Alexion Pharmaceuticals’ ALXN first-quarter 2015 earnings (including stock-based compensation expense) of $1.07 per share missed the Zacks Consensus Estimate of $1.18. Earnings were below the year-ago figure of $1.41 per share.
Including one-time items, Alexion’s earnings fell to 45 cents per share in the reported quarter from 79 cents per share in the year-ago quarter. Earnings were affected by expenses related to the Strensiq manufacturing campaign and three strategic license agreements.
Alexion’s net product sales climbed 6% year over year in the first quarter to $600.3 million. First-quarter 2014 revenues included reimbursement of $87.8 million from shipments in prior years related to an agreement with the French government, excluding which net product sales increased approximately 25% in the reported quarter. We note that all of Alexion’s revenues are generated from Soliris sales. Net product sales surpassed the Zacks Consensus Estimate of $592 million.
Quarterly Details
Soliris sales were driven by additions of new patients in both the approved indications – paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS).
Operating expenses (excluding stock-based compensation expense and upfront and milestone payments related to license and collaboration deals and other special items) increased 29.8% to $254.3 million in the quarter. The increase was due to a rise in research and development (R&D) expenses (19.6% higher) and selling, general and administrative (SG&A) expenses (37.2% higher).
2015 Outlook Maintained
Alexion maintained its guidance for 2015. The company continues to expect net product sales in the range of $2.55–$2.6 billion. The guidance includes a negative foreign exchange translation impact of approximately 6% ($160 million). The (pre earnings) Zacks Consensus Estimate of $2.6 billion is on the high end of the guided range.
The company expects R&D costs (excluding stock-based compensation expense) for 2015 in the range of $440–$470 million. Selling, general and administrative costs (excluding stock-based compensation expense) in 2015 are expected in the range of $620–$650 million. The company expects adjusted earnings for 2015 in the range of $5.60–$5.80 per share. Foreign exchange translations are expected to negatively impact earnings by 35 cents. The (pre earnings) Zacks Consensus Estimate is $5.32 per share.
Our Take
Alexion’s first-quarter results were mixed with the company missing earnings estimates but beating on revenues. We expect growth at Alexion to continue to be driven by strong Soliris sales in the PNH and aHUS indications.
We are also impressed by Alexion’s efforts to develop its pipeline. Alexion is expecting seven product approvals through 2018 including Strensiq. Approval of new products is expected to substantially reduce the company’s dependence on Soliris for growth.
Meanwhile, the company is also working on expanding Soliris’ label into indications such as antibody-mediated rejection, neuromyelitis optica, myasthenia gravis and the prevention of delayed graft function in renal transplant patients.
Alexion currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care space include Biogen Inc. BIIB, AVEO Pharmaceuticals, Inc. AVEO and Horizon Pharma HZNP. All these stocks hold a Zacks Rank #1 (Strong Buy).
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