þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Pennsylvania (State or other jurisdiction of incorporation or organization) |
23-2472830 (I.R.S. Employer Identification No.) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
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EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-32.1 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
June 30, | March 31, | |||||||
2011 | 2011 | |||||||
(In thousands, except | ||||||||
share and per share amounts) | ||||||||
ASSETS |
||||||||
CURRENT ASSETS: |
||||||||
Cash and cash equivalents |
$ | 35,947 | $ | 38,394 | ||||
Investments short-term |
211,796 | 162,928 | ||||||
Receivables |
34,584 | 22,969 | ||||||
Inventory |
17,569 | 20,425 | ||||||
Prepaid expenses and other current assets |
8,489 | 8,244 | ||||||
Total current assets |
308,385 | 252,960 | ||||||
PROPERTY, PLANT AND EQUIPMENT, NET |
94,332 | 95,020 | ||||||
INVESTMENTS LONG-TERM |
37,637 | 93,408 | ||||||
OTHER ASSETS |
10,882 | 11,060 | ||||||
TOTAL ASSETS |
$ | 451,236 | $ | 452,448 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
CURRENT LIABILITIES: |
||||||||
Accounts payable and accrued expenses |
$ | 41,621 | $ | 44,934 | ||||
Deferred revenue current |
3,905 | 3,123 | ||||||
Total current liabilities |
45,526 | 48,057 | ||||||
DEFERRED REVENUE LONG-TERM |
4,529 | 4,837 | ||||||
OTHER LONG-TERM LIABILITIES |
7,292 | 7,536 | ||||||
Total liabilities |
57,347 | 60,430 | ||||||
COMMITMENTS AND CONTINGENCIES (Note 11) |
||||||||
SHAREHOLDERS EQUITY: |
||||||||
Common stock, par value, $0.01 per share;
160,000,000 shares authorized;
107,183,675 and 105,771,507 shares
issued; 96,957,371 and 95,702,299 shares
outstanding at June 30, 2011 and March
31, 2011, respectively |
1,067 | 1,055 | ||||||
Non-voting common stock, par value, $0.01 per
share; 450,000 shares authorized;
382,632 shares issued and outstanding at
June 30, 2011 and March 31, 2011 |
4 | 4 | ||||||
Treasury stock, at cost (10,226,304 and
10,069,208 shares at June 30, 2011 and
March 31, 2011, respectively) |
(133,933 | ) | (131,095 | ) | ||||
Additional paid-in capital |
953,701 | 936,295 | ||||||
Accumulated other comprehensive loss |
(2,484 | ) | (3,013 | ) | ||||
Accumulated deficit |
(424,466 | ) | (411,228 | ) | ||||
Total shareholders equity |
393,889 | 392,018 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |
$ | 451,236 | $ | 452,448 | ||||
3
Three Months Ended | ||||||||
June 30, | ||||||||
2011 | 2010 | |||||||
(In thousands, except per share amounts) | ||||||||
REVENUES: |
||||||||
Manufacturing revenues |
$ | 38,759 | $ | 26,891 | ||||
Royalty revenues |
10,181 | 8,917 | ||||||
Product sales, net |
9,686 | 6,204 | ||||||
Research and development revenue under collaborative arrangements |
3,257 | 268 | ||||||
Total revenues |
61,883 | 42,280 | ||||||
EXPENSES: |
||||||||
Cost of goods manufactured and sold |
16,219 | 12,665 | ||||||
Research and development |
28,050 | 22,977 | ||||||
Selling, general and administrative |
31,497 | 19,726 | ||||||
Total expenses |
75,766 | 55,368 | ||||||
OPERATING LOSS |
(13,883 | ) | (13,088 | ) | ||||
OTHER INCOME (EXPENSE), NET: |
||||||||
Interest income |
502 | 852 | ||||||
Interest expense |
| (1,130 | ) | |||||
Other income (expense), net |
89 | (101 | ) | |||||
Total other income (expense), net |
591 | (379 | ) | |||||
LOSS BEFORE INCOME TAXES |
(13,292 | ) | (13,467 | ) | ||||
INCOME TAX BENEFIT |
(54 | ) | (58 | ) | ||||
NET LOSS |
$ | (13,238 | ) | $ | (13,409 | ) | ||
LOSS PER COMMON SHARE: |
||||||||
Basic and diluted |
$ | (0.14 | ) | $ | (0.14 | ) | ||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: |
||||||||
Basic and diluted |
96,649 | 95,326 | ||||||
COMPREHENSIVE LOSS: |
||||||||
Net loss |
$ | (13,238 | ) | $ | (13,409 | ) | ||
Unrealized gains on marketable securities: |
||||||||
Holding gains, net of tax |
529 | 494 | ||||||
Unrealized gains on marketable securities |
529 | 494 | ||||||
COMPREHENSIVE LOSS |
$ | (12,709 | ) | $ | (12,915 | ) | ||
4
Three Months Ended | ||||||||
June 30, | ||||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net loss |
$ | (13,238 | ) | $ | (13,409 | ) | ||
Adjustments to reconcile net loss to cash flows from operating activities: |
||||||||
Depreciation |
1,908 | 2,105 | ||||||
Share-based compensation expense |
5,660 | 4,456 | ||||||
Other non-cash charges |
(130 | ) | 146 | |||||
Changes in assets and liabilities: |
||||||||
Receivables |
(11,615 | ) | 1,050 | |||||
Inventory, prepaid expenses and other assets |
1,918 | 2,051 | ||||||
Accounts payable and accrued expenses |
(3,234 | ) | (8,202 | ) | ||||
Deferred revenue |
474 | (409 | ) | |||||
Other long-term liabilities |
| 4 | ||||||
Payment of non-recourse RISPERDAL CONSTA secured 7% notes principal
attributable to original issue discount |
| (650 | ) | |||||
Cash flows used in operating activities |
(18,257 | ) | (12,858 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Purchase of property, plant and equipment |
(924 | ) | (4,336 | ) | ||||
Sales of property, plant and equipment |
3 | 30 | ||||||
Purchases of investments |
(67,495 | ) | (102,790 | ) | ||||
Sales and maturities of investments |
75,240 | 135,917 | ||||||
Cash flows provided by investing activities |
6,824 | 28,821 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Proceeds from the issuance of common stock for share-based compensation
arrangements |
8,986 | 474 | ||||||
Payment of non-recourse RISPERDAL CONSTA secured 7% notes principal |
| (5,767 | ) | |||||
Cash flows provided by (used in) financing activities |
8,986 | (5,293 | ) | |||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
(2,447 | ) | 10,670 | |||||
CASH AND CASH EQUIVALENTS Beginning of period |
38,394 | 79,324 | ||||||
CASH AND CASH EQUIVALENTS End of period |
$ | 35,947 | $ | 89,994 | ||||
SUPPLEMENTAL CASH FLOW DISCLOSURE: |
||||||||
Cash paid for interest |
$ | | $ | 898 | ||||
Cash paid for taxes |
$ | | $ | 31 | ||||
Non-cash investing and financing activities: |
||||||||
Purchased capital expenditures included in accounts payable and accrued
expenses |
$ | 720 | $ | 1,635 |
5
6
7
Three Months Ended | ||||||||
June 30, | ||||||||
(In thousands) | 2011 | 2010 | ||||||
Stock options |
7,877 | 13,768 | ||||||
Restricted stock units |
1,554 | 795 | ||||||
Total |
9,431 | 14,563 | ||||||
8
Gross Unrealized | ||||||||||||||||||||
Losses | ||||||||||||||||||||
Amortized | Less than | Greater than | Estimated | |||||||||||||||||
Cost | Gains | One Year | One Year | Fair Value | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
June 30, 2011 |
||||||||||||||||||||
Short-term investments: |
||||||||||||||||||||
Available-for-sale securities: |
||||||||||||||||||||
U.S. government and agency debt securities |
$ | 158,567 | $ | 128 | $ | | $ | | $ | 158,695 | ||||||||||
Corporate debt securities |
26,045 | 49 | | (1 | ) | 26,093 | ||||||||||||||
International government agency debt securities |
25,657 | 149 | | | 25,806 | |||||||||||||||
210,269 | 326 | | (1 | ) | 210,594 | |||||||||||||||
Money market funds |
1,202 | | | | 1,202 | |||||||||||||||
Total short-term investments |
211,471 | 326 | | (1 | ) | 211,796 | ||||||||||||||
Long-term investments: |
||||||||||||||||||||
Available-for-sale securities: |
||||||||||||||||||||
U.S. government and agency debt securities |
17,300 | | (132 | ) | | 17,168 | ||||||||||||||
Corporate debt securities |
8,012 | | | (306 | ) | 7,706 | ||||||||||||||
International government agency debt securities |
6,121 | | (8 | ) | | 6,113 | ||||||||||||||
Strategic investments |
644 | 149 | | | 793 | |||||||||||||||
32,077 | 149 | (140 | ) | (306 | ) | 31,780 | ||||||||||||||
Held-to-maturity securities: |
||||||||||||||||||||
Certificates of deposit |
5,440 | | | | 5,440 | |||||||||||||||
U.S. government obligations |
417 | | | | 417 | |||||||||||||||
5,857 | | | | 5,857 | ||||||||||||||||
Total long-term investments |
37,934 | 149 | (140 | ) | (306 | ) | 37,637 | |||||||||||||
Total investments |
$ | 249,405 | $ | 475 | $ | (140 | ) | $ | (307 | ) | $ | 249,433 | ||||||||
March 31, 2011 |
||||||||||||||||||||
Short-term investments: |
||||||||||||||||||||
Available-for-sale securities: |
||||||||||||||||||||
U.S. government and agency debt securities |
$ | 117,298 | $ | 129 | $ | (1 | ) | $ | | $ | 117,426 | |||||||||
Corporate debt securities |
20,973 | 48 | | (4 | ) | 21,017 | ||||||||||||||
International government agency debt securities |
23,048 | 236 | | | 23,284 | |||||||||||||||
161,319 | 413 | (1 | ) | (4 | ) | 161,727 | ||||||||||||||
Money market funds |
1,201 | | | | 1,201 | |||||||||||||||
Total short-term investments |
162,520 | 413 | (1 | ) | (4 | ) | 162,928 | |||||||||||||
Long-term investments: |
||||||||||||||||||||
Available-for-sale securities: |
||||||||||||||||||||
U.S. government and agency debt securities |
57,709 | | (804 | ) | | 56,905 | ||||||||||||||
International government agency debt securities |
15,281 | | (93 | ) | | 15,188 | ||||||||||||||
Corporate debt securities |
15,140 | | (29 | ) | (328 | ) | 14,783 | |||||||||||||
Strategic investments |
644 | 31 | | | 675 | |||||||||||||||
88,774 | 31 | (926 | ) | (328 | ) | 87,551 | ||||||||||||||
Held-to-maturity securities: |
||||||||||||||||||||
Certificates of deposit |
5,440 | | | | 5,440 | |||||||||||||||
U.S. government obligations |
417 | | | | 417 | |||||||||||||||
5,857 | | | | 5,857 | ||||||||||||||||
Total long-term investments |
94,631 | 31 | (926 | ) | (328 | ) | 93,408 | |||||||||||||
Total investments |
$ | 257,151 | $ | 444 | $ | (927 | ) | $ | (332 | ) | $ | 256,336 | ||||||||
9
Three Months Ended June 30, | ||||||||
(In thousands) | 2011 | 2010 | ||||||
Proceeds from the sales and maturities of marketable securities |
$ | 75,240 | $ | 135,917 | ||||
Realized gains |
$ | 13 | $ | 37 | ||||
Realized losses |
$ | 1 | $ | 18 |
Available-for-sale | Held-to-maturity | |||||||||||||||
Amortized | Estimated | Amortized | Estimated | |||||||||||||
(In thousands) | Cost | Fair Value | Cost | Fair Value | ||||||||||||
Within 1 year |
$ | 146,480 | $ | 146,703 | $ | 5,857 | $ | 5,857 | ||||||||
After 1 year through 5 years |
89,429 | 89,153 | | | ||||||||||||
After 5 years through 10 years |
5,793 | 5,725 | | | ||||||||||||
Total |
$ | 241,702 | $ | 241,581 | $ | 5,857 | $ | 5,857 | ||||||||
10
4. | FAIR VALUE MEASUREMENTS |
June 30, | ||||||||||||||||
(In thousands) | 2011 | Level 1 | Level 2 | Level 3 | ||||||||||||
Cash equivalents |
$ | 1,303 | $ | 1,303 | $ | | $ | | ||||||||
U.S. government and agency debt securities |
175,863 | 175,863 | | | ||||||||||||
Corporate debt securities |
33,799 | | 33,071 | 728 | ||||||||||||
International government agency debt securities |
31,919 | 31,919 | | | ||||||||||||
Strategic equity investments |
793 | 793 | | | ||||||||||||
Total |
$ | 243,677 | $ | 209,878 | $ | 33,071 | $ | 728 | ||||||||
March 31, | ||||||||||||||||
2011 | Level 1 | Level 2 | Level 3 | |||||||||||||
Cash equivalents |
$ | 1,303 | $ | 1,303 | $ | | $ | | ||||||||
U.S. government and agency debt securities |
174,331 | 174,331 | | | ||||||||||||
Corporate debt securities |
35,801 | | 34,754 | 1,047 | ||||||||||||
International government agency debt securities |
38,471 | 38,471 | | | ||||||||||||
Strategic equity investments |
675 | 675 | | | ||||||||||||
Total |
$ | 250,581 | $ | 214,780 | $ | 34,754 | $ | 1,047 | ||||||||
Fair | ||||
(In thousands) | Value | |||
Balance, April 1, 2011 |
$ | 1,047 | ||
Investments transferred into Level 3 |
728 | |||
Investments transferred out of Level 3 |
(1,068 | ) | ||
Total unrealized gains included in comprehensive income |
21 | |||
Balance, June 30, 2011 |
$ | 728 | ||
11
June 30, | March 31, | |||||||
(In thousands) | 2011 | 2011 | ||||||
Raw materials |
$ | 3,996 | $ | 3,100 | ||||
Work in process |
4,169 | 5,843 | ||||||
Finished goods (1) |
8,825 | 11,127 | ||||||
Consigned-out inventory (2) |
579 | 355 | ||||||
Total inventory |
$ | 17,569 | $ | 20,425 | ||||
(1) | At June 30, 2011 and March 31, 2011, the Company had $2.2 million and $2.0 million, respectively, of finished goods inventory located at its third party warehouse and shipping service provider. | |
(2) | At June 30, 2011 and March 31, 2011, consigned-out inventory relates to VIVITROL inventory in the distribution channel for which the Company has not recognized revenue. |
June 30, | March 31, | |||||||
(In thousands) | 2011 | 2011 | ||||||
Land |
$ | 301 | $ | 301 | ||||
Building and improvements |
36,792 | 36,792 | ||||||
Furniture, fixture and equipment |
63,727 | 62,660 | ||||||
Leasehold improvements |
44,746 | 44,779 | ||||||
Construction in progress |
42,379 | 42,194 | ||||||
Subtotal |
187,945 | 186,726 | ||||||
Less: accumulated depreciation |
(93,613 | ) | (91,706 | ) | ||||
Total property, plant and equipment, net |
$ | 94,332 | $ | 95,020 | ||||
June 30, | March 31, | |||||||
(In thousands) | 2011 | 2011 | ||||||
Accounts payable |
$ | 11,908 | $ | 9,269 | ||||
Accrued compensation |
7,914 | 17,481 | ||||||
Accrued other |
21,799 | 18,184 | ||||||
Total accounts payable and accrued expenses |
$ | 41,621 | $ | 44,934 | ||||
Three Months Ended | ||||||||
June 30, | ||||||||
(In thousands) | 2011 | 2010 | ||||||
Cost of goods manufactured and sold |
$ | 556 | $ | 361 | ||||
Research and development |
1,935 | 1,515 | ||||||
Selling, general and administrative |
3,169 | 2,580 | ||||||
Total share-based compensation expense |
$ | 5,660 | $ | 4,456 | ||||
12
(In thousands) | Balance | |||
Accrued restructuring, March 31, 2011 |
$ | 3,157 | ||
Payments for facility closure costs |
(238 | ) | ||
Other adjustments |
60 | |||
Accrued Restructuring, June 30, 2011 |
$ | 2,979 | ||
13
| our expectations regarding our financial performance, including revenues, expenses, gross margins, liquidity, capital expenditures and income taxes; | ||
| our expectations regarding the commercialization of RISPERDAL CONSTA and VIVITROL including the sales and marketing efforts of our partners Ortho-McNeil-Janssen Pharmaceuticals, Inc. and Janssen Pharmaceutica International, a division of Cilag International AG, which we refer to as Janssen, and our ability to establish and maintain successful sales and marketing, reimbursement and distribution arrangements for our products; | ||
| our efforts and ability to evaluate and license product candidates and build our pipeline; | ||
| our expectations regarding our product candidates, including the development, regulatory review and therapeutic and commercial potential of such product candidates and the costs and expenses related thereto; | ||
| our expectations regarding the initiation, timing and results of clinical trials of our products; | ||
| our expectation and timeline for regulatory approval of the New Drug Application, or NDA, submission for BYDUREONTM (exenatide extended-release for injectable suspension) and, if approved, the commercialization of BYDUREON by Amylin Pharmaceuticals, Inc., or Amylin, and Eli Lilly & Co., or Lilly; | ||
| our expectations regarding the successful manufacture of our products and product candidates, including RISPERDAL CONSTA and VIVITROL, by us at a commercial scale, and our expectations regarding the successful manufacture of BYDUREON by our partner Amylin; | ||
| the continuation of our collaborations and other significant agreements and our ability to establish and maintain successful development collaborations; | ||
| our expectations regarding the financial impact of health care reform legislation and foreign currency exchange rate fluctuations and valuations; | ||
| the proposed merger transaction with Elan Drug Technologies, or EDT; | ||
| the impact of new accounting pronouncements; | ||
| our expectations concerning the status, intended use and financial impact of and arrangements involving our properties, including manufacturing facilities; and | ||
| our future capital requirements and capital expenditures and our ability to finance our operations and capital requirements. |
14
15
16
Three Months Ended | Change | |||||||||||
June 30, | Favorable/ | |||||||||||
(In millions) | 2011 | 2010 | (Unfavorable) | |||||||||
Manufacturing revenues: |
||||||||||||
RISPERDAL CONSTA |
$ | 38.4 | $ | 26.3 | $ | 12.1 | ||||||
VIVITROL |
0.4 | | 0.4 | |||||||||
Polymer |
| 0.6 | (0.6 | ) | ||||||||
Manufacturing revenues |
$ | 38.8 | $ | 26.9 | $ | 11.9 | ||||||
Three Months Ended | Change | |||||||||||
June 30, | Favorable/ | |||||||||||
(In millions) | 2011 | 2010 | (Unfavorable) | |||||||||
Royalty revenues |
$ | 10.2 | $ | 8.9 | $ | 1.3 | ||||||
17
Three Months Ended | Three Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(In millions) | 2011 | % of Sales | 2010 | % of Sales | ||||||||||||
Product sales, gross |
$ | 14.1 | 100.0 | % | $ | 7.4 | 100.0 | % | ||||||||
Adjustments to product sales, gross: |
||||||||||||||||
Medicaid rebates |
(1.2 | ) | (8.5 | )% | (0.5 | ) | (6.7 | )% | ||||||||
Chargebacks |
(1.2 | ) | (8.5 | )% | (0.4 | ) | (5.4 | )% | ||||||||
Reserve for inventory in the channel (1) |
(0.7 | ) | (5.0 | )% | 0.4 | 5.4 | % | |||||||||
Other |
(1.3 | ) | (9.2 | )% | (0.7 | ) | (9.5 | )% | ||||||||
Total adjustments |
(4.4 | ) | (31.2 | )% | (1.2 | ) | (16.2 | )% | ||||||||
Product sales, net |
$ | 9.7 | 68.8 | % | $ | 6.2 | 83.8 | % | ||||||||
(1) | Our reserve for inventory in the channel is an estimate that reflects the deferral of the recognition of revenue on shipments of VIVITROL to our customers until the product has left the distribution channel as we do not yet have the history to reasonably estimate returns related to these shipments. We estimate the product shipments out of the distribution channel through data provided by external sources, including information on inventory levels provided by our customers as well as prescription information. |
Three Months Ended | Change | |||||||||||
June 30, | Favorable/ | |||||||||||
(In millions) | 2011 | 2010 | (Unfavorable) | |||||||||
Research and development revenue
under collaborative arrangements |
$ | 3.3 | $ | 0.3 | $ | 3.0 | ||||||
Three Months Ended | Change | |||||||||||
June 30, | Favorable/ | |||||||||||
(In millions) | 2011 | 2010 | (Unfavorable) | |||||||||
Cost of goods manufactured and sold: |
||||||||||||
RISPERDAL CONSTA |
$ | 13.1 | $ | 10.4 | $ | (2.7 | ) | |||||
VIVITROL |
2.8 | 1.7 | (1.1 | ) | ||||||||
Polymer |
0.3 | 0.6 | 0.3 | |||||||||
Cost of goods manufactured and sold |
$ | 16.2 | $ | 12.7 | $ | (3.5 | ) | |||||
18
Three Months Ended | Change | |||||||||||
June 30, | Favorable/ | |||||||||||
(In millions) | 2011 | 2010 | (Unfavorable) | |||||||||
Research and development |
$ | 28.1 | $ | 23.0 | $ | (5.1 | ) | |||||
Three Months Ended | Change | |||||||||||
June 30, | Favorable/ | |||||||||||
(In millions) | 2011 | 2010 | (Unfavorable) | |||||||||
Selling, general and administrative |
$ | 31.5 | $ | 19.7 | $ | (11.8 | ) | |||||
Three Months Ended | Change | |||||||||||
June 30, | Favorable/ | |||||||||||
(In millions) | 2011 | 2010 | (Unfavorable) | |||||||||
Interest income |
$ | 0.5 | $ | 0.8 | $ | (0.3 | ) | |||||
Interest expense |
| (1.1 | ) | 1.1 | ||||||||
Other income (expense), net |
0.1 | (0.1 | ) | 0.2 | ||||||||
Total other income (expense), net |
$ | 0.6 | $ | (0.4 | ) | $ | 1.0 | |||||
19
June 30, | March 31, | |||||||
(In millions) | 2011 | 2011 | ||||||
Cash and cash equivalents |
$ | 36.0 | $ | 38.4 | ||||
Investments short-term |
211.8 | 162.9 | ||||||
Investments long-term |
37.6 | 93.4 | ||||||
Total cash, cash equivalents and investments |
$ | 285.4 | $ | 294.7 | ||||
Working capital |
$ | 262.9 | $ | 204.9 |
Three Months Ended | ||||||||
June 30, | ||||||||
(In millions) | 2011 | 2010 | ||||||
Cash and cash equivalents, beginning of period |
$ | 38.4 | $ | 79.3 | ||||
Cash (used in) operating activities |
(18.3 | ) | (13.0 | ) | ||||
Cash provided by investing activities |
6.8 | 29.0 | ||||||
Cash provided by (used in) financing activities |
9.0 | (5.3 | ) | |||||
Cash and cash equivalents, end of period |
$ | 35.9 | $ | 90.0 | ||||
Amortized | Gross Unrealized | Estimated | ||||||||||||||
(in millions) | Cost | Gains | Losses | Fair Value | ||||||||||||
Investments short-term |
$ | 211.5 | $ | 0.3 | $ | | $ | 211.8 | ||||||||
Investments long-term available-for-sale |
32.1 | 0.1 | (0.4 | ) | 31.8 | |||||||||||
Investments long-term held-to-maturity |
5.8 | | | 5.8 | ||||||||||||
Total |
$ | 249.4 | $ | 0.4 | $ | (0.4 | ) | $ | 249.4 | |||||||
20
21
22
Exhibit | ||
No. | ||
2.1
|
Business Combination Agreement and Plan of Merger, dated as of May 9, 2011, by and among Elan Corporation, plc, Antler Science Two Limited, Elan Science Four Limited, EDT Pharma Holdings Limited, EDT US Holdco, Inc., Antler Acquisition Corp., and Alkermes, Inc. (Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on May 9, 2011.) | |
2.2
|
Form of Shareholders Agreement by and among Alkermes, plc, Elan Corporation, plc, and Elan Science Three Limited. (Incorporated by reference to Exhibit 2.2 to our Current Report on Form 8-K filed on May 9, 2011.) | |
10.1
|
Amended and Restated Alkermes Fiscal 2012 Reporting Officer Performance Pay Plan. (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on May 19, 2011.)+ | |
31.1
|
Rule 13a-14(a)/15d-14(a) Certification (filed herewith). | |
31.2
|
Rule 13a-14(a)/15d-14(a) Certification (filed herewith). | |
32.1
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). | |
101
|
The following materials from Alkermes, Inc.s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) the Notes to the Condensed Consolidated Financial Statements (furnished herewith). | |
+
|
Indicates a management contract or any compensatory plan, contract or arrangement. |
23
ALKERMES, INC. (Registrant) |
||||
By: | /s/ Richard F. Pops | |||
Chairman, President and Chief Executive Officer | ||||
(Principal Executive Officer) | ||||
By: | /s/ James M. Frates | |||
Senior Vice President, Chief Financial Officer and Treasurer | ||||
(Principal Financial and Accounting Officer) | ||||
24
Exhibit | ||
No. | ||
2.1
|
Business Combination Agreement and Plan of Merger, dated as of May 9, 2011, by and among Elan Corporation, plc, Antler Science Two Limited, Elan Science Four Limited, EDT Pharma Holdings Limited, EDT US Holdco, Inc., Antler Acquisition Corp., and Alkermes, Inc. (Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on May 9, 2011.) | |
2.2
|
Form of Shareholders Agreement by and among Alkermes, plc, Elan Corporation, plc, and Elan Science Three Limited. (Incorporated by reference to Exhibit 2.2 to our Current Report on Form 8-K filed on May 9, 2011.) | |
10.1
|
Amended and Restated Alkermes Fiscal 2012 Reporting Officer Performance Pay Plan. (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on May 19, 2011.)+ | |
31.1
|
Rule 13a-14(a)/15d-14(a) Certification (filed herewith). | |
31.2
|
Rule 13a-14(a)/15d-14(a) Certification (filed herewith). | |
32.1
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). | |
101
|
The following materials from Alkermes, Inc.s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) the Notes to the Condensed Consolidated Financial Statements (furnished herewith). | |
+
|
Indicates a management contract or any compensatory plan, contract or arrangement. |
25
1. | I have reviewed this quarterly report on Form 10-Q of Alkermes, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c. | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d. | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
By: | /s/ Richard F. Pops | |||
Chairman, President and Chief Executive Officer | ||||
(Principal Executive Officer) | ||||
1. | I have reviewed this quarterly report on Form 10-Q of Alkermes, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c. | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d. | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
By: | /s/ James M. Frates | |||
Senior Vice President, Chief Financial Officer and Treasurer | ||||
(Principal Financial and Accounting Officer) | ||||
By: | /s/ Richard F. Pops | |||
Chairman, President and Chief Executive Officer | ||||
(Principal Executive Officer) | ||||
By: | /s/ James M. Frates | |||
Senior Vice President, Chief Financial Officer and Treasurer | ||||
(Principal Financial and Accounting Officer) | ||||
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
|
Jun. 30, 2011
|
Mar. 31, 2011
|
---|---|---|
SHAREHOLDERS' EQUITY: | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 160,000,000 | 160,000,000 |
Common stock, shares issued | 107,183,675 | 105,771,507 |
Common stock, shares outstanding | 96,957,371 | 95,702,299 |
Treasury stock, shares | 10,226,304 | 10,069,208 |
Non-voting common stock
|
||
SHAREHOLDERS' EQUITY: | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 450,000 | 450,000 |
Common stock, shares issued | 382,632 | 382,632 |
Common stock, shares outstanding | 382,632 | 382,632 |
Property, Plant and Equipment (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment |
|
Document and Entity Information (USD $)
|
3 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Jul. 25, 2011
|
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ALKERMES INC | |
Entity Central Index Key | 0000874663 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2011 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --03-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Public Float | $ 1,372,950,388 | |
Entity Common Stock, Shares Outstanding | 97,614,842 |
Restructuring (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||
Restructuring [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Restructuring Activities |
|
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Property, Plant and Equipment
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY, PLANT AND EQUIPMENT |
6. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
|
Summary of Significant Accounting Policies (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
May 09, 2011
|
Mar. 31, 2011
|
|
Summary of Significant Accounting Policies (Textuals) [Abstract] | |||
Former shareholders ownership percentage in Alkermes, plc | 75.00% | ||
Percentage of interest held by Elan Corporation, plc | 25.00% | ||
Cash paid for merger | $ 500 | ||
Term loan financing | 450 | ||
Potential future payments for developing milestones | 17.0 | ||
Cost of revenue | 3.0 | ||
Deferred revenue | $ 5.2 | ||
Number of shares owned by Elan Corporation, plc | 31.9 |
Share Based Compensation (Details Textuals) (USD $)
In Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2011
|
Mar. 31, 2011
|
|
Share Based Compensation (Textuals) | ||
Share based compensation expense capitalized | $ 0.5 | $ 0.6 |
Share Based Compensation (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share Based Compensation Expense |
|
Commitments and Contingencies
|
3 Months Ended |
---|---|
Jun. 30, 2011
|
|
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES |
11. COMMITMENTS AND CONTINGENCIES
From time to time, the Company may be subject to legal proceedings and claims in the ordinary
course of business. The Company is not aware of any such proceedings or claims that it believes
will have, individually or in the aggregate, a material adverse effect on its business, financial
condition or results of operations.
|
Loss Per Share
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOSS PER SHARE |
2. LOSS PER SHARE
Basic loss per common share is calculated based upon net loss available to holders of common
shares divided by the weighted average number of shares outstanding. Diluted loss per common share
is based upon the weighted-average number of common shares outstanding during the period plus
additional weighted-average common equivalent shares outstanding during the period when the effect
is dilutive. Common equivalent shares result from the assumed exercise of outstanding stock options
(the proceeds of which are then assumed to have been used to repurchase outstanding stock using the
treasury stock method) and the vesting of unvested restricted stock units. Common equivalent shares
have not been included in the net loss per common share calculations because the effect would have
been anti-dilutive. The potential common equivalent shares consisted of the following:
|
Property Plant and Equipment (Details) (USD $)
In Thousands |
Jun. 30, 2011
|
Mar. 31, 2011
|
---|---|---|
Property, plant and equipment | ||
Land | $ 301 | $ 301 |
Building and improvements | 36,792 | 36,792 |
Furniture, fixture and equipment | 63,727 | 62,660 |
Leasehold improvements | 44,746 | 44,779 |
Construction in progress | 42,379 | 42,194 |
Subtotal | 187,945 | 186,726 |
Less: accumulated depreciation | (93,613) | (91,706) |
Total property, plant and equipment, net | $ 94,332 | $ 95,020 |
Share-Based Compensation
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE-BASED COMPENSATION |
8. SHARE-BASED COMPENSATION
Share-based compensation expense consists of the following:
At June 30, 2011 and March 31, 2011, $0.5 million and $0.6 million, respectively, of share-based
compensation cost was capitalized and recorded as Inventory in the condensed consolidated balance
sheets.
|
Loss Per Share (Tables)
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Anti-dilutive loss per common share |
|
Restructuring
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||
Restructuring [Abstract] | |||||||||||||||||||||||||||||||||||||||||
RESTRUCTURING |
9. RESTRUCTURING
In connection with the 2008 restructuring program, in which the Company and Eli Lilly and
Company announced the decision to discontinue the AIR® Insulin development program (the
“2008 Restructuring”), the Company recorded net restructuring charges of approximately $6.9 million
in the year ended March 31, 2008. Activity related to the 2008 Restructuring in the three months
ended June 30, 2011 was as follows:
At June 30, 2011 and March 31, 2011, the restructuring liability related to the 2008
Restructuring consists of $0.7 million classified as current and $2.3 million and $2.5 million
classified as long-term, respectively, in the accompanying condensed consolidated balance sheets.
As of June 30, 2011, the Company had paid in cash, written off, recovered and made restructuring
charge adjustments that totaled approximately $0.9 million in facility closure costs, $2.9 million
in employee separation costs and $0.2 million in other contract termination costs in connection
with the 2008 Restructuring. The $3.0 million remaining in the restructuring accrual at June 30,
2011 is expected to be paid out through fiscal 2016 and relates primarily to future lease costs
associated with an exited facility.
|
Accounts Payable and Accrued Expenses
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTS PAYABLE AND ACCRUED EXPENSES |
7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts
payable and accrued expenses consist of the
following:
|
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical)
|
3 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Changes in assets and liabilities: | ||
RISPERDAL CONSTA secured notes principal | 7.00% | 7.00% |
Investments
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS |
3. INVESTMENTS
Investments consist of the following:
The Company’s strategic investments include common stock in public companies with which
the Company has or had a collaborative arrangement with.
The proceeds from the sales and maturities of marketable securities, excluding
strategic equity investments, which were primarily reinvested and resulted in realized gains and
losses, were as follows:
The Company’s available-for-sale and held-to-maturity securities at June 30, 2011 have
contractual maturities in the following periods:
At June 30, 2011, the Company believes that the unrealized losses on its
available-for-sale investments are temporary. The investments with unrealized losses consist
primarily of U.S. government and agency debt securities and corporate debt securities. In making
the determination that the decline in fair value of these securities was temporary, the Company
considered various factors, including but not limited to: the length of time each security was in
an unrealized loss position; the extent to which fair value was less than cost; financial condition
and near term prospects of the issuers; and the Company’s intent not to sell these securities and
the assessment that it is more likely than not that the Company would not be required to sell these
securities before the recovery of their amortized cost basis.
The Company has an $8.5 million investment in a collaborative partner, Acceleron Pharma, Inc.
(“Acceleron”), which is recorded within “Other assets” in the accompanying condensed consolidated
balance sheets at June 30, 2011 and March 31, 2011. The Company accounts for its investment in
Acceleron under the cost method as Acceleron is a privately-held company over which the Company
does not exercise significant influence. The Company will continue to monitor this investment to
evaluate whether any decline in its value has occurred that would be other-than-temporary, based on
the implied value from any recent rounds of financing completed by Acceleron, market prices of
comparable public companies and general market conditions.
The Company’s investment in Civitas Therapeutics, Inc. (“Civitas”) was $1.2 million and $1.3
million at June 30, 2011 and March 31, 2011, respectively, which is recorded within “Other assets”
in the accompanying condensed consolidated balance sheets. The Company accounts for its investment
in Civitas under the equity method as the Company has an approximate 11% ownership position in
Civitas, has a seat on the board of directors and believes it may be able to exercise significant
influence over the operating and financial policies of Civitas. During the three months ended June
30, 2011, the Company reduced its investment in Civitas by $0.1 million, which represented the
Company’s proportionate share of Civitas’ net loss for this period.
|
Restructuring (Details Textuals) (USD $)
|
12 Months Ended | 3 Months Ended | ||||
---|---|---|---|---|---|---|
Mar. 31, 2008
|
Jun. 30, 2011
|
Mar. 31, 2011
|
Jun. 30, 2011
Facility Closing [Member]
|
Jun. 30, 2011
Employee Severance [Member]
|
Jun. 30, 2011
Contract Termination [Member]
|
|
Restructuring and Related Cost [Line Items] | ||||||
Restructuring and Related Cost, Incurred Cost | $ 900,000 | $ 2,900,000 | $ 200,000 | |||
Restructuring (Textuals) | ||||||
Restructuring charges, net | 6,900,000 | |||||
Restructuring Liability, Current | 700,000 | 700,000 | ||||
Restructuring Liability, Noncurrent | 2,300,000 | 2,500,000 | ||||
Restructuring reserve accrual | $ 2,979,000 | $ 3,157,000 |
Fair Value Measurements
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3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Fair Value Measurements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS |
The following table presents information about the Company’s assets that are measured at fair
value on a recurring basis and indicates the fair value hierarchy of the valuation techniques the
Company utilized to determine such fair value:
There were no transfers or reclassifications of any securities between Level 1 and Level
2 during the three months ended June 30, 2011. The following table illustrates the rollforward of
the fair value of the Company’s investments whose fair value is determined using Level 3 inputs:
During the three months ended June 30, 2011, there was one investment in corporate debt
securities transferred into Level 3 from Level 2 as trading in this security ceased during the
period. There was also one investment in corporate debt securities transferred from Level 3 into
Level 2 as trading in this security resumed during the period.
Substantially all of the Company’s corporate debt securities have been classified as Level 2.
These securities have been initially valued at the transaction price and subsequently valued, at
the end of each reporting period, utilizing market observable data. The market observable data
includes reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers,
current spot rates and other industry and economic events. The Company validates the prices
developed using the market observable data by obtaining market values from other pricing sources,
analyzing pricing data in certain instances and confirming that the relevant markets are active.
The Company’s Level 3 investment at June 30, 2011 consists of one corporate debt security. The
Company used a discounted cash flow model to determine the estimated fair value of this security.
The assumptions used in the discounted cash flow model included estimates for interest rates,
timing of cash flows, expected holding periods and risk adjusted discount rates, which include
provisions for default and liquidity risk, which the Company believes to be the most critical
assumptions utilized within the analysis.
The carrying amounts reflected in the condensed consolidated balance sheets for cash and cash
equivalents, accounts receivable, other current assets, accounts payable and accrued expenses
approximate fair value due to their short-term nature.
|
Loss Per Share (Details)
In Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Anti-dilutive loss per common share | ||
Anti-dilutive loss per common share | 9,431 | 14,563 |
Stock options [Member]
|
||
Anti-dilutive loss per common share | ||
Anti-dilutive loss per common share | 7,877 | 13,768 |
Restricted stock units [Member]
|
||
Anti-dilutive loss per common share | ||
Anti-dilutive loss per common share | 1,554 | 795 |
Fair Value Measurements (Details 1) (USD $)
In Thousands |
3 Months Ended |
---|---|
Jun. 30, 2011
|
|
Roll forward of the fair value of the Company's investments from fair value measured on level 3 inputs | |
Balance, April 1, 2011 | $ 1,047 |
Investments transferred into Level 3 | 728 |
Investments transferred out of Level 3 | (1,068) |
Total unrealized gains included in comprehensive income | 21 |
Balance, June 30, 2011 | $ 728 |
Income Taxes (Details) (USD $)
In Millions |
3 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Income Taxes (Textuals) [Abstract] | ||
Income Tax benefit | $ 0.1 | $ 0.1 |
Deferred tax liability, Other comprehensive income (loss) | $ 0.3 | $ 0.3 |
Investments (Details 1) (USD $)
In Thousands |
3 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Proceeds from the sales and maturities of marketable securities | ||
Proceeds from the sales and maturities of marketable securities | $ 75,240 | $ 135,917 |
Realized gains | 13 | 37 |
Realized losses | $ 1 | $ 18 |
Summary of Significant Accounting Policies (Policies)
|
3 Months Ended |
---|---|
Jun. 30, 2011
|
|
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation |
Basis of Presentation
The accompanying condensed consolidated financial statements of Alkermes for the three months
ended June 30, 2011 and 2010 are unaudited and have been prepared on a basis substantially
consistent with the audited financial statements for the year ended March 31, 2011. The year-end
condensed consolidated balance sheet data was derived from audited financial statements, but does
not include all disclosures required by accounting principles generally accepted in the United
States of America (“U.S.”) (commonly referred to as “GAAP”). In the opinion of management, the
condensed consolidated financial statements include all adjustments, which are of a normal
recurring nature, that are necessary to present fairly the results of operations for the reported
periods.
These financial statements should be read in conjunction with the Company’s audited
consolidated financial statements and notes thereto which are contained in the Company’s Annual
Report on Form 10-K for the year ended March 31, 2011, as amended, filed with the Securities and Exchange Commission
(SEC). The results of the
Company’s operations for any interim period are not necessarily indicative of the results of the
Company’s operations for any other interim period or for a full fiscal year.
|
Principles of Consolidation |
Principles of Consolidation — The condensed consolidated financial statements include the
accounts of Alkermes, Inc. and its wholly-owned subsidiaries: Alkermes Controlled Therapeutics,
Inc. and Alkermes Europe, Ltd. Intercompany accounts and transactions have been eliminated.
|
Use of Estimates |
Use of Estimates — The preparation of our condensed consolidated financial statements in
accordance with GAAP requires management to make estimates, judgments, and assumptions that may
affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure
of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates and
judgments and methodologies, including those related to revenue recognition and related allowances,
its collaborative relationships, clinical trial expenses, the valuation of inventory, impairment
and amortization of long-lived assets, share-based compensation, income taxes including the
valuation allowance for deferred tax assets, valuation of investments, litigation, and
restructuring charges. The Company bases its estimates on historical experience and on various
other assumptions that are believed to be reasonable, the results of which form the basis for
making judgments about the carrying values of assets and liabilities. Actual results may differ
from these estimates under different assumptions or conditions.
|
Segment Information |
Segment Information — The Company operates as one business segment, which is the business of
developing, manufacturing and commercializing innovative medicines designed to yield better
therapeutic outcomes and improve the lives of patients with serious diseases. The Company’s chief
decision maker, the Chairman, President and Chief Executive Officer, reviews the Company’s
operating results on an aggregate basis and manages the Company’s operations as a single operating
unit.
|
New Accounting Pronouncements |
New Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting
Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the
specified effective date. Unless otherwise discussed, the Company believes that the impact of
recently issued standards that are not yet effective will not have a material impact on its
financial position or results of operations upon adoption.
In January 2010, the Company adopted accounting guidance issued by the FASB related to fair
value measurements that requires additional disclosure related to transfers in and out of Levels 1
and 2 of the fair value hierarchy. In addition, effective for the Company on April 1, 2011, this
standard further requires an entity to present disaggregated information about activity in Level 3
fair value measurements on a gross basis, rather than as one net amount. As this accounting
standard only requires enhanced disclosure, the adoption of this newly issued accounting standard
did not impact the Company’s financial position or results of operations.
On April 1, 2011, the Company prospectively adopted the accounting guidance related to the
milestone method of revenue recognition for research and development arrangements. Under the
milestone method, contingent consideration received from the achievement of a substantive milestone
is recognized in its entirety in the period in which the milestone is achieved, which the Company
believes is more consistent with the substance of its performance under its various licensing and
collaboration agreements. A milestone is defined as an event (i) that can only be achieved based in
whole or in part on either the entity’s performance or on the occurrence of a specific outcome
resulting from the entity’s performance, (ii) for which there is substantive uncertainty at the
date the arrangement is entered into that the event will be achieved, and (iii) that would result
in additional payments being due to the entity. A milestone is substantive if the consideration
earned from the achievement of the milestone is consistent with the Company’s performance required
to achieve the milestone, or the increase in value to the collaboration resulting from the Company’s
performance, relates solely to the Company’s past performance, and is reasonable relative to all of
the other deliverables and payments within the arrangement. The Company’s license and collaboration
agreements with its partners provide for payments to the Company upon the achievement of
development milestones, such as the completion of clinical trials or regulatory approval for drug
candidates. As of April 1, 2011, the Company’s agreements with partners included potential future
payments for development milestones aggregating $17.0 million from agreements with Amylin
Pharmaceuticals, Inc. (“Amylin”), and Cilag GmbH International (“Cilag”). Given the
challenges inherent in developing and obtaining approval for pharmaceutical and biologic products,
there was substantial uncertainty whether any such milestones would be achieved at the time these
licensing and collaboration agreements were entered into. In addition, the Company evaluated whether the
development milestones met the remaining criteria to be considered substantive. As a result of the
Company’s analysis, the Company considers its development milestones to be substantive and,
accordingly, the Company expects to recognize as revenue future payments received from such
milestones as it achieves each milestone. The election to adopt the milestone method did not impact
the Company’s historical financial position at April 1, 2011. This policy election may result in
revenue recognition patterns for future milestones that are materially different from those
recognized for milestones received prior to adoption. During the three months ended June 30, 2011,
the Company recognized into revenue $3.0 million received from Cilag upon the achievement of a
developmental milestone in April 2011.
Milestone payments received prior to April 1, 2011 from arrangements where the Company has
continuing performance obligations have been deferred and are recognized through the application of
a proportional performance model where the milestone is recognized over the related performance
period or, in full, when there are no remaining performance obligations. The Company makes its best
estimate of the period of time for the performance period. The Company will continue to recognize
milestones payments
received prior to April 1, 2011 in this manner.
As of June 30, 2011, the Company has deferred revenue
of $5.2 million from milestone payments received prior to April 1, 2011 that will be recognized
ratably through 2018.
|
Fair Value Measurements |
In January 2010, the Company adopted accounting guidance issued by the FASB related to fair
value measurements that requires additional disclosure related to transfers in and out of Levels 1
and 2 of the fair value hierarchy. In addition, effective for the Company on April 1, 2011, this
standard further requires an entity to present disaggregated information about activity in Level 3
fair value measurements on a gross basis, rather than as one net amount. As this accounting
standard only requires enhanced disclosure, the adoption of this newly issued accounting standard
did not impact the Company’s financial position or results of operations.
|
Inventory
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Inventory [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORY |
5. INVENTORY
Inventory is stated at the lower of cost or market value. Cost is determined using the
first-in, first-out method. Inventory consists of the following:
|
Fair Value Measurements (Tables)
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3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Company's assets measured at fair value on a recurring basis |
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Roll forward of the fair value of the Company's investments from fair value measured on level 3 inputs |
|
Restructuring (Details) (USD $)
In Thousands |
3 Months Ended |
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Jun. 30, 2011
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|
Restructuring Activities | |
Accrued restructuring, March 31, 2011 | $ 3,157 |
Payments for facility closure costs | (238) |
Other adjustments | 60 |
Accrued Restructuring, June 30, 2011 | $ 2,979 |
Inventory (Tables)
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3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Inventory [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory |
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Accounts Payable and Accrued Expenses (Tables)
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3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Accounts Payable and Accrued Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts payable and accrued expenses |
|
Summary of Significant Accounting Policies
|
3 Months Ended |
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Jun. 30, 2011
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|
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company
Alkermes, Inc. (the “Company” or “Alkermes”) is a fully integrated biotechnology company
committed to developing innovative medicines to improve patients’ lives. The Company is
headquartered in Waltham, Massachusetts and has a research facility in Massachusetts and a
commercial manufacturing facility in Ohio. The Company leverages its formulation expertise and
proprietary product platforms to develop, both with partners and on its’ own, innovative and
competitively advantaged medications that can enhance patient outcomes in major therapeutic areas.
The Company’s pipeline includes extended-release injectable and oral products for the treatment of
prevalent, chronic diseases, such as central nervous system (“CNS”), disorders, reward disorders,
addiction, diabetes and autoimmune disorders.
On May 9, 2011, the Company and Elan Corporation, plc (“Elan”), a public limited company
incorporated in Ireland, announced the signing of a definitive Business Combination Agreement and
Plan of Merger (the “Merger Agreement”), pursuant to which Alkermes and the global drug delivery
technologies business of Elan, known as Elan Drug Technologies (“EDT”) will be combined under
Antler Science Two plc, a new holding company incorporated in Ireland that was incorporated as a private limited company and
re-registered as a public
limited company on July 25, 2011, and which will be renamed Alkermes plc, at or prior to the completion of the
business combination (“New Alkermes”). Following the completion of the merger, a wholly owned subsidiary
of Elan will own
31.9 million ordinary shares of New Alkermes (approximately 25% of the company), subject to the terms of a
shareholder’s agreement to be entered
into at the effective time of the merger by and among such Elan subsidiary, New Alkermes, and Elan, and the Company’s
former shareholders will own the remaining shares of New Alkermes (approximately 75% of the company). As
an additional payment for EDT, Alkermes will also pay Elan $500 million in cash, subject to certain
net cash and working capital adjustments. The Company has obtained a commitment from Morgan Stanley & Co.
Incorporated, (“Morgan Stanley”), and HSBC Securities (USA) Inc. (“HSBC”) to provide up to $450
million in term loan financing which, in addition to existing cash and investment balances, will
comprise the cash consideration to Elan. Under the terms of the shareholder’s agreement and subject
to certain conditions, upon the closing of the merger, Elan will have the right to designate one
person for election to the New Alkermes board of directors, will agree to vote in a manner
consistent with the recommendations of the New Alkermes board of directors, and will be subject
to a standstill provision and certain other restrictions on its ability to transfer New Alkermes
ordinary shares without the consent of New Alkermes. This transaction, which has been approved by our board
of directors and the board of directors of Elan, is subject to customary closing conditions
including approval of our shareholders and customary regulatory approvals.
Basis of Presentation
The accompanying condensed consolidated financial statements of Alkermes for the three months
ended June 30, 2011 and 2010 are unaudited and have been prepared on a basis substantially
consistent with the audited financial statements for the year ended March 31, 2011. The year-end
condensed consolidated balance sheet data was derived from audited financial statements, but does
not include all disclosures required by accounting principles generally accepted in the United
States of America (“U.S.”) (commonly referred to as “GAAP”). In the opinion of management, the
condensed consolidated financial statements include all adjustments, which are of a normal
recurring nature, that are necessary to present fairly the results of operations for the reported
periods.
These financial statements should be read in conjunction with the Company’s audited
consolidated financial statements and notes thereto which are contained in the Company’s Annual
Report on Form 10-K for the year ended March 31, 2011, as amended, filed with the Securities and Exchange Commission
(SEC). The results of the
Company’s operations for any interim period are not necessarily indicative of the results of the
Company’s operations for any other interim period or for a full fiscal year.
Principles of Consolidation — The condensed consolidated financial statements include the
accounts of Alkermes, Inc. and its wholly-owned subsidiaries: Alkermes Controlled Therapeutics,
Inc. and Alkermes Europe, Ltd. Intercompany accounts and transactions have been eliminated.
Use of Estimates — The preparation of our condensed consolidated financial statements in
accordance with GAAP requires management to make estimates, judgments, and assumptions that may
affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure
of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates and
judgments and methodologies, including those related to revenue recognition and related allowances,
its collaborative relationships, clinical trial expenses, the valuation of inventory, impairment
and amortization of long-lived assets, share-based compensation, income taxes including the
valuation allowance for deferred tax assets, valuation of investments, litigation, and
restructuring charges. The Company bases its estimates on historical experience and on various
other assumptions that are believed to be reasonable, the results of which form the basis for
making judgments about the carrying values of assets and liabilities. Actual results may differ
from these estimates under different assumptions or conditions.
Segment Information — The Company operates as one business segment, which is the business of
developing, manufacturing and commercializing innovative medicines designed to yield better
therapeutic outcomes and improve the lives of patients with serious diseases. The Company’s chief
decision maker, the Chairman, President and Chief Executive Officer, reviews the Company’s
operating results on an aggregate basis and manages the Company’s operations as a single operating
unit.
New Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting
Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the
specified effective date. Unless otherwise discussed, the Company believes that the impact of
recently issued standards that are not yet effective will not have a material impact on its
financial position or results of operations upon adoption.
In January 2010, the Company adopted accounting guidance issued by the FASB related to fair
value measurements that requires additional disclosure related to transfers in and out of Levels 1
and 2 of the fair value hierarchy. In addition, effective for the Company on April 1, 2011, this
standard further requires an entity to present disaggregated information about activity in Level 3
fair value measurements on a gross basis, rather than as one net amount. As this accounting
standard only requires enhanced disclosure, the adoption of this newly issued accounting standard
did not impact the Company’s financial position or results of operations.
On April 1, 2011, the Company prospectively adopted the accounting guidance related to the
milestone method of revenue recognition for research and development arrangements. Under the
milestone method, contingent consideration received from the achievement of a substantive milestone
is recognized in its entirety in the period in which the milestone is achieved, which the Company
believes is more consistent with the substance of its performance under its various licensing and
collaboration agreements. A milestone is defined as an event (i) that can only be achieved based in
whole or in part on either the entity’s performance or on the occurrence of a specific outcome
resulting from the entity’s performance, (ii) for which there is substantive uncertainty at the
date the arrangement is entered into that the event will be achieved, and (iii) that would result
in additional payments being due to the entity. A milestone is substantive if the consideration
earned from the achievement of the milestone is consistent with the Company’s performance required
to achieve the milestone, or the increase in value to the collaboration resulting from the Company’s
performance, relates solely to the Company’s past performance, and is reasonable relative to all of
the other deliverables and payments within the arrangement. The Company’s license and collaboration
agreements with its partners provide for payments to the Company upon the achievement of
development milestones, such as the completion of clinical trials or regulatory approval for drug
candidates. As of April 1, 2011, the Company’s agreements with partners included potential future
payments for development milestones aggregating $17.0 million from agreements with Amylin
Pharmaceuticals, Inc. (“Amylin”), and Cilag GmbH International (“Cilag”). Given the
challenges inherent in developing and obtaining approval for pharmaceutical and biologic products,
there was substantial uncertainty whether any such milestones would be achieved at the time these
licensing and collaboration agreements were entered into. In addition, the Company evaluated whether the
development milestones met the remaining criteria to be considered substantive. As a result of the
Company’s analysis, the Company considers its development milestones to be substantive and,
accordingly, the Company expects to recognize as revenue future payments received from such
milestones as it achieves each milestone. The election to adopt the milestone method did not impact
the Company’s historical financial position at April 1, 2011. This policy election may result in
revenue recognition patterns for future milestones that are materially different from those
recognized for milestones received prior to adoption. During the three months ended June 30, 2011,
the Company recognized into revenue $3.0 million received from Cilag upon the achievement of a
developmental milestone in April 2011.
Milestone payments received prior to April 1, 2011 from arrangements where the Company has
continuing performance obligations have been deferred and are recognized through the application of
a proportional performance model where the milestone is recognized over the related performance
period or, in full, when there are no remaining performance obligations. The Company makes its best
estimate of the period of time for the performance period. The Company will continue to recognize
milestones payments
received prior to April 1, 2011 in this manner.
As of June 30, 2011, the Company has deferred revenue
of $5.2 million from milestone payments received prior to April 1, 2011 that will be recognized
ratably through 2018.
|
Income Taxes
|
3 Months Ended |
---|---|
Jun. 30, 2011
|
|
Income Taxes [Abstract] | |
INCOME TAXES |
10. INCOME TAXES
The Company records a deferred tax asset or liability based on the difference between the
financial statement and tax bases of assets and liabilities, as measured by enacted tax rates
assumed to be in effect when these differences reverse. At June 30, 2011, the Company determined
that it is more likely than not that the deferred tax assets may not be realized and a full
valuation allowance continues to be recorded.
The Company recorded an income tax benefit of $0.1 million for the three months ended June 30,
2011 and 2010, primarily related to its recognition of $0.3 million of income tax expense recorded
during the three months ended June 30, 2011 and 2010 as a discrete item within other comprehensive
loss associated with the increase in the value of certain securities that the Company carried at
fair market value.
|
Inventory (Details) (USD $)
|
Jun. 30, 2011
|
Mar. 31, 2011
|
---|---|---|
Inventory | ||
Raw materials | $ 3,996,000 | $ 3,100,000 |
Work in process | 4,169,000 | 5,843,000 |
Finished goods (1) | 8,825,000 | 11,127,000 |
Consigned-out inventory (2) | 579,000 | 355,000 |
Total inventory | 17,569,000 | 20,425,000 |
Inventory (Textuals) [Abstract] | ||
Finished goods inventory located at third party warehouse and shipping service provider | $ 2,200,000 | $ 2,000,000 |
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Investments (Tables)
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Jun. 30, 2011
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments |
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Proceeds from the sales and maturities of marketable securities |
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The cost and fair value of available-for-sale and held-to-maturity securities by contractual maturity |
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Accounts Payable and Accrued Expenses (Details) (USD $)
In Thousands |
Jun. 30, 2011
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Mar. 31, 2011
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Accounts payable and accrued expenses | ||
Accounts payable | $ 11,908 | $ 9,269 |
Accrued compensation | 7,914 | 17,481 |
Accrued other | 21,799 | 18,184 |
Total accounts payable and accrued expenses | $ 41,621 | $ 44,934 |