Here's What You Need to Know About Alexion Pharmaceuticals' Upcoming Earnings

Alexion Pharmaceuticals will report first-quarter earnings next Thursday. Can they beat the analysts' optimistic upward revisions?

Apr 21, 2014 at 6:00PM

Biotech earnings seasons will get into full swing this week, with several top names such as Gilead, Celgene, Biogen, and others set to report. With all of these giants in the industry reporting almost simultaneously, it's almost easy to forget that Alexion Pharmaceuticals (NASDAQ:ALXN), a leading orphan-drug maker, will also report on Thursday, April 24, before the bell. While perhaps not the biggest name of the bunch reporting this week, Alexion is still a key name to watch during earnings season because it has forged a leading position among orphan drugmakers. As a result, its earnings could be quite telling for how other specialist biotechs may fare this quarter. So let's take a closer look at the key issues heading into Alexion's earnings release.

ALXN Chart

ALXN data by YCharts

Earnings estimates have steadily risen through the quarter
At this point, I think an earnings beat by Alexion is going to be tough to achieve, because analysts have markedly raised their estimates throughout the quarter. Specifically, consensus had first-quarter earnings coming in at $0.87 per share two months ago, but the latest figures have risen by 44% to $1.26 per share. This significant upward revision is due primarily to an agreement reached with the French government over reimbursement for Alexion's flagship blood disorder drug, Soliris. What's important to understand is that several European countries were questioning the drug's average treatment price of $440,000 per patient. Now that France has apparently agreed that the drug's price is indeed reasonable, analysts expect other EU countries to follow suit.

After this news, Alexion subsequently raised its annual guidance as well, upping 2014 sales forecasts to a range of $2.15 billion to $2.17 billion, from a range of $2 billion to 2.02 billion. If this forecast holds true, we are looking at year-over-year revenue growth of around 30%.

Keep an eye out for guidance on expenses
Growing revenues are generally what makes headlines, but expenses are equally important to a company's overall health. As a company still in the early phase of its life cycle, Alexion is using a fair amount of cash to support its active clinical program that includes studies to expand Soliris' label and developing other therapies for ultra-rare diseases. So it's not surprising that Alexion's operating expenses have been climbing year over year by double digits.

Going into the year, Alexion was projecting a 12% increase in operating expenses in 2014 compared with 2013, mostly stemming from the cost of commercializing Soliris. So, I will be keen to see if this number stays the same or deviates from the company's original guidance.

What to do with this cash?
Alexion has been slowly building a nice chunk of change in the bank, reporting about $1.5 billion in cash and cash equivalents at the end of 2013. With first-quarter revenue expected to come in around $560 million, Alexion should thus be closing in on the $2 billion mark later this year. The company could choose to either return this cash to shareholders via a dividend or go on the hunt to for more deals like its $125 million licensing agreement with Moderna Therapeutics.

And as we've seen with the recent merger between Questcor Pharmaceuticals and Mallinckrodt, orphan-drug makers are a hot-ticket item, and companies are even willing to ignore potentially serious problems to acquire them. Indeed, I don't recall a single person saying that Questcor would be taken out in light of its ongoing regulatory issues with Acthar Gel. Regardless, this example shows that cash-rich companies like Alexion could be willing to make a deal to expand their commercial pipeline. So, Alexion's mounting cash position is a key issue to be on the lookout for in the upcoming earnings release, as it could lead to more licensing deals or an acquisition down the road. 

Foolish wrap-up
Although I am expecting a number of earnings beats this week among biotechs, Alexion Pharmaceuticals probably won't be in that group, because the company and analysts recently revised guidance upward in a significant manner. That said, you should keep a close watch on Alexion's first-quarter earnings, because that could affect how the industry performs, at least in the short term. My belief stems from the fact that Alexion has trounced most biotechs this year, heading higher by 12.7%. So, if it fails to meet consensus or lowers 2014 guidance for unforeseen reasons, this event could have a ripple effect on biotechs in general. You should definitely tune in to this specialty biopharma's earnings report Thursday.

3 stocks poised to be multibaggers
The one sure way to get wealthy is to invest in a groundbreaking company that goes on to dominate a multibillion-dollar industry. Our analysts have found multibagger stocks time and again. And now they think they've done it again with three stock picks that they believe could generate the same type of phenomenal returns. They've revealed these picks in a new free report that you can download instantly by clicking here now.

 

George Budwell owns shares of Gilead Sciences. The Motley Fool recommends Celgene and Gilead Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers