Alexion Exits 2011 on a Strong Note

Alexion Pharmaceuticals Inc.’s (ALXN - Analyst Report) fourth quarter 2011 earnings (excluding special items but including stock-based compensation) of 36 cents per share beat the Zacks Consensus Estimate by 7 cents and the year ago adjusted earnings by 14 cents per share. Earnings in the quarter benefited from increased revenues.

Quarterly Results

Alexion’s revenues jumped 45.9% to approximately $227.6 million in the reported quarter driven by strong Soliris sales. Revenues surpassed the Zacks Consensus Estimate of $220 million.

Soliris is available for the treatment of paroxysmal nocturnal hemoglobinuria (PNH), a rare genetic blood disorder and atypical hemolytic uremic syndrome (aHUS), an ultra-rare genetic disorder. We remind investors that in September 2011, the US Food and Drug Administration (FDA) cleared Soliris for treating children and adults suffering from aHUS. Soliris was subsequently launched in the country.

The impressive revenues recorded in the final quarter of 2011 were indicative of the addition of new PNH patients primarily in the US, Western Europe and Japan. The launch of Soliris for the aHUS indication also contributed to the increased revenues recorded in the quarter.

Adjusted operating expenses (excluding stock-based compensation and other special items) at Alexion climbed 34.3% to $111.2 million in the reported quarter. The increase was attributable to a hike in both research and development (R&D) expenses (26.4%) and selling, general and administrative (SG&A) expenses (37.8%).

While R&D expenses increased because of the company’s efforts to develop its pipeline, the rise in SG&A expenses was attributable to Alexion’s efforts to expand and the costs related to the preparations for the launch of Soliris for the aHUS indication.

Annual Results

Alexion earned (excluding special items but including stock-based compensation) $1.14 per share in 2011, which were 6 cents above the Zacks Consensus Estimate of $1.08 and 42 cents above the 2010 earnings of 72 cents per share. Revenues climbed 44.8% to $783.4 million driven by impressive Soliris sales. Revenues beat the Zacks Consensus Estimate of $775.0 million.

2012 Projection

Apart from announcing financial results, Alexion provided a bright outlook for 2012. The company expects to end 2012 with revenues in the range of $1.04-$1.07 billion well above 2011 revenues of $783.4 million. The Zacks Consensus Estimate of $1.03 billion is just shy of the guidance range provided by the company.

Alexion expects adjusted earnings for 2012 in the range of $1.60-$1.70 well above 2011 levels. Soliris is expected to continue performing well, driving growth at Alexion. The Zacks Consensus Estimate of $1.51 is below the company’s guidance range.

Our Recommendation

Currently, we have a long-term Neutral recommendation on Alexion Pharma. The stock carries a Zacks #2 Rank (Buy rating) in the short-run.

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