On October 25, 2023 Alkermes plc (Nasdaq: ALKS) reported financial results for the third quarter of 2023 (Press release, Alkermes, OCT 25, 2023, View Source [SID1234636323]).
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"With solid performance across our proprietary commercial portfolio, the successful settlement of the VIVITROL patent litigation, and progress toward completion of the separation of our oncology business, we have made significant strides to evolve the business into a pure-play neuroscience company with the potential to generate strong profitability and cash flow," said Richard Pops, Chief Executive Officer of Alkermes. "Our presentation at this week’s World Sleep Congress of the first-in-human safety and tolerability data and initial proof-of-concept data for ALKS 2680, our investigational, orexin 2 receptor agonist for the treatment of narcolepsy, represents an important milestone for that development program. We look forward to sharing additional data from the phase 1 study and advancing ALKS 2680 into a planned phase 2 program next year."
"Our third quarter results demonstrate the financial strength of the business, driven by top-line year-over-year growth, strategic capital allocation and our focus on delivering value to shareholders," commented Iain Brown, Chief Financial Officer of Alkermes. "Upon planned completion of the separation of the oncology business in the coming weeks, the remaining neuroscience business will be positioned to deliver enhanced profitability as we focus on growing our proprietary commercial products and advancing the key programs that we believe will drive future growth."
Quarter Ended Sept. 30, 2023 Financial Results
Revenues
– Total revenues for the quarter were $380.9 million, compared to $252.4 million for the same period in the prior year.
– Net sales of proprietary products for the quarter increased approximately 16% to $231.8 million, compared to $199.4 million for the same period in the prior year.
Net sales of VIVITROL were $99.3 million, compared to $96.5 million for the same period in the prior year, representing an increase of approximately 3%.
Net sales of ARISTADAi were $81.8 million, compared to $75.7 million for the same period in the prior year, representing an increase of approximately 8%.
Net sales of LYBALVI were $50.7 million, compared to $27.1 million for the same period in the prior year, representing an increase of approximately 87%.
– Manufacturing and royalty revenues for the quarter were $149.1 million, compared to $52.9 million for the same period in the prior year.
Royalty revenues from INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and INVEGA HAFYERA/BYANNLI for the quarter were $76.1 million. The company recorded royalty revenues from these products of $26.7 million for the same period in the prior year. This increase was driven by the favorable resolution of the arbitration proceedings related to these products in the second quarter of 2023.
Manufacturing and royalty revenues from VUMERITY for the quarter were $34.6 million, compared to $26.3 million for the same period in the prior year.
Costs and Expenses
– Total operating expenses for the quarter were $337.1 million, compared to $313.0 million for the same period in the prior year. This 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 $61.5 million, compared to $50.6 million for the same period in the prior year.
Research and Development (R&D) expenses were $97.1 million, compared to $100.4 million for the same period in the prior year.
Selling, General and Administrative (SG&A) expenses were $169.4 million, compared to $152.8 million for the same period in the prior year.
Profitability
– Net income according to generally accepted accounting principles in the U.S. (GAAP) was $47.8 million for the quarter, or a GAAP basic earnings per share of $0.29 and diluted earnings per share of $0.28, based on 166.6 million and 171.9 million shares outstanding, respectively. This compared to GAAP net loss of $64.0 million, or a basic and diluted GAAP loss per share of $0.39, for the same period in the prior year.
– Non-GAAP net income was $109.5 million for the quarter, or a non-GAAP basic earnings per share of $0.66 and diluted earnings per share of $0.64, based on 166.6 million and 171.9 million shares outstanding, respectively. This compared to non-GAAP net income of $3.5 million, or a non-GAAP basic and diluted earnings per share of $0.02, for the same period in the prior year.
Balance Sheet
– At Sept. 30, 2023, the company recorded cash, cash equivalents and total investments of $995.6 million, compared to $907.2 million at June 30, 2023. The company’s total debt outstanding as of Sept. 30, 2023 was $291.4 million.
Financial Expectations for 2023
Alkermes reiterated its financial expectations for full-year 2023, as set forth in its press release dated June 6, 2023.
Separation of Oncology Business
– Alkermes expects to complete the separation of its oncology business into a new, independent publicly-traded company, Mural Oncology plc (Mural), in November 2023, subject to various customary conditions, including final approval from Alkermes’ board of directors. Alkermes expects to capitalize Mural with cash of $275 million upon completion of the separation.
– In October 2023, members of Mural’s designated management team held an investor webcast to provide an overview of its pipeline and strategy. A replay is available on the Investors section of Alkermes’ website at www.alkermes.com.
Recent Events
Neuroscience
– In October 2023, the company presented initial phase 1 clinical data related to ALKS 2680, the company’s novel, investigational orexin 2 receptor agonist in development for the treatment of narcolepsy, at the World Sleep Congress. The presentation included safety and tolerability data from single- and multiple-ascending dose evaluations in healthy volunteers and initial Maintenance of Wakefulness Test proof-of-concept data in four patients with narcolepsy type 1.
– In September 2023, the company presented multiple posters highlighting real-world and clinical data related to its psychiatry portfolio at Psych Congress 2023.
Corporate
– In September 2023, the company published its latest Corporate Responsibility Report, which details how the company integrates environmental, social and governance considerations into its business. A copy of the report is available on the Responsibility section of Alkermes’ website.
– In August 2023, the company entered into a settlement agreement with Teva Pharmaceuticals USA, Inc. (Teva) to resolve the patent litigation between the parties related to VIVITROL. Pursuant to the terms of the settlement agreement, the company has granted Teva a license under the company’s U.S. Patent No. 7,919,499 to market a generic version of VIVITROL in the United States beginning Jan. 15, 2027, or earlier under certain customary circumstances.
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, Oct. 25, 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.