Alexion Beats; Raises Guidance


Alexion Pharmaceuticals Inc.’s (ALXN) second quarter 2012 earnings (excluding special items but including stock-based compensation expense) of 41 cents per share beat the Zacks Consensus Estimate by 11 cents. Second quarter 2012 earnings increased 78.3% from the year-ago period. Higher product sales boosted second quarter earnings.

Alexion’s revenues jumped 47.9% to $274.7 million in the reported quarter driven by the continuing strong performance of Soliris. Revenues comfortably surpassed the Zacks Consensus Estimate of $263 million.

Quarterly Results

Soliris, Alexion’s only marketed product, 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 for both indications driving revenues.

Adjusted operating expenses climbed 38.6% to $142.2 million in the reported quarter. The increase was attributable to a hike in both research and development (R&D) expenses (68.4%) and selling, general and administrative (SG&A) expenses (24.2%).

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 for 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 is also thinking beyond Soliris with candidates like asfotase alfa, ALXN1102, ALXN1007.

Guidance Raised

Apart from announcing financial results for the quarter, Alexion raised its outlook for 2012. The company raised its revenue guidance for the year to $1.110-$1.125 billion from the previous forecast of $1.065-$1.085 billion. The constant global growth of Soliris inspired the company to raise its revenue guidance. The Zacks Consensus Estimate of $1.093 billion is just below the company’s new guidance range.

Soliris also increased its adjusted SG&A guidance to $360-$370 million from the old guidance of $345-$355 million, due to the constant investment in worldwide activities. The company maintained its R&D guidance of $220-$230 million.

The company also raised its earnings guidance for the year from $1.65-$1.75 per share to $1.78-$1.88 per share. The revised guidance range is well above the current Zacks Consensus Estimate of $1.58 per share. Soliris should continue performing well, driving growth at Alexion.

Our Recommendation

Currently, we have a Neutral recommendation on Alexion, which carries a Zacks #3 Rank (short-term hold rating). We are impressed by the strong Soliris sales and the increasing number of PNH and aHUS patients. Though the company’s raised outlook for 2012 is encouraging, we remain concerned about Alexion’s overdependence on a single product and the lack of near-term catalysts.

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