Alexion Pharmaceuticals, Inc.
Q3 2014 Earnings Call Transcript

Published: 23 Oct 2014

[Operator:]

Good morning, and welcome to the Alexion Pharmaceuticals, Inc. Third Quarter 2014 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, Shannon. Good morning, and thank you, all, for joining us on today's call to discuss Alexion's performance for the third quarter of 2014 and our outlook for the rest of the year. Today's call will be led by Dr. Leonard Bell, our Chairman and CEO. Lenny will be joined by members of Alexion management

[Leonard Bell:]

Thank you, Irving. In the third quarter, the global Alexion team continued to execute on our key commercial, clinical and organizational objectives. During the quarter, our commercial organization again provided Soliris to an increasing number of new patients across our PNH and aHUS operations worldwide. Our development team has made strong progress in the quarter, in particular, with completion of the juvenile onset HPP natural history study, which will now enable us to complete our asfotase alfa BLA submission in the United States. In addition, we have recently submitted our asfotase alfa registration dossier in Japan, which follows our Q2 EU submission. And as reflected in our financial performance during the third quarter and the upward revisions in our guidance announced today, we continue to execute on our initiatives to achieve long-term operational and financial efficiencies. Turning first to our global commercial operations. In PNH, newly diagnosed patients continue to make up the majority of patients newly starting on Soliris across our territories. And in aHUS, we continue to add new patients in the U.S. and Europe. We are likewise seeing an ongoing steady uptake in Japan in the first full year of our launch. In 2015 and beyond, we see the majority of our growth ahead of us in both PNH and aHUS, driven by our disease education initiatives as we help physicians to optimize patient care worldwide. While we continue our growth in PNH, our ongoing experience in aHUS further reinforces our confidence that our opportunity to serve patients with aHUS is at least as large as our opportunity to serve patients with PNH and perhaps larger. As one measure, match for time since their respective approvals, more patients in the U.S. are currently receiving Soliris for aHUS than there had been for PNH. In Europe, we are seeing a similar trend in the early stages of our aHUS launch. As we consistently serve more patients with Soliris in our 2 current therapeutic areas, we are also rapidly progressing our development pipeline. With regard to our anticipated next product, asfotase alfa, we reached key milestones in Q3 and in the early days of Q4. First, we have recently completed our juvenile natural history study in patients with HPP. With this supportive data, we are now completing our BLA submission to the FDA for asfotase alfa. We will remain on target for our launch in the U.S. and Europe in early 2015. Second, and as announced last week, we have submitted our NDA for asfotase alfa for HPP in Japan and expect to launch in late 2015. Turning to the life cycle management of Soliris, we are pleased to now announce that we have initiated clinical development programs for our first 2 Soliris next-generation molecules and look forward to updating you on our innovative portfolio of investigational candidates as our activities proceed. We continue to make progress toward our anticipated series of as many as 7 new indication or product approvals through 2018, in addition to our next product asfotase alfa, Soliris for AMR and DGF in kidney transplant and for both NMO and MG, our third product cPMP for infants with MoCD Type A. And we expect approval of one or more of our innovative Soliris next-generation products within the same period. Turning to our wider objectives for growing our global organization. As we announced last month, I am pleased to note that David Hallal has been promoted to Chief Operating Officer and has also joined our Board of Directors. In his 9th year at Alexion, David's strong leadership of our global commercial operations continues to contribute significantly to our growth, while he is also increasingly expanding his leadership of our broader enterprise to includes key growth strategies and initiatives across all areas of our company. We also recently announced in Q3 that Ed Miller has joined Alexion as Senior Vice President and Chief Compliance Officer. Ed is building upon the strong compliance function that Alexion has established over the past several years. And finally, we've also recognized the major contributions of 2 key leaders with the promotions of Clare Carmichael, our Chief Human Resources Officer; and John Moriarty, Alexion's General Counsel, each to the level of executive Vice President. Looking briefly at our financial performance, we are pleased that we have achieved strong 39% growth in revenues in Q3 compared to the year-ago quarter. We also demonstrated strong operational leverage as we reported 53% growth in non-GAAP EPS in this quarter compared to year-ago quarter. As we continue to achieve strong financial performance into the final months of the year, we announced this morning that we are raising our revenue guidance to the higher range of $2.220 billion to $2.225 billion. And we're also now raising our 2014 guidance for non-GAAP EPS to the higher range of $5.15 to $5.20, reflecting ongoing financial discipline and the operational benefits of our global structure. At this point, I'll turn the call over to Vikas for a closer look at our financial performance in Q3 as well as our expectations for the final quarter of 2014. Vikas?

[Vikas Sinha:]

Thanks, Lenny. In Q3, we achieved another quarter of profitable growth, strong cash flow and continued operating leverage. Net sales increased to $555 million in Q3 or 39% above the year-ago quarter, primarily reflecting strong unit volume growth. Strong revenues combined with ongoing financial discipline resulted in a 53% increase in non-GAAP EPS in Q3 compared to the year-ago quarter. Looking at the balance sheet. We ended the quarter with $1.78 billion in cash and cash equivalents. During Q3, we experienced strong positive cash flow from operations, offset by approximately $105 million in share repurchases. The primary objective of our ongoing stock repurchase program is to mitigate the natural pace of stock dilution from equity grants. Turning to guidance. We are pleased to be increasing our 2014 forecast for both sales and EPS as announced this morning. Strong performance in both our current businesses, PNH and aHUS, enables us to raise our 2014 sales guidance to the higher range of $2.220 billion to $2.225 billion. This upwardly revised revenue guidance takes into account the expected increase in FX headwind in Q4. We are reiterating our 2014 guidance for R&D and SG&A. As in the past, we expect to experience higher expenses in Q4 compared to Q3, due to the ramp-up of development programs, our ongoing infrastructure build-out for HPP launch and major medical conferences that take place in the final months of the year. We're also reiterating full year 2014 COGS at a level of approximately 8%. With regard to tax, we have lowered our full year 2014 tax guidance to approximately 7.5%, largely as a result of our regional income mix. Finally, with regard to EPS. With our increased revenue guidance and ongoing control of expenses, we have raised 2014 guidance for non-GAAP EPS now to the higher range of $5.15 to $5.20. I'd like to highlight that excluding the $0.37 impact earlier this year on EPS associated with pre-2014 sales, this would reflect non-GAAP EPS growth of approximately 56% year-on-year from 2013 to 2014. As we look at 2015, we expect to maintain our pretax operating margin similar to Q3 levels as we continue to invest for our asfotase alfa launch and our late-stage pipeline. Also, with regard to 2015, we are reiterating the longer-term guidance for our non-GAAP tax rate, which we provided earlier this year. As we expect ongoing operational benefits from our centralized supply chain and business operations, we continue to forecast our non-GAAP effective tax rate rising to 13% to 14% in 2015 as we use up available tax credits. Beyond 2015, we are reiterating our forecast of a range of 16% to 18% tax rate in 2016 and beyond. This unchanged longer-term tax rate guidance reflects our current expectation of our forecasted tax rate, inclusive of the recently announced proposed changes to the Irish tax policies. We are very pleased with our financial performance for the first 9 months of 2014 and look forward to finishing the year strongly. At this point, I'll turn the call over to David. David?

[David L. Hallal:]

Thanks, Vikas. During Q3, we achieved strong Soliris in-quarter revenue growth of 39% over the year-ago quarter. This reflects continued steady growth in PNH globally and the strength of our ongoing aHUS launch. Looking first at PNH during Q3. Newly diagnosed patients continue to make up the majority of patients newly starting on Soliris across our territories. We are pleased with our steady performance in the U.S., Western Europe and Japan, and we are also observing consistent growth in serving new patients across Turkey, Brazil and Russia. Overall, we are seeing consistent expansion in the number of patients we serve across our nearly 50-country platform as we implement our strategic initiatives. While awareness of PNH globally has increased significantly over time, more education is still required to further enhance the understanding of PNH and appropriate testing of higher-risk patients. Our experience supports our belief that on a global basis, the majority of patients with PNH have yet to receive an accurate diagnosis, let alone commence appropriate treatment. Turning now to aHUS. We continue to add new patients in the U.S., Europe and Japan. During Q3, our global field teams continue to educate physicians on the additional aHUS clinical data in our U.S. and European labels, which demonstrates the immediate and long-term benefits of sustained Soliris treatment. The revised labels, which now specify important longer-term clinical benefits associated with chronic and sustained Soliris treatment with inclusion of results from 2 years of ongoing treatment, will enhance and broaden our commercial efforts. Indeed, market research in the U.S. shows that the updated label is helping physicians better appreciate the chronic nature of aHUS and the immediate and long-term benefits of sustained Soliris treatment. In Q3, we continued to make progress in Europe. In England, NICE reaffirmed the very significant clinical value of Soliris for the treatment of aHUS and has now officially recommended funding. Importantly, new and existing aHUS patients continue to receive funded access to Soliris as we look forward to confirmation by NICE for a final policy. Likewise, in Italy, aHUS patients continue to receive funded access to treatment as we work toward the expected completion of the reimbursement process by the end of the year. Beyond the U.S. and EU, we made steady progress with our aHUS launch in Japan and Turkey during the quarter. Globally, the ongoing strength in the early stages of our aHUS launch confirms our view that our opportunity to serve patients with aHUS is at least as large as our opportunity to serve patients with PNH and perhaps larger. As one measure, we continue to observe that match for time since their respective approvals, more patients in the U.S. are currently receiving Soliris for aHUS than there had been for PNH. In Europe, we are now seeing a similar trend in the earlier stages of our aHUS launch. These results in the U.S. and Europe support our belief that the incidence of aHUS is higher than the incidence of PNH. We are very pleased with our performance in Q3 and we continue to see that the majority of our growth is ahead of us in both PNH and aHUS. Turning now to HPP. With the significant progress by our regulatory and development teams, we are advancing our commercial preparations for the launch of our next product, asfotase alfa, in the U.S., Europe and Japan in 2015. In Q3, our initial field-based medical teams in the U.S. and Europe continued to expand our disease awareness initiatives, including their presence at international medical congresses, like ASBMR. Also, we continue to hire and train our in-country metabolic commercial teams. As we establish relationships with the HPP community, we are acutely aware that low disease awareness typically results in misdiagnoses and thus, HPP patients often go for years without receiving an accurate diagnosis. An early goal of our commercial plan will be to optimize patient care by educating physicians on the signs and symptoms of HPP and the appropriate pathways for rapid and accurate diagnosis. Beyond planning for the launch of asfotase alfa, we continue to establish commercial teams to assess and plan for our opportunities in AMR, DGF, NMO, MG and the next-generation Soliris molecules. These teams are working closely with our R&D colleagues as they advance these programs through the development process. Finally, in looking more broadly across all of our functions and all of our geographies as we continue to grow, I have expanded my focus to build upon our long-standing patient-centered values so that we can deliver many more transformative therapies to more patients. We will continue to improve upon what we know well and what we do well with quality, urgency and our core passion to transform the lives of patients. I look forward to updating you as we grow our corporate operations. At this point, I'll turn the call over to Martin for a look at our research and development programs. Martin?

[Martin MacKay:]

Thanks, David. I am pleased to provide an update on our lead development programs as we drive toward our goal of achieving up to 7 new indications or product approvals through 2018. Looking first at asfotase alfa in the U.S. We are very pleased that the natural history study in juvenile onset HPP patients is now complete and supports our filing as we look to build a strong label to serve patients with HPP. Following the previous submissions of the CMC and preclinical portions, we are on track to finalize our rolling submission for the U.S. BLA this quarter. In Europe, our MAA continues to progress through accelerated assessment by the European Medicines Agency. And as announced last week, we have now filed our dossier for asfotase alfa in Japan. Our goal in all territories is to continue working collaboratively with regulatory authorities to obtain marketing authorization for asfotase alfa as quickly as possible. As we proceed with our regulatory filings, we continue to build the growing body of clinical data, reflecting the devastating nature of HPP and the potentially transformative impact of asfotase alfa for patients with the disease. At the American Society for Bone and Mineral Research meeting in September, clinical researchers presented new data from a survival analysis that showed improved survival in pediatric HPP patients with severe disease treated with asfotase alfa for up to 5 years. The analysis showed that patients with HPP treated with asfotase alfa in 2 Phase II studies had overall survival of 89% versus 27% survival for untreated matched historical controls. Additionally, at both ASBMR and the European Society for Paediatric Endocrinology congress in September, researchers reported new data from the ongoing open label extension phases of the Phase II clinical studies in which sustained gains in physical function and reductions in disability and pain were observed in pediatric HPP patients receiving asfotase alfa treatment for up to 3 years. These additional efficacy data support the life-transforming potential of asfotase alfa for HPP patients. Turning to our development program of eculizumab. We have completed enrollment and dosing in both our living-donor and deceased-donor antibody mediated rejection or AMR studies in kidney transplant patients. We will have data from both trials in the second half of 2015 and are having discussions with regulators in both the U.S. and Europe on filing strategies. In our program in delayed graft function or DGF, we are opening sites and enrolling patients in a single multinational registration trial of eculizumab for the prevention of DGF after kidney transplantation in adults at increased risk of DGF. In our neurology programs with eculizumab, enrollment is ongoing and our registration trial in relapsing neuromyelitis optica or NMO, a life-threatening ultra-rare neurologic disorder. Enrollment is also ongoing in our registration study in refractory myasthenia gravis or MG, a rare debilitating neurologic disorder caused by uncontrolled complement activation. In Q3, the European Commission granted orphan drug designation to eculizumab for the treatment of patients with MG. Finally, with regard to our portfolio of innovative candidates for the life cycle management of Soliris. We are pleased to note that we have now initiated clinical development programs on the first 2 next-generation Soliris molecules with additional molecules and programs at earlier stages of development. We look forward to updating you on these programs as they proceed. Beyond eculizumab and asfotase alfa, we also have lead development programs with 2 additional highly innovative therapies, cPMP and ALXN1007. In our metabolic disease area, we continue to develop our cPMP replacement therapy for the treatment of patients with molybdenum cofactor deficiency Type A. The synthetic cPMP switch study in patients with MoCD is ongoing. We are also continuing our retrospective data collection, which we expect to be complete by the end of the year, and enrollment in our natural history study is also ongoing. With regard to ALXN1007, our novel anti-inflammatory antibody, we have now commenced dosing in a Phase II proof-of-concept study in patients with a rare autoimmune disorder called antiphospholipid syndrome or APS. This open label Phase II study is designed to evaluate the safety and tolerability of ALXN1007. We have started site activation in another severe and ultra-rare disorder, graft versus host disease involving the lower gastrointestinal tract or GI-GVHD. This Phase II proof-of-concept study is designed to evaluate the safety and tolerability of the ALXN1007 in newly diagnosed GI-GVHD patients, and we aim to start dosing by the end of the year. Beyond our current late-stage clinical development programs, we continue to make significant progress to bring forward our next wave of potential breakthrough treatments. Turning to Moderna. We have accelerated 4 additional targeted early stage preclinical projects for a total now of 6 different preclinical mRNA rare disease programs. We are targeting the first candidate from these 6 different programs to enter the clinic in 2016. In addition, our research team is currently evaluating several additional preclinical candidates across a range of severe and ultra-rare disorders. As we enter the last quarter of 2014, we have delivered on our goal of 10 development milestones this year and we expect to reach additional development milestones in Q4, most notably completing the U.S. filing for asfotase alfa. These accomplishments reflect a momentum from the continued build-out of a broad and deep global R&D organization, which enables us to simultaneously progress multiple development programs. We are committed to drive our programs forward with great urgency, both our current internal programs and through our research collaborations, licensing or acquisitions. We are combining increasing skills with unwavering commitment to urgently bring forward new therapeutic candidates with life-transforming potential for patients with severe and life-threatening diseases. I will now turn the call back to Lenny. Lenny?

[Leonard Bell:]

Thanks, Martin. Before closing, I want to acknowledge the enormous and lasting impact that our former Chairman, Dr. Max Link, has had on the biopharmaceutical industry, on Alexion and on me, personally. Max joined me at the company's inception in 1992. He was a colleague, friend, mentor, confidant and guide over the course of 22 years. I miss him very much. He is also greatly missed by the entire Alexion family and by the stream of other organizations he lead over the past 4 decades with his commitment to drive medical innovation to benefit patients around the world. At this point, operator, we'll take questions.

[Operator:]

[Operator Instructions] And our first question comes from Eric Schmidt with Cowen and Company.

[Eric Schmidt:]

Maybe for Martin on the next-generation Soliris candidates that have entered the clinic now. We've noticed there's no mention of those on the ClinicalTrials.gov. So just kind of wondering why that is, and when we might or how we might learn anything about the candidates themselves?

[Martin MacKay:]

Thank you, Eric. And obviously, you're correct about the ClinicalTrials.gov piece. These are actually volunteer studies with our first 2 molecules. And as we mentioned in the script, they're really part of an innovative portfolio that we're building around the life-cycle management of Soliris now. We're really using our clinical experience with eculizumab and deep expertise in complement biology. We're building these molecules. In terms of when you can expect, we are committed to giving you updates on these programs as they progress over the next year or so.

[Operator:]

And we'll move to our next question from Geoffrey Porges with Bernstein.

[Geoffrey C. Porges:]

Just on asfotase, a couple of related questions. So could you give us a sense on when we might see the natural history study presented or published? And then, David, you mentioned on asfotase, the large number of unidentified patients. Where in the clinical environment are those patients? Do you envisage that you're going to have to reach out to pediatricians or to dentists or -- I mean, where -- how are you going to find the unidentified patients with HPP?

[Leonard Bell:]

You're going to start with the natural history study?

[Martin MacKay:]

Yes. In terms of when you can expect to see the results of that, we'll continue to publish the results of -- several trials are going on with HPP over the next period and the obvious conferences. Well, I would say though is the natural history study did confirm what we've seen before the really serious morbidities associated with HPP

[David L. Hallal:]

Thanks, Martin. Yes, Geoff, and it is a fairly broad audience that would see patients either with HPP or patients that are higher likelihood for having HPP. So we are -- we're taking some time to understand in the following specialties, whether or not it's pediatric or adult endocrinologist, geneticists, pediatric nephrologist, rheumatologist, orthopods, neonatologist. We've taken some steps to try to understand which of those physicians are at higher likelihood for either having managed a patient in the past, currently managing a patient today or frankly patients that may have the disease and they just have not necessarily been worked up appropriately, diagnostically. And as we -- this is the community in which we're building the relationship with. And so over time, this is where we would anticipate will help to identify our patients.

[Operator:]

And we'll move to our next question from Robyn Karnauskas with Deutsche Bank.

[Robyn S. Karnauskas:]

I guess on the follow-on Soliris program. You mentioned before that once you've identified the drugs that you're going to take forward, that you may have a very broad development program. I was just wondering if these first trials will help you to make that decision to go into a direct, very broad program? And then on aHUS, what percentage of patients do you think that getting time off the drug or having gaps in use versus continuous use of Soliris?

[Martin MacKay:]

I'll take the first question on the next-generation, and correct, we will have a broad development program. But we'll also have, we believe, many options within that -- with the programs and the molecules that we're progressing. And really on a simple basis of giving treatment options to both physicians and patients alike in the diseases that we're interested in.

[David L. Hallal:]

Yes, Rob, and as it relates to aHUS, as we've noted in past calls, we -- we're observing that the compliance for patients with the confirmed diagnosis of aHUS is good, but less than we have historically observed with PNH. And -- but I think it's sort of an important point to recognize when both I and Lenny talk to matched for time for their respective approvals, the patients that are actively on treatment for Soliris with aHUS is actually higher than what we observed in PNH. And that is sort of with lower patient retention rates. I will say that early, the feedback has been positive with our new expanded labels in the U.S. and Europe. We see it in market research, we're seeing it in that physicians that we dialogue with directly and through that, a greater appreciation for the chronic nature of the disease and the longer-term clinical benefits of ongoing Soliris treatment through 2 years.

[Operator:]

And we'll move to our next question from Ying Huang with Bank of America.

[Ying Huang:]

I have a couple. So first one is you have submitted the filing to Europe and also Japan as well as FDA in the U.S. Can you confirm that the definition of so-called early onset is the same for all 3 regulatory agencies for asfotase in HPP indication? And then the second question I have is the readiness of launch for asfotase here. It sounds like you do you have a very well-organized commercial infrastructure established in the U.S. Can you talk about your readiness to launch HPP in Europe and also Japan?

[Martin MacKay:]

Ying, I'll take your question in terms of the indication. Let me just take half a step backward and confirm what you have said that we have filed in Europe in June and have accelerated assessment. We've now filed in Japan in 15th of October and also, that's going through the process. The U.S.A., both in terms of the breakthrough designation that we have and also the fact that we have a rolling submission -- and already 2 parts of the rolling submission and with the completion of the juvenile natural history study will allow us to complete the third part within this quarter. As you may imagine with all regulatory authorities now, we are in discussions and as part of those discussions to label indication statement and other pieces of it. So I would say, normally progressing at this rate.

[David L. Hallal:]

Thanks, Martin. And as it relates to the build-out and preparation for the asfotase alfa launch, the way we've approached this is -- our objective, much like for PNH and aHUS, is to build not just the capability, but a core competence in the area of metabolic disorders. So the -- a few years ago, we developed a global therapeutic area focused on metabolic disease in planning for the strategy and tactics for the launch of asfotase alfa. As you've mentioned, U.S. versus Europe, I take a look at really our leading countries that generally are going to contribute for us the most significant opportunity to serve patients for HPP. And what we've been doing, as I mentioned on the call, is hiring and now training our in-country metabolic teams in the form of a metabolic business unit. And these teams are collaborating now with the medical teams that we've built and deployed in the field to prepare to serve patients. So I think Europe, we are every bit as we look country to country for when that opportunity will be, we will be on par, we are on par with where we are in the U.S.

[Operator:]

And we'll move to our next question from Matt Roden with UBS.

[Matthew Roden:]

My question is in transplant AMR. You're waiting for presumably the 12-month follow-up data, which puts you into the second half of the year. But if I heard you correctly, you mentioned that you're already in discussions with regulators about the next step. So when I think back to the prior data that you presented in AMR, the effect looks pretty transformative. So it occurs to me that along the lines of early stoppage of oncology trials, I just wonder if there are any decisions or accelerations, program on earlier follow-up would be possible with this AMR program? I'm just -- I don't know if that's too aggressive of an assumption. I'm just trying to understand what the potential range of outcomes are for the program and next steps.

[Martin MacKay:]

I do think it's a little aggressive on assumption there. As you know the primary endpoint is a 9-week end point, but the primary analysis will be 12 months. And also, as we said, and you correctly articulated it, we are in discussions with regulators and that will really help our -- dictate our strategy. But first and foremost, let's see the data, that will help enormously.

[Matthew Roden:]

Okay, great. And then just to follow-up on the commercial side. You guys have been reticent to talk about any segment growth, but just wondering if you can give us the sense as to whether or not there's any -- anything sort of nonrecurring in the Soliris number this quarter? Whether or not it just simply reflects underlying demand growth? And then for Vikas. I gather from the results that you appear to have been pretty well hedged on foreign exchange. Just wondering if there is anything worth noting there for the quarter or anything to keep in mind going forward?

[David L. Hallal:]

Yes. We saw growth across all geographies, including Latin America in Q3. Looking at Q4 in Russia, we see an impact on regional healthcare budgets due to increased economic pressure in that country. I think it's also important -- and as a reminder, 2/3 of our business is outside of the U.S. and we anticipate an impact on our non-U.S. business from both major and commodity currencies. And maybe Vikas can provide a little bit more color on that.

[Vikas Sinha:]

Going -- moving from Q2 to Q3, the impact wasn't as great. But when we look at going from Q3 to Q4, there's a dramatic change, as David was mentioning, on the commodity currencies, like ruble and Australian dollar and Canadian dollar. All of these are showing tremendous weakness, in addition to euro and yen. Euro and yen, we definitely hedged pretty well, almost 50% of that is hedged. So going in to next quarter, that portion we definitely will be able to get there with a lesser impact. Overall, we also don't hedge our expenses. So net-net, you'll see some impact on the top line, which has been factored into our guidance that we provided today. But with the natural hedge, the impact on EPS will be minimal in the next quarter.

[Operator:]

And we'll move to our next question from Salveen Richter with SunTrust.

[Salveen J. Richter:]

Just regard to asfotase. You mentioned that your educating physicians on the diagnosis of HPP. I'm wondering what the specific initiatives are here? And then are you seeing these efforts kind of paying off in the diagnosis of these patients? And just a quick question for Vikas as well. Their COGS were a little bit higher than expected this quarter. Is that a onetime impact or something we should think about going forward?

[David L. Hallal:]

Yes, just -- first-off -- it's difficult to necessarily see is it paying off. But what we can see is that, and I sort of alluded to this on the call, there's an appreciation by physicians. They're probably not thinking about this disease enough when that they're seeing patients present with symptoms that are consistent with the disease. They're certainly not an appreciation for how to confirm a diagnosis with this disease. As an example, alk phos tests are readily available, but I don't think that physicians are really thinking that low alk phos adjusted for gender and age can actually relate to a confirmed HPP diagnosis. They're usually looking for elevated alk phos in a number of different metabolic bone diseases. So I think what we're qualifying early on is that there is -- there's an educational gap. And there is for a very good reason, the extreme rarity of the disease. And that after these interactions with our field-based medical teams, physicians are certainly appreciating what they need to do sooner to help to create a more rapid and accurate diagnosis for patients.

[Vikas Sinha:]

Yes, Salveen, on the COGS question. Yes, going forward, we'll be back into our 8% guidance level. For the full year also, we'll still remain at the 8% guidance level. Q3, we saw maintenance cost as a rollout in facility. That's what impacted the quarter.

[Operator:]

[Operator Instructions] We'll move to our next question from Chris Raymond with Robert Baird.

[Christopher J. Raymond:]

Back onto the -- under the aHUS compliance issue. So I think I heard your answer to an earlier question on the early receptivity to the new label and the positive feedback. But I wonder if you could maybe directionally sort of describe any observed sort of revenue impact this quarter from these efforts? Are you seeing benefit now? Or is this something that might have more follow through into 2015? Obviously, I know you don't want to give details, but any sort of the directionality would be great.

[David L. Hallal:]

We don't necessarily see an immediate impact from the label change. What I -- and I think that I've discussed this in the past, what we would expect to see early on is feedback from physicians that give us a sense that taking data in our label out to 2 years where we generally had to launch with only 6 months of data makes a meaningful impact. And that impact is mostly on their -- sort of where they frame their view on the benefits that they can expect from long-term therapy. So from a revenue impact perspective, we would expect us to see it, but we would expect to see it over a long period of time. And again, early on, we are encouraged by the receptivity of the community.

[Operator:]

And we'll take our next question from Howard Liang with Leerink.

[Howard Liang:]

Regarding Soliris for NMO and MG, ClinicalTrials.gov says potential data in early 2016, January or so. I don't know if this mean anything, but is there any possibility that in the best-case scenario that you -- one of those -- of these trials could have data in 2015?

[Vikas Sinha:]

That's highly unlikely, Howard. These are both, for us, relatively large studies as you'd see from ClinicalTrials.gov, the randomized, double blind, placebo controlled and multi-center. So we continue to activate sites and recruit patients into the study. As you will also remember then in more trials and event-driven trial, and although we have a number that we think we will need to reach in terms of the patients that will be dictated by the events, but we are looking to 2016 to see our results from both neuromyelitis optica and myasthenia gravis trials.

[Operator:]

And let's take our next question from Terence Flynn with Goldman Sachs.

[Terence C. Flynn:]

Just last year at ASH, you guys have mentioned a compassionate youth program for asfotase, that was already underway in Japan. I was just wondering if you can share any update on that program with respect to either the type and/or number of HPP patients that are involved.

[David L. Hallal:]

Yes. We've locked and analyzed data from our 10-10 study, which you maybe familiar with, which is included in our regulatory submissions. And in order to continue to maintain access for pediatric patients indeed -- in need, we actually had increased the number of sites for the study, and we're looking to continue to enroll patients. And in that way, it puts us in a better position to help the patients with this devastating disease. In terms of patient numbers, the way that I would frame it up is when you look in aggregate of all of the asfotase alfa trials, the enrolled patients at this point in time is about 1/3 of that we had in our overall PNH trials. So it's a fairly limited number as opposed to our PNH program.

[Operator:]

And we'll move to our next question from M. Somaiya with Nomura Securities.

[M. Ian Somaiya:]

Just had a question on the Soliris line expansion strategy. I was disconnected when the Q&A session began, so I apologize if this question's already been asked and answered. I think, Lenny, you began by saying that one of the first Soliris line extensions will be approved within your sort of 3-year time frame. And I'm just wondering, given the close proximity to 3 of these antibodies moving into clinic, when should we expect the other 2 to reach to market? And it would help if we can just get a sense for what the strategy is from an indication perspective.

[Martin MacKay:]

This is Martin, I'll take that question. As you heard on the script, we've -- 2 molecules have entered the clinic and as Lenny said, when he was rounding up that we are looking for up to 7 indications or approvals in the 2018 time frame. So that's actually 4 years. So we're moving 2 molecules into the clinic and having what we believe is our innovative portfolio coming off at the back of that, it really will depend on results. At the end of the day, what we want to do is give treatment options for both physicians and patients as part of this life cycle program.

[M. Ian Somaiya:]

And if I could just ask a follow-up. What was the sort of the minimum criteria that you set for yourself to even pursue development of a follow on?

[Martin MacKay:]

That's a really good question because as you know eculizumab's transformative for patients in PNH and atypical aHUS. And as we conduct other trials across transplant neurology, the hurdles are high for sure. It really comes back to my statement about treatment options and being able to offer those for physicians and patients alike. So that's what we're aiming to do with this life cycle program.

[Operator:]

And we'll move to our next question from Brian Abrahams from Wells Fargo.

[Brian Corey Abrahams:]

You mentioned the Phase II study for 1007 is beginning for acute GI graft versus host disease. So I was just wondering if you might be able to speak a little bit about the epidemiology and current treatment paradigm in that indication, the scientific rationale and whether you'd be able to move straight into a Phase III following this study?

[Martin MacKay:]

Yes, in terms of -- that's our second study, actually, with Alexion 1007. The first, as you know is an antiphospholipid syndrome, which I would actually started with patients now. So in terms of the epidemiology, like the vast majority of the diseases, we look at the numbers, they are small, but the disease is devastating. And commonly found after transplants -- often stem cell transplants and cell transplants, where the transplanted cells really attack the host body. And there's a range of clinical manifestations across liver, skin, mucosa and the GI track area that we are most interested in. With particularly in the GI track, it's really a very nasty disease with intestinal inflammation, sloughing, severe diarrhea and a number of other manifestations. In terms of your question about where this can go and how quickly? It really depends on the results that we achieve with 1007 in this indication. And based on these data, will allow us to move forward and progress accordingly.

[Operator:]

And we'll move to our next question from Yaron Werber with Citi.

[Yaron Werber:]

I just had a follow-up on the low alk phos kind of screen. I don't know -- do you have any good data what percentage of adults present sort of -- or have concomitant low alk phos. I'm trying to get a sense sort of how good of a biomarker is it? And sort of what's your plan as to how you can use that as a tool to actually finding patients? Is it sort of on a hospital-by-hospital basis? Or is there some kind of -- I don't if you call it diagnostic that you can sort of market along with the drug?

[David L. Hallal:]

I think it's -- again, sort of important, I'll restate. We're focused on a few key specialties, as I mentioned. That's where we would go with our disease and diagnostic initiatives and that's where our field-based medical teams have started. And eventually where our commercial teams will move to post-approval. And that's with the pediatric endocrinologist, endocrinologist, geneticist, neonatologist, some rheumatologist, orthopods, a series of physicians who -- we take a step back and we understand which ones are treating patients with metabolic bone diseases. Now it's not just simply test everybody, but it's patients with osteogenesis imperfecta, patients with osteomalacia, there's a few examples where these are patients who are showing a disorder, that perhaps in additional tests, can help to determine if the diagnosis is accurate. And that's the approach that we taking. Now in terms of the percentage of patients that would actually have low alk phos that would point to HPP, very difficult to determine right now. And something that we'll be looking to better understand over time.

[Operator:]

And we'll take our final question from Geoffrey Porges with Bernstein.

[Geoffrey C. Porges:]

David or Lenny, given all of your recurring comments about the trajectory of aHUS compared to PML, I was wondering if you'd give us some indication that the aHUS revenue in the U.S. market will exceed the -- sorry, PNH, I beg your pardon, revenue in the U.S. market? And if that will happen, when it might happen? Is it within a couple of years or is that still something that's more remote than that?

[David L. Hallal:]

No. I do want to clarify. While we don't work in the MS space that it's PNH versus the PML, I just want to -- but no, as it relates to the acceleration as you are stating now, aHUS was launched in late 2011 as opposed to the PNH indication in the U.S., which was launched in April of '07. And we continue to see a tremendous durability to our PNH franchise, that is in the U.S. 2014. We continue to identify and see treatment initiation in a similar number of new patients on a quarterly basis today as we did back in 2007 and 2008. So that durability means PNH continues to roll forward. Now again, matched for time, we see now 12 quarters into the aHUS launch, there are more active patients on treatment for Soliris than we had 12 quarters into the PNH launch. It really depends on our continued success in really building both of those opportunities. As we said, both opportunities we see the majority of the growth in front of us. And so what's the acceleration, what is the rate of growth in both, will be that over time. The good news is we see more of our growth in front of us than behind us, and that's where we are focused on at this point.

[Operator:]

That was our last question, and this concludes today's conference call. Thank you for your participation. You may now disconnect.