Alkermes Announces Third Quarter Fiscal 2007 Results.- Company Reports Profitable Quarter Driven by 51% Increase in Revenues Compared to Third Quarter Fiscal 2006 - - Financial Expectations for Fiscal 2007 Improve - CAMBRIDGE, Mass. -- Alkermes, Inc. (Nasdaq: ALKS ALKS Alkermes, Inc. (stock symbol) ) today announced financial results for the third quarter of fiscal 2007. Financial highlights for the quarter ended December 31, 2006 include: * Second consecutive profitable quarter on a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis, with net income of $2.9 million. * Record revenues of $62.4 million. Sales of RISPERDAL([R]) CONSTA([R]) by Janssen-Cilag were $226 million. * Strong balance sheet, with cash and total investments of $356.2 million. * Improved financial expectations, with fiscal year 2007 non-GAAP net income expected to range from $30 to $35 million. Key operating results for the third quarter of fiscal 2007 include: * Net income for the quarter ended December 31, 2006 was $2.9 million or a basic and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.03, including $7.5 million in share-based compensation expense, as compared to a net income of $1.4 million or a basic earnings per share of $0.02 and diluted earnings per share of $0.01 for the same period in 2005, which did not include any share-based compensation expense. * Non-GAAP net income for the quarter ended December 31, 2006 was $11.1 million or a basic and diluted earnings per share of $0.11, compared to a net income of $1.6 million or a basic and diluted earnings per share of $0.02 for the same period in 2005. Alkermes is providing non-GAAP results as a complement to GAAP results. The non-GAAP net income excludes certain noncash or nonrecurring items, and Alkermes' management believes these non-GAAP measures help to indicate underlying trends in the Company's ongoing operations. The reconciliation between non-GAAP and GAAP earnings per share for the third quarters of fiscal 2007 and 2006 is provided in the following table: [TABLE OMITTED] "We are pleased to begin calendar 2007 from a position of strength, with growing revenues from our commercial products, strong operating performance, and opportunities for significant long-term growth," stated James Frates, chief financial officer of Alkermes. "We reported another profitable quarter while continuing to invest in our pipeline, further demonstrating our commitment to building a profitable, multi-product company." Revenues * Total revenues for the quarter ended December 31, 2006 were $62.4 million, compared to $41.4 million for the same period in 2005. * Total manufacturing revenues for the quarter ended December 31, 2006 were $28.8 million, comprised of $23.6 million for RISPERDAL CONSTA and $5.2 million for VIVITROL([R]), compared to $14.7 million for the same period in 2005, all of which related to RISPERDAL CONSTA. * Royalty revenues for the quarter ended December 31, 2006 were $5.7 million based on RISPERDAL CONSTA sales of $226 million, compared to $4.2 million based on RISPERDAL CONSTA sales of $169 million for the same period in 2005. * Research and development (R&D) revenue under collaborative arrangements for the quarter ended December 31, 2006 was $19.5 million, compared to $10.0 million for the same period in 2005. * Net collaborative profit for the quarter ended December 31, 2006 was $8.4 million, compared to $12.5 million for the same period in 2005. Costs and Expenses * Cost of goods manufactured, on a non-GAAP basis, for the quarter ended December 31, 2006 was $12.1 million, of which $7.6 million related to RISPERDAL CONSTA and $4.5 million related to VIVITROL, compared to $6.1 million for the same period in 2005, all of which related to RISPERDAL CONSTA. On a GAAP basis, cost of goods manufactured for the quarter ended December 31, 2006 was $13.0 million, including share-based compensation expense of $0.9 million. * R&D expenses, on a non-GAAP basis, for the quarter ended December 31, 2006 were $28.0 million, compared to $22.5 million for the same period in 2005. On a GAAP basis, R&D expenses for the quarter ended December 31, 2006 were $29.9 million, including share-based compensation expense of $1.9 million. * Selling, general and administrative (SG&A) expenses, on a non-GAAP basis, for the quarter ended December 31, 2006 were $11.7 million, compared to $9.3 million for the same period in 2005. On a GAAP basis, SG&A expenses for the quarter ended December 31, 2006 were $16.4 million, including share-based compensation expense of $4.7 million. * Interest expense for the quarter ended December 31, 2006 was $4.1 million for the quarter ended December 31, 2006 compared to $5.2 million for the same period in 2005. Interest income for the quarter ended December 31, 2006 was $4.3 million compared to $3.3 million for the same period in 2005. At December 31, 2006, Alkermes had cash and total investments of $356.2 million, compared to $325.6 million at September 30, 2006. This increase reflects collections from the Company's partners, including monies received from Cephalon Ceph´a`lon n. 1. (Zool.) The head. related to work performed on the two additional VIVITROL manufacturing lines under construction. Recent Highlights * Expanded manufacturing agreement with Eli Lilly Eli Lilly can refer to:
v. in·haled, in·hal·ing, in·hales v.tr. 1. To draw (air or smoke, for example) into the lungs by breathing; inspire. 2. Insulin (AIR Insulin) under which Alkermes will be the exclusive commercial manufacturer of AIR Insulin powder for the AIR([R]) Inhaled Insulin System (AIR([R]) Insulin System). The manufacturing agreement outlines the terms for the manufacture and supply of commercial product and provides for additional investment by Lilly for the construction and operation of a second manufacturing line at Alkermes' commercial-scale production facility for inhaled medications, expanding the facility's powder production capacity to meet post-launch requirements. * Reported positive phase 1 results for ALKS 27 for COPD COPD chronic obstructive pulmonary disease. COPD abbr. chronic obstructive pulmonary disease Chronic obstructive pulmonary disease (COPD) : Alkermes and Indevus Pharmaceuticals, Inc. reported preliminary results from the phase 1 study which showed that ALKS 27 was well tolerated over a wide dose range, with no dose-limiting effects observed. ALKS 27 is being developed for the treatment of chronic obstructive pulmonary disease chronic obstructive pulmonary disease n. Abbr. COPD A chronic lung disease, such as asthma or emphysema, in which breathing becomes slowed or forced. (COPD). * Filed new drug application for RISPERDAL CONSTA in Japan: Janssen Pharmaceutica Janssen Pharmaceutica, is a pharmaceutical company based in Beerse, Belgium, was established in 1953 by Dr. Paul Janssen. It was created not as a subsidiary of a chemical factory but solely with the aim of conducting pharmacological research. K.K., the Japanese organization of its partner Janssen-Cilag, submitted a new drug application to the Pharmaceuticals and Medical Devices Agency (PMDA PMDA Plastics Machinery Distributors' Association (United Kingdom) PMDA Plutonium Management and Disposition Agreement (US-Russia) PMDA Pharmaceuticals and Medical Device Agency (Japan) ) for marketing approval of RISPERDAL CONSTA in Japan. Financial Expectations The following outlines the Company's financial expectations for the fiscal year ending March 31, 2007. Certain statements set forth below constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. For information with respect to factors that could cause Alkermes' actual results to differ materially from its expectations, please see the risk factors provided at the end of this press release and within reports filed by Alkermes with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, including the annual report on Form 10-K/A for the year ended March 31, 2006, which the Company filed in August 2006. Alkermes today improved its financial expectations for fiscal year 2007. The non-GAAP financial expectations exclude the impact of share-based compensation expense related to the Company's adoption of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123R. Revenues: The Company is increasing its expectation for total revenues for fiscal 2007 to a range of $221 to $243 million, revised from an earlier expectation of $206 to $228 million. The Company is increasing its expectation for manufacturing revenues to a range of $100 to $110 million from an earlier expectation of $85 to $95 million. The Company is increasing its expectation for manufacturing revenues for RISPERDAL CONSTA to a range of $85 to $90 million, revised from an earlier expectation of $75 to $80 million and is increasing its expectation for manufacturing revenues for VIVITROL to a range of $15 to $20 million, revised from an earlier expectation of $10 to $15 million. While Alkermes does not record VIVITROL sales, the Company expects sales of VIVITROL in fiscal 2007 to remain in the range of $5 to $10 million. The Company expects royalty revenues from RISPERDAL CONSTA to remain in the range of $21 to $23 million. The Company is increasing its expectation for research and development revenues to a range of $65 to $70 million, revised from an earlier expectation of $60 to $65 million, due to an increased level of effort and time being spent on partnered programs in late-stage clinical development. The Company is adjusting its expectation for net collaborative profit to a range of $35 to $40 million, revised from an earlier expectation of $40 to $45 million, primarily due to the timing of expenditures related to certain VIVITROL-related activities. Cost of Goods Manufactured: The Company is increasing its expectation for cost of goods manufactured to a range of $40 to $50 million, revised from an earlier expectation of $35 to $44 million. The Company's expectation for cost of goods manufactured related to RISPERDAL CONSTA remains in the range of $27 to $32 million. The Company is increasing its expectation for cost of goods manufactured related to VIVITROL to a range of $13 to $18 million, revised from an earlier expectation of $8 to $12 million. Research and Development Expenses: The Company expects R&D expenses to remain in the range of $105 to $110 million. Selling, General and Administrative Expenses: The Company is increasing its expectation for SG&A expenses to a range of $45 to $50 million, revised from an earlier expectation of $40 to $45 million, based on SG&A spending to date. Operating Income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. : The Company is increasing its expectation for operating income to a range of $30 to $35 million, revised from an earlier expectation of $25 to $30 million. Net Interest Income/Expense: The Company expects other income/expense, net, to remain in the range of $0 to $5 million. Income Taxes: The Company continues to anticipate income tax expense to range from $1 to $2 million. Utilization of tax loss carryforwards tax loss carryforward See carryforward. is limited in the calculation of the U.S. alternative minimum tax (AMT See vPro. ). As a result, a federal tax charge is reflected for fiscal 2007. The current AMT liability is available as a credit against future tax obligations upon the full utilization or expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of the Company's net operating loss carryforwards Net operating loss carryforwards Application of losses to offset earnings in future years. . Net Income (non-GAAP): The Company is increasing its expectation for non-GAAP net income to a range of $30 to $35 million, or a basic earnings per share of approximately $0.30 to $0.35, revised from an earlier expectation of $25 to $30 million, or a basic earnings per share of approximately $0.25 to $0.30. The basic non-GAAP net income per share calculation is based on an estimated 100 million shares of the Company's common stock outstanding on a weighted average basis for fiscal 2007. The non-GAAP net income expectation does not include the impact of the adoption of SFAS 123R relative to share-based compensation expense. SFAS 123R: Based on the Company's expectation with respect to stock grants and the estimates used to value such grants, the Company expects the impact of SFAS 123R expense for fiscal 2007 to remain in the range of $25 to $30 million, or $0.25 to $0.30 basic earnings per share. The Company expects to recognize these expenses within cost of goods manufactured, R&D expenses and SG&A expenses in the approximate ratio of 10%, 30% and 60%, respectively. Conference Call Alkermes will host a conference call at 4:30 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. on Wednesday, February 7, 2007 to discuss these financial results and provide an update on the Company. The conference call may be accessed by dialing 1-866-256-3815 for domestic callers and 1-703-639-1212 for international callers. The conference call ID number is 1031642. In addition, a replay of the conference call will be available from 7:30 p.m. EST on Wednesday, February 7, 2007 through 5:00 p.m. EST on Monday, February 12, 2007, and may be accessed by visiting Alkermes' website or by dialing 1-888-266-2081 for domestic callers and 1-703-925-2533 for international callers. The replay access code is 1031642. Alkermes is also providing a podcast (iPOD broadCAST) An audio broadcast that has been converted to an MP3 file or other audio file format for playback in a digital music player or computer. The "pod" in podcast was coined from "iPod," the predominant portable, digital music player, and although podcasts are MP3 file available for download on the Alkermes website, which will be available shortly following the conference call and will be available until Thursday, February 15, 2007. About Alkermes Alkermes, Inc. is a biotechnology company that develops innovative medicines designed to yield better therapeutic outcomes and improve the lives of patients with serious disease. Alkermes currently has two commercial products: RISPERDAL([R]) CONSTA([R])[(risperidone) long-acting injection], the first and only long-acting atypical antipsychotic The atypical anti-psychotics (also known as second generation anti-psychotics) are a class of prescription medications used to treat psychiatric conditions. Some atypical anti-psychotics are FDA approved for use in the treatment of schizophrenia. medication approved for use in schizophrenia schizophrenia (skĭt'səfrē`nēə), group of severe mental disorders characterized by reality distortions resulting in unusual thought patterns and behaviors. , and marketed worldwide by Janssen-Cilag (Janssen), a wholly owned division of Johnson & Johnson; and VIVITROL([R]) (naltrexone naltrexone /nal·trex·one/ (nal-trek´son) an opioid antagonist used as the hydrochloride salt in treatment of opioid or alcohol abuse. nal·trex·one n. An endorphin and narcotic antagonist. for extended-release injectable in·ject·a·ble adj. Capable of being injected. Used of a drug. n. A drug or medicine that can be injected. suspension) the first and only once-monthly injectable medication approved for the treatment of alcohol dependence and marketed in the U.S. primarily by Cephalon, Inc. Alkermes' pipeline includes extended-release injectable, pulmonary pulmonary /pul·mo·nary/ (pool´mo-nar?e) 1. pertaining to the lungs. 2. pertaining to the pulmonary artery. pul·mo·nar·y adj. Of, relating to, or affecting the lungs. , and oral products for the treatment of prevalent, chronic diseases such as central nervous system disorders Nervous system disorders A satisfactory classification of diseases of the nervous system should include not only the type of reaction (congenital malformation, infection, trauma, neoplasm, vascular diseases, and degenerative, metabolic, toxic, or deficiency , addiction addiction: see drug addiction and drug abuse. and diabetes. Alkermes' headquarters are in Cambridge, Massachusetts This article is about the city of Cambridge in Massachusetts. For the English university town, see Cambridge, England. For other places, see Cambridge (disambiguation). Cambridge, Massachusetts is a city in the Greater Boston area of Massachusetts, United States. , and it operates research and manufacturing facilities in Massachusetts and Ohio. Certain statements set forth above may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to: statements concerning future business and operating results and profitability; the therapeutic value of the Company's product candidates to patients; plans for clinical trials; expectations concerning the commercialization of RISPERDAL CONSTA and VIVITROL; the successful supply of RISPERDAL CONSTA and VIVITROL; the successful scale-up and manufacture of AIR Insulin, including the timing for the commencement of the second manufacturing line for AIR Insulin; and the successful continuation of development activities for proprietary and partnered programs, including ALKS 27. Although the Company believes that such statements are based on reasonable assumptions within the bounds of its knowledge of its business and operations, the forward-looking statements are neither promises nor guarantees and the Company's business is subject to significant risk and uncertainties and there can be no assurance that its actual results will not differ materially from its expectations. These risks and uncertainties include, among others: whether the Company will achieve the financial expectations provided; whether sales of VIVITROL will meet forecasted estimates; whether the Company can continue to successfully manufacture RISPERDAL CONSTA and VIVITROL at a commercial scale or economically or in sufficient quantities to supply the market; whether RISPERDAL CONSTA will continue to be commercialized successfully by its partner Janssen and whether VIVITROL will be commercialized successfully by Alkermes and its partner Cephalon; whether RISPERDAL CONSTA will receive marketing approval in Japan; whether the Company is able to successfully and efficiently scale up and manufacture its product candidates, including AIR Insulin; whether advancement of the Company's partnered and proprietary product candidates, including ALKS 27, will be delayed due to actions or decisions by its partners with regard to development and regulatory strategy, timing and funding which are out of its control, and the outcome of clinical and preclinical preclinical /pre·clin·i·cal/ (-klin´i-k'l) before a disease becomes clinically recognizable. pre·clin·i·cal adj. 1. work the Company is pursuing, both on its own and with partners; decisions by the FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. or foreign regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities regarding the Company's product candidates; potential changes in cost, scope and duration of clinical trials; whether third party payors will cover or reimburse re·im·burse tr.v. re·im·bursed, re·im·burs·ing, re·im·burs·es 1. To repay (money spent); refund. 2. To pay back or compensate (another party) for money spent or losses incurred. VIVITROL; and whether RISPERDAL CONSTA, VIVITROL and the Company's product candidates, in commercial use, have unintended side effects Side effects Effects of a proposed project on other parts of the firm. , adverse reactions adverse reactions, n.pl unfavorable reactions resulting from administration of a local anesthetic; responsible factors include the drug used, concentration, and route of administration. or incidents of misuse that could cause the FDA or other health authorities to require post approval studies or require removal of its products from the market. For further information with respect to factors that could cause the Company's actual results to differ materially from expectations, reference is made to the reports the Company filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. The forward-looking statements made in this release are made only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" and the Company disclaims any intention or responsibility for updating predictions or financial expectations contained in this release. AIR([R]) is a registered trademark of Alkermes, Inc.; VIVITROL([R]) is a registered trademark of Cephalon, Inc.; RISPERDAL([R]) CONSTA([R]) is a registered trademark of Johnson & Johnson Corporation. 1 Alkermes, Inc. adopted SFAS 123R based on the modified prospective transition method beginning April 1, 2006. Based on the Company's non-GAAP disclosure under SFAS 148 (Accounting for Stock-Based Compensation--Transition and Disclosure) for reporting periods prior to April 1, 2006 (as previously disclosed in the Company's financial statement footnotes), non-GAAP share-based compensation expense in the third quarter of fiscal 2006 was $5.5 million, or $0.06 per basic and $0.05 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, and the resulting non-GAAP loss per basic and diluted share was $0.04. [TABLE OMITTED] This selected financial information should be read in conjunction with the consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge and notes thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. included in the Company's Annual Report on Form 10-K/A for the year ended March 31, 2006 and the Company's report on Form 10-Q Form 10-Q See 10-Q. for the quarterly period ended December 31, 2006, to be filed by February 9, 2007. [TABLE OMITTED] This selected financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K/A for the year ended March 31, 2006 and the Company's report on Form 10-Q for the quarterly period ended December 31, 2006, to be filed by February 9, 2007. [TABLE OMITTED] |
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