On February 11, 2021 Alkermes plc (Nasdaq: ALKS) reported financial results for the quarter and year ended Dec. 31, 2020 and provided financial expectations for 2021 (Press release, Alkermes, FEB 11, 2021, View Source [SID1234574904]).
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"2020 was a demonstration of the resiliency of our organization, as we adapted our business to endure a pandemic that has proved to be one of the most disruptive events in our recent history. Despite the challenges posed by COVID-19, we achieved significant growth of net sales from our portfolio of proprietary commercial products, advanced our pipeline of neuroscience and oncology candidates, and announced a Value Enhancement Plan designed to drive growth and improve operational and financial performance," said Richard Pops, Chief Executive Officer of Alkermes. "We are focused on value creation in 2021 as we seek to grow and diversify our commercial portfolio, demonstrate the value of our R&D investments, and manage the company for growth and long-term profitability, all while striving to make a meaningful difference in the lives of people living with serious mental illness, addiction and cancer."
Quarter Ended Dec. 31, 2020 Financial Highlights
Total revenues for the quarter were $280.0 million. This compared to $412.7 million for the same period in the prior year, which included a $150.0 million milestone payment from Biogen related to the U.S. Food and Drug Administration’s (FDA) approval of VUMERITY in 2019.
Net loss according to generally accepted accounting principles in the U.S. (GAAP) was $42.6 million for the quarter, or a basic and diluted GAAP loss per share of $0.27. This compared to GAAP net loss of $5.4 million, or a basic and diluted GAAP loss per share of $0.03, for the same period in the prior year.
Non-GAAP net income was $16.5 million for the quarter, or a non-GAAP basic and diluted earnings per share of $0.10. This compared to non-GAAP net income of $131.4 million, or a non-GAAP basic and diluted earnings per share of $0.83 for the same period in the prior year.
Year Ended Dec. 31, 2020 Financial Results
Revenues
Total revenues for the year were $1.04 billion. This compared to $1.17 billion in the prior year. Total revenues in 2019 included a $150.0 million milestone payment from Biogen related to the FDA’s approval of VUMERITY, of which $144.8 million was recorded as license revenue and $5.2 million was recorded as research and development (R&D) revenue.
Net sales of proprietary products for the year were $551.8 million, compared to $524.5 million in the prior year.
Net sales of VIVITROL were $310.7 million, compared to $335.4 million in the prior year, representing a decrease of approximately 7%, primarily due to COVID-19-pandemic-related disruptions.
Net sales of ARISTADAi were $241.0 million, compared to $189.1 million in the prior year, representing an increase of approximately 27%.
Manufacturing and royalty revenues for the year were $484.0 million, compared to $447.9 million in the prior year.
Manufacturing and royalty revenues from RISPERDAL CONSTA, INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA were $345.6 million, compared to $323.3 million in the prior year.
Costs and Expenses
Total operating expenses for the year were $1.15 billion, compared to $1.35 billion in the prior year.
R&D expenses were $394.6 million, compared to $512.8 million in the prior year, which included the $86.6 million charge related to the acquisition of Rodin Therapeutics, Inc. (Rodin) in 2019.
Selling, General and Administrative (SG&A) expenses were $538.8 million, compared to $599.4 million in the prior year, primarily reflecting the impact of the restructuring implemented in 2019 and additional expense management measures in 2020.
Net Loss/Net Income
GAAP net loss for the year was $110.9 million, or a basic and diluted GAAP loss per share of $0.70. This compared to GAAP net loss of $196.6 million, or a basic and diluted GAAP loss per share of $1.25, in the prior year.
Non-GAAP net income for the year was $68.6 million, or a non-GAAP basic and diluted earnings per share of $0.43. This compared to non-GAAP net income of $112.2 million, or a non-GAAP basic and diluted earnings per share of $0.71, in the prior year, which included the $150 million of revenue from Biogen following approval of VUMERITY.
Balance Sheet
At Dec. 31, 2020, Alkermes recorded cash, cash equivalents and total investments of $659.8 million, compared to $597.2 million at Sept. 30, 2020, and $614.4 million at Dec. 31, 2019, driven primarily by the company’s operating results and changes in working capital. The company’s total debt outstanding as of Dec. 31, 2020 was $275.0 million, consisting of a term loan that matures in March 2023.
"Our solid 2020 financial results demonstrate efficient management of our business from a financial and operational perspective in response to the significant disruptions caused by the pandemic. These efforts underscore our focus on execution and reflect our commitment to driving bottom line growth," commented Iain Brown, Chief Financial Officer of Alkermes. "We enter 2021 well positioned to execute on our strategic priorities and work toward the long-term profitability margin targets set forth in our Value Enhancement Plan. We plan to achieve these targets through commercial execution, focused investment in the company’s future growth drivers and continued efforts to optimize our infrastructure and operating model. Our financial expectations for 2021 reflect anticipated growth of our commercial portfolio and focused investments to support the anticipated launch of LYBALVI and advance the clinical development program for nemvaleukin, as we position these programs to drive future value creation."
Financial Expectations for 2021
The following financial expectations for 2021 are based on recent trends and assume continuation of such trends into the first half of the year, and an anticipated improvement in patient access to treatment providers and to the company’s commercial products in the second half of the year. If patient access does not improve as anticipated, or if new COVID-19-related disruptions emerge, the company’s ability to meet these expectations could be negatively impacted. All line items are according to GAAP, except as otherwise noted.
*R&D expense expectations for 2021 include a potential $25 million milestone payment to the former shareholders of Rodin related to the anticipated submission of an investigational new drug application, or equivalent, for ALKS 1140, the first clinical candidate to emerge from the histone deacetylase (HDAC) inhibitor platform acquired by the company in late 2019.
Recent Events:
LYBALVI (formerly referred to as ALKS 3831)
In December 2020, the FDA acknowledged receipt of the company’s New Drug Application (NDA) resubmission for LYBALVI and assigned the application a new Prescription Drug User Fee Act (PDUFA) target action date of June 1, 2021. Subsequent to Alkermes’ resubmission of the NDA, the FDA issued a new request for records under Section 704(a)(4) of the Federal Food, Drug, and Cosmetic Act to supplement the information previously provided by the company. The resubmission and records request followed the company’s receipt of a Complete Response Letter (CRL) from the FDA in November 2020 following its remote review of records relating to the manufacture of LYBALVI at the company’s Wilmington, OH facility. The CRL did not identify or raise any concerns about the clinical or non-clinical data in the NDA and the FDA has not asked the company to complete any new clinical trials to support approval of the application.
Nemvaleukin alfa ("nemvaleukin", formerly referred to as ALKS 4230)
In November 2020, preliminary data from ARTISTRY-1 and ARTISTRY-2, phase 1/2 studies evaluating nemvaleukin administered intravenously and subcutaneously, respectively, as monotherapy and in combination with pembrolizumab in patients with refractory advanced solid tumors, were presented at the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper)’s (SITC) (Free SITC Whitepaper) 35th Anniversary Annual Meeting.
HDAC-inhibitor platform
In December 2020, the company nominated ALKS 1140, a novel CoRESTii-selective HDAC inhibitor candidate with potential applications in neuropsychiatric indications. First-in-human studies for ALKS 1140 are planned to begin in 2021.
Other
In January 2021, results from a National Institute on Drug Abuse (NIDA)-funded study evaluating the efficacy and safety of naltrexone for extended-release injectable suspension (XR-NTX) administered once every three weeks plus oral extended-release bupropion administered daily as a combination treatment for adults with moderate or severe methamphetamine use disorder (MUD) were published by Dr. Madhukar H. Trivedi et al. in the New England Journal of Medicine (NEJM).iii
Corporate
In December 2020, the company announced a Value Enhancement Plan designed to drive growth, improve operational and financial performance and enhance shareholder value. The plan includes a commitment to multi-year profitability targets, a review and optimization of the company’s cost structure and potential monetization of non-core assets.
In December 2020, two new, independent directors joined the company’s board of directors (Board). David Daglio brings to the Board more than 20 years of experience in institutional investment management, and Brian McKeon brings strong financial and management expertise as well as public company executive and director experience.
In January 2021, Blair C. Jackson was appointed Chief Operating Officer and Iain M. Brown was named Chief Financial Officer. They will oversee the company’s implementation of the Value Enhancement Plan.
Conference Call
Alkermes will host a conference call and webcast presentation with accompanying slides at 8:00 a.m. ET (1:00 p.m. GMT) on Thursday, Feb. 11, 2021, 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. GMT) on Thursday, Feb. 11, 2021, through Thursday, Feb. 18, 2021, 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 13715619.