DUBLIN, Dec. 10, 2020 /PRNewswire/ -- Alkermes
plc (Nasdaq: ALKS) today announced a Value Enhancement Plan,
or the Plan, designed to drive growth, improve operational and
financial performance and enhance shareholder value, as the company
continues to advance its mission of developing new medicines
designed to have a real-world impact in the treatment of serious
mental illness, addiction and cancer. The Plan includes a
commitment to multi-year profitability targets, a review and
optimization of the company's cost structure, potential
monetization of non-core assets, and continued governance
enhancements, including the addition of two new independent
directors with substantial financial and operational expertise to
the company's board of directors (the "Board").
The Value Enhancement Plan is the result of an intensive process
initiated over the last several months and is intended to position
the company to efficiently execute on its business strategy,
support the continued growth of its commercial products, including
the potential approval and launch of ALKS 3831, and further the
advancement of its pipeline of development programs. The Plan
builds upon the company's implementation of a restructuring and
addition of two new independent directors to the Board in the fall
of 2019 and the company's board refreshment efforts announced in
July 2020. These initiatives also
follow constructive dialogue with the company's shareholders,
including funds advised by Elliott Advisors (UK) Limited
("Elliott"), and entry into an associated cooperation agreement
between Alkermes and affiliates of Elliott.
"Alkermes' Board and management are committed to engaging with
shareholders and understanding their perspective and have been
working on initiatives to drive greater operational efficiency,
with a focus on shareholder value creation. These new initiatives
also support our strong growth trajectory, which has come more
clearly into focus over the past few months, with the positive
advisory committee meeting and constructive regulatory interactions
for ALKS 3831 for schizophrenia and bipolar I disorder, and with
new clinical data emerging in our ALKS 4230 immuno-oncology
program," said Richard Pops, Chairman and Chief Executive Officer
of Alkermes. "We believe these actions, alongside our focus on
commercial execution, the potential approval and commercial launch
of ALKS 3831, and the continued development of our pipeline
candidates, position the company well for long-term value
creation."
A spokesperson for Elliott said, "Elliott is highly
supportive of the initiatives announced today and commends the
Board and management of Alkermes on taking these steps. From our
dialogue with management we are confident that the Company is
committed to creating shareholder value. Further, both David Daglio and Brian
McKeon will add significant value to Alkermes' Board and the
newly formed board committee. Alkermes is significantly undervalued
given its attractive assets and growth potential, and we are
confident that these new initiatives will yield meaningful share
price upside. We thank Richard and the rest of the team for their
constructive dialogue and look forward to an ongoing engagement
with the Company."
Profitability Targets & Cost Structure Optimization
Efforts
As part of the Value Enhancement Plan, the company today
announced its commitment to achieving:
- FY 2023 non-GAAP net income equal to 25% of the company's total
revenues and EBITDA margin1 of 20% of total
revenues
- FY 2024 non-GAAP net income equal to 30% of the company's total
revenues and EBITDA margin of 25% of total revenues
The company plans to achieve these margins through disciplined
management of the company's cost structure combined with revenue
growth, and is committed to meeting these targets in a range of
scenarios. To underline Alkermes' commitment to strong
profitability, the compensation committee of the Board will
consider these targets in its design of this year's long-term
incentive plan for senior management.
Alkermes has already undertaken several important initiatives to
support these targets, including a reorganization of the company's
commercial infrastructure, which was implemented in November 2020. As part of the reorganization,
several functional areas within the company's commercial
organization were consolidated to improve efficiencies and
approximately 80 full-time positions were reallocated to support
the anticipated launch of ALKS 3831, reducing the need for
previously planned new hires. Additionally, the company has
commenced an extensive review of its operations and structure both
internally and with external advisors to identify potential areas
for improved efficiencies. This review is ongoing, and the company
plans to provide an update on the findings and planned initiatives
resulting from the review following its conclusion, expected in the
first quarter of 2021.
Evaluation of Strategic Opportunities
A newly set-up committee of the board will evaluate a broad
range of potential strategic options related to Alkermes' non-core
assets, including monetization and divestiture opportunities.
In addition, the company underscored its prior commitment to
exploring a strategic collaboration for ALKS 4230, the company's
immuno-oncology pipeline candidate, as an important element of the
company's focus on realizing the full potential of ALKS 4230 across
a broad spectrum of possible treatment combinations, tumor types
and lines of therapy. Alkermes believes that accumulating objective
response data and subcutaneous administration data from its
ARTISTRY development program for ALKS 4230 will serve as the
basis for potential collaboration discussions.
Board Refreshment and Governance Update
The company today announced that it is taking a series of
actions as part of its ongoing commitment to strong corporate
governance and regular Board refreshment. These efforts build upon
the refreshment process that began in 2019 with the engagement of a
leading recruitment firm and the subsequent appointment of two
highly-qualified independent directors: Andy Wilson and Richard
Gaynor, M.D.
- Following the company's July 2020
announcement of its continuing Board refreshment efforts, the
Alkermes Board has appointed two new independent directors –
David Daglio and Brian McKeon – who bring investor perspectives
and strong financial and operational expertise to the Board.
- Two long-serving directors, Robert
Breyer and Paul Mitchell,
plan to retire and step down from the Board at the close of the
company's 2021 Annual General Meeting of Shareholders.
- The Board plans to identify at least one additional independent
director to be appointed in the first half of 2021.
"Our board refreshment efforts during the past two years reflect
our continued commitment to a strong, independent board with
expertise that aligns with and directly supports Alkermes'
strategic priorities," said Lead Independent Director David W. Anstice. "I am pleased to welcome David
and Brian to the Board and believe that Alkermes will benefit
greatly from their distinct combination of financial and
operational expertise. We are confident that the Board is well
positioned to provide robust guidance and oversight as the company
continues its efforts to positively impact the lives of patients
living with serious mental illness, addiction and cancer, while
driving shareholder value creation."
"On behalf of the Board, I would also like to express our most
sincere appreciation to Paul
Mitchell and Bob Breyer for
their long and distinguished tenure on the Board and their
invaluable contributions to Alkermes," Mr. Anstice added.
In addition to the appointment of new directors, the company
will also undertake the following corporate governance actions:
- The Board plans to form a committee to oversee achievement of
the Profitability Targets and the potential monetization of the
company's non-core assets. The committee will initially be
comprised of the Chief Executive Officer and three independent
directors, including two of the newly appointed directors.
- The Board also intends to recommend that the company's
shareholders approve, at the company's 2021 Annual General Meeting
of Shareholders, an amendment to the company's Articles of
Association to declassify the Board.
Investor Day
The company plans to host an investor day in the first quarter
of 2021 to provide an update on the implementation of the Value
Enhancement Plan and highlight some of the new research and
development programs in the company's portfolio.
New Director Biographies
About David Daglio
As former Executive Vice President and Chief Investment Officer of
Mellon Investments, Mr. Daglio brings a seasoned institutional
investment management perspective to the Board. Over his 21-year
career at Mellon, Mr. Daglio oversaw active equity portfolio
management teams, served as the head of Opportunistic Value
strategies and on Mellon's board of directors, and helped architect
and manage the merger of three unique companies to create the
12th largest U.S. asset manager. In his roles at Mellon,
Mr. Daglio worked with institutional clients and boards around the
world and grew portfolio assets by more than five-fold. Mr. Daglio
currently serves as a director of Total Brain Ltd.
About Brian McKeon
Mr. McKeon brings strong financial and management expertise as well
as public company executive and director experience to the Board.
He has served as Executive Vice President and Chief Financial
Officer of IDEXX Laboratories since 2014, leading its finance,
corporate development and strategy, and investor relations
functions, and, since June 2019, has
overseen IDEXX's livestock, water and human diagnostics businesses.
Mr. McKeon previously served as a director of IDEXX from 2003
through 2013, and as a director of athenahealth, Inc. from
September 2017 to February 2019. Prior to IDEXX, Mr. McKeon held
executive leadership roles at Iron Mountain, The Timberland Company
and PepsiCo.
About Alkermes
Alkermes plc is a fully
integrated, global biopharmaceutical company developing innovative
medicines in the fields of neuroscience and oncology. The company
has a portfolio of proprietary commercial products focused on
addiction and schizophrenia, and a pipeline of product candidates
in development for schizophrenia, bipolar I disorder,
neurodegenerative disorders and cancer. Headquartered
in Dublin, Ireland, Alkermes plc has an R&D
center in Waltham, Massachusetts; a research and
manufacturing facility in Athlone, Ireland; and a
manufacturing facility in Wilmington, Ohio. For more information, please visit
Alkermes' website at www.alkermes.com.
About Elliott
Elliott Management Corporation manages
approximately $41 billion of assets.
Its flagship fund, Elliott Associates, L.P., was founded in 1977,
making it one of the oldest funds of its kind under continuous
management. The Elliott funds' investors include pension plans,
sovereign wealth funds, endowments, foundations, funds-of-funds,
and employees of the firm. Elliott Advisors (UK) Limited is an
affiliate of Elliott Management Corporation.
Non-GAAP Financial Measures
Non-GAAP net income (loss)
adjusts for one-time and non-cash charges by excluding from U.S.
generally accepted accounting principles ("GAAP") results:
share-based compensation expense; amortization; depreciation;
non-cash net interest expense; changes in the fair value of the
contingent consideration; certain other one-time or non-cash items;
and the income tax effect of these reconciling items.
Note Regarding Forward-Looking Statements
Certain
statements set forth in this press release constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, as amended, including,
but not limited to, statements concerning: the company's
expectations concerning future financial and operating performance,
business plans or prospects, including expected revenue growth, the
company's commitment to, and ability to achieve, specified
profitability targets, including non-GAAP net income and EBITDA
margin targets as a percentage of total revenues, oversight of the
achievement of such targets by a newly formed Board committee, and
the company's ability to create share price upside and long-term
value for shareholders through expense management, cost structure
optimization and potential monetization or divestiture of non-core
assets; the company's expectations regarding the timing and results
of the review of the company's operations and cost structure; the
potential therapeutic and commercial value of the company's
marketed and development products; the company's expectations
concerning future development activities for the company's
development products, including expectations regarding the
potential for future ALKS 4230 data to serve as a basis for a
potential collaboration; expectations concerning the company's
regulatory interactions and commercial activities, including those
relating to the potential approval and commercial launch of ALKS
3831; and the company's plans for additional Board-related changes,
including the expected appointment of at least one additional
director and its plans to recommend declassification of the Board.
The company cautions that forward-looking statements are inherently
uncertain. The forward-looking statements are neither promises nor
guarantees and they are necessarily subject to a high degree of
uncertainty and risk. Actual performance and results may differ
materially from those expressed or implied in the forward-looking
statements due to various risks and uncertainties. These risks and
uncertainties include, among others: the cost structure review and
optimization activities being undertaken by the company may not
yield the intended results; the company may not be able to achieve
its targeted profitability metrics, including non-GAAP net income
and EBITDA margin targets as a percentage of total revenues, in a
timely manner or at all; the unfavorable outcome of litigation,
including so-called "Paragraph IV" litigation and other patent
litigation, related to any of the company's products or products
using the company's proprietary technologies, which may lead to
competition from generic drug manufacturers; clinical development
activities may not be completed on time or at all; the results of
the company's clinical development activities may not be positive,
or predictive of real-world results or of results in subsequent
clinical trials; regulatory submissions may not occur or be
submitted in a timely manner; the FDA or regulatory authorities
outside the U.S. may make adverse decisions regarding the company's
products, such as decisions not to approve the company's NDAs,
including the NDA for ALKS 3831; the company and its licensees may
not be able to continue to successfully commercialize their
products; there may be a reduction in payment rate or reimbursement
for the company's products or an increase in the company's
financial obligations to governmental payers; the company's
products may prove difficult to manufacture, be precluded from
commercialization by the proprietary rights of third parties, or
have unintended side effects, adverse reactions or incidents of
misuse; and the impacts of the ongoing COVID-19 pandemic and
continued efforts to mitigate its spread on the company's business,
results of operations or financial condition; and those risks and
uncertainties described under the heading "Risk Factors" in the
company's Annual Report on Form 10-K for the year ended
Dec. 31, 2019, the company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 and in subsequent filings made by
the company with the U.S. Securities and Exchange Commission
("SEC"), which are available on the SEC's website at www.sec.gov.
Existing and prospective investors are cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of the date hereof. Except as required by law, the company
disclaims any intention or responsibility for updating or revising
any forward-looking statements contained in this press release.
Alkermes
Contacts:
|
|
For
Investors:
|
Sandy Coombs +1 781
609 6377
|
For Media:
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Katie Joyce +1 781
609 6806
|
1Calculated as earnings before interest, taxation,
depreciation, amortization and one-time items, includes share-based
compensation expenses
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SOURCE Alkermes plc