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Will Soliris Aid Growth for Alexion (ALXN) in Q3 Earnings?

Zacks Equity Research

We expect Alexion Pharmaceuticals, Inc. ALXN to surpass on estimates when it reports third-quarter 2019 results on Oct 23, before market open.

The company’s surprise track has been impressive so far, having delivered an earnings beat in each of the trailing four quarters, the average being 13.34%. In the last reported quarter, Alexion came up with a positive surprise of 11.86%.

Shares of Alexion have inched up 2.7% so far this year versus the industry’s decrease of 5.1%.

Let’s see how things are shaping up for the quarter to be reported.

Factors at Play

Alexion’s complement franchise consists of key growth driver Soliris, which is approved for the treatment of paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS), resulting from chronic uncontrolled activation of the complement component of the immune system.

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.

Label expansion into additional indications gave Soliris easy access to a higher patient population, which in turn, increased its commercial potential significantly. The drug is likely to have performed well and contributed to significant revenues in third-quarter 2019.

Investors will be keen to know the sales figures of Alexion’s long-acting C5 complement inhibitor Ultomiris. Notably, the drug generated sales of $54.2 million in the second quarter, leading to possible sequential growth.  We expect sales to further increase in third-quarter results.

Under its metabolic franchise, Alexion markets Strensiq for the treatment of patients with pediatric-onset hypophosphatasia (HPP) and Kanuma for addressing lysosomal acid lipase deficiency (LAL-D). These drugs are likely to have performed well in the third quarter.

Key Developments in Q3

Meanwhile, earlier this month, 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.

We expect management to provide an update on the deal during the upcoming earnings call as investors will be keen to know the strategic benefits of the acquisition.

Moreover, in September 2019, Alexion announced the departure of its current chief financial officer Paul Clancy, who will be succeeded by Dr. Aradhana Sarin, M.D., the present chief strategy and business officer.

The transition will take place after the company reports third-quarter results.

Why a Likely Earnings Beat?

Our proven model predicts an earnings beat for Alexion this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Alexion has an Earnings ESP of +1.80% as the Zacks Consensus Estimate is pegged at $2.50 and the Most Accurate Estimate stands at $2.54.

Zacks Rank: Alexion has a Zacks Rank #2, which increases the predictive power of ESP. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alexion Pharmaceuticals, Inc. Price and EPS Surprise

Alexion Pharmaceuticals, Inc. Price and EPS Surprise

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

Other Stocks That Warrant a Look

Here are a few other healthcare stocks worth considering as our model shows that these too have the right mix of elements to beat estimates this time around.

Gilead Sciences, Inc. GILD has an Earnings ESP of +0.91% and a Zacks Rank #3. The company is scheduled to release results on Oct 24.

Amgen, Inc. AMGN has an Earnings ESP of +0.50% and a Zacks Rank of 3. The company is scheduled to release results on Oct 29.

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