Overview of Financial Performance

Alkermes plc, a global biopharmaceutical company, has reported its financial results for the year ended December 31, 2024. The company’s total revenues for the year were $1,557.6 million, an increase of 10.5% compared to the previous year. This growth was driven by strong performance across the company’s key product portfolios.

Product Sales Trends

Alkermes’ product sales, net, increased by 18.0% to $1,083.5 million in 2024. This was primarily due to the following:

• VIVITROL product sales, gross, increased by 10%, driven by a 7% increase in unit sales and a 3.2% increase in selling price.
• ARISTADA and ARISTADA INITIO product sales, gross, increased by 5%, due to a 3% increase in unit sales and a 3.0% increase in selling price.
• LYBALVI product sales, gross, increased by 52%, primarily due to a 45% increase in unit sales and price increases of 3.8% and 2.0% in January and July 2024, respectively.

The decrease in Medicaid rebates as a percentage of sales was mainly attributable to the higher sales of LYBALVI, which has lower Medicaid utilization than VIVITROL, ARISTADA and ARISTADA INITIO. Additionally, actual Medicaid utilization rates for VIVITROL were lower than originally estimated, resulting in $8.7 million in credits received from certain states in Q4 2024.

Manufacturing and Royalty Revenues

Alkermes’ manufacturing and royalty revenues decreased by 36.2% to $474.1 million in 2024. This was primarily due to the following:

• Royalty revenues from the long-acting INVEGA products decreased by $249.6 million, primarily due to the receipt of $195.4 million in back royalties in 2023 related to 2022 U.S. sales, as well as the expiration of the royalty on U.S. net sales of INVEGA SUSTENNA in August 2024.
• Royalty and manufacturing revenues from RISPERDAL CONSTA decreased by $13.8 million, mainly due to the expiration of patents covering the product.
• Royalty revenues from VUMERITY increased by $4.7 million due to higher end-market sales, partially offset by a decrease in manufacturing revenue.

Costs and Expenses

Cost of goods manufactured and sold decreased by 3.0% to $245.3 million, primarily due to lower volumes of certain legacy products, partially offset by increased costs related to VIVITROL out-of-specification batches.

Research and development expenses decreased by 9.4% to $245.3 million, driven by a $28.4 million decrease in internal R&D expenses, mainly from lower employee-related costs. External R&D expenses increased by $2.9 million, primarily due to higher spending on the ALKS 2680 and LYBALVI development programs.

Selling, general and administrative expenses decreased by 6.5% to $645.2 million, largely due to a $44.0 million decrease in selling and marketing expenses, including lower media spend and free goods.

Amortization of acquired intangible assets decreased by $34.6 million as certain assets became fully amortized during 2024.

Other Income and Taxes

Other income, net increased by $15.7 million to $23.1 million, primarily due to higher interest income from the company’s cash and investments, as well as a $3.7 million increase in other income from the gain on the sale of the Athlone Facility.

The income tax provision was $71.6 million in 2024, compared to a $97.6 million benefit in 2023. The change was primarily due to the partial release of the valuation allowance against certain Irish deferred tax assets in 2023.

Liquidity and Capital Resources

As of December 31, 2024, Alkermes had $824.7 million in cash, cash equivalents and investments, compared to $813.4 million at the end of 2023. The company generated $439.1 million in cash from operating activities during 2024.

In December 2024, Alkermes prepaid its outstanding long-term debt of $289.5 million without penalty. The company also repurchased approximately $200.0 million of its ordinary shares during 2024.

Alkermes expects its existing cash, cash equivalents and investments will be sufficient to finance its anticipated working capital and other cash requirements, including capital expenditures, for at least the next 12 months.

Analysis of Strengths and Weaknesses

Strengths:

• Diversified product portfolio with strong growth in key franchises like VIVITROL, ARISTADA and LYBALVI
• Improved profitability through cost management and reduced amortization of intangible assets
• Solid liquidity position with over $800 million in cash and investments
• Successful resolution of INVEGA royalty dispute and elimination of long-term debt

Weaknesses:

• Declining royalty revenues from legacy products like RISPERDAL CONSTA and INVEGA SUSTENNA
• Potential competition from generic versions of VIVITROL in the future
• Reliance on a small number of key products for the majority of revenues
• Ongoing legal challenges and patent expirations for certain products

Outlook and Future Prospects

Alkermes is well-positioned for continued growth, with its portfolio of differentiated, proprietary products and a strong financial foundation. The company’s focus on driving sales of its newer products like LYBALVI, while managing costs, should support improved profitability going forward.

However, the company faces increasing competition and patent expiration risks that could impact future revenues. Successful execution of its R&D pipeline and effective management of its product lifecycle will be critical to sustaining long-term growth.

Overall, Alkermes has demonstrated its ability to navigate a challenging biopharmaceutical landscape and deliver solid financial results. With a diversified product portfolio, strong liquidity, and a commitment to innovation, the company appears well-equipped to capitalize on future opportunities and overcome potential headwinds.