Alexion Reports First Quarter 2014 Results

  Alexion Reports First Quarter 2014 Results

 - Soliris® (eculizumab) Net Product Sales Increased 67 Percent vs. Year-Ago
                          Quarter to $567 Million -

 - Soliris Net Product Sales Increased 41 Percent to $479 Million, Excluding
        $88 Million Related to Reimbursement of Prior Year Shipments -

 - Rolling Submission of U.S. Biologics License Application for Asfotase Alfa
                                 Initiated –

         - NMO and MG Registration Trials with Eculizumab Underway -

      - Enrollment Complete in Living-Donor AMR Trial with Eculizumab -

                 - 2014 Guidance Increased for Non-GAAP EPS -

First Quarter 2014 Financial Highlights:

  *Q1 2014 net product sales increased 67 percent to $566.6 million, compared
    to $338.9 million in Q1 2013. Excluding the impact of $87.8 million for
    reimbursement of prior year shipments, Q1 2014 net product sales increased
    41 percent to $478.8 million.
  *Q1 2014 GAAP EPS increased 93 percent to $0.79 per share from Q1 2013; Q1
    2014 GAAP EPS included $0.31 per share related to reimbursement of prior
    year shipments.
  *Q1 2014 non-GAAP EPS increased 135 percent to $1.53 per share compared to
    Q1 2013; Q1 2014 non-GAAP EPS increased 78 percent to $1.16 per share,
    compared to Q1 2013, excluding $0.37 per share in Q1 2014 related to
    reimbursement of prior year shipments.

Business Wire

CHESHIRE, Conn. -- April 24, 2014

Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) today announced financial results
and a development pipeline update for the three months ended March 31, 2014.
The Company reported net product sales of Soliris^® (eculizumab) of $566.6
million, including reimbursement of prior year shipments related to an
agreement with the French government of $87.8 million, an increase of 67
percent from the same period in 2013. Revenue performance for the quarter also
reflected steady additions of new patients with paroxysmal nocturnal
hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS) commencing
Soliris treatment.

Alexion is now serving patients with PNH and aHUS in nearly 50 countries. Both
PNH and aHUS are severe and life-threatening ultra-rare disorders caused by
chronic uncontrolled complement activation.

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.

First Quarter 2014 Financial Results:

Alexion recorded increased revenue in the first quarter 2014 related to an
agreement with the French government. The Company recorded $87.8 million of
additional net product sales related to reimbursement for product shipments in
prior years under this agreement.

First Quarter 2014 Non-GAAP Financial Results:

The Company reported non-GAAP net income of $312.6 million, or $1.53 per
share, in the first quarter of 2014, compared to non-GAAP net income of $131.3
million, or $0.65 per share, in the first quarter of 2013. Q1 2014 non-GAAP
EPS includes an increase of $0.37 per share related to the reimbursement of
prior year shipments.

Alexion's non-GAAP operating expenses for Q1 2014 were $195.9 million,
compared to $164.4 million for Q1 2013. Non-GAAP research and development
(R&D) expenses for Q1 2014 were $81.5 million, compared to $66.4 million for
Q1 2013. Non-GAAP selling, general and administrative (SG&A) expenses for Q1
2014 were $114.3 million, compared to $97.9 million for Q1 2013.

First Quarter 2014 GAAP Financial Results:

Alexion reported GAAP net income of $159.4 million, or $0.79 per share, in the
first quarter of 2014, compared to GAAP net income of $82.2 million, or $0.41
per share, in the first quarter of 2013. Q1 2014 GAAP EPS includes an increase
of $0.31 per share related to the reimbursement of prior year shipments.

On a GAAP basis, operating expenses for Q1 2014 were $324.2 million, compared
to $186.7 million for Q1 2013. GAAP R&D expenses for Q1 2014 were $191.5
million, compared to $74.5 million for Q1 2013. Q1 2014 GAAP R&D expense
included $100.0 million of expense for an upfront payment on the strategic
agreement with Moderna Therapeutics. GAAP SG&A expenses were $129.3 million
for Q1 2014, compared to $108.8 million for Q1 2013.

Balance Sheet:

As of March 31, 2014, the Company had $1.55 billion in cash and cash
equivalents compared to $1.52 billion at December 31, 2013. During the
quarter, cash flows were impacted by $125.0 million in upfront and equity
payments under the Company’s strategic agreement with Moderna Therapeutics.

“In the first quarter of 2014, we provided Soliris to an increasing number of
patients with PNH worldwide, made important progress in our aHUS operations in
Western Europe and other territories, and continued to execute on key
initiatives to further improve operational and financial efficiencies across
our global operations,” said Leonard Bell, M.D., Chief Executive Officer of
Alexion. “As we performed strongly in our current therapeutic areas in the
quarter, we also progressed toward our next levels of growth as we reached a
number of significant milestones across our pipeline, including the initiation
of the rolling submission for our BLA for our next product, asfotase alfa.
Throughout 2014 we will remain focused on serving more patients with PNH and
aHUS globally while simultaneously advancing our lead development programs as
we drive toward as many as seven additional launches through 2018.”

Research and Development Progress

Alexion has development programs underway with highly innovative therapeutic
candidates that have the potential to become first-in-class therapies for
patients with severe and ultra-rare disorders.

Asfotase Alfa

  *Alexion has initiated the rolling submission of a Biologics License
    Application (BLA) for asfotase alfa, a targeted enzyme replacement therapy
    for the treatment of patients with hypophosphatasia (HPP) and anticipates
    completing the rolling submission in the fall of this year. The Company
    received Breakthrough Therapy designation for asfotase alfa in
    pediatric-onset HPP in 2013. Alexion has completed the analysis of its
    natural history study in infants with HPP and a natural history study in
    juveniles with HPP is ongoing.

Ultra-Rare Disease Programs With Eculizumab

  *Transplant: Antibody-Mediated Rejection (AMR) – Enrollment is complete and
    dosing continues in the Company-sponsored, multinational living-donor
    kidney transplant trial in patients at elevated risk of AMR. Alexion
    continues to enroll patients in the expanded Company-sponsored,
    multinational deceased-donor kidney transplant trial in patients at
    elevated risk of AMR.
  *Transplant: Delayed Graft Function (DGF) – This quarter, the U.S. Food and
    Drug Administration (FDA) granted orphan drug designation to eculizumab
    for the prevention of DGF in renal transplant patients, and the European
    Commission granted orphan drug designation to eculizumab for the
    prevention of DGF after solid organ transplantation. Alexion is planning
    to commence a single, multinational registration trial for the prevention
    of DGF in renal transplant patients.
  *Neurology: Neuromyelitis Optica (NMO) – Alexion has commenced dosing in a
    single, multinational, placebo-controlled, registration trial in relapsing
    NMO.
  *Neurology: Myasthenia Gravis (MG) - Alexion has commenced screening in a
    single, multinational, placebo-controlled, registration trial in severe,
    refractory MG.

Ultra-Rare Disease Programs with Additional Highly Innovative Therapeutics

  *cPMP Replacement Therapy (ALXN 1101): A natural history study in patients
    with molybdenum cofactor deficiency (MoCD) is ongoing and Alexion has
    initiated a synthetic cPMP bridging study. Alexion received Breakthrough
    Therapy designation for its cPMP replacement therapy in 2013, which is
    being developed for patients with MoCD Type A.

  *ALXN1007: Alexion is preparing to commence two Phase 2 proof-of-concept
    studies of ALXN1007, a novel anti-inflammatory antibody, in severe and
    life-threatening ultra-rare disorders.

2014 Financial Guidance

Alexion today announced that the Company is revising upward its guidance for
2014 non-GAAP earnings per share from the previous range of $4.37 to $4.47,
now to the higher range of $4.75 to $4.85 per share. Guidance for cost of
goods sold is being revised downward from approximately 9 percent of net
product sales now to approximately 8 percent of sales. Guidance for 2014 SG&A
expense is being revised downward from the previous range of $560 to $580
million now to the lower range of $550 to $570 million. Guidance for the 2014
non-GAAP tax rate, is being revised downward from 10 to 11 percent to the
lower range of 8 to 9 percent. Guidance for the 2014 GAAP tax rate is being
increased from the previous range of 20 to 22 percent now to the range of 23
to 25 percent. EPS guidance is based on a forecast of approximately 205
million diluted shares outstanding for the year.

Alexion is reiterating its 2014 revenue guidance of $2.15 to $2.17 billion as
provided in the press release issued on March 10, 2014, and is also
reiterating its non-GAAP R&D guidance of $360 to $380 million as provided in
the Company’s press release on January 30, 2014.

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, April 24, at 10:00 a.m.,
Eastern Time. To participate in this call, dial 800-378-1475 (USA) or
719-785-9448 (International), passcode 6226785, 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 p.m., Eastern Time. The replay number is
888-203-1112 (USA) or 719-457-0820 (International), passcode 6226785. 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 U.S. (2007), European Union (2007), Japan (2010)
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 U.S. (2011), the European Union
(2011), Japan (2013) and other countries 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 its effects on TMA and renal
function. Prospective clinical trials in additional patients, the preliminary
results of which were reported at international nephrology and hematology
conferences in 2013, 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 medical 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 U.S. prescribing information on Soliris,
is available at www.soliris.net.

About Alexion

Alexion is a biopharmaceutical company focused on serving patients with severe
and 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 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 2014,
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 U.S.
Securities and Exchange Commission, including but not limited to the risks
discussed in Alexion's Annual Report on Form 10-K for the period ended
December 31, 2013 and in our other filings with the U.S. 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, and
non-cash taxes. 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 month periods ended March 31, 2014 and 2013.


ALEXION PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)

                                               Three months ended
                                                   March 31
                                                   2014          2013
                                                                   
Net product sales                                  $ 566,616       $ 338,941
                                                                   
Cost of sales                                        32,939          35,269
                                                                   
Operating expenses:
Research and development                             191,457         74,536
Selling, general and administrative                  129,291         108,826
Impairment of intangible asset                       3,464           -
Acquisition-related costs                            (38     )       3,234
Amortization of purchased intangible                 -               104
assets
                                                                  
Total operating expenses                            324,174       186,700 
                                                                   
Operating income                                     209,503         116,972
                                                                   
Other income (expense)                              2,408         (231    )
                                                                   
Income before income taxes                           211,911         116,741
                                                                   
Income tax provision                                 52,557          34,524
                                                                  
Net income                                         $ 159,354      $ 82,217  
                                                                   
Earnings per common share
Basic                                              $ 0.81         $ 0.42    
Diluted                                            $ 0.79         $ 0.41    
                                                                   
Shares used in computing earnings per
common share
Basic                                               197,797       194,771 
Diluted                                             201,804       199,057 



ALEXION PHARMACEUTICALS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(in thousands, except per share amounts)
(unaudited)
                                           Three months ended
                                                March 31
                                                2014            2013
                                                                   
Net income reconciliation:
GAAP net income                                 $ 159,354          $ 82,217
                                                                   
Share-based compensation expense                  23,840             16,855
Acquisition-related costs (1)                     (38      )         3,234
Amortization of purchased intangible              -                  104
assets
Upfront and milestone payments
related to license and collaboration              101,925            3,000

agreements (2)
Impairment of intangible asset (3)                3,464              -
Non-cash taxes (4)                                24,054             25,904
                                                                  
Non-GAAP net income                             $ 312,599         $ 131,314 
                                                                   
GAAP earnings per share - diluted               $ 0.79            $ 0.41    
Non-GAAP earnings per share - diluted           $ 1.53            $ 0.65    
                                                                   
Shares used in computing diluted                 201,804          199,057 
earnings per share (GAAP)
Shares used in computing diluted                 204,830          202,225 
earnings per share (non-GAAP)
                                                                   
Cost of sales reconciliation:
GAAP cost of sales                              $ 32,939           $ 35,269
Share-based compensation expense                 (883     )        (875    )
Non-GAAP cost of sales                          $ 32,056          $ 34,394  
                                                                   
Research and development
reconciliation:
GAAP research and development                   $ 191,457          $ 74,536
Share-based compensation expense                  (7,984   )         (5,090  )
Upfront and milestone payments
related to license and collaboration             (101,925 )        (3,000  )

agreements (2)
Non-GAAP research and development               $ 81,548          $ 66,446  
                                                                   
Selling, general and administrative
reconciliation:
GAAP selling, general and                       $ 129,291          $ 108,826
administrative
Share-based compensation expense                 (14,973  )        (10,890 )
Non-GAAP selling, general and                   $ 114,318         $ 97,936  
administrative
                                                                   
Income tax provision reconciliation:
GAAP income tax provision                       $ 52,557           $ 34,524
Non-cash taxes (4)                               (24,054  )        (25,904 )
Non-GAAP income tax provision                   $ 28,503          $ 8,620   


(1)  The following table summarizes acquisition-related costs:


                                                      Three months ended
                                                          March 31
                                                          2014      2013
Acquisition-related costs:
Separately-identifiable employee costs                    $ -        $ 248
Professional fees                                         -          775
Changes in fair value of contingent consideration         (38)       2,211
                                                          $ (38)     $ 3,234


      In January 2014, the Company entered into an agreement that provides an
(2)  option to purchase drug products for clinical development and
      commercialization. The Company recorded research and development expense
      for an upfront payment of $100.0 million.
      
(3)   During the three months ended March 31, 2014, the Company recorded a
      $3.5 million impairment related to an early stage development asset.
      
(4)   Non-cash taxes represents the adjustment from GAAP tax expense to the
      amount of taxes that are payable in cash on our operating profits.



ALEXION PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)

                                              March 31,     December 31,
                                                  2014            2013
Cash and cash equivalents                         $ 528,285       $  529,857
Marketable securities                               1,029,193        984,994
Trade accounts receivable, net                      429,021          421,752
Inventories                                         126,154          102,602
Deferred tax assets, current                        45,871           41,432
Other current assets                                87,356           106,220
Property, plant and equipment, net                  218,086          201,109
Intangible assets, net                              603,021          609,719
Goodwill                                            254,073          254,073
Deferred tax assets, noncurrent                     3,366            3,394
Other noncurrent assets                            55,240          62,544
Total assets                                      $ 3,379,666     $  3,317,696
                                                                  
Accounts payable and accrued expenses             $ 231,708       $  423,940
Current portion of long-term debt                   48,000           48,000
Other current liabilities                           117,114          110,489
Long-term debt, less current portion                45,500           65,000
Contingent consideration, noncurrent                106,241          106,744
Deferred tax liabilties, noncurrent                 45,986           101,241
Other noncurrent liabilities                       84,139          80,203
Total liabilities                                  678,688         935,617
                                                                  
Total stockholders' equity                         2,700,978       2,382,079
Total liabilities and stockholders'               $ 3,379,666     $  3,317,696
equity


Contact:

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