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July 30, 2020, 7:41 a.m. EDT


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(EDGAR Online via COMTEX) -- Item 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Note Regarding Forward-Looking Statements This quarterly report on Form 10-Q contains forward-looking statements. Words such as "anticipates," "may," "forecasts," "expects," "intends," "plans," "potentially," "believes," "seeks," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such statements. Such forward-looking statements are based on current expectations, estimates and projections about our industry and business, management's beliefs, and certain assumptions made by our management, and may include, but are not limited to, statements regarding: the potential benefits and commercial potential of ULTOMIRIS(R), SOLIRIS(R), STRENSIQ(R), KANUMA(R) and ANDEXXA(R) for approved indications and any expanded uses; sales of our products in various markets worldwide, pricing for our products, level of insurance coverage and reimbursement for our products, timing regarding development and regulatory approvals for our products or for additional indications or in additional territories; plans for clinical trials (and proof of concept trials and exploratory clinical studies), status of our ongoing clinical trials for our product candidates, commencement dates for new clinical trials, clinical trial results and evaluation of our clinical trial results by regulatory agencies; potential benefits offered by product candidates, including improved dosing intervals and potential to improve treatment in a number of IgG-mediated and neurological diseases; the medical and commercial potential of additional indications for our products; the expected timing for the completion and/or regulatory approval of our facilities and facilities of our third-party manufacturers; future expansion of our commercial organization and transition to third parties in certain jurisdictions to perform sales, marketing and distribution functions; future governmental and regulatory decisions regarding pricing (and discounts) and the adoption, implementation and interpretation of healthcare laws and regulations (and the impact on our business); plans, prospects and expected timing for future regulatory approval of products and product candidates; competitors, potential competitors and future competitive products (including biosimilars); plans to grow our product pipeline (and diversify our business, including through acquisitions) and anticipated benefits to the Company; future objective to expand business and sales; future plans to retain earnings and not pay dividends; expected decisions to appeal certain litigation and intellectual property decisions; expectations to realize the carrying value of product inventory; impact of accounting standards; future costs, operating expenses (including research and development, sales, general and administrative and restructuring expenses) and capital requirements, capital investment, sufficiency of cash to fund operations for at least the next 12 months, ability to make payment on our credit facility and make contingent payment obligations, the sufficiency of our existing capital resources and projected cash needs, price approval and funding processes in various countries; the sources of expected increases in cash flow from operations, if any; anticipated impact of interest rate changes on financial statements; anticipated future milestone, contingent and royalty payments and lease payments (and, in each case, expected impact on liquidity); anticipated impact of the COVID-19 pandemic on our business; Alexion Pharmaceuticals, Inc. (amounts in millions, except per share amounts) timing and anticipated amounts of future tax payments and benefits (including the potential recognition of unrecognized tax benefits), as well as timing of conclusion of tax audits; collection of accounts receivable and impact of any delay in the future in collecting accounts receivable on financial condition and operations, as well as the ability of counterparties to our derivatives to perform their obligations; the safety and efficacy of our products and our product candidates; the adequacy of our pharmacovigilance and drug safety reporting processes; the uncertainties involved in the drug development process and manufacturing; performance and reliance on third party service providers; our future research and development activities, plans for acquired programs, our ability to develop and commercialize products with our collaborators, anticipated regulatory approval of acquisitions and anticipated closing of acquisitions; periods of patent, regulatory and market exclusivity for our products; the scope of our intellectual property and the outcome of any challenges or opposition to our intellectual property; and estimates of the capacity of manufacturing and other service facilities to support our business operations, products and product candidates. Such risks and uncertainties include, but are not limited to, the impact of the COVID-19 pandemic on our business (including our financial results and clinical trials), increased competition, actions by regulatory agencies, product candidates not receiving regulatory approvals, the possibility that expected tax benefits will not be realized, assessment of impact of recent accounting pronouncements, potential declines in sovereign credit ratings or sovereign defaults in countries where we sell our products, delay of collection or reduction in reimbursement due to adverse economic conditions or changes in government and private insurer regulations and approaches to reimbursement, uncertainties surrounding legal proceedings, company investigations and government investigations and assessments, the securities class action litigation filed in December 2016, the investigation of our Brazilian operations by Brazilian authorities, the tax assessment by the Brazilian Federal Revenue Service, risks related to the short and long-term effects of other government healthcare measures, intellectual property lawsuits, and the effect of shifting foreign exchange rates, as well as those risks and uncertainties discussed later in this report under the section entitled "Risk Factors." Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether because of new information, future events or otherwise. However, readers should carefully review the risk factors set forth in this and other reports or documents we file from time to time with the SEC. Overview Alexion is a global biopharmaceutical company focused on serving patients and families affected by rare diseases and devastating conditions through the discovery, development and commercialization of life-changing medicines. As a leader in rare diseases for more than 25 years, Alexion has developed and commercializes two approved complement inhibitors to treat patients with paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS), as well as the first and only approved complement inhibitor to treat anti-acetylcholine receptor (AChR) antibody-positive generalized myasthenia gravis (gMG) and neuromyelitis optica spectrum disorder (NMOSD) in patients who are anti-aquaporin-4 (AQP4) antibody positive. Alexion also has two highly innovative enzyme replacement therapies and the first and only approved therapies for patients with life-threatening and ultra-rare metabolic disorders, hypophosphatasia (HPP) and lysosomal acid lipase deficiency (LAL-D). With the acquisition of Portola Pharmaceuticals, Inc. (Portola) in July 2020, we added the first and only approved Factor Xa inhibitor reversal agent for patients treated with rivaroxaban or apixaban when reversal of anticoagulation is needed due to life-threatening or uncontrolled bleeding. In addition to our marketed therapies, we have a diverse pipeline resulting from internal innovation and business development. Alexion focuses its research efforts on novel molecules and targets in the complement cascade and development efforts on the core therapeutic areas of hematology, nephrology, neurology, metabolic disorders and cardiology. Recent Developments Alexion Pharmaceuticals, Inc. (amounts in millions, except per share amounts) On June 29, 2020, we announced that the European Commission (EC) approved ULTOMIRIS (ravulizumab) for the treatment of adults and children with a body weight of 10 kg or above with aHUS who are complement inhibitor treatment-na�ve or have received SOLIRIS (eculizumab) for at least three months and have evidence of response to eculizumab. On July 2, 2020, we completed the acquisition of Portola Pharmaceuticals, Inc. (Portola), a commercial-stage biopharmaceutical company focused on life-threatening blood-related disorders, through a tender offer and subsequent merger of Portola with Odyssey Merger Sub Inc., a wholly owned subsidiary of Alexion. Portola's commercialized medicine, ANDEXXA(R), marketed as Ondexxa(R) in Europe, is the first and only approved Factor Xa inhibitor reversal agent, and has demonstrated transformative clinical value by rapidly reversing the anticoagulant effects of Factor Xa inhibitors rivaroxaban and apixaban in severe and uncontrolled bleeding. Under the terms of the agreement, we acquired all outstanding common stock of Portola for $18.00 per share in cash, or approximately $1,380.1, including the settlement of certain of Portola's outstanding equity awards but excluding shares of Portola stock held by Alexion at closing. The acquisition was funded by cash on hand. In connection with the acquisition, we also paid $196.9 to settle certain debt held by Portola that was subject to preexisting change of control provisions. On July 28, 2020, the Board of Directors approved a new share repurchase authorization of up to an additional $1,500.0. The repurchase program does not have an expiration date and we are not obligated to acquire a particular number of shares. The repurchase program may be discontinued at any time at our discretion. COVID-19 Pandemic During the first quarter of 2020, the World Health Organization (WHO) declared the COVID-19 public health crisis a pandemic and recommended containment and mitigation measures worldwide. On March 13, 2020, U.S. President Trump announced a National Emergency relating to the pandemic. Government authorities worldwide have recommended or imposed various social distancing, quarantine and isolation measures on large portions of the population. While the impact of the COVID-19 pandemic to date on our business has been less than we had initially forecast, it is evolving rapidly and its future effects are difficult to predict with meaningful precision as the impact will depend on many factors beyond the Company's control and knowledge. As the pandemic continues, we are taking steps that are designed to respond proactively to evolving events and planning for COVID-19 uncertainties. We remain focused on continuing to serve patients, protecting the health and safety of our employees and the communities in which we live and work and supporting our patients in clinical trials. In early March 2020, we activated a task force designed to assess, mitigate and manage the risks related to COVID-19 to avoid or minimize business disruption, including safeguarding of our facilities, and to ensure the safety and sense of security for our staff. In early March 2020, Alexion closed all sites to non-essential employees and the Company has suspended all travel indefinitely. In early June 2020, Alexion gradually allowed re-entry to certain sites in some geographies, including Switzerland, Germany, Australia, and Japan in accordance with local government laws, regulations and restrictions and our own safety procedures and checklists. Office sites are being reconfigured to maintain physical distancing and we expect to adopt and implement additional precautions commensurate with any expansion of employees returning to worksites. We are focused on protecting patient and customer safety as well as providing an uninterrupted supply of medicines for patients around the world. We have taken proactive measures that are designed to mitigate the risk of potential supply interruptions, and we strive to maintain sufficient inventory levels to continue serving current and new patients receiving our medicines for approved indications as well as those participating in ongoing clinical trials. Additionally, while total revenues for the six months ended June 30, 2020 increased from the comparable period in the prior year, we expect that there may be fewer patient/doctor in-person interactions, fewer visits between our representatives and health care providers and the potential inability of our patients to access hospitals or infusion centers (voluntarily or involuntarily), which may result in a reduction in future sales. We are proactively engaging with healthcare professionals virtually and through enhanced digital channels in an effort to mitigate this risk, we have also recently noted that the new patient productivity and initiation queue has decreased since the COVID-19 outbreak. We have preclinical studies and clinical testing ongoing across the globe. We have a business continuity plan for our preclinical and clinical trials, including a pandemic response plan. A number of clinical trial sites are restricting site visits and imposing restrictions on the initiation of new trials and patient visits to protect both site staff and patients from possible COVID-19 exposure. Given the safety concerns around COVID-19 and the associated risk to maintaining normal clinical trial operations, we are making decisions study-by-study and country-by-country to minimize the risk to the patients and facilities, and there has been and may continue to be an impact on the timing of trials that are under active enrollment. We are actively implementing remote and local procedures per recent guidance of the U.S. Food and Drug Administration (FDA). Alexion Pharmaceuticals, Inc. (amounts in millions, except per share amounts) In May 2020, Alexion initiated a global Phase III study to investigate ULTOMIRIS(R) (ravulizumab-cwvz) in a subset of adult patients with COVID-19 who are hospitalized with severe pneumonia or acute respiratory distress syndrome (ARDS). The study is actively enrolling patients and is expected to enroll approximately 270 patients across the U.S., E.U. and Japan and is evaluating the impact of ULTOMIRIS on survival, duration of mechanical ventilation, and duration of hospital stay compared to best supportive care. This follows the FDA's rapid review and acceptance of Alexion's investigational new drug (IND) application for ULTOMIRIS for severe COVID-19. In recognition of the urgent needs of some patients and in order to streamline the emergency access process, Alexion has opened emergency Expanded Access Programs (EAP) in the U.S. and France for SOLIRIS in severe COVID-19 pneumonia. The extent to which the COVID-19 pandemic impacts our business, including our commercial results and clinical trials, will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the virus, the duration of the outbreak, governmental regulations and restrictions, travel restrictions and actions to contain the outbreak or treat its impact. We continue to be responsive to the ever-changing situation while remaining true to our core values. Products and Development Programs We focus our product development programs on life-transforming therapeutics for rare diseases for which current treatments are either non-existent or inadequate. We have developed or are developing innovative products for, among others, the following indications: Paroxysmal Nocturnal PNH is a chronic, progressive, debilitating and life-threatening ultra-rare Hemoglobinuria (PNH) blood disorder characterized by intravascular hemolysis (destruction of red blood cells) that is mediated by an uncontrolled activation of the complement system, a part of the immune system. PNH red blood cells are exquisitely vulnerable to activated complement, resulting in chronic intravascular hemolysis. Chronic intravascular hemolysis in patients with PNH may be associated with life-threatening thromboses, recurrent pain, kidney disease, disabling fatigue, impaired quality of life, severe anemia, pulmonary hypertension, shortness of breath and intermittent episodes of dark-colored urine (hemoglobinuria). A small sub-set of PNH patients on C5-inhibitor treatment may experience clinically evident extravascular hemolysis (PNH-EVH). Atypical Hemolytic aHUS is a severe and life-threatening, ultra-rare genetic disease Uremic Syndrome (aHUS) characterized by chronic uncontrolled complement activation and thrombotic microangiopathy (TMA), the formation of blood clots in small blood vessels throughout the body, causing a reduction in platelet count (thrombocytopenia) and life-threatening damage to the kidney, brain, heart and other vital organs.

         Generalized Myasthenia  Myasthenia Gravis (MG) is a debilitating, complement-mediated neuromuscular
              Gravis (gMG)       disease in which patients suffer profound muscle weakness throughout the body,
                                 resulting in slurred speech, impaired swallowing and choking, double vision,
                                 upper and lower extremity weakness, disabling fatigue, shortness of breath due
                                 to respiratory muscle weakness and episodes of respiratory failure.
             Hypophosphatasia (HPP)      HPP is an ultra-rare genetic and progressive metabolic disease in which
                                         patients experience devastating effects on multiple systems of the body,
                                         leading to debilitating or life-threatening complications. HPP is
                                         characterized by defective bone mineralization that can lead to deformity of
                                         bones and other skeletal abnormalities, as well as systemic complications
                                         such as profound muscle weakness, seizures, pain, and respiratory failure
                                         leading to premature death in infants.
         Lysosomal Acid Lipase   LAL-D is a serious, life-threatening ultra-rare disease associated with
            Deficiency (LAL      premature mortality and significant morbidity. LAL-D is a chronic disease in
          Deficiency or LAL-D)   which genetic mutations result in decreased activity of the LAL enzyme that
                                 leads to marked accumulation of lipids in vital organs, blood vessels, and
                                 other tissues, resulting in progressive and systemic organ damage including
                                 hepatic fibrosis, cirrhosis, liver failure, accelerated atherosclerosis,
                                 cardiovascular disease, and other devastating consequences.
            Neuromyelitis Optica     NMOSD is a severe and ultra-rare autoimmune disease of the central
         Spectrum Disorder (NMOSD)   nervous system (CNS) that primarily affects the optic nerves and the
                                     spinal cord. Each relapse of the disorder results in a stepwise
                                     accumulation of disability, including blindness and paralysis, and
                                     sometimes premature death. Complement activation due to anti-AQP4
                                     antibodies is one of the primary underlying causes of the destruction of
                                     vital cells in the central nervous system in patients with NMOSD.
              Wilson Disease       Wilson disease is a rare disorder, characterized by excess copper stored
                                   in various body tissues, that can lead to severe liver disease, including
                                   cirrhosis and acute liver failure, as well as debilitating neurological
                                   morbidities such as impaired movement, gait, speech, swallowing, and
                                   psychiatric disorders.

Warm Autoimmune WAIHA is a rare autoimmune disorder caused by pathogenic Immunoglobulin G Hemolytic Anemia (WAIHA) (IgG) antibodies that react with and cause the premature destruction of red blood cells at normal body temperature. The disease is often characterized by profound, and potentially life-threatening anemia and other acute complications, including severe and life-threatening hemolysis, severe weakness, enlarged spleen and/or liver, rapid heart rate (tachycardia), chest pain, heart failure and fainting (syncope).

                                 Alexion Pharmaceuticals, Inc.
                        (amounts in millions, except per share amounts)
          Amyotrophic Lateral    ALS is a progressive neurodegenerative disease of the CNS characterized by
            Sclerosis (ALS)      the loss of upper (brain) and lower (spinal cord) motor neurons. Ongoing
                                 loss of motor neurons and muscle strength leads to loss of independence,
                                 paralysis and death, typically due to respiratory insufficiency.
             C3 Glomerulopathy (C3G)     C3 glomerulopathy (C3G) is a rare, chronic disease affecting the kidneys
                                         in which the alternative pathway of the complement system is dysregulated
                                         due to genetic mutations or autoantibodies affecting the regulation of the
                                         alternative pathway. This lack of regulation results in the alternative
                                         pathway overactivation and the excessive deposition of C3 protein
                                         fragments in the glomeruli, a key filtration component of the kidney,
                                         often leading to serious kidney damage.
               COVID-19        Coronaviruses are a family of viruses that can cause illnesses such as the
                               common cold, severe acute respiratory syndrome (SARS) and Middle East
                               respiratory syndrome (MERS). In 2019, a new coronavirus was identified as
                               the cause of a disease outbreak that likely originated in China. The virus
                               is now known as the severe acute respiratory syndrome coronavirus 2
                               (SARS-CoV-2) and the disease it causes is called coronavirus disease 2019
                               (COVID-19). In March 2020, the World Health Organization (WHO) declared
                               the COVID-19 outbreak a pandemic. Signs and symptoms of COVID-19 may
                               appear two to 14 days after exposure and can include fever, cough,
                               shortness of breath or difficulty breathing. The severity of COVID-19
                               symptoms can range from very mild to very severe. Some people may have no
                               symptoms at all and spread the infection inadvertently. People who are
                               older or who have pre-existing diagnosed or undiagnosed medical
                               conditions, such as heart disease, lung disease and/or diabetes, or who
                               have a compromised or overreacting immune system may be at higher risk of
                               serious illness or complications and may require assisted ventilation as
                               well as urgent critical care.

        Marketed Products
        Our marketed products consist of the following:
                           Product                                Therapeutic Area                         Approved Indication
                                                                     Hematology                 Paroxysmal Nocturnal Hemoglobinuria (PNH)
           [[Image Removed: alxn-20200630_g2.jpg]]                                                                                           Atypical
                                                                                                          Hematology/Nephrology              Hemolytic
                                                                                                                                          Uremic Syndrome
                                                                     Hematology                 Paroxysmal Nocturnal Hemoglobinuria (PNH)
                                                                                                          Hematology/Nephrology              Hemolytic
                                                                                                                                          Uremic Syndrome
           [[Image Removed: alxn-20200630_g3.jpg]]                                                                                          Generalized
                                                                                                                Neurology                   Myasthenia
                                                                                                                                           Gravis (gMG)
                                                                                                                Neurology                 Optica Spectrum
           [[Image Removed: alxn-20200630_g4.jpg]]               Metabolic Disorders                     Hypophosphatasia (HPP)
           [[Image Removed: alxn-20200630_g5.jpg]]               Metabolic Disorders            Lysosomal Acid Lipase Deficiency (LAL-D)

In July 2020, Alexion acquired Portola Pharmaceuticals, Inc. (Portola). The acquisition adds ANDEXXA(R) (coagulation factor Xa (recombinant), inactivated-zhzo), marketed as ONDEXXYA(R) in Europe, to Alexion's marketed products. ANDEXXA(R)is the first and only approved Factor Xa inhibitor reversal agent, and has demonstrated transformative clinical value by rapidly reversing the anticoagulant effects of Factor Xa inhibitors rivaroxaban and apixaban in severe and uncontrolled bleeding.

Jul 30, 2020


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