Alexion (ALXN) Tops Q2 Earnings And Revenues (Revised)

Alexion Pharmaceuticals, Inc.’s (NASDAQ:ALXN) second-quarter 2016 earnings (including stock-based compensation expense) of 93 cents per share surpassed the Zacks Consensus Estimate of 91 cents. Earnings were, however, lower than the year-ago figure of $1.13.

Alexion’s revenues, on the other hand, soared 18.3% year over year to $753 million. The impact of currency headwinds on the top line was 3% ($18 million). The majority of the company’s revenues were generated by Soliris. The top line also surpassed the Zacks Consensus Estimate of $743 million.

Soliris Drives Growth

Soliris sales were up 10.2% to $701 million driven by steady growth in patients for both the approved indications – paroxysmal nocturnal hemoglobinuria and atypical hemolytic uremic syndrome. Sales volumes of Soliris were up 15% year over year.

Strensiq and Kanuma contributed $45 million and $6 million, respectively, to quarterly revenues.

Operating expenses (including stock-based compensation expense, and upfront and milestone payments related to license and collaboration deals, and other special items) were on the rise. Research and development (R&D) expenses were up 36.2%, while selling, general and administrative (SG&A) expenses rose 4.7%.

Outlook

Alexion has reiterated its guidance for total revenue and Soliris sales for 2016. The company continues to expect revenues in the range of $3.05–$3.1 billion, with Soliris contributing in the range of $2.83–$2.87 billion.

The company expects adjusted earnings per share in the range of $4.50–$4.65 (previous projection: at the low end of the $5.00–$5.20 band).

Revenues from the metabolic franchise, comprising Kanuma and Strensiq, are now expected in the range $200–$220 million ($180–$200 million expected previously). The company continues to expect R&D and SG&A expenses to be at the high end of the $650–$680 million band and the $760–$790 million band, respectively.

ALEXION PHARMA Price

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Pipeline Update

The company continues to progress on the candidates in its pipeline. Currently, the company is evaluating Soliris in three phase III studies – REGAIN, for the treatment of refractory generalized myasthenia gravis; PREVENT, for the treatment of relapsing neuromyelitis optica spectrum disorder; and PROTECT, for the treatment of delayed graft function. Results from the PROTECT study are expected in the second half of 2016.

Our Take

Alexion’s second-quarter results were impressive, with the company beating both top- and bottom-line estimates. We expect growth at Alexion to continue being driven by strong sales of Soliris. Launch of new products – Strensiq and Kanuma – should boost revenues and eventually reduce the company’s dependence on Soliris for growth. We are also impressed by Alexion’s efforts to develop its pipeline.

Alexion currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the health care sector include Innoviva, Inc. (NASDAQ:INVA) , Nektar Therapeutics (NASDAQ:NKTR) and ANI Pharmaceuticals, Inc. (NASDAQ:ANIP) , each sporting a Zacks Rank #1 (Strong Buy).

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(We have revised this article to correct a mistake. The previous version, published earlier today, should not be relied upon).