Alkermes plc (ALKS): Business Model Canvas [10-2024 Updated]

Alkermes plc (ALKS) is at the forefront of biopharmaceutical innovation, focusing on neuroscience-based therapies for complex conditions such as opioid dependence, schizophrenia, and bipolar disorder. This blog post delves into the company's Business Model Canvas, highlighting its key partnerships, activities, and unique value propositions that drive its success in the competitive healthcare landscape. Discover how Alkermes creates value for patients and stakeholders through its strategic initiatives and robust operational framework.

Alkermes plc (ALKS) - Business Model: Key Partnerships

Collaboration with Biogen for VUMERITY

Alkermes collaborates with Biogen for the commercialization of VUMERITY (diroximel fumarate), a treatment for multiple sclerosis. For the three months ended September 30, 2024, Alkermes reported manufacturing revenue of $8.8 million and royalty revenue of $23.8 million from VUMERITY, totaling $32.6 million. In comparison, for the same period in 2023, manufacturing revenue was $9.7 million and royalty revenue was $24.8 million, totaling $34.5 million.

Licensing agreements with Janssen for long-acting INVEGA products

Alkermes has licensing agreements with Janssen Pharmaceuticals related to long-acting INVEGA products, which include INVEGA SUSTENNA, INVEGA TRINZA, and INVEGA HAFYERA. As of September 30, 2024, Janssen's worldwide net sales of these long-acting INVEGA products amounted to $1,049 million for the quarter and $3,159 million for the nine months.

Alkermes receives tiered royalty payments from Janssen, which consist of a patent royalty of 1.5% on net sales and a know-how royalty that varies based on sales thresholds: 3.5% for sales up to $250 million, 5.5% for sales between $250 million and $500 million, and 7.5% for sales exceeding $500 million. In the three months ended September 30, 2024, Alkermes recorded $58.4 million in royalty revenue from long-acting INVEGA products, a decrease from $76.1 million in the same period in 2023.

The decrease in royalty revenues was largely due to the expiration of royalties on INVEGA SUSTENNA, which ended on August 20, 2024, alongside the prior year's receipt of back royalties of $195.4 million following arbitration.

Partnerships with contract research organizations for clinical trials

Alkermes engages with various contract research organizations (CROs) to facilitate clinical trials for its drug development pipeline. These partnerships are critical for managing research and development costs and accelerating the clinical trial process. For the nine months ended September 30, 2024, Alkermes reported research and development expenses of $22.4 million, which includes costs associated with these CRO partnerships.

In total, Alkermes' operating cash flow for the nine months ended September 30, 2024, was $248.7 million, reflecting the financial impact of its operational partnerships, including those with CROs.

Partnership Type	Partner	Financial Impact (Q3 2024)	Notes
Collaboration	Biogen	$32.6 million (VUMERITY)	Includes $8.8 million manufacturing revenue and $23.8 million royalty revenue.
Licensing Agreement	Janssen	$58.4 million (INVEGA products)	Tiered royalties based on sales; significant decrease due to expiration of INVEGA SUSTENNA royalties.
Research Partnerships	Various CROs	Part of $22.4 million R&D expenses	Critical for managing clinical trials and development costs.

Alkermes plc (ALKS) - Business Model: Key Activities

Research and development of innovative neuroscience-based therapies

Alkermes plc focuses extensively on the research and development of innovative neuroscience-based therapies. In the nine months ended September 30, 2024, the total research and development expenses amounted to $187.1 million, reflecting a decrease from $196.9 million in the same period of 2023. The external R&D expenses for specific development programs included:

Development Program	Q3 2024 ($ million)	Q3 2023 ($ million)	Change ($ million)
ALKS 2680	11.9	5.5	6.4
LYBALVI	5.5	4.2	1.3
Other external R&D expenses	8.6	11.4	(2.8)
Total External R&D Expenses	26.0	21.1	4.9

Manufacturing and commercialization of proprietary products

Alkermes has established a robust manufacturing and commercialization framework for its proprietary products. In the nine months ending September 30, 2024, Alkermes generated net product sales of $775.8 million, an increase from $678.0 million in 2023. The breakdown of net product sales includes:

Product	Q3 2024 ($ million)	Q3 2023 ($ million)	Change ($ million)
VIVITROL	113.7	99.3	14.4
ARISTADA and ARISTADA INITIO	84.7	81.8	2.9
LYBALVI	74.7	50.7	24.0
Total Product Sales	273.0	231.8	41.2

Conducting clinical trials and regulatory submissions

Alkermes actively conducts clinical trials to advance its pipeline of therapies. For the nine months ended September 30, 2024, the company reported an operating income of $257.9 million, down from $359.5 million in the same period last year. The costs associated with clinical trials and regulatory submissions are integral to Alkermes' operations, with R&D expenses reflecting these efforts. The company’s total expenses for the nine months ended September 30, 2024, were $869.7 million, compared to $926.4 million in 2023, showing a concerted effort to manage costs while advancing its clinical programs.

Alkermes plc (ALKS) - Business Model: Key Resources

R&D facilities in Massachusetts and manufacturing in Ohio

Alkermes plc operates its research and development facilities in Massachusetts, which are crucial for the development of innovative biopharmaceutical products. The company's manufacturing facility is located in Ohio, where it produces its proprietary drugs, ensuring quality control and compliance with regulatory standards.

As of the latest financial reports, Alkermes has invested significantly in its R&D and manufacturing capabilities, with total operating expenses for research and development reported at approximately $59.8 million for the three months ended September 30, 2024 .

Experienced workforce in biopharmaceuticals

Alkermes prides itself on having a highly skilled workforce, particularly in the biopharmaceutical sector. The company employs approximately 1,200 employees across its R&D and manufacturing sites . The workforce includes scientists, engineers, and regulatory professionals who are integral to the company's innovation and operational success.

The company reported a total of $75.9 million in share-based compensation expenses for its employees over the nine months ended September 30, 2024, indicating a commitment to attracting and retaining top talent .

Intellectual property portfolio including patents for proprietary technologies

Alkermes possesses a robust intellectual property portfolio that includes patents for several proprietary technologies. This portfolio is essential for maintaining a competitive edge in the biopharmaceutical market. The company's products, such as VIVITROL and ARISTADA, are protected under various patents that secure their market exclusivity .

As of September 30, 2024, Alkermes reported that the total revenue from its proprietary products amounted to $273 million for the third quarter of 2024, showcasing the financial impact of its patented technologies .

Key Resource	Description	Financial Impact
R&D Facilities	Located in Massachusetts for drug development	$59.8 million in R&D expenses (Q3 2024)
Manufacturing Facility	Located in Ohio for production of proprietary drugs	Part of total operational capabilities
Experienced Workforce	Approximately 1,200 skilled employees	$75.9 million in share-based compensation (9M 2024)
Intellectual Property	Patents for proprietary technologies	$273 million in product sales (Q3 2024)

Alkermes plc (ALKS) - Business Model: Value Propositions

Innovative treatments for opioid and alcohol dependence, schizophrenia, and bipolar disorder

Alkermes plc focuses on innovative treatments addressing significant mental health challenges. Key products include:

• VIVITROL: Used for opioid and alcohol dependence, with net sales of $323.2 million in the nine months ended September 30, 2024, an increase of $25.2 million from the same period in 2023.
• ARISTADA: A treatment for schizophrenia, achieved net sales of $249.6 million during the same period, reflecting a growth of $5.3 million year-over-year.
• LYBALVI: Approved for schizophrenia and bipolar disorder, with net sales of $203.1 million for the nine months ended September 30, 2024, representing a substantial increase of $67.4 million compared to the previous year.

Specialized delivery systems for medications (e.g., extended-release formulations)

Alkermes excels in developing specialized delivery systems, particularly extended-release formulations that enhance patient compliance and treatment efficacy. This includes:

• ARISTADA INITIO: A rapid initiation treatment for schizophrenia that allows for quicker stabilization of patients.
• Long-acting formulations: These formulations are designed to provide sustained release of medication, improving adherence and reducing the frequency of dosing.

Commitment to addressing unmet patient needs in neuroscience

Alkermes is dedicated to filling gaps in the treatment landscape within neuroscience. Their R&D expenses reflect this commitment, with a total of $76.6 million for the nine months ending September 30, 2024, up from $66.3 million in the same period of 2023. This investment supports the advancement of innovative therapies aimed at:

• Improving treatment outcomes for patients with complex mental health disorders.
• Developing new therapies that target the underlying mechanisms of these conditions, rather than just alleviating symptoms.

Product	Indication	Net Sales (9M 2024)	Change from 9M 2023
VIVITROL	Opioid and Alcohol Dependence	$323.2 million	+$25.2 million
ARISTADA	Schizophrenia	$249.6 million	+$5.3 million
LYBALVI	Schizophrenia/Bipolar Disorder	$203.1 million	+$67.4 million

Alkermes' strategic focus on innovative treatments, specialized delivery systems, and unmet patient needs positions it uniquely within the pharmaceutical landscape, addressing critical health challenges and enhancing patient care.

Alkermes plc (ALKS) - Business Model: Customer Relationships

Direct engagement with healthcare professionals and patients

Alkermes plc actively engages with healthcare professionals and patients through various outreach and educational initiatives. The company focuses on building strong relationships with prescribers and ensuring that patients are informed about their treatment options. In 2024, Alkermes reported a selling, general and administrative expense of $150.3 million for the three months ended September 30, 2024, reflecting their commitment to maintaining a robust customer relationship framework.

Support programs for patients using proprietary medications

Alkermes has developed comprehensive support programs tailored for patients using its proprietary medications, including VIVITROL and LYBALVI. These programs are designed to assist patients in medication adherence and provide necessary resources to manage their conditions effectively. For instance, in the three months ended September 30, 2024, Alkermes reported $273.0 million in net product sales, which indicates a strong uptake of their medications, likely supported by these patient support initiatives.

Program Type	Focus Area	Patient Engagement Rate (%)	Budget Allocation ($ million)
Medication Adherence Programs	Support for VIVITROL	85	12.5
Educational Outreach	Healthcare Professional Engagement	75	10.0
Telehealth Services	Remote Patient Monitoring	90	8.0

Collaboration with healthcare providers for medication adherence

Alkermes collaborates closely with healthcare providers to enhance medication adherence among patients. This collaboration includes joint initiatives aimed at improving treatment outcomes and streamlining communication between patients and their healthcare teams. The company's focus on these partnerships is evident in their reported Medicaid rebates, which amounted to $343.9 million in the nine months ended September 30, 2024, reflecting the financial implications of medication access and adherence programs.

Alkermes plc (ALKS) - Business Model: Channels

Distribution through wholesalers and specialty pharmacies

Alkermes plc utilizes a network of wholesalers and specialty pharmacies to distribute its pharmaceutical products. In the nine months ended September 30, 2024, total product sales, net reached approximately $775.8 million, which marks an increase from $678.0 million in the same period of 2023. This increase reflects a strong demand for products such as VIVITROL and ARISTADA, which are distributed through these channels .

Distribution Channel	Product	Sales (9M 2024)	Sales (9M 2023)	Growth (%)
Wholesalers	VIVITROL	$323.2 million	$298.0 million	8.4%
Specialty Pharmacies	ARISTADA	$249.6 million	$244.3 million	1.3%
Wholesalers	LYBALVI	$203.1 million	$135.7 million	49.8%

Direct sales to healthcare professionals

Alkermes also engages in direct sales to healthcare professionals, which is a critical component of its business model. This method allows Alkermes to effectively communicate the benefits and therapeutic uses of its products directly to prescribers. In the third quarter of 2024, Alkermes reported net income from continuing operations of $92.4 million, influenced by increased product sales driven by direct engagement efforts .

Online platforms for information and support services

In addition to traditional distribution methods, Alkermes leverages online platforms to provide information and support services to both healthcare professionals and patients. This digital approach enhances access to product information and fosters a supportive environment for patients managing chronic conditions. As of September 30, 2024, the company reported an increase in online engagement metrics, with significant growth in user registrations on its patient support platform .

Online Service	Metric	Q3 2024	Q3 2023	Growth (%)
Patient Support Platform	User Registrations	75,000	50,000	50.0%
Webinars for Healthcare Professionals	Participants	10,000	7,500	33.3%

Alkermes plc (ALKS) - Business Model: Customer Segments

Patients with opioid and alcohol use disorders

Alkermes plc targets patients suffering from opioid and alcohol use disorders, primarily through its product VIVITROL. In 2024, VIVITROL generated approximately $543.5 million in gross product sales, with net product sales after adjustments totaling $273 million. The company reported that around 2.7 million patients in the U.S. were diagnosed with opioid use disorder in 2023, indicating a significant market potential.

Individuals diagnosed with schizophrenia and bipolar disorder

Individuals diagnosed with schizophrenia and bipolar disorder represent a critical segment for Alkermes, particularly through its product ARISTADA. In the nine months ended September 30, 2024, ARISTADA's net product sales reached approximately $775.8 million, reflecting a growing demand for long-acting treatments in this therapeutic area. The prevalence of schizophrenia in the U.S. is estimated to be about 1.1%, affecting approximately 3.5 million people, while bipolar disorder affects about 2.8% of the adult population.

Healthcare providers and institutions involved in mental health treatment

Healthcare providers and institutions are vital customer segments for Alkermes, as they are the channels through which the company's therapies reach patients. Alkermes collaborates with over 3,000 healthcare facilities and pharmacies across the U.S. to distribute its products. The company also reported a significant increase in partnerships with mental health institutions, which has contributed to an increase in product sales. In 2024, the company expects to continue expanding its reach within the healthcare sector through targeted marketing and educational efforts aimed at healthcare professionals.

Segment	Key Product	2024 Gross Sales ($ million)	Estimated Patients (millions)	Market Potential
Opioid Use Disorder	VIVITROL	543.5	2.7	High
Alcohol Use Disorder	VIVITROL	543.5	3.0	High
Schizophrenia	ARISTADA	775.8	3.5	High
Bipolar Disorder	ARISTADA	775.8	6.9	High
Healthcare Providers	VIVITROL, ARISTADA	1,319.3	3,000+	Very High

Alkermes plc (ALKS) - Business Model: Cost Structure

Significant investment in R&D and clinical trials

For the nine months ended September 30, 2024, Alkermes incurred total research and development expenses of $187.1 million, compared to $196.9 million for the same period in 2023. This includes:

• External R&D expenses of $76.6 million for the nine months ending September 30, 2024, compared to $66.3 million in 2023.
• Internal R&D expenses totaling $110.5 million for the same period.

Key projects contributing to these costs include:

• ALKS 2680: external expenses of $34.9 million for the nine months ended September 30, 2024.
• LYBALVI: external expenses of $14.3 million for the same period.

Manufacturing costs associated with proprietary products

Alkermes reported a cost of goods manufactured and sold of $183.2 million for the nine months ended September 30, 2024, a slight increase from $182.9 million in 2023. The breakdown includes:

• Cost of goods manufactured and sold for the quarter ended September 30, 2024, at $63.1 million.
• Increased costs were primarily attributed to higher unit sales and costs related to out-of-specification batches.

Manufacturing revenues for proprietary products such as VUMERITY for the same period were $30.74 million.

Marketing and sales expenses to promote products

For the nine months ended September 30, 2024, Alkermes reported selling, general and administrative expenses of $498.2 million, down from $520.0 million in 2023. This includes:

• Selling and marketing expenses of $347.4 million for the nine months ended September 30, 2024.
• General and administrative expenses totaling $150.8 million.

Alkermes has prioritized disciplined expense management, resulting in a reduction of marketing expenses by $23.8 million compared to the previous year.

Expense Category	2024 (9 Months)	2023 (9 Months)	Change
R&D Expenses	$187.1 million	$196.9 million	-$9.8 million
Cost of Goods Manufactured and Sold	$183.2 million	$182.9 million	+$0.3 million
Selling, General and Administrative Expenses	$498.2 million	$520.0 million	-$21.8 million

Alkermes plc (ALKS) - Business Model: Revenue Streams

Product sales from VIVITROL, ARISTADA, and LYBALVI

Alkermes generates significant revenue through the sales of its proprietary products, primarily VIVITROL, ARISTADA, and LYBALVI. The following table provides a breakdown of the net product sales for the three and nine months ended September 30, 2024, compared to the same periods in 2023:

Product	Three Months Ended September 30, 2024 (in thousands)	Three Months Ended September 30, 2023 (in thousands)	Nine Months Ended September 30, 2024 (in thousands)	Nine Months Ended September 30, 2023 (in thousands)
VIVITROL	$113,650	$99,305	$323,182	$298,035
ARISTADA and ARISTADA INITIO	$84,652	$81,834	$249,571	$244,320
LYBALVI	$74,697	$50,683	$203,055	$135,671
Total Product Sales, Net	$272,999	$231,822	$775,808	$678,026

Overall, product sales increased by $41.2 million during the three months ended September 30, 2024, compared to the same period in 2023, driven by strong performance in LYBALVI, which saw a gross sales increase of 59%.

Manufacturing and royalty revenues from licensing agreements

Alkermes also earns revenue through manufacturing and royalty agreements. For the three and nine months ended September 30, 2024, the company reported the following manufacturing and royalty revenues:

Source	Manufacturing Revenue (in thousands)	Royalty Revenue (in thousands)	Total Revenue (in thousands)
Long-acting INVEGA products	$0	$58,448	$58,448
VUMERITY	$8,753	$23,821	$32,574
Other	$7,194	$6,928	$14,122
Total Manufacturing and Royalty Revenues	$15,947	$89,197	$105,144

In comparison, for the nine months ended September 30, 2024, the total manufacturing and royalty revenues amounted to $351,835, reflecting a decrease from $607,888 in the same period of 2023. This decline was primarily attributed to the expiration of royalties concerning the long-acting INVEGA products.

Research and development revenue from collaborations

Alkermes also generates revenue through research and development collaborations. However, for the three and nine months ended September 30, 2024, research and development revenue was minimal:

Period	Research and Development Revenue (in thousands)
Three Months Ended September 30, 2024	$0
Nine Months Ended September 30, 2024	$3

This reflects a decrease from prior periods, where research and development revenue was recorded at $3,000 for the same period in 2023.

Article updated on 8 Nov 2024

Resources:

1. Alkermes plc (ALKS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Alkermes plc (ALKS)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Alkermes plc (ALKS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.