Alkermes plc (ALKS)

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Alkermes, plc (ALKS)

F3Q 2013 Earnings Call

January 31, 2013 8:30 am ET


Rebecca Peterson - SVP, Corporate Communications

Richard Pops - CEO

Shane Cooke - President

Jim Frates - CFO


Cory Kasimov - JPMorgan

Steve Byrne - Bank of America

David Risinger - Morgan Stanley

Catherine Arnold - Credit Suisse

Jon Eckard - Citi

Anant Padmanabhan - Cowen & Company

Ami Fadia - UBS

Mario Corso - Mizuho USA

Corey Davis - Jefferies

Terence Flynn - Goldman Sachs



Ladies and gentlemen, thank you for standing by. Welcome to the Alkermes plc Conference Call to discuss the company's Third Quarter Fiscal 2013 Financial Results. At this time, all participants are in a listen-only mode. There will be a question-and-answer session to follow. Please be advised that this call is being recorded at Alkermes request.

At this time, I would like to introduce your host for today's call Ms. Rebecca Peterson, Senior Vice President of Corporate Communications at Alkermes. Please go ahead.

Rebecca Peterson

Good morning. Welcome to the Alkermes plc conference call to discuss our financial results for the third quarter of fiscal year 2013, which ended on December 31st, 2012. With me today are Richard Pops, our CEO; Shane Cooke, our President; and Jim Frates, our CFO.

Before we begin today, let me remind you that we will make forward-looking statements relating to, among other things, our expectations concerning the commercialization of our products, our future financial expectations and business performance, and our expectations concerning the therapeutic value of our clinical development products. Listeners are cautioned that these forward-looking statements are neither promises nor guarantee and are subject to a high degree of risk and uncertainty.

Our press release issued today, our Annual Report on Form 10-K with the SEC and our other filings with the SEC identify risk factors that could cause our actual performance to differ materially from those projected or suggested in the forward-looking statements. We undertake no obligation to update or revise the information provided on this call as a result of new information or future results or developments.

This morning, Jim Frates will discuss our third quarter financial results, and Richard Pops will provide a brief update on the company. After our remarks, we'll open up the call for Q&A.

Now I'd like to turn over the call to Jim.

Jim Frates

Thanks, Rebecca. Good morning, everyone. We are pleased to report another quarter of strong financial results, driven by robust operational performance across the business. From a broader perspective it's now been more than a year since the merger. This is the first quarter we can see the true organic growth that this business can generate. We're very optimistic about the future and today we're improving our financial expectations for fiscal 2013.

First, let me start with a review of the results for our fiscal third quarter. We recorded total revenues of $135.9 million representing an increase of 8.2% over the third quarter of last fiscal year. This growth was given primarily by our key commercial products, which together grew 33% year-over-year. The revenues from our key commercial products accounted for nearly 70% of total revenues during the quarter compared to 55% during the third quarter of last year. This increasing percentage is exactly what we predicted as our key commercial products continue to ramp and the legacy product revenues diminish.

Now, let me highlight the performance of the key products driving our growth. Our long-acting atypical franchise, RISPERDAL CONSTA and INVEGA SUSTENNA, continue to be the most significant contributor to our results during the quarter. End-market sales for RISPERDAL CONSTA and INVEGA SUSTENNA were approximately $586 million. Year-over-year, the combined franchise grew approximately 13% on a dollar basis and, as Johnson & Johnson reported last week, achieved operational growth of nearly 15% due to an increase in combined market share.

Alkermes reported manufacturing and royalty revenues of $52.5 million for the quarter for this product franchise compared to $47.6 million of revenues in the third quarter of fiscal 2012. For modeling purposes, I want to remind you that INVEGA SUSTENNA's royalty rate is tiered between 5% and 9%. On January 1st, the royalty is reset to 5% and will tier up through the calendar year as certain sales levels are achieved.

For AMPYRA and FAMPYRA manufacturing and royalty revenues were $18.4 million during our third quarter. In the United States, the quarter reported an unaudited AMPYRA quarterly net sales of approximately $73 million and guided to AMPRYA U.S. net sales of $285 million to $315 million for calendar 2013. Outside the United States, Biogen reported FAMPYRA quarterly net sales of approximately $10.5 million and total FAMPYRA revenues of $57.4 million for calendar 2012.

Turning to VIVITROL, net sales for the third quarter of fiscal 2013 were $15.9 million marking the 14th consecutive quarter of growth for the product. VIVITROL continues to show momentum with revenues that grew approximately 5% quarter over quarter. The actual growth is even better than that. If you recall last quarter, we changed our revenue designation model to a sales in model, which resulted in a one-time recognition of $1.7 million in sales. Excluding that, the net sales growth was 18% quarter over quarter. Year-over-year sales are approximately 50%. VIVITROL is beginning to perform and we're pleased to see it becoming a more meaningful part of our business.

During the third quarter, Alkermes recognized BYDUREON royalty revenues of $5.3 million based on estimated worldwide end-market sales of approximately $65 million, which is a 41% increase compared to estimated end-market sales of BYDUREON during the prior quarter.

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