— Company Improves Guidance for Fiscal 2013, With
— Second Quarter Revenues Grew to
— Second Quarter Non-GAAP Diluted EPS Grew to
“We reported a very strong quarter in what is shaping up to be a very
strong year. The financial power of our commercial product portfolio is
becoming even more apparent in our improved guidance and in the recent
upgrade of our credit ratings,” commented Richard Pops, Chief Executive
Officer of
Second Quarter Fiscal 2013 Highlights
-
Total revenues for the second quarter of fiscal 2013 increased more
than 72% to
$124.0 million , compared to the same period in fiscal 2012, which was attributable to the expansion of the company’s commercial product portfolio as a result of the merger and growth from the company’s key commercial products. Total revenues of$72.0 million for the same period in fiscal 2012 included results forAlkermes, Inc. and 14 days of operations of the former EDT business. -
Based on accounting principles generally accepted in the U.S. (GAAP),
Alkermes reported a net loss of$16.7 million , or a basic and diluted loss per share of$0.13 , for the second quarter of fiscal 2013. This compared to a GAAP net loss of$22.3 million , or a basic and diluted loss per share of$0.22 , for the same period in fiscal 2012. -
Included in the GAAP net loss for the second quarter of fiscal 2013
was a one-time charge of
$12.1 million related to the refinancing of the company’s debt inSeptember 2012 . The company successfully refinanced its previously outstanding senior secured term loans and reduced the company’s overall debt outstanding. The new term loans have a lower blended interest rate of approximately 4.4% compared to the prior blended interest rate of approximately 7.6%, and the refinancing is expected to result in savings of approximately$18 million in cash interest annually. -
The company reported non-GAAP1 net income of
$23.7 million , or non-GAAP diluted earnings per share (EPS) of$0.17 , for the second quarter of fiscal 2013. This compared to non-GAAP net income of$7.1 million , or a non-GAAP diluted EPS of$0.07 , for the same period in fiscal 2012.
“Our second fiscal quarter results clearly demonstrate the financial
strength and growth potential that we envisioned when we created
Second Quarter Fiscal 2013 Financial Results
It should be noted that comparative financial information provided below includes 14 days of revenues and operating expenses from the former EDT business during the second quarter of fiscal 2012.
Revenues
-
Manufacturing and royalty revenues from the company’s long-acting
atypical antipsychotic franchise, RISPERDAL® CONSTA®
and INVEGA® SUSTENNA®/XEPLION®, were
$50.3 million for the second quarter of fiscal 2013, compared to$44.9 million for the same period in fiscal 2012. Worldwide end-market sales of RISPERDAL CONSTA and INVEGA SUSTENNA/XEPLIONfor the second quarter of fiscal 2013 were approximately$564 million and grew approximately 15% compared to the same period in fiscal 2012. -
Manufacturing and royalty revenues from AMPYRA®/FAMPYRA®2
were
$5.0 million for the second quarter of fiscal 2013, compared to$0.6 million for the same period in fiscal 2012. End-market sales of AMPYRA byAcorda Therapeutics, Inc. in the U.S. for the second quarter of fiscal 2013 were approximately$69.8 million and grew approximately 28% compared to the same period in fiscal 2012. -
Net sales of VIVITROL® were
$15.2 million for the second quarter of fiscal 2013, compared to$9.9 million for the same period in fiscal 2012. During the quarter,Alkermes changed its revenue recognition policy for VIVITROL net sales, following the establishment of a product return history. Prior to the second quarter of fiscal 2013, net sales were recognized when the product left the distribution channel. Beginning in the second quarter of fiscal 2013, the company recognizes net sales upon product shipment into the distribution channel. This change in accounting policy resulted in a one-time increase of$1.7 million in VIVITROL net sales in the second quarter of fiscal 2013. Excluding this adjustment, net sales of VIVITROL were$13.5 million and grew approximately 36% compared to the same period in fiscal 2012. -
Royalty revenue from BYDUREON® was
$3.3 million for the secondquarter of fiscal 2013, compared to$0.1 million for the same period in fiscal 2012. The royalty revenue for the second quarter was$3.7 million based on estimated end-market sales of approximately$46 million , partially offset by a$0.4 million true-up from the previous quarter. -
Additionally, second quarter fiscal 2013 results included
TRICOR ® 145 revenues of$12.5 million and RITALIN LA®/FOCALIN XR® revenues of$9.1 million .
Costs and Expenses
-
Operating expenses for the second quarter of fiscal 2013 were
$118.6 million , which included expenses associated with the advancement of pipeline candidates in later-stage clinical trials and expenses associated with the former EDT business. This compared to operating expenses of$83.7 million for the same period in fiscal 2012. -
Net interest expense for the second quarter of fiscal 2013 was
$22.4 million , which included a one-time charge of$12.1 million related to refinancing the company’s debt inSeptember 2012 . This compared to net interest expense of$7.2 million for the same period in fiscal 2012.
Balance Sheet
At
Financial Expectations for Fiscal 2013
-
Revenues:
Alkermes now expects total revenues to range from$510 million to $540 million , up from a range of$490 million to $530 million . The company continues to expect VIVITROL net sales to range from$45 million to $55 million and 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 now expects cost of
goods manufactured to range from
$160 million to $170 million , down from a range of$170 million to $180 million . -
Research and Development (R&D) Expenses: The company now expects
R&D expenses to range from
$150 million to $160 million , down from a range of$155 million to $165 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 now expects net income tax
expense to range from
$5 million to $10 million , compared to previous expectations of a nominal tax charge in fiscal 2013. -
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 Loss: The company now expects a reduced GAAP net loss
to range from break-even to
$15 million , or a basic and diluted loss per share of approximately$0.00 to $0.11 , based on a weighted average basic and diluted share count of approximately 132 million shares outstanding. This compares to previous expectations of a GAAP net loss in the range of$20 million to $40 million , or a basic and diluted loss per share of approximately$0.15 to $0.30 . -
Capital Expenditures: The company continues to expect capital
expenditures to be approximately
$25 million . -
Non-GAAP Net Income: The company now expects non-GAAP net
income to range from
$120 million to $140 million , and non-GAAP diluted EPS to range from$0.88 to $1.02 , based on a weighted average diluted share count of approximately 137 million shares outstanding. This compares to previous expectations of non-GAAP net income in the range of$95 million to $115 million and non-GAAP diluted EPS in the range of$0.69 to $0.84 . -
Free Cash Flow: The company now expects free cash flow to range
from
$95 million to $115 million , up from a range of$70 million to$90 million .
Conference Call
About
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; and the therapeutic value of the company’s products. 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: the commercial
markets and demand for the company’s products may not be as large as the
company anticipates; reimbursement for the company’s products may
change; the possibility of adverse decisions by the
VIVITROL® is a registered trademark of
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
(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) | 2012 | 2011 | |||||||||
Revenues: | |||||||||||
Manufacturing and royalty revenues | $ 107,327 | $ 54,039 | |||||||||
Product sales, net | 15,192 | 9,887 | |||||||||
Research and development revenue | 1,459 | 8,052 | |||||||||
Total Revenues | 123,978 | 71,978 | |||||||||
Expenses: | |||||||||||
Cost of goods manufactured and sold | 41,491 | 17,530 | |||||||||
Research and development | 35,088 | 28,160 | |||||||||
Selling, general and administrative | 31,428 | 36,234 | |||||||||
Amortization of acquired intangible assets | 10,547 | 1,817 | |||||||||
Total Expenses | 118,554 | 83,741 | |||||||||
Operating Income (Loss) | 5,424 | (11,763 | ) | ||||||||
Other (Expense), net: | |||||||||||
Interest income | 216 | 383 | |||||||||
Interest expense | (22,648 | ) | (7,561 | ) | |||||||
Other income, net | 723 | 336 | |||||||||
Total Other (Expense), net | (21,709 | ) | (6,842 | ) | |||||||
(Loss) Before Income Taxes | (16,285 | ) | (18,605 | ) | |||||||
Income Tax Provision | 422 | 3,650 | |||||||||
Net (Loss) — GAAP | $ (16,707 | ) | $ (22,255 | ) | |||||||
(Loss) Earnings Per Share: | |||||||||||
GAAP (loss) per share — basic and diluted | $ (0.13 | ) | $ (0.22 | ) | |||||||
Non-GAAP earnings per share — basic | $ 0.18 | $ 0.07 | |||||||||
Non-GAAP earnings per share — diluted | $ 0.17 | $ 0.07 | |||||||||
Weighted Average Number of Ordinary Shares Outstanding: | |||||||||||
Basic and diluted — GAAP | 131,067 | 102,474 | |||||||||
Basic — Non-GAAP | 131,067 | 102,474 | |||||||||
Diluted — Non-GAAP | 136,217 | 106,646 | |||||||||
An itemized reconciliation between net (loss) on a GAAP basis and non-GAAP net income is as follows: | |||||||||||
Net (Loss) — GAAP | $ (16,707 | ) | $ (22,255 | ) | |||||||
Adjustments: | |||||||||||
Non-cash net interest expense | 2,092 | 1,684 | |||||||||
Non-cash taxes | (846 | ) | 3,646 | ||||||||
Depreciation expense | 8,264 | 2,653 | |||||||||
Amortization expense | 10,547 | 1,817 | |||||||||
Share-based compensation | 10,447 | 7,052 | |||||||||
Deferred revenue | (1,206 | ) | (277 | ) | |||||||
Loss on debt refinancing | 12,129 | - | |||||||||
Change in method of revenue recognition for VIVITROL product sales | (1,013 | ) | - | ||||||||
Merger-related costs | - | 12,783 | |||||||||
Non-GAAP Net Income | $ 23,707 | $ 7,103 | |||||||||
Six Months | Six Months | ||||||||||
Ended | Ended | ||||||||||
Condensed Consolidated Statements of Operations - GAAP | September 30, | September 30, | |||||||||
(In thousands, except per share data) | 2012 | 2011 | |||||||||
Revenues: | |||||||||||
Manufacturing and royalty revenues | $ 245,707 | $ 102,979 | |||||||||
Product sales, net | 27,564 | 19,573 | |||||||||
Research and development revenue | 2,946 | 11,309 | |||||||||
Total Revenues | 276,217 | 133,861 | |||||||||
Expenses: | |||||||||||
Cost of goods manufactured and sold | 83,561 | 33,749 | |||||||||
Research and development | 72,894 | 56,210 | |||||||||
Selling, general and administrative | 61,212 | 67,731 | |||||||||
Amortization of acquired intangible assets | 20,981 | 1,817 | |||||||||
Total Expenses | 238,648 | 159,507 | |||||||||
Operating Income (Loss) | 37,569 | (25,646 | ) | ||||||||
Other (Expense), net: | |||||||||||
Interest income | 515 | 885 | |||||||||
Interest expense | (32,818 | ) | (7,561 | ) | |||||||
Other income, net | 1,646 | 425 | |||||||||
Total Other (Expense), net | (30,657 | ) | (6,251 | ) | |||||||
Income (Loss) Before Income Taxes | 6,912 | (31,897 | ) | ||||||||
Income Tax Provision | 1,186 | 3,596 | |||||||||
Net Income (Loss) — GAAP | $ 5,726 | $ (35,493 | ) | ||||||||
Earnings (Loss) Per Share: | |||||||||||
GAAP earnings (loss) per share — basic and diluted | $ 0.04 | $ (0.36 | ) | ||||||||
Non-GAAP earnings per share — basic | $ 0.59 | $ 0.11 | |||||||||
Non-GAAP earnings per share — diluted | $ 0.57 | $ 0.10 | |||||||||
Weighted Average Number of Ordinary Shares Outstanding: | |||||||||||
Basic — GAAP | 130,753 | 99,578 | |||||||||
Diluted — GAAP | 135,589 | 99,578 | |||||||||
Basic — Non-GAAP | 130,753 | 99,578 | |||||||||
Diluted — Non-GAAP | 135,589 | 103,706 | |||||||||
An itemized reconciliation between net income (loss) on a GAAP basis and non-GAAP net income is as follows: | |||||||||||
Net Income (Loss) — GAAP | $ 5,726 | $ (35,493 | ) | ||||||||
Adjustments: | |||||||||||
Non-cash net interest expense | 3,620 | 1,684 | |||||||||
Non-cash taxes | (991 | ) | 3,581 | ||||||||
Depreciation expense | 15,848 | 4,557 | |||||||||
Amortization expense | 20,981 | 1,817 | |||||||||
Share-based compensation | 18,609 | 12,712 | |||||||||
Deferred revenue | 1,764 | (474 | ) | ||||||||
Loss on debt refinancing | 12,129 | - | |||||||||
Change in method of revenue recognition for VIVITROL product sales | (1,013 | ) | - | ||||||||
Merger-related costs | - | 22,270 | |||||||||
Non-GAAP Net Income | $ 76,673 | $ 10,654 |
Use of Non-GAAP Financial Measures
We use "non-GAAP net income" as a key indicator of the underlying
financial operating performance of
Condensed Consolidated Balance Sheets | September 30, | March 31, | ||||||||||
(In thousands) | 2012 | 2012 | ||||||||||
Cash, cash equivalents and total investments | $ 208,177 | $ 246,138 | ||||||||||
Receivables | 101,998 | 96,381 | ||||||||||
Inventory | 40,887 | 39,759 | ||||||||||
Prepaid expenses and other current assets | 12,583 | 12,566 | ||||||||||
Property, plant and equipment, net | 295,374 | 302,995 | ||||||||||
Intangible assets, net and goodwill | 689,604 | 710,585 | ||||||||||
Other assets | 21,924 | 26,793 | ||||||||||
Total Assets | $ 1,370,547 | $ 1,435,217 | ||||||||||
Long-term debt — current portion | $ 6,750 | $ 3,100 | ||||||||||
Other current liabilities | 61,988 | 86,064 | ||||||||||
Long-term debt | 363,847 | 441,360 | ||||||||||
Deferred revenue - long-term | 8,845 | 7,578 | ||||||||||
Other long-term liabilities | 44,109 | 43,263 | ||||||||||
Total shareholders' equity | 885,008 | 853,852 | ||||||||||
Total Liabilities and Shareholders' Equity | $ 1,370,547 | $ 1,435,217 | ||||||||||
Ordinary shares outstanding (in thousands) | 131,568 | 130,177 | ||||||||||
This selected financial information should be read in conjunction with
the consolidated financial statements and notes thereto included in
Source:
Alkermes Contacts:
For Investors:
Rebecca
Peterson, +1 781-609-6378
or
For Media:
Jennifer Snyder,
+1 781-609-6166