Note Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates and projections about our industry, 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 Soliris® (eculizumab), for its approved indications and any future indications, timing and effect of sales of Soliris in various markets worldwide, level of future Soliris sales and collections, costs, expenses and capital requirements, cash outflows, cash from operations, impact of interest rate changes on our outstanding obligations, status of reimbursement, price approval and funding processes in various countries worldwide, progress in developing commercial infrastructure and interest about Soliris in the patient, physician and payor communities, the safety and efficacy of Soliris and our product candidates, estimates of the potential markets and estimated commercialization dates for Soliris around the world, sales and marketing plans, any changes in the current or anticipated market demand or medical need for Soliris, potential clinical trials of our product candidates for new indications, status of our ongoing clinical trials, commencement dates for new clinical trials, evaluation of our clinical trial results by regulatory agencies in other countries, prospects for regulatory approval in other countries, the need for additional research and testing, the uncertainties involved in the drug development process and manufacturing, our future research and development activities, assessment of competitors and potential competitors, estimates of the capacity and ability of Alexion and third parties to provide manufacturing, product finishing, vial filling, packaging and other services to support Soliris and our product candidates, assessment of our ability to satisfy customer demand for Soliris if the inventory held by our finished vial contractor is not released for sale, costs relating to the validation process at the Rhode Island facility, timing for submission of sBLA for commercial production of eculizumab at the Rhode Island facility, potential costs resulting from product liability or other third party claims, the sufficiency of our existing capital resources and projected cash needs, assessment of impact of recent accounting pronouncements, potential for release of tax valuation allowances, and the effect of shifting currency exchange rates. Words such as "anticipates," "expects," "intends," "plans," "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. These 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 forward-looking statements. Such risks and uncertainties include, but are not limited to, those 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 other reports or documents we file from time to time with the Securities and Exchange Commission.

Business

Overview

We are a biopharmaceutical company engaged in the discovery, development and commercialization of biologic therapeutic products aimed at treating patients with severe and life-threatening disease states, including hematologic, kidney and neurologic diseases, transplant rejection, cancer and autoimmune disorders. Our marketed product Soliris® (eculizumab) is the first and only therapy approved for the treatment of patients with paroxysmal nocturnal hemoglobinuria, or PNH.

Soliris is designed to inhibit a specific aspect of the complement component of the immune system and thereby treat inflammation associated with chronic hematologic, kidney and neurological disorders, transplant rejection, and autoimmune disorders. Soliris is a humanized monoclonal antibody that generally blocks complement activity for one to two weeks after a single dose at the doses currently prescribed. The initial indication for which we received approval for Soliris is PNH. PNH is a rare, debilitating and life-threatening, acquired genetic deficiency blood disorder defined by the destruction of red blood cells, or hemolysis. The chronic 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).

In March 2007, the Food and Drug Administration, or FDA, granted marketing approval for Soliris. In the United States, Soliris is indicated for the treatment of all patients with PNH to reduce hemolysis. We began commercial sale of Soliris in the United States during April 2007.

In June 2007, the European Commission, or E.C., approved the use of Soliris for patients with PNH in the European Union, which also serves as the basis for approval in Iceland and Norway. Subsequently, we engaged with appropriate authorities on the operational, reimbursement, price approval and funding processes that are separately required in each country and have initiated commercialization in those countries where this process was completed.

We were granted marketing approval in Canada in January 2009 and Australia in February 2009 for the use of Soliris for patients with PNH.

In January 2009, the Ministry of Health, Labour and Welfare of Japan designated Soliris as an orphan drug. Among other things, this designation will provide us, if Soliris is approved for marketing and sale in Japan, with 10 years of market exclusivity for Soliris as a treatment for patients with PNH in Japan, subject to limited exceptions. In March 2009, we submitted a New Drug Application for Soliris as a treatment for PNH patients to Japan's Pharmaceuticals and Medical Devices Agency.

In April 2009 and August 2009, the FDA and E.C. granted Soliris Orphan Drug Designation for the treatment of patients with atypical Hemolytic Uremic Syndrome, or aHUS, an ultra-rare, inherited, and life-threatening complement-inhibitor deficiency disease that often progresses to end-stage kidney disease or failure. Alexion is currently enrolling patients in four clinical studies of Soliris as an investigational treatment for adolescent and adult patients with aHUS.

Clinical

We are focusing our research and development efforts on the use of eculizumab as a treatment for patients with other rare and severe complement-mediated conditions, including kidney diseases, transplant rejection and other severe chronic disorders. We are particularly focusing our development efforts in two lead development areas: nephrology and transplant.

Nephrology

We are currently engaged in four clinical studies to investigate the use of eculizumab as a treatment for patients with aHUS, a disease in which the lack of naturally occurring complement inhibitors can cause life-threatening kidney damage. We are also aware that an investigator-initiated trial of eculizumab is ongoing in patients with dense deposit disease, another ultra-rare and severe kidney disease that can evolve into chronic renal failure, requiring dialysis and renal transplantation.

Transplant

We are aware that independent investigators are evaluating eculizumab in kidney transplant patients at elevated risk of rejection and we are considering initiating controlled clinical trials. We are further considering expansion of development efforts to include investigation of eculizumab as a treatment for patients undergoing transplantation of other organs.

Other Eculizumab Development Programs

The FDA authorized our Investigational New Drug Application, or IND, for studying the safety and efficacy of eculizumab in treating myasthenia gravis, a rare autoimmune syndrome characterized by the failure of

neuromuscular transmission, and we are currently enrolling patients in this trial. We are also aware that independent investigators are examining the role of eculizumab for the treatment of two additional neurological disorders:
multifocal motor neuropathy and neuromyelitis optica. We are also considering clinical development of eculizumab for cold agglutinin disease, an ultra-rare auto-immune hemolytic anemia.

Oncology

The FDA authorized our IND to evaluate the activity of an antibody to the immune regulator CD200 in patients with chronic lymphocytic leukemia, or CLL, an incurable chronic cancer that results from expansion of B-lymphocytes. We continue dosing of CLL patients with anti-CD200, which commenced in the second quarter of 2008, and have begun to screen and enroll patients with multiple myeloma as we expand our anti-CD200 clinical program.

Manufacturing

We currently rely on a single third-party contract manufacturer for commercial quantities of Soliris. We obtain drug product to meet our requirements for clinical studies using both internal and third-party contract manufacturing capabilities. For both clinical and commercial requirements, we have contracted and expect to continue contracting for product finishing, vial filling and packaging through third parties.

In July 2006, we acquired a manufacturing plant in Smithfield, Rhode Island for the future commercial production of Soliris and development and manufacturing of future products. We submitted a supplemental BLA during the third quarter of 2009 for commercial production of eculizumab at this facility. The EMEA and FDA have commenced their inspections of our Rhode Island manufacturing facility. We also commenced the use of our Rhode Island facility for the production and purification of certain of our product candidates for clinical studies.

Our most significant agreement with a third party manufacturer is the large-scale product supply agreement with Lonza Sales AG, or Lonza, dated December 18, 2002, which has been amended from time to time. This agreement, the Lonza Agreement, relates to the manufacture of eculizumab. An amendment to the Lonza Agreement, dated June 8, 2007, provides for additional production and minimum quantity purchase commitments of Soliris of $30,000 to $35,000 from 2009 through 2013. Such commitments may be cancelled only in limited circumstances. If we terminate the Lonza Agreement without cause, we will be required to pay for product scheduled for manufacture under our arrangement. Under an existing arrangement with Lonza, we expect to pay Lonza a royalty on sales of Soliris manufactured at our Rhode Island facility.

Two third party contractors provide vialing services for Soliris. In July 2009, we became aware that one of the vialers is undergoing regulatory review by the EMEA to address deficiencies at its facility. We do not believe that this situation, even if resolved adversely, will result in a constraint on our ability to satisfy demand for Soliris supply. We believe we hold sufficient Soliris inventory to satisfy patient needs for commercial and clinical Soliris for the foreseeable future. Further, our second vialer continues to produce Soliris on a routine basis, and we believe they have the capacity to meet our current and future commercial and clinical needs.

If the contractor under review is unable to release certain lots of product to us for sale, it may be necessary to dispose of the inventory. The contractor has informed us that it is actively developing a plan to resume manufacturing, release and shipment of product. During the three months ended September 30, 2009, approximately $8,100 of inventory vialed by the contract manufacturer was released for sale, however, approximately $2,900 remains at risk of disposal or expiry if the situation is resolved adversely. We continue to evaluate the situation, and at this time we can not estimate whether and to what extent a loss on this inventory is probable.

Critical Accounting Policies and the Use of Estimates

The significant accounting policies and basis of preparation of our consolidated financial statements are described in Note 1, "Business Overview and Summary of Significant Accounting Policies" of our financial statements included in our Form 10-K for the year ended December 31, 2008. Under accounting principles generally

accepted in the United States, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and disclosure of contingent assets and liabilities in our financial statements. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ from those estimates.

We believe the judgments, estimates and assumptions associated with the following critical accounting policies have the greatest potential impact on our consolidated financial statements, so we consider these to be our critical accounting policies:

• Revenue recognition

• Royalties

• Inventories

• Research and development expenses

• Stock-based compensation

• Long-lived assets

• Income taxes

For a complete discussion of these critical accounting policies, refer to "Critical Accounting Policies and Use of Estimates" within "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" included within our Form 10-K for the year ended December 31, 2008. We have reviewed our critical accounting policies as disclosed in our Form 10-K, and we have not noted any material changes.

Results of Operations

Revenues

Net product sales

The following table summarizes product revenue for the three and nine months ended September 30, 2009 and 2008:

Three months ended Increase / Nine months ended Increase / September 30, (Decrease) September 30, (Decrease) 2009 2008 $ Change 2009 2008 $ Change Net product sales $ 102,628 $ 76,500 $ 26,128 $ 276,151 $ 181,605 $ 94,546

The increase in revenue for the three and nine months ended September 30, 2009, as compared to the same period in 2008, was due to an increased number of patients treated with Soliris. The increase in treated patients was due to additional patients and physicians requesting Soliris therapy, as well as reimbursement and price approvals in additional countries.

Cost of sales

Cost of sales was $11,895 and $8,948, for the three months ended September 30, 2009 and 2008, respectively and $32,167 and $21,554, for the nine months ended September 30, 2009 and 2008, respectively. Cost of sales as a percentage of net product revenue was 11.6% and 11.7% for the three months ended September 30, 2009 and 2008 and 11.6% and 11.9% for the nine months ended September 30, 2009 and 2008, respectively. Cost of sales includes manufacturing costs, as well as royalty expenses associated with sales of Soliris.

On a periodic basis and based on events such as the outcome of litigation, we may reassess the estimates of royalties owed to certain third parties. Changes in these estimates could have a material impact on our cost of sales in future periods.

Research and Development

Our research and development expense includes personnel, facility and external costs associated with the research and development of our product candidates, as well as product development costs.

We group our research and development expenses into two major categories:
external direct expenses and all other R&D expenses.

External direct expenses are comprised of costs paid to outside parties for clinical development, product development and discovery research. Clinical development costs are comprised of costs to conduct and manage clinical trials related to eculizumab and other product candidates. Product development costs are those incurred in performing duties related to pre- and post-approval manufacturing development and regulatory functions. Discovery research costs are incurred in conducting laboratory studies and performing preclinical research for other uses of eculizumab and other product candidates. Clinical development costs have been accumulated and allocated to each of our programs, while product development and discovery research costs have not been allocated.

All other R&D expenses consist of costs to compensate personnel, to maintain our facility, equipment and overhead and similar costs of our research and development efforts. These costs relate to efforts on our clinical and preclinical products as well as our discovery research efforts. These costs have not been allocated directly to each program.

The following table provides information regarding research and development expenses:

                                         Three months ended                       Nine months ended
                                           September 30,            $               September 30,           $
                                          2009         2008      Variance          2009        2008     Variance
Clinical development                   $     6,246   $  3,982   $    2,264      $   16,676   $ 15,614   $   1,062
Product development                          2,667      1,668          999           7,316      5,347       1,969
Discovery research                             497        359          138           1,233        923         310

Total external direct expenses               9,410      6,009        3,401          25,225     21,884       3,341

Payroll and benefits                         9,807      6,844        2,963          27,051     19,761       7,290
Operating and occupancy                      1,176      1,048          128           3,682      3,039         643
Depreciation and amortization                  930        973          (43 )         2,742      2,622         120

Total other R&D expenses                    11,913      8,865        3,048          33,475     25,422       8,053

Research and development expense       $    21,323   $ 14,874   $    6,449      $   58,700   $ 47,306   $  11,394

For the three months ended September 30, 2009, the increase in research and development expense of $6,449, as compared to the same period in the prior year, was primarily related to the following:

• Increase of $2,264 in external clinical development expenses related primarily to an increase in spending for the study of eculizumab for non-PNH indications (see table below).

• Increase of $2,963 in research and development payroll and benefit expense related primarily to manufacturing and product development activities at our production facility in Smithfield RI and global expansion of staff supporting our expanding number of clinical programs.

For the nine months ended September 30, 2009, the increase in research and development expense of $11,394, as compared to the same period in the prior year, was primarily related to the following:

• Increase of $7,290 in research and development payroll and benefit expense related primarily to manufacturing and product development activities at our production facility in Smithfield RI and global expansion of staff supporting our expanding number of clinical programs.

• Increase of $1,969 in external product development expenses related primarily to increases in manufacturing development activities at our production facility in Smithfield RI.

• Increase of $1,062 in external clinical development expenses related primarily to an increase in spending for the study of eculizumab for non-PNH indications (see table below).

The following table summarizes external direct expenses related to our clinical development programs:

                                        Three months ended       Nine months ended
                                          September 30,            September 30,
                                         2009         2008        2009        2008
       External direct expenses
       Eculizumab: PNH program        $    2,197    $  3,007   $    6,193   $ 11,309
       Eculizumab: non-PNH programs        3,665         200        7,536      1,165
       CD200 program                         292         146          876        495
       Unallocated                            92         629        2,071      2,645

                                      $    6,246    $  3,982   $   16,676   $ 15,614

At this time, due to the risks inherent in the clinical trial process and given the early stages of our various product development programs, we are unable to estimate with any certainty the costs we will incur in the continued development of our programs for potential commercialization. While we are focused on advancing each of our product development programs, our future R&D expenses will depend on the determinations we make as to the scientific and clinical success of each program, as well as ongoing assessments as to program's commercial potential. As such, we are unable to predict how we will allocate available resources among our product development programs in the future.

The successful development of our drug candidates is uncertain and subject to a number of risks. A large portion of our annual expenses relates to commercialization of Soliris and general and administrative costs. We may not have or be able to raise the necessary capital to support both the commercialization of Soliris as well as each of our development programs through and until commercialization. Further, we cannot guarantee that results of clinical trials will be favorable or sufficient to support regulatory approvals for our other programs. We could decide to abandon development or be required to spend considerable resources not otherwise contemplated. For additional discussion regarding the risks and uncertainties regarding our development programs, please refer to the Risk Factors in this Form 10-Q, including the risk factors set forth under the headings, "If we fail to obtain the capital necessary to fund our operations, we will be unable to continue the commercialization of Soliris or continue to complete our product development", "None of our product candidates except for Soliris has received regulatory approvals", "Completion of preclinical studies or clinical trials does not guarantee advancement to the next phase of development" and "There are many reasons why drug testing could be delayed or terminated".

Selling, General and Administrative Expenses

Our selling, general and administrative expense includes commercial and administrative personnel, corporate facility and external costs required to support the marketing and sales of our commercialized products. These selling, general and administrative costs include: corporate facility operating expenses and depreciation; marketing and sales operations in support of Soliris; human resources; finance, legal, information technology and support personnel expenses; and other corporate costs such as telecommunications, insurance, audit and legal expenses.

The table below provides information regarding selling, general and administrative expenses:

                                         Three months ended                    Nine months ended
                                           September 30,            $            September 30,           $
                                          2009         2008      Variance       2009        2008     Variance
Selling, general and administrative
expense                                $    41,523   $ 32,064   $    9,459   $  120,880   $ 94,754   $  26,126

For the three months ended September 30, 2009, the increase of $9,459 in selling, general and administrative expense, as compared to the same period in the prior year, was primarily related to the following:

• Increase in salary, benefits and other labor expenses of $5,590. The increases in these costs were a result of increased headcount related to commercial development activities, including increases in payroll and benefits costs related to our global commercial teams of $5,051. This increase was also due to increases in payroll and benefits of $539 within other operational groups to support our worldwide growth.

• Increase in external selling, general and administrative expenses of $3,869 was due primarily to increases in marketing and consulting services of $1,632, travel costs of $427, occupancy and depreciation expenses of $877 relating to new and expanded office space in Europe, Japan, Canada and Australia and $242 for our patient assistance program.

For the nine months ended September 30, 2009, the increase of $26,126 in selling, general and administrative expense, as compared to the same period in the prior year, was primarily related to the following:

• Increase in salary, benefits and other labor expenses of $14,782. The increases in these costs were a result of increased headcount related to commercial development activities, including increases in payroll and benefits costs related to our global commercial teams of $10,683. This increase was also due to increases in payroll and benefits of $4,099 within other operational groups to support our worldwide growth.

• Increase in external selling, general and administrative expenses of $11,344 was due primarily to increases in marketing and consulting services of $4,702, travel costs of $1,753 and occupancy and depreciation expenses of $3,061 relating to new and expanded office space in Europe, Japan, Canada and Australia.

Other Income and Expense

We recognize investment income primarily from our portfolio of cash equivalents and short-term marketable securities. Investment income was $125 and $690, for . . .