Alexion Pharmaceuticals, Inc. ALXN is scheduled to release second-quarter 2020 results on Jul 30, before market open.

The company has an excellent track record, delivering an earnings beat in the trailing four quarters by 11.65%, on average. In the last reported quarter, Alexion came up with an earnings surprise of 19.26%.

Shares of Alexion have lost 3.1% in the year so far against the industry’s growth of 8.5%.

Let’s see how things are shaping up for the quarter to be reported.

Factors at Play

Alexion’s complement franchise consists of key growth driver, Soliris, which is approved for the treatment of paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS). Soliris is also approved for the treatment of generalized myasthenia gravis (gMG) in adults who are anti-acetylcholine receptor (AChR) antibody-positive. It is also approved to treat neuromyelitis optica spectrum disorder (NMOSD).

Soliris drove growth for the company in the last reported quarter, led by solid demand for its approved indications, a trend that most likely continued to-be-reported quarter. Label expansion of the drug into additional indications in previous quarters is likely to have boosted sales in the to-be-reported quarter.

Investors will be keen to know the performance of Alexion’s long-acting C5 complement inhibitor, Ultomiris. Notably, the drug generated sales of $222.8 million in the first quarter, leading to sequential growth. Sales have most likely increased in the second quarter as well. The drug is also approved for the treatment of atypical aHUS to inhibit complement-mediated thrombotic microangiopathy (TMA) in adult and pediatric (aged one month or older) patients.

In June 2020, the European Commission also approved Ultomiris for the treatment of adults and children with a bodyweight of 10 kg or above with aHUS, who are complement inhibitor treatment-naive or have received Soliris for at least three months and have evidence of response to Soliris.

During the first quarter, based on preclinical data supporting the role of complement in COVID-19 and preliminary clinical evidence from approximately 100 patients, Alexion initiated a phase III study, investigating the use of Ultomiris in adults with COVID-19, who are hospitalized with severe pneumonia or acute respiratory distress symptom. We expect the company to provide updates on the same in the quarter.

Under its metabolic franchise, Alexion markets Strensiq for the treatment of patients with pediatric-onset hypophosphatasia (HPP) and Kanuma for addressing lysosomal acid lipase deficiency (LAL-D). These drugs are likely to have performed well in the second quarter.

In July 2020, the company completed the acquisition of Portola Pharmaceuticals, Inc. The acquisition added Factor Xa inhibitor reversal agent,Andexxa [coagulation factor Xa (recombinant), inactivated-zhzo], marketed as Ondexxya in Europe, to Alexion’s commercial portfolio. Andexxa is the first and only approved Factor Xa inhibitor reversal agent and has demonstrated transformative clinical value by rapidly reversing the anticoagulant effects of Factor Xa inhibitors, Xarelto (rivaroxaban) and Eliquis (apixaban), in severe and uncontrolled bleeding. Hence, R&D expenses are likely to have increased as well. We expect updates on the same by the company during the second-quarter earnings release.

Due to the COVID-19 pandemic, during the first-quarter call, the company lowered its sales and earnings guidance for 2020. It now expects adjusted earnings per share of $10.45-$10.75, down from the previous guidance of $10.65-$10.85. The company projected revenues of $5.23-$5.33 billion, down from the previous guidance of $5.50-$5.56 million.

Combined revenues from Soliris and Ultomiris are now estimated at $4.49-$4.57 billion (previous guidance: $4.76-$4.80 billion).Hence, sales might have been adversely impacted in the second quarter.

Moreover, investors will be keen to know if the corona virus pandemic has affected the demand for other marketed drugs and those in clinical studies.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Alexion this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here as you will see below.

Earnings ESP: Alexion has an Earnings ESP of -3.36%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks That Warrant a Look

Here are some biotech stocks with the right mix of elements to beat on earnings this time around:

Alkermes Plc.ALKS has an Earnings ESP of +362.51% and a Zacks Rank #3. The company is scheduled to release second-quarter 2020 results on Jul 29.

Bristol Myers Squibb Company BMY has an Earnings ESP of +0.23% and a Zacks Rank #2.  The company is scheduled to release second-quarter 2020 results on Aug 6.

ACADIA Pharmaceuticals, Inc. ACAD has an Earnings ESP of +8.12% and a Zacks Rank of 3. The company is scheduled to release second-quarter 2020 results on Aug 5.

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