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Alkermes Inc. Q1 2011 Earnings Conference Call Transcript

Alkermes Inc. Q1 2011 Earnings Conference Call Transcript

Alkermes Inc., (ALKS)

Q1 2011 Earnings Call

August 5, 2010 04:30 pm ET


Richard F. Pops - Chairman, President and Chief Executive Officer

James M. Frates - Chief Financial Officer

Ms. Rebecca Peterson - Vice President of Corporate Communications


Mario Corso – Caris & Co.

Steve Byrne - Banc of America/Meryl Lynch

Tom Ruse - Baird

Dave Windley - Jeffries

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Ladies and gentlemen, thank you for standing by. Welcome to the Alkermes Conference Call to discuss the company’s first quarter fiscal 2011 financial results. At this time, all participants are in a listen-only mode. There will be a question-and-answer session to follow. Please be advised that this call is being recorded at Alkermes' request.

At this time I'd like to introduce your host for today's call, Ms. Rebecca Peterson, Vice President of Corporate Communications at Alkermes. Please go ahead.

Rebecca Peterson

Good afternoon and welcome to the Alkermes conference call to discuss our financial results for the first quarter of fiscal 2011 which ended on June 30th, 2010. With me this afternoon are Richard Pops, Chairman, President and CEO of Alkermes and Jim Frates, our CFO.

Before we begin today, let me remind you that we will make forward-looking statements relating to among other things our expectations concerning the commercialization of Risperdal Consta, Vivitrol and Bydureon; our future financial expectations and business performance, our expectations concerning the future of business development transactions and our expectations concerning the therapeutic value and development of our product candidates.

Listeners are cautioned that these statements are neither promises nor guarantees, but are subject to risks and uncertainties that could affect our actual results to different materially from the results contemplated by these forward-looking statements.

You can find a list and a detailed description of these risks and other risks on our annual report on Form 10-K, and our quarterly report on Form 10-Q, as well as in other periodic reports filed with the SEC under the Securities and Exchange Act of 1934 as amended.

We undertake no obligation to update or revise the information provided in this call. This afternoon, Jim Frates will discuss our first quarter financial results, and Richard Pops will provide an update on the Company. After our remarks we’ll open up the calls for Q&A.

And now, I’d like to turn over the call to Jim.

James Frates

Thanks Rebecca, good afternoon everyone. As we begin fiscal year 2011, am happy to report another quarter right inline with our expectations. Risperdal Consta continues to achieve solid quarterly sales and is a blockbuster product that will remain a profitable source of revenue for Alkermes for years to come.

During the quarter, we recognized $35.2 million of manufacturing and royalty revenues from Consta. Vivitrol, in the alcohol dependence indication, achieved $6.2 million of net sales, our highest quarter to date in the fourth consecutive quarter growth.

To give you more details on this quarter’s financial, total revenues were $42.3 million, driven by manufacturing and royalty revenues from Risperdal Consta. Royalty revenues were based on $365 million in end-market sales. As Johnson and Johnson stated on its recent quarterly earnings call, Risperdal Consta achieved second quarter sales growth of 3.4% on an operational basis, this is driven by very strong growth in Asia.

Risperdal Consta continues be a blockbuster product, and is the only long acting A typical anti-psychotic, approved from both schizophrenia and bipolar 1 disorder in the United States. Risperdal Consta is the gold standard long-acting choice around the world choice around the world, and has span protection through 2020 in the United States and 2021 in the EU.

One quarter into the fiscal year, we continue to see strength in Risperdal Consta and we are reiterating our expectations for total revenues for Consta in the range of 135 to $147 million this year.

For our second quarter, we expect manufacturing revenues to be in the in the range of 25 to $30 million.

Turning to Bydureon, as you know, the FDA has assigned us PUDFA date of October 22, 2010; we expect Bydureon to provide a substantial revenue stream by Alkermes upon the launch of this product. Bydureon will be profitable to Alkermes from the first dollar of sales, and we have a significant stake in the profits.

Our agreement with Amylin includes an 8% of royalty on the first 40 million units sold in a year, and a 5.5% royalty on units beyond 40 million. The next year we start over again at 8%. In addition Alkermes will receive a $7 million [indiscernible] payment upon the first commercial sale in the United States, and an additional $7 million upon the first commercial sale in the EU.

Turning to expenses, total operating expenses for the first quarter was $55.4 million, which included $4.5 million of charges for non-cash compensation. This is inline with our expectations and reduced from $57.5 million for the same period last year. Excluding non-cash compensation expense, we reported a proforma net loss of approximately $9 million this quarter. On a GAAP basis, we reported a net loss of 13.4 million or a basic in diluted loss per share of $0.14.

A full reconciliation of our proforma net loss to GAAP, as well as details of our quarterly revenues and expenses is available in the press release issued this afternoon on our website.

The company ended the quarter with cash investments of nearly $329 million. This cash position coupled with a strong recurring cash flows from Risperdal Consta will allow us to invest in our pipeline as we work towards our near term data milestone. That being said, we will continue to adhere to our disciplined expense management strategy as we lay the groundwork for our net stage of growth.

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