On April 29, 2020 Alkermes plc (Nasdaq: ALKS) reported financial results for the first quarter of 2020, and provided commentary related to the impact of the COVID-19 pandemic on the business (Press release, Alkermes, APR 29, 2020, View Source [SID1234556751]).
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"In the face of the COVID-19 pandemic, Alkermes has adapted our business practices so that we can both continue to operate safely and meet our public health responsibilities. People living with serious mental illness and addiction have an ongoing need for their medicines and care, yet many are facing challenges in accessing their caregivers and the healthcare system," said Richard Pops, Chief Executive Officer of Alkermes. "We immediately mobilized to change the way we do business to protect the health and wellbeing of our employees and maintain business continuity, including preserving our ability to provide uninterrupted supply of the medicines we manufacture. I am grateful and proud of the resiliency and adaptability demonstrated by employees across the company. In the next stage of our response, we are focusing on how we can learn from the challenges posed by this pandemic and be creative in developing new best practices that have the potential to have a lasting positive impact on our business."
"We entered 2020 with clear operational objectives: drive the growth of VIVITROL and ARISTADA; prepare for the potential approval and launch of ALKS 3831; and advance our research and development portfolio, including the clinical development program for ALKS 4230 in oncology. We have made progress against all these objectives and our first quarter results reflect solid commercial execution for our proprietary products," continued Mr. Pops. "We will continue to adapt as needed in this dynamic environment to advance these key priorities. ALKS 4230 and ALKS 3831 represent the next major potential value drivers for the business. The potential of ALKS 4230 continues to be supported by the accumulating clinical data across our studies of both intravenous and subcutaneous administration in monotherapy and combination settings. We look forward to sharing data at a medical meeting later this year. For ALKS 3831, we will be finalizing our commercial launch planning as we approach the November 2020 PDUFA date. ALKS 3831 offers an important opportunity to drive operating leverage and efficiencies related to our existing psychiatry commercial infrastructure and drive long-term profitability."
Quarter Ended March 31, 2020 Financial Highlights
Total revenues for the quarter were $246.2 million. This compared to $223.1 million for the same period in the prior year.
Net loss according to generally accepted accounting principles in the U.S. (GAAP) was $38.7 million for the quarter, or a basic and diluted GAAP net loss per share of $0.24. This compared to GAAP net loss of $96.4 million, or a basic and diluted GAAP net loss per share of $0.62, for the same period in the prior year.
Non-GAAP net income was $1.7 million for the quarter, or a non-GAAP basic and diluted earnings per share of $0.01. This compared to non-GAAP net loss of $26.0 million, or a non-GAAP basic and diluted net loss per share of $0.17, for the same period in the prior year.
Quarter Ended March 31, 2020 Financial Results
Revenues
Net sales of proprietary products were $129.7 million, compared to $99.5 million for the same period in the prior year.
Net sales of VIVITROL were $78.8 million, compared to $69.2 million for the same period in the prior year, representing an increase of approximately 14%.
Net sales of ARISTADA1 were $51.0 million, compared to $30.3 million for the same period in the prior year, representing an increase of approximately 68%.
Manufacturing and royalty revenues were $116.3 million, compared to $108.9 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 $75.6 million for the same period in the prior year.
Costs and Expenses
Total operating expenses were $283.6 million, compared to $299.1 million for the same period in the prior year.
Research and Development (R&D) expenses were $93.3 million, compared to $102.6 million for the same period in the prior year.
Selling, General and Administrative (SG&A) expenses were $133.4 million, compared to $141.2 million for the same period in the prior year.
Balance Sheet
At March 31, 2020, Alkermes recorded cash, cash equivalents and total investments of $549.7 million, compared to $614.4 million at Dec. 31, 2019. Cash on hand at March 31, 2020 significantly exceeded the company’s total debt outstanding of $276.6 million under its term loan, which matures in March 2023.
"Our first quarter results were slightly ahead of expectations, reflecting 30% year-over-year growth in net sales of our proprietary products, and continued focus on advancing our pipeline of novel oncology and neuroscience candidates," commented James Frates, Chief Financial Officer of Alkermes. "Due to the uncertain duration and extent of COVID-19 disruptions to the healthcare system, including patient access to treatment, we cannot reliably estimate the future impact that COVID-19 may have on our business and are withdrawing our 2020 financial expectations at this time. We remain focused on driving the growth of VIVITROL and ARISTADA, advancing our research and development activities, and maintaining disciplined expense management. We believe Alkermes is financially well-positioned, with sufficient capital and liquidity to weather the impacts of this pandemic. We will continue to take proactive steps to help ensure business continuity and advance our business objectives."
Financial Expectations for 2020
Due to uncertainties regarding the impact of the COVID-19 pandemic on Alkermes’ operating and financial results, Alkermes withdraws the financial expectations for 2020 set forth in its press release dated Feb. 13, 2020. The company expects that the extent of the impact of COVID-19 on its business will be driven primarily by the severity and duration of the pandemic. While the company has adopted practices to mitigate the impact of COVID-19 disruptions, at this time, it is unable to reasonably estimate the impact of the pandemic on future results.
COVID-19 Update
Protection of Employee Well-Being
The company has instituted a global remote work policy that will continue until further notice for those employees who can work remotely, including field-based employees. For those manufacturing and lab-based employees who work on critical research and manufacturing tasks, the company has instituted additional equipment, sanitization and physical distancing practices to help protect their health and safety as they continue to advance important research and deliver medicines for patients.
Manufacturing & Supply
At this time, the company continues to operate its manufacturing facilities in Wilmington, Ohio and Athlone, Ireland and does not anticipate any interruptions in its ability to supply commercial product to the patients that rely on VIVITROL, ARISTADA and the third-party products it manufactures, and investigational product for ongoing clinical trials. Together with its critical supply chain vendors, the company is working to continually assess and mitigate the potential impact of COVID-19 on Alkermes’ manufacturing operations.
Supporting Patients & Healthcare Providers
The company has taken action to support people living with schizophrenia, opioid dependence and alcohol dependence and help assure that they have access to the information, resources and medicines that may assist in their treatment. To support these efforts, the company is:
identifying new healthcare providers who are currently available to administer injections of its medicines, including appropriate retail pharmacies and clinics;
updating the provider locators on VIVITROL.com and ARISTADA.com with information on these healthcare providers and injection sites; and
working closely with healthcare providers, including pharmacies, and payers to help navigate new challenges that may arise for patients in accessing their prescribed medications.
For the safety of employees and in consideration of national and local guidelines, in mid-March the company suspended all in-person meetings and interactions with the healthcare community for field-based sales personnel. The company remains dedicated to supporting the needs of healthcare providers and patients through virtual interactions.
Research and Development
Clinical trials: The company has been in frequent communication with investigators regarding the impact of the current environment on the conduct of its ongoing clinical trials and is focused on supporting treatment continuity and ensuring patient safety. While COVID-19 has impacted timelines of certain clinical trials, ongoing studies are continuing with the appropriate precautions, managed in consultation with investigators and academic institutions.
Regulatory: At this time, the company continues its regulatory activities relating to ALKS 3831, including preparation for an Advisory Committee meeting in advance of the November 2020 Prescription Drug User Fee Act ("PDUFA") target action date for ALKS 3831.
Conference Call
Alkermes will host a conference call and webcast presentation with accompanying slides at 8:00 a.m. ET (1:00 p.m. BST) on Wednesday, April 29, 2020, 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. BST) on Wednesday, April 29, 2020, through Wednesday, May 6, 2020, 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 13701480.