Here's Why Alkermes Spiked Today

Expectation-topping results mixed with upbeat guidance put Wall Street in a good mood.

Brian Feroldi
Brian Feroldi
Feb 14, 2018 at 3:51PM
Health Care

What happened

In response to reporting fourth-quarter results and sharing guidance for 2018, shares of Alkermes (NASDAQ:ALKS), a commercial-stage biopharmaceutical company focused on diseases of the central nervous system, rose as much as 10% on Wednesday. Shares settled down in afternoon trading but were still up 7% as of 2:30 p.m. EST.

So what

Here's a review of the headline numbers from the quarter:

  • Revenue jumped 29% to $275 million thanks to broad strength in product sales and the company's recently announced deal with Biogen (NASDAQ:BIIB). That sailed past the $253 million in revenue that Wall Street had projected.
  • Non-GAAP net income more than doubled to $50.3 million, or $0.33 per share. That also compared favorably to the $0.23 that analysts had modeled.
A person in a suit giving thumbs up as money falls in the background.

Image source: Getty Images.

Looking beyond the financials, Alkermes also provided investors with a review of its recent business developments:

  • ALKS 5461, a hopeful treatment for depression that has already achieved Fast Track status, was successfully submitted to the FDA for review.
  • Alkermes' agreement with Biogen could allow the company to earn up to $200 million in milestone payments plus royalties on any product sales should everything go according to plan.
  • Aripiprazole Lauroxil NanoCrystal Dispersion, which is a compound that helps patients get started with Alkermes' schizophrenia drug Aristada, has been submitted for regulatory review.

Turning to 2018, here's the guidance that management is offering investors:

  • Revenue is expected to land between $975 million and $1.025 billion. The midpoint of this range is slightly ahead of what Wall Street was expecting.
  • Non-GAAP net loss is expected to be between $5 million to $35 million, or $0.03 to $0.23 per share. This is behind the $0.44 in EPS that analysts were projecting. 

Given the strong fourth-quarter results, it isn't hard to figure out why shareholders are having a good day.


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Now what

Alkermes has set itself up to have an action packed 2018. All of the company's products look poised for continued growth and go/no-go decisions are expected on both ALKS 5461 and Aripiprazole Lauroxil NanoCrystal Dispersion. Meanwhile, Biogen looks poised to submit BIIB098 for regulatory review -- which should trigger a $50 million milestone payment -- and investors should also get a look at phase 2 results for a schizophrenia product candidate called ALKS 3831.

Investors have reason to believe CFO James Frates when he says that 2018 should be a "transformative year" for Alkermes. That's why Alkermes stock is capable of still moving higher, even after accounting for Wednesday's big jump.