DUBLIN--(BUSINESS WIRE)--Alkermes plc (NASDAQ: ALKS) today reported financial results for the second quarter of 2017.
“Our solid results this quarter demonstrate the continued strength of our business and commercial portfolio, driven by increasing demand for our proprietary products, VIVITROL® and ARISTADA®, which continue to grow robustly in their respective markets,” commented James Frates, Chief Financial Officer of Alkermes. “The financial underpinnings of our business are strong for today and into the future, as we focus on growing our commercial portfolio and the clinical development of our pipeline candidates. Today, we are reiterating our financial expectations for 2017 that we provided in February.”
“We are executing on our strategy and making rapid progress as we continue to invest in our future growth drivers. Following a pre-NDA meeting with FDA for ALKS 5461 earlier this week, we are on track to begin the rolling submission of the ALKS 5461 New Drug Application next month and expect to complete the submission by year-end 2017. We are excited to bring this important, potential, new proprietary medicine to patients struggling with major depressive disorder,” said Richard Pops, Chief Executive Officer of Alkermes. “Alkermes is grounded in our deep commitment to the treatment of addiction and serious mental illness. We continue to advance our pipeline of late-stage product candidates and were also pleased to report positive preliminary topline data from the ALKS 3831 phase 3 antipsychotic efficacy study as well as the approval and launch of the ARISTADA two-month dose in June.”
Quarter Ended June 30, 2017 Highlights
- Total revenues for the quarter were $218.8 million. This compared to $195.2 million for the same period in the prior year.
- Net loss according to generally accepted accounting principles in the U.S. (GAAP) was $43.0 million, or a basic and diluted GAAP loss per share of $0.28, for the quarter and reflected increased investment in the company’s commercial infrastructure and higher cost of goods manufactured and sold reflecting increased manufacturing activity. This compared to GAAP net loss of $47.2 million, or a basic and diluted GAAP loss per share of $0.31, for the same period in the prior year.
- Non-GAAP net income was $1.2 million, or a non-GAAP basic and diluted earnings per share of $0.01 for the quarter. This compared to non-GAAP net loss of $1.6 million, or a non-GAAP basic and diluted loss per share of $0.01, for the same period in the prior year.
Quarter Ended June 30, 2017 Financial Results
Revenues
- Net sales of VIVITROL were $66.1 million, compared to $47.2 million for the same period in the prior year.
- Net sales of ARISTADA were $22.7 million, compared to $10.3 million for the same period in the prior year.
- Manufacturing and royalty revenues from RISPERDAL CONSTA®, INVEGA SUSTENNA®/XEPLION® and INVEGA TRINZA®/TREVICTA® were $82.2 million, compared to $69.6 million for the same period in the prior year.
- Manufacturing and royalty revenues from AMPYRA®/FAMPYRA®1 were $25.3 million, compared to $40.8 million for the same period in the prior year.
- Royalty revenue from BYDUREON® was $11.6 million, compared to $12.3 million for the same period in the prior year.
Costs and Expenses
- Operating expenses were $263.4 million, compared to $242.3 million for the same period in the prior year, reflecting increased investment in the company’s commercial infrastructure and higher cost of goods manufactured and sold reflecting increased manufacturing activity at our site in Ohio.
Balance Sheet
At June 30, 2017,
Alkermes had cash and total investments of $560.8 million, compared to
$589.4 million at March 31, 2017. At June 30, 2017, the company’s total
debt outstanding was $282.6 million.
Financial Expectations
Alkermes
reiterates its financial expectations for 2017 set forth in its press
release dated Feb. 15, 2017.
Conference Call
Alkermes will
host a conference call at 8:30 a.m. ET (1:30 p.m. BST) on Thursday, July
27, 2017, to discuss these financial results and provide an update on
the company. The conference call may be accessed by visiting Alkermes’
website or 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 Thursday, July 27, 2017 through
5:00 p.m. ET (10:00 p.m. BST) on Thursday, August 3, 2017, 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.
About Alkermes plc
Alkermes
plc is a fully integrated, global biopharmaceutical company developing
innovative medicines for the treatment of central nervous system (CNS)
diseases. The company has a diversified commercial product portfolio and
a substantial clinical pipeline of product candidates for chronic
diseases that include schizophrenia, depression, addiction and multiple
sclerosis. Headquartered in Dublin, Ireland, Alkermes plc has an R&D
center in Waltham, Massachusetts; a research and manufacturing facility
in Athlone, Ireland; and a manufacturing facility in Wilmington, Ohio.
For more information, please visit Alkermes’ website at www.alkermes.com.
Non-GAAP Financial Measures
This
press release includes information about certain financial measures that
are not prepared in accordance with generally accepted accounting
principles in the U.S. (GAAP), including non-GAAP net income (loss) and
non-GAAP diluted earnings (loss) per share. These non-GAAP measures are
not based on any standardized methodology prescribed by GAAP and are not
necessarily comparable to similar measures presented by other companies.
Non-GAAP net income (loss) adjusts for one-time and non-cash charges by excluding from GAAP results: share-based compensation expense; amortization; depreciation; non-cash net interest expense; certain other one-time or non-cash items; and the income tax effect of these reconciling items.
The company’s management and board of directors utilize these non-GAAP financial measures to evaluate the company’s performance. The company provides these non-GAAP measures of the company’s performance to investors because management believes that these non-GAAP financial measures, when viewed with the company’s results under GAAP and the accompanying reconciliations, better indicate underlying trends in ongoing operations. However, non-GAAP net income (loss) and non-GAAP diluted earnings (loss) per share are not measures of financial performance under GAAP and, accordingly, should not be considered as alternatives to GAAP measures as indicators of operating performance. Further, non-GAAP net income (loss) and non-GAAP diluted earnings (loss) per share should not be considered measures of our liquidity.
A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables included in this press release.
Note Regarding Forward-Looking Statements
Certain
statements set forth in this press release constitute “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, as amended, including, but not limited to,
statements concerning: future financial and operating performance,
business plans or prospects; the likelihood of continued revenue growth
from the company’s commercial products, including the growth of VIVITROL
and ARISTADA; the therapeutic and commercial value of the company’s
products, including the launch and commercialization of two-month
ARISTADA; and expectations concerning the timing and results of clinical
development activities, including the timing of the NDA submission for
ALKS 5461. You are cautioned that forward-looking statements are
inherently uncertain. Although the company believes that such statements
are based on reasonable assumptions within the bounds of its knowledge
of its business and operations, the forward-looking statements are
neither promises nor guarantees and they are necessarily subject to a
high degree of uncertainty and risk. Actual performance and results may
differ materially from those expressed or implied in the forward-looking
statements due to various risks and uncertainties. These risks and
uncertainties include, among others: the unfavorable outcome of
litigation, including so-called “Paragraph IV” litigation and other
patent litigation, related to any of our products, which may lead to
competition from generic drug manufacturers; data from clinical trials
may be interpreted by the U.S. Food and Drug Administration (“FDA”) in
different ways than we interpret it; the FDA may not agree with our
regulatory approval strategies or components of our filings, such as
clinical trial designs; clinical development activities may not be
completed on time or at all; the results of our clinical development
activities may not be positive, or predictive of real-world results or
of results in subsequent clinical trials; regulatory submissions may not
occur or be submitted in a timely manner; the company, and its partners,
may not be able to continue to successfully commercialize its products;
there may be a reduction in payment rate or reimbursement for the
company’s products or an increase in the company’s financial obligations
to governmental payers; the FDA or regulatory authorities outside the
U.S. may make adverse decisions regarding the company’s products; the
company’s products may prove difficult to manufacture, be precluded from
commercialization by the proprietary rights of third parties, or have
unintended side effects, adverse reactions or incidents of misuse; and
those risks and uncertainties described under the heading “Risk Factors”
in the company’s Annual Report on Form 10-K for the year ended Dec. 31,
2016 and Quarterly Reports on Form 10-Q for the quarters ended March 31,
2017 and June 30, 2017 and in subsequent filings made by the company
with the U.S. Securities and Exchange Commission (“SEC”), which are
available on the SEC’s website at www.sec.gov.
Existing and prospective investors are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the
date hereof. Except as required by law, the company disclaims any
intention or responsibility for updating or revising any forward-looking
statements contained in this press release.
VIVITROL® is a registered trademark of Alkermes, Inc.; ARISTADA® is a registered trademark of Alkermes Pharma Ireland Limited; RISPERDAL CONSTA®, INVEGA SUSTENNA®, XEPLION®, INVEGA TRINZA® and TREVICTA® are registered trademarks of Johnson & Johnson; AMPYRA® and FAMPYRA® are registered trademarks of Acorda Therapeutics, Inc.; BYDUREON® is a registered trademark of Amylin Pharmaceuticals, LLC.
1AMPYRA® (dalfampridine) Extended Release Tablets, 10 mg is developed and marketed in the U.S. by Acorda Therapeutics, Inc. and outside the U.S. by Biogen Idec, under a licensing agreement with Acorda Therapeutics, as FAMPYRA® (prolonged-release fampridine tablets).
(tables follow)
Alkermes plc and Subsidiaries | |||||||||
Selected Financial Information (Unaudited) | |||||||||
Three Months | Three Months | ||||||||
Ended | Ended | ||||||||
Condensed Consolidated Statements of Operations - GAAP | June 30, | June 30, | |||||||
(In thousands, except per share data) | 2017 | 2016 | |||||||
Revenues: | |||||||||
Manufacturing and royalty revenues | $ 129,252 | $ 137,034 | |||||||
Product sales, net | 88,756 | 57,519 | |||||||
Research and development revenues | 833 | 612 | |||||||
Total Revenues | 218,841 | 195,165 | |||||||
Expenses: | |||||||||
Cost of goods manufactured and sold | 39,775 | 33,998 | |||||||
Research and development | 99,153 | 97,007 | |||||||
Selling, general and administrative | 108,950 | 96,120 | |||||||
Amortization of acquired intangible assets | 15,472 | 15,157 | |||||||
Total Expenses | 263,350 | 242,282 | |||||||
Operating Loss | (44,509 | ) | (47,117 | ) | |||||
Other Expense, net: | |||||||||
Interest income | 1,171 | 994 | |||||||
Interest expense | (2,923 | ) | (3,323 | ) | |||||
Increase in the fair value of contingent consideration | 700 | 2,200 | |||||||
Other expense, net | (119 | ) | (467 | ) | |||||
Total Other Expense, net | (1,171 | ) | (596 | ) | |||||
Loss Before Income Taxes | (45,680 | ) | (47,713 | ) | |||||
Income Tax Benefit | (2,681 | ) | (520 | ) | |||||
Net Loss — GAAP | $ (42,999 | ) | $ (47,193 | ) | |||||
Net (Loss) Earnings Per Share: | |||||||||
GAAP net loss per share — basic and diluted | $ (0.28 | ) | $ (0.31 | ) | |||||
Non-GAAP earnings (loss) per share — basic and diluted | $ 0.01 | $ (0.01 | ) | ||||||
Weighted Average Number of Ordinary Shares Outstanding: | |||||||||
Basic and diluted — GAAP | 153,392 | 151,301 | |||||||
Basic — Non-GAAP | 153,392 | 151,301 | |||||||
Diluted — Non-GAAP | 160,307 | 151,301 | |||||||
An itemized reconciliation between net loss on a GAAP basis and non-GAAP net income (loss) is as follows: | |||||||||
Net Loss — GAAP | $ (42,999 | ) | $ (47,193 | ) | |||||
Adjustments: | |||||||||
Share-based compensation expense | 22,680 | 26,631 | |||||||
Amortization expense | 15,472 | 15,157 | |||||||
Depreciation expense | 9,034 | 7,927 | |||||||
Change in the fair value of warrants and equity method investments | 1,611 | (127 | ) | ||||||
Non-cash net interest expense | 193 | 231 | |||||||
Increase in the fair value of contingent consideration | (700 | ) | (2,200 | ) | |||||
Income tax effect related to reconciling items | (4,102 | ) | (2,051 | ) | |||||
Non-GAAP Net Income (Loss) | $ 1,189 | $ (1,625 | ) | ||||||
Six Months | Six Months | ||||||||
Ended | Ended | ||||||||
Condensed Consolidated Statements of Operations - GAAP | June 30, | June 30, | |||||||
(In thousands, except per share data) | 2017 | 2016 | |||||||
Revenues: | |||||||||
Manufacturing and royalty revenues | $ 243,931 | $ 243,194 | |||||||
Product sales, net | 165,212 | 106,893 | |||||||
Research and development revenues | 1,476 | 1,853 | |||||||
Total Revenues | 410,619 | 351,940 | |||||||
Expenses: | |||||||||
Cost of goods manufactured and sold | 80,187 | 61,709 | |||||||
Research and development | 203,988 | 198,079 | |||||||
Selling, general and administrative | 211,049 | 185,840 | |||||||
Amortization of acquired intangible assets | 30,774 | 30,313 | |||||||
Total Expenses | 525,998 | 475,941 | |||||||
Operating Loss | (115,379 | ) | (124,001 | ) | |||||
Other Expense, net: | |||||||||
Interest income | 2,114 | 2,005 | |||||||
Interest expense | (5,687 | ) | (6,618 | ) | |||||
Increase in the fair value of contingent consideration | 2,300 | 4,100 | |||||||
Other expense, net | (1,618 | ) | (218 | ) | |||||
Total Other Expense, net | (2,891 | ) | (731 | ) | |||||
Loss Before Income Taxes | (118,270 | ) | (124,732 | ) | |||||
Income Tax Benefit | (6,390 | ) | (116 | ) | |||||
Net Loss — GAAP | $ (111,880 | ) | $ (124,616 | ) | |||||
Net Loss Per Share: | |||||||||
GAAP net loss per share — basic and diluted | $ (0.73 | ) | $ (0.82 | ) | |||||
Non-GAAP net loss per share — basic and diluted | $ (0.17 | ) | $ (0.13 | ) | |||||
Weighted Average Number of Ordinary Shares Outstanding: | |||||||||
Basic and diluted — GAAP and Non-GAAP | 153,050 | 151,063 | |||||||
An itemized reconciliation between net loss on a GAAP basis and non-GAAP net loss is as follows: | |||||||||
Net Loss — GAAP | $ (111,880 | ) | $ (124,616 | ) | |||||
Adjustments: | |||||||||
Share-based compensation expense | 43,849 | 50,887 | |||||||
Amortization expense | 30,774 | 30,313 | |||||||
Depreciation expense | 17,495 | 15,475 | |||||||
Change in the fair value of warrants and equity method investments | 3,063 | 743 | |||||||
Non-cash net interest expense | 386 | 463 | |||||||
Increase in the fair value of contingent consideration | (2,300 | ) | (4,100 | ) | |||||
Income tax effect related to reconciling items | (8,052 | ) | 1,289 | ||||||
Upfront license option payment to Reset Therapeutics, Inc. charged to R&D expense | - | 10,000 | |||||||
Non-GAAP Net Loss | $ (26,665 | ) | $ (19,546 | ) | |||||
Pursuant to compliance and disclosure interpretations published by the SEC in May 2016, the Company made certain changes to how it presents non-GAAP net income (loss). The Company no longer adjusts the deferred revenue recognized in the period and now reflects the tax effect of the reconciling items, as opposed to the non-cash taxes, as was previously the case. The Company revised its prior period presentation to reflect its current period presentation.
Condensed Consolidated Balance Sheets | June 30, | December 31, | |||||
(In thousands) | 2017 | 2016 | |||||
Cash, cash equivalents and total investments | $ 560,831 | $ 619,165 | |||||
Receivables | 199,709 | 191,102 | |||||
Inventory | 77,352 | 62,998 | |||||
Prepaid expenses and other current assets | 43,457 | 39,344 | |||||
Property, plant and equipment, net | 266,484 | 264,785 | |||||
Intangible assets, net and goodwill | 380,326 | 411,100 | |||||
Other assets | 203,184 | 137,929 | |||||
Total Assets | $ 1,731,343 | $1,726,423 | |||||
Long-term debt — current portion | $ 3,000 | $ 3,000 | |||||
Other current liabilities | 221,644 | 208,993 | |||||
Long-term debt | 279,552 | 280,666 | |||||
Deferred revenue — long-term | 6,782 | 7,122 | |||||
Other long-term liabilities | 18,278 | 17,161 | |||||
Total shareholders' equity | 1,202,087 | 1,209,481 | |||||
Total Liabilities and Shareholders' Equity | $ 1,731,343 | $1,726,423 | |||||
Ordinary shares outstanding (in thousands) | 153,650 | 152,431 | |||||
This selected financial information should be read in conjunction with the consolidated financial statements and notes thereto included in Alkermes plc's Quarterly Report on Form 10-Q for the three and six months ended June 30, 2017, which the company intends to file in July 2017.