Alkermes plc (ALKS)

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Alkermes, Inc. (ALKS)

F3Q10 (Qtr End 12/31/09) Earnings Call

February 4, 2010 at 4:30 pm ET


Rebecca Peterson - VP, Corporate Communications

Jim Frates - CFO

Richard Pops - Chairman, President and CEO


Cory Kasimov - JPMorgan

Steve Yoo - Leerink Swann

Dave Windley - Jefferies & Company

Thomas Russo - Robert W. Baird

Ian Sanderson - Cowen & Company



Ladies and gentlemen thank you for standing by. Welcome to the Alkermes conference call to discuss the company's third quarter financial fiscal 2010 financial results. My name is John and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. There will be a question-and-answer session to follow. Please be advised 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, Vice President of Corporate Communications at Alkermes. Please go ahead.

Rebecca Peterson

Thanks very much. Good afternoon and welcome to the Alkermes conference call to discuss our financial results for the third quarter of fiscal 2010, which ended on December 31st, 2009. With me this afternoon are Richard Pops, Chairman, President and CEO of Alkermes and Jim Frates, our CFO.

Before we begin, let me remind you that during the call today, we will make forward-looking statements relating to among other things our expectations concerning the commercialization of RISPERDAL CONSTA, VIVITROL, and Exenatide once weekly, our future financial expectations and business performance, our expectations concerning future of business development transactions and our expectations concerning the therapeutic value and development of our product candidates.

Listeners are cautioned that these statements are neither promises nor guarantees, but are subject to risks and uncertainties that could cause our actual results to differ materially from the results contemplated by the forward-looking statements. You can find a complete list and detailed description of these and other risks in our Annual Report on Form 10-K, our quarterly report on Form 10-Q, which was filed this afternoon as well as the other periodic reports filed with the SEC under the Securities and Exchange Act of 1934 as amended. We undertake no obligation to update or revise the information provided in this call.

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

Now, I’d like to turn over the call to Jim.

Jim Frates

Thanks, Rebecca. Good afternoon, everyone. Overall, this has been a strong quarter from a financial point of view. Both RISPERDAL CONSTA and VIVITROL achieved record quarterly sales. On a revenue basis, RISPERDAL CONSTA, the primary engine of revenue growth here at Alkermes, continued to perform very well growing operationally at over 18% year-over-year.

In addition, we’re making progress toward our goal of reaching operational breakeven for VIVITROL in the alcohol dependence indication with 17% sequential growth in net sales. During the quarter, our strong revenue performance coupled with our expense management allowed us to record a small pro forma net income and generate $6.4 million of cash from operations, finishing the quarter with approximately $358 million in cash.

As Rich will discuss further, our strategy is to make disciplined investments in our pipeline with the cash flow we generate to lay the ground work for the next stage of our growth. To provide more detail on this quarter’s financials, total revenues were $44.2 million attributable to strong manufacturing revenues and record royalty revenues from RISPERDAL CONSTA based on roughly $400 million in end market sales.

As J&J stated on its recent quarterly earnings call “RISPERDAL CONSTA achieved fourth quarter sales growth of 18.1% on an operational basis. U.S. sales growth was 13.7% with increased script share and market growth contributing to the results. Sales outside the United States were up 20.6% operationally with double digit growth in all the major regions and a launch earlier this year of RISPERDAL CONSTA in Japan.” These strong revenue results from RISPERDAL CONSTA were notable as they occurred during the first full quarter that Johnson & Johnson was promoting both RISPERDAL CONSTA and their long acting form is INVEGA demonstrating an additional promotional activity in the market place may in fact serve to grow this class. There is room in the market for multiple long acting atypical products.

Based on sales during our first three fiscal quarters of 2010, RISPERDAL CONSTA continues to be a blockbuster product, on track for another year of growth with expected sales in excess of $1.4 billion for our fiscal year. RISPERDAL CONSTA has patent protection through 2020 in the United States and 2021 in the EU. And so we expect RISPERDAL CONSTA will continue to generate a profitable revenue stream for Alkermes for years to come.

With respect to VIVITROL, net sales for the third quarter were $5.5 million, an increase of approximately 17% compared to the second quarter. In addition for the fourth consecutive quarter, we have reduced our SG&A expenses associated with VIVITROL. The big news in the quarter was the positive results from our Phase III study of VIVITROL and opioid dependence. We intend to file an sNDA for that indication by April of this calendar year and plan to leverage our current commercial team to sell the drug.

Turning to Exenatide Once Weekly or EQW, the PDUFA date of March 5th, 2010 is rapidly approaching. And our partner Amylin is preparing for all aspects of product launch including manufacturing. During this quarter we recognized manufacturing revenues in the amount of $1.5 million related to our supply agreement with Amylin for polymer for Exenatide once weekly.

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