Alexion Pharmaceuticals (ALXN) Q3 2020 Earnings Call Transcript

Alexion Pharmaceuticals (ALXN)
Q3 2020 Earnings Call
Oct 29, 2020, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to Alexion Pharmaceuticals third-quarter 2020 results conference call. [Operator instructions] Please be advised that today's conference may be recorded. I'd now like to hand the conference over to your host today, Mr. Chris Stevo, head of investor relations.

Please go ahead.

Chris Stevo -- Head of Investor Relations

Thank you, operator. Good morning. Thank you for joining us on today's call to discuss Alexion's performance for the third-quarter 2020. As has been our practice recently, we are practicing physical distancing and are each doing the call from home.

Today's call will be led by Ludwig Hantson, our CEO. Ludwig will be joined by Aradhana Sarin, our chief financial officer; John Orloff, our global head of R&D and Brian Goff, our chief commercial and global operations officer. We will begin the call with a brief presentation, and we'll reserve the rest of the time for your questions. You can access the webcast slides that will be presented on this call and other earnings materials by going to the events section of our investor relations page on our website.

Before we begin, I would like to point out that we will be making forward-looking statements, and these statements involve certain risks and uncertainties that could cause our actual results to differ materially. Please take a look at the risk factors discussed in our SEC filings for additional detail. These forward-looking statements apply only as of today, and we undertake no duty to update any of the statements after the call, except as required by law. I'd also like to remind you that we'll be using non-GAAP financial measures, which we believe provide useful information for the understanding of our ongoing business performance.

Reconciliations of our financial results and financial guidance are included in our press release. These non-GAAP financial measures should be considered in addition to, but not a substitute for, our GAAP results. Thank you. And with that, it's my pleasure to give you our CEO.

Ludwig?

Ludwig Hantson -- Chief Executive Officer

Thank you, Chris, and good morning, everyone. I'm pleased to share our third-quarter performance today. COVID-19 continues to test the global community, healthcare systems, and families worldwide. Our ability to successfully navigate through this challenging time is a testament to the strength of our business and the resilience of our global organization.

Alexion's patient-centric culture and focused rare disease infrastructure continues to shine in this new environment. I would like to thank our employees worldwide for their hard work and commitment to our mission of transforming the lives of people with rare diseases and devastating conditions. Despite the challenges posed by COVID-19, the Alexion team has continued to deliver. Third-quarter financial results were strong, with 26% revenue growth and 16% non-GAAP EPS growth year over year.

As a result, we're increasing our full year financial guidance to reflect the momentum of the business. We continue to progress our revised capital allocation strategy and are well on track to achieve our 2020 commitment to return capital to shareholders of $500 million to $550 million in share repurchases this year. Our commercial execution remains resilient across the portfolio. With ULTOMIRIS, we have now achieved our ambition of greater than 70% conversion across each of our top markets in PNH.

We remain on track to achieve the same ambition in atypical HUS. Our first quarter with ANDEXXA was strong, with integration efforts under way and approximately $39 million in sales within the quarter. We look forward to continuing to drive this momentum as the integration progresses. Finally, progress continues in our R&D portfolio.

During the quarter, we received approval for the ULTOMIRIS 100 milligrams per mL high-concentration formulation in U.S. and ULTOMIRIS approval for atypical HUS in Japan. We continue to advance our pipeline, including nearing completion of enrollment in our Phase III ULTOMIRIS GMG trial and our partner CAEL's initiation of the Phase III CAEL-101 programs in AL amyloidosis. As we have shared before, we have a multiyear strategy for value creation against which we continue to execute.

It is our ambition to continue to lead and expand in our C5 business. ULTOMIRIS is now established as the market leader for PNH across our top markets, with atypical HUS on track to achieve a similar outcome within two years of launch. The expansion of our C5 business began with Neurology, which is now the largest franchise in the U.S. in terms of both revenues and patient volumes.

We continue to build upon this success with additional ULTOMIRIS development programs and our third-generation C5 inhibitor, 1720. Finally, diversified. As we shared earlier this month, we have significant opportunity in our Factor D and FcRn platforms and high-value potential in our innovative assets such as CAEL-101 and 1840. Our acquisition of Portola earlier this year has brought us ANDEXXA, which allows us to expand upon our critical care presence to address this unmet need in the Factor Xa market.

Collectively, these three components will drive a sustainable and growing C5 business while also driving new growth opportunities beyond. We have made great progress on our journey thus far, and have a strong foundation upon which to drive future growth. Finally, turning to Slide 8. I'd like to reiterate some of the key messages from our Investor Day earlier this month.

Over the last three years, we have transformed this company, establishing a strong foundation for sustainable long-term growth and delivering significant value for patients and shareholders. Driven by our long-term value-creation strategy, we see sustainable growth ahead and a clear path to revenues of $9 billion to $10 billion by 2025 and continuous best-in-class operating margins. Beyond this, we see even greater value within our current pipeline of more than $10 billion in peak sales potential. As a biotech company, Alexion is uniquely positioned within the industry with a unique set of rare disease tailored capabilities.

Over the next several years, we have a number of pivotal data readouts and an ambition for more than five novel IND filings by 2025. Anchored by three novel platforms and a number of promising individual assets, we have built a diversified development portfolio with the potential for seven blockbuster franchises to drive continued growth well into the future. Our commitment and ongoing success as a company comes down to the hard work done by our employees, and I would like to thank our teams all over the world for their continued dedication. With that, I will now turn the call over to Aradhana to discuss our financial results.

Aradhana Sarin -- Chief Financial Officer

Thank you, Ludwig. Starting with Slide 10. We reported third-quarter total revenues of approximately $1.6 billion, an increase of 26% year over year. We are pleased with the momentum we saw over the quarter, which was driven by strength in our Neurology franchise, continued growth in the PNH, atypical HUS and metabolic businesses, and our first quarter of ANDEXXA revenue.

Operating margin trend continued in Q3 and with non-GAAP operating margin of 56%. Non-GAAP EPS was $3.24, representing 16% growth year over year driven primarily by strong top-line growth. Moving to Slide 11. Third-quarter total net product sales were primarily driven by volume growth across each of our medicines in key markets.

Turning to Slide 12. SOLIRIS revenue in the third quarter were approximately $1.42 billion. Year over year, SOLIRIS revenue was up 5% as growth in SOLIRIS Neurology indications was partially offset by conversions to ULTOMIRIS in PNH and atypical HUS. ULTOMIRIS revenue in the third quarter was $289 million, including contribution from the ongoing launches in atypical HUS.

We call -- we made this strategic decision to lower the annual cost per patient of ULTOMIRIS as compared to SOLIRIS. ULTOMIRIS for atypical HUS represents a 30% lower annual cost per patient compared to SOLIRIS during maintenance treatment, which will carry through to future ULTOMIRIS indications that we are pursuing. Total C5 franchise revenues were $1.3 billion, an increase of 23% year over year. Metabolic revenues for the third quarter were $218 million, representing 19% growth versus prior year, driven by volume.

On the right side of the slide, we highlight ANDEXXA third-quarter sales of $38.9 million, representing Alexion's first consolidation of these sales after the closing of the Portola acquisition. Performance in the quarter was driven by return of hospital demand and further benefited by some normalization of stocking activities. Turning to the P&L on Slide 14. During the quarter, non-GAAP R&D expense was $269 million or 17% of revenues.

Non-GAAP SG&A expense was $301 million or 19% of revenues. The non-GAAP effective tax rate in the quarter was approximately 16%. Non-GAAP third quarter EPS was $3.24, growing 16% year over year. GAAP earnings per share was $2.62.

We ended the third quarter with approximately $2.3 billion in cash and marketable securities and repurchased approximately 0.6 million shares at a cost of $74 million during the third quarter of 2020. As of the end of the quarter, we have repurchased $434 million in shares in 2020, leaving us well within sight of our target of $500 million to $550 million for the year. Free cash flow in the third quarter was approximately $812 million, bringing us to $2.1 billion year-to-date. Now moving to Slide 15, I'd like to provide an update to our 2020 full year guidance.

As we shared at our Investor Day earlier this month, we are increasing our guidance. And this update reflects revenues between $5.9 billion to $5.95 billion for the full year, which is $350 million above our prior guidance and reflects 19% growth year over year at the midpoint. In terms of product revenue, updated guidance for SOLIRIS and ULTOMIRIS is $5 billion to $5.035 billion. Guidance for our metabolic business is now $835 million to $845 million, and we expect ANDEXXA revenues to be $65 million to $70 million in the second half of 2020.

This revised guidance reflects the continued strength we have seen in the business and our fourth quarter outlook, including compliance rates continue to be strong across indications and slightly above expectations; continued strong conversion to ULTOMIRIS and the corresponding price headwinds that conversion implies; and increased demand for ANDEXXA. In addition to the above, to help you understand the quarter-on-quarter sales that are implied by our full-year guidance, I would also note the following: Our new patient initiation queue build has slowed compared to pre-pandemic levels. We have not yet seen a material impact to U.S. payer mix to date, but we continue to monitor.

Fourth-quarter guidance reflects approximately $70 million less of forecasted tender market and certain international revenue versus third quarter 2020. Finally, we continue to deliver best-in-class operating margins, driven by top-line strength. Non-GAAP operating margin is expected to be between 54.5% and 55.5% of revenue. Non-GAAP R&D expense is expected to be between 16% and 17% of revenue as we continue to invest in our growing development portfolio.

Non-GAAP SG&A spend is expected to be 19.5% to 20.5% of revenues. GAAP EPS is expected to be between $1.78 and $2.13. Non-GAAP EPS is expected to be between $11.70 and $12. As previously discussed, we continue to monitor the impact of the following as the COVID-19 situation evolves globally, including: access to medical care around the world, compliance rates across our indications, queue of new patient starts, and U.S.

payer mix given fluctuating unemployment rates. On Slide 16, we have a view of our quarterly revenues, including the implied revenue for fourth quarter based on the midpoint of our updated 2020 guidance. Fourth quarter guidance reflects approximately $70 million less of forecasted tender market and certain international revenue versus third quarter of 2020. We expect year-over-year growth for the fourth quarter to be 4%, while full-year growth is expected to be 19%.

With that, I will now turn the call over to John to provide an update on our R&D activities.

John Orloff -- Global Head of R&D

Thank you, Aradhana. Starting on Slide 18, you can see our robust clinical stage pipeline. As we shared on our investor day earlier in October, we have made tremendous progress thus far in 2020 on our breadth of development. The 20-plus clinical programs we have planned today support our ambition for 7 potential blockbuster franchises, expanding our existing presence in Hematology, Nephrology, Metabolics, Neurology, and Acute Care, and also aim to support our entrance into new areas such as Cardiology and Ophthalmology.

We continue to advance our C5 platform with an emphasis on reaching even more rare disease patients. This includes numerous ongoing late-stage programs with ULTOMIRIS and two newly announced indications we plan to pursue with ALXN1720, our third-generation C5 inhibitor. We will be taking 1720 forward initially to expand our presence in neuromuscular diseases with both gMG and dermatomyositis and expect to share top-line data from the recently reinitiated Phase I healthy volunteer study in the first half of next year. We also continue to make great strides in diversifying our portfolio and expanding our pipeline outside of C5 therapies.

Earlier this month, we provided an update on our innovative Factor D platform, including plans to advance ALXN2040 into geographic atrophy. We are excited about this program given the proof-of-concept that has already been established with complement inhibition as well as a number of properties which we believe make this asset well-suited for ophthalmology. We also see the potential for an oral dosing regimen to have huge advantages over intravitreal injections, both in terms of patient preference and in the ability to treat both eyes simultaneously with a systemic approach. We look forward to initiating this Phase II program in the second half of next year.

Now turning to Slide 19. We remain committed to our ambition for 10 launches by 2023. You can see here the current programs that we view is likely to launch within that window, the potential opportunity each presents. The once-weekly ULTOMIRIS subcutaneous program for PNH and atypical HUS remains on track for filing in the third quarter of next year.

We are also expanding our ULTOMIRIS portfolio with additional Neurology and Nephrology programs. I am pleased to share that our ULTOMIRIS gMG trial has achieved greater than 90% enrollment, and we have closed the screening process for patients globally. The NMOSD ULTOMIRIS trial continues to progress and has achieved greater than 50% enrollment, and our ALS program also continues to enroll. Both the HSCT TMA and complement-mediated TMA trials remain on track to initiate later this year and in the first half of next year, respectively.

The Phase III program in Japan for Guillain-Barre syndrome with SOLIRIS remains on track to initiate in the first half of 2021. Building on this foundation, we see opportunity to diversify beyond C5 with four additional late-stage novel assets currently in scope. We have initiated and look forward to progressing the enrollment of the Phase III portion of the pivotal program of CAEL-101 given the high unmet need of these patients with AL amyloidosis. We also remain on track to initiate a Phase III program with AG10 or ALXM2060 in ATTR cardiomyopathy by the end of this year in Japan, rounding out our current cardiology programs.

We continue to plan for Phase III data in the first half of next year for our Phase III superiority trial of ALXN1840 in Wilson disease. 1840 has the potential to be a transformative new standard of care in Wilson disease with its rapid onset of action, profound copper clearance properties, and convenient once-daily oral dosing. As shared during our investor day, we are excited by the potential to redefine the treatment goals for Wilson disease by shifting from a focus on blood copper levels to a total body decoppering approach. We continue to make progress here and look forward to sharing more in the future.

Finally, the ALXN2040 PNH add-on therapy program remains on track to begin Phase III development by the end of this year. We are confident that our robust pipeline and innovative R&D capabilities will support our ambition to significantly expand the number of patients we serve. Turning now to Slide 20 to discuss progress made thus far in 2020 and key upcoming R&D milestones. ULTOMIRIS continued to expand its reach in Q3 with approval for atypical HUS in Japan.

We also received approval in the U.S. and a positive CHMP opinion in Europe for the ULTOMIRIS 100 mg per mL high-concentration formulation. Before the end of 2020, we expect an additional four clinical programs to initiate and 2 INDs to be filed with ALXN1820 expected soon. Finally, we are looking forward to multiple potential value-creating inflection points over the next 12 months.

Building on our leadership and complement and diversifying beyond C5, 2021 will be an exciting year for Alexion. We expect top-line data readouts in a number of key programs, including the 1840 Wilson disease study in the first half and ULTOMIRIS gMG study in the second half. With that, I'll now turn the call over to Brian to provide commercial highlights from the quarter. Brian?

Brian Goff -- Chief Commercial and Global Operations Officer

Thank you, John. Turning first to Slide 22. Within the third quarter, PNH in Germany reached over 70% conversion of SOLIRIS patients to ULTOMIRIS, rounding out our top three markets to have achieved this ULTOMIRIS launch ambition. Collectively making up roughly two-thirds of our global revenues, all three countries have established a new best-in-class standard by achieving this conversion in less than 18 months, well ahead of our initial two-year ambition.

This speaks to the value ULTOMIRIS brings to patients and our team's excellent expertise and execution capabilities. Our ULTOMIRIS journey continues as we remain on track to achieve a similar ambition of 70% conversion within two years for atypical HUS. As John mentioned earlier, we received regulatory approval for atypical HUS in Japan in September, and the local team is quickly progressing with launch activities. We continue to innovate for patients to attempt to improve their holistic treatment experience.

We're making progress with the launch of the 100-milligram per milliliter higher concentration of ULTOMIRIS in the U.S., reducing the average annual infusion time by approximately 60% for patients. And we look forward to expanding the ULTOMIRIS franchise with the potential once-weekly subcutaneous formulation with the goal to provide an alternative choice to patients who prefer to self-administer. Turning to Neurology on Slide 23. Within the third quarter, our U.S.

team added 111 new patients for a total of 2,452 U.S. gMG and NMOSD patients on SOLIRIS. Since setting the ambition earlier this year to quadruple the number of U.S. neurology patients by 2025, we've continued to drive growth despite the challenges posed by COVID-19.

SOLIRIS' strong value proposition in both gMG and NMOSD, as well as the resilience of the commercial, makes this possible. While new patient additions have slowed from pre-COVID levels, we do continue to see balanced growth across both indications, and our teams are focused on continuing to pivot to new ways of working in light of the pandemic. Specifically, we continue to improve our virtual effectiveness to support communications efforts with stakeholders across the healthcare ecosystem. And given the strong value proposition of SOLIRIS, we continue to focus on driving depth of adoption with physicians who are experienced with the benefits of SOLIRIS for both gMG and NMOSD patients.

We're also implementing artificial-intelligence-aided targeting to identify high potential new prescribers more efficiently with the ambition to drive prescribing breadth. Finally, our OneSource organization in the U.S. provides trusted and consistent support services for patients. In rare diseases, it often takes some time for a patient to initiate treatment once they're identified, and OneSource helps support patients throughout that journey.

In addition to navigating reimbursement, OneSource helps facilitate sharing infusion site information with HCPs and patients. And increasingly, many of our neurology patients have taken advantage of at-home infusion availability. Our ambition for Neurology is one of our key value creation drivers, and we remain confident in its long-term growth trajectory. We continue to be pleased with the progress we're making with NMOSD despite new entrants.

SOLIRIS offers an incredible efficacy and safety profile for patients who risk facing devastating consequences from each and every relapse. We also continue to see ULTOMIRIS in gMG as a potential key contributor to our long-term growth. Once available, we see a path forward for expanding the addressable population we serve with ULTOMIRIS with the Phase III trial enrolling patients regardless of their prior treatment regimen. Given the great progress John's team has made with enrollment, we anticipate a potential U.S.

launch for ULTOMIRIS in gMG in the second half of 2022. And we expect to ultimately expand our unique target market to approximately 20,000 patients with the opportunity to move earlier in the patient journey. We see this goal as achievable even as new products come to market. Given the large number of gMG patients in the U.S.

and the remaining unmet needs many of these patients face, we believe new entrants have the possibility to expand the overall treated patient population and to facilitate disruption of earlier line, often cyclical treatment regimens. So, while we're seeing a slowdown in new patient adds over the past two quarters, we're confident in the path forward as we continue to navigate COVID-19, evolve and innovate a growing new set of capabilities and build on our foundation in Neurology over the years to come. Turning to Slide 24. This was the first quarter we had ANDEXXA fully in-house, and integration efforts are well under way.

As you heard from Ludwig and Aradhana, we saw a strong performance from ANDEXXA in the U.S., even when excluding the impact from some one-timers. For the first time this year, we saw demand return consistent with pre-COVID levels as access to medical care has reopened more broadly and people have started to return to more active lifestyles. Outside of the U.S., we also achieved a significant milestone by securing reimbursement in the U.K. for GI related bleeds.

We're continuing our pursuit of U.K. reimbursement expansion to intracranial hemorrhages as well as reimbursement in Germany. While we're very pleased with our ANDEXXA progress in just a few short months and the stabilization seen in sales for the quarter, we still have a ways to go in order to maximize the opportunity in line with our ambitions. As we've discussed previously, we plan to refocus the allocation of commercial resources to shift to a multifaceted hospital system approach.

We've started this process and will continue to make inroads on hiring and onboarding over the coming months. To execute on this approach in hospitals, we plan to optimize both new and existing top-tier accounts. First, we'll work to achieve formulary status with ANDEXXA and its inclusion in bleeding protocols, and we'll also educate to facilitate having ANDEXXA built into the EMR systems and to complete a drug use review. This way, when a physician intends to use ANDEXXA, the necessary steps are already in place from an economic standpoint to access the drug seamlessly.

Secondly, we'll partner with institutions to raise awareness and build advocacy for ANDEXXA. We'll work to identify clinical champions that understand the strong clinical value proposition of ANDEXXA and appreciate its health economic value, all with the goal to ensure stakeholders throughout the hospital are aware of and willing to use ANDEXXA when a Factor Xa patient is suffering from a major bleed. Finally, we'll continue the efforts initiated by Portola to ensure demand is created, and HCPs choose to use ANDEXXA at the time of need. We'll focus on education in both network and affiliated centers to ensure broad pull-through.

Expanded cross-functional teams are already deployed against many of these target accounts, and more will follow as we make progress in fully deploying our new mix of field-facing teams and enhanced capabilities. And to drive even longer-term growth with ANDEXXA, we believe that geographic and label expansion are both key to success. Plans are under way to seek access and reimbursement in new markets, and our clinical team is working on development plans to pursue a broader label. As you heard on our investor day, we see ANDEXXA as one of the key drivers of Alexion's midterm growth potential.

And each of these pieces are essential to deliver the full value of ANDEXXA. While this will take some time to fully execute, I'm incredibly pleased with the progress the teams have made in just the first quarter alone, and I look forward to sharing more updates with you on future calls. So, with that, I'd now like to hand it over to Ludwig for closing comments. Ludwig?

Ludwig Hantson -- Chief Executive Officer

Thank you, Brian. In the third quarter, we continue to build on the momentum of the last few years. We remain focused on executing against our value-creation strategy and believe in our trajectory toward future growth. As we have shared, with our focused rare disease expertise, we have the team and the resources to deliver on the promise of our broad and diverse pipeline and to be the leader in rare disease.

We see continued double-digit revenue growth in our portfolio, and we believe we have a clear path to $9 billion to $10 billion in revenue by 2025. There is vast potential in our pipeline which is anchored by three novel platforms and several novel assets, of which we believe will allow us to significantly grow the number of patients with rare diseases we serve. We anticipate multiple pivotal readouts for some of these key programs over the next 12-plus months. I'm very proud of the progress the entire Alexion team has made over the last several years, and I'm confident that our continued momentum will drive long-term value.

With that, we will now open the call to questions. Operator?

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Josh Schimmer with Evercore ISI. Your line is now open.

Josh Schimmer -- Evercore ISI -- Analyst

I have the questions -- great quarter. A couple of COVID-related questions, if I may. For the Phase III study of ULTOMIRIS, can you provide an enrollment status update? And are there going to be any interim looks in that trial? And as we think about the answer to that question and timing for the data, how are you thinking about a potential effect of these new waves that are extending throughout the globe as it may impact Q4 and into 2021? And then also relatedly, is there any reason to think that the third quarter was benefiting from some pent-up demand from some of the lockdowns that slowed adoption in the second quarter and first quarter? Thank you.

John Orloff -- Global Head of R&D

Hi, Josh. It's John here. I can take the first question on the clinical program. As you know, there's growing evidence for the involvement of complement and severe progress of pneumonia, both on the inflammatory side as well as the coagulopathy-based patients experience.

Because of the pandemic, you know, the slowdown over the summer, enrollment fell behind a little bit. It's picking up now because we have growing activity with second-wave surges in U.S. as well as France and U.K. So, we've seen an uptick in enrollment.

We're over 30% enrolled now. We do and plan to have an interim analysis after a certain number of patients have completed, likely in the first part of 2021.

Aradhana Sarin -- Chief Financial Officer

Thanks, John. I'll take the second question. We are, obviously, seeing some impact from COVID. I wouldn't necessarily say that the third quarter was driven by pent-up demand, though we did see some orders, as we mentioned, particularly in tender markets and certain international markets that were forecasted in fourth quarter, you know, come in the third quarter.

If you look at our guidance for the fourth quarter, for the full year, we are definitely taking into account not only sort of the selling days and the ULTOMIRIS price headwind, but additional COVID wave, our field force in many countries, and the U.S. also remains sort of working remotely. And we have seen the slowdown in, for example, the Neurology patient that we mentioned. So, we are taking that into account.

Ludwig Hantson -- Chief Executive Officer

Yeah.

Brian Goff -- Chief Commercial and Global Operations Officer

Yeah.

Ludwig Hantson -- Chief Executive Officer

Sorry, go ahead.

Brian Goff -- Chief Commercial and Global Operations Officer

Yeah, I'll just jump in too, Josh. This is Brian. And as it relates to this kind of bolus effect or a surge that could happen when COVID slows down. As Aradhana said, I don't think we're seeing that, certainly not in the U.S.

because there's been so much regional variation that just continued throughout. And one support point that's interesting in the third quarter is that medical claims actually in the U.S. for gMG patients have been down about 20% overall. So even the impact that we've seen is not just SOLIRIS patients alone.

It's really for the overall utilization. However, on the converse, interestingly, we had a kind of experiment, I guess you could call it, in Germany, where, as you know, third quarter for Europe was in a different state in key geographies relative to the U.S. So, in the third quarter, Germany actually in Neurology, though we didn't give the specific numbers, had a very nice pop, growth in both NMOSD as well as gMG. And so, we look at that as that could be one example of the fact that first evidence that patients may queue up during the COVID shutdowns and then what you have is when things go off, you can have a higher volume during the decline period.

So that's one example in Germany. We haven't yet seen that in the U.S., but of course, we'll be monitoring. I think the more important part of the whole equation is that as I had mentioned in my comments, we're focused intensively on capabilities that we believe we're going to need with or without COVID for the future state. And that's virtual promotional effectiveness, really healthy mix of in-person as well as virtual.

Secondly, we are pretty excited about the artificial intelligence guided healthcare practitioner targeting efficiency. And that's really intended to help us out with breadth of prescribing. We have the OneSource team, of course, with very strong patient support, particularly in the U.S. And then the thing I'm most proud of is that, in Neurology, we've got a team now that is highly experienced in both gMG as well as NMOSD with three years and counting experience.

And so those are the areas that we're going to lean on as we go forward.

Ludwig Hantson -- Chief Executive Officer

OK. Operator, we'll take the next question.

Operator

Our next question comes from Cory Kasimov with JP Morgan. Your line is now open.

Cory Kasimov -- J.P. Morgan -- Analyst

My questions -- two of them for you. I guess the first one is kind of a follow-up on what Brian was just talking about in the commercial front as it relates to geographic mix, where U.S. SOLIRIS growth remains strong, but the third quarter, nine-month sales were down year over year in Europe and Asia Pacific. I'm wondering if you can kind of go into some more color on that dynamic.

And we're just talking about tailwinds in Germany. But just kind of broadly speaking, what are we seeing there? How should we be thinking about potential inflections going forward? And then the second question is, just wanted to ask about the rationale for taking ALXN2040 into GA versus your next-gen asset? And maybe you can provide some clarity on timing for 2050 and the incremental benefit you could expect there over the first-gen molecule?

Brian Goff -- Chief Commercial and Global Operations Officer

Yes. Aradhana, do you want to start with the moving parts financially? And then I can speak to some of the geographic differences?

Aradhana Sarin -- Chief Financial Officer

Sure. So, if we talk about the third quarter, you can see that our -- we, obviously, had a very, very strong third quarter, and some of it was clearly because of different regions. As I mentioned, there was some pull-through in the third quarter from some international markets and rest of world markets. We are seeing strong growth in Japan.

Thou,gh going forward, you know, again, our Neurology business is growing strongly in Japan, though we may have more effect from, for example, competitor trials there and so forth. I would say, other regions, you know, the U.S. continues to be strong with the exception of Neurology, which, as we mentioned, the new patient adds are slowing down. And international, we won't see the $70 million sort of onetime, I would say, or was forecast in fourth quarter happening in third quarter, we won't really see that repeat again in the fourth quarter.

So those are some of the moving pieces we're forecasting.

Brian Goff -- Chief Commercial and Global Operations Officer

Yes. And Cory, I would just -- this is Brian again. I would just reflect back on the comments I was giving to Josh that you guys know that U.S., Germany, Japan is about two-thirds of our revenue. So just to keep it simple, those three countries are really what we continue to monitor, particularly with the COVID impacts.

And what was interesting in the third quarter is the U.S., as I mentioned, was -- as everyone knows, was still in very much a hot zone in most of the regions throughout the U.S. Germany had a cooling off period. Japan was probably in the best position in the third quarter. And Aradhana said, we actually are really pleased with the way things have continued in Japan, though, I think it's fair to say it's not opened up in the traditional sense as it was pre-COVID.

And so, what we continue to monitor is, again, making sure that we've got the capabilities in place to be successful with or without COVID. I will also just say, keep in mind, the fact that we've added 111 patients for gMG, while that's an admitted slowdown, this is easily the most intense, you know, headwind period we could have imagined in terms of the COVID dynamics. So we are, I must say, pleased, certainly in the short-term with the fact that we continue to grow, and we definitely have the same remaining persistent ambition with 4x Neurology growth in the U.S. in the longer term.

John, do you want to talk about it?

Aradhana Sarin -- Chief Financial Officer

Sorry, one other thing I forgot to mention is regarding the ULTOMIRIS price headwind, that's -- given we've now achieved a 70% conversion in our major markets and we're on our way in terms of conversion for atypical HUS, there's the ULTOMIRIS price headwind as well. Sorry, John, do you want to comment on 2040 for GA?

John Orloff -- Global Head of R&D

Yeah, sure. So, Cory, you're right, the pharmacokinetics and the pharmacodynamics of 2050, when delivered systemically, are better than danicopan. However, in our preclinical experiments using a rabbit model of geographic atrophy, we found that 2040 is actually -- has a high infinity for melanin in the back of the eye where it's concentrated and essentially allows for our prolonged distribution to the retina, which is very important in treating geographic atrophy since the disease starts with the choroid and the retinal pigment epithelium which provides nutritional support to the photoreceptors. And so, based on that model, we predict that 2040, despite its inferior systemic pharmacokinetics, can be delivered to the eye with a low-dosing frequency such that it could support the q.day dosing in humans.

And so that's why we're taking 2040 based on that rabbit model. We don't have similar preclinical data for 2050. In contrast, 2050, as we've announced, is going into PNH as monotherapy. That study is ongoing right now in Phase II, and we should have data in the middle of next year for that.

The Phase III program for danicopan 2040 will be starting this quarter.

Ludwig Hantson -- Chief Executive Officer

Operator, we'll take the next question.

Operator

Our next question comes from Geoffrey Porges with SVB Leerink. Your line is now open.

Geoffrey Porges -- SVB Leerink -- Analyst

A couple of questions on subcu ULTOMIRIS. I was wondering, John, if you can just confirm that the point estimate for the is better than 0.9, and that the confidence intervals are not particularly wide. And secondly, as you think about subcu ULTOMIRIS, will that expand your penetration of any of your treatments in any of the major indications? And then, lastly, do you intend to study subcu in MG and NMO? And could you just comment, sorry, on the path of life? Is there a patent extension opportunity with subcu? Sorry for all the questions on the program.

John Orloff -- Global Head of R&D

So, Geoff, with regards to the top line data that we shared in the spring, yes, we have achieved a very strict non-inferiority criteria. In fact, the lower bounds are well above the margins. So, there's no issue there. Very strong data, and we agreed to the criteria with the regulatory agencies.

So, we're on solid ground there. As you know, we're generating additional safety and drug-device combination data which would position us for filing in the third quarter of next year. We do plan to attempt to extrapolate the data from this program, which is being conducted in patients with PNH. The regulatory agencies both in the U.S.

and the EU have granted us the extrapolation to atypical HUS. We're in conversations now to see whether the same data set can support a subcu filing in myasthenia gravis and NMO.

Brian Goff -- Chief Commercial and Global Operations Officer

Yeah. And Geoffrey, maybe -- this is Brian again, maybe I'll just add on your question about subcu and whether or not it expands the market. I think we certainly see that potential because there are a cohort of patients where subcu will be the way that they want to receive therapy, more home-based therapy. That said, we don't see this as another sort of massive conversion going from ULTOMIRIS every two months, which is incredibly meaningful for patients to have that kind of minimal invasion in their life while they're managing a rare disease over to subcu once-weekly.

But we do think it's a very important addition of optionality for patients to have.

Ludwig Hantson -- Chief Executive Officer

Operator, we'll take the next question.

Operator

Our next question comes from the line of Chris Raymond with Piper Sandler. Your line is now open.

Chris Raymond -- Piper Sandler -- Analyst

Just two questions. So, I know you talked from the previous question around the development of ULTOMIRIS and COVID-19, but we've kind of heard some chatter around off-label use happening now with SOLIRIS in hospitalized COVID-19 patients. I wonder if you could maybe talk sort of qualitatively about any sort of measurable level of use of SOLIRIS off-label in these patients that you might be seeing, you know, regardless of geography? And then I think, Brian, I think I heard you talk about balanced growth across both neurology indications for SOLIRIS. But then, I think, I heard you say the 111 U.S.

neurology adds were gMG. Could you just sort of clarify that? What's the mix between NMO and gMG? Thanks.

John Orloff -- Global Head of R&D

So, Chris, this is John. I'll take the first question. Yes, we do have experience with SOLARIS and COVID-19. Earlier in the pandemic, we had compassionate use and expanded access program in France, and it was used in Italy as well.

There was a case series published by Professor Diarno with five patients that showed benefit of SOLIRIS in those patients. But, again, it's uncontrolled data. There were also some experience in France as well as in the U.K. with C5 inhibition suggesting that there's a potential benefit.

But we won't know until we actually have carefully controlled data. Our COVID-19 305 study, as I said, is enrolling, and we should have interim data in the first part of 2021. There is strong scientific rationale for blocking terminal complement supported by recent publications, where the dual mechanisms of inflammation and Mac deposition, along with the activation of the coagulation cascade, which is clearly interlinked with complement positions the C5 inhibition for success. There have been other anti-inflammatories that have been not successful as you've seen some of the data.

We believe we're upstream of that cytokine storm, and that many of the downstream mediators can be blocked by blocking C5.

Brian Goff -- Chief Commercial and Global Operations Officer

And Chris, just picking up on the second part of your question, and it may have been misinterpreted. When I referred to the the adding 111 patients in the U.S. for neurology, that's a combination of gMG and NMOSD. The point I was trying to make is that we have balanced growth with both of those indications, and we didn't split out exactly how that breaks down.

But there's -- they're obviously very different disease states. In the case of gMG, there is more promotional sensitivity as far as we can tell, and it might be because gMG tends to be -- I'll put quotes around it a "little more forgiving" for patients than the intensity of a relapse associated with NMOSD. So, what we see is in the U.S., as I've mentioned, the claims for gMG have been down, not including SOLIRIS, just overall, about 20%. In NMOSD, when a patient relapses, they need treatment, and we do see that continued progress that we're making.

And the other point I'll just make is, it's important for this quarter to note that we've had no observable competitive impact with NMOSD to date.

Ludwig Hantson -- Chief Executive Officer

Operator, we'll take the next question.

Operator

Our next question comes from the line of Phil Nadeau with Cowen & Company. Your line is now open.

Phil Nadeau -- Cowen and Company -- Analyst

Good morning. Congratulations on the quarter. Two related questions for me. First, as we do think about another COVID wave, what is the most recent data that you have on the proportion of your patients across indications that are getting at home infusions? Has that, in fact, increased over the last six or nine months? And then second, Brian, just to follow-up on a point you just made.

In your comments about Germany, it sounded like there was some warehousing of patients during COVID that -- and there was a bolus once COVID subsided a bit and the answer to the last question, though, it sounded like you also suggested maybe some gMG patients just simply go away if they don't go on therapy immediately because there's promotional sensitivity and it's a more forgiving disease. So, I guess, I'm trying to square those two comments. What do you think will happen in the U.S. once COVID subsides? Will we see bolus warehouse patients, particularly in Neurology? Or is there likely to be some proportion of patients who aren't starting now, who for whatever reason will never go on to C5 therapy? Thanks.

Brian Goff -- Chief Commercial and Global Operations Officer

Yeah, good morning, Phil. Good questions. On the first one with home infusion, it's a relatively small part of overall utilization. That said, we do see some growth.

And part of that is the growth that you would expect naturally motivated by COVID, burden of access to hospitals, infusion center dynamics. And we're doing what we can appropriately to make sure that we make that available to patients as much as possible. Secondly, on Germany and the dynamics around gMG, Neurology, I would not characterize it as patients "go away" with gMG. I think what you're seeing is a rephasing of treatment because a lot of patients in this era are likely managed on, you know, the typical high-dose corticosteroids, where doctors can kind of do that remotely without a lot of intensive therapeutic education, talking to patients through complement therapy and the like.

But the gMG, of course, doesn't go away. So, I think what we saw in Germany is that you saw a case of patients being managed during the intensity of COVID. And then when COVID relaxed, patients came in, the doctors had those appropriate educational discussions around complement, and we saw really nice progress with patients being converted to SOLIRIS therapy. So, it's very tough to say from where we sit right now about the puts and takes on the timing on when that happens.

But I think, overall, we take that as a very encouraging sign about the strength, first of all, of complement as a key part of the underlying pathophysiology. And secondly, just the resilience of the unmet need that's out there and the fact that when you have different geographies that move into different phases of COVID, that we expect that there will be continued growth with SOLIRIS. And eventually, when we get to that point with ULTOMIRIS as well, as I had mentioned.

Ludwig Hantson -- Chief Executive Officer

Operator, we'll take the next question.

Operator

Our next question comes from the line of Mohit Bansal with Citigroup. Your line is now open.

Mohit Bansal -- Citi -- Analyst

Great. Thanks for taking my questions. A couple of questions, if I may, please. So, one on ANDEXXA.

It seems like the guidance is still fairly conservative considering the 3Q sales of $39 million. Could you talk a little bit about that? And the other one is actually on subcu ULTOMIRIS. Since you mentioned MG patients are relatively sensitive to promotion, is there a possibility subcu ULTOMIRIS could expand or maybe have more utilization in MG patients given that their relative age compared to other diseases as well as disease state and also competing against future competition that could be subdued in FcRn space as well? Would love to get your thoughts there. Thank you.

Brian Goff -- Chief Commercial and Global Operations Officer

Yeah, good morning, Mohit. I'll start with ANDEXXA, just in the order that you asked. And first, I would just remind everyone that this is our first full quarter of having ANDEXXA because the deal closed at the beginning of July. So, we are really pleased with the progress we're making on integrating the Portola team.

We're thrilled to have these colleagues on board. We've got a lot of really healthy mix now of people who came from our organization already who have critical care, acute care experience, and now we've got all the expertise that came with the Portola team. So, what we're focused on near-term is rebalancing efforts. And I've talked a number of times about the best way to think of the opportunity with ANDEXXA is it's a three-part story.

So first is ensuring that we've got really good awareness and really good advocacy with clinical champions. That's critically important in the complex institutions that we're focused on to make sure that you've got bleed protocols in place, formulary acceptance, and ultimately, demand generation, which is the second pillar. But the third is about access, and that's a two-part story. It's physical access, making sure the product is on site as well as economic access and that continues to get strengthened as time goes on.

So, when we look at quarter to quarter, I would not over-extrapolate what we have in this quarter or, frankly, even the next quarter. These repowered, rebalanced mobilizations that we're doing will take time to pull-through. And that really is the story within ANDEXXA. It's a long-term value-creation story that we're so excited about.

And by the way, the second one, which was similar to the question that Geoffrey Porges asked on ULTOMIRIS subcu, as I mentioned, we do believe, emphatically, that's an important offering to build out more of a portfolio of choices that are ULTOMIRIS based for patients. So, I do think there's a potential to grow the market. I also think that there may be patients that say that, for their home-based treatment, that that's the best option, subcutaneous and perhaps not once every two months, which for the majority of patients, we believe will be the key profile that they want.

John Orloff -- Global Head of R&D

And to that end, in addition to developing ULTOMIRIS in myasthenia gravis that I just mentioned a moment ago, we are pursuing our third-generation C5 inhibitor 1720 which is finishing its Phase I study shortly. We'll be moving into myasthenia gravis with 1720, and that's a small volume subcutaneous administration that's ideally suited for auto-injector. In addition to that, we have our own FcRn program, which has been rebooted going back into healthy volunteers to generate data in the first part of 2021 with the plans to move into myasthenia gravis in the second half of next year. So, we do believe that having a subcu offering is a good option for patients with MG in addition to those that they already have.

Ludwig Hantson -- Chief Executive Officer

OK. Operator, we'll take our last question.

Operator

Our last question comes from the line of Geoff Meacham with Bank of America. Your line is now open.

Geoff Meacham -- Bank of America Merrill Lynch -- Analyst

Good morning, guys. Thanks for taking the questions, and congrats on the good quarter. I just have two and they're probably for Brian. So, in PNH, there's 30% of patients that haven't switched to ULTOMIRIS.

Does that inform your view of the switching dynamic, let's say, in a few years when multiple competitors are theoretically on the market, just trying to get a sense for the stickiness of that population. And then in the three major commercial countries you've highlighted, the Germany, U.S., Japan. Should COVID persist longer into 2021, are there some new strategies that you've implemented today to help with new patient adds? It does seem like maintaining stable patients is more straightforward, but new adds is a little bit more of a dynamic process. Thank you.

Brian Goff -- Chief Commercial and Global Operations Officer

Yeah, good morning, Geoff. And thanks for the kudos on the quarter. We are very pleased with the progress we've made in a very challenging period. So, on the question about the 30% that -- well, roughly 30%, let's say, that have not converted to ULTOMIRIS for PNH, especially, and that's more a story about there's a long tail of PNH prescribing.

So, a lot of the conversions that we've achieved at this stage are doctors who may have more than one PNH patient. Then you've got a long tail, but just -- it just takes time to get everything in sync with the education of the doctor so they're aware of ULTOMIRIS. The doctor then educating the patient about all the benefits of the efficacy that they've had with SOLIRIS plus every two months opportunity, which is less burdensome for them. And we figure that, that's going to take us some continued months.

We have plenty of time to help the patient navigate through that journey, but I wouldn't necessarily over-extrapolate that into all the other future indications that we're pursuing with ULTOMIRIS. By the time we get there, we believe the awareness of ULTOMIRIS, all the benefits that the community will be aware of will be well established. And with respect to COVID-oriented new strategies to be successful in that continued era, yeah, definitely. And as I had mentioned, we're mobilizing a lot more virtual promotional effectiveness, technology-based training of our teams.

I think even without our efforts, customers on the receiving end are becoming more oriented to that form of engagement. And then just as one of many examples that I've cited openly, the artificial intelligence, claims based HCP targeting that we're doing is much more efficient than deploying our teams and having them try to go out and find clinicians who might be high potential to treat rare disease patients. So that's just one of many examples that we're putting in place.

Ludwig Hantson -- Chief Executive Officer

Yes. Thanks, Brian, and thanks, all presenters. We're at the top of the hour. So, we had another strong quarter.

I really want to thank all my Alexion colleagues, again, for their hard work and needless to say that this team has been delivering quarter after quarter, and we plan to continue to do so. So, thanks to all of you for dialing in, and enjoy the rest of your day. Thanks, everybody.

Operator

[Operator signoff]

Duration: 62 minutes

Call participants:

Chris Stevo -- Head of Investor Relations

Ludwig Hantson -- Chief Executive Officer

Aradhana Sarin -- Chief Financial Officer

John Orloff -- Global Head of R&D

Brian Goff -- Chief Commercial and Global Operations Officer

Josh Schimmer -- Evercore ISI -- Analyst

Cory Kasimov -- J.P. Morgan -- Analyst

Geoffrey Porges -- SVB Leerink -- Analyst

Chris Raymond -- Piper Sandler -- Analyst

Phil Nadeau -- Cowen and Company -- Analyst

Mohit Bansal -- Citi -- Analyst

Geoff Meacham -- Bank of America Merrill Lynch -- Analyst

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