Alkermes (ALKS) Posts Narrower Q2 Loss, Ups 2016 Outlook

Alkermes plc (NASDAQ:ALKS) reported a loss of 18 cents per share (including share-based compensation expense) in the second quarter of 2016, much narrower than the Zacks Consensus Estimate of a loss of 33 cents. Reported loss was also narrower than the year-ago loss of 27 cents per share.

Alkermes reported revenues of $195.2 million in the second quarter of 2016, up almost 29% year over year. Revenues also came in above the Zacks Consensus Estimate of $166.7 million.

Focus on Vivitrol & Aristada

Manufacturing and royalty revenues increased 21.1% year over year to $137 million. Manufacturing and royalty revenues from Risperdal Consta, Invega Sustenna/Xeplion and Invega Trinza/Trevicta were up 14.5% to $69.6 million while that from Ampyra/Fampyra surged 51.7% reflecting the timing of shipments.

The company earned royalty revenues of $12.3 million from Bydureon, up 10.8%.

Vivitrol sales increased almost 27% year over year to $47.2 million reflecting sales growth in both commercial and Medicaid settings.

Aristada sales came in at $10.3 million, up from $5.5 million in the first quarter of 2016. Launch of Aristada in the rapidly growing, long-acting antipsychotic market continues to progress well as the company works on securing reimbursement and access.

Research & development (R&D) expenses amounted to $97 million, up 10.4% from the year-ago period. Also, selling, general and administrative (SG&A) spending shot up 34.4% to $96.1 million.

2016 Outlook Improved

Alkermes updated its financial outlook for 2016 based on the strong performance of Vivitrol as well as guidelines recently issued by the Securities and Exchange Commission. The company now expects total revenues in the range of $710 million to $760 million, up from the previous range of $700 million to $750 million. The Zacks Consensus estimate for revenues stands at $727 million.

The company now expects Vivitrol net sales in the range of $190 million to $210 million (representing an increase of 40% year over year), up from the previous range of $180 million to $200 million.

The company projects loss per share in the range of 3 cents to 23 cents. Previously, the company had guided loss per share in the range of 16 cents to 36 cents.

The company continues to expect R&D and SG&A expenses in the range of $370–$400 million and $360–$390 million, respectively.

Meanwhile, Alkermes expects Aristada net sales in the range of $13–$15 million in the third quarter of 2016. Ampyra/Fampyra revenues are expected in the range of $15 million to $20 million in the third quarter of 2016.

Pipeline Update

Alkermes continues to progress with its late-stage pipeline candidates. While phase III studies on ALKS 3831 (schizophrenia) and ALKS 8700 (multiple sclerosis) will continue to enroll throughout the remainder of 2016, top-line data from the FORWARD-5 study on ALKS 5461 (major depressive disorder) is anticipated by 2016 end.

The company plans to submit a supplemental new drug application to the FDA for a two-month dosing interval of Aristada in the second half of 2016.

Our Take

Alkermes’ second-quarter results were better-than-expected with the company reporting a narrower-than-expected loss and revenues surpassing expectations. Results were driven not only by the company’s royalty and manufacturing business, but also by strong performance as demonstrated by Vivitrol and commercialization of Aristada. The company’s raised and updated 2016 outlook, particularly on the top line front and for Vivitrol, is encouraging. While Vivitrol should benefit from the newly passed legislation, Comprehensive Addiction Recovery Act or CARA, gaining reimbursement and access for Aristada should also work well.

Meanwhile, Alkermes’ progress with its pipeline is impressive. Focus should be on the same as the company expects important data readouts over the coming months.

Alkermes is a Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the health care sector include Innoviva, Inc. (NASDAQ:INVA) , ANI Pharmaceuticals, Inc. (NASDAQ:ANIP) and Fibrocell Science, Inc. (NASDAQ:FCSC) , each sporting a Zacks Rank #1 (Strong Buy).