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Alexion (ALXN) Tops Q3 Earnings, Lags Sales, 2017 View Up

Alexion Pharmaceuticals, Inc.’s ALXN posted third-quarter 2017 adjusted earnings of $1.44 per share which was higher than the year ago earnings of $1.23 by 17.1%. Earnings also beat the Zacks Consensus Estimate of $1.13. Strong product revenues drove the bottom-line in the quarter.

Revenues rose 8% year over year to $859 million, but slightly missed the Zacks Consensus Estimate of $869 million. Revenues were driven by increased sales of Soliris, Strensiq and Kanuma. However, sales declined sequentially by 5.8% as the order were shifted from the third to the second quarter of 2017 thus impacting the third quarter sales. The company benefitted by favorable timing of orders in the preceding quarter directly impacted sales growth in the third quarter. Negative impact of currency headwind on the top line was less than 1% ($5 million).

So far this year, Alexion’s share price has increased 7.9%, outperforming the industry’s gain of 6.9%.

 

Revenue in Detail

Soliris (paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS)) sales were up 4% to $756 million during the quarter driven by strong volume growth. While Strensiq (hypophosphatasia (HPP)) contributed $87 million to revenues, up 44% year over year, Kanuma (lysosomal acid lipase deficiency (LAL-D)) contributed $16 million (up 79%) to quarterly revenues.

Cost Summary

Research and Development (R&D) expenses (excluding stock based compensation) were $175 million, down 2.2% year over year.
Selling, general and administrative (SG&A) expenses (excluding stock based compensation) were $230 million, up 14.4% year over year.

2017 Guidance

Alexion increased] earnings guidance for 2017. The company expects adjusted earnings per share to be in the range of $5.50 to $5.65 up from its previous expectation of $5.40 to $5.55.

Meanwhile, the company also raised the lower end of the total revenue guidance, It projects revenues to be in the range of $3.475 to $3.525billion versus  prior expectation of $3.45 to $3.53 billion. In fact, revenue guidance for Soliris was also tightened toa range of $3.09-$3.13 billion from the previous expectation of $3.07-$3.13 billion.

Pipeline Update

In October 2017, Alexion received FDA approval for label expansion of Soliris to treat patients with refractory generalized myasthenia in adults who are anti-acetylcholine receptor (AchR) antibody-positive. Further, the European Commission also approved the drug for the same indication in Augsust 2017. The label expansion should help the company in boosting the revenues.

In August 2017, the company also strengthened its patent portfolio with three new United States’ patents for Soliris that extend protection into 2027.
Currently, Alexion is evaluating Soliris in a couple of other phase III studies – PREVENT, for the treatment of relapsing neuromyelitis optica spectrum disorder. The company completed enrollment in the study earlier this year and will report data in mid 2018.

The company also advanced the ALXN1210 clinical development programs which is being evaluated in phase III studies for the treatment of PNH and aHUS in the third quarter.

Our Take

Alexion exceeded earnings estimates but missed sales estimates in the third quarter. The company also raised its earnings guidance. Going forward, we expect growth at Alexion to continue being driven by Soliris.
In the meantime, other new products – Strensiq and Kanuma – are doing well and should boost revenues.

We are also impressed by Alexion’s efforts to develop its pipeline, especially the label expansion efforts for Soliris and the recent approval of Soliris to treat patients with refractory generalized myasthenia in both the United States and Europe. The company’s aggressive restructuring measures announced  last month are expected to deliver significant savings.

Alexion Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

 

Alexion Pharmaceuticals, Inc. Price, Consensus and EPS Surprise | Alexion Pharmaceuticals, Inc. Quote

 

Zacks Rank & Stocks to Consider

Alexion carries a Zacks Rank #3 (Hold). ). Some other top-ranked stocks in health care sector include Ligand Pharmaceuticals Inc. LGND, Adaptimmune Therapeutics plc ADAP, and Novo Nordisk A/S NVO. While Ligand sports a Zacks Rank #1 (Strong Buy), Adaptimmune and Novo Nordisk carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ligand’s earnings per share estimates have moved up $3.68 to $3.70 for 2018 over the last 30 days. The company pulled off positive earnings surprises in two of the trailing four quarters, with an average beat of 6.19%. The share price of the company has increased 40.4% year to date.

Adaptimmune’s loss per share estimates have narrowed from $1.03 to 95 cents for 2017 and from 95 cents to 90 cents for 2018 over the last 60 days. The company delivered positive earnings surprises in three of the trailing four quarters, with an average beat of 2.56%. The share price of the company has increased 72.1% year to date.

Novo Nordisk’s earnings per share estimates have moved up $2.37 to $2.39 for 2017 and from $2.51 to $2.54 for 2018 over the last 60 days. The company came up with positive earnings surprises in three of the trailing four quarters, with an average beat of 3.63%. The share price of the company has increased 39.8% year to date.

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