Why is Alexion (ALXN) up 9.7% since its last earnings report?

It’s been about a month since Alexion Pharmaceuticals’ (ALXN) last reported earnings. Shares are up about 9.7% in that time, outperforming the S&P 500.

Will the recent positive trend continue into its next earnings release, or is Alexion headed for a pullback? Before we dive into how investors and analysts have reacted recently, let’s take a quick look at the latest earnings report to better understand the important catalysts.

Alexion beats Q4 profit and sales

Alexion reported fourth-quarter 2018 adjusted earnings of $2.14 per share, up 45% from $1.48 in the year-ago quarter. Earnings also exceeded the Zacks Consensus Estimate of $1.83. Net income for the quarter was boosted by strong sales.

Revenues increased 24% year over year to $1.128 billion, surpassing the Zacks Consensus Estimate of $1.060 billion. Revenues were driven by increased sales of Soliris, Strensiq and Kanuma.

Revenues in detail

Soliris (paroxysmal nocturnal hemoglobinuria (“PNH”) and atypical hemolytic uremic syndrome (aHUS)) sales increased 23% to $976.7 million in the reported quarter, driven by strong volume growth. While Strensiq (hypophosphatasia (“HPP”)) contributed $126.1 million in revenue, up 32% year over year, Kanuma (lysosomal acid lipase deficiency (LAL-D)) contributed $25.7 million in quarterly revenue, up 17%.

Summary of the costs

Adjusted research and development (R&D) expenses were $164 million, down 13% year over year.

Adjusted selling, general and administrative (SG&A) expenses were $278 million, an increase of 13.4% year over year.

Full Year 2018 Results

The company reported adjusted earnings of $7.92, up 35% year over year. The company’s revenue was $4.131 billion, up 16% year over year.

Guidelines for 2019

The company expects earnings in the range of $9.10-$9.30 per share. Alexion is forecasting revenues of $4.63 billion-$4.70 billion in 2019. The Zacks Consensus Estimate for 2019 earnings is $8.78 and sales of $4.76 billion.

Soliris and Ultomiris revenues are estimated at $3.97-4.02 billion.

Pipeline update

In January 2019, Alexion announced positive final results from the Phase III Ultomiris study in patients with aHUS who had not previously received a complement inhibitor. The study met its primary objective, as 53.6% of patients achieved a complete thrombotic microangiopathy (TMA) response.

In December 2018, the FDA approved Ultomiris for adults with PNH. Applications for approval in the European Union (EU) and Japan are currently under review. Phase III studies of Ultomiris in children and adolescents with PNH are currently ongoing.

Alexion plans to initiate a proof-of-concept study of Ultomiris in amyotrophic lateral sclerosis (ALS) and a proof-of-concept study in primary progressive multiple sclerosis (PPMS).

Alexion has filed applications in the United States and the EU for Soliris for the treatment of neuromyelitis optica spectrum disorder (NMOSD).

A Phase I study of subcutaneous ALXN1210 co-administered with Halozyme Therapeutics, Inc.’s ENHANZE drug delivery technology, PH20, is ongoing. Pending co-formulation data, this next-generation subcutaneous formulation will be called ALXN1810 and has the potential to further extend the dosing interval to once every two weeks or once a month.

In the fourth quarter of 2018, Alexion acquired Syntimmune. The acquisition added the anti-FcRn antibody ALXN1830 (SYNT001) to the company’s clinical portfolio. ALXN1830 is currently in Phase Ib/IIa development for patients with warm autoimmune hemolytic anemia (WAIHA) and for patients with pemphigus vulgaris (PV) or pemphigus foliaceus (PF).

How have estimates changed since then?

Analysts have been silent over the past two months as none of them revised their earnings estimates.

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