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Alexion Pharmaceuticals (NASDAQ:ALXN)

Q1 2014 Earnings Call

April 24, 2014 10:00 am ET

Executives

Irving Adler - Executive Director of Corporate Communications

Leonard Bell - Co-Founder, Chief Executive Officer, Treasurer and Director

Vikas Sinha - Chief Financial Officer and Executive Vice President

David L. Hallal - Chief Commercial Officer and Executive Vice President

Martin MacKay - Global Head of Research & Development and Executive Vice President

Stephen P. Squinto - Co-Founder, Chief Global Operations Officer and Executive Vice President

Analysts

Eric Schmidt - Cowen and Company, LLC, Research Division

Geoffrey C. Meacham - JP Morgan Chase & Co, Research Division

Robyn Karnauskas - Deutsche Bank AG, Research Division

Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division

Matthew Roden - UBS Investment Bank, Research Division

Ying Huang - Barclays Capital, Research Division

Howard Liang - Leerink Swann LLC, Research Division

Geoffrey C. Porges - Sanford C. Bernstein & Co., LLC., Research Division

Brian Corey Abrahams - Wells Fargo Securities, LLC, Research Division

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

Matthew W. Luchini - Nomura Securities Co. Ltd., Research Division

Yaron Werber - Citigroup Inc, Research Division

Lee Kalowski - Crédit Suisse AG, Research Division

Operator

Good morning, and welcome to the Alexion's Pharmaceutical Inc. First Quarter 2014 Results Conference Call. Today's call is being recorded.

For opening remarks and introduction, I would like to turn the call over to Mr. Irving Adler, Executive Director, Corporate Communications. Please go ahead, sir.

Irving Adler

Thank you, operator. Good morning, and thank you all for joining us on today's call to discuss Alexion's performance for the first quarter of 2014, and our outlook for the rest 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: Vikas Sinha, Executive Vice President and Chief Financial Officer; David Hallal, Executive Vice President and Chief Commercial Officer; Martin MacKay, Executive Vice President and Global Head of R&D; Steve Squinto, Executive Vice President and Chief Global Operations Officer; and Saqib Islam, Senior Vice President and 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 the first quarter of 2014, Alexion's global team advanced our mission to provide life-transforming therapies to patients with severe and rare disorders. Our accomplishments in the quarter spanned our commercial development and operational initiatives.

Our commercial team provided Soliris an increasing number of patients with PNH and aHUS worldwide. With continued steady progress in the United States, we're also particularly pleased with our aHUS operations in Europe during the quarter.

Our development team reached a number of significant milestones across our pipeline. Among these, we announced this morning that, based on our discussions with the FDA, we have commenced the rolling submission of our BLA for our next product, asfotase alfa, which we expect to complete in the fall. And separately, we have now commenced registration trials for eculizumab in 2 additional indications, NMO and MG.

Finally, as reflected in our financial performance during the first quarter, we continue to execute on our initiatives to achieve long-term operational and financial efficiencies. Looking first at our commercial operations. In Q1, we continued our steady growth trajectory. Additionally, we were especially pleased to announced an agreement with the French government, that provides Soliris reimbursement for patients with PNH and aHUS.

Importantly, as we have previously announced last month, the agreement reflects the government's recognition of the transformative medical benefits of Soliris, as indicated by the ASMR II ratings for Soliris in both PNH and aHUS.

In March, we likewise progressed the process in England, as we announced that NICE strongly confirmed that the positive impact of Soliris on qualities [ph] is of a magnitude rarely seen for any new drug. Strongly affirmative value of Soliris.

With unequivocal clinical endorsements now, from both AGNSS and NICE. We look forward to working with the health authorities to conclude the reimbursement process in England. Most importantly though, new and existing patients with aHUS continue to gain access to Soliris through the current, broad, government reimbursement policy.

Looking across our global commercial operations. We continue to see significant growth ahead of us in both PNH and aHUS. In PNH, we will continue to expand our presence across our commercial platform, driven by the knowledge that, globally, the majority of patients with PNH have yet to receive an accurate diagnosis, let alone begin appropriate therapy.

Moreover, the ongoing strength of the early stages of the global launch in aHUS further reinforces our confidence that our opportunity to serve patients with aHUS is at least as large as our opportunities to serve patients with PNH, and perhaps larger. This view is supported by our continued observation that matched for the time, since their respective approvals. There are more patients in the United States currently receiving Soliris for aHUS than there had been for PNH.

Our success in serving patients with PNH and aHUS, reflects our commitment to focus exclusively on developing a life-transforming therapies for patients with severe and life-threatening rare disorders. During Q1, we advanced several of these development programs. First, based on our ongoing discussions with the FDA as part of the breakthrough therapy process, we are pleased to have commenced the rolling submission of the BLA for our next product, asfotase alfa.

We have already submitted the CMC section of the dossier, expect to submit initial clinical components this quarter, and anticipate completing the entire dossier during the fall. As you look to build a strong label for asfotase alfa to serve patients with HPP. Based upon our rolling submission of Breakthrough Therapy designation, we anticipate launching in the United States in early 2015.

Additionally, we are on track for our pediatric-onset HPP filing in Europe near mid-year, and for our Japan filing later in 2014. Supporting our expected launch in an initial European countries in the first part 2015, with Japan to follow later next year. Second, in our eculizumab neurology programs, we are now enrolling patients in our NMO registration study, and we have begun screening patients in our MG registration study.

And finally, we have now completed enrollment and have indeed overenrolled our eculizumab-AMR study in a living-donor setting. In addition, we have advanced our deceased-donor study toward an expected enrollment completion in Q3. These accomplishments, just during this quarter, keep us on track as we drive toward our anticipated series of as many as 7 new indications or product approvals through 2018.

Starting with our next product, asfotase alfa, and then followed by 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 next-generation follow-on product to Soliris within the same period.

In early April, we announced our plans for future expansion, with additional facilities to Ireland, as we continue to optimize our global supply chain operations to best serve patients worldwide. Separately, and following our continued improvements in our Rhode Island manufacturing and quality operations, earlier this year, we submitted our request for inspection to the FDA, and we are waiting the reinspection of our manufacturing facility.

Looking in our financial performance, and excluding the onetime positive impact of $88 million in pre-2014 sales, we achieved 41% growth in revenues in Q1 2014, compared to a year-ago quarter. Turning to our earnings, and also excluding the onetime positive impact for the pre-2014 sales, we reported 78% growth in non-GAAP EPS in Q1 2014, compared to the year-ago quarter.

Looking forward, and based on our strong revenue performance anticipated for the year, coupled with our forecasted improvements in COGS, SG&A and non-GAAP tax rate, we are now raising our non-GAAP EPS guidance for the year from the prior range of $4.37 to $4.47, now to the higher range of $4.75 to $4.85.

At this point, I'll turn the call over to Vikas for a closer look at our financial performance in Q1, as well as our expectations for the remainder of 2014. Vikas?

Vikas Sinha

Thanks, Lenny. We are pleased by our strong start to 2014. I would like to discuss our revenue and earnings performance in Q1, as well as the factors driving to this upward revision in EPS guidance.

Our revenue of $567 million and non-GAAP EPS of $1.53, were positively impacted by $88 million in revenue associated with shipments of Soliris in France before 2014. Excluding this item, our in quarter sales of $479 million or 41% increase compared to the prior year. This $88 million in revenue also contributed $0.37 to our non-GAAP EPS. Our non-GAAP EPS, excluding this item, was $1.16, which was an increase of 78% over Q1 2013.

Again, excluding this $88 million in revenue related to previous years, I note 5 factors in particular that positively impacted Q1 earnings. First, our earnings were significantly augmented by the strength of our top line revenue performance across all our territories.

Second, I would like to note that our Q1 revenues and sequential growth benefited from the significant number of patients in France, who entered the quarter already on treatment.

Third, COGS during the quarter, at approximately 6.5% of sales, were lower than the anticipated 9% as we modified our royalty agreement enabling us to reverse prior accruals. COGS were also improved as we were able to use increased inventory from our third-party manufacturers based in Singapore.

Fourth, SG&A for the quarter was 24% of sales as we continue to make improvements in our operations across our commercial platform. And fifth, our non-GAAP tax rate of 8% was lower than the previously anticipated 10% to 11%, largely due to the utilization of foreign tax credits earlier than anticipated.

These improvements in Q1 in COGS, SG&A and our non-GAAP tax rate, reflect the positive impact of our long-term initiatives to increase operational and financial efficiencies. And also -- and are also expected to positively impact our financial performance in the remaining quarters of 2014. Looking at the balance sheet, we ended the quarter with $1.55 billion in cash and cash equivalents.

Now, turning to our 2014 guidance. I note in particular, 3 areas of continued benefit that we expect from our ongoing operational and financial initiatives. First, based in part on our Q1 performance, we are guiding to a lower full year COGS from the previous 9% of sales to approximately 8% of sales for 2014.

Second, increasing efficiencies across our global platform have enabled us to reduce our 2014 SG&A guidance to the lower level of $550 million to $570 million. As in the past, we expect SG&A in the remainder of the year to be higher than Q1, reflecting costs associated with the organizational buildout for asfotase alfa and major medical conferences across 3 therapeutic areas.

Third, we are guiding to a lower non-GAAP tax rate from the previously guided range of 10% to 11%, now to the lower full year 2014 non-GAAP tax rate in the range of 8% to 9%. Beyond 2014, as previously noted and following utilization of our remaining tax credits, we continue to expect that our non-GAAP tax rate will gradually rise to a range of 16% to 18% by 2016.

Given our strong revenue performance and the improvements in our COGS, SG&A and tax rates, we have to revise our 2014 non-GAAP EPS guidance from the previous range of $4.37 to $4.47, now to the higher range of $4.75 to $4.85. We're very pleased with the strong start to 2014, which is reflected in our financial results and our outlook for the year.

At this point, I'll turn the call over to David. David?

David L. Hallal

Thanks, Vikas. During Q1, we achieved strong Soliris in quarter revenue growth of 41% over the year-ago quarter. This reflects continued steady growth in PNH and our ongoing launch in aHUS, now further supported by the recent reimbursement progress in Europe.

Looking first at PNH in Q1. We were pleased with our steady performance in our core territories of the U.S., Western Europe and Japan. And we also observed consistent growth in serving new patients in Turkey, Brazil and Russia.

In all territories, including those where we have operated the longest, we continue to observe that the majority of patients with PNH, newly starting on Soliris, were also newly diagnosed. The consistent number of newly diagnosed patients and continuing uptake of Soliris in PNH, reflects the ongoing positive impact of our disease awareness and diagnostic initiatives. These educational efforts are supported by continued new medical evidence and are vital to patients. Given that on a global basis, the majority of patients with PNH have yet to receive an accurate diagnosis, let alone commenced appropriate therapy.

Now turning to aHUS. During Q1 we were pleased with the ongoing strength of the early stages of our global launch. Importantly, the transformative clinical benefits of Soliris for patients with aHUS, and the overall value proposition with Soliris, are recognized by public and private reimbursement authorities in the U.S., Western Europe and Japan.

In the U.S., our aHUS disease education and diagnostic initiatives, again resulted in a steady increase in the number of new patients commencing Soliris therapy. Our U.S. team continues to implement our plan with urgency to help more patients with this devastating disease. In Western Europe, we were especially pleased to achieve an agreement with the government in France. And combined with our strong progress in other Western European countries, we remained confident that we will further extend our aHUS launch across the region in 2014.

In England, and following the strong confirmation in March by NICE of the efficacy and value of Soliris, we look forward to working with the U.K. government to conclude the reimbursement process. Importantly, during the NICE process, new and existing patients with aHUS in England continue to gain access to treatment through the broad NHS England interim policy.

Beyond the U.S. and EMEA, we made steady progress with our Japan aHUS launch in Q1. We continue to ramp-up our disease education and diagnostic initiatives to hematologists and nephrologist, and look forward to a steady uptake of Soliris for aHUS patients in Japan, as the first year of launch progresses.

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. These results support our belief that the incidence of aHUS is higher than the incidence of PNH.

In line with this dynamic, we will continue to accelerate our efforts to support rapid diagnosis and treatment of more patients with aHUS, as well as continue to educate physicians about the genetic lifelong nature of the disease.

Beyond our current commercial operations, I would like to now turn to our preparations for the launch of our next product, asfotase alfa, for patients with hypophosphatasia or HPP. Importantly, in addition to the FDA's Breakthrough Therapy designation, our market research confirms our view that there is a strong need for transformative therapy for patients with pediatric-onset HPP, including those adults who had their first symptoms prior to the age of 18.

As we continue to establish our metabolic therapeutic area for our anticipated launch of asfotase alfa early next year, we have started to selectively add initial field-based medical teams in the U.S. and Western Europe. Additionally, we expect to begin hiring and training our initial in-country metabolic commercial teams later this year.

To best serve patients with HPP, we are leveraging our learnings and expertise in PNH and aHUS to develop commercial programs upon launch to support the HPP community. We recognize that in very similar to our current operations. Physician education is essential to optimize care for patients with an ultra-rare disease.

Beyond planning for the launch of asfotase alfa, we are beginning to establish commercial teams to assess and plan for our opportunities in AMR, DGF, NMO, MG and the next-generation Soliris molecules. These teams will work closely with our R&D colleagues as they advance these programs through the development process.

At this point, I'll turn the call over to Martin for a look at our development programs. Martin?

Martin MacKay

Thanks, David. I am pleased to provide an update on our lead development programs, as we drive towards our goal of achieving up to 7 new indications or product approvals through 2018.

To begin, and based on our ongoing discussions to date with the FDA as part of the breakthrough therapy process, we announced this morning that we have recently commenced the rolling submission of our BLA for asfotase alfa. Specifically, we have submitted the CMC section of the dossier, expect to submit initial clinical components later this quarter, and anticipate completing the entire dossier during the fall as we look to build a strong label for asfotase alfa. We are on track to file a dossier with European regulators near mid-year. Likewise, we continue to expect to file our dossier for asfotase alfa in Japan before year end.

Our goal in all territories is to work collaboratively with regulatory authorities to obtain marketing authorization for pediatric-onset HPP as quickly as possible. As we proceed with our asfotase alfa filings, we continue to build the growing body of clinical data on the devastating nature of HPP and the transformative impact of this noble therapy for patients.

Next month, researchers will present new data from the first natural history study of the severe perinatal and infantile forms of HPP at the joint meeting of the Pediatric Academic Societies and the Asian Society for Pediatric Research. These data show the very high mortality rates in this patient population and are supportive of our filings.

Researchers will also present new data from the extension phase of 2 clinical studies examining the long-term efficacy and safety of asfotase alfa in infants and juveniles with HPP. These abstract show that infants and young children with life-threatening HPP, treated with asfotase alfa for 3 years, had sustained improvement in bone mineralization and respiratory status, and have improved probability of survival.

In addition, data from the juvenile extension study show that children with rickets and weakness from HPP, treated with asfotase alfa for up to 3 years, showed significant, early and sustained improvement in bone mineralization and radiographic evidence of healing of rickets, as well as early and sustained improvement in gross motor function and stamina. We are pleased that these data are consistent with earlier results and support the life-transforming potential of asfotase alfa for HPP patients.

And finally, the natural history study in juveniles with HPP is ongoing and is expected to be completed in the fall, enabling us to complete our rolling submission for the U.S. BLA.

I would like to discuss the progress of our development programs with eculizumab. Looking first at antibody-mediated rejection, or AMR, in kidney transplant patients. We have now completed enrollment, and have indeed overenrolled, and our living-donor study and dosing is ongoing. We also continued to enroll patients in our expanded deceased-donor study, and expect to remain on track to complete enrollment and dosing in this program in the second half of the year.

Earlier this month, the Committee on Orphan Medicinal Products of the European Commission, granted orphan drug status to eculizumab for the prevention of graft rejection following solid organ transplantation. Also, in the area of transplant, in Q1, both the FDA and the European Commission granted orphan drug designation to eculizumab for the prevention of delayed graft function or DGF. Following positive discussions with regulators in the U.S. and EU, we expect to initiate a single multinational DGF registration trial in mid-2014.

Turning now to neurology. Our program in neuromyelitis optica, or NMO, is on track as we have now initiated dosing in our anticipated single registration trial with eculizumab in relapsing NMO, a life-threatening ultra-rare neurologic disorder. Our study is a double-blind, placebo-controlled study conducted across multiple sites, with the primary outcome measure of time to relapse in patients who continue to have relapses regardless of which therapy or therapies they may have received.

We have now also commenced screening in our single registration study in refractory myasthenia gravis, or MG. This will be a double-blind, placebo-controlled multicenter study, in which the primary outcome is change in total MG-ADL score from baseline to week 26.

Finally, with regard to lifecycle management of Soliris well through the 2020s, we expect to initiate clinical studies with 2 or more next-generation Soliris molecules in 2014. With another molecule at an earlier stage of development.

I will now turn to our lead development programs with our highly innovative therapies, cPMP and ALXN1007. 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, an ultra-rare genetic metabolic disorder that causes catastrophic neurologic damage in newborns.

We have now commenced the synthetic cPMP switch study in patients with MoCD, who previously received the E. coli derived form of the drug. And we are continuing our retrospective data collection and enrollment in our natural history study, which are both programs we expect to complete in 2014.

With regard to ALXN1007, our novel anti-inflammatory antibody, we will commence our first Phase II proof-of-concept study in Q2. And will commence the next proof-of-concept clinical study in another severe and ultra-rare disorder later this year, with the expectation of having initial data near year end in at least one of these studies.

Beyond our current late-stage clinical development program, we are pleased to note that we have now initiated 2 targeted programs as part of our long-term exclusive strategic agreement with Moderna for the discovery and development of messenger RNA Therapeutics to treat patients with rare diseases.

As we look ahead in 2014, we are well on the way toward the 10 or more development milestones we expect to reach in our in-house programs. And we plan to continue enhancing our R&D capabilities through disciplined research collaborations, licensing and acquisitions. Our focus remains on developing therapeutic candidates with life-transforming potential for patients with rare and severe disorders.

I will now turn the call back to Lenny. Lenny?

Leonard Bell

Thanks, Martin. In the first quarter of 2014, we had strong performance across our commercial development and operational initiatives. Throughout remainder of the year, we'll build on these accomplishments as we seek to serve more patients with PNH and aHUS around the world, complete the regulatory filings for asfotase alfa and prepare for a robust launch in HPP. And to simultaneously drive forward our lead development programs for the benefit of patients with additional severe and rare disorders. As always, we thank our employees for their dedication to our mission. As we work to transform the lives of patients.

Operator, we will now take questions.

Question-and-Answer Session

Operator

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

Eric Schmidt - Cowen and Company, LLC, Research Division

Maybe for Vikas, if we pull out the $88 million for France in Q1, it looks like the quarter-on-quarter gross for Soliris in absolute dollars is around $37 million. I know you spoke to a little bit of bolus and new patient starts from France, but we're also expecting Q1 to be seasonally slow. So how do we think about that $37 million quarter-on-quarter increase in sales and what does that mean going forward?

Vikas Sinha

Thank you, Eric. So let me just explain the $37 million sequential growth and how it will look like going from Q1 to Q2. There were 2 factors that impacted Q1. That sequential growth was there from Q4 to Q1, but will not continue into Q1 to Q2. First is, as you mentioned, we entered Q1 with a significant number of patients already receiving Soliris in France. And second, we also saw a reduction in rebate in some European countries. Excluding these 2 items, that will not contribute to the sequential growth from Q1 to Q2, our growth would have been approximately $20 million to $21 million. And then as you're moving from Q1 to Q2 as -- and obviously, as compared to Q1, there will be 1 additional infusion day in Q2. So that -- if you factor that in on top of $20 million to $21 million, you'll get a sequential growth from Q1 to Q2. Does that make sense?

Eric Schmidt - Cowen and Company, LLC, Research Division

Yes, it does. Perfect.

Operator

And we'll now move to Geoff Meacham with JPMorgan.

Geoffrey C. Meacham - JP Morgan Chase & Co, Research Division

I want to talk a little bit about HPP. Just with respect to the patient community or advocacy groups, so I guess it would be helpful if you can compare the contrast the level of disease awareness that, in your experience, compared to PNH and aHUS. So just help us, I guess, with the launch and the visibility for HPP.

Leonard Bell

David?

David L. Hallal

Yes. Geoff, thanks for the question. We see it -- what I was referring to a little bit earlier in the call, we want to run our PNH and aHUS as a playbook across the opportunity to serve patients with HPP. We see it as being similarly low. And it's, frankly, across more than 1 or 2 specialties. As you know, with PNH, we launched into a single specialty, largely the hematology audience. With aHUS, we launched into the nephrology and hematology audience. And now, with HPP, there is a variety of different specialties, where these patients visit. Often times, unfortunately, without an accurate diagnosis. And so our pre-approval plans around disease awareness will be very, very important for us, as well as, obviously, targeting the right physicians with our disease awareness and diagnostic initiatives.

Operator

And we'll now move to Robyn Karnauskas with Deutsche Bank.

Robyn Karnauskas - Deutsche Bank AG, Research Division

So I was just curious, so you talked about launching in adults who's been diagnosed before 18 in the U.S. Did Europe reached a similar agreement? And do you see expansion for the technology for asfotase alfa into other indications?

Leonard Bell

Martin?

Martin MacKay

Okay. Thanks, Lenny. Well, clearly, as I mentioned on the call, we're working through this now and gathering more data. Of course, the key part here was the recognition of onset being important, whether it's perinatal, infantile or juvenile. This is the important piece of it. So we see the treatment of any patient that onset comes earlier than, for example, adults. Hopefully that helped.

Leonard Bell

We, certainly, Robyn. It's Lenny, adding in. We certainly see our keen focus from a development and commercial perspective, making sure that we don't lose focus on the primary objective, which is the pediatric-onset hypophosphatasia, which we see as a very significant and devastating disorder. So we're really keeping our focus on that disorder, as we then look to expand further after that into other areas potentially.

Martin MacKay

Yes.

Operator

And we'll now take a question from Chris Raymond with Robert W. Baird.

Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division

Just -- I have a reminder here in my calendar that, I think, in this half we're expecting a reinspection in the Rhode Island facility. Can you just talk about -- has that happened already or is there an update there?

Stephen P. Squinto

Yes. Now I can answer that, this is Steve. So I think, as Lenny mentioned on the call, first I'll say we're extraordinarily pleased with some of the remediation plans we put in place in Rhode Island and the improvements that we've already made to the Rhode Island facility. In fact, such so, that we informed the FDA that, from our point of view, we're ready for a reinspection. They have not yet visited and has not yet been scheduled.

Operator

And we'll now move to Matt Roden with UBS.

Matthew Roden - UBS Investment Bank, Research Division

So having looked at the clinicaltrials.gov entries for the NMO and MG studies you announced this morning. Looks like in both cases, the entry criteria differs a little bit from the Phase II studies, in terms of prior treatment experience among other things. Just wondering, Martin, if you could speak to the refined entry criteria in Phase III, what that implies to the practical matter of getting the trials done and ultimately, the size of the addressable populations if approvable?

Martin MacKay

Thanks a lot, Matt. And really, you touched on it in your question. We've had extensive discussions with investigators globally and of course, with regulators. And those clinical endpoints much more matched the population that we'd be looking to treat. So we believe that this study is really perfectly attuned to that patient population, in both neuromyelitis optica and myasthenia gravis. Thank you.

Matthew Roden - UBS Investment Bank, Research Division

And is there anything you can say about whether or not this represents, still, sort of ultra-severe, ultra-rare patient populations or is this in any way sort of a little bit of a broader patient population than what you had initially studied in Phase II?

Leonard Bell

Yes. It's Lenny, just chiming in as well. It's potentially a little broader population, but frankly, at the same level of severity.

Martin MacKay

Yes.

Operator

And we'll now move to Ying Huang with Barclays.

Ying Huang - Barclays Capital, Research Division

I have 2 questions. First one is on the rolling submission for asfotase. We noted that the natural history study for juvenile patient is still ongoing. So do you expect to finish that study in the fall, when you complete the rolling submission? If not, would that have any impact on the labeling discussion with the agency or not? And then secondly, I want to ask a question about the treatment protocol for the recently initiated NMO study in Phase III. Would you allow patients to receive drugs like CellCept or Rituxan for NMO?

Martin MacKay

Thank you. Let me take the rolling submission question first, and maybe just going to a little more detail here for clarity. We have identified a path to get to the best label to serve patients with HPP. Through our continued dialogue with the FDA, and as both Lenny and I mentioned on the call, as part of the Breakthrough Therapy process, we recently expanded our juvenile natural history study. We really feel that this expansion of the juvenile natural history study will position us for a strong and comprehensive label in the pediatric-onset indication. The timing of the discussion with the FDA and the decision to expand the trial, is such that we now expect this expanded study to complete in the fall. As part of this discussions, we agreed on a rolling submission to allow earlier review of available components of the dossier with the clean objective of shortening the overall review period. And in fact, as we noted, we have submitted the CMC section, we'll submit parts of the initial clinical package this quarter, and plan to complete the submission in the fall. We know that by virtue of the Breakthrough Therapy designation, the FDA is interested in moving asfotase alfa forward as quickly as possible. So while the expanded juvenile natural history study may result in a short delay in the time to the completion of our U.S. filing, we believe this expanded study will bring a lot of value to the product label. Based on our rolling submission and Breakthrough Therapy designation, we anticipate launching in early 2015. I would add one other part to the question and that is, we are still on track for submitting for pediatric-onset HPP in the EU near mid-year and in Japan later in 2014. With an expectation to launch asfotase alfa in the EU in 2015, but Japan to follow later that year.

Leonard Bell

So the short answer is it works well. As being someone who's had -- read the notes also, I think it's a -- yes.

Martin MacKay

Thank you. Thank you, Lenny. Yes. As to your question on Rituximab, we do anticipate after the obvious clear out period of studying severe relapsing NMO patients, including those that have failed Rituximab. So hopefully, that handles both your questions, the second being slightly shorter than the first.

Operator

And we'll now move to Howard Liang with Leerink.

Howard Liang - Leerink Swann LLC, Research Division

cPMP or Alexion 1101, this study -- the current study with the synthetic version is characterized as a bridging study. Is that -- are you planning to do another study with another version as a pivotal study for its intention to use the E. coli data for potential filing? And can you talk about is the bridging study with 4 patients?

Martin MacKay

Yes. Let me try and break that question down. I think there's 2 or 3 components in there. As you rightly know, we do have the switch study and in fact, we've started the study with the synthetic form of cPMP as a natural bridge. We will continue with the study, as we noted on the call. In terms of filing, clearly, the switch study, I will be part of that filing. And we will look to conduct a naive study sometime next year, as part of the filing package for MoCD. I would say it's just a little premature to know exactly how that will pan out. Again, as I've noted, we have a Breakthrough designation for this cPMP and MoCD, and that's going allow us again to have these interactions with the FDA to plan for the best way forward in this devastating disease.

Operator

And we'll now move to Geoffrey Porges with Sanford Bernstein.

Geoffrey C. Porges - Sanford C. Bernstein & Co., LLC., Research Division

I'll tackle the commentary about the aHUS and PNH markets. So, Lenny, you overcast, could you give us some color on the net growth in Q1 from Q4? How much of it came from aHUS and how much from PNH? And then secondly, are you saying that the revenue from aHUS can exceed the revenue in market from PNH? And then lastly, when would you expect that to happen on a market-by-market basis, is that within 4 or 5 quarters or a longer period of time after the aHUS launches? When do you think that will actually happen?

Leonard Bell

Steve, you want to start to give some color?

David L. Hallal

Sure. So, Geoff, we -- typically, we don't break out our growth between PNH and aHUS. I would say, yes, as to one measure that we're utilizing, that is the number of active patients in the U.S. on treatment for aHUS for time-adjusted intervals against the launch pattern in PNH, where we see that exceeding. Obviously, we think at some point, aHUS may likely exceed that of PNH. But it's very difficult to tell when because there is such an opportunity to continue to grow our operations in PNH with so many patients not yet diagnosed. So both businesses are growing. Do we expect that the lines at some point would cross? aHUS exceeding PNH? Maybe at some point, but the PNH opportunity remains very robust.

Operator

We'll now move to Brian Abrahams with Wells Fargo.

Brian Corey Abrahams - Wells Fargo Securities, LLC, Research Division

Quickly on asfotase, you mentioned you submitted the CMC package. I was hoping you could remind us where you are with respect to manufacturing from a process and supply perspective as the launch approaches. And then, in bigger picture, as you move Soliris into later stage trials in multiple orphan indication, I was sort of curious if there are ways you might be able to leverage your expertise and complement pathway science to potentially explore some of the less ultra-rare opportunities where there is still an unmet need in the division of the component that the complement pathway could benefit patients?

Leonard Bell

Steve, you want to address the manufacturing question?

Stephen P. Squinto

I'll take it quickly on the asfotase alfa manufacturing. I think, I've mentioned on prior calls or we've mentioned on prior calls, that we put a lot of effort into building a very robust manufacturing process for asfotase alfa. We're quite -- feeling quite good about that and are in good shape, which is why we were able to put together the CMC section of the dossier very, very quickly. And fortunately, allowed us to submit, as we've just announced. So we're in good shape with asfotase alfa manufacturing.

Leonard Bell

Martin?

Martin MacKay

Yes. Thank you. Brian, in terms of your question on the other complement inhibitors, I'll break it down into a couple of parts. Certainly, for Soliris, we'll also, always concentrate on ultra rare and devastating, obviously, with PNH and atypical aHUS. But if you look at our other studies with eculizumab whether it be neuromyelitis optica, myasthenia gravis or in the transplant area with AMR and DGF, a small population devastating disease. As we look at other mediators in the complement pathway, we'll take this on a case-by-case basis. As you rightly see the expertise here, Alexion around that pathway is quite formidable, and we will look at other indications as we develop this mediators. Hopefully, that answers your question.

Operator

And we'll now move to Terence Flynn with Goldman Sachs.

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

Just 2 for me. I was wondering if you can give us any more color about aHUS in Japan, and how that -- maybe the early launch there compares to the early PNH launch in that country? And then with respect to the European countries, the roll out of aHUS, I think, you mentioned you're targeting a number of other countries in Europe this year. I was wondering if you could speculate about kind of the sequence of rollouts there.

Leonard Bell

Sure. So regarding Japan, as I've mentioned during the call, we're adjusting our -- Q1 was really just our second quarter of launch. And we're pleased with the early observations, as we initiate our disease awareness and diagnostic initiatives. As it relates to -- and we'll be providing updates on Japan, as the first year of launch progresses. As it relates to PNH, I think, one, PNH and aHUS have very different dynamics everywhere, and then Japan, specifically, has a different dynamic. And so the difference between PNH and aHUS, as we have observed, is there was a large or prevalent pool in PNH in all the countries that we launched. And so we generally saw, when we opened up in countries, higher number of patients initially commenced treatment, whereas aHUS, because of the very, very high rate of mortality in ESRD within is the first 12 months of diagnosis, there was less of a prevalent pool and largely, sort of a slower buildup of patients initially as we entered countries. Just to remind you, in Japan, because of the very high prevalence of bone marrow failure disorders, which overlap with PNH, we believe Japan has always benefited from having an enriched population of patients with PNH. So we would see that dynamic not necessarily carry through with aHUS. As it relates to Europe, we're very pleased with our progress. I think for the first time in 2014, we can safely say that we have some European countries that had a full year of reimbursement for aHUS for all of 2014, and that's why we're very excited about the progress that we're likely to make this year in serving more patients. We announced, obviously, earlier -- last quarter the success in France. What we look toward now is continued province by province activity in Spain, following the approval of national reimbursement. So our teams are working with local authorities there. And we still expect, near mid-year, a long-term arrangement with the Italian government as well. But right now, in Italy, through an early access program, patients are receiving access to treatment. So we're very encouraged in Europe and do look forward to adding even more countries.

Operator

And will now move to Ian Somaiya with Nomura Securities.

Matthew W. Luchini - Nomura Securities Co. Ltd., Research Division

This is Matthew, on for Ian. I wanted to come back, if I could, to PNH and talk a little bit about some of the other territories you guys have highlighted over the last couple of quarters, Turkey, Brazil, Russia, et cetera. And specifically, when I was hoping in this, if you could give a sense or a little bit more color in terms of -- sort of the relative differences you're seeing as you are now on the ground in these markets in terms of physician awareness or disease awareness and diagnosis rates, anything that could get us, give us a little bit more sense as to how these markets are behaving relative to, say, what you saw in the U.S. and EU when Soliris was initially being rolled out in PNH?

Leonard Bell

Thanks. Again, just to remind you, Turkey, Russia and Brazil, what is -- what supports our efforts there with PNH is that the government have established a mechanism to serve their citizens with funding. And so that is, obviously, very helpful. In the aggregate population of those 3 countries, when you look at the reimbursable population, is larger than that of even the United States. And so what we've observed in these 3 countries is actually a very similar pattern of what we've seen in the U.S. and Europe and that is, when we initially launched in these countries our disease awareness activities, there was an initial group of patients that would start treatment. And then through our initiatives, through newly diagnosed patients, newly identified patients, we'd see a steady pattern of patients commencing therapy. So not dramatically different than what we've seen in the U.S. and Western Europe. Just -- what I would say, it's just earlier in the time line of our commercialization efforts.

Operator

And we'll now move to Yaron Werber with Citi.

Yaron Werber - Citigroup Inc, Research Division

I have got 2 questions. One is simple, just any plans to take one of your follow-on, the Soliris follow-on programs into AMD, just given some of the interesting data there and geographic atrophy. And then secondly, with respect to asfotase alfa, you guys are obviously going to be involved in looking at low-alkaline phosphatase screening to try to find undiagnosed adults with HPP. I guess, technically, they may not qualify for the labels, it's not clear, because they weren't diagnosed before the age of 18. So what's the thinking about strategy there how to get them reimbursed?

Leonard Bell

Sure. Thanks, Yaron. Martin, do you want to go first or...

Martin MacKay

Yes. In terms of the other indications, and then maybe Lenny and David can talk about the asfotase. Another indication, and it's fair to say with those follow-on, is I really touched on and when I described some of the works that we're doing in the complement pathway, we're interested in a number of indications, actually. And we will, obviously, gather some data to be able to decide on which indications would be most useful for us.

Leonard Bell

Yes. And just strictly speaking, we have a whole portfolio of different modules that we're progressing forward. Obviously, we're going to be focused most exceptionally on serving patients with PNH, aHUS, and other disorders that are really demarketed by having just overwhelming devastation, premature mortality and for where we know, we can provide a life-transforming benefit. There may be other molecules, of course, that may serve a purpose for other types of administration in other sorts of disease settings. David?

David L. Hallal

Yes. Regarding the onset question, first, really appreciate your knowledge on how an HPP patient will be diagnosed. So yes, we are focused, obviously, on low ALP and making sure, at launch, that there are enough diagnostic labs, that not only conducts the test, but I think what's really important is it's not just low ALP, it's age-adjusted and gender adjusted-ALP, which our early market research suggest that maybe not all physicians appreciate, much of their efforts is to diagnose patients with high-ALP, which goes in the wrong direction of HPP. So the diagnostic initiative is very, very important. And then to your point about onset. I guess, the way that we look at it is, I'm not sure that they would have had to have had a diagnosis prior to the age of 18. But I think the past medical history for the patient would have to highlight some level of symptoms associated with HPP, before the age of 18. And then it can be documented as that patient having had pediatric-onset hypophosphatasia. And that's the approach that we will take, and we think it's a reasonable approach.

Operator

We'll move to Lee Kalowski with Crédit Suisse.

Lee Kalowski - Crédit Suisse AG, Research Division

So on the call, it sounds like you're guiding for a U.S. and EU launch for HPP in 2015. I think in the past, you talked about approvals coming in 2014, but it sounds like you're also very far along the way with the rolling submission. So should we be thinking about a possibility of 2014 approval, at least, in the U.S. And as far as some of the sensitivities around milestone payments that might be due with respect to the U.S. and EU approval and launch milestones, of a cost, can you give is a little color on that?

Leonard Bell

Yes. I'll answer the question. Thank you for your very thoughtful and insightful question. So I think, as Martin and I said in the prepared remarks, as Martin said, very extensively, subsequently, we are very much focused on filing across our 3 core quarter areas, really, our core territories, where there'll be a filing in Europe in the coming months. There'll be for pediatric-onset hypophosphatasia. There'll be -- the filings are already underway now, here in the United States. That filing we expect to complete in the fall. For the review of that, of course, it's subject to the Breakthrough Therapy designation. So we'll, obviously, try to progress this as quickly as possible. The FDA cleared, indicated by virtue of its designation of Breakthrough Therapy designation, there are high level of interest in expediting assets. And we think there's an excellent dialogue underway. We expect that dialogue to accelerate over the next several months, frankly, now they already have materials to start review and that will be increasing on a monthly basis. And then, of course, towards the end of the year we'll be filing in Japan, which is extremely important given that there is a relatively high preponderance of the mutations in Japan, resulting in a lethal or near-lethal version of the disorder. So we're very well focused on beating our own performance there in aHUS and PNH with bringing that forward as quickly as possible for patients. And I think that, that gives you our impression of where we are, I don't know if you had -- that helps orient you some more. Thank you very much.

Operator

And that does conclude today's conference. We thank you for your participation. And you may now disconnect.

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