UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
For the quarterly period ended
OR
Commission File Number
(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, a 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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Accelerated filer ☐ |
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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 ☐ No
The number of the registrant’s ordinary shares, $0.01 par value, outstanding as of October 28, 2022 was
ALKERMES PLC AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022
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Page No. |
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Item 1. |
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Condensed Consolidated Balance Sheets — September 30, 2022 and December 31, 2021 |
5 |
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6 |
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7 |
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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. |
37 |
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Item 4. |
37 |
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Item 1. |
39 |
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Item 1A. |
39 |
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Item 2. |
42 |
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Item 5. |
42 |
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Item 6. |
43 |
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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”) may include, without limitation, statements regarding:
Actual results might differ materially from those expressed or implied by these forward-looking statements because these forward-looking statements are subject to risks, assumptions and uncertainties. In light of these risks, assumptions and uncertainties, the forward-looking expectations 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 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 information about the risks, assumptions and uncertainties of our business,
3
see “Part I, Item 1A—Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the United States (“U.S.”) Securities and Exchange Commission (the “SEC”) on February 16, 2022, as amended by our Amendment No. 1 to Annual Report on Form 10-K/A, filed with the SEC on April 29, 2022 (our “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. While we believe that any industry publications and third-party research, surveys and studies from which data is included in this Form 10-Q are reliable, we have not independently verified any such data. This Form 10-Q may also include data based on our own internal estimates and research. Our internal estimates and research have not been verified by any independent source and 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 or implied in this Form 10-Q.
Note Regarding Company and Product References
Alkermes plc 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 portfolio of proprietary commercial products focused on alcohol dependence, opioid dependence, schizophrenia and bipolar I disorder, and a pipeline of product candidates in development for neurodegenerative disorders and cancer. Use of terms such as “us,” “we,” “our,” “Alkermes” or the “Company” in this Form 10-Q is meant to refer to Alkermes plc and its consolidated subsidiaries. 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 licensed products, 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 U.S. federal trademark registrations (“®”) and other trademarks (“TM”), including ALKERMES®, ARISTADA®, ARISTADA INITIO®, LinkeRx®, LYBALVI®, NanoCrystal® and VIVITROL®.
The following are trademarks of the respective companies listed: AMPYRA®—Acorda Therapeutics, Inc. (“Acorda”); BYANNLI®, INVEGA®, INVEGA HAFYERA®, INVEGA SUSTENNA®, INVEGA TRINZA®, TREVICTA®, XEPLION®, and RISPERDAL CONSTA®—Johnson & Johnson Corporation (or its affiliates); KEYTRUDA®—Merck Sharp & Dohme Corp.; and VUMERITY®—Biogen MA Inc. (together with its affiliates, “Biogen”). 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 may be 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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September 30, 2022 |
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December 31, 2021 |
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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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$ |
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Receivables, net |
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Investments—short-term |
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Inventory |
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Contract assets |
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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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INVESTMENTS—LONG-TERM |
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RIGHT-OF-USE ASSETS |
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INTANGIBLE ASSETS, NET |
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GOODWILL |
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DEFERRED TAX ASSETS |
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OTHER ASSETS |
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TOTAL ASSETS |
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$ |
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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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$ |
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Accrued sales discounts, allowances and reserves |
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Operating lease liabilities—short-term |
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Contract liabilities—short-term |
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Current portion of long-term debt |
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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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OTHER LONG-TERM LIABILITIES |
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Total liabilities |
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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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( |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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( |
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( |
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Accumulated deficit |
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( |
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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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$ |
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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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Nine Months Ended |
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September 30, |
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September 30, |
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2022 |
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2021 |
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2022 |
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2021 |
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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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License revenue |
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— |
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— |
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Research and development revenue |
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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 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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( |
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( |
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Other (expense) income, net |
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( |
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( |
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Total other expense, net |
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( |
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( |
) |
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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 (BENEFIT) PROVISION |
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( |
) |
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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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Holding loss, net of a tax benefit of $ |
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( |
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( |
) |
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( |
) |
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( |
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COMPREHENSIVE LOSS |
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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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Nine Months Ended |
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September 30, |
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2022 |
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2021 |
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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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Loss on debt extinguishment |
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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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( |
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Contract assets |
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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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( |
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Right-of-use assets |
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Accounts payable and accrued expenses |
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Contract liabilities |
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( |
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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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( |
) |
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Cash flows provided by operating activities |
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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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— |
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Proceeds from contingent consideration |
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Return of Fountain Healthcare Partners II, L.P. investment |
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— |
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Payment made for licensed Intellectual Property ("IP") |
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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 used in investing activities |
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( |
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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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Proceeds from the issuance of long-term debt |
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— |
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Payment made for debt extinguishment |
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— |
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( |
) |
Principal payments of long-term debt |
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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) INCREASE IN CASH AND CASH EQUIVALENTS |
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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
(unaudited)
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Ordinary Shares |
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Additional |
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Accumulated Other 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, 2021 |
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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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$ |
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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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( |
) |
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( |
) |
Share-based compensation |
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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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