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Alkermes (ALKS) Reports Narrower-than-Expected Q1 Loss

Alkermes plc ALKS reported a loss of 32 cents per share (including share-based compensation expense) in the first quarter of 2016, narrower than the Zacks Consensus Estimate of a loss of 43 cents. Reported loss was, however, wider than the year-ago loss of 5 cents per share.

Alkermes reported revenues of $156.8 million for the first quarter of 2016, down 2.8% year-over-year, which included products sales from the divested Gainesville manufacturing facility. Revenues were, however, above the Zacks Consensus Estimate of $146 million.

Quarter in Detail

Manufacturing and royalty revenues tanked 17.5% year over year to $106.2 million. Manufacturing and royalty revenues from Risperdal Consta, Invega Sustenna/Xeplion and Invega Trinza were, however, up 16.6% to $54.7 million.

Alkermes recorded manufacturing and royalty revenues of $28.2 million (down 22.7%) from Ampyra/Fampyra.

The company earned royalty revenues of $10.5 million from Bydureon, up 7.1%. Vivitrol sales surged 40.8% year over year to $43.8 million on the back of an increase in the commercial business and Medicaid programs. Vivitrol sales also increased 15% sequentially.

Net sales of Aristada came in at $5.5 million (launched in Oct 2015).

Research & development (R&D) expenses amounted to $101.1 million, up 43.8% from the year-ago period. Likewise, selling, general and administrative (SG&A) spending shot up 42.3% to $89.7 million.

Outlook

For the second quarter, the company expects Aristada sales in the range of $7–$9 million.

Meanwhile, Alkermes has reiterated its guidance for 2016. The company expects loss per share in the range of 16 cents to 36 cents on revenues of $700–$750 million.

Pipeline Update

Along with financial results, Alkermes revealed positive preliminary data from a single-ascending dose phase I study on ALKS 7119 for the treatment of agitation in patients with Alzheimer’s disease and other central nervous system indications. Based on these data, the company plans to commence a multiple-ascending dose study in the third quarter of 2016. Results from the study are expected around 2016 end. Meanwhile, full results from the single-ascending dose study are expected in the second half of the year.

In the reported quarter, the company presented positive top-line results from a randomized, open-label, pharmacokinetic study, which evaluated a two-month dosing interval of Aristada for the treatment of schizophrenia. The company plans to submit a supplemental New Drug Application (sNDA) in the U.S. in the second half of 2016.

Moreover, a head-to-head study on ALKS 8700, to evaluate the gastrointestinal tolerability of the candidate, in comparison with Biogen Inc.’s BIIB Tecfidera, for multiple sclerosis is expected to be initiated in mid 2016. The company plans to file for its approval in the U.S. in 2018.

Our Take

Alkermes delivered impressive first-quarter 2016 results, with a narrower-than-expected loss and revenues beating expectations. Given a promising pipeline and the company’s efforts on the commercialization of Aristada, we expect investor focus to remain on further updates. We are also pleased with robust growth in Vivitrol sales.

Alkermes carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the health care sector are Aegerion Pharmaceuticals, Inc. AEGR and Emergent BioSolutions, Inc. EBS, both sporting a Zacks Rank #1 (Strong Buy).

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