Alkermes plc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; balance-sheet amounts are as of March 31, 2021. Alkermes is a global biopharmaceutical company with proprietary products in addiction and schizophrenia, partnered-product royalties and manufacturing revenue, and a development pipeline.
Financial performance and position
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Total revenue | $251.4 million | $246.2 million; up $5.2 million (about 2%) |
| Operating expenses | $267.9 million | $283.6 million; down $15.7 million |
| Operating loss | $16.4 million | $37.4 million; operating margin improved to about -6.5% from -15.2% |
| Net loss / diluted loss per share | $22.4 million / $0.14 | $38.7 million / $0.24 |
| Cash flows from operations | $(45.1) million | $(40.3) million |
| Cash and investments | $627.4 million | $659.8 million at December 31, 2020 |
| Debt | $297.7 million outstanding | $275.0 million at December 31, 2020 |
Cash and cash equivalents were $205.0 million, versus $273.0 million at year-end. Current assets were $1.006 billion and current liabilities $365.8 million. Management said existing cash and investments were expected to fund anticipated working capital and other cash requirements for at least 12 months after the filing date. The company reported compliance with debt covenants.
Changes versus the prior-year quarter
- Product sales were essentially flat at $130.0 million. ARISTADA and ARISTADA INITIO net sales increased to $55.4 million from $51.0 million; VIVITROL declined to $74.5 million from $78.8 million.
- Manufacturing and royalty revenue rose to $119.8 million from $116.3 million. INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA revenue increased $6.7 million, while RISPERDAL CONSTA revenue fell $13.1 million. VUMERITY revenue rose to $13.4 million from $1.7 million.
- Lower cost of goods manufactured and sold, R&D expense and SG&A contributed to the smaller operating loss. SG&A declined $8.2 million, partly reflecting lower marketing and employee-related costs amid COVID-19 impacts.
- Other results included a $2.1 million charge from the March term-loan refinancing. Other income of $6.0 million in Q1 2020 became other expense of $2.2 million in Q1 2021, primarily reflecting a smaller contingent-consideration fair-value gain.
Outlook, risks and contingencies
- COVID-19 continued to affect commercial activity and healthcare access. Management expected sales of marketed products, particularly VIVITROL, to remain affected over the next few months; clinical-trial and early-stage discovery timelines could also be affected. Manufacturing facilities remained operational.
- LYBALVI’s FDA resubmission had a June 1, 2021 target action date. The FDA had requested additional manufacturing records after the company’s resubmission; the prior complete response letter related to review of manufacturing records at the Wilmington facility.
- Nemvaleukin development spending increased as the ARTISTRY program advanced. The FDA granted orphan-drug designation for mucosal melanoma in March 2021; the company announced ARTISTRY-6 in April 2021.
- The March 2021 refinancing extended the term-loan maturity from 2023 to March 2026 and changed pricing to LIBOR plus 2.50%, with a 0.50% LIBOR floor. The filing notes restrictive covenants and potential mandatory prepayments if specified excess-cash-flow thresholds are met.
- Risks include generic competition and patent disputes involving marketed or licensed products, payer and reimbursement pressure, reliance on licensees and third parties, clinical and regulatory uncertainty, and pandemic-related disruption. The company noted potential generic challenges to its long-acting antipsychotic franchise.
- Baudax Bio’s disclosed going-concern uncertainty affects the valuation of Alkermes’ contingent consideration from the Gainesville transaction. That consideration had a fair value of $27.3 million at March 31, 2021; the company reported no material losses from claims or proceedings that were probable at that date.
- No specific full-year financial guidance was provided in the filing text summarized here. Management stated that cash and investments were expected to cover anticipated needs for at least 12 months after filing.
Key facts for investors to verify
- LYBALVI’s FDA review outcome and whether the manufacturing-record requests affect timing or approval.
- VIVITROL demand, Medicaid rebate trends and the duration of COVID-19-related commercial impacts.
- Partner-product sales and royalty trends, including Janssen’s long-acting products, RISPERDAL CONSTA and VUMERITY, alongside generic challenges.
- Operating cash use and the level of cash and investments relative to debt, refinancing terms and covenant requirements.
- Baudax’s ability to fund contingent-consideration payments, and developments in product, patent, government and securities litigation.