Analyst Conference Summary


Alexion Pharmaceuticals

conference date: July 24, 2014 @ 7:00 AM Pacific Time
for quarter ending: June 30, 2014 (second quarter 2014, Q2)

Forward-looking statements

Overview: Sequential revenue drop, but continued strong y/y revenue growth, with new products on their way.

Basic data (GAAP):

Revenue was $512.5 million, down 10% sequentially from $566.6 million and up 38% from $370.1 million in the year-earlier quarter.

Net income was $166.5 million, up 4% sequentially from $159.4 million, and up 74% from $95.9 million year-earlier.

EPS (diluted earnings per share) was $0.83, up 5% sequentially from $0.79 and up 73% from $0.48 year-earlier.


2014 guidance revised up: revenue between $2.18 and $2.20 billion. Non-GAAP EPS between $4.95 and $5.05.

Conference Highlights:

Soliris (eculizumab) sales were $512.2 million, down 10% sequentially from $567 million and up 38% from Q2 2013, reflecting steady additions of PNH (paroxysmal nocturnal hemoglobinuria) and aHUS (atypical hemolytic uremic syndrome) patients. Sees the majority of growth still in the future, as new patients are diagnosed. The aHUS FDA label was revised, improved, which should help sales going forward. 82% of patients in the trial that were on dialysis were able to stop dialysis. Global aHUS launch continues.

The sequential decline in revenue was from recognition of $88 million in revenue from France in Q1, which was associated with sales made before 2014. Excluding that sequential growth continued.

During the quarter Alexion applied to the EU for marketing authorization for Asfotase Alfa. Asfotase Alfa for HPP (pediatric-onset hypophosphatasia) launches should occur in 2015. In U.S. the second component of the rolling BLA was submitted to the FDA. The HPP sales team has already begun education efforts.

Non-GAAP numbers: net income was $229.1 million, down 27% sequentially from $312.6 million and up 56% from $147.2 million year-earlier. Diluted EPS $1.12, down 17% sequentially from $1.53, and up 53% from $0.73 year-earlier. Excludes $28.4 million in share-based compensation, $2.0 million acquisition related costs, and $32.2 million in non-cash taxes.

Cash and equivalents balance $1.59 billion, up sequentially from $1.55 billion. Long term debt $81 million. Cash flow from operations was strong. $156 million was used to repurchase shares in the quarter.

Alexion continues to develop therapies with Soliris for AMR (Antibody-Mediated Rejection) with enrollment complete for living donors and deceased donors. DGF (Delayed Graft Function) trial is scheduled for enrollment in Q3 2014, and NMO (Neuromyelitis Optica) continues dosing in a registrational trial. The registrational study for refractory MG (Myasthenia Gravis) was started in the quarter; orphan drug status was granted for this.

Alexion is also developing other treatments for ultra-rare diseases. ALXN 1101 for MoCD (Molybdenum Cofactor Deficiency) Type A natural history study and synthetic cPMP bridging study are ongoing. ALXN 1007 for inflammatory diseases commenced a Phase 2 study in patients with APS (antiphospholipid syndrome). See also Alexion pipeline.

Two next-generation Soliris derivatives should start trials in 2014.

Between 2014 and 2018 Alexion could have as many as 7 product approvals.

During the quarter Alexion announced it is establishing messenger RNA (mRNA) research capabilities through an exclusive research agreement with Moderna Therapeutics.

GAAP cost of sales was $39.6 million. R&D expense was $92.6 million. Sales, General & Administrative expense was $159.5 million. Acquisition related expense $2.0 million. Total operating expenses were $254.0 million, leaving operating income of $218.8 million. Interest and other expense was $0.2 million. Income tax provision was $52.2 million.

After 2014, with the exhaustion of tax credits, the tax rate will gradually rise through 2016.


With the AMR kidney transplant trials complete, when is data due? The primary endpoint is treatment failure at 9 weeks and 12 month results. We will get results in the second half o 2015. We won't know how to proceed until the one-year data is in.

Asfotase in Europe and Japan, and reimbursement adult vs. children? Onset is very important here. The breakthrough designation is for the pediatric population. What will be key for funding will be when people have their first disease symptoms, not how old they are.

aHUS incremental potential from label change? We would expect to see impact over time, not an immediate turn on. It helps achieve a more rapid diagnosis patients. The label now includes 2 years efficacy; the old label just 6 months.

APS is a larger patient population than what we have focused on in the past, but we are interested in some sub-populations. We will not be recruiting trial patients any time soon.

Cost of goods sold? We feel 8% would be more sustainable at this time. We benefited from a reduction in royalty payments.

Value of asfotase alpha for HPP? It is a devastating disease that hits infants and young children. Median time to death from diagnosis was less than 1 year. But 90% of those treated with asfotase lived at least 3 years. We will use that data to seek reimbursement from government authorities.

Dry AMD opportunity thinking? It is of interest to us, we are considering how our molecules might work in this area.

In utero administration of asfotase alpha? HPP early diagnosis is important, and it could be diagnosed in utero. It should be considered given the devastating nature of this disease.

Our main use of cash is to invest wisely in our pipeline to enhance future shareholder value. Share by backs to to compensate for dilution.

Many physicians enter our education program thinking they have never had a patient with HPP, but many leave thinking they mave have had such a patient.

OpenIcon Analyst Conference Summaries Main Page



More Analyst Conference Pages:



Disclaimer: My analyst call summaries may include both our condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. Before making or terminating an investment you should always verify any factual basis of your decision.

Copyright 2014 William P. Meyers