- 2Q19 total revenues of $1,203.3 million, a 15 percent increase
over 2Q18 and a 23 percent volume increase
- 2Q19 GAAP diluted EPS of $2.04; non-GAAP diluted EPS of
$2.64
- Received 3 regulatory approvals - SOLIRIS® (eculizumab) for
adults with neuromyelitis optica spectrum disorder (NMOSD) in the
U.S., and ULTOMIRIS® (ravulizumab-cwvz) for adults with paroxysmal
nocturnal hemoglobinuria (PNH) in Japan and the EU
- ULTOMIRIS for atypical hemolytic uremic syndrome (aHUS) under
priority review with U.S. FDA
- Total revenues and EPS guidance increased to reflect strength
of the business and continued growth
Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) today announced
financial results for the second quarter of 2019. Total revenues in
the second quarter were $1,203.3 million, a 15 percent increase
compared to the same period in 2018. The negative impact of foreign
currency on total revenues year-over-year was 1 percent, or $15.1
million, inclusive of hedging activities. On a GAAP basis, diluted
EPS in the quarter was $2.04, a 200 percent increase versus the
prior year. The second quarter of 2018 included $803.7 million of
expense related to the value of the in-process research and
development asset acquired in connection with our acquisition of
Wilson Therapeutics AB. Non-GAAP diluted EPS for the second quarter
of 2019 was $2.64, a 28 percent increase versus the second quarter
of 2018.
"We delivered another strong quarter, with continued growth
driven by the successful U.S. launches of ULTOMIRIS in PNH and
SOLIRIS in gMG. We received three regulatory approvals over the
last month, including SOLIRIS for NMOSD in the U.S., and ULTOMIRIS
for PNH in Japan and the EU. In addition, the FDA granted priority
review for ULTOMIRIS in atypical HUS," said Ludwig Hantson, Ph.D.,
Chief Executive Officer of Alexion. "We are well positioned to
continue our momentum in the second half of 2019, strengthening our
four durable franchises in hematology and nephrology, neurology,
metabolics and FcRn, advancing and expanding our pipeline, and
serving more people living with rare diseases than ever
before."
Second Quarter 2019 Financial
Highlights
- Total net product sales were $1,202.5 million in the second
quarter of 2019, compared to $1,044.7 million in the second quarter
of 2018.
- SOLIRIS® (eculizumab) net product sales were $980.8 million,
compared to $898.2 million in the second quarter of 2018,
representing a 9 percent increase. SOLIRIS volume increased 17
percent year-over-year. SOLIRIS net product sales for the second
quarter 2019 included a $31.6 million reduction to revenue related
to a recent judicial order on SOLIRIS pricing in Canada. The
reduction in revenue includes the impact for the period from
September 2017 to June 2019.
- ULTOMIRIS® (ravulizumab-cwvz) net product sales were $54.2
million in the second quarter of 2019.
- STRENSIQ® (asfotase alfa) net product sales were $141.3
million, compared to $125.1 million in the second quarter of 2018,
representing a 13 percent increase. STRENSIQ volume increased 21
percent year-over-year.
- KANUMA® (sebelipase alfa) net product sales were $26.2 million,
compared to $21.4 million in the second quarter of 2018,
representing a 22 percent increase. KANUMA volume increased 33
percent year-over-year.
- GAAP cost of sales was $99.2 million, compared to $95.3 million
in the second quarter of 2018. Non-GAAP cost of sales was $95.7
million, compared to $89.3 million in the second quarter of
2018.
- GAAP R&D expense was $187.6 million, compared to $173.4
million in the second quarter of 2018. Non-GAAP R&D expense was
$148.7 million, compared to $158.3 million in the second quarter of
2018.
- GAAP SG&A expense was $299.3 million, compared to $277.3
million in the second quarter of 2018. Non-GAAP SG&A expense
was $255.8 million, compared to $230.4 million in the second
quarter of 2018.
- GAAP acquired in-process research and development expense
(benefit) was $(4.1) million related to the agreement of the final
working capital adjustment for the Syntimmune, Inc. acquisition,
compared to $803.7 million in the second quarter of 2018, related
to the in-process research and development asset acquired in
connection with the 2018 acquisition of Wilson Therapeutics
AB.
- GAAP income tax expense was $39.7 million, compared to income
tax expense of $38.8 million in the second quarter of 2018.
Non-GAAP income tax expense was $90.2 million, compared to $77.1
million in the second quarter of 2018.
- GAAP diluted EPS was $2.04, compared to $(2.05) in the second
quarter of 2018. The second quarter of 2018 included $803.7 million
of expense related to the value of the in-process research and
development asset acquired in connection with the Wilson
Therapeutics AB acquisition. Non-GAAP diluted EPS was $2.64,
compared to $2.07 in the second quarter of 2018.
Research and Development
PHASE 3
- SOLIRIS - Neuromyelitis Optica Spectrum Disorder
(NMOSD): In June 2019, the U.S. Food and Drug Administration
(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 3 study in children and adolescents with NMOSD by the end of
2019.
- SOLIRIS - Generalized Myasthenia Gravis (gMG): Dosing is
underway in a Phase 3 study of SOLIRIS in children and adolescents
with gMG.
- ULTOMIRIS - Paroxysmal Nocturnal Hemoglobinuria (PNH):
ULTOMIRIS was approved for adults with PNH in Japan in June 2019
and in the EU in July 2019. A Phase 3 study of ULTOMIRIS in
children and adolescents with PNH is underway.
- ULTOMIRIS - Atypical Hemolytic Uremic Syndrome (aHUS):
In June 2019, Alexion announced that the FDA granted priority
review for ULTOMIRIS in aHUS and set a Prescription Drug User Fee
Act (PDUFA) target action date of October 19, 2019. The filing was
based on previously announced positive topline results from a Phase
3 study of ULTOMIRIS in complement inhibitor-naïve patients with
aHUS. Alexion plans to file for regulatory approvals in the EU and
Japan in the second half of 2019. In addition, a Phase 3 study of
ULTOMIRIS in children and adolescents with aHUS is underway.
- ULTOMIRIS - Subcutaneous: Dosing is underway in a
single, PK-based Phase 3 study of ULTOMIRIS delivered
subcutaneously once per week to support registration in PNH and
aHUS. Data are expected in early 2020.
- ULTOMIRIS - gMG: Dosing is underway in a Phase 3 study
of ULTOMIRIS in gMG.
- ULTOMIRIS - NMOSD: Alexion plans to initiate a Phase 3
study of ULTOMIRIS in NMOSD by the end of 2019, pending regulatory
feedback.
- ULTOMIRIS - Hematopoietic Stem Cell Transplant-Associated
Thrombotic Microangiopathy (HSCT-TMA): Alexion plans to
initiate a Phase 3 study of ULTOMIRIS in HSCT-TMA in the first half
of 2020, pending regulatory feedback.
- ALXN1840 (WTX101) - Wilson Disease: Dosing is underway
in a Phase 3 study of ALXN1840 (WTX101) in Wilson disease, a rare
genetic disorder with devastating hepatic and neurological
consequences. ALXN1840 is a first-in-class oral copper-binding
agent with a unique mechanism of action to bind serum copper and
promote its removal from the liver. Enrollment is expected to
complete in early 2020.
PHASE 1/2
- ALXN1830 (SYNT001): Alexion plans to initiate a Phase
2/3 study of ALXN1830 (SYNT001) in warm autoimmune hemolytic anemia
(WAIHA) in early 2020. In addition, Alexion plans to initiate a
Phase 1 study of a subcutaneous formulation of ALXN1830 in healthy
volunteers in early 2020. Pending results from the Phase 1 study,
Alexion plans to initiate a Phase 2/3 study of subcutaneous
ALXN1830 in gMG in 2020.
- ALXN1810 - Subcutaneous: Alexion has completed a Phase 1
study of subcutaneous ALXN1210 co-administered with Halozyme's
ENHANZE® drug-delivery technology, recombinant human hyaluronidase
enzyme (rHuPH20), a next-generation subcutaneous formulation called
ALXN1810. Strategic planning for the best development path for
ALXN1810 is ongoing.
- ULTOMIRIS - Amyotrophic Lateral Sclerosis (ALS):
Alexion plans to initiate a proof-of-concept study for ULTOMIRIS in
ALS in early 2020, pending regulatory feedback.
- ULTOMIRIS - Primary Progressive Multiple Sclerosis
(PPMS): Alexion plans to initiate an exploratory clinical
study of ULTOMIRIS in PPMS.
- Caelum Biosciences - CAEL-101 - Light Chain (AL)
Amyloidosis: Alexion is collaborating with Caelum Biosciences
to develop CAEL-101 for AL amyloidosis, a rare systemic disorder
that causes misfolded immunoglobulin light chain protein to build
up in and around tissues, resulting in progressive and widespread
organ damage. CAEL-101 is a first-in-class amyloid fibril targeted
therapy designed to improve organ function by reducing or
eliminating amyloid deposits in patients with AL amyloidosis. In a
Phase 1a/1b study, CAEL-101 demonstrated improved organ function,
including cardiac and renal function, in patients with relapsed and
refractory AL amyloidosis. Pending regulatory feedback, a Phase 2/3
study investigating CAEL-101 as an add-on to current
standard-of-care therapy is planned to begin in 2020.
- Affibody AB - ABY-039: In April 2019, Alexion entered
into a partnership with Affibody AB, following approval from the
relevant regulatory authorities, to co-develop ABY-039 for rare
Immunoglobulin G (IgG)-mediated autoimmune diseases. Currently in
Phase 1 development, ABY-039 is a bivalent antibody-mimetic that
targets the neonatal Fc receptor (FcRn). ABY-039 has been
specifically designed to combine Affibody's protein therapeutics
platform (Affibody® molecules) and AlbumodTM technology to achieve
a long half-life, which, along with its small size provides the
potential for less frequent, convenient, at-home subcutaneous
administration.
PRE-CLINICAL
- ALXN1720: In June 2019, Alexion submitted the initial
Clinical Trial Authorization (CTA) application to the Medicines and
Healthcare Products Regulatory Agency (MHRA) for the initiation of
a Phase 1 study of ALXN1720, a novel anti-C5 albumin-binding
bi-specific mini-body that binds and prevents activation of human
C5. Alexion plans to initiate this first-in-human study in late
2019.
- Zealand Pharma A/S: Alexion is collaborating with
Zealand Pharma A/S to discover and develop novel peptide therapies
for up to four targets in the complement pathway. Peptides offer a
number of advantages, including being highly selective and potent,
allowing low dosage volumes for ease of administration, and having
the potential to treat a broad range of complement-mediated
diseases.
- Dicerna - GalXCTM: Alexion is collaborating with Dicerna
Pharmaceuticals to jointly discover and develop up to four
subcutaneously delivered GalXCTM RNA interference (RNAi)
candidates, currently in pre-clinical development, for the
treatment of complement-mediated diseases.
- Complement Pharma - CP010: Alexion is collaborating with
Complement Pharma to co-develop CP010, a pre-clinical C6 inhibitor
that has the potential to treat multiple neurological
disorders.
2019 Financial Guidance
Alexion is increasing total revenues and EPS guidance. Full
guidance updates are outlined below.
Previous (as of April 25,
2019)
Updated (as of July 24,
2019)
Total revenues
$4,675 to $4,750 million
$4,750 to $4,800 million
SOLIRIS/ULTOMIRIS revenues
$4,020 to $4,070 million
$4,095 to $4,130 million
Metabolic revenues
$655 to $680 million
$655 to $670 million
R&D (% total revenues)
GAAP
19% to 20%
17% to 19%
Non-GAAP
16% to 17%
14% to 16%
SG&A (% total revenues)
GAAP
23% to 24%
23% to 24%
Non-GAAP
20% to 21%
20% to 21%
Operating margin
GAAP
35% to 42%
42% to 43%
Non-GAAP
54% to 55%
55% to 56%
Earnings per share
GAAP
$6.76 to $7.96
$8.13 to $8.41
Non-GAAP
$9.25 to $9.45
$9.65 to $9.85
Updated 2019 financial guidance assumes a GAAP effective tax
rate of 6 to 7 percent and a non-GAAP effective tax rate of 14 to
15 percent.
Alexion’s financial guidance is based on current foreign
exchange rates net of hedging activities and does not include the
effect of acquisitions, license and collaboration agreements,
intangible asset impairments, litigation charges, changes in fair
value of contingent consideration or restructuring and related
activity outside of the previously announced activities that may
occur after the issuance of this press release.
Conference Call/Webcast Information: Alexion will host a
conference call/audio webcast to discuss the second quarter 2019
results today at 8:00 a.m. Eastern Time. To participate in the
call, dial 866-762-3111 (USA) or 210-874-7712 (International),
conference ID 5564357 shortly before 8:00 a.m. Eastern Time. A
replay of the call will be available for a limited period following
the call. The audio webcast can be accessed on the Investor page of
Alexion’s website at: http://ir.alexion.com.
About Alexion Alexion is a global biopharmaceutical
company focused on serving patients and families affected by rare
diseases through the discovery, development and commercialization
of life-changing therapies. As the global leader in complement
biology and inhibition for more than 20 years, Alexion has
developed and commercializes two approved complement inhibitors to
treat patients with paroxysmal nocturnal hemoglobinuria (PNH), as
well as the first and only approved complement inhibitor to treat
atypical hemolytic uremic syndrome (aHUS), anti-acetylcholine
receptor (AchR) antibody-positive generalized myasthenia gravis
(gMG) and neuromyelitis optica spectrum disorder (NMOSD). Alexion
also has two highly innovative enzyme replacement therapies for
patients with life-threatening and ultra-rare metabolic disorders,
hypophosphatasia (HPP) and lysosomal acid lipase deficiency
(LAL-D). In addition, the company is developing several
mid-to-late-stage therapies, including a second complement
inhibitor, a copper-binding agent for Wilson disease and an
anti-neonatal Fc receptor (FcRn) antibody for rare Immunoglobulin G
(IgG)-mediated diseases as well as several early-stage therapies,
including one for light chain (AL) amyloidosis and a second
anti-FcRn therapy. Alexion focuses its research efforts on novel
molecules and targets in the complement cascade and its development
efforts on the core therapeutic areas of hematology, nephrology,
neurology and metabolic disorders. Alexion has been named to the
Forbes' list of the World’s Most Innovative Companies seven years
in a row and is headquartered in Boston, Massachusetts’ Innovation
District. The company also has offices around the globe and serves
patients in more than 50 countries. This press release and further
information about Alexion can be found at: www.alexion.com.
[ALXN-E]
Forward-Looking Statement This press release contains
forward-looking statements, including statements related to:
guidance regarding anticipated financial results for 2019 (and the
assumptions related to such guidance); the strength of our business
and continued growth; plans to expand the Company's pipeline;
Company's goal of continuing to build on momentum as the year
progresses; further future growth in the Company's four durable
franchises (hematology/nephrology, metabolics, neurology and FcRn);
plans to make future regulatory submissions/filings for approval of
certain of our products and product candidates, including SOLIRIS
(eculizumab) and ULTOMIRIS (ALXN1210/ravulizumab-cwvz), and the
expected timing related thereto, (as well as the expected timing of
the receipt of certain regulatory approvals to market a product);
future plans for, and the timing for, the commencement of future
clinical trials and the expected timing of the receipt of results
of certain clinical trials and studies; potential benefits of
current products and products under development and in clinical
trials (including further extended dosing intervals); Company’s
plans to initiate proof-of-concept studies for ULTOMIRIS in ALS and
exploratory clinical study for ULTOMIRIS in PPMS; the potential to
treat a broad range of complement mediated diseases with the
product to be developed with Zealand Pharma A/S; and Alexion's
future clinical, regulatory, and commercial plans for ULTOMIRIS and
other product candidates. Forward-looking statements are subject to
factors that may cause Alexion's results and plans to differ
materially from those forward-looking statements, including for
example: our dependence on sales from our principal product
(SOLIRIS); our ability to facilitate the timely conversion of PNH
patients (and any future indications) from SOLIRIS to ULTOMIRIS;
payer, physician and patient acceptance of ULTOMIRIS as an
alternative to SOLIRIS; appropriate pricing for ULTOMIRIS; future
competition from biosimilars and novel products; decisions of
regulatory authorities regarding the adequacy of our research,
marketing approval or material limitations on the marketing of our
products; delays or failure of product candidates to obtain
regulatory approval; delays or the inability to launch product
candidates due to regulatory restrictions, anticipated expense or
other matters; interruptions or failures in the manufacture and
supply of our products and our product candidates; failure to
satisfactorily address matters raised by the FDA and other
regulatory agencies; results in early stage clinical trials may not
be indicative of full results or results from later stage or larger
clinical trials (or broader patient populations) and do not ensure
regulatory approval; the possibility that results of clinical
trials are not predictive of safety and efficacy and potency of our
products (or we fail to adequately operate or manage our clinical
trials) which could cause us to halt trials, delay or prevent us
from making regulatory approval filings or result in denial of
approval of our product candidates; unexpected delays in clinical
trials; unexpected concerns that may arise from additional data or
analysis obtained during clinical trials; future product
improvements may not be realized due to expense or feasibility or
other factors; uncertainty of long-term success in developing,
licensing or acquiring other product candidates or additional
indications for existing products; inability to complete planned
acquisitions due to failure of regulatory approval or material
changes in target or otherwise; inability to complete acquisitions
and investments due to increased competition for technology; the
possibility that current rates of adoption of our products are not
sustained; the adequacy of our pharmacovigilance and drug safety
reporting processes; failure to protect and enforce our data,
intellectual property and proprietary rights and the risks and
uncertainties relating to intellectual property claims, lawsuits
and challenges against us (including intellectual property lawsuits
relating to ULTOMIRIS brought by third parties against Alexion and
inter partes review petitions submitted by third parties); the risk
that third party payors (including governmental agencies) will not
reimburse or continue to reimburse for the use of our products at
acceptable rates or at all; failure to realize the benefits and
potential of investments, collaborations, licenses and
acquisitions; the possibility that expected tax benefits will not
be realized; assessment of impact of recent accounting
pronouncements; potential declines in sovereign credit ratings or
sovereign defaults in countries where we sell our products; delay
of collection or reduction in reimbursement due to adverse economic
conditions or changes in government and private insurer regulations
and approaches to reimbursement; uncertainties surrounding legal
proceedings, company investigations and government investigations,
including investigations of Alexion by the U.S. Securities and
Exchange Commission (SEC) and U.S. Department of Justice; the risk
that estimates regarding the number of patients with PNH, aHUS,
gMG, NMOSD, HPP and LAL-D and other future indications we are
pursuing are inaccurate; the risks of changing foreign exchange
rates; risks relating to the potential effects of the Company's
restructuring; risks related to the acquisition of companies and
co-development and collaboration efforts; and a variety of other
risks set forth from time to time in Alexion's filings with the
SEC, including but not limited to the risks discussed in Alexion's
Quarterly Report on Form 10-Q for the period ended March 31, 2019
and in our other filings with the SEC. Alexion disclaims any
obligation to update any of these forward-looking statements to
reflect events or circumstances after the date hereof, except when
a duty arises under law.
In addition to financial information prepared in accordance with
GAAP, this press release also contains non-GAAP financial measures
that Alexion believes, when considered together with the GAAP
information, provide investors and management with supplemental
information relating to performance, trends and prospects that
promote a more complete understanding of our operating results and
financial position during different periods. The non-GAAP results
exclude the impact of the following GAAP items (see reconciliation
tables below for additional information): share-based compensation
expense, fair value adjustment of inventory acquired, amortization
of purchased intangible assets, changes in fair value of contingent
consideration, restructuring and related expenses, upfront payments
related to licenses and collaborations, acquired in-process
research and development assets, impairment of intangible assets,
change in value of strategic equity investments, litigation
charges, gain or loss on sale of a business or asset and certain
adjustments to income tax expense. These non-GAAP financial
measures are not intended to be considered in isolation or as a
substitute for, or superior to, the financial measures prepared and
presented in accordance with GAAP, and should be reviewed in
conjunction with the relevant GAAP financial measures. Please refer
to the attached Reconciliations of GAAP to non-GAAP Financial
Results and GAAP to non-GAAP 2019 Financial Guidance for
explanations of the amounts adjusted to arrive at non-GAAP net
income and non-GAAP earnings per share amounts for the three and
six month periods ended June 30, 2019 and 2018 and projected twelve
months ending December 31, 2019.
(Tables Follow)
ALEXION PHARMACEUTICALS,
INC.
TABLE 1: CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share
amounts)
(unaudited)
Three months ended
Six months ended
June 30
June 30
2019
2018
2019
2018
Net product sales
$
1,202.5
$
1,044.7
$
2,342.7
$
1,975.1
Other revenue
0.8
0.3
1.0
0.8
Total revenues
1,203.3
1,045.0
2,343.7
1,975.9
Cost of sales
99.2
95.3
185.0
186.9
Operating expenses:
Research and development
187.6
173.4
383.5
350.0
Selling, general and administrative
299.3
277.3
580.8
534.4
Acquired in-process research and
development
(4.1
)
803.7
(4.1
)
803.7
Amortization of purchased intangible
assets
80.1
80.1
160.1
160.1
Change in fair value of contingent
consideration
6.1
4.7
(22.6
)
57.4
Restructuring expenses
2.5
10.6
11.6
16.1
Total operating expenses
571.5
1,349.8
1,109.3
1,921.7
Operating income (loss)
532.6
(400.1
)
1,049.4
(132.7
)
Other income and expense:
Investment (expense) income
(14.9
)
7.7
27.6
113.5
Interest expense
(18.3
)
(25.0
)
(38.2
)
(49.1
)
Other income and (expense)
0.1
(1.2
)
2.5
1.3
Income (loss) before income taxes
499.5
(418.6
)
1,041.3
(67.0
)
Income tax (benefit) expense
39.7
38.8
(6.4
)
141.3
Net income (loss)
$
459.8
$
(457.4
)
$
1,047.7
$
(208.3
)
Earnings (loss) per common share
Basic
$
2.05
$
(2.05
)
$
4.68
$
(0.94
)
Diluted
$
2.04
$
(2.05
)
$
4.64
$
(0.94
)
Shares used in computing earnings (loss)
per common share
Basic
224.2
222.6
224.0
222.3
Diluted
225.6
222.6
225.7
222.3
ALEXION PHARMACEUTICALS,
INC.
TABLE 2: RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL RESULTS
(in millions, except per share
amounts)
(unaudited)
Three months ended
Six months ended
June 30
June 30
2019
2018
2019
2018
GAAP net income (loss)
$
459.8
$
(457.4
)
$
1,047.7
$
(208.3
)
Before tax adjustments:
Cost of sales:
Share-based compensation
3.5
5.5
7.3
8.8
Restructuring related expenses (1)
—
0.5
—
5.8
Research and development expense:
Share-based compensation
13.9
15.1
29.2
30.0
Upfront payments related to licenses and
collaborations (2)
25.0
—
46.2
—
Restructuring related expenses (1)
—
—
—
0.1
Selling, general and administrative
expense:
Share-based compensation
43.5
33.3
81.2
66.4
Restructuring related expenses (1)
—
6.5
—
10.1
Litigation charges(3)
—
7.1
0.1
7.1
Acquired in-process research and
development (4)
(4.1
)
803.7
(4.1
)
803.7
Amortization of purchased intangible
assets
80.1
80.1
160.1
160.1
Change in fair value of contingent
consideration (5)
6.1
4.7
(22.6
)
57.4
Restructuring expenses (1)
2.5
10.6
11.6
16.1
Investment income:
Change in value of strategic equity
investments (6)
25.2
—
(8.6
)
(100.8
)
Other income:
Restructuring related expenses (1)
—
—
—
(0.1
)
Adjustments to income tax (benefit)
expense (7)
(50.5
)
(38.3
)
(197.5
)
(4.4
)
Non-GAAP net income
$
605.0
$
471.4
$
1,150.6
$
852.0
GAAP earnings (loss) per common share -
diluted
$
2.04
$
(2.05
)
$
4.64
$
(0.94
)
Non-GAAP earnings per common share -
diluted
$
2.64
$
2.07
$
5.04
$
3.76
Shares used in computing diluted earnings
(loss) per common share (GAAP)
225.6
222.6
225.7
222.3
Shares used in computing diluted earnings
per common share (non- GAAP)
228.9
227.2
228.5
226.8
(1)
The following table summarizes the total
restructuring and related expenses recorded by type of activity and
the classification within the Reconciliation of GAAP to non-GAAP
Financial Results:
Three months ended June
30,
Three months ended June
30,
2019
2018
Employee Separation
Costs
Asset- Related Charges
Other
Total
Employee Separation
Costs
Asset- Related Charges
Other
Total
Cost of sales
$
—
$
—
$
—
$
—
$
—
$
0.5
$
—
$
0.5
Research and development
—
—
—
—
—
—
—
—
Selling, general and administrative
—
—
—
—
—
6.5
—
6.5
Restructuring expense
2.4
—
0.1
2.5
3.1
—
7.5
10.6
Other (income) expense
—
—
—
—
—
—
—
—
$
2.4
$
—
$
0.1
$
2.5
$
3.1
$
7.0
$
7.5
$
17.6
Six months ended June
30,
Six months ended June
30,
2019
2018
Employee Separation
Costs
Asset- Related Charges
Other
Total
Employee Separation
Costs
Asset- Related Charges
Other
Total
Cost of sales
$
—
$
—
$
—
$
—
$
—
$
5.8
$
—
$
5.8
Research and development
—
—
—
—
—
0.1
—
0.1
Selling, general and administrative
—
—
—
—
—
10.1
—
10.1
Restructuring expense
11.5
—
0.1
11.6
4.1
—
12.0
16.1
Other (income) expense
—
—
—
—
—
—
(0.1
)
(0.1
)
$
11.5
$
—
$
0.1
$
11.6
$
4.1
$
16.0
$
11.9
$
32.0
(2)
During the three months ended June 30,
2019, we recorded an upfront license payment of $25.0 million in
connection with an agreement that we entered into with Affibody AB
(Affibody). During the six months ended June 30, 2019, we recorded
upfront license payments of $25.0 million and $21.2 million in
connection with agreements that we entered into with Affibody and
Zealand Pharma A/S, respectively.
(3)
During the second quarter of 2018, we
recorded $7.1 million in litigation charges in connection with
ongoing investigations.
(4)
In connection with the agreement of the
final working capital adjustment for the Syntimmune acquisition, we
recognized a benefit of $4.1 million associated with previously
acquired in-process research and development in the second quarter
of 2019. During the second quarter of 2018, we completed the
acquisition of Wilson Therapeutics AB. The acquisition was
accounted for as an asset acquisition, as substantially all of the
fair value of the gross assets acquired is concentrated in a single
asset, WTX101, an early Phase III development asset. The value of
the acquired in-process research and development asset related to
WTX101 was expensed during the three and six months ended June 30,
2018 due to the stage of development of this asset.
(5)
For the three months ended June 30, 2019
and 2018, changes in the fair value of contingent consideration
expense reflect the interest component of contingent consideration
related to the passage of time. Changes in the fair value of
contingent consideration expense for the six months ended June 30,
2019 and 2018 include the impact of changes in the expected timing
and probability of achieving contingent milestones, in addition to
the interest component related to the passage of time.
(6)
During the three and six months ended June
30, 2019, we recognized an unrealized (loss) gain of $(25.2)
million and $8.6 million, respectively, in investment income to
adjust our strategic equity investments to fair value. The six
months ended June 30, 2018 included the recognition of an
unrealized gain of $100.8 million on our investment in Moderna
Therapeutics, Inc. following the completion of a new round of
equity financing in the first quarter 2018.
(7)
Alexion's non-GAAP income tax expense for
the three and six months ended June 30, 2019 and 2018 excludes
the tax effect of pre-tax adjustments to GAAP profit.
Non-GAAP income tax expense for the six months ended June 30,
2019 also excludes certain one-time tax benefits of $95.7 million
and $30.3 million associated with a tax election made with respect
to intellectual property of Wilson Therapeutics AB and a release of
an existing valuation allowance, respectively. Non-GAAP
income tax expense for the six months ended June 30, 2018 also
excludes adjustments to provisional estimates of the impact of Tax
Cuts and Jobs Act we recorded in fourth quarter 2017.
ALEXION PHARMACEUTICALS,
INC.
TABLE 3: RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL GUIDANCE
(in millions, except per share
amounts and percentages)
(unaudited)
Twelve months ending
December 31, 2019
Low
High
GAAP net income
$
1,842
$
1,904
Before tax adjustments:
Share-based compensation
256
239
Upfront payments related to licenses and
collaborations
46
46
Acquired in-process research and
development
(4
)
(4
)
Amortization of purchased intangible
assets
320
320
Change in fair value of contingent
consideration
(15
)
(15
)
Restructuring expenses
25
20
Change in value of strategic equity
investments
(9
)
(9
)
Adjustments to income tax expense
(252
)
(246
)
Non-GAAP net income
$
2,210
$
2,256
Diluted GAAP earnings per common share
$
8.13
$
8.41
Diluted non-GAAP earnings per common
share
$
9.65
$
9.85
Operating expense and margin (% total
revenues)
GAAP research and development expense
19
%
17
%
Share-based compensation
2
%
2
%
Upfront payments related to licenses and
collaborations
1
%
1
%
Non-GAAP research and development
expense
16
%
14
%
GAAP selling, general and administrative
expense
24
%
23
%
Share-based compensation
3
%
3
%
Non-GAAP selling, general and
administrative expense
21
%
20
%
GAAP operating margin
42
%
43
%
Share-based compensation
5
%
5
%
Upfront payments related to licenses and
collaborations
1
%
1
%
Acquired in-process research and
development
0
%
0
%
Amortization of purchased intangible
assets
7
%
7
%
Change in fair value of contingent
consideration
0
%
0
%
Restructuring expenses
1
%
0
%
Non-GAAP operating margin
55
%
56
%
Income tax expense (% of income before
income taxes)
GAAP income tax expense
7
%
6
%
Tax effect of pre-tax adjustments to GAAP
net income and other one-time items associated with intellectual
property
8
%
8
%
Non-GAAP income tax expense
15
%
14
%
Amounts may not foot due to rounding.
ALEXION PHARMACEUTICALS,
INC.
TABLE 4: NET PRODUCT SALES BY
GEOGRAPHY
(in millions)
(unaudited)
Three months ended
Six months ended
June 30
June 30
2019
2018
2019
2018
SOLIRIS
United States
$
496.3
$
395.8
$
960.0
$
731.8
Europe
280.2
253.4
544.7
504.2
Asia Pacific
110.3
93.6
211.2
179.1
Rest of World
94.0
155.4
226.9
283.2
Total Soliris
$
980.8
$
898.2
$
1,942.8
$
1,698.3
ULTOMIRIS
United States
$
54.2
$
—
$
78.8
$
—
Europe
—
—
—
—
Asia Pacific
—
—
—
—
Rest of World
—
—
—
—
Total Ultomiris
$
54.2
$
—
$
78.8
$
—
STRENSIQ
United States
$
106.2
$
99.9
$
205.7
$
189.1
Europe
19.5
16.4
37.0
30.4
Asia Pacific
12.1
6.3
22.0
12.0
Rest of World
3.5
2.5
6.7
4.3
Total Strensiq
$
141.3
$
125.1
$
271.4
$
235.8
KANUMA
United States
$
15.3
$
13.0
$
29.1
$
24.9
Europe
6.8
5.8
13.1
11.7
Asia Pacific
1.3
1.1
2.1
2.1
Rest of World
2.8
1.5
5.4
2.3
Total Kanuma
$
26.2
$
21.4
$
49.7
$
41.0
Net Product Sales
United States
$
672.0
$
508.7
$
1,273.6
$
945.8
Europe
306.5
275.6
594.8
546.3
Asia Pacific
123.7
101.0
235.3
193.2
Rest of World
100.3
159.4
239.0
289.8
Total Net Product Sales
$
1,202.5
$
1,044.7
$
2,342.7
$
1,975.1
ALEXION PHARMACEUTICALS,
INC.
TABLE 5: CONDENSED
CONSOLIDATED BALANCE SHEETS
(in millions)
(unaudited)
June 30
December 31
2019
2018
Cash and cash equivalents
$
1,984.2
$
1,365.5
Marketable securities
105.4
198.3
Trade accounts receivable, net
1,123.6
922.3
Inventories
494.6
472.5
Prepaid expenses and other current assets
(1)
460.7
426.4
Property, plant and equipment, net (1)
1,123.5
1,471.5
Intangible assets, net
3,487.6
3,641.3
Goodwill
5,037.4
5,037.4
Right of use operating assets (1)
209.5
—
Other assets
541.2
396.7
Total assets
$
14,567.7
$
13,931.9
Accounts payable and accrued expenses
$
728.7
$
698.2
Revolving credit facility
—
250.0
Current portion of long-term debt
126.6
93.8
Current portion of contingent
consideration
100.0
97.6
Other current liabilities (1)
76.2
34.4
Long-term debt, less current portion
2,438.3
2,501.7
Contingent consideration
158.2
183.2
Facility lease obligations (1)
—
361.0
Deferred tax liabilities
341.2
391.1
Noncurrent operating lease liabilities
(1)
165.5
—
Other liabilities (1)
269.5
155.6
Total liabilities
4,404.2
4,766.6
Total stockholders' equity (1)
10,163.5
9,165.3
Total liabilities and stockholders'
equity
$
14,567.7
$
13,931.9
(1)
In February 2016, the Financial Accounting
Standards Board issued a new standard that requires lessees to
recognize leases on-balance sheet. We adopted the new standard on
January 1, 2019 using the modified retrospective approach. The June
30, 2019 condensed consolidated balance sheet is presented under
the new standard, while the December 31, 2018 condensed
consolidated balance sheet is not adjusted and continues to be
reported under the accounting standards in effect for that period.
Upon adoption of the new lease standard, we derecognized $472.8
million of property, plant and equipment and other assets and
$372.2 million of facility lease obligations associated with
previously existing build-to-suit arrangements which resulted in a
decrease of $90.3 million to retained earnings, net of tax. In
addition, we capitalized $326.1 million and $255.3 million of right
of use assets and lease liabilities, respectively, within our
condensed consolidated balance sheet upon adoption.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190724005146/en/
Alexion: Media Megan
Goulart, 857-338-8634 Senior Director, Corporate Communications
Investors Susan Altschuller, Ph.D., 857-338-8788 Vice
President, Investor Relations
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