What happened

Share of Alkermes (NASDAQ:ALKS) are down 9.6% at 3 p.m. EDT, having been down as much as 15.7%, after the drugmaker released disappointing first-quarter earnings.

Investors' anxiety comes mainly from Alkermes' Aristada. Back in February, management guided for sales of $40 million, but first-quarter sales of the schizophrenia drug actually came in at $30 million, up just 4% year over year. That's a far cry from the 72% year-over-year growth and the 35% quarter-over-quarter growth seen in the fourth quarter.

Man hunched over holding his head

Image source: Getty Images.

So what

It's certainly disappointing that Aristada didn't hit management's target. The launch of Aristada Initio, which helps patients get started on the drug while hospitalized, was supposed to increase Alkermes' market share.

But management said some of the slow growth for Aristada came from changes in inventory, and backed the overall 2019 revenue guidance it gave back in February. If management can hit its goal, today's decline will end up being a substantial overreaction.

Investors should also keep in mind that Aristada sales of $30 million are less than 14% of Alkermes' overall revenue, so while sales of the drug were expected to grow this year, the effect -- positive or negative -- will be muted by changes in the bulk of its revenue.

Now what

While it's often dangerous to catch a falling knife, today's drop looks overdone. Investors who have a long time frame and trust in management's guidance can pick up shares today at a discount.