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Alkermes Sets Itself Up for a "Transformative" 2018

By Brian Feroldi - Updated Feb 20, 2018 at 8:46AM

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The commercial-stage biopharma caps off 2017 on a high note and prescribes itself a healthy future.

Alkermes (ALKS 2.08%), a biopharmaceutical company focused on diseases of the central nervous system, reported its fourth-quarter and full-year earnings on Wednesday, Feb. 14. Sales growth accelerated to 29% during the period thanks to growing product sales and the company's new licensing deal with Biogen (NASDAQ: BIIB). The big top-line gain enabled Alkermes to more than double its earnings even as spending on research and development and sales, general, and administrative expenses trended higher.

Alkermes Q4 results: The raw numbers

Metric Q4 2017 Q4 2016 Year-Over-Year Change
Revenue $275.4 million $213.5 million 29%
GAAP net income ($9.9 million) ($21.4 million) (N/A)
Non-GAAP net income $50.3 million $23.3 million 116%
Non-GAAP earnings per share $0.33 $0.15 120%

Data source: Alkermes. GAAP = generally accepted accounting principles.

What happened with Alkermes this quarter?

  • Sales of Vivitrol, a drug used to prevent opioid and alcohol abuse, jumped 22% to $75.6 million.
  • Sales of Aristada, a treatment for schizophrenia, increased 64% to $28.3 million.
  • Manufacturing and royalty revenue from the sales of Johnson & Johnson's three schizophrenia drugs increased 6% to $78.2 million.
  • Manufacturing and royalty revenues from Acorda Therapeutics' multiple sclerosis drug Ampyra/Fampyra increased 18% to $38.1 million.
  • Revenues from the company's partnership with Biogen for BIIB098 -- which was formerly known as ALKS 8700 -- included $28 million of license revenue and $2.3 million of R&D reimbursement.
  • Operating expenses grew 14% as a result of increased investments in R&D and the commercial organization.

Financials aside, here's a review of the company's recent business developments:

  • ALKS 5461, a hopeful treatment for depression, was recently submitted to the FDA for review. ALKS 5461 has already been granted Fast Track status.
  • Alkermes' license and collaboration agreement with Biogen sets the company up to earn up to $200 million in milestone payments plus mid-teen royalties on any product sales.
  • A new drug application was submitted to the FDA for Aripiprazole Lauroxil NanoCrystal Dispersion, which is a product that is designed to help patients get started with Aristada. A target action date of June 30, 2018 has been assigned.
Various pills scattered on top of hundred dollar bills.

Image source: Getty Images.

Turning to the full-year 2017, here's a look at the key financial numbers from the year:

  • Revenue grew 21% to $903 million. This exceeded management's guidance range.
  • Vivitrol sales were $269.3 million, landing right around the midpoint of management's expectation.
  • GAAP net loss of $157.9 million, or $1.03 per share, was lower than management had projected.
  • Non-GAAP net income was $27.8 million, or $0.17 per share. 
  • Alkermes ended the year with $591 million in the bank and total debt of $281 million.

What management had to say

Alkermes CEO Richard Pops kept his commentary focused on the company's pipeline of central nervous system (CNS) disease products:

"We are making significant progress in advancing our pipeline of late-stage CNS development candidates, highlighted by the recent submission of the ALKS 5461 NDA, the recently announced license and collaboration agreement with Biogen to develop and commercialize BIIB098, and as we near completion of enrollment in the six-month pivotal weight study for ALKS 3831"

Looking forward

CFO James Frates commentated that Alkermes has set itself up for a "transformative" 2018:

Our financial expectations for 2018 reflect important investments that will drive future value as we advance our late-stage pipeline and prepare for the anticipated launch of ALKS 5461, with the planned expansion of our commercial organization midyear. We also expect solid growth for Vivitrol and Aristada, and remain committed to driving awareness and advancing the treatment paradigm for these important medicines."

In response to that enthusiasm, here's a look at what the company expects to happen in 2018:

  • Revenue will land between $975 million and $1.025 billion, representing growth of 11% at the midpoint.
  • Spending on R&D and SG&A will rise as the company advances its pipeline and prepares for the launch of ALKS 5461.
  • GAAP net loss will range from $250 million to $280 million, or $1.61 to $1.81 per share.
  • Non-GAAP net loss will be $5 million to $35 million, or $0.03 to $0.23 per share.

Finally, Pops communicated that the company is in great shape to continue delivering for its investors from here:

Alkermes has worked for many years toward this moment. With a diversified CNS business and significant news flow expected across our pipeline of development candidates in 2018, we are focused on executing on our business strategy to bring these important potential new medicines to patients and creating value for our shareholders."

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