On October 24, 2018 Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) reported financial results for the third quarter of 2018 (Press release, Alexion, OCT 24, 2018, View Source [SID1234530306]). Total revenues in the third quarter were $1,026.5 million, a 20 percent increase compared to the same period in 2017. The negative impact of foreign currency on total revenues year-over-year was 1 percent, or $8.9 million, inclusive of hedging activities. On a GAAP basis, diluted earnings per share (EPS) in the quarter was $1.47 per share. The third quarter of 2018 included $18.2 million of restructuring and related expenses compared to $164.7 million in the third quarter of 2017. Non-GAAP diluted EPS for the third quarter of 2018 was $2.02 per share, a 40 percent increase versus the third quarter of 2017.
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"We continued to execute on our key objectives this quarter, further strengthening our core business and again delivering strong top and bottom-line growth," said Ludwig Hantson, Ph.D., Chief Executive Officer of Alexion. "Following the groundbreaking Phase 3 results of eculizumab in NMOSD, we are moving quickly to prepare global regulatory submissions, which could make it the first approved therapy for patients with this devastating disease. Our teams continue to demonstrate launch excellence with sustained growth of Soliris in gMG. In addition, we made significant progress diversifying our portfolio with the anticipated acquisition of Syntimmune and our collaboration with Dicerna. We continue to look for additional opportunities while advancing internal programs to position us for further long-term growth."
Third Quarter 2018 Financial Highlights
Total net product sales were $1,026.5 million in the third quarter of 2018, compared to $1,044.7 million in the second quarter of 2018. Second quarter revenue benefited from favorable timing of orders from certain non-U.S. markets that access Alexion medicines through a tender process as well as approximately $18.2 million related to order timing ahead of the July 4th holiday in the United States, compared to the third quarter of 2018.
Soliris (eculizumab) net product sales were $888.0 million, compared to $755.4 million in the third quarter of 2017, representing an 18 percent increase. Soliris volume increased 24 percent year-over-year.
Strensiq (asfotase alfa) net product sales were $113.2 million, compared to $87.0 million in the third quarter of 2017, representing a 30 percent increase. Strensiq volume increased 37 percent year-over-year.
Kanuma (sebelipase alfa) net product sales were $25.3 million, compared to $16.4 million in the third quarter of 2017, representing a 54 percent increase. Kanuma volume increased 74 percent year-over-year.
GAAP cost of sales was $90.6 million, compared to $157.0 million in the same quarter last year. Non-GAAP cost of sales was $87.3 million, compared to $70.8 million in the same quarter last year.
GAAP R&D expense was $174.8 million, compared to $195.7 million in the same quarter last year. Non-GAAP R&D expense was $162.3 million, compared to $175.7 million in the same quarter last year.
GAAP SG&A expense was $258.7 million, compared to $270.6 million in the same quarter last year. Non-GAAP SG&A expense was $224.5 million, compared to $229.0 million in the same quarter last year.
GAAP income tax expense was $11.2 million, compared to an income tax benefit of $19.8 million in the same quarter last year. Non-GAAP income tax expense was $75.8 million, compared to $35.7 million in the same quarter last year. Both GAAP and non-GAAP income tax benefit /expense for the third quarter of 2017 included a benefit from the conclusion of a routine IRS audit for the 2013-2014 years.
GAAP diluted EPS was $1.47 per share, compared to $0.35 per share in the same quarter last year. The third quarter of 2018 included $18.2 million of restructuring and related expenses compared to $164.7 million in the third quarter of 2017. Non-GAAP diluted EPS was $2.02 per share, compared to $1.44 per share in the third quarter of 2017.
Research and Development
PHASE 3
Ultomiris TM – Paroxysmal Nocturnal Hemoglobinuria (PNH): Applications for the approval of UltomirisTM (also known as ALXN1210) in adults with PNH have been accepted by regulatory authorities in the U.S., the European Union (EU) and Japan. The U.S. Food and Drug Administration (FDA) has set a Prescription Drug User Fee Act (PDUFA) date of February 18, 2019, as part of an expedited eight-month review following the company’s use of a rare disease priority review voucher. The applications are supported by comprehensive data from two rigorous Phase 3 clinical studies. In September 2018, UltomirisTM was granted Orphan Drug Designation in Japan. In addition, a Phase 3 study of UltomirisTM in children and adolescents with PNH is currently underway.
ALXN1210 – Atypical Hemolytic Uremic Syndrome (aHUS): Enrollment is complete in the Phase 3 trial of ALXN1210 administered intravenously every eight weeks in complement inhibitor treatment-naïve adolescent and adult patients with aHUS. Results from this study are expected in early 2019. Alexion intends to file for regulatory approval in aHUS following approval in PNH. A Phase 3 study of ALXN1210 in children with aHUS is currently underway.
ALXN1210 – Subcutaneous: In late 2018, Alexion plans to initiate a single, PK-based Phase 3 study of ALXN1210 delivered subcutaneously once per week to support registration in PNH and aHUS.
Eculizumab – Relapsing Neuromyelitis Optica Spectrum Disorder (NMOSD): In September 2018, Alexion announced positive results from the Phase 3 PREVENT study, in which patients with anti-aquaporin-4 (AQP4) auto antibody-positive NMOSD received eculizumab or placebo on top of stable standard-of-care therapy. The study met its primary endpoint of time to first adjudicated on-trial relapse, demonstrating that treatment with eculizumab reduced the risk of relapse by 94.2 percent compared to placebo (p<0.0001). At 48 weeks, 97.9 percent of patients receiving eculizumab were free of relapse compared to 63.2 percent of patients receiving placebo. No cases of meningococcal infection were observed. Eculizumab was generally well tolerated with a safety profile consistent with that seen in previous clinical studies and real-world use in its three approved indications. Based on the significant need for an approved treatment, the company is rapidly preparing regulatory submissions in the U.S., EU and Japan, and expects to submit applications in early 2019.
WTX101 – Wilson Disease: Enrollment is underway in a Phase 3 study of WTX101 in Wilson disease, a rare genetic disorder with devastating hepatic and neurological consequences. The study is now powered for superiority. WTX101 is a first-in-class oral copper-binding agent with a unique mechanism of action to access and bind to serum copper and promote its removal from the liver.
PHASE 1/2
SYNT001: In September 2018, Alexion announced an agreement to acquire Syntimmune. Pending relevant regulatory approvals, the acquisition is expected to close in the fourth quarter of 2018. The acquisition will add anti-FcRn antibody SYNT001 to the company’s clinical pipeline. SYNT001 is currently in Phase 1b/2a development in patients with warm autoimmune hemolytic anemia (WAIHA) and in patients with pemphigus vulgaris (PV) or pemphigus foliaceus (PF). In 2019, the company plans to initiate two pivotal trials – one in WAIHA following successful completion of the current Phase 1b/2a study, and one in an undisclosed indication.
ALXN1810 – Subcutaneous: Alexion initiated a Phase 1 study of subcutaneous ALXN1210 co-administered with Halozyme’s ENHANZE drug-delivery technology, PH20, in the third quarter of 2018. Pending co-formulation data, this next-generation subcutaneous formulation will be called ALXN1810 and has the potential to further extend the dosing interval to once every two weeks or once per month.
PRE-CLINICAL
Dicerna – GalXC TM : In October 2018, Alexion began a collaboration with Dicerna Pharmaceuticals, Inc. 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.
2018 Financial Guidance
A foreign currency headwind, net of hedging activities, of approximately $10 million.
Unfavorable Soliris revenue impact of $90 to $110 million from ALXN1210 and other clinical trial recruitment versus prior year.
GAAP guidance reflects the preliminary financial impact of the announced agreement to acquire Syntimmune and the recently announced collaboration with Dicerna. Alexion expects to account for Syntimmune as an asset acquisition during the fourth quarter of 2018. In addition, non-GAAP financial guidance includes the preliminary impact of operating expenses for Syntimmune.
GAAP effective tax rate of 70 to 150 percent impacted by non-deductible pre-tax acquisition charges; non-GAAP effective tax rate of 14 to 15 percent.
Alexion expects to incur additional restructuring and related expenses in 2018 of up to approximately $125 million related to the Company’s 2017 restructuring activities.
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 2018 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 5947065 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