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Alexion (ALXN) Up 3.3% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Alexion Pharmaceuticals (ALXN - Free Report) . Shares have added about 3.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Alexion due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Alexion Beats on Q3 Earnings, Raises View

Alexion posted third-quarter 2019 adjusted earnings of $2.79 per share, which surged 38% from the year-ago quarter’s $2.02. Earnings also beat the Zacks Consensus Estimate of $2.49.

Moreover, revenues rose 23% year over year to $1.26 billion in the reported quarter and also surpassed the Zacks Consensus Estimate of $1.24 billion. Revenues were driven by increased sales of Soliris, Strensiq, Kanuma and the uptake of Ultomiris.

Revenues in Detail

Soliris (for the treatment of paroxysmal nocturnal hemoglobinuria [PNH] and atypical hemolytic uremic syndrome [aHUS]) sales were up 12% year over year to $990.5 million in the reported quarter, driven by strong volume growth.

Strensiq revenues were $154.3 million (up 36% year over year), driven by strong volume growth. Kanuma (lysosomal acid lipase deficiency [LAL-D]) contributed $28.4 million (up 12% year over year) to quarterly revenues.

Ultomiris’ (ravulizumab-cwvz) net product sales were $89.9 million in the reported quarter, reflecting a sequential increase of 65.9%.

Cost Summary

Adjusted research and development (R&D) expenses were $186.1 million, up 14.6% year over year.

Adjusted selling, general and administrative (SG&A) expenses were $260.4 million, up 16% year over year.

2019 Guidance

Alexion raised its revenue and earnings view for 2019. The company expects adjusted earnings per share to be $10.25-$10.40, up from the previous guidance of $9.65-$9.85. Alexion projects revenues of $4.86-$4.89 billion, up from the prior outlook of $4.75-$4.80 billion. The Zacks Consensus Estimate for earnings is pegged at $9.97 and for sales at $4.85 billion.

Combined revenues from Soliris and Ultomiris are expected to be $4.18-$4.20 billion, up from $4.10-$4.13 billion guided previously.
Pipeline Update

In August 2019, the European Commission (EC) approved Soliris for the treatment of neuromyelitis optica spectrum disorder (NMOSD) in adult patients, who are anti-aquaporin-4 (AQP4) antibody-positive with a relapsing course of the disease.

Alexion plans to initiate a phase III study in children and adolescents with NMOSD by the end of 2019. Another phase III study on Soliris is also underway for addressing children and adolescents with Generalized Myasthenia Gravis (gMG).

Earlier this month, the FDA approved a label expansion of Alexion’s long-acting C5 complement inhibitor Ultomiris (ravulizumab-cwvz). The drug has been approved for the treatment of aHUS to inhibit complement-mediated thrombotic microangiopathy (TMA) for adult and pediatric (aged one month or older) patients.

Meanwhile, aphase III study of Ultomiris in children and adolescents with aHUS is ongoing. Another late-stage study of Ultomiris in children and adolescents with PNH is also underway.

A single, PK-based phase III study of Ultomiris delivered subcutaneously once per week is currently underway to support registration in PNH and aHUS. Data are expected in the first half of 2020. Another phase III study of the drug for the treatment of generalized myasthenia gravis (gMG) is also currently ongoing.
 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

At this time, Alexion has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. It comes with little surprise Alexion has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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