Will Soliris, Ultomiris Drive Alexion's (ALXN) Q4 Earnings?

We expect Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) to surpass estimates when it reports fourth-quarter 2019 results on Jan 30, before market open.

The company’s surprise history has been impressive so far, having delivered an earnings beat in the trailing four quarters by 12.50%, on average. In the last reported quarter, Alexion came up with a positive earnings surprise of 12.05%.

Shares of Alexion have lost 11.7% in the past year compared with the industry’s decline of 4.7%.

Let’s see how things are shaping up for the quarter to be reported.

Factors at Play

Alexion’s complement franchise consists of key growth driver Soliris, which is approved for the treatment of paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS), resulting from chronic uncontrolled activation of the complement component of the immune system.

In August 2019, the European Commission (EC) approved Soliris for the treatment of neuromyelitis optica spectrum disorder (NMOSD) in adult patients, who are anti-aquaporin-4 (AQP4) antibody-positive with a relapsing course of the disease. The company plans to initiate a phase III study in children and adolescents with NMOSD.

Label expansion into additional indications gave Soliris easy access to a higher patient population, which in turn increased its commercial potential significantly. The drug is likely to have performed well and contributed significant revenues in fourth-quarter 2019.

Investors will be keen to know the sales figures of Alexion’s long-acting C5 complement inhibitor, Ultomiris. Notably, the drug generated sales of $89.9 million in the third quarter, leading to sequential growth. We expect sales to have further increased in the fourth quarter. In October 2019, the FDA approved the label expansion of the drug. The drug was approved for the treatment of atypical aHUS to inhibit complement-mediated thrombotic microangiopathy (TMA) in adult and pediatric (aged one month or older) patients.

Under its metabolic franchise, Alexion markets Strensiq for the treatment of patients with pediatric-onset hypophosphatasia (HPP) and Kanuma for addressing lysosomal acid lipase deficiency (LAL-D). These drugs are likely to have performed well in the fourth quarter.

Key Developments in Q4

In October 2019, Alexion announced that it reached a definitive agreement to acquire the clinical-stage biopharmaceutical company, Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) , for $930 million. The transaction is expected to close in the first half of 2020.

In October 2019, Alexion announced a collaboration agreement with Stealth BioTherapeutics Corp. for a late-stage therapy for mitochondrial diseases. Both companies agreed to co-develop and commercialize elamipretide, which is a novel, potential first-in-class therapy that targets mitochondrial dysfunction. The candidate is currently being evaluated in a phase III study in patients with primary mitochondrial myopathy (PMM).

We expect management to provide an update on the deal during the upcoming earnings call as investors will be keen to know the strategic benefits of the acquisition.

Why a Likely Earnings Beat?

Our proven model predicts an earnings beat for Alexion this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Alexion has an Earnings ESP of +5.97% as the Zacks Consensus Estimate is pegged at $2.58 and the Most Accurate Estimate stands at $2.74.

Zacks Rank: It currently has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks That Warrant a Look

Here are a few other healthcare stocks worth considering, as our model shows that these too have the right mix of elements to beat estimates this time around.

Gilead Sciences, Inc. (NASDAQ:GILD) has an Earnings ESP of +4.45% and a Zacks Rank #3. The company is scheduled to release results on Feb 4.

BioDelivery Sciences International, Inc. (NASDAQ:BDSI) has an Earnings ESP of +50.00% and a Zacks Rank of 1. The company is scheduled to release results on Mar 12.

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