Alkermes(ALKS) - 2025 Q1 - Quarterly Report

Part I Condensed Consolidated Financial Statements (unaudited) Alkermes' unaudited condensed consolidated financial statements for Q1 2025, including balance sheets, statements of operations, cash flows, and shareholders' equity, are presented with detailed notes Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $2,081,977 | $2,055,567 | | Cash and cash equivalents | $399,806 | $291,146 | | Total current assets | $1,479,050 | $1,415,355 | | Total Liabilities | $570,394 | $590,590 | | Total current liabilities | $443,730 | $465,199 | | Total Shareholders' Equity | $1,511,583 | $1,464,977 | Condensed Consolidated Statement of Operations Highlights (in thousands) | Account | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenues | $306,510 | $350,372 | | Total expenses | $292,718 | $307,063 | | Operating income from continuing operations | $13,792 | $43,309 | | Net income from continuing operations | $22,464 | $38,948 | | Net income | $22,464 | $36,828 | | Diluted EPS from continuing operations | $0.13 | $0.23 | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Cash flows provided by operating activities | $98,811 | $21,108 | | Cash flows provided by (used in) investing activities | $9,102 | $(39,951) | | Cash flows provided by (used in) financing activities | $747 | $(17,873) | | Net increase (decrease) in cash | $108,660 | $(36,716) | Management's Discussion and Analysis of Financial Condition and Results of Operations Net income from continuing operations decreased to $22.5 million in Q1 2025, primarily due to a $54.8 million decline in manufacturing and royalty revenues, partially offset by increased product sales and reduced operating expenses - The decrease in net income was primarily due to a $54.8 million fall in manufacturing and royalty revenue, partially offset by an $11.0 million increase in net product sales and a $14.4 million decrease in operating expenses[78] Net Product Sales (in millions) | Product | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | VIVITROL | $101.0 | $97.7 | $3.3 | | ARISTADA and ARISTADA INITIO | $73.5 | $78.9 | $(5.4) | | LYBALVI | $70.0 | $57.0 | $13.0 | | Total | $244.5 | $233.5 | $10.9 | Manufacturing and Royalty Revenues (in millions) | Revenue Source | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Long-acting INVEGA products | $17.7 | $62.7 | $(45.0) | | VUMERITY | $27.8 | $31.3 | $(3.5) | | RISPERDAL CONSTA | $9.1 | $2.7 | $6.4 | | Other | $7.4 | $20.1 | $(12.7) | | Total | $62.0 | $116.8 | $(54.8) | - The decrease in royalty revenues from long-acting INVEGA products was primarily due to the expiration of the U.S. royalty on INVEGA SUSTENNA net sales in August 2024[106] - R&D expenses increased by $4.2 million, driven by a $7.3 million increase in spending on the ALKS 2680 development program for narcolepsy and idiopathic hypersomnia[109][110] - Cash and investments increased to $916.2 million at March 31, 2025, up from $824.7 million at December 31, 2024[115] Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes to its market risks since December 31, 2024, with key exposures including investment portfolio and Euro currency fluctuations from Irish operations - There have been no material changes to the company's market risks since December 31, 2024[129] - The company is exposed to non-U.S. currency exchange risk, primarily from Euro-denominated expenses related to its Irish operations[130] - Investment objectives are to preserve capital, provide liquidity, and generate investment income, managed through a diversified portfolio[117] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The principal executive officer and interim principal financial officer concluded that disclosure controls and procedures were effective as of March 31, 2025[132] - There were no material changes in the company's internal control over financial reporting during the first quarter of 2025[133] Part II Legal Proceedings The company is involved in patent infringement litigation for INVEGA TRINZA and VUMERITY, a government investigation regarding VIVITROL, and product liability claims - The U.S. Court of Appeals affirmed a lower court decision in favor of Janssen regarding the patent for INVEGA TRINZA, a product from which Alkermes receives royalties[70] - The company is involved in patent infringement litigation against Zydus, which is seeking to market a generic version of VUMERITY, with a bench trial scheduled for July 28, 2025[71] - The company has received a subpoena and civil investigative demands from U.S. state and federal authorities regarding VIVITROL and is cooperating with the investigations[72] Risk Factors A new risk factor highlights the potential adverse impact of changes in global trade policies, including tariffs, on the company's international supply chain and revenue - A new risk factor was added regarding the adverse effects of changes in global trade policies, including tariffs imposed by the U.S. and other nations[137] - The company's supply chain for proprietary products and manufacturing of third-party products from which it derives revenue have international components, creating exposure to tariffs and trade policy changes[137] Unregistered Sales of Equity Securities and Use of Proceeds Alkermes did not repurchase shares under its public program in Q1 2025, instead acquiring 834,590 shares for tax withholding, with $200 million remaining authorized Share Repurchase Activity - Q1 2025 | Period | Total Shares Purchased | Avg. Price Paid | Purchased as Part of Program | Remaining Program Value (millions) | | :--- | :--- | :--- | :--- | :--- | | Jan 2025 | 1,879 | $28.67 | — | $200.0 | | Feb 2025 | 832,359 | $34.50 | — | $200.0 | | Mar 2025 | 352 | $34.40 | — | $200.0 | | Total | 834,590 | $34.49 | — | $200.0 | - All shares purchased during the quarter were acquired to satisfy tax withholding obligations related to the vesting of equity awards, not as part of the public repurchase program[140] - As of March 31, 2025, $200.0 million remains authorized under the share repurchase program announced in February 2024[140] Other Information This section details the adoption and termination of Rule 10b5-1 trading plans by company officers and directors during Q1 2025 - Several officers and a director adopted or terminated Rule 10b5-1 trading plans for the sale of company shares during the quarter[141] Exhibits This section lists the exhibits filed with the Form 10-Q, including officer certifications and Interactive Data Files (XBRL) for financial reporting - The exhibits filed with the 10-Q include officer certifications under Rule 13a-14(a)/15d-14(a) and Section 906 of the Sarbanes-Oxley Act, as well as XBRL data files[143]