Alkermes' CEO Discusses F1Q13 Results - Earnings Call Transcript

Alkermes, Inc. (ALKS)

F1Q13 Earnings Conference Call

July 26, 2012 08:30 AM ET

Executives

Richard F. Pops - Chairman and CEO

James M. Frates - SVP and CFO

Rebecca Peterson - SVP of Corporate Communications

Analysts

William Tanner - Lazard Capital Markets

Anant Padmanabhan - Cowen & Company

Thomas Russo - Robert W. Baird & Company, Inc.

Karen Jay – J.P. Morgan Securities LLC

Steve Byrne - Bank of America/Merrill Lynch

Graig Suvannavejh - Jefferies & Company, Inc.

Ami Fadia - UBS Investment Bank, Research Division

Mario Corso - Caris & Company

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Alkermes Conference Call to discuss the Company's First Quarter Fiscal 2013 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

Thanks, John. Welcome to the Alkermes PLC conference call to discuss our financial results for the first quarter of the fiscal year 2013, which ended on June 30, 2012. With me today are Richard Pops, our CEO; Shane Cooke, our President; and Jim Frates, our CFO.

Before we begin, let me remind you that during the call today, we will make forward-looking statements relating to among other things, our expectations concerning the commercialization of RISPERDAL CONSTA, INVEGA SUSTENNA, AMPYRA/FAMPYRA, BYDUREON and VIVITROL, our future financial expectations and business performance, and our expectations concerning the therapeutic value and clinical development of our products.

Listeners are cautioned that these forward-looking statements are neither promises nor guarantees, and are subject to a high degree of uncertainty and risk. Our press release issued today, our annual report on Form 10-K filed with the SEC and our other filings with the SEC identify risk factors that could cause our actual performance to differ materially from those projected or suggested in the forward-looking statements. We undertake no obligation to update or revise the information provided on this call as a result of new information or future results or developments.

This morning, Jim Frates will discuss our first quarter financial results and Richard Pops will provide a brief update on the Company. After our remarks, we will open up the call for Q&A.

Now I'd like to turn over the call to Jim.

James M. Frates

Thanks, Rebecca. Good morning, everyone. Very pleased to report a solid quarter for Alkermes. The business is performing as we expected and Alkermes financial profile has never been stronger. We’re on track to near expectation of over a half a billion dollars in revenue and non-GAAP net income in the range of $85 million to a $105 million for fiscal year 2013.

Now let me walk through the results. We recorded total revenues of $152.2 million, which is a 146% increase over the first quarter of last year, driven by the growth of our key commercial products, strong performance for some of our legacy products and license revenue.

I will start my review by highlighting the contributions from our five key commercial products. First, revenues related to our long acting atypical franchise RISPERDAL CONSTA, and INVEGA SUSTENNA, were once again the most significant contributors to our top line during the first quarter. End market sales for RISPERDAL CONSTA and INVEGA SUSTENNA during the quarter were approximately $550 million.

The combined franchise grew more than 14% on a dollar basis and nearly 20% on an operational basis year-over-year, due to an increase in combined market share. For the quarter, Alkermes recorded manufacturing and royalty revenues of $47.9 million for this product franchise compared to $48.5 million RISPERDAL CONSTA revenue in the first quarter of 2012.

This comparison is not indicative of the strong underlying growth of the franchise. As last years quarter included unusually high RISPERDAL CONSTA manufacturing revenues due to the timing of our shipments to Johnson & Johnson. What’s most important to our financials is that this franchise is growing and doing very well with 5% sequential quarterly end market sales growth.

Next, manufacturing and royalty revenues for AMPYRA and FAMPYRA were $17.1 million during the first quarter. Outside the United States, Biogen continues to launch FAMPYRA on a country-by-country basis and reported net sales of approximately $20 million for the quarter. Acorda is scheduled to report U.S. sales of AMPYRA next week.

Turning to VIVITROL, net sales for the first quarter of fiscal 2013 were $12.4 million, representing the 12th consecutive quarter of growth. This reflects more than 12% growth sequentially and approximately 28% growth over the same quarter last year.

During the first quarter of fiscal 2013, which was the first full quarter of the BYDUREON launch, Alkermes recorded BYDUREON royalty revenues of $3 million. This reflects our 8% royalty on an estimated $40 million in end market net sales during the quarter. Clearly this product is off to a great start and we’re excited about its future prospects.

In addition to our five key commercial products, during the first quarter of fiscal 2013, Alkermes earned revenues from legacy products, the most significant of which were $12 million from TRICOR 145 and $10.9 million from the combined RITALIN LA, FOCALIN XR franchise. For these products our financial expectations for fiscal 2013 anticipate revenue erosion from generic competition, assuming generic entry in mid calendar year 2012 with revenues declining by roughly half each quarter starting in the September quarter.

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