Alexion Pharmaceuticals, Inc.
Q2 2013 Earnings Call Transcript

Published: 25 Jul 2013

[Operator:]

Good morning, and welcome to the Alexion Pharmaceuticals Incorporated Second Quarter 2013 Results Conference Call. Today's call is being recorded. For opening remarks and introductions, I would like to turn the call over to Mr. Irving Adler, Executive Director, Corporate Communications. Please go ahead, sir.

[Irving Adler:]

Thank you, Kim. Good morning. Thank you for joining us on today's call to discuss Alexion's performance for the second quarter of 2013 and our outlook for the second half of the year. Today's call will be led by Dr. Leonard Bell, our Chief Executive Officer. Lenny will be joined by members of Alexion management

[Leonard Bell:]

Thanks, Irving. In the second quarter of 2013, the Alexion global team continued the strong commercial progress and the increasing R&D momentum that we achieved during Q1. In each key initiative, we are further accelerating our tightly focused mission to develop and deliver life-transforming therapies for patients with severe and life-threatening disorders that are also ultra-rare. Looking first in our commercial operations of PNH, Q2 was the 24th consecutive quarter in which Soliris therapy was commenced in a significant number of new patients with this life-threatening disorder. This continued growth was again observed across our core territories

[Vikas Sinha:]

Thanks, Lenny. As we reported in this morning's press release, Q2 2013 was another period of strong financial performance by Alexion. During the quarter, we again achieved steady growth in revenues and profits from our PNH and aHUS operations and cash flow was, again, robust. I'd like to highlight a few points regarding our performance in Q2 and then look ahead to some key considerations for the second half of 2013. Soliris sales in Q2 were at $370.1 million, a 35% increase compared to the year-ago quarter. In aHUS, we are gratified by the steady uptake of Soliris in the U.S. and by our reimbursement progress in Western Europe during the second quarter. We expect continued contributions from Western Europe in the second half of the year, and note that the impact from anticipated initial launches is already included in our increased 2013 guidance. As we executed strongly on patient-centered initiatives in Q2, we continued to control both SG&A and R&D expenses. Strong topline performance, combined with control of other key financial parameters, resulted in a 56% in non-GAAP net income to $147 million or $0.73 per share in the second quarter. Looking at our balance sheet. Cash and cash equivalents at quarter-end grew by approximately $100 million to $1.1 billion. This reflects continued positive cash flow from our business during the quarter offset by our share repurchase program. Turning to our guidance. We are now raising our 2013 revenue guidance from the previous range of $1,505,000,000 to $1,520,000,000, now to the higher and narrower range of $1,520,000,000 to $1,530,000,000. You will also notice in this morning's press release that we have made offsetting adjustments in the SG&A and R&D lines of our 2013 guidance for operating expense. R&D is now expected to be 18% of sales, reduced from 19% in our earlier guidance and SG&A is now expected to remain stable at 29% of sales. With revenues expected at a higher level and expenses essentially unchanged, we are increasing our 2013 guidance of a non-GAAP EPS from the previous range of $2.87 to $2.97, now to the higher and narrower range of $2.97 to $3.02. Other adjustments to guidance are detailed in this morning's release. Looking at a few points released to -- related to our guidance, I'll note that with regard to sequential quarter growth, increased infusion days in Q2 compared to Q1 resulted in approximately $5 million to $6 million in sales growth in Q2 that would not be anticipated in Q3. As in the past, we expect that SG&A in Q4 will reflect the impact of the major medical conferences in which we participate. We also expect R&D expenses will increase in the remaining quarters of this year as we continue to execute on 10 development programs. We are pleased with our progress in the second quarter of the year and our plans for the future. I look forward to providing further updates of our performance as the year progresses. At this point, I'll turn the call over to David. David?

[David L. Hallal:]

Thanks, Vikas. In the second quarter of 2013, global revenues from our Soliris operations increased by a robust 35% compared to the same period last year. As we continue to grow our PNH operations by achieving deeper penetration in the nearly 50 countries in which we serve patients, we are also serving an increasing number of patients with aHUS in the U.S. and Western Europe. During Q2, looking first to PNH, in our core territories of the U.S., Western Europe and Japan, our disease awareness and diagnostic initiatives continued to result in a steady rate of identification of new patients with PNH. These initiatives continued to enable us to serve an increasing number of patients with PNH and, as in prior quarters, the majority of PNH patients newly starting on Soliris during Q2 were also newly diagnosed. Beyond our core territories, we continued to expand our PNH operations in additional major countries. As anticipated, in Turkey, Brazil and Russia, in Q2, we observed a steady rate of new patient identification and Soliris treatment initiations indicating further expected consistent growth over time. We also now expect to add patients in Korea in the second half of 2013 as the next major country in our global PNH rollout. In addition, we see a significant opportunity to serve patients with PNH in multiple countries in Latin America, with a potential for growth in Argentina and Colombia later in 2013 and continuing further in 2014. Turning now to aHUS. In Q2, we again observed that our efforts resulted in the steady increase in the number of new patients with aHUS in the U.S., commencing Soliris therapy. We continue to observe that the majority of patients, who are newly starting on Soliris treatment, were newly diagnosed, as they presented urgently with life-threatening thrombotic microangiopathy or TMA. As we extend our aHUS initiatives to reach more hematologists and nephrologists, we are confident that we can improve our ability to serve more patients by focusing on 4 drivers to further optimize patient care. First, an increasing number of patients with life-threatening TMA will be tested for aHUS. Second, a shorter turnaround time for ADAMTS13 test will provide physicians and patients with critical diagnostic results more rapidly. Third, once diagnosed with aHUS, a higher proportion of patients will be rapidly started on Soliris treatment. And finally, over time, physicians will more fully appreciate the genetic and lifelong nature of aHUS and the optimal outcomes achieved with chronic Soliris treatment. Our efforts in aHUS are aided by the growing body of peer-reviewed clinical evidence regarding the disease and the clinical benefits of Soliris treatment. These include, most recently, the New England Journal of Medicine publication in early June of the life-transforming results from our pivotal multi-center, multinational registration trials in aHUS. This publication is now a major new resource for our field teams in educating physicians worldwide. Turning to our aHUS operations in Western Europe, as we begin to serve initial patients, our teams are planning for their individual country launches. And as expected, we made significant progress with the reimbursement processes in key countries during the quarter. Starting with England, during Q2, the government commenced its first program to fund Soliris treatment for patients with aHUS. And we observed that an initial and growing group of patients accessed therapy. Now in July, and following this initial program, we were pleased to recently learn that the government's Clinical Priorities Advisory Group, or CPAG, has decided to recommend a new broader and formal clinical access policy that includes all aHUS patients who have functioning kidneys as well as patients on dialysis who are transplantable. Upon implementation, this policy would provide broad access to Soliris for children and adults with aHUS in England through the NICE review next year. This is an important and positive step forward for patients in England. In Germany, following the Q1 accomplishment of reimbursement for aHUS in all settings, both outpatient and inpatient in Q2, we have now started to see an increasing number of aHUS patients diagnosed and treated by hospital-based nephrologists and hematologists. In France, we are continuing reimbursement discussions with the government following the very high ASMR II rating that Soliris received for aHUS. We expect that this strong recognition of the clinical benefits of Soliris will support broad access to therapy in France and we expect these discussions to progress through the year. In Italy, during Q2, the government continued to provide Soliris through an early access program as we advanced through the reimbursement process to cover all patients with aHUS year. In Spain, selected initial aHUS patients are starting to receive access to Soliris locally. We have made meaningful progress in the national government reimbursement process and we anticipate finalizing the process in the fall. And finally, in Belgium, funding for all patients with aHUS commenced on July 1. Beyond the significant progress in Q2 across Europe, I note that we have started serving initial aHUS patients in Turkey this quarter. In Japan, and based on our recent regulatory filing with the PMDA, our in-country commercial team is now laying the foundation for our anticipated aHUS launch. We continue to be pleased with our launch of Soliris for aHUS, and our observations in Q2 reaffirm our view that our opportunity to serve aHUS patients is at least as large as our opportunity to serve patients with PNH, and perhaps larger. Beyond our current Soliris indication in PNH and aHUS, we are growing our commercial operations to support more indications and products. Looking forward, over the next several years, we anticipate a potential series of additional major approvals between 2014 and 2018, starting with our second product, asfotase alfa, in late 2014 and then followed by Soliris in the deceased- and living-donor kidney transparent settings; Soliris in delayed-graft function; Soliris in one or more neurology indications; our third product, cPMP for infants with MoCD Type A; and we expect to launch one or more of our next-generation follow-on products to Soliris within the same 2014 to 2018 period. In closing, we look forward to serving more patients with PNH and ASUS in more countries in 2013 and to serving patients with additional severe and life-threatening ultra-rare disorders in the years ahead. At this point, I'll turn the call over to Martin for a look at our development programs. Martin?

[Martin MacKay:]

Thanks, David. It has been a very exciting first 2 months for me since I joined the Alexion team. I am gratified to be working in an environment where we are truly transforming the lives of individual patients who would otherwise be at high risk of severe disability or premature death from an ultra-rare disorder. I am especially compelled by the tremendous potential of the pipeline. For the next few minutes, I want to provide both a brief update on key milestones in our development programs, and also a wider view of how we are building the momentum of our global R&D organization to support an expanding yet highly focused portfolio of clinical initiatives. To begin, I would like to discuss the progress of our development programs with eculizumab, starting with kidney transplant. I am pleased to announce that during the quarter, we completed dosing in our multinational deceased donor trial in patients at elevated risk of antibody-mediated rejection, or AMR. Initial topline data from the study are expected to be presented at the European Society for Organ Transplantation congress this September. As we have noted, our deceased-donor study will also evaluate delayed-graft function, or DGF, as a key prospective secondary endpoint. We expect to discuss this DGF data with regulators as well as data from a separate investigator-initiated trial in DGF in the second half of 2013 in order to accelerate an Alexion-sponsored multinational DGF registration program. Enrollment in our company-sponsored multinational living-donor transplant trial in patients at elevated risk of AMR is ongoing, and we expect to continue enrollment through 2013. In neurology, as we have discussed, we are now preparing to conduct single registration trials with Soliris in both relapsing neuromyelitis optica, or NMO, as well as in severe refractory myasthenia gravis, or MG. We are pleased by the recent publication in the Lancet of the positive data from the investigator study in NMO. We continue to make preparations towards commencing both studies in the second half of 2013, and I can now report that we have finalized the NMO protocol and are nearing completion of the MG protocol. Turning to STEC-HUS. We are continuing to obtain and analyze additional and longer-term controlled clinical outcome data from an epidemiologic study in approximately 400 STEC-HUS patients, who received only best supportive care. We expect the key investigators on this study to commence their review of the data this fall. Finally, with regard to the life cycle management of Soliris well through the 2020s, we are increasingly focused on the rapid advancement of 2 or more next-generation molecules into the clinic during 2014. I will now turn to our lead development programs with our second highly innovative therapeutic candidate, asfotase alfa. The FDA Breakthrough Therapy designation we received for asfotase alfa in May is an important element in the late stages of our development program. In addition, and importantly, the designation is aligned with the medical community's view of HPP as a disorder in which the age of onset is a critical clinical consideration, more so than the current age of the patient. The designation specifically covered the perinatal onset, infantile onset and juvenile onset forms of the disease. Through the designation, we expect more frequent interactions with the FDA. These interactions, for example, will help us to strengthen our filing and regulatory strategies for this larger-than-anticipated patient population. Following the completion of enrollment, we are now analyzing the data in our natural history study of HPP in infants, with the goal of including this in our filing for marketing authorization. We remain on track for a filing for asfotase alfa in HPP in the U.S. and Europe mid-2014. In addition, enrollment is ongoing in our clinical trial for asfotase alfa in Japan, and we expect to complete dosing in 2014. Beyond asfotase alfa, we are evaluating 3 additional highly innovative therapeutic candidates as treatment for patients with severe and life-threatening disorders that are also ultra-rare. In our metabolic disease area, we continue to accelerate the development of our cPMP replacement therapy for the treatment of patients with Molybdenum Cofactor Deficiency Type A, a severe ultra-rare and genetic metabolic disorder that is fatal in newborns. I am pleased to report that we have now commenced dosing with our synthetic cPMP and a study in healthy volunteers this month. Additionally, we are continuing with a retrospective data collection from the small number of individual newborns with MoCD, who have been treated with the earlier form of the cPMP replacement therapy. Finally, we plan to initiate a natural history study in patients with MoCD Type A this quarter. Also, after completing dosing in our single-dose Phase I clinical study of ALXN1007, our novel anti-inflammatory antibody, I am pleased to report that we have now commenced a multi-dose Phase I clinical study in healthy volunteers, and we plan to discuss the initiation of a multi-dose Phase II proof-of-concept study in patients with regulators before year-end. Following these discussions, we expect to explore parallel development of ALXN1007 in multiple severe life-threatening and ultra-rare conditions. And finally, enrollment continues in a Phase I study of ALXN1102 or ALXN1103, our novel alternative pathway complement inhibitor. We are continuing to enroll and dose patients in these Phase I studies and expect to meet with regulators to discuss trial data and the development program following completion of patient treatment. As we look at the number of development milestones we have reached in the first half of the year and those we expect in the second half, it is evident that we are achieving a growing momentum across our R&D operations. Our priorities, as we accelerate, are clear as we strive to move forward rapidly and simultaneously on a greater number of R&D programs than we have in the past. There are 6 key elements to this momentum, as we build our global R&D organization. First, we are committed to significantly expanding our R&D leadership. As part of this initiative, we are especially pleased to now welcome Dr. Steve Ryder as Senior Vice President and Chief Development Officer. Steve joins us with extensive biologics and small molecule experience from Astellas Pharma, where he was President, Global Development. We have recently recruited a number of additional highly talented and experienced physicians and scientists as we continue to build our leadership cadre. Second, we are focused on maximizing the life cycle management of Soliris well through the 2020s. This includes our ongoing work on 2 or more next-generation follow-ons to Soliris, which we will begin to discuss in more detail as they get closer to entering the clinic in 2014. Third, we are accelerating the development of our late-stage portfolio. This includes asfotase alfa, the 5 transplant and neurology programs with Soliris that I discussed earlier, as well as our cPMP program and multiple indications for ALXN1007. Fourth, as a company, we are significantly increasing our pursuit of business development opportunities, being within our tight focus of potentially transformative therapeutic candidates for severe and life-threatening disorders. Our recent collaborations with Ensemble, which seeks to leverage its highly innovative approach to the use of small molecule compounds to modulate protein-protein interactions, holds promising potential with regard to a number of such disease targets. Our fifth area of focus, which is tied to both our internal development and our business development strategy, is translational medicine. We are intent on further shortening the timely date to conduct proof-of-concept studies and arrive at critical go-no-go decisions on promising preclinical candidates. And sixth, building on our successes to date, our research programs will now further seek to genetically map select groups of severe and life-threatening, ultra-rare disorders. I look forward to updating you on all of these initiatives on future calls. I will now turn the call back to Lenny. Lenny?

[Leonard Bell:]

Thank you, Martin. In the first half of 2013, we accomplished a significant number of important commercial and clinical milestones while continuing to build our global organization to serve more patients worldwide. As always, we thank all of you who make our work possible, including employees, researchers, physicians, investors and especially patients and their families. Working together, we can expect to reach many additional milestones in the second half of the year. Operator, we'll now take questions.

[Operator:]

[Operator Instructions] We'll move on to Eric Schmidt from Cowen & Co.

[Eric Schmidt:]

Lenny, maybe I'll ask about manufacturing. It sounds like the EMA actually inspected Rhode Island recently. Is that the case? And that you passed inspection from that party? And maybe Vikas, could you just talk about the financial implications of the Singapore approval happening a little bit earlier, when we might see products shipped from Singapore and what we might see in terms of P&L impact when that happens?

[Leonard Bell:]

Steve, do you want to describe that current -- Rhode Island?

[Stephen P. Squinto:]

Yes. Let me just walk you through the timing of going all the way back to the FDA inspection and walking all the way through the new EMA GMP compliance letter. So the FDA inspected the Rhode Island facility back in August of 2012. As you know, we did receive a 483 which then turned into a warning letter of the FDA issued in March of 2013. Actually, EMEA came in January of 2013, about 3 months up ahead of the warning letter. And after the 483 was received, of course, we started to make pretty significant improvements in the manufacturing facility, both from a facility's point of view and as well as a quality operation's point of view as well. So the EMEA came in January of '13 and then found the manufacturing quality improvements to be acceptable. The facility then received a GMP compliant letter in May of 2013.

[Vikas Sinha:]

Eric, on the financial front, as you know, we have currently -- we are currently producing inventory and stock. And so as we finish the SKUs, then only we will be using the Singapore-produced products. So I don't see much of an impact this year, but next year will be a transition year and then we should start seeing impact on '15 or so.

[Operator:]

Our next question is from Geoff Meacham from JPMorgan.

[Geoffrey C. Meacham:]

One on asfotase alfa, you guys are filing in pediatrics, but would you expect reimbursement or labeling to be restricted at all by age? I know, Lenny, you mentioned, segmentation of the market by age at this point now. And then a follow-up on STEC-HUS, are you guys still on track for a year-end filing. Obviously, the filing has lost momentum, but I wasn't sure if it was coming from KOLs or regulators telling you to hold back or if there's some sort of data trigger that you're aiming to hit?

[Leonard Bell:]

Thanks, Jeff. As Martin and I just said on the call, in regarding asfotase alfa and hypophosphatasia, it's a pretty important observation that the breakthrough therapy designation is not based upon the age of the patient to be treated, but the age of onset of disease. And so, of course, just from a logic perspective, individuals who have age of onset as infants or as juveniles or perinatal, obviously may very well be anywhere from newborns to adult patients as long as they had onset before the age of 18. And that's really when it's -- as I was saying and Martin described, potentially it might be a much larger-than-anticipated population based upon age of onset. Is that understandable?

[Geoffrey C. Meacham:]

Yes, it's helpful.

[Leonard Bell:]

Okay. And Martin, do you want to...

[Martin MacKay:]

Sure. Thanks, Lenny, and thanks for the question, Geoff. In terms of STEC-HUS, as we continue to obtain and really analyze the longer-term control data, we expect the key investigators on the study to really commence their review of this data in the fall. Up to this point, I would say the greatest challenge has really been to identify those patients who would truly benefit most from being treated with Soliris and STEC-HUS.

[Operator:]

Our next question today is from Salveen Richter from Canaccord.

[Andrew Peters:]

This is Andrew on the line for Salveen. Maybe a question for Vikas. Curious of the increase in guidance, if it's due to kind of you coming on board quicker than you expected or what the drivers are. And then maybe related to that, I was wondering what the timeframe for the CPAG implication -- implementation is and how that's going read through to the NICE.

[Vikas Sinha:]

David, why don't you comment on the launch in the second half and aHUS continuing until next year.

[David L. Hallal:]

Sure, so it's a -- as Vikas had indicated, the guidance that was provided this morning on the call takes into account what our expectations are in Europe for aHUS in the second half of the year. We've been pointing to this point in time as a real key point for us in Western Europe, I think you've heard the progress there throughout the call. As it relates to CPAG, I think there's an important point which was, during Q2, even prior to the CPAG recommendation, we started to see an initial and growing group of patients in England with aHUS access treatment. So our team there locally is educating physicians, we're identifying patients and we're seeing patients gain access to funding. As it relates to CPAG, just technically speaking, just like AGNSS, they have made a recommendation for a broader group of patients, for a formal clinical access policy for all patients with aHUS with functioning kidneys as well as any patients on dialysis who are transplantable. But that recommendation still needs to be adopted and ratified, and the patients are expecting that to happen very, very soon.

[Operator:]

Moving on, our next question is from Ying Huang from Barclays.

[Ying Huang:]

I have a couple of questions. Number one is, obviously, there's some media reports that you guys could be takeout or a target for M&A transaction here. I was wondering, strategically speaking, how do you think an orphan franchise like what you have here fits into a large pharma portfolio here. And then secondly, in terms of the aHUS launch in U.S., you guys were trying to refocus the sales force of patients outside of the hospital setting. So I was wondering what kind of progress you guys have made since that?

[Leonard Bell:]

Thank you for that single question, Ying. And as we've said in the past, we don't comment on any rumors. And as we've been talking about, probably extensively in the monologue part of the call so far, although I think we may have more opportunities in the rest of the hour, I'm sure. Alexion is currently operating from an unprecedented position in our history. From all perspectives, as I look around, R&D, commercial operations, manufacturing and, really, overall senior management, we believe that we're seeing the results in our quarterly performance. And as importantly, we are also poised to take advantage of the breadth and accelerating number of significant opportunities that we see in front of us. As we look down this road, we see, first and foremost, continued strong growth in Soliris in each of its 10 -- to each of its 2 currently approved indications. We see also see 5 highly innovative compounds across-the-board now being investigated in 10 additional severe and ultra-rare indications, which we expect to result in a continuous series of anticipated major product approvals from 2014 through 2018. With execution of a strategy now taking the current and future Soliris franchises, as we described earlier in the call, through to 2030 and beyond, together with the benefits of a stronger and wider global manufacturing and supply platform here in the United States, increasing in Singapore and, as we noted just moments ago, now in Ireland, with an expanding experienced senior leadership team and an equally strong balance sheet with another quarter of strong financial performance. As I look back, just over past 4 years, we moved from a company with a single product approved in a single disorder then to a second indication and now, closing in on a robust and continuous series of new products and indications, major launches over the next 4 years. As we look ahead, we're tremendously excited. What was your second question?

[Ying Huang:]

About the progression on aHUS launch in the U.S. outside of the hospital setting.

[Stephen P. Squinto:]

Yes. Thanks, Ying. So as I've indicated, we expanded our team ahead of the aHUS launch in the U.S. and we dedicated that single expanded sales force to support both our PNH and aHUS initiatives. And that sales team is -- field team is focused on hematologists, pediatric nephrologists as well as adult nephrologists. We are and have been experiencing success in both the inpatient and outpatient setting. As I mentioned, many patient are presenting with life-threatening TMA where those patients are in a situation where they are being identified, diagnosed and treated at the hospital setting. But at the same time, there are patients with longer-term disease who have more severe longer-term impact to their kidneys that are identified in the outpatient setting, where physicians are looking at the totality of the information now has been reported at medical congresses that those patients with longer-term disease can see long-term benefits to Soliris treatment with improved kidney function. So we are having success really in both settings with our field team in identifying and starting new patients on treatment.

[Operator:]

Moving on, we'll hear from Rachel McMinn from Bank of America Merrill Lynch.

[Rachel L. McMinn:]

I missed part of the call, so I apologized if this has been asked. Your x US aHUS -- or your comment about aHUS being a larger market opportunity, did somebody asked that already?

[David L. Hallal:]

No.

[Leonard Bell:]

This would be the time.

[Rachel L. McMinn:]

Okay, so I apologize. I missed the entire Q&A portion so far. So I don't want to repeat -- ask like 15 questions. So your comment about this being...

[Leonard Bell:]

Start with part A.

[Rachel L. McMinn:]

So part A. Is that -- I mean, when you say it could be as big or bigger in the past, you've referenced the initial uptake in the U.S. Are you referencing that again? Has anything changed there for you? Or are you seeing things, just x US, that gives you more confidence? I also wanted to ask you about asfotase alfa. I think, Lenny, you mentioned there was a potentially larger population there, and I wanted to clarify those comments. And finally, just your enthusiasm for next-generation Soliris launching within 2018, if you're just putting something in the clinic next year, what gives you confidence in that timeframe for a launch?

[Leonard Bell:]

Yes, something x US, [ph] right?

[Rachel L. McMinn:]

Something, yes.

[Stephen P. Squinto:]

Yes. So Rachel, as you know, we now have 7 quarters behind us in the U.S. And Q2 sort of reaffirms that view, as we see on a quarterly basis, the new patients that are presenting with life-threatening TMA, recognizing that we're not capturing all of them right now. But when we see those that we are helping to receive a rapid diagnosis and initiate treatment, that is giving us confidence in the size of the opportunity. But as you state, we're now starting to see that in countries outside of the U.S. And as I alluded to on the call, for example, now in Germany, with the Q1 achievement of full reimbursement in the inpatient and outpatient setting, we were pleased with our observations in Q2. And we're seeing some initial positive indications in the U.K. as we saw our initial patients start on treatment in England in Q2. So it is indeed reaffirming that observation outside of the U.S.

[Leonard Bell:]

And Rachel, as regards the second part, part B of question 1. In terms of asfotase alfa, what I think was noteworthy earlier on the quarter -- or to me, during the second quarter, was that the Breakthrough Therapy designation was very specific on the basis of age of onset of patients and not the age of the patients of when they get treated. And specifically in regard to patients at perinatal, infantile or juvenile onset of disease, which actually is, as you've kind of appreciate, I'm sure, means that the patients who are treated can be any age, over 18 or below 18, as long as they hit onset of disease prior to age 18. And that then would be a significantly greater population than one might have anticipated if it were just to be strictly those who are under age 18. Martin?

[Martin MacKay:]

Thanks, Lenny, and thank you for the question, Rachel. On the follow-on, there's just a couple of points. It's clearly really important to us to maximize the life cycle of Soliris being such a terrific molecule. And well into the next decade, that's what we're looking at here. Now your specific question on follow-ons, we do have a path forward which we're going throw a lot of muscle behind because of the importance to it. And as follow-ons, we would expect it to be -- and I'm always careful to say this, but some more easier than the normal path for a new molecular entity. We know the molecule, we know the indications that we would be looking at and we know the clinical trials and, of course, we know the key opinion leaders. So it is an aggressive timeline, but we are absolutely behind this. Hope that helps.

[Operator:]

Moving on, our next question is from David Friedman from Morgan Stanley.

[David Friedman:]

I was wondering if you could just maybe discuss your updated thoughts or plans for the cPMP program? And what do you think you will need to do in terms of steps left before you could file that program?

[Leonard Bell:]

Thanks very much, David. Martin?

[Martin MacKay:]

Yes. Thank you, David. Clearly, an important step is the healthy volunteer study. We do believe that this will be the most effective way to really evaluate the safety, the pharmaco-dynamics and PK of the synthetic form of the cPMP. And this study will be necessary really to transition from the earlier form of the cPMP to our currently synthesized form. As I'm sure you know, the earlier forms of the cPMP were produced in a bacterial expression system. And we are now producing via chemical synthetic group. So that's really step 1. That said, we would really like to accelerate the development on this replacement therapy. As I've said in the script, and you've heard many times, this really is a severe, ultra-rare disorder. Recently, we've met with regulators to discuss our program. We've started dosing in healthy volunteers. We're also initiating a natural history study to learn more about the disease. And finally, we've also started the retrospective data collection from the handful of individual newborns who had been treated with the earlier form. So clearly, it's early, David, but again with a lot of acceleration, thoughts on how we can bring this forward.

[Operator:]

Our next question today is from Terence Flynn from Goldman Sachs.

[Terence C. Flynn:]

Just 2 for me. First on aHUS in France. I was wondering -- it seems like it's taking a little bit longer with respect to the reimbursement discussions. I was wondering if you can give us any more insight there. And then on 1107, when might we expect to know anything about the mechanism of action there, the potential indications?

[Leonard Bell:]

Yes. Thanks very much, Terrence. I'll look to answer the first part and then Martin will field second part. Excuse me, David, go ahead. Basically, the way I would describe, as David mentioned earlier during the call, I think this was -- the second quarter was a particularly important quarter for us moving forward really meaningfully in 3 different countries in Europe. Most notably, the second time, we've got a broad agreement in England. I would the second time's the charm. But it's a very important formal process that just went through again with CPAG. We think that bodes extremely well for other countries. Likewise, actually, in a -- within the other central European environment in Belgium, obviously received a broad reimbursement approval. And as David intimated, we are extremely close to having a broad understanding as well in Spain. With that actually, we anticipate France is moving forward over the timeframe we had anticipated, and we would expect some time late fall to complete this. In terms of 1007?

[Martin MacKay:]

Thanks, Lenny. And again, thanks for the question, Terence. As you know, we've completed our dose into the single-dose Phase I. We plan to discuss the initiation of a multi-dose Phase II study with regulators before year-end. And then I think I mentioned this on the call, following these discussions, I think we're in a much better position to really explore development of 1007. And we have multiple ideas in mind, all of them in severe life-threatening disease and, of course, ultra-rare. In terms of your specific about timing, we will provide more information when we reach these key clinical milestones.

[Operator:]

Chris Raymond from Robert Baird has our next question.

[Christopher J. Raymond:]

Just curious, you guys have been very descriptive of your life cycle management efforts. Could you maybe talk about what specific attribute or improvement on Soliris you'd be looking for either if it is a clinical improvement or safety improvement, convenience, or maybe all of the above. And maybe a second part is can you maybe give us an update, if there is one, on any IP extension strategies for Soliris?

[Martin MacKay:]

Mark, thank you for your question, and you really answered it in part with all of the above. What we really intend on doing is serving patients in the very best way that we can. And there could be multiple means of doing that. The key thing is that we really explore like Chris, what this life cycle management plan looks like. We have some molecules. We'll take them into the clinic and we certainly have ideas about all the things that you mentioned. But at the very heart of it is how we can serve the patients best. And that will unfold over the next relatively short period.

[Leonard Bell:]

And in regards to IP, Chris, in the United States and Europe, there is issued and valid patents out to 2020 including extensions and a supplementary protection certificates. In addition, there is a variety of pending applications that potentially could go out towards the mid-'20s or late '20s as well. And there's also, of course, a series of interwoven designations for orphan drug exclusivity across the major territories, which in different indications, would go out towards 2020 or potentially, for some of them now, that we're just starting. And our registration trials actually might go out substantially longer. And then on top of that, of course, there is a broad understanding based upon the risk management profiles and so forth of a control distribution system around the world with Soliris, where there is such a direct interaction with every prescriber and there's a very controlled tight system to assure the proper utilization and safety around the world, out to every territory and every country and every region around the world. So we think there's a variety of opportunities for carrying and continuing to serve across an increasing number of severe life-threatening ultra-rare disorders out into the 2020s with Soliris. If not, frankly longer. And at the same time, Martin has really described that we are committed to serving patients broadly and deeply. We have a great understanding of their needs and we're committed to that as we look forward to bring at least 2 molecules into the clinic as a follow-on candidates to Soliris next year. And we committed as well to bring at least one of them into approval launch status over the same multi-year period of time. We think that, overall, we have an opportunity to actually to increase our service to patients with the strategy over what already we consider to be a very robust model of service.

[Operator:]

Our next question comes from Robyn Karnauskas from Deutsche Bank.

[Robyn Karnauskas:]

I guess two really quick questions. The follow-up was Chris's question on the pipeline and how you're thinking about the business going forward? How important it is to diversify the business away from Soliris in the outer years? And what is more important, is it expanding Soliris or the follow-on Soliris products, or is it diversifying with new products? And then second question, when you think about M&A, there's a lot of M&A as far as bringing in products into the pipeline, what do you look for as far as in products that will help you go forward diversifying the company as you've been doing in recent years?

[Leonard Bell:]

Thanks very much for that single-part question, Robyn. As we look at our growth over the following 10 to 20 years, we really see tremendous opportunity to expand the Soliris opportunities to certifications, to bring forward next-generation molecules to expand that and serve patients even better. But at the same time, our ambitions to serve patients clearly exceed our ambitious to be able to deliver that just through Soliris -- or even the follow-ons actually for Soliris. that's really why internally with Martin now and increasingly with a new leadership being brought in to supplement the current leadership. We have a tremendous opportunity to go forward beyond an expanding robust Soliris franchise over the next 10, 15 years. And over the next several years, identify tremendous opportunities, always focusing though on patients with severe and life-threatening disorders. And for that reason we look to only go forward, as you know, with therapies that are truly transformative for these patients. I think as we now have asfotase alfa, looking to file for a registration for what we now anticipate to be a larger first indication for asfotase alfa next year, cPMP also against a lethal infant disorder. And as we look at other opportunities, bolt-on or otherwise, they're bringing to Alexion, we look at these opportunities across a broad array, with a filter, so that it's very specific for only those therapies that are potentially transformative or patients with just severe and devastating disorders. Martin?

[Martin MacKay:]

Yes. In terms of what we look for, which really just adds to the points that Lenny made, it starts off with the path of physiology of disease, what we understand about these devastating ultra-rare disorders. I mentioned briefly in the script about doing genetic analysis and deep genetic analysis of a very focused group of diseases and then, clearly, surround the target. Is the target plausible? Can you attack it by means. And we are agnostic to the modality, whether it's an antibody, where we have terrific skills, small molecule, other modalities, we will bring that to bear. Right at the heart of it, as Lenny said, it's about the devastating nature of the diseases that we're looking at and just how much of a change that we can make in their lives.

[Leonard Bell:]

Was there a second part or a third part, Robyn, I don't remember.

[Robyn Karnauskas:]

I think -- I was just really trying to get a sense of what was more important, expanding Soliris or is the focus now, over the next years, really in -- be on bringing things in?

[Leonard Bell:]

I think what you heard is all of the above.

[David L. Hallal:]

And as we're coming up on the top of the hour, we can stay a few more minutes. [Operator Instructions] Operator?

[Operator:]

Are you ready for one final question?

[David L. Hallal:]

No, it's not a final question. We can take a few more, but are only asking people limit themselves to one apiece.

[Operator:]

We do have a question from Brian Abrahams from Wells Fargo.

[Brian Corey Abrahams:]

A question on asfotase alfa on the regulatory side. I'm just wondering if you have any increased understanding of what breakthrough status might mean for the development plan here. I know you reiterated plans for a mid-2014 filings here. Just wondering if there could be any opportunity for this to be accelerated? Wondering where that potential next juvenile study could fit in given what you've talked about as FDA stance on the importance of age of onset here rather than age of treatment?

[Martin MacKay:]

Thanks, Brian. It's clearly early days in terms of the breakthrough status, the designation. But what it clearly means is we'll have more frequent interactions with the FDA. And as you can imagine, we have some of those plans just now to discuss the data that we have. But also as you allude to, the studies that we want to do in this area. I wouldn't go much further than that at this stage until we really understand what the designation means. But we're very pleased that we will be able to have those more frequent interactions, in particular, at this stage of development of asfotase alfa.

[Operator:]

We'll move on to Matt Roden from UBS Securities.

[Matthew Roden:]

I just was wondering if you could comment on the NMO Phase III that's posted on clinicaltrials.gov. Two things kind of jumped out of me. One is the exclusion of retox, and I don't think that was the case in the prior study. And secondly, the EDSS has to be 7 or less. I was wondering if you can comment on the rationale for those 2 particular changes from the Phase II, and whether or not you think that will impact either the utilization downstream or patient enrollment.

[Martin MacKay:]

Okay. Thank you. Just a couple of points specifically to your question. I think you know from reading about it that this is about a 90-patient study, approximately 100 sites. We decided on the criteria just based on kind of treatment of those patients and the severity of the disease. In terms of the EDSS score of less than 7, we wanted to make sure that we were able to help in the disease, particularly, in the clinical trial stage of things. So that's why we chose that particular criteria.

[Operator:]

We'll take our next question from Lee Kalowski from Crédit Suisse.

[Lee Kalowski:]

I also had an NMO question. I'd also seen the posting on clinical trials. I was wondering if you can just give us a sense for when you expect the first patient to be dosed? And the timeline, I'm just wondering if the study completion that's posted, if that's just a placeholder or when we should expect that data from the trial?

[Martin MacKay:]

Yes. I'll answer your questions in reverse order. It's a placeholder. Now that we've had the protocol complete, though, that's clearly very good start. And now, we'll prepare to commence the single multinational registration trial in the second half of this year. So we will start this year and, obviously, being event, we will see the progress of that depending on the patients that we recruit. Hope that's helpful.

[Operator:]

Our next question comes from Stephen Willey from Stifel.

[Stephen D. Willey:]

I have a question on South Korea actually. I know that we've seen I think some registry data presented at a couple of ASH meetings now, and I think it's looks like, if I remember correctly, at least a couple of 100 patients that look to at least be typically worthy of treatments. So I guess, how should we think about the rate at which those patients come online into the model?

[David L. Hallal:]

Yes, thanks, Steven. So as I mentioned the second half of this year, we expect to add Korea to our portfolio. I think that just looking at the access path, I would view it as probably a slow but growing number of patients over time. We obviously, work very closely with the key opinion leaders including the Professor Lee in Korea. So they will be looking at some of the more severe patients to initiate treatment first. And then we might see a slow and growing proportion of patients over time access treatment. Thanks.

[Operator:]

Our next question is from Matthew Luchini from Piper Jaffray.

[Matthew W. Luchini:]

You've talked a bit about the second-generation Soliris compounds. And I was just wondering, if you might be able to expand on -- if both -- how the profiles of the 2 products might be different from one another as well as if both end up looking promising, would you -- is it a one or -- either/or situation, or would you consider commercializing both of them? And if so how would you segment the 2 relative to one other?

[Martin MacKay:]

Thank you. I think I mentioned this previously, it's just a bit early to have that level of discussion. And I'd go back to my comment, what's really important here is how we can best serve patients. And we'll only really know about it, once we get into clinical trials. And then we'll been able to make decisions, what makes the most sense and which ones to push forward. It's really as simple as that.

[Operator:]

And that was our last question, and this concludes today's conference call. Thank you, all, for your participation.