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Alkermes' (ALKS) Earnings and Sales Beat Estimates in Q3

Zacks Equity Research

Alkermes plc. ALKS reported adjusted loss of 4 cents per share in the third quarter of 2019 in contrast to earnings of 7 cents in the year-ago quarter. However, the reported loss was narrower than the Zacks Consensus Estimate of a loss of 21 cents.

The company’s revenues of $255.2 million in the quarter increased 2.6% from the year-ago quarter. The top line beat the Zacks Consensus Estimate of $250.98 million. The company’s proprietary products, especially Aristada, drove revenues. However, this was offset by declining sales of Ampyra, following the entry of generics into the market in 2018.

Alkermes’ shares have lost 36.8% year to date compared with the industry’s decline of 2.8%.

Factors Impacting Q3

Manufacturing and royalty revenues from J&J’s JNJ drugs, Risperdal Consta, Invega Sustenna/Xeplion and InvegaTrinza/Trevicta, were $76.7 million, down 0.6% year over year. The same from Ampyra/Fampyra were down 62.1% year over year to $7.7 million due to generic competition. Research and development revenues, primarily from the collaboration with Biogen BIIB for Vumerity (diroximel fumarate) were $12.7 million, down 22.1% year over year.

Vivitrol sales improved about 6.6% year over year to $85.2 million.

Aristada sales came in at $53.6 million, up 48.5% year over year.

Research and development (R&D) expenses were $107.7 million, down 6.3% year over year.

Selling, general and administrative (SG&A) expenses were $148.7 million, up 15.5% year over year.

Restructuring Update

Alkermes announced a restructuring plan to reduce costs, better cost structure and to focus on growth opportunities. The company stated that the plan will likely result in cost savings of approximately $150 million. It will also cut 160 jobs as part of the plan. The company anticipates a charge of approximately $15 million related to its restructuring, which will be recorded in fourth-quarter results.

2019 Outlook

Alkermes maintained its total revenue guidance for 2019 in the range of $1.14-$1.19 billion. The expected range includes milestone payment of $150 million, which will be triggered following final FDA approval for multiple sclerosis (“MS”) candidate, Vumerity. The Zacks Consensus Estimate for 2019 revenues is $1.18 billion.

The company now expects Aristada net sales for 2019 to be $185-$190 million, down from its previous expectation of $200-$210 million.

The company narrowed its guidance for Vivitrol sales to the range of $330-$340 million from its previous range of $330-$350 million. It anticipates R&D expenses to be $430-$450 million compared with the previous range of $450-$480 million. Alkermes’ guidance for SG&A expenses stands at $590-$610 million (previously $590-$620 million).

The company raised its profit outlook. It expects earnings per share to be 44-57 cents, compared with 25-43 cents expected previously. The Zacks Consensus Estimate for 2019 earnings is pegged at 36 cents.

Pipeline Update

The company stated that the FDA has tentatively approved Vumerity for treating relapsing form of MS. However, final approval is pending and is expected by the end of 2019. Meanwhile, it intends to submit new drug application for ALKS 3831 in both schizophrenia and bipolar I disorder and the first efficacy data for early-stage immuno-oncology candidate – ALKS 4230 before year-end.

Alkermes plc Price, Consensus and EPS Surprise

 

Alkermes plc Price, Consensus and EPS Surprise

Alkermes plc price-consensus-eps-surprise-chart | Alkermes plc Quote

Zacks Rank & Key Pick

Alkermes currently has a Zacks Rank #2 (Buy).

Alnylam Pharmaceuticals Inc. ALNY is another stock to consider from the biotech sector, carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Estimates for Alnylam have narrowed from loss of $8.21 to $8.20 for 2019 and from $7.56 to $7.55 for 2020 in the past 30 days. The company delivered a positive earnings surprise in three of the trailing four quarters, with the average beat being 9.79%.   

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