On February 15, 2024 Alkermes plc (Nasdaq: ALKS) reported financial results for the quarter and year ended Dec. 31, 2023 and provided financial expectations for 2024 (Press release, Alkermes, FEB 15, 2024, View Source [SID1234640135]).
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"We entered 2024 as a pure-play neuroscience company and are well positioned to deliver on our strategic priorities to drive growth of our proprietary commercial products, advance the clinical development of ALKS 2680 for the treatment of narcolepsy, and generate significant cash flow," said Richard Pops, Chief Executive Officer of Alkermes. "Our financial expectations for 2024 reflect our sharpened strategic focus and our work to position the business for sustained profitability and growth. As we look ahead, 2024 will be an important year as we focus on maintaining strong momentum in the launch of LYBALVI and advancing and expanding our development pipeline. We look forward to sharing our progress."
Key Financial Highlights
Revenues
(In millions)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2023
2022
2023
2022
Total Revenues
$
377.5
$
304.7
$
1,663.4
$
1,111.8
Total Proprietary Net Sales
$
242.0
$
216.1
$
920.0
$
777.6
VIVITROL
$
102.4
$
102.0
$
400.4
$
379.5
ARISTADAi
$
83.4
$
79.2
$
327.7
$
302.1
LYBALVI
$
56.2
$
34.9
$
191.9
$
96.0
Profitability
(In millions)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2023
2022
2023
2022
GAAP Net Income (Loss)
$
112.8
$
(28.3)
$
355.8
$
(158.3)
GAAP Net Income (Loss)
From Continuing Operations
$
160.6
$
17.2
$
519.2
$
(33.2)
Non-GAAP Net Income
$
37.4
$
24.2
$
243.7
$
57.9
Non-GAAP Net Income From
Continuing Operations
$
81.8
$
67.4
$
396.5
$
174.9
EBITDA
$
32.3
$
(1.2)
$
323.8
$
(84.0)
EBITDA From Continuing
Operations
$
72.8
$
34.6
$
486.3
$
50.6
Please refer to Note 2 below for details related to certain tax provisions recorded during the quarter ended Dec. 31, 2023 which impacted GAAP Net Income and Non-GAAP Net Income during the quarter.
Revenue Highlights
LYBALVI
– Revenues for the fourth quarter and year ended Dec. 31, 2023 were $56.2 million and $191.9 million, respectively.
– Fourth quarter revenues and total prescriptions grew 61% and 65%, respectively, compared to the fourth quarter of 2022.
ARISTADAi
– Revenues for the fourth quarter and year ended Dec. 31, 2023 were $83.4 million and $327.7 million, respectively.
– Fourth quarter revenues and total prescriptions (on a months of therapy basis) grew 5% and 4%, respectively, compared to the fourth quarter of 2022.
VIVITROL
– Revenues for the fourth quarter and year ended Dec. 31, 2023 were $102.4 million and $400.4 million, respectively.
Manufacturing & Royalties
– Royalty revenues from INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and INVEGA HAFYERA/BYANNLI for the fourth quarter and year ended Dec. 31, 2023 were $75.2 million and $486.1 million, respectively. 2023 royalty revenues included $195.4 million of back royalties and associated interest related to U.S. net sales of these products in 2022, following favorable resolution of the arbitration proceedings related to these products in the second quarter of 2023.
– VUMERITY revenues for the fourth quarter and year ended Dec. 31, 2023 were $33.6 million and $129.3 million, respectively.
Key Operating Expenses
Please see Note 1 below for details regarding discontinued operations.
(In millions)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2023
2022
2023
2022
R&D Expense –
Continuing Operations
$
73.9
$
73.0
$
270.8
$
272.7
R&D Expense –
Discontinued Operations
$
21.5
$
31.6
$
116.2
$
121.1
SG&A Expense –
Continuing Operations
$
169.8
$
152.9
$
689.8
$
590.8
SG&A Expense –
Discontinued Operations
$
19.4
$
4.7
$
48.6
$
15.0
Year-over-year increase in SG&A expense related to continuing operations was driven primarily by investment in the LYBALVI direct-to-consumer advertising campaign and certain one-time expenses related to the successful resolution of legal proceedings including the Janssen arbitration and VIVITROL patent litigation.
Balance Sheet
At Dec. 31, 2023, the company recorded cash, cash equivalents and total investments of $813.4 million, compared to $740.1 million at Dec. 31, 2022. The company’s total debt outstanding as of Dec. 31, 2023 was $290.7 million.
Share Repurchase Program
On Feb. 15, 2024, the company’s board of directors approved a new share repurchase program, authorizing the company to repurchase up to $400 million of the company’s ordinary shares (exclusive of any fees, commissions or other expenses related to such repurchases). The program does not have an expiration date and can be discontinued at any time. Please refer to Note 3 below for further details.
Financial Expectations for 2024
All line items are according to GAAP, except as otherwise noted.
In millions
2024
Expectations
Total Revenues a
$1,500 – $1,600
VIVITROL Net Sales
$410 – $430
ARISTADAi Net Sales
$340 – $360
LYBALVI Net Sales
$275 – $295
Cost of Goods Sold
$230 – $250
R&D Expenses
$225 – $255
SG&A Expenses
$625 – $655
GAAP Net Income b
$350 – $390
Non-GAAP Net Income b
$465 – $505
EBITDA
$445 – $485
Effective Tax Rate
~17%
a Expected Total Revenues reflect expiration of the U.S. royalty related to INVEGA SUSTENNA in August 2024.
b Expected 2024 weighted average basic share count of approximately 169.0 million shares outstanding and a weighted average diluted share count of approximately 173.0 million shares outstanding.
Recent Events
– In November 2023, the company completed the separation of its oncology business into Mural Oncology plc, a new, independent, publicly-traded company.
– In December 2023, the company announced that it had entered into a definitive agreement to sell its development and manufacturing facility in Athlone, Ireland to Novo Nordisk. Under the terms of the agreement, upon closing of the transaction, Alkermes will be entitled to a one-time cash payment of $92.5 million for the facility and related assets, subject to customary adjustments in accordance with the agreement. The transaction is expected to close in mid-2024, subject to certain closing conditions.
– In January 2024, the company announced topline results from a phase 3, open-label extension study assessing the long-term safety, tolerability and durability of treatment effect of LYBALVI in patients with schizophrenia, schizophreniform disorder or bipolar I disorder for up to four years of treatment, following treatment received in prior LYBALVI studies.
– In January 2024, the company announced that it had completed the narcolepsy type 1 cohort in its phase 1b study of ALKS 2680, the company’s novel, investigational orexin 2 receptor agonist in development for the treatment of narcolepsy. The data supported dose selection of 4 mg, 6 mg, and 8 mg once daily for the planned phase 2 study in narcolepsy type 1, which the company plans to initiate in the first half of 2024.
Notes and Explanations
1. The company determined that upon the separation of its oncology business, completed on Nov. 15, 2023, the oncology business met the criteria for discontinued operations in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 205, Discontinued Operations. Accordingly, the accompanying consolidated financial statements for all periods presented have been updated to present the assets and liabilities associated with the oncology business as discontinued operations on the consolidated balance sheets, and the results of all discontinued operations reported as a separate component of loss in the consolidated statements of operations and comprehensive income (loss).
2. During the quarter ended Dec. 31, 2023, the company recorded a $102.2 million net tax benefit from continuing operations and an income tax provision of $6.9 million from discontinued operations driven by a $161.0 million tax benefit related to the partial release of a valuation allowance against certain Irish deferred tax assets, partially offset by
(i) an income tax expense related to a reduced foreign derived intangible income deduction following the publication of new guidance on the application of Section 174 of the U.S. Internal Revenue Code of 1986, as amended, and
(ii) a one-time charge related to the transfer of certain intellectual property in connection with the separation of the company’s oncology business.
The tax benefit related to the release of the valuation allowance was excluded from non-GAAP net income due to the one-time nature of the benefit.
3. Under the share repurchase program, the company may repurchase ordinary shares of the company from time to time in an aggregate amount of up to $400 million (exclusive of any fees, commissions or other expenses related to such repurchases), subject to general business and market conditions and other investment opportunities, through open market purchases, conducted through Rule 10b5-1 plans or 10b-18 plans pursuant to the Securities Exchange Act of 1934, as amended, or through other mechanisms permitted by the company’s constitution.
Conference Call
Alkermes will host a conference call and webcast presentation with accompanying slides at 8:00 a.m. EST (1:00 p.m. GMT) on Thursday, Feb. 15, 2024, 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.