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Why Alkermes' Q4 Results Were Better Than They Might Seem

By Keith Speights - Feb 11, 2021 at 12:00PM

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The biotech posted a big year-over-year sales decline. But there was a good reason for it.

Alkermes (ALKS 2.11%) proved to be a disappointment for investors last year, with its stock slipping while the overall market soared. However, the biotech is off to a pretty good start in 2021.

That good start isn't as strong as it was. Alkermes announced its fourth-quarter results before the market opened on Thursday. Its shares slid more than 8% in early trading. Here are the highlights of the biotech's Q4 update.

Lab worker holding a pipette.

Image source: Getty Images.

By the numbers

Alkermes reported revenue in the fourth quarter of $280 million, down 32% year over year. Although the company's top line went in the wrong direction, the result still topped the average analyst estimate of $268.3 million.

The biotech announced a fourth-quarter net loss of $42.6 million, or $0.27 per share, based on generally accepted accounting principles (GAAP). This represented significant deterioration from the net loss of $5.4 million, or $0.03 per share, recorded in the same quarter of 2019.

On a non-GAAP adjusted basis, Alkermes' net income in the fourth quarter totaled $16.5 million, or $0.10 per share. This was a lot lower than the adjusted earnings of $131.4 million, or $0.83 per share, posted in the prior-year period. However, it beat the consensus Wall Street adjusted earnings estimate of $0.07 per share.

Behind the numbers

Alkermes' revenue decline really wasn't as bad as it looks at first glance. In the fourth quarter of 2019, the company received a $150 million milestone payment from Biogen related to U.S. Food and Drug Administration (FDA) approval of Vumerity in treating multiple sclerosis (MS). Adjusting for that one-time payment for Vumerity's approval, Alkermes' revenue in the fourth quarter would have increased 6.5% year over year.

Licensing Vumerity from Alkermes appears to have been a good move for Biogen, by the way. Biogen CEO Michael Vounatsos noted in his company's Q4 conference call that Vumerity is now the No. 2 MS product in the U.S.

Several of the company's marketed products delivered solid sales growth in Q4. Sales of Alkermes' partnered long-acting antipsychotics, which include Risperdal Consta, Invega Sustenna/Xeplion, and Invega Trinza/Trevicta, totaled $92.3 million, up nearly 17% year over year. Sales of another antipsychotic drug, Aristada, soared 21% to $68.9 million.

One exception, though, was Vivitrol. Sales for the opioid- and alcohol-dependence drug fell nearly 14% year over year to $80 million. 

Alkermes also received a revenue boost from its legacy products. Revenue for these older products totaled $38.6 million in the fourth quarter, a 37% year-over-year jump.

Looking ahead

Alkermes expects that revenue for full-year 2021 will be between $1.1 billion and $1.17 billion. It anticipates GAAP loss per share of $0.53 to $0.78, with adjusted non-GAAP EPS between $0.37 and $0.62. The midpoint of this adjusted EPS range is a little below the consensus analyst estimate of $0.52.

The biotech stock could have a potential catalyst on the way in the near future. The FDA is scheduled to announce an approval decision for Lybalvi in treating schizophrenia and bipolar I disorder by June 1, 2021.  

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