Alkermes plc 10-Q for FY2023 Q1

Alkermes plc. (ALKS)

10-Q 2023-04-26 For: 2023-03-31

Added on April 11, 2026

About this 10-Q

Alkermes plc filed this 10-Q on April 26, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).

Headline figures

Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $287.6M; up 3.2% from $278.55M a year earlier
Net loss: $41.85M; compared with a net loss of $35.9M a year earlier
Diluted EPS: -$0.25; compared with -$0.22 a year earlier

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Ireland		98-1007018
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Ordinary shares, $0.01 par value		ALKS		Nasdaq Global Select Market


Large accelerated filer ☒		Accelerated filer ☐
Non-accelerated filer ☐		Smaller reporting company ☐
		Emerging growth company ☐


		Page No.
PART I - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited):
	Condensed Consolidated Balance Sheets — March 31, 2023 and December 31, 2022	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss — For the Three Months Ended March 31, 2023 and 2022	6
	Condensed Consolidated Statements of Cash Flows — For the Three Months Ended March 31, 2023 and 2022	7
	Condensed Consolidated Statements of Shareholders’ Equity — For the Three Months Ended March 31, 2023 and 2022	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	31
Item 4.	Controls and Procedures	32

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
Signatures		36

	March 31, 2023	December 31, 2022
	(In thousands, except share and per share amounts)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$321,401	$292,473
Investments—short-term	279,058	315,992
Receivables, net	269,178	287,967
Inventory	184,984	181,418
Contract assets	8,429	8,929
Prepaid expenses and other current assets	47,008	43,527
Total current assets	1,110,058	1,130,306
PROPERTY, PLANT AND EQUIPMENT, NET	321,109	325,361
DEFERRED TAX ASSETS	151,232	115,602
RIGHT-OF-USE ASSETS	111,586	115,855
INVESTMENTS—LONG-TERM	92,083	131,610
GOODWILL	92,873	92,873
INTANGIBLE ASSETS, NET	28,880	37,680
OTHER ASSETS	14,906	14,691
TOTAL ASSETS	$1,922,727	$1,963,978
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$190,149	$220,089
Accrued sales discounts, allowances and reserves	282,264	252,115
Operating lease liabilities—short-term	15,304	15,722
Contract liabilities—short-term	2,193	6,816
Current portion of long-term debt	3,000	3,000
Total current liabilities	492,910	497,742
LONG-TERM DEBT	289,635	290,270
OPERATING LEASE LIABILITIES—LONG-TERM	86,112	89,829
OTHER LONG-TERM LIABILITIES	48,494	42,384
Total liabilities	917,151	920,225
COMMITMENTS AND CONTINGENT LIABILITIES (Note 14)
SHAREHOLDERS’ EQUITY:
Preferred shares, par value, $0.01 per share; 50,000,000 shares authorized; zero issued and outstanding at March 31, 2023 and December 31, 2022, respectively	—	—
Ordinary shares, par value, $0.01 per share; 450,000,000 shares authorized; 171,518,796 and 168,951,193 shares issued; 166,058,960 and 164,377,009 shares outstanding at March 31, 2023 and December 31, 2022, respectively	1,715	1,690
Treasury shares, at cost (5,459,836 and 4,574,184 shares at March 31, 2023 and December 31, 2022, respectively)	(185,606)	(160,862)
Additional paid-in capital	2,938,726	2,913,099
Accumulated other comprehensive loss	(8,129)	(10,889)
Accumulated deficit	(1,741,130)	(1,699,285)
Total shareholders’ equity	1,005,576	1,043,753
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$1,922,727	$1,963,978

	Three Months Ended
	March 31,
	2023			2022
	(In thousands, except per share amounts)
REVENUES:
Product sales, net	$	214,727		$	171,268
Manufacturing and royalty revenues		72,862			105,170
License revenue		—			2,000
Research and development revenue		6			107
Total revenues		287,595			278,545
EXPENSES:
Cost of goods manufactured and sold (exclusive of amortization of acquired intangible assets shown below)		58,175			55,159
Research and development		93,637			95,953
Selling, general and administrative		174,477			145,052
Amortization of acquired intangible assets		8,800			8,966
Total expenses		335,089			305,130
OPERATING LOSS		(47,494	)		(26,585	)
OTHER EXPENSE, NET:
Interest income		4,966			573
Interest expense		(5,288	)		(2,350	)
Change in the fair value of contingent consideration		—			(19,067	)
Other (expense) income, net		(39	)		2,431
Total other expense, net		(361	)		(18,413	)
LOSS BEFORE INCOME TAXES		(47,855	)		(44,998	)
INCOME TAX BENEFIT		(6,010	)		(9,095	)
NET LOSS	$	(41,845	)	$	(35,903	)
LOSS PER ORDINARY SHARE:
Basic and diluted	$	(0.25	)	$	(0.22	)
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES OUTSTANDING:
Basic and diluted		165,085			162,483
COMPREHENSIVE LOSS:
Net loss	$	(41,845	)	$	(35,903	)
Holding gain (loss), net of a tax provision (benefit) of $488 and $(1,382), respectively		2,760			(4,511	)
COMPREHENSIVE LOSS	$	(39,085	)	$	(40,414	)

	Ordinary Shares				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Treasury Stock
	Shares		Amount		Capital		Loss			Deficit			Shares			Amount			Total
	(In thousands, except share data)
BALANCE — December 31, 2022		168,951,193	$	1,690	$	2,913,099	$	(10,889	)	$	(1,699,285	)		(4,574,184	)	$	(160,862	)	$	1,043,753
Issuance of ordinary shares under employee stock plans		2,567,603		25		2,849		—			—			—			—			2,874
Receipt of Alkermes' shares for the exercise of stock options or to satisfy minimum tax withholding obligations related to share-based awards		—		—		—		—			—			(885,652	)		(24,744	)		(24,744	)
Share-based compensation		—		—		22,778		—			—			—			—			22,778
Unrealized gains on marketable securities, net of tax provision of $488		—		—		—		2,760			—			—			—			2,760
Net loss		—		—		—		—			(41,845	)		—			—			(41,845	)
BALANCE — March 31, 2023		171,518,796	$	1,715	$	2,938,726	$	(8,129	)	$	(1,741,130	)		(5,459,836	)	$	(185,606	)	$	1,005,576

	Three Months Ended March 31,
(In thousands)	2023		2022
VIVITROL	$	96,659	$	84,854
ARISTADA and ARISTADA INITIO		80,077		72,485
LYBALVI		37,991		13,929
Total product sales, net	$	214,727	$	171,268

	Three Months Ended March 31, 2023
(In thousands)	Manufacturing Revenue		Royalty Revenue		Total
Long-acting INVEGA products⁽¹⁾	$	—	$	13,562	$	13,562
VUMERITY		12,649		16,225		28,874
RISPERDAL CONSTA		10,416		566		10,982
Other		15,375		4,069		19,444
	$	38,440	$	34,422	$	72,862

	Three Months Ended March 31, 2022
(In thousands)	Manufacturing Revenue		Royalty Revenue		Total
Long-acting INVEGA products⁽¹⁾	$	—	$	37,054	$	37,054
VUMERITY		11,395		19,200		30,595
RISPERDAL CONSTA		15,578		1,848		17,426
Other		11,854		8,241		20,095
	$	38,827	$	66,343	$	105,170

(In thousands)	Contract Assets
Contract assets at December 31, 2022	$	8,929
Additions		10,115
Transferred to receivables, net		(10,615	)
Contract assets at March 31, 2023	$	8,429

(In thousands)	Contract Liabilities
Contract liabilities at December 31, 2022	$	10,701
Additions		(934	)
Amounts recognized into revenue		(3,354	)
Contract liabilities at March 31, 2023	$	6,413

			Gross Unrealized
					Losses
	Amortized				Less than			Greater than			Estimated
March 31, 2023	Cost		Gains		One Year			One Year			Fair Value
Short-term investments:
Available-for-sale securities:
Corporate debt securities	$	125,254	$	129	$	(114	)	$	(1,683	)	$	123,586
U.S. government and agency debt securities		135,633		39		(87	)		(1,103	)		134,482
Non-U.S. government debt securities		21,444		—		—			(454	)		20,990
Total short-term investments		282,331		168		(201	)		(3,240	)		279,058
Long-term investments:
Available-for-sale securities:
Corporate debt securities		47,232		—		(664	)		(703	)		45,865
U.S. government and agency debt securities		45,859		—		(415	)		(1,046	)		44,398
		93,091		—		(1,079	)		(1,749	)		90,263
Held-to-maturity securities:
Certificates of deposit		1,820		—		—			—			1,820
Total long-term investments		94,911		—		(1,079	)		(1,749	)		92,083
Total investments	$	377,242	$	168	$	(1,280	)	$	(4,989	)	$	371,141

December 31, 2022
Short-term investments:
Available-for-sale securities:
Corporate debt securities	$	141,418	$	—	$	(424	)	$	(2,054	)	$	138,940
U.S. government and agency debt securities		143,710		16		(266	)		(1,289	)		142,171
Non-U.S. government debt securities		35,455		—		(28	)		(546	)		34,881
Total short-term investments		320,583		16		(718	)		(3,889	)		315,992
Long-term investments:
Available-for-sale securities:
Corporate debt securities		68,229		—		(1,550	)		(676	)		66,003
U.S. government and agency debt securities		62,220		—		(917	)		(1,424	)		59,879
Non-U.S. government debt securities		4,099		—		—			(191	)		3,908
		134,548		—		(2,467	)		(2,291	)		129,790
Held-to-maturity securities:
Certificates of deposit		1,820		—		—			—			1,820
Total long-term investments		136,368		—		(2,467	)		(2,291	)		131,610
Total investments	$	456,951	$	16	$	(3,185	)	$	(6,180	)	$	447,602

	Available-for-sale				Held-to-maturity
	Amortized		Estimated		Amortized		Estimated
(In thousands)	Cost		Fair Value		Cost		Fair Value
Within 1 year	$	272,122	$	268,811	$	1,820	$	1,820
After 1 year through 5 years		103,300		100,510		—		—
Total	$	375,422	$	369,321	$	1,820	$	1,820

	December 31,
	2022		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	19,857	$	19,857	$	—	$	—
U.S. government and agency debt securities		202,050		168,639		33,411		—
Corporate debt securities		204,943		—		204,943		—
Non-U.S. government debt securities		38,789		—		38,789		—
Total	$	465,639	$	188,496	$	277,143	$	—

	Three Months Ended
	March 31,
	2023			2022
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(41,845	)	$	(35,903	)
Adjustments to reconcile net loss to cash flows from operating activities:
Depreciation and amortization		18,714			19,197
Share-based compensation expense		22,643			18,343
Deferred income taxes		(36,117	)		(29,301	)
Change in the fair value of contingent consideration		—			19,067
Other non-cash charges		369			371
Changes in assets and liabilities:
Receivables		18,789			63,290
Contract assets		500			(6,849	)
Inventory		(2,029	)		(4,285	)
Prepaid expenses and other assets		(3,697	)		(15,351	)
Right-of-use assets		4,269			4,129
Accounts payable and accrued expenses		(30,154	)		(33,414	)
Accrued sales discounts, allowances and reserves		30,148			27,956
Contract liabilities		(4,287	)		(2,980	)
Operating lease liabilities		(4,379	)		(4,411	)
Other long-term liabilities		5,774			1,819
Cash flows (used in) provided by operating activities		(21,302	)		21,678
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions of property, plant and equipment		(6,860	)		(7,791	)
Proceeds from the sale of equipment		—			—
Proceeds from contingent consideration		—			501
Return of Fountain Healthcare Partners II, L.P. investment		—			485
Purchases of investments		(23,898	)		(114,615	)
Sales and maturities of investments		103,608			60,779
Cash flows provided by (used in) investing activities		72,850			(60,641	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of ordinary shares under share-based compensation arrangements		2,874			1,795
Employee taxes paid related to net share settlement of equity awards		(24,744	)		(17,069	)
Principal payments of long-term debt		(750	)		(750	)
Cash flows used in financing activities		(22,620	)		(16,024	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		28,928			(54,987	)
CASH AND CASH EQUIVALENTS—Beginning of period		292,473			337,544
CASH AND CASH EQUIVALENTS—End of period	$	321,401		$	282,557

	March 31,		December 31,
(In thousands)	2023		2022
Raw materials	$	59,045	$	61,064
Work in process		74,661		76,228
Finished goods⁽¹⁾		51,278		44,126
Total inventory	$	184,984	$	181,418

		March 31, 2023
(In thousands)	Weighted Amortizable Life (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Goodwill		$	92,873	$	—		$	92,873
Finite-lived intangible assets:
Collaboration agreements	12	$	465,590	$	(443,255	)	$	22,335
Capitalized IP	11-13		118,160		(111,615	)		6,545
Total		$	583,750	$	(554,870	)	$	28,880


Product	Indication(s)	Territory

	Initiation or re-initiation of ARISTADA for the treatment of Schizophrenia	U.S.
	Schizophrenia	U.S.


	Schizophrenia; Bipolar I disorder	U.S.


	Alcohol dependence; Opioid dependence	U.S.



Product	Indication(s)	Licensee	Licensed Territory

RISPERDAL CONSTA	Schizophrenia; Bipolar I disorder	Janssen Pharmaceuticals, Inc. and Janssen Pharmaceutica International, a division of Cilag International AG (“Janssen International”)	Worldwide

INVEGA SUSTENNA* / XEPLION	INVEGA SUSTENNA: Schizophrenia; Schizoaffective disorder XEPLION: Schizophrenia	Janssen Pharmaceutica (together with Janssen Pharmaceuticals, Inc., Janssen International and their affiliates “Janssen”)	Worldwide
INVEGA TRINZA* / TREVICTA	Schizophrenia	Janssen	Worldwide
INVEGA HAFYERA* / BYANNLI	Schizophrenia	Janssen	Worldwide

	Three Months Ended
	March 31,
(In millions, except for % of Sales)	2023			% of Sales				2022			% of Sales
Product sales, gross	$	433.9			100.0		%	$	342.4			100.0		%
Adjustments to product sales, gross:
Medicaid rebates		(97.9	)		(22.6	)	%		(76.5	)		(22.3	)	%
Chargebacks		(45.6	)		(10.5	)	%		(33.8	)		(9.9	)	%
Product discounts		(34.3	)		(7.9	)	%		(26.9	)		(7.9	)	%
Medicare Part D		(18.9	)		(4.4	)	%		(16.0	)		(4.7	)	%
Other		(22.5	)		(5.1	)	%		(17.9	)		(5.2	)	%
Total adjustments		(219.2	)		(50.5	)	%		(171.1	)		(50.0	)	%
Product sales, net	$	214.7			49.5		%	$	171.3			50.0		%

	Three Months Ended
	March 31,
(In millions)	2023		2022		Change
VIVITROL	$	96.7	$	84.9	$	11.8
ARISTADA and ARISTADA INITIO		80.1		72.5		7.6
LYBALVI		37.9		13.9		24.0
Product sales, net	$	214.7	$	171.3	$	43.4

			Gross
	Amortized		Unrealized					Allowance for		Estimated
(In millions)	Cost		Gains		Losses			Credit Losses		Fair Value
Investments—short-term available-for-sale	$	282.3	$	0.2	$	(3.4	)	$	—	$	279.1
Investments—long-term available-for-sale		93.1		—		(2.9	)		—		90.2
Investments—long-term held-to-maturity		1.8		—		—			—		1.8
Total	$	377.2	$	0.2	$	(6.3	)	$	—	$	371.1

Exhibit No.		Description of Exhibit
10.1 #*		License Agreement by and among Elan Pharmaceutical Research Corp., d/b/a Nanosystems and Elan Pharma International Limited and Janssen Pharmaceutica N.V. dated as of March 31, 1999.
10.2 #*		Agreement Amendment No. 2, dated as of July 31, 2009, to the License Agreement by and among Elan Pharmaceutical Research Corp., d/b/a Nanosystems and Elan Pharma International Limited and Janssen Pharmaceutica N.V. dated as of March 31, 1999, as amended by the First Amendment, dated as of July 31, 2003.
31.1 #		Rule 13a-14(a)/15d-14(a) Certification.
31.2 #		Rule 13a-14(a)/15d-14(a) Certification.
32.1 ‡		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.SCH #		Inline XBRL Taxonomy Extension Schema Document.
101.CAL #		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB #		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE #		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF #		Inline XBRL Taxonomy Extension Definition Linkbase Document.
104 #		Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101)


	ALKERMES PLC

	(Registrant)


	By:	/s/ Richard F. Pops
		Richard F. Pops
		Chairman and Chief Executive Officer
		(Principal Executive Officer)


	By:	/s/ Iain M. Brown
		Iain M. Brown
		Senior Vice President, Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

		Page

ARTICLE 1 - Definitions		1
ARTICLE 2 - LICENSE GRANT		7
ARTICLE 3 - DEVELOPMENT ACTIVITIES		9
ARTICLE 4 - CLINICAL AND REGULATORY ACTIVITIES		10
ARTICLE 5 - PAYMENTS		12
ARTICLE 6 - ROYALTIES		13
ARTICLE 7 - ROYALTY PAYMENTS, REPORTS AND RECORDS		14
ARTICLE 8 - COMMERCIALIZATION		16
ARTICLE 9 - MANUFACTURING AND SUPPLY		17
ARTICLE 10 - RIGHTS IN TECHNOLOGY, INVENTIONS AND PATENTS		17
ARTICLE 11 - INFRINGEMENT		19
ARTICLE 12 - CONFIDENTIALITY		23
ARTICLE 13 - TERM		26
ARTICLE 14 - TERMINATION BY JANSSEN		27
ARTICLE 15 - TERMINATION FOR CAUSE		27
ARTICLE 16 - RIGHTS AND OBLIGATIONS UPON TERMINATION		27
ARTICLE 17 - REPRESENTATIONS AND WARRANTIES		28
ARTICLE 18 - INDEMNIFICATION		30
ARTICLE 19 - CHOICE OF LAW		32
ARTICLE 20 - FORCE MAJEURE		32
ARTICLE 21 - DISPUTE RESOLUTION		32
ARTICLE 22 - NOTICES		35
ARTICLE 23 - WAIVER		36
ARTICLE 24 - ENTIRE AGREEMENT		36
ARTICLE 25 - ASSIGNMENT		36
ARTICLE 26 - TITLES		38
ARTICLE 27 - PUBLICITY		38
ARTICLE 28 - UNENFORCEABLE PROVISIONS		38
ARTICLE 29 - CONSTRUCTION		38
ARTICLE 30 - EXECUTION		39
ARTICLE 31 - NON-SOLICITATION		39

Exhibit A	NANO PATENTS
Exhibit B	SELECTION PATENTS
Form 1	STATEMENT

If to NANO, EPIL
and/or EPRC:		Elan Pharma International Limited
		Lincoln House, Lincoln Place
		Dublin 2, Ireland
		Attention: Colin Sainsbury, Esq.
		Telefax: 353-1-709-4124

With a copy to:		NanoSystems
		3000 Horizon Drive
		King of Prussia, PA 19406
		Attention: President
		Telefax: 610-313-5180

If to JANSSEN:		Janssen Pharmaceutica N.V.
		Turnhoutseweg 30
		B-2340 Beerse Belgium
		Attention: Managing Director
		Telefax: 32-14-60-2841

ELAN PHARMACEUTICAL
RESEARCH CORP., d/b/a
NANOSYSTEMS




By:	/s/ Seamus Mulligan
	Name:	S. Mulligan
	Title:	President	31/3/99




ELAN PHARMA INTERNATIONAL LIMITED


By:	/s/ Seamus Mulligan
	Name:	S. Mulligan
	Title:	President	31/3/99




JANSSEN PHARMACEUTICA N.V.


By:	/s/ G. Van Reet
	Name:	Managing Director
	Title:



By:	/s/ G. Vercauteren
	Name:	International Vice President
		Business Development

	EPIL Letter to Janssen and EDDI of 23 July 2009
	Amendment No 2 to license dated 31 March 1999, as amended

	Monksland, Athlone, County Westmeath, Ireland

	Attention:	Vice President & Legal Counsel
	Telefax:	00 353 90 64 95402

With a copy to:	Elan Drug Delivery, Inc.
	3500 Horizon Drive, King of Prussia, PA 19406,
	USA

	Attention:	President
	Telefax:	001 610-313-5182

Yours faithfully,

Signed on behalf of:
Elan Pharma International Limited

/s/ William Daniel
Name:	William Daniel
Title:	Director
Date:	1 April 2011


/s/ David Czekai
Name: David Czekai
Title: VP and GM
Date: 18 Apr 2011

Accepted for and on behalf of:
Janssen Pharamceutica N.V.


/s/ Ludo Lauwers
Name: Ludo Lauwers
Title: Senior Vice President, Site Management
Date: 17 March 2011


/s/ Dirk Collier
Member of the Board


	Date: April 26, 2023		/s/ Richard F. Pops
			Richard F. Pops

			Chairman and Chief Executive Officer
			(Principal Executive Officer)