Alkermes NASDAQ: ALKS executives highlighted a strong start to 2026 and the completion of the Avadel Pharmaceuticals acquisition during the company’s first-quarter earnings call, pointing to accelerating scale across addiction and psychiatry brands and a new foothold in sleep medicine through LUMRYZ.
Avadel acquisition adds LUMRYZ and expands sleep medicine strategy
Management framed the mid-February close of the Avadel acquisition as a major strategic step. CEO Richard Pops said the deal is “a key element of our strategy to become a leader in the sleep medicine space,” adding that LUMRYZ is “early in its commercial life and has significant potential for growth.”
Pops said the company believes the acquisition strengthens Alkermes’ financial profile while also giving it a commercial presence in sleep medicine “well in advance of the potential approval and launch of alixorexton.” He said building relationships with sleep specialists and other stakeholders now could “accelerate our potential launch trajectory for alixorexton.”
Pops also referenced “the announced entry of Eli Lilly into this therapeutic space” near the end of the quarter, describing it as “external validation” for orexin-pathway therapies and noting what he characterized as limited competitive entrants and scarce intellectual property around chemistry.
Product sales rise; LUMRYZ contributes post-close
Chief Commercial Officer Todd Nichols said Alkermes now has commercial capabilities in three areas: addiction (VIVITROL), psychiatry (ARISTADA and LYBALVI), and sleep medicine (LUMRYZ). Nichols said integration of the Avadel commercial team is “progressing well,” with a combined team “fully in place” entering the second quarter.
Net sales from Alkermes’ proprietary product portfolio increased 38% year-over-year to $338.1 million, which Nichols said reflected solid demand, “certain favorable gross-to-net adjustments,” and six weeks of contribution from LUMRYZ.
- VIVITROL: Q1 net sales were $112.4 million. Nichols said performance was driven by the company’s ability to capitalize on “highly localized market dynamics in certain states and payer systems.” Full-year 2026 guidance was reiterated at $460 million to $480 million.
- ARISTADA family: Q1 net sales were $93.8 million, which Nichols said reflected “solid underlying demand.” Full-year guidance was reiterated at $365 million to $385 million.
- LYBALVI: Q1 net sales increased 32% year-over-year to $92.4 million. Nichols said underlying total prescription (TRX) growth was 21% year-over-year, driven by new patient starts and broader prescriber adoption. He said gross-to-net adjustments were about 33% and are expected to widen into the “mid-30s” during the year as market access expands. Full-year guidance was reiterated at $380 million to $400 million.
Nichols said first-quarter results benefited from gross-to-net favorability of about $14 million, driven mainly by favorable patient mix, with roughly two-thirds tied to VIVITROL and the remainder to ARISTADA and LYBALVI. He added that channel inventory levels were “relatively stable,” leading the company to expect Q1-to-Q2 growth trends to track end-market demand.
For LUMRYZ, Nichols said Alkermes recorded $39.5 million of net sales during the first six weeks after the mid-February close. He also said that “for the full quarter, LUMRYZ generated approximately $72 million of net revenue.” The company exited the quarter with about 3,600 patients on therapy, and Nichols said Alkermes expects to build on momentum in new patient enrollments.
For full-year 2026, Nichols guided to LUMRYZ total net sales of $350 million to $370 million, with Alkermes recording $315 million to $335 million reflecting ownership beginning at the mid-February close.
Financial results: higher revenues, acquisition costs, and updated non-cash outlook items
CFO Joshua Reed reported total first-quarter revenues of $392.9 million. Manufacturing royalty revenues were $54.8 million, including $27.3 million from VUMERITY and $18 million from the long-acting INVEGA product.
Cost of goods sold (COGS) was $61.6 million, which included purchase accounting related to the fair-value step-up of LUMRYZ inventory. Reed said COGS would have been $48.9 million excluding the step-up charge, compared with $49.2 million in the prior-year quarter. For Q2, he guided to COGS of $85 million to $95 million reflecting a full quarter of LUMRYZ sales and the associated inventory step-up.
R&D expenses were $103.3 million versus $71.8 million in the prior-year quarter, driven by initiation of the Phase III BRILLIANT program for alixorexton in narcolepsy, continued work on the Phase II Vibrance-3 study in idiopathic hypersomnia, and Phase I studies for ALKS 7290 and ALKS 4510. Q2 R&D guidance was $110 million to $120 million.
SG&A expenses totaled $264.6 million and included approximately $55 million of acquisition-related costs, including transaction expenses and share-based compensation. Excluding those one-time items, SG&A was $209.4 million compared with $171.7 million a year ago, which Reed attributed primarily to the addition of Avadel commercial infrastructure mid-quarter. Q2 SG&A guidance was $210 million to $220 million.
Alkermes reported a GAAP net loss of $66.5 million and EBITDA of negative $30.1 million, while adjusted EBITDA was positive $80.3 million—well above Reed’s prior Q1 expectation of $30 million to $50 million—due to higher-than-expected revenues and the timing of R&D expenses. For Q2, the company guided to adjusted EBITDA of $100 million to $120 million.
Reed said Alkermes ended Q1 with about $538 million in cash and investments. To fund the Avadel acquisition, the company used about $775 million of cash and entered into term loans totaling $1.525 billion due in 2031. Reed said the company expects to “pay down this debt quickly with cash flows from the business.” Alkermes also repurchased about 1 million shares for $28 million at an average price of about $28 per share, and Reed said $172 million remains authorized for repurchases.
Reed said purchase price accounting refinements led the company to update certain non-cash outlook items. The company now expects to expense about $105 million of LUMRYZ inventory fair value step-up in 2026 (down from about $150 million previously), and it lowered full-year COGS guidance to $320 million to $340 million. Amortization of intangible assets is now expected to be $75 million to $85 million (down from $95 million to $105 million). Reed also said the company now expects “no income tax expense or benefit for the year,” from a prior estimate of a $20 million tax benefit. The changes led Alkermes to project GAAP net loss of $70 million to $90 million and EBITDA of positive $105 million to $135 million, while “all other components” of the 2026 outlook, including adjusted EBITDA, were unchanged.
Orexin pipeline: Phase III enrollment underway; new programs in ADHD and fatigue
Pops said Alkermes is focused on enrolling the Phase III BRILLIANT studies in narcolepsy type 1 and type 2, noting the program is now open for enrollment with “site initiation and patient screening underway.” He said investigator interest is strong, and emphasized execution and study quality.
Pops also said Alkermes will present additional data from the Phase II Vibrance-2 narcolepsy type 2 study at the annual sleep meeting in Baltimore in June. He said much of the dataset was previously shared, but the presentation will include more dimensionality around efficacy and extension-phase data. In response to questions, Pops said time-course data for the Epworth Sleepiness Scale will be shown.
For idiopathic hypersomnia (IH), Pops said the Phase II Vibrance-3 study is ongoing and “on track to be completed in the fourth quarter of this year.” He noted it includes established endpoints such as the Epworth Sleepiness Scale and the Idiopathic Hypersomnia Severity Scale, along with mean sleep latency measured by the Maintenance of Wakefulness Test to help characterize durability of wakefulness. In Q&A, Pops said the company expects to have top-line results from the full study, including the split-dose arm, when it reads out.
On LUMRYZ development, Pops said Alkermes expects to report top-line data later in the quarter from the Phase III REVITALYZ study in IH, describing it as a double-blind, placebo-controlled randomized withdrawal study enrolling about 150 patients. He said, if positive, it could support an sNDA and “a potential launch in early 2028 if approved.” Nichols added the company believes IH is “underdeveloped,” citing about 40,000 diagnosed patients and only one FDA-approved product on the market.
Chief Operating Officer Blair Jackson said Alkermes is expanding orexin 2 receptor agonist development beyond sleep medicine with ALKS 7290 and ALKS 4510, both of which have been advancing through single and multiple ascending dose cohorts in healthy volunteers. Jackson said the company is initiating ALKS 7290 studies in adults with ADHD this year, including a Phase 1b proof-of-concept study expected to enroll about 50 patients over two weeks, with results expected in the fourth quarter. He said enrollment is underway and the first patients were dosed in April. Jackson also said Alkermes plans to initiate a Phase II ADHD study this summer, expected to enroll about 300 patients over a four-week treatment period with a primary endpoint of change from baseline on the Adult ADHD Investigator Symptom Rating Scale, with completion expected in 2027.
For ALKS 4510, Jackson said Alkermes plans to initiate a multi-dose Phase IIa study later this year in fatigue associated with multiple sclerosis and Parkinson’s disease. In Q&A, Jackson said the company expects to use the PROMIS Fatigue Scale, which he said was used in Alkermes’ narcolepsy studies, along with other disease-specific scales.
About Alkermes NASDAQ: ALKS
Alkermes plc is a biopharmaceutical company focused on developing innovative medicines to address unmet needs in the central nervous system (CNS). The company applies its proprietary drug delivery technologies and therapeutic expertise to advance treatments for addiction, schizophrenia, bipolar I disorder and depression. Alkermes' portfolio includes both commercial products and a pipeline of investigational therapies designed to improve patient outcomes and support long-term disease management.
Alkermes' commercial franchise features several approved products.
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