Alkermes Plc Reports Third Quarter 2018 Financial Results

Alkermes Plc Reports Third Quarter 2018 Financial Results

PR Newswire

DUBLIN, Oct. 23, 2018

— Third Quarter Revenues Increased to $248.7 Million, Driven by 24% Year-Over-Year Growth of Proprietary Product Net Sales

— Company Reports GAAP Net Loss per Share of $0.22 and Diluted Non-GAAP Earnings per Share of $0.07

— Company Increases Financial Expectations for 2018

DUBLIN, Oct. 23, 2018 /PRNewswire/ -- Alkermes plc (Nasdaq: ALKS) today reported financial results for the third quarter of 2018.

"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

"The third quarter was highlighted by the launch of ARISTADA INITIO®1, 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

Costs and Expenses

"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

ALKS 4230

Upcoming Milestones:

The following outlines the company's expected upcoming milestones.

ALKS 5461

ALKS 3831

BIIB098 (diroximel fumarate)

ALKS 4230

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.

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.

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 basic and 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, are useful in identifying underlying trends in ongoing operations. However, non-GAAP net income (loss) and non-GAAP basic and 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 basic and 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 potential therapeutic and commercial value of the company's marketed and development products,  and patient access to, and policy related to, such products; expectations concerning the timing and results of clinical development and regulatory activities, including the timing of the phase 3 clinical trial (ENLIGHTEN-2) data readout for ALKS 3831, the timing of the submission of the NDA for BIIB098, the timing of presentation of initial data from the ALKS 4230 phase 1 study and initiation of a subcutaneous dosing phase 1 study for ALKS 4230, and the outcome and timing of the FDA's review of the NDA for ALKS 5461. The company cautions 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 or products using our proprietary technologies, which may lead to competition from generic drug manufacturers; data from clinical trials may be interpreted by the FDA in different ways than we interpret it; the FDA may not agree with our regulatory approval strategies or components of our filings for our products, including our clinical trial designs, conduct and methodologies and, for ALKS 5461, evidence of efficacy and adequacy of bridging to buprenorphine; 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 licensees may not be able to continue to successfully commercialize their 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 most recent Annual Report on Form 10-K 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® and ARISTADA INITIO® are registered trademarks 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.

1 ARISTADA INITIO was approved by the FDA for the initiation of ARISTADA, a long-acting injectable atypical antipsychotic for the treatment of schizophrenia in adults. The ARISTADA INITIO regimen consists of ARISTADA INITIO plus a single 30 mg dose of oral aripiprazole.

2 AMPYRA® (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


September 30, 


September 30,



(In thousands, except per share data)


2018


2017



Revenues:







Manufacturing and royalty revenues


$        116,411


$        122,677



Product sales, net


116,035


93,681



Research and development revenue


16,274


1,027



Total Revenues


248,720


217,385



Expenses:







Cost of goods manufactured and sold


39,410


36,054



Research and development


101,265


104,411



Selling, general and administrative


128,777


99,633



Amortization of acquired intangible assets


16,426


15,643



Total Expenses


285,878


255,741



Operating Loss


(37,158)


(38,356)



Other Income, net:







Interest income


2,561


1,173



Interest expense


(3,346)


(3,129)



Change in the fair value of contingent consideration


4,200


13,600



Other expense, net


(90)


(9,078)



Total Other Income, net


3,325


2,566



Loss Before Income Taxes


(33,833)


(35,790)



Income Tax Provision


611


486



Net Loss — GAAP


$         (34,444)


$         (36,276)










Net (Loss) Earnings Per Share:







GAAP net loss per share — basic and diluted


$             (0.22)


$             (0.24)



Non-GAAP earnings per share — basic and diluted


$              0.07


$              0.03










Weighted Average Number of Ordinary Shares Outstanding:







Basic and diluted — GAAP


155,328


153,684



Basic — Non-GAAP


155,328


153,684



Diluted — Non-GAAP


159,763


159,989










An itemized reconciliation between net loss on a GAAP basis and non-GAAP net income is as follows:







Net Loss — GAAP


$         (34,444)


$         (36,276)



Adjustments:







Share-based compensation expense


25,068


19,487



Amortization expense


16,426


15,643



Depreciation expense


9,842


9,394



Non-cash net interest expense


170


192



Change in the fair value of warrants and equity method investments


(367)


(303)



Change in the fair value of contingent consideration


(4,200)


(13,600)



Income tax effect related to reconciling items


(869)


(844)



Other-than-temporary impairment of equity method investment



10,471



Non-GAAP Net Income


$          11,626


$            4,164


























Nine Months 


Nine Months 





Ended


Ended



Condensed Consolidated Statements of Operations - GAAP


September 30, 


September 30, 



(In thousands, except per share data)


2018


2017



Revenues:







Manufacturing and royalty revenues


$        359,253


$        366,608



Product sales, net


317,684


258,893



Research and development revenues


53,325


2,503



License revenues


48,250




Total Revenues


778,512


628,004



Expenses:







Cost of goods manufactured and sold


127,303


116,241



Research and development


316,434


308,399



Selling, general and administrative


385,181


310,682



Amortization of acquired intangible assets


48,742


46,417



Total Expenses


877,660


781,739



Operating Loss


(99,148)


(153,735)



Other Expense, net:







  Interest income


5,946


3,287



  Interest expense


(11,959)


(8,816)



  Change in the fair value of contingent consideration


(17,300)


15,900



  Other expense, net


(2,815)


(10,696)



Total Other Expense, net


(26,128)


(325)



Loss Before Income Taxes


(125,276)


(154,060)



Income Tax Provision (Benefit)


4,322


(5,904)



Net Loss — GAAP


$       (129,598)


$       (148,156)










Net (Loss) Earnings Per Share:







GAAP net loss per share — basic and diluted


$             (0.84)


$             (0.97)



Non-GAAP earnings (loss) per share — basic


$              0.28


$             (0.15)



Non-GAAP earnings (loss) per share — diluted


$              0.27


$             (0.15)










Weighted Average Number of Ordinary Shares Outstanding:







Basic and diluted — GAAP


154,979


153,263



Basic — Non-GAAP


154,979


153,263



Diluted — Non-GAAP


160,224


153,263










An itemized reconciliation between net loss on a GAAP basis and non-GAAP net income (loss) is as follows:







Net Loss — GAAP


$       (129,598)


$       (148,156)



Adjustments:







Share-based compensation expense


76,043


63,336



Amortization expense


48,742


46,417



Depreciation expense


29,016


26,889



Change in the fair value of warrants and equity method investments


600


2,760



Non-cash net interest expense


531


578



Change in the fair value of contingent consideration


17,300


(15,900)



Income tax effect related to reconciling items


(5,535)


(8,896)



Other-than-temporary impairment of equity method investment



10,471



Restructuring expense


3,598




Debt refinancing charge


2,298




Non-GAAP Net Income (Loss)


$          42,995


$         (22,501)

















Condensed Consolidated Balance Sheets


September 30, 


December 31, 



(In thousands)


2018


2017



Cash, cash equivalents and total investments


$        578,543


$        590,716



Receivables


250,913


233,590



Contract assets


13,476




Inventory


88,018


93,275



Prepaid expenses and other current assets


50,265


48,475



Property, plant and equipment, net


303,087


284,736



Intangible assets, net and goodwill


300,299


349,041



Other assets


176,109


197,394



Total Assets


$     1,760,710


$     1,797,227



Long-term debt — current portion


$            2,843


$            3,000



Other current liabilities


301,945


288,122



Long-term debt   


277,007


278,436



Contract liabilities — long-term 


5,010


5,657



Other long-term liabilities


23,190


19,204



Total shareholders' equity


1,150,715


1,202,808



Total Liabilities and Shareholders' Equity


$     1,760,710


$     1,797,227










Ordinary shares outstanding (in thousands)


155,364


154,009










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 months ended September 30, 2018, which the company intends to file in October 2018.

















2018 Guidance — GAAP to Non-GAAP Adjustments








An itemized reconciliation between projected loss per share on a GAAP basis and projected earnings per share on a non-GAAP basis is as follows:








(In millions, except per share data)


Amount


Shares


(Loss)
Earnings
Per Share

Projected Net Loss — GAAP

$

(195.0)


155

$

(1.26)

  Adjustments:







Share-based compensation expense


120.0





Amortization expense


65.0





Depreciation expense


42.5





Non-cash net interest expense


1.0





Income tax effect related to reconciling items 


(3.5)





Other (including debt refinancing & restructuring charges)


5.0





Projected Net Income — Non-GAAP

$

35.0


161

$

0.22








Projected GAAP and non-GAAP measures reflect mid-points within ranges of estimated guidance.

 

 

Alkermes Contacts:

For Investors:

Sandy Coombs

+1 781 609 6377


Eva Stroynowski

+1 781 609 6823

For Media:

Sherry Feldberg

+1 781 609 6276

 

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