Alkermes (NASDAQ:ALKS), a commercial-stage drug manufacturer specializing in diseases of the central nervous system, reported its second-quarter results on Thursday. A large collaboration payment from its partnership with Biogen (NASDAQ:BIIB) helped drive total revenue growth of 39%. The boost allowed the company to swing into the black on the bottom line.
Let's dig into the details to get a better sense of what else happened during the period and figure out where the company might be heading.
Alkermes' second-quarter results: The raw numbers
|Metric||Q2 2018||Q1 2017||Year-Over-Year Change|
|Revenue||$304.6 million||$218.8 million||39%|
|GAAP net income||($32.6 million)||($43.0 million)||N/A|
|Non-GAAP net income||$45.6 million||$1.2 million||3,800%|
|Non-GAAP earnings per share||$0.29||$0.01||2,900%|
What happened with Alkermes this quarter?
- Sales for Vivitrol, a treatment for opioid and alcohol dependence, jumped 15% to $76.2 million.
- Sales for Aristada, a treatment for schizophrenia, increased 48% to $33.6 million.
- Manufacturing and royalty revenue from its partnership with Johnson & Johnson increased 4% to $85.2 million.
- Manufacturing and royalty revenue related to its deal with Acorda Therapeutics fell 22% to $19.7 million.
- License revenue from its collaboration with Biogen related to BIIB098 (which was previously called ALKS 8700) was $48.3 million. Research and development revenue from the collaboration totaled $18.3 million, the vast majority of which was related to BIIB098.
- Operating costs jumped 16% to $304.7 million. The increase was primarily related to commercialization costs of Vivitrol and Aristada.
- The GAAP loss is partly attributable to a $19.6 million non-cash charge that was recorded during the period related to Recro Pharma's receipt of a complete response letter from the Food and Drug Adminstration (FDA) for its IV Meloxicam drug.
- Aristada Initio received FDA approval in July and is now commercially available. This drug is designed to make it easier for patients to start on Aristada.
- Cash balance at quarter end was $561 million. Total debt was $280 million.
What management had to say
CFO James Frates called the second quarter "strong" and credited the revenue boost to the combination of "solid growth of our proprietary commercial products, the continued strength of our royalty and manufacturing business, as well as the receipt of a $50 million payment related to our collaboration with Biogen for BIIB098."
Frates also stated that the next few months should be an exciting time for shareholders, saying, "As we head into a catalyst-rich second half of the year, we are well positioned financially to drive value, grow our portfolio of commercial products, and advance our late-stage pipeline."
COO Jim Robinson expressed his optimism for the potential for Aristada Initio to drive additional growth: "The launch of Aristada Initio is an important opportunity to support continuity of care and address a critical unmet need for patients, as Aristada is now the first and only long-acting atypical antipsychotic that can be fully dosed on day one for up to two months. Aristada Initio represents a key addition to the treatment paradigm for schizophrenia, and provides a platform to further expand utilization of Aristada."
The second half of 2018 is filled with events for shareholders to look forward to:
- An advisory meeting for ALKS 5461, a potential treatment for major depressive disorder, is set to take place in the fourth quarter.
- Topline data from a pivotal study of ALKS 3831 as a hopeful treatment of schizophrenia is expected in the fourth quarter.
- The new drug application for BIIB098, an investigational treatment for multiple sclerosis, is expected to be submitted by year end.
- Phase 1 data on the immuno-oncology drug ALKS 4230 will be presented "later this year."
Frates also reiterated guidance for the full year calling for revenue of about $1 billion and just over breakeven on a non-GAAP basis on the bottom line.
CEO Richard Pops outlined the company's positioning to continue driving strong growth in the years ahead: "With a growing proprietary commercial portfolio and partnered royalty and manufacturing business approaching $1 billion in revenue in 2018, Alkermes is in a strong position to create significant long-term value. As we head into the second half of 2018, we are on the threshold of important value inflections across our development portfolio."
Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alkermes and Biogen. The Motley Fool owns shares of Johnson & Johnson and has the following options: short October 2018 $135 calls on Johnson & Johnson. The Motley Fool has a disclosure policy.