UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number
ALKERMES PUBLIC LIMITED COMPANY
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☒ |
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Accelerated filer ☐ |
Non-accelerated filer ☐ |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes
The number of the registrant’s ordinary shares, $0.01 par value, outstanding as of July 24, 2020 was
ALKERMES PLC AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2020
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Page No. |
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Item 1. |
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Condensed Consolidated Balance Sheets — June 30, 2020 and December 31, 2019 |
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6 |
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Condensed Consolidated Statements of Cash Flows — For the Six Months Ended June 30, 2020 and 2019 |
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8 |
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10 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
23 |
Item 3. |
36 |
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Item 4. |
36 |
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Item 1. |
37 |
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Item 1A. |
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Item 2. |
38 |
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Item 5. |
38 |
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Item 6. |
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40 |
2
Cautionary Note Concerning Forward-Looking Statements
This document contains and incorporates by reference “forward‑looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In some cases, these statements can be identified by the use of forward‑looking terminology such as “may,” “will,” “could,” “should,” “would,” “expect,” “anticipate,” “continue,” “believe,” “plan,” “estimate,” “intend,” or other similar words. These statements discuss future expectations and contain projections of results of operations or of financial condition, or state trends and known uncertainties or other forward‑looking information. Forward-looking statements in this Quarterly Report on Form 10-Q (this “Form 10-Q”) include, without limitation, statements regarding:
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our expectations regarding our financial performance, including revenues, expenses, liquidity, capital expenditures and income taxes; |
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our expectations regarding our products, including those expectations related to product development, regulatory filings, regulatory approvals and regulatory timelines, therapeutic and commercial scope and potential, and the costs and expenses related to such activities; |
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our expectations regarding the initiation, timing and results of clinical trials of our products; |
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our expectations regarding the competitive, payer and legal landscape, and changes therein, related to our products, including competition from generic forms of our products or competitive products and competitive development programs, barriers to access or coverage of our products and changes in reimbursement of our products, and legal measures (legislation, regulations or other measures) that may limit pricing and reimbursement of, and access to, our products; |
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our expectations regarding the financial impact of currency exchange rate fluctuations and valuations; |
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our expectations regarding future amortization of intangible assets; |
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our expectations regarding our collaborations, licensing arrangements and other significant agreements with third parties relating to our products, including our development programs; |
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our expectations regarding the impact of new legislation, rules, regulations and the adoption of new accounting pronouncements; |
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our expectations regarding near‑term changes in the nature of our market risk exposures or in management’s objectives and strategies with respect to managing such exposures; |
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our expectations regarding our ability to comply with restrictive covenants of our indebtedness and our ability to fund our debt service obligations; |
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our expectations regarding future capital requirements and capital expenditures and our ability to finance our operations and capital requirements; |
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our expectations regarding the timing, outcome and impact of administrative, regulatory, legal and other proceedings related to our products and intellectual property (“IP”), including our patents; |
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our expectations regarding the impact of the novel coronavirus (“COVID-19”) on our business and operations; and |
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other factors discussed elsewhere in this Form 10-Q. |
Actual results might differ materially from those expressed or implied by these forward-looking statements. These forward-looking statements are subject to risks, assumptions and uncertainties. In light of these risks, assumptions and uncertainties, the forward-looking events discussed in this Form 10-Q might not occur. You are cautioned not to place undue reliance on the forward-looking statements in this Form 10-Q, which speak only as of the date of this Form 10-Q. All subsequent written and oral forward-looking statements concerning the matters addressed in this Form 10-Q and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements
3
contained or referred to in this section. Except as required by applicable law or regulation, we do not undertake any obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For more information regarding the risks, assumptions and uncertainties of our business, see “Part I, Item 1A—Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 (the “Annual Report”) and “Part II, Item 1A—Risk Factors” in this Form 10-Q.
This Form 10-Q may include data that we obtained from industry publications and third-party research, surveys and studies. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. This Form 10-Q also may include data based on our own internal estimates and research. Our internal estimates and research have not been verified by any independent source and, while we believe the industry publications and third-party research, surveys and studies are reliable, we have not independently verified such data. Such third-party data and our internal estimates and research are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Part I, Item 1A—Risk Factors” in our Annual Report and “Part II, Item 1A—Risk Factors” in this Form 10-Q. These and other factors could cause our results to differ materially from those expressed in this Form 10-Q.
Note Regarding Company and Product References
Alkermes plc (as used in this report, together with our subsidiaries, “Alkermes,” the “Company,” “us,” “we” and “our”) is a fully integrated, global biopharmaceutical company that applies its scientific expertise and proprietary technologies to research, develop and commercialize, both with partners and on its own, pharmaceutical products that are designed to address unmet medical needs of patients in major therapeutic areas. We have a diversified portfolio of marketed products focused on central nervous system (“CNS”) disorders such as addiction and schizophrenia and a pipeline of product candidates in the fields of neuroscience and oncology. Except as otherwise suggested by the context, (a) references to “products” or “our products” in this Form 10-Q include our marketed products, marketed products using our proprietary technologies, our product candidates and product candidates using our proprietary technologies, (b) references to the “biopharmaceutical industry” in this Form 10-Q are intended to include reference to the “biotechnology industry” and/or the “pharmaceutical industry” and (c) references to “licensees” in this Form 10-Q are used interchangeably with references to “partners.”
Note Regarding Trademarks
We are the owner of various United States (“U.S.”) federal trademark registrations (“®”) and other trademarks (“TM”), including ALKERMES®, ARISTADA®, ARISTADA INITIO®, LinkeRx®, NanoCrystal® and VIVITROL®.
The following are trademarks of the respective companies listed: ANJESOTM—Baudax Bio, Inc.; INVEGA SUSTENNA®, INVEGA TRINZA®, TREVICTA®, XEPLION®, and RISPERDAL CONSTA®—Johnson & Johnson (or its affiliates); VUMERITY®—Biogen MA Inc. (together with its affiliates, “Biogen”); and ZYPREXA®—Eli Lilly and Company. Other trademarks, trade names and service marks appearing in this Form 10-Q are the property of their respective owners. Solely for convenience, the trademarks and trade names in this Form 10-Q are referred to without the ® and TM symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.
4
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
ALKERMES PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
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June 30, 2020 |
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December 31, 2019 |
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(In thousands, except share and per share amounts) |
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ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
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$ |
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$ |
Investments—short-term |
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Receivables, net |
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Contract assets |
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Inventory |
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Prepaid expenses and other current assets |
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Total current assets |
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PROPERTY, PLANT AND EQUIPMENT, NET |
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INTANGIBLE ASSETS, NET |
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RIGHT-OF-USE ASSETS |
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GOODWILL |
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DEFERRED TAX ASSETS |
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INVESTMENTS—LONG-TERM |
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CONTINGENT CONSIDERATION |
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OTHER ASSETS |
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TOTAL ASSETS |
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$ |
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$ |
LIABILITIES AND SHAREHOLDERS’ EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable and accrued expenses |
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$ |
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$ |
Operating lease liabilities—short-term |
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Contract liabilities—short-term |
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Long-term debt—short-term |
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Total current liabilities |
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LONG-TERM DEBT |
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OPERATING LEASE LIABILITIES—LONG-TERM |
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CONTRACT LIABILITIES—LONG-TERM |
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OTHER LONG-TERM LIABILITIES |
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Total liabilities |
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COMMITMENTS AND CONTINGENT LIABILITIES (Note 15) |
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SHAREHOLDERS’ EQUITY: |
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Preferred shares, par value, $ |
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Ordinary shares, par value, $ |
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Treasury shares, at cost ( |
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( |
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( |
Additional paid-in capital |
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Accumulated other comprehensive loss |
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( |
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( |
Accumulated deficit |
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( |
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( |
Total shareholders’ equity |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
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$ |
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$ |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
ALKERMES PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2020 |
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2019 |
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2020 |
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2019 |
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(In thousands, except per share amounts) |
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REVENUES: |
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Product sales, net |
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$ |
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$ |
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$ |
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$ |
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Manufacturing and royalty revenues |
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Research and development revenue |
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License revenue |
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— |
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— |
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Total revenues |
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EXPENSES: |
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Cost of goods manufactured and sold (exclusive of amortization of acquired intangible assets shown below) |
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Research and development |
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Selling, general and administrative |
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Amortization of acquired intangible assets |
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Total expenses |
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OPERATING LOSS |
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( |
) |
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( |
) |
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( |
) |
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( |
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OTHER INCOME (EXPENSE), NET: |
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Interest income |
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Interest expense |
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( |
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( |
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( |
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( |
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Change in the fair value of contingent consideration |
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( |
) |
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( |
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Other income, net |
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Total other income (expense), net |
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( |
) |
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( |
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LOSS BEFORE INCOME TAXES |
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( |
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( |
) |
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( |
) |
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( |
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INCOME TAX PROVISION (BENEFIT) |
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( |
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NET LOSS |
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$ |
( |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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LOSS PER ORDINARY SHARE: |
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Basic and diluted |
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$ |
( |
) |
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$ |
( |
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$ |
( |
) |
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$ |
( |
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WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES OUTSTANDING: |
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Basic and diluted |
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COMPREHENSIVE LOSS: |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Unrealized gain, net of a tax provision of $ |
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COMPREHENSIVE LOSS |
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$ |
( |
) |
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$ |
( |
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$ |
( |
) |
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$ |
( |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
ALKERMES PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
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Six Months Ended |
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June 30, |
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2020 |
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2019 |
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(In thousands) |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss |
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$ |
( |
) |
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$ |
( |
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Adjustments to reconcile net loss to cash flows from operating activities: |
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Depreciation and amortization |
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Share-based compensation expense |
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Deferred income taxes |
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( |
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Change in the fair value of contingent consideration |
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( |
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Other non-cash charges |
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Changes in assets and liabilities: |
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Receivables |
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Contract assets |
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( |
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( |
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Inventory |
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( |
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( |
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Prepaid expenses and other assets |
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Right-of-use assets |
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Accounts payable and accrued expenses |
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( |
) |
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( |
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Contract liabilities |
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( |
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Operating lease liabilities |
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( |
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( |
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Other long-term liabilities |
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Cash flows used in operating activities |
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( |
) |
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( |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Additions of property, plant and equipment |
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( |
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( |
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Proceeds from the sale of equipment |
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Proceeds from contingent consideration |
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— |
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Purchases of investments |
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( |
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( |
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Sales and maturities of investments |
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Cash flows provided by (used in) investing activities |
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( |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from the issuance of ordinary shares under share-based compensation arrangements |
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Employee taxes paid related to net share settlement of equity awards |
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( |
) |
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( |
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Principal payments of long-term debt |
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( |
) |
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( |
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Cash flows (used in) provided by financing activities |
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( |
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NET DECREASE IN CASH AND CASH EQUIVALENTS |
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( |
) |
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( |
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CASH AND CASH EQUIVALENTS—Beginning of period |
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CASH AND CASH EQUIVALENTS—End of period |
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$ |
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$ |
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SUPPLEMENTAL CASH FLOW DISCLOSURE: |
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Non-cash investing and financing activities: |
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Purchased capital expenditures included in accounts payable and accrued expenses |
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$ |
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$ |
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|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
ALKERMES PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(unaudited)
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Accumulated |
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Additional |
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Other |
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Ordinary Shares |
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Paid-In |
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Comprehensive |
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Accumulated |
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Treasury Stock |
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Shares |
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Amount |
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Capital |
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Loss |
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Deficit |
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Shares |
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Amount |
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Total |
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(In thousands, except share data) |
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BALANCE — December 31, 2019 |
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( |
) |
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( |
) |
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( |
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( |
) |
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Issuance of ordinary shares under employee stock plans |
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— |
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— |
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— |
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— |
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Receipt of Alkermes' shares for the exercise of stock options or to satisfy minimum tax withholding obligations related to share-based awards |
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( |
) |
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— |
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— |
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( |
) |
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( |
) |
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( |
) |
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Share-based compensation expense |
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— |
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— |
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— |
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— |
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— |
|
|
|
— |
|
|
|
|
|
|
Unrealized gain on marketable securities, net of tax provision of $ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
BALANCE — March 31, 2020 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
Issuance of ordinary shares under employee stock plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
Receipt of Alkermes' shares for the purchase of stock options or to satisfy minimum tax withholding obligations related to share-based awards |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
Unrealized gain on marketable securities, net of tax provision of $ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
BALANCE — June 30, 2020 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
Ordinary Shares |
|
|
Paid-In |
|
|
Comprehensive |
|
|
Accumulated |
|
|
Treasury Stock |
|
|
|
|
|
|||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Loss |
|
|
Deficit |
|
|
Shares |
|
|
Amount |
|
|
Total |
|
||||||||
|
|
(In thousands, except share data) |
|
|||||||||||||||||||||||||||||
BALANCE — December 31, 2018 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|