Alkermes plc Reports Second Quarter Fiscal 2012 Financial Results
Thursday, November 03, 2011 7:00:07 AM ET -- Second Quarter Revenues Grew More Than 46% Year-Over-Year to $72.0 Million, Reflecting Growth and Expansion of Commercial Product Portfolio --
-- Company Reports Adjusted EBITDA of $13.3 Million for Second Quarter --
-- Company Expects Significant Increase in Revenues and Positive Adjusted EBITDA for Fiscal Year 2012, Underscoring Financially Transformative Nature of Merger --
Alkermes
plc (ALKS ) today reported financial results for its second
quarter of fiscal 2012, which ended on Sept. 30, 2011. These are the
first financial results released by Alkermes plc (Alkermes) following
the successful completion on Sept. 16, 2011, of the merger of Alkermes,
Inc. with Elan Drug Technologies (EDT). Alkermes is a new, growing,
global leader in central nervous system (CNS) therapeutics,
characterized by its broad portfolio of commercial products and robust
pipeline of new product candidates.
"This quarter marks the beginning of a new phase of growth for Alkermes,
as we begin to realize the financially transformative effects of the EDT
transaction. We are now fully executing on our strategy to build
Alkermes for growth in both the near- and long-term. In
the near-term, we will see the growth in revenues from the expansion of
our portfolio of commercial products. Over the long-term, we will
realize the value of our advancing pipeline of new drug candidates,"
commented Richard Pops, Chief Executive Officer of Alkermes. "We are
committed to our vision of building Alkermes plc as a global leader in
the development of innovative products for a broad range of CNS diseases
for the benefit of patients and healthcare systems around the world."
Second Quarter Fiscal 2012 Financial Results
These financial results reflect a full quarter of operations of
Alkermes, Inc. and 14 days of operations of the former EDT business,
together with the consolidated balance sheet as of Sept. 30, 2011.
For the quarter ended Sept. 30, 2011, the company reported a net loss of
$22.3 million, or a basic and diluted loss per share of $0.22, based on
U.S. Generally Accepted Accounting Principles (GAAP).
As a complement to GAAP results, the company is also providing a
non-GAAP measure of Adjusted EBITDA, which the company believes better
indicates underlying trends in ongoing operations. Adjusted EBITDA
excludes from GAAP results the following: interest expense, taxes,
depreciation, amortization, share-based compensation expense and certain
noncash or nonrecurring items, such as merger-related expenses.
For the second quarter of fiscal 2012, the company reported Adjusted
EBITDA of $13.3 million, or a basic and diluted Adjusted EBITDA per
share of $0.13 and $0.12, respectively. This result includes $3.4
million of Adjusted EBITDA from EDT for the 14-day period following the
close of the merger. The reconciliation between GAAP net loss and
Adjusted EBITDA for the second quarters of fiscal 2012 and 2011 is
provided in the tables at the end of this press release.
"Our second quarter results were driven by the strong performance of our
long-acting atypical antipsychotic franchise, as well as growing sales
of VIVITROL(R) and milestone revenue triggered by the EU launch
of BYDUREON(TM)," commented James Frates, Chief Financial
Officer of Alkermes. "Next quarter, we will report the first complete
quarter of financial results of our combined organization, which will
more fully reflect our diverse product portfolio. Moving forward, we
will continue to focus on growing revenues and delivering on our
Adjusted EBITDA goals."
Revenues
Total revenues for the second quarter of fiscal 2012 were $72.0 million,
compared to $49.2 million for Alkermes, Inc. for the same period in
fiscal 2011. Alkermes plc earns revenues from a broad portfolio of
products, including five key growth products: RISPERDAL(R)
CONSTA(R), INVEGA(R) SUSTENNA(R), AMPYRA(R),
VIVITROL and BYDUREON. Alkermes, Inc. revenues were in line with the
company’s expectations:
--
Manufacturing and royalty revenues from RISPERDAL CONSTA were $44.3
million for the second quarter of fiscal 2012, compared to $42.0
million for the same period in fiscal 2011.
--
Net sales for VIVITROL were $9.9 million for the second quarter of
fiscal 2012, compared to $6.5 million for the same period in fiscal
2011, representing a 52.8% increase year-over-year, and compared to
$9.7 million for the first quarter of fiscal 2012, representing a 2.1%
sequential quarterly increase. This marks the ninth consecutive
quarter of growth for VIVITROL.
--
Research & Development (R&D) revenues for the second quarter of fiscal
2012 included a $7.0 million milestone payment in connection with the
launch of BYDUREON in the EU.
The EDT portfolio contributed $9.1 million to the second quarter fiscal
2012 revenues during the 14-day period following the close of the merger.
Costs and Expenses
Operating expenses for the second quarter of fiscal 2012 were $83.7
million, compared to $56.3 million for the same period of fiscal 2011.
The increase was mainly the result of: $12.8 million of merger-related
expenses included in Selling, General & Administrative (SG&A) expenses;
$6.8 million of costs and expenses associated with 14 days of the EDT
business; a $4.0 million increase in SG&A expenses for Alkermes, Inc.
due to a $1.4 million increase in share-based compensation expense and
an increase in promotional efforts associated with VIVITROL’s launch in
the opioid dependence indication; a $3.3 million increase in Alkermes,
Inc.’s R&D expenses due largely to the advancement of pipeline
candidates into later-stage development; and $1.8 million of
amortization of intangibles. Net interest expense for the second quarter
of fiscal 2012 was $7.2 million, due primarily to interest expense on
the $450 million of term loans secured on June 30, 2011, to fund the
merger.
Balance Sheet
At Sept. 30, 2011, Alkermes had $1.5 billion in total assets, reflecting
the combination of Alkermes, Inc. and EDT, compared with total assets of
Alkermes, Inc. on March 31, 2011, of $452.4 million. As of Sept. 30,
2011, Alkermes had cash and total investments of $240.6 million,
compared to $294.7 million at March 31, 2011.
Financial Expectations for Fiscal 2012
Alkermes’ financial expectations for the fiscal year ending March 31,
2012, are outlined below and include the anticipated results for the
full fiscal year of Alkermes, Inc. and for the EDT business from Sept.
16, 2011 through March 31, 2012. The following statements are
forward-looking, and actual results may differ materially. Please see
"Note Regarding Forward-Looking Statements" at the end of this release
for risks that could cause results to differ materially from these
forward-looking statements.
--
Revenues: Alkermes expects total revenues to range from $350
million to $380 million, up from a range of $205 million to $229
million. These revenue expectations include no changes from the
Alkermes, Inc. guidance provided on May 18, 2011, and reflect
additional revenues from the EDT portfolio.
--
Cost of Goods Manufactured: The company expects total cost of
goods manufactured to range from $120 million to $130 million, up from
a range of $46 million to $57 million, driven by the expansion of the
product portfolio.
--
R&D Expenses: The company expects R&D expenses to
range from $135 million to $145 million, up from a range of $110
million to $125 million. This expectation is based on product
candidates moving into later-stage development.
--
SG&A Expenses: The company expects SG&A expenses to range
from $130 million to $140 million, up from a range of $85 million to
$95 million. These expectations include $25 million to $30 million of
merger-related expenses.
--
Amortization of Intangible Assets: The company expects
amortization of intangibles to range from $25 million to $30 million.
--
Net Interest Expense: The company expects net interest expense
to range from $25 million to $27 million, revised from net interest
income of up to $3 million, due to interest charges on the $450
million of term loans secured on June 30, 2011, to fund the merger.
--
Net Income Tax Expense: The company expects net income tax
expense to range from $5 million to $10 million.
--
GAAP Net Loss: The company expects a GAAP net loss in the range
of $90 million to $102 million, or a basic and diluted loss per share
of approximately $0.78 to $0.89. This loss per share is based on a
weighted average basic and diluted share count of approximately 115
million shares outstanding. This compares to previous expectations of
a GAAP net loss in the range of $36 million to $45 million for
Alkermes, Inc., or a basic and diluted loss per share of approximately
$0.38 to $0.47. This loss per share was based on a weighted average
basic and diluted share count of approximately 96 million shares
outstanding.
--
Share-based Compensation Expense: The company expects share-based
compensation expense, included in the operating expenses above, to
range from $30 million to $35 million, up from a range of $20 million
to $25 million.
--
Adjusted EBITDA: The company expects Adjusted EBITDA to range
from $45 million to $55 million, or a basic Adjusted EBITDA per share
of $0.39 to $0.48, based on a weighted average basic share count of
approximately 115 million shares outstanding, or a diluted Adjusted
EBITDA per share of $0.38 to $0.46, based on a weighted average
diluted share count of approximately 120 million shares outstanding.
This compares to a prior expectation of an Adjusted EBITDA loss of $7
million to $13 million for Alkermes, Inc., or a basic and diluted loss
per share of $0.07 to $0.14, based on a weighted average basic and
diluted share count of approximately 96 million shares outstanding.
Conference Call
Alkermes will host a conference call at 8:30 a.m. EDT (12:30 p.m. GMT)
on Thursday, November 3, 2011, to discuss these financial results and
provide an update on the company. The conference call may be accessed by
dialing +1 888 424 8151 for U.S. callers and +1 847 585 4422 for
international callers. The conference call ID number is 6037988. In
addition, a replay of the conference call will be available from 11:30
a.m. EDT (3:30 p.m. GMT) on Thursday, November 3, 2011, through 5:00
p.m. EST (10:00 p.m. GMT) on Thursday, November 10, 2011, and may be
accessed by visiting Alkermes’ website or by dialing +1 888 843 7419 for
U.S. callers and +1 630 652 3042 for international callers. The replay
access code is 6037988.
About Alkermes plc
Alkermes plc is a fully integrated, global biopharmaceutical company
that applies its scientific expertise and proprietary technologies to
develop innovative medicines that improve patient outcomes. The company
has a diversified portfolio of more than 20 commercial drug products and
a substantial clinical pipeline of product candidates that address
central nervous system (CNS) disorders such as addiction, schizophrenia
and depression. Headquartered in Dublin, Ireland, Alkermes plc has an
R&D center in Waltham, Massachusetts and manufacturing facilities in
Athlone, Ireland; Gainesville, Georgia; and Wilmington, Ohio. For more
information, please visit Alkermes’ website at www.alkermes.com.
Note Regarding Forward-Looking Statements
Certain statements set forth above may constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, including, but not limited to, statements concerning
future financial and operating performance, business plans or prospects;
the likelihood of continued revenue growth from the company’s five key
commercial products; the timing, funding and feasibility of development
activities for its product candidates; and the therapeutic value of the
company’s products. 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; the company’s business is subject to
significant risk and uncertainties and there can be no assurance that
its actual results will not differ materially from its expectations.
These risks and uncertainties include, among others: the company’s
ability to successfully conduct clinical trials in a timely and
cost-effective manner; the possibility that the anticipated benefits
from the recently completed merger of Alkermes, Inc. and EDT cannot or
will not be fully realized; the possibility that costs or difficulties
related to integration of the former Alkermes, Inc. and EDT businesses
will be greater than expected; the possibility that clinical trial
results for the company’s products will not be predictive of real-world
results or of results in subsequent clinical trials; decisions by
foreign regulatory authorities or the U.S. Food and Drug Administration
(FDA) regarding the company’s products; the risk that 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 that
could cause the FDA or foreign regulatory authorities to require
post-approval studies or require removal of the company’s products from
the market; and those risks described in our Registration Statement on
Form S-4 (commission file number 333- 175078) which was declared
effective by the SEC on August 4, 2011, Alkermes, Inc.’s Annual Report
on Form 10-K, as amended, for the year ended March 31, 2011 and in other
filings made by the company with the SEC and which are available at the
SEC’s website at http://www.sec.gov .
The information contained in this press release is provided by the
company as of the date hereof and, except as required by law, the
company disclaims any intention or responsibility for updating any
forward-looking information contained in this press release.
VIVITROL(R) is a trademark of Alkermes, Inc.; RISPERDAL(R)
CONSTA(R) and INVEGA(R) SUSTENNA(R) are
trademarks of Janssen Pharmaceuticals, Inc.; AMPYRA(R) is a
trademark of Acorda Therapeutics, Inc.; and BYDUREON(TM) is a
trademark of Amylin Pharmaceuticals, Inc.
(tables follow)
Alkermes plc and Subsidiaries
Selected Financial Information (Unaudited)
Three Months Three Months
Ended Ended
Condensed Consolidated Statements of Operations - GAAP September 30, September 30,
(In thousands, except per share data) 2011 2010
---------------------------------------------------------------------- ---------- ---------
Revenues:
Manufacturing and royalty revenues $ 54,039 $ 42,623
Product sales, net 9,887 6,469
Research and development revenue 8,052 155
---------------------------------------------------------------------- ---------- ---------
Total Revenues 71,978 49,247
---------------------------------------------------------------------- ---------- ---------
Expenses:
Cost of goods manufactured and sold 17,530 13,911
Research and development 28,160 23,932
Selling, general and administrative 36,234 18,436
Amortization of acquired intangible assets 1,817 -
---------------------------------------------------------------------- ---------- ---------
Total Expenses 83,741 56,279
---------------------------------------------------------------------- ---------- ---------
Operating Loss (11,763 ) (7,032 )
---------------------------------------------------------------------- ---------- - --------- ---
Other (Expense), net:
Interest income 383 673
Interest expense (7,561 ) (2,168 )
Other income (expense), net 336 (82 )
---------------------------------------------------------------------- ---------- --------- ---
Total Other (Expense), net (6,842 ) (1,577 )
---------------------------------------------------------------------- ---------- - --------- ---
Loss Before Income Taxes (18,605 ) (8,609 )
---------------------------------------------------------------------- ---------- - --------- ---
Income Tax Provision (Benefit) 3,650 (943 )
---------------------------------------------------------------------- ---------- --------- ---
Net Loss -- GAAP $ (22,255 ) $ (7,666 )
---------------------------------------------------------------------- ---------- - --------- ---
(Loss) Earnings Per Share:
GAAP loss per share -- basic and diluted $ (0.22 ) $ (0.08 )
========== = ========= ===
Adjusted EBITDA per share -- basic (Non-GAAP) $ 0.13 $ 0.01
========== =========
Adjusted EBITDA per share -- diluted (Non-GAAP) $ 0.12 $ 0.01
========== =========
Weighted Average Number of Common Shares Outstanding -- GAAP:
Basic and diluted 102,474 95,511
========== =========
Weighted Average Number of Common Shares Outstanding -- Adjusted
EBITDA (Non-GAAP)
Basic 102,474 95,511
========== =========
Diluted 106,646 97,885
========== =========
An itemized reconciliation between net loss on a GAAP basis and
Adjusted EBITDA is as follows:
Net Loss -- GAAP $ (22,255 ) $ (7,666 )
Adjustments:
Share-based compensation included in cost of goods manufactured and 529 525
sold
Share-based compensation included in R&D 2,309 1,637
Share-based compensation included in SG&A 4,214 2,786
Depreciation included in cost of goods manufactured and sold 1,523 1,004
Depreciation included in R&D 827 695
Depreciation included in SG&A 303 318
Amortization of acquired intangible assets 1,817 -
Interest expense 7,561 -
Income tax provision (benefit) 3,650 (943 )
Costs incurred related to the merger with Elan Drug Technologies, 12,783 -
included in SG&A
Costs incurred related to the redemption of the non-recourse 7% - 2,168
Notes included in interest expense
---------- ---------
Adjusted EBITDA -- Non-GAAP $ 13,261 $ 524
========== =========
Use of Non-GAAP Financial Measures
We use "Adjusted EBITDA" as a key indicator of financial operating
performance without regard to financing methods, capital structures,
taxes or historical cost basis. Adjusted EBITDA is not a GAAP
measure of performance and is defined as net income or loss plus or
minus interest expense, provision for or benefit from income taxes,
depreciation and amortization of costs, share-based compensation
expense and other noncash or nonrecurring items, such as
merger-related expenses. We feel that Adjusted EBITDA provides
management and investors with a better representation of the ongoing
economics of the business and reflects how we manage the business
internally.
Condensed Consolidated Balance Sheets September 30, March 31,
(In thousands) 2011 2011
-------------------------------------------- ------------- -------------
Cash, cash equivalents and total investments $ 240,554 $ 294,730
Receivables 79,644 22,969
Inventory 47,118 20,425
Prepaid expenses and other current assets 13,382 8,244
Property, plant and equipment, net 304,611 95,020
Intangible assets, net and goodwill 792,972 -
Other assets 25,822 11,060
-------------------------------------------- ------------- -------------
Total Assets $1,504,103 $ 452,448
-------------------------------------------- ------------- -------------
Long-term debt -- current portion $ 2,325 $ -
Other current liabilities 87,999 48,057
Deferred revenue -- long-term 4,359 4,837
Long-term debt 441,859 -
Other long-term liabilities 57,881 7,536
Total shareholders’ equity 909,680 392,018
-------------------------------------------- ------------- -------------
Total Liabilities and Shareholders’ Equity $1,504,103 $ 452,448
-------------------------------------------- ------------- -------------
Common shares outstanding (in thousands) 129,585 95,702
This selected financial information should be read in conjunction
with the consolidated financial statements and notes thereto
included in Alkermes, Inc.’s Annual Report on Form 10-K for the year
ended March 31, 2011, the company’s Registration Statement on Form
S-4 and the company’s Quarterly Report on Form 10-Q for the six
months ended September 30, 2011, which the company intends to file
in November 2011.
SOURCE: Alkermes
Alkermes Contacts:
For Investors:
Rebecca Peterson, +1 781 609 6378
or
For Media:
Jennifer Snyder, +1 781 609 6166
