Delaware | 0-27756 | 13-3648318 |
------------------ | ------------------ | --------------- |
(State or other jurisdiction of of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): | |
¨ | 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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | |
¨ | Emerging growth company |
Date: October 26, 2017 | ALEXION PHARMACEUTICALS, INC. |
By: /s/ Michael V. Greco | |
Name: Michael V. Greco | |
Title: Senior Vice President of Law and Corporate Secretary | |
• | 3Q17 Total Revenues of $859 Million, an 8 Percent Increase Year-Over-Year |
• | 3Q17 GAAP EPS of $0.35 Per Share, a 17 Percent Decrease Year-Over-Year, and Non-GAAP EPS of $1.44 Per Share, a 17 Percent Increase Year-Over-Year |
• | Received FDA Approval for Soliris for the Treatment of Patients with Generalized Myasthenia Gravis (gMG) and European Commission Approval for Soliris for the Treatment of Patients with Refractory gMG |
• | Completed Enrollment in the Phase 3 Trial of Eculizumab in Patients with Neuromyelitis Optica Spectrum Disorder |
• | Completed Enrollment in the ALXN1210 Phase 3 PNH Naive and Switch Studies |
• | Announces Plans to Initiate a Single, PK-based Phase 3 Study of ALXN1210 Delivered Subcutaneously Once Per Week to Support Registration in PNH and aHUS |
• | Provides Updated 2017 Guidance |
• | Soliris® (eculizumab) net product sales were $756 million, compared to $728 million in the third quarter of 2016, representing a 4 percent increase. Soliris volume increased 3 percent year-over-year. |
• | Strensiq® (asfotase alfa) net product sales were $87 million, compared to $61 million in the third quarter of 2016, representing a 44 percent increase. |
• | Kanuma® (sebelipase alfa) net product sales were $16 million, compared to $9 million in the third quarter of 2016, representing a 79 percent increase. |
• | GAAP cost of sales was $157 million, inclusive of restructuring related expenses of $83 million, compared to $71 million in the same quarter last year. Non-GAAP cost of sales was $71 million, compared to $62 million in the same quarter last year. |
• | GAAP R&D expense was $195 million, inclusive of restructuring related expenses of $1 million, compared to $195 million in the same quarter last year. Non-GAAP R&D expense was $175 million, compared to $179 million in the same quarter last year. |
• | GAAP SG&A expense was $271 million, inclusive of restructuring related expenses of $6 million, compared to $230 million in the same quarter last year. Non-GAAP SG&A expense was $230 million, compared to $201 million in the same quarter last year. |
• | GAAP income tax benefit was $20 million, compared to income tax expense of $65 million in the same quarter last year. Non-GAAP income tax expense was $35 million, compared to $56 million in the same quarter last year. Both GAAP and non-GAAP income tax expense for the third quarter of 2017 includes a benefit from the conclusion of a routine IRS audit for the 2013-2014 years. |
• | GAAP diluted EPS was $0.35 per share, inclusive of restructuring and related expenses of $164 million, compared to $0.42 per share in the same quarter last year. Non-GAAP diluted EPS was $1.44 per share, compared to $1.23 per share in the third quarter of 2016. |
• | Soliris® (eculizumab)- Generalized Myasthenia Gravis (gMG): The U.S. Food and Drug Administration (FDA) approved Soliris as a treatment for adult patients with generalized myasthenia gravis (gMG) who are anti-acetylcholine receptor (AchR) antibody-positive. The European Commission approved the extension of the indication for Soliris to include the treatment of refractory gMG in adults who are AchR antibody-positive. Alexion has submitted an application in Japan to extend the indication for Soliris as a potential treatment for patients with refractory gMG who are AchR antibody-positive. |
• | Eculizumab- Relapsing Neuromyelitis Optica Spectrum Disorder (NMOSD): Alexion completed enrollment in the PREVENT study, a single, multinational, placebo-controlled Phase 3 |
• | ALXN1210- PNH: Enrollment is complete in a Phase 3 trial comparing ALXN1210 administered intravenously every eight weeks to Soliris in complement inhibitor treatment-naive patients with PNH and in a Phase 3 PNH Switch study of ALXN1210 administered intravenously every eight weeks compared to patients currently treated with Soliris. Alexion expects to report data from these studies in the second quarter of 2018. |
• | ALXN1210- aHUS: Enrollment and dosing are ongoing in a Phase 3 trial with ALXN1210 administered intravenously every eight weeks in complement inhibitor treatment-naive adolescent and adult patients with aHUS. Enrollment is expected to be complete in early 2018. Alexion also initiated enrollment in a Phase 3 trial of ALXN1210 in pediatric patients with aHUS. |
• | ALXN1210- Subcutaneous: Initial pharmacokinetic and tolerability data from the Phase I study in healthy volunteers support progressing the development of a subcutaneous formulation of ALXN1210. Based on discussions with regulators, Alexion plans to initiate a single, PK-based Phase 3 study of ALXN1210 delivered subcutaneously once per week to support registration in PNH and aHUS in late 2018. |
Previous | Updated | ||
Total revenues | $3,450 to $3,525 million | $3,475 to $3,525 million | |
Soliris revenues | $3,075 to $3,125 million | $3,090 to $3,125 million | |
Metabolic revenues | $375 to $400 million | $385 to $400 million | |
R&D (% total revenues) | |||
GAAP | 23% to 25% | 23% to 25% | |
Non-GAAP | 21% to 22% | 21% to 22% | |
SG&A (% total revenues) | |||
GAAP | 29% to 30% | 30% to 32% | |
Non-GAAP | 25% to 26% | 26% to 27% | |
Operating margin | |||
GAAP | 23% to 26% | 16% to 19% | |
Non-GAAP | 43% to 44% | 43% to 44% | |
Earnings per share | |||
GAAP | $2.82 to $3.12 | $2.00 to $2.35 | |
Non-GAAP | $5.40 to $5.55 | $5.50 to $5.65 |
• | Foreign currency headwinds of $30 to $40 million versus prior assumption of $40 to $50 million |
• | Soliris revenue impact of $80 to $90 million from ALXN1210 and other clinical trial recruitments versus prior assumption of $70 to $100 million |
Three months ended | Nine months ended | ||||||||||||||
September 30 | September 30 | ||||||||||||||
2017 | 2016(1) | 2017 | 2016(1) | ||||||||||||
Net product sales | $ | 859 | $ | 798 | $ | 2,640 | $ | 2,251 | |||||||
Other revenue | — | 1 | 1 | 2 | |||||||||||
Total revenues | 859 | 799 | 2,641 | 2,253 | |||||||||||
Cost of sales | 157 | 71 | 310 | 190 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 195 | 195 | 613 | 551 | |||||||||||
Selling, general and administrative | 271 | 230 | 798 | 695 | |||||||||||
Amortization of purchased intangible assets | 80 | 82 | 240 | 242 | |||||||||||
Change in fair value of contingent consideration | 4 | 41 | 32 | 31 | |||||||||||
Acquisition-related costs | — | — | — | 2 | |||||||||||
Restructuring expenses | 72 | 1 | 99 | 2 | |||||||||||
Impairment of intangible assets | — | — | 31 | — | |||||||||||
Total operating expenses | 622 | 549 | 1,813 | 1,523 | |||||||||||
Operating income | 80 | 179 | 518 | 540 | |||||||||||
Other income and expense: | |||||||||||||||
Investment income | 5 | 5 | 13 | 8 | |||||||||||
Interest expense | (25 | ) | (24 | ) | (73 | ) | (72 | ) | |||||||
Other expense | (2 | ) | (1 | ) | — | (4 | ) | ||||||||
Income before income taxes | 58 | 159 | 458 | 472 | |||||||||||
Income tax (benefit) expense | (20 | ) | 65 | 45 | 166 | ||||||||||
Net income | $ | 78 | $ | 94 | $ | 413 | $ | 306 | |||||||
Earnings per common share | |||||||||||||||
Basic | $ | 0.35 | $ | 0.42 | $ | 1.84 | $ | 1.37 | |||||||
Diluted | $ | 0.35 | $ | 0.42 | $ | 1.83 | $ | 1.35 | |||||||
Shares used in computing earnings per common share | |||||||||||||||
Basic | 223 | 224 | 224 | 224 | |||||||||||
Diluted | 225 | 226 | 226 | 226 |
Three months ended | Nine months ended | ||||||||||||||
September 30 | September 30 | ||||||||||||||
2017 | 2016(4) | 2017 | 2016(4) | ||||||||||||
GAAP net income | $ | 78 | $ | 94 | $ | 413 | $ | 306 | |||||||
Before tax adjustments: | |||||||||||||||
Cost of sales: | |||||||||||||||
Share-based compensation | 3 | 3 | 8 | 8 | |||||||||||
Fair value adjustment in inventory acquired | — | 6 | 5 | 8 | |||||||||||
Restructuring related expenses (1) | 83 | — | 83 | — | |||||||||||
Research and development expense: | |||||||||||||||
Share-based compensation | 19 | 14 | 55 | 44 | |||||||||||
Upfront and milestone payments related to licenses and collaborations | — | 2 | 9 | 5 | |||||||||||
Restructuring related expenses (1) | 1 | — | 1 | — | |||||||||||
Selling, general and administrative expense: | |||||||||||||||
Share-based compensation | 35 | 29 | 109 | 99 | |||||||||||
Restructuring related expenses (1) | 6 | — | 6 | — | |||||||||||
Amortization of purchased intangible assets | 80 | 82 | 240 | 242 | |||||||||||
Change in fair value of contingent consideration | 4 | 41 | 32 | 31 | |||||||||||
Acquisition-related costs | — | — | — | 2 | |||||||||||
Restructuring expenses (1) | 72 | 1 | 99 | 2 | |||||||||||
Impairment of intangible assets (2) | — | — | 31 | — | |||||||||||
Other income and expense: | |||||||||||||||
Restructuring related expenses (1) | 2 | — | 2 | — | |||||||||||
Adjustments to income tax expense (3) | (55 | ) | 9 | (94 | ) | 19 | |||||||||
Non-GAAP net income | $ | 328 | $ | 281 | $ | 999 | $ | 766 | |||||||
GAAP earnings per common share - diluted | $ | 0.35 | $ | 0.42 | $ | 1.83 | $ | 1.35 | |||||||
Non-GAAP earnings per common share - diluted | $ | 1.44 | $ | 1.23 | $ | 4.38 | $ | 3.36 | |||||||
Shares used in computing diluted earnings per common share (GAAP) | 225 | 226 | 226 | 226 | |||||||||||
Shares used in computing diluted earnings per common share (non-GAAP) | 228 | 228 | 228 | 228 |
Three months ended | Nine months ended | ||||||||||||||||||||||||||||||
September 30, 2017 | September 30, 2017 | ||||||||||||||||||||||||||||||
Employee Separation Costs | Asset-Related Charges | Other | Total | Employee Separation Costs | Asset-Related Charges | Other | Total | ||||||||||||||||||||||||
Cost of sales | $ | — | $ | 83 | $ | — | $ | 83 | $ | — | $ | 83 | $ | — | $ | 83 | |||||||||||||||
Research and development | — | 1 | — | 1 | — | 1 | — | 1 | |||||||||||||||||||||||
Selling, general and administrative | — | 6 | — | 6 | — | 6 | — | 6 | |||||||||||||||||||||||
Restructuring expenses | 66 | — | 6 | 72 | 87 | — | 12 | 99 | |||||||||||||||||||||||
Other expense | — | — | 2 | 2 | — | — | 2 | 2 | |||||||||||||||||||||||
$ | 66 | $ | 90 | $ | 8 | $ | 164 | $ | 87 | $ | 90 | $ | 14 | $ | 191 |
Twelve months ended | ||||||||
December 31, 2017 | ||||||||
Low | High | |||||||
GAAP net income | $ | 451 | $ | 530 | ||||
Before tax adjustments: | ||||||||
Share-based compensation | 241 | 218 | ||||||
Fair value adjustment in inventory acquired | 5 | 5 | ||||||
Upfront and milestone payments related to licenses and collaborations | 10 | 9 | ||||||
Amortization of purchased intangible assets | 320 | 320 | ||||||
Change in fair value of contingent consideration | 36 | 36 | ||||||
Restructuring and related expenses | 286 | 256 | ||||||
Impairment of intangible assets | 31 | 31 | ||||||
Adjustments to income tax expense | (126 | ) | (117 | ) | ||||
Non-GAAP net income | $ | 1,254 | $ | 1,288 | ||||
Diluted GAAP earnings per common share | $ | 2.00 | $ | 2.35 | ||||
Diluted non-GAAP earnings per common share | $ | 5.50 | $ | 5.65 |
Operating expense and margin (% total revenues) | ||||||
GAAP research and development expense | 25 | % | 23 | % | ||
Share-based compensation | (2 | )% | (2 | )% | ||
Upfront and milestone payments related to licenses and collaborations | (1 | )% | 0 | % | ||
Restructuring related expenses | 0 | % | 0 | % | ||
Non-GAAP research and development expense | 22 | % | 21 | % | ||
GAAP selling, general and administrative expense | 32 | % | 30 | % | ||
Share-based compensation | (4 | )% | (4 | )% | ||
Restructuring related expenses | (1 | )% | 0 | % | ||
Non-GAAP selling, general and administrative expense | 27 | % | 26 | % | ||
GAAP operating margin | 16 | % | 19 | % | ||
Share-based compensation | 7 | % | 6 | % | ||
Fair value adjustment in inventory acquired | 0 | % | 0 | % | ||
Upfront and milestone payments related to licenses and collaborations | 1 | % | 1 | % | ||
Amortization of purchased intangible assets | 9 | % | 9 | % | ||
Change in fair value of contingent consideration | 1 | % | 1 | % | ||
Restructuring and related expenses | 8 | % | 7 | % | ||
Impairment of intangible assets | 1 | % | 1 | % | ||
Non-GAAP operating margin | 43 | % | 44 | % |
Three months ended | Nine months ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
2017 | 2016(1) | 2017 | 2016(1) | |||||||||||||
Soliris | ||||||||||||||||
United States | $ | 308 | $ | 275 | $ | 914 | $ | 773 | ||||||||
Europe | 248 | 240 | 738 | 703 | ||||||||||||
Asia Pacific | 82 | 80 | 241 | 223 | ||||||||||||
Rest of World | 118 | 133 | 459 | 395 | ||||||||||||
Total Soliris | $ | 756 | $ | 728 | $ | 2,352 | $ | 2,094 | ||||||||
Strensiq | ||||||||||||||||
United States | $ | 71 | $ | 51 | $ | 204 | $ | 118 | ||||||||
Europe | 9 | 6 | 23 | 10 | ||||||||||||
Asia Pacific | 5 | 3 | 13 | 9 | ||||||||||||
Rest of World | 2 | 1 | 4 | 2 | ||||||||||||
Total Strensiq | $ | 87 | $ | 61 | $ | 244 | $ | 139 | ||||||||
Kanuma | ||||||||||||||||
United States | $ | 11 | $ | 6 | $ | 31 | $ | 12 | ||||||||
Europe | 4 | 2 | 9 | 5 | ||||||||||||
Asia Pacific | 1 | 1 | 2 | 1 | ||||||||||||
Rest of World | — | — | 2 | — | ||||||||||||
Total Kanuma | $ | 16 | $ | 9 | $ | 44 | $ | 18 | ||||||||
Net Product Sales | ||||||||||||||||
United States | $ | 390 | $ | 332 | $ | 1,149 | $ | 903 | ||||||||
Europe | 261 | 248 | 770 | 718 | ||||||||||||
Asia Pacific | 88 | 84 | 256 | 233 | ||||||||||||
Rest of World | 120 | 134 | 465 | 397 | ||||||||||||
Total Net Product Sales | $ | 859 | $ | 798 | $ | 2,640 | $ | 2,251 |
September 30 | December 31 | ||||||
2017 | 2016 | ||||||
Cash and cash equivalents | $ | 550 | $ | 966 | |||
Marketable securities | 979 | 327 | |||||
Trade accounts receivable, net | 705 | 650 | |||||
Inventories | 441 | 375 | |||||
Prepaid expenses and other current assets (1) | 207 | 260 | |||||
Property, plant and equipment, net | 1,354 | 1,036 | |||||
Intangible assets, net | 4,032 | 4,303 | |||||
Goodwill | 5,037 | 5,037 | |||||
Other assets | 338 | 299 | |||||
Total assets | $ | 13,643 | $ | 13,253 | |||
Accounts payable and accrued expenses | $ | 738 | $ | 572 | |||
Deferred revenue | 18 | 37 | |||||
Current portion of long-term debt | 167 | 167 | |||||
Current portion of contingent consideration | — | 24 | |||||
Other current liabilities | 49 | 23 | |||||
Long-term debt, less current portion | 2,763 | 2,888 | |||||
Contingent consideration | 160 | 129 | |||||
Facility lease obligation | 333 | 233 | |||||
Deferred tax liabilities | 353 | 396 | |||||
Other liabilities | 118 | 90 | |||||
Total liabilities | 4,699 | 4,559 | |||||
Total stockholders' equity (1) | 8,944 | 8,694 | |||||
Total liabilities and stockholders' equity | $ | 13,643 | $ | 13,253 |