Analyst Conference Summary

Biotechnology

conference date: January 30, 2020 @ 5:00 AM Pacific Time
for quarter ending: December 31, 2019 (fourth quarter 2019, Q4)

Forward-looking statements

Overview: Continued strong revenue growth.

Basic data (GAAP):

Revenue was $1.38 billion, up 10% sequentially from $1.26 billion and up 23% from $ million in the year-earlier quarter.

Net income was $889 million, up 90% sequentially from $468 million, and way up from negative $45 million year-earlier.

EPS (diluted earnings per share) was $4.02, up 93% sequentially from $2.08 and way up from negative $0.20 year-earlier.

Guidance:

For the full year 2020 Alexion expects revenue between $5.50 and $5.56 billion. GAAP operating margin between 39.3% and 43.5%, non-GAAP 53.5% to $54.5%. Resulting estimated GAAP EPS of $7.91 to $8.71; non-GAAP EPS $10.65 to $10.85.

Conference Highlights:

Ludwig N. Hantson, PhD, CEO, said: " Our key achievements include establishing Ultomiris as the market leader in PNH within the first year of launch, expanding our C5 portfolio to make neurology our largest franchise in the U.S., and further diversifying our pipeline with seven business development deals adding five clinical-stage assets to our portfolio."

On October 16, Alexion announced it would acquire Achillion. The deal should close in the first half of 2020.

In October 2019, the FDA approved Ultomiris for the treatment of aHUS to inhibit complement-mediated thrombotic microangiopathy (TMA) for adults and children one month and older. Applications for approval in the EU and Japan are under review. A Phase 3 study in children and adolescents with aHUS is underway.

In Q4 2019 Alexion received approval in Japan for Soliris (eculizumab) for neuromyelitis optica spectrum disorder (NMOSD).

In August 2019, the European Commission approved Soliris for adults with anti-aquaporin-4 (AQP4) auto antibody-positive NMOSD. An application for approval in Japan is under review. Alexion plans to initiate a Phase 3 study in children and adolescents with NMOSD by the end of 2019.

Alexion is collaborating with Caelum Biosciences to develop CAEL-101 for light chain (AL) amyloidosis. A pivotal Phase 2/3 study investigating CAEL-101 as an add-on to current standard-of-care therapy is planned to begin in the first half of 2020. In October 2019, the European Commission granted orphan drug designation to CAEL-101 for the treatment of AL amyloidosis.

In September 2019, Alexion announced an agreement with Eidos for an exclusive license to develop and commercialize AG10 in Japan. AG10 is a small molecule designed to treat the root cause of transthyretin amyloidosis (ATTR) – destabilized and misfolded transthyretin (TTR) protein – by binding and stabilizing TTR in the blood. Eidos is currently evaluating AG10 in a Phase 3 study in the U.S. and Europe for ATTR cardiomyopathy (ATTR-CM) and plans to begin a Phase 3 study in ATTR polyneuropathy (ATTR-PN). Alexion plans to expand the AG10 program into Japan in 2020, pending regulatory feedback.

In October 2019, Alexion announced an agreement with Stealth BioTherapeutics for an option to co-develop and commercialize elamipretide for mitochondrial diseases. Currently being evaluated in a Phase 3 study in people with primary mitochondrial myopathy (PMM) - a genetic mitochondrial disease - elamipretide is a novel, potential first-in-class therapy that targets mitochondrial dysfunction. Alexion will have the opportunity to exercise the option following the delivery of results from the Phase 3 PMM study, which are expected in the first quarter of 2020. If exercised, the option also provides for co-development and commercialization of elamipretide in Barth syndrome, Leber’s hereditary optic neuropathy (LHON) and geographic atrophy associated with dry age-related macular degeneration (GA).

Non-GAAP numbers: net income was $611 million, down 4% sequentially from $636 million and up 26% from $486 million year-earlier. Diluted EPS $2.71, down 3% sequentially from $2.79, and up 27% from $2.14 year-earlier.

Cash and equivalents balance $2.75 billion, up sequentially from $2.22 billion. Debt $2.38 billion. $ free cash flow.

Alexion is collaborating with Caelum Biosciences to develop CAEL-101 for AL amyloidosis, a rare systemic disorder that causes misfolded immunoglobulin light chain protein to build up in and around tissues. Pending regulatory feedback, a Phase 2/3 study investigating CAEL-101 as an add-on to current standard-of-care therapy is planned to begin in early 2020.

Alexion is collaborating with Dicerna Pharmaceuticals to jointly discover and develop subcutaneously delivered GalXCTM RNA interference (RNAi) candidates, currently in pre-clinical development, for the treatment of complement-mediated diseases. In December 2019, Alexion exercised its option for exclusive rights to two additional targets, expanding the collaboration to now encompass four targets within the complement pathway.

In March 2019, Alexion announced a partnership with Affibody AB to co-develop ABY-039 for rare Immunoglobulin G (IgG)-mediated autoimmune diseases.

In June 2019 the FDA approved Soliris for NMOSD. Alexion also filed for regulatory approval in the EU and Japan, and orphan drug priority review has been granted in Japan. This is the first approved drug for NMOSD.

Alexion is also developing other treatments for ultra-rare diseases. ALXN 1101 for MoCD (Molybdenum Cofactor Deficiency) Type A Phase 3 registrational study is enrolling patients.

ALXN1007 for inflammatory diseases continues a Phase 2 study for graft-versus-host disease involving the GI tract (GI-GVHD). It has orphan drug status.

Alexion is collaborating with Dicerna Pharmaceuticals to jointly discover and develop up to four subcutaneously delivered GalXC RNA interference (RNAi) candidates, currently in pre-clinical development, for the treatment of complement-mediated diseases.

ALXN1840 (formerly WTX101) for Wilson disease is in Phase 3. There are about 10,000 potential patients in both the U.S. and in Europe.

ALXN1810 is in Phase 1. It is ALXN1210 delivered subcutaneously.

The Syntimmune agreement, announced in September 2019, added SYNT001 in Phase 1b/2a for WAIHA (warm autoimmune hemolytic anemia), PV pemphigus vlugaris, and PF (pemphigus foliaceus). Pivotal trials should be initiated in 2019.

See also Alexion pipeline.

GAAP cost of sales was $114 million. R&D expense was $270 million. SG&A expense was $381 million. Amortization of purchased intangibles $74 million. Change in fair value of contingent consideration $4 million. Restructuring $0.1 million. Total operating expenses were $729 million, leaving operating income of $541 million. Interest and other income net was $61 million. Income tax benefit was $287 million.

Full year 2019 income $4.99 billion, up 21% y/y. GAAP EPS $10.70. Non-GAAP EPS $10.53.

Q&A summary:

not available

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