) first-quarter 2014 earnings (including stock-based compensation
expense) of $1.41 per share easily beat the Zacks Consensus
Estimate of $1.09 per share. Earnings (boosted by 37 cents per
share pertaining to the reimbursement of prior year shipments)
were above the year-ago figure by 143%. Higher product sales
benefited earnings in the first quarter of 2014.
Alexion's revenues jumped 67% in the first quarter of 2014 to
approximately $566.6 million. We note that all of Alexion
revenues are generated from Soliris sales. We also note that the
revenue figure in the quarter included $87.8 million recognized
from the reimbursement for Soliris sales made before the
commencement of this year as per an agreement with the French
government last month. Revenues surpassed the Zacks Consensus
Estimate of $519 million.
Soliris, the sole marketed product at Alexion, is available in
the U.S, EU, Japan and many other countries for the treatment of
paroxysmal nocturnal hemoglobinuria (PNH). PNH is a rare genetic
blood disorder. Sales of the drug have been boosted further by
its label expansion into the aHUS indication in the U.S. (Sep
2011) and the EU (Nov 2011). Japanese approval for Soliris in the
aHUS indication came in Sep 2013.
Operating expenses (excluding stock-based compensation expense
and upfront and milestone payments related to license and
collaboration deals) climbed approximately 19% to $195.9 million
in the first quarter of 2014. The increase was attributable to a
rise in research and development (R&D) expenses (up
approximately 23%) and selling, general and administrative
(SG&A) expenses (up approximately 17%). The increase in
R&D expenses was attributable to the company's efforts to
develop its pipeline. SG&A expenses increased due to
Alexion's efforts to expand.
Alexion announced that it has initiated the rolling submission of
a Biologics License Application (BLA) for asfotase alfa in the
hypophosphatasia indication. The rolling submission to the U.S.
Food and Drug Administration (FDA) is expected to be completed in
the fall of 2014.
Earnings View for 2014 Upped
Alexion increased its guidance for adjusted earnings per share.
The company now expects adjusted earnings for 2014 in the range
of $4.75-$4.85 per share (old guidance: $4.37 to $4.47). The
comprehensive outperformance and the hike in 2014 earnings
outlook resulted in the stock gaining in
Revenues for 2014 are still expected in the range of $2.15
billion-$2.17 billion. The Zacks Consensus Estimate for 2014
hints at earnings of $4.01 per share on revenues of approximately
$2.2 billion. The company still expects R&D costs (excluding
stock based compensation expense) for 2014 in the range of
$360-$380 million. Selling, general and administrative costs
(excluding stock based compensation expense) in 2014 are now
expected in the range of $550 million-$570 million (old guidance:
$560 million - $580 million).
Once again, Alexion impressed with strong results. The hike in
the 2014 earnings guidance is encouraging. We expect growth at
Alexion to be driven by strong Soliris sales in the PNH and aHUS
We are also impressed by Alexion's efforts to develop its
pipeline. Alexion is expecting seven product approvals within the
time period of 2014 to 2018 including asfotase alfa, ALXN 1101
and Soliris' label expansion into indications such as
antibody-mediated rejection, neuromyelitis optica and the
prevention of delayed graft function in renal transplant
patients. This will reduce the company's dependence on Soliris
Alexion currently carries a Zacks Rank #2 (Buy). A better-ranked
stock in the biopharma sector is
), carrying a Zacks Rank #1 (Strong Buy).
We note that another biopharma company
) - also a Zacks Rank #2 stock -posted solid first quarter
results on Apr 22 after market close. Gilead's results surpassed
expectations by a wide margin with its hepatitis C virus (HCV)
drug, Sovaldi, delivering sales of $2.3 billion in its first full
quarter on the market.
), another major player in the sector, will report first quarter
results on Apr 29, before market opens on that day.
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