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Alexion Reports Third Quarter 2013 Results

  Alexion Reports Third Quarter 2013 Results

Soliris® (eculizumab) Net Product Sales Increased 36 Percent to $400.4 million

                    Steady Soliris Growth in PNH Worldwide

      aHUS Launch Progresses in US and Europe; Japan Launch Begins in Q4

          Guidance Revised Upward for 2013 Revenues and Non-GAAP EPS

 Strong Progress in Pipeline Programs, cPMP Replacement Therapy Receives FDA
                       Breakthrough Therapy Designation

Third Quarter 2013 Financial Highlights:

  *Q3 2013 net product sales increased 36 percent to $400.4 million, compared
    to $294.1 million in Q3 2012.
  *Q3 2013 GAAP net income increased to $93.8 million, or $0.47 per share,
    compared to net income of $92.2 million, or $0.46 per share, in Q3 2012.
    Q3 2013 GAAP EPS included a decrease of $0.10 per share related to
    expenses from both a license agreement and a litigation settlement. Q3
    2012 GAAP EPS included an increase of $0.13 per share related to the net
    effect of an intellectual property settlement and an impairment loss.
  *Q3 2013 non-GAAP net income increased 39 percent to $167.9 million, or
    $0.83 per share, compared to Q3 2012 non-GAAP net income of $120.7
    million, or $0.60 per share.

Business Wire

CHESHIRE, Conn. -- October 24, 2013

Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) today announced financial results
for the three and nine months ended September 30, 2013. The Company reported
net product sales of Soliris^® (eculizumab) of $400.4 million in the third
quarter of 2013, an increase of 36 percent from the same period in 2012.

Revenue performance for the quarter reflected steady additions of new patients
with paroxysmal nocturnal hemoglobinuria (PNH) globally, and an increasing
number of new patients with atypical hemolytic uremic syndrome (aHUS)
commencing Soliris treatment in the US and Europe.

“In the third quarter, we continued our strong and ongoing global performance
with Soliris in PNH and were pleased to provide Soliris to a steadily growing
number of new patients with aHUS in the United States as well as an increasing
number of patients with aHUS in Europe. In addition, we were pleased to
receive our aHUS approval in Japan,” said Leonard Bell, M.D., Chief Executive
Officer of Alexion. “Key pipeline initiatives, including our asfotase alfa
program in HPP, our Soliris programs in kidney transplant and our cPMP
replacement therapy program, reached new milestones in Q3. In Q4, we are
further expanding our commercial and clinical initiatives as we prepare for
further growth in 2014.”

Third Quarter 2013 Financial Results: 
Alexion's non-GAAP operating results are GAAP operating results adjusted for
the impact of certain items described below. A full reconciliation of GAAP to
non-GAAP financial results is included later in this press release.

Third Quarter 2013 Non-GAAP Financial Results:
The Company reported non-GAAP net income of $167.9 million, or $0.83 per
share, in the third quarter of 2013, compared to non-GAAP net income of $120.7
million, or $0.60 per share, in the third quarter of 2012.

Alexion's non-GAAP operating expenses for Q3 2013 were $178.8 million,
compared to $130.9 million for Q3 2012. Non-GAAP research and development
(R&D) expenses for Q3 2013 were $68.9 million, compared to $50.6 million for
Q3 2012. Non-GAAP selling, general and administrative (SG&A) expenses for Q3
2013 were $109.9 million, compared to $80.3 million for Q3 2012.

Third Quarter 2013 GAAP Financial Results:
Alexion reported GAAP net income of $93.8 million, or $0.47 per share, in the
third quarter of 2013, compared to GAAP net income of $92.2 million, or $0.46
per share, in the third quarter of 2012.

Q3 2013 GAAP results included a decrease of $20.7 million, or $0.10 per share,
related to expenses from both a license agreement and a litigation settlement.
Q3 2012 GAAP results included an increase of $27.1 million, or $0.13 per
share, related to the net effect of an intellectual property settlement and an
impairment loss.

On a GAAP basis, operating expenses for Q3 2013 were $213.8 million, compared
to $171.6 million for Q3 2012. GAAP R&D expenses for Q3 2013 were $88.2
million, compared to $54.3 million for Q3 2012. GAAP SG&A expenses were $122.9
million for Q3 2013, compared to $90.0 million for Q3 2012.

Balance Sheet:
As of September 30, 2013, the Company had $1.30 billion in cash, cash
equivalents and marketable securities compared to $1.12 billion at June 30,
2013.

Research and Development Progress:

Alexion currently has development programs underway with its five highly
innovative therapeutic candidates: eculizumab (Soliris) and four additional
novel therapeutic candidates that have the potential to become first-in-class
therapies for patients with severe and ultra-rare disorders.

Ultra-Rare Disease Programs With Eculizumab

  *Neurology: Neuromyelitis Optica (NMO) – Alexion will commence a single,
    multinational, placebo-controlled, registration trial in relapsing NMO.
  *Neurology: Myasthenia Gravis (MG) – Alexion will commence a single,
    multinational, placebo-controlled, registration trial in severe,
    refractory MG.
  *Transplant: Antibody-Mediated Rejection (AMR) – During the quarter,
    researchers presented preliminary data from the Company-sponsored,
    multinational deceased-donor kidney transplant trial in patients at
    elevated risk of AMR. Enrollment in the Company-sponsored, multinational
    living-donor kidney transplant trial in patients at elevated risk of AMR
    is ongoing.
  *Transplant: Delayed Graft Function (DGF) – Based on recent regulatory
    discussions, Alexion now plans to conduct a single multinational,
    placeo-controlled, registration trial in patients at risk for DGF.
  *Nephrology: STEC-HUS – The Company continues to analyze longer-term
    control clinical outcome data from an epidemiologic study in approximately
    400 STEC-HUS patients who received only best supportive care during the
    earlier German epidemic.

Ultra-Rare Disease Programs with Additional Highly Innovative Therapeutics

  *Asfotase Alfa: Alexion is  developing asfotase alfa as a treatment for
    pediatric-onset hypophosphatasia (HPP), an ultra-rare, inherited and
    life-threatening metabolic disease. During the quarter, researchers
    presented data from the ongoing study of asfotase alfa in infants and
    young children with HPP. The Company completed its initial analysis of its
    natural history study in infants with HPP. The Company received
    Breakthrough Therapy designation for asfotase alfa in pediatric-onset HPP
    in Q2 2013.

  *cPMP Replacement Therapy (ALXN 1101): Alexion is developing cPMP as a
    treatment for patients with Molybdenum Cofactor Deficiency (MoCD) Type A,
    a severe, ultra-rare and genetic metabolic disorder that causes
    catastrophic and irreversible neurologic damage within the first few weeks
    of life. Alexion has initiated a natural history study in patients with
    MoCD Type A and has also completed dosing with the synthetic cPMP in a
    study in healthy volunteers. The Company received Breakthrough Therapy
    designation for cPMP replacement therapy for patients with MoCD Type A, as
    announced earlier today.

  *ALXN1007: Alexion has commenced a multi-dose Phase I clinical study of
    ALXN1007, a novel anti-inflammatory antibody, in healthy volunteers. The
    Company is preparing to commence a multi-dose Phase II proof-of-concept
    study of ALXN1007.
  *ALXN1102/1103: Enrollment continues in a Phase I study to characterize the
    mechanism of action and develop initial safety data for ALXN1102 and
    ALXN1103, different formulations of one of Alexion's novel complement
    inhibitors.

2013 Financial Guidance:

Alexion today announced that it is raising its 2013 revenue guidance from the
previous range of $1.520 to $1.530 billion, now to the higher and narrower
range of $1.535 to $1.540 billion. The upward revision reflects continued
global growth of Soliris in PNH and growth from the ongoing launch of Soliris
in aHUS. Guidance for 2013 non-GAAP EPS is also being revised upward, from the
previous range of $2.97 to $3.02, now to the higher and narrower range of
$3.02 to $3.04, based on a forecast of approximately 203 million diluted
shares outstanding. Guidance for R&D is being narrowed from the previous range
of $275 to $285 million now to $280 to $285 million. SG&A is also being
narrowed from the previous range of $435 to $445 million now to $440 to $445
million.

Other items of 2013 guidance provided in the Company's press release of July
25, 2013 are being reiterated today. The Company’s non-GAAP effective tax
rate, reported on a cash tax liability basis, is expected to be 6 to 8
percent. The Company’s GAAP effective tax rate is expected to be in the range
of 29 to 31 percent. The Company's share-based compensation expense for the
year is expected to be $76 to $78 million. Cost of sales is expected to be
approximately 10 percent of net product sales. The Company’s GAAP effective
tax rate is expected to be in the range of 29 to 31 percent.

Conference Call/Webcast Information:

Alexion will host a conference call/audio webcast to discuss matters mentioned
in this release. The call is scheduled for today, October 24, at 10:00 a.m.,
Eastern Time. To participate in this call, dial 800-289-0438 (USA) or
913-312-0706 (International), passcode 3882932, shortly before 10:00 a.m.,
Eastern Time. A replay of the call will be available for a limited period
following the call, beginning at 1:00 PM, Eastern Time. The replay number is
888-203-1112 (USA) or 719-457-0820 (International), passcode 3882932. The
audio webcast can be accessed at www.alexionpharma.com.

About Soliris:

Soliris is a first-in-class terminal complement inhibitor developed from the
laboratory through regulatory approval and commercialization by Alexion.
Soliris is approved in the US, European Union, Japan and other countries as
the first and only treatment for patients with paroxysmal nocturnal
hemoglobinuria (PNH), a debilitating, ultra-rare and life-threatening blood
disorder, characterized by complement-mediated hemolysis (destruction of red
blood cells). Soliris is indicated to reduce hemolysis. Soliris is also
approved in the US, European Union, and Japan as the first and only treatment
for patients with atypical hemolytic uremic syndrome (aHUS), a debilitating,
ultra-rare and life-threatening genetic disorder characterized by
complement-mediated thrombotic microangiopathy, or TMA (blood clots in small
vessels). Soliris is indicated to inhibit complement-mediated TMA. The
effectiveness of Soliris in aHUS is based on the effects on TMA and renal
function. Prospective clinical trials in additional patients are ongoing to
confirm the benefit of Soliris in patients with aHUS. Soliris is not indicated
for the treatment of patients with Shiga toxin E. coli related hemolytic
uremic syndrome (STEC-HUS). For the breakthrough innovation in complement
inhibition, Alexion and Soliris have received the pharmaceutical industry's
highest honors: the 2008 Prix Galien USA Award for Best Biotechnology Product
with broad implications for future biomedical research and the 2009 Prix
Galien France Award in the category of Drugs for Rare Diseases. More
information including the full prescribing information on Soliris is available
at www.soliris.net.

About Alexion:

Alexion Pharmaceuticals, Inc. is a biopharmaceutical company focused on
serving patients with severe and ultra-rare disorders through the innovation,
development and commercialization of life-transforming therapeutic products.
Alexion is the global leader in complement inhibition and has developed and
markets Soliris® (eculizumab) as a treatment for patients with PNH and aHUS,
two debilitating, ultra-rare and life-threatening disorders caused by chronic
uncontrolled complement activation. Soliris is currently approved in nearly 50
countries for the treatment of PNH, and in the United States, European Union,
Japan and other countries for the treatment of aHUS. Alexion is evaluating
other potential indications for Soliris in additional severe and ultra-rare
disorders beyond PNH and aHUS, and is developing other highly innovative
biotechnology product candidates across multiple therapeutic areas. This press
release and further information about Alexion Pharmaceuticals, Inc. can be
found at: www.alexionpharma.com.

[ALXN-E]

This news release contains forward-looking statements, including statements
related to guidance regarding anticipated financial results for 2013,
assessment of the Company's financial position and commercialization efforts,
medical benefits and commercial potential for Soliris for PNH and aHUS and
other potential indications, medical and commercial potential of Alexion's
complement-inhibition technology and other technologies, and plans for
clinical programs for each of our product candidates. Forward-looking
statements are subject to factors that may cause Alexion's results and plans
to differ from those expected, including for example, decisions of regulatory
authorities regarding marketing approval or material limitations on the
marketing of Soliris for PNH and aHUS and other potential indications, delays,
interruptions or failures in the manufacture and supply of Soliris and our
product candidates, progress in establishing and developing commercial
infrastructure, failure to satisfactorily address the issues raised by the FDA
in the Warning Letter received by Alexion in March 2013, the possibility that
results of clinical trials are not predictive of safety and efficacy results
of Soliris in broader patient populations in the disease studied or other
diseases, the risk that acquisitions will not result in short-term or
long-term benefits, the possibility that current results of commercialization
are not predictive of future rates of adoption of Soliris in PNH, aHUS or
other diseases, the possibility that clinical trials of our product candidates
could be delayed or that additional research and testing is required by
regulatory agencies, the risk that third party payors (including governmental
agencies) will not reimburse or continue to reimburse for the use of Soliris
at acceptable rates or at all, the risk that estimates regarding the number of
patients with PNH, aHUS or other diseases are inaccurate, and a variety of
other risks set forth from time to time in Alexion's filings with the US
Securities and Exchange Commission, including but not limited to the risks
discussed in Alexion's Quarterly Report on Form 10-Q for the period ended June
30, 2013 and in our other filings with the US Securities and Exchange
Commission. Alexion does not intend 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
news 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: share-based compensation expense,
acquisition-related costs, amortization of purchased intangible assets,
intellectual property settlements, upfront and milestone payments related to
license and collaboration agreements, intangible asset impairments, non-cash
taxes, and taxes related to acquisition structuring. 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 Reconciliation of GAAP
to Non-GAAP Net Income for explanations of the amounts adjusted to arrive at
non-GAAP net income and non-GAAP earnings per share amounts for the three and
nine month periods ended September 30, 2013 and 2012.

                                                                    
ALEXION PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
                                                                             
                        Three months ended                Nine months ended
                        September 30                      September 30
                          2013           2012           2013             2012    
                                                                             
Net product sales       $ 400,405       $ 294,136       $ 1,109,437       $ 813,588
                                                                             
Cost of sales:
Cost of sales              42,177           33,186           116,823            93,067
Change in
contingent
liability from             9,181            (53,377 )        9,181              (53,377 )
intellectual
property
settlements
                                                                          
Total cost of sales       51,358         (20,191 )       126,004          39,690  
                                                                             
Operating expenses:
Research and               88,209           54,280           231,308            159,323
development
Selling, general           122,886          89,957           354,901            272,054
and administrative
Acquisition-related        2,573            967              6,974              19,447
costs
Impairment of              -                26,300           -                  26,300
intangible asset
Amortization of
purchased                  104              104              312                312
intangible assets
                                                                          
Total operating           213,772        171,608        593,495          477,436 
expenses
                                                                             
Operating income           135,275          142,719          389,938            296,462
                                                                             
Other income and          (987    )       (1,954  )       (1,646    )       (6,165  )
expense
                                                                             
Income before              134,288          140,765          388,292            290,297
income taxes
                                                                             
Income tax                 40,503           48,586           116,405            116,446
provision
                                                                          
Net Income              $  93,785       $  92,179       $  271,887        $  173,851 
                                                                             
Earnings per common
share
Basic                   $  0.48         $  0.48         $  1.40           $  0.92    
Diluted                 $  0.47         $  0.46         $  1.37           $  0.88    
                                                                             
Shares used in
computing earnings
per common share
Basic                     195,662        193,353        194,520          189,219 
Diluted                   199,711        201,142        198,655          197,635 
                                                                             

                                                                 
ALEXION PHARMACEUTICALS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(in thousands, except per share amounts)
(unaudited)
                                                          
                            Three months ended            Nine months ended
                            September 30                  September 30
                             2013        2012          2013        2012    
                                                                        
Net income
reconciliation:
GAAP net income             $ 93,785      $ 92,179        $ 271,887     $ 173,851
                                                                        
Share-based                   21,597        14,015          56,409        40,322
compensation expense
Acquisition-related           2,573         967             6,974         19,447
costs (1)
Amortization of
purchased intangible          104           104             312           312
assets
Change in contingent
liability from                9,181         (53,377 )       9,181         (53,377 )
intellectual property
settlements (2)
Upfront and milestone
payments related to
license and                   11,500        -               14,500        -
collaboration
agreements (3)
Impairment of                 -             26,300          -             26,300
intangible asset (4)
Non-cash taxes (5)            29,173        40,550          87,194        74,207
Tax related to
acquisition structuring       -             -               -             21,812
(6)
                                                                     
Non-GAAP net income         $ 167,913    $ 120,738      $ 446,457    $ 302,874 
                                                                        
GAAP earnings per share     $ 0.47       $ 0.46         $ 1.37       $ 0.88    
- diluted
Non-GAAP earnings per       $ 0.83       $ 0.60         $ 2.21       $ 1.52    
share - diluted
                                                                        
Shares used in
computing diluted            199,711     201,142       198,655     197,635 
earnings per share
(GAAP)
Shares used in
computing diluted            202,988     202,377       201,886     198,953 
earnings per share
(non-GAAP)
                                                                        
Cost of sales
reconciliation:
GAAP cost of sales          $ 51,358      $ (20,191 )     $ 126,004     $ 39,690
Share-based                   (757    )     (664    )       (2,349  )     (1,939  )
compensation expense
Change in contingent
liability from               (9,181  )    53,377        (9,181  )    53,377  
intellectual property
settlements (2)
Non-GAAP cost of sales      $ 41,420     $ 32,522       $ 114,474    $ 91,128  
                                                                        
Research and
development
reconciliation:
GAAP research and           $ 88,209      $ 54,280        $ 231,308     $ 159,323
development
Share-based                   (7,803  )     (3,643  )       (17,961 )     (10,373 )
compensation expense
Upfront and milestone
payments related to
license and                  (11,500 )    -             (14,500 )    -       
collaboration
agreements (3)
Non-GAAP research and       $ 68,906     $ 50,637       $ 198,847    $ 148,950 
development
                                                                        
Selling, general and
administrative
reconciliation:
GAAP selling, general       $ 122,886     $ 89,957        $ 354,901     $ 272,054
and administrative
Share-based                  (13,037 )    (9,708  )      (36,099 )    (28,010 )
compensation expense
Non-GAAP selling,
general and                 $ 109,849    $ 80,249       $ 318,802    $ 244,044 
administrative
                                                                        
Income tax provision
reconciliation:
GAAP income tax             $ 40,503      $ 48,586        $ 116,405     $ 116,446
provision
Non-cash taxes (5)            (29,173 )     (40,550 )       (87,194 )     (74,207 )
Tax related to
acquisition structuring      -           -             -           (21,812 )
(6)
Non-GAAP income tax         $ 11,330     $ 8,036        $ 29,211     $ 20,427  
provision
                                                                        
(1) The following
table summarizes
acquisition-related
costs:
                            Three months ended            Nine months ended
                            September 30                  September 30
                             2013        2012          2013        2012    
Acquisition-related
costs:
Separately-identifiable     $ -           $ 457           $ 248         $ 3,552
employee costs
Professional fees             -             1,052           775           11,562
Changes in fair value
of contingent                2,573       (542    )      5,951       4,333   
consideration
                            $ 2,573      $ 967          $ 6,974      $ 19,447  
                                                                        

      In October 2013, the Company entered into a litigation settlement and
(2)  license agreement, which resulted in an increase of $9.2 million in cost
      of sales.
      
      In October 2012, the Company entered into an intellectual property
      settlement and license agreement, which resulted in a decrease of $53.4
      million in cost of sales.

      In July 2013, the Company entered into a license and collaboration
      agreement for the identification, development, and commercialization of
(3)   therapeutic candidates based on specific drug targets. Under the terms
      of the agreement, the Company recorded research and development expense
      for an upfront payment of $11.5 million.

      In January 2013, the Company entered into a license agreement for
      specific targets and products to be developed. Under the terms of the
      agreement, the Company recorded research and development expense for an
      upfront payment of $3.0 million.

      During the three months ended September 30, 2012, the Company recorded
(4)   an impairment of an intangible asset of $26.3 million related to a
      preclinical program.

      Non-cash taxes represents the adjustment from GAAP tax expense to the
(5)   amount of taxes that are payable in cash. The adjustment includes tax
      amounts that are not currently payable in cash due to the continued
      utilization of our US net operating losses and credits.

      The tax provision for the nine months ended September 30, 2012 includes
(6)   tax expense of $21.8 million related to the structuring of the Enobia
      acquisition.
      

                                                            
ALEXION PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
                                                                  
                                                September 30,     December 31,
                                                2013              2012
Cash and cash equivalents                       $  910,411        $  989,501
Marketable securities                              392,344           -
Trade accounts receivable, net                     404,956           295,598
Inventories                                        105,196           94,521
Deferred tax assets, current                       23,820            26,086
Other current assets                               78,775            89,894
Property, plant and equipment, net                 178,842           165,629
Deferred tax assets, noncurrent                    9,743             13,954
Intangible assets, net                             646,138           646,678
Goodwill                                           254,073           253,645
Other noncurrent assets                           45,497           38,054
Total assets                                    $  3,049,795      $  2,613,560
                                                                  
Accounts payable and accrued expenses           $  280,200        $  271,275
Current portion of long-term debt                  48,000            48,000
Other current liabilities                          67,256            40,814
Long-term debt, less current portion               77,000            101,000
Contingent consideration                           144,621           139,002
Other noncurrent liabilities                      77,952           42,619
Total liabilities                                 695,029          642,710
                                                                  
Total stockholders' equity                        2,354,766        1,970,850
Total liabilities and stockholders'             $  3,049,795      $  2,613,560
equity
                                                                  

Contact:

Alexion Pharmaceuticals, Inc.
Irving Adler, 203-271-8210
Executive Director, Corporate Communications
or
Kim Diamond, 203-439-9600
Senior Director, Corporate Communications
or
Investors
Rx Communications
Rhonda Chiger, 917-322-2569
 
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