Delaware | 000-27756 | 13-3648318 |
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(State or other jurisdiction of of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
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¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Date: July 30, 2015 | ALEXION PHARMACEUTICALS, INC. |
By: /s/ Michael V. Greco | |
Name: Michael V. Greco | |
Title: Vice President of Law and Corporate Secretary | |
• | Net product sales of Soliris® were $636 million compared to $512.5 million in the same quarter last year. |
• | Non-GAAP R&D expense was $116.6 million compared to $85.1 million in the same quarter last year. GAAP R&D expense was $131.7 million compared to $92.6 million in the same quarter last year. |
• | Non-GAAP SG&A expense was $169.1 million compared to $139.5 million in the same quarter last year. GAAP SG&A expense was $221.4 million compared to $159.5 million in the same quarter last year. |
• | Non-GAAP effective tax rate was a benefit of 0.6% compared to tax expense of 8.0% in the same quarter last year. In Q2 2015, the Company benefited from the utilization of operating losses from Synageva in 2015. |
• | Non-GAAP diluted EPS was $1.44, compared to $1.12 in the same quarter last year. On a GAAP basis, diluted EPS was $0.83 compared to $0.83 in the same quarter last year. Q2 2015 GAAP EPS was impacted by $40.1 million, or $0.20 per share, related to acquisition and restructuring costs resulting from the Synageva acquisition. |
• | As of June 30, 2015, Alexion had cash, cash equivalents and marketable securities of $1.5 billion. |
• | Neurology- Myasthenia Gravis (MG): Alexion exceeded the target enrollment in the REGAIN study, a single, multinational, placebo-controlled, registration trial of eculizumab in refractory MG. |
• | Neurology- Neuromyelitis Optica (NMO): Alexion expects to complete enrollment in the PREVENT study, a single, multinational, placebo-controlled, registration trial of eculizumab in relapsing NMO, in 2016. |
• | Kidney Transplant- Delayed Graft Function (DGF): Alexion expects to complete enrollment in the PROTECT study, a single, multinational DGF prevention registration trial with eculizumab, in 2015. |
• | Kidney Transplant- Antibody-Mediated Rejection (AMR): Alexion reported preliminary 1-year data from a single-arm Phase 2 study of eculizumab in the prevention of acute AMR in sensitized deceased-donor kidney transplant recipients at the American Transplant Congress. |
• | ALXN 1210 and ALXN 5500: The Company advanced Phase 1 studies with its first two next-generation Soliris molecules, and expects to initiate a Phase 2 trial with ALXN 1210 in patients with paroxysmal nocturnal hemoglobinuria (PNH) in 2015. |
• | ALXN 1007: Enrollment and dosing are ongoing in two Phase 2 proof-of-concept studies in patients with graft versus host disease involving the lower gastrointestinal tract (GI-GVHD) and antiphospholipid syndrome (APS), two severe, autoimmune diseases with potentially life-threatening complications. Alexion expects to have interim data from the GI-GVHD study later this year. |
• | Strensiq™ (asfotase alfa): Strensiq received a positive opinion from the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) recommending marketing authorization for long-term enzyme replacement therapy in patients with pediatric-onset HPP. Strensiq was also approved by Japan’s Ministry of Health, Labour and Welfare (MHLW) for the treatment of patients with HPP. The regulatory process for Strensiq in the U.S. is ongoing. The Food and Drug Administration (FDA) previously granted Breakthrough Therapy designation for Strensiq and accepted Alexion’s Biologics License Application (BLA) for Priority Review. |
• | Kanuma™ (sebelipase alfa): Kanuma received a positive CHMP opinion from the EMA recommending marketing authorization for long-term enzyme replacement therapy in patients of all ages with lysosomal acid lipase deficiency (LAL-D). In Q2, a New Drug Application for Kanuma was also submitted to Japan’s MHLW as a treatment for patients with LAL-D. The regulatory process for Kanuma in the U.S. is ongoing. The FDA granted Breakthrough Therapy designation for Kanuma for LAL-D presenting in infants and accepted the BLA for Priority Review. |
• | SBC-103: Enrollment was completed in a Phase 1/2 trial of SBC-103, an enzyme replacement therapy being investigated for patients with mucopolysaccharidosis IIIB, or MPS IIIB. Preliminary data are expected in the second half of 2015. |
• | cPMP Replacement Therapy (ALXN 1101): Alexion completed enrollment in the synthetic cPMP bridging study in patients with molybdenum cofactor deficiency (MoCD) Type A and enrollment in a natural history study is ongoing. The Company plans to initiate a pivotal study with ALXN 1101 by the end of 2015. Alexion received Breakthrough Therapy designation for its cPMP replacement therapy in 2013. |
• | Alexion has more than 30 diverse pre-clinical programs across a range of therapeutic modalities, with four of these programs expected to enter the clinic in 2016. |
Cost of sales | 8% to 9% of net product sales |
Research and development expense | $520 to $540 million |
Selling, general and administrative expense | $690 to $710 million |
Interest expense | $55 million |
Effective tax rate | 3% to 4% |
Diluted shares outstanding | 219 million |
ALEXION PHARMACEUTICALS, INC. | |||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||
(unaudited) | |||||||||||||||||
Three months ended | Six months ended | ||||||||||||||||
June 30 | June 30 | ||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||
Net product sales | $ | 635,983 | $ | 512,495 | $ | 1,236,316 | $ | 1,079,111 | |||||||||
Other revenue | 227 | — | 227 | — | |||||||||||||
Total revenues | 636,210 | 512,495 | 1,236,543 | 1,079,111 | |||||||||||||
Cost of sales | 52,007 | 39,626 | 121,406 | 72,565 | |||||||||||||
Operating expenses: | |||||||||||||||||
Research and development | 131,693 | 92,554 | 352,773 | 284,011 | |||||||||||||
Selling, general and administrative | 221,383 | 159,477 | 408,499 | 288,768 | |||||||||||||
Impairment of intangible asset | — | — | — | 3,464 | |||||||||||||
Acquisition-related costs | 33,821 | 1,989 | 45,800 | 1,951 | |||||||||||||
Restructuring expenses | 16,224 | — | 23,276 | — | |||||||||||||
Total operating expenses | 403,121 | 254,020 | 830,348 | 578,194 | |||||||||||||
Operating income | 181,082 | 218,849 | 284,789 | 428,352 | |||||||||||||
Other income (expense) | (3,790 | ) | (203 | ) | (552 | ) | 2,205 | ||||||||||
Income before income taxes | 177,292 | 218,646 | 284,237 | 430,557 | |||||||||||||
Income tax provision | 7,077 | 52,151 | 22,699 | 104,708 | |||||||||||||
Net income | $ | 170,215 | $ | 166,495 | $ | 261,538 | $ | 325,849 | |||||||||
Earnings per common share | |||||||||||||||||
Basic | $ | 0.84 | $ | 0.84 | $ | 1.30 | $ | 1.65 | |||||||||
Diluted | $ | 0.83 | $ | 0.83 | $ | 1.29 | $ | 1.62 | |||||||||
Shares used in computing earnings per common share | |||||||||||||||||
Basic | 202,234 | 197,880 | 200,806 | 197,838 | |||||||||||||
Diluted | 204,546 | 201,524 | 203,302 | 201,715 |
ALEXION PHARMACEUTICALS, INC. | |||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS | |||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||
(unaudited) | |||||||||||||||||
Three months ended | Six months ended | ||||||||||||||||
June 30 | June 30 | ||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||
Net income reconciliation: | |||||||||||||||||
GAAP net income | $ | 170,215 | $ | 166,495 | $ | 261,538 | $ | 325,849 | |||||||||
Share-based compensation expense | 67,000 | 28,414 | 109,797 | 52,254 | |||||||||||||
Acquisition-related costs (1) | 33,821 | 1,989 | 45,800 | 1,951 | |||||||||||||
Upfront and milestone payments related to license and collaboration agreements | 1,750 | — | 114,250 | 101,925 | |||||||||||||
Impairment of intangible assets | — | — | — | 3,464 | |||||||||||||
Restructuring expenses (2) | 16,224 | — | 23,276 | — | |||||||||||||
Non-cash taxes (3) | 8,722 | 32,174 | 5,050 | 56,228 | |||||||||||||
Non-GAAP net income | $ | 297,732 | $ | 229,072 | $ | 559,711 | $ | 541,671 | |||||||||
GAAP earnings per share - diluted | $ | 0.83 | $ | 0.83 | $ | 1.29 | $ | 1.62 | |||||||||
Non-GAAP earnings per share - diluted | $ | 1.44 | $ | 1.12 | $ | 2.72 | $ | 2.65 | |||||||||
Shares used in computing diluted earnings per share (GAAP) | 204,546 | 201,524 | 203,302 | 201,715 | |||||||||||||
Shares used in computing diluted earnings per share (non-GAAP) | 206,934 | 204,435 | 205,488 | 204,631 |
Three months ended | Six months ended | ||||||||||||||||
June 30 | June 30 | ||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||
Cost of sales reconciliation: | |||||||||||||||||
GAAP cost of sales | $ | 52,007 | $ | 39,626 | $ | 121,406 | $ | 72,565 | |||||||||
Share-based compensation expense | (1,344 | ) | (964 | ) | (2,753 | ) | (1,847 | ) | |||||||||
Non-GAAP cost of sales | $ | 50,663 | $ | 38,662 | $ | 118,653 | $ | 70,718 | |||||||||
Research and development expense reconciliation: | |||||||||||||||||
GAAP research and development expense | $ | 131,693 | $ | 92,554 | $ | 352,773 | $ | 284,011 | |||||||||
Share-based compensation expense | (13,329 | ) | (7,453 | ) | (24,413 | ) | (15,437 | ) | |||||||||
Upfront and milestone payments related to license and collaboration agreements | (1,750 | ) | — | (114,250 | ) | (101,925 | ) | ||||||||||
Non-GAAP research and development expense | $ | 116,614 | $ | 85,101 | $ | 214,110 | $ | 166,649 | |||||||||
Selling, general and administrative expense reconciliation: | |||||||||||||||||
GAAP selling, general and administrative expense | $ | 221,383 | $ | 159,477 | $ | 408,499 | $ | 288,768 | |||||||||
Share-based compensation expense | (52,327 | ) | (19,997 | ) | (82,631 | ) | (34,970 | ) | |||||||||
Non-GAAP selling, general and administrative expense | $ | 169,056 | $ | 139,480 | $ | 325,868 | $ | 253,798 | |||||||||
Income tax provision reconciliation: | |||||||||||||||||
GAAP income tax provision | $ | 7,077 | $ | 52,151 | $ | 22,699 | $ | 104,708 | |||||||||
Non-cash taxes (3) | (8,722 | ) | (32,174 | ) | (5,050 | ) | (56,228 | ) | |||||||||
Non-GAAP income tax provision (benefit) | $ | (1,645 | ) | $ | 19,977 | $ | 17,649 | $ | 48,480 | ||||||||
(1 | ) | The following table summarizes acquisition-related costs: | ||||||||||||||||
Three months ended | Six months ended | |||||||||||||||||
June 30, | June 30 | |||||||||||||||||
Acquisition-related costs: | 2015 | 2014 | 2015 | 2013 | ||||||||||||||
Transaction costs | $ | 26,799 | $ | — | $ | 26,799 | $ | — | ||||||||||
Integration costs | 2,978 | — | 2,978 | — | ||||||||||||||
Changes in fair value of contingent consideration | 4,044 | 1,989 | 16,023 | 1,951 | ||||||||||||||
$ | 33,821 | $ | 1,989 | $ | 45,800 | $ | 1,951 | |||||||||||
(2 | ) | Restructuring expense of $16.2 million related to $10.3 million resulting from the Synageva acquisition and an additional $5.9 million related to the European headquarters relocation. | ||||||||||||||||
(3 | ) | Non-cash taxes represents the adjustment from GAAP tax expense to the amount of taxes that are payable (receivable) in cash in the current period. In the second quarter 2015, the Company completed the acquisition of Synageva which resulted in a benefit to both GAAP and non-GAAP taxes from the utilization of Synageva's operating losses in 2015. The tax benefit recorded in the second quarter is resulting from the application of the lower full year tax rate to the first half of the year. | ||||||||||||||||
ALEXION PHARMACEUTICALS, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands) | ||||||||
(unaudited) | ||||||||
June 30, | December 31, | |||||||
2015 | 2014 | |||||||
Cash and cash equivalents | $ | 1,322,123 | $ | 943,999 | ||||
Marketable securities | 172,229 | 1,017,567 | ||||||
Trade accounts receivable, net | 535,824 | 432,888 | ||||||
Inventories | 234,347 | 176,441 | ||||||
Prepaid expenses and other current assets | 268,715 | 225,134 | ||||||
Property, plant and equipment, net | 555,388 | 392,248 | ||||||
Intangible assets, net | 4,824,520 | 587,046 | ||||||
Goodwill | 5,007,142 | 254,073 | ||||||
Other assets | 247,431 | 172,566 | ||||||
Total assets | $ | 13,167,719 | $ | 4,201,962 | ||||
Accounts payable and accrued expenses | $ | 454,384 | $ | 439,248 | ||||
Deferred revenue | 88,366 | 58,837 | ||||||
Current portion of long-term debt | 131,250 | 48,000 | ||||||
Deferred tax liabilities, current | 42,018 | 12,476 | ||||||
Other current liabilities | 53,151 | 48,179 | ||||||
Long-term debt, less current portion | 3,368,750 | 9,500 | ||||||
Facility lease obligation | 129,560 | 107,099 | ||||||
Contingent consideration | 129,546 | 116,425 | ||||||
Other liabilities | 217,823 | 60,180 | ||||||
Total liabilities | 4,614,848 | 899,944 | ||||||
Total stockholders' equity | 8,552,871 | 3,302,018 | ||||||
Total liabilities and stockholders' equity | $ | 13,167,719 | $ | 4,201,962 |