Alexion 4Q Tops on Both Lines

Zacks

Alexion Pharmaceuticals Inc.’s (ALXN) fourth quarter 2012 earnings (excluding special items but including stock-based compensation expense) of 54 cents per share beat the Zacks Consensus Estimate by 7 cents and the year-ago adjusted earnings by 18 cents per share.

Higher product sales boosted fourth quarter earnings. Including one-time items, fourth quarter 2012 earnings came in at 40 cents per share, up 60%.

Alexion’s revenues jumped 41% to approximately $320.5 million in the final quarter of 2012 driven by strong Soliris sales. Revenues surpassed the Zacks Consensus Estimate of $317 million.

Full year earnings (excluding special items but including stock-based compensation expense) came in at $1.86 per share, 6 cents above the Zacks Consensus Estimate and 63.2% above the year-ago earnings.  Revenues increased 44.8% to $1.13 billion in 2012, in line with the Zacks Consensus Estimate.

Quarterly Results

Alexion’s only marketed product, Soliris, is available for the treatment of paroxysmal nocturnal hemoglobinuria (:PNH), a rare genetic blood disorder and atypical hemolytic uremic syndrome (aHUS), an ultra-rare genetic disorder. Soliris continued to perform well with new patient additions in the PNH indication. The successful label expansion into the aHUS indication boosted revenues further.

Adjusted operating expenses climbed 46.8% to $163.2 million in the reported quarter. The increase was attributable to a rise in both research and development (R&D) expenses (up 86.6%) and selling, general and administrative (SG&A) expenses (up 30.6%). The huge jump in R&D expenses was attributable to the company’s efforts to develop its pipeline.

Pipeline Update

Alexion currently has several candidates in clinical development focusing on different areas including hematology, nephrology and neurology. The company is also working on expanding Soliris’ label into additional indications like Shiga-toxin producing e. coli hemolytic uremic syndrome (STEC-HUS), acute humoral kidney rejection (:AHR), neuromyelitis optica (NMO) and myasthenia gravis (MG).

Alexion’s pipeline also includes asfotase alfa (hypophosphatasia), ALXN1102/ALXN1103 (hematology), ALXN1007 (inflammatory disorders).

2013 Outlook

Apart from releasing its financial results, the company provided guidance for 2013. The company expects to end 2013 with adjusted earnings per share in the range of $2.82-$2.92. The Zacks Consensus Estimate of $2.63 per share is below the company’s guidance range. Net product sales are expected in the range of $1.490 -$1.505 billion.

Alexion, a biopharmaceutical company, carries a Zacks Rank #2 (Buy). Other well placed biopharma stocks include Array Biopharma (ARRY), Medivation, Inc. (MDVN) and Targacept, Inc. (TRGT). All 3 stocks carry a Zacks Rank #2.

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