- Alkermes on Wednesday said it will lay off about 160 employees, curtail future hiring and cut spending as it starts a corporate restructuring designed to stem losses.
- The Irish biopharma expects to complete most of the job cuts by the end of the year, and will take a charge of between $13 million to $15 million in the fourth quarter to cover termination costs.
- Alkermes expects the steps it's taking to lower costs by $150 million, with the restructuring ultimately saving "several hundred million dollars over the next few years." Shares in the company, which had fallen in value by more than a third since the start of the year, rose by 6% on the news Wednesday.
Alkermes' restructuring plans are an important step, wrote Evercore ISI analyst Umer Raffat in a Oct. 23 note to investors. The Dublin, Ireland-headquartered biopharma is generating around $1 billion in annualized revenue, but expenses have meant the company is posting net losses.
But the newfound cost discipline likely matters little to the 160 employees who will depart the company in the coming months.
The biopharma employed about 2,300 full-time staff as of Feb. 4, 2019, meaning Wednesday's restructure will affect around 7% of the company's workforce.
Alkermes' announcement accompanied a third-quarter earnings report showing a net los of $53 million, up from $34 million during the same three-month period a year ago. Revenues rose to $255 million from $249 million.
The company expects total revenue for the year to reach between $1.1 billion and $1.2 billion, a forecast that includes an expected $150 million milestone payment from Biogen. That money is tied to final U.S. approval of the companies' multiple sclerosis drug Vumerity (diroximel fumarate), which won a tentative Food and Drug Administration nod earlier this month.
Yet Alkermes slightly lowered top sale estimates for its Vivitrol (naltrexone) treatment for alcohol and opioid dependence, as well as for its schizophrenia drug Aristada (aripiprazole lauroxil).
Alkermes' restructuring comes as the company attempts to win back investor confidence. The company's shares trade at about half their value from a year ago, before the FDA rejected its experimental depression treatment ALKS-5461.
CEO Richard Pops said the biopharma is looking to Vumerity as a "profitable new source of royalty revenues," and expects to file this quarter for FDA approval of another drug, ALKS 3831, for schizophrenia and bipolar disorder.