On October 27, 2016 Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) reported financial results for the third quarter of 2016 (Press release, Alexion, OCT 27, 2016, View Source [SID1234516041]). Total revenues grew to $799 million, a 20 percent increase, compared to $667 million for the same period in 2015. In the third quarter, the negative impact of foreign currency on total revenue was 2.5 percent or $16 million, net of hedging activities, compared to the same quarter last year. On a GAAP basis, diluted earnings per share (EPS) for the third quarter of 2016 was $0.42 per share, compared to a loss of $0.81 per share in the third quarter of 2015. Non-GAAP diluted EPS for the third quarter of 2016 was $1.23 per share. Non-GAAP diluted EPS was $1.08 per share in the third quarter of 2015, reflecting a reduction of $0.08 per share to conform to the current non-GAAP income tax expense definition.
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"In Q3 2016, we delivered strong financial performance and served an increasing number of patients with PNH, aHUS, HPP and LAL-D, while also achieving significant R&D milestones," said David Hallal, Chief Executive Officer of Alexion. "As we continue to grow our complement and metabolic businesses, we are working with urgency to file our regulatory submissions for eculizumab for the treatment of patients with refractory gMG in both the U.S. and Europe, and to enroll patients with PNH and aHUS into the global ALXN1210 registration trials."
Third Quarter 2016 Financial Highlights
Soliris (eculizumab) net product sales were $729 million, compared to $665 million in Q3 2015.
Strensiq (asfotase alfa) net product sales were $61 million.
Kanuma (sebelipase alfa) net product sales were $9 million.
GAAP R&D expense was $196 million, compared to $166 million in the same quarter last year. Non-GAAP R&D expense was $180 million, compared to $147 million in the same quarter last year.
GAAP SG&A expense was $230 million, compared to $213 million in the same quarter last year. Non-GAAP SG&A expense was $201 million, compared to $182 million in the same quarter last year.
GAAP diluted EPS was $0.42 per share, compared to a loss of $0.81 per share in the same quarter last year. Non-GAAP diluted EPS was $1.23 per share. Non-GAAP diluted EPS was $1.08 per share in the third quarter of 2015, reflecting a reduction of $0.08 per share to conform to the current non-GAAP income tax expense definition.
Product and Pipeline Updates
Complement Portfolio
Eculizumab- Refractory Generalized Myasthenia Gravis (gMG): Alexion plans to file regulatory submissions for eculizumab for the treatment of patients with refractory gMG in both the United States and Europe in the first quarter of 2017.
Eculizumab- Relapsing Neuromyelitis Optica Spectrum Disorder (NMOSD): The PREVENT study, a single, multinational, placebo-controlled registration trial of eculizumab in patients with relapsing NMOSD is on-going, with data expected in 2017.
Eculizumab- Delayed Graft Function (DGF): Data from the PROTECT study, a single, multinational, placebo-controlled registration trial of eculizumab in the prevention of DGF, are expected during the fourth quarter of 2016.
ALXN1210- PNH: Alexion has initiated a PNH registration trial of ALXN1210 administered intravenously every eight weeks. Enrollment is expected to begin in the fourth quarter of 2016.
ALXN1210- aHUS: Alexion has initiated an aHUS registration trial with ALXN1210 administered intravenously every eight weeks. Enrollment is expected to begin in the fourth quarter of 2016.
ALXN1210- Subcutaneous: Alexion has commenced dosing of a new formulation of ALXN1210 administered subcutaneously in healthy volunteers in a Phase I study.
ALXN1007: Alexion is evaluating higher doses of ALXN1007, a complement inhibitor that targets C5a, in a Phase 2 study of patients with graft-versus-host disease involving the lower gastrointestinal tract (GI-GVHD). The FDA and the European Commission granted orphan drug designation to ALXN1007 for the treatment of patients with GVHD.
Metabolic Portfolio
SBC-103: A Phase 1/2 study of SBC-103, a recombinant form of the NAGLU enzyme, in patients with mucopolysaccharidosis IIIB, or MPS IIIB, is on-going. Alexion has completed the planned dose escalation, with all patients now randomized to either a 5 mg/kg or 10 mg/kg dose. A natural history study to characterize the course of disease progression in patients with MPS IIIB is also ongoing.
cPMP Replacement Therapy (ALXN1101): Alexion is enrolling patients in a pivotal study to evaluate ALXN1101 in neonates with Molybdenum Cofactor Deficiency (MoCD) Type A.
Immuno-Oncology Program
Samalizumab (ALXN6000): Samalizumab is a first-in-class immunomodulatory humanized monoclonal antibody that blocks the key immune checkpoint protein, CD200. The Leukemia and Lymphoma Society announced the BEAT AML Master Trial, a multi-arm clinical trial in acute myeloid leukemia (AML), which will evaluate samalizumab as well as other potential therapies for the treatment of AML.
Preclinical Portfolio
Alexion has more than 30 diverse preclinical programs across a range of therapeutic modalities.
2016 Financial Guidance
Alexion expects 2016 total revenues to be at the upper end of our previously guided range of $3.05 to $3.10 billion. Alexion is reiterating its Soliris revenue guidance and based on the strength of the Strensiq launch is further increasing its Metabolic revenue guidance to $225 to $235 million.
R&D and SG&A expense guidance has been increased to reflect acceleration of the ALXN1210 programs and additional investment in the global infrastructure to support the launches of Strensiq and Kanuma, as well as an increase in legal expenses.
Alexion’s updated 2016 GAAP EPS guidance is expected to be in the range of $1.79 to $2.09 and non-GAAP EPS guidance is now expected to be at the upper end of the previously guided range of $4.50 to $4.65 per share.
Updated 2016 financial guidance is as follows:
Updated GAAP Updated Non-GAAP Prior Non-GAAP
Guidance Prior GAAP Guidance Guidance Guidance
Total revenues Upper end of $3,050 to $3,100 million $3,050 to $3,100 million Upper end of $3,050 to $3,100 million $3,050 to $3,100 million
Soliris revenues $2,835 to $2,875 million $2,835 to $2,875 million $2,835 to $2,875 million $2,835 to $2,875 million
Metabolic revenues $225 to $235 million $200 to $220 million $225 to $235 million $200 to $220 million
Cost of sales 8% to 9% 8% to 9% 8% to 9% 8% to 9%
Research and development expense $740 to $781 million $708 to $779 million $680 to $690 million High end of $650 to $680 million
Selling, general and administrative expense $913 to $955 million $883 to $935 million $790 to $810 million High end of $760 to $790 million
Interest expense $100 million $100 million $100 million $100 million
Effective tax rate 32% to 34% 32% to 34% 15.5% to 16.5% 15.5% to 16.5%
Earnings per share $1.79 to $2.09 $1.91 to $2.26 Upper end of $4.50 to $4.65 $4.50 to $4.65
Diluted shares outstanding 228 million 228 million 230 million 230 million
Alexion’s 2016 financial guidance is based on current foreign exchange rates net of hedging activities and does not include the effect of business combinations, license and collaboration agreements, asset acquisitions, intangible asset impairments, changes in fair value of contingent consideration or restructuring activity that may occur after the day prior to the date of this press release.