Alkermes plc (ALKS)

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Alkermes Plc. (ALKS)

Citi Global Healthcare Conference

February 25, 2013; 11:05 a.m. ET


Richard Pops - Chairman & Chief Executive Officer


Unidentified Participant



Jon Eckard (ph) here on Citi’s biotech research team. Welcome to the company presentation for Alkermers and here today we have Richard Pops, Chairman and CEO.

Richard Pops

Thank you Jon. Good morning everybody or afternoon, whatever it is. So, we’ll see today about [three of the stories] (ph) on Alkermers. On the PowerPoint presentation is this idea of creating value through two portfolios and to know our company is to gain an understanding of these two portfolios that we’ve been building over the last several years and we’re really excited about where we are right now and where we are going to be going over the next 12 months and beyond.

I will make forward-looking statements and as I always do, I encourage you to read our disclosures in our SEC filing to try and capture the risks of our business.

The simplest way to think about these two portfolios is that one is our commercial portfolio, and that is drugs that are approved by the FDA and regulatory authorities around the world and are generating revenue for us and being sold in the market around the world. This portfolio is remarkable in terms of complexity, the lack of coherence between the various elements and its long patent life.

The other one is the commercial, is the pipeline, the development pipeline, the products in development, and while most of the world is in focus over the last year on our building the commercial portfolio and the news coming from that, almost in the background this pipeline has been maturing and getting more and more exciting and is filled with all kinds of news events in 2013.

So the commercial portfolio is comprised of, right now about over 25, but we ask people to focus on what we call the Big 5. These five products are singular products in their classes really. They are early in their patent life and they are going to drive the growth of our revenue line into the next decade.

The pipeline is also quite rich and is popular with primarily the new drivers, the new chemical entities, no longer simply based on their delivery technologies, but entirely new molecules that are designed to satisfy specific needs that we’ve identified in the market place. It’s a whole theory. This concept is about value. The way we select product is based on the idea of finding a value, both for patients and the families, but also for payers and the whole ecosystem in general.

There are papers on the rocks, as well as our long acting form of identifying currently stage three for the treatment of schizophrenia, 5461. We’ll talk about also the compression, 3831 also for schizophrenia. And then with our commercial pipeline still with us, we also have follow-on product line extensions that will drive those franchises in the future as well.

So these Big 5 in the commercial portfolio are driving a revenue line, a value creation line that we are really, really pleased with and what’s so interesting about this business is the story about this business is far from completely told. These five products are early in the line and there still remains many potential outcomes for how this portfolio is going to grow.

For example, take Bydureon. How big a product is Bydureon going to be? How big a product is Vivitrol going to be? And what we liked so much about the portfolio is any aggregate, when we model all these discreet elements, there’s many different ways that this portfolio will grow in non-linear ways into the future.

We say this portfolio by itself was referenced, was comprised of a really exciting biotechnology company, but its important to understand that way we are managing the company, the way we are building the company and that we are playing even in a bigger arena. The idea is that we are creating a much bigger company using this as a financial foundation for a potential blockbuster product. And if you’re able to finance your own R&D, if your proving the technical capabilities to make innovative new products and you have the capital to keep doing this repeatedly, we see the probability of us having a breakout of success in the pipeline as being very high over time.

(Inaudible) saw the first opportunity for that happen this year, 5461 and 3831, which we’ll talk more about, represent not theoretical ideas, but products that fully conceive in the clinic, being tested in patients or data’s being just developed for you over time.

So, if there were a single picture that captures what we’ve done on the commercial side over the last two years or so, that’s it. We’ve built the company now, we’re comparing fiscal years 2011 for a March year end to fiscal year 2013, which is the year we’re in right now, which we’ll complete at the end of this month.

So we took revenues from about $180 million to over $500 million and we went from loosing money as we invested aggressively in the development portfolio, to making money on an ongoing sustained basis, while being able to grow the R&D expenses at a rate not as great as we grew the revenue line or the product line. And what we liked so much about this, at this level of finance, of funding, around $150 million to $160 million a year, we can do an enormous amount of R&D. We are still perpetuating and we can still deliver on our financial goals that we think are important in managing the company with discipline.

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