Alexion Pharmaceuticals, Inc. (“Alexion” or the “Company,” NASDAQ: ALXN) today announced financial results for the quarter ended September 30, 2009.
Third Quarter 2009 Financial Results:
For the three months ended September 30, 2009, Alexion reported total revenues of $102.6 million from net product sales of Soliris® (eculizumab), compared to $76.5 million for the year-ago quarter, Q3 2008. As previously reported, Q3 2008 sales included recognition of $71.2 million from shipments of Soliris that occurred during that quarter and $5.3 million associated with shipments of Soliris in previous quarters. Soliris sales in Q3 2009 increased 44 percent compared to the $71.2 million of in-quarter shipments in Q3 2008.
Total revenues in Q3 2009 increased by 11 percent compared to total revenues of $92.3 million in the prior quarter, Q2 2009. The increase in sales was primarily driven by the addition of significant numbers of new patients receiving Soliris in the U.S. and in European countries. There was no material impact on revenues from Euro-Dollar exchange rates between Q2 2009 and Q3 2009 as the impact from the stronger Euro in Q3 2009 was offset by Euro hedging rates previously set at lower levels.
Soliris, approved by the U.S. Food and Drug Administration (FDA) in March 2007 and the European Commission (EC) in June 2007, is the only drug specifically indicated for the treatment of patients with paroxysmal nocturnal hemoglobinuria (“PNH”), a rare, debilitating and life-threatening blood disorder.
The Company reports both GAAP operating results and non-GAAP operating results. Non-GAAP operating results are equal to GAAP operating results less the impact of share-based compensation. The following summary table is provided for investors’ convenience. A further reconciliation and explanation of the GAAP to non-GAAP figures appears at the end of this announcement.
Third Quarter 2009 Non-GAAP Financial Results
The Company reported non-GAAP net income for Q3 2009 of $33.7 million, or $0.37 per diluted share, compared to non-GAAP net income of $25.7 million, or $0.29 per diluted share, in the year-ago quarter, Q3 2008.
Alexion’s non-GAAP total operating expenses for Q3 2009 were $55.9 million, compared to $41.0 million for Q3 2008. Non-GAAP research and development (“R&D”) expenses for Q3 2009 were $19.2 million, compared to $13.7 million for the year-ago quarter. The increase in R&D expenses from the year-ago quarter primarily reflects the expansion of the Company’s clinical trial programs. Non-GAAP selling, general and administrative (“SG&A”) expenses for Q3 2009 were $36.7 million, compared to $27.3 million for Q3 2008. The increase in non-GAAP SG&A expenses primarily reflected costs associated with the expansion of the Company’s commercial operations in existing markets in the U.S. and Europe, as well as in additional countries in Europe, and in Canada, Latin America and Asia-Pacific.
Third Quarter 2009 GAAP Financial Results
Alexion reported GAAP net income for Q3 2009 of $26.7 million, or $0.29 per diluted share, compared to GAAP net income of $19.7 million, or $0.23 per diluted share, for Q3 2008.
On a GAAP basis, operating expenses for Q3 2009 were $62.8 million, compared to $46.9 million for Q3 2008. R&D expenses for Q3 2009 were $21.3 million, compared to $14.9 million for the year-ago quarter. The increase in R&D expenses from the year-ago quarter primarily reflects the expansion of the Company’s clinical trial programs. SG&A expenses were $41.5 million for Q3 2009, compared to $32.1 million for Q3 2008. The increase in GAAP SG&A expenses primarily reflected costs associated with the expansion of the Company’s commercial operations in existing markets in the U.S. and Europe, as well as in additional countries in Europe, and in Canada, Latin America and Asia-Pacific.
Balance Sheet:
As of September 30, 2009, the Company had $166.9 million in cash, cash equivalents and restricted cash, compared to $147.6 million at June 30, 2009. Alexion reduced the principal balance on its Rhode Island manufacturing facility mortgage by $24 million during Q3 2009 and has subsequently paid the remaining $20 million balance on this loan.
“In Q3, we continued to execute strongly on both our operational and research initiatives. We are serving a growing number of patients with PNH, while building our global presence to help more patients in countries around the world,” said Leonard Bell, M.D., Chief Executive Officer. “Our research and development teams made important progress in Q3. We are deepening our focus in our lead development areas of nephrology and transplant, while also investigating Soliris as a potential treatment for patients with an increasing number of other rare, severe complement-mediated disorders.”
Research and Development:
Since Soliris was first approved as a treatment for patients with PNH, researchers have been evaluating the potential of Soliris as a therapy for patients suffering with other rare and severe complement-mediated disorders. There are currently 12 clinical trials underway with Soliris in eight such conditions, with primary focus on nephrology and organ transplant.
Nephrology: Atypical Hemolytic Uremic Syndrome (aHUS)
Enrollment of adult and adolescent patients for our lead nephrology program, atypical Hemolytic Uremic Syndrome, or aHUS, was initiated in four open-label clinical studies with Soliris. Like PNH, aHUS is a severe, ultra-rare complement-inhibitor deficiency disorder. During Q3, two case reports were published in scientific journals regarding patients with aHUS who were treated with Soliris. Because aHUS frequently affects children, often with devastating results, Alexion is developing protocols to study Soliris as a treatment for pediatric patients with aHUS.
Later this month, at the American Society of Nephrology Conference in San Diego, independent investigators will present three case reports of pediatric patients with rare kidney diseases who were treated with Soliris. Investigators will present two case reports of patients with aHUS treated with Soliris and a separate case report regarding a patient with a second rare kidney disorder, dense deposit disease, treated with Soliris.
Transplant: Acute Humoral Kidney Rejection (AHR)
Soliris is also being investigated for the prevention of antibody-mediated rejection, also known as acute humoral rejection, in patients at increased risk. As previously reported, an investigator at the Mayo Clinic is conducting a study of 20 patients undergoing kidney transplantation who are known to be at elevated risk for AHR. The Company is also evaluating expansion of its kidney transplant program to include controlled clinical trials in multiple centers in North America, Europe and Australia. In addition, the Company is now funding further new investigator-initiated studies in patients at elevated risk of rejection following kidney transplant. Further, Alexion is also evaluating strategies to investigate the use of Soliris in patients undergoing transplantation of other organs.
Oncology Program
Alexion is on track with patient enrollment and dosing in a clinical study of its anti-CD200 antibody in patients with chronic lymphocytic leukemia. Early pharmacodynamic and biologic data suggest drug activity in this patient population. The Company is also moving forward with its anti-CD200 program to include patients with multiple myeloma.
2009 Financial Guidance:
Alexion is revising upward its previously announced guidance for worldwide Soliris net product sales, from a previous range of $368 to $378 million, now to a higher range of $383 to $385 million for the full-year 2009. The Company expects to achieve these results despite an anticipated negative impact of approximately $3 million on Q4 2009 revenues compared to Q3 2009, resulting from lower Euro hedging rates previously set at lower levels.
Driven primarily by the stronger-than-expected sales forecast, full-year 2009 financial guidance for non-GAAP diluted earnings per share (“EPS”) is being revised upward, from the previously announced range of $1.01 to $1.06, to a higher range of $1.15 to $1.18.
Guidance for total operating expenses remains within the previously announced range of $220 to $235 million, and is now narrowed to $220 to $226 million. Guidance for SG&A expenses remains within the previously announced range of $140 to $150 million, and is now narrowed to $143 to $146 million. Full-year guidance for R&D expenses is now being revised downward, from a previous range of $80 to $85 million, now to a lower range of $77 to $80 million as the Company prioritizes its R&D activities. Guidance for gross margin is being reiterated at 87 to 89 percent of net product sales. Taxes are expected to remain within the previously announced range of five percent to seven percent. The guidance for R&D and SG&A expenses excludes share-based compensation, which is being reiterated in a range of $28 to $30 million for the year.
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