On April 26, 2023 Alkermes plc (Nasdaq: ALKS) reported its financial results for the first quarter of 2023 (Press release, Alkermes, APR 26, 2023, View Source [SID1234630509]).
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"During the first quarter we made continued progress across our portfolio, including strong commercial execution driving growth for our proprietary products – LYBALVI, VIVITROL and ARISTADA – and important progress in the development of ALKS 2680, our orexin 2 receptor agonist, which is now poised to enter a phase 1b proof-of-concept study in patients with narcolepsy and idiopathic hypersomnia, with data expected later this year," said Richard Pops, Chief Executive Officer of Alkermes. "In addition, we made significant operational and strategic advances in the planned separation of our oncology business, which remains on track for completion in the second half of this year. We remain sharply focused on executing our strategic priorities to create significant value for shareholders."
"Our strong first quarter financial results were driven by 25% growth year-over-year in proprietary product net sales and continued focus on disciplined management of our cost structure," commented Iain Brown, Chief Financial Officer of Alkermes. "Today, we are reiterating our financial expectations for 2023 and believe we are in a strong financial position to continue to execute our strategic priorities, including further driving the launch of LYBALVI, advancing our orexin 2 receptor agonist clinical development program and completing the planned separation of the oncology business later this year."
Quarter Ended March 31, 2023 Financial Results
Revenues
– Total revenues for the quarter were $287.6 million, compared to $278.5 million for the same period in the prior year.
– Net sales of proprietary products for the quarter increased approximately 25% to $214.7 million, compared to $171.3 million for the same period in the prior year.
Net sales of VIVITROL were $96.7 million, compared to $84.9 million for the same period in the prior year, representing an increase of approximately 14%.
Net sales of ARISTADAi were $80.1 million, compared to $72.5 million for the same period in the prior year, representing an increase of approximately 10%.
Net sales of LYBALVI were $38.0 million, compared to $13.9 million for the same period in the prior year, representing an increase of approximately 173%.
– Manufacturing and royalty revenues for the quarter were $72.9 million, compared to $105.2 million for the same period in the prior year.
Royalty revenues from INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and INVEGA HAFYERA/BYANNLI (the long-acting INVEGA products) for the quarter were $13.6 million, compared to $37.1 million for the same period in the prior year. This decrease was driven primarily by Janssen Pharmaceutica N.V.’s (Janssen), a subsidiary of Johnson & Johnson, partial termination of the license agreement related to sales of the long-acting INVEGA products in the United States (U.S.), effective Feb. 2, 2022.
Manufacturing and royalty revenues from VUMERITY for the quarter were $28.9 million, compared to $30.6 million for the same period in the prior year.
Costs and Expenses
– Total operating expenses for the quarter were $335.1 million, compared to $305.1 million for the same period in the prior year. The increase was driven primarily by investment in the launch of LYBALVI and expenses associated with the planned separation of the oncology business.
Cost of Goods Manufactured and Sold was $58.2 million, compared to $55.2 million for the same period in the prior year.
Research and Development (R&D) expenses were $93.6 million, compared to $96.0 million for the same period in the prior year.
Selling, General and Administrative (SG&A) expenses were $174.5 million, compared to $145.1 million for the same period in the prior year, primarily reflecting increased investment to support the launch of LYBALVI.
Profitability
– Net loss according to generally accepted accounting principles in the U.S. (GAAP) was $41.8 million for the quarter, or a basic and diluted GAAP loss per share of $0.25. This compared to GAAP net loss of $35.9 million, or a basic and diluted GAAP loss per share of $0.22, for the same period in the prior year.
– Non-GAAP net income was $2.4 million for the quarter, or a non-GAAP basic and diluted earnings per share of $0.01. This compared to non-GAAP net income of $19.6 million, or a non-GAAP basic and diluted earnings per share of $0.12, for the same period in the prior year.
Balance Sheet
– At March 31, 2023, the company recorded cash, cash equivalents and total investments of $692.5 million, compared to $740.1 million at Dec. 31, 2022. The company’s total debt outstanding as of March 31, 2023 was $292.6 million.
Financial Expectations for 2023
Alkermes reiterates its financial expectations for 2023, as set forth in its press release dated Feb. 16, 2023.
Separation of Oncology Business
Alkermes continues to make meaningful progress on the previously announced planned separation of the company’s oncology business. The separation would allow Alkermes to maintain its focus on researching, developing and commercializing therapies for people living with complex neurological conditions and is expected to accelerate and enhance the profitability of the remaining neuroscience business.
– As previously announced, in April, Alkermes submitted a confidential draft Form 10 registration statement to the United States Securities and Exchange Commission (SEC) in connection with the planned separation of its oncology business into an independent, publicly-traded company. Upon completion of the planned separation, the new company would be known as Mural Oncology plc.
– Alkermes continues to expect to complete the separation in the second half of 2023, subject to various customary conditions, including final approval from Alkermes’ board of directors.
Recent Events
Corporate
– In April 2023, the company received a second favorable interim award (the Second Interim Award) from the arbitral tribunal (the Tribunal) in the company’s arbitration proceedings with Janssen in respect of Janssen’s partial termination in the U.S. of two license agreements with the company. The Second Interim Award, which builds on the first interim award that was issued in December 2022, provides that back royalties related to 2022 of approximately $194 million (inclusive of interest) are due to the company under the two agreements, and that a separate Know-How Royalty (as defined in the applicable license agreement) term applies for each of INVEGA SUSTENNA, INVEGA TRINZA and INVEGA HAFYERA.
Neuroscience
– In February 2023, the company initiated a multiple ascending dose cohort in the phase 1 study of its ALKS 2680 orexin 2 receptor agonist, which is in clinical development for the treatment of narcolepsy and other hypersomnia conditions.
– In March 2023, the company announced the publication of results from its phase 3 ENLIGHTEN-Early study of LYBALVI in the peer-reviewed publication, the Journal of Clinical Psychiatry. ENLIGHTEN-Early evaluated the effect of LYBALVI compared to olanzapine on body weight in young adult patients (ages 16 to 39; mean age: 26 years) with schizophrenia, schizophreniform disorder or bipolar I disorder who were early in their illness.
Conference Call
Alkermes will host a conference call and webcast presentation with accompanying slides at 8:00 a.m. ET (1:00 p.m. BST) on Wednesday, April 26, 2023, 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 may be accessed by visiting Alkermes’ website.