Alkermes Breaks $1 Billion

Alkermes (ALKS -0.85%) had 2018 revenue that came in at over $1 billion, the level that's typically set as a blockbuster.

Of course, it took the biotech a couple of drugs and royalties on a handful of others to get to that level, but it's a solid start as the company continues to transition from a formulation company to one with growing proprietary drugs.

Alkermes results: The raw numbers

Data source: Alkermes.

What happened with Alkermes this quarter?

• Sales of opioid and alcohol-dependence drug Vivitrol increased 11% year over year as states including Michigan, Pennsylvania, California, Florida, and Kentucky increase coverage of the drug as a treatment option for patients suffering from substance-use disorder.
• Schizophrenia drug Aristada saw sales increase 72% year over year and 35% quarter over quarter, thanks to the launch of Aristada Initio, which helps patients get started on the drug while hospitalized. Alkermes estimates it captured 29% of new prescriptions for long-acting aripiprazole, the active ingredient in Aristada.
• Ampyra, which goes by Fampyra outside the U.S., brought in $38.8 million, basically flat year over year, which wasn't bad since a generic launched in the U.S. last year.
• Manufacturing and royalty revenues for Risperdal Consta, Invega Sustenna, and Invega Trinza were up about 4% year over year.
• Fourth-quarter revenue also included a one-time payment of $26.7 million, which came from the sale of certain royalty streams by Zealand Pharma to Royalty Pharma.
• In November, Alkermes reported positive data from a second phase-3 clinical trial for schizophrenia drug ALKS 3831 that showed patients taking the drug had lower weight gain than those taking olanzapine.
• In December, Alkermes and its partner Biogen (BIIB 0.23%) filed for Food and Drug Administration (FDA) approval of diroximel fumarate, which Biogen plans to market under the name Vumerity.
• In January, Alkermes got bad news from the FDA when the agency turned down the marketing application for its depression drug ALKS 5461.

Image source: Getty Images.

What management had to say

CEO Richard Pops explained the situation with ALKS 5461: "We disagree with the conclusions reached by FDA in its review, but we'll need additional interactions with the agency to know whether there's a reasonable path forward for 5461. It's not clear to us, at this point, that there is."

Pops also went over what Alkermes might be looking for in a potential acquisition or licensing deals:

So now, for the first time, we're also looking at adjacencies that leverage the commercial platform, rather than the scientific platform, and I'd say -- if I had to pick a financial metric that we were most motivated by at this moment -- it's top-line revenue growth with high quality products. We're not really interested in bulk for its own sake. We want to continue the pedigree that we're building in the community, of having a very differentiated, high-value-added medicine.

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Looking forward

Management guided for 2019 revenue in the range of $1.14 billion to $1.19 billion, which includes an expected $150 million milestone payment from Biogen for the approval of Vumerity. Subtracting that, revenue will be down a little year over year due to the generic competition for Ampyra, which will be mostly offset by the growth in Vivitrol and Aristada.

Unfortunately, the increased revenue won't translate into an increase in adjusted earnings, which are expected to fall from $0.61 per share last year to a range of $0.25 to $0.43 this year. The decline will come from increased spending on the sales force for Aristada, as well as higher research and development expenses. Both are an investment in the future, but they'll hurt the bottom line this year.