What happened

Shares of Alexion Pharmaceuticals (NASDAQ:ALXN), a biotech company with a keen focus on developing therapies to treat ultra-rare diseases, moved steadily higher by 13% during the month of July, according to data from S&P Global Market Intelligence. The catalyst behind the double-digit move higher appears to be the company's second-quarter earnings results. 

So what

For the quarter, Alexion reported $912 million in total sales, a 21% increase from the prior-year quarter. The increase was predominantly due to growth from Soliris, its blockbuster rare-disease drug that's the priciest prescription medicine in the world.

Soliris sales came in at $814 million, a 16% increase from Q2 2016, with approximately $35 million derived from favorable order timing. Sales of Strensiq also impressed, with 84% year-on-year sales growth, to $83 million. Comparatively, Wall Street had been looking for only $846.2 million in second-quarter sales.

A growing stack of pills lying on a pile of cash.

Image source: Getty Images.

In terms of profitability, Alexion saw its adjusted earnings per share (EPS) grow to $1.56 in Q2 2017 from $1.13 in the year-ago period. This adjusted profit came in a clean $0.30 per share ahead of the consensus estimate. This marked the fourth consecutive quarter that Alexion's per-share profit blew by Wall Street's estimates.

Added together, this strong quarter set Alexion up to raise its full-year sales and profit forecast. What was once a forecast that called for $3.4 billion to $3.5 billion in sales and $5.10 to $5.30 in full-year EPS is now calling for $3.45 billion to $3.525 billion in sales and $5.40 to $5.55 in full-year EPS.

Now what

In addition to the company's solid results fueled by Soliris, investors also received a taste of what to expect, catalystwise, in the coming year. After all, while Alexion could buy its way to growth, expanding the Soliris label and advancing in-house therapies would be an optimal pathway to growth. According to the press release, the company expects to report data on patients with relapsing neuromyelitis optica spectrum disorder in 2018.

The press release also notes that its phase 3 studies involving ALXN1210 for patients with paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS) are advancing. The PNH study should offer a data readout in the second quarter of 2018, and enrollment in the aHUS study should be complete in early 2018.

A biotech lab researcher using multiple pipettes and test tubes.

Image source: Getty Images.

Alexion's stock is attempting to regain its footing after an internal sales-practice probe led to the departure of its CEO and CFO in December, and sacked the company's share price. However, the solid performance of Soliris in the second quarter, complemented with growth from Strensiq and the company's advancing pipeline, lends hope that Alexion's put its near-term issues in the rearview mirror. Assuming Soliris continues to see strong double-digit growth, and Alexion has success with ALXN1210 in clinical trials, modest upside in its valuation would be a reasonable expectation.

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