It's been a volatile couple of weeks for Alkermes (ALKS 1.07%). The commercial-stage biopharma shook investors' confidence in early April when it announced that it received a refuse to file letter from the Food and Drug Administration for ALKS 5461, an important pipeline candidate designed to treat depression. However, just a few weeks later the agency surprised investors again by announcing that it had overturned its original decision and officially accepted ALKS 5461 for review.
Having put the drama surrounding ALKS 5461 behind it, Alkermes posted first-quarter results featuring double-digit revenue growth and a shrinking loss on the bottom line. Management also provided investors with updated financial guidance for the full year.
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Alkermes Q1 results: The raw numbers
| Metric | Q1 2018 | Q1 2017 | Year-Over-Year Change |
|---|---|---|---|
| Revenue | $225.2 million | $191.8 million | 17% |
| GAAP net income | ($62.5 million) | ($68.9 million) | N/A |
| Non-GAAP net income | ($14.2 million) | ($27.9 million) | N/A |
| Non-GAAP earnings per share | ($0.09) | ($0.18) | N/A |
Data source: Alkermes. GAAP = generally accepted accounting principles.
What happened with Alkermes this quarter?
- Sales of Alkermes' opioid- and alcohol-abuse prevention drug Vivitrol grew 7% to $62.7 million.
- Sales of the company's schizophrenia drug Aristada rose 62% to $29.2 million.
- Manufacturing and royalty revenue related to Johnson & Johnson's schizophrenia drugs jumped 15% to $68.8 million.
- Manufacturing and royalty revenue related to Acorda Therapeutics' multiple sclerosis drug fell 3% to $28.3 million.
- Research and development revenue earned as part of its collaboration with Biogen (BIIB 4.77%) for BIIB098 -- which used to be called ALKS 8700 -- was $17.5 million.
Looking beyond the financials, here's an overview of the key events from the period:
- ALKS 5461 was accepted for regulatory review, and a target decision date of Jan. 31, 2019, was assigned.
- Enrollment was completed in the company's Enlighten-2 study. This six-month trial is comparing weight gain in patients with stable schizophrenia who use ALKS 3831 versus olanzapine. Data is expected by the fourth quarter of this year.
- The potential approval of Aripiprazole Lauroxil NanoCrystal Dispersion, a drug designed to help patients get started with Aristada, remains on a track. A decision is expected by the end of June.
What management had to say
CFO James Frates was pleased with the company's first-quarter results, noting that they were "in line with our expectations and reflect the solid growth of our proprietary commercial products and the continued strength of our royalty and manufacturing business."
For his part, CEO Richard Pops kept his commentary focused on the company's late-stage pipeline:
Alkermes is entering the final stages of development for three of our pipeline candidates. The regulatory review of ALKS 5461 is back on track and we continue to prepare for potential approval and launch in 2019. For ALKS 3831, we recently completed enrollment of the ENLIGHTEN-2 pivotal study, with topline data expected in the fourth quarter of 2018. For BIIB098, preparation of the regulatory submission has begun and we are on track to submit the [New Drug Application] toward year-end.
Management also restated its belief that the approval of Aripiprazole Lauroxil NanoCrystal Dispersion could help drive meaningful sales growth for Aristada.
Looking forward
Management tweaked its financial forecast for 2018 to reflect the timing and potential launch of ALKS 5461 in 2019. While projections for revenue and spending on R&D were reaffirmed, the company now projects that selling, general, and administrative spending will be about $40 million less than originally planned. As a result, the GAAP net loss was lowered by a similar amount. The company believes that its non-GAAP results will be slightly better than breakeven.
With the uncertainty surrounding ALKS 5461 in the rearview mirror (for now), CEO Richard Pops kept his final comments focused on the excitement that lies ahead:
We are on the threshold of our next phase of growth. Our dedication and determination to bring these important new medicines to patients are steadfast and we look forward to sharing our progress throughout the year.
