest rate swap agreements that qualify for and are designated as cash flow hedges. These contracts convert the floating interest rate on a portion of our debt to a fixed rate, plus a borrowing spread.
The following table summarizes the total interest rate swap contracts executed as of March 31, 2021:
Type of Interest Rate Swap Contract Notional Amount Effective Date Termination Date Fixed Interest Rate or Rate Range
Floating to Fixed $450.0 December 2018 December 2022
2.60% - 2.79%
Floating to Fixed $1,300.0 December 2019 December 2022
2.37% - 2.83%

The amount of gains and (losses) recognized in the condensed consolidated statements of operations for the three months ended March 31, 2021 and 2020 from foreign exchange and interest rate swap contracts that qualified as cash flow hedges were as follows:
19

Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
Three months ended Three months ended
  March 31, 2021 March 31, 2020
Financial Statement Line Item in which the Effects of Cash Flow Hedges are Recorded Net Product Sales Interest Expense Net Product Sales Interest Expense
Total amount presented in the Condensed Consolidated Statements of Operations $ 1,635.7  $ (27.1) $ 1,444.6  $ (25.8)
Impact of cash flow hedging relationships:
Foreign exchange forward contracts $ (11.8) $ —  $ 11.4  $ — 
Interest rate contracts $ —  $ (11.4) $ —  $ (4.6)

The impact on accumulated other comprehensive income (AOCI) and earnings from foreign exchange and interest rate swap contracts that qualified as cash flow hedges, for the three months ended March 31, 2021 and 2020 were as follows:
Three months ended
  March 31,
  2021 2020
Foreign Exchange Forward Contracts:
Gain recognized in AOCI, net of tax $ 33.4  $ 26.0 
(Loss) gain reclassified from AOCI to net product sales, net of tax $ (9.1) $ 8.8 
Interest Rate Swap Contracts:
Gain (loss) recognized in AOCI, net of tax $ 1.0  $ (47.3)
Loss reclassified from AOCI to interest expense, net of tax $ (8.8) $ (3.6)

Assuming no change in foreign exchange rates from market rates as of March 31, 2021, $9.7 of gains recognized in AOCI will be reclassified to revenue over the next 12 months. Assuming no change in LIBOR-based interest rates from market rates as of March 31, 2021, $45.7 of losses recognized in AOCI will be reclassified to interest expense over the next 12 months.
We enter into foreign exchange forward contracts designed to limit the balance sheet exposure of monetary assets and liabilities. We enter into these hedges to reduce the impact of fluctuating exchange rates on our operating results. Balance sheet hedges related to foreign exchange forward contracts in effect as of March 31, 2021 had durations of up to 3 months. Hedge accounting is not applied to these derivative instruments as gains and losses on these hedge transactions are designed to offset gains and losses on underlying balance sheet exposures. As of March 31, 2021, the notional amount of foreign exchange contracts where hedge accounting is not applied was $1,126.5.
We recognized a gain of $12.2 and $16.2, in other income and (expense) for the three months ended March 31, 2021 and 2020, respectively, associated with the foreign exchange contracts not designated as hedging instruments. These amounts were partially offset by gains or losses on monetary assets and liabilities.
20

Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
The following tables summarize the fair value of outstanding derivatives as of March 31, 2021 and December 31, 2020: 
March 31, 2021
  Asset Derivatives Liability Derivatives
Balance Sheet
Location
Fair
Value
Balance Sheet
Location
Fair
Value
Derivatives designated as hedging instruments:
Foreign exchange forward contracts Prepaid expenses and other current assets $ 19.2  Other current liabilities $ 9.4 
Foreign exchange forward contracts Other assets 0.1  Other liabilities — 
Interest rate contracts Prepaid expenses and other current assets —  Other current liabilities 45.7 
Interest rate contracts Other assets —  Other liabilities 32.9 
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts Prepaid expenses and other current assets 22.3  Other current liabilities 12.2 
Total fair value of derivative instruments $ 41.6  $ 100.2 

December 31, 2020
  Asset Derivatives Liability Derivatives
Balance Sheet
Location
Fair
Value
Balance Sheet
Location
Fair
Value
Derivatives designated as hedging instruments:
Foreign exchange forward contracts Prepaid expenses and other current assets $ —  Other current liabilities $ 44.3 
Foreign exchange forward contracts Other assets —  Other liabilities 1.2 
Interest rate contracts Prepaid expenses and other current assets —  Other current liabilities 45.9 
Interest rate contracts Other assets —  Other liabilities 45.4 
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts Prepaid expenses and other current assets 26.1  Other current liabilities 35.8 
Total fair value of derivative instruments $ 26.1  $ 172.6 

21

Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
Although we do not offset derivative assets and liabilities within our condensed consolidated balance sheets, our International Swap and Derivatives Association agreements provide for net settlement of transactions that are due to or from the same counterparty upon early termination of the agreement due to an event of default or other termination event. The following tables summarize the potential effect on our condensed consolidated balance sheets of offsetting our foreign exchange forward contracts and interest rate contracts subject to such provisions:
March 31, 2021
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet
Description Gross Amounts of Recognized Assets/Liabilities Gross Amounts Offset in the Condensed Consolidated Balance Sheet Net Amounts of Assets/Liabilities Presented in the Condensed Consolidated Balance Sheet Derivative Financial Instruments Cash Collateral Received (Pledged) Net Amount
Derivative assets $ 41.6  $ —  $ 41.6  $ (21.3) $ —  $ 20.3 
Derivative liabilities $ (100.2) $ —  $ (100.2) $ 21.3  $ —  $ (78.9)
December 31, 2020
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet
Description Gross Amounts of Recognized Assets/Liabilities Gross Amounts Offset in the Condensed Consolidated Balance Sheet Net Amounts of Assets/Liabilities Presented in the Condensed Consolidated Balance Sheet Derivative Financial Instruments Cash Collateral Received (Pledged) Net Amount
Derivative assets $ 26.1  $ —  $ 26.1  $ (26.1) $ —  $ — 
Derivative liabilities $ (172.6) $ —  $ (172.6) $ 26.1  $ —  $ (146.5)

10.Caelum Biosciences
Background
In January 2019, we entered into an agreement with Caelum, a biotechnology company that is developing CAEL101 for light chain (AL) amyloidosis. Under the terms of the agreement, we acquired a minority equity interest in preferred stock of Caelum and an exclusive option to acquire the remaining equity in Caelum based on Phase II data, for pre-negotiated economics. We paid $30.0 in the first quarter 2019 and agreed to pay up to an additional $30.0 in contingent development milestones prior to the exercise of the option to acquire the remaining equity in Caelum. These contingent payments met the definition of a derivative liability and were initially recorded at fair value of $27.1, based on the probability-weighted cash flows, discounted using a cost of debt ranging from 3.3% to 3.5%. We allocated the total consideration of $57.1, inclusive of the fair value of the contingent payments, to the equity investment in Caelum and the option to acquire the remaining equity in Caelum based on the relative fair values of the assets.
Following discussions with the FDA, Caelum changed its clinical development plan for CAEL-101 in the fourth quarter 2019. In December 2019, we amended the terms of the agreement with Caelum to modify the option to acquire the remaining equity in Caelum based on data from the modified Phase II/III trials. The amendment also modified the development-related milestone events associated with the initial $30.0 in contingent payments, provided for an additional $20.0 in upfront funding, as well as funding of $60.0 in exchange for an additional equity interest at fair value upon achievement of a specific development-related milestone event.
In December 2019, we accounted for the amendment as an exchange transaction as the terms of the modified option were determined to be substantially different than the terms of the original option. In conjunction with this amendment, we recognized a gain of $32.0 during the fourth quarter 2019 in other income and (expense), which reflected an increase in the fair value of the option, less $20.0 in incremental upfront funding which we accrued as of December 31, 2019 and paid during the first quarter 2020, and $4.1 associated with the change in the fair value of contingent payments which we also modified as part of the amendment.
22

Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
A Phase II trial for CAEL-101 subsequently commenced during the first quarter of 2020 and met its primary objectives, supporting the safety and tolerability of CAEL-101 and confirmed the dose and regimen to be adopted for the Phase III studies. In September 2020, Alexion and Caelum announced the initiation of the Cardiac Amyloid Reaching for Extended Survival (CARES) program. This includes two parallel Phase III trials to evaluate the survival benefits of CAEL-101.
In December 2020, in connection with entering into the Merger Agreement with AstraZeneca (refer to Note 1, Business), we determined that the fair value of our option to acquire the remaining equity of Caelum decreased as a result of a change to the expected option exercise date. This resulted in a $49.0 impairment charge which we recorded to investment income, net. The carrying value of the preferred stock was unaffected.
In March 2021, we amended the terms of our agreement with Caelum. The amended terms with Caelum modified the previously agreed upon funding of $60.0 in exchange for additional equity and included provisions to provide additional support to Caelum. Upon execution of the second amendment in March 2021, we provided $46.0 to Caelum in exchange for preferred equity and agreed to pay $14.0 upon achievement of a specified development milestone. We also committed to provide services to Caelum at no cost and to reimburse Caelum for costs incurred for incremental clinical trial activities that we requested be completed.
We continue to hold a minority equity interest in Caelum. Including the equity acquired in connection with the execution of the second amendment, we hold a 33.3% fully-diluted interest in Caelum as of March 31, 2021.
In the event we exercise the exclusive purchase option, the agreement provides for additional payments to Caelum for up to $500.0, which includes an upfront option exercise payment of $150.0 and potential regulatory and commercial milestone payments of up to $350.0. The pending acquisition of Alexion by AstraZeneca will accelerate the expiration period of the exclusive purchase option to 6-months after the close of the acquisition.
Our arrangement with Caelum, including through our preferred equity investments, provides Alexion the obligation to absorb losses and the right to receive benefits from Caelum. From the date of the initial agreement in January 2019 up until the date of the second amendment in March 2021, Caelum was not consolidated in our condensed consolidated financial statements as we did not have the power to direct the activities of Caelum that most significantly impact its economic performance, notably the completion of the clinical trials and activities to support regulatory approval of CAEL-101. As a result of the second amendment in March 2021, we became the primary beneficiary of Caelum and began consolidating Caelum as the incremental funding and support for clinical trial activities provides us the deemed power to direct the activities of Caelum that most significantly impact its economic performance.
Accounting for Caelum as a Consolidated VIE
Upon the initial consolidation of Caelum in March 2021, we recorded a $161.0 noncontrolling interest and derecognized our equity investment and purchase option of $41.0 and $15.0, respectively. Additionally, we recorded net assets of $217.0, comprised of cash and cash equivalents and other assets and liabilities, net in our condensed consolidated balance sheets. Caelum is a VIE that does not meet the definition of a business and as a result, no goodwill was recognized. The following table summarizes the assets acquired and liabilities assumed in connection with the consolidation of Caelum:
Assets Acquired and Liabilities Assumed
Cash and cash equivalents $ 16.9 
Acquired in-process research and development 193.3 
Other assets and liabilities, net 6.8 
Total net assets acquired $ 217.0 

Substantially all of the fair value of the gross assets of Caelum is concentrated in a single in-process research and development asset, CAEL-101. Due to the stage of development of this asset at the date of consolidation, significant risk remained and it was not yet probable that there was future economic benefit from this asset. Absent successful clinical results and regulatory approval for the asset, there is no alternative future use associated with CAEL-101. Accordingly, the value of this asset was expensed during the first quarter of 2021.
Caelum net loss included in our condensed consolidated statements of operations was $196.0, including acquired in-process research and development of $193.3, for the three months ended March 31, 2021, of which
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Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
$146.8 was attributed to the noncontrolling interest. The carrying value of the assets and liabilities associated with Caelum included in the condensed consolidated balance sheets as of March 31, 2021, which are limited in use for its operations and do not have recourse against our general credit are as follows:
March 31, 2021
Cash and cash equivalents $ 56.5 
Prepaid expenses and other current assets $ 8.6 
Other assets $ 7.8 
Accounts payable $ 3.6 
Accrued expenses $ 2.3 
Accounting for Caelum Prior to Consolidation
Prior to our consolidation of Caelum in March 2021, we recognized our equity investment in Caelum and the option to acquire the remaining equity in Caelum within other assets in our condensed consolidated balance sheets. As our equity investment in Caelum and option to acquire the remaining equity in Caelum did not have readily determinable fair values, we only adjusted the carrying value of the assets for impairment and any subsequent changes resulting from an observable price change in an orderly transaction for identical or similar equity securities of the same issuer. There were no observable price changes or impairments associated with these assets during the three months ended March 31, 2021 prior to consolidation or during the three months ended March 31, 2020.
In addition to our equity investment, we recognized the $30.0 in contingent development milestones at fair value as a derivative liability during 2020. We paid the associated development milestones in the second and third quarters of 2020 and as a result reduced the derivative liability balance to zero. Each reporting period, we adjusted the derivative liability associated with the contingent payments to fair value with changes in fair value recognized in other income and (expense). Changes in fair values reflected new information about the probability and anticipated timing of meeting the conditions of the milestone payments. In the absence of new information, changes in fair value reflected the interest component of the liability related to the passage of time. We recorded $2.3 of expense in other income and (expense) during the three months ended March 31, 2020 related to the change in the fair value of the liability. No expense was recognized during the three months ended March 31, 2021 as the derivative liability was previously settled.
11.Other Investments    
Other investments include strategic investments in equity securities of certain biotechnology companies which we acquired in connection with strategic business development transactions, including license and option agreements. These investments are included in other assets in our condensed consolidated balance sheets.
Dicerna
In October 2018, we purchased $10.3 of Dicerna Pharmaceuticals Inc. (Dicerna) common stock in connection with an agreement that we entered into with Dicerna, a publicly-traded biopharmaceutical company. As our equity investment in Dicerna common stock has a readily determinable fair value, we are recording the investment at fair value. During the three months ended March 31, 2021 and 2020, we recognized an unrealized gain of $3.0 and unrealized loss of $3.1, respectively, in investment income to adjust our equity investment in Dicerna to fair value.
The fair value of this investment was $21.4 and $18.4 as of March 31, 2021 and December 31, 2020, respectively.
Zealand
In March 2019, we purchased $13.8 (Kr. 90.9) of Zealand Pharma A/S (Zealand) common stock in connection with an agreement that we entered into with Zealand, a publicly-traded biopharmaceutical company based in Copenhagen, Denmark. Refer to Note 17, Commitments and Contingencies, for additional information on the agreement. As our equity investment in Zealand common stock has a readily determinable fair value, we are recording the investment at fair value. During the three months ended March 31, 2021 and 2020, we recognized an unrealized loss of $2.5 and $0.2, respectively, in investment income to adjust our equity investment in Zealand to fair value.
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Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
The fair value of this investment was $25.4 and $29.1 as of March 31, 2021 and December 31, 2020, respectively.
BridgeBio (Eidos)
In September 2019, we purchased $19.9 of Eidos Therapeutics, Inc. (Eidos) common stock, in connection with an agreement that we entered into with Eidos, a publicly-traded biopharmaceutical company and subsidiary of BridgeBio Pharma, Inc. Refer to Note 17, Commitments and Contingencies, for additional information on the agreement. In January 2021, BridgeBio Pharma, Inc. (BridgeBio) completed its acquisition of all the outstanding shares of Eidos common stock that BridgeBio did not already own at which time we received 1.85 shares of BridgeBio common stock for each share of Eidos common stock previously held. As our equity investment in BridgeBio common stock has a readily determinable fair value, we are recording the investment at fair value. During the three months ended March 31, 2021 and 2020, we recognized an unrealized loss of $9.8 and $3.7, respectively, in investment income to adjust our equity investment in BridgeBio (formerly Eidos) to fair value.
The fair value of this investment was $63.4 and $73.2 as of March 31, 2021 and December 31, 2020, respectively.
Portola
In March 2020 and April 2020, we purchased $14.5 and $3.6, respectively, of common stock of Portola Pharmaceuticals, Inc., a publicly traded commercial-stage biological company which we acquired on July 2, 2020. As our equity investment in Portola common stock had a readily determinable fair value, we recorded the investment at fair value. During the three months ended March 31, 2020, we recognized an unrealized gain of $0.6, in investment income to adjust our equity investment in Portola to fair value. Upon the closing of the acquisition of Portola on July 2, 2020, the fair value of the equity investment of $47.8 was derecognized and included in the fair value of consideration transferred, resulting in a realized gain of $29.7 in investment income on our initial investment. Refer to Note 3, Acquisitions, for additional information.
Inozyme
On July 17, 2020, we sold certain intellectual property rights and assets focusing on ENPP1 gene deficiencies to Inozyme Pharma (Inozyme), a publicly traded biopharmaceutical company, in exchange for $14.8 of Inozyme Pharma common stock, which was initially recorded at its IPO offering price, net of the effects of a nine month holding period restriction. We recognized the $14.8 of consideration received as a gain within gain on sale of assets in our condensed consolidated statements of operations in the third quarter of 2020. As our equity investment in Inozyme common stock has a readily determinable fair value, we are recording the investment at fair value. We have considered the effects of the holding period restriction and determined that the impact on the fair value of the investment is immaterial as of March 31, 2021. During the three months ended March 31, 2021, we recognized an unrealized gain of $1.5, in investment income to adjust our investment in Inozyme to fair value.
The fair value of this investment was $22.0 and $20.5 as of March 31, 2021 and December 31, 2020, respectively.
Other Strategic Investments
We have other strategic investments in equity securities of $5.8 and $2.6 as of March 31, 2021 and December 31, 2020, respectively. During the three months ended March 31, 2021 and 2020, purchases relating to these investments were immaterial and we recognized immaterial losses in investment income related to these investments.
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Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
12.Stockholders' Equity
Share Repurchases
In November 2012, our Board of Directors authorized a share repurchase program. In February 2017, our Board of Directors increased the amount that we are authorized to expend on future repurchases to $1,000.0 under our repurchase program, which superseded all prior repurchase programs. The entire amount authorized pursuant to this February 2017 Board approval has been utilized. On October 22, 2019, the Board of Directors approved a share repurchase authorization of up to $1,000.0. On July 28, 2020, the Board of Directors approved a new share repurchase authorization of up to an additional $1,500.0. The repurchase program does not have an expiration date and we are not obligated to acquire a particular number of shares. The repurchase program may be discontinued at any time at our discretion. We did not repurchase shares of our common stock during the three months ended March 31, 2021. Under the program, we repurchased 1.3 shares of our common stock at a cost of $107.1 during the three months ended March 31, 2020. As of March 31, 2021, there is a total of $2,024.7 remaining for repurchases under the repurchase programs.
13.Other Comprehensive Income and Accumulated Other Comprehensive Income
The following tables summarize the changes in AOCI, by component, for the three months ended March 31, 2021 and 2020:
Defined Benefit Pension Plans Unrealized Gains (Losses) from Debt Securities Unrealized Gains (Losses) from Hedging Activities Foreign Currency Translation Adjustment Total Accumulated Other Comprehensive Income (Loss)
Balances, December 31, 2020 $ (10.2) $ —  $ (102.7) $ (11.7) $ (124.6)
Other comprehensive income (loss) before reclassifications —  —  34.6  (13.1) 21.5 
Amounts reclassified from other comprehensive income —  —  17.9  —  17.9 
Net other comprehensive income (loss) —  —  52.5  (13.1) 39.4 
Balances, March 31, 2021 $ (10.2) $ —  $ (50.2) $ (24.8) $ (85.2)
Defined Benefit Pension Plans Unrealized Gains (Losses) from Debt Securities Unrealized Gains (Losses) from Hedging Activities Foreign Currency Translation Adjustment Total Accumulated Other Comprehensive Income (Loss)
Balances, December 31, 2019 $ (9.2) $ (0.1) $ (40.1) $ (17.4) $ (66.8)
Other comprehensive income (loss) before reclassifications —  (0.2) (21.3) (8.0) (29.5)
Amounts reclassified from other comprehensive income —  —  (5.2) —  (5.2)
Net other comprehensive income (loss) —  (0.2) (26.5) (8.0) (34.7)
Balances, March 31, 2020 $ (9.2) $ (0.3) $ (66.6) $ (25.4) $ (101.5)
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Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)

The table below provides details regarding significant reclassifications from AOCI during the three months ended March 31, 2021 and 2020:
Details about Accumulated Other Comprehensive Income Components Amount Reclassified From Accumulated Other Comprehensive Income during the three months ended March 31, Affected Line Item in the Condensed Consolidated Statements of Operations
2021 2020
Unrealized Gains (Losses) on Hedging Activity
Foreign exchange forward contracts $ (11.8) $ 11.4  Net product sales
Interest rate contracts (11.4) (4.6) Interest expense
(23.2) 6.8 
5.3  (1.6) Income tax expense
$ (17.9) $ 5.2 

14.Fair Value Measurement
Authoritative guidance establishes a valuation hierarchy for disclosure of the inputs to the valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value.
The following tables present information about our assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020, and indicate the fair value hierarchy of the valuation techniques we utilized to determine such fair value.
    Fair Value Measurement as of
March 31, 2021
Balance Sheet
Classification
Type of Instrument Total Level 1 Level 2 Level 3
Cash equivalents Money market funds $ 1,258.8  $ —  $ 1,258.8  $ — 
Marketable securities Mutual funds $ 39.7  $ 39.7  $ —  $ — 
Other assets Equity securities $ 137.4  $ 137.4  $ —  $ — 
Prepaid expenses and other current assets Foreign exchange forward contracts $ 41.5  $ —  $ 41.5  $ — 
Other assets Foreign exchange forward contracts $ 0.1  $ —  $ 0.1  $ — 
Other current liabilities Foreign exchange forward contracts $ 21.6  $ —  $ 21.6  $ — 
Other current liabilities Interest rate contracts $ 45.7  $ —  $ 45.7  $ — 
Other liabilities Interest rate contracts $ 32.9  $ —  $ 32.9  $ — 
Current portion of contingent consideration Acquisition-related contingent consideration $ 120.0  $ —  $ —  $ 120.0 
Contingent consideration Acquisition-related contingent consideration $ 303.5  $ —  $ —  $ 303.5 
 
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Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
    Fair Value Measurement as of
December 31, 2020
Balance Sheet
Classification
Type of Instrument Total Level 1 Level 2 Level 3
Cash equivalents Money market funds $ 833.7  $ —  $ 833.7  $ — 
Marketable securities Mutual funds $ 34.9  $ 34.9  $ —  $ — 
Other assets Equity securities $ 143.2  $ 122.7  $ 20.5  $ — 
Prepaid expenses and other current assets Foreign exchange forward contracts $ 26.1  $ —  $ 26.1  $ — 
Other current liabilities Foreign exchange forward contracts $ 80.1  $ —  $ 80.1  $ — 
Other liabilities Foreign exchange forward contracts $ 1.2  $ —  $ 1.2  $ — 
Other current liabilities Interest rate contracts $ 45.9  $ —  $ 45.9  $ — 
Other liabilities Interest rate contracts $ 45.4  $ —  $ 45.4  $ — 
Current portion of contingent consideration Acquisition-related contingent consideration $ 114.9  $ —  $ —  $ 114.9 
Contingent consideration Acquisition-related contingent consideration $ 299.4  $ —  $ —  $ 299.4 
There were no securities transferred between Level 1, 2 and 3 during the three months ended March 31, 2021.
Valuation Techniques
We classify mutual fund investments and equity securities, which are valued based on quoted market prices in active markets with no valuation adjustment, as Level 1 assets within the fair value hierarchy.
Cash equivalents classified as Level 2 within the valuation hierarchy relate to money market funds. The fair value of our money market funds was determined through third-party pricing sources.
Other investments in equity securities of publicly traded companies which are subject to holding period restrictions are carried at fair value using an option pricing valuation model and classified as Level 2 equity securities within the fair value hierarchy. The most significant assumptions within the option pricing valuation model are the term of the restrictions and the stock price volatility, which is based upon the historical volatility of the applicable company or similar companies. We also use a constant maturity risk-free interest rate to match the remaining term of the restrictions on such investments.
Our derivative assets and liabilities include foreign exchange and interest rate derivatives that are measured at fair value using observable market inputs such as forward rates, interest rates, our own credit risk as well as an evaluation of our counterparties’ credit risks. Based on these inputs, the derivative assets and liabilities are classified within Level 2 of the valuation hierarchy.
Contingent consideration liabilities related to business acquisitions are classified as Level 3 within the valuation hierarchy and are valued based on various estimates, including probability of success, discount rates and amount of time until the conditions of the milestone payments are met.
As of March 31, 2021, there has not been any impact to the fair value of our derivative liabilities due to our own credit risk. Similarly, there has not been any significant adverse impact to our derivative assets based on our evaluation of our counterparties’ credit risks.
Acquisition-Related Contingent Consideration
In connection with our prior business combinations, we may be required to pay future consideration that is contingent upon the achievement of specified development, regulatory approvals or sales-based milestone events. We determine the fair value of these obligations using various estimates that are not observable in the market and represent a Level 3 measurement within the fair value hierarchy. As of March 31, 2021, the resulting probability-weighted cash flows were discounted using a cost of debt ranging from 2.5% to 3.0% for developmental and regulatory milestones and a weighted average cost of capital of 9.0% for sales-based milestones. As of December 31, 2020, the resulting probability-weighted cash flows were discounted using a cost of debt ranging from 2.8% to 3.3% for developmental and regulatory milestones and a weighted average cost of capital of 9.0% for sales-based milestones.
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Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
Each reporting period, we adjust the contingent consideration to fair value with changes in fair value recognized in operating income. Changes in fair values reflect new information about the probability and timing of meeting the conditions of the milestone payments. In the absence of new information, changes in fair value will only reflect the interest component of contingent consideration related to changes in discount rates and the passage of time.
As of March 31, 2021, estimated future contingent milestone payments related to our business combinations range from zero if no milestone events are achieved, to a maximum of $905.6 if all development, regulatory and sales-based milestones are reached. In the first quarter of 2021, a sales-based milestone associated with our acquisition of Enobia Pharma Corp. was achieved. In connection with such achievement, we will make a $120.0 milestone payment in the second quarter of 2021. No additional milestone payments associated with our prior business combinations are expected during the next 12 months. As of March 31, 2021, the fair value of acquisition-related contingent consideration was $423.5. The following table represents a roll-forward of our acquisition-related contingent consideration:
Three Months Ended March 31, 2021
Balance as of December 31, 2020
$ 414.3 
Changes in fair value 9.2 
Balance as of March 31, 2021
$ 423.5 
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Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
15.Revenue Recognition
Disaggregation of Revenue
The Company disaggregates revenue from contracts with customers into product and geographical regions as summarized below.
Three months ended March 31,
2021 2020
SOLIRIS
United States $ 553.9  $ 556.2 
Europe 251.3  263.5 
Asia Pacific 102.4  87.1 
Rest of World 120.0  116.1 
Total $ 1,027.6  $ 1,022.9 
ULTOMIRIS
United States $ 206.9  $ 131.5 
Europe 63.8  33.8 
Asia Pacific 73.3  57.1 
Rest of World 2.9  0.4 
Total $ 346.9  $ 222.8 
STRENSIQ
United States $ 155.2  $ 128.1 
Europe 18.9  24.0 
Asia Pacific 17.0  13.6 
Rest of World 6.4  6.5 
Total $ 197.5  $ 172.2 
ANDEXXA
United States $ 25.3  $ — 
Europe 3.6  — 
Asia Pacific —  — 
Rest of World —  — 
Total $ 28.9  $ — 
KANUMA
United States $ 17.1  $ 16.4 
Europe 10.8  7.5 
Asia Pacific 1.2  0.9 
Rest of World 5.7  1.9 
Total $ 34.8  $ 26.7 
Total Net Product Sales $ 1,635.7  $ 1,444.6 

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Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
Contract Balances and Receivables
Contract liabilities primarily relate to consideration received and/or billed for goods that have not been delivered to the customer and for which the performance obligation has not yet been completed. These amounts are included within other current liabilities in the condensed consolidated balance sheets.
The following table provides information about receivables and contract liabilities from our contracts with customers.
March 31, 2021 December 31, 2020
Receivables, which are included in "Trade accounts receivable, net" $ 1,473.0  $ 1,409.3 
Contract liabilities, which are included in "Other current liabilities" $ 23.8  $ 3.0 

16.Income Taxes
Tax Rate
The following table provides a comparative summary of our income tax expense and effective income tax rate for the three months ended March 31, 2021:
Three months ended
March 31,
2021 2020
Income tax expense $ 113.4 $ 106.0 
Effective income tax rate 18.8  % 16.0  %

Income tax expense is attributable to the U.S. federal, state and foreign income taxes on our profitable operations. The increase in the effective tax rate for the three months ended March 31, 2021 as compared to the same period in the prior year is primarily attributable to the consolidation of Caelum during the first quarter 2021. Caelum's net loss included in our condensed consolidated statement of operations for the three months ended March 31, 2021 was $196.0, including acquired in-process research and development expense of $193.3, for which no tax benefit has been recognized. This resulted in an increase to the effective tax rate of 5.2% for the three months ended March 31, 2021.
In April 2020 we became aware of a European withholding tax regulation that could be interpreted to apply to certain of our previous intra-group transactions. We recorded an immaterial reserve related to this matter during the second quarter of 2020.
We have recorded tax on the undistributed earnings of our controlled foreign corporation (CFC) subsidiaries. To the extent CFC earnings may not be repatriated to the U.S. as a dividend distribution due to limitations imposed by law, we have not recorded the related potential withholding, foreign, local, and U.S. state income taxes.
We continue to maintain a valuation allowance when it is more likely than not that all or a portion of certain deferred tax assets will not be realized.
17.Commitments and Contingencies
Asset Acquisition and In-License Agreements
We have entered into asset purchase agreements, license agreements, and option arrangements in order to advance and obtain technologies and services related to our business. These agreements generally require us to pay an initial fee and certain agreements call for future payments upon the attainment of agreed upon development, regulatory and/or commercial milestones. These agreements may also require minimum royalty payments based on sales of products developed from the applicable technologies, if any. Refer to Note 10, Caelum Biosciences, for information on commitments and additional payments that may be required in connection with our agreement with Caelum, which has been consolidated as a variable interest entity in our condensed consolidated balance sheets.
In March 2019, we entered into an agreement with Zealand which provides us with exclusive worldwide licenses, as well as development and commercial rights, for subcutaneously delivered preclinical peptide therapies
31

Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
directed at up to four complement pathway targets. Pursuant to the agreement, Zealand will lead joint discovery and research efforts through the preclinical stage, and Alexion will lead development efforts beginning with the investigational new drug filing and Phase I studies. In addition to the agreement, we made an equity investment in Zealand (refer to Note 11, Other Investments). Under the terms of the agreement, we made an upfront payment of $40.0 for an exclusive license to the lead target and the equity investment, as well as for preclinical research services to be performed by Zealand in relation to the lead target. The market value of the equity investment was $13.8 as of the date of acquisition, which we recorded in other assets in our condensed consolidated balance sheets. We also recognized prepaid research and development expense of $5.0 within the condensed consolidated balance sheets associated with the research activities to be performed by Zealand. Due to the early stage of the asset we are licensing, we recorded the upfront license payment of $21.2 as research and development expense during the first quarter 2019. As of March 31, 2021, we could be required to pay up to $610.0, for the lead target, upon the achievement of specified development, regulatory and commercial milestones, as well as royalties on commercial sales. In addition, we could be required to pay up to an additional $115.0 in development and regulatory milestones if both a long-acting and short-acting product are developed with respect to the lead target. Each of the three subsequent targets can be selected for an option fee of $15.0 and has the potential for additional development, regulatory and commercial milestones, as well as royalty payments, at a reduced price to the lead target.
In September 2019, we entered into an agreement with Eidos through which Alexion obtained 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) and is currently in a Phase III study in the U.S., Europe and Japan for ATTR cardiomyopathy (ATTR-CM). In addition, we made an equity investment in Eidos (refer to Note 11, Other Investments). Under the terms of the agreement, we made an upfront payment of $50.0 for the exclusive license to AG10 in Japan and the equity investment. The market value of the equity investment was $19.9 as of the date of acquisition, which we recorded in other assets in our condensed consolidated balance sheets. Due to the early stage of the asset we are licensing, we recorded the upfront license payment of $30.1 as research and development expense during the third quarter 2019. In January 2021, BridgeBio completed its acquisition of all the outstanding shares of Eidos common stock that BridgeBio did not already own. As of March 31, 2021, we could be required to pay $30.0 upon achievement of a Japanese-based regulatory milestone as well as royalties on commercial sales.
In October 2018, we entered into a collaboration agreement with Dicerna that provides us with exclusive worldwide licenses and development and commercial rights for two preclinical RNA interference (RNAi) subcutaneously delivered molecules for complement-mediated diseases, as well as an exclusive option for other preclinical RNAi molecules for two additional targets within the complement pathway. In addition to the collaboration agreement, we made an equity investment in Dicerna. Under the terms of the agreements, we made an upfront payment of $37.0 for the exclusive licenses and the equity investment. The market value of the equity investment was $10.3 as of the date of acquisition, which we recorded in other assets in our condensed consolidated balance sheets. Due to the early stage of the assets we are licensing, we recorded the upfront license payment of $26.7 as research and development expense during the fourth quarter 2018. In December 2019, we exercised our option for exclusive rights to two additional targets within the complement pathway under an existing agreement with Dicerna, which expands our existing research collaboration and license agreement with Dicerna to include a total of four targets within the complement pathway. In connection with the option exercise, we paid Dicerna $20.0, which we recorded as research and development expense in the fourth quarter 2019. As of March 31, 2021, we could be required to pay up to $604.1 for amounts due upon the achievement of specified research, development, regulatory and commercial milestones on the four licensed targets, as well as royalties on commercial sales.
In December 2017, we entered into a collaboration and license agreement with Halozyme Therapeutics, Inc. that allows us to use drug-delivery technology in the development of subcutaneous formulations for our portfolio of products for up to four targets. Under the terms of the agreement, we made an upfront payment of $40.0 for an exclusive license to two of the four potential targets and due to the early stage of the assets we are licensing, we recorded an expense for the upfront payment during the fourth quarter 2017. During the second quarter 2020, we forfeited our rights to one of the two targets we initially licensed. As of March 31, 2021, we could be required to pay up to $155.0 for the remaining licensed target upon achievement of specified development, regulatory and sales-based milestones, as well as royalties on commercial sales. Each of the two subsequent targets can be licensed for an option fee of $8.0, with contingent payments of up to $160.0 per target, subject to development, regulatory and commercial milestones, as well as royalties on commercial sales.
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Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
In connection with our prior acquisition of Syntimmune, Inc., a clinical-stage biotechnology company developing an antibody therapy targeting the FcRn, we could be required to pay up to $800.0 upon the achievement of specified development, regulatory and commercial milestones, of which $130.0 is specific to the subcutaneous formulation. We are currently subject to a claim in litigation in connection with the Syntimmune acquisition alleging that Alexion failed to meet its obligations under the merger agreement to use commercially reasonable efforts to achieve the milestones and plaintiff has requested payment of the full earn-out amount.
In addition, as of March 31, 2021, we have other license agreements under which we may be required to pay up to an additional $114.1 for currently licensed targets, if certain development, regulatory and commercial milestones are met, including up to $71.5 for the development of cerdulatinib in multiple indications pursuant to an in-licensing agreement with Astellas Pharma, Inc. which was assumed through the acquisition of Portola in the third quarter 2020. Additional amounts may be payable if we elect to acquire licenses to additional targets, as applicable, under the terms of these agreements.
During the next 12 months, we may incur milestone payments related to our asset acquisitions, option and in-license agreements of approximately $155.1 as of March 31, 2021, inclusive of $14.0 of potential milestone payments due to Caelum, which has been consolidated as a variable interest entity as of the first quarter 2021. Additionally, in the event we exercise the exclusive purchase option with Caelum, the agreement provides for additional payments to Caelum for up to $500.0, which includes an upfront option exercise payment of $150.0 and potential regulatory and commercial milestone payments of up to $350.0. The pending acquisition of Alexion by AstraZeneca will accelerate the expiration period of the exclusive purchase option to 6-months after the close of the acquisition.
Asset Sale and Out-License Arrangements
In connection with prior asset sale and out-license arrangements, including those assumed by Alexion through prior acquisitions, Alexion is entitled to receive contingent payments upon the achievement of various regulatory and commercial milestones and other events, as well as royalties on commercial sales. Income resulting from contingent milestone payments and royalties on commercial sales is generally recognized when the contingent consideration is probable and no longer constrained. Additionally, sales-based milestones and royalties on commercial sales resulting from an out-license arrangement are subject to the sales-and-usage based royalty scope exception and recognized only when the associated sales occur.
In September 2018, we sold all assets, rights and obligations of the ALXN1101 program to Origin Biosciences, Inc. (Origin) and, as a result, recognized a gain of $3.5 during the third quarter 2018. Under the terms of the agreement with Origin, Alexion is entitled to receive contingent payments upon the achievement of various regulatory and commercial milestones, including Origin’s receipt of a PRV, as well as royalties on commercial sales. In the first quarter of 2021, ALXN1101, now branded as NULIBRY™ (fosdenopterin), received approval from the FDA. Origin also received a PRV in connection with this approval. As a result, we recognized income of $20.0 in gain on sale of assets in the condensed consolidated statements of operations for the three months ended March 31, 2021. This income primarily represents the change in our estimate of variable consideration expected to be received under this contract. Additional rights to receive contingent payments of approximately $21.0 upon certain contingent milestone events, as well as royalties on sales of NULIBRY™, remain fully constrained given the significant uncertainty in realizing any such amounts.
The amount of contingent consideration related to our other asset sale and out-license agreements is fully constrained and therefore has not been recognized as of March 31, 2021.
Manufacturing Agreements
We have various manufacturing development and license agreements to support our clinical and commercial product needs.
We rely on Lonza, a third party manufacturer, to produce a portion of commercial and clinical quantities of our commercial products and product candidates. We have various manufacturing and license agreements with Lonza, with remaining total non-cancellable future commitments of approximately $1,432.1 through 2030. This amount includes $97.9 of undiscounted, fixed payments applicable to our Contract Manufacturing Organization (CMO) embedded lease arrangement with Lonza. If we terminate certain supply agreements with Lonza without cause, we will be required to pay for product scheduled for manufacture under our arrangement. Under an existing arrangement with Lonza, we pay Lonza a royalty on the sales of SOLIRIS and ULTOMIRIS manufactured at Lonza facilities.
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Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
In addition to our commitments with Lonza, as of March 31, 2021 we have non-cancellable commitments of approximately $125.7 through 2023 with other third party manufacturers.
Contingent Liabilities
We are currently involved in various claims, disputes, lawsuits, investigations, administrative proceedings and legal proceedings. On a quarterly basis, we review the status of each significant matter and assess its potential financial exposure. In accordance with generally accepted accounting principles, if the potential loss from any claim, asserted or unasserted, or legal proceeding is considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss. Because of uncertainties related to claims, proceedings and litigation, accruals are based on our best estimates based on information available at the time of the assessment. On a periodic basis, as additional information becomes available, or based on specific events such as the outcome of litigation, court decisions or settlement of claims (and offers of settlement), we may reassess the potential liability related to these matters and may revise these estimates, which could result in a material adverse adjustment to our operating results. Costs associated with our involvement in legal proceedings are expensed as incurred. The outcome of any such proceedings, regardless of the merits, is inherently uncertain. If we were unable to prevail in any such proceedings, our consolidated financial position, results of operations, and future cash flows may be materially impacted.
We have received, and may in the future receive, notices from third parties claiming that their patents may be infringed by the use, development, manufacture, importation or sale of our products or product candidates. Under the guidance of ASC 450, Contingencies, we record a royalty accrual based on our best estimate of the fair value percent of net sales of our products that we could be required to pay the owners of patents for technology used in the manufacture and sale of our products. A costly license, or inability to obtain a necessary license, could have a material adverse effect on our financial results.
In May 2015, we received a subpoena in connection with an investigation by the Enforcement Division of the Securities and Exchange Commission (SEC) requesting information related to our grant-making activities and compliance with the Foreign Corrupt Practices Act (FCPA) in various countries. In addition, in October 2015, we received a request from the Department of Justice (DOJ) for the voluntary production of documents and other information pertaining to Alexion’s compliance with the FCPA. The SEC and DOJ also sought information related to Alexion’s recalls of specific lots of SOLIRIS and related securities disclosures.
The investigations focused on operations in various countries, including Brazil, Colombia, Japan, Russia and Turkey, and Alexion's compliance with the FCPA and other applicable laws.
In May 2020, DOJ informed us that it has closed its inquiry into these matters.
On July 2, 2020, we reached a civil settlement with the SEC fully resolving the SEC’s investigation into possible violations of the FCPA. Alexion neither admitted nor denied any wrongdoing in connection with the settlement but agreed to pay $21.5 to the SEC, consisting of amounts attributable to disgorgement, civil penalties, and pre-judgment interest. In connection with this settlement, in July 2020, we paid $21.5 to the SEC.
Following the settlement with the SEC, the Ministry of Health in Turkey initiated an investigation regarding the matters referenced in the SEC Order as they relate to the Company’s operations in Turkey between 2010 and 2015. We are cooperating with this investigation.
Alexion is committed to continually focusing on its compliance program and continues to enhance its comprehensive company-wide program that is designed to enhance our business processes, structures, controls, training, talent, and systems across Alexion’s global operations.
As previously reported, on December 29, 2016, a shareholder filed a putative class action against the Company and certain former employees in the U.S. District Court for the District of Connecticut, alleging that defendants made misrepresentations and omissions about SOLIRIS. On April 12, 2017, the court appointed a lead plaintiff. On July 14, 2017, the lead plaintiff filed an amended putative class action complaint against the Company and seven current or former employees. Defendants moved to dismiss the amended complaint on September 12, 2017. Plaintiffs filed an opposition to defendants’ motion to dismiss on November 13, 2017, and defendants filed a reply brief in further support of their motion on December 28, 2017. On March 26, 2019, the court held a telephonic status conference. During that conference, the court informed counsel that it was preparing a ruling granting the defendants’ pending motion to dismiss. The court inquired of plaintiffs’ counsel whether they intended to seek leave to amend their complaint, and indicated that if they wished to file a second amended complaint, they would be allowed to do so. On April 2, 2019, the court granted plaintiffs until May 31, 2019 to file a second amended
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Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
complaint, thereby rendering moot defendants’ pending motion to dismiss. On June 2, 2019, plaintiffs filed a second amended complaint against the same defendants. The complaint alleges that defendants engaged in securities fraud, including by making misrepresentations and omissions in its public disclosures concerning the Company’s SOLIRIS sales practices, management changes, and related investigations, between January 30, 2014 and May 26, 2017, and that the Company's stock price dropped upon the purported disclosure of the alleged fraud. The plaintiffs seek to recover unspecified monetary relief, unspecified equitable and injunctive relief, interest, and attorneys’ fees and costs. Defendants’ filed a motion to dismiss the amended complaint on August 2, 2019; plaintiffs’ filed their opposition to that motion on October 2, 2019; and defendants’ filed their reply in further support of their motion on November 15, 2019. Given the early stage of these proceedings, we cannot presently predict the likelihood of obtaining dismissal of the case (or the ultimate outcome of the case if the motion to dismiss is denied by the court), nor can we estimate the possible loss or range of loss at this time.
In December 2016, we received a subpoena from the U.S. Attorney's Office for the District of Massachusetts requesting documents relating generally to our support of Patient Services, Inc. (PSI) and National Organization for Rare Disorders (NORD), 501(c)(3) organizations that provide financial assistance to Medicare patients taking drugs sold by Alexion; Alexion’s provision of free drug to Medicare patients; and Alexion compliance policies and training materials concerning the anti-kickback statute and information on donations to PSI and NORD from 2010 through 2016. In April 2019, we entered into a civil settlement agreement with the DOJ and the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services to resolve this matter. As part of the settlement agreement, Alexion paid $13.1 to the DOJ and OIG. OIG did not require a Corporate Integrity Agreement with Alexion because it made fundamental organizational changes, including hiring a new executive leadership team, replacing half of the members of its Board of Directors, and effecting a significant change in the workforce.
In May 2017, Brazilian authorities seized records and data from our São Paulo, Brazil offices as part of an investigation being conducted into Alexion’s Brazilian operations. We are cooperating with this inquiry.
In June 2017, we received a demand to inspect certain of our books and records pursuant to Section 220 of the General Corporation Law of the State of Delaware on behalf of a purported stockholder. Among other things, the demand sought to determine whether to institute a derivative lawsuit against certain of the Company’s directors and officers in relation to the investigation by our Audit and Finance Committee announced in November 2016 and the investigations instituted by the SEC, DOJ, U.S. Attorney’s Office for the District of Massachusetts, and Brazilian law enforcement officials that are described above. We have responded to the demand. Given the early stages of this matter, an estimate of the possible loss or range of loss cannot be made at this time.
On September 27, 2017, a hearing panel of the Canadian Patented Medicine Prices Review Board (PMPRB) issued a decision in a previously pending administrative pricing matter that we had excessively priced SOLIRIS in a manner inconsistent with the Canadian pricing rules and guidelines. In its decision, the PMPRB ordered Alexion to decrease the price of SOLIRIS to an upper limit based upon pricing in certain other countries, and to forfeit excess revenues for the period between 2009 and 2017. The amount of excess revenues for the period between 2009 and 2017 was determined not to be a material amount and was paid in 2018. In October 2017, Alexion filed an application for judicial review of the PMPRB’s decision in the Federal Court of Canada. On May 23, 2019, the Federal Court of Canada dismissed Alexion's application for judicial review and, as a consequence, affirmed the decision of the PMPRB that we had excessively priced SOLIRIS. On June 21, 2019, Alexion filed a notice of appeal of the Federal Court of Canada's ruling, and, on October 17, 2019, Alexion filed a memorandum of fact and law in support of the appeal. On December 3, 2019, the Attorney General of Canada filed its memorandum of fact and law in support of the Federal Court of Canada's dismissal of Alexion's appeal of the PMPRB's decision. On December 19, 2019, the intervenor, the Minister of Health for the Province of British Columbia, filed a separate memorandum of fact and law in support of the Federal Court of Canada's decision. The Canadian Federal Court of Appeal heard the appeal on October 21 and 22, 2020, but has not issued a decision as of the date of this filing. Pursuant to an order made by the Federal Court of Canada, as of April 28, 2021, we have placed approximately $80.9 in escrow to secure our obligations pending the final resolution of all appeals in this matter. This amount reflects the difference between the list price for SOLIRIS and the price determined by the PMPRB to be non-excessive for sales of SOLIRIS in Canada for the period beginning September 2017 through March 31, 2021. In addition, on a quarterly basis, until the appeals process has concluded, Alexion will be required to place amounts into escrow for each vial of SOLIRIS sold in the applicable quarter equal to the difference between the list price for SOLIRIS and the price determined by the PMPRB to be non-excessive. Our revenues in Canada have been reduced by $54.7 cumulatively to date, which is our current best estimate of our liability through March 31, 2021 if we lose the appeal of this matter (the amount of our ultimate liability, however, may be greater than this estimate when the appeal process for this matter is concluded).
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Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
Chugai Pharmaceutical Co., Ltd. has filed three lawsuits against Alexion. The first was filed in November 2018 in the United States District Court for the District of Delaware against Alexion Pharmaceuticals, Inc. alleging that ULTOMIRIS infringes one U.S. patent held by Chugai Pharmaceutical Co., Ltd. Upon issuance of a new U.S. patent on November 12, 2019, Chugai filed a second lawsuit in the United States alleging that ULTOMIRIS infringes the new patent. The parties have agreed to consolidate the November 2018 and November 2019 lawsuits. Chugai filed a third lawsuit in December 2018 in the Tokyo District Court against Alexion Pharma GK (a wholly-owned subsidiary of Alexion) in Japan, and alleges that ULTOMIRIS infringes two Japanese patents held by Chugai Pharmaceutical Co., Ltd.  Chugai’s complaints seek unspecified damages and certain injunctive relief. On March 5, 2020, the Supreme Court of Japan dismissed Chugai's appeal against an earlier IP High Court of Japan decision which held that one of the Chugai patents-in-suit is invalid. Subsequently Chugai filed a correction to the claims of this patents-in-suit and Alexion has countered that the corrected claims are still invalid and not infringed. In all cases, Alexion has denied the charges and countered that the patents are neither valid nor infringed. A trial date for the U.S. case which was initially set for July 2021 has been re-scheduled for January 2022. The case is still at the briefing stage in Japan. Given the early stages of these litigations, an estimate of the possible loss or range of loss cannot be made at this time.
In connection with an ongoing matter, in August 2019, the Brazilian Federal Revenue Service provided a Notice of Tax and Description of the Facts (the “Tax Assessment”) to two Alexion subsidiaries (the "Brazil Subsidiaries"), as well as to two additional entities, a logistics provider utilized by Alexion and a distributor. The Tax Assessment focuses on the importation of SOLIRIS vials pursuant to Alexion’s free drug supply to patients program (referred to as Global Access to Medicines, or GATM) in Brazil. In September 2019, the Brazil Subsidiaries filed defenses to the Tax Assessment disputing the basis for liability under the Tax Assessment, based on, among others, the following: in connection with the operation of GATM, during the period from September 2014 to June 2019: (i) the importers responsible for the importation of the GATM SOLIRIS vials into Brazil were correctly identified and (ii) the correct customs value was utilized for the purpose of importing the GATM SOLIRIS vials provided to the patients free of charge. Alexion prevailed in the first level of administrative appeals in the Brazilian federal administrative proceeding system based on a deficiency in the Brazil Tax Assessment. The decision was subject to an automatic (ex officio) appeal to the second level of the administrative courts. On March 30, 2021, counter-arguments against the ex officio appeal were filed on behalf of the Brazil Subsidiaries. There are three separate levels of administrative appeals within the Brazilian federal administrative proceeding system and, if the outcome of these administrative appeals is unfavorable, the final decision of the federal administrative proceeding system can be disputed to the federal court systems in Brazil (at this time, Alexion intends to appeal the Tax Assessment if it is not overturned in the course of administrative appeals). Given the early stage of these proceedings, Alexion is unable to predict the duration, scope or outcome of this matter, but we expect that a final resolution will take three years or more. While it is possible that a loss related to the Tax Assessment may be incurred, given its ongoing nature, we cannot reasonably estimate the potential magnitude of any such possible loss or range of loss, or the cost of the ongoing administrative appeals (and potential appeals to the federal court system) of the Tax Assessment. Any determination that any aspects of the importation of free of charge medications into Brazil as set forth in the Tax Assessment are not, or were not, in compliance with existing laws or regulations could result in the imposition of fines, civil penalties and, potentially criminal penalties, and/or other sanctions against us, and could have an adverse impact on our Brazilian operations.
In connection with Alexion’s acquisition of Portola, we have assumed litigation to which Portola was a party. Among the litigation assumed is a securities fraud class action filed against Portola and certain of its officers, directors and underwriters (“Defendants”) under the Securities Act of 1933 and the Securities Exchange Act of 1934. Specifically, on January 16, 2020, February 7, 2020, and February 28, 2020, stockholders filed three putative class actions in the U.S. District Court for the Northern District of California, captioned Hayden v. Portola Pharmaceuticals, Inc., et al., No. 3:20-cv-00367-VC (N.D. Cal.); McCutcheon v. Portola Pharmaceuticals, Inc., et al., No. 3:20-cv-00949 (N.D. Cal.); and Southeastern Pennsylvania Transportation Authority v. Portola Pharmaceuticals, Inc., et al., No. 3:20-cv-01501 (N.D. Cal.). These cases have since been consolidated, and on April 22, 2020, the Court issued an Order appointing the Alameda County Employees’ Retirement Association (“ACERA”) as Lead Plaintiff in the litigation. ACERA filed its amended consolidated complaint on May 20, 2020, asserting that Defendants made misrepresentations and omissions in public disclosures (including in materials issued in connection with the August 7, 2019 securities offering) concerning Portola’s sales of andexanet alfa, marketed as ANDEXXA in the United States and ONDEXXYA in Europe, between January 8, 2019 and February 26, 2020. Specifically, plaintiffs allege that Defendants made materially false and/or misleading statements about the demand for ANDEXXA, usage of ANDEXXA by hospitals and healthcare organizations, and about Portola’s accounting for its return reserves. Plaintiffs contend that the alleged fraud was revealed on January 9, 2020, when Portola announced its preliminary unaudited financial
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Alexion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(amounts in millions, except per share amounts)
results for the fourth quarter of 2019, and again on February 26, 2020, when Portola issued its fourth quarter 2019 financial results. In July 2020, Portola and the Portola Defendants filed a motion to dismiss with the Court. The court heard oral argument on September 24, 2020 and granted defendants’ pending motion to dismiss, but with leave for plaintiffs to amend further their complaint. Plaintiffs filed an amended complaint on November 5, 2020. In December 2020, Portola and Portola Defendants filed a motion to dismiss with the Court. A hearing occurred on March 4, 2021, and the Court dismissed the case with leave to amend on March 10, 2021. The Plaintiffs filed a second amended complaint on March 31, 2021. Portola and the Portola Defendants must file a motion to dismiss by May 5, 2021, with the opposition scheduled to be filed by June 9,2021, and the reply scheduled to be filed by June 30, 2021. A hearing is scheduled for July 22, 2021. Plaintiffs seek to recover unspecified monetary relief, interest, and attorneys’ fees and costs. Given the early stage of these proceedings, we cannot presently predict the likelihood of obtaining dismissal of the case (or the ultimate outcome of the case if that motion to dismiss is denied by the court), nor can we estimate the possible loss or range of loss at this time.
In connection with the transactions contemplated by the Merger Agreement with AstraZeneca, nine complaints have been filed by purported Alexion stockholders against Alexion and its current or former directors, and, in certain cases, AstraZeneca and the Merger Subs. The complaints are captioned Votto v. Alexion Pharmaceuticals, Inc., et al., No. 1:21-cv-02067 (S.D.N.Y); Wang v. Alexion Pharmaceuticals, Inc., et al., No. 1:21-cv-02095 (S.D.N.Y.); Wei v. Alexion Pharmaceuticals, Inc., et al., No. 1:21-cv-02100 (S.D.N.Y.); Naquin v. Alexion Pharmaceuticals, Inc., et al., No. 1:21-cv-02119 (S.D.N.Y.); Raul v. Alexion Pharmaceuticals, Inc., et al., No. 1:21-cv-02238 (S.D.N.Y.); Parshall v. Alexion Pharmaceuticals, Inc., et al., No. 1:21-cv-02670 (S.D.N.Y.); Davis v. Alexion Pharmaceuticals, Inc., et al., No. 1:21-cv-01429 (E.D.N.Y.); Kent v. Alexion Pharmaceuticals, Inc., et al., No. 1:21-cv-00441 (D. Del.); McKenzie v. Alexion Pharmaceuticals, Inc., et al., No. 2:21-cv-01515 (E.D. Pa.). The complaints generally allege that the preliminary registration statement filed with the SEC on February 19, 2021, omitted certain allegedly material information in connection with the transaction, and one of the complaints further alleges that the Alexion directors breached their fiduciary duties in connection with the transaction and that AstraZeneca and the other entity defendants aided and abetted the alleged breaches. The lawsuits seek various remedies, including enjoining the consummation of the transaction unless certain allegedly material information is disclosed, directing dissemination of additional allegedly material disclosures, rescission of the transaction, or rescissory damages in the event the transaction is consummated without such disclosures, and an accounting to the plaintiffs for any damages allegedly suffered. Given the early stage of the proceedings, an estimate of the possible loss or range of loss cannot be made at this time.
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Alexion Pharmaceuticals, Inc.
(amounts in millions, except per share amounts)
Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Note Regarding Forward-Looking Statements
This quarterly report on Form 10-Q contains forward-looking statements. Words such as “anticipates,” "may," "forecasts," “expects,” “intends,” “plans,” "potentially," “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such statements. Such forward-looking statements are based on current expectations, estimates and projections about our industry and business, management's beliefs, and certain assumptions made by our management, and may include, but are not limited to, statements regarding:
the proposed transaction with AstraZeneca PLC;
the potential benefits and commercial potential of ULTOMIRIS®, SOLIRIS®, STRENSIQ®, KANUMA® and ANDEXXA® for approved indications and any expanded uses;
sales of our products in various markets worldwide, pricing for our products, level of insurance coverage and reimbursement for our products, timing regarding development and regulatory approvals for our products or for additional indications or in additional territories;
plans for clinical trials (and proof of concept trials and exploratory clinical studies), status of our ongoing clinical trials for our product candidates, commencement dates for new clinical trials, timing and results of clinical trials and evaluation of our clinical trial results by regulatory agencies;
potential benefits offered by product candidates, including improved dosing intervals and potential to improve treatment in disease areas;
the medical and commercial potential of additional indications for our products;
the expected timing for the completion and/or regulatory approval of our facilities and facilities of our third-party manufacturers;
future expansion of our commercial organization and transition to third parties in certain jurisdictions to perform sales, marketing and distribution functions;
future governmental and regulatory decisions that directly or indirectly impact drug pricing (and discounts) and the adoption, implementation and interpretation of healthcare laws and regulations (and the impact on our business);
plans, prospects and expected timing for future regulatory filings and regulatory approval of products and product candidates;
competitors, potential competitors and future competitive products (including biosimilars);
plans to grow our product pipeline (and diversify our business, including through acquisitions) and anticipated benefits to the Company;
future objective to expand business and sales;
future plans to retain earnings and not pay dividends;
expected decisions to appeal certain legal proceedings and intellectual property decisions;
expectations to realize the carrying value of product inventory and the ability to sell certain inventory;
impact of accounting standards;
future costs (including cost of goods sold), operating expenses (including research and development, sales, general and administrative and restructuring expenses) and capital requirements, capital investment, sufficiency of cash to fund operations for at least the next 12 months, ability to make payment on our credit facility and make contingent payment obligations, the sufficiency of our existing capital resources and projected cash needs, price approval and funding processes in various countries;
the sources of expected increases in cash flow from operations, if any;
anticipated impact of interest rate changes on financial statements;
anticipated future milestone, contingent and royalty payments and lease payments (and, in each case, expected impact on liquidity);
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Alexion Pharmaceuticals, Inc.
(amounts in millions, except per share amounts)
anticipated impact of the COVID-19 pandemic on our business;                                
timing and anticipated amounts of future tax payments and benefits (including the potential recognition of unrecognized tax benefits), as well as timing of conclusion of tax audits;
collection of accounts receivable and impact of any delay in the future in collecting accounts receivable on financial condition and operations, as well as the ability of counterparties to our derivatives to perform their obligations;
the safety and efficacy of our products and our product candidates;
the adequacy of our pharmacovigilance and drug safety reporting processes;
the uncertainties involved in the drug development process and manufacturing;
performance and reliance on third party service providers;
our future research and development activities, plans for acquired programs, our ability to develop and commercialize products with our collaborators, anticipated regulatory approval of acquisitions and anticipated closing of acquisitions;
periods of patent, regulatory and market exclusivity for our products;
the scope of our intellectual property, future patent filings, and the outcome of any challenges or opposition to our intellectual property; and
estimates of our inventory capacity and the capacity of manufacturing and other service facilities to support our business operations, products and product candidates.
Such risks and uncertainties include, but are not limited to, the possibility that our sale to AstraZeneca does not close on the anticipated timeline or at all; the impact of the COVID-19 pandemic on our business (including our financial results and clinical trials), increased competition, actions by regulatory agencies, product candidates not receiving regulatory approvals, the possibility that expected tax benefits will not be realized, changes in healthcare and tax laws and regulations, implementation of the Most Favored Nation pricing proposal in the U.S., 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 and assessments, pending securities class action litigations, the investigation of our Brazilian operations by Brazilian authorities, the tax assessment by the Brazilian Federal Revenue Service and potential future tax assessments or liabilities by other revenue or tax regulators, risks related to the short and long-term effects of other government healthcare measures, intellectual property lawsuits, and the effect of shifting foreign exchange rates, as well as those risks and uncertainties discussed later in this report under the section entitled “Risk Factors.” Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether because of new information, future events or otherwise. However, readers should carefully review the risk factors set forth in this and other reports or documents we file from time to time with the SEC.
Overview
Alexion is a global biopharmaceutical company focused on serving patients and families affected by rare diseases and devastating conditions through the discovery, development and commercialization of life-changing medicines.
As a leader in rare diseases for more than 25 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) in patients who are anti-aquaporin-4 (AQP4) antibody positive. Alexion also has two highly innovative enzyme replacement therapies and the first and only approved therapies for patients with life-threatening and ultra-rare metabolic disorders, hypophosphatasia (HPP) and lysosomal acid lipase deficiency (LAL-D) as well as the first and only approved Factor Xa inhibitor reversal agent for patients treated with rivaroxaban or apixaban when reversal of anticoagulation is needed due to life-threatening or uncontrolled bleeding.
In addition to our marketed therapies, we have a diverse pipeline resulting from internal innovation and business development. Alexion focuses its research efforts on novel molecules and targets in the complement cascade and development efforts on the core therapeutic areas of hematology, nephrology, neurology, metabolic disorders, cardiology, ophthalmology and acute care.
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Alexion Pharmaceuticals, Inc.
(amounts in millions, except per share amounts)
Merger Agreement with AstraZeneca
On December 12, 2020, we entered into an Agreement and Plan of Merger (the Merger Agreement) with AstraZeneca PLC, a public limited company incorporated under the laws of England and Wales (AstraZeneca), Delta Omega Sub Holdings Inc., a Delaware corporation and a wholly owned subsidiary of AstraZeneca (Bidco), Delta Omega Sub Holdings Inc. 1, a Delaware corporation and a direct, wholly owned subsidiary of Bidco (Merger Sub I) and Delta Omega Sub Holdings LLC 2, a Delaware limited liability company and a direct, wholly owned subsidiary of Bidco (Merger Sub II). The Merger Agreement provides, among other things, that subject to the satisfaction or waiver of the conditions set forth therein (1) Merger Sub I will merge with and into Alexion (the “First Merger”), with Alexion surviving the First Merger as a wholly owned subsidiary of Bidco, and (2) immediately following the effective time of the First Merger (the Effective Time), Alexion will merge with and into Merger Sub II (the Second Merger and, together with the First Merger, the Mergers), with Merger Sub II surviving the Second Merger as a wholly owned subsidiary of Bidco and an indirect wholly owned subsidiary of AstraZeneca.
Under the Merger Agreement, at the Effective Time (as defined in the Merger Agreement), each share of common stock, par value $0.0001 per share, of Alexion issued and outstanding immediately prior to the Effective Time (other than certain excluded shares as described in the Merger Agreement) will be converted into the right to receive (1) 2.1243 American depositary shares of AstraZeneca (or, at the election of the holder thereof, a number of ordinary shares of AstraZeneca equal to the number of underlying ordinary shares represented by such American depositary shares) and (2) $60.00 in cash, without interest (collectively, the “Merger Consideration”).
The boards of directors of both companies have unanimously approved the acquisition.
The respective obligations of Alexion and AstraZeneca to consummate the transactions contemplated by the Merger Agreement are subject to the satisfaction or waiver of a number of customary conditions, including: (1) the adoption of the Merger Agreement by Alexion’s stockholders; (2) approval of the transactions contemplated by the Merger Agreement by AstraZeneca’s shareholders; (3) the absence of any law or order prohibiting consummation of the Mergers; (4) AstraZeneca’s registration statement on Form F-4 having been declared effective by the Securities and Exchange Commission; (5) AstraZeneca’s shareholder circular (or, if required, prospectus) having been approved by the U.K. Financial Conduct Authority; (6) the American depository shares of AstraZeneca issuable in the Mergers (and the ordinary shares of AstraZeneca represented thereby) having been approved for listing on the Nasdaq; (7) the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the approval of the Mergers under the antitrust and foreign investment laws of other specified jurisdictions; (8) accuracy of the other party’s representations and warranties, subject to certain materiality standards set forth in the Merger Agreement and (9) compliance by the other party in all material respects with such other party’s obligations under the Merger Agreement.
Without limiting the generality of the foregoing, we are subject to a variety of specified restrictions under the Merger Agreement. Unless we obtain AstraZeneca’s prior written consent (which consent may not be unreasonably withheld, conditioned or delayed) and except (i) as required or expressly contemplated by the Merger Agreement, (ii) as required by applicable law or (iii) as set forth in the confidential disclosure schedule delivered by Alexion to AstraZeneca, we may not, among other things and subject to certain exceptions and aggregate limitations, incur additional indebtedness, issue additional shares of our common stock outside of our equity incentive plans, repurchase our common stock, pay dividends, acquire assets, securities or property, dispose of businesses or assets, enter into material contracts or make certain additional capital expenditures.
The transaction is not subject to a financing condition. To support the financing of the offer consideration, AstraZeneca has entered into a new committed $17,500.0 bridge-financing facility, provided by Morgan Stanley, J.P. Morgan Securities plc and Goldman Sachs.
Under the Merger Agreement, Alexion will be required to make a payment to AstraZeneca equal to $1,180.0 if the Merger Agreement is terminated in certain circumstances, including because the Alexion board of directors has changed its recommendation in favor of the Mergers or we terminated the Merger Agreement in order to enter into an agreement providing for a Company Superior Proposal (as defined in the Merger Agreement), and Alexion will be required to make a payment to AstraZeneca equal to $270.0 if the Merger Agreement is terminated because Alexion’s stockholders fail to adopt the Merger Agreement. AstraZeneca will be required to make a payment to Alexion equal to $1,415.0 if the Merger Agreement is terminated in certain circumstances, including because the AstraZeneca board of directors has changed its recommendation in favor of the Mergers or because AstraZeneca’s shareholders fail to approve the transactions contemplated by the Merger Agreement.
The acquisition is expected to close during the third quarter 2021.
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Alexion Pharmaceuticals, Inc.
(amounts in millions, except per share amounts)
Recent Developments
COVID-19 Pandemic
The COVID-19 pandemic continues to present a substantial public health and economic challenge globally. While the impact of the COVID-19 pandemic to date on our business has been less than we had initially forecast, it is evolving rapidly and its future effects are difficult to predict with meaningful precision as the impact will depend on many factors beyond the Company’s control and knowledge. As the pandemic continues, we continue to take steps that are designed to respond proactively to evolving events and planning for COVID-19 uncertainties.
We are focused on protecting patient and customer safety as well as providing an uninterrupted supply of medicines for patients around the world. We have taken proactive measures that are designed to mitigate the risk of potential supply interruptions, and we strive to maintain sufficient inventory levels to continue serving current and new patients receiving our medicines for approved indications, as well as those participating in ongoing clinical trials. We and our third-party contract manufacturing partners continue to operate manufacturing facilities at near normal levels.
We are monitoring the demand for our products as due to quarantines, travel restrictions, hospital policies and patient concerns regarding exposure to COVID-19, we have observed fewer patient/doctor interactions, we have also noted that the new patient productivity and initiation queue has decreased since the COVID-19 outbreak (particularly in our neurological indications) and our representatives are having fewer in-person visits with health care providers, including for infusion of our products which has adversely impacted our revenue growth and may continue to affect our revenue growth in the future. We have been proactively engaging with healthcare professionals virtually and through enhanced digital channels in an effort to mitigate this risk. Additionally, we continue to actively monitor potential further impacts on our business such as growth in unemployment and loss of commercial insurance coverage and/or growth in Medicaid with higher discounts.
We have preclinical studies and clinical testing ongoing across the globe. We have a business continuity plan for our preclinical and clinical trials, including a pandemic response plan. A number of clinical trial sites are restricting site visits and imposing restrictions on the initiation of new trials and patient visits to protect both site staff and patients from possible COVID-19 exposure. Given the safety concerns around COVID-19 and the associated risk to maintaining normal clinical trial operations, we are making decisions study-by-study and country-by-country to minimize the risk to the patients and facilities, and there has been and may continue to be an impact on the timing of trials that are under active enrollment. The majority of clinical trials that were paused at the onset of the pandemic have resumed, however we are continuing to experience impact to enrollment for some studies. We are actively implementing remote and local procedures per guidance of the FDA.
The extent to which the COVID-19 pandemic impacts our business, including our commercial results and clinical trials, will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the virus, the duration of the outbreak, governmental regulations and restrictions, travel restrictions and actions to contain the outbreak or treat its impact. We continue to be responsive to the ever-changing situation while remaining true to our core values.
Products and Development Programs
We focus our product development programs on life-transforming therapeutics for rare diseases and devastating conditions for which current treatments are either non-existent or inadequate. We have developed or are developing innovative products for, among others, the following indications:
Paroxysmal Nocturnal Hemoglobinuria (PNH)
PNH is a chronic, progressive, debilitating and life-threatening ultra-rare blood disorder characterized by intravascular hemolysis (destruction of red blood cells) that is mediated by an uncontrolled activation of the complement system, a part of the immune system. PNH red blood cells are exquisitely vulnerable to activated complement, resulting in chronic intravascular hemolysis (IVH). Chronic IVH in patients with PNH may be associated with life-threatening thromboses, recurrent pain, kidney disease, disabling fatigue, impaired quality of life, severe anemia, pulmonary hypertension, shortness of breath and intermittent episodes of dark-colored urine (hemoglobinuria). A small sub-set of PNH patients on C5-inhibitor treatment may experience clinically evident extravascular hemolysis (PNH-EVH).
Atypical Hemolytic Uremic Syndrome (aHUS)
aHUS is a severe and life-threatening, ultra-rare genetic disease characterized by chronic uncontrolled complement activation and thrombotic microangiopathy (TMA), the formation of blood clots in small blood vessels throughout the body, causing a reduction in platelet count (thrombocytopenia) and life-threatening damage to the kidney, brain, heart and other vital organs.
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Generalized Myasthenia Gravis (gMG)
Myasthenia Gravis (MG) is a debilitating, complement-mediated neuromuscular disease in which patients suffer profound muscle weakness throughout the body, resulting in slurred speech, impaired swallowing and choking, double vision, upper and lower extremity weakness, disabling fatigue, shortness of breath due to respiratory muscle weakness and episodes of respiratory failure.
Hypophosphatasia (HPP)
HPP is an ultra-rare genetic and progressive metabolic disease in which patients experience devastating effects on multiple systems of the body, leading to debilitating or life-threatening complications. HPP is characterized by defective bone mineralization that can lead to deformity of bones and other skeletal abnormalities, as well as systemic complications such as profound muscle weakness, seizures, pain, and respiratory failure leading to premature death in infants.
Lysosomal Acid Lipase Deficiency (LAL Deficiency or LAL-D)
LAL-D is a serious, life-threatening ultra-rare disease associated with premature mortality and significant morbidity. LAL-D is a chronic disease in which genetic mutations result in decreased activity of the LAL enzyme that leads to marked accumulation of lipids in vital organs, blood vessels, and other tissues, resulting in progressive and systemic organ damage including hepatic fibrosis, cirrhosis, liver failure, accelerated atherosclerosis, cardiovascular disease, and other devastating consequences.
Neuromyelitis Optica Spectrum Disorder (NMOSD)
NMOSD is a severe and ultra-rare autoimmune disease of the central nervous system (CNS) that primarily affects the optic nerves and the spinal cord. Each relapse of the disorder results in a stepwise accumulation of disability, including blindness and paralysis, and sometimes premature death. Complement activation due to anti-AQP4 antibodies is one of the primary underlying causes of the destruction of vital cells in the central nervous system in patients with NMOSD.
Anticoagulant Effects of Factor Xa Inhibitors
Factor Xa inhibitors (i.e. apixaban, rivaroxaban and edoxaban), may rarely cause patients to be hospitalized with life-threatening or uncontrolled bleeding. Potential events include intracranial hemorrhage; intraocular, pericardial, intraspinal, intraarticular bleeding at critical sites; major gastrointestinal, retroperitoneal, or genitourinary bleeding; and bleeding associated with major blunt or penetrating injury.
Wilson Disease
Wilson disease is a rare disorder, characterized by excess copper stored in various body tissues, that can lead to severe liver disease, including cirrhosis and acute liver failure, as well as debilitating neurological morbidities such as impaired movement, gait, speech, swallowing, and psychiatric disorders.
Warm Autoimmune Hemolytic Anemia (WAIHA)
WAIHA is a rare autoimmune disorder caused by pathogenic immunoglobulin G (IgG) antibodies that react with and cause the premature destruction of red blood cells at normal body temperature. The disease is often characterized by profound, and potentially life-threatening anemia and other acute complications, including severe and life-threatening hemolysis, severe weakness, enlarged spleen and/or liver, rapid heart rate (tachycardia), chest pain, heart failure and fainting (syncope).
Amyotrophic Lateral Sclerosis (ALS)
ALS is a progressive neurodegenerative disease of the CNS characterized by the loss of upper (brain) and lower (spinal cord) motor neurons. Ongoing loss of motor neurons and muscle strength leads to loss of independence, paralysis and death, typically due to respiratory insufficiency.
 C3 Glomerulopathy (C3G)
C3G is a rare, chronic disease affecting the kidneys in which the alternative pathway of the complement system is dysregulated due to genetic mutations or autoantibodies affecting the regulation of the alternative pathway. This lack of regulation results in the alternative pathway overactivation and the excessive deposition of C3 protein fragments in the glomeruli, a key filtration component of the kidney, often leading to serious kidney damage.
Relapsed/refractory B-and T-cell malignancies
The B cell non-Hodgkin lymphomas (NHLs) are a diverse group of disorders of proliferating malignant B cells. Collectively, NHL is the eighth leading type of cancer in the U.S., with B-cell lymphomas diagnosed in approximately 85% to 90% of patients. The T cell lymphomas are represented by diverse histologies depending on the malignant cell of origin. T cell NHL comprises approximately 10% to 15% of the total cases of NHL. Patients present with fever, night sweats, and unintentional weight loss. With progressive disease, the malignant cells metastasize from lymph nodes and bone marrow to other organs, ultimately resulting in organ failure. Front-line therapy consists of combination chemotherapy with rituximab. Experimental agents are in development to address patients who relapse or are refractory to front-line therapy. There are no curative therapies in the relapsed/refractory setting.
Transthyretin Amyloidosis (ATTR)
Transthyretin (TTR) amyloidosis (ATTR) is a systemic, progressive, life-threatening disease wherein misfolded TTR protein forms fibrils that deposit in organs and tissues, disrupting normal organ function and tissue structure. ATTR is segmented into mutant/hereditary (ATTRm) caused by mutations in the TTR gene and wild type (ATTRwt)/non-hereditary with no mutations in the TTR gene.

Phenotypically, ATTR amyloidosis is heterogeneous:
ATTR cardiomyopathy (ATTR-CM), caused by the accumulation of misfolded TTR amyloid in the heart, leading to heart failure
ATTR polyneuropathy (ATTR-PN), caused by the accumulation of misfolded TTR amyloid in the peripheral and/or autonomic-nervous system. These deposits can damage patients’ sensory-motor ability, while also impairing normal cardiovascular and digestive function
While ATTRwt is, by definition, a cardiac disease, ATTRm is more heterogeneous, and can present with various degrees of cardiac and neurological manifestations
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Hematopoietic Stem Cell Transplantation Associated Thrombotic Microangiopathy (HSCT-TMA)
Thrombotic microangiopathy (TMA) is a disorder that may occur following hematopoietic stem cell transplant (HSCT), often presenting in the setting of multiple triggers, including endothelial insult, immune dysregulation, and uncontrolled complement activation. The TMA has a significant impact, typically resulting in severe organ dysfunction and long-term morbidity and death. Mortality in patients with HSCT-TMA is approximately 60% with severe TMA approaching 90%.
Lupus Nephritis (LN)
Lupus nephritis occurs in approximately 50% of patients with systemic lupus erythematosus (SLE), an autoimmune disorder caused by loss of tolerance to self-antigens, the production of autoantibodies, and deposition of complement-fixing immune complexes (ICs) in injured tissues. Chronic kidney disease is an independent major risk factor in lupus nephritis for overall mortality and morbidity, attributed to cardiovascular disease and septic shock.
Immunoglobulin A
Nephropathy (IgAN)
Immunoglobulin A nephropathy (IgAN), also known as Berger’s disease, is the most common global primary glomerulonephropathy that can progress to renal failure. IgAN is a lifelong disease leading to chronic kidney disease. IgAN progresses to end-stage renal disease in 30% to 40% of patients over the course of 20 to 30 years.
Guillain-Barré Syndrome
(GBS)
Guillain-Barré syndrome (GBS) is a rare, but potentially fatal neuropathy, with rapid-onset muscle weakness caused by the immune system damaging the peripheral nervous system. The symptoms may develop over hours to a few weeks and can be life-threatening with many patients requiring mechanical ventilation. It is the most common cause of acute flaccid tetraplegia worldwide.
COVID-19

Coronaviruses are a family of viruses that can cause illnesses such as the common cold, severe acute respiratory syndrome (SARS) and Middle East respiratory syndrome (MERS). In 2019, a new coronavirus was identified that is now known as the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) and the disease it causes is called coronavirus disease 2019 (COVID-19). In March 2020, the World Health Organization (WHO) declared the COVID-19 outbreak a pandemic. Signs and symptoms of COVID-19 may appear two to 14 days after exposure and can include fever, cough, shortness of breath or difficulty breathing. The severity of COVID-19 symptoms can range from very mild to very severe. Some people may have no symptoms at all. People who are older or who have pre-existing diagnosed or undiagnosed medical conditions, such as heart disease, lung disease and/or diabetes, or who have a compromised or overreacting immune system may be at higher risk of serious illness or complications and may require assisted ventilation as well as urgent critical care.
AL Amyloidosis

Light chain (AL) amyloidosis (AL-A) is the most common form of systemic amyloidosis. The clinical manifestations of AL-A are caused by the accumulation in tissues and organs (primarily heart, kidneys, and liver) of amyloid made of misfolded immunoglobulin light chains, produced by plasma cell dyscrasia. Progressive amyloid deposition eventually results in organ dysfunction with high morbidity and mortality. The degree of cardiac amyloid deposition and cardiac complications are the most important prognostic determinant. The Mayo staging system (European modification) stratifies patients in stage I, II, IIIa and IIIb for increasing levels of circulating cardiac biomarkers (NTproBNP and cardiac troponin) and highly influences both treatment and prognosis of AL-A. Early mortality remains a high unmet medical need especially for patients with cardiomyopathy: median survival is approximately 4 months in patients with stage IIIb presentation.
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Marketed Products
Our marketed products consist of the following:
Product Therapeutic Area Approved Indication
ALXN-20210331_G2.JPG
Hematology Paroxysmal Nocturnal Hemoglobinuria (PNH)
Hematology/Nephrology
Atypical Hemolytic Uremic Syndrome (aHUS)

ALXN-20210331_G3.JPG
Hematology Paroxysmal Nocturnal Hemoglobinuria (PNH)
Hematology/Nephrology Atypical Hemolytic Uremic Syndrome (aHUS)
Neurology Generalized Myasthenia Gravis (gMG)
Neurology Neuromyelitis Optica Spectrum Disorder (NMOSD)
ALXN-20210331_G4.JPG
Metabolic Disorders Hypophosphatasia (HPP)
ALXN-20210331_G5.JPG
Metabolic Disorders Lysosomal Acid Lipase Deficiency (LAL-D)
ALXN-20210331_G6.JPG
Acute Care
Reversal of anticoagulation in patients treated with Factor Xa inhibitors when experiencing life-threatening or uncontrolled bleeding.
ULTOMIRIS (ALXN1210/ravulizumab-cwvz)
ULTOMIRIS is an innovative, long-acting C5 inhibitor discovered and developed by Alexion that works by inhibiting the C5 protein in the terminal complement cascade. In clinical studies, ULTOMIRIS demonstrated rapid, complete, and sustained reduction of free C5 levels.
In December 2018, ULTOMIRIS was approved by the U.S. Food and Drug Administration (FDA) as a new treatment option for adult patients with PNH in the U.S.
ULTOMIRIS was approved as a new treatment option for adult patients with PNH by Japan's Ministry of Health, Labour, and Welfare (MHLW) in June 2019. ULTOMIRIS was approved by the European Commission (EC) in July 2019 as a treatment for adult patients with PNH with hemolysis with clinical symptoms indicative of high disease activity, and also for adult patients who are clinically stable after having been treated with SOLIRIS for at least the past six months.
In October 2019, the FDA approved the use of ULTOMIRIS as a treatment for adult and pediatric (one month of age or older) patients with aHUS to inhibit complement-mediated TMA.
In June 2020, the EC approved ULTOMIRIS for the treatment of adults and children with a body weight of 10kg or above with aHUS who are complement inhibitor treatment-naïve or have received SOLIRIS (eculizumab) for at least three months and have evidence of response to eculizumab.
In September 2020, ULTOMIRIS was approved by Japan's MHLW as a new treatment option for adult and pediatric patients with aHUS.
In October 2020, ULTOMIRIS 100 mg/mL formulation was approved by the FDA for the treatment of adult patients with PNH and for adults and pediatric (one month of age or older) patients with aHUS to inhibit complement-mediated TMA. In November 2020, ULTOMIRIS 100 mg/mL formulation was approved by the EC for treatment of PNH and aHUS. The 100 mg/mL formulation is a higher concentration formulation of ULTOMIRIS than the formulation initially approved in December 2018. ULTOMIRIS 100 mg/mL reduces average annual infusion times by approximately 60 percent compared to ULTOMIRIS 10 mg/mL while delivering safety and efficacy consistent with the ULTOMIRIS 10 mg/mL formulation.
SOLIRIS (eculizumab)
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Alexion Pharmaceuticals, Inc.
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SOLIRIS is an innovative C5 inhibitor discovered and developed by Alexion that works by inhibiting the C5 protein in the terminal complement cascade. SOLIRIS is a humanized monoclonal antibody that effectively blocks terminal complement activity at the doses currently prescribed.
SOLIRIS is approved for the treatment of PNH and aHUS in pediatric and adult patients in the U.S., Europe, Japan and in several other countries. Alexion is sponsoring multinational registries to gather information regarding the natural history of patients with PNH and aHUS and the longer-term outcomes during anti-C5 treatment.
In 2017, the FDA and EC regulatory authorities approved SOLIRIS for the treatment of gMG in adults who are anti-acetylcholine receptor (AChR) antibody-positive. Additionally, in 2017, the MHLW in Japan approved SOLIRIS as a treatment for patients with gMG who are AChR antibody-positive and whose symptoms are difficult to control with high-dose intravenous immunoglobulin therapy or plasmapheresis (PLEX).
In June 2019, SOLIRIS became the first FDA-approved treatment option for adult patients with NMOSD who are AQP4 auto antibody positive. In August 2019, the EC approved SOLIRIS as the first treatment in Europe for NMOSD in adults who are AQP4 antibody-positive with a relapsing course of the disease. In November 2019, the Japanese MHLW approved SOLIRIS as a treatment for the prevention of relapse in patients with AQP4 antibody-positive NMOSD, including Neuromyelitis Optica.
STRENSIQ (asfotase alfa)
STRENSIQ, a targeted enzyme replacement therapy, is the first and only approved therapy for patients with HPP and is designed to directly address underlying causes of HPP by aiming to restore the genetically defective metabolic process, thereby preventing or reversing the severe and potentially life-threatening complications in patients with HPP. STRENSIQ is approved in the U.S. for patients with perinatal-, infantile- and juvenile-onset HPP, in Europe for the treatment of patients with pediatric-onset HPP, and in Japan for the treatment of patients with HPP. Alexion is sponsoring a multinational registry to gather information regarding the natural history of patients with HPP and the longer-term outcomes during STRENSIQ treatment.
KANUMA (sebelipase alfa)
KANUMA, a recombinant form of the human LAL enzyme, is the only enzyme-replacement therapy that is approved for the treatment for patients with LAL-D. KANUMA is approved in the U.S. for the treatment of patients with LAL-D, in Europe for long-term enzyme replacement therapy in patients with LAL-D, and in Japan for the treatment of patients with LAL-D. Alexion is sponsoring a multinational registry to gather information regarding the natural history of patients with LAL-D and the longer-term outcomes during KANUMA treatment.
ANDEXXA (coagulation factor Xa - [recombinant] inactivated-zhzo)
ANDEXXA is approved by the FDA as a reversal agent for patients treated with rivaroxaban or apixaban, when reversal of anticoagulation is needed due to life-threatening or uncontrolled bleeding. ANDEXXA was approved under the FDA’s Accelerated Approval Pathway, and received conditional marketing authorization in the EU based on the change from baseline in anti-Factor Xa activity in healthy volunteers and in patients through the ANNEXXA-4 trial demonstrating hemostatic efficacy. Continued approval for this indication is contingent upon post-marketing study results that verify that clinical benefit is conferred to patients.
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Alexion Pharmaceuticals, Inc.
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Clinical Development Programs
Our ongoing clinical development programs include the following:
Product Mechanism of Action Development Area Indication Phase I Phase II Phase III Phase IV Filed
ULTOMIRIS (ALXN1210/ravulizumab-cwvz) (Intravenous) Anti-C5 Neurology
Pulmonology
Nephrology
gMG/NMOSD/ALS/
COVID-19/HSCT-TMA/IgAN/LN
l
ULTOMIRIS (ALXN1210/ravulizumab-cwvz)
(Subcutaneous)
Anti-C5 Hematology/Nephrology PNH/aHUS l
ALXN1720 (Subcutaneous) Anti-C5 Next Generation Subcutaneous Complement Inhibitor l
ALXN1820
(Subcutaneous)
Anti-Properdin Subcutaneous Complement Inhibitor l
ALXN1830
(SYNT001)
(Subcutaneous)
Anti-FcRN Hematology
Neurology
l
ALXN1840
(WTX101)
High-affinity, specific Cu binder Metabolic Disorders Wilson disease l
ALXN2040
(ACH-4471/danicopan)
Factor D Inhibitor Hematology/Nephrology PNH-EVH l
ALXN2050
(ACH-5228)
Factor D Inhibitor Hematology/Nephrology PNH l
ALXN2060
(AG10)
TTR Stabilizer Metabolic Disorders ATTR-CM l
ALXN2070
(ANDEXXA)
Anti-Factor Xa Reversal Acute Care
Reversal of anticoagulation in patients treated with Factor Xa inhibitors when experiencing life-threatening or uncontrolled bleeding.
l
ALXN2075
(Cerdulatinib)
Dual spleen tyrosine kinase and janus kinase (SYK/JAK) inhibitor Oncology Relapsed/refractory chronic lymphocytic leukemia or B cell or T cell NHL l
SOLIRIS (eculizumab) Anti-C5 Neurology GBS l
CAEL-101 Chimeric Monoclonal Antibody Metabolic Disorders
AL Amyloidosis
l

ULTOMIRIS (ALXN1210/ravulizumab-cwvz)
ULTOMIRIS is an innovative, long-acting C5 inhibitor discovered and developed by Alexion that works by inhibiting the C5 protein in the terminal complement cascade. In clinical studies, ALXN1210 demonstrated rapid, complete, and sustained reduction of free C5 levels.
Intravenous (IV)
In January 2019, Alexion announced that the Phase III, global, single arm, multicenter study evaluating the safety and efficacy of ALXN1210 administered by IV infusion every 8 weeks to adult patients with aHUS who had never been treated with a complement inhibitor (inhibitor-naïve patients) met its primary objective. In the study's initial 26-week
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Alexion Pharmaceuticals, Inc.
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treatment period, 53.6 percent of patients demonstrated complete TMA response. A second Phase III, single arm, multicenter study to evaluate the safety, efficacy, pharmacokinetics (PK), and pharmaco-dynamics (PD) of ALXN1210 administered by IV infusion every 8 weeks in inhibitor-naïve pediatric patients (including adolescents) with aHUS is ongoing.
In March 2019, Alexion initiated a Phase III double-blind, placebo-controlled, multicenter study to evaluate the safety and efficacy of ALXN1210 in adult patients for the treatment of gMG. Additionally, in December 2019, Alexion initiated a Phase III, single arm, open-label, multicenter study to evaluate the safety and efficacy of ALXN1210 in adult patients with NMOSD.
In March 2020, Alexion initiated a Phase III, randomized, double-blind, placebo-controlled, multicenter study to evaluate the efficacy and safety of ALXN1210 in patients with ALS.
In May 2020, following the FDA's acceptance of Alexion's IND application, Alexion initiated a Phase III open-label, randomized, controlled clinical trial of ALXN1210 in adult patients with COVID-19, who are hospitalized with severe COVID-19 requiring mechanical ventilation. The trial is investigating the role of terminal complement inhibition in managing patients with severe COVID-19. In January 2021, we paused further enrollment in this study due to lack of efficacy, pending further analysis of the data. This decision was made based on the recommendation of an independent data monitoring committee (IDMC), following their review of data from a pre-specified interim analysis.
In August 2020, Alexion submitted an application to the Japanese Pharmaceuticals and Medical Devices Agency (PMDA) to register the ULTOMIRIS 100mg/ml formulation. The 100 mg/mL formulation is a higher concentration formulation of ULTOMIRIS than the formulation initially approved in December 2018. ULTOMIRIS 100 mg/mL reduces average annual infusion times by approximately 60 percent compared to ULTOMIRIS 10 mg/mL while delivering safety and efficacy consistent with the ULTOMIRIS 10 mg/mL formulation.
In December 2020, Alexion initiated two Phase III, multicenter studies to evaluate the safety and efficacy of ALXN1210 in adult and pediatric HSCT-TMA populations.
In February 2021, Alexion initiated a Phase II, proof of concept study in two renal indications, LN and IgAN.
In addition to aHUS, gMG, NMOSD, ALS, COVID-19, HSCT-TMA, LN and IgAN, Alexion plans to initiate a Phase III study of ALXN1210 in complement mediated thrombotic microangiopathy (CM-TMA) in the second quarter of 2021 and a Phase II/III study in
dermatomyositis (DM), a rare autoimmune inflammatory myopathy characterized by chronic inflammation and degeneration of muscle and skin, in the second half of 2021.
Subcutaneous (SC) Delivery
In March 2019, Alexion initiated a PK-based Phase III study of ALXN1210 delivered subcutaneously once per week to PNH patients to support regulatory approval submissions in both PNH and aHUS. In June 2020, Alexion announced that the ongoing study met its primary objective of pharmacokinetic-based non-inferiority of ULTOMIRIS SC versus intravenous (IV) ULTOMIRIS at Day 71. Pending completion of the study and collection of required 12-month safety data, Alexion expects to file for approval for the SC formulation and device combination in PNH and aHUS in the U.S. in the third quarter of 2021 and in the E.U. in the first quarter of 2022.
ALXN1720
ALXN1720 is a novel humanized bi-specific minibody that binds selectively and with high affinity to C5 and to albumin. ALXN1720 is designed for subcutaneous administ