On November 2, 2022 Alkermes plc (Nasdaq: ALKS) reported financial results for the third quarter of 2022 and updated certain financial expectations for full-year 2022 (Press release, Alkermes, NOV 2, 2022, View Source [SID1234622772]). Alkermes today also announced its intent, as approved by its Board of Directors (the Board), to explore a separation of its commercial-stage neuroscience business and development-stage oncology business.
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"One year into the launch of LYBALVI, we have gained confidence in its commercial potential and the opportunity it represents to be an important, long-term value driver for Alkermes. Our teams have made excellent progress in raising awareness of LYBALVI, establishing and expanding the foundation of prescribers, and driving patient access to this important new medicine," said Richard Pops, Chief Executive Officer of Alkermes. "We are proving the value of our distinctive commercial capabilities with the growth of our three proprietary products in complex and dynamic markets. At the same time, we’ve progressed our oncology portfolio with nemvaleukin in potential registration-enabling studies and our pipeline of preclinical engineered cytokines advancing behind it. As the value propositions for each of our neuroscience and oncology businesses have come more clearly into focus, separating the oncology business represents an important opportunity to unlock value for each business and position both for success."
"Our third quarter results demonstrate strong year-over-year growth of our proprietary commercial product portfolio and our continued focus on operational efficiency. The addition of LYBALVI to our portfolio of proprietary commercial products has highlighted the operating leverage we have built into the business and the growth potential it represents," commented Iain Brown, Chief Financial Officer of Alkermes. "As we approach the end of the year, we are pleased to raise certain of our financial expectations for 2022, primarily reflecting the strong performance of LYBALVI. We remain in a strong financial position to advance our strategic priorities with a focus on execution and driving shareholder value as we work to separate our neuroscience and oncology businesses."
Quarter Ended Sept. 30, 2022 Financial Results
Revenues
– Total revenues for the quarter were $252.4 million, compared to $294.1 million for the same period in the prior year.
– Net sales of proprietary products for the quarter were $199.4 million, compared to $157.7 million for the same period in the prior year.
Net sales of VIVITROL were $96.5 million, compared to $88.8 million for the same period in the prior year, representing an increase of approximately 9%.
Net sales of ARISTADAi were $75.7 million, compared to $68.9 million for the same period in the prior year, representing an increase of approximately 10%.
Net sales of LYBALVI were $27.1 million, following its commercial launch in October 2021.
– Manufacturing and royalty revenues for the quarter were $52.9 million, primarily driven by royalty revenues from long-acting INVEGA products and VUMERITY, partially offset by a one-time revenue reversal related to AMPYRA. Manufacturing and royalty revenues were $136.3 million for the same period in the prior year.
Royalty revenues from INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and INVEGA HAFYERA/BYANNLI (the long-acting INVEGA products) were $26.7 million, compared to $79.3 million for the same period in the prior year. This decrease was driven primarily by Janssen Pharmaceutica N.V.’s partial termination of the license agreement related to sales of the long-acting INVEGA products in the United States (U.S.), effective Feb. 2, 2022.
Manufacturing and royalty revenues from VUMERITY were $26.3 million, compared to $26.7 million for the same period in the prior year.
The company recorded a one-time reversal of royalty revenue of approximately $21.5 million in the quarter due to the outcome of recent arbitration proceedings related to agreements pertaining to AMPYRA, which includes a $16.5 million arbitration award and other royalty revenue that was previously recognized.
Costs and Expenses
– Total operating expenses for the quarter were $313.0 million, compared to $313.8 million for the same period in the prior year.
Cost of Goods Manufactured and Sold was $50.6 million, compared to $49.6 million for the same period in the prior year.
Research and Development (R&D) expenses were $100.4 million, compared to $118.4 million for the same period in the prior year. R&D expenses for the third quarter of 2021 included the accrual of a $25.0 million development milestone payment.
Selling, General and Administrative (SG&A) expenses were $152.8 million, compared to $136.2 million for the same period in the prior year, reflecting increased investment in the launch of LYBALVI.
Profitability
– Net loss according to generally accepted accounting principles in the U.S. (GAAP) was $64.0 million for the quarter, or a basic and diluted GAAP loss per share of $0.39. This compared to GAAP net loss of $29.0 million, or a basic and diluted GAAP loss per share of $0.18, for the same period in the prior year.
– Non-GAAP net income was $3.5 million for the quarter, or a non-GAAP basic and diluted earnings per share of $0.02. This compared to non-GAAP net income of $23.6 million for the quarter, or a non-GAAP basic earnings per share of $0.15 and non-GAAP diluted earnings per share of $0.14, for the same period in the prior year.
Balance Sheet
– At Sept. 30, 2022, the company recorded cash, cash equivalents and total investments of $747.1 million, compared to $760.0 million at June 30, 2022. The company’s total debt outstanding as of Sept. 30, 2022 was $293.9 million.
Financial Expectations for 2022
The following updated financial expectations for 2022 primarily reflect LYBALVI’s launch performance to date, the company’s current assumption that it will continue to receive royalty payments related to sales of the long-acting INVEGA products outside the U.S. through the end of the year and the impact of the AMPYRA royalty revenue reversal. All line items are according to GAAP, except as otherwise noted.
Recent Events:
Psychiatry
In September 2022, the company presented clinical, epidemiology and health economics and outcomes research related to its psychiatry portfolio at Psych Congress 2022.
Corporate
In November 2022, the company announced approval by the Board to explore a separation of its commercial-stage neuroscience business and development-stage oncology business. The company, together with the Board and external financial and legal advisors, plans to explore a separation of the oncology business into an independent, publicly-traded company as part of an ongoing review of strategic alternatives for the oncology business. The separation, if consummated, is expected to be completed in the second half of 2023.
In September 2022, 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.
Conference Call
Alkermes will host a conference call and webcast presentation with accompanying slides at 8:00 a.m. ET (12:00 p.m. GMT) on Wednesday, Nov. 2, 2022, 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.