On February 14, 2019 Alkermes plc (Nasdaq: ALKS) reported financial results for the year ended Dec. 31, 2018 and provided financial expectations for 2019 (Press release, Alkermes, FEB 14, 2019, View Source [SID1234533306]).
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"Our strong financial results in 2018 were driven by the growth of our proprietary commercial products and the continued strength and diversity of our royalty and manufacturing business," commented James Frates, Chief Financial Officer of Alkermes. "As we enter 2019, our financial expectations reflect the continued growth of our proprietary products, VIVITROL and ARISTADA, as well as important investments in the future growth drivers of the company including our advancing development pipeline and commercial capabilities to support our expanding presence in schizophrenia."
Quarter Ended Sept. 30, 2018 Financial Highlights
Total revenues for the quarter were $315.8 million. This compared to $275.4 million for the same period in the prior year, representing an increase of 15%. Proprietary product net sales for VIVITROL and ARISTADAi were $132.7 million for the quarter, reflecting a 28% increase compared to the same period in the prior year.
Net loss according to generally accepted accounting principles in the U.S. (GAAP) was $9.7 million for the quarter, or a basic and diluted GAAP net loss per share of $0.06. This compared to GAAP net loss of $9.8 million, or a basic and diluted GAAP net loss per share of $0.06, for the same period in the prior year.
Non-GAAP net income was $54.8 million for the quarter, or a non-GAAP basic earnings per share of $0.35 and non-GAAP diluted earnings per share of $0.34. This compared to non-GAAP net income of $50.3 million, or a non-GAAP basic earnings per share of $0.33 and non-GAAP diluted earnings per share of $0.31, for the same period in the prior year.
The launch of ARISTADA INITIOii continues to gain traction as payers and providers recognize the value proposition of this important new offering, particularly in combination with the ARISTADA two-month dose which provides the unique ability to fully dose a patient on day one for up to two monthsiii. With this offering, we are supporting continuity of care which is critically important for this patient population. We also continue to build the customized commercial capabilities necessary to navigate this complex treatment environment, including recent expansions of our field- and hospital-based teams," stated Jim Robinson, President and Chief Operating Officer of Alkermes. "VIVITROL results for 2018 were in-line with our expectations and we are encouraged by solid growth trends across many states. As we enter 2019, we remain committed to increasing access to VIVITROL and driving increased adoption in order to meet the needs of patients with opioid and alcohol dependence."
Quarter Ended Dec. 31, 2018 Financial Results
Revenues
Net sales of VIVITROL were $83.8 million, compared to $75.6 million for the same period in the prior year, representing an increase of approximately 11%.
Net sales of ARISTADA were $48.8 million, compared to $28.3 million for the same period in the prior year, representing an increase of approximately 72%.
Manufacturing and royalty revenues from RISPERDAL CONSTA, INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA were $81.4 million, compared to $78.2 million for the same period in the prior year.
Manufacturing and royalty revenues from AMPYRA/FAMPYRAiv were $38.8 million, compared to $38.1 million for the same period in the prior year, which was above our expectations given generic entry into the market in 2018.
Manufacturing and royalty revenues included $26.7 million from Alkermes’ share of proceeds from the sale of certain royalty streams by Zealand Pharma A/S, related to products using Alkermes’ technology, to Royalty Pharma.
Research and development revenues were $15.6 million, of which $14.4 million related to R&D reimbursement from the company’s collaboration with Biogen for diroximel fumarate, or BIIB098.
Costs and Expenses
Operating expenses were $315.7 million, compared to $269.5 million for the same period in the prior year, primarily reflecting increased investment in the commercialization of ARISTADA and VIVITROL.
Calendar Year 2018 Financial Highlights
Total revenues increased 21% to $1.09 billion in 2018, which included VIVITROL net sales of $302.6 million and ARISTADA net sales of $147.7 million. This compared to total revenues of $903.4 million for 2017, which included VIVITROL net sales of $269.3 million and ARISTADA net sales of $93.5 million. Please see the tables at the end of this press release for a detailed breakdown of the revenues from our key commercial products.
GAAP net loss was $139.3 million, or a basic and diluted GAAP loss per share of $0.90, for 2018. This compared to a GAAP net loss of $157.9 million, or a basic and diluted GAAP loss per share of $1.03, for 2017.
Non-GAAP net income was $97.8 million, or a non-GAAP basic earnings per share of $0.63 and non-GAAP diluted earnings per share of $0.61, for 2018. This compared to non-GAAP net income of $27.8 million, or a non-GAAP basic earnings per share of $0.18 and non-GAAP diluted earnings per share of $0.17, for 2017.
At Dec. 31, 2018, Alkermes recorded cash, cash equivalents and total investments of $620.0 million, compared to $590.7 million at Dec. 31, 2017. At Dec. 31, 2018, the company’s total debt outstanding was $279.3 million, compared to $281.4 million at Dec. 31, 2017.
"Alkermes is defined by our commitment to making medicines that help address critical public health challenges, using our scientific insights to develop medicines that are designed with the real-world needs of patients in mind. Following the positive results of the ALKS 3831 ENLIGHTEN-2 pivotal study and the increasing traction of ARISTADA in the market, we continue to establish our emerging leadership position in the treatment of schizophrenia," said Richard Pops, Chief Executive Officer of Alkermes. "2019 will be an important year for our late-stage pipeline highlighted by the planned submission of the
ALKS 3831 New Drug Application and the regulatory review of the recently submitted New Drug Application for diroximel fumarate for multiple sclerosis, with expected action in the fourth quarter. As development activities surrounding our ALKS 4230 immuno-oncology program gain momentum, we expect to have our first indications of ALKS 4230’s anti-tumor response activity this year, and we look forward to updating you on our progress."
Recent Events:
ALKS 3831
In November 2018, Alkermes announced positive topline results from ENLIGHTEN-2, a pivotal phase 3 study of ALKS 3831 compared to olanzapine in patients with stable schizophrenia. In the study, ALKS 3831 met the pre-specified co-primary endpoints, demonstrating both a lower mean percent weight gain from baseline at six months compared to the olanzapine group and a lower proportion of patients who gained 10% or more of their baseline body weight at six months compared to the olanzapine group.
Diroximel fumarate (BIIB098)
In December 2018, Alkermes and Biogen announced the submission of a New Drug Application (NDA) to the U.S. Food and Drug Administration (FDA) for diroximel fumarate, a novel oral fumarate in development for the treatment of relapsing forms of multiple sclerosis. If approved, Biogen intends to market diroximel fumarate under the brand name VUMERITYTM. This name has been conditionally accepted by the FDA and will be confirmed upon approval.
ALKS 4230
In November 2018, Alkermes presented initial clinical data from the ongoing dose-escalation stage of the phase 1 study for ALKS 4230 at the 2018 Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) Annual Meeting.
ALKS 5461
In January 2019, Alkermes received a Complete Response Letter from the FDA regarding the NDA for ALKS 5461 for the adjunctive treatment of major depressive disorder.
Financial Expectations for 2019
The following outlines the company’s financial expectations for 2019, which include planned investments in the company’s pipeline of development candidates and commercial infrastructure to support the company’s expanding presence in schizophrenia.
Revenues: The company expects total revenues to range from $1.14 billion to $1.19 billion, driven by expected growth of our proprietary products and an expected $150 million milestone payment from Biogen in the fourth quarter related to the potential FDA approval of diroximel fumarate. Included in this total revenue expectation, Alkermes expects VIVITROL net sales to range from $330 million to $350 million, and ARISTADA net sales to range from $210 million to $230 million.
Cost of Goods Manufactured and Sold: The company expects cost of goods manufactured and sold to range from $180 million to $190 million.
Research and Development (R&D) Expenses: The company expects R&D expenses to range from $450 million to $480 million.
Selling, General and Administrative (SG&A) Expenses: The company expects SG&A expenses to range from $590 million to $620 million.
Amortization of Intangible Assets: The company expects amortization of intangibles to be approximately $40 million.
Net Interest Expense: The company expects net interest expense to range from $5 million to $10 million.
Income Tax Expense: The company expects income tax expense to range from $10 million to $15 million.
GAAP Net Loss: The company expects GAAP net loss to range from $135 million to $165 million, or a basic and diluted loss per share of $0.87 to $1.06, based on a weighted average basic and diluted share count of approximately 156 million shares outstanding.
Non-GAAP Net Income: The company expects non-GAAP net income to range from $40 million to $70 million, or a non-GAAP basic earnings per share of $0.26 to $0.45, based on a weighted average basic share count of approximately 156 million shares outstanding and a non-GAAP diluted earnings per share of $0.25 to $0.43, based on a weighted average diluted share count of approximately 161 million shares outstanding.
Share-Based Compensation: The company expects share-based compensation of approximately $120 million.
Capital Expenditures: The company expects capital expenditures to range from $90 million to $100 million.
Conference Call
Alkermes will host a conference call and webcast presentation with accompanying slides at 8:30 a.m. ET (1:30 p.m. BST) on Thursday, Feb. 14, 2019, to discuss these financial results and provide an update on the company. The webcast may be accessed on the Investors section of Alkermes’ website at www.alkermes.com. The conference call may be accessed by dialing +1 877 407 2988 for U.S. callers and +1 201 389 0923 for international callers. In addition, a replay of the conference call will be available from 11:00 a.m. ET (4:00 p.m. BST) on Thursday, Feb. 14, 2019, through Thursday, Feb. 21, 2019, and may be accessed by visiting Alkermes’ website or by dialing +1 877 660 6853 for U.S. callers and +1 201 612 7415 for international callers. The replay conference ID is 13687392.