On October 23, 2018 Alkermes plc (Nasdaq: ALKS) reported financial results for the third quarter of 2018 (Press release, Alkermes, OCT 23, 2018, View Source [SID1234530060]).
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"Our solid results in the quarter were in-line with expectations, driven by the growth of our proprietary commercial products, the continued strength of our royalty and manufacturing business, and the important investments we are making in our late-stage pipeline and commercial organization," commented James Frates, Chief Financial Officer of Alkermes. "Our diverse business is financially strong and we are well positioned to execute on our strategy to drive value and long-term growth. Based on our outlook for the remainder of the year, today we are raising our financial expectations for 2018, primarily driven by upside from AMPYRA revenues."
Quarter Ended Sept. 30, 2018 Financial Highlights
Total revenues for the quarter were $248.7 million. This compared to $217.4 million for the same period in the prior year, representing an increase of 14%. Proprietary product net sales for VIVITROL and ARISTADA were $116.0 million for the quarter, reflecting a 24% increase compared to the same period in the prior year.
Net loss according to generally accepted accounting principles in the U.S. (GAAP) was $34.4 million for the quarter, or a basic and diluted GAAP net loss per share of $0.22. This compared to GAAP net loss of $36.3 million, or a basic and diluted GAAP net loss per share of $0.24, for the same period in the prior year.
Non-GAAP net income was $11.6 million for the quarter, or a non-GAAP basic and diluted earnings per share of $0.07. This compared to non-GAAP net income of $4.2 million, or a non-GAAP basic and diluted earnings per share of $0.03, for the same period in the prior year.
"The third quarter was highlighted by the launch of ARISTADA INITIO1, the newest addition to the ARISTADA product family. This new offering is resonating with healthcare providers and the early trends are encouraging. ARISTADA INITIO further differentiates ARISTADA in the market and provides an opportunity to address unmet patient need," stated Jim Robinson, President and Chief Operating Officer of Alkermes. "We are also making important strides with VIVITROL as the product continues to grow and as policymakers continue to activate in their response to the opioid crisis. We look forward to providing updates on our progress."
Quarter Ended Sept. 30, 2018 Financial Results
Revenues
Net sales of VIVITROL were $79.9 million, compared to $69.2 million for the same period in the prior year, representing an increase of approximately 15%.
Net sales of ARISTADA were $36.1 million, compared to $24.5 million for the same period in the prior year, representing an increase of approximately 48%.
Manufacturing and royalty revenues from RISPERDAL CONSTA, INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA were $77.2 million, compared to $79.4 million for the same period in the prior year, reflecting the timing of RISPERDAL CONSTA manufacturing shipments.
Manufacturing and royalty revenues from AMPYRA/FAMPYRA2 were $20.3 million, compared to $24.5 million for the same period in the prior year.
Research and development revenues were $16.3 million, of which $15.7 million related to the collaboration with Biogen for BIIB098, or diroximel fumarate.
Costs and Expenses
Operating expenses were $285.9 million, compared to $255.7 million for the same period in the prior year, primarily reflecting increased investment in the commercialization of VIVITROL and ARISTADA.
"Against the backdrop of the highly-anticipated upcoming regulatory interactions for ALKS 5461 for the adjunctive treatment of major depressive disorder and the ALKS 3831 ENLIGHTEN-2 pivotal study data in schizophrenia, we continue to make important progress across our other pipeline assets. BIIB098 for multiple sclerosis is on track for NDA submission by year-end and ALKS 4230, our immuno-oncology program, is gaining momentum, highlighted by the recent initiation of combination therapy evaluation," said Richard Pops, Chief Executive Officer of Alkermes. "Our results this quarter demonstrate the strong and resilient company we have carefully built over the years, with important medicines driving an expected topline in excess of $1 billion and a diverse development portfolio of late-stage product candidates, each with the potential to impact the practice of medicine and change the growth trajectory of the company. As we head into the fourth quarter, the business is well positioned for growth and the opportunities ahead."
Recent Events:
ARISTADA
Completed enrollment of six-month phase 3b study evaluating ARISTADA INITIO plus the ARISTADA two-month dose and INVEGA SUSTENNA in patients experiencing an acute exacerbation of schizophrenia
ALKS 4230
Initiated clinical evaluation of ALKS 4230 in combination with PD-1 inhibitor pembrolizumab
Submitted new clinical protocol for subcutaneous dosing phase 1 study to the ALKS 4230 Investigational New Drug (IND) application
Upcoming Milestones:
The following outlines the company’s expected upcoming milestones.
ALKS 5461
Joint meeting of the Psychopharmacologic Drugs Advisory Committee and the Drug Safety and Risk Management Advisory Committee to review the ALKS 5461 New Drug Application (NDA) on Nov. 1, 2018
Prescription Drug User Fee Act (PDUFA) target action date on Jan. 31, 2019
ALKS 3831
Topline results for ENLIGHTEN-2, a six-month weight study of ALKS 3831 compared to olanzapine in patients with stable schizophrenia in Q4 2018
BIIB098 (diroximel fumarate)
Planned submission of the NDA for diroximel fumarate for the treatment of multiple sclerosis in Q4 2018
ALKS 4230
Presentation of initial clinical data from ongoing dose-escalation stage of the phase 1 study at the 2018 Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) Annual Meeting in November 2018
Initiation of subcutaneous dosing phase 1 study in early 2019
Financial Expectations for 2018
Alkermes is updating its financial expectations for 2018 to reflect greater than expected revenues from AMPYRA. The following outlines Alkermes’ updated financial expectations for 2018.
Revenues: The company now expects total revenues to range from $1.015 billion to $1.045 billion, increased from its previous expectation of $975 million to $1.025 billion. This increase was driven by upside from AMPYRA following delayed generic competition in 2018. Included in this total revenue expectation, Alkermes continues to expect VIVITROL net sales to range from $300 million to $330 million, although closer to the lower end of this range, and ARISTADA net sales to range from $140 million to $160 million.
Cost of Goods Manufactured and Sold: The company continues to expect cost of goods manufactured and sold to range from $180 million to $190 million.
Research and Development (R&D) Expenses: The company continues to expect R&D expenses to range from $415 million to $445 million.
Selling, General and Administrative (SG&A) Expenses: The company continues to expect SG&A expenses to range from $515 million to $545 million.
Amortization of Intangible Assets: The company continues to expect amortization of intangibles to be approximately $65 million.
Net Interest Expense: The company continues to expect net interest expense to be approximately $10 million.
Income Tax Expense: The company continues to expect income tax expense of up to $10 million.
GAAP Net Loss: The company now expects GAAP net loss to range from $180 million to $210 million, or a basic and diluted loss per share of $1.16 to $1.35, based on a weighted average basic and diluted share count of approximately 155 million shares outstanding. This compares to previous expectations of GAAP net loss in the range of $210 million to $240 million, or a basic and diluted loss per share of $1.35 to $1.55, based on a weighted average basic and diluted share count of approximately 155 million shares outstanding.
Non-GAAP Net Income: The company now expects non-GAAP results to range from non-GAAP net income of $20 million to $50 million, or a non-GAAP basic earnings per share of $0.13 to $0.32 and a non-GAAP diluted earnings per share of $0.12 to $0.31, based on a weighted average basic share count of approximately 155 million shares outstanding and a weighted average diluted share count of approximately 161 million shares outstanding. This compares to previous expectations of non-GAAP net results in the range of non-GAAP net loss of $10 million to non-GAAP net income of $20 million, or a basic and diluted non-GAAP net loss per share of $0.06 to a non-GAAP basic earnings per share of $0.13 and a non-GAAP diluted earnings per share of $0.12, based on a weighted average basic share count of approximately 155 million shares outstanding and a weighted average diluted share count of approximately 161 million shares outstanding.
Share-Based Compensation: The company continues to expect share-based compensation of approximately $120 million.
Capital Expenditures: The company now expects capital expenditures to range from $65 million to $75 million, compared to a previous expectation in the range of $80 million to $90 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 Tuesday, Oct. 23, 2018, 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 +1 888 424 8151 for U.S. callers and +1 847 585 4422 for international callers. The conference call ID number is 6037988. In addition, a replay of the conference call will be available from 11:00 a.m. ET (4:00 p.m. BST) on Tuesday, Oct. 23, 2018, through 5:00 p.m. ET (9:00 p.m. GMT) on Tuesday, Oct. 30, 2018, and may be accessed by visiting Alkermes’ website or by dialing +1 888 843 7419 for U.S. callers and +1 630 652 3042 for international callers. The replay access code is 6037988.