Alkermes plc Reports Third Quarter Fiscal 2013 Financial Results

Thu Jan 31, 2013 7:00am EST

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- Company Improves Guidance for Fiscal 2013, Driven by Stronger Revenues and
Lower Expenses -

- Third Quarter Non-GAAP Diluted EPS Grew to $0.34 from $0.10 for the Same
Period in Prior Fiscal Year -
DUBLIN--(Business Wire)--
Alkermes plc (NASDAQ: ALKS) today reported financial results for its third
quarter of fiscal 2013, which ended Dec. 31, 2012, and improved financial
expectations for its fiscal year 2013. 

"With results now spanning an entire year, the power of Alkermes plc is becoming
evident. Our strong financial performance was driven by our five key commercial
products, which grew 33% year-over-year," commented James Frates, Chief
Financial Officer of Alkermes. "Today, we are again improving our financial
expectations for fiscal 2013, based on our robust operational performance across
the business. We now expect Alkermes to generate between $135 million and $155
million in non-GAAP net income this fiscal year." 

Third Quarter Fiscal 2013 Highlights

* Total revenues for the third quarter of fiscal 2013 increased 8.2% to $135.9
million, compared to the same period in fiscal 2012, which was attributable
primarily to growth from the company`s key commercial products. 
* Based on accounting principles generally accepted in the U.S. (GAAP), Alkermes
reported net income of $16.3 million, or a basic and diluted earnings per share
(EPS) of $0.12, for the third quarter of fiscal 2013. This compared to a GAAP
net loss of $14.8 million, or a basic and diluted loss per share of $0.11, for
the same period in fiscal 2012. 
* The company reported non-GAAP1 net income of $46.5 million, or a non-GAAP
diluted EPS of $0.34, for the third quarter of fiscal 2013. This compared to
non-GAAP net income of $12.8 million, or a non-GAAP diluted EPS of $0.10, for
the same period in fiscal 2012.

"This quarter demonstrates the strength of Alkermes` business model, which is
characterized by two robust portfolios - our commercial products and our
development pipeline. The quarterly financial results underscore our ability to
hit financial goals while investing in a promising pipeline," commented Richard
Pops, Chief Executive Officer of Alkermes. "As we move into 2013, we are excited
by how our late-stage pipeline is taking shape, with interesting new medicines
that have blockbuster potential and many important data readouts this year." 

Third Quarter Fiscal 2013 Financial Results

Revenues

* Manufacturing and royalty revenues from the company`s long-acting atypical
antipsychotic franchise, RISPERDAL® CONSTA® and INVEGA® SUSTENNA®/XEPLION®, were
$52.5 million for the third quarter of fiscal 2013, compared to $47.6 million
for the same period in fiscal 2012. Worldwide end-market sales of RISPERDAL
CONSTA and INVEGA SUSTENNA/XEPLION for the third quarter of fiscal 2013 were
approximately $586 million and grew approximately 13% compared to the same
period in fiscal 2012. 
* Manufacturing and royalty revenues from AMPYRA®/FAMPYRA®2 were $18.4 million
for the third quarter of fiscal 2013, compared to $10.6 million for the same
period in fiscal 2012. Unaudited end-market sales of AMPYRA by Acorda
Therapeutics, Inc. in the U.S. for the third quarter of fiscal 2013 were
approximately $73 million and grew approximately 28% compared to the same period
in fiscal 2012. End-market sales of FAMPYRA by Biogen Idec for the third quarter
of fiscal 2013 were approximately $10.5 million and grew approximately 1%
compared to the same period in fiscal 2012. 
* Net sales of VIVITROL® were $15.9 million for the third quarter of fiscal
2013, compared to $10.6 million for the same period in fiscal 2012, representing
an increase of approximately 50%. 
* Royalty revenue from BYDUREON® was $5.3 million for the third quarter of
fiscal 2013, based on estimated end-market net sales of approximately $65
million. This compared to royalty revenue of $0.3 million for the same period in
fiscal 2012. 
* Additionally, third quarter fiscal 2013 results included RITALIN LA®/FOCALIN
XR® revenues of $9.8 million and TRICOR® 145 revenues of $6.8 million. This
compared to RITALIN LA/FOCALIN XR revenues of $11.6 million and TRICOR 145
revenues of $15.7 million for the same period in fiscal 2012.

Costs and Expenses

* Operating expenses for the third quarter of fiscal 2013 were $110.6 million,
compared to operating expenses of $130.6 million for the same period in fiscal
2012. This reduction was due primarily to the timing of clinical trial expenses
and the inclusion of certain merger-related expenses in fiscal 2012. 
* Net interest expense for the third quarter of fiscal 2013 was $4.5 million.
This compared to net interest expense of $10.1 million for the same period in
fiscal 2012. This reduction was due primarily to the successful refinancing of
Alkermes` senior secured bank debt in September 2012.

Balance Sheet

At Dec. 31, 2012, Alkermes recorded cash and total investments of $239.3
million, compared to $208.2 million at Sept. 30, 2012, and $246.1 million at
March 31, 2012. 

Financial Expectations for Fiscal 2013

Alkermes is improving its financial expectations for fiscal 2013, reflecting
increased net sales expectations for VIVITROL and decreased research and
development (R&D) expense expectations. These factors are expected to increase
non-GAAP net income by $15 million to a range of $135 million to $155 million.
The following outlines Alkermes` financial expectations for the fiscal year
ending March 31, 2013.

* Revenues: Alkermes now expects total revenues to range from $520 million to
$545 million, up from a range of $510 million to $540 million. The company now
expects VIVITROL net sales to range from $55 million to $60 million, up from a
range of $45 million to $55 million. The company continues to expect milestone
revenues, unrelated to key clinical development candidates, to range from $20
million to $30 million. 
* Cost of Goods Manufactured: The company continues to expect cost of goods
manufactured to range from $160 million to $170 million. 
* R&D Expenses: The company nowexpectsR&D expenses to range from $140 million to
$150 million, down from a range of $150 million to $160 million. 
* Selling, General and Administrative (SG&A) Expenses: The company continues to
expect SG&A expenses to range from $120 million to $130 million. 
* Amortization of Intangible Assets: The company continues to expect
amortization of intangibles to range from $40 million to $45 million. 
* Net Interest Expense: The company continues to expect net interest expense to
range from $35 million to $40 million. 
* Net Income Tax Expense: The company continues to expect net income tax expense
to range from $5 million to $10 million. 
* Share-Based Compensation Expense: The company continues to expect share-based
compensation expense, included in the operating expenses above, to range from
$35 million to $40 million. 
* GAAP Net Income: The company now expects GAAP net income to range from
break-even to positive $15 million, or a basic and diluted EPS of approximately
$0.00 to $0.11, based on weighted average basic and diluted share counts of
approximately 132 million and 137 million shares outstanding, respectively. This
compares to previous expectations of a GAAP net loss in the range of break-even
to $15 million, or a basic and diluted loss per share of approximately $0.00 to
$0.11. 
* Capital Expenditures: The company now expects capital expenditures to be
approximately $20 million, down from approximately $25 million. 
* Non-GAAP Net Income: The company now expects non-GAAP net income to range from
$135 million to $155 million, and non-GAAP diluted EPS to range from $0.99 to
$1.13. This compares to previous expectations of non-GAAP net income in the
range of $120 million to $140 million and non-GAAP diluted EPS in the range of
$0.88 to $1.02. 
* Free Cash Flow: The company now expects free cash flow to range from $115
million to $135 million, up from a range of $95 million to $115 million.

Conference Call

Alkermes will host a conference call at 8:30 a.m. EST (1:30 p.m. GMT) on
Thursday, Jan. 31, 2013, to discuss these financial results and provide an
update on the company. The conference call will be webcast on the investor
relations section of Alkermes` website at www.alkermes.com or 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. EST (4:30 p.m. GMT) on
Thursday, Jan. 31, 2013, through 5:00 p.m. EST (10:00 p.m. GMT) on Thursday,
Feb. 7, 2013, 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; a
research and manufacturing facility in Athlone, Ireland; and manufacturing
facilities in 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 commercial products; the therapeutic and
commercial value of the company`s products; and our expectations concerning the
timing and results of our clinical development activities. These statements are
neither promises nor guarantees and are subject to a variety of risks and
uncertainties, many of which are beyond the company`s control, which could cause
actual results to differ materially from those contemplated in these
forward-looking statements. 

These risks and uncertainties include, among others: whether the company, and
its partners, are able to continue to successfully commercialize and develop its
products; reimbursement for the company`s products may change; the possibility
of adverse decisions by the U.S. Food and Drug Administration (FDA) or
regulatory authorities outside the U.S. 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; whether clinical
development activities will be completed on time or at all and whether the
results of such activities will be predictive of real-world results or of
results in subsequent clinical trials; and those risks described in the
company`s Annual Report on Form 10-K for the year ended March 31, 2012, and in
other filings made by the company with the Securities and Exchange Commission
("SEC") and which are available at 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 they are made. 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® is a registered trademark of Alkermes, Inc.; RISPERDAL® CONSTA® and
INVEGA® SUSTENNA® are registered trademarks of Janssen Pharmaceuticals, Inc.;
XEPLION® is a registered trademark of Johnson & Johnson Corporation; AMPYRA® and
FAMPYRA® are registered trademarks of Acorda Therapeutics, Inc.; BYDUREON® is a
registered trademark of Amylin Pharmaceuticals, LLC; TRICOR® is a registered
trademark of Fournier Industrie et Sante Corporation; and RITALIN LA® and
FOCALIN XR® are registered trademarks of Novartis AG Corporation. 

1As a complement to GAAP results, the company is providing non-GAAP net income
(loss) and non-GAAP diluted earnings (loss) per share, which the company
believes better indicate underlying trends in ongoing operations and cash flows.
Non-GAAP net income (loss) adjusts for one-time and non-cash charges by
excluding from GAAP results: share-based compensation; amortization;
depreciation; non-cash net interest expense; non-cash tax expense; deferred
revenue; and certain other one-time items. 

2AMPYRA® (dalfampridine) Extended Release Tablets, 10 mg is developed and
marketed in the U.S. by Acorda Therapeutics, Inc. and outside the U.S. by Biogen
Idec, under a licensing agreement with Acorda Therapeutics, as FAMPYRA®
(prolonged-release fampridine tablets). 

(tables follow)

 Alkermes plc and Subsidiaries                                                                                                                                
 Selected Financial Information (Unaudited)                                                                                                                   
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                  Three Months            Three Months        
                                                                                                                  Ended                   Ended               
 Condensed Consolidated Statements of Operations - GAAP                                                           December 31,            December 31,        
 (In thousands, except per share data)                                                                            2012                    2011                
 Revenues:                                                                                                                                                    
 Manufacturing and royalty revenues                                                                               $ 118,274               $ 112,780           
 Product sales, net                                                                                               15,917                  10,597              
 Research and development revenue                                                                                 1,718                   2,266               
 Total Revenues                                                                                                   135,909                 125,643             
 Expenses:                                                                                                                                                    
 Cost of goods manufactured and sold                                                                              38,914                  42,752              
 Research and development                                                                                         31,319                  40,493              
 Selling, general and administrative                                                                              29,867                  35,469              
 Amortization of acquired intangible assets                                                                       10,549                  11,896              
 Total Expenses                                                                                                   110,649                 130,610             
 Operating Income (Loss)                                                                                          25,260                  (4,967     )        
 Other (Expense), net:                                                                                                                                        
 Interest income                                                                                                  155                     350                 
 Interest expense                                                                                                 (4,703     )            (10,458    )        
 Other income, net                                                                                                (49        )            345                 
 Total Other (Expense), net                                                                                       (4,597     )            (9,763     )        
 Income (Loss) Before Income Taxes                                                                                20,663                  (14,730    )        
 Income Tax Provision                                                                                             4,405                   98                  
 Net Income (Loss) - GAAP                                                                                         $ 16,258                $ (14,828  )        
                                                                                                                                                              
 (Loss) Earnings Per Share:                                                                                                                                   
 GAAP earnings (loss) per share - basic                                                                           $ 0.12                  $ (0.11    )        
 GAAP earnings (loss) per share - diluted                                                                         $ 0.12                  $ (0.11    )        
 Non-GAAP earnings per share - basic                                                                              $ 0.35                  $ 0.10              
 Non-GAAP earnings per share - diluted                                                                            $ 0.34                  $ 0.10              
                                                                                                                                                              
 Weighted Average Number of Ordinary Shares Outstanding:                                                                                                      
 Basic - GAAP                                                                                                     132,097                 129,670             
 Diluted - GAAP                                                                                                   137,497                 129,670             
 Basic - Non-GAAP                                                                                                 132,097                 129,670             
 Diluted - Non-GAAP                                                                                               137,497                 133,617             
                                                                                                                                                              
 An itemized reconciliation between net income (loss) on a GAAP basis and non-GAAP net income is as follows:                                                  
 Net Income (Loss) - GAAP                                                                                         $ 16,258                $ (14,828  )        
 Adjustments:                                                                                                                                                 
 Non-cash net interest expense                                                                                    496                     2,853               
 Non-cash taxes                                                                                                   3,373                   (9,957     )        
 Depreciation expense                                                                                             8,052                   8,981               
 Amortization expense                                                                                             10,549                  11,896              
 Share-based compensation                                                                                         8,226                   9,031               
 Deferred revenue                                                                                                 (412       )            415                 
 Merger-related costs                                                                                             -                       4,447               
 Non-GAAP Net Income                                                                                              $ 46,542                $ 12,838            
                                                                                                                                                              
                                                                                                                                                              
                                                                                                                  Nine Months             Nine Months         
                                                                                                                  Ended                   Ended               
 Condensed Consolidated Statements of Operations - GAAP                                                           December 31,            December 31,        
 (In thousands, except per share data)                                                                            2012                    2011                
 Revenues:                                                                                                                                                    
 Manufacturing and royalty revenues                                                                               $ 363,981               $ 215,759           
 Product sales, net                                                                                               43,481                  30,170              
 Research and development revenue                                                                                 4,664                   13,575              
 Total Revenues                                                                                                   412,126                 259,504             
 Expenses:                                                                                                                                                    
 Cost of goods manufactured and sold                                                                              122,475                 76,501              
 Research and development                                                                                         104,213                 96,703              
 Selling, general and administrative                                                                              91,079                  103,200             
 Amortization of acquired intangible assets                                                                       31,530                  13,713              
 Total Expenses                                                                                                   349,297                 290,117             
 Operating Income (Loss)                                                                                          62,829                  (30,613    )        
 Other (Expense), net:                                                                                                                                        
 Interest income                                                                                                  670                     1,235               
 Interest expense                                                                                                 (37,521    )            (18,019    )        
 Other income, net                                                                                                1,597                   770                 
 Total Other (Expense), net                                                                                       (35,254    )            (16,014    )        
 Income (Loss) Before Income Taxes                                                                                27,575                  (46,627    )        
 Income Tax Provision                                                                                             5,591                   3,694               
 Net Income (Loss) - GAAP                                                                                         $ 21,984                $ (50,321  )        
                                                                                                                                                              
 Earnings (Loss) Per Share:                                                                                                                                   
 GAAP earnings (loss) per share - basic                                                                           $ 0.17                  $ (0.46    )        
 GAAP earnings (loss) per share - diluted                                                                         $ 0.16                  $ (0.46    )        
 Non-GAAP earnings per share - basic                                                                              $ 0.94                  $ 0.21              
 Non-GAAP earnings per share - diluted                                                                            $ 0.90                  $ 0.21              
                                                                                                                                                              
 Weighted Average Number of Ordinary Shares Outstanding:                                                                                                      
 Basic - GAAP                                                                                                     131,202                 109,645             
 Diluted - GAAP                                                                                                   136,216                 109,645             
 Basic - Non-GAAP                                                                                                 131,202                 109,645             
 Diluted - Non-GAAP                                                                                               136,216                 113,727             
                                                                                                                                                              
 An itemized reconciliation between net income (loss) on a GAAP basis and non-GAAP net income is as follows:                                                  
 Net Income (Loss) - GAAP                                                                                         $ 21,984                $ (50,321  )        
 Adjustments:                                                                                                                                                 
 Non-cash net interest expense                                                                                    4,116                   4,537               
 Non-cash taxes                                                                                                   2,382                   (6,376     )        
 Depreciation expense                                                                                             23,900                  13,538              
 Amortization expense                                                                                             31,530                  13,713              
 Share-based compensation                                                                                         26,835                  21,743              
 Deferred revenue                                                                                                 1,352                   (59        )        
 Loss on debt refinancing                                                                                         12,129                  -                   
 Change in method of revenue recognition for VIVITROL product sales                                               (1,013     )            -                   
 Merger-related costs                                                                                             -                       26,718              
 Non-GAAP Net Income                                                                                              $ 123,215               $ 23,493            
                                                                                                                                                              


Use of Non-GAAP Financial Measures

We use "non-GAAP net income" as a key indicator of the underlying financial
operating performance of Alkermes plc. Non-GAAP net income is not a GAAP measure
of performance and is defined as net income or loss plus or minus the non-cash
portion of net interest expense and provision for or benefit from income taxes,
plus depreciation and amortization of costs, share-based compensation expense,
deferred revenue and other nonrecurring items. We feel that non-GAAP net income
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                 December 31,                March 31,    
 (In thousands)                                        2012                        2012         
 Cash, cash equivalents and total investments          $ 239,280                   $ 246,138    
 Receivables                                           119,835                     96,381       
 Inventory                                             45,686                      39,759       
 Prepaid expenses and other current assets             12,697                      12,566       
 Property, plant and equipment, net                    292,186                     302,995      
 Intangible assets, net and goodwill                   679,055                     710,585      
 Other assets                                          23,024                      26,793       
 Total Assets                                          $ 1,411,763                 $ 1,435,217  
 Long-term debt - current portion                      $ 6,750                     $ 3,100      
 Other current liabilities                             70,529                      86,064       
 Long-term debt                                        362,349                     441,360      
 Deferred revenue - long-term                          9,140                       7,578        
 Other long-term liabilities                           43,056                      43,263       
 Total shareholders' equity                            919,939                     853,852      
 Total Liabilities and Shareholders' Equity            $ 1,411,763                 $ 1,435,217  
                                                                                                
 Ordinary shares outstanding (in thousands)            132,420                     130,177      
                                                                                                


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 December 31,
2012, which the company intends to file in January 2013.

Alkermes Contacts:
For Investors:
Rebecca Peterson, +1 781-609-6378
or
For Media:
Jennifer Snyder, +1 781-609-6166 

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