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Alexion Pharmaceuticals Inc  (NASDAQ:ALXN)
Q3 2018 Earnings Conference Call
Oct. 24, 2018, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the Alexion Pharmaceuticals Incorporated Third Quarter 2018 Results Conference Call. (Operator Instructions)

For opening remarks and introductions, I would now like to turn the call over to Susan Altschuller (technical difficulty).

Susan Altschuller -- Vice President, Investor Relations

Thank you, Krystal. Good morning, and thank you for joining us on today's call to discuss Alexion's performance for the third quarter of 2018.

Today's call will be led by Ludwig Hantson, our CEO. Ludwig will be joined by Paul Clancy, our CFO; John Orloff, our Global Head of R&D; and Brian Goff, our CCO.

You can access the webcast slides that will be presented on this call by going to the Events section of our Investor Relations page on our website.

(Forward-Looking Cautionary Statements)

I'd also like to remind you that we will 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. Ludwig?

Ludwig Hantson -- Chief Executive Officer

Thank you, Susan, and thank you all for joining us this morning.

We continued to build on our momentum, advancing our mission of bringing hope to patients and families affected by rare diseases. We had an excellent third quarter with a number of significant achievements to highlight. Yesterday marked the anniversary of the FDA approval of Soliris for patients with MG. One year later, I'm very proud to say that we have delivered on our ambition of making MG the best Soliris launch yet. Last month, we reported remarkable top line results from our Phase 3 PREVENT study of Soliris in NMOSD. We're moving quickly to prepare global regulatory submissions, which could make Soliris the first approved therapy for patients with this devastating disease. Also last month, we announced an agreement to acquire Syntimmune, and with it, SYNT001, an innovative FcRn targeted asset that holds great promise for treating IgG mediated diseases. And once again, we delivered strong top and bottom line growth.

Moving to Slide 6. We have continued to execute on our five key objectives throughout the year. We have made notable progress in addition to the achievements I've just mentioned. We continued to grow the in-line business, with our complement and metabolic portfolios delivering year-over-year revenue growth of 20% and volume growth of 26% in the quarter. MG remains a significant growth driver. And at the end of September, 560 MG patients were on therapy in the US. The PNH regulatory submissions for Ultomiris, formerly referred to as 1210, have been accepted in the US, EU and Japan; and we're actively preparing for anticipated launches. I'm very pleased with the significant progress we've made in building our pipeline this year. With Syntimmune, Wilson Therapeutics, Complement Pharma, and most recently, Dicerna, our pipeline today is far more robust and diverse. Again, I will highlight the groundbreaking results from our Phase 3 study of Soliris in NMOSD, which showed a 94.2% reduction in the risk of adjudicated relapse and an adjudicated annualized relapse rate of 0.02. Finally, given our strong financial performance, we have increased our guidance. We have accomplished a lot in the first three quarters of this year, executing on our base business, successfully launching an MG, preparing for Ultomiris launches, and we're building our pipeline for long-term value creation; all while maintaining our focus on transforming the lives of the patients with rare diseases.

With that, I will now turn the call over to Paul to discuss the third quarter financial results and to provide details on our guidance. Paul?

Paul Clancy -- Executive Vice President, Chief Financial Officer

Thanks, Ludwig. I'm pleased to be reporting on another strong quarter.

Starting with Slide 8. We reported total revenues in the quarter of $1.027 billion, an increase of 20% year-over-year, driven by continued performance of Soliris and metabolic portfolios. Our non-GAAP operating margin was 54% in the third quarter, an expansion of 916 basis points. This was well above our prior forecast, driven by top line leverage, timing of program spend and lower workforce costs. We're anticipating a lower operating margin in the fourth quarter of the year, due to an expanding pipeline in sales and marketing investment to support our growth opportunities; I'll provide further details. Non-GAAP earnings-per-share growth was 40%, driven by top line performance and strong operating expense control.

Moving to Slide 9. Net product sales were driven by volume growth of 26%, partially offset by an FX headwind of 1% and a price headwind of 5%. The price headwind was largely driven by price changes in Turkey and Brazil. Specifically, we formalized reimbursement agreements subsequent to marketing authorization for Soliris in Turkey in the third quarter of 2018, in Brazil in the fourth quarter of 2017. Additionally (ph), changes in our metabolics business contributed to the price headwind. From a geographic perspective, recall that in the third quarter of 2017, we had a low amount of orders in Latin America. When taking that into consideration, we continued to deliver exceptionally strong revenue growth in the United States, in Asia Pacific, while delivering more modest growth in the Rest of World. From a sequential basis, it's worth noting that the second quarter included an approximately $18 million benefit related to the order timing ahead of the July 4th holiday in the United States. Approximately half of this was for Soliris and half for Strensiq.

Turning to Slide 10. Soliris revenue in the third quarter was $888 million, with year-over-year volume growth of 24%, driven primarily by the strength in the US and Japan, which both include the growing contribution from our MG launch.

Moving to Slide 11. Strensiq revenues for the third quarter were $113 million, representing 30% revenue growth and 37% volume growth year-over-year. Kanuma revenues in the third quarter were $25 million, representing 54% revenue growth and 74% volume growth year-over-year.

Turning to the P&L on Slide 12. During the quarter, non-GAAP R&D expense was $162 million, or 16% of revenues. Spend was lower than anticipated due to lower program spend and lower workforce costs. Non-GAAP SG&A expense was $225 million, or 22% of revenue. The non-GAAP effective tax rate in the quarter was approximately 14%. We reported third quarter non-GAAP earnings per share of $2.02, growing 40% year-over-year. GAAP earnings per share was $1.47. We ended the third quarter with approximately $1.5 billion in cash and marketable securities.

Now turning to Slide 13, which outlines our updated financial guidance. Before getting into specifics, I'd like to call out a few items. First, our updated guidance reflects the strength of the business, especially MG. Second, as we move into the fourth quarter and beyond, we anticipate increased investment in R&D due to our expanding pipeline and increased investment in medical affairs in sales and marketing, given growth opportunities in neurology. And third, GAAP guidance includes accounting for two asset acquisitions, Wilson Therapeutics in the second quarter and the planned acquisition of Syntimmune expected to close in the fourth quarter, as well as our collaboration with Dicerna announced this morning. We're increasing our top line revenue guidance to a range between $4.020 billion and $4.050 billion, which represents 14% growth year-over-year at the midpoint. For Soliris, our revenue guidance is $3.460 billion to $3.480 billion, an increase over prior guidance, driven by the strength of MG. Turning to metabolics, our revenue guidance remains $560 million to $570 million, reflecting continued momentum in Strensiq. We estimate price will be a 3% headwind in 2018, with three-quarters attributable to Soliris and one-quarter attributable to metabolics. We now forecast FX impact for 2018 to represent roughly a $10 million headwind, using current foreign exchange rates. GAAP operating margin is expected to be 0% to 5%, which is inclusive of the Syntimmune and Wilson acquisitions, the Dicerna collaboration, as well as restructuring and related expenses. We're increasing our non-GAAP operating margins to be in the range of 51% to 52%, representing approximately 600 basis points to 700 basis points expansion over 2017. This is inclusive of R&D spend of 16% to 17% of revenues, and includes increased investments for the ongoing SYNT001 Phase 1, Phase 2 trials; the WTX101 Phase 3 trial; preparations for regulatory filings for Soliris in NMOSD; initiation of 1210 subcutaneous and MG programs; and increased workforce spend. We also expect to further invest in medical affairs, and sales and marketing as we intensify preparations for potential launches of Ultomiris in PNH, and support our growing neurology portfolio, including expanding our MG sales footprint and preparing for the potential launch of Soliris in NMOSD. At the midpoint of this guidance, non-GAAP operating profit is expected to grow 30% year-over-year. We're forecasting a non-GAAP effective tax rate of 14% to 15%. GAAP earnings per share is expected to be between negative $0.08 to positive $0.26 per share, inclusive of Syntimmune and Wilson acquisitions. We're increasing non-GAAP EPS, which is now expected to be between $7.45 to $7.60 per share. The midpoint of this range is approximately 29% growth year-over-year. With the strong year-to-date performance, we're poised to deliver on our 2018 financial ambitions.

With that, I'll turn the call over to John.

John Orloff -- Executive Vice President, Head of Research & Development

Thank you, Paul. With our impressive Phase 3 NMOSD results, the acquisition of Syntimmune and our new collaboration with Dicerna, our pipeline has progressed considerably in the third quarter. I'm very proud of our team for all they have accomplished and we remain committed to advancing and rebuilding our pipeline.

Slide 15 reflects key updates in our development portfolio. Starting with Soliris in NMOSD, we are actively engaging with regulators and plan to file early next year. Moving to Ultomiris, our PNH BLA filings have been accepted in the US, Europe and now Japan. Recall, our US PDUFA date is scheduled for February 18 of next year. We remain on track to report Phase 3 top line results for 1210 in atypical hemolytic uremic syndrome, or aHUS in early 2019 and plan to file our sBLA subject to Ultomiris approval in PNH. We now plan to initiate our Phase 3 study investigating 1210 and MG in early 2019. Our subcutaneous programs are progressing on schedule, and it is our ambition to be first to market with a subcutaneous C5 inhibitor. We plan to initiate a Phase 3 bridging study for once-weekly subcutaneous 1210 in the fourth quarter. We initiated our Alexion1810 (ph) Phase 1 trial in healthy volunteers in the third quarter. Recall, this trial is investigating a co-administration of 1210 and Halozyme's PH20, and co-formulation work remains ongoing. With Halozyme's enhanced technology, we see potential for every two week or once-monthly dosing schedules. We expect to add two clinical stage assets to our portfolio this year, with a previously announced acquisition of Wilson Therapeutics and agreement to acquire Syntimmune. Our Phase 3 WTX101 trial is ongoing, and we see meaningful opportunity for label differentiation as the study is now designed to demonstrate superiority over the current standard of care. I remind you that our trial enhancements have modestly increased enrollment timelines. And we plan to file for regulatory approval with the required one-year data in the first half of 2021. In addition to the two ongoing Phase 1b/2a programs for SYNT001, there is an ongoing Phase 1 healthy volunteer dose ranging study, which will be informative for dose optimization. We look to initiate two pivotal trials for 001 in 2019.

Slide 16 provides an overview of the devastating nature of NMOSD. Stepwise disease progression is driven by each unpredictable and debilitating relapse. Therefore, the primary goal of treatment is relapse prevention. Each relapse may result in worsening disability, including vision loss, paralysis and even premature death. The majority of NMOSD patients continue to have high disease activity, despite long-term off-label treatment with ISTs, so there is a critical need for an effective treatment. While we continue to refine our global addressable population estimates, in the US, there are approximately 8,000 diagnosed patients with 90% of those patients meeting our criteria for high disease activity. Roughly 75% of those patients test positive for the anti-aquaporin-4 auto antibody and roughly 90% are treated. The relatively recent introduction of this test has improved awareness in diagnosis of NMOSD and has been included in the most recently published diagnostic guidelines.

Slide 17 highlights key findings from our Phase 3 PREVENT study, evaluating Soliris in patients with for anti-aquaporin-4 auto antibody confirmed NMOSD. The trial enrolled patients with high disease activity, despite treatment with immunosuppressant maintenance therapy. Per protocol patients in both the Soliris arm and the placebo arm were allowed to remain on maintenance IST therapy, provided a stable dose was confirmed at screening. Approximately 75% of patients enrolled were on IST maintenance therapy and approximately 32% of patients enrolled had been previously treated with Rituximab. The study met its primary endpoint of time to first adjudicated on-trial relapse, demonstrating that treatment with Soliris reduce the risk of adjudicated relapse by 94.2% compared to placebo with a p-value of less than 0.0001. Nearly 98% of patients in the Soliris group were relapse-free at 48 weeks compared to approximately 63% of patients in the placebo group. Additionally, the Soliris adjudicated on-trial annualized relapse rate was 0.02 versus 0.35 for placebo. Soliris was generally well tolerated with an overall safety profile consistent with that seen in clinical studies and real-world use in all three approved indications, and we did not reserve any meningococcal infections. We're very happy with these results, which we believe confirm that the complement inhibition achieved by Soliris has a profound effect on relapse prevention and marks a potential turning point in the treatment of this disease. Pending regulatory review, we believe Soliris has the potential to be the first approved treatment for NMOSD.

Moving to Slide 18. This quarter, we announced our planned acquisition of Syntimmune, a clinical-stage biotechnology company developing antibody therapeutics targeting the FcRn receptor. We are excited to help shape the FcRn landscape and view this acquisition as a great step toward diversifying our pipeline. The acquisition will bring SYNT001, an anti-FcRn antibody, with demonstrated proof of mechanism into our pipeline. On the right, you see a range of IgG mediated autoimmune diseases that could be treated by targeting FcRn. We see potential for broad application across a number of indications with over 001. We have already decided to move forward in warm autoimmune hemolytic anemia, or WAIHA, and plan to initiate a pivotal trial in another undisclosed indication next year. WAIHA, a rare hemolytic autoimmune disorder, affects approximately 65,000 patients across the US and EU5. The disease is characterized by profound potentially life-threatening anemia and other acute complications, including severe hemolysis, fatigue, congestive heart failure and enlargement of the liver and spleen. There are currently no approved therapies. 001 is the first, and at present, the only anti-FcRn asset in clinical development for WAIHA. We expect data from the ongoing Phase 1b/2a study in 2019, and intend to initiate a pivotal program following its completion. We plan to provide updates on our 001 development plans in the coming months.

Turning to Slide 19. Today, we announced a collaboration with Dicerna Pharmaceuticals to discover and develop RNAi therapies for complement-mediated diseases with the GalXC technology platform. This innovative RNAi-based approach to blocking the production of complement pathway factors and with potentially broad therapeutic applicability across rarer diseases offers us the opportunity to pursue multiple targets. This preclinical collaboration is a strong strategic fit with our complement expertise and internal research programs. I'm very proud of the progress we have made rebuilding our pipeline and I'm excited for what lies ahead in our development portfolio.

With that, I'll turn the call over to Brian to discuss the commercial highlights for the quarter. Brian?

Brian Goff -- Executive Vice President, Chief Commercial Officer

Thanks, John.

Starting with Soliris on Slide 21. We continue to execute on our base business, and importantly, on our MG launch, which is now confirmed to be the best Soliris launch to date. As of quarter end, we had roughly 1,000 MG patients enrolled in OneSource, including 560 patients on therapy. We continue to see strong movement through OneSource and onto treatment with a run rate of approximately 16 net new patient additions per week. We also continue to see growth in our PNH and aHUS businesses and believe there is still room for expansion, with roughly half of the addressable US patient population treated. We believe this underlying momentum lays a strong foundation upon which we can facilitate Ultomiris conversion once we've achieved regulatory approvals.

Turning to Strensiq on Slide 22. We reported revenues of approximately $113 million this quarter, and we continue to believe Strensiq will exit 2018 with revenues approaching $500 million. As of quarter end, Strensiq is on market and reimbursed in seven countries.

Looking at Kanuma on Slide 23. We reported $25 million in revenue this quarter. We remain focused on securing new funding agreements and partnerships in additional countries to expand access to this transformational medicine. To date, Kanuma has launched and reimbursed in eight countries.

Turning to Slide 24. We remain confident in our abilities to facilitate conversion to Ultomiris in PNH, and are rapidly advancing our launch preparation ahead of the February 18th PNH PDUFA date, as well as potential launches in Europe and Japan. We're leveraging our deep PNH experience to inform our sales force, medical affairs, and case management strategies ahead of launch, and we're developing payer dossiers to articulate the unique Ultomiris value proposition. We're also utilizing market research in our existing footprint to segment physicians, while actively engaging with payers in advance of launch. We believe the extensive depth of our PNH knowledge and stakeholder engagement is key to facilitating rapid conversion. I'd also like to highlight findings from recent physician and patient market research that suggest Ultomiris IV infusion, every eight weeks, is the preferred route of administration in PNH, which reinforces our view on market receptivity at launch. Importantly, in every eight week IV profile was preferred over monthly, weekly and daily subcutaneous dosing. We believe minimizing the burden of managing the disease, improving compliance and co-pay considerations are all important factors driving these preferences. We expect Ultomiris IV based dosing to achieve and maintain significant market share. However, we feel that there is an opportunity for subcutaneous dose therapies to provide additional options for patients, and we'll be in the lead initiating our Phase 3 trial of once-weekly subcutaneous 1210 this year.

As you can see on Slide 25, we're also focused on maximizing our neurology portfolio. We have plans to further expand our footprint in order to build on our success in MG. Given the strength of the data and the lack of approved therapies, we're preparing for a potential launch in NMOSD, with a significant sense of urgency.

I want to thank our global team for their continued efforts and reiterate the organization's excitement as we evolve our broader strategy and prepare for numerous potential launches in 2019.

I'd now like to turn the call back to Ludwig for final remarks. Ludwig?

Ludwig Hantson -- Chief Executive Officer

Thank you, Brian.

Beginning on Slide 27. We continue to make progress on each of the five objectives we laid out at the beginning of the year. We are not only achieving but, in many areas, surpassing our plans to grow the in-line business, launch MG, extend our leadership with Ultomiris, rebuild the pipeline, and deliver financially.

Turning to Slide 28. Thanks to this team and to our talented employees around the world, we now have a strong foundation and are advancing our strategy to enter the next phase of rare disease leadership. We remain committed to delivering innovative therapies to patients and needs, and believe the Syntimmune acquisition and Phase 3 NMOSD readout are critical next steps in doing so. We have expanded our portfolio to drive long-term sustainability in our core therapeutic areas. Our goal is to further build upon this, as we continue to redefine what it means to live with a rare disease. I'm very proud of what we, as a company, have achieved so far this year, and I'm very excited for the future we are continuing to build, not only for Alexion but also for patients with rare diseases. While we have accomplished a great deal, we also know there are many patients and families still waiting. So we continue to forge ahead with utmost urgency. I look forward to updating you on our progress as we go.

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

Questions and Answers:

Operator

Thank you. (Operator Instructions) Geoffrey Porges, Leerink.

Geoffrey Porges -- Leerink Partners LLC -- Analyst

Thank you very much, and congratulations on really all the phenomenal progress. Couple of financial questions related. Paul, you highlighted the operating margin improvement, but then you also highlighted the incremental investments that you're going to be making both in pipeline and in commercial preparedness. Can you see your way clear to maintaining that 50%-plus operating margin, so not just in the immediate future, because we've sort of been waiting for that to improve for a while?

And then secondly, related on guidance for next year. Given that you will be guiding ahead of the 1210 approval, should we be assuming that you'll guide -- assuming that approval when we hear from you in the first of the year? Thanks.

Paul Clancy -- Executive Vice President, Chief Financial Officer

Thanks, Geoff. Great question. Appreciate the initial comments as well. We're definitely pleased and are committed to the 50% operating margin, right. I mean, that was put out with Ludwig in the new strategy a year ago for 2019. We actually are surpassing it with the guidance for 2018. So that's -- in my mind, that's excellent, excellent progress; it's exactly as you said. And we understand that, that is really kind of earning the trust back from our investors that was so critical. As we move into 2019, it's premature to kind of give spot numbers and exact numbers, that -- we'll hold that obviously for the guidance call.

But let me kind of give you at least a framework to kind of -- and some guardrails to think about. We still want to have top line to bottom line leverage. I think the thought process of the degree that we delivered this year is actually quite astounding, right. And it's on the heels of good -- strong revenue growth, coupled with kind of pulling through the restructuring and cost containment efforts going into next year. We purposely -- and I purposely wanted to kind of frame up that those dynamics probably aren't as strong going into next year in terms of margin expansion for all really what we think of positive reasons. We actually do have, as we go into next year, what we start to now envision is a meaningfully expanded pivotal trial pipeline, when you combine Wilson that is in Phase 3, our objectives for the FcRn product to be into two Phase 3s by the end of next year, continuing to move 1210 into other indications both subcutaneous as well as MG, potentially others, so that's a high-class problem; as well as making sure we put wood on the fire with respect to making sure Ultomiris is launched extremely. I mean, there's obviously tremendous amount of synergy with the existing footprint, but MG has really kind of exceeded our expectations this year. We want to keep that going and then this new opportunity that we probably didn't envision around NMO. So all great stuff, but I still think we'll commit to top line and bottom line -- leverage to the bottom line, the degree of it will probably not be at the pace that we saw in 2018.

Geoffrey Porges -- Leerink Partners LLC -- Analyst

Okay. And then timing for guidance and the basis?

Paul Clancy -- Executive Vice President, Chief Financial Officer

I'm sorry.

Geoffrey Porges -- Leerink Partners LLC -- Analyst

Will you guide, assuming 1210 approval, when you gave us the guidance in (multiple speakers)?

Paul Clancy -- Executive Vice President, Chief Financial Officer

Yes, yes, yes. We will. I think, we think that that -- you never know, but we think that that is a very, very high likelihood.

Operator

Matthew Harrison, Morgan Stanley.

Matthew Harrison -- Morgan Stanley -- Analyst

I wanted to ask a question which I realized might be more difficult to answer. But I was hoping maybe you guys could provide some perspective for us. So, overnight, Chugai confirmed that they're going to present data from SKY59 in patients at ASH, and you've also got another potential competing product coming at ASH. And I'm just wondering if you might be willing to help us think about what are the key metrics that you're going to focus on when you think about that data versus what you've demonstrated with Soliris and 1210? Thanks.

John Orloff -- Executive Vice President, Head of Research & Development

So, Matt. This is John. Thanks. Yes. Well, we're really anticipating the ASH Congress. We have a big presence there with four abstracts, three of them are oral, presenting data from our Phase 3 program with Ultomiris in both naive and experienced patients, switch patients that will build on what we shared earlier this year. And we think our data is really raising the bar and we anticipate the approval for 1210 here shortly in the US. Of course we filed also in the EU and Japan. So, we'll certainly be first to market, raising the bar from what Soliris has demonstrated. And I don't really want to speculate what they may or may not show, but I will say that they are targeting a different epitope (ph) than we target -- that Soliris targets and that Ultomiris targets. And so, there are some considerations relating to switching patients in that scenario.

Operator

Geoff Meacham, Barclays.

Geoffrey Meacham -- Barclays PLC -- Analyst

Congrats on yet another good quarter, and thanks for the question. Brian, on the MG launch, I wanted to get more context from you for the OUS perspective, what the experience has been from access reimbursement, and looking forward, maybe what hurdles remain.

And then for Ludwig or Paul, you guys have done quite a bit of BD to expand the pipeline. Do you feel like you're at capacity now, meaning, is the pace going forward expected to slow down, or are there still more deals to do? Thank you.

Brian Goff -- Executive Vice President, Chief Commercial Officer

Yes. Hi, Geoff. It's Brian. Good morning. I'll start. So with MG, and obviously as we talked about on the call, we're really excited about the progress in the US. Outside, to your question, we're still looking for more in Germany and Japan. And we have recently made some changes in our approach to essentially better leverage the learnings that we've had, the progress that we've made in the US. The changes predominantly include adjustments to our sales education, the initiatives that are more effective at explaining the role of complement to physicians, as well as, I would say, broader and more effective KOL engagements. And we'll look to continue on that journey ahead. We also, by the way, now have approval for MG in Canada. And so that's also now becoming a part of our geographic footprint for gMG. And the benefit of all of this is, of course, such strong momentum in the US; we can amortize those learnings around the world.

John Orloff -- Executive Vice President, Head of Research & Development

Geoff, I'll take the second part of the question on business development. Short answer is, no. We don't think we're at capacity we want to press on. I think what you're -- have seen in terms of -- there is a lot of questions like, what are you trying to do on BD at the beginning of the year? I think what you've seen now through, call it, 10 months of the year is exactly what we set out to achieve. Rebuild the pipeline, clinical stage assets, manageable deployment of capital with what we hope to have meaningfully strong returns for shareholders; all in the category of rare disease and transformative type therapies. So, we've got a couple of those that kind of tilted toward the research stage. We may be at capacity on the research stage. That one probably, we raised the bar. But with respect to trying to bring in more clinical stage assets, we will press on.

Ludwig Hantson -- Chief Executive Officer

Yes, we will keep a disciplined approach on BD. That's awesome job so far.

Geoffrey Meacham -- Barclays PLC -- Analyst

Okay. Thanks guys.

Ludwig Hantson -- Chief Executive Officer

Thank you, Geoff.

Paul Clancy -- Executive Vice President, Chief Financial Officer

Thank you.

Operator

Josh Schimmer, Evercore ISI.

Joshua Schimmer -- Evercore ISI -- Analyst

Great. I'm just curious over what period of time do you expect the 1210 trial patients to shift from the 90 million to 100 million unfavorable to favorable, and do you expect that whole amount to be converted. And given that you'll have 1210 data in PNH and aHUS, do you expect that you might see off-label adoption in myasthenia gravis and NMO before those labels are -- those indications are added to 1210 label? Thanks.

Paul Clancy -- Executive Vice President, Chief Financial Officer

Josh, let me try to take both of those. On the 1210 patient conversion, I would characterize that, as we move into '19, not a headwind but not a tailwind yet. Just because of the nature of where those patients were kind of coupled with, where we expect to have launches and reimbursement. Remember, 301 was disproportionately Asia Pacific; 302 disproportionately Europe; those are going to be a little bit staged. The other dynamic just that we're trying to keep a close watch on is competitive impact of kind of into the kind of commercial. So competitors moving into trials, which I think it's just going to be harder -- it's been harder to predict this year, it will be harder to predict, but we're just going to try to be cognizant of that.

As it relates to the second part of your question, we are focused on on-label promotion for 12 -- for Ultomiris moving into PNH. That is critical for -- and particularly with the backdrop of where we've come, compliance and culture is a critical part of where we are as a company, and that will kind of be -- will guide all of our behaviors there.

Ludwig Hantson -- Chief Executive Officer

Yes. I think all of you know from last year that I'm very passionate about compliance, and this is front and center at Alexion, and we have high standards for our marketing and sales practices. So we will wait till we get the regulatory approval and the label before we get going on any discussions on the new indications.

Paul Clancy -- Executive Vice President, Chief Financial Officer

Yes. I'll just add, we do anticipate approval on PNH in 2019, followed by aHUS in 2020. And as we said, we're going to be initiating our Phase 3 trial in MG with 1210, and we're in the process now with a positive readout from NMO, evaluating our neurology strategy and our potential beyond those that we've disclosed currently.

Operator

Robyn Karnauskas, Citi.

Robyn Karnauskas -- Citigroup Inc. -- Analyst

Thank you, and again, congrats on the progress. Just a couple of questions on just patient dynamic both in the MG and the PNH side. But for MG, we're going to get competitor data in earlier stage MG with an injectable that maybe priced cheaper later this year in Phase 2 (ph). And I'm just trying to understand a little bit the dynamic, how -- for MG, you've now only (ph) launched for a year. Do you think patients will want to get a complement drug earlier stage in the disease, maybe in front of even FcRn or in IVIG? What do you think the dynamics are for MG for an injectable versus an infusion? And then for PNH, for switching (technical difficulty) some patients might be reluctant to switch, because they had just a horrible bleeding (ph) event. And how do to help patients get over that hurdle or concern when they're switching onto a new therapy? Thanks.

Brian Goff -- Executive Vice President, Chief Commercial Officer

Yes. Hi, Robyn, I'll take both of those. On MG, I think we have to remind ourselves where we are in terms of both the size of the population and where we are in our launch progress, and then we can have a little discussion on method of infusion or injectable. So the total population, as you know, is 60,000 to 80,000 patients in the US. And if we just take the kind of extreme end of that, the out-of-option patients that align with the REGAIN criteria, that's about 5% to 10%. So we've always talked about 3,000 to 8,000. And what we talked about this morning is, we have 560 patients on therapy, which we're really pleased about. And I'm especially proud of the team that's behind those numbers. But that's also a pretty healthy reminder about how much more work is to be done and how large a space this is for potentially a number of different therapeutic options, which is also why we continue to look at neurology as a really important area of interest for us.

As it relates to method of delivery for the products, the patients that we're focused on right now are again generally out-of-option patients. And all the signals that we hear are very encouraging. We're talking about Soliris Q2 week infusion. And I can tell you, when I spend time in the field talking with whether it's our commercial teams or the customers themselves, the physicians, the feedback is really strong on what patients are reporting back. The other aspect is that these are patients that are generally quite disabled, they have extreme fatigue and weakness, as you know. And so, just to have not the burden of having to self-inject is one aspect that we take into consideration. And the other one is from a payer dynamic. Once you move into the subcutaneous world, particularly in this population, you're talking about Part D on the Medicare side and that comes with a co-pay. So we're -- we look at all of those elements as we look at optionality for patients.

On your -- the second part of your question for PNH, all I can say right now is that we think the most important thing for these PNH patients is that the options are based on Soliris, and that's why we're encouraged by the progress we continue to make with Soliris in our base business, both PNH and aHUS. And the profile that we have with Ultomiris gives us a very strong platform. And we know, as I had said in my comments, that there's very strong patient preference for a once every week IV formulation. So we feel confident about our facilitated conversion opportunity.

Ludwig Hantson -- Chief Executive Officer

And Brian, with respect to MG, we also see low DC rates.

Brian Goff -- Executive Vice President, Chief Commercial Officer

Yes. So far, the discontinuations, as we've talked about now on a few calls, has tracked well below what we saw in the REGAIN patient population. And in that pivotal study, the discontinuation rates at 12 weeks was around 40%. And we've been below that line, which is another signal about the performance of the product.

Operator

Chris Raymond, Piper Jaffray.

Christopher Raymond -- Piper Jaffray Companies -- Analyst

Just on the guidance, I think, Paul, you guys raised full-year '18 guidance, but that number infers sort of flattish Q4 revenue sort of quarter-on-quarter. But you highlighted in the Q3 report order timing headwinds, et cetera. So, I guess, one would assume that potentially could be made up in Q4. So, first of all, is that assumption wrong? And if not, is there something else that might hold Q4 revenue back like FX?

And then, maybe if I can slide in a quick question on the Dicerna deal. So, key RNAi players already had relatively well documented setbacks, specifically with respect to knocking down enough C5. With this deal, you must believe there's a solid path here, I guess, with RNAi. Can you maybe talk about what you think makes Dicerna different, or is there perhaps another non-C5 target that makes more sense? Any color there would be great. Thanks.

Paul Clancy -- Executive Vice President, Chief Financial Officer

Let me just kind of clarify the revenue sequentially kind of dynamics. The July 4th holiday effectively increased dynamics, effectively increased Q2, depressed Q3. So, as we move into Q4, I think we're behind those dynamics and it's pretty straightforward at that point in time. John, I'll turn to you for the Dicerna question (ph).

John Orloff -- Executive Vice President, Head of Research & Development

Yes. So, first of all, C5 is not one of the targets we're looking to prosecute with the Dicerna deal. We believe that we've addressed the C5 inhibition with Soliris. We raised the bar with Ultomiris in PNH, and we'll look for the data with aHUS. Rather, we're using this technology platform which is proprietary to Dicerna to pursue additional targets in the complement cascade that will allow us to expand the potential number of indications that our complement mediated. This technology is designed to silence gene expression and inhibit the translation of mRNA for key proteins that maybe mediating disease. And with their GalXC technology platform, they're targeting liver production of various complement factors.

Operator

Paul Matteis, Stifel.

Paul Matteis -- Stifel -- Analyst

Great. Just a follow-up on that RNAi question. I wanted to just even delve deeper and understand why you think RNAi is a potentially better -- a good approach relative to antibodies and complement disease, given that the Soliris data in PNH look much better than the Alnylam data for Alnylam's (ph) C5.

And then just separately on FcRn. I wonder if you wouldn't mind commenting on kind of a development competitive -- developing competitive landscape there with Momenta's updates and their early safety data and how you're kind of refining your view on where the Syntimmune compound fits in? Thanks so much.

John Orloff -- Executive Vice President, Head of Research & Development

So for the first question, we believe the technology has been de-risked by the fact that they've already demonstrated proof-of-concept in Primary Hyperoxaluria. And as you know, Alnylam does have an approved product, the first approved product with RNAi technology. We are targeting other upstream complement cascade factors, and we will be pursuing indications that go beyond the current footprint. So we're not focused as much on PNH as other complement-mediated diseases, whereby factors that are primarily produced in the liver are potential attractive targets. And this is all about shots on goal, it's about optionality, and it doesn't mean that necessarily this is better than an antibody-based approach, but depending on the target, we may pursue it. It supplements our own internal discovery efforts, where we're pursuing multiple internal programs with complement based targets. And we think this is a great strategic fit for us on the research perspective.

With regard to Momenta, what I can say is the Syntimmune molecule and all of the FcRn molecules are not appreciably differentiated at this stage. They all have the same mechanism, they all reduce IgG and dose-dependent fashion. They all share an adverse event profile characterized by headaches, which are, for the SYNT001 molecule, is mild to moderate. And they have specificity to some degree for FcRn and IgG reduction. I can -- the Momenta data shows that there is some reduction in albumin. We do not see reduction in albumin, so we are specific for IgG that's been shown. And we're pursuing three programs right now. One, Phase 1 study in healthy volunteers, it is designed to optimize the dose to help us to select an appropriate dose for Phase 3 next year, as well as a Phase 1b/2a study in pemphigus. And another in WAIHA, again which we'll inform our execution of the Phase 3 program in WAIHA and another Phase 3 study, a different indication next year.

Ludwig Hantson -- Chief Executive Officer

Yes. It's a class of drugs that potentially could transform the IG treatment landscape over the next few years. And as you know, it's -- IVIG is widely used in autoimmune disorders. WAIHA is our lead indication, but the way that we think about this is we have a pipeline opportunity in the product, and it's a technology platform, and the addressable market opportunity is huge. So at this stage, we're the only one in the WAIHA space, very pleased with that, and hopefully, we can move to Phase 3 next year. And this is a unique opportunity for us.

Operator

Phil Nadeau, Cowen & Company.

Philip Nadeau -- Cowen and Company, LLC -- Analyst

A question for Brian. Brian, you mentioned that you've already started to work with payers on 1210 in advance of the launch. Can you talk about what you've been doing with them? And in particular, I'm curious whether you think reimbursement is going to be gating to the conversion from Soliris. Do you expect there to be immediate access to reimbursement, or will it take some time for access to develop? Thanks.

Brian Goff -- Executive Vice President, Chief Commercial Officer

Yes. Hi, Phil. We have been engaging with payers very actively since we now have the profile of the product itself. Say, generally, we feel really good about the fact that we have two very large distinct studies with all 11 of the primary and secondary endpoints, all moving the same direction, that creates a strong value proposition for payers. And then, the second part in addition to the data is to begin discussions around what the totality of both direct and indirect cost savings could look like. So we haven't locked in on any specific pricing discussions. Of course, it's too early for that. But the feedback that we've had so far is that we feel good about our abilities to engage with those payers and to get the kind of access that we believe is needed to have the facilitated conversion that we want to be on the pathway to eventually make Ultomiris the new standard of care for PNH. So more to come as we continue to engage, but so far, it's been promising feedback.

Operator

Terence Flynn, Goldman Sachs.

Terence Flynn -- The Goldman Sachs Group, Inc. -- Analyst

Was just wondering on NMO front, if you can talk about your views of the recent competitor data there? And then of the 4,000 to 5,000 patients on treatment that you cited on the slides, do you have a sense of how many of those might have previously received Rituxan? Thanks.

John Orloff -- Executive Vice President, Head of Research & Development

Thanks, Terence. This is John. So, first of all, I'll just say that we're really pleased with the outstanding results we have from our Phase 3 program. I think they're very definitive. And this is a patient population that has significant disability, no approved therapies currently. And with these data that show 94% reduction in adjudicated relapse and 95% reduction in annualized relapse rate, with an absolute rate of 0.02, we think it has potential to be first-in-class and best-in-class with the first approved therapy for NMO. So, I think that there is opportunity here in the NMOSD space for multiple therapies. And the IST used in our population was about 75% of patients that had concomitant IST use. About 32% of them had prior use of Rituximab within three months of the study start.

Brian Goff -- Executive Vice President, Chief Commercial Officer

And Terence, may -- this is Brian. Maybe I'll jump in and just add that the difference between NMOSD and gMG, of course is, as John noted, the relapsers themselves are terrifying, they're unpredictable, they have potentially devastating consequences, where patients, without any warning, can have blindness, can have some form of paralysis, or both. And so, the heavy emphasis -- and we're so grateful for the data, of course, will be on making sure that the goal will be to get to a no relapse state. And even small differences, as data continues to play out, can be really significant for these patients and for clinicians who have had quite literally, in this case, no approved therapeutic options.

Ludwig Hantson -- Chief Executive Officer

The objective should be, for those patients, to live in the relapse-free world. And I think we -- the PREVENT study came very close to that. And I think that's the bar that's out there for NMOSD treatment.

Next question?

Operator

Laura Chico, Raymond James.

Ludwig Hantson -- Chief Executive Officer

We can't hear you.

Operator

Please check that your line is not on mute.

Laura Chico -- Raymond James -- Analyst

Sorry about that. Thanks for taking the question. Two quick housekeeping questions for you. On 1210 and aHUS, we noticed one of the child adolescent studies was expanded to encompass some switch subjects. I'm just kind of curious if you can comment on how that might affect the labeling implications.

And then secondarily, I just wanted to clarify on the Phase 3 study in MG, has the start timing changed? I'm noticing in the deck that's got a first half '19 start timing. Just wondering if you could add any additional clarity perhaps on design attributes and kind of how that all might come together to potentially affect timing for launch there. Thanks?

Ludwig Hantson -- Chief Executive Officer

Hey, Laura, if you come in on mute, you should only have one question.

John Orloff -- Executive Vice President, Head of Research & Development

So, with regard to the aHUS study, the pediatric study, yes, was -- we added some switch patients based on interactions with the regulatory authorities. But it will not have an impact on our plans to file with the adult study, which will read out in first quarter of 2019, followed by subsequent submissions to regulatory authorities, which are being gated by the action dates for PNH in EU and the US.

With regard to the --

Ludwig Hantson -- Chief Executive Officer

1210 MG timing.

John Orloff -- Executive Vice President, Head of Research & Development

The MG timing, yes, so initially, we had a target to start at the end of this year. But with the availability of the great results from NMO as well as the Syntimmune deal, we took a step back to evaluate our -- reevaluate our neurology strategy as we look at the opportunities before us, and we've recommitted our effort to proceed with a 1210 MG trial that will begin in the first quarter of 2019.

Ludwig Hantson -- Chief Executive Officer

Operator, we will take two more questions.

Operator

Ying Huang, Bank of America.

Ying Huang -- BofA Merrill Lynch -- Analyst

Maybe one for Paul. When you mentioned the pricing assumption for the updated guidance for 2018, there's 3% headwind there. So besides the Brazil and also Turkey reimbursement agreement, can you talk about what happens with the pricing ex-US, especially in Europe? And what's your outlook for 2019 on pricing in general?

Paul Clancy -- Executive Vice President, Chief Financial Officer

Yes. Good question, Ying. Thanks for it. I'll hold off on 2019, because we're kind of getting into guidance as well. But like kind of the really, the only meaningful change versus kind of what we thought in previous guidance and coming into the year in terms of the business plan is the dynamics in Turkey, which we pointed out on the call. That's what drove -- in Turkey and Brazil, that's what drove it this quarter, that's what kind of changes the full year dynamics a little bit different. It was a formalized agreement, subsequent to marketing authorization in both those countries. We had expected it. I think even going back a year ago, I think I had pointed out that what we felt in terms of Rest of World wouldn't be the growth trajectory that we had experienced over the last handful of years going forward, still important parts of the business, but as we moved into a formalized reimbursement agreements, it's changed. The strength of the business is United States, AsiaPac, solid performance in Europe.

Ying Huang -- BofA Merrill Lynch -- Analyst

Thanks (multiple speakers)

Paul Clancy -- Executive Vice President, Chief Financial Officer

Thank you.

Operator

Anupam Rama, JPMorgan.

Anupam Rama -- JP Morgan Chase & Co -- Analyst

Just a quick one on Strensiq. Outside of unfavorable order timing, were there any other headwinds to note? The quarter-over-quarter growth seems like a decline, even if you back out the unfavorable order in 2Q. And then, what's assumed in sort of that approaching $500 million? Is it increased penetration in the seven countries that you're in (ph) for Strensiq, or additional geographic expansion as well? Thanks so much.

Paul Clancy -- Executive Vice President, Chief Financial Officer

Yes. I think Brian and I will tag team this, Anupam. Thanks for the question. No, nothing meaningfully different in terms of trends. I think you got to back it out of Q2, put it into Q3. It's one of those type of dynamics. So, on a sequential basis, when doing that, we still kind of see sequential growth. Brian?

Brian Goff -- Executive Vice President, Chief Commercial Officer

Yes. Anupam, I'll just add -- I mean, again I'm really proud of the metabolics team behind this product. And what you have here is strong underlying demand growth. Paul talked about the volume increases of 37%. It's an ultra-rare disease. So there is variability on both patient identification, and at times to -- sometimes genetic testing is required, so there could be a lag effect on patients onboarding to therapy. But generally, we feel really good about the continued progress we're making. And it's always a two-parter, it is about continued progress on that end in the US, and then geographic expansion. And as you noted, we're pleased that we're now available and reimbursed in seven countries around the world.

Ludwig Hantson -- Chief Executive Officer

So, thanks, everybody. So we'll end the call here. And I'm going to say the obvious that I'm very proud of the Alexion team and everything the team has achieved this year. We're growing our base business. We're delivering in our ambition of making gMG the best Soliris launch. We're advancing toward the Ultomiris launch. We're rebuilding our pipeline internally and through business development. We're delivering on our financial ambitions. So, we're basically executing on all the five objectives that we laid out beginning of 2018. So a big thank you to the entire Alexion team for an awesome job. So we'll keep you posted on the progress, but we're very pleased with what we have done so far. So, thanks for calling in. Enjoy the rest of your day, and we'll talk soon. Thank you.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a wonderful day.

Duration: ?? minutes

Call participants:

Susan Altschuller -- Vice President, Investor Relations

Ludwig Hantson -- Chief Executive Officer

Paul Clancy -- Executive Vice President, Chief Financial Officer

John Orloff -- Executive Vice President, Head of Research & Development

Brian Goff -- Executive Vice President, Chief Commercial Officer

Geoffrey Porges -- Leerink Partners LLC -- Analyst

Matthew Harrison -- Morgan Stanley -- Analyst

Geoffrey Meacham -- Barclays PLC -- Analyst

Joshua Schimmer -- Evercore ISI -- Analyst

Robyn Karnauskas -- Citigroup Inc. -- Analyst

Christopher Raymond -- Piper Jaffray Companies -- Analyst

Paul Matteis -- Stifel -- Analyst

Philip Nadeau -- Cowen and Company, LLC -- Analyst

Terence Flynn -- The Goldman Sachs Group, Inc. -- Analyst

Laura Chico -- Raymond James -- Analyst

Ying Huang -- BofA Merrill Lynch -- Analyst

Anupam Rama -- JP Morgan Chase & Co -- Analyst

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