On October 23, 2019 Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) reported financial results for the third quarter of 2019 (Press release, Alexion, OCT 23, 2019, View Source [SID1234542431]). Total revenues in the third quarter were $1,263.1 million, a 23 percent increase compared to the same period in 2018. The negative impact of foreign currency on total revenues year-over-year was less than 1 percent, or $2.5 million, inclusive of hedging activities. On a GAAP basis, diluted EPS in the quarter was $2.08, a 41 percent increase versus the prior year. Non-GAAP diluted EPS for the third quarter of 2019 was $2.79, a 38 percent increase versus the third quarter of 2018.
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"With consistent and strong execution, we have delivered another record performance in the third quarter, building on our momentum from the first half of 2019. Our teams continued to demonstrate launch excellence across the globe, with very rapid starts to the German and Japanese ULTOMIRIS PNH launches, where conversion is progressing ahead of the best-in-class U.S. launch at the same time points, as well as a strong start to the SOLIRIS NMOSD launch in the U.S.," said Ludwig Hantson, Ph.D., Chief Executive Officer of Alexion. "We also continued to expand our portfolio with two additional approvals – ULTOMIRIS for atypical HUS in the U.S. and SOLIRIS for NMOSD in the EU – and three new business development transactions that further diversify our pipeline, including an agreement to acquire Achillion. By continuing to deliver on the ambitious transformation plan we laid out two-and-a-half years ago, we have successfully established a strong foundation for the future and look forward to building on this progress as we advance our mission of delivering life-changing therapies to people with rare diseases."
Third Quarter 2019 Financial Highlights
Total net product sales were $1,263.1 million in the third quarter of 2019, compared to $1,026.5 million in the third quarter of 2018.
SOLIRIS (eculizumab) net product sales were $990.5 million, compared to $888.0 million in the third quarter of 2018, representing a 12 percent increase. SOLIRIS volume increased 11 percent year-over-year.
ULTOMIRIS (ravulizumab-cwvz) net product sales were $89.9 million in the third quarter of 2019.
STRENSIQ (asfotase alfa) net product sales were $154.3 million, compared to $113.2 million in the third quarter of 2018, representing a 36 percent increase. STRENSIQ volume increased 36 percent year-over-year.
KANUMA (sebelipase alfa) net product sales were $28.4 million, compared to $25.3 million in the third quarter of 2018, representing a 12 percent increase. KANUMA volume increased 16 percent year-over-year.
GAAP cost of sales was $95.2 million, compared to $90.6 million in the third quarter of 2018. Non-GAAP cost of sales was $91.8 million, compared to $87.3 million in the third quarter of 2018.
GAAP R&D expense was $232.9 million, compared to $174.8 million in the third quarter of 2018. Non-GAAP R&D expense was $186.1 million, compared to $162.3 million in the third quarter of 2018.
GAAP SG&A expense was $299.3 million, compared to $258.7 million in the third quarter of 2018. Non-GAAP SG&A expense was $260.4 million, compared to $224.5 million in the third quarter of 2018.
GAAP income tax expense was $67.9 million, compared to $11.2 million in the third quarter of 2018. Non-GAAP income tax expense was $82.5 million, compared to $75.8 million in the third quarter of 2018.
GAAP diluted EPS was $2.08, compared to $1.47 in the third quarter of 2018. Non-GAAP diluted EPS was $2.79, compared to $2.02 in the third quarter of 2018.
Research and Development
PHASE 3
SOLIRIS – Neuromyelitis Optica Spectrum Disorder (NMOSD): In August 2019, the European Commission approved SOLIRIS for adults with anti-aquaporin-4 (AQP4) auto antibody-positive NMOSD. An application for approval in Japan is under review. Alexion plans to initiate a Phase 3 study in children and adolescents with NMOSD by the end of 2019.
SOLIRIS – Generalized Myasthenia Gravis (gMG): A Phase 3 study of SOLIRIS in children and adolescents with gMG is underway.
ULTOMIRIS – Paroxysmal Nocturnal Hemoglobinuria (PNH): A Phase 3 study of ULTOMIRIS in children and adolescents with PNH is underway.
ULTOMIRIS – Atypical Hemolytic Uremic Syndrome (aHUS): In October 2019, the U.S. Food and Drug Administration (FDA) approved ULTOMIRIS for the treatment of aHUS to inhibit complement-mediated thrombotic microangiopathy (TMA) for adults and children one month and older. Applications for approval in the EU and Japan are under review. A Phase 3 study of ULTOMIRIS in children and adolescents with aHUS is underway.
ULTOMIRIS – Subcutaneous: A single, PK-based Phase 3 study of ULTOMIRIS delivered subcutaneously once per week is underway to support registration in PNH and aHUS. Data are expected in the first half of 2020.
ULTOMIRIS – gMG: A Phase 3 study of ULTOMIRIS in adults with gMG is underway.
ULTOMIRIS – NMOSD: Alexion plans to initiate a Phase 3 study of ULTOMIRIS in NMOSD by the end of 2019.
ULTOMIRIS – Hematopoietic Stem Cell Transplant-Associated Thrombotic Microangiopathy (HSCT-TMA): Alexion plans to initiate a Phase 3 study of ULTOMIRIS in HSCT-TMA in the first half of 2020, pending regulatory feedback.
ULTOMIRIS – Amyotrophic Lateral Sclerosis (ALS): Alexion plans to initiate a Phase 2/3 study for ULTOMIRIS in ALS in early 2020, pending regulatory feedback.
ALXN1840 (WTX101) – Wilson Disease: A Phase 3 study of ALXN1840 (WTX101) in Wilson disease is underway. Enrollment is expected to complete in early 2020.
CAEL-101 – Caelum Biosciences: Alexion is collaborating with Caelum Biosciences to develop CAEL-101 for light chain (AL) amyloidosis, a rare systemic disorder that causes misfolded immunoglobulin light chain protein to build up in and around tissues, resulting in progressive and widespread organ damage. A pivotal Phase 2/3 study investigating CAEL-101 as an add-on to current standard-of-care therapy is planned to begin in the first half of 2020. In October 2019, the European Commission granted orphan drug designation to CAEL-101 for the treatment of AL amyloidosis.
AG10 – Eidos: In September 2019, Alexion announced an agreement with Eidos for an exclusive license to develop and commercialize AG10 in Japan. AG10 is a small molecule designed to treat the root cause of transthyretin amyloidosis (ATTR) – destabilized and misfolded transthyretin (TTR) protein – by binding and stabilizing TTR in the blood. Eidos is currently evaluating AG10 in a Phase 3 study in the U.S. and Europe for ATTR cardiomyopathy (ATTR-CM) – a progressive, fatal disease caused by the accumulation of misfolded TTR amyloid in the heart – and plans to begin a Phase 3 study in ATTR polyneuropathy (ATTR-PN) – a progressive, fatal disease caused by the accumulation of misfolded TTR amyloid in the peripheral nervous system. Alexion plans to expand the AG10 program into Japan in 2020, pending regulatory feedback.
Elamipretide – Stealth: In October 2019, Alexion announced an agreement with Stealth BioTherapeutics for an option to co-develop and commercialize elamipretide for mitochondrial diseases. Currently being evaluated in a Phase 3 study in people with primary mitochondrial myopathy (PMM) – a genetic mitochondrial disease – elamipretide is a novel, potential first-in-class therapy that targets mitochondrial dysfunction. Alexion will have the opportunity to exercise the option following the delivery of results from the Phase 3 PMM study, which are expected in the first quarter of 2020. If exercised, the option also provides for co-development and commercialization of elamipretide in Barth syndrome, Leber’s hereditary optic neuropathy (LHON) and geographic atrophy associated with dry age-related macular degeneration (GA).
PHASE 1/2
ALXN1830 (SYNT001): Alexion plans to initiate a Phase 2 study of ALXN1830 (SYNT001) in warm autoimmune hemolytic anemia (WAIHA) in early 2020. In addition, Alexion plans to initiate a Phase 1 study of a subcutaneous formulation of ALXN1830 in healthy volunteers in early 2020. Pending results from the Phase 1 study, Alexion plans to initiate a Phase 2 study of subcutaneous ALXN1830 in gMG in the second half of 2020.
Danicopan (ACH-4471) & ACH-5228 – Achillion: In October 2019, Alexion announced an agreement to acquire Achillion. Pending approval of Achillion shareholders, satisfaction of customary closing conditions and approval from relevant regulatory agencies, including clearance under the HSR Act, the acquisition is expected to close in the first half of 2020. The acquisition will add two oral Factor D inhibitors to treat rare diseases associated with the complement alternative pathway to Alexion’s clinical-stage pipeline – danicopan (ACH-4471) and ACH-5228. Danicopan is currently in Phase 2 development as an add-on therapy to eculizumab for PNH in patients with clinical extravascular hemolysis (EVH) and for C3 glomerulopathy, and ACH-5228 is currently in Phase 1 development.
ULTOMIRIS – Primary Progressive Multiple Sclerosis (PPMS): Alexion plans to initiate an exploratory clinical study of ULTOMIRIS in PPMS.
ALXN1810 – Subcutaneous: Alexion has completed a Phase 1 study of subcutaneous ALXN1210 co-administered with Halozyme’s ENHANZE drug-delivery technology, recombinant human hyaluronidase enzyme (rHuPH20), a next-generation subcutaneous formulation called ALXN1810. Strategic planning for the best development path for ALXN1810 is ongoing.
Affibody AB – ABY-039: Alexion is partnering with Affibody AB to co-develop ABY-039 for rare Immunoglobulin G (IgG)-mediated autoimmune diseases. Currently in Phase 1 development, ABY-039 is a bivalent antibody-mimetic that targets the neonatal Fc receptor (FcRn).
ALXN1720: In September 2019, Alexion began a Phase 1 study of ALXN1720, a novel anti-C5 albumin-binding bi-specific mini-body that binds and prevents activation of human C5, in healthy volunteers.
PRE-CLINICAL
Zealand Pharma A/S: Alexion is collaborating with Zealand Pharma A/S to discover and develop novel peptide therapies for up to four targets in the complement pathway. Peptides offer a number of advantages, including being highly selective and potent, allowing low dosage volumes for ease of administration, and having the potential to treat a broad range of complement-mediated diseases.
Dicerna – GalXCTM: Alexion is collaborating with Dicerna Pharmaceuticals to jointly discover and develop up to four subcutaneously delivered GalXCTM RNA interference (RNAi) candidates, currently in pre-clinical development, for the treatment of complement-mediated diseases.
Complement Pharma – CP010: Alexion is collaborating with Complement Pharma to co-develop CP010, a pre-clinical C6 inhibitor that has the potential to treat multiple neurological disorders.
Immune Pharma – anti-eotaxin-1 antibody: Alexion has entered into an asset purchase agreement with Immune Pharma to acquire an anti-eotaxin-1 antibody for potential development in inflammatory diseases. The agreement is pending completion of bankruptcy proceedings, which are expected to conclude by the first quarter of 2020.
Share Repurchase Authorization
In October 2019, the Board of Directors approved a new share repurchase authorization of $1 billion. The repurchase program does not have an expiration date and we are not obligated to acquire a particular number of shares of common stock.
Updated 2019 financial guidance assumes a GAAP effective tax rate of 5 to 6 percent and a non-GAAP effective tax rate of 13 to 14 percent for the year.
Updated guidance excludes the financial impact of the recently announced agreement to acquire Achillion as it is anticipated to close in the first half of 2020.
Alexion’s financial guidance is based on current foreign exchange rates net of hedging activities and does not include the effect of acquisitions, license and collaboration agreements, intangible asset impairments, litigation charges, changes in fair value of contingent consideration or restructuring and related activity outside of the previously announced activities that may occur after the issuance of this press release.
Conference Call/Webcast Information:
Alexion will host a conference call/audio webcast to discuss the third quarter 2019 results today at 8:00 a.m. Eastern Time. To participate in the call, dial 866-762-3111 (USA) or 210-874-7712 (International), conference ID 6281803 shortly before 8:00 a.m. Eastern Time. A replay of the call will be available for a limited period following the call. The audio webcast can be accessed on the Investor page of Alexion’s website at: View Source