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Alexion (ALXN) to Report Q3 Earnings: What's in the Cards?

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Alexion Pharmaceuticals, Inc. (ALXN - Free Report) is scheduled to report third-quarter 2018 results on Oct 24, before the opening bell.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 22.49%. Moreover, Alexion’s track record is excellent as it has consistently topped estimates in the last four quarters, with an average positive earnings surprise of 14.98%.

Alexion’s shares have outperformed the industry so far this year. The stock has gained 5.3% against the industry’s decline of 14.7%.

 

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

Factors Likely to Impact Q3 Results

Alexion’s blockbuster drug Soliris continues to perform well. The company continues with identifying and treating a consistently high number of new patients with paroxysmal nocturnal hemoglobinuria (“PNH”) and atypical hemolytic uremic syndrome (aHUS) with Soliris.

Alexion is working on expanding Soliris’ label for additional indications. The FDA recently approved the drug for the treatment of refractory generalized myasthenia gravis in patients who are anti-acetylcholine receptor antibody-positive. The drug was approved in Europe for this indication.

Additionally, a phase III study (PREVENT) on Soliris in patients with relapsing neuromyelitis optica spectrum disorder was successful. Label expansion in additional indications will give Soliris access to a higher patient population, thereby significantly increasing the commercial potential of the drug. 

Alexion acquired Sweden-based Wilson Therapeutics for $855 million. The acquisition added 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 dependence on its blockbuster drug, Soliris. In September 2018, the company announced that it will acquire a clinical-stage biotechnology company, Syntimmune for $1.2 billion. The transaction is expected to close in the fourth quarter of 2018. We expect the company to update on the acquisition in the third-quarter call.

The company should also provide updates on its pipeline candidates in the third quarter.

The company is currently evaluating ALXN1210 (a longer-acting anti-C5 antibody that inhibits terminal complement) in phase III studies for both PNH and aHUS. Based on the positive data from both the phase III studies, on ALXN1210- in PNH naïve patients and switch patients, Alexion submitted regulatory applications in both the United States and Europe. A tentative approval for PNH is expected in 2019. The FDA granted priority review to the same and set an action date of Feb 18, 2019.

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 and optimize the additional R&D expenses.

What Does the Zacks Model Unveil?

Our proven model does not conclusively show an earnings beat for Alexion in the to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. But that is not the case here, as you will see below.

Earnings ESP: Alexion has an Earnings ESP of -0.61% as the Most Accurate Estimate is pegged at $1.74 and the Zacks Consensus Estimate is pegged at $1.75. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Alexion currently has a Zacks Rank #3, which increases the predictive power of ESP. However, we need to have a positive Earnings ESP to be confident of an earnings beat.

Note that Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement are best avoided.

 

Stocks That Warrant a Look

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

Amgen Inc. (AMGN - Free Report) is scheduled to release results on Oct 30. The company has an Earnings ESP of +0.56% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

AMAG Pharmaceuticals Inc. (AMAG - Free Report) is expected to report results on Nov 1. The company has an Earnings ESP of +13.76% and a Zacks Rank of 3.

Alnylam Pharmaceuticals Inc. (ALNY - Free Report) is expected to report earnings on Nov 6. The company has an Earnings ESP of +2.88% and a Zacks Rank of 3.

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