Alexion's new CFO promises to put cash to good use

After announcing the shock departure of Alexion's chief executive and chief financial officer yesterday, the company's chairman Leonard Bell quickly named David Brennan, ex-AstraZeneca chief and former Honeywell CFO David Anderson as interim appointments for the respective roles.

The departure of Alexion’s two most important executives have been linked to a previously-announced internal accounting investigation regarding revenue reporting for the company’s biggest seller, Soliris.

Soliris is on track to exceed sales of $3 billion this year, but the company has been under pressure to sustain its stellar year-on-year growth.

A former employee had alleged that fraudulent practices had been used to boost sales of the rare disease blockbuster drug, and the result of the internal investigation is still pending.

The company still claims that now ex-CEO David Hallal resigned for “personal reasons” and that CFO Vikas Sinha had “left to pursue other opportunities”, but the board is understood to have lost faith in their leadership.

On a hastily arranged call for analysts, Alexion founder and chairman Leonard Bell reiterated his belief in the company and its staff - and clearly hopes that investor doubts won’t drag down the company he established nearly 25 years ago.

He reiterated that the firm’s own audit and finance committee has not at this point identified any facts that would require a restatement of previous results.

"With strong new leaders in place, we will continue to be relentlessly focused on serving patients and families with devastating and rare diseases," said Bell.

The news of the departures saw the company’s shares fall rapidly, adding up to a 31% decline this year, although a rally helped it regain 11%.

The company reported higher-than-expected revenue and profit in Q3, and raised its revenue outlook for 2016, predicting it would reach the upper end of its earlier $3.05 billion to $3.1 billion guidance.

Nevertheless, the company failed to confirm these earnings figures when it did not submit its 10Q with financial regulator the SEC.

Capital allocation

Before the reason for the delay emerged, some had speculated that Alexion might be vulnerable to a takeover.

However new interim CFO David Anderson indicated that he could be looking to spend money – which could include a major acquisition.

He said he was “mindful of executing on our capital allocation strategy and appreciate the importance of that.” The company had approximately $1.2 billion in cash and cash equivalents on its balance sheet at the end of Q2, and could put this to use on M&A, as well as financing its pipeline or a share repurchase programme.

However the first priority for the company will be to steady the ship, including the filing of the 10-Q, now expected in January, with full year results to follow in February.

Interim chief executive David Brennan said he would act as a full-time CEO, and also assist in the process of selecting a new full time leader for the company.