Delaware | 0-27756 | 13-3648318 |
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Date: February 8, 2018 | ALEXION PHARMACEUTICALS, INC. |
By: /s/ Michael V. Greco | |
Name: Michael V. Greco | |
Title: Senior Vice President of Law and Corporate Secretary | |
• | 2017 Total Revenues of $3.551 Billion, a 15 Percent Increase Over 2016 and a 17 Percent Volume Increase |
• | 2017 GAAP Diluted EPS of $1.97 Per Share, a 12 Percent Increase Over 2016; Non-GAAP Diluted EPS of $5.86 Per Share, a 27 Percent Increase Over 2016 |
• | Continued Double-Digit Volume Growth of Soliris in 2017 Despite Rapid Enrollment in ALXN1210 Trials |
• | Initial Launches Underway for Soliris in Patients with AchR Antibody-Positive Generalized Myasthenia Gravis (gMG) in the U.S., Germany and Japan |
• | Data from ALXN1210 Phase 3 PNH Naive and Switch Studies Expected in Second Quarter of 2018 |
• | Four New Independent Directors With Deep Biopharmaceutical Experience Appointed to Alexion's Board of Directors |
• | 2018 Guidance: Revenue $3.850 to $3.950 Billion; GAAP Diluted EPS $4.35 to $4.75 Per Share; Non-GAAP Diluted EPS $6.60 to $6.80 Per Share |
• | Soliris® (eculizumab) net product sales were $3,144.1 million, compared to $2,843.2 million in 2016, representing an 11 percent increase. Soliris volume increased 11 percent year-over-year. |
• | Strensiq® (asfotase alfa) net product sales were $339.8 million, compared to $209.4 million in 2016, representing a 62 percent increase. Strensiq volume increased 74 percent year-over-year. |
• | Kanuma® (sebelipase alfa) net product sales were $65.6 million, compared to $29.1 million in 2016, representing a 125 percent increase. Kanuma volume increased 136 percent year-over-year. |
• | GAAP cost of sales was $454.2 million, inclusive of restructuring related expenses of $152.1 million, compared to $258.3 million in 2016. Non-GAAP cost of sales was $285.8 million, compared to $236.4 million in 2016. |
• | GAAP R&D expense was $878.4 million, inclusive of restructuring related expenses of $16.3 million, compared to $757.2 million in 2016. Non-GAAP R&D expense was $736.3 million, compared to $690.0 million in 2016. |
• | GAAP SG&A expense was $1,094.4 million, inclusive of restructuring related expenses of $10.9 million, compared to $953.0 million in 2016. Non-GAAP SG&A expense was $927.8 million, compared to $829.3 million in 2016. |
• | GAAP income tax expense was $104.5 million, compared to $176.8 million in 2016. GAAP income tax expense includes a $45.8 million charge related to U.S. tax reform. The charge from U.S. tax reform includes a transition tax expense of $177.9 million and deferred tax expense related to the new GILTI minimum tax of $165.4 million, partially offset by the $297.5 million benefit of revaluing balance sheet taxes. Non-GAAP income tax expense was $186.7 million, compared to $182.8 million in 2016. Both GAAP and non-GAAP income tax expense for 2017 include a benefit from the conclusion of a routine IRS audit for the years 2013 and 2014. |
• | GAAP diluted EPS was $1.97 per share, inclusive of restructuring and related expenses of $286.5 million, compared to $1.76 per share in 2016. Non-GAAP diluted EPS was $5.86 per share, compared to $4.62 per share in 2016. |
• | Soliris net product sales were $791.9 million, compared to $748.7 million in the fourth quarter of 2016, representing a 6 percent increase. Soliris volume increased 6 percent year-over-year. |
• | Strensiq net product sales were $95.6 million, compared to $70.5 million in the fourth quarter of 2016, representing a 36 percent increase. Strensiq volume increased 43 percent year-over-year. |
• | Kanuma net product sales were $21.9 million, compared to $11.0 million in the fourth quarter of 2016, representing a 99 percent increase. Kanuma volume increased 82 percent year-over-year. |
• | GAAP cost of sales was $144.6 million, inclusive of restructuring related expenses of $69.1 million, compared to $67.6 million in the same quarter last year. Non-GAAP cost of sales was $72.5 million, compared to $62.3 million in the same quarter last year. |
• | GAAP R&D expense was $265.0 million, inclusive of restructuring related expenses of $15.3 million, compared to $205.9 million in the same quarter last year. Non-GAAP R&D expense was $188.6 million, compared to $186.1 million in the same quarter last year. |
• | GAAP SG&A expense was $296.4 million, inclusive of restructuring related expenses of $4.5 million, compared to $258.5 million in the same quarter last year. Non-GAAP SG&A expense was $245.2 million, compared to $234.0 million in the same quarter last year. |
• | GAAP income tax expense was $59.3 million, compared to $11.7 million in the same quarter last year, driven primarily by the $45.8 million charge related to U.S. tax reform. Non-GAAP income tax expense was $46.8 million, compared to $37.7 million in the same quarter last year. |
• | GAAP diluted EPS was $0.13 per share, inclusive of restructuring and related expenses of $95.1 million, compared to $0.41 per share in the same quarter last year. Non-GAAP diluted EPS was $1.48 per share, compared to $1.26 per share in the fourth quarter of 2016. |
• | Soliris® (eculizumab)- Generalized Myasthenia Gravis (gMG): In December 2017, the Ministry of Health, Labour and Welfare (MHLW) in Japan approved Soliris as a treatment for patients with gMG who are anti-acetylcholine receptor (AchR) antibody-positive and whose symptoms are difficult to control with high-dose intravenous immunoglobulin (IVIG) therapy or plasmapheresis (PLEX). |
• | Soliris (eculizumab)- Relapsing Neuromyelitis Optica Spectrum Disorder (NMOSD): Enrollment is complete in the PREVENT study, a single, multinational, placebo-controlled Phase 3 trial of Soliris in patients with NMOSD. Alexion expects to report data in mid-2018. |
• | ALXN1210- Paroxysmal Nocturnal Hemoglobinuria (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- Atypical Hemolytic Uremic Syndrome (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 the second quarter of 2018 and Alexion expects to report data from this study in the fourth |
• | ALXN1210- Subcutaneous: Alexion plans to initiate in late 2018 a single, PK-based Phase 3 study of ALXN1210 delivered subcutaneously once per week to support registration in PNH and aHUS. In December 2017, Alexion entered into a collaboration and license agreement with Halozyme Therapeutics, Inc. that enables the Company to use Halozyme's ENHANZE® drug-delivery technology in the development of subcutaneous formulations for its portfolio of products, including a next-generation subcutaneous formulation of ALXN1210 to potentially further extend the dosing interval to once every two weeks or once per month. |
Total revenues | $3,850 to $3,950 million |
Soliris revenues | $3,325 to $3,400 million |
Metabolic revenues | $525 to $550 million |
R&D (% total revenues) | |
GAAP | 20% to 22% |
Non-GAAP | 18% to 20% |
SG&A (% total revenues) | |
GAAP | 26% to 28% |
Non-GAAP | 23% to 24% |
Operating margin | |
GAAP | 31% to 34% |
Non-GAAP | 48% to 49% |
Earnings per share | |
GAAP | $4.35 to $4.75 |
Non-GAAP | $6.60 to $6.80 |
• | A foreign currency benefit, net of hedging activities, of $45 million to $55 million |
• | Unfavorable Soliris revenue impact of $90 million to $110 million from ALXN1210 and other clinical trial recruitment versus prior year |
• | GAAP effective tax rate of 15 to 17 percent; non-GAAP effective tax rate of 16 to 18 percent (both inclusive of Alexion's provisional assessment of the impact of U.S. tax reform) |
Three months ended | Twelve months ended | ||||||||||||||
December 31 | December 31 | ||||||||||||||
2017 | 2016(1) | 2017 | 2016(1) | ||||||||||||
Net product sales | $ | 909.4 | $ | 830.2 | $ | 3,549.5 | $ | 3,081.7 | |||||||
Other revenue | 0.3 | 0.6 | 1.6 | 2.4 | |||||||||||
Total revenues | 909.7 | 830.8 | 3,551.1 | 3,084.1 | |||||||||||
Cost of sales | 144.6 | 67.6 | 454.2 | 258.3 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 265.0 | 205.9 | 878.4 | 757.2 | |||||||||||
Selling, general and administrative | 296.4 | 258.5 | 1,094.4 | 953.0 | |||||||||||
Amortization of purchased intangible assets | 80.0 | 80.0 | 320.1 | 322.2 | |||||||||||
Change in fair value of contingent consideration | 9.2 | 5.0 | 41.0 | 35.7 | |||||||||||
Acquisition-related costs | — | — | — | 2.3 | |||||||||||
Restructuring expenses | 5.9 | 1.3 | 104.6 | 3.0 | |||||||||||
Impairment of intangible assets | — | 85.0 | 31.0 | 85.0 | |||||||||||
Total operating expenses | 656.5 | 635.7 | 2,469.5 | 2,158.4 | |||||||||||
Operating income | 108.6 | 127.5 | 627.4 | 667.4 | |||||||||||
Other income and expense: | |||||||||||||||
Investment income | 5.6 | 2.9 | 18.5 | 10.9 | |||||||||||
Interest expense | (25.1 | ) | (24.4 | ) | (98.4 | ) | (96.9 | ) | |||||||
Other income (expense) | 0.2 | (1.5 | ) | 0.3 | (5.2 | ) | |||||||||
Income before income taxes | 89.3 | 104.5 | 547.8 | 576.2 | |||||||||||
Income tax expense | 59.3 | 11.7 | 104.5 | 176.8 | |||||||||||
Net income | $ | 30.0 | $ | 92.8 | $ | 443.3 | $ | 399.4 | |||||||
Earnings per common share | |||||||||||||||
Basic | $ | 0.13 | $ | 0.41 | $ | 1.98 | $ | 1.78 | |||||||
Diluted | $ | 0.13 | $ | 0.41 | $ | 1.97 | $ | 1.76 | |||||||
Shares used in computing earnings per common share | |||||||||||||||
Basic | 223.3 | 223.8 | 223.9 | 224.3 | |||||||||||
Diluted | 225.0 | 225.6 | 225.4 | 226.3 |
Three months ended | Twelve months ended | ||||||||||||||
December 31 | December 31 | ||||||||||||||
2017 | 2016(4) | 2017 | 2016(4) | ||||||||||||
GAAP net income | $ | 30.0 | $ | 92.8 | $ | 443.3 | $ | 399.4 | |||||||
Before tax adjustments: | |||||||||||||||
Cost of sales: | |||||||||||||||
Share-based compensation | 3.0 | 2.9 | 11.1 | 11.1 | |||||||||||
Fair value adjustment in inventory acquired | — | 2.4 | 5.2 | 10.8 | |||||||||||
Restructuring related expenses (1) | 69.1 | — | 152.1 | — | |||||||||||
Research and development expense: | |||||||||||||||
Share-based compensation | 21.1 | 13.8 | 76.4 | 57.6 | |||||||||||
Upfront and milestone payments related to licenses and collaborations | 40.0 | 6.0 | 49.4 | 9.6 | |||||||||||
Restructuring related expenses (1) | 15.3 | — | 16.3 | — | |||||||||||
Selling, general and administrative expense: | |||||||||||||||
Share-based compensation | 46.7 | 24.5 | 155.7 | 123.7 | |||||||||||
Restructuring related expenses (1) | 4.5 | — | 10.9 | — | |||||||||||
Amortization of purchased intangible assets | 80.0 | 80.0 | 320.1 | 322.2 | |||||||||||
Change in fair value of contingent consideration | 9.2 | 5.0 | 41.0 | 35.7 | |||||||||||
Acquisition-related costs | — | — | — | 2.3 | |||||||||||
Restructuring expenses (1) | 5.9 | 1.3 | 104.6 | 3.0 | |||||||||||
Impairment of intangible assets (2) | — | 85.0 | 31.0 | 85.0 | |||||||||||
Other income and expense: | |||||||||||||||
Restructuring related expenses (1) | 0.3 | — | 2.6 | — | |||||||||||
Adjustments to income tax expense (3) | 12.5 | (26.0 | ) | (82.2 | ) | (6.0 | ) | ||||||||
Non-GAAP net income | $ | 337.6 | $ | 287.7 | $ | 1,337.5 | $ | 1,054.4 | |||||||
GAAP earnings per common share - diluted | $ | 0.13 | $ | 0.41 | $ | 1.97 | $ | 1.76 | |||||||
Non-GAAP earnings per common share - diluted | $ | 1.48 | $ | 1.26 | $ | 5.86 | $ | 4.62 | |||||||
Shares used in computing diluted earnings per common share (GAAP) | 225.0 | 225.6 | 225.4 | 226.3 | |||||||||||
Shares used in computing diluted earnings per common share (non-GAAP) | 227.6 | 227.8 | 228.1 | 228.3 |
Three months ended | Twelve months ended | ||||||||||||||||||||||||
December 31, 2017 | December 31, 2017 | ||||||||||||||||||||||||
Employee Separation Costs | Asset-Related Charges | Other | Total | Employee Separation Costs | Asset-Related Charges | Other | Total | ||||||||||||||||||
Cost of Sales | $ | — | $ | 69.1 | $ | — | $ | 69.1 | $ | — | $ | 152.1 | $ | — | $ | 152.1 | |||||||||
Research & Development | — | 15.3 | — | 15.3 | — | 16.3 | — | 16.3 | |||||||||||||||||
Selling , General and Administrative | — | 4.5 | — | 4.5 | — | 10.9 | — | 10.9 | |||||||||||||||||
Restructuring Expense | 1.0 | — | 4.9 | 5.9 | 87.3 | — | 17.3 | 104.6 | |||||||||||||||||
Other expense | — | — | 0.3 | 0.3 | — | — | 2.6 | 2.6 | |||||||||||||||||
$ | 1.0 | $ | 88.9 | $ | 5.2 | $ | 95.1 | $ | 87.3 | $ | 179.3 | $ | 19.9 | $ | 286.5 |
Twelve months ending | ||||||||
December 31, 2018 | ||||||||
Low | High | |||||||
GAAP net income | $ | 982 | $ | 1,074 | ||||
Before tax adjustments: | ||||||||
Share-based compensation | 247 | 217 | ||||||
Amortization of purchased intangible assets | 320 | 320 | ||||||
Change in fair value of contingent consideration | 15 | 15 | ||||||
Restructuring and related expenses | 70 | 30 | ||||||
Adjustments to income tax expense | (129 | ) | (106 | ) | ||||
Non-GAAP net income | $ | 1,505 | $ | 1,550 | ||||
Diluted GAAP earnings per common share | $ | 4.35 | $ | 4.75 | ||||
Diluted non-GAAP earnings per common share | $ | 6.60 | $ | 6.80 |
Operating expense and margin (% total revenues) | ||||||
GAAP research and development expense | 22 | % | 20 | % | ||
Share-based compensation | (2 | )% | (2 | )% | ||
Restructuring related expenses | 0 | % | 0 | % | ||
Non-GAAP research and development expense | 20 | % | 18 | % | ||
GAAP selling, general and administrative expense | 28 | % | 26 | % | ||
Share-based compensation | (4 | )% | (3 | )% | ||
Restructuring related expenses | 0 | % | 0 | % | ||
Non-GAAP selling, general and administrative expense | 24 | % | 23 | % | ||
GAAP operating margin | 31 | % | 34 | % | ||
Share-based compensation | 7 | % | 6 | % | ||
Amortization of purchased intangible assets | 8 | % | 8 | % | ||
Change in fair value of contingent consideration | 0 | % | 0 | % | ||
Restructuring and related expenses | 2 | % | 1 | % | ||
Non-GAAP operating margin | 48 | % | 49 | % | ||
Income tax expense (% of income before income taxes) | ||||||
GAAP income tax expense | 17 | % | 15 | % | ||
Tax effect of pre-tax adjustments to GAAP net income | 1 | % | 1 | % | ||
Non-GAAP income tax expense | 18 | % | 16 | % |
Three months ended | Twelve months ended | |||||||||||||||
December 31 | December 31 | |||||||||||||||
2017 | 2016(1) | 2017 | 2016(1) | |||||||||||||
Soliris | ||||||||||||||||
United States | $ | 321.5 | $ | 285.4 | $ | 1,235.0 | $ | 1,058.5 | ||||||||
Europe | 246.9 | 237.0 | 985.2 | 939.7 | ||||||||||||
Asia Pacific | 86.7 | 80.8 | 328.1 | 303.8 | ||||||||||||
Rest of World | 136.8 | 145.5 | 595.8 | 541.2 | ||||||||||||
Total Soliris | $ | 791.9 | $ | 748.7 | $ | 3,144.1 | $ | 2,843.2 | ||||||||
Strensiq | ||||||||||||||||
United States | $ | 76.2 | $ | 59.7 | $ | 280.1 | $ | 177.5 | ||||||||
Europe | 12.3 | 5.4 | 35.6 | 15.3 | ||||||||||||
Asia Pacific | 5.3 | 3.6 | 18.6 | 13.0 | ||||||||||||
Rest of World | 1.8 | 1.8 | 5.5 | 3.6 | ||||||||||||
Total Strensiq | $ | 95.6 | $ | 70.5 | $ | 339.8 | $ | 209.4 | ||||||||
Kanuma | ||||||||||||||||
United States | $ | 11.2 | $ | 8.4 | $ | 42.4 | $ | 20.4 | ||||||||
Europe | 5.9 | 1.7 | 14.6 | 6.3 | ||||||||||||
Asia Pacific | 0.9 | 0.4 | 2.7 | 1.3 | ||||||||||||
Rest of World | 3.9 | 0.5 | 5.9 | 1.1 | ||||||||||||
Total Kanuma | $ | 21.9 | $ | 11.0 | $ | 65.6 | $ | 29.1 | ||||||||
Net Product Sales | ||||||||||||||||
United States | $ | 408.9 | $ | 353.5 | $ | 1,557.5 | $ | 1,256.4 | ||||||||
Europe | 265.1 | 244.1 | 1,035.4 | 961.3 | ||||||||||||
Asia Pacific | 92.9 | 84.8 | 349.4 | 318.1 | ||||||||||||
Rest of World | 142.5 | 147.8 | 607.2 | 545.9 | ||||||||||||
Total Net Product Sales | $ | 909.4 | $ | 830.2 | $ | 3,549.5 | $ | 3,081.7 |
December 31 | December 31 | ||||||
2017 | 2016(2) | ||||||
Cash and cash equivalents | $ | 584.4 | $ | 966.0 | |||
Marketable securities | 889.7 | 327.4 | |||||
Trade accounts receivable, net | 726.5 | 649.6 | |||||
Inventories | 460.4 | 374.7 | |||||
Prepaid expenses and other current assets (1) | 292.9 | 260.5 | |||||
Property, plant and equipment, net | 1,325.4 | 1,035.6 | |||||
Intangible assets, net | 3,954.4 | 4,303.1 | |||||
Goodwill | 5,037.4 | 5,037.4 | |||||
Other assets | 312.2 | 299.0 | |||||
Total assets | $ | 13,583.3 | $ | 13,253.3 | |||
Accounts payable and accrued expenses | $ | 710.2 | $ | 572.1 | |||
Deferred revenue | 15.9 | 36.6 | |||||
Current portion of long-term debt | 167.4 | 167.0 | |||||
Current portion of contingent consideration | — | 23.8 | |||||
Other current liabilities | 59.0 | 23.4 | |||||
Long-term debt, less current portion | 2,720.7 | 2,888.1 | |||||
Contingent consideration | 168.9 | 129.1 | |||||
Facility lease obligations | 342.9 | 233.4 | |||||
Deferred tax liabilities | 365.0 | 395.5 | |||||
Other liabilities | 140.2 | 90.5 | |||||
Total liabilities | 4,690.2 | 4,559.5 | |||||
Total stockholders' equity (1) | 8,893.1 | 8,693.8 | |||||
Total liabilities and stockholders' equity | $ | 13,583.3 | $ | 13,253.3 |