Alkermes reports $42.3 million revenue for first-quarter fiscal 2011

Alkermes, Inc.Aug 7 2010

Alkermes, Inc. (NASDAQ: ALKS) today reported financial results for its first quarter of fiscal 2011, which ended on June 30, 2010.

“We reported another solid quarter as we prepare for our next growth phase with near-term opportunities to add additional sources of revenue”

Financial highlights:

• Quarterly revenues of $42.3 million, driven by strong manufacturing and royalty revenues from RISPERDAL^® CONSTA^®. Worldwide sales of RISPERDAL CONSTA by Janssen, Division of Ortho-McNeil-Janssen Pharmaceuticals, Inc. and Janssen-Cilag (Janssen) were approximately $356 million, an increase of 3.4 percent on an operational basis year-over-year, and are based on product sales in more than 70 countries.
• GAAP net loss of $13.4 million and pro forma net loss of $9.0 million.
• Strong financial position, with cash and total investments of $328.5 million, prior to redemption of all remaining non-recourse RISPERDAL CONSTA secured 7% Notes on July 1, 2010, at a total cost of approximately $46.4 million.

Additional highlights:

• Company preparing for upcoming October 12, 2010, Prescription Drug User Fee Act (PDUFA) date for VIVITROL^® for opioid dependence and October 22, 2010, PDUFA date for BYDUREON™ for type 2 diabetes.
• Presented positive data from the pivotal phase 3 study of VIVITROL for the treatment of opioid dependence at the 2010 American Psychiatric Association Annual Meeting in New Orleans, Louisiana.
• Announced results from a pooled analysis of safety data from three completed randomized controlled trials showing that BYDUREON was generally well-tolerated with a low discontinuation rate due to serious adverse events similar to comparators in patients with type 2 diabetes. The data were presented at the 70^th Annual Scientific Sessions of the American Diabetes Association in Orlando, Florida.
• Reported positive data from the head-to-head DURATION-4 study comparing BYDUREON to once-daily therapies ACTOS^® (pioglitazone HCl), JANUVIA^® (sitagliptin) and metformin in patients with type 2 diabetes.
• The company announced that the U.S. Food and Drug Administration (FDA) granted priority review for the VIVITROL supplemental New Drug Application (sNDA) for opioid dependence.
• The FDA notified the company of the scheduling of a Psychopharmacologic Drugs Advisory Committee meeting on September 16, 2010, for the review of the company's sNDA submission for VIVITROL for opioid dependence.

"We reported another solid quarter as we prepare for our next growth phase with near-term opportunities to add additional sources of revenue," commented James Frates, Chief Financial Officer of Alkermes. "By the end of calendar 2010, we anticipate several important milestones, including FDA action on both BYDUREON for the treatment of type 2 diabetes and VIVITROL for the treatment of opioid dependence, as well as an interim analysis from the phase 2 study of ALKS 33 for the treatment of alcohol dependence."

Key operating results for the quarter ended June 30, 2010, include the following:

• GAAP net loss was $13.4 million or a basic and diluted loss per share of $0.14, including $4.5 million in share-based compensation expense. For the same period in 2009, GAAP net loss was $10.2 million or a basic and diluted loss per share of $0.11, including $3.2 million in share-based compensation expense and $8.2 million of charges associated with the relocation of the company's headquarters.
• Pro forma net loss was $9.0 million or a basic and diluted loss per share of $0.09, compared to a pro forma net income of $1.2 million or a basic and diluted earnings per share of $0.01 for the same period in 2009.

Alkermes is providing pro forma results as a complement to GAAP results. The pro forma measure excludes certain noncash or nonrecurring items, and Alkermes' management believes these pro forma measures help to indicate underlying trends in the company's ongoing operations. The reconciliation between pro forma and reported diluted (loss) earnings per share for the first quarters of fiscal 2011 and 2010 is provided in the following table:

Revenues

• Total revenues for the quarter ended June 30, 2010, were $42.3 million, compared to $47.5 million for the same period in 2009.
• Total manufacturing revenues for the quarter ended June 30, 2010, were $26.9 million, which included $26.3 million related to RISPERDAL CONSTA and $0.6 million related to polymer for BYDUREON, compared to $28.8 million, which included $27.9 million related to RISPERDAL CONSTA and $0.9 million related to polymer for BYDUREON, for the same period in 2009.
• Royalty revenues for the quarter ended June 30, 2010, were $8.9 million, based on RISPERDAL CONSTA sales of $355.7 million, compared to $8.7 million, based on RISPERDAL CONSTA sales of $347.8 million, for the same period in 2009.
• Net sales of VIVITROL for the quarter ended June 30, 2010, were $6.2 million, compared to net sales of $4.2 million for the same period in 2009.
• Research and development (R&D) revenue under collaborative arrangements for the quarter ended June 30, 2010, was $0.3 million, compared to $1.5 million for the same period in 2009.
• The company no longer records net collaborative profit. Net collaborative profit for the quarter ended June 30, 2009, was $4.3 million.

Costs and Expenses

• Cost of goods manufactured and sold for the quarter ended June 30, 2010, was $12.7 million, which included $10.4 million related to RISPERDAL CONSTA, $1.7 million related to VIVITROL and $0.6 million related to polymer for BYDUREON, compared to $12.7 million for the same period in 2009, of which $9.7 million related to RISPERDAL CONSTA, $2.0 million related to VIVITROL and $1.0 million related to polymer for BYDUREON.
• R&D expenses for the quarter ended June 30, 2010, were $23.0 million. R&D expenses were $25.6 million for the same period in 2009, which included $8.0 million of charges associated with the relocation of the company's headquarters, primarily related to the accelerated depreciation of certain R&D-related assets.
• Selling, general and administrative (SG&A) expenses for the quarter ended June 30, 2010, were $19.7 million, compared to $19.3 million for the same period in 2009.
• Share-based compensation expense (included in the operating expenses above) for the quarter ended June 30, 2010, was $4.5 million, of which $0.4 million related to cost of goods manufactured, $1.5 million related to R&D expenses and $2.6 million related to SG&A expenses. Share-based compensation expense for the same period in 2009 was $3.2 million, of which $0.3 million related to cost of goods manufactured, $0.8 million related to R&D expenses and $2.1 million related to SG&A expenses.
• Interest income for the quarter ended June 30, 2010, was $0.9 million, compared to $1.6 million for the same period in 2009. Interest expense for the quarter ended June 30, 2010, was $1.1 million, compared to $1.7 million for the same period in 2009.
• Income tax benefit for both the quarter ended June 30, 2010, and the quarter ended June 30, 2009, was $0.1 million.

At June 30, 2010, Alkermes had cash and total investments of $328.5 million, compared to $350.2 million at March 31, 2010. During the quarter, the company retired $6.4 million of the non-recourse RISPERDAL CONSTA secured 7% Notes through a scheduled principal payment. The company redeemed the remaining 7% Notes in full on July 1, 2010, at a total cost of approximately $46.4 million.