Alexion Beats, Raises Outlook

Yesterday, Alexion Pharmaceuticals (ALXN - Analyst Report) came out with strong third quarter financials. The company reported earnings per share of 29 cents, well above the Zacks Consensus Estimate of 21 cents and 23 cents reported in the year-ago quarter.

Revenues increased 34% to $102.6 million from $76.5 million in the corresponding period last year, driven by strong Soliris (eculizumab) sales. However, revenues increased 44% after excluding $5.3 million of Soliris sales from the third quarter of 2008 as they were associated with the previous quarter’s shipments. Soliris posted robust sales primarily due to the addition of a significant numbers of new patients in both the US and European countries.

Soliris is Alexion’s only US Food and Drug Administration (FDA) approved (approval received in March 2007) product used for the treatment of Paroxysmal Nocturnal Hemoglobinuria (PNH), a life threatening blood disorder. The drug had received European Commission (EC) approval in June 2007.

Operating expenses during the reported quarter were $62.8 million, an increase of 34% compared to $46.9 million in the corresponding period last year due to an increase in both R&D (43% rise) and SG&A (29% rise) expenses -- the increase primarily reflects the expansion of Alexion’s clinical trial programs and higher costs associated with the expansion of commercial operations in existing markets in the US and Europe as well as in several other countries. We expect these costs to increase further as the company is exploring the use of Soliris in other indications besides PNH.

At the end of the September quarter, Alexion had $166.9 million in cash, cash equivalents and restricted cash, up from $147.6 million at the end of June 2009. Meanwhile, the company reduced the principal balance on its Rhode Island manufacturing facility mortgage by $24 million during the quarter and subsequently paid the remaining $20 million balance on this loan.

Based on its strong performance, Alexion raised its outlook for 2009. The company now expects net product sales of Soliris in the range of $383 to $385, up from the earlier guidance of $368 to $378 million. We have a Neutral recommendation on the stock.

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