Full Press Release Details
| Alkermes Contacts: | ||
| For Investors: | Sandy Coombs +1 781 609 6377 | |
| For Media: | Eva Stroynowski +1 781 609 6823 |
Alkermes Plc Reports Third Quarter 2019 Financial Results and Implementation of Restructuring
- Third Quarter Revenues of $255.2 Million, Primarily Driven by Approximately 20% Year-Over-Year Growth of Proprietary Product Net Sales -
- Company Reports GAAP Net Loss per Share of $0.34 and Non-GAAP Net Loss per Share of $0.04 -
- Restructuring Significantly Decreases Operating Expense Base and is Expected to Deliver Cost Savings of Several Hundred Million Dollars Over the Next Few Years -
- Company Updates Financial Expectations for 2019 -
DUBLIN, Ireland, Oct. 23, 2019 - Alkermes plc (Nasdaq: ALKS) today reported financial results for the third quarter of 2019 and the implementation of a restructuring plan following a review of the company's operations, cost structure and growth opportunities.
"As the profile of Alkermes changes, our executional priorities are clear: maximize the value of our commercial products and development candidates, streamline our cost structure and position the company for sustained future profitability. The restructuring is designed to further focus our R&D efforts on specific high-potential programs within CNS and oncology, improve financial efficiencies in our SG&A organization and drive growth," commented Richard Pops, Chief Executive Officer of Alkermes. "VIVITROL and ARISTADA provide a strong and growing foundation for our commercial business and the anticipated commercial launch of VUMERITYTM will provide a profitable new source of royalty revenues. We also continue to advance our pipeline programs, with the planned submission of the ALKS 3831 New Drug Application for both schizophrenia and bipolar I disorder this quarter, and the planned presentation of new data from ALKS 4230, our phase 1/2 immuno-oncology asset, at an upcoming medical meeting."
Quarter Ended Sept. 30, 2019 Financial Highlights
Quarter Ended Sept. 30, 2019 Financial Results
"Our third quarter results reflect solid year-over-year growth of VIVITROL and ARISTADA. We are committed to further improving our financial efficiency and focusing the investments we are making to support our future growth," commented James Frates, Chief Financial Officer of Alkermes. "As we approach the end of the year, we are refining our financial expectations for 2019, including an increase in our expectations for non-GAAP net income, to reflect our results year-to-date, expectations for the fourth quarter and the impact of the restructuring announced today."
In October 2019, Alkermes completed a review of the company's operations, cost structure and growth opportunities and implemented a restructuring plan. The restructuring included the elimination of approximately 160 current positions across the organization, a decrease in the company's expected near-term hiring plans and implementation of cost-saving measures related to external spend. These efforts are expected to result in cost savings of approximately $150 million. The company expects to record a charge of approximately $15 million in the fourth quarter of 2019 as a result of the restructuring, consisting of one-time termination benefits for employee severance, benefits and related costs.
Financial Expectations for 2019
The following outlines the company's updated financial expectations for 2019, which include the impact of the restructuring announced today:
Alkermes will host a conference call and webcast presentation with accompanying slides at 8:00 a.m. ET (1:00 p.m. BST) on Wednesday, Oct. 23, 2019, to discuss these financial results and provide an update on the company. The webcast may be accessed on the Investors section of Alkermes' website at www.alkermes.com. The conference call may be accessed by dialing +1 877 407 2988 for U.S. callers and +1 201 389 0923 for international callers. In addition, a replay of the conference call will be available from 11:00 a.m. ET (4:00 p.m. BST) on Wednesday, Oct. 23, 2019, through Wednesday, Oct. 30, 2019, and may be accessed by visiting Alkermes' website or by dialing +1 877 660 6853 for U.S. callers and +1 201 612 7415 for international callers. The replay access code is 13694597.
Alkermes plc is a fully integrated, global biopharmaceutical company developing innovative medicines for the treatment of central nervous system (CNS) diseases and oncology. The company has a diversified commercial product portfolio and a substantial clinical pipeline of product candidates for diseases that include schizophrenia, depression, addiction, multiple sclerosis, and cancer. Headquartered in Dublin, Ireland, Alkermes plc has an R&D center in Waltham, Massachusetts; a research and manufacturing facility in Athlone, Ireland; and a manufacturing facility in Wilmington, Ohio. For more information, please visit Alkermes' website at www.alkermes.com.
Non-GAAP Financial Measures
This press release includes information about certain financial measures that are not prepared in accordance with GAAP, including non-GAAP net income (loss) and non-GAAP basic and diluted net earnings (loss) per share. These non-GAAP measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies.
Non-GAAP net income (loss) adjusts for one-time and non-cash charges by excluding from GAAP results: share-based compensation expense; amortization; depreciation; non-cash net interest expense; certain other one-time or non-cash items; changes in the fair value of contingent consideration; changes in the fair value of warrants and equity method investments; restructuring charges; and the income tax effect of these reconciling items.
The company's management and board of directors utilize these non-GAAP financial measures to evaluate the company's performance. The company provides these non-GAAP measures of the company's performance to investors because management believes that these non-GAAP financial measures, when viewed with the company's results under GAAP and the accompanying reconciliations, are useful in identifying underlying trends in ongoing operations. However, non-GAAP net income (loss) and non-GAAP basic and diluted net earnings (loss) per share are not measures of financial performance under GAAP and, accordingly, should not be considered as alternatives to GAAP measures as indicators of operating performance. Further, non-GAAP net income (loss) and non-GAAP basic and diluted net earnings (loss) per share should not be considered measures of our liquidity.
A reconciliation of certain GAAP to non-GAAP financial measures has been provided in the tables included in this press release.
Note Regarding Forward-Looking Statements
Certain statements set forth in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, including, but not limited to, statements concerning: the company's business plans or prospects; the company's expectations concerning future financial and operating performance, including the potential cost savings that may be achieved in connection with the company's implementation of a restructuring, and the company's potential future profitability and continued growth, including expectations of continued revenue growth from the company's commercial products and royalty streams and the potential addition of VUMERITY as a new source of royalty revenue; expectations concerning the company's continued investment in its development pipeline and commercial products and capabilities, and the value that can be derived therefrom; the potential therapeutic and commercial value of the company's marketed and development products; expectations concerning the timing, details and results of the company's clinical development activities, including plans for the presentation of new data for ALKS 4230 at an upcoming medical meeting; the company's expectations and timelines for regulatory activities and interactions with the FDA, including the company's planned submission of an NDA for ALKS 3831 for the treatment of schizophrenia and the treatment of bipolar I disorder; and the company's expectations relating to the anticipated launch of VUMERITY and the financial benefits that may be achieved under the company's license and collaboration agreement with Biogen. The company cautions that forward-looking statements are inherently uncertain. Although the company believes that such statements are based on reasonable assumptions within the bounds of its knowledge of its business and operations, the forward-looking statements are neither promises nor guarantees and they are necessarily subject to a high degree of uncertainty and risk. Actual performance and results may differ materially from those expressed or implied in the forward-looking statements due to various risks and uncertainties. These risks and uncertainties include, among others: that the expected cost savings related to the company's implementation of a restructuring plan may not be achieved or may be lower than anticipated; the unfavorable outcome of litigation, including so-called "Paragraph IV" litigation and other patent litigation, related to any of our products or products using our proprietary technologies, which may lead to competition from generic drug manufacturers; data from clinical trials may be interpreted by the FDA in different ways than we interpret it; the FDA may not agree with our regulatory approval strategies or components of our filings for our products, including our clinical trial designs, conduct and methodologies and adequacy of the data included to support the proposed indications; clinical development activities may not be completed on time or at all; the results of our clinical development activities may not be positive, or predictive of real-world results or of results in subsequent clinical trials; regulatory submissions may not occur or be submitted or approved in a timely manner; the company and its licensees may not be able to continue to successfully commercialize their products; there may be a reduction in payment rate or reimbursement for the company's products or an increase in the company's financial obligations to governmental payers; the FDA or regulatory authorities outside the U.S. may make adverse decisions regarding the company's products; the company's products may prove difficult to manufacture, be precluded from commercialization by the proprietary rights of third parties, or have unintended side effects, adverse reactions or incidents of misuse; and those risks and uncertainties described under the heading "Risk Factors" in the company's most recent Annual Report on Form 10-K and in subsequent filings made by the company with the U.S. Securities and Exchange Commission ("SEC"), which are available on the SEC's website at www.sec.gov. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Except as required by law, the company disclaims any intention or responsibility for updating or revising any forward-looking statements contained in this press release.
VIVITROL is a registered trademark of Alkermes, Inc.; ARISTADA and ARISTADA INITIO are registered trademarks of Alkermes Pharma Ireland Limited and VUMERITYTM is a trademark of Alkermes Pharma Ireland Limited used by Biogen under an exclusive license; RISPERDAL CONSTA , INVEGA SUSTENNA , XEPLION , INVEGA TRINZA and TREVICTA are registered trademarks of Johnson & Johnson; and AMPYRA and FAMPYRA are registered trademarks of Acorda Therapeutics, Inc.
i AMPYRA (dalfampridine) Extended Release Tablets, 10 mg is developed and marketed in the U.S. by Acorda. Biogen Inc. markets this product as FAMPYRA (prolonged-release fampridine tablets) outside the U.S. under a licensing agreement with Acorda.
ii The term "ARISTADA" as used in this press release refers to ARISTADA and ARISTADA INITIO , unless the context indicates otherwise.
| Alkermes plc and Subsidiaries | ||||||||
| Selected Financial Information (Unaudited) | ||||||||
| Condensed Consolidated Statements of Operations - GAAP | Three Months Ended | Three Months Ended | ||||||
| (In thousands, except per share data) | September 30, 2019 | September 30, 2018 | ||||||
| Revenues: | ||||||||
| Product sales, net | $ | 138,774 | $ | 116,035 | ||||
| Manufacturing and royalty revenues | 103,783 | 116,411 | ||||||
| Research and development revenue | 12,686 | 16,274 | ||||||
| Total Revenues | 255,243 | 248,720 | ||||||
| Expenses: | ||||||||
| Cost of goods manufactured and sold | 42,319 | 39,410 | ||||||
| Research and development | 107,671 | 101,265 | ||||||
| Selling, general and administrative | 148,701 | 128,777 | ||||||
| Amortization of acquired intangible assets | 10,173 | 16,426 | ||||||
| Total Expenses | 308,864 | 285,878 | ||||||
| Operating Loss | (53,621 | ) | (37,158 | ) | ||||
| Other (Expense) Income, net: | ||||||||
| Interest income | 3,509 | 2,561 | ||||||
| Interest expense | (3,385 | ) | (3,346 | ) | ||||
| Change in the fair value of contingent consideration | 1,300 | 4,200 | ||||||
| Other expense, net | (1,664 | ) | (90 | ) | ||||
| Total Other (Expense) Income, net | (240 | ) | 3,325 | |||||
| Loss Before Income Taxes | (53,861 | ) | (33,833 | ) | ||||
| (Benefit) Provision for Income Taxes | (983 | ) | 611 | |||||
| Net Loss - GAAP | $ | (52,878 | ) | $ | (34,444 | ) | ||
| Net (Loss) Earnings Per Share: | ||||||||
| GAAP net loss per share - basic and diluted | $ | (0.34 | ) | $ | (0.22 | ) | ||
| Non-GAAP net (loss) earnings per share - basic and diluted | $ | (0.04 | ) | $ | 0.07 | |||
| Weighted Average Number of Ordinary Shares Outstanding: | ||||||||
| Basic and diluted - GAAP | 157,199 | 155,328 | ||||||
| Basic - Non-GAAP | 157,199 | 155,328 | ||||||
| Diluted - Non-GAAP | 157,199 | 159,763 | ||||||
| An itemized reconciliation between net loss on a GAAP basis and non-GAAP net (loss) income is as follows: | ||||||||
| Net Loss - GAAP | $ | (52,878 | ) | $ | (34,444 | ) | ||
| Adjustments: | ||||||||
| Share-based compensation expense | 26,729 | 25,068 | ||||||
| Amortization expense | 10,173 | 16,426 | ||||||
| Depreciation expense | 10,173 | 9,842 | ||||||
| Change in the fair value of contingent consideration | (1,300 | ) | (4,200 | ) | ||||
| Income tax effect related to reconciling items | 155 | (869 | ) | |||||
| Non-cash net interest expense | 168 | 170 | ||||||
| Change in the fair value of warrants and equity method investments | (206 | ) | (367 | ) | ||||
| Non-GAAP Net (Loss) Income | $ | (6,986 | ) | $ | 11,626 |
| Alkermes plc and Subsidiaries | ||||||||
| Selected Financial Information (Unaudited) | ||||||||
| Condensed Consolidated Statements of Operations - GAAP | Nine Months Ended | Nine Months Ended | ||||||
| (In thousands, except per share data) | September 30, 2019 | September 30, 2018 | ||||||
| Revenues: | ||||||||
| Product sales, net | $ | 374,890 | $ | 317,684 | ||||
| Manufacturing and royalty revenues | 340,595 | 359,253 | ||||||
| Research and development revenue | 41,732 | 53,325 | ||||||
| License revenue | 1,000 | 48,250 | ||||||
| Total Revenues | 758,217 | 778,512 | ||||||
| Expenses: | ||||||||
| Cost of goods manufactured and sold | 133,903 | 127,303 | ||||||
| Research and development | 314,676 | 316,434 | ||||||
| Selling, general and administrative | 444,996 | 385,181 | ||||||
| Amortization of acquired intangible assets | 30,187 | 48,742 | ||||||
| Total Expenses | 923,762 | 877,660 | ||||||
| Operating Loss | (165,545 | ) | (99,148 | ) | ||||
| Other Expense, net: | ||||||||
| Interest income | 10,785 | 5,946 | ||||||
| Interest expense | (10,405 | ) | (11,959 | ) | ||||
| Change in the fair value of contingent consideration | (27,800 | ) | (17,300 | ) | ||||
| Other expense, net | (1,534 | ) | (2,815 | ) | ||||
| Total Other Expense, net | (28,954 | ) | (26,128 | ) | ||||
| Loss Before Income Taxes | (194,499 | ) | (125,276 | ) | ||||
| (Benefit) Provision for Income Taxes | (3,233 | ) | 4,322 | |||||
| Net Loss - GAAP | $ | (191,266 | ) | $ | (129,598 | ) | ||
| Net (Loss) Earnings Per Share: | ||||||||
| GAAP net loss per share - basic and diluted | $ | (1.22 | ) | $ | (0.84 | ) | ||
| Non-GAAP net (loss) earnings per share - basic | $ | (0.12 | ) | $ | 0.28 | |||
| Non-GAAP net (loss) earnings per share - diluted | $ | (0.12 | ) | $ | 0.27 | |||
| Weighted Average Number of Ordinary Shares Outstanding: | ||||||||
| Basic and diluted - GAAP | 156,845 | 154,979 | ||||||
| Basic - Non-GAAP | 156,845 | 154,979 | ||||||
| Diluted - Non-GAAP | 156,845 | 160,224 | ||||||
| An itemized reconciliation between net loss on a GAAP basis and non-GAAP net (loss) income is as follows: | ||||||||
| Net Loss - GAAP | $ | (191,266 | ) | $ | (129,598 | ) | ||
| Adjustments: | ||||||||
| Share-based compensation expense | 79,590 | 76,043 | ||||||
| Amortization expense | 30,187 | 48,742 | ||||||
| Depreciation expense | 29,715 | 29,016 | ||||||
| Change in the fair value of contingent consideration | 27,800 | 17,300 | ||||||
| Income tax effect related to reconciling items | 5,170 | (5,535 | ) | |||||
| Non-cash net interest expense | 505 | 531 | ||||||
| Change in the fair value of warrants and equity method investments | (907 | ) | 600 | |||||
| Restructuring expense | - | 3,598 | ||||||
| Debt refinancing charge | - | 2,298 | ||||||
| Non-GAAP Net (Loss) Income | $ | (19,206 | ) | $ | 42,995 |
| Alkermes plc and Subsidiaries | ||||||||
| Selected Financial Information (Unaudited) | ||||||||
| Condensed Consolidated Balance Sheets | September 30, | December 31, | ||||||
| (In thousands) | 2019 | 2018 | ||||||
| Cash, cash equivalents and total investments | $ | 608,533 | $ | 620,039 | ||||
| Receivables | 250,234 | 292,223 | ||||||
| Contract assets | 5,022 | 8,230 | ||||||
| Inventory | 100,987 | 90,196 | ||||||
| Prepaid expenses and other current assets | 54,493 | 53,308 | ||||||
| Property, plant and equipment, net | 341,406 | 309,987 | ||||||
| Intangible assets, net and goodwill | 253,687 | 283,874 | ||||||
| Other assets | 143,633 | 167,150 | ||||||
| Total Assets | $ | 1,757,995 | $ | 1,825,007 | ||||
| Long-term debt - current portion | $ | 2,843 | $ | 2,843 | ||||
| Other current liabilities | 367,551 | 336,931 | ||||||
| Long-term debt | 274,838 | 276,465 | ||||||
| Contract liabilities - long-term | 11,188 | 9,525 | ||||||
| Other long-term liabilities | 33,391 | 27,958 | ||||||
| Total shareholders' equity | 1,068,184 | 1,171,285 | ||||||
| Total Liabilities and Shareholders' Equity | $ | 1,757,995 | $ | 1,825,007 | ||||
| Ordinary shares outstanding (in thousands) | 157,476 | 155,757 | ||||||
| This selected financial information should be read in conjunction with the consolidated financial statements and notes thereto included in Alkermes plc's Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2019, which the company intends to file in October 2019. |
| Alkermes plc and Subsidiaries | ||||||||||||
| 2019 Guidance - GAAP to Non-GAAP Adjustments | ||||||||||||
| An itemized reconciliation between projected loss per share on a GAAP basis and projected earnings per share on a non-GAAP basis is as follows: | ||||||||||||
| (In millions, except per share data) | Amount | Shares | (Loss) Earnings Per Share | |||||||||
| Projected Net Loss - GAAP | $ | (150.0 | ) | 157 | $ | (0.96 | ) | |||||
| Adjustments: | ||||||||||||
| Share-based compensation expense | 100.0 | |||||||||||
| Amortization expense | 40.0 | |||||||||||
| Depreciation expense | 40.0 | |||||||||||
| Change in the fair value of contingent consideration | 30.0 | |||||||||||
| Restructuring | 15.0 | |||||||||||
| Income tax effect related to reconciling items | 4.0 | |||||||||||
| Non-cash net interest expense | 1.0 | |||||||||||
| Projected Net Income - Non-GAAP | $ | 80.0 | 159 | $ | 0.50 | |||||||
| Projected GAAP and non-GAAP measures reflect mid-points within ranges of estimated guidance. |