Alkermes Falls on Pipeline News; Q4 Earnings Plunge Y/Y - Analyst Blog

Alkermes ( ALKS ) reported fourth quarter 2014 earnings (including share-based compensation expense) of 2 cents per share, down substantially from year-ago earnings of 20 cents per share but better than the Zacks Consensus Estimate of a loss of 5 cents.

Alkermes reported revenues of $175.2 million for the fourth quarter of 2014, up 13.4% year over year. Revenues were boosted by strong sales of drugs like Invega Sustenna, Vivitrol and Ampyra. Moreover, revenues were above the Zacks Consensus Estimate of $158.9 million.

Alkermes' full-year loss (including share-based compensation expense) came in at 3 cents per share as compared to earnings of 90 cents per share in the prior year. The Zacks Consensus Estimate was at a loss of 14 cents.

2014 revenues increased 3.8% to $618.8 million, beating the Zacks Consensus Estimate of $603 million.

Quarter in Details

Manufacturing and royalty revenues at Alkermes climbed 7.9% to $143.2 million in the reported quarter. Manufacturing and royalty revenues included $70.3 million (down 1.3%) from the company's long-acting atypical antipsychotic franchise, Risperdal Consta and Invega Sustenna.

Alkermes recorded manufacturing and royalty revenues of $24.3 million (up 30.6%) on Ampyra (EU trade name: Fampyra).

Alkermes earned royalty revenues of $9.8 million (up 27.3%) on Bydureon. The company has an agreement with AstraZeneca ( AZN ) for Bydureon.

Vivitrol sales increased 44.2% to $29.7 million in the reported quarter.

Research & development (R&D) expenses for the fourth quarter increased 52.8% to $74.4 million. Selling, general and administrative (SG&A) spending shot up 24.1% from the year-ago quarter to $54.8 million.

In a separate press release, Alkermes informed that its pain candidate, ALKS 7106, failed to meet the company's pre-specified criteria needed to advance the candidate into phase II studies.

The randomized, double-blind, placebo-controlled phase I study was conducted to evaluate the safety, tolerability and pharmacokinetics of single escalating doses of ALKS 7106 in 64 healthy adults. Based on data from the study, Alkermes has decided to discontinue the development of ALKS 7106. Alkeremes' shares were down 4.1%.

Meanwhile, the company continues to progress with its other pipeline candidates, namely, ALKS 5461 (phase III - major depressive disorder), ALKS 3831 (phase II - schizophrenia) and ALKS 8700 (phase I - multiple sclerosis).

2015 Outlook

Alkermes expects loss per share in the range of 27 cents to 40 cents. The Zacks Consensus Estimate currently stands at a loss of 19 cents per share.

Alkermes expects total revenues in the range of $640 million to $670 million. The guidance includes Vivitrol net sales between $125 million and $135 million and net sales from the anticipated launch of aripiprazole lauroxil (under FDA review for schizophrenia with a response expected by Aug 22, 2015) between $5 million and $10 million. The Zacks Consensus Estimate stands at $675 million.

The company expects R&D spend in the range of $345 million to $365 million. 2015 R&D spend is expected to increase as the company continues to develop its pipeline.

SG&A spend is expected at $310-$330 million. Costs associated with the marketing of Vivitrol and sales activity in anticipation of the potential launch of aripiprazole lauroxil are expected to push up SG&A expenses. Upon approval, Alkermes expects to launch aripiprazole lauroxil later this year.

Alkermes currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the health care sector include BioMarin Pharmaceutical Inc. ( BMRN ) and Cytokinetics, Incorporated ( CYTK ). While Cytokinetics is a Zacks Rank #1 (Strong Buy) stock, BioMarin carries a Zacks Rank #2 (Buy).

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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 Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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