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Alexion (ALXN) Admits Senior Management Pressured Staff to Boost Soliris Sales

1/5/2017 6:39:08 AM

Alexion Admits Senior Management Pressured Staff to Boost Soliris Sales January 5, 2017
By Alex Keown, Breaking News Staff

NEW HAVEN, Conn. – Following an internal investigation into sales practices related to its blood-disorder drug Soliris, Alexion Pharmaceuticals (ALXN) said unnamed members of its senior management used inappropriate business tactics to increase revenue from customers.

In a filing with the U.S. Securities and Exchange Commission, Alexion said some revenues pulled in 2015 and 2016 were “realized by employee actions that involved inappropriate business conduct, including violations of Company policies and procedures.” The 10-Q was initially expected to be filed in October 2016, but the investigation delayed the filing.

In its findings, the Audit and Finance Committee “did not identify any instances of improper revenue recognition associated with pull-in sales, instances where Soliris orders were not placed by customers for patients in order to fulfill an actual need, or instances where Soliris was sold to build stock of unwanted product.”

The committee focused on “pull-in sales” and found they accounted for a very small amount of total revenue, less than 1 percent. During the fourth quarter of 2015, sales of Soliris were between $10 and $17 million.
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The findings followed an investigation by the board of directors into sales of the drug that may have sparked the resignation of two top executives, Chief Executive Officer David Hallal and Chief Financial Officer Vikas Sinha. Neither man was accused of any improprieties by the investigating committee.

Although the company said senior management used inappropriate conduct, it did not name any offenders. But, the company said it was “undertaking a series of remedial actions including, but not limited to, expanded training programs and implementing new processes related to financial reporting, controls and compliance.”

“We have already initiated remedial actions to maintain a strong internal control environment and are committed to setting a tone at the top that is fully aligned with our ethical standards and values. Importantly, the Alexion team is as passionate as ever about fulfilling our mission of serving patients with rare and devastating diseases and the outlook for Alexion is strong,” David Brennan, Alexion’s interim CEO said in a statement.

With an annual price tag of about $440,000 for patients, Soliris is known as the world’s most expensive drug. It is used to treat paroxysmal nocturnal hemoglobinuria, a rare blood disorder that affects about one or two people out of every million. Eculizumab received orphan drug designation (ODD) in 2014 from the U.S. Food and Drug Administration for the prevention of DGF in renal transplant patients, and from the European Medicines Agency for the prevention of DGF after solid organ transplantation. Soliris (eculizumab) is not approved in any country for the treatment or prevention of DGF. Currently, there are no approved therapies to prevent or treat DGF after kidney transplantation.

In December, Alexion reported Soliris Soliris failed to meet endpoints in a trial that would have expanded its use. The drug was being tested for the prevention of delayed graft function (DGF) after kidney transplantation in adult recipients of a deceased donor kidney.

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