Edited Transcript of ALXN earnings conference call or presentation 25-Apr-19 12:00pm GMT

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Update time : 2019-06-19 16:09:59

Q1 2019 Alexion Pharmaceuticals Inc earnings Call

CHESHIRE Apr 27, 2019 (Thomson StreetEvents) -- Edited Transcript of Alexion Pharmaceuticals Inc earnings parliament summon or presentation Thursday, April 25, 2019 at 12:00:00pm GMT

TEXT translation of Transcript

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Corporate Participants

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* Brian M. Goff

Alexion Pharmaceuticals, Inc. - Executive VP & leading Commercial Officer

* John J. Orloff

Alexion Pharmaceuticals, Inc. - Executive VP and leading of investigation & Development

* Ludwig N. Hantson

Alexion Pharmaceuticals, Inc. - CEO & Director

* Paul J. Clancy

Alexion Pharmaceuticals, Inc. - Executive VP & CFO

* Susan Altschuller

Alexion Pharmaceuticals, Inc. - VP of IR

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Conference summon Participants

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* Christopher Joseph Raymond

Piper Jaffray Companies, investigation fraction - MD & Senior investigation Analyst

* Geoffrey Christopher Meacham

Barclays beach PLC, investigation fraction - MD & Senior investigation Analyst

* Geoffrey Craig Porges

SVB Leerink LLC, investigation fraction - Director of Therapeutics Research, MD & Senior Biotechnology Analyst

* Joshua Elliott Schimmer

Evercore ISI Institutional Equities, investigation fraction - Senior MD & Equity Analyst

* Kennen B. MacKay

RBC leading Markets, LLC, investigation fraction - Co-Head of Biotechnology Research

* Matthew Kelsey Harrison

Morgan Stanley, investigation fraction - Executive Director

* Paul Andrew Matteis

Stifel, Nicolaus & Company, Incorporated, investigation fraction - Co-Head of the Biotech Team, MD & Senior Analyst

* Philip M. Nadeau

Cowen and Company, LLC, investigation fraction - MD and Senior investigation Analyst

* Robyn Karnauskas

Citigroup Inc, investigation fraction - Director and Senior Analyst

* Steven James Seedhouse

Raymond James & Associates, Inc., investigation fraction - investigation Analyst

* Tessa Thomas Romero

JP Morgan follow & Co, investigation fraction - Analyst

* Ying Huang

BofA Merrill Lynch, investigation fraction - Director at Equity Research

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Presentation

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Operator [1]

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Good morning, and greet ought the Alexion Pharmaceuticals Incorporated parliament summon ought controversy first area 2019 economical results. Today's summon is being recorded.

For opening remarks and introductions, I used to now although ought fetch the summon can ought Susan Altschuller, Vice headmaster of Investor Relations. entertain impress can ahead, ma'am.

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Susan Altschuller, Alexion Pharmaceuticals, Inc. - VP of IR [2]

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Thank you, Daniel. Good morning and thank you although joining us above today's summon ought controversy Alexion's deed although the first area 2019. Today's summon will be led by Ludwig Hantson, our CEO. Ludwig will be joined by Paul Clancy, our leading economical Officer; John Orloff, our Global leading of R&D; and Brian Goff, our leading Commercial Officer. You can access the webcast slides that will be presented above this summon by going ought the Events piece of our Investor Relations page above our website.

Before we begin, I used to although ought point out that we will be making forward-looking statements, and these statements contain sure risks and uncertainties that could effect our genuine results ought disagree materially. entertain accept a appear at the danger factors discussed at our SEC filings although extra detail. These forward-looking statements use only although of today, and we undertake no duty ought update any of the statements after the call, silent although required by law. I used to also although ought remember you that we will be using non-GAAP economical measures, which we think supply useful news although the concord of our ongoing riddle performance. Reconciliations of our economical results and economical guidance are included at our review release. These non-GAAP economical measures ought be considered, at love to, silent no a agent for, our GAAP results. Thank you.

Ludwig?

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Ludwig N. Hantson, Alexion Pharmaceuticals, Inc. - CEO & Director [3]

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Thank you, Susan, and thank you, everyone, although joining us this morning. I'm identical pleased with the well commence ought the year. We've delivered above the climax and bottom line, and make already made great impress can consequently distant above our 2019 key objectives.

Here above glide 5, I hope ought highlight some of these achievements. First with ULTOMIRIS, we make an opportunity ought redefine the standard of anxiety at PNH and HUS. Our U.S. launch although PNH is above track ought confront our best-in-class aim of 70% or greater conversion by year 2. We desire ought launch at Germany mid-year and at Japan by the target of this year. Furthermore, I'm pleased ought proclaim that just this week, we filed the approval of ULTOMIRIS although atypical HUS at the U.S. with a latent launch at early 2020 and are also planning ought rope at Europe and Japan this year.

Second, we are accelerating our neurology portfolio, house above the best Alexion launch ought date. We're seeing continuous well patient growth with Soliris at gMG. With a PDUFA appointment of June 28 although Soliris at NMOSD, our team is dedicated and focused above launch preparedness, although we desire ought increase into our next scare neurology indication.

We also received orphan medication priority magazine although filing at Japan. at May, we will gift extra side III news at the AAN conference. Given the might of our clinical data, we think Soliris could be transformative although patients with this devastating disease.

Third, our metabolics portfolio continues ought become with Strensiq and Kanuma. We also make an opportunity ought fetch a transformative manufacture ought Wilson illness patients with 1840, and enrollment is above track at our ongoing pivotal study.

Fourth, we're executing and expanding our pipeline. We last ought table impress can with our inside assets, and we make now dosed the first patients at the side III trial of ULTOMIRIS at gMG and a side III trial of ULTOMIRIS administered at a weekly subQ formulation designed ought back latent registration at both PNH and atypical HUS.

Furthermore, we continued ought perpendicular our portfolio with 3 riddle development deals, 2 clinical stage and 1 preclinical stage. extra riddle development is a heart focus, and we make the economical and operational award ought perpendicular our pipeline further.

Finally, we delivered identical well economical deed and make updated our guidance ought think the upward trajectory and growth of the business.

Turning ought glide 6. Earlier this year, we laid out our tactic at house 4 durable growing blockbuster pillars although we diversify our portfolio. With our hematology and nephrology, neurology, metabolics and FcRn franchises, we aspire ought deliver continued double-digit revenue growth can the coming years.

However, we're no sitting however although we plan ought farther perpendicular each of these 4 pillars also although potentially increase at other areas of scare illness with the aim of delivering transformative therapies ought level more patients.

With that, I will now fetch the summon can ought Paul ought controversy our first area economical results and updated guidance. Paul?

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Paul J. Clancy, Alexion Pharmaceuticals, Inc. - Executive VP & CFO [4]

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Thanks, Ludwig. We delivered an superb area ought commence the year.

Starting with glide 8. We reported sum revenues at the area of $1.140 billion, an enlarge of 23% year-over-year, driven by growth at gMG, the ULTOMIRIS conversion and growth at the heart business. Our non-GAAP operating border was 57% at the first quarter, an expansion of 741 foundation points, driven by climax rope leverage at phasing of R&D spend. Non-GAAP earnings per fraction was $2.39, representing 42% growth year-over-year.

Moving ought glide 9. First area net manufacture sales were driven by volume growth of 26%, partially offset by a FX headwind of 1% and a revenue headwind of 2%. The revenue headwind was largely a originate of Soliris revenue changes at Turkey, driven by our formalized reimbursement council at the third area of 2018.

Turning ought glide 10. Soliris revenue at the first area was $962 million with year-over-year volume growth of 23%, driven largely by might at the U.S. and Japan, due ought the growing contribution from gMG. Soliris growth was partially impacted by the conversion ought ULTOMIRIS.

On glide 11, you'll scream on ULTOMIRIS revenue at Q1. The first sum area although FDA approval was $25 million.

Underlying volume growth at the PNH and atypical HUS riddle inclusive of both Soliris and ULTOMIRIS remained well at the quarter, and we hope it ought be at the tall sole digits although the sum year.

Moving ought glide 12. Strensiq revenues although the first area were $130 million, representing 18% revenue growth and 26% volume growth year-over-year. Kanuma revenues at the first area were $24 million, representing 20% revenue growth and 28% volume growth year-over-year.

Turning ought the P&L above glide 13. during the quarter, non-GAAP R&D expend was $159 million or 14% of revenues. Non-GAAP SG&A expend was $244 million or 21% of revenues. The non-GAAP effective tax worthy at the area was almost 16%. The GAAP tax worthy was negative 9%, driven by sure onetime tax benefits, largely related ought a tax selection associated with the Wilson intellectual property.

We reported first area non-GAAP earnings per fraction of $2.39, growing 42% year-over-year. GAAP earnings per fraction was $2.61, inclusive of the onetime tax benefits. We ended the first area with almost $1.7 billion at cash and marketable securities.

I'll now fetch ought glide 14 although the 2019 economical guidance. We're guiding ought sum revenues among $4.675 billion ought $4.750 billion, an enlarge from preceding guidance. This represents 14% growth year-over-year at the midpoint of the range.

For the blend of Soliris and ULTOMIRIS, our revenue guidance is $4.020 billion ought $4.070 billion. This assumes continued momentum at gMG also although a modest initial contribution from our anticipated U.S. approval and launch at NMOSD at the second half of the year.

Earlier this month, it was announced that a Soliris biosimilar was approved at Russia. however Russia represents a few fraction of our overall sales, we anticipated this accident and it was factored into our creative guidance and included at our updated guidance today.

For ULTOMIRIS, we hope stable patient conversion from Soliris ought last although PNH at the U.S. 2019 revenues favour from conversion due ought the loading dose at the first year.

Turning ought metabolics. Our revenue guidance is unchanged at $655 million ought $680 million although both Strensiq and Kanuma. This includes the shock of a strategic pricing resolution although Strensiq at the U.S. ought back sustainability given weight-based dosing. We estimate revenue will be a 2% headwind at 2019, and FX shock net of hedging ought represent a $50 million headwind.

GAAP operating border is expected ought be 35% ought 42%, inclusive of restructuring and related expenses also although upfront payments. Non-GAAP operating border guidance is expected ought be among 54% ought 55%, unchanged from preceding guidance. Non-GAAP R&D expend is expected ought be 16% ought 17% of revenues, and we hope R&D expend ought enlarge over the grade of the year. Non-GAAP SG&A expend is expected ought be 20% ought 21% of revenues.

At the midpoint of this guidance, non-GAAP operating favour is expected ought become almost 18% year-over-year. We hope a non-GAAP effective tax worthy although ought 2018.

GAAP earnings per fraction is expected ought be among $6.76 and $7.96 and non-GAAP earnings per fraction guidance is expected ought be among $9.25 and $9.45. The midpoint of this mount is almost 18% growth year-over-year.

With a well first quarter, we're vigorous positioned ought deliver above our 2019 economical ambitions.

I'll now fetch the summon can ought John.

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John J. Orloff, Alexion Pharmaceuticals, Inc. - Executive VP and leading of investigation & development [5]

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Thank you, Paul. We last ought slaughter above advancing and house out our pipeline. We've made significant impress can at each of our 4 blockbuster pillars, which I will highlight today.

As seen at the 3 right-hand columns, we currently make 16 development programs at our pipeline. during the past 12 months, we reported definite pivotal news at ULTOMIRIS at PNH and atypical HUS, and with Soliris at NMOSD make progressed ULTOMIRIS into extra side III trials and make announced a sum of 7 riddle development deals, 4 clinical stage and 3 preclinical stage.

Last month, at our Investor Day, we conducted a deep dive above the R&D portfolio and make announced a sum of 7 riddle development deals, 4 clinical stage and 3 preclinical stage.

Last month, at our Investor Day, we conducted a deep dive above the R&D portfolio and make announced a sum of 7 riddle development deals, 4 clinical stage and 3 preclinical stage.

Last month, at our Investor Day, we conducted a deep dive above the R&D portfolio and I used to encourage you ought accept a appear if you haven't done consequently already.

On glide 17, we make outlined our R&D program phasing can the next 18 months. although you can see, we hope clinical trial activity ought ramp up towards the back half of 2019 into 2020, with numerous side III ULTOMIRIS programs and our ongoing side III superiority trial although 1840 at Wilson disease. We hope early clinical investigation and riddle development will also contribute.

Moving now ought glide 18. You can scream on our plans ought increase patient optionality with our innovative C5 portfolio. Focusing above hematology and nephrology, we make an ambition ought arise the standard of anxiety with ULTOMIRIS each 8-week IV at PNH and make filed although approval at atypical HUS.

With our planned higher concentration formulation, which we plan ought rope at the back half of this year, ULTOMIRIS patients will favour from both each 8-week dosing and reduced infusion time of only 45 minutes. We hope ought rope our ULTOMIRIS once-weekly subcutaneous, utilizing West's patient-friendly SmartDose appliance at late 2020 or early 2021, with latent approval at 2021.

Our extra subcutaneous programs, including 1720 and our collaboration with Halozyme although ALXN1810 supply opportunity and extra indications. We hope these hematology and nephrology-focused complement efforts ought lengthen both the durability and longevity of our complement leadership.

Now turning ought neurology above glide 19. house above our foundation of Soliris, we plan ought increase treatment options although gMG patients with ULTOMIRIS also although our anti-FcRn program 1830. This portfolio means used to quit us ought serve patients along the spectrum of disease. I used to also letter that it is our ambition ought launch the first subcutaneous therapy at gMG with our weekly subcutaneous ULTOMIRIS.

In NMOSD, we were granted priority magazine although Soliris with the U.S. PDUFA appointment of June 28 and desire ought be the first FDA-approved therapy. We are committed ought innovating although patients and are finalizing our side III program create although ULTOMIRIS at NMOSD, with plans ought commence a pivotal learn by year-end.

Given the success of Soliris at neuromuscular junction and at CNS, complement appears ought play an significant role at neurological diseases. Based above existing scientific literature also although our own preclinical modeling, we scream on rationale ought commence a proof-of-concept learn of ULTOMIRIS at ALS and an exploratory clinical trial although the treatment of PPMS at late 2019.

Turning ought glide 20. Our collaboration with Caelum Biosciences is intended ought increase and diversify our hematology footprint with a latent ought serve patients with AL amyloidosis, a scare illness with a tall mortality rate. We saw early proof of opinion with CAEL-101, which demonstrated clinical consequence above organ duty and target combat at vivo. Pending feedback from regulators, a side II/III learn investigating 101 although add-on ought present chemotherapeutic standard of anxiety is planned ought commence at early 2020.

Our program at ALXN1840 at Wilson disease, depicted above glide 21, represents an opportunity ought increase our existing metabolics business. The side III trial comparing 1840 with standard of anxiety copper chelators is ongoing and we make enrolled can 70 patients. We think 1840 has latent ought be differentiated with a 10,000-fold higher affinity ought copper that results at a sole award ought quotation copper direct from the liver, potentially improving liver duty and neuropsychiatric symptoms.

Moving ought our FcRn pillar above glide 22. With the trend Affibody deal, we will make the opportunity ought greet the broad mount of IgG-mediated autoimmune diseases with 2 products. ABY-039 is at a side I single-ascending dose study. remember 039 is a 19 kilodalton bivalent anti-FcRn with a hope half-life, stemming from its albumin-binding domain. We think there can be multiple chronic autoimmune diseases vigorous suited although a potentially best-in-class subcutaneous anti-FcRn.

With ALXN1830, our initial concentrate is at hot autoimmune hemolytic anemia and gMG. due ought CMC issues with our clinical supply, we make made some adjustments ought the development plan. however we will no make equip ought deduce the side I/II hot autoimmune hemolytic anemia learn this year, we are now planning ought impress into seamless adaptive side II/III studies at hot autoimmune hemolytic anemia and gMG. We make addressed the CMC issues, and we'll make sufficient clinical equip ought commence these studies by year-end 2019 or early 2020. We will also commence a side I SAD/MAD learn although our 1830 subcutaneous formulation by year-end.

I'd although ought thank the R&D and riddle development organizations although their continued efforts ought impress can our pipeline and portfolio strategy. I'm looking send ought updating you above our impress can on the grade of this year.

With that, I'll fetch the summon can ought Brian ought controversy commercial highlights although the quarter. Brian?

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Brian M. Goff, Alexion Pharmaceuticals, Inc. - Executive VP & leading Commercial officer [6]

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Thank you, John. Starting above glide 24. however only 4 months into the launch of ULTOMIRIS although PNH at the U.S., we're identical encouraged with the initial impress can we've made. although of the beginning of this week, 27% of PNH patients were enrolled at OneSource, a main indicator of conversion, and 22% of PNH patients are above treatment with ULTOMIRIS. consequently we think we're above a identical firm motorway towards achieving our aim of facilitating a best-in-class Soliris ought ULTOMIRIS PNH patient conversion of at least 70% within the first 2 years of launch.

The commercial and operational expertise of our team are critical ought the success of our launch, and we think ULTOMIRIS sets a new prevent although patients. although you scream on above the left, ULTOMIRIS delivers above the key attributes of a best-in-class therapy although PNH. consequently far, patient and doctor feedback has been positive. And from a payer standpoint, there make been marginal barriers although conversion. And ought date, can 60% of commercial lives now make a defined policy although ULTOMIRIS.

We make a although ambition ought facilitate a quick best-in-class conversion at Europe and Japan, and prelaunch planning is underway with the first latent ex U.S. launch at Germany midyear.

Turning ought glide 25. Our neurology franchise represents a significant growth opportunity both near and hope term. This franchise is built upon the success of our launch of Soliris at gMG, the best Alexion launch ought date. at fact, although of this month, we're arrogant ought proclaim that at the U.S., there are can 1,000 patients currently being treated with Soliris. And by the target of this year, our second sum year of launch, we hope gMG ought be the largest U.S. Soliris symptom by patient volume. We're excited ought perpendicular upon our success with gMG although we actively prepare although our latent expansion of Soliris into NMOSD at the U.S. midyear.

There are currently no approved therapies although NMOSD. Patients alive at continuous fear of the unpredictable and potentially devastating effects of another attack. Therefore, relapse prevention rest the main treatment goal. Given the might of our news and the significant need, we make a feeling of urgency ought serve these patients. We are precise now expanding our sphere and medical teams and prelaunch inside drill is vigorous underway. We think we make the precise infrastructure at lay ahead of our June 28th PDUFA date.

Moving ought our metabolics franchise above glide 26. We reported first area Strensiq revenue of $130 million. We hope continued growth coming from Strensiq at 2019 although we identify new patients and pursue reimbursement agreements at extra geographies. Kanuma ended the area with revenue of $24 million and continues above a motorway of stable growth.

With the love of ALXN1840 although Wilson disease, we make the latent ought farther strengthen and become our metabolics portfolio. We think 1840 could supply meaningful differentiation and superiority can the present standard of anxiety although Wilson disease, with almost 20,000 patients at the U.S. and EU5, and the latent ought be the first approved therapy at decades. We scream on significant opportunity although 1840, which if approved, will fraction well summon point synergies with Kanuma.

I hope ought thank our team although their dedication ought bringing desire ought patients suffering from scare diseases and used to although ought reiterate the organization's enthusiasm and commitment although we impress over the year.

I'll now fetch the summon back ought Ludwig although closing comments. Ludwig?

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Ludwig N. Hantson, Alexion Pharmaceuticals, Inc. - CEO & Director [7]

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Thank you, Brian. We make already made great impress can at the first few months of the year, silent we're no stopping here. We're vigorous positioned ought perpendicular above our momentum and deliver above our 2019 objectives. Alexion 2.0 is at its next side of growth. We last ought slaughter above our tactic with the aim ought table a meaningful shock above patient lives and create long-term shareholder value.

As always, I used to although ought thank our global employees although their dedication ought our mission and the patients we serve although their continued faith at us.

With that, we will now empty the summon ought questions. Operator?

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Questions and Answers

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Operator [1]

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