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Alkermes (ALKS) Down 14.2% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Alkermes (ALKS - Free Report) . Shares have lost about 14.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Alkermes due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Alkermes Exceeds Q3 Earnings Estimates, Raises Outlook

Alkermes reported adjusted earnings of 7 cents per share in the third quarter of 2018, while the Zacks Consensus Estimate was a loss of 6 cents. The bottom line also exceeded the adjusted earnings of 3 cents recorded in the year-ago quarter.

The company’s revenues of $248.7 million in the quarter were up 14% year over year. The top line beat the Zacks Consensus Estimate of $236 million.

The results were driven by strong growth of the company’s proprietary products, Vivitrol and Aristada. Net sales for Vivitrol and Aristada were $116.0 million in the quarter, reflecting a 24% increase from the year-ago quarter.

 

Revenues Rise

Manufacturing and royalty revenues from Risperdal Consta, Invega Sustenna/ Xeplion and Invega Trinza/Trevicta were $77.2 million, down 2.8% year over year. The same from Ampyra/Fampyra were down 17.1% year over year to $20.3 million. Research and development revenues were $16.3 million, of which $15.7 million was related to the collaboration with Biogen Inc. for BIIB098.

Vivitrol sales improved 15% year over year to $79.9 million.

Aristada sales came in at $36.1 million, up 48% year over year. During the quarter, the company launched Aristada Initio, the newest addition to the Aristada product family, and the early trends of the products showed encouraging results.

Costs Rise

Research and Development (R&D) expenses were $101.3 million, down 3% year over year.

Selling, General and Administrative (SG&A) expenses were $128.8 million, up 29.3% year over year.

2018 Outlook

The company expects total revenues to be $1.015-$1.045 billion, above its previous expectation of $975 million to $1.025 billion. This increase was driven by Ampyra, following the delayed generic competition in 2018.  The Zacks Consensus Estimate for 2018 is $1.01 billion

The company continues to expect Vivitrol sales to be $300-$330 million, while Aristada sales are anticipated to be $140-$160 million. The company reaffirmed its R&D expenses to be $415-$445 million. Alkermes reiterated its guidance for SG&A expenses of $515-$545 million.

For 2018, the company expects earnings per share to be 12-31 cents compared with the previous expectation of loss per share of 6-12 cents. The Zacks Consensus Estimate for 2018 is earnings of 9 cents per share.

Pipeline Update

During the quarter, the company initiated clinical evaluation of ALKS 4230 in combination with Merck’s PD-1 inhibitor, Keytruda (pembrolizumab).

On Nov 1, 2018, there will be a joint meeting of the Psychopharmacologic Drugs Advisory Committee, and the Drug Safety and Risk Management Advisory Committee to review the new drug application (NDA) for ALKS 5461, being evaluated for adjunctive treatment of major depressive disorder. An action date of Jan 31, 2019 has been set for the same.

The company also expects to release top-line data from ALKS 3831’s ENLIGHTEN-2 pivotal study in schizophrenia, in the fourth quarter of 2018.

The company is on track to submit the NDA for BIIB098 for multiple sclerosis by the end of 2018.



 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted -14.47% due to these changes.

VGM Scores

At this time, Alkermes has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Alkermes has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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