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Is a Beat in Store for Alexion (ALXN) This Earnings Season?

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Alexion Pharmaceuticals, Inc. (ALXN - Free Report) is scheduled to report first-quarter 2018 results on Apr 26, before the opening bell.

In the last quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Also, Alexion’s track record is excellent as it has consistently topped estimates in the last four quarters, with an average positive earnings surprise of 15.21%.

Alexion’s shares have underperformed the industry in the past  year. The stock has lost 9.9% compared with the industry’s decline of 8.3%.


What Does the Zacks Model Unveil?

Our proven model shows that Alexion is likely to beat on earnings in the to-be-reported quarter because it has the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — which have a significantly higher chance of beating estimates.

Zacks ESP: Alexion has an Earnings ESP of +2.09% as the Most Accurate estimate is $1.51 and the Zacks Consensus Estimate is pegged at $1.48. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Alexion’s Zacks Rank #2, when combined with a positive ESP makes us reasonably confident of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Note that Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Let’s see how things are shaping up for this announcement.

Factors Likely to Impact Q1 Results

Alexion’s blockbuster drug, Soliris, continues to perform well. Alexion continues to identify and treat a consistently high number of new patients with paroxysmal nocturnal hemoglobinuria (“PNH”) and atypical hemolytic uremic syndrome (aHUS) with Soliris, across its 50-country operating platform.

Alexion is working on expanding Soliris’ label into additional indications. The FDA recently approved the drug for the treatment of refractory generalized myasthenia gravis (gMG) in patients who are anti-acetylcholine receptor antibody-positive. The drug was approved in Europe for this indication. Approximately 60,000-80,000 patients are expected to have gMG in the United States.

Additionally, a phase III study (PREVENT) on Soliris in patients with relapsing neuromyelitis optica spectrum disorder is ongoing with enrollment was completed and data expected in mid-2018. Label expansion in additional indications will give Soliris access to a higher patient population and increase the commercial potential of the drug significantly.  The Zacks Consensus Estimate for Soliris hints that the drug’s sales will increase to about 8.2% from the year-ago quarter to $803 million.

Alexion recently announced that it will acquire Sweden-based Wilson Therapeutics for $855 million. The transaction is expected to close in the second quarter. The acquisition will add a late-stage candidate, WTX101 to Alexion’s pipeline. The candidate is currently in phase III for the treatment of Wilson disease, a rare genetic disorder.

Alexion is looking to diversify its portfolio and reduce its dependence on its blockbuster drug Soliris. The deal will strengthen Alexion’s rare disease pipeline with a late-stage candidate.

The company plans to focus on rare diseases businesses in core areas of hematology, nephrology, neurology and metabolic disorders to enhance productivity. Alexion will reduce spending and headcount associated with the previously announced de-prioritized pipeline programs as well as optimizing additional R&D expenses.

The company plans to relocate its headquarters to Boston, MA by mid-2018 with approximately 400 positions. As a result of the restructuring plan, the company will reduce its global workforce by approximately 20%. The company expects that the increased financial flexibility will allow it to reinvest approximately $100 million annually into R&D. Alexion expects pretax savings of approximately $250 million by 2019.

In the meantime, the company’s efforts to develop its pipeline are impressive, particularly in case of ALXN1210. Currently, it is evaluating ALXN1210 (a longer-acting anti-C5 antibody that inhibits terminal complement) in phase III studies for both PNH and aHUS. A tentative approval for PNH is expected in 2019.

Patients are also being dosed in a phase III trial with ALXN1210 administered intravenously every eight weeks in complement inhibitor treatment-naive adolescent and adult patients with aHUS.  The company is expected to complete enrollment in the second quarter and announce the results in the fourth quarter of 2018.

Other Stocks That Warrant a Look

Here are some biotech stocks that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this quarter.

Pfizer Inc. (PFE - Free Report) is scheduled to release results on May 1. The company has an Earnings ESP of +1.36% and a Zacks Rank #2.

AbbVie Inc. (ABBV - Free Report) is scheduled to release  results on Apr 26. The company has an Earnings ESP of +0.06% and a Zacks Rank #3.

Gilead Sciences, Inc. (GILD - Free Report) is scheduled to release results on May 1. The company has an Earnings ESP of +0.32% and a Zacks Rank #2.

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