Here are six things to know.
1. New Haven, Conn.-based Alexion sells drugs for rare diseases. Alexion said the investigation focused primarily on “pull-in” sales of Soliris, a drug used to treat atypical hemolytic uremic syndrome and paroxysmal nocturnal hemoglobinuria. “Pull-in” sales are transactions “that increase revenue recognized in an earlier fiscal quarter than the one in which a sale otherwise would have occurred,” according to the company.
2. The investigation looked into allegations of improper sales practices made by a former Alexion employee, reports WSJ.
3. The investigation finding was reported in a securities filing of the company’s third-quarter financial results. It came a month after Alexion CEO David Hallal and CFO Vikas Sinha left the company, according to the report. David Brennan now serves as interim CEO, while David Anderson has taken over as CFO.
4. The pharmaceutical company affirmed it didn’t need to restate any earnings, according to the report. Alexion also said “pull-in” sales, where a customer, as a result of encouragement by an employee, might place an order for a patient earlier than the customer might otherwise place the order, “are not inherently problematic or impermissible when executed in accordance with company policies and procedures, and in accordance with U.S. Generally Accepted Accounting Principles.”
5. Additionally, the company said, the investigation did not find instances of improper revenue recognition associated with “pull-in” sales. — instances where Soliris orders were not placed by customers for patients to fulfill an actual need, or instances where Soliris was sold to build stock of unwanted product. It did, however, find that certain revenue pulled in from the first quarter of 2016 into the fourth quarter of 2015 “was realized by employee actions that involved inappropriate business conduct, including violations of company policies and procedures,” the company said. Alexion said the estimated total “pull-in” sales for the fourth quarter of 2015 represented less than 1 percent of total revenue for 2015.
6. In light of the investigation, Mr. Brennan said the company has 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.” These actions include expanded training programs and implementing new processes related to financial reporting, controls and compliance.
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