Alkermes plc Announces Sale of Gainesville, GA Manufacturing Facility to Recro Pharma, Inc.
March 09 2015 - 5:00AM
Business Wire
–– Alkermes Streamlines Manufacturing
Operations and Exits Non-Core Business ––
–– Alkermes Provides Updated 2015 Financial
Guidance to Reflect Transaction ––
Alkermes plc (NASDAQ:ALKS) today announced that it has entered
into a definitive agreement to sell its manufacturing facility in
Gainesville, GA, the manufacturing and royalty revenue associated
with products manufactured at the facility and global rights to
Meloxicam IV/IM to Recro Pharma, Inc. (Recro), a specialty
pharmaceutical company. Under the terms of the agreement, Alkermes
will receive from Recro an initial cash payment of $50 million,
development and commercialization milestone payments of up to $120
million related to Meloxicam IV/IM and low double-digit royalties
on net sales of Meloxicam IV/IM. This transaction is subject to
antitrust law clearance as well as other customary terms and
conditions. This transaction is anticipated to close in the second
quarter of 2015.
Assets being sold as part of the transaction include the Good
Manufacturing Practices (GMP) facility in Gainesville, which was
acquired by Alkermes in 2011 as part of its business combination
with Elan Drug Technologies; Alkermes’ rights to RITALIN LA®,
FOCALIN XR®, VERELAN® , ZOHYDRO® ER, and BIDILTM; and the
late-stage, parenteral formulation of Meloxicam IV/IM, a
nonsteroidal anti-inflammatory drug, which has completed multiple
phase 2 trials for the management of moderate-to-severe acute pain,
as well as related technology.
“We are streamlining Alkermes’ manufacturing operations for our
commercial products and late-stage pipeline into our two GMP
facilities in Athlone, Ireland, and Wilmington, Ohio,” said James
Frates, Chief Financial Officer of Alkermes. “With this
transaction, we are capturing value from non-core assets, as we
continue to execute on our strategy and focus on the key driver of
our future growth – our late-stage pipeline of innovative medicines
for central nervous system diseases.”
Financial Expectations for
2015
As a result of this transaction, Alkermes is revising its
financial expectations for 2015. The following statements are
forward-looking, and actual results may differ materially. Please
see “Note Regarding Forward-Looking Statements” at the end of this
press release for risks that could cause results to differ
materially from these forward-looking statements.
- Cash and Total Investments: The
transaction is expected to increase the company’s cash and total
investments by $50 million. The company reported cash and total
investments of approximately $802 million at Dec. 31, 2014.
- Revenues: The company expects that
revenues will decrease by approximately $40 million, to be in
the range of $600 million to $630 million, revised from an
expectation of $640 million to $670 million.
- Cost of Goods Manufactured and Sold:
The company expects that cost of goods manufactured and sold will
decrease by approximately $25 million, to be in the range of
$130 million to $140 million, revised from an expectation of $155
million to $165 million.
- Research and Development (R&D)
Expenses: The company continues to expect R&D expenses to
range from $345 million to $365 million.
- Selling, General and Administrative
(SG&A) Expenses: The company continues to expect SG&A
expenses to range from $310 million to $330 million.
- Amortization of Intangible
Assets: The company continues to expect amortization of
intangible assets to be approximately $65 million.
- Net Interest Expense: The
company continues to expect net interest expense to range from $10
million to $15 million.
- Income Tax Expense: The company
continues to expect income tax expense to range from $10 million to
$15 million.
- GAAP Net Loss: The company expects
that GAAP net loss will increase by approximately $15 million,
to be in the range of $270 million to $300 million, and a basic and
diluted loss per share of $1.80 to $2.00, based on a weighted
average basic and diluted share count of approximately 150 million
shares outstanding. This is revised from an expectation of a GAAP
net loss of $255 million to $285 million, and a basic and diluted
loss per share of $1.70 to $1.90, based on a weighted average basic
and diluted share count of approximately 150 million shares
outstanding.
- Non-GAAP Net Loss: The company
expects that non-GAAP net loss will increase by approximately $15
million, to be in the range of $55 million to $75 million, and
a basic and diluted non-GAAP net loss per share of $0.37 to $0.50.
This is revised from an expectation of a non-GAAP net loss in the
range of $40 to $60 million, and a basic and diluted non-GAAP net
loss per share of $0.27 to $0.40.
- Capital Expenditures: The company
expects that capital expenditures will decrease by approximately $5
million, to be approximately $50 million, revised from an
expectation of approximately $55 million.
- Free Cash Flow: The company expects
that free cash outflow will increase by approximately $10
million, to be in the range of $105 million to $125 million.
This is revised from an expectation of a free cash outflow of $95
million to $115 million.
Lazard Frères & Co. LLC served as financial advisor and
Goodwin Procter LLP served as legal advisor to Alkermes.
About Alkermes
Alkermes plc is a fully integrated, global biopharmaceutical
company that applies its scientific expertise and proprietary
technologies to develop innovative medicines that improve patient
outcomes. The company has a diversified portfolio of more than 20
commercial drug products and a substantial clinical pipeline of
product candidates that address central nervous system (CNS)
disorders such as addiction, schizophrenia, depression and multiple
sclerosis. Headquartered in Dublin, Ireland, Alkermes plc has an
R&D center in Waltham, Massachusetts; a research and
manufacturing facility in Athlone, Ireland; and a manufacturing
facility in Wilmington, Ohio. For more information, please visit
Alkermes’ website at www.alkermes.com.
Non-GAAP Financial
Measures
This press release includes information about certain financial
measures that are not prepared in accordance with generally
accepted accounting principles in the U.S. (GAAP), including
non-GAAP net loss, non-GAAP net loss per share and free cash flow.
These non-GAAP measures are not based on any standardized
methodology prescribed by GAAP and are not necessarily comparable
to similar measures presented by other companies.
Management defines its non-GAAP financial measures as
follows:
- Non-GAAP net income adjusts for
one-time and non-cash charges by excluding from GAAP results:
share-based compensation expense; amortization; depreciation;
non-cash net interest expense; non-cash tax expense; deferred
revenue; and certain other one-time or non-cash items.
- Free cash flow represents non-GAAP net
income less capital expenditures.
The company’s management believes that these non-GAAP financial
measures, when viewed with the company’s results under GAAP and the
accompanying reconciliations, better indicate underlying trends in
ongoing operations and cash flows. However, non-GAAP net loss,
non-GAAP net loss per share and free cash flow are not measures of
financial performance under GAAP and, accordingly, should not be
considered as alternatives to GAAP measures as indicators of
operating performance.
A reconciliation of GAAP to non-GAAP financial measures has been
provided in the table included in this press release.
Note Regarding Forward-Looking
Statements
Certain statements set forth above may constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, as amended, including,
but not limited to: statements concerning future financial and
operating performance, business plans or prospects; the likelihood
of continued revenue growth from the company’s commercial products;
the therapeutic and commercial value of the company’s products and
Meloxicam IV/IM; and the likelihood that the sale transaction with
Recro will be completed on time or at all. The company cautions
that forward-looking statements are inherently uncertain. Although
the company believes that such statements are based on reasonable
assumptions within the bounds of its knowledge of its business and
operations, the forward-looking statements are neither promises nor
guarantees and they are necessarily subject to a high degree of
uncertainty and risk. Actual performance and results may differ
materially from those expressed or implied in the forward-looking
statements due to various risks and uncertainties. These risks and
uncertainties include, among others: regulatory submissions may not
occur or be submitted in a timely manner; the company, and its
partners, may not be able to continue to successfully commercialize
its products; there may be a reduction in payment rate or
reimbursement for the company’s products or an increase in the
company’s financial obligations to governmental payers; the U.S.
Food and Drug Administration or regulatory authorities outside the
U.S. may make adverse decisions regarding the company’s products
and Meloxicam IV/IM; the company’s products may prove difficult to
manufacture, be precluded from commercialization by the proprietary
rights of third parties, or have unintended side effects, adverse
reactions or incidents of misuse; completion of the sale to Recro
is subject to customary closing conditions, including antitrust law
clearance; and those risks and uncertainties described under the
heading “Risk Factors” in the company’s Annual Report on Form 10-K
for the fiscal year ended Dec. 31, 2014, and in any other
subsequent filings made by the company with the Securities and
Exchange Commission (“SEC”) and which are available on the SEC’s
website at www.sec.gov. Existing and prospective investors are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date they are made. The
information contained in this press release is provided by the
company as of the date hereof and, except as required by law, the
company disclaims any intention or responsibility for updating or
revising any forward-looking information contained in this press
release.
Alkermes plc and
Subsidiaries 2015 Guidance — GAAP to Non-GAAP
Adjustments
An itemized reconciliation between
projected loss per share on a GAAP basis and projected earnings per
share on a non-GAAP basis is as follows:
Loss
(In millions, except per share data)
Amount Shares Per Share
Projected Net Loss — GAAP $ (285.0 ) 150 $ (1.90 )
Adjustments: Non-cash net interest expense 1.0 Non-cash taxes 10.0
Depreciation expense 35.0 Amortization expense 65.0 Share-based
compensation expense 110.0 Deferred revenue (1.0 )
Projected Non-GAAP Net Loss $ (65.0 ) 150 $ (0.43 )
Capital expenditures 50.0
Projected Free Cash Outflow
$ (115.0 )
Projected GAAP and non-GAAP measures reflect mid-points within
ranges of estimated guidance.
Alkermes plc:For Investors:Rebecca
Peterson, +1 781-609-6378For Media:Jennifer Snyder, +1
781-609-6166
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