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Why Is Alexion (ALXN) Up 4.6% Since Last Earnings Report?

Zacks Equity Research

A month has gone by since the last earnings report for Alexion Pharmaceuticals (ALXN). Shares have added about 4.6% in that time frame, outperforming 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 Earnings Beat Estimates, Guidance Raised

Alexion posted second-quarter 2019 adjusted earnings of $2.64 per share, which increased 27.5% from the year-ago quarter’s $2.07. Earnings also beat the Zacks Consensus Estimate of $2.36. Strong product revenues drove the bottom line in the quarter.

Revenues rose 15.2% year over year to $1.203 billion and exceeded the Zacks Consensus Estimate of $1.174 billion. Revenues were driven by increased sales of Soliris, Strensiq and Kanuma. However, foreign currency negatively impacted revenues by 1%.

Revenues in Detail

Soliris (paroxysmal nocturnal hemoglobinuria [“PNH”] and atypical hemolytic uremic syndrome [aHUS]) sales were up 9.2% to $980.8 million in the reported quarter, driven by strong volume growth. Soliris net product sales for the second quarter declined $31.6 million due to a recent judicial order on the drug’s pricing in Canada.

While Strensiq (hypophosphatasia [“HPP”]) revenues were $141.3 million (up 13% year over year), Kanuma (lysosomal acid lipase deficiency [LAL-D]) contributed $26.2 million (up 22%) to quarterly revenues.

Ultomiris (ravulizumab-cwvz) net product sales were $54.2 million in the reported quarter.

Cost Summary

Adjusted research and development (R&D) expenses were $148.7 million, down 6.1% year over year.

Adjusted selling, general and administrative (SG&A) expenses were $255.8 million, up 11% year over year.

2019 Guidance

Alexion raised its revenue and earnings guidance for 2019. The company expects earnings per share to be $9.65-$9.85, up from the previous guidance of $9.25-$9.45. Alexion projects revenues of $4.75-$4.80 billion, up from the prior outlook of $4.68-$4.75 billion. The Zacks Consensus Estimate for earnings is pegged at $9.51 and for sales at $4.78 billion.

Combined revenues for Soliris and Ultomiris are expected to be $4.10-$4.13 billion,up from $4.02-$4.07 billion guided previously.

Pipeline Update

In June 2019, the FDA approved Soliris for adults with anti-aquaporin-4 (AQP4) auto antibody-positive NMOSD. Applications for approval in the European Union (EU) and Japan are under review. Alexion plans to initiate a phase III study in children and adolescents with NMOSD by the end of 2019.

Ultomiris was approved for adults with PNH in Japan in June 2019 and in the EU in July 2019. A phase III study of Ultomiris in children and adolescents with PNH is underway.

The FDA granted Priority Review to the drug for the treatment of atypical hemolytic uremic syndrome (aHUS) and set an action date of Oct 19, 2019. Alexion plans to file for regulatory approvals in the EU and Japan in the second half of the year. A phase III study of Ultomiris in children and adolescents with aHUS is underway.

Dosing is underway in a single, PK-based phase III study of Ultomirisdelivered subcutaneously once per week to support registration in PNH and aHUS. Data are expected by early 2020. Dosing is also underway in a phase III study of the drugin generalized myasthenia gravis (gMG).

Alexion plans to initiate a phase III study of Ultomirisin NMOSD by the end of the year.

Dosing is ongoing in a phase III study of ALXN1840 (WTX101) in Wilson disease, a rare genetic disorder with devastating hepatic and neurological consequences.  Enrollment is expected to complete in early 2020.

Alexion plans to initiate a phase II/III study of ALXN1830 (SYNT001) in warm autoimmune hemolytic anemia (WAIHA) in early 2020.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 5.29% due to these changes.

VGM Scores

Currently, Alexion has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Alexion has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.



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