Alexion Pharmaceuticals’ (ALXN: 52.80 -0.40 -0.75%) second quarter fiscal 2010 earnings (excluding special items but including stock-based compensation) of 31 cents per share was well above the year-ago earnings of 18 cents per share. On a reported basis, the company earned 39 cents per share in the reported quarter as against 26 cents in the year-ago quarter. The Zacks Consensus Estimate for the second quarter of 2010 was 30 cents per share.
Alexion’s revenues increased 36.4% year-over-year to $125.8 million in the reported quarter, driven by strong Soliris (eculizumab) sales. Revenues were in-line with the Zacks Consensus Revenue Estimate of $126.0 million.
Soliris is Alexion’s only approved product. It is approved for the treatment of paroxysmal nocturnal hemoglobinuria (PNH), a rare genetic blood disorder. The disorder can lead to anemia, fatigue, pain and breathing problems. Soliris received approval from the US Food and Drug Administration (FDA) and the European Commission in 2007. Approval in Japan came earlier this year. Soliris will be launched in Japan shortly.
Operating expenses for the reported quarter jumped 33% year-over-year to $71.8 million in the reported quarter. The increase was attributable to a hike in both research and development (R&D) expenses (up 31.5%) and selling, general and administrative expenses (up 33.2%) expenses. We believe the increase in operating expenses is primarily due to increased clinical trial programs. We expect R&D costs to increase further as the company is exploring the use of Soliris in other indications besides PNH.
In addition, higher costs associated with the expansion of Alexion’s commercial operations in existing markets in the U.S., Europe and several other countries were also responsible for the increase in operating expenses.
Pipeline Update
In addition to posting second quarter results, Alexion provided an update on its pipeline. Last month, Alexion announced that it intends to launch Soliris in Japan in the third quarter of 2010, earlier than previously expected. Alexion’s decision to launch Soliris early follows a recent approval regarding the price of the drug by an advisory committee of Japan’s Ministry of Health, Labor and Welfare. As a result of the approval, Soliris is eligible to receive reimbursement from Japan’s National Health Insurance (NHI) system.
Furthermore, during the quarter, the company announced the completion of enrollment in four clinical studies that are being conducted to evaluate Soliris in patients suffering from atypical hemolytic uremic syndrome (aHUS). Preliminary results are expected by year-end. The drug is also being studied in kidney transplant patients who have a high risk of organ rejection.
GuidanceAlexion reiterated its previously announced guidance for 2010. The adjusted earnings for 2010 are forecasted in the range of $1.63−$1.68. The company expects net product sales of Soliris in the range of $515 million to $530 million. The Zacks Consensus Estimate for 2010 earnings and revenue currently stand at $1.34 per share and $529 million, respectively.
| Overall Summary: |  25%, Bullish 75%, Bearish | Trade Quality: | Upside 25%, Poor Downside 80%, |
| Analysts' Targets | |
| Oppenheimer & Co. Inc. | $62 |
| Perform | |
| Thursday, June 03, 2010 | |
| Brean Murray & Co. | $66 |
| Buy | |
| Friday, April 23, 2010 | |
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