Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) today announced financial results for the quarter and year ended December 31, 2010. For the three months ended December 31, 2010, Alexion Pharmaceuticals, Inc. ("Alexion", or the "Company") reported net product sales of Soliris® (eculizumab) of $156.0 million, reflecting strong additions of new patients, compared to $110.6 million for the same period in 2009.
“In 2010, we exceeded our clinical and commercial objectives. We served significantly greater numbers of patients with PNH in our core territories of the U.S., Western Europe and Japan, and made important progress in our lead pipeline programs”
Soliris, approved in the U.S. (2007), European Union (2007) and Japan (2010), is the only drug specifically indicated for the treatment of patients with paroxysmal nocturnal hemoglobinuria (PNH), a rare, debilitating and life-threatening blood disease.
Historically, Alexion's non-GAAP operating results have been equal to GAAP operating results less the impact of share-based compensation and taxes that are not payable in cash (non-cash taxes). Additionally, acquisition-related expenses are excluded from non-GAAP results. The following summary table is provided for investors' convenience.
Fourth Quarter Non-GAAP Financial Results:
The Company reported non-GAAP net income of $48.6 million, or $0.51 per share, in the fourth quarter of 2010, compared to non-GAAP net income of $28.5 million, or $0.31 per share, in the fourth quarter of 2009.
Alexion's non-GAAP operating expenses for Q4 2010 were $82.8 million, compared to $68.2 million for Q4 2009. Non-GAAP research and development (R&D) expenses for Q4 2010 were $25.4 million, compared to $20.3 million for Q4 2009. The increase in R&D expenses primarily reflected the expansion of the Company's clinical trial programs. Non-GAAP selling, general and administrative (SG&A) expenses for Q4 2010 were $57.4 million, compared to $47.9 million for Q4 2009. The increase in SG&A expenses primarily reflected Alexion's growing global operations and the Company's expanded participation at medical conferences.
Fourth Quarter GAAP Financial Results:
Alexion reported GAAP net income of $26.5 million, or $0.28 per share in the fourth quarter of 2010, compared to Q4 2009 GAAP net income of $237.1 million, or $2.59 per share, which included a non-recurring tax benefit of $215.5 million, or $2.36 per share.
On a GAAP basis, operating expenses for Q4 2010 were $90.7 million, compared to $75.1 million for Q4 2009. GAAP R&D expenses for Q4 2010 were $27.2 million, compared to $23.2 million for Q4 2009. GAAP SG&A expenses were $63.5 million for Q4 2010, compared to $51.9 million for Q4 2009.
Full Year 2010 Non-GAAP Financial Results:
The Company reported non-GAAP net income of $167.3 million in 2010, or $1.78 per share, compared to non-GAAP net income of $108.4 million, or $1.18 per share, in 2009.
Alexion's non-GAAP operating expenses for the full year 2010 were $294.1 million, compared to $225.9 million for 2009. Non-GAAP R&D expenses for 2010 were $90.4 million, compared to $72.9 million for the prior year. The increase in R&D expenses primarily reflected the expansion of the Company's clinical trial programs. Non-GAAP SG&A expenses for 2010 were $203.7 million, compared to $153.1 million in 2009. The increase in SG&A expenses primarily reflected Alexion's growing global operations and expanded participation at medical conferences.
Full Year 2010 GAAP Financial Results:
Alexion reported GAAP net income of $97.0 million, or $1.04 per share in 2010 compared to 2009 GAAP net income of $295.2 million, or $3.26 per share, which included a non-recurring tax benefit of $215.5 million, or $2.38 per share.
Alexion's GAAP operating expenses for the full year 2010 were $325.9 million, compared to $254.7 million for the prior year. GAAP R&D expenses for 2010 were $98.4 million, compared to $81.9 million in 2009. GAAP SG&A expenses were $227.5 million in 2010, compared to $172.8 million for the prior year.
Balance Sheet:
As of December 31, 2010, the Company had $361.6 million in cash, cash equivalents and marketable securities compared to $176.2 million at December 31, 2009. In January and February 2011, the Company used $114 million of available cash for the Taligen and Orphatec acquisitions described below.
Q4 Research and Development Progress:
During the fourth quarter of 2010, Alexion made significant progress on advancing the development of eculizumab as a treatment for patients suffering from additional rare and severe complement-mediated disorders beyond PNH, with a focus on its two lead nephrology programs in aHUS and transplant.
atypical Hemolytic Uremic Syndrome (aHUS)
In November 2010, researchers at the American Society of Nephrology (ASN) annual meeting in Denver presented positive data from the Company's two Phase 2 26-week studies of eculizumab as a treatment for adult and adolescent patients with aHUS. aHUS is an ultra-rare, chronic and life-threatening disease in which uncontrolled complement activation causes blood clots in small blood vessels throughout the body (thrombotic microangiopathy, or TMA) leading to kidney failure, stroke, heart attack and death.
The Company has completed dosing in these two Phase 2 clinical studies of eculizumab as an investigational treatment for patients with aHUS. A separate clinical study in pediatric patients with aHUS, as well as an additional study in adult patients, is ongoing.
Transplant: Acute Humoral Kidney Rejection (AHR)
Eculizumab is being investigated as a treatment for patients undergoing kidney transplant who are at elevated risk of antibody mediated rejection, also known as acute humoral rejection, or AHR. The Company is supporting investigator-initiated studies in elevated-risk kidney transplantation in the U.S. and Australia. Separately, an investigator-initiated study in patients with ABO blood-type incompatibility is enrolling. Alexion is now planning two global, company-sponsored controlled clinical trials evaluating eculizumab to prevent AHR in patients undergoing kidney transplant. The global studies are expected to commence in multiple centers this year following protocol finalization.
Acquisition of Orphatec Assets:
This morning, Alexion announced that it has purchased patents and assets from Germany-based Orphatec Pharmaceuticals GmbH related to an investigational therapy for patients with molybdenum cofactor deficiency (MoCD) Type A. MoCD Type A is an ultra-rare metabolic disease in newborns in which a genetic deficiency of cPMP causes a deficiency of molybdenum cofactor, which in turn leads to catastrophic brain damage, with survival generally measured in weeks or months.
Deficiency of the cofactor leads to accumulation of neurotoxic sulfite, resulting in uncontrollable seizures, severe and rapid neurological damage and death. There are currently no treatment options for patients with MoCD Type A.
The investigational therapy is designed to replace the deficient cPMP, which enables MoCD production so that the infant's body can eliminate the toxic sulfite. Scientific discoveries underlying this highly innovative therapy were pioneered in Germany, and have led to encouraging early clinical experience with cPMP replacement therapy in several newborns. Investigators in Germany and Australia have reported clinically meaningful results in the first patient treated.
The Orphatec assets were purchased with an upfront cash payment of approximately $3 million plus contingent payments which would be earned upon reaching various development, regulatory and commercial milestones.
Taligen Acquisition:
On January 31, 2011, Alexion announced that it acquired Taligen Therapeutics, Inc., a privately held development-stage biotechnology company based in Cambridge, Massachusetts. The acquisition was completed with an upfront cash payment of $111 million for 100 percent of Taligen's equity interests. Additional contingent payments would be earned upon reaching various clinical efficacy and product approval milestones in both the U.S. and European Union for up to six product candidates. The acquisition broadens Alexion's portfolio of product candidates and accelerates the Company's capabilities in translational medicine by bringing additional accomplished researchers to the Company to form the nucleus of a Translational Medicine Group in Cambridge, Massachusetts. Alexion aims to accelerate the development of promising pre-clinical compounds from the acquisition, including potential treatments for patients with ophthalmic diseases such as age-related macular degeneration (AMD), as well as other novel regulators of the complement inflammatory pathways targeting the treatment of patients with rare disorders.
"In 2010, we exceeded our clinical and commercial objectives. We served significantly greater numbers of patients with PNH in our core territories of the U.S., Western Europe and Japan, and made important progress in our lead pipeline programs," said Leonard Bell, M.D., Chief Executive Officer of Alexion. "In 2011, we are accelerating our initiatives to serve more patients with PNH in our core territories and new countries, as well as increasing our commitment to the more rapid innovation of first-in-class therapies for patients with debilitating and life-threatening rare diseases."
2011 Financial Guidance:
In 2011, worldwide net product sales are expected to be within a range of $715 to $735 million. On a non-GAAP basis, R&D expenses are anticipated to be in the range of $128 to $138 million, and selling, general and administrative expenses in the range of $270 to $280 million. The Company's share-based compensation expense for the year is expected to be in a range of approximately $39 to $41 million. Cost of sales is expected to be approximately 13 percent of net product sales. The GAAP effective tax rate is expected to be in the range of 30 to 32 percent. The non-GAAP effective tax rate, reported on a cash tax liability basis, is expected to be in the range of 10 to 12 percent. Based on a forecast of approximately 97 million diluted shares outstanding, Alexion is providing guidance of $2.10 to $2.25 for non-GAAP earnings per share for the year.
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