Delaware | 0-27756 | 13-3648318 |
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¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Date: July 28, 2016 | ALEXION PHARMACEUTICALS, INC. |
By: /s/ Michael V. Greco | |
Name: Michael V. Greco | |
Title: Senior Vice President of Law and Corporate Secretary | |
• | Soliris® (eculizumab) net product sales were $701 million, compared to $636 million in Q2 2015, representing a 10 percent increase. Soliris volume increased 15 percent year-on-year. |
• | Strensiq® (asfotase alfa) net product sales were $45 million. |
• | Kanuma® (sebelipase alfa) net product sales were $6 million. |
• | GAAP R&D expense was $179 million, compared to $132 million in the same quarter last year. Non-GAAP R&D expense was $165 million, compared to $117 million in the same quarter last year. |
• | GAAP SG&A expense was $232 million, compared to $221 million in the same quarter last year. Non-GAAP SG&A expense was $200 million, compared to $169 million in the same quarter last year. |
• | GAAP diluted EPS was $0.51 per share, compared to $0.83 per share in the same quarter last year. Non-GAAP diluted EPS was $1.13 per share, reflecting a reduction of $0.12 per share attributable to the modification of reported non-GAAP income tax expense, compared to $1.30 per share, reflecting a reduction of $0.14 per share attributable to the modification of non-GAAP income tax expense in the same quarter last year. GAAP and non-GAAP EPS in the second quarter of 2016 includes the impact of a full quarter of Synageva operations, shares issued for the acquisition and interest expense on related borrowings. |
• | Eculizumab- Refractory Generalized Myasthenia Gravis (gMG): Data from the REGAIN study, a single, multinational, placebo-controlled Phase 3 trial of eculizumab in patients with refractory gMG, were presented at the International Congress on Neuromuscular Diseases (ICNMD) meeting. Alexion expects to provide an update on discussions with regulators by the end of the year. |
• | Eculizumab- Relapsing Neuromyelitis Optica Spectrum Disorder (NMOSD): Alexion expects to complete enrollment this year in the PREVENT study, a single, multinational, placebo-controlled Phase 3 trial of eculizumab in patients with relapsing NMOSD. |
• | Eculizumab- Delayed Graft Function (DGF): Enrollment is complete in the PROTECT study, a single, multinational, placebo-controlled Phase 3 trial of eculizumab in the prevention of DGF, and data are expected in the second half of 2016. |
• | ALXN1210: New data from the Phase 1/2 study of ALXN1210, a highly innovative longer-acting C5 antibody, in patients with paroxysmal nocturnal hemoglobinuria (PNH) were presented at the European Hematology Association (EHA) Congress. Alexion expects to present additional PNH data later this year. Alexion also expects to initiate a clinical program with ALXN1210 in patients with atypical hemolytic uremic syndrome (aHUS) later this year. The European Commission granted Orphan Drug Designation (ODD) to ALXN1210 for the treatment of patients with PNH. |
• | ALXN1007: New data from the Phase 2 study of ALXN1007, a complement inhibitor that targets C5a, in patients with graft-versus-host disease involving the lower gastrointestinal tract (GI-GVHD) were presented at EHA and Alexion is now evaluating higher doses of ALXN1007 in patients with GI-GVHD. |
• | SBC-103: New Phase 1/2 data of SBC-103, a recombinant form of the NAGLU enzyme, in patients with mucopolysaccharidosis IIIB, or MPS IIIB, were presented at the International Symposium on MPS and Related Diseases meeting. Alexion has now completed the planned dose escalation, with all patients now randomized to either a 5 mg/kg or 10 mg/kg dose. A natural history study to characterize the course of disease progression in patients with MPS IIIB is ongoing. |
• | cPMP Replacement Therapy (ALXN1101): Alexion is enrolling patients in a pivotal study to evaluate ALXN1101 in neonates with Molybdenum Cofactor Deficiency (MoCD) Type A. A study to characterize the natural history of MoCD type A was completed in Q2. |
• | Alexion has more than 30 diverse preclinical programs across a range of therapeutic modalities, with four of these programs expected to enter the clinic in 2016. |
GAAP Guidance | Updated Non-GAAP Guidance | Prior Non-GAAP Guidance | |||
Total revenues | $3,050 to $3,100 million | $3,050 to $3,100 million | Low end of $3,050 to $3,100 million | ||
Soliris revenues | $2,835 to $2,875 million | $2,835 to $2,875 million | $2,835 to $2,875 million | ||
Metabolic revenues | $200 to $220 million | $200 to $220 million | $180 to $200 million | ||
Cost of sales | 8% to 9% | 8% to 9% | 8% to 9% | ||
Research and development expense | $708 to $779 million | High end of $650 to $680 million | High end of $650 to $680 million | ||
Selling, general and administrative expense | $883 to $935 million | High end of $760 to $790 million | High end of $760 to $790 million | ||
Interest expense | $100 million | $100 million | $100 million | ||
Effective tax rate | 32% to 34% | 15.5% to 16.5% (1) | 7% to 8% | ||
Earnings per share | $1.91 to $2.26 | $4.50 to $4.65 | Low end of $5.00 to $5.20 | ||
Diluted shares outstanding | 228 million | 230 million | 230 million |
(1) | Alexion has modified the definition of its non-GAAP income tax expense. The modified definition no longer includes the cash tax benefits the Company realizes during the year from net operating losses and income tax credits, and now includes other deferred taxes. The modification does not change the amount of cash taxes the Company will pay in 2016, or in the future, or have any impact on cash flow. Refer to the reconciliation of GAAP to non-GAAP financial guidance (Table 3) and the supplemental effective tax rate information for financial guidance (Table 6) provided later in the press release. |
Three months ended | Six months ended | ||||||||||||||
June 30 | June 30 | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net product sales | $ | 752,546 | $ | 635,983 | $ | 1,452,971 | $ | 1,236,316 | |||||||
Other revenue | 570 | 227 | 1,183 | 227 | |||||||||||
Total revenues | 753,116 | 636,210 | 1,454,154 | 1,236,543 | |||||||||||
Cost of sales | 60,627 | 52,007 | 119,613 | 121,406 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 179,311 | 131,693 | 355,601 | 352,773 | |||||||||||
Selling, general and administrative | 231,802 | 221,383 | 464,363 | 408,499 | |||||||||||
Amortization of purchased intangible assets | 80,055 | — | 160,149 | — | |||||||||||
Change in fair value of contingent consideration | 5,186 | 4,044 | (9,614 | ) | 16,023 | ||||||||||
Acquisition-related costs | 974 | 29,777 | 2,313 | 29,777 | |||||||||||
Restructuring expenses | 455 | 16,224 | 1,177 | 23,276 | |||||||||||
Total operating expenses | 497,783 | 403,121 | 973,989 | 830,348 | |||||||||||
Operating income | 194,706 | 181,082 | 360,552 | 284,789 | |||||||||||
Other income and expense: | |||||||||||||||
Investment income | 1,872 | 2,226 | 3,423 | 5,110 | |||||||||||
Interest expense | (23,793 | ) | (3,971 | ) | (47,683 | ) | (4,622 | ) | |||||||
Foreign currency loss | (2,820 | ) | (2,045 | ) | (2,729 | ) | (1,040 | ) | |||||||
Income before income taxes | 169,965 | 177,292 | 313,563 | 284,237 | |||||||||||
Income tax expense | 55,022 | 7,077 | 106,454 | 22,699 | |||||||||||
Net income | $ | 114,943 | $ | 170,215 | $ | 207,109 | $ | 261,538 | |||||||
Earnings per common share | |||||||||||||||
Basic | $ | 0.51 | $ | 0.84 | $ | 0.92 | $ | 1.30 | |||||||
Diluted | $ | 0.51 | $ | 0.83 | $ | 0.92 | $ | 1.29 | |||||||
Shares used in computing earnings per common share | |||||||||||||||
Basic | 224,089 | 202,234 | 224,593 | 200,806 | |||||||||||
Diluted | 225,756 | 204,546 | 226,328 | 203,302 | |||||||||||
Three months ended | Six months ended | ||||||||||||||
June 30 | June 30 | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
GAAP net income | $ | 114,943 | $ | 170,215 | $ | 207,109 | $ | 261,538 | |||||||
Before tax adjustments: | |||||||||||||||
Cost of sales: | |||||||||||||||
Share-based compensation | 2,078 | 1,344 | 5,481 | 2,753 | |||||||||||
Fair value adjustment on inventory acquired (1) | 1,326 | — | 1,857 | — | |||||||||||
Research and development expense: | |||||||||||||||
Share-based compensation | 14,394 | 13,329 | 29,579 | 24,413 | |||||||||||
Upfront and milestone payments related to licenses and collaborations | — | 1,750 | 3,050 | 114,250 | |||||||||||
Selling, general, and administrative expense: | |||||||||||||||
Share-based compensation | 31,507 | 52,327 | 69,808 | 82,631 | |||||||||||
Amortization of purchased intangible assets (2) | 80,055 | — | 160,149 | — | |||||||||||
Change in fair value of contingent consideration (3) | 5,186 | 4,044 | (9,614 | ) | 16,023 | ||||||||||
Acquisition-related costs (4) | 974 | 29,777 | 2,313 | 29,777 | |||||||||||
Restructuring expenses | 455 | 16,224 | 1,177 | 23,276 | |||||||||||
Adjustments to income tax expense (5) | 6,843 | (20,172 | ) | 14,499 | (27,880 | ) | |||||||||
Non-GAAP net income | $ | 257,761 | $ | 268,838 | $ | 485,408 | $ | 526,781 | |||||||
GAAP earnings per share - diluted | $ | 0.51 | $ | 0.83 | $ | 0.92 | $ | 1.29 | |||||||
Non-GAAP earnings per share - diluted (6) | $ | 1.13 | $ | 1.30 | $ | 2.12 | $ | 2.56 | |||||||
Shares used in computing diluted earnings per share (GAAP) | 225,756 | 204,546 | 226,328 | 203,302 | |||||||||||
Shares used in computing diluted earnings per share (non-GAAP) | 228,212 | 206,934 | 228,720 | 205,488 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Acquisition-related costs: | |||||||||||||||
Transaction costs | $ | — | $ | 26,799 | $ | 375 | $ | 26,799 | |||||||
Integration costs | 974 | 2,978 | 1,938 | 2,978 | |||||||||||
$ | 974 | $ | 29,777 | $ | 2,313 | $ | 29,777 |
Three months ended | Six months ended | ||||||||||||||
June 30 | June 30 | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Non-GAAP earnings per share - diluted | $ | 1.13 | $ | 1.30 | $ | 2.12 | $ | 2.56 | |||||||
Reduction attributable to the modified definition of non-GAAP income tax expense | $ | 0.12 | $ | 0.14 | $ | 0.24 | $ | 0.16 | |||||||
$ | 1.25 | $ | 1.44 | $ | 2.36 | $ | 2.72 |
Twelve months ended | |||||||
December 31, 2016 | |||||||
Low | High | ||||||
GAAP net income guidance | $ | 435 | $ | 515 | |||
Before tax adjustments: | |||||||
Cost of sales: | |||||||
Share-based compensation | 12 | 5 | |||||
Fair value adjustment on inventory acquired | 5 | 2 | |||||
Research and development expense: | |||||||
Share-based compensation | 73 | 55 | |||||
Upfront and milestone payments related to licenses and collaborations | 26 | 3 | |||||
Selling, general, and administrative expense: | |||||||
Share-based compensation | 145 | 123 | |||||
Amortization of purchased intangible assets | 320 | 320 | |||||
Change in fair value of contingent consideration | (2 | ) | (2 | ) | |||
Acquisition-related costs | 2 | 2 | |||||
Restructuring expenses | 2 | 1 | |||||
Adjustments to the income tax expense | 17 | 46 | |||||
Non-GAAP net income guidance | $ | 1,035 | $ | 1,070 | |||
Diluted GAAP earnings per share | $ | 1.91 | $ | 2.26 | |||
Diluted Non-GAAP earnings per share | $ | 4.50 | $ | 4.65 | |||
Shares used in computing diluted earnings per share guidance (GAAP) | 228 | 228 | |||||
Shares used in computing diluted earnings per share guidance (non-GAAP) | 230 | 230 |
Three months ended | Six months ended | ||||||||||||||
June 30 | June 30 | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Soliris | $ | 701,009 | $ | 635,983 | $ | 1,365,665 | $ | 1,236,316 | |||||||
Strensiq | 45,141 | — | 78,383 | — | |||||||||||
Kanuma | 6,396 | — | 8,923 | — | |||||||||||
Total net product sales | 752,546 | 635,983 | 1,452,971 | 1,236,316 | |||||||||||
Royalty revenue | 570 | 227 | 1,183 | 227 | |||||||||||
Total other revenue | 570 | 227 | 1,183 | 227 | |||||||||||
Total revenues | $ | 753,116 | $ | 636,210 | $ | 1,454,154 | $ | 1,236,543 |
June 30 | December 31 | ||||||
2016 | 2015 | ||||||
Cash and cash equivalents | $ | 597,550 | $ | 1,010,111 | |||
Marketable securities | 582,501 | 374,904 | |||||
Trade accounts receivable, net | 609,297 | 532,832 | |||||
Inventories | 329,847 | 289,874 | |||||
Prepaid expenses and other current assets | 242,014 | 208,993 | |||||
Property, plant and equipment, net | 825,301 | 697,025 | |||||
Intangible assets, net | 4,547,762 | 4,707,914 | |||||
Goodwill | 5,037,444 | 5,047,885 | |||||
Other assets | 257,631 | 228,343 | |||||
Total assets | $ | 13,029,347 | $ | 13,097,881 | |||
Accounts payable and accrued expenses | 436,267 | 460,708 | |||||
Deferred revenue | 53,422 | 20,504 | |||||
Current portion of long-term debt | 79,136 | 166,365 | |||||
Other current liabilities | 89,637 | 62,038 | |||||
Long-term debt, less current portion | 3,171,092 | 3,254,536 | |||||
Facility lease obligation | 196,439 | 151,307 | |||||
Contingent consideration | 109,565 | 121,424 | |||||
Deferred tax liabilities | 570,074 | 528,990 | |||||
Other liabilities | 124,376 | 73,393 | |||||
Total liabilities | 4,830,008 | 4,839,265 | |||||
Total stockholders' equity | 8,199,339 | 8,258,616 | |||||
Total liabilities and stockholders' equity | $ | 13,029,347 | $ | 13,097,881 |
Twelve months ended | |||||
December 31, 2016 | |||||
High | Low | ||||
GAAP income tax expense as a percentage of GAAP pre-tax income | 34 | % | 32 | % | |
Tax effect of pre-tax adjustments to GAAP net income | (6.5 | %) | (4.5 | %) | |
Tax effect of intercompany transactions (1) | (11.0 | %) | (11.0 | %) | |
Shared-based compensation deductions not included in GAAP tax expense | — | (1.0 | %) | ||
Non-GAAP income tax expenses as a percentage of non-GAAP pre-tax income | 16.5 | % | 15.5 | % | |
Effect of other tax attributes (2) | (8.5 | %) | (8.5 | %) | |
Cash taxes as a percentage of non-GAAP pre-tax income (3) | 8.0 | % | 7.0 | % |