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Executives

Leonard Bell – Chief Executive Officer

Steve Squinto – Executive Vice President and Head, R&D

Vikas Sinha – Senior Vice President and CFO

David Hallal – Senior Vice President, Global Commercial Operations

Tom Dubin – Senior Vice President and Chief Legal Officer

Analysts

Rachel McMinn – Bank of America-Merrill Lynch

Eric Schmidt – Cowen and Company

Geoff Meacham – JPMorgan

Yogesh Ahuja – Goldman Sachs

Salveen Richter – Canaccord

Ying Huang – Barclays

Robyn Karnauskas – Deutsche Bank

Matt Roden – UBS

Howard Liang – Leerink Swann

Art – Sanford Bernstein

Alexion Pharmaceuticals, Inc. (ALXN) Q1 2012 Results Earnings Call April 24, 2012 10:00 AM ET

Operator

Good day, ladies and gentlemen. And welcome to the First Quarter 2012 Alexion Pharmaceuticals’ Earnings Conference Call. My name is [Alisha], and I’ll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions)

As a reminder, this conference is being recorded for replay purposes. I would now like to introduce your host for today’s call, Dr. Leonard Bell, Chief Executive Officer. Please proceed, sir.

Leonard Bell

Thank you, [Alisha]. Good morning. Thank you for joining us on today’s call to discuss Alexion’s performance for the first quarter of 2012. I’m joined by members of Alexion management. Steve Squinto, Executive Vice President and Head of R&D; Vikas Sinha, Senior Vice President and Chief Financial Officer; David Hallal, Senior Vice President, Global Commercial Operations; and Tom Dubin, Senior Vice President and Chief Legal Officer. We also welcome our entire Alexion team working around the world.

Vikas, David and Steve will join me on today’s call to report on our financial, commercial and R&D accomplishments in the first quarter, and to update our strategic initiatives and accelerated execution plans for 2012.

Before we begin, Tom will apprise you of our potential to make forward-looking statements. Tom?

Tom Dubin

Thanks, Lenny. During this call we may make forward-looking statements, such as expected financial results, medical benefits, regulatory milestones and commercial potential of Soliris, asfotase alfa, and our other product candidates in the U.S. and other territories, plans for development and clinical trials of Soliris, asfotase alfa and our other product candidates, and operations reimbursement, price approval and funding processes in different territories.

Forward-looking statements are subject to factors that may cause our results and plans to differ from those expected, including decisions of regulatory authorities regarding approval or limitations on the marketing of Soliris and our product candidates for various indications. The possibility that results of clinical trials are not predictive of the safety and efficacy of Soliris or our product candidates in broader patient populations in the disease studied or in other diseases.

The risk that third parties won’t agree to license any necessary intellectual property to us on reasonable terms or at all, the possibility that initial results of commercialization are not predictive of future results, the risk that third-party payers will not or not continue to reimburse for the use of Soliris at acceptable rates or at all, and a variety of other risks set forth from time-to-time in our filings with the SEC, including our 10-Q for the quarter ended December 31, 2011. We do not intend to update any of these forward-looking statements after this call except when the duty arises under law.

I’d like to remind you that our reported non-GAAP numbers conform to U.S. GAAP except in three respects. First, our non-GAAP numbers exclude share-based compensation. Second, we exclude non-cash tax adjustments associated with the utilization of our U.S. net operating losses. And third, with completion of three recent acquisitions, we also exclude amortization of acquired intangible assets and costs associated with acquisitions. A reconciliation of our GAAP to non-GAAP results is included in the press release we issued this morning.

Thanks you. Lenny?

Leonard Bell

Thanks, Tom. In the first quarter of 2012, Alexion made steady progress across our strategic objectives for the year as we continue to expand our initiatives to develop and deliver life transforming therapies for patients with severe and ultra-rare disorders.

Our development and commercial teams performed solidly in three key areas during the quarter. First, we again provided Soliris to a substantial number of new patients with PNH globally. Second, we are very pleased by the steady increase in new patients with aHUS beginning treatment with Soliris. And finally, we significantly advanced our eight lead development programs with eculizumab and four other highly innovative therapeutics. Steve will discuss the details and the specific areas of progress, and what is now the broadest pipeline in Alexion’s history.

I’d like to turn first our global operations of PNH and aHUS. In PNH, during Q1, we again achieved steady quarter-on-quarter growth in our core territories of United States, Western Europe and Japan.

Importantly and as in previous quarters, we again observed that a majority of PNH patients newly starting on Soliris were newly diagnosed with PNH indicating an ongoing and cumulative impact from our disease awareness programs and diagnostics initiatives.

We are driven by the recognition that even in the territories where we have operated the longest, the majority of PNH patients who can benefit from Soliris have still not received an accurate diagnosis nor started on appropriate therapy.

Turning to aHUS, we are very pleased to be serving a steady edition of new patients beginning treatment with Soliris in Q1. Patients newly commencing Soliris treatment represent a broad range of ages and clinical profiles, and are being treated by adult and pediatric nephrologists, as well as hematologists, indicating broader interest by the full range of physician who are likely to treat patients with aHUS.

As we have previously noted, more than half of aHUS patients not treated with Soliris are known to advance to dialysis from the kidney damage or die within the first year of following diagnosis. Based on this natural history, we identified two groups of aHUS patients prior to launch.

Patients with the longer duration of disease and substantial chronic kidney damage and as expected a larger proportion of patients were being identified during their first TMA clinical presentation and require emergent medical intervention.

Before approval, we focused on being able to serve all the patients with aHUS, including meeting the urgent needs of newly presenting patients by developing a range of patient centered initiatives. We are very pleased to see the early positive impact that our initiatives are having on the care of patients with aHUS.

As we have discussed, our PNH and aHUS operations in United States are driven by our recently expanded sales force, which is supported by our integrated hematology and nephrology therapeutic area teams. We observed strong marketing synergies that are focused on both hematology and nephrology with learning in each area that supports the other.

Our current commercial operations are only one part of our strategy for maximizing the therapeutic value of Soliris. As a long sort medical breakthrough, Soliris has the potential to transform the lives of patients suffering from a range of severe and ultra-rare disorders or uncontrolled complement activation beyond PNH and aHUS.

We are currently focused on applying the breakthrough innovation of Soliris and clinical development programs in four such disorders, acute humoral transplant rejection, STEC-HUS, neuromyelitis optica and myasthenia gravis.

As we seek to maximize the potential for Soliris to transform the lives of patients, we are also working diligently on expanding and accelerating development of our portfolio of other highly innovative treatments for patients with severe and ultra-rare disorders.

Our lead clinical development programs now comprise five innovative biologics, including Soliris, currently being investigating in eight severe and ultra-rare disorders in multiple therapeutic areas.

Importantly, even as we have significantly expanded our development pipeline, we have recognized a need to maintain the highest level of focus. Our eight lead clinical programs have been chosen for their strong fit with our longstanding objective to pursue the highest level of medical innovation to serve patients.

Specifically, all of these disorders manifest clinical complications that range from serve to fatal and all are ultra-rare. In the alignment with the severity of these disorders all of the therapies we have chosen to develop are highly innovative, first-in-class treatments with strong potential to provide a life transforming impact to patient.

As a recent indication of our high standards of breakthrough innovation, we note the publication last month of the highly encouraging asfotase alfa pediatric data in the New England Journal of Medicine. Given their various stages of development, our lead pipeline programs have the potential to make a growing contribution throughout our organization well into the next decade.

Turning to our financial performance, revenues in Q1 were $244.7 million, an increase of 47% compared to Q1 2011. By serving an increasing number of patients while maintain rigorous financial controls, we achieved Q1 2012 non-GAAP net income of $0.45 per share or $88.1 million, 57% increase year-over-year.

Following our performance in Q1, we announced this morning that we are raising our 2012 revenue guidance from the previous range of $1.04 billion to $1.07 million now to the higher and narrower range of $1.065 billion to $1.085 billion.

As we increase our revenue forecast for the year and continue to maintain tight control over expenses, we also raised our guidance for 2012 non-GAAP EPS from the previous range of $1.60 to $1.70 now to the higher range of $1.65 to $1.75.

We are gratified by our strong start in 2012 including our very encouraging and steady progress in serving patients with aHUS, as well as with a substantial expansion and acceleration of our research programs.

As the year progresses the global Alexion team will drive forward in each of its opportunities to serve current and future patients to the widest commercial operations and the deepest development pipeline in our history.

At this point, I’ll turn the call over to Vikas for a more detailed look at our financial results. Vikas?

Vikas Sinha

Thanks, Lenny. Q1 2012 was a period of strong financial performance by Alexion with steady sales growth and increasing profitability. Cash flow was again robust and expenses were controlled well within our previously stated target.

Net product sales of Soliris were $244.7 million in Q1, an increase of 47% compared to the year ago quarter. Revenue performance in Q1 was supported by our core geographies of the U.S., Western Europe and Japan, augmented by serving a small but growing number of patients in other countries.

As we executed strongly on patient centered initiatives in Q1, we continued to control both SG&A and R&D expenses. In Q1, non-GAAP SG&A was $77.9 million and non-GAAP R&D was $42.1 million.

Strong topline performance combined with control of other key financial parameters resulted in a 57% increase in our non-GAAP net income year-over-year to $88.1 million or $0.45 per share in Q1 2012.

Turning to our balance sheet, cash, cash equivalence and marketable securities at quarter end were $359 million. These reflect positive cash flow from operations during the quarter and acquisition related debt offset by payment for the purchase of Enobia.

I would now like to review our guidance. Following our performance in Q1, we announced this morning that we are raising our 2012 revenue guidance from the previous range of $1.04 billion to $1.07 billion now to the higher and narrower range of $1.065 billion to $1.085 billion.

As we increase our revenue forecast for the year and continue to maintain tight control over expenses, we have also raised our guidance for 2012 non-GAAP EPS from the previous range of $1.60 to $1.70 now to the higher range of $1.65 to $1.75.

While, all other items of the guidance are being reiterated, I’d like to provide some insights into our remaining non-GAAP SG&A and R&D expenses, and our GAAP tax rate.

First, I would note that non-GAAP SG&A is historically lower in Q1, compared to other quarters. In particular, we expect to have significantly greater non-GAAP SG&A expenses in Q2 and Q4 due to expenses related to medical conferences.

Additionally, excluded from our non-GAAP SG&A in 2012 will be approximately $20 million to $25 million in acquisition-related cost for Enobia and we have already recognized $12.4 million of this cost in Q1.

Turning to non-GAAP R&D, we expect that non-GAAP R&D in Q2 will increase to approximately $63 million to $68 million, mainly driven by asfotase alfa manufacturing and development costs.

Falling this peak in Q2, we expect R&D to be lower in Q3 than in Q2, though still above the Q1 level. We continue to expect that as a result of extra expenses related to Enobia, R&D will be 21% of sales in 2012 and will return to our target levels of 17% to 18% of sales in 2013.

Finally, regarding taxes, we expect to incur a $20 million to $30 million tax expense in Q2 for the integration and structuring of the Enobia acquisition. Excluding this charge, we continue to expect our 2012 GAAP tax rate of 32% to 34%. Our non-GAAP tax rate forecast of 8% to 10% remains unchanged.

Importantly, we expect to realize substantial long-term financial benefits from the structuring of our organization as we integrate Enobia.

Overall, we are very pleased with our performance in the first quarter of 2012. We are especially gratified at the discipline with which we are expecting our commercial platform in our development programs and the efficiency with which we are integrating our acquired drug candidates into a pipeline within our financial parameter.

At this point, I’ll turn the call over to David who will provide an update of our global commercial operations. David?

David Hallal

Thanks, Vikas. In the first quarter of 2012, global revenues from our Soliris operations increased by 47% compared to the first quarter of 2011. Q1 revenues reflect steady additions of new PNH patients in our core territories of the U.S., Western Europe and Japan augmented by a steady increase in new patients with aHUS commencing treatment with Soliris.

Looking more closely at PNH, we are gratified to observe the treatment is increasingly being optimized for patients. Through our disease awareness programs, we are discussing with physicians the large and growing body of clinical evidence regarding the morbidities and premature mortality associated with PNH and the positive long-term outcomes demonstrated with Soliris treatment.

Similarly, our diagnostic initiatives are aided by publications, which recommend testing for patients at higher likelihood for having the disease. Given the clinical evidence, more patients are being tested and if they are determined to have PNH, their physicians are more likely to rapidly initiate treatment with Soliris.

Our view of the global landscape remains unchanged. We continue to find that the majority of patients with PNH have not yet received an accurate diagnosis let alone are receiving appropriate treatment, even in those countries where we have been operating the longest.

As we expand our disease education and diagnostic efforts in both existing and new countries, we believe we will continue to transform the lives of more patients with PNH around the world.

Turning to aHUS, we are very pleased with the second full quarter of our aHUS launch with a steady addition of new patients beginning treatment with Soliris in Q1. Importantly, we note several dynamics from the early stages of our aHUS launch.

First, we are observing that patients who are receiving Soliris represent a broad range of ages and clinical profiles, including those with long-term disease and chronic kidney damage as well as those who are being identified during their first TMA clinical presentation.

Second, we continued to observe that a significant proportion of the new prescribers of Soliris for patients with aHUS are hematologists. Thus, we are able to apply our long-term presence in hematology for the benefit for both PNH and aHUS patients.

And third, our decision to expand our sales team in the United States has enabled us to grow our present and increase reach and frequency of our interaction amongst both hematologist and nephrologists, as each representative is able to focus on more physicians in a smaller geographic area.

Importantly, our aHUS disease awareness programs, which are focused on the morbidities and mortality of aHUS are underway and are being well received by physicians. These programs help educate physicians on the early signs and symptoms of aHUS, the role of chronic uncontrolled compliment activation as the underlying cause of TMA in these patients and the compelling clinical benefits that Soliris can provide to patient with aHUS by inhibiting compliment-mediated TMA.

Based up on the no natural history of aHUS, we identified two groups of patients with aHUS prior to launch. Patients with a longer duration of disease and substantial kidney damage and as expected a larger proportion of patients who are identified during their first TMA clinical presentation and require immediate medical intervention.

Before approval, we focused on being able to serve all patients with aHUS, including meeting the urgent needs of newly presenting patient. By developing a broad range of patient-centered initiatives in the areas of disease awareness, patient diagnosis, reimbursement support and providing supply of Soliris to treatment sites within hours.

For the implementation of these initiatives, we are currently supporting an increasing number of physicians as they identify emerging aHUS patients and seek to start them on Soliris therapy without delay.

We are pleased with the early positive impact that these initiatives are having on the patient care and look forward to serving more patients with aHUS in the United States overtime.

Turning briefly to our upcoming aHUS launch in Europe, we are on track with our reimbursement discussions with healthcare authorities in major European countries. We expect to start serving patients with aHUS in initial European countries later in 2012 with others commencing through mid-2013.

To prepare for our EU launches, we will start to expand our European field teams on a country-by-country basis with professionals who have experience in rare disorders and relevant medical specialty. As in the U.S., each member of our expanded European field teams will be fully cross trained on both PNH and aHUS and will manage a smaller territory than in the past.

While we expect that the initial use of Soliris and aHUS in Europe will grow only gradually due to the low prevalence and low awareness of the disease, we are confident that we will serve an increasing number of European patients with aHUS over time.

Turning now to HPP. In March, we attended the American College of Medical Genetics Meeting where we provided disease information and met with physicians who have experienced treating patients with HPP. Like PNH and aHUS, we know that HPP is often misunderstood given the rarity of the disorder and the wide range of its clinical signs.

Thus, we believe that disease awareness and diagnostic initiatives will be a critical component of our commercial program as we prepare for the potential introduction of asfotase alfa. As our clinical and regulatory teams drive the development program forward, the commercial team will continue to assess the needs of the HPP community as we prepare for the potential introduction of asfotase alfa.

Looking ahead, we are driving forward on every front to transform the lives of more patients in more countries who are suffering with PNH and aHUS while beginning to prepare for new Soliris indications and the launch of asfotase alfa. Driven by our commitment to patients and families, our global commercial operations team will continue to employ their experience, skills and talent to achieve our objectives for many years to come.

Now, I’ll turn the call over to Steve, who’ll review our expanding pipeline initiatives. Steve?

Steve Squinto

Thanks, David. In the first quarter of 2012, we continue to make substantial progress in our lead pipeline programs, which include five highly innovative compounds currently being investigated at various stages of development across eight severe and ultra-rare indications beyond PNH and aHUS.

I would first like to provide an update on our eculizumab programs, starting with STEC-HUS. Out of the total 198 patients enrolled in our STEC-HUS study in Germany, the interim data presented in November were from the 148 patients who were treated at the first nine clinical trial sites.

The interim data were very encouraging demonstrating that eculizumab treatment for eight-weeks substantially reduce the occurrence of serious morbidities in STEC-HUS patients. Interim data showed a rapid, large and sustained reduction in thrombotic microangiopathy or TMA and reversal of organ damage with eculizumab treatment.

Patients in the study were observed for 28 weeks following treatment initiation. We have now commenced the normal process of data collection and data cleaning for subsequent data base lock and analysis for the overall 198 patient intensive treat group.

After the final steps are concluded, we expect to have discussions with regulators regarding a pathway for filing an SPLA as early as the second half of this year. In our kidney transplant program with eculizumab, we continue to enroll patients in our company-sponsored multinational living donor kidney transplant trial in patients at elevated risk of antibody-mediated rejection.

Patients in this study are being dosed with eculizumab for nine weeks post-transplant and then will be observed for 52 weeks following transplant. In addition, we expect to initiate a disease donor study in the summer of this year.

We also have two neurology clinical development programs ongoing with eculizumab, in severe and refractory neuromyelitis optica and in myasthenia gravis. Data from the investigator initiated Phase 2 clinical trial of eculizumab in severe refractory NMO is expected to be presented at a scientific meeting in the second half of 2012. Even before these data are presented, we expect to hold a series of discussions with investigators to design the next study prior to our anticipated meeting with regulators.

With regard to myasthenia gravis, additional data from the 14 patient Phase 2 study are being presented at the American Academy of Neurology Annual Meeting this month. We expect to discuss the plans for a larger perspective controlled study with regulators in 2012.

I would like to turn now to our other lead development program with highly innovative therapeutics beyond eculizumab, starting with asfotase alfa. We are highly encouraged by the progress made in asfotase alfa clinical development in just the first quarter of this year. It is noteworthy that this significant progress was demonstrated in the three distinct trials across a broad spectrum of HPP patients.

Turning first to pediatric patients. Our Phase 2 study of infants and young children with life-threatening HPP were published in the New England Journal of Medicine in March. Importantly, all the patients treated with asfotase alfa demonstrated an improvement in blood levels of PPI and PLP, two key biochemical indicators of HPP providing strong support for the potential of asfotase alfa to correct the underlying enzyme deficiency in patients with HPP.

The study made its primary end point with 90% of patients showing substantial skeletal healing at 24-weeks of treatment with asfotase alfa. In the study, skeletal healing became apparent as early as week three. All patients treated with asfotase alfa also had an improvement in respiratory function and patients also demonstrated improvements in fine motor and gross motor function and cognitive development. These findings are remarkable given the historically grim outlook for patients with life threatening HPP.

Also in pediatrics, data in juveniles were presented at the Sanford Burnham Rare Disease Day Symposium in February. Data showed that all patients who were treated with asfotase alfa had an objective response to therapy, with clinically and statistically meaningful decreases in enzyme substrate. These biochemical improvements were accompanied by improvement in bone mineralization as evidence by both bone biopsy and radiographic improvement. In addition, asfotase alfa-treated patients showed a marked improvement in physical function as measured by the six minute walk test.

In Q1, clinical data were also presented for the first time from the Phase II study of asfotase alfa in Adolescents and Adult with HPP at the American College of Medical Genetics meeting in March. In this study, all patients were treated with asfotase alfa, had an objective response to therapy with clinically and statistically meaningful decreases in enzyme substrate. And these biochemical improvements were accompanied by improvement in patient’s physical function as demonstrated by an improvement in the six minute walk test.

Based on the significant accomplishments during the first quarter, we are accelerating the development of asfotase alfa as a treatment for a broad spectrum of HPP patients. Our efforts remained focused on three key areas.

First, we are optimizing the commercial scale manufacturing process to ensure our ability to provide long-term support to the HPP community.

Second, we are completing the clinical development program in children prior to an anticipated regulatory filing for pediatric patients in 2014. We will have further discussions with regulators regarding the studies required for registration in pediatrics and expect to complete a natural history study in infants to supplement the existing open label trial.

And third, our expanding adult program will now be further informed by the encouraging Phase 2 data. We continue to expect that we will need to initiate a placebo-controlled study in adults with severe HPP to support registration in this patient population. I look forward to updating you on our asfotase alfa program on future calls.

Beyond acetate alpha, we are also evaluating three additional highly innovative therapeutics as treatment for patients with severe and ultra-rare disorders. We are pleased that these cover a wide range of therapeutic areas, enabling us to employ our skills in developing ultra-orphan therapies to a growing universe of patients.

Looking briefly at these programs, first, in our new metabolic disease area, which includes asfotase alfa, we are also accelerating the development of our cPMP replacement therapy for the treatment of patients with molybdenum cofactor deficiency Type A, a severe ultra-rare and genetic metabolic disorder that is fatal in newborns.

In 2011, we made substantial progress on our GMP manufacturing process for our cPMP replacement therapy. Following successful completion of the initial cGMP manufacturing runs at the end of last year, we now have commenced pre-IND toxicology studies. Additionally, we’re also now increasing our cPMP manufacturing to provide sufficient supplies to commence clinical studies in early 2013.

Second, we continue to enroll patients in a Phase I study to characterize the mechanism of action of ALXN1102 formally known as TT30 and to develop initial safety data. As a remainder, ALXN1102 is a unique inhibitor of the alternative complement pathway with a mechanism of action different from Soliris and thus build on our world-class expertise in complement biology. Once we have the data from the study, we can better evaluate the overall therapeutic potential of ALXN1102, for various disease targets.

Lastly, we continue to enroll subjects in a Phase I clinical study of ALXN1007, a novel anti-inflammatory antibody, which is a product of our antibody discovery technologies. This Phase I study is evaluating the safety tolerability pharmacokinetics and pharmacodynamics of this compound in healthy volunteers.

I would like to turn briefly to the multi-factorial disease age-related macular degeneration. Importantly, eculizumab or AMD does not fit within our core mission of developing life transforming therapies for patients with severe ultra-rare and life-threatening disorders. I would note that data from the investigator initiated study of intravenous eculizumab in patients with dry AMD will be available at the ARVO Conference on May 7th.

As a remainder, this is an investigator-initiated exploratory study designed to test the stomach, but not direct intraocular complement inhibition in patients with dry AMD. These data will help determine whether or not complement inhibition plays a role in dry AMD. We expect to review our options for this program later this year.

In closing, I’m proud that Alexion’s R&D team continues to be driven via passion and an urgency to help patients and families suffering with severe and ultra-rare disorders. I look forward to updating you on our progress on future conference call.

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

Leonard Bell

Thanks, Steve. Out strong start to 2012 positions us to keep executing rapidly on our key objectives throughout the year. We are pleased that we continue to serve an increasing number of patients with PNH and now aHUS, and we’ll continue accelerating our development programs with a goal of rapidly brining life-transforming innovations to more patients with severe and ultra-rare disorders.

As always, we thank all those who make our work possible, our employees, researchers and physicians around the world and of course, patients and their families who are always at the forefronts of what we do.

Operator, we will now take questions.

Question-and-Answer Session

Operator

(Operator Instructions) The first question comes from the line of Rachel McMinn with Bank of America-Merrill Lynch. Please proceed.

Rachel McMinn – Bank of America-Merrill Lynch

Yeah. Thanks very much and congrats on another good quarter. I guess, just two questions for me, one is that the first quarter historically is typically the weakest quarter-over-quarter sales that we see. I guess, is there any reason why 1Q 2012 would be different. And then just digging into aHUS a little bit more, you talked about these patients, this large proportion of patients that are this urgent need bucket. Can you give us a little bit more color on who sees those patients and how your approach might be different in helping to educate those physicians, are they more of nephrologists for example. Thanks.

Leonard Bell

Thanks very much, Rachel. I’ll handle the first and Dave, do you want to handle the second?

David Hallal

Yeah.

Leonard Bell

So no, actually we have a very encouraging view of the remainder of 2012 which is -- as we mentioned why we’ve raised our revenue guidance. So we anticipate further growth in -- as we may clear in the call. I think we see that growth coming now from both PNH and as we have greater visibility to aHUS we feel comfortable there as well.

David Hallal

And then Rachel, regarding the sort of the emergent patients, we’re actually seeing both hemes and nephs and that really depends on who has called in for the consult. There are both hematologic and renal complications obviously associated with TMA. And therefore, it really depends upon where that referral is made and that’s why we’re trying to reach out to as many hematologists and nephrologists as we can. And one other dynamic as it is their first TMA clinical presentation. In this case, we tend to identify the patients as the physician is also rapidly making a diagnosis and moving to treatment.

Leonard Bell

Perhaps, certainly the most important dynamic, which I think David also mentioned on the call, Rachel that we’re able to supply treatment very rapidly and within -- as David said, within hours. And we think that actually is being very attentive to the urgency of situation and we’re very, very excited to the progress that we’re being able to make on patient care.

Rachel McMinn – Bank of America-Merrill Lynch

All right. Thanks, thanks very much.

Operator

Your next question comes from the line of Eric Schmidt with Cowen and Company. Please proceed.

Eric Schmidt – Cowen and Company

Good morning, team. It seems like steady is the word of today at Alexion and like steady PNH new patients adds is certainly a considerable accomplishment at this stage of that market’s trajectory. But I guess, I’m wondering what’s steady means and aHUS the more nascent market. Does that mean that new patient starts were the same in Q1 versus Q4 and if so, what kind has been your biggest barrier there?

Leonard Bell

Yeah. It’s a steady question that will be asking us. I anticipate being asked that steady question several times when the steady quarters evolve. But no, I think that we are very, very encouraged really by the growth we’ve seen in aHUS Q1 on Q4. We think it shows that we are starting to get strong legs as we built out further and further initiatives to help patients rapidly get treatment.

And I think as we saw early on PNH and maybe we’re seeing it a little more clearly here in aHUS is that a few quarters in we’ll start getting a meaningful visibility. So I think that we see steady growth going forward.

Eric Schmidt – Cowen and Company

Okay. Thanks for the color. One follow-up may be for David. He mentioned that this aHUS market is sort of bifurcated into those with longer term previously diagnosed disease versus those who are now the first presentation crisis mode. Can you give us any few on of the patients who are on Soliris today which of these two markets that are coming from, and what your thought is over the next 12 months, whether there might be a differential in split between the two?

David Hallal

Yeah. Well, the other word you used to love Eric was gradual. Typically, you’re sort of partially retired for the call. But based on the fact that there is low prevalence of the disease, we thought that there was unlike PNH where the majority of early patients that we started were from a prevalent pool, we actually saw some balance here early on. Some patients were longer term diseased and then the balance of starting to drove off of the proportion of patients with the emergent diseases.

So we’re actually seeing relative balance at this point, would expect moving forward maybe a larger proportion maybe coming from those newly presenting patients.

Eric Schmidt – Cowen and Company

Thanks a lot, guys.

Operator

Your next question comes from the line of Geoff Meacham with JPMorgan. Please proceed.

Geoff Meacham – JPMorgan

Hi, guys. Thanks for taking the question. One for you on asfotase alfa, so it looks like filing in 2014 as what you guys have consistently said, may be help us with what the gating factor is, is it just waiting for the natural history study to mature or from a regulatory perspective, do you have to have full optimization of manufacturing prior to filing.

David Hallal

Well, I think to start with the manufacturing, there already is a commercial scale manufacturing in place that we think we’ll -- obviously support finishing the clinical development programs, but also will support early market launch as well. We are making modifications to it but the process already is in place.

In terms of further clinical development, I think as I mentioned on the call this morning, based on conversations that the Enobia team had with regulators prior to the acquisition. We do intend to initiate a natural history study in infants and it’s also likely that we’ll initiate a placebo-controlled juvenile trial as well, which will be another six months of therapy.

Geoff Meacham – JPMorgan

And those things will be included in the 2014 filing or are those separate?

David Hallal

I think that will be supportive.

Geoff Meacham – JPMorgan

Okay. And just a follow-up for Vikas, any updates and progress for collections in Europe when you look at accounts receivable DSO, you are still up marginally on a sequential basis?

Vikas Sinha

Geoff, when I look at sequentially Q4 to Q1 without the VAT in the numbers they are more or less flat between the quarters. But definitely we have on our side increased our activities in collecting in two key areas that are Italy and Spain and which are actually showing good results right now.

Geoff Meacham – JPMorgan

Got you. Okay. Thanks.

Operator

Next question comes from the line of Sapna Srivastava with Goldman Sachs. Please proceed.

Yogesh Ahuja – Goldman Sachs

Hi, guys. This is Yogesh on behalf of Sapna. Congrats on other good quarter. And thanks for taking my question. Just a follow-up on the aHUS launch, in terms of patients with an already known, diagnosed in aHUS, are you seeing any difference in uptick in the so called plasma resistant or plasma sensitive patients or in those with known mutations and those that don’t?

And then also any idea as to what we should expect from interim data in the transplant trials? Thanks.

David Hallal

Yeah. So I’ll take the aHUS question. We actually are seeing both patients with existing disease, who have longer term disease and more chronic kidney damage associated with their disease progression, those fitting more that plasma sensitive group. We see those patients benefiting from treatment as their -- clearly, as data that suggested those patients are benefiting from long-term Soliris treatment.

And we’re seeing patients go right to Soliris not even necessarily having plasma exchange and then of course, we do see some that start on some plasma exchange and then very quickly move to Soliris. So again, we’re seeing relative balance across the spectrum.

Steve Squinto

To your question regarding transplantation, we don’t expect interim data to be presented in the transplant program. We’re enrolling patients as we said on the call and probably would expect to be enrolling patients into 2013 as well.

Yogesh Ahuja – Goldman Sachs

Great. Thanks a lot.

Operator

The next question comes from the line Salveen Richter with Canaccord. Please proceed.

Salveen Richter – Canaccord

Thanks for taking my questions. I’m just wondering if there is a difference in messaging and education to physicians that treat the critical care patient bucket versus those with more advanced disease and then have you had any commercial aHUS patients come on board in the EU?

David Hallal

Yeah. So the messaging obviously based on the breadth of our clinical trial program where patients were treated very late and some patients were treated earlier. Obviously, our messaging is that Soliris in general can provide compelling clinical benefits to patients with aHUS and the earlier you get there the better.

But even for patients with longer term disease with long-term treatment benefits are being seen. Right now as it relates to the EU -- very few patients, really some initial patients in Germany and as I discussed on the call, we’re engaging in reimbursement discussions right now with key European countries, we would expect adding more patients later on in 2012 and into 2013.

Salveen Richter – Canaccord

Okay. And then David, are you getting any pushback on physician misconceptions of the disease or do you feel like you’ve addressed a lot of that part of the story?

David Hallal

Well, as it relates to pushback with the rare disease, I think even as we’re in our fifth, sixth year with PNH, a lot of education is required. And we clearly for example are educating not just about thrombotic microangiopathy. But what is the underlying cause of it and when it’s chronic uncontrolled complement activation it certainly points to aHUS.

So I think significant misconceptions clearly what we see in the marketplace exist and a long-term disease education program I think will make a meaningful difference and we’re seeing very, very nice early impact so far.

Salveen Richter – Canaccord

All right. Thank you.

David Hallal

Thanks.

Operator

The next question comes from the line of Ying Huang with Barclays. Please proceed.

Ying Huang – Barclays

Hi. Good morning, guys. Congratulations also on the quarter. Quantitatively, can you give us a little bit color around the ramp up for aHUS compared to what you saw in PNH back in 2007?

Steve Squinto

I think, what we’ve described before of course is unfortunately because more than one-half of aHUS patients either suffer end-stage renal disease, permanent kidney damage or die in the first year of diagnosis. We had anticipated and projected that there will be a gradual update of new patients. And I think that as we are out in the market, we’re certainly very encouraged by the need to as rapidly as possible meet a significant number of patients needs that we see in United States. So we’ve -- on that basis as we mentioned we’ve also increased our guidance for 2012.

Ying Huang – Barclays

Thanks.

Operator

The next question comes from the line of Brian Abrahams with Wells Fargo Securities. Please proceed.

Unidentified Analyst

Hi. This is (inaudible) calling for Brian. Thanks for taking my questions. How should we think about pricing and reimbursement in EU, and given the tougher pricing environment in Europe compared to perhaps your previous negations there particularly countries like Germany and maybe additional color on timeline for country-by-country launch in Europe would be very helpful? Thank you.

Leonard Bell

Sure. Thank you very much for your question. I think just a key perspective remarkably and virtually all of licensed commercial experience and accomplishments they have coincided with a severe global financial crisis.

I’d just remind people, we initiated our European country launches largely during 2008, 2009 and this is what many of us recall the time and cataclysm with banking crisis, across all the European countries as well as some of us may remember on the call in the United States, there was a housing of credit to backhaul that occurred as well.

And all of that actually, we established our commercial operations across the European Continent in that context. And successfully navigated through those world changing events by keeping our focus on identifying patients who have a life threatening and very rare disorder, providing them a treatment, which will be able to describe some market and transformational impact on their lives.

So as simply in 2012, we don’t really see overall macro environment equal to what we saw in 2008 quite frankly. We see there is meaningfully more favorable than what we saw earlier. And then in that context, we also are increasingly focused in patients with aHUS, for example, who have clearly as we have marked several times.

More than half of these patients which of course includes a disproportionate number of children will unfortunately either have end-stage renal disease, permanent kidney damage or die within a year.

So we’re encouraged by what we see. We obviously understand the processes on a country-by-country basis very well. And we’re encouraged by the focus of governments continually since 2008 in the midst of the post financial crisis to really focus on the well-being of their systems.

Unidentified Analyst

Thank you. Very helpful. Thanks.

Operator

Your next question comes from the line of Robyn Karnauskas with Deutsche Bank. Please proceed.

Robyn Karnauskas – Deutsche Bank

Hi, guys. Thanks for taking my question. I guess, two quick ones on aHUS you had mentioned earlier upon approval that children dose or infant dose was 75% to 85% of the adult dose. I was wondering if you could give color on the average dose you’re staying in aHUS patients or at least in children?

And second, you mentioned your diagnostic initiatives continuing to grow use of PNH -- use of Soliris in PNH. I was just wondering what is the bottleneck like, when do you expect sort of diagnostic to tick off or just will it be slow and steady as you’ve mentioned a couple of times or is there something that’s really keeping doctors back from correctly diagnosing these patients.

Leonard Bell

So in regard to Robyn, -- it’s Lenny. So regard to the question about aHUS, we actually commented that it was that dose in children can be 80% lower than the dose in adult as opposed to 80% of the adult dose, right. So it actually is only about 20% -- 15% to 20% of the adult dose in the smallest children.

And increasingly, we see of course, as we mentioned called urgently to meet the needs of children whether it should be based on their first presentation, whether it’s unfortunately after -- it’s survived the initial presentation but now unfortunately transplantation and all of the situation, of course the dosage is much, much less and that obviously has implications outside United States for governments who of course can treatment of their patients who are children, which I think are all very much favor of this as well as proven adults.

As regards to the PNH, I will turn it over to David to talk about the diagnostics efforts. But I would actually mention that at least we’ve improved from a gradual to steady, so that’s an improvement there. David?

David Hallal

Sure. As Lenny and I discussed during the call, when we think about the disease in general, there are still patients who medical literature suggests have signs, symptoms or another diagnosis, which suggest that they are at highly likelihood for having PNH and what we are finding in our core territories and new countries as well, the opportunity to educate physicians on those patients who need testing. And we continue to see a steady rise in testing amongst physicians and then once they do identify patients with PNH, they certainly are most apt to rapidly start them on treatment.

Steve Squinto

One other, just closing to David’s comments for diagnosis in PNH, it really is quite meaningful that 20 quarters into the launch, for example, from a more mature communities that we work in like United States, for example, still actually a majority of patients who commence treatment with Soliris are newly identified and newly diagnosed. So it is remarkable. It also indicates that underscores our view of a steady growth for a longer period to go.

Robyn Karnauskas – Deutsche Bank

Thanks.

Operator

Your next question comes from the line of Matt Roden with UBS. Please proceed.

Matt Roden – UBS

Great. Thanks for taking the question, guys and congrats on the good quarter here. Steve, you mentioned AMD, I appreciate the comments there. Just wondering if you could may be go one step deeper here. Given the mechanism, while the result of the investigator lead eculizumab trial fare up on new development plans for 1102.

You mentioned a slightly different mechanism, do you think if there is direct read across from the eculizumab data to potential for 1102. It sounds like the -- you might view the trial here as potentially proof of concept but in general, I was wondering if you can may be talk about that and may be talk about where you think this indication fits into your R&D priority? Thanks.

Steve Squinto

Yeah. I think a couple of things. The first comment I’ll make is that you asked about the mechanism of action. Age-related macular degeneration generally is an extraordinarily complex disease. We have wet, we have dry forms, than within the drive forms you have geographic atrophy drusen.

I think unlike a lot of other diseases we study, I think mechanistically we know much, much less about what’s really happening in AMD. And I think at this point, it’s sort of too early to make comments about whether there might be learnings from this trial that might apply to ALXN1102.

Matt Roden – UBS

Okay. Thank you.

Operator

Your next question comes from the line of Howard Liang with Leerink Swann. Please proceed.

Howard Liang – Leerink Swann

Thanks very much. I know it’s the early days, but I was wondering if you can talk about any experience of discontinuations on Soliris among aHUS patients, for example if you get a patient in a critical stage, how long do they typically stay on Soliris?

Steve Squinto

Yeah. Well, Howard as we had anticipated, compliances is generally good in patients diagnosed with aHUS and what we’re finding is that it appears to be similar to the high levels that we have grown accustomed to observing in PNH over the past several years.

Howard Liang – Leerink Swann

Thanks.

Operator

And your final question comes from the line of Geoff Porges with Sanford Bernstein. Please proceed.

Art – Sanford Bernstein

Hi. This is [Art] here for Geoff. Just a few question, first of all do you guys know what the impact of FX was in Q1?

And second, since you already had a lot of time to explore the HPP opportunity. Can you provide maybe a little bit of additional guidance of how big the HPP population is in pediatric, juvenile and adult? Thank you.

Steve Squinto

I can answer the second question and if you like, we actually don’t provide patient numbers, regarding ultra-orphan disorders and it’s still too early to be able to provide that sort of sense.

David Hallal

Let me try and answer the first one. From Q4 to Q1, between the several currencies that we deal with, we didn’t see much of an impact on FX, but we definitely see going from Q1 to Q2, the currency is under pressure and we definitely see 2% to 3% FX impact coming in.

Art – Sanford Bernstein

Thank you.

Operator

Ladies and gentlemen that concludes today’s conference. Thank you for your participation. You may now disconnect and have a great day.

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