On July 28, 2016 Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) reported financial results for the second quarter of 2016 (Press release, Alexion, JUL 28, 2016, View Source [SID:1234514086]). Total revenues grew to $753 million, an 18 percent increase, compared to $636 million for the same period in 2015. In the second quarter, the negative impact of currency on total revenue was 3 percent or $18 million, net of hedging activities, compared to the same quarter last year. On a GAAP basis, diluted earnings per share (EPS) for the second quarter of 2016 was $0.51 per share, compared to $0.83 per share in the second quarter of 2015. Non-GAAP diluted EPS for the second quarter 2016 was $1.13 per share, reflecting a reduction of $0.12 per share attributable to the modification of reported non-GAAP income tax expense; prior to this modification non-GAAP diluted EPS would have been reported at $1.25 per share (Table 2). Non-GAAP diluted EPS was $1.30 per share in the second quarter 2015, reflecting a reduction of $0.14 per share attributable to the tax modification.

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Alexion has modified the definition of its non-GAAP income tax expense to align with the Compliance & Disclosure Interpretations (C&DIs) issued by the U.S. Securities and Exchange Commission (SEC) on May 17, 2016, and has reflected this modification in 2015 and 2016 non-GAAP interim period results. Alexion’s modified definition no longer includes the cash tax benefits the Company realizes during the year from net operating losses and income tax credits, and now includes other deferred taxes. The modification does not change the amount of cash taxes the Company will pay in 2016, or in the future, or have any impact on cash flow. A reconciliation of GAAP to non-GAAP financial results (Table 2) and supplemental effective tax rate information for financial guidance (Table 6) are provided later in the press release.

"In Q2 2016, we delivered strong financial performance as we served an increasing number of patients with PNH, aHUS, HPP and LAL-D. We are pleased with the sustained growth in our core Soliris business, the strong launch of Strensiq, and the continued progress with our Kanuma launch," said David Hallal, Chief Executive Officer of Alexion. "In the second half of 2016, we will continue to leverage our rare disease expertise to reach more patients with Soliris, Strensiq and Kanuma while advancing multiple milestones in our robust pipeline."

Second Quarter 2016 Financial Highlights

Soliris (eculizumab) net product sales were $701 million, compared to $636 million in Q2 2015, representing a 10 percent increase. Soliris volume increased 15 percent year-on-year.
Strensiq (asfotase alfa) net product sales were $45 million.
Kanuma (sebelipase alfa) net product sales were $6 million.
GAAP R&D expense was $179 million, compared to $132 million in the same quarter last year. Non-GAAP R&D expense was $165 million, compared to $117 million in the same quarter last year.
GAAP SG&A expense was $232 million, compared to $221 million in the same quarter last year. Non-GAAP SG&A expense was $200 million, compared to $169 million in the same quarter last year.
GAAP diluted EPS was $0.51 per share, compared to $0.83 per share in the same quarter last year. Non-GAAP diluted EPS was $1.13 per share, reflecting a reduction of $0.12 per share attributable to the modification of reported non-GAAP income tax expense, compared to $1.30 per share, reflecting a reduction of $0.14 per share attributable to the modification of non-GAAP income tax expense in the same quarter last year. GAAP and non-GAAP EPS in the second quarter of 2016 includes the impact of a full quarter of Synageva operations, shares issued for the acquisition and interest expense on related borrowings.
Product and Pipeline Updates

Complement Portfolio

Eculizumab- Refractory Generalized Myasthenia Gravis (gMG): Data from the REGAIN study, a single, multinational, placebo-controlled Phase 3 trial of eculizumab in patients with refractory gMG, were presented at the International Congress on Neuromuscular Diseases (ICNMD) meeting. Alexion expects to provide an update on discussions with regulators by the end of the year.

Eculizumab- Relapsing Neuromyelitis Optica Spectrum Disorder (NMOSD): Alexion expects to complete enrollment this year in the PREVENT study, a single, multinational, placebo-controlled Phase 3 trial of eculizumab in patients with relapsing NMOSD.
Eculizumab- Delayed Graft Function (DGF): Enrollment is complete in the PROTECT study, a single, multinational, placebo-controlled Phase 3 trial of eculizumab in the prevention of DGF, and data are expected in the second half of 2016.

ALXN1210: New data from the Phase 1/2 study of ALXN1210, a highly innovative longer-acting C5 antibody, in patients with paroxysmal nocturnal hemoglobinuria (PNH) were presented at the European Hematology Association (EHA) (Free EHA Whitepaper) Congress. Alexion expects to present additional PNH data later this year. Alexion also expects to initiate a clinical program with ALXN1210 in patients with atypical hemolytic uremic syndrome (aHUS) later this year. The European Commission granted Orphan Drug Designation (ODD) to ALXN1210 for the treatment of patients with PNH.

ALXN1007: New data from the Phase 2 study of ALXN1007, a complement inhibitor that targets C5a, in patients with graft-versus-host disease involving the lower gastrointestinal tract (GI-GVHD) were presented at EHA (Free EHA Whitepaper) and Alexion is now evaluating higher doses of ALXN1007 in patients with GI-GVHD.
Metabolic Portfolio

SBC-103: New Phase 1/2 data of SBC-103, a recombinant form of the NAGLU enzyme, in patients with mucopolysaccharidosis IIIB, or MPS IIIB, were presented at the International Symposium on MPS and Related Diseases meeting. Alexion has now 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 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. A study to characterize the natural history of MoCD type A was completed in Q2.
Preclinical Portfolio

Alexion has more than 30 diverse preclinical programs across a range of therapeutic modalities, with four of these programs expected to enter the clinic in 2016.
2016 Financial Guidance

Alexion is reiterating its total revenue and Soliris guidance ranges provided on the first quarter of 2016 earnings call on April 28, 2016, and based on the strength of the Strensiq launch is increasing its Metabolic revenue guidance to $200 to $220 million. Alexion is reiterating its non-GAAP operating expense guidance and is updating its non-GAAP tax rate and non-GAAP EPS guidance. Alexion is also issuing 2016 GAAP financial guidance.

2016 financial guidance is as follows:

GAAP Guidance
Updated Non-GAAP Guidance
Prior Non-GAAP Guidance
Total revenues $3,050 to $3,100 million $3,050 to $3,100 million Low end of $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
Metabolic revenues $200 to $220 million $200 to $220 million $180 to $200 million
Cost of sales 8% to 9% 8% to 9% 8% to 9%
Research and development expense $708 to $779 million High end of $650 to $680 million
High end of $650 to $680 million
Selling, general and administrative expense
$883 to $935 million
High end of $760 to $790 million High end of $760 to $790 million
Interest expense $100 million $100 million $100 million
Effective tax rate 32% to 34% 15.5% to 16.5% (1) 7% to 8%
Earnings per share
$1.91 to $2.26
$4.50 to $4.65
Low end of $5.00 to $5.20
Diluted shares outstanding 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.

(1) Alexion has modified the definition of its non-GAAP income tax expense. The modified definition no longer includes the cash tax benefits the Company realizes during the year from net operating losses and income tax credits, and now includes other deferred taxes. The modification does not change the amount of cash taxes the Company will pay in 2016, or in the future, or have any impact on cash flow. Refer to the reconciliation of GAAP to non-GAAP financial guidance (Table 3) and the supplemental effective tax rate information for financial guidance (Table 6) provided later in the press release.

On July 28, 2016 Acorda Therapeutics, Inc. (Nasdaq:ACOR) reported a financial and pipeline update for the second quarter ended June 30, 2016 (Press release, Acorda Therapeutics, JUL 28, 2016, View Source [SID:1234514082]).

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"AMPYRA’s continued growth is fueling investment in our late stage pipeline. We expect several important milestones in the second half of 2016 and early 2017, including data from our Phase 3 dalfampridine post-stroke and CVT-301 trials. These near-term opportunities target large, unmet needs and have the potential to improve the lives of people with these serious neurological diseases," said Ron Cohen, M.D., Acorda’s President and CEO. "We are working towards concluding our acquisition of Biotie later this year and excited about the addition of the tozadenant Phase 3 program to our pipeline of late stage assets."

Financial Results

The Company reported a GAAP net loss attributable to Acorda of $18.3 million for the quarter ended June 30, 2016, or $0.40 per diluted share. GAAP net income in the same quarter of 2015 was $1.0 million, or $0.02 per diluted share.

Non-GAAP net income for the quarter ended June 30, 2016, was $3.4 million, or $0.07 per diluted share. Non-GAAP net income in the same quarter of 2015 was $13.5 million, or $0.31 per diluted share. Non-GAAP net income excludes share based compensation charges, non-cash interest expense, acquisition-related expenses, expenses associated with changes in the fair value of acquired contingent consideration, foreign currency losses/(gains) and tax adjustments. A reconciliation of the GAAP financial results to non-GAAP financial results is included in the attached financial statements.

AMPYRA (dalfampridine) Extended Release Tablets, 10 mg – For the quarter ended June 30, 2016, the Company reported AMPYRA net revenue of $122.1 million compared to $105.5 million for the same quarter in 2015.

ZANAFLEX CAPSULES (tizanidine hydrochloride), ZANAFLEX (tizanidine hydrochloride) tablets and authorized generic capsules – For the quarter ended June 30, 2016, the Company reported combined net revenue and royalties from ZANAFLEX and tizanidine of $(0.7) million compared to $3.2 million for the same quarter in 2015. Combined net revenue and royalties for the period ended June 30, 2016, includes a charge of $3.0 million due to an increase in current and estimated future returns for ZANAFLEX.

FAMPYRA (prolonged-release fampridine tablets) – For the quarter ended June 30, 2016, the Company reported FAMPYRA royalties from sales outside of the U.S. of $2.7 million compared to $2.5 million for the same quarter in 2015.

Research and development (R&D) expenses for the quarter ended June 30, 2016, were $50.3 million, including $2.6 million of share-based compensation, compared to $31.2 million, including $2.2 million of share-based compensation for the same quarter in 2015. R&D expenses increased due to investment in our late stage programs, as well as the addition of Biotie R&D expenses from the date of acquisition.

Sales, general and administrative (SG&A) expenses for the quarter ended June 30, 2016, were $53.1 million, including $6.7 million of share-based compensation, compared to $52.8 million, including $6.5 million of share-based compensation for the same quarter in 2015. SG&A expenses exclude transaction expenses related to the Biotie acquisition and include Biotie expenses for the quarter ended June 30, 2016, from the date of acquisition.

Benefit from income taxes for the quarter ended June 30, 2016, was $1.0 million, including $2.4 million of cash taxes, compared to a provision for income taxes of $1.1 million, including $0.6 million of cash taxes, for the same quarter in 2015.

At June 30, 2016, the Company had cash, cash equivalents and investments of $137.4 million. The decrease in cash from December 31, 2015, is primarily attributable to the Company’s acquisition of Biotie. In June 2016, the Company entered into a three-year senior secured revolving credit agreement with JP Morgan Chase Bank, N.A. for up to $60 million.

2016 Financial Guidance

The Company reiterates AMPYRA 2016 net sales guidance of $475-$485 million.
R&D guidance is revised from $165-$175 million to $195-$205 million. This guidance is a non-GAAP projection which excludes share-based compensation, as more fully described below under "Non-GAAP Financial Measures." The increase in R&D expense is primarily driven by the addition of tozadenant, a Phase 3 asset for the treatment of OFF periods for people with Parkinson’s disease.
SG&A guidance remains unchanged at $195-$205 million. This guidance is a non-GAAP projection which excludes share-based compensation for the Company and transaction expenses related to the Biotie acquisition, as more fully described below under "Non-GAAP Financial Measures." SG&A guidance reflects the addition of the Biotie operations, offset by reductions in current and projected SG&A expenses.
The Company expects to be approximately cash flow neutral for the second half of 2016.
Second Quarter 2016 Highlights

Commercial

AMPYRA (dalfampridine)
AMPYRA revenues for the second quarter of 2016 were $122.1 million, up 16% from the second quarter in 2015. This represents the 13th consecutive quarter of double-digit, year-over-year growth for AMPYRA, which was launched in 2010.
In June, the United States Court of Appeals for the Federal Circuit denied a request by Mylan Pharmaceuticals for a rehearing of the Court’s previous decision to uphold a lower court ruling that Acorda’s Abbreviated New Drug Application (ANDA) litigation against Mylan can continue in the District Court of Delaware. Mylan has indicated that it intends to file a petition for certiorari to the United States Supreme Court.
In July, the Company submitted its responses to four Inter Partes Review (IPR) petitions to the United States Patent and Trademark Office (USPTO). A decision on the IPR is expected in March 2017.
A District Court trial for Company’s litigation against six generic companies seeking ANDA approvals is scheduled for September 2016. The Company has five Orange Book-listed patents on AMPYRA and will vigorously defend its intellectual property rights.
Late Stage Clinical Pipeline

Dalfampridine in Post-Stroke Walking Difficulties (PSWD)
Data from an unblinded analysis of the current twice-daily (BID) clinical trial are expected in the fourth quarter of 2016. Data from the Phase 1 multi-dose pharmacokinetic (PK) testing for once-daily (QD) dalfampridine are also expected in the fourth quarter of 2016.
If the multi-dose PK and BID analyses are positive, the Company plans to move forward with two concurrent, pivotal Phase 3 trials of dalfampridine in PSWD in mid-2017 using a QD formulation.
CVT-301 in Parkinson’s Disease
In June, data from the CVT-301 Phase 2b clinical trial were presented in three posters during the 20th International Congress of Parkinson’s Disease and Movement Disorders in Berlin, Germany.
Last patient out (LPO) of the ongoing Phase 3 efficacy study is expected by the end of 2016.
Early Stage Pipeline

CVT-427 in Migraine
Data from a Phase 1 pharmacokinetic (PK) study of CVT-427, an inhaled formulation of zolmitriptan, showed increased bioavailability and faster absorption compared to oral and nasal administration of the same active ingredient. The trial enrolled 21 healthy adults.
The data showed that median TMAX was about 12 minutes for all CVT-427 doses compared to 1.5 hours for the oral tablet and 3.0 hours for the nasal spray.
There were no serious adverse events, dose limiting toxicities, or study discontinuations due to adverse events reported after administration. The most commonly reported treatment-emergent AEs were cough, chest discomfort, headache and feeling hot. Apart from cough, single dose CVT-427 tolerability was generally consistent with the known safety profile of zolmitriptan.
The data were presented at the 58th Annual Scientific Meeting of the American Headache Society in San Diego, CA.
The Company plans to initiate a special population study in the second half of 2016, and expects to advance this program into Phase 2 in 2017.
Other Pipeline
In May, development of PLUMIAZTM, an investigational therapy for the treatment of seizure clusters in people with epilepsy, was discontinued after data from the Phase 3 clinical trials did not demonstrate its bioequivalence to Diastat (diazepam) rectal gel.
Corporate Updates

The Company has received more than 97% of Biotie’s outstanding shares in the tender offer and expects to complete the purchase of 100% of Biotie’s shares in the second half of this year.
In June, Biotie delisted its American Depositary Shares from the NASDAQ following the filing of an application on Form 25 with the U.S. Securities and Exchange Commission.
In July, Dr. Burkhard Blank assumed the role of Chief Medical Officer (CMO). Dr. Blank was named interim CMO in January 2016, and previously served as CMO for several biopharmaceutical companies, including Boehringer Ingelheim, Inc.