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Alexion (ALXN) Beats on Q3 Earnings, Lifts 2019 Guidance

Zacks Equity Research

Alexion Pharmaceuticals, Inc. ALXN posted third-quarter 2019 adjusted earnings of $2.79 per share, which surged 38% from the year-ago quarter’s $2.02. Earnings also beat the Zacks Consensus Estimate of $2.49.

Moreover, revenues rose 23% year over year to $1.26 billion in the reported quarter and also surpassed the Zacks Consensus Estimate of $1.24 billion. Revenues were driven by increased sales of Soliris, Strensiq, Kanuma and the uptake of Ultomiris.

Shares of Alexion have inched up 2% so far this year versus the industry’s decline of 2.8%.

Revenues in Detail

Soliris (for the treatment of paroxysmal nocturnal hemoglobinuria [PNH] and atypical hemolytic uremic syndrome [aHUS]) sales were up 12% year over year to $990.5 million in the reported quarter, driven by strong volume growth.

Strensiq revenues were $154.3 million (up 36% year over year), driven by strong volume growth. Kanuma (lysosomal acid lipase deficiency [LAL-D]) contributed $28.4 million (up 12% year over year) to quarterly revenues.

Ultomiris’ (ravulizumab-cwvz) net product sales were $89.9 million in the reported quarter, reflecting a sequential increase of 65.9%.

Cost Summary

Adjusted research and development (R&D) expenses were $186.1 million, up 14.6% year over year.

Adjusted selling, general and administrative (SG&A) expenses were $260.4 million, up 16% year over year.

2019 Guidance

Alexion raised its revenue and earnings view for 2019. The company expects adjusted earnings per share to be $10.25-$10.40, up from the previous guidance of $9.65-$9.85. Alexion projects revenues of $4.86-$4.89 billion, up from the prior outlook of $4.75-$4.80 billion. The Zacks Consensus Estimate for earnings is pegged at $9.97 and for sales at $4.85 billion.

Combined revenues from Soliris and Ultomiris are expected to be $4.18-$4.20 billion, up from $4.10-$4.13 billion guided previously.

Pipeline Update

In August 2019, the European Commission (EC) approved Soliris for the treatment of neuromyelitis optica spectrum disorder (NMOSD) in adult patients, who are anti-aquaporin-4 (AQP4) antibody-positive with a relapsing course of the disease.

Alexion plans to initiate a phase III study in children and adolescents with NMOSD by the end of 2019. Another phase III study on Soliris is also underway for addressing children and adolescents with Generalized Myasthenia Gravis (gMG).

Earlier this month, the FDA approved a label expansion of Alexion’s long-acting C5 complement inhibitor Ultomiris (ravulizumab-cwvz). The drug has been approved for the treatment of aHUS to inhibit complement-mediated thrombotic microangiopathy (TMA) for adult and pediatric (aged one month or older) patients.

Meanwhile, aphase III study of Ultomiris in children and adolescents with aHUS is ongoing. Another late-stage study of Ultomiris in children and adolescents with PNH is also underway.

A single, PK-based phase III study of Ultomiris delivered subcutaneously once per week is currently underway to support registration in PNH and aHUS. Data are expected in the first half of 2020. Another phase III study of the drug for the treatment of generalized myasthenia gravis (gMG) is also currently ongoing.

Recent Developments

In October 2019, Alexion announced that it reached a definitive agreement to acquire the clinical-stage biopharmaceutical company Achillion Pharmaceuticals, Inc. ACHN for $930 million. The transaction is expected to close in the first half of 2020.

The acquisition will add Achillion’s lead candidate danicopan (ACH-4471), currently in phase II development, and ACH-5228, which is in phase I. Alexion is looking to strengthen its PNH franchise with this buyout as a potential approval of danicopan will make the company a market leader in the PNH space.

Also, earlier this month, Alexion announced a collaboration agreement with Stealth BioTherapeutics Corp MITO for a late-stage therapy of mitochondrial diseases.

Our Take

Alexion’s earnings and sales topped estimates in the third quarter of 2019. With the recent label expansion of Soliris, we expect the medicine to continue driving growth in the future. The company got approval for Ultomiris in the United States to treat PNH and aHUS. The drug’s label expansion will further boost sales for the company.

Diversification with strong acquisition and positive collaborations also looks promising for Alexion.

Alexion Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

Alexion Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

Alexion Pharmaceuticals, Inc. price-consensus-eps-surprise-chart | Alexion Pharmaceuticals, Inc. Quote

Zacks Rank

Alexion currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the biotech sector is Incyte Corporation INCY, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Incyte’s earnings estimates have been revised 6.6% upward for 2019 and 9% for 2020 over the past 60 days. The stock has rallied 23.5% year to date.

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