Alkermes' Revenue Soars, Projects an Exciting Year Ahead

By Brian Feroldi Markets Fool.com

Alkermes (NASDAQ: ALKS),a drug developer that specializes in extended-release products and diseases of the central nervous system,released its fourth-quarter and full-year earnings results before the start of trading on February 15th. Here's a look at the company's results and details on management's expectation for the year ahead.

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Alkermes Q4 results: The raw numbers

Metric Q4 2016 Q4 2015 Year-Over-Year Change
Revenue $213.5 million $163.1 million 31%
GAAP net income ($21.1 million) ($69.4 million) N/A
Non-GAAP net income $23.3 million ($21.0 million) N/A
Non-GAAP EPS $0.15 ($0.14) N/A

Data source: Alkermes. GAAP = generally accepted accounting principles. EPS = earnings per share.

Image source: Getty Images.

What happened with Alkermes this quarter?

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  • Alkermes' top-selling drug, Vivitrol, continues to grow rapidly. Sales of this treatment for opioid and alcohol dependence came in at $62.1 million for the quarter, up 62% over the year-ago period.
  • Sales of Aristada, the company's extended-release version of theschizophrenia drug Abilify, grew to $17.3 million, up 276% over the fourth quarter of 2015, which is when it launched.
  • Manufacturing and royalty revenues related toJohnson & Johnson's schizophrenia drugs Risperdal Consta, Invega Sustenna/Xeplion, and InvegaTrinza/Trevicta dropped 1% to $74.0 million for the quarter.
  • Manufacturing and royalty revenues related toAcorda Therapeutics' multiple sclerosis drug Ampyra/Fampyra were$32.3 million, up 69% year over year.
  • Royalties from sales of diabetes drug Bydureon dipped 7% to $11.3 million.
  • Alkermes ended the quarter with $619 million in cash.

What management had to say

"We have built Alkermes to thrive in an increasingly challenging biopharmaceutical industry," said CEO Richard Pops.

Pops said his confidence stems from the strong growth prospects for both Vivitrol and Aristada, as well as from the company's burgeoning late-stage pipeline:

We have identified our next phase of growth based on a remarkable, late-stage, phase 3 portfolio. Our focus on large, chronic diseases of the CNS [Central Nervous System] coupled with our approach to selecting, developing, and commercializing medicines is unique and built for a complex public health environment.

Management wasparticularly excited about the near-term prospects for Aristada. The company expects to win FDA approval for a new two-month dosing option of the drug by mid-year. He believes this will help the drug stand out in the highly competitive antipsychotic market.

Pops also commented further on the planned activities in 2017 related to Alkermes' pipeline:

Our late-stage pipeline will continue to evolve rapidly, highlighted by the planned NDA submission for ALKS 5461 in major depressive disorder, the completion of the pivotal efficacy study of ALKS 3831 in schizophrenia, and completion of the required elements for registration of ALKS 8700 in multiple sclerosis.

Looking forward

CFOJames Frates told investors that the company expects to grow its top line by 20% in 2017, driven primarily by volume growth in both Vivitrola and Aristada. However, he also said the company is planning on making big investments in its commercial infrastructure to support the expected growth in Aristada and in anticipation of a 2018 launch of ALKS 5461.

Here's a look at management's guidance for 2017 compared to its results in 2016.

Metric

2017 Guidance

2016 Actual

Revenue

$870 million to $920 million

$746 million

GAAP net income

($180 million to $210 million)

($208 million)

Non-GAAP net income

($15 million) to $15 million

($10.3 million)

Non-GAAP EPS

($0.10) to $0.10

($0.07)

Data source: Alkermes.

The midpoints of this forecast fell a bit short of what Wall Street was expecting.

Regardless, Alkermes investors have plenty to look forward to in 2017. Vivitrol and Aristada look poised for significant growth, Phase 3 data readouts are expected on four separate pipeline products, and two New Drug Application submissions are planned. That positions the company well to deliver on its long-term target of producing more than $2 billion in annual revenue in the 2020's.

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Brian Feroldi has no position in any stocks mentioned. The Motley Fool recommends Alkermes and Johnson and Johnson. The Motley Fool has a disclosure policy.