Alexion Pharmaceuticals, Inc.
Q4 2014 Earnings Call Transcript

Published: 29 Jan 2015

[Operator:]

Good morning and welcome to the Alexion Pharmaceuticals, Inc. Fourth Quarter and Full Year 2014 Results Conference Call. Today's call is being recorded. For opening remarks and introductions, I would now like to turn the call over to Mr. Irving Adler, Executive Director, Corporate Communications. Go ahead, sir.

[Irving Adler:]

Thank you, Tony. Good morning and thank you all for joining us on today's call to discuss Alexion's performance for the fourth quarter and full year 2014 and our plans for 2015. Today's call will be led by Dr. Leonard Bell, our Chairman and CEO. Lenny will be joined by members of Alexion management; David Hallal, our Chief Operating Officer and CEO-elect; Vikas Sinha, our Chief Financial Officer; Martin MacKay, our Global Head of R&D; Julie O’Neill, our Executive Vice President, Global Operations; and Saqib Islam, our chief Strategy and Portfolio Officer. Before we begin, I'd like to note that during this call, we will make forward-looking statements, all of which involve certain assumptions, risks and uncertainties that are beyond our control and could cause our actual results to differ materially from these statements. A description of these risks can be found in our most recent 10-Q and 10-K filings with the SEC. Any forward-looking statements apply only as of today's date and we undertake no duty to update any of these statements after this call. I'd also like to remind you that our reported non-GAAP operating results are adjusted from our U.S. GAAP operating results for certain items that we described in our press release issued this morning. A reconciliation of our GAAP to non-GAAP results is included in the release. Thank you. Lenny?

[Leonard Bell:]

Thanks very much, Irving. In Q4, the global Alexion team drove a strong conclusion to 2014 as we advance our relentless mission to provide transformative therapies to patients with severe and life-threatening disorders. During Q4, our commercial organization again provided Soliris to an increasing number of patients with PNH and aHUS across our operations in 50 countries. Our development teams made continued and strong progress in the quarter, notably with the completion of the rolling submission of our BLA for asfotase alfa in the United States and also our submission in Japan. Importantly, we reported the advancement of the first 2 next-generation Soliris molecules into the clinic, and based on initial clinical data, at least one of these molecules will advance into Phase II PNH trials this year. And finally, we expect another year of strong financial performance in 2015. Equally important, we now are pleased to announce that we expect significant improvements in both our 2015 and longer-term effective tax rates compared to previous guidance. Our accomplishments throughout 2014 position us to reach a new set of significant milestones on behalf of patients this year and beyond. By every measure, Alexion is at the strongest and most promising point in our history. Our commercial and financial performance are at record levels. Our potential to deliver new therapies to patients is greater than ever, and we have a world-class team of talented and dedicated colleagues at every level of the organization. Thus, I'm confident that the time is right for the company and for me, personally, to complete our planned leadership transition as we announced this morning. The Board and I are delighted that David Hallal will become our second CEO. David has been instrumental in driving our results and in shaping our high-performance culture. He has demonstrated outstanding leadership at Alexion playing a principal role in leading many of the company's key initiatives on behalf of patients, including the highly successful launches of Soliris for PNH and aHUS, while also driving the buildout of Alexion's 50-country operating platform. Since joining Alexion 9 years ago, David's role has expanded across the entire organization. And over the last several years, he and I have increasingly shared responsibilities. Now is the right time for David to lead Alexion. As Chairman, I look forward to continuing to contribute to Alexion as I guide the Board and advise the company on strategic matters. I'll now turn both the company and the call over to David. David?

[David L. Hallal:]

Thanks, Lenny. I am deeply honored to become Alexion's next CEO. On behalf of the entire organization, I would like to thank Lenny for his extraordinary leadership in building Alexion into one of the most successful and innovative biotechnology companies in the world, developing a company-wide commitment to innovation, creating our patient-focused culture and instilling exquisite discipline and operational excellence that have driven our remarkable success over the last 2 decades. I look forward to leading our dedicated and talented employees worldwide as we continue to execute on our long-term strategic plan focused on developing and delivering innovative therapies for patients with devastating and life-threatening disorders. As we close another record year in 2014 and as I look at the company today, I see more than $2 billion in revenues with far more growth ahead of us in our in-line businesses; the launch of our next product, asfotase alfa, this year; the most robust pipeline in our history with 3 ongoing registration programs; and 4 additional highly innovative molecules in clinical development; global leadership and complement science to serve patients through the next 2 decades; a strong foundation for future growth, with an additional 17 preclinical development programs, spanning diverse modalities in therapeutic areas; and lastly, a balance sheet aligned with our strong growth objectives. We have never been better positioned to leverage our unique 50-country commercial platform to drive future product expansion. Now turning to our performance in Q4. We advanced our mission by reaching significant milestones across our commercial and pipeline initiatives. Looking first to PNH. Our performance in 2014 affirms our view that on a global basis, the majority of patients with PNH have yet to receive an accurate diagnosis, let alone commence appropriate treatment. Throughout 2014, as in prior years, we continue to identify a consistently high number of newly diagnosed patients with PNH in the U.S., Europe and Japan, the territories in which we have operated the longest. As we look at 2015, we have strong conviction in our PNH franchise, as we aim to serve many more patients around the world. Turning to aHUS. We continue to observe a steady addition of new patients commencing Soliris treatment in the U.S. and Europe in 2014, while we made important progress in the early stages of our launch in Japan. Globally, the ongoing strength 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 in the U.S., now more than 3 years following their respective FDA approvals, more patients are currently receiving Soliris for aHUS than there had been for PNH. In Europe, we are observing a similar trend in the earlier stages of our aHUS launch. These observations support our view that the incidence of aHUS is likely higher than PNH. Looking at 2015 and beyond, we continue to see that the majority of our aHUS growth is ahead of us, supported by our strength in labels in the U.S. and Europe, which demonstrate the immediate and long-term benefit of early and sustained treatment for patients with aHUS. Our experience with PNH and aHUS provides us with key learnings to support the launch of our next product, asfotase alfa, for patients with HPP. In 2014, we completed the regulatory filings in the U.S., EU and Japan and we expect approvals in all of these territories this year. This creates the potential to commence launches in the U.S. and Germany during the first half of 2015 and in Japan by year-end. Asfotase alfa will be the first of as many as 7 new indications or product approvals through 2018. These include eculizumab, and DGF, NMO, MG, and AMR, one or more of our portfolio of next-generation Soliris molecules as well as cPMP for infants with MoCD Type A within the same period. As we progress each of these programs in 2015, we expect to reach at least 12 significant development milestones during the year, which Martin will discuss later in the call. Looking briefly at our 2014 financial performance. For the full year, we achieved 38% revenue growth for 2014 in-year sales compared to 2013. We also demonstrated strong operational leverage with 57% EPS growth associated with in-year sales for 2014. Turning to our 2015 guidance. We announced this morning our revenue forecast of $2.55 billion to $2.6 billion despite currency headwinds. On a constant currency basis, we would expect an in-year sales growth rate of approximately 26%. Robust growth for Soliris reflects strong underlying demand with the anticipated addition of a similar number of new patients on treatment year-on-year. Our revenue guidance also includes a small initial contribution from asfotase alfa. We are pleased that even with our increased investment in our global infrastructure, including preparation for the launch of asfotase alfa, our 2015 pretax operating results are expected to deliver similar margins as compared to 2014. Finally, and as Vikas will describe in more detail, we expect to see immediate improvements in both our 2015 effective tax rate and our long-term tax rate as compared to prior guidance. At this point, I'll turn the call over to Vikas. Vikas?

[Vikas Sinha:]

Thanks, David. In Q4, the steady increase in uptick of Soliris among PNH and aHUS patients in our core territories and newer markets resulted in strong revenue and EPS growth during the quarter and for the year. Revenue in Q4 increased 36% year-on-year to $599 million despite the early signs of weakness in key FX currencies late in the quarter. Turning to the full year. As noted in this morning's press release, 2014 in-year revenues of $2.15 billion, exclude $88 million related to reimbursement for prior year sales in France. Thus, for the full year 2014, in-year sales increased 38% compared to 2013. Excluding onetime 2014 price benefits, sales increased by approximately $500 million compared to 2013. By exceeding our revenue target while maintaining strict financial discipline in our growing commercial and clinical activities, we reported 2014 non-GAAP EPS of $5.21 per diluted share, an increase of 69% year-over-year. Excluding the impact of $88 million in pre-2014 sales, EPS would be $4.84, an increase of 57%. Looking at our balance sheet. Cash, cash equivalents and marketable securities at year-end grew by nearly $450 million to $1.9 billion. We achieved these gains through strong positive cash flow from operations, which also enabled us to repurchase $300 million of our own shares during the year. As a result of that repurchase, our total shares outstanding for Q4 2014 were 204 million shares, nearly unchanged from Q4 2013. I would now like to turn to our 2015 guidance. We are guiding 2015 total revenue in the range of $2.55 billion to $2.6 billion. I would note that our 2015 revenue forecast assumes that key currencies remain at the current exchange rates through the year. As a result, and reflecting that 2/3 of our revenues are outside of the U.S, our 2015 revenue guidance includes a negative FX impact of approximately 5% of revenues or $135 million after hedging. On a constant currency basis, without this 5% impact, our total revenue forecast in 2015 would have been greater than $2.7 billion, which would represent an in-year sales growth rate of approximately 26%. This forecast reflects our expectation of continued strong growth at Soliris with expected addition of a similar number of new patients on treatment in 2015 compared to 2014 as well as a small initial asfotase alfa contribution. Turning to Q1 revenue. I would like to note that the increasingly negative sequential FX impact during Q1 combined with 2 fewer days are expected to result in Q1 revenues in the range of $585 million to $590 million. Looking at other elements of our 2015 guidance, I will highlight the following

[Martin MacKay:]

Thanks, Vikas. In 2014, our R&D teams made important progress in our mission to serve more patients with devastating and rare diseases. I am very pleased that we surpassed our goal of achieving 10 development milestones over the year. Looking to 2015, I would like to update you on our lead development programs as we drive towards our goal of achieving up to 7 new indications or product approvals through 2018. First, asfotase alfa, our highly innovative potential therapy for patients with HPP. As David mentioned, we continue to expect decisions in the U.S. and EU in the first half of 2015 followed by a decision in Japan by the end of the year. We are working with regulatory authorities to obtain these marketing authorizations as quickly as possible, given the high rates of mortality, severe debilitating effects and current lack of any approved therapy for patients with HPP. We continue to build the growing body of clinical data reflecting the potentially transformative impact of asfotase alfa. In early March, at the Endocrine Society meeting, new data will be presented showing rapid and continued improvements in muscle strength, significant gains in physical function and reduction in pain in children receiving asfotase alfa for up to 3 years. Importantly, new Burden of Disease Data in Adults with HPP will also be presented at ENDO, and we plan to start a clinical study with asfotase alfa in adult patients with severe HPP in 2015. I would now like to turn to our development programs with eculizumab beginning with our 3 multinational registration trials of eculizumab in delayed graft function, neuromyelitis optica and myasthenia gravis. We expect to complete enrollment in our DGF trial in kidney transplant patients at increased risk for rejection and early graft loss by the end of the year. In our neurology programs with eculizumab, in Q4, we were pleased that Soliris was granted orphan drug designations in Japan for both the treatment of patients with NMO and MG. In our registration trial in relapsing NMO, the PREVENT study, enrollment and dosing are ongoing. In our registration trial in refractory MG, the REGAIN study, we expect to complete enrollment in this study this year. As the leaders in complement biology, we advanced our portfolio of next-generation Soliris molecules in 2014. As we announced on the Q3 call, we initiated Phase I studies of the first 2 next-generation Soliris molecules, ALXN1210 and ALXN5500, with additional molecules and programs in our expanding portfolio at earlier stages of development. The data already support advancing both of these molecules into further trials, and we intend to progress at least one of them into a Phase II PNH trial this year with additional indications likely to follow. ALXN1210 is a longer acting anti-C5 monoclonal antibody, suitable for once monthly dosing. We are targeting approval of at least one next generation candidate in 2018. We also have lead development programs with 2 additional highly innovative therapies, ALXN1007 and cPMP. We have commenced dosing in 2 Phase II proof-of-concept studies to validate the safety and tolerability of ALXN1007 in patients with 2 severe and potentially life-threatening autoimmune diseases

[Leonard Bell:]

Thank you very much, Martin. Alexion's depth and strength as a global organization and the unprecedented range of the opportunities we are aggressively pursuing, underscore our potential to serve a continuously increasing number of patients in 2015 and beyond. As always, we thank our employees and the many other people who make our work possible, including researchers, physicians, patients and families. We are united in our commitment to serve patients with severe and life-threatening disorders through breakthrough medical innovation to transform their lives from illness and desperation into health and hope. Operator, we'll now take questions.

[Operator:]

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

[Eric Schmidt:]

Lenny, congrats on the last 23 years and thanks a lot for all the success. David, good luck on matching Lenny's success. I guess this [indiscernible] your tenure.

[David L. Hallal:]

Exceeding. Exceeding.

[Eric Schmidt:]

Exceeding? Okay, sounds like you might be retiring in 2039 then or later.

[Leonard Bell:]

No, he'll [indiscernible]. He's much younger.

[Eric Schmidt:]

Question's actually for Vikas. I'm not sure you're going to provide the worldwide geographic breakdowns of sales in 2014 until the cake comes out, but if you could, that'd be appreciated. And just wondering what kind of EU pricing pressures, if any, are in the guidance.

[Vikas Sinha:]

In the press release we gave this time, we included the geographical breakdown, so that's why I didn't put it in the script. So it's right at the bottom of the press release. So -- but you know, it's very well spread out equally between U.S., Europe [indiscernible]. The 2 blocks are almost equal there. You have to take into consideration the $88 million, which is included in the European sales. If we take that out, you will see that [indiscernible]. What was the second question?

[Eric Schmidt:]

The EU pricing environment and any pressures on the guidance.

[Vikas Sinha:]

What we have incorporated is a couple of percentage that we normally see as an erosion due to price. We've already started the overall view on U.K., and Italy is already incorporated in those numbers. And as we move forward, it is -- it just turns out to be a couple of percentage on a yearly basis. We definitely see the pressure on the overall price.

[Operator:]

Our next question will come from Geoffrey Porges with Bernstein.

[Geoffrey C. Porges:]

Congratulations, Lenny. You'll be missed for many reasons and not the least being the entertaining conference calls. So congratulations and good luck, David.

[David L. Hallal:]

Thank you.

[Geoffrey C. Porges:]

Quick questions on asfotase. As you're preparing for launch, could you give us a sense of what your manufacturing capacity is? How many patients can you supply, for example, in 2016 and 2017? And then, as you're engaging in the market, David, what are you finding in terms of the sort of patient numbers? I'm sure you won't give us actual numbers, but is there a compassionate use population here that you can imagine starting on treatment immediately? And if so, when might you be announcing that and providing product in such a fashion?

[David L. Hallal:]

Thanks, Geoff. And I don't know about trying to be as entertaining as Lenny could be really difficult, but that was the door slamming, by the way. Regarding manufacturing, we -- we're well on track to be able to provide all of the patients that we intend to serve, obviously, ready for -- as we would expect a first half in 2015 launch in the U.S. and Germany. As it relates to patient numbers, I'll just sort of walk you through. We've had a study, the 1010 study, that has remained open and that has enabled some patients with HPP to access treatment, even after we had locked all of our databases associated with all of our clinical trials and utilized that for the submission to the U.S., EU and Japanese authorities. And as we look at 2015, U.S. and Germany first half of the year, and then Japan, near year-end. The challenging thing is, and as you've said, it's difficult to pinpoint the patient numbers given the very low incidence of the disease, and then of course, the very high mortality rate in the youngest patients with HPP and mortality rate of about 70% at 3 years. So as we look at the launch and the overall opportunity, we have very strong conviction on this opportunity to dramatically improve the lives and save the lives of patients who suffer from HPP, but it's something that I think is going to take some time. I think it will be a steady trajectory at approval, and we will buildout the portfolio over time.

[Operator:]

Our next question will come from Salveen Richter with SunTrust.

[Salveen J. Richter:]

Lenny, we will miss you -- definitely the commentary, and congratulations, David.

[David L. Hallal:]

Thank you.

[Salveen J. Richter:]

So in terms of asfotase, given the mechanism, it make sense that this drug could potentially be used in other indications, and we've seen some papers around this. Just wanted to get a sense of your thoughts here and when you might pull a trigger to potentially look at other programs.

[Leonard Bell:]

Martin?

[Martin MacKay:]

Yes, just very briefly, Salveen, you're absolutely right. Given the mechanism of asfotase alfa and clearly, we're looking at the potential use and other indications. As you also correctly say, there have been publications in certain indications, and of course, they're of great interest to us. The point I would make is clearly preclinical work has been done. And I would say that just more continuing with rigorous preclinical studies at this stage to really understand the benefits asfotase alfa could bring in those indications is very much on our mind.

[Operator:]

Our next question will come from Geoff Meacham with Barclays.

[Geoffrey C. Meacham:]

Lenny, David, a huge congrats to you both. Love the glamour shot in the press release today.

[Leonard Bell:]

That was the biggest change we'll make in the company.

[Geoffrey C. Meacham:]

So I have 2 -- so on asfotase, obviously, you guys will have a very wide range of drug volume per patient when you look at infants versus adults. Maybe just walk us through the complexities that this adds when you have reimbursement discussions this year, and would you expect the cap -- to cap the annual costs for adults? And then just a quick follow-up for Vikas.

[Leonard Bell:]

Yes. So -- as we're looking at it, Geoff, and we look at asfotase and HPP, we have a little bit of experience as it relates to aHUS, right, for the first time following the PNH introduction, which was a set dose for every patient. We have patients who receive Soliris for aHUS. The youngest and smallest patients receive about 20% of the total Soliris dose that, say, an adult patient would receive. So we have a little bit of experience with this. Obviously, as we look at asfotase, we believe that the package of information that we have provided to the regulator supports the potential of this being a highly transformative therapy. And with that, we think that is the most important support mechanism for us in our discussions around pricing and reimbursement, and we believe for those patients with really bad HPP that are exposed to very poor outcomes or the risk of poor outcomes that we will have a pricing and reimbursement strategy to serve those patients.

[Geoffrey C. Meacham:]

Got you. And then just real quick for Vikas. In the geographic breakout

[Vikas Sinha:]

Asia-Pacific wise, when I look at that, this was the area where Japan falls under, and also Australia falls under that group. And that's where the headwinds came quite a lot early on this year on the FX. And if you see the [indiscernible] grew very significantly this year compared to that, right?

[Operator:]

Our next question will come from Matthew Roden with UBS.

[Matthew Roden:]

Great. Lenny, obviously, amazing value creation. Congrats on everything. And David, obviously, you have big shoes to fill here, but fortunately, you seem to have big feet.

[David L. Hallal:]

Yes. Lenny doesn't wear shiny shoes, though. So at least I have [indiscernible] maybe a head start on me there.

[Matthew Roden:]

So I wanted to ask you about your comments on the tax rate. And you mentioned additional tax credits, but it sounded like there might be something more sustainable and long term in there, just trying to better understand that. Was there any kind of legal or accounting or structural change that's led to a sustained tax benefit over time versus prior -- what -- how have your long-term tax expectations changed today?

[Vikas Sinha:]

Some of the -- on the short run, as I've said, it's a carryforward [indiscernible] tax credits. It's -- and in the longer term, what we were able to do this year is get down to much more detailed country by country forecast globally, which helped us better understand the jurisdictional mix of the profit compared to what we had done quickly early on in the year. So that's the shift that gave us several percentage break as we looked at which legal entity does the profit fall under. Does that help?

[Matthew Roden:]

It does, I guess. So I would say, how has your long-term sort of sustainable tax rate at a fully taxed level, how do you expect that to be now and has that changed?

[Vikas Sinha:]

Yes. So earlier, we were looking at 16% to 18%. In today's guidance, we pulled it down to 14% to 16%, right? And that's purely a function of -- with the new exchange rates, with the new forecast that we're looking at, we actually built everything from bottom up this time and tried to really fine-tune where it lines up.

[Matthew Roden:]

Okay. Great. And then lastly, just on the guidance as well. Unclear to me or maybe I missed it, is or -- is asfotase sales, are they reflected in 2015 sales guidance?

[Vikas Sinha:]

Yes. A small contribution from asfotase has been included and we have not broken it out.

[Operator:]

Our next question will come from Anupam Rama with JPMorgan.

[Anupam Rama:]

Congrats to Lenny and David. Just a quick question on the asfotase alfa adult trial, how are you thinking about this initial trial? And are you thinking about stratifying by onset of disease? Or will it still [ph] be an all comer severe adult HPP patient population?

[Martin MacKay:]

It's Martin here. Just a little early days in terms of the exact nature of the adult study. It will be in severe patients. We know that. And as David alluded to, as we're learning in the field more about just the pathophysiology of the disease and the nature of the disease in the adult population, that will inform the exact nature of the trial that we run this year.

[Operator:]

Next we'll move to Terence Flynn with Goldman Sachs.

[Terence C. Flynn:]

I'd like to offer my congrats as well. On -- the question I had relates to the EPS guidance and the ForEx headwind. I guess by our math, the 30% looks to be about 5%. But I think we were expecting about half as much given your xU.S. expenses. So just wondering if my math is right. And if so, what drove the delta?

[Vikas Sinha:]

Yes. So Terence, what we looked at is, on the top line, we had $125 million headwind. And as we look at our expenses, we were able to cover half of it through natural hedges. And then the operating results are impacted approximately by half of the $135 million. That's how we came to the 60 [ph] -- $0.30 a share. And obviously, the -- based on your model, you'll get some offset on the tax right there. Net-net on the EPS side, it'll be a much lower impact for you.

[Operator:]

Our next question will come from Ying Huang calling from Bank of America.

[Ying Huang:]

First question, Lenny, is this your last earning call or not? Just kidding, anyway. So maybe, David, can you outline the commercial opportunity of the adult patients with severe HPP for us? And then also for the indications for next-gen Soliris, are you going to test beyond PNH in a Phase II setting? And lastly, I guess, for Vikas, you are accumulating almost $2 billion in cash on balance sheet now, so any thought on the use of cash?

[Leonard Bell:]

Yes. So I'll take HPP, and then Martin, next-gen, and then Vikas. As it relates and I think it's important to note that our breakthrough therapy designation in the U.S. is for perinatal, infantile and juvenile onset disease. And as I've described, there are -- published very high mortality rates. And more recently at medical congresses, there has been presentations about those very high mortality rates in those patients, but there are also survivors as well. And certainly, independent of onset of disease, we would expect that adult patients -- and we know of them are suffering from high degrees of morbidity associated with HPP. And so when we look at our breakthrough therapy designation and the approach that we're taking with onset of disease with regulators, we would anticipate being able to hopefully serve those adults with severe disease. But of course, as Martin indicated, we are very interested in driving hard with additional better understanding of the nature of the disease and how the patients respond to treatment. Martin, next-gen?

[Martin MacKay:]

Yes. Thank you, David, and thank you for the question, Ying. As we've discussed before, our mantra all along here with the next-generation portfolio is to outcompete ourselves. As I mentioned, based on the Phase I data that started in 2014 with 2 molecules, just to remind you that's the ALXN1210 and ALXN5500, both of these can go further into trials based on the Phase I data. And as we've said on the call, at least one will go into a Phase II trial in 2015, and as you correctly allude to, within PNH. But also, we're very keen to look at additional indications and that will follow those studies, obviously dependent on the data that we produce. I would also point to an earlier portfolio coming at the back of ALXN1210 and ALXN5500, where we broaden that portfolio over time and we'll be progressing those with urgency through the pipeline.

[Vikas Sinha:]

And regarding cash, our -- we have 2 -- approximately $1.9 billion now, and we will accumulate more in 2015. And our first and foremost objective would be to broaden our portfolio through licensing or acquisitions. And secondary objective would be to stop the dilution, and we'll do some buyback for which we have a $500 million authorization right now.

[Leonard Bell:]

And as we have quite a few people on the line still -- are going to try to finish on time, if we could limit questions to more or less one per person. Thanks.

[Operator:]

Next we'll move to Robyn Karnauskas with Deutsche Bank.

[Evan Seigerman:]

This is Evan on for Rob, and sorry she's unavailable to ask a question today. Just going back to the AMR prevention trial. Do we know why the historical controls really didn't match up to what we saw in the clinic? And what are some potential reads for this going forward into the treatment trial?

[Martin MacKay:]

The quick answer is we don't know exactly why the standard of care arm performed better than the historical studies that are being published. As we said also before, eculizumab actually behaved exactly as we predicted in those studies with a very good reduction in AMR. Clearly, we've looked at the 9-week data and looked at the primary endpoint. We will, obviously, look at the 1-year data and secondary endpoint. That may give us some indication as to what happens there. And then, obviously, we have the open-label deceased-donor study, which we'll readout in 2015. In terms of the latter part of your question, we are working with great tenacity now on what that treatment trial would look like, started speaking with principal investigators and key opinion leaders. And clearly, there's a strong desire here to look at eculizumab in the treatment setting. And I will update you on those discussions as the year progresses.

[Operator:]

And next we'll move to Chris Raymond with Robert W. Baird.

[Christopher J. Raymond:]

My congrats to both David and Lenny, as well. Question on the next-generation Soliris program. I know you guys have answered some questions on this. But just curious, maybe 2-part question. You guys, I think, have said you'd take at least one forward. Could you envision a scenario where you'd take more than one forward? And then the second part is, we noticed in some of the patent filings that you do have at least some IP around a subQ formulation, could you confirm if one of the unnamed or undescribed programs is subQ?

[David L. Hallal:]

Yes. So our objective actually is that we want to bring more than one forward. We really want to provide optionality. If you see the way we're developing Soliris today, not only in PNH and aHUS, but of course, the 3 registration trials and this soon to be initiated treatment of AMR trial. There's different specialties, different patients and all of them may benefit from unique, innovative attributes that we can provide with a portfolio of next-generation molecules. So when we talk about one or more, that's really putting a time point on it. When we really look at the portfolio, we intend to have 2 or more that would enter into the commercial arena, and we would be looking to provide physicians and patients with maximum optionality. Martin, do you want to...

[Martin MacKay:]

I think your answers are perfect, David. We do recognize the transformative benefits of Soliris. As David articulated, more treatment options and absolutely taking more than one in there. And as I mentioned to a previous question, we have a deeper portfolio coming up at the back of ALXN1210 and ALXN5500. So we will continue to look for those options.

[David L. Hallal:]

And Chris, we haven't disclosed whether or not what we're looking at precisely how it's administered. But over the course of this year, we'll be providing more perspective on the portfolio in general.

[Operator:]

Next we'll move to Howard Liang with Leerink Partners.

[Howard Liang:]

Congrats to Lenny and David. Just going back to the Soliris AMR study. Just a follow-up. Have you looked at the patients in the control arm in terms of what percentage of those got Soliris, and whether there's a big difference between those who got Soliris and didn't get Soliris in the control arm?

[Martin MacKay:]

That's part of the ongoing analysis -- how we're doing. As mentioned, we've got the 9-week primary endpoint data, and we will have more data in terms of secondary endpoints and the 1-year data. And that will give us time also to look at those patients that did move on to eculizumab during the study.

[Operator:]

Next we'll move to Ian Somaiya with Nomura.

[M. Ian Somaiya:]

I wanted to echo the sentiment shared on both David and Lenny. Had a question for you on asfotase alfa. I was wondering whether in utero delivery is a viable option with asfotase alfa, and whether any type of formulation work would be required to evaluate that? And just on the guidance, Vikas, I might've missed this, but what was the benefit to the operating expense line from FX?

[Leonard Bell:]

Yes. Martin will take the first part of your question.

[Martin MacKay:]

It's an absolutely intriguing question, Ian, the notion of both in utero treatment, but also, in utero and diagnostics. Clearly, in these devastating diseases, there's a common theme, "The earlier you can treat, the better." And certainly in the case of the perinatal and infantile form of hypophosphatasia, that would be an area we would like to look at. But please, and I know you wouldn't do this, don't underestimate the challenges of in utero delivery and diagnostics. But clearly, it's an area that we would be interested in but one step at a time in terms of the treatment of the infantile patient.

[Vikas Sinha:]

On the guidance side, we normally land up getting benefit on the SG&A part, especially on the global infrastructure. And so my guess is around $50 million to $60 million.

[M. Ian Somaiya:]

Is that 5 0, 6 0 or 1 5?

[Vikas Sinha:]

Yes, the 5 0, 6 0.

[Operator:]

Next we'll move to Matthew Harrison with Morgan Stanley.

[Matthew Kelsey Harrison:]

I just wanted to ask around disclosure for some of these next-generation programs. Obviously, you've got some Phase I data you've talked about moving into Phase II. When should we start to think about getting data from the clinical studies? I mean, will we see anything this year? Or you think not until next year?

[Martin MacKay:]

We won't -- we wouldn't anticipate clinical data this year, Matthew. Clearly, we'll run these trials with, again, great tenacity and urgency to push them along as we always do. But we will be mindful of waiting for the data, planning the trials accordingly. As David alluded to, we want to take more than one molecule and at this early stage, and we've got this portfolio coming up at the back. I would think a relatively steady stream of data next year and beyond. Another key fact for us is we aim to bring one of those forward to the market within that 2018 time frame that we talked about our 7 launches.

[Operator:]

Next we'll move to Brian Abrahams with Wells Fargo.

[Brian Corey Abrahams:]

My congrats to Lenny as well on all your accomplishments for the company and for patients and to David on the new position. I know the press release called out 17 preclinical programs. I'm curious

[Martin MacKay:]

I counted 3 or 4 questions in there and you're right with the 17 preclinical programs. As you know, it's not really been our history to talk about such early programs in calls and at press releases, and I would say they are preclinical with all the caveats around them. But also say we're very excited in terms of the modalities that we're looking at. And that's over and above, as you correctly say, the Moderna collaboration, and also the therapeutic areas that we're working on. These are ultra-rare devastating diseases that we're working on in the portfolio. In terms of the last part of your question, I think it is fair to say we've built that portfolio over the last period. We're very keen to be able to fuel future growth after the next wave of products and launches that we talk about, the 7 -- up to 7 in the 2018 time frame. So beyond that, these will be the programs that will fuel that future growth.

[Operator:]

Next we'll move to Yaron Werber with Citi.

[Yaron Werber:]

Great. And congrats again to both David and Lenny. If you don't mind, a couple of questions. First one, Vikas, for you. COGS in Singapore, give us a sense -- is there sort of an incremental benefit over time in Singapore -- continues to capture more of the volume of sales? And then secondly, I'm not sure if you can comment, but is your thought to actually start one of the pivotals for the follow-on, the Soliris follow-on this year? Or is it probably starting more next year?

[Leonard Bell:]

Vikas, why don't I just -- I'll take the second one and then over to you. So as Martin highlighted and we discussed earlier this month, one of our 12 development milestones is to initiate a Phase II trial in PNH in at least one of the next-generation molecules. And with that, Vikas?

[Vikas Sinha:]

Yes. So Yaron, in terms of COGS, we definitely having manufacturing outside of U.S. It's very beneficial for us depending on our -- based on our tax [indiscernible]. It's very hard to quantify that. So on the COGS line, it should remain the same -- stable [indiscernible].

[Operator:]

Our last question will come from Bret Holley with Guggenheim.

[Bret Holley:]

I'll add my congrats to both Lenny and David. My question is on your current thoughts on how strictly payers are likely to think about defining pediatric juvenile onset HPP? I mean, what's the nature of the discussions -- preliminary discussions, I'm sure -- had with payers.

[Leonard Bell:]

We really -- in the preapproval phase, we haven't really had meaningful discussions. But to the extent it is what it is, and that is when was onset of disease, when was the first or more than one symptom of HPP first observed and presented to a medical professional. And so I think the key for us, obviously, is a good understanding of treating physicians, and truly recognizing the natural history of the patient's disease and recognizing what their medical history is associated with some of the early signs and symptoms of the disease.

[Operator:]

That was our last question. And this does conclude today's conference call. Thank you for your participation and you may now disconnect.