Revenues Skyrocket at Merged Alkermes - Analyst Blog

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Alkermes ( ALKS ) reported break-even earnings (including depreciation and stock-based compensation expenses) in the fourth quarter of fiscal 2012 (ended March 31, 2012). The Zacks Consensus Estimate hinted at a loss of $0.15 per share.

This was the second full quarter following the purchase of Elan Corporation 's ( ELN ) drug delivery unit, Elan Drug Technologies (EDT). We remind investors that Alkermes purchased the EDT unit in September 2011.

Alkermes suffered a loss of $0.14 per share in the year-ago quarter. However, results of the year-ago quarter only comprised figures from the standalone Alkermes. The company, prior to the purchase of the EDT unit, was headquartered in Cambridge, Massachusetts. However, the company shifted its base to Dublin, Ireland, post-merger.

Quarterly Results

Total revenues for the fourth quarter of fiscal 2012 jumped 155% to $130.5 million. The massive jump was attributable to the 160.5% rise in manufacturing and royalty revenues due to the expanded product portfolio following the purchase of the EDT unit. Revenues topped the Zacks Consensus Estimate of $126.0 million.

In the reported quarter, Alkermes recorded $45.3 million as manufacturing and royalty revenues from its long-acting atypical antipsychotic franchise comprising Risperdal Consta and Invega Sustenna/Xeplion. These schizophrenia drugs are marketed by Johnson & Johnson ( JNJ ). Alkermes recorded manufacturing and royalty revenues from Ampyra/Fampyra, marketed for improving walking ability in multiple sclerosis patients, were $13.8 million in the reported quarter.

Alkermes earned $8.2 million in royalty revenues from type II diabetes treatment Bydureon, including a milestone payment of $7 million from partner Amylin Pharmaceuticals ( AMLN ) following the U.S. launch of the therapy in February 2012.

Vivitrol, a legacy Alkermes product, performed well in the final quarter of fiscal 2012. Sales of the product climbed approximately 29% year over year to $11.0 million. This was the eleventh consecutive quarter in which the product exhibited growth.

During the quarter, Alkermes also earned revenues from its legacy products, Tricor 145 ($10.3 million); Ritalan LA/Focalin XR franchise ($10 million); and Verelan ($6.1 million).

Research and development (R&D) revenue from collaborations went up to $8.8 million in the fourth quarter of fiscal 2012 from $0.1 million a year ago.

Total expenses at Alkermes (excluding amortization of acquired intangible assets) climbed 102% to $130.7 million. The massive increase was primarily attributable to the rise in the cost of goods sold and research and development expenses following the merger.

Annual Results

For fiscal 2012, Alkermes suffered a loss (including depreciation and stock-based compensation expenses) of $0.09 per share. The Zacks Consensus loss estimate was $0.61 per share. The company suffered a loss of $0.45 per share a year ago.

Revenues jumped 109% to $390 million, following the expanded product portfolio due to the merger. Revenues were above the Zacks Consensus Estimate of $385 million.

Fiscal 2013 Projection

Apart from announcing the financial results, Alkermes also provided an outlook for fiscal 2013. Revenues are projected in the range of $490-$530 million, well above fiscal 2012 levels. The Zacks Consensus Estimate of $516 million is well within the company's guidance range.

R&D expenses are projected in the range of $155-$165 million. SG&A expenses are projected in the range of $120 -$130 million.

Alkermes expects adjusted earnings in fiscal 2013 in the range of $0.62-$0.77 per share. The Zacks Consensus Estimate hints at a loss of $0.22 per share for fiscal 2013.

Our Recommendation

Currently, we have a Neutral stance on Alkermes in the long run. The company carries a Zacks #3 Rank ("Hold" rating) in the short run.


 
ALKERMES INC (ALKS): Free Stock Analysis Report
 
AMYLIN PHARMA (AMLN): Free Stock Analysis Report
 
ELAN CP PLC ADR (ELN): Free Stock Analysis Report
 
JOHNSON & JOHNS (JNJ): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ALKS , AMLN , EDT , ELN , JNJ

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