Technology

Why Is Alexion (ALXN) Down 6.3% Since Last Earnings Report?

It has been about a month since the last earnings report for Alexion Pharmaceuticals (ALXN). Shares have lost about 6.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Alexion due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Alexion Q1 Earnings Beat Estimates, Guidance Raised

Alexion posted first-quarter 2019 adjusted earnings of $2.39 per share, which increased 42.3% from the year-ago quarter’s $1.68. Earnings also beat the Zacks Consensus Estimate of $2.19. Strong product revenues drove the bottom line in the quarter.

Revenues rose 22.6% year over year to $1.140 billion and exceeded the Zacks Consensus Estimate of $1.112 billion. Revenues were driven by increased sales of Soliris, Strensiq and Kanuma. 

Revenues in Detail

Soliris (paroxysmal nocturnal hemoglobinuria [“PNH”] and atypical hemolytic uremic syndrome [aHUS]) sales were up 20% to $962 million in the reported quarter, driven by strong volume growth. While Strensiq (hypophosphatasia [“HPP”]) revenues were $130.1 million (up 18% year over year), Kanuma (lysosomal acid lipase deficiency [LAL-D]) contributed $23.5 million (up 20%) to quarterly revenues.

Cost Summary

Adjusted research and development (R&D) expenses were $159.4 million, down 1.4% year over year.

Adjusted selling, general and administrative (SG&A) expenses were $243.7 million, up 10.6% year over year.

2019 Guidance

Alexion raised its revenue and earnings guidance for 2019. The company expects earnings per share to be $9.25-$9.45, up from the previous guidance of $9.10-$9.30. Alexion projects revenues of$4.68-$4.75 billion, up from the prior outlook of $4.63-$4.70 billion.

Revenues for Soliris and Ultomiris are expected to be $4.02-$4.07 billion, up from $3.97-$4.02 billion guided previously.

Pipeline Update

In February 2019, the FDA grantedpriority review to Soliris in Neuromyelitis Optica Spectrum Disorder (NMOSD)indication and set an action date of Jun 28, 2019. Alexion has submitted applications in the European Union (EU) and Japan. Soliris has been granted Orphan Drug priority review in Japan.

In December 2018, the FDA approved Ultomiris for adults with Paroxysmal Nocturnal Hemoglobinuria (PNH). The company strongly launched the drug in the United States for the same indication. Applications for approval in the EU and Japan are currently under review. A phase III study of Ultomiris in children and adolescents with PNH is currently underway.

In April 2019, Alexion submitted an application in the United States for the approval of Ultomiris in patients with Atypical Hemolytic Uremic Syndrome (aHUS). The company plans to file for regulatory approval in the EU and Japan in 2019. Further, a phase III study of Ultomiris in adolescents and children with aHUS is underway.

In the first quarter of 2019, Alexion initiated a phase III study of the drug in generalized Myasthenia Gravis (gMG).

Also, the company plans to initiate a phase III study of the drug in NMOSD by the end of 2019.

Moreover, Alexion plans to initiate a proof-of-concept study for Ultomiris in Amyotrophic Lateral Sclerosis (ALS) and an exploratory clinical studyin Primary Progressive Multiple Sclerosis (PPMS).

The company is enrolling and dosing a phase III study of ALXN1840 (WTX101) in Wilson disease, a rare genetic disorder with devastating hepatic and neurological consequences.
 

How Have Estimates Been Moving Since Then?

Fresh estimates followed an upward path over the past two months.

VGM Scores

At this time, Alexion has a strong Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Alexion has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.