Alkermes plc

Previous wording

Net income from continuing operations was $38.9 million or $0.23 per ordinary share—basic and diluted, for the three months ended March 31, 2024, compared to net loss from continuing operations of $12.1 million or $0.07 per ordinary share—basic and diluted, for the three months ended March 31, 2023.

Current wording

Net income from continuing operations was $94.7 million and $133.6 million or $0.56 and 0.79 per ordinary share—basic and $0.55 and $0.78 per ordinary share—diluted, for the three months and six months ended June 30, 2024, respectively, compared to net income from continuing operations of $279.1 million and $267.1 million or $1.68 and $1.61 per ordinary share—basic and $1.63 and $1.56 per ordinary share—diluted, for the three and six months ended June 30, 2023, respectively.

Previous wording

The net income from continuing operations during the three months ended March 31, 2024, as compared to the net loss from continuing operations during the three months ended March 31, 2023, was primarily due to an increase of $44.0 million in manufacturing and royalty revenues, an increase of $18.8 million in product sales, net and a decrease of $7.7 million in amortization of acquired intangible assets, partially offset by an increase of $11.9 million in selling, general and administrative expense, and an increase of $6.4 million in R&D expense.

Current wording

The decreases in net income from continuing operations during the three and six months ended June 30, 2024, as compared to the three and six months ended June 30, 2023, were primarily due to decreases of $256.1 million and $212.1 million, respectively, in manufacturing and royalty revenues, partially offset by increases of $37.8 million and $56.6 million, respectively, in product sales, net and decreases of $46.9 million and $38.4 million, respectively, in operating expenses.

Previous wording

On May 1, 2024, we completed the previously announced sale of the Athlone Facility to Novo. We also entered into subcontracting arrangements with Novo to continue certain development and manufacturing activities currently performed at the Athlone Facility for a period of time after the closing of the transaction; these activities may continue through the end of 2025.

Current wording

On May 1, 2024, we completed the sale of the Athlone Facility to Novo. We also entered into subcontracting arrangements with Novo to continue certain development and manufacturing activities currently performed at the Athlone Facility for a period of time after the closing of the transaction; these activities may continue through the end of 2025.

Previous wording

ALKS 2680 is a novel, investigational, oral, selective orexin 2 receptor (“OX2R”) agonist in development as a once-daily treatment for narcolepsy. Orexin neuropeptides are important regulators of the sleep/wake cycle through OX2R activation, and loss of orexinergic neurons in the brain is associated with excessive daytime sleepiness and cataplexy in narcolepsy. ALKS 2680 was designed to address the underlying pathology of narcolepsy with the goal of improving duration of wakefulness and providing cataplexy control. ALKS 2680 was evaluated in a phase 1 study in healthy volunteers and patients with narcolepsy type 1, narcolepsy type 2 and idiopathic hypersomnia and is currently being evaluated in a phase 2 study in patients with narcolepsy type 1. We expect to initiate a planned phase 2 study in patients with narcolepsy type 2 in the second half of 2024.

Current wording

ALKS 2680 is a novel, investigational, oral, selective orexin 2 receptor (“OX2R”) agonist in development as a once-daily treatment for narcolepsy. Orexin neuropeptides are important regulators of the sleep/wake cycle through OX2R activation, and loss of orexinergic neurons in the brain is associated with excessive daytime sleepiness and cataplexy in narcolepsy. ALKS 2680 was designed to address the underlying pathology of narcolepsy with the goal of improving duration of wakefulness and providing cataplexy control. Once-daily oral administration of ALKS 2680 was evaluated in a phase 1 study in healthy volunteers and patients with narcolepsy type 1, narcolepsy type 2 and idiopathic hypersomnia and is currently being evaluated in our Vibrance-1 phase 2 study in patients with narcolepsy type 1. We expect to initiate Vibrance-2, a phase 2 study in patients with narcolepsy type 2, in the third quarter of 2024.

Previous wording

As a result of the Separation, the historical results of our oncology business have been reflected as discontinued operations in our consolidated financial statements through the Separation Date. Prior period results of operations and balance sheet information have been recast to reflect this presentation.

Current wording

As a result of the Separation, the historical results of our oncology business have been reflected as discontinued operations in our condensed consolidated financial statements through the Separation Date. Prior period results of operations and balance sheet information have been recast to reflect this presentation.

Previous wording

Our product sales, net, consist of sales of VIVITROL, ARISTADA and ARISTADA INITIO, and LYBALVI, primarily to wholesalers, specialty distributors and pharmacies. The following table presents the adjustments deducted from product sales, gross to arrive at product sales, net, for sales of VIVITROL, ARISTADA and ARISTADA INITIO, and LYBALVI during the three months ended March 31, 2024 and 2023:

Current wording

Our product sales, net, consist of sales of VIVITROL, ARISTADA and ARISTADA INITIO, and LYBALVI, primarily to wholesalers, specialty distributors and pharmacies. The following table presents the adjustments deducted from product sales, gross to arrive at product sales, net, for sales of VIVITROL, ARISTADA and ARISTADA INITIO, and LYBALVI during the three and six months ended June 30, 2024 and 2023:

Previous wording

VIVITROL product sales, gross, increased by 2% during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, primarily due to a 3.2% increase in the selling price that went into effect in January 2024, partially offset by a 1% decrease in the number of units sold. ARISTADA and ARISTADA INITIO product sales, gross, were relatively flat during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, due to a 3.0% increase in the selling price that went into effect in January 2024, partially offset by a 3% decrease in the number of units sold. LYBALVI product sales, gross, increased by 56% during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, primarily due to a 50% increase in the number of units sold and 3% and 3.8% increases in the selling price that went into effect in July 2023 and January 2024, respectively.

Current wording

VIVITROL product sales, gross, increased by 9% and 6% during the three and six months ended June 30, 2024, respectively, as compared to the three and six months ended June 30, 2023, due to increases of 6% and 2%, respectively, in the number of units sold and a 3.2% increase in the selling price that went into effect in January 2024. ARISTADA and ARISTADA INITIO product sales, gross, increased by 4% and 2% during the three and six months ended June 30, 2024, respectively, as compared to the three and six months ended June 30, 2023. The increase in ARISTADA and ARISTADA INITIO during the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was due to an increase of 2% in the number of units sold and a 3.0% increase in the selling price that went into effect in January 2024. The increase in ARISTADA and ARISTADA INITIO during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to the January 2024 increase in the selling price. LYBALVI product sales, gross, increased by 57% and 56% during the three and six months ended June 30, 2024, respectively, as compared to the three and six months ended June 30, 2023, due to increases of 52% and 51%, respectively, in the number of units sold and increases in the selling price of 3.8% and 3.0% that went into effect in January 2024 and July 2023, respectively.

Previous wording

The following table compares product sales, net earned during the three months ended March 31, 2024 and 2023:

Current wording

The following table compares product sales, net earned during the three and six months ended June 30, 2024 and 2023:

Previous wording

The following table compares manufacturing and royalty revenues earned during the three months ended March 31, 2024 and 2023:

Current wording

The following table compares manufacturing and royalty revenues earned during the three and six months ended June 30, 2024 and 2023:

Previous wording

In November 2021, we received notice from Janssen of partial termination of our license agreement under which we provided Janssen with rights to, and know-how, training and technical assistance in respect of, our NanoCrystal technology, which was used to develop the long-acting INVEGA products. The partial termination became effective in February 2022, at which time Janssen ceased paying royalties related to sales of INVEGA SUSTENNA, INVEGA TRINZA and INVEGA HAFYERA. Accordingly, we ceased recognizing royalty revenue related to sales of these products in February 2022. In April 2022, we commenced binding arbitration proceedings related to, among other things, Janssen’s partial termination of this license agreement and Janssen’s royalty and other obligations under the agreement. In May 2023, the Tribunal issued the Final Award, which concluded the arbitration proceedings. The Final Award provided that we were due back royalties and late-payment interest related to 2022 U.S. net sales of the long-acting INVEGA products, which we received from Janssen in the second quarter of 2023, and are entitled to 2023 and future royalty revenues from Janssen related to net sales of INVEGA SUSTENNA through August 20, 2024, INVEGA TRINZA through the second quarter of 2030 (but no later than May 2030 when the license agreement expires) and INVEGA HAFYERA through May 2030 (when the license agreement expires).

Current wording

In November 2021, we received notice from Janssen of partial termination of our license agreement under which we provided Janssen with rights to, and know-how, training and technical assistance in respect of, our NanoCrystal technology, which was used to develop the long-acting INVEGA products. The partial termination became effective in February 2022, at which time Janssen ceased paying royalties related to sales of INVEGA SUSTENNA, INVEGA TRINZA and INVEGA HAFYERA. Accordingly, we ceased recognizing royalty revenue related to sales of these products in February 2022. In April 2022, we commenced binding arbitration proceedings related to, among other things, Janssen’s partial termination of this license agreement and Janssen’s royalty and other obligations under the agreement. In May 2023, the Tribunal issued the Final Award, which concluded the arbitration proceedings. The Final Award provided that we were due back royalties and late-payment interest related to 2022 U.S. net sales of the long-acting INVEGA products, and are entitled to 2023 and future royalty revenues from Janssen related to net sales of INVEGA SUSTENNA through August 20, 2024, INVEGA TRINZA through the second quarter of 2030 (but no later than May 2030 when the license agreement expires) and INVEGA HAFYERA through May 2030 (when the license agreement expires).

Previous wording

Following issuance of the Final Award, we recognized royalty revenues related to the back royalties and resumed recognizing royalty revenue related to U.S. sales of the long-acting INVEGA products. Royalty revenues related to the long-acting INVEGA products increased by $49.1 million during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, primarily due to the result of the arbitration proceedings in the second quarter of 2023 and the resumption of recognizing royalty revenue on U.S. net sales of the long-acting INVEGA products. During the three months ended March 31, 2024, Janssen’s worldwide net sales of the long-acting INVEGA products were $1,056.0 million, as compared to $1,044.0 million during the three months ended March 31, 2023.

Current wording

The decreases in royalty revenues related to the long-acting INVEGA products during the three and six months ended June 30, 2024, as compared to the three and six months ended June 30, 2023, were primarily due to the receipt in June 2023 of back royalties of $195.4 million, inclusive of $8.1 million in late-payment interest, related to 2022 U.S. sales of the long-acting INVEGA products following the successful outcome of the arbitration proceedings described above. The decreases were partially offset by increases in royalty revenue related to worldwide net sales of the long-acting INVEGA products. During the three and six months ended June 30, 2024, Janssen’s worldwide net sales of the long-acting INVEGA products were $1,054.0 million and $2,110.0 million, respectively, as compared to $1,031.0 million and $2,075.0 million during the three and six months ended June 30, 2023, respectively.

Previous wording

We receive a 15% royalty on worldwide net sales of VUMERITY manufactured and packaged by us, subject to increases in such royalty rate for VUMERITY manufactured and/or packaged by Biogen or its designees, in the period that the end-market sales of VUMERITY occur. We also recognize manufacturing revenue related to VUMERITY at cost plus 15%, upon making available bulk batches of VUMERITY to Biogen and, to the extent we package such product, then also when packaged batches of VUMERITY are made available to Biogen. Manufacturing revenue from VUMERITY decreased by $0.5 million during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The decrease was primarily due to a reduction in the sales price, partially offset by increases in the number of packaged and bulk batches made available to Biogen. The reduction in the sales price related to our manufacturing revenue was primarily due to the removal of depreciation expense from the manufacturing cost base as the assets used to manufacture VUMERITY were classified as held for sale in the three months ended March 31, 2024. Royalty revenue related to VUMERITY increased by $2.9 million during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The increase in royalty revenue was due to an increase in end-market net sales of VUMERITY from $108.2 million during the three months ended March 31, 2023 to $127.5 million during the three months ended March 31, 2024.

Current wording

We receive a 15% royalty on worldwide net sales of VUMERITY manufactured and packaged by us, subject to increases in such royalty rate for VUMERITY manufactured and/or packaged by Biogen or its designees, in the period that the end-market sales of VUMERITY occur. We also recognize manufacturing revenue related to VUMERITY at cost plus 15%, upon making available bulk batches of VUMERITY to Biogen and, to the extent we package such product, then also when packaged batches of VUMERITY are made available to Biogen. Manufacturing revenue from VUMERITY decreased by $0.5 million and $1.0 million during the three and six months ended June 30, 2024, respectively, as compared to the three and six months ended June 30, 2023. The decreases were primarily due to reductions in the sales price. The reduction in the sales price related to our manufacturing revenue was primarily due to the removal of depreciation expense from the manufacturing cost base as the assets used to manufacture VUMERITY were classified as held for sale and transferred to Novo in connection with the sale of the Athlone Facility in the six months ended June 30, 2024. Royalty revenue related to VUMERITY increased by $3.4 million and $6.4 million during the three and six months ended June 30, 2024, respectively, as compared to the three and six months ended June 30, 2023. The increases in royalty revenue were due to increases in end-market net sales of VUMERITY from $146.2 million and $254.3 million during the three and six months ended June 30, 2023, respectively, to $166.8 million and $293.3 million during the three and six months ended June 30, 2024, respectively.

Previous wording

The increase in cost of goods manufactured and sold during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to an increase of $3.9 million in the cost of goods sold for VIVITROL, partially offset by decreases in the cost of goods manufactured for certain legacy products that we manufacture due to a decrease in sales of such products. The increase in the cost of goods sold for VIVITROL was primarily due to an increase in costs related to out-of-specification batches and investigation costs.

Current wording

The decrease in the cost of goods manufactured and sold during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to decreases in the cost of goods manufactured for certain legacy products due to a decrease in sales of such products, as discussed above, partially offset by an increase of $1.3 million in the cost of goods manufactured for VIVITROL, primarily due to an increase in the number of units manufactured and sold, as discussed above.

Previous wording

The following table sets forth our external R&D expenses for the three months ended March 31, 2024 and 2023 relating to our then-current development programs and our internal R&D expenses, listed by the nature of such expenses:

Current wording

The following table sets forth our external R&D expenses for the three and six months ended June 30, 2024 and 2023 relating to our then-current development programs and our internal R&D expenses, listed by the nature of such expenses:

Previous wording

The increase in expenses related to ALKS 2680 during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to an increase in spend related to the advancement of the development program for the product, including completion of our phase 1b proof-of-concept study and activities to prepare for the initiation of our phase 2 clinical studies for the product, the first of which was announced in April 2024 in patients with narcolepsy type 1, and the second of which we expect to initiate in patients with narcolepsy type 2 in the second half of 2024.The increase in expenses related to LYBALVI during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to increased spend on the pediatric studies related to the product, partially offset by decreased spend following the completion of the long-term safety and tolerability studies for the product. The decrease in other external R&D expenses during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to disciplined prioritization of R&D spend and activities associated with our research programs.

Current wording

The increases in expenses related to ALKS 2680 during the three and six months ended June 30, 2024, as compared to the three and six months ended June 30, 2023, were primarily due to increases in spend related to the advancement of the development program for the product, including completion of our phase 1b proof-of-concept study and activities to prepare for the initiation of our phase 2 clinical studies for the product, the first of which was announced in April 2024 in patients with narcolepsy type 1, and the second of which we expect to initiate in patients with narcolepsy type 2 in the third quarter of 2024. The increases in expenses related to LYBALVI during the three and six months ended June 30, 2024, as compared to the three and six months ended June 30, 2023, were primarily due to increased spend on the pediatric studies related to the product, partially offset by decreased spend following the completion of the long-term safety and tolerability studies for the product. The decreases in other external R&D expenses during the three and six months ended June 30, 2024, as compared to the three and six months ended June 30, 2023, were primarily due to disciplined prioritization of R&D spend and activities associated with our research programs.

Previous wording

The increase in general and administrative expense during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to an increase in employee-related expenses of $4.8 million, primarily due to an increase in share-based compensation expense related to the vesting of certain performance-based restricted stock unit awards, as previously discussed in Note 13, Share-based Compensation within the “Notes to Condensed Consolidated Financial Statements” in this Form 10-Q, partially offset by a decrease in professional services fees of $1.9 million, primarily due to decreased legal expenses.

Current wording

The decreases in general and administrative expense during the three and six months ended June 30, 2024, as compared to the three and six months ended June 30, 2023, were primarily due to decreases in legal expenses of $9.1 million and $11.1 million, respectively. The decrease during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was partially offset by an increase of $2.3 million in employee-related expenses, primarily due to increases in certain payroll-related taxes and in share-based compensation expense related to the vesting of certain performance-based restricted stock unit awards in February 2024, as described in Note 14, Share-based Compensationin the “Notes to Condensed Consolidated Financial Statements” in this Form 10-Q.

Previous wording

Interest income consists primarily of interest earned on our cash and available-for-sale investments. Interest expense consists of interest incurred on our 2026 Term Loans. The increases in interest income and interest expense in the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, were primarily related to increases in interest rates, due to the rising interest rate environment.

Current wording

Interest income consists primarily of interest earned on our cash and available-for-sale investments. The increases in interest income in the three and six months ended June 30, 2024, as compared to the three and six months ended June 30, 2023, were primarily related to increases in interest rates, due to the rising interest rate environment. Interest expense consists of interest incurred on our 2026 Term Loans.

Previous wording

The income tax provision in the three months ended March 31, 2024 was primarily attributable to taxes on income earned in Ireland. The income tax provision in the three months ended March 31, 2023 was primarily due to U.S. federal and state taxes on income earned in the U.S. and the tax impact of employee equity activity.

Current wording

The income tax provision in the three and six months ended June 30, 2024 were primarily attributable to taxes on income earned in Ireland. The income tax provision in the three and six months ended June 30, 2023 were primarily due to U.S. federal and state taxes on income earned in the U.S.

Previous wording

We generated $21.1 million of cash from operating activities and used $21.3 million of cash in operating activities during the three months ended March 31, 2024 and 2023, respectively. We expect that our existing cash, cash equivalents and investments will be sufficient to finance our anticipated working capital and other cash requirements, such as capital expenditures and principal and interest payments on our long-term debt, for at least the twelve months following the date from which our financial statements were issued. Subject to market conditions, interest rates and other factors, we may pursue opportunities to obtain additional financing in the future, including debt and equity offerings, corporate collaborations, bank borrowings, arrangements relating to assets or other financing methods or structures. In addition, the 2026 Term Loans have an incremental facility capacity in an amount of $175.0 million, plus additional potential amounts, provided that we meet certain conditions, including a specified leverage ratio.

Current wording

We generated $167.1 million and $194.4 million of cash from operating activities during the six months ended June 30, 2024 and 2023, respectively. We expect that our existing cash, cash equivalents and investments will be sufficient to finance our anticipated working capital and other cash requirements, such as capital expenditures and principal and interest payments on our long-term debt, for at least the twelve months following the date from which our financial statements were issued. Subject to market conditions, interest rates and other factors, we may pursue opportunities to obtain additional financing in the future, including debt and equity offerings, corporate collaborations, bank borrowings, arrangements relating to assets or other financing methods or structures. In addition, the 2026 Term Loans have an incremental facility capacity in an amount of $175.0 million, plus additional potential amounts, provided that we meet certain conditions, including a specified leverage ratio.

Previous wording

Information about our cash flows, by category, is presented in the accompanying consolidated statements of cash flows. The discussion of our cash flows that follows does not include the impact of any adjustments to remove discontinued operations and is stated on a total company consolidated basis. The following table summarizes our cash flows for the three months ended March 31, 2024 and 2023:

Current wording

Information about our cash flows, by category, is presented in the accompanying consolidated statements of cash flows. The discussion of our cash flows that follows does not include the impact of any adjustments to remove discontinued operations and is stated on a total company consolidated basis. The following table summarizes our cash flows for the six months ended June 30, 2024 and 2023:

Previous wording

Cash flows from operating activities represent the cash receipts and disbursements related to all of our activities other than investing and financing activities. Operating cash flow is derived by adjusting our net income (loss) for non-cash operating items such as depreciation, amortization and share-based compensation and changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in our results of operations.

Current wording

Cash flows from operating activities represent the cash receipts and disbursements related to all of our activities other than investing and financing activities. Operating cash flow is derived by adjusting our net income for non-cash operating items such as depreciation, amortization and share-based compensation and changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in our results of operations.

Previous wording

Cash flows provided by operating activities for the three months ended March 31, 2024 were $21.1 million and primarily consisted of a net income of $38.9 million adjusted for non-cash items, including share-based compensation of $32.8 million, depreciation and amortization of $8.1 million and deferred income taxes of $7.5 million, partially offset by changes in working capital of $66.3 million.

Current wording

Cash flows provided by operating activities for the six months ended June 30, 2024 were $167.1 million and primarily consisted of net income of $128.2 million, adjusted for non-cash items including share-based compensation of $53.4 million, depreciation and amortization of $14.7 million, deferred income taxes of $21.7 million and gain on the sale of the Athlone Facility of $1.5 million, partially offset by changes in working capital of $51.5 million.

Previous wording

Cash flows used in investing activities for the three months ended March 31, 2024 were primarily due to $32.0 million in net purchase of investments and the purchase of $8.3 million of property, plant and equipment. Cash flows provided by investing activities for the three months ended March 31, 2023 were primarily due to a $79.7 million increase in net sales of investments, offset by the purchase of $6.9 million of property, plant and equipment.

Current wording

Cash flows provided by investing activities for the six months ended June 30, 2024 were primarily due to proceeds related to the sale of the Athlone Facility of approximately $97.9 million, which included a payment of approximately $91.0 million for the facility and certain related assets, partially offset by $71.0 million in net purchase of investments and the purchase of $15.5 million of property, plant and equipment. Cash flows provided by investing activities for the six months ended June 30, 2023 were primarily due to $210.3 million in net sales of investments, offset by the purchase of $16.6 million of property, plant and equipment.

Previous wording

Cash flows used in financing activities for the three months ended March 31, 2024 and 2023 primarily related to $28.3 million and $24.7 million of employee taxes paid related to the net share settlement of equity awards, respectively, partially offset by $11.2 million and $2.9 million of cash that we received upon exercises of employee stock options, respectively.

Current wording

Cash flows used in financing activities for the six months ended June 30, 2024 primarily related to $84.7 million used to repurchase our ordinary shares under the Repurchase Program and $29.0 million of employee taxes paid related to the net share settlement of equity awards, partially offset by $13.8 million of cash that we received upon exercises of employee stock options. Cash flows used in financing activities for the six months ended June 30, 2023 primarily related to $25.3 million of employee taxes paid related to the net share settlement of equity awards, partially offset by $12.0 million of cash that we received upon exercises of employee stock options.

Previous wording

At March 31, 2024, the principal balance of our borrowings consisted of $291.0 million outstanding under our 2026 Term Loans. See Note 12, Long-Term Debt, in the “Notes to Condensed Consolidated Financial Statements” in this Form 10-Q for further discussion of our 2026 Term Loans.

Current wording

At June 30, 2024, the principal balance of our borrowings consisted of $290.3 million outstanding under our 2026 Term Loans. See Note 12, Long-Term Debt in the “Notes to Condensed Consolidated Financial Statements” in this Form 10-Q for further discussion of our 2026 Term Loans.