Investors were a little disappointed with Alkermes' (NASDAQ: ALKS) first-quarter results, but assuming the issues are transient like management claims, the drugmaker appears to be setting itself up for future growth.
Alkermes results: The raw numbers
Income from operations
Earnings per share
Data source: Alkermes.
What happened with Alkermes this quarter?
- The decline in revenue came from manufacturing and royalty revenue for Ampyra, which goes by Fampyra in some markets. Revenue from the product dropped from $28.3 million in the year-ago period to just $12.2 million in the first quarter. Of course, the drop was expected because Ampyra started facing generic competition in late 2018.
- Manufacturing and royalty revenues that Alkermes gets for other products it helped develop increased nearly 10%.
- Sales of opioid and alcohol-dependence drug Vivitrol also grew about 10%.
- Antipsychotic Aristada was a bit of a disappointment, with sales up approximately 4% year over year to $30 million -- quite a ways away from the $40 million management predicted back in February. As it turns out, there was an inventory drawdown of approximately $10 million during the quarter, so management's prediction of demand for the drug was correct, but the decline in inventory resulted in less sales.
- In February, Alkermes and partner Biogen's (NASDAQ: BIIB) marketing application for multiple sclerosis drug Vumerity was accepted by the FDA.
- The company presented data from clinical trials for ALKS 3881 and Aristada at the Congress of the Schizophrenia International Research Society (SIRS). The ALKS 3881 data were quite impressive, showing that the drug doesn't cause weight gain seen in patients taking olanzapine. And the Alpine study for Aristada showed the drug worked as well as Johnson & Johnson's Invega Sustenna.
- The earnings number includes a noncash charge related to the fair value of a milestone payment on a drug candidate that Alkermes sold to Recro Pharma in 2015. Excluding that charge and making other adjustments, the non-GAAP loss was $0.17 per share, compared to a loss of $0.09 per share in the year-ago quarter.
Image source: Getty Images.
What management had to say
Craig Hopkinson, Alkermes' chief medical officer, talked about the reception to the ALKS 3881 data presented at SIRS:
On the clinician front, there's a lot of excitement around the 3831 data, where folks come up to us straight after the presentation asking when this would be available. How long they would have to wait? What the regulatory process would be? So I think we're getting a lot of traction.
Chief Financial Officer James Frates pointed out recent developments that he thinks will drive sales of Aristada, stating, "Looking ahead, there are number of potential new growth drivers that we expect to benefit Aristada as we move toward the second half of the year, including the impact of our recently expanded commercial team, important new data from the Alpine study, and a recent national formulary addition."
Management reiterated its 2019 revenue guidance of $1.14 billion to $1.19 billion. Revenue from Ampyra will continue to decline, but it'll largely be made up for by growth of Vivitrol and Aristada, especially if Aristada inventories return to their previous levels.
Looking a little further down the line, Alkermes should have two additional growth drivers in the years to come. The FDA is expected to make a decision on multiple sclerosis drug Vumerity, which Biogen will market, in the fourth quarter. And Alkermes is shooting for filing the marketing application for ALKS 3831 with the FDA around the middle of the year, setting up a likely approval next year.
And even further down the line, on the pipeline front, there's ALKS 4230, a cancer drug that should read out midstage results this year.
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