Why Is Alexion (ALXN) Up 2.1% Since Last Earnings Report?

A month has gone by since the last earnings report for Alexion Pharmaceuticals (ALXN). Shares have added about 2.1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Alexion due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Alexion Beats on Q2 Earnings & Sales, Ups '20 Guidance

Alexion’s second-quarter adjusted earnings of $3.11 per share comfortably beat the Zacks Consensus Estimate of $2.55 and grew from $2.64 in the year-ago quarter.

Moreover, revenues rose 20.1% year over year to $1.44 billion in the reported quarter and surpassed the Zacks Consensus Estimate of $1.27 billion. Revenues were driven by higher sales of Ultomiris, Strensiq and Kanuma.

Revenues in Detail

Soliris (approved for the treatment of paroxysmal nocturnal hemoglobinuria [PNH], atypical hemolytic uremic syndrome [aHUS] and generalized myasthenia gravis [gMG]) sales were down5.4% year over year to $975.5million in the reported quarter.

Long-acting C5 complement inhibitor, Ultomiris approved for the treatment of adult patients with PNH and aHUS, generated sales of $251.1 million compared with $54.2 million in the year-ago quarter,representing a 363% increase.The company achieved its goal of establishing Ultomiris as a new standard of care in PNH, with more than 70% patient conversion from Soliris in the United States.

Strensiq revenues were $184.3 million (up 30% year over year). Kanuma contributed $33.6 million (up 28% year over year) to quarterly revenues.

In June, the European Commission approved Ultomiris for adults and children with aHUS.

Cost Summary

Adjusted research and development (R&D) expenses increased to $204.6 million from $148.7 million in the year-ago quarter.

Adjusted selling, general and administrative (SG&A) expenses were $253.6 million, down from $255.8 million in the year-ago quarter.

2020 Guidance

Alexion increased total revenues and adjusted earnings per share guidance and reducedthe operating margin guidance.

The company now expects adjusted earnings per share of $10.65-$10.95 (previous guidance:$10.45-$10.75). The company now projects revenues of $5.50-$5.60 billion (previous guidance: $5.23-$5.33 million).

Combined revenues from Soliris and Ultomiris are now estimated at $4.73-$4.76 billion (previous guidance: $4.49-$4.57 billion).

Pipeline Update

Alexion plans to initiate a phase II/III study in children and adolescents with Neuromyelitis Optica Spectrum Disorder (NMOSD) in the second half of 2020.
An application for approval of Ultomiris in aHUS is under review in Japan. A phase III study of Ultomiris in children and adolescents with aHUS is underway
Applications for approval of Ultomiris100mg/mL formulation are under review in the EU and the United States. The FDA has set an action date of Oct 11, 2020. This higher concentration formulation is designed to reduce infusion time by more than 50% to approximately 45 minutes. Alexion plans to file for regulatory approval of this formulation in Japan in the third quarter of 2020.

Recent Developments

In July 2020, Alexion announced the completion of its acquisition of Portola. The acquisition added Andexxa [coagulation factor Xa (recombinant), inactivated-zhzo] to the company's commercial and development portfolios. Andexxa has conditional approval in the United States and the EU (marketed as Ondexxya in the EU) for the reversal of anticoagulation in patients experiencing life-threatening or uncontrolled bleeding, who are treated with rivaroxaban or apixaban.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -5.18% due to these changes.

VGM Scores

Currently, Alexion has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Alexion has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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