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Earnings Beat at Alkermes

Zacks Equity Research

Alkermes’ (ALKS) adjusted earnings (including stock-based compensation expense but excluding other special items) of 24 cents per share for the 3-month period ended Jun 30, 2013 compared unfavorably with the year-ago earnings of 32 cents per share.

Results in the reported period were hurt by lower revenues and higher operating expenses. The Zacks Consensus Estimate hinted at earnings of $0.16 per share.

Total revenue for the 3-month period ended Jun 30, 2013 declined 9% year over year to $138.6 million. Results in the year-ago quarter were aided by the inclusion of intellectual property license revenue worth $200 million, which is not related to key development programs. Revenues surpassed the Zacks Consensus Estimate of $135 million.
For the 3-month period ended Jun 30, 2013, Alkermes recorded $56.2 million (up 15.6% year over year) of manufacturing and royalty revenues from its long-acting atypical antipsychotic franchise comprising Risperdal Consta and Invega Sustenna/Xeplion.

The drugs are marketed by Johnson & Johnson (JNJ). Alkermes recorded manufacturing and royalty revenues of $19.9 million (up 15.7% year over year) from Ampyra (EU trade name: Fampyra). Alkermes earned royalty revenues of $16.4 million from type II diabetes treatment Bydureon. Bydureon is co-marketed with Bristol-Myers Squibb Company (BMY).

Vivitrol, a legacy Alkermes product, performed well during the 3-month period. Sales of the product climbed approximately 40% year over year to $17.4 million. Alkermes also earned revenues from TriCor 145 ($4.1 million) and Ritalin LA/Focalin XR franchise ($11.2 million) and Verelan ($6.5 million). Reported total expenses were $125.1 million during the period, up from the year-ago figure of $120.1 million.

We note that in May 2013, Alkermes had announced a change in its fiscal year-end from Mar 31 to Dec. 31. The company maintained its outlook (provided in May) for the 9-month period starting from Apr 2013 to Dec 2013. The company still expects adjusted earnings for the period to be in the range of $0.61 - $0.75 per share. Revenues for the 9-month period are projected in the range of $395 - $425 million.

Alkermes, a biopharmaceutical company, carries a Zacks Rank #3 (Hold). However, another stock which appears to be more attractive in the biopharma space is Actelion Ltd. (ALIOF) with a Zacks Rank #1 (Strong Buy). 

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