Alkermes
Annual Report 2019

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Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549Form 10-K(Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934for the fiscal year ended December 31, 2019OR☐☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission file number: 001-35299ALKERMES PUBLIC LIMITED COMPANY(Exact name of registrant as specified in its charter) Ireland(State or other jurisdiction of incorporation or organization) 98-1007018(I.R.S. Employer Identification No.)Connaught House1 Burlington RoadDublin 4, Ireland(Address of principal executive offices) D04 C5Y6(Zip code) +353-1-772-8000(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registeredOrdinary shares, $0.01 par value ALKS Nasdaq Global Select Market Securities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well‑known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or an emerginggrowth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of theExchange Act. Large Accelerated Filer ☒ Accelerated Filer ☐Non-Accelerated Filer ☐ Smaller Reporting Company ☐ Emerging Growth Company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revisedfinancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Act). Yes ☐ No ☒The aggregate market value of the registrant’s ordinary shares held by non‑affiliates of the registrant (without admitting that any person whose shares are not included insuch calculation is an affiliate) computed by reference to the price at which the ordinary shares were last sold as of the last business day of the registrant’s most recentlycompleted second fiscal quarter was $3,507,584,798.As of February 4, 2020, 157,787,433 ordinary shares were outstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of the definitive proxy statement for our 2020 Annual General Meeting of Shareholders are incorporated by reference into Part III of this report. Table of ContentsALKERMES PLC ANDSUBSIDIARIESANNUAL REPORT ON FORM 10‑KFOR THE YEAR ENDED DECEMBER 31, 2019INDEXPART I Item 1. Business 5Item 1A. Risk Factors 25Item 1B. Unresolved Staff Comments 43Item 2. Properties 43Item 3. Legal Proceedings 43Item 4. Mine Safety Disclosures 43PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 44Item 6. Selected Financial Data 47Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 48Item 7A. Quantitative and Qualitative Disclosures about Market Risk 62Item 8. Financial Statements and Supplementary Data 63Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures 63Item 9A. Controls and Procedures 64Item 9B. Other Information 64PART III Item 10. Directors, Executive Officers and Corporate Governance 65Item 11. Executive Compensation 65Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 65Item 13. Certain Relationships and Related Transactions, and Director Independence 65Item 14. Principal Accounting Fees and Services 65PART IV Item 15. Exhibits and Financial Statement Schedules 66Item 16 Form 10-K Summary 72SIGNATURES 73 2 Table of ContentsCAUTIONARY NOTE CONCERNING FORWARD‑LOOKING STATEMENTSThis document contains and incorporates by reference “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, asamended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In some cases, these statements can beidentified by the use of forward-looking terminology such as “may,” “will,” “could,” “should,” “would,” “expect,” “anticipate,” “continue,” “believe,” “plan,”“estimate,” “intend,” or other similar words. These statements discuss future expectations and contain projections of results of operations or of financial condition,or state trends and known uncertainties or other forward-looking information. Forward‑looking statements in this Annual Report on Form 10‑K (this “AnnualReport”) include, without limitation, statements regarding: •our expectations regarding our financial performance, including revenues, expenses, liquidity, capital expenditures and income taxes; •our expectations regarding our products, including those expectations related to product development, regulatory filings, regulatory approvalsand regulatory timelines, therapeutic and commercial scope and potential, and the costs and expenses related to such activities; •our expectations regarding the initiation, timing and results of clinical trials of our products; •our expectations regarding the competitive landscape, and changes therein, related to our products, including competition from generic forms ofour products or competitive products and competitive development programs; •our expectations regarding the financial impact of currency exchange rate fluctuations and valuations; •our expectations regarding future amortization of intangible assets; •our expectations regarding our collaborations, licensing arrangements and other significant agreements with third parties relating to our products,including our development programs; •our expectations regarding the impact of new legislation, rules, regulations and the adoption of new accounting pronouncements; •our expectations regarding near‑term changes in the nature of our market risk exposures or in management’s objectives and strategies withrespect to managing such exposures; •our ability to comply with restrictive covenants of our indebtedness and our ability to fund our debt service obligations; •our expectations regarding future capital requirements and capital expenditures and our ability to finance our operations and capitalrequirements; •our expectations regarding the timing, outcome and impact of administrative, regulatory, legal and other proceedings related to our patents, otherproprietary and intellectual property (“IP”) rights, and our products; and •other factors discussed elsewhere in this Annual Report.Actual results might differ materially from those expressed or implied by these forward‑looking statements because these forward‑looking statements aresubject to risks, assumptions and uncertainties. You are cautioned not to place undue reliance on forward‑looking statements, which speak only as of the date ofthis Annual Report. All subsequent written and oral forward‑looking statements concerning the matters addressed in this Annual Report and attributable to us orany person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except as required byapplicable law or regulation, we do not undertake any obligation to update publicly or revise any forward‑looking statements, whether as a result of newinformation, future events or otherwise. In light of these risks, assumptions and uncertainties, the forward‑looking events discussed in this Annual Report might notoccur. For more information regarding the risks, assumptions and uncertainties of our business, see “Item 1A—Risk Factors” in this Annual Report.This Annual Report includes data that we obtained from industry publications and third-party research, surveys and studies. Industry publications andthird-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do notguarantee the accuracy or completeness of such information. This Annual Report also includes data based on our own internal estimates and research. Our internalestimates and research have not been verified by any independent source, and, while we believe the industry publications and third-party research, surveys andstudies are reliable, we have not independently verified such data. Such third-party data and our internal estimates and research are necessarily subject to a highdegree of uncertainty and risk due to a variety of factors, including those described in “Item 1A—Risk Factors” in this Annual Report. These and other factorscould cause results to differ materially from those expressed in this Annual Report.3 Table of ContentsNOTE REGARDING COMPANY AND PRODUCT REFERENCESUse of terms such as “us,” “we,” “our,” “Alkermes” or the “Company” in this Annual Report is meant to refer to Alkermes plc and its consolidatedsubsidiaries. Except as otherwise suggested by the context, (a) references to “products” or “our products” in this Annual Report include our marketed products,marketed products using our proprietary technologies, our product candidates, product candidates using our proprietary technologies, development products anddevelopment products using our proprietary technologies, (b) references to the “biopharmaceutical industry” in this Annual Report are intended to includereference to the “biotechnology industry” and/or the “pharmaceutical industry” and (c) references to “licensees” in this Annual Report are used interchangeablywith references to “partners.”NOTE REGARDING TRADEMARKSWe are the owner of various United States (“U.S.”) federal trademark registrations (“®”) and other trademarks (“TM”), including ALKERMES®,ARISTADA®, ARISTADA INITIO®, LinkeRx®, NanoCrystal®, and VIVITROL®.The following are trademarks of the respective companies listed: ABILIFY® and ABILIFY MAINTENA®—Otsuka Pharmaceutical Co., Ltd. (“OtsukaPharm. Co.”); AMPYRA® and FAMPYRA®—Acorda Therapeutics, Inc. (“Acorda”); ANTABUSE®—Teva Women’s Health, Inc.; AUBAGIO® andLEMTRADA®—Sanofi Societe Anonyme France; AVONEX®, PLEGRIDY®, TECFIDERA®, TYSABRI® and VUMERITY®—Biogen MA Inc. (together withits affiliates, “Biogen”); BETASERON®—Bayer Pharma AG; BRIXADI®—Braeburn Inc.; BUNAVAILTM—BioDelivery Sciences; CAMPRAL®—MerckSante; CAPLYTA®—Intra-Cellular Therapies, Inc.; COPAXONE®—Teva Pharmaceutical Industries Ltd.; EXTAVIA®, GILENYA®, and MAYZENT®—Novartis AG; INVEGA SUSTENNA®, INVEGA TRINZA®, TREVICTA®, XEPLION® and RISPERDAL CONSTA®—Johnson & Johnson (or its affiliates);LATUDA®— Sumitomo Dainippon Pharma Co., Ltd.; MAVENCLAD®—Merck KGaA, REBIF®—Ares Trading S.A.; OCREVUS®—Genentech, Inc.(“Genentech”); PROBUPHINE®—Titan Pharmaceuticals, Inc.; REXULTI®— H. Lundbeck A/S plc; PERSERIS®, SUBOXONE®, SUBUTEX® andSUBLOCADE®—Indivior plc (or its affiliates); ZUBSOLV®—Orexo US, Inc.; ZYPREXA® and ZYPREXA RELPREVV®—Eli Lilly and Company (“Lilly”);and VRAYLAR®— Forest Laboratories, LLC. Other trademarks, trade names and service marks appearing in this Annual Report are the property of theirrespective owners. Solely for convenience, the trademarks and trade names in this Annual Report are referred to without the ® and ™ symbols, but such referencesshould not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. 4 Table of ContentsPART IItem 1.BusinessThe following discussion contains forward‑looking statements. Actual results may differ significantly from those expressed or implied in theforward‑looking statements. See “Cautionary Note Concerning Forward‑Looking Statements” on page 3 in this Annual Report. Factors that might cause futureresults to differ materially from those expressed or implied in the forward‑looking statements include, but are not limited to, those discussed in “Item 1A—RiskFactors” and elsewhere in this Annual Report.OverviewAlkermes plc is a fully integrated, global biopharmaceutical company that applies its scientific expertise and proprietary technologies to research, developand commercialize, both with partners and on its own, pharmaceutical products that are designed to address unmet medical needs of patients in major therapeuticareas. Alkermes has a diversified portfolio of marketed products focused on central nervous system disorders such as addiction and schizophrenia and a pipeline ofproduct candidates in the fields of neuroscience and oncology. Headquartered in Dublin, Ireland, Alkermes has a research and development (“R&D”) center inWaltham, Massachusetts; an R&D and manufacturing facility in Athlone, Ireland; and a manufacturing facility in Wilmington, Ohio.In November 2019, Alkermes acquired Rodin Therapeutics, Inc. (“Rodin”), a privately-held biopharmaceutical company focused on developing novel,small molecule therapeutics for synaptopathies. This acquisition expanded Alkermes’ R&D efforts to include small molecule therapeutics for synaptopathies.Marketed ProductsThe key marketed products discussed below are expected to generate significant revenues for us. See “Patents and Proprietary Rights” in “Item 1—Business” in this Annual Report for information with respect to the IP protection for these marketed products.The following provides summary information regarding our proprietary products that we commercialize: Product Indication(s) Territory Initiation or re-initiation ofARISTADA forthe treatment ofSchizophrenia U.S. Schizophrenia U.S. Alcoholdependence andOpioid dependence U.S. 5 Table of ContentsThe following provides summary information regarding our licensed products, and third-party products using our proprietary technologies under license,that are commercialized by our licensees: Third-Party Products Using Our Proprietary Technologies Product Indication(s) Licensee Licensed Territory RISPERDAL CONSTA Schizophreniaand Bipolar Idisorder JanssenPharmaceutica Inc.(“Janssen, Inc.”) andJanssenPharmaceuticaInternational, adivision of CilagInternational AG (“JanssenInternational”) WorldwideINVEGA SUSTENNA / XEPLION INVEGA SUSTENNA:Schizophreniaand Schizoaffectivedisorder XEPLION:Schizophrenia JanssenPharmaceutica N.V.(together withJanssen, Inc., JanssenInternational andtheir affiliates“Janssen”) Worldwide INVEGA TRINZA / TREVICTA Schizophrenia Janssen Worldwide Our Licensed Products Product Indication(s) Licensee Licensed Territory VIVITROL Alcohol dependence andOpioid dependence Cilag GmbHInternational (“Cilag”) Russia andCommonwealth ofIndependent States (“CIS”) VUMERITY Multiple sclerosis Biogen Worldwide6 Table of ContentsProprietary ProductsWe develop and commercialize products designed to address the unmet needs of patients suffering from addiction and schizophrenia.ARISTADAARISTADA (aripiprazole lauroxil) is an extended-release intramuscular injectable suspension approved in the U.S. for the treatment of schizophrenia.ARISTADA is the first of our products to utilize our proprietary LinkeRx technology. ARISTADA is a prodrug; once in the body, ARISTADA is likely convertedby enzyme-mediated hydrolysis to N-hydroxymethyl aripiprazole, which is then hydrolyzed to aripiprazole. ARISTADA is available in four dose strengths withonce-monthly dosing options (441 mg, 662 mg and 882 mg), a six-week dosing option (882 mg) and a two-month dosing option (1064 mg). ARISTADA ispackaged in a ready-to-use, pre-filled product format. We developed ARISTADA and exclusively manufacture and commercialize it in the U.S.ARISTADA INITIOARISTADA INITIO (aripiprazole lauroxil), consisting of a single injection of 675 mg ARISTADA INITIO in combination with a single 30 mg dose of oralaripiprazole, is indicated for the initiation of ARISTADA when used for the treatment of schizophrenia in adults. ARISTADA INITIO leverages our proprietaryNanoCrystal technology and provides an extended-release formulation of aripiprazole lauroxil in a smaller particle size compared to ARISTADA. This smallerparticle size enables faster dissolution and leads to more rapid achievement of relevant levels of aripiprazole. The first ARISTADA dose may be administered onthe same day as the ARISTADA INITIO regimen or up to 10 days thereafter. We developed ARISTADA INITIO and exclusively manufacture and commercializeit in the U.S.What is schizophrenia?Schizophrenia is a serious brain disorder marked by positive symptoms (hallucinations and delusions, disorganized speech and thoughts, and agitated orrepeated movements) and negative symptoms (depression, blunted emotions and social withdrawal). Approximately 3.5 million people are diagnosed withschizophrenia in the U.S., with men and women affected equally. Worldwide, it is estimated that one person in every 100 develops schizophrenia. Studies havedemonstrated that as many as 75% of patients with schizophrenia have difficulty taking their oral medication on a regular basis, which can lead to worsening ofsymptoms.VIVITROL (U.S.)VIVITROL (naltrexone for extended-release injectable suspension) is a once-monthly, non-narcotic, injectable medication approved in the U.S., Russia andcertain countries of the CIS for the treatment of alcohol dependence and for the prevention of relapse to opioid dependence, following opioid detoxification.VIVITROL uses our polymer-based microsphere injectable extended-release technology to deliver and maintain therapeutic medication levels in the body throughone intramuscular injection every four weeks. We developed and exclusively manufacture VIVITROL and we commercialize VIVITROL in the U.S.For a discussion of legal proceedings related to VIVITROL, see Note 19, Commitments and Contingent Liabilities in the “Notes to Consolidated FinancialStatements” in this Annual Report, and for information about risks relating to such legal proceedings, see “Item 1A—Risk Factors” in this Annual Report andspecifically the sections entitled “—Patent protection for our products is important and uncertain,” “—Uncertainty over intellectual property in thebiopharmaceutical industry has been the source of litigation, which is inherently costly and unpredictable, could significantly delay or prevent approval orcommercialization of our products, and could adversely affect our business” and “—Litigation, arbitration or regulatory action (such as citizens petitions) filedagainst regulatory agencies related to our product or Alkermes, including securities litigation, may result in financial losses, harm our reputation, divertmanagement resources, negatively impact the approval of our products, or otherwise negatively impact our business.”What are opioid dependence and alcohol dependence?Opioid dependence is a serious and chronic brain disease characterized by compulsive, prolonged self-administration of opioid substances that are not usedfor a medical purpose. According to the 2018 U.S. National Survey on Drug Use and Health, an estimated 1.9 million people aged 18 or older in the U.S. had anopioid use disorder in the past year. Alcohol dependence is a serious and chronic brain disease characterized by cravings for alcohol, loss of control over drinking,withdrawal symptoms and an increased tolerance for alcohol. According to the 2018 U.S. National Survey on Drug Use and Health, an estimated 14.4 millionpeople aged 18 or older in the U.S. had an alcohol use disorder in the past year. Adherence to medication is particularly challenging with these patient populations.In 2013, with the publication of the Diagnostic Statistical Manual (“DSM”) 5, the DSM IV diagnoses of substance use disorders as either dependence orabuse (i.e., opioid dependence or alcohol dependence), which reflects the approved indication of VIVITROL,7 Table of Contentswere combined into one diagnostic category of “substance use disorders” (i.e., opioid use disorder or alcohol use disorder) with three categories of disorderseverity—mild, moderate or severe.Licensed Products and Products Using Our Proprietary TechnologiesWe have licensed products to third parties for commercialization and have licensed our proprietary technologies to third parties to enable them to develop,commercialize and/or manufacture products. We receive royalties and/or manufacturing and other revenues from the commercialization of these products. Sucharrangements include the following:INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and RISPERDAL CONSTAINVEGA SUSTENNA/XEPLION (paliperidone palmitate), INVEGA TRINZA/TREVICTA (paliperidone palmitate 3-month injection) and RISPERDALCONSTA (risperidone long-acting injection) are long-acting atypical antipsychotics owned and commercialized worldwide by Janssen that incorporate ourproprietary technologies.INVEGA SUSTENNA is approved in the U.S. for the treatment of schizophrenia and for the treatment of schizoaffective disorder as either a monotherapyor adjunctive therapy. Paliperidone palmitate extended-release injectable suspension is approved in the European Union (“EU”) and other countries outside of theU.S. for the treatment of schizophrenia and is marketed and sold under the trade name XEPLION. INVEGA SUSTENNA/XEPLION uses our nanoparticleinjectable extended-release technology to increase the rate of dissolution and enable the formulation of an aqueous suspension for once-monthly intramuscularadministration. INVEGA SUSTENNA/XEPLION is manufactured by Janssen. For a discussion of legal proceedings related to the patents covering INVEGASUSTENNA, see Note 19, Commitments and Contingent Liabilities in the “Notes to Consolidated Financial Statements” in this Annual Report and for informationabout risks relating to such legal proceedings, see “Item 1A—Risk Factors” in this Annual Report and specifically the section entitled “—We or our licensees mayface claims against intellectual property rights covering our products and competition from generic drug manufacturers.”INVEGA TRINZA is approved in the U.S. for the treatment of schizophrenia in patients who have been adequately treated with INVEGA SUSTENNA for atleast four months. TREVICTA is approved in the EU for the maintenance treatment of schizophrenia in adult patients who are clinically stable on XEPLION.INVEGA TRINZA/TREVICTA is the first schizophrenia treatment to be taken once every three months. INVEGA TRINZA/TREVICTA uses our proprietarytechnology and is manufactured by Janssen.RISPERDAL CONSTA is approved in the U.S. for the treatment of schizophrenia and as both monotherapy and adjunctive therapy to lithium or valproatein the maintenance treatment of bipolar I disorder. RISPERDAL CONSTA is approved in numerous countries outside of the U.S. for the treatment ofschizophrenia and the maintenance treatment of bipolar I disorder. RISPERDAL CONSTA uses our polymer-based microsphere injectable extended-releasetechnology to deliver and maintain therapeutic medication levels in the body through just one intramuscular injection every two weeks. RISPERDAL CONSTAmicrospheres are exclusively manufactured by us. For a discussion of legal proceedings related to certain of the patents covering RISPERDAL CONSTA, see Note19, Commitments and Contingent Liabilities in the “Notes to Consolidated Financial Statements” in this Annual Report and for information about risks relating tosuch legal proceedings, see “Item 1A—Risk Factors” in this Annual Report and specifically the section entitled “—We or our licensees may face claims againstintellectual property rights covering our products and competition from generic drug manufacturers.”Revenues from Janssen accounted for approximately 28%, 29% and 33% of our consolidated revenues for the years ended December 31, 2019, 2018 and2017, respectively. See “Collaborative Arrangements” in “Item 1—Business” in this Annual Report for additional information about our relationship with Janssen.What is bipolar I disorder?Bipolar I disorder is a brain disorder that causes unusual shifts in a person’s mood, energy and ability to function. Patients with this brain disorder mayexperience debilitating mood swings, from extreme highs (mania) to extreme lows (depression). Bipolar I disorder is characterized based on the occurrence of atleast one manic episode, with or without the occurrence of a major depressive episode and affects approximately one percent of the American adult population inany given year. The median age of onset for bipolar I disorder is 25 years.What is schizoaffective disorder?Schizoaffective disorder is a condition in which a person experiences a combination of schizophrenia symptoms, such as delusions, hallucinations or othersymptoms characteristic of schizophrenia, and mood disorder symptoms, such as mania or depression. Schizoaffective disorder is a serious mental illness thataffects about one in 300 people.8 Table of ContentsVIVITROL (Russia and CIS)VIVITROL is described more fully above under the heading “Proprietary Products” in “Item 1—Business” in this Annual Report. We developed andexclusively manufacture VIVITROL for Cilag. Cilag exclusively commercializes VIVITROL in Russia and certain countries of the CIS.VUMERITY (Diroximel Fumarate)VUMERITY (diroximel fumarate), formerly referred to as BIIB098, is a novel, oral fumarate with a distinct chemical structure that was approved in theU.S. in October 2019 for the treatment of relapsing forms of multiple sclerosis in adults, including clinically isolated syndrome, relapsing-remitting disease andactive secondary progressive disease.Under our license and collaboration agreement with Biogen, Biogen holds the exclusive, worldwide license to develop and commercialize VUMERITY.For more information about the license and collaboration agreement with Biogen, see “Collaborative Arrangements—Biogen” in “Item 1—Business” in thisAnnual Report.Revenues from Biogen related to this license and collaboration agreement accounted for approximately 17%, 10% and less than 10% of our consolidatedrevenues for the years ended December 31, 2019, 2018 and 2017, respectively.What is multiple sclerosis?Multiple sclerosis, or MS, is an unpredictable, often disabling disease of the CNS, which interrupts the flow of information within the brain, and betweenthe brain and body. MS symptoms can vary over time and from person to person. Symptoms may include extreme fatigue, impaired vision, problems with balanceand walking, numbness or pain and other sensory changes, bladder and bowel symptoms, tremors, problems with memory and concentration and mood changes,among others. Approximately 400,000 individuals in the U.S. and 2.5 million people worldwide have MS, and most are diagnosed between the ages of 15 and 50.Key Development ProgramsOur R&D is focused on the development of novel, competitively advantaged medications designed to enhance patient outcomes in major CNS disordersand in oncology. As part of our ongoing R&D efforts, we have devoted, and will continue to devote, significant resources to conducting pre-clinical work andclinical studies to advance the development of new pharmaceutical products. The discussion below highlights our current key R&D programs. Drug developmentinvolves a high degree of risk and investment, and the status, timing and scope of our development programs are subject to change. Important factors that couldadversely affect our drug development efforts are discussed in “Item 1A—Risk Factors” in this Annual Report. See “Patents and Proprietary Rights” in “Item 1—Business” in this Annual Report for information with respect to the intellectual property protection for our development candidates.ALKS 3831ALKS 3831 is an investigational, novel, once-daily, oral atypical antipsychotic drug candidate for the treatment of adults with schizophrenia and for thetreatment of adults with bipolar I disorder. ALKS 3831 is composed of samidorphan, a novel, new molecular entity, co-formulated with the establishedantipsychotic agent, olanzapine, in a single bilayer tablet.ALKS 3831 is designed to provide the robust antipsychotic efficacy of olanzapine while mitigating olanzapine-associated weight gain. The ENLIGHTENclinical development program for ALKS 3831 includes two key phase 3 studies in patients with schizophrenia: ENLIGHTEN-1, a four-week study which evaluatedthe antipsychotic efficacy of ALKS 3831 compared to placebo, and ENLIGHTEN-2, a six-month study which assessed weight gain with ALKS 3831 compared toZYPREXA® (olanzapine). The program also includes supportive studies to evaluate the pharmacokinetic (“PK”) and metabolic profile and long-term safety ofALKS 3831, and pharmacokinetic bridging studies comparing ALKS 3831 and ZYPREXA.In May 2019, we conducted a pre-NDA meeting with the U.S. Food and Drug Administration (“FDA”) to discuss the FDA’s key requirements for the newdrug application (“NDA”) for ALKS 3831, including those related to efficacy, safety, weight and metabolic profile, and the expansion of the planned NDA forALKS 3831 to encompass the treatment of bipolar I disorder in addition to the treatment of schizophrenia. In November 2019, we submitted our NDA to theFDA,seeking approval for ALKS 3831 for the treatment of schizophrenia and for the treatment of manic and mixed episodes associated with bipolar I disorder as amonotherapy or adjunct to lithium or valproate and for maintenance treatment of bipolar I disorder. In January 2020, the FDA accepted the ALKS 3831 NDA andassigned a Prescription Drug User Fee Act (“PDUFA”) target action date of November 15, 2020. The ALKS 3831 NDA includes data from the ENLIGHTENclinical development program in patients with schizophrenia, as well as PK bridging data comparing ALKS 3831 and ZYPREXA. We are seeking approval offixed dosage strengths of ALKS 3831 composed of 10 mg of samidorphan co-formulated with 5 mg, 10 mg, 15 mg or 20 mg of olanzapine.9 Table of ContentsALKS 4230 ALKS 4230 is a novel, engineered fusion protein designed to selectively expand tumor-killing immune cells while avoiding the activation ofimmunosuppressive cells by preferentially binding to the intermediate-affinity interleukin-2 (“IL-2”) receptor complex. The selectivity of ALKS 4230 is designedto leverage the proven anti-tumor effects of existing IL-2 therapy while mitigating certain limitations. ARTISTRY is our clinical development program that evaluates ALKS 4230 in patients with advanced solid tumors. ARTISTRY-1, an ongoing phase 1/2study of ALKS 4230 administered via intravenous infusion as a monotherapy and in combination with the anti-PD-1 therapy, pembrolizumab, is designed toevaluate the safety profile and anti-tumor activity of ALKS 4230 in patients with select advanced solid tumors. ARTISTRY-1 has three distinct stages: an ongoingmonotherapy dose-escalation stage, an ongoing monotherapy expansion stage, and an ongoing combination therapy stage with the PD-1 inhibitor pembrolizumabin patients with select advanced solid tumors. ARTISTRY-2, an ongoing phase 1/2 study of ALKS 4230 administered subcutaneously as monotherapy and incombination with pembrolizumab in patients with advanced solid tumors, is designed to explore the safety, tolerability and efficacy of ALKS 4230 and assessonce-weekly and once-every-three-week subcutaneous dosing schedules. ARTISTRY-2, which we initiated in February 2019, is being conducted in two stages: anongoing dose-escalation stage, to be followed by a dose-expansion stage. In November 2019, we presented data from the ARTISTRY clinical development program at the 2019 Society for Immunotherapy of Cancer Meeting.Collaborative ArrangementsWe have entered into several collaborative arrangements to develop and commercialize products and, in connection with such arrangements, to accesstechnological, financial, marketing, manufacturing and other resources. See “Patents and Proprietary Rights” in “Item 1—Business” in this Annual Report forinformation with respect to the IP protection for these products.JanssenINVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTAUnder our license agreement with Janssen Pharmaceutica N.V., we granted Janssen a worldwide exclusive license under our NanoCrystal technology todevelop, commercialize and manufacture INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA and related products.Under this license agreement, we received milestone payments upon the achievement of certain development goals from Janssen; there are no furthermilestones to be earned under this agreement. We receive tiered royalty payments between 3.5% and 9% of INVEGA SUSTENNA/XEPLION and INVEGATRINZA/TREVICTA end-market net sales in each country where the license is in effect, with the exact royalty percentage determined based on aggregateworldwide net sales. The tiered royalty payments consist of a patent royalty and a know‑how royalty, both of which are determined on a country‑by‑country basis.The patent royalty, which equals 1.5% of net sales, is payable in each country until the expiration of the last of the patents with valid claims applicable to theproduct in such country. The know‑how royalty is a tiered royalty of 3.5% on calendar year net sales up to $250 million, 5.5% on calendar year net sales ofbetween $250 million and $500 million and 7.5% on calendar year net sales exceeding $500 million. The know‑how royalty rate resets to 3.5% at the beginning ofeach calendar year and is payable until 15 years from the first commercial sale of a product in each individual country, subject to the expiry of the licenseagreement. These royalty payments may be reduced in any country based on patent litigation or on competing products achieving certain minimum salesthresholds. The license agreement expires upon the expiration of the last of the patents subject to the agreement. After expiration, Janssen retains a non‑exclusive,royalty‑free license to develop, manufacture and commercialize the products.Janssen may terminate the license agreement in whole or in part upon three months’ notice to us. We and Janssen have the right to terminate the agreementupon a material breach of the other party, which is not cured within a certain time period, or upon the other party’s bankruptcy or insolvency.RISPERDAL CONSTAUnder a product development agreement, we collaborated with Janssen on the development of RISPERDAL CONSTA. Under the development agreement,Janssen provided funding to us for the development of RISPERDAL CONSTA, and Janssen is responsible for securing all necessary regulatory approvals for theproduct.Under two license agreements, we granted Janssen and an affiliate of Janssen exclusive worldwide licenses to use and sell RISPERDAL CONSTA. Underour license agreements with Janssen, we receive royalty payments equal to 2.5% of Janssen’s end-market net sales of RISPERDAL CONSTA in each countrywhere the license is in effect based on the quarter when the product is sold10 Table of Contentsby Janssen. This royalty may be reduced in any country based on lack of patent coverage and significant competition from generic versions of the product. Janssencan terminate the license agreements upon 30 days’ prior written notice to us. Either party may terminate the license agreements by written notice following abreach which continues for 90 days after the delivery of written notice thereof or upon the other party’s insolvency. The licenses granted to Janssen expire on acountry‑by‑country basis upon the later of (i) the expiration of the last patent claiming the product in such country or (ii) 15 years after the date of the firstcommercial sale of the product in such country, provided that in no event will the license granted to Janssen expire later than the twentieth anniversary of the firstcommercial sale of the product in each such country, with the exception of Canada, France, Germany, Italy, Japan, Spain and the United Kingdom, in each case,where the fifteen‑year minimum shall pertain regardless. After expiration, Janssen retains a non‑exclusive, royalty‑free license to manufacture, use and sellRISPERDAL CONSTA.We exclusively manufacture RISPERDAL CONSTA for commercial sale. Under our manufacturing and supply agreement with Janssen, we receivemanufacturing revenue based on a percentage of Janssen’s net unit sales price for RISPERDAL CONSTA for the applicable calendar year. This percentage isdetermined based on Janssen’s unit demand for such calendar year and varies based on the volume of units shipped, with a minimum manufacturing fee of 7.5%.Either party may terminate the manufacturing and supply agreement upon a material breach by the other party, which is not resolved within 60 days after receipt ofa written notice specifying the material breach or upon written notice in the event of the other party’s insolvency or bankruptcy. Janssen may terminate theagreement upon six months’ written notice to us. In the event that Janssen terminates the manufacturing and supply agreement without terminating the licenseagreements, the royalty rate payable to us on Janssen’s net sales of RISPERDAL CONSTA would increase from 2.5% to 5.0%.AcordaUnder an amended and restated license agreement, we granted Acorda an exclusive worldwide license to use and sell and, solely in accordance with oursupply agreement, to make or have made, AMPYRA/FAMPYRA. We receive certain commercial and development milestone payments, license revenues and aroyalty of approximately 10% based on net selling price of AMPYRA and FAMPYRA by Acorda and its sub‑licensee, Biogen. This royalty payment may bereduced in any country based on lack of patent coverage, competing products achieving certain minimum sales thresholds, and whether we manufacture theproduct.In June 2009, we entered into an amendment of the amended and restated license agreement and the supply agreement with Acorda and, pursuant to suchamendment, consented to the sublicense by Acorda to Biogen of Acorda’s rights to use and sell FAMPYRA in certain territories outside of the U.S. (to the extentthat such rights were to be sublicensed to Biogen pursuant to its separate collaboration and license agreement with Acorda). Under this amendment, we agreed tomodify certain terms and conditions of the amended and restated license agreement and the supply agreement with Acorda to reflect the sublicense by Acorda toBiogen.Acorda has the right to terminate the amended and restated license agreement upon 90 days’ written notice. We have the right to terminate the amended andrestated license agreement for countries in which Acorda fails to launch a product within a specified time after obtaining the necessary regulatory approval or failsto file regulatory approvals within a commercially reasonable time after completion of, and receipt of positive data from, all pre-clinical and clinical studiesrequired for filing a marketing authorization application. Either party has the right to terminate the amended and restated license agreement by written noticefollowing a material breach of the other party, which is not cured within a certain time period, or upon the other party’s entry into bankruptcy or dissolutionproceedings. If we terminate Acorda’s license in any country, we are entitled to a license from Acorda of its patent rights and know‑how relating to the product aswell as the related data, information and regulatory files, and to market the product in the applicable country, subject to an initial payment equal to Acorda’s cost ofdeveloping such data, information and regulatory files and to ongoing royalty payments to Acorda. Subject to the termination of the amended and restated licenseagreement, licenses granted under the license agreement terminate on a country‑by‑country basis upon the expiration of the last to expire of our patents or theexistence of a threshold level of competition in the marketplace.Under our commercial manufacturing supply agreement with Acorda, we manufacture and supply AMPYRA/FAMPYRA for Acorda (and its sub‑licensee,Biogen). Under the terms of the agreement, Acorda may obtain up to 25% of its total annual requirements of product from a second‑source manufacturer. Wereceive manufacturing royalties equal to 8% of net selling price (or higher under certain circumstances) for all product manufactured by us and a compensatingpayment for product manufactured and supplied by a third party. We may terminate the commercial manufacturing supply agreement upon 12 months’ priorwritten notice to Acorda, and either party may terminate the commercial manufacturing supply agreement following a material and uncured breach of thecommercial manufacturing supply agreement or amended and restated license agreement or the entry into bankruptcy or dissolution proceedings by the other party.In addition, subject to early termination of the commercial manufacturing supply agreement noted above, the commercial manufacturing supply agreementterminates upon the expiry or termination of the amended and restated license agreement.11 Table of ContentsWe are entitled to receive the following milestone payments under our amended and restated license agreement with Acorda for each of the third and fourthnew indications of the product developed thereunder: (i) $1.0 million upon initiation of a phase 3 clinical trial; (ii) $1.0 million upon acceptance of an NDA by theFDA; (iii) $1.5 million upon approval of the NDA by the FDA; and (iv) $1.5 million upon the first commercial sale.BiogenUnder a license and collaboration agreement with Biogen, which we entered into in November 2017 and amended in October 2018, January 2019 andOctober 2019, we granted Biogen a worldwide, exclusive, sublicensable license to develop, manufacture and commercialize VUMERITY and other productscovered by patents licensed to Biogen under the agreement.Under this license and collaboration agreement, we received an upfront cash payment of $28.0 million in November 2017, and milestone payments of$50.0 million, $150.0 million and $5.0 million in June 2018, November 2019 and December 2019, respectively, upon the achievement of certain developmentalmilestones, including FDA approval of the NDA for VUMERITY in October 2019, and amendment of the license and collaboration agreement in October 2019.We are also eligible to receive additional payments upon achievement of milestones with respect to the first two products, other than VUMERITY, covered bypatents licensed to Biogen under the license and collaboration agreement.In addition, we receive a 15% royalty on worldwide net sales of VUMERITY, subject to, under certain circumstances, minimum annual payments for thefirst five years following FDA approval of VUMERITY. We are also entitled to receive royalties on net sales of products other than VUMERITY covered bypatents licensed to Biogen under the license and collaboration agreement, at tiered royalty rates calculated as percentages of net sales ranging from high-singledigits to sub-teen double digits. All royalties are payable on a product-by-product and country-by-country basis until the later of (i) the last-to-expire patent rightcovering the applicable product in the applicable country and (ii) a specified period of time from the first commercial sale of the applicable product in theapplicable country. Royalties for all products and the minimum annual payments for VUMERITY are subject to customary reductions, as set forth in the licenseand collaboration agreement.Except in limited circumstances, we were responsible for the development of VUMERITY until it was approved by the FDA. Following FDA approval ofVUMERITY in October 2019 and except for the manufacturing responsibilities discussed below, Biogen is now responsible for all development andcommercialization activities for VUMERITY and all other products covered by patents licensed to Biogen.Under the license and collaboration agreement, Biogen appointed us as the toll manufacturer of clinical and commercial supplies of VUMERITY, subjectto Biogen’s right to manufacture or have manufactured commercial supplies as a back-up manufacturer and subject to good faith agreement by the parties on theterms of such manufacturing arrangements. In October 2019, we entered into a commercial supply agreement with Biogen for the commercial supply ofVUMERITY, an amendment to such commercial supply agreement and an amendment to the November 2017 license and collaboration agreement with Biogen.Under these agreements, Biogen has an option to assume responsibility, subject to a transition period, for the manufacture (itself or through a designee) of clinicalsupplies of VUMERITY and up to 100% of commercial supplies of VUMERITY in exchange for an increase in the royalty rate to be paid by Biogen to us on netsales of product that is manufactured by Biogen or its designee. If VUMERITY discontinuations due to gastrointestinal adverse events in VUMERITY’s long-term safety clinical trial exceed a certain pre-definedthreshold, then “GI Inferiority” shall be deemed to exist, and (i) Biogen shall have the right to recapture from us its $50.0 million option payment through certaintemporary reductions in royalty rates, and (ii) the minimum annual payments Biogen owes to us shall terminate.Unless earlier terminated, the license and collaboration agreement will remain in effect until the expiry of all royalty obligations. Biogen has the right toterminate the license and collaboration agreement at will, on a product-by-product basis or in its entirety upon 180 days’ prior notice to us. Either party has theright to terminate the license and collaboration agreement following any governmental prohibition of the transactions effected by the agreement, or in connectionwith an insolvency event involving the other party. Upon termination of the license and collaboration agreement by either party, then, at our request, theVUMERITY program will revert to us.Proprietary Technology PlatformsWe have used our proprietary technology platforms, which include technologies owned and exclusively licensed to us, to establish drug development,clinical development and regulatory expertise.Injectable Extended‑Release Microsphere TechnologyOur injectable extended‑release microsphere technology allows us to encapsulate small‑molecule pharmaceuticals, peptides and proteins in microspheresmade of common medical polymers. The technology is designed to enable novel formulations of12 Table of Contentspharmaceuticals by providing controlled, extended release of drugs over time. Drug release from the microsphere is controlled by diffusion of the drug through themicrosphere and by biodegradation of the polymer. These processes can be modulated through a number of formulation and fabrication variables, including drugsubstance and microsphere particle sizing and choice of polymers and excipients.LinkeRx TechnologyThe long‑acting LinkeRx technology platform is designed to enable the creation of extended‑release injectable versions of antipsychotic therapies and mayalso be useful in other disease areas in which extended duration of action may provide therapeutic benefits. The technology uses proprietary linker‑tail chemistry tocreate new molecular entities derived from known agents.NanoCrystal TechnologyOur NanoCrystal technology is applicable to poorly water‑soluble compounds and involves formulating and stabilizing drugs into particles that arenanometers in size. A drug in NanoCrystal form can be incorporated into a range of common dosage forms and administration routes, including tablets, capsules,inhalation devices and sterile forms for injection, with the potential for enhanced oral bioavailability, increased therapeutic effectiveness, reduced/eliminatedfed/fasted variability and sustained duration of intravenous/intramuscular release.Oral Controlled Release TechnologyOur oral controlled release (“OCR”) technologies are used to formulate, develop and manufacture oral dosage forms of pharmaceutical products with varieddrug release profiles.Manufacturing and Product SupplyWe own and occupy an R&D and manufacturing facility in Athlone, Ireland and a manufacturing facility in Wilmington, Ohio. We either purchase activepharmaceutical ingredients (“API”) from third parties or receive it from our third‑party licensees to formulate products using our technologies. The manufacture ofour products for clinical trials and commercial use is subject to Current Good Manufacturing Practices (“cGMP”) regulations and other regulations. Ourmanufacturing and development capabilities include formulation through process development, scale‑up and full‑scale commercial manufacturing and specializedcapabilities for the development and manufacturing of controlled substances.Although some materials and services for our products are currently only available from a single source or a limited number of qualified sources, weattempt to acquire an adequate inventory of such materials, establish alternative sources and/or negotiate long‑term supply arrangements. However, we cannot becertain that we will continue to be able to obtain long‑term supplies of our manufacturing materials.Our supply chain is growing with an expanding external network of third‑party service providers involved in the manufacture of our products who aresubject to inspection by the FDA or comparable agencies in other jurisdictions. Any delay, interruption or other issues that arise in the acquisition of API, rawmaterials, or components, or in the manufacture, fill‑finish, packaging, or storage of our marketed or development products, including as a result of a failure of ourfacilities or the facilities or operations of third parties to pass any regulatory agency inspection, could significantly impair our ability to sell our products oradvance our development efforts, as the case may be. For information about risks relating to the manufacture of our marketed products and product candidates, see“Item 1A—Risk Factors” in this Annual Report and specifically those sections entitled “—We rely on third parties to provide services in connection with themanufacture and distribution of our products” and “—We are subject to risks related to the manufacture of our products.”Marketed ProductsWe manufacture ARISTADA and ARISTADA INITIO, and microspheres for RISPERDAL CONSTA and VIVITROL, in our Wilmington, Ohio facility.We are currently operating one RISPERDAL CONSTA line, two VIVITROL lines, two ARISTADA lines and one ARISTADA INITIO line at commercial scale.We source our packaging operations for VIVITROL, ARISTADA and ARISTADA INITIO to third‑party contractors. Janssen is responsible for packagingoperations for RISPERDAL CONSTA and, in Russia and certain countries of the CIS, VIVITROL. Our Wilmington, Ohio facility has been inspected by U.S.,European (including the UK Medicines and Healthcare products Regulatory Agency), Chinese, Japanese, Brazilian, Turkish and Saudi Arabian regulatoryauthorities for compliance with required cGMP standards for continued commercial manufacturing.13 Table of ContentsWe manufacture AMPYRA, FAMPYRA, VUMERITY, and other products in our Athlone, Ireland facility. This facility has been inspected by U.S., Irish,Brazilian, Turkish, Saudi Arabian, Korean, Belarusian, Russian and Chinese regulatory authorities for compliance with required cGMP standards for continuedcommercial manufacturing. In 2019, the FDA completed a pre-approval inspection and recommended the Athlone, Ireland facility for approval to manufacturecommercial supplies of VUMERITY.For more information about our manufacturing facilities, see “Item 2—Properties” in this Annual Report.Clinical ProductsWe have established, and are operating, facilities with the capability to produce clinical supplies of injectable extended‑release products, solid dosage formproducts and biologics products at our Wilmington, Ohio facility and solid dosage form products at our Athlone, Ireland facility. We have also contracted withthird‑party manufacturers to formulate certain products for clinical use. We require that our contract manufacturers adhere to cGMP in the manufacture of productsfor clinical use.Research & DevelopmentWe devote significant resources to R&D programs. We focus our R&D efforts on developing novel therapeutics in areas of high unmet medical need. OurR&D efforts include, but are not limited to, areas such as pharmaceutical formulation, analytical chemistry, process development, engineering, scale‑up and drugoptimization/delivery. Please see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report foradditional information relating to our R&D expenditures.Permits and Regulatory ApprovalsWe hold various licenses in respect of our manufacturing activities conducted in Wilmington, Ohio and Athlone, Ireland. The primary licenses held in thisregard are FDA Registrations of Drug Establishment and Drug Enforcement Administration of the U.S. Department of Justice (“DEA”). We also hold aManufacturers Authorization (No. M1067), an Investigational Medicinal Products Manufacturers Authorization (No. IMP074) and Certificates of GoodManufacturing Practice Compliance of a Manufacturer (Ref. 2014/7828/IMP074 and 2014/7828/M1067) from the Health Products Regulatory Authority in Ireland(“HPRA”) in respect of our Athlone, Ireland facility, and a number of Controlled Substance Licenses granted by the HPRA. Due to certain U.S. state lawrequirements, we also hold state licenses to cover distribution activities conducted in certain states and not in respect of any manufacturing activities conducted inthose states.We do not generally act as the marketing authorization holder for products incorporating our drug delivery technologies that have been developed on behalfof a licensee of such technologies. In such cases, our licensee usually holds the relevant marketing authorization from the FDA or other regulatory authority, andwe would support this authorization by furnishing a copy of the product’s Drug Master File, or chemistry, manufacturing and controls data, to the relevantregulator. We generally update this information annually with the relevant regulator. In other cases where we have developed proprietary products, such asVIVITROL, ARISTADA and ARISTADA INITIO, we hold the marketing authorization and related regulatory documentation ourselves.Marketing, Sales and DistributionWe are responsible for the marketing of VIVITROL, ARISTADA and ARISTADA INITIO in the U.S. We focus our sales and marketing efforts onphysicians in private practice and in public treatment systems. We believe that we use customary pharmaceutical company practices to market our products,including through advertisements, professional symposia, selling initiatives and other methods, and to educate individual physicians, nurses, social workers,counselors and other stakeholders involved in the treatment of opioid dependence, alcohol dependence and schizophrenia. We provide, and contract withthird‑party vendors to provide, customer service and other related programs for our products, such as product‑specific websites, insurance research services andorder, delivery and fulfillment services.Our sales force for VIVITROL in the U.S. consists of approximately 100 individuals. VIVITROL is primarily sold to pharmaceutical wholesalers,pharmacies, specialty distributors and treatment providers. Product sales of VIVITROL during the year ended December 31, 2019 to Cardinal Health, McKessonCorporation and AmerisourceBergen Corporation (“AmerisourceBergen”) represented approximately 23%, 21% and 12%, respectively, of total VIVITROL grosssales.Our sales force for ARISTADA and ARISTADA INITIO in the U.S. consists of approximately 250 individuals. ARISTADA and ARISTADA INITIO areprimarily sold to pharmaceutical wholesalers. Product sales of ARISTADA and ARISTADA INITIO during the year ended December 31, 2019 to Cardinal Health,McKesson Corporation and AmerisourceBergen represented approximately 43%, 25% and 24%, respectively, of total ARISTADA and ARISTADA INITIO grosssales.ICS, a division of AmerisourceBergen, provides warehousing, shipping and administrative services for VIVITROL, ARISTADA and ARISTADA INITIO.14 Table of ContentsUnder our license agreements with Janssen, Acorda, Biogen and other licensees and sublicensees, they are each responsible for the commercialization of anyproducts developed under their respective agreement if and when regulatory approval is obtained.CompetitionWe face intense competition in the development, manufacture, marketing and commercialization of our products from many and varied sources, such asresearch institutions and biopharmaceutical companies, including other companies with similar technologies. Some of these competitors are also our licensees, whocontrol the commercialization of products from which we receive manufacturing and royalty revenues. These competitors are working to develop and market othersystems, products and other methods of preventing or reducing disease, and new small‑molecule and other classes of drugs that can be used with or without a drugdelivery system.The biopharmaceutical industry is characterized by intensive research, development and commercialization efforts and rapid and significant technologicalchange. Many of our competitors are larger and have significantly greater financial and other resources than we do. We expect our competitors to develop newtechnologies, products and processes that may be more effective than those we develop. The development of technologically improved or different products ortechnologies may make our products or product platforms obsolete or noncompetitive before we recover expenses incurred in connection with their development orrealize any revenues from any marketed product.There are other companies developing extended‑release product platforms. In many cases, there are products on the market or in development that may bein direct competition with our products. In addition, we know of new chemical entities that are being developed that, if successful, could compete against ourproducts. These chemical entities are being designed to work differently than our products and may turn out to be safer or to be more effective than our products.Among the many experimental therapies being tested around the world, there may be some that we do not now know of that may compete with our proprietaryproduct platforms or products. Our licensees could choose a competing technology to use with their drugs instead of one of our product platforms and coulddevelop products that compete with our products.With respect to our products, we believe that our ability to successfully compete will depend on, among other things, the existence of competing oralternative products in the marketplace, including generic competition, and the relative price of those products; the efficacy, safety and reliability of our productscompared to competing or alternative products; product acceptance by, and preferences of, physicians, other health care providers and patients; our ability tocomply with applicable laws, regulations and regulatory requirements with respect to the commercialization of our products, including any changes or increases toregulatory restrictions; protection of our proprietary rights relating to our products; our ability to obtain reimbursement for our products in approved indications;our ability to complete clinical development and obtain regulatory approvals for our products, and the timing and scope of regulatory approvals; our ability toprovide a reliable supply of commercial quantities of a product to the market; and our ability to recruit, retain and develop skilled employees.With respect to our proprietary injectable product platform, we are aware that there are other companies developing extended-release delivery systems forpharmaceutical products, including, but not limited to Luye Pharma Group Ltd. (“Luye Pharma”), which is developing risperidone formulated as extended releasemicrospheres for intramuscular injection for the treatment of schizophrenia and/or schizoaffective disorders. In the treatment of schizophrenia, ARISTADA,INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and RISPERDAL CONSTA compete with each other and a number of other injectableproducts including ZYPREXA RELPREVV ((olanzapine) For Extended Release Injectable Suspension), which is marketed and sold by Lilly; ABILIFYMAINTENA (aripiprazole for extended release injectable suspension), a once-monthly injectable formulation of ABILIFY (aripiprazole) developed by OtsukaPharm. Co.; PERSERIS (risperidone for extended release injectable suspension), a once-monthly formulation of risperidone marketed by Indivior plc; CAPLYTA(lumateperone), an oral, once-daily anti-psychotic developed by Intra-Cellular Therapies, Inc.; other oral compounds currently on the market; and generic versionsof branded oral and injectable products. In the treatment of bipolar disorder, RISPERDAL CONSTA competes with antipsychotics such as oral aripiprazole;REXULTI, which is co-marketed by Otsuka Pharm Co. and H. Lundbeck A/S plc; LATUDA, which is marketed and sold by Sunovion Pharmaceuticals Inc.;VRAYLAR, which is marketed and sold by Allergan plc; ABILIFY MAINTENA; risperidone; quetiapine; olanzapine; ziprasidone and clozapine.In the treatment of alcohol dependence, VIVITROL competes with generic acamprosate calcium (also known as CAMPRAL) and generic disulfiram (alsoknown as ANTABUSE) as well as currently marketed drugs, including generic drugs, also formulated from naltrexone. Other pharmaceutical companies aredeveloping products that have shown some promise in treating alcohol dependence that, if approved by the FDA, would compete with VIVITROL.15 Table of ContentsIn the treatment of opioid dependence, VIVITROL competes with SUBOXONE (buprenorphine HCl/naloxone HCl dehydrate sublingual tablets),SUBOXONE (buprenorphine/naloxone) Sublingual Film, SUBUTEX (buprenorphine HCl sublingual tablets) and SUBLOCADE (once-monthly buprenorphineextended-release injection), each of which is marketed and sold by Indivior plc, and BUNAVAIL buccal film (buprenorphine and naloxone) marketed byBioDelivery Sciences, PROBUPHINE (buprenorphine) from Titan Pharmaceuticals, Inc., ZUBSOLV (buprenorphine and naloxone) marketed by Orexo US, Inc.,and once launched, will compete with BRIXADI, which will be marketed by Braeburn, Inc. VIVITROL also competes with methadone, oral naltrexone and genericversions of SUBUTEX and SUBOXONE sublingual tablets. Other pharmaceutical companies are developing products that have shown promise in treating opioiddependence that, if approved by the FDA, would compete with VIVITROL.In the treatment of MS, VUMERITY competes with AVONEX, TYSABRI, TECFIDERA, and PLEGRIDY from Biogen; OCREVUS from Genentech;BETASERON from Bayer HealthCare Pharmaceuticals; COPAXONE from Teva Pharmaceutical Industries Ltd.; REBIF and MAVENCLAD from EMD Serono,Inc.; GILENYA, EXTAVIA and MAYZENT from Novartis AG; and AUBAGIO and LEMTRADA from Sanofi-Aventis.With respect to our NanoCrystal technology, we are aware that other technology approaches similarly address poorly water‑soluble drugs. Theseapproaches include nanoparticles, cyclodextrins, lipid‑based self‑emulsifying drug delivery systems, dendrimers and micelles, among others, any of which couldlimit the potential success and growth prospects of products incorporating our NanoCrystal technology. In addition, there are many competing technologies to ourOCR technology, some of which are owned by large pharmaceutical companies with drug delivery divisions and other, smaller drug‑delivery‑specific companies.Patents and Proprietary RightsOur success will be dependent, in part, on our ability to obtain and maintain patent protection for our products, including those marketed and sold by ourlicensees, to maintain trade secret protection and to operate without infringing upon the proprietary rights of others. We have a proprietary portfolio of patent rightsand exclusive licenses to patents and patent applications, which includes numerous patents in the U.S. and in other countries directed to compositions of matter,methods of treatment and formulations, as well as processes of preparation. In the future, we plan to file additional patent applications in the U.S. and in othercountries directed to new or improved products and processes, and we intend to continue to vigorously defend our patent positions. In addition, our licensees mayown additional patents that cover those products owned by such licensees that incorporate our proprietary technologies and for which we receive royalties.ARISTADA and ARISTADA INITIOWe have several U.S. patents and patent applications, and a number of corresponding foreign counterparts, that cover ARISTADA and/or ARISTADAINITIO. Our principal U.S. patents for ARISTADA and/or ARISTADA INITIO and their expiration dates are as follows: U.S. Patent No. Product(s) Covered Expiration Date 8,431,576 ARISTADA;ARISTADA INITIO 2030 8,796,276 ARISTADA;ARISTADA INITIO 2030 10,112,903 ARISTADA;ARISTADA INITIO 2030 10,023,537 ARISTADA 2030 10,352,529 ARISTADA;ARISTADA INITIO 2030 9,034,867 ARISTADA 2032 10,226,458 ARISTADA 2032 9,193,685 ARISTADA 2033 9,861,699 ARISTADA 2033 10,342,877 ARISTADA 2033 9,452,131 ARISTADA 2035 9,526,726 ARISTADA 2035 10,064,859 ARISTADA 2035 10,238,651 ARISTADA 2035 10,478,434 ARISTADA 2035 10,016,415 ARISTADA INITIO 2035In the U.S., in addition to patent protection, ARISTADA is entitled to regulatory exclusivity until October 2020, a benefit afforded to new chemical entities.16 Table of ContentsVIVITROL and RISPERDAL CONSTAWe have a number of patents and pending patent applications covering our microsphere technology throughout the world, which, to some extent, coverVIVITROL and RISPERDAL CONSTA. The latest to expire of our patents covering RISPERDAL CONSTA expire in the U.S. in 2023 and in the EU in 2021. Weown one unexpired Orange-Book listed U.S. patent covering RISPERDAL CONSTA, which expires in 2020. For a discussion of legal proceedings related tocertain of the patents covering RISPERDAL CONSTA, see Note 19, Commitments and Contingent Liabilities in the “Notes to Consolidated Financial Statements”in this Annual Report.We own seven unexpired Orange-Book listed U.S. patents covering VIVITROL. The latest to expire of our patents covering VIVITROL expire in theU.S. in 2029 and in the EU in 2021. Under the terms of a settlement and license agreement entered into in July 2019 with Amneal Pharmaceuticals LLC(“Amneal”), we granted Amneal a non-exclusive license under certain patents covering VIVITROL, including the latest to expire patent covering VIVITROL inthe U.S., to market and sell a generic formulation of VIVITROL in the U.S. beginning sometime in 2028 or earlier under certain circumstances.INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTAOur NanoCrystal technology patent portfolio, licensed to Janssen in relation to INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA,contains a number of granted patents and pending patent applications throughout the world, including in the U.S. and in countries outside of the U.S. The latest ofthe patents subject to our license agreement with Janssen covering INVEGA SUSTENNA/XEPLION expires in 2030 in the U.S. and certain other countries and in2022 in the EU. The latest to expire of the licensed patents covering INVEGA TRINZA/TREVICTA in the U.S. expired in 2017 and in the EU will expire in 2022.In addition, Janssen has other patents not subject to our license agreement, including one that covers INVEGA SUSTENNA in the U.S. and expires in 2031 andone that covers INVEGA TRINZA in the U.S. and expires in 2036. For a discussion of legal proceedings related to the patents covering INVEGA SUSTENNA,see Note 19, Commitments and Contingent Liabilities in the “Notes to Consolidated Financial Statements” in this Annual Report.VUMERITYWe have U.S. patents and patent applications, and a number of corresponding foreign counterparts, that cover VUMERITY. U.S. Patent Nos. 8,669,281,9,090,558 and 10,080,733, each expiring in 2033, cover compositions of, or methods of treatment for, VUMERITY.We also have worldwide patent protection for our Key Development Programs:ALKS 3831We own or have a license to U.S. and worldwide patents and patent applications that cover a class of compounds that includes the opioid modulators inALKS 3831. In addition, we own U.S. and worldwide patents and patent applications that claim formulations and methods of treatment that cover ALKS 3831.The principal owned or licensed U.S. patents for ALKS 3831 and their expiration dates are as follows: U.S. Patent No. Product(s) Covered Expiration Date 7,956,187 ALKS 3831 2021 8,252,929 ALKS 3831 2021 7,262,298 ALKS 3831 2025 8,680,112 ALKS 3831 2030 9,119,848 ALKS 3831 2031 10,005,790 ALKS 3831 2031 8,778,960 ALKS 3831 2031 9,126,977 ALKS 3831 2031 9,517,235 ALKS 3831 2031 9,943,514 ALKS 3831 2031 10,300,054 ALKS 3831 2031ALKS 4230We have U.S. patents and patent applications, and a number of corresponding foreign counterparts, that cover ALKS 4230. U.S. Patent Nos. 9,359,415 and10,407,481, each expiring in 2033, cover compositions of ALKS 4230.17 Table of ContentsProtection of Proprietary Rights and Competitive PositionWe have exclusive rights through licensing agreements with third parties to issued U.S. patents, pending patent applications and corresponding patents orpatent applications in countries outside the U.S, subject in certain instances to the rights of the U.S. government to use the technology covered by such patents andpatent applications. Under certain licensing agreements, we are responsible for patent expenses, and we pay annual license fees and/or minimum annual royalties.In addition, under these licensing agreements, we are obligated to pay royalties on future sales of products, if any, covered by the licensed patents.There may be patents issued to third parties that relate to our products. The manufacture, use, offer for sale, sale or import of some of our products might befound to infringe on the claims of these patents. A third party might file an infringement action against us. The cost of defending such an action is likely to be high,and we might not receive a favorable ruling. There may also be patent applications filed by third parties that relate to some of our products if issued in theirpresent form. The patent laws of the U.S. and other countries are distinct, and decisions as to patenting, validity of patents and infringement of patents may beresolved differently in different countries.If patents exist or are issued that cover our products, we or our licensees may not be able to manufacture, use, offer for sale, sell or import some of ourproducts without first getting a license from the patent holder. The patent holder may not grant us a license on reasonable terms, or it may refuse to grant us alicense at all. This could delay or prevent us from developing, manufacturing, selling or importing those of our products that would require the license.We try to protect our proprietary position by filing patent applications in the U.S. and in other countries related to our proprietary technology, inventionsand improvements that are important to the development of our business. Because the patent position of biopharmaceutical companies involves complex legal andfactual questions, enforceability of patents cannot be predicted with certainty. The ultimate degree of patent protection that will be afforded to products andprocesses, including ours, in the U.S. and in other important markets, remains uncertain and is dependent upon the scope of protection decided upon by the patentoffices, courts and lawmakers in these countries. Patents, if issued, may be challenged, invalidated or circumvented. Thus, any patents that we own or license fromothers may not provide any protection against competitors. Our pending patent applications, those we may file in the future, or those we may license from thirdparties, may not result in patents being issued. If issued, they may not provide us with proprietary protection or competitive advantages against competitors withsimilar technology. Furthermore, others may independently develop similar technologies or duplicate any technology that we have developed outside the scope ofour patents. The laws of certain countries do not protect our intellectual property rights to the same extent as do the laws of the U.S.We also rely on trade secrets, know‑how and technology, which are not protected by patents, to maintain our competitive position. We try to protect thisinformation by entering into confidentiality agreements with parties that have access to it, such as our corporate partners, collaborators, licensees, employees andconsultants. Any of these parties may breach the agreements and disclose our confidential information or our competitors might learn of the information in someother way. If any trade secret, know‑how or other technology not protected by a patent were to be disclosed to, or independently developed by, a competitor, suchevent could materially adversely affect our business, financial condition, cash flows and results of operations. For more information, see “Item 1A—Risk Factors”in this Annual Report.Our trademarks, including VIVITROL, ARISTADA and ARISTADA INITIO, are important to us and are generally covered by trademark applications orregistrations in the U.S. Patent and Trademark Office and the patent or trademark offices of other countries. Our licensed products and products using ourproprietary technologies also use trademarks that are owned by our licensees, such as the trademarks INVEGA SUSTENNA/XEPLION, INVEGATRINZA/TREVICTA and RISPERDAL CONSTA, which are registered trademarks of Johnson & Johnson, VUMERITY, which is a registered trademark ofBiogen (and used by Alkermes under license) and AMPYRA and FAMPYRA, which are registered trademarks of Acorda. Trademark protection varies inaccordance with local law and continues in some countries as long as the trademark is used and in other countries as long as the trademark is registered. Trademarkregistrations generally are for fixed but renewable terms.RegulatoryRegulation of Pharmaceutical ProductsUnited StatesOur current and contemplated activities, and the products and processes that result from such activities, are subject to substantial government regulation.Before new pharmaceutical products may be sold in the U.S., pre‑clinical studies and clinical trials of the products must be conducted and the results submitted tothe FDA for approval. Clinical trial programs must determine an appropriate dose and regimen, establish substantial evidence of effectiveness and define theconditions for safe use. This is a high‑risk process that requires stepwise clinical studies in which the product must successfully meet pre‑specified endpoints.18 Table of ContentsPre‑Clinical Testing: Before beginning testing of any compounds with potential therapeutic value in human subjects in the U.S., stringent governmentrequirements for pre‑clinical data must be satisfied. Pre‑clinical testing includes both in vitro, or in an artificial environment outside of a living organism, and invivo, or within a living organism, laboratory evaluation and characterization of the safety and efficacy of a drug and its formulation.Investigational New Drug Exemption: Pre‑clinical testing results obtained from in vivo studies in several animal species, as well as from in vitro studies,are submitted to the FDA, as part of an Investigational New Drug (“IND”) Application, and are reviewed by the FDA prior to the commencement of humanclinical trials. The pre‑clinical data must provide an adequate basis for evaluating both the safety and the scientific rationale for the initial clinical studies in humanvolunteers.Clinical Trials: Clinical trials involve the administration of the drug to healthy human volunteers or to patients under the supervision of a qualifiedinvestigator pursuant to an FDA‑reviewed protocol. Human clinical trials are typically conducted in three sequential phases, although the phases may overlap withone another and, depending upon the nature of the clinical program, a specific phase or phases may be skipped altogether. Clinical trials must be conducted underprotocols that detail the objectives of the study, the parameters to be used to monitor safety, and the efficacy criteria, if any, to be evaluated. Each protocol must besubmitted to the FDA as part of the IND. •Phase 1 clinical trials—test for safety, dose tolerability, absorption, bio‑distribution, metabolism, excretion and clinical pharmacology and, ifpossible, to gain early evidence regarding efficacy. •Phase 2 clinical trials—involve a relatively small sample of the actual intended patient population and seek to assess the efficacy of the drug forspecific targeted indications, to determine dose‑response and the optimal dose range and to gather additional information relating to safety andpotential adverse effects. •Phase 3 clinical trials—consist of expanded, large‑scale studies of patients with the target disease or disorder to obtain definitive statistical evidenceof the efficacy and safety of the proposed product and dosing regimen.In the U.S., the results of the pre‑clinical and clinical testing of a product are then submitted to the FDA in the form of a Biologics License Application(“BLA”), or an NDA. The NDA or BLA also includes information pertaining to the preparation of the product, analytical methods, details of the manufacture offinished products and proposed product packaging and labeling. The submission of an application is not a guarantee that the FDA will find the applicationcomplete and accept it for filing. The FDA may refuse to file the application if it is not considered sufficiently complete to permit a review and will inform theapplicant of the reason for the refusal. The applicant may then resubmit the application and include supplemental information.Once an NDA or BLA is accepted for filing, the FDA has 10 months, under its standard review process, within which to review the application (for someapplications, the review process is longer than 10 months). For drugs that, if approved, would represent a significant improvement in the safety or effectiveness ofthe treatment, diagnosis, or prevention of serious conditions when compared to standard applications, the FDA may assign “priority review” designation andreview the application within six months. The FDA has additional review pathways to expedite development and review of new drugs that are intended to treatserious or life‑threatening conditions and demonstrate the potential to address unmet medical needs, including: “Fast Track,” “Breakthrough Therapy,” and“Accelerated Approval.” However, none of these expedited pathways ensure that a product will receive FDA approval.As part of its review, the FDA may refer the application to an advisory committee for independent advice on questions related to the development of thedrug and a recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee; however,historically, it has typically followed such recommendations. The FDA may determine that a Risk Evaluation and Mitigation Strategy (“REMS”) is necessary toensure that the benefits of a new product outweigh its risks. If required, a REMS may include various elements, such as publication of a medication guide, apatient package insert, a communication plan to educate health care providers of the drug’s risks, limitations on who may prescribe or dispense the drug, or othermeasures that the FDA deems necessary to assure the safe use of the drug.In reviewing a BLA or NDA, the FDA may grant marketing approval, or issue a complete response letter to communicate to the applicant the reasons theapplication cannot be approved in its then-current form and provide input on the changes that must be made before an application can be approved. Even if suchadditional information and data are submitted to the FDA, the FDA may ultimately decide that the BLA or NDA still does not satisfy the criteria for approval. Thereceipt of regulatory approval often takes a number of years, involves the expenditure of substantial resources and depends on a number of factors, including theseverity of the disease in question, the availability of alternative treatments, efficacy and potential safety signals observed in pre‑clinical tests or clinical trials, andthe risks and benefits demonstrated in clinical trials. It is impossible to predict with any certainty whether and when the FDA will grant marketing approval. Even ifa product is approved, the approval may be subject to limitations based on the FDA’s interpretation of the data. For example, the FDA may require, as a conditionof approval, restricted distribution and use, enhanced labeling, special packaging or labeling, expedited reporting of certain adverse events, pre‑approval ofpromotional materials or restrictions on direct‑to‑consumer advertising, any of which could negatively impact the commercial success of a drug. The FDA mayrequire a sponsor to conduct additional post‑marketing studies as a condition of approval to provide data on safety and effectiveness. In addition, prior tocommercialization, controlled substances are subject to review and scheduling by the DEA.19 Table of ContentsThe FDA tracks information on side effects and adverse events reported during clinical studies and after marketing approval. Non‑compliance with safetyreporting requirements may result in civil or criminal penalties. Side effects or adverse events that are identified during clinical trials can delay, impede or preventmarketing approval. Based on new safety information that emerges after approval, the FDA can mandate product labeling changes, impose a REMS or the additionof elements to an existing REMS, require new post‑marketing studies (including additional clinical trials), or suspend or withdraw approval of the product.If we seek to make certain types of changes to an approved product, such as adding a new indication, making certain manufacturing changes, or changingmanufacturers or suppliers of certain ingredients or components, the FDA will need to review and approve such changes in advance. In the case of a newindication, we are required to demonstrate with additional clinical data that the product is safe and effective for the new intended use. Such regulatory reviews canresult in denial or modification of the planned changes, or requirements to conduct additional tests or evaluations that can substantially delay or increase the cost ofthe planned changes.In addition, the FDA regulates all advertising and promotional activities for products under its jurisdiction. A company can make only those claims relatingto safety and efficacy that are consistent with FDA regulation and guidance. However, physicians may prescribe legally available drugs for uses that are notdescribed in the drug’s labeling. Such off‑label uses are common across certain medical specialties and often reflect a physician’s belief that the off‑label use is thebest treatment for a particular patient. The FDA does not regulate the behavior of physicians in their choice of treatments, but the FDA regulations do imposestringent restrictions on manufacturers’ communications regarding off‑label uses. Failure to comply with applicable FDA requirements may subject a company toadverse publicity, enforcement action by the FDA and the U.S. Department of Justice, corrective advertising and the full range of civil and criminal penaltiesavailable to the FDA and the U.S. Department of Justice.Controlled Substances Act: The DEA regulates pharmaceutical products that are controlled substances. Controlled substances are those drugs that appearon one of the five schedules promulgated and administered by the DEA under the Controlled Substances Act (the “CSA”). The CSA governs, among other things,the inventory, distribution, recordkeeping, handling, security and disposal of controlled substances. Pharmaceutical products that act on the CNS are oftenevaluated for abuse potential; a product that is then classified as a controlled substance must undergo scheduling by the DEA, which is a separate process that maydelay the commercial launch of a pharmaceutical product even after FDA approval of the NDA for such product. Companies with a scheduled pharmaceuticalproduct are subject to periodic and ongoing inspections by the DEA and similar state drug enforcement authorities to assess ongoing compliance with the DEA’sregulations. Any failure to comply with these regulations could lead to a variety of sanctions, including the revocation, or a denial of renewal, of any DEAregistration and injunctions, or civil or criminal penalties.Outside the United StatesCertain of our products are commercialized by our licensees in numerous jurisdictions outside the U.S. Most of these jurisdictions have product approvaland post‑approval regulatory processes that are similar in principle to those in the U.S. In Europe, there are several tracks for marketing approval, depending on thetype of product for which approval is sought. Under the centralized procedure, a company submits a single application to the European Medicines Agency(“EMA”). The marketing application is similar to the NDA in the U.S. and is evaluated by the Committee for Medicinal Products for Human Use (“CHMP”), theexpert scientific committee of the EMA. If the CHMP determines that the marketing application fulfills the requirements for quality, safety, and efficacy, it willsubmit a favorable opinion to the European Commission (“EC”). The CHMP opinion is not binding, but is typically adopted by the EC. A marketing applicationapproved by the EC is valid in all member states.In addition to the centralized procedure, Europe also has: (i) a nationalized procedure, which requires a separate application to, and approval determinationby, each country; (ii) a decentralized procedure, whereby applicants submit identical applications to several countries and receive simultaneous approval; and(iii) a mutual recognition procedure, where applicants submit an application to one country for review and other countries may accept or reject the initial decision.Regardless of the approval process employed, various parties share responsibilities for the monitoring, detection and evaluation of adverse events post‑approval,including national authorities, the EMA, the EC and the marketing authorization holder.Good Manufacturing ProcessesThe FDA, the EMA, the competent authorities of the EU member states and other regulatory agencies regulate and inspect equipment, facilities andprocesses used in the manufacturing of pharmaceutical and biologic products prior to approving a product. If, after receiving approval from regulatory agencies, acompany makes a material change in manufacturing equipment, location or process, additional regulatory review and approval may be required. Companies alsomust adhere to cGMP and product‑specific regulations enforced by the FDA and other regulatory agencies both in the manufacture of clinical product andfollowing product approval. The FDA, the EMA and other regulatory agencies also conduct regular, periodic visits to re‑inspect equipment, facilities and processesfollowing the initial approval of a product. If, as a result of these inspections, it is determined that our equipment, facilities or processes do not comply withapplicable regulations and conditions of product approval, regulatory agencies may seek civil, criminal or administrative sanctions and/or remedies against us,including the suspension of our manufacturing operations.20 Table of ContentsGood Clinical PracticesThe FDA, the EMA and other regulatory agencies promulgate regulations and standards, commonly referred to as Good Clinical Practices (“GCP”), fordesigning, conducting, monitoring, auditing and reporting the results of clinical trials to ensure that the data and results are accurate and that the trial participantsare adequately protected. The FDA, the EMA and other regulatory agencies enforce GCP through periodic inspections of trial sponsors, principal investigators,trial sites, contract research organizations (“CROs”) and institutional review boards. If our studies fail to comply with applicable GCP, patient safety and well-being could be impacted, the clinical data generated in our clinical trials may be deemed unreliable, and relevant regulatory agencies may require us to performadditional clinical trials before approving our marketing applications. Noncompliance can also result in civil or criminal sanctions. We rely on third parties,including CROs, to carry out many of our clinical trial‑related activities. Failure of such third parties to comply with GCP can likewise result in rejection of ourclinical trial data or other sanctions.Hatch‑Waxman ActUnder the U.S. Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch‑Waxman Act”), Congress created an abbreviated FDA reviewprocess for generic versions of pioneer, or brand‑name, drug products. The law also provides incentives by awarding, in certain circumstances, non‑patent relatedmarketing exclusivities to pioneer drug manufacturers. Newly approved drug products and changes to the conditions of use of approved products may benefit fromperiods of non‑patent‑related marketing exclusivity in addition to any patent protection the drug product may have. The Hatch‑Waxman Act provides five years ofnew chemical entity (“NCE”) marketing exclusivity to the first applicant to gain approval of an NDA for a product that contains an active ingredient, known as theactive drug moiety, not found in any other approved product. The FDA is prohibited from accepting any abbreviated NDA (“ANDA”) for a generic drug or 505(b)(2) application referencing the NCE for five years from the date of approval of the NCE, or four years in the case of an ANDA or 505(b)(2) application containinga patent challenge, and in both cases may not approve such generic drug or 505(b)(2) application until expiration of NCE marketing exclusivity. A 505(b)(2)application is an NDA wherein the applicant relies, in part, on data and the FDA’s findings of safety and efficacy from studies not conducted by or for theapplicant and for which the applicant has not obtained a right of reference. Hatch-Waxman Act exclusivities will not prevent the submission or approval of a fullNDA (e.g., under 505(b)(1)), as opposed to an ANDA or 505(b)(2) application, for any drug, including, for example, a drug with the same active ingredient,dosage form, route of administration, strength and conditions of use.The Hatch‑Waxman Act also provides three years of exclusivity for applications containing the results of new clinical investigations, other thanbioavailability studies, essential to the FDA’s approval of new uses of approved products, such as new indications, dosage forms, strengths, or conditions of use.However, this exclusivity only protects against the approval of ANDAs and 505(b)(2) applications for the protected use and will not prohibit the FDA fromaccepting or approving ANDAs or 505(b)(2) applications for other products containing the same active ingredient.The Hatch‑Waxman Act requires NDA applicants and NDA holders to provide certain information about patents related to the drug for listing in the FDA’sApproved Drugs Product List, commonly referred to as the Orange Book. ANDA and 505(b)(2) applicants must then certify regarding each of the patents listedwith the FDA for the reference product. A certification that a listed patent is invalid or will not be infringed by the marketing of the applicant’s product is called a“Paragraph IV certification.” If the ANDA or 505(b)(2) applicant provides such a notification of patent invalidity or noninfringement, then the FDA may acceptthe ANDA or 505(b)(2) application four years after approval of the NDA for an NCE. If a Paragraph IV certification is filed and the ANDA or 505(b)(2)application has been accepted as a reviewable filing by the FDA, the ANDA or 505(b)(2) applicant must then, within 20 days, provide notice to the NDA holderand patent owner stating that the application has been submitted and providing the factual and legal basis for the applicant’s opinion that the patent is invalid ornot infringed. The NDA holder or patent owner may file suit against the ANDA or 505(b)(2) applicant for patent infringement. If this is done within 45 days ofreceiving notice of the Paragraph IV certification, a one‑time, 30‑month stay of the FDA’s ability to approve the ANDA or 505(b)(2) application is triggered. The30‑month stay begins at the end of the NDA holder’s data exclusivity period, or, if data exclusivity has expired, on the date that the patent holder is notified. TheFDA may approve the proposed product before the expiration of the 30‑month stay if a court finds the patent invalid or not infringed, or if the court shortens theperiod because the parties have failed to cooperate in expediting the litigation.Sales and MarketingWe are subject to various U.S. federal and state laws pertaining to healthcare fraud and abuse, including anti‑kickback laws and false claims laws.Anti‑kickback laws make it illegal for a prescription drug manufacturer to solicit, offer, receive, or pay any remuneration in exchange for, or to induce, the referralof business, including the purchase or prescription of a particular drug. Due to the broad scope of the U.S. statutory provisions, the general absence of guidance inthe form of regulations, and few court decisions addressing industry practices, it is possible that our practices might be challenged under anti‑kickback or similarlaws. False claims laws prohibit anyone from knowingly and willingly presenting, or causing to be presented, for payment to third‑party payers (includingMedicare and Medicaid) claims for reimbursed drugs or services that are false or fraudulent, claims for items or services not provided as claimed or claims formedically unnecessary items or services. Activities relating to the sale and marketing of our21 Table of Contentsproducts may be subject to scrutiny under these laws. Violations of fraud and abuse laws may be punishable by criminal and/or civil sanctions, including fines andcivil monetary penalties, as well as the possibility of exclusion from federal healthcare programs (including Medicare and Medicaid). In addition, federal and stateauthorities are paying increased attention to enforcement of these laws within the pharmaceutical industry and private individuals have been active in allegingviolations of the laws and bringing suits on behalf of the government under the federal civil False Claims Act. If we were subject to allegations concerning, or wereconvicted of violating, these laws, our business could be harmed. See “Item 1A—Risk Factors” in this Annual Report and specifically those sections entitled “—Ifwe fail to comply with the extensive legal and regulatory requirements affecting the healthcare industry, we could face increased costs, penalties and a loss ofbusiness,” “—Revenues generated by sales of our products depend on the availability of reimbursement from third‑party payers, and a reduction in payment rate orreimbursement or an increase in our financial obligation to governmental payers could result in decreased sales of our products and decreased revenues” and “—The commercial use of our products may cause unintended side effects or adverse reactions, or incidents of misuse may occur, which could adversely affect ourbusiness and share price.”Laws and regulations have been enacted by the federal government and various states to regulate the sales and marketing practices of pharmaceuticalmanufacturers. The laws and regulations generally limit financial interactions between manufacturers and healthcare providers and require disclosure to thegovernment and public of such interactions. The laws include federal “sunshine”, or open payments, provisions enacted in 2010 as part of the comprehensivefederal healthcare reform legislation and supplemented as part of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment forPatients and Communities Act. Such provisions apply to pharmaceutical manufacturers with products reimbursed under certain government programs and requirethose manufacturers to disclose annually to the federal government (for re‑disclosure to the public) certain payments made to, or at the request of, or on behalf of,physicians or to teaching hospitals and, commencing for information to be submitted as of January 1, 2022, certain payments made to physicians assistants, nursepractitioners, clinical nurse specialists, certified registered nurse anesthetists and certified nurse-midwives. Certain state laws also require disclosure ofpharmaceutical pricing information and marketing expenditures. Given the ambiguity found in many of these laws and their implementation, our reporting actionscould be subject to the penalty provisions of the pertinent federal and state laws and regulations.Pricing and ReimbursementUnited StatesIn the U.S., sales of our products, including those sold by our licensees, and our ability to generate revenues on such sales are dependent, in significant part,on the availability and level of reimbursement from third‑party payers such as state and federal governments, including Medicare and Medicaid, managed careproviders and private insurance plans. Third‑party payers are increasingly challenging the prices charged for medical products and examining the medical necessityand cost‑effectiveness of medical products, in addition to their safety and efficacy.Medicaid is a joint federal and state program that is administered by the states for low‑income and disabled beneficiaries. Under the Medicaid rebateprogram, we are required to pay a rebate for each unit of product reimbursed by the state Medicaid programs. The amount of the rebate for each product is set bylaw as the greater of 23.1% of average manufacturer price (“AMP”) or the difference between AMP and the best price available from us to any commercial ornon‑federal governmental customer. The rebate amount must be adjusted upward where the AMP for a product’s first full quarter of sales, when adjusted forincreases in the Consumer Price Index—Urban, is less than the AMP for the current quarter, with this difference being the amount by which the rebate is adjustedupwards. The rebate amount is required to be recomputed each quarter based on our report of current AMP and best price for each of our products to the Centersfor Medicare & Medicaid Services (“CMS”). The terms of our participation in the rebate program imposes a requirement for us to report revisions to AMP or bestprice within a period not to exceed 12 quarters from the quarter in which the data was originally due. Any such revisions could have the impact of increasing ordecreasing our rebate liability for prior quarters, depending on the direction of the revision. In addition, if we were found to have knowingly submitted falseinformation to the government, the statute provides for civil monetary penalties per item of false information in addition to other penalties available to thegovernment. Medicare is a federal program that is administered by the federal government that covers individuals age 65 and over as well as those with certaindisabilities. Medicare Part B pays physicians who administer our products under a payment methodology using average sales price (“ASP”) information.Manufacturers, including us, are required to provide ASP information to the CMS on a quarterly basis. This information is used to compute Medicare paymentrates, with rates for Medicare Part B drugs outside the hospital outpatient setting and in the hospital outpatient setting consisting of ASP plus a specifiedpercentage. These rates are adjusted periodically. If a manufacturer is found to have made a misrepresentation in the reporting of ASP, the statute provides for civilmonetary penalties for each misrepresentation and for each day in which the misrepresentation was applied.22 Table of ContentsMedicare Part D provides coverage to enrolled Medicare patients for self‑administered drugs (i.e. drugs that do not need to be injected or otherwiseadministered by a physician) and certain physician-administered drugs reimbursed under a pharmacy benefit. Medicare Part D also covers the prescription drugbenefit for dual eligible beneficiaries. Medicare Part D is administered by private prescription drug plans approved by the U.S. government and each drug planestablishes its own Medicare Part D formulary for prescription drug coverage and pricing, which the drug plan may modify from time‑to‑time. The prescriptiondrug plans negotiate pricing with manufacturers and may condition formulary placement on the availability of manufacturer discounts. Except for dual eligibleMedicare Part D beneficiaries who qualify for low income subsidies, manufacturers, including us, are required to provide a seventy percent (70%) discount on ourbrand name prescription drugs utilized by Medicare Part D beneficiaries when those beneficiaries reach the coverage gap in their drug benefits.The availability of federal funds to pay for our products under the Medicaid Drug Rebate Program and Medicare Part B requires that we extend discounts tocertain purchasers under the Public Health Services (“PHS”) pharmaceutical pricing program. Purchasers eligible for discounts include a variety of communityhealth clinics, other entities that receive health services grants from PHS, and hospitals that serve a disproportionate share of financially needy patients.We also make our products available for purchase by authorized users of the Federal Supply Schedule (“FSS”) of the General Services Administrationpursuant to our FSS contract with the Department of Veterans Affairs. Under the Veterans Health Care Act of 1992 (the “VHC Act”), we are required to offerdeeply discounted FSS contract pricing to four federal agencies: the Department of Veterans Affairs; the Department of Defense; the Coast Guard; and the PHS(including the Indian Health Service), in order for federal funding to be made available for reimbursement of any of our products by such federal agencies andcertain federal grantees. Coverage under Medicaid, the Medicare Part B program and the PHS pharmaceutical pricing program is also conditioned upon FSSparticipation. FSS pricing is negotiated periodically with the Department of Veterans Affairs. FSS pricing is intended not to exceed the price that we charge ourmost‑favored non‑federal customer for a product. In addition, prices for drugs purchased by the Department of Veterans Affairs, Department of Defense (includingdrugs purchased by military personnel and dependents through the TriCare retail pharmacy program), Coast Guard and PHS are subject to a cap on pricing equal to76% of the non‑federal average manufacturer price (“non‑FAMP”). An additional discount applies if non‑FAMP increases more than inflation (measured by theConsumer Price Index—Urban). In addition, if we are found to have knowingly submitted false information to the government, the VHC Act provides for civilmonetary penalties per false item of information in addition to other penalties available to the government.In addition, on January 21, 2016, CMS released the final Medicaid covered outpatient drug regulation, which became effective on April 1, 2016. Thisregulation implements those changes made by the Patient Protection and Affordable Care Act (the “PPACA”) to the Medicaid drug rebate statute in 2010 andaddresses a number of other issues with respect to the Medicaid program, including, but not limited to, the eligibility and calculation methodologies for AMP andbest price, and the expansion of Medicaid rebate liability to include Medicaid managed care organizations. The final Medicaid covered outpatient drug regulationestablished two calculation methodologies for AMP: one for drugs generally dispensed through retail community pharmacies (“RCP”) and one for so-called “5idrugs” (inhaled, infused, instilled, implanted or injectable drugs) “not generally dispensed” through RCPs. The regulation further made clear that 5i drugs wouldqualify as “not generally dispensed” and, therefore, able to use the alternative AMP calculation, if not more than thirty percent (30%) of their sales were to RCPs orto wholesalers for RCPs. The primary difference between the two AMP calculations is the requirement to exclude from AMP, for those qualifying 5i drugs notgenerally dispensed through RCPs, certain payments, rebates and discounts related to sales to non-RCPs; such exclusion often leads to a lower AMP. The decisionof which AMP calculation a product is eligible to use must be made and applied on a monthly basis based on the percentage of sales of such product to RCPs or towholesalers for RCPs.U.S. federal and state governments regularly consider reforming healthcare coverage and lessening healthcare costs. Such reforms may include pricecontrols, value-based pricing and changes to the coverage and reimbursement of our products, which may have a significant impact on our business. In addition,emphasis on managed care in the U.S. has increased and we expect will continue to increase the pressure on drug pricing. Private insurers regularly seek to managedrug cost and utilization by implementing coverage and reimbursement limitations through means including, but not limited to, formularies, increasedout‑of‑pocket obligations and various prior authorization requirements. Even if favorable coverage and reimbursement status is attained for one or more productsfor which we have received regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.23 Table of ContentsOutside the United StatesWithin the EU, products are paid for by a variety of payers, with governments being the primary source of payment. Governments may determine orinfluence reimbursement of products. Governments may also set prices or otherwise regulate pricing. Negotiating prices with governmental authorities can delaycommercialization of products. Governments may use a variety of cost‑containment measures to control the cost of products, including price cuts, mandatoryrebates, value‑based pricing and reference pricing (i.e. referencing prices in other countries and using those reference prices to set a price). Recent budgetarypressures in many EU countries are causing governments to consider or implement various cost‑containment measures, such as price freezes, increased price cutsand rebates, and expanded generic substitution and patient cost‑sharing. If budget pressures continue, governments may implement additional cost‑containmentmeasures.Other RegulationsForeign Corrupt Practices Act: We are subject to the U.S. Foreign Corrupt Practices Act (the “FCPA”), which prohibits U.S. corporations and theirrepresentatives from paying, offering to pay, promising, authorizing, or making payments of anything of value to any foreign government official, government staffmember, political party, or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an official capacity. In manycountries, the healthcare professionals with whom we regularly interact may meet the FCPA’s definition of a foreign government official. The FCPA also requirespublic companies to make and keep books and records that accurately and fairly reflect their transactions and to devise and maintain an adequate system of internalaccounting controls.Environmental, Health and Safety Laws: Our operations are subject to complex and increasingly stringent environmental, health and safety laws andregulations in the countries where we operate and, in particular, where we have manufacturing facilities, namely the U.S. and Ireland. Environmental and healthand safety authorities in the relevant jurisdictions, including the Environmental Protection Agency and the Occupational Safety and Health Administration in theU.S. and the Environmental Protection Agency and the Health and Safety Authority in Ireland, administer laws which regulate, among other matters, the emissionof pollutants into the air (including the workplace), the discharge of pollutants into bodies of water, the storage, use, handling and disposal of hazardoussubstances, the exposure of persons to hazardous substances, and the general health, safety and welfare of employees and members of the public. In certain cases,these laws and regulations may impose strict liability for pollution of the environment and contamination resulting from spills, disposals or other releases ofhazardous substances or waste and/or any migration of such hazardous substances or waste. Costs, damages and/or fines may result from the presence,investigation and remediation of contamination at properties currently or formerly owned, leased or operated by us and/or off‑site locations, including where wehave arranged for the disposal of hazardous substances or waste. In addition, we may be subject to third‑party claims, including for natural resource damages,personal injury and property damage, in connection with such contamination.The General Data Protection Regulation (“GDPR”): The GDPR came into force on May 25, 2018 and replaced the previous EU Data Protection Directive(95/46). The GDPR, which governs the processing of personal data (including personal health data), applies to the Company and any of its subsidiaries that areestablished in the EU as well as any of its subsidiaries that are established outside the EU to the extent that they process personal data relating to clinical trialparticipants in the EU. The GDPR imposes significant obligations on controllers and processors of personal data, including, as compared to the prior directive,higher standards for obtaining consent from individuals to process their personal data, more robust notification requirements to individuals about the processing oftheir personal data, a strengthened individual data rights regime, mandatory data breach notifications, limitations on the retention of personal data, increasedrequirements pertaining to health data, and strict rules and restrictions on the transfer of personal data outside of the EU, including to the U.S. The GDPR alsoimposes additional obligations on, and required contractual provisions to be included in, contracts between companies subject to the GDPR and their third-partyprocessors that relate to the processing of personal data. The GDPR allows EU member states to make additional laws and regulations further limiting theprocessing of genetic, biometric or health data.Other Laws: We are subject to a variety of financial disclosure, securities trading regulations and governmental regulations as an Irish-incorporated publiccompany in the U.S., including laws relating to the oversight activities of the SEC, the Irish Companies Act 2014, and the regulations of the Nasdaq Stock Market(“Nasdaq”), on which our shares are traded. We are also subject to various laws, regulations and recommendations relating to safe working conditions, laboratorypractices, the experimental use of animals, and the purchase, storage, movement, import and export and use and disposal of hazardous or potentially hazardoussubstances used in connection with our research work.EmployeesAs of February 4, 2020, we had approximately 2,235 full‑time employees. A significant number of our management and professional employees have priorexperience with pharmaceutical, biopharmaceutical or medical product companies. We believe that we have been successful in attracting skilled and experiencedscientific and senior management personnel; however, competition for such personnel is intense. None of our employees is covered by a collective bargainingagreement. We consider our relations with our employees to be good.24 Table of ContentsAvailable Information and Website DisclosureOur principal executive offices are located at Connaught House, 1 Burlington Road, Dublin 4, Ireland D04 C5Y6. Our telephone number is+353‑1‑772‑8000 and our website address is www.alkermes.com. Information found on, or accessible through, our website is not incorporated into, and does notform a part of, this Annual Report. We make available free of charge through the Investors section of our website our Annual Reports on Form 10‑K, QuarterlyReports on Form 10‑Q, Current Reports on Form 8‑K and all amendments to those reports as soon as reasonably practicable after such material is electronicallyfiled with, or furnished to, the SEC. We also make available on our website (i) the charters for the standing committees of our board of directors, including theAudit and Risk Committee, Compensation Committee, and Nominating and Corporate Governance Committee, and (ii) our Code of Business Conduct and Ethicsgoverning our directors, officers and employees. We intend to disclose on our website any amendments to, or waivers from, our Code of Business Conduct andEthics that are required to be disclosed pursuant to the rules of the SEC.From time to time, we may use our website to distribute material information. Our financial and other material information is routinely posted to andaccessible on the Investors section of our website, available at www.alkermes.com. Investors are encouraged to review the Investors section of our website becausewe may post material information on that site that is not otherwise disseminated by us. Information that is contained in and can be accessed through our website isnot incorporated into, and does not form a part of, this Annual Report.Item 1A. Risk FactorsYou should consider carefully the risks described below in addition to the financial and other information contained in this Annual Report, including thematters addressed under the caption “Cautionary Note Concerning Forward-Looking Statements.” If any events described by the following risks actually occur,they could materially adversely affect our business, financial condition, cash flows or results of operations. This could cause the market price of our ordinaryshares to decline.We receive substantial revenue from our key products and our success depends on our ability to maintain or increase sales of such products.Sales of our proprietary products, VIVITROL and ARISTADA, comprise an increasingly significant portion of our revenues, and we continue to dependupon the substantial revenue generated from the sales of INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and RISPERDAL CONSTA byJanssen and upon sales of FAMPYRA by Biogen. Any significant negative developments relating to these products, or to our licensee relationships, could have amaterial adverse effect on our business, financial condition, cash flows and results of operations.We rely heavily on our licensees in the commercialization and continued development of products from which we receive revenue; and if our licensees are noteffective, our revenues could be materially adversely affected.Our arrangements with licensees are critical to bringing products using our proprietary technologies and from which we receive manufacturing and/orroyalty revenue to the market and successfully commercializing them. We rely on these licensees in various respects, including commercializing such products;providing funding for development programs and conducting pre-clinical testing and clinical trials with respect to new formulations or other development activitiesfor such products; and managing the regulatory approval process.The revenues that we receive from manufacturing fees and royalties depend primarily upon the success of our licensees, and particularly Janssen, Acordaand Biogen, in commercializing certain products. Janssen is responsible for the commercialization of RISPERDAL CONSTA, INVEGA SUSTENNA/XEPLION,and INVEGA TRINZA/TREVICTA, and, in Russia and the CIS, VIVITROL. Acorda is responsible for commercializing AMPYRA, and Biogen is responsible forcommercializing FAMPYRA and VUMERITY. We have no involvement in the commercialization efforts for these and other products sold by third parties towhich we have licensed our proprietary technology. Our revenues may fall below our expectations, the expectations of our licensees or those of investors, whichcould have a material adverse effect on our results of operations and the market price of our ordinary shares. Such revenues will depend on numerous factors, manyof which are outside our control.Our licensees may also choose to use their own or other technology to develop an alternative product and withdraw their support of our product, or tocompete with our jointly developed product. In addition, ARISTADA competes directly with RISPERDAL CONSTA, INVEGA SUSTENNA/XEPLION andINVEGA TRINZA/TREVICTA, products from which we receive manufacturing and/or royalty revenue. Disputes may also arise between us and a licensee andmay involve the ownership of technology developed under a license or other issues arising out of collaborative agreements. Such a dispute could delay the relatedprogram or result in expensive arbitration or litigation, which may not be resolved in our favor.In addition, most of our licensees can terminate their agreements with us without cause, and we cannot guarantee that any of these relationships willcontinue. Failure to make or maintain these arrangements or a delay in, or failure of, a licensee’s performance,25 Table of Contentsor factors that may affect a licensee’s sales, may materially adversely affect our business, financial condition, cash flows and results of operations.We face competition in the biopharmaceutical industry.We face intense competition in the development, manufacture, marketing and commercialization of our products from many and varied sources, such asresearch institutions and biopharmaceutical companies, including other companies with similar technologies, and manufacturers of generic drugs (see “—We orour licensees may face claims against our intellectual property rights covering our products and competition from generic drug manufacturers” for additionalinformation relating to competition from generic drug manufacturers). Some of these competitors are also our licensees, who control the commercialization ofproducts from which we receive manufacturing and/or royalty revenues. These competitors are working to develop and market other systems, products, and othermethods of preventing or reducing disease, and new small-molecule and other classes of drugs that can be used with or without a drug delivery system.The biopharmaceutical industry is characterized by intensive research, development and commercialization efforts and rapid and significant technologicalchange. Many of our competitors are larger and have significantly greater financial and other resources than we do. We expect our competitors to develop newtechnologies, products and processes that may be more effective than those we develop. The development of technologically improved or different products ortechnologies may make our products or product platforms obsolete or noncompetitive before we recover expenses incurred in connection with their development orrealize any revenues from any product.There are other companies developing extended-release product platforms. In many cases, there are products on the market or in development that may bein direct competition with our products. In addition, we know of new chemical entities that are being developed that, if successful, could compete against ourproducts. These chemical entities are being designed to work differently than our products and may turn out to be safer or more effective than our products.Among the many experimental therapies being tested around the world, there may be some that we do not now know of that may compete with our proprietaryproduct platforms or products. Our licensees could choose a competing technology to use with their drugs instead of one of our product platforms and coulddevelop products that compete with our products.With respect to our proprietary injectable product platform, we are aware that there are other companies developing extended-release delivery systems forpharmaceutical products, including, but not limited to Luye Pharma, which is developing risperidone formulated as extended release microspheres forintramuscular injection for the treatment of schizophrenia and/or schizoaffective disorders. In the treatment of schizophrenia, ARISTADA, INVEGASUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA and RISPERDAL CONSTA compete with each other and a number of other injectable productsincluding ZYPREXA RELPREVV ((olanzapine) For Extended Release Injectable Suspension), which is marketed and sold by Lilly; ABILIFY MAINTENA,(aripiprazole for extended release injectable suspension), a once-monthly injectable formulation of ABILIFY (aripiprazole) developed by Otsuka Pharm. Co.;PERSERIS (risperidone for extended release injectable suspension), a once-monthly formulation of risperidone marketed by Indivior plc; CAPLYTA(lumateperone), an oral, once-daily anti-psychotic developed by Intra-Cellular Therapies, Inc.; other oral compounds currently on the market; and generic versionsof branded oral and injectable products. In the treatment of bipolar disorder, RISPERDAL CONSTA competes with antipsychotics such as oral aripiprazole;REXULTI, which is co-marketed by Otsuka Pharm Co. and H. Lundbeck A/S plc; LATUDA, which is marketed and sold by Sunovion Pharmaceuticals Inc.;VRYLAR, which is marketed and sold by Allergan plc; ABILIFY MAINTENA, risperidone, quetiapine, olanzapine, ziprasidone and clozapine.In the treatment of alcohol dependence, VIVITROL competes with generic acamprosate calcium (also known as CAMPRAL) and generic disulfiram (alsoknown as ANTABUSE) as well as currently marketed drugs, including generic drugs, also formulated from naltrexone. Other pharmaceutical companies aredeveloping products that have shown some promise in treating alcohol dependence that, if approved by the FDA, would compete with VIVITROL.In the treatment of opioid dependence, VIVITROL competes with SUBOXONE (buprenorphine HCl/naloxone HCl dehydrate sublingual tablets),SUBOXONE (buprenorphine/naloxone) Sublingual Film, SUBUTEX (buprenorphine HCl sublingual tablets) and SUBLOCADE (once-monthly buprenorphineextended-release injection), each of which is marketed and sold by Indivior plc, and BUNAVAIL buccal film (buprenorphine and naloxone) marketed byBioDelivery Sciences, PROBUPHINE (buprenorphine) from Titan Pharmaceuticals, Inc. and ZUBSOLV (buprenorphine and naloxone) marketed by Orexo US,Inc., and once launched, will compete with BRIXADI, which will be marketed by Braeburn, Inc. It also competes with methadone, oral naltrexone and genericversions of SUBUTEX and SUBOXONE sublingual tablets. Other pharmaceutical companies are developing products that have shown promise in treating opioiddependence that, if approved by the FDA, would compete with VIVITROL.In the treatment of MS, VUMERITY competes with AVONEX, TYSABRI, TECFIDERA, and PLEGRIDY from Biogen; OCREVUS from Genentech;BETASERON from Bayer HealthCare Pharmaceuticals; COPAXONE from Teva Pharmaceutical Industries Ltd.; REBIF and MAVENCLAD from EMD Serono,Inc.; GILENYA, EXTAVIA and MAYZENT from Novartis AG; and AUBAGIO and LEMTRADA from Sanofi-Aventis.With respect to our NanoCrystal technology, we are aware that other technology approaches similarly address poorly water-soluble drugs. Theseapproaches include nanoparticles, cyclodextrins, lipid-based self-emulsifying drug delivery systems, dendrimers and micelles, among others, any of which couldlimit the potential success and growth prospects of products incorporating our26 Table of ContentsNanoCrystal technology. In addition, there are many competing technologies to our OCR technology, some of which are owned by large pharmaceuticalcompanies with drug delivery divisions and other, smaller drug delivery-specific companies.If we are unable to compete successfully in the biopharmaceutical industry, our business, financial condition, cash flows and results of operations could bematerially adversely affected.Our revenues may be lower than expected as a result of failure by the marketplace to accept our products or for other factors.We cannot be assured that our products will be, or will continue to be, accepted in the U.S. or in any markets outside the U.S. or that sales of our productswill not decline or cease in the future. A number of factors may cause revenues from sales of our products to grow at a slower than expected rate, or even todecrease or cease, including: •the perception of physicians and other members of the healthcare community as to our products’ safety and efficacy relative to that of competingproducts and the willingness or ability of physicians and other members of the healthcare community to prescribe, dispense and/or administer, andpatients to use, our products, including those that may be scheduled by the DEA (if and when approved); •unfavorable publicity concerning us or our products, similar classes of drugs or the industry generally; •the cost-effectiveness of our products; •patient and physician satisfaction with our products; •the successful manufacture of our products on a timely and cost-effective basis; •the cost and availability of raw materials necessary for the manufacture of our products; •the size of the markets for our products; •reimbursement policies of government and third-party payers; •the introduction, availability and acceptance of competing treatments, including treatments marketed and sold by our licensees; •the reaction of companies that market competitive products; •adverse event information relating to our products or to similar classes of drugs; •changes to the product labels of our products, or of products within the same drug classes, to add significant warnings or restrictions on use; •our continued ability to access third parties to vial, package and/or distribute our products on acceptable terms; •the unfavorable outcome of investigations, litigation or other legal proceedings, including government investigations regarding VIVITROL,securities litigation relating to ALKS 5461, and litigation or other proceedings before the U.S. Patent and Trademark Office’s (the “USPTO”) PatentTrial and Appeal Board (the “PTAB”), including so-called “Paragraph IV” litigation relating to INVEGA SUSTENNA and RISPERDAL CONSTA,opposition proceedings in the EU relating to RISPERDAL CONSTA and any other litigation related to any of our products; •regulatory developments related to the manufacture or continued use of our products, including the issuance of a REMS by the FDA; •the extent and effectiveness of the sales and marketing and distribution support our products receive, including from our licensees; •our licensees’ decisions as to the timing and volume of product orders and product shipments, the timing of product launches, and product pricingand discounting; •disputes with our licensees relating to the marketing and sale of products from which we receive revenue; •exchange rate valuations and fluctuations; •global political changes and/or instability, including the exit of the United Kingdom from the European Union (commonly referred to as “Brexit”),and any related changes in applicable laws and regulations, that may impact resources and markets for our products outside of the U.S.; and •any other material adverse developments with respect to the commercialization of our products.These and other factors, including other risks disclosed in this “Item 1A—Risk Factors” in this Annual Report, could materially adversely affect ourrevenues, financial condition, cash flows and results of operations.27 Table of ContentsRevenues generated by sales of our products depend on the availability from third-party payers of reimbursement for our products and the extent of cost-sharing arrangements for patients (e.g., patient co-payment, co-insurance, deductible obligations), cost-control measures imposed, reductions in payment rateor reimbursement or increases in our financial obligation to payers could result in decreased sales of our products and decreased revenues.In both U.S. and non-U.S. markets, sales of our products depend, in part, on the availability of reimbursement from third-party payers such as state andfederal governments, including Medicare and Medicaid in the U.S. and similar programs in other countries, managed care providers and private insurance plans.Deterioration in the timeliness, certainty and amount of reimbursement for our products, the existence of barriers to coverage of our products (such as priorauthorization, criteria for use or other requirements), increases in our financial obligation to payers, including government payers (including due to changes in ourAMP calculation and the expansion of our Medicaid rebate obligations to other government payers), limitations by healthcare providers on how much, or underwhat circumstances, they will prescribe or administer our products or unwillingness by patients to pay any required co-payments, or deductible amounts, couldreduce the use of, and revenues generated from, our products and could have a material adverse effect on our business, financial condition, cash flows and resultsof operations. In addition, when a new product is approved, the availability of government and private reimbursement for that product is uncertain, as is the amountfor which that product will be reimbursed. We cannot predict the availability or amount of reimbursement for our products.In the U.S., federal and state legislatures, health agencies and third-party payers continue to focus on containing the cost of healthcare, including bycomparing the effectiveness, benefits and costs of similar treatments. Any adverse findings for our products from such comparisons may reduce the extent ofreimbursement for our products. Economic pressure on state budgets may result in states increasingly seeking to achieve budget savings through mechanisms thatlimit coverage or payment for drugs, including but not limited to price control initiatives, discounts and other pricing-related actions. For example, in 2017, theState of California enacted as law SB-17, a drug pricing transparency bill that requires, among other things, that manufacturers notify the state and health insurers,and justify, any time such manufacturers plan to increase the price of a medication by sixteen percent (16%) or more over a two-year period. Similar state drugpricing initiatives were enacted in 2018 and 2019 (e.g., Oregon HB 4005 with reporting requirements commencing in 2019) and we expect additional state drugpricing initiatives to be proposed and enacted in 2020. In addition, state Medicaid programs are increasingly requesting manufacturers to pay supplemental rebatesand requiring prior authorization by the state program for use of any drug. Managed care organizations continue to seek price discounts and, in some cases, toimpose restrictions on the coverage of particular drugs. Government efforts to reduce Medicaid expenses may lead to increased use of managed care organizationsby Medicaid programs. This may result in managed care organizations influencing prescription decisions for a larger segment of the population and acorresponding constraint on prices and reimbursement for our products.In 2020, we may face uncertainties as a result of likely continued federal and administrative efforts to repeal, substantially modify or invalidate some or allof the provisions of the PPACA and potential reforms and changes to government negotiation or regulation of drug pricing. PPACA significantly expandedcoverage of mental health and substance use disorders and provided federal parity protections to such coverage benefits. There is no assurance that such effortsand proposed legislation will not adversely affect our business and financial results, and we cannot predict how future federal or state legislative or administrativechanges relating to healthcare reform and drug pricing will affect our business.The government-sponsored healthcare systems in Europe and many other countries are the primary payers for healthcare expenditures, including paymentfor drugs and biologics. We expect that countries may take actions to reduce expenditure on drugs and biologics, including mandatory price reductions, patientaccess restrictions, suspensions of price increases, increased mandatory discounts or rebates, preference for generic products, reduction in the amount ofreimbursement and greater importation of drugs from lower-cost countries. These cost-control measures likely would reduce our revenues. In addition, certaincountries set prices by reference to the prices in other countries where our products are marketed. Thus, the inability to secure adequate prices in a particularcountry may not only limit the marketing of products within that country, but may also adversely affect the ability to obtain acceptable prices in other markets.If any of our licensees undergoes a change in control or in management, this may adversely affect revenues from our products.Any change of control, or change in management, of our licensees may result in a reprioritization of our product within such licensee’s portfolio, or suchlicensee may fail to maintain the financial or other resources necessary to continue the development and/or commercialization of such product.If any of our licensees undergoes a change of control and the acquirer either is unable to perform such licensee’s obligations under its agreements with us orhas a product that competes with ours that such acquirer does not divest, it could materially adversely affect our business, financial condition, cash flows andresults of operations.28 Table of ContentsWe rely on a limited number of pharmaceutical wholesalers to distribute our products.As is typical in the pharmaceutical industry, we utilize pharmaceutical wholesalers in connection with the distribution of the products that we market andsell. A significant amount of our product is sold to end-users through the three largest wholesalers in the U.S. market, Cardinal Health Inc., AmerisourceBergenCorp. and McKesson Corp. If we are unable to maintain our business relationships with these major pharmaceutical wholesalers on commercially acceptableterms, if the buying patterns of these wholesalers fluctuate due to seasonality or if wholesaler buying decisions or other factors outside of our control change, suchevents could materially adversely affect our business, financial condition, cash flows and results of operations.The FDA or other regulatory agencies may not approve our products or may delay approval.We must obtain government approvals before marketing or selling our products in the U.S. and in jurisdictions outside the U.S. The FDA, DEA (to theextent a product is a controlled substance), and comparable regulatory agencies in other countries, impose substantial and rigorous requirements for thedevelopment, production and commercial introduction of drug products. These include pre-clinical, laboratory and clinical testing procedures, sampling activities,clinical trials and other costly and time-consuming procedures. Satisfaction of the requirements of the FDA and of other regulatory agencies typically takes asignificant number of years and can vary substantially based upon the type, complexity and novelty of the product.In addition, regulation is not static, and regulatory agencies, including the FDA, evolve in their staff, interpretations and practices and may impose morestringent requirements than currently in effect, which may adversely affect our planned drug development and/or our commercialization efforts. The approvalprocedure and the time required to obtain approval also varies among countries. Regulatory agencies may have varying interpretations of the same data, andapproval by one regulatory agency does not ensure approval by regulatory agencies in other jurisdictions. In addition, the FDA or regulatory agencies outside theU.S. may choose not to communicate with or update us during clinical testing and regulatory review periods. The ultimate decision by the FDA or other regulatoryagencies regarding drug approval may not be consistent with prior communications.This product approval process can last many years, be very costly and still be unsuccessful. Regulatory approval by the FDA or regulatory agencies outsidethe U.S. can be delayed, limited or not granted at all for many reasons, including: •a product may not demonstrate safety and efficacy for each target indication in accordance with the FDA’s or other regulatory agencies’ standards; •data from pre-clinical testing and clinical trials may be interpreted by the FDA or other regulatory agencies in different ways than we or ourlicensees interpret it; •the FDA or other regulatory agencies may not agree with our or our licensees’ regulatory approval strategies, components of our or our licensees’filings, such as clinical trial designs, conduct and methodologies, or the sufficiency of our or our licensees’ submitted data; •the FDA or other regulatory agencies might not approve our or our licensees’ manufacturing processes or facilities; •the FDA or other regulatory agencies may not approve accelerated development timelines for our products; •the failure of our clinical investigational sites and the records kept at such sites, including the clinical trial data, to be in compliance with the FDA’sGCP, or EU legislation governing GCP, including the failure to pass FDA, EMA or EU member state inspections of clinical trials; •the FDA or other regulatory agencies may change their approval policies or adopt new regulations; and •adverse medical events during the trials could lead to requirements that trials be repeated or extended, or that a program be terminated or placed onclinical hold, even if other studies or trials relating to the program are successful.For example, in November 2019, we submitted an NDA to the FDA, seeking approval for ALKS 3831 for the treatment of schizophrenia and for thetreatment of bipolar I disorder. The FDA accepted the NDA for review in January 2020 and assigned a PDUFA target action date of Nov. 15, 2020. We cannotpredict whether our NDA will be approved in a timely manner, or at all, and the review process involves risks and uncertainties, including whether the NDA andthe preclinical and clinical results of the ALKS 3831 studies and the PK bridging data will meet FDA regulatory requirements, including those related to efficacy,safety, weight and metabolic profile for approval for the proposed indications.In addition, disruptions at the FDA and other regulatory agencies that are unrelated to our company or our products could also cause delays to theregulatory approval process for our products. For example, over the last several years, including in December 2018 and January 2019, the U.S. governmenthas shut down several times and certain regulatory agencies, including the FDA, have had to furlough critical employees and stop critical activities. If a prolongedgovernment shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions.29 Table of ContentsFailure to obtain regulatory approval for products will prevent their commercialization. Any delay in obtaining regulatory approval for products couldadversely affect our ability to successfully commercialize such products. In addition, share prices have declined significantly in certain instances where companieshave failed to obtain FDA approval of a product or where the timing of FDA approval is delayed. If the FDA’s or any other regulatory agency’s response to anyapplication for approval is delayed or not favorable for any of our products, our share price could decline significantly and could materially adversely affect ourbusiness, financial condition, cash flows and results of operations.Clinical trials for our products are expensive, may take several years to complete, and their outcomes are uncertain.Before obtaining regulatory approvals for the commercial sale of any products, we or our licensees must demonstrate, through pre-clinical testing andclinical trials, that our products are safe and effective for use in humans. Conducting clinical trials is a lengthy, time-consuming and expensive process. We haveincurred, and we will continue to incur, substantial expense for pre-clinical testing and clinical trials.Our pre-clinical and clinical development efforts may not be successfully completed. Completion of clinical trials may take several years or more. Thelength of time can vary substantially with the type, complexity, novelty and intended use of the product and the clinical study designs and methodologiesemployed. The commencement and rate of completion of clinical trials may be delayed by many factors, including: •the potential delay by a partner in beginning a clinical trial; •issues with the opening of a new clinical trial site or with inspections of clinical trial sites; •the failure of third-party CROs and other third-party service providers and independent clinical investigators to manage and conduct the trials, toperform oversight of the trials, including data audit and verification procedures, or to meet expected deadlines; •the inability to recruit clinical trial participants at the expected rate; •the inability to follow patients adequately after treatment; •unforeseen safety issues; •the inability to manufacture or obtain sufficient quantities of materials used for clinical trials; and •unforeseen governmental or regulatory issues or concerns, including those of the FDA, DEA and other regulatory agencies; and •unforeseen global instability, including political instability or instability from an outbreak of pandemic or contagious disease, such as the novelcoronavirus, in or around the countries in which we conduct our clinical trials.In addition, we are currently conducting and enrolling patients in clinical studies in a number of countries where our experience is more limited. We dependon independent clinical investigators, CROs and other third-party service providers and our collaborators in the conduct of clinical trials for our products and in theauditing, verification and accurate reporting of results from such clinical trials. We rely heavily on these parties for successful execution of our clinical trials but donot control many aspects of their activities. For example, while the investigators are not our employees, we are responsible for ensuring that each of our clinicaltrials is conducted in accordance with the general investigational plan and protocols for the trial. Third parties may not complete activities on schedule or may notconduct our clinical trials in accordance with regulatory requirements or our stated protocols.The outcome of our clinical trials is uncertain. The results from pre-clinical testing and early clinical trials often have not predicted results of later clinicaltrials. In oncology, since we may report preliminary or interim data from one or more patients in a clinical study of our product as of a point in time, there is alsothe added risk that this preliminary or interim data may not be predictive of future data from this same study, including future data from these same patients. Assuch, these data may change as patient clinical study enrollment continues and as more patient data becomes available. A number of products have shownpromising results in early clinical trials but subsequently failed to establish sufficient safety and efficacy data in later clinical trials to obtain necessary regulatoryapprovals.If a product fails to demonstrate safety and efficacy in clinical trials, or if third parties fail to conduct clinical trials in accordance with their obligations, thedevelopment, approval and commercialization of our products may be delayed or prevented, and such events could materially adversely affect our business,financial condition, cash flows and results of operations.Preliminary, topline or interim data from our clinical trials that we may announce, publish or report from time to time may change as more patient databecome available, are subject to audit and verification procedures that could result in material changes in the final data, and may not be indicative of finaldata or results of future clinical trials.30 Table of ContentsFrom time to time, we may announce, publish or report preliminary, topline or interim data from our clinical trials. Preliminary, topline or interim datafrom our clinical trials, including those in oncology, are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollmentcontinues and/or more patient data become available and may not be indicative of final data from such trials or results of future clinical trials. Preliminary, toplineor interim data also remain subject to audit confirmation and verification procedures that may result in the final data being materially different from thepreliminary, topline or interim data we previously announce, published or reported. For example, preliminary data from our ongoing clinical trials of ALKS 4230may change as more patient data become available and are not necessarily predictive of final data from such trials. As a result, preliminary, topline and interimdata should be viewed with caution until the final data are available. Material adverse differences between preliminary, topline or interim data and final data orresults of future clinical trials could significantly harm our business, financial condition, cash flows and results of operations.Our business may suffer if we are unable to develop new products.Our long-term viability and growth will be significantly impacted by our ability to successfully develop new products from our research and developmentactivities and we expect the development of products for our own account to consume substantial resources. Since we fund the development of our proprietaryproducts, there is a risk that we may not be able to continue to fund all such development efforts to completion or to provide the support necessary to perform theclinical trials, obtain regulatory approvals, obtain a final DEA scheduling designation (to the extent our products are controlled substances) or market anyapproved products on a worldwide basis. If we develop commercial products on our own, the risks associated with such development programs may be greaterthan those associated with our programs that are developed with licensees.If our delivery technologies or product development efforts fail to result in the successful development and commercialization of products, if our licenseesdecide not to pursue development and/or commercialization of our products or if our products do not perform as anticipated, such events could materiallyadversely affect our business, financial condition, cash flows and results of operations (see “—Our revenues may be lower than expected as a result of failure bythe marketplace to accept our products or for other factors” for factors that may affect the market acceptance of our products approved for sale).The FDA or other regulatory agencies may impose limitations or post-approval requirements on any product approval.Even if regulatory approval to market a product is granted by the FDA or other regulatory agencies, the approval may impose limitations on the indicateduse for which the product may be marketed or additional post-approval requirements, such as a REMS, with which we would need to comply in order to maintainthe approval of such product. Our business could be seriously harmed if we do not complete these post-approval requirements and the FDA or other regulatoryagencies, as a result, require us to change the label for our products or if such requirements restrict the marketing, sale or use of our products.Further, if a product for which we obtain regulatory approval is a controlled substance, it will not become commercially available until after the DEAprovides its final schedule designation, which may take longer and may be more restrictive than we expect or may change after its initial designation. We currentlyexpect ALKS 3831, if approved, to require such DEA final schedule designation prior to commercialization. A restrictive designation could adversely affect ourability to commercialize such products and could materially adversely affect our business, financial condition, cash flows and results of operations.In addition, legislative and regulatory proposals have also been made to expand post-approval requirements and restrict sales and promotional activities forpharmaceutical products. We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretationswill be changed, or what the impact of such changes on the commercialization of our products, if any, may be.We are subject to risks related to the manufacture of our products.The manufacture of pharmaceutical products is a highly complex process in which a variety of difficulties may arise from time to time including, but notlimited to, product loss due to material failure, equipment failure, vendor error, operator error, labor shortages, inability to obtain material, equipment ortransportation, physical or electronic security breaches, natural disasters and many other factors. Problems with manufacturing processes could result in productdefects, manufacturing failures or products not being manufactured to specifications, which could require us to delay shipment of products or recall productspreviously shipped, or could impair our ability to receive regulatory approval for a product, expand into new markets or supply products in existing markets. Wemay not be able to resolve any such problems in a timely fashion, if at all.We rely solely on our manufacturing facility in Wilmington, Ohio for the manufacture of RISPERDAL CONSTA, VIVITROL, ARISTADA, ARISTADAINITIO and certain of our other products in development. We rely on our manufacturing facility in Athlone, Ireland for the manufacture of AMPYRA (includingthe authorized generic version of AMPYRA), FAMPYRA, VUMERITY and some of our other products using our NanoCrystal and OCR technologies.31 Table of ContentsDue to regulatory and technical requirements, we have limited ability to shift production among our facilities or to outsource any part of our manufacturingto third parties. Any such shift of production among our facilities or transition of our manufacturing processes to a third party could take a significant amount oftime and money and may not be successful.Our manufacturing facilities also require specialized personnel and are expensive to operate and maintain. Any delay in the regulatory approval or marketlaunch of products, or suspension of the sale of our products, manufactured in our facilities, may cause operating losses as we continue to operate these facilitiesand retain specialized personnel. In addition, any interruption in manufacturing could result in delays in meeting contractual obligations and could damage ourrelationships with our licensees, including the loss of manufacturing and supply rights.We rely on third parties to provide services in connection with the manufacture and distribution of our products.We rely on third parties for the timely supply of specified raw materials, equipment, contract manufacturing, formulation and packaging services, storageand product distribution services, customer service activities and product returns processing. These third parties must comply with federal, state and localregulations applicable to their business, including FDA and, as applicable, DEA regulations. Although we actively manage these third-party relationships to ensurecontinuity, quality and compliance with regulations, some events beyond our control, including global instability due to political unrest or from an outbreak ofpandemic or contagious disease, such as the novel coronavirus, could result in the complete or partial failure of these goods and services. Any such failure couldmaterially adversely affect our business, financial condition, cash flows and results of operations.The manufacture of products and product components, including the procurement of bulk drug product and other materials used in the manufacture ofproducts, and packaging, storage and distribution of our products, requires successful coordination among us and multiple third-party providers. For example, weare responsible for the entire supply chain for ARISTADA, ARISTADA INITIO and VIVITROL, up to the sale of final product and including the sourcing of keyraw materials and active pharmaceutical agents from third parties. Issues with our third-party providers, including our inability to coordinate these efforts, lack ofcapacity available at such third-party providers or any other problems with the operations of these third-party providers, could require us to delay shipment ofsaleable products, recall products previously shipped or could impair our ability to supply products at all. This could increase our costs, cause us to lose revenue ormarket share and damage our reputation and have a material adverse effect on our business, financial condition, cash flows and results of operations.We endeavor to qualify and register new vendors and to develop contingency plans so that production is not impacted by issues associated with third-partyproviders. Nonetheless, our business could be materially and adversely affected by issues associated with third-party providers.We are also dependent in certain cases on third parties to manufacture products. Where the manufacturing rights to the products using our technologies aregranted to, or retained by, our third-party licensee (for example, in the cases of INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA) orapproved sub-licensee, we have no control over the manufacturing, supply or distribution of the product. Supply or manufacturing issues encountered by suchlicensees or sublicenses could materially and adversely affect sales of such products from which we receive revenue, and also our business, financial condition,cash flows and results of operations.If we or our third-party providers fail to meet the stringent requirements of governmental regulation in the manufacture of our products, we could incursubstantial remedial costs and a reduction in sales and/or revenues.We and our third-party providers are generally required to comply with cGMP regulations and other applicable foreign standards in the manufacture of ourproducts. In addition, in the U.S., the DEA and state-level agencies heavily regulate the manufacturing, holding, processing, security, recordkeeping anddistribution of substances, including controlled substances. Our products that are scheduled by the DEA as controlled substances make us subject to the DEA’sregulations. We are subject to unannounced inspections by the FDA, the DEA and comparable state and foreign agencies in other jurisdictions to confirmcompliance with all applicable laws. Any changes of suppliers or modifications of methods of manufacturing require amending our application to the FDA or otherregulatory agencies, and ultimate amendment acceptance by such agencies, prior to release of product to the applicable marketplace. Our inability or the inabilityof our third-party providers to demonstrate ongoing cGMP or other regulatory compliance could require us to withdraw or recall products and interrupt clinical andcommercial supply of our products. Any delay, interruption or other issues that may arise in the manufacture, formulation, packaging or storage of our products asa result of a failure of our facilities or the facilities or operations of third-party providers to pass any regulatory agency inspection could significantly impair ourability to develop and commercialize our products. This could increase our costs, cause us to lose revenue or market share and damage our reputation.The FDA and various regulatory agencies outside the U.S. have inspected and approved our commercial manufacturing facilities. We cannot guarantee thatthe FDA or any other regulatory agencies will approve any other facility we or our third-party providers may operate or, once approved, that any of these facilitieswill remain in compliance with cGMP and other regulations. Any third party we use to manufacture bulk drug product must be licensed by the FDA and, forcontrolled substances, the DEA. Failure by32 Table of Contentsus or our third-party providers to gain or maintain regulatory compliance with the FDA or other regulatory agencies could materially adversely affect our business,financial condition, cash flows and results of operations.Patent protection for our products is important and uncertain.The following factors are important to our success: •receiving and maintaining patent and/or trademark protection for our products, technologies and developing technologies, including those that aresubject to our licensing arrangements; •maintaining our trade secrets; •not infringing the proprietary rights of others; and •preventing others from infringing our proprietary rights.Patent protection only provides rights of exclusivity for the term of the patent. We are able to protect our proprietary rights from unauthorized use by thirdparties only to the extent that our proprietary rights are covered by valid and enforceable patents or are effectively maintained as trade secrets. In this regard, we tryto protect our proprietary position by filing patent applications in the U.S. and elsewhere related to our proprietary product inventions and improvements that areimportant to our business and products. Our pending patent applications, together with those we may file in the future, or those we may license to or from thirdparties, may not result in patents being issued. Even if issued, such patents may not provide us with sufficient proprietary protection or competitive advantagesagainst competitors with similar technology. The development of new technologies or products may take a number of years, and there can be no assurance that anypatents which may be granted in respect of such technologies or products will not have expired or be due to expire by the time such products are commercialized,or that such patents will successfully withstand any challenges during their respective terms.Although we believe that we make reasonable efforts to protect our IP rights and to ensure that our proprietary technology does not infringe the rights ofthird parties, we cannot ascertain the existence of all potentially conflicting IP claims. Therefore, there is a risk that third parties may make claims of infringementagainst our products or technologies. There may be patents issued to, or patent applications filed by, third parties that relate to certain of our products. If patentsexist or are issued that cover our products, we may not be able to manufacture, use, offer for sale, sell or import such products without first getting a license fromthe patent holder. The patent holder may not grant us a license on reasonable terms, or it may refuse to grant us a license at all. This could delay or prevent us fromdeveloping, manufacturing, selling or importing those of our products that would require the license. Claims of IP infringement also might require us to redesignaffected products, enter into costly settlement or license agreements or pay costly damage awards, or face a temporary or permanent injunction prohibiting us frommarketing or selling certain of our products. Even if we have an agreement to indemnify us against such costs, the indemnifying party may be unable to uphold itscontractual obligations. If we cannot or do not license the infringed technology at all, license the technology on reasonable terms or substitute similar technologyfrom another source, our business, financial condition, cash flows and results of operations could be materially adversely affected.Because the patent positions of biopharmaceutical companies involve complex legal and factual questions, enforceability of patents cannot be predictedwith certainty. The ultimate degree of patent protection that will be afforded to products and processes, including ours, and those of our licensees, in the U.S. and inother important markets, remains uncertain and is dependent upon the scope of protection decided upon by the patent offices, courts and lawmakers in thesecountries. Patents, if issued, may be challenged, invalidated or circumvented. As more products are commercialized using our proprietary product platforms, or asany product achieves greater commercial success, our patents become more likely to be subject to challenge by potential competitors. The laws of certain countriesmay not protect our IP rights to the same extent as do the laws of the U.S., and any patents that we own or license from others may not provide any protectionagainst competitors. Furthermore, others may independently develop similar technologies outside the scope of our patent coverage.We also rely on trade secrets, know-how and technology, which are not protected by patents, to maintain our competitive position. We try to protect thisinformation by entering into confidentiality agreements with parties that have access to it, such as our licensees, licensors, contract manufacturers, potentialbusiness partners, employees and consultants. Any of these parties may breach the agreements and disclose our confidential information, or our competitors mightlearn of the information in some other way. To the extent that our employees, consultants or contractors use IP owned by others in their work for us, disputes mayarise as to the rights in related or resulting know-how and inventions. If any trade secret, know-how or other technology not protected by a patent were to bedisclosed to, or independently developed by, a competitor, such event could materially and adversely affect our business, financial condition, cash flows andresults of operations.In addition, in the case of certain of our licensed products or products incorporating our licensed technology, our licensees are responsible for prosecuting,maintaining, enforcing and defending the IP related to the product(s) from which we derive revenue. Their failure to secure, maintain, enforce and defend this IPcould materially and adversely affect our business, financial condition, cash flows, and results of operations. See also “—We or our licensees may face claimsagainst IP rights covering our products and competition from generic drug manufacturers” for risks related to our licensed products or products incorporating ourlicensed technology.33 Table of ContentsUncertainty over IP in the biopharmaceutical industry has been the source of litigation, which is inherently costly and unpredictable, could significantly delayor prevent approval or commercialization of our products, and could adversely affect our business.There is considerable uncertainty within the biopharmaceutical industry about the validity, scope and enforceability of many issued patents in the U.S. andelsewhere in the world. We cannot currently determine the ultimate scope and validity of patents which may be granted to third parties in the future or whichpatents might be asserted to be infringed by the manufacture, use or sale of our products.In part as a result of this uncertainty, there has been, and we expect that there may continue to be, significant litigation and an increasing number of IPRsand administrative proceedings in the pharmaceutical industry regarding patents and other IP rights. A patent holder might file an IPR, interference and/orinfringement action against us, including in response to patent certifications required under the Hatch-Waxman Act, claiming that certain claims of one or more ofour issued patents are invalid or that the manufacture, use, offer for sale, sale or import of our products infringed one or more of such party’s patents. We may haveto expend considerable time, effort and resources to defend such actions. In addition, we may need to enforce our IP rights against third parties who infringe ourpatents and other IP or challenge our patents, patent applications or trademark applications (see “—We or our licensees may face claims against our IP rightscovering our products and competition from generic drug manufacturers” for additional information regarding litigation with generic drug manufacturers). Weexpect that litigation may be necessary in some instances to determine the validity and scope of certain of our proprietary rights. Competitors may sue us as a wayof delaying the introduction of our products.Litigation and trial proceedings, such as IPRs, concerning patents and other intellectual property rights may be expensive, protracted with no certainty ofsuccess, and distracting to management. Ultimately, the outcome of such litigation and proceedings could adversely affect our business and the validity and scopeof our patents or other proprietary rights or delay or prevent us from manufacturing and marketing our products.We or our licensees may face claims against IP rights covering our products and competition from generic drug manufacturers.In the U.S., generic manufacturers of innovator drug products may file ANDAs and, in connection with such filings, certify that their products do notinfringe the innovator’s patents and/or that the innovator’s patents are invalid. This often results in litigation between the innovator and the ANDA applicant. Thistype of litigation is commonly known in the U.S. as “Paragraph IV” litigation.For example, we and our partner Acorda received notices of numerous ANDA filings challenging the validity of one or more of the Orange Book-listedpatents for AMPYRA and/or asserting that a generic form of AMPYRA would not infringe such patents, and we and Acorda engaged in Paragraph IV litigationwith various ANDA filers disputing such claims. For further discussion of the legal proceedings related to the patents covering AMPYRA, see Note 19,Commitments and Contingent Liabilities in the “Notes to Consolidated Financial Statements” in this Annual Report.Similarly, Janssen Pharmaceuticals NV and Janssen Pharmaceuticals, Inc. initiated patent infringement lawsuits against Teva entities (TevaPharmaceuticals USA, Inc. and Teva Pharmaceuticals Industries, Ltd.) and Mylan entities (Mylan Laboratories Limited, Mylan Pharmaceuticals Inc., and MylanInstitutional LLC), each of whom filed an ANDA seeking approval to market a generic version of INVEGA SUSTENNA. For a discussion of this Paragraph IVlitigation, see Note 19, Commitments and Contingent Liabilities in the “Notes to Consolidated Financial Statements” in this Annual Report.Although we intend to vigorously enforce our IP rights, and we expect our licensees will do the same, there can be no assurance that we or our licenseeswill prevail in defense of such patent rights. Our and our licensees’ existing patents could be invalidated, found unenforceable or found not to cover generic formsof our or our licensees’ products. If an ANDA filer were to receive FDA approval to sell a generic version of our products and/or prevail in any patent litigation,our products would become subject to increased competition and our business, financial condition, cash flows and results of operations could be materiallyadversely affected.Litigation, arbitration or regulatory action (such as citizens petitions) filed against regulatory agencies related to our product or Alkermes, including securitieslitigation, may result in financial losses, harm our reputation, divert management resources, negatively impact the approval of our products, or otherwisenegatively impact our business.We may be the subject of certain claims, including those asserting violations of securities and fraud and abuse laws and derivative actions. Followingperiods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted against companies. For example, inDecember 2018 and January 2019, two purported stockholders of ours filed putative class actions against us and certain of our officers on behalf of a putative classof purchasers of our securities during the period of February 17, 2017 through November 1, 2018. In March 2019, the U.S. District Court for the Eastern District ofNew York consolidated the two cases and appointed a lead plaintiff. Such action alleges violations of Sections 10(b) and 20(a) of the Exchange Act based onallegedly false or misleading statements and omissions regarding our regulatory submission for ALKS 5461, our drug candidate for the adjunctive treatment ofmajor depressive disorder, and the FDA’s review and consideration of that submission, and34 Table of Contentsseeks to recover unspecified money damages, prejudgment and postjudgment interest, reasonable attorneys’ fees, expert fees and other costs. For further discussionof this putative class action, see Note 19, Commitments and Contingent Liabilities in the “Notes to Consolidated Financial Statements in this Annual Report. Thisclass action and any similar future litigation could result in substantial costs and a diversion of management’s attention and resources, which could harm ourbusiness.We may be the subject of certain government inquiries or requests for documentation. For example, in June 2017 we received a subpoena from an Office ofthe U.S. Attorney, and in January 2019 we received a civil investigative demand from an Office of the U.S. Attorney, in each case for documents related toVIVITROL. We are cooperating with the government. If, as a result of the government’s requests, proceedings are initiated and we are found to have violated oneor more applicable laws, we may be subject to significant liability, including without limitation, civil fines, criminal fines and penalties, civil damages andexclusion from federal funded healthcare programs such as Medicare and Medicaid, as well as potential liability under the federal anti-kickback statute and FalseClaims Act and state False Claims Acts, and may be required to enter into a corporate integrity or other settlement with the government, any of which couldmaterially affect our reputation, business, financial condition, cash flows and results of operations. Conduct giving rise to such liability could also form the basisfor private civil litigation by third-party payers or other persons allegedly harmed by such conduct. In addition, if some of our existing business practices arechallenged as unlawful, we may have to change those practices, including changes and impacts on the practices of our sales force, which could also have a materialadverse effect on our business, financial condition, cash flows and results of operations.We may not be successful in defending ourselves in litigation or arbitration which may result in large judgments or settlements against us, which could havea negative effect on our business, financial condition, cash flows and results of operations. Further, our liability insurance coverage may not be sufficient tosatisfy, or may not cover, any expenses or liabilities that may arise. Additionally, regardless of whether or not there is merit to the claims underlying any lawsuitsor government inquiries of which we are subject, or whether or not we are found as a result of such lawsuits or inquiries to have violated any applicable laws, suchlawsuits and inquiries can be expensive to defend or respond to, may divert the attention of our management and other resources that would otherwise be engagedin managing our business, and may further cause significant and potentially irreparable harm to our public reputation.We may also be the subject of citizen petitions that request that the FDA refuse to approve, delay approval of, or impose additional approval requirementsfor our NDAs. If successful, such petitions can significantly delay, or even prevent, the approval of the NDA in question. Even if the FDA ultimately denies such apetition, the FDA may substantially delay approval while it considers and responds to the petition or impose additional approval requirements as a result of suchpetition. These outcomes and others could adversely affect our share price as well as our ability to generate revenues from the commercialization and sale of ourproducts and products using our proprietary technologies.If we fail to comply with the extensive legal and regulatory requirements affecting the healthcare industry, we could face costs, penalties and a loss of business.Our activities, and the activities of our licensees and third-party providers, are subject to extensive government regulation. Government regulation byvarious national, state and local agencies, which includes detailed inspection of, and controls over, research and laboratory procedures, clinical investigations,product approvals and manufacturing, marketing and promotion, adverse event reporting, sampling, distribution, recordkeeping, storage, and disposal practices,and achieving compliance with these regulations, substantially increases the time, difficulty and costs incurred in obtaining and maintaining approvals to marketnewly developed and existing products. Government regulatory actions can result in delay in the release of products, seizure or recall of products, suspension orrevocation of the authority necessary for the manufacture and sale of products, and other regulatory enforcement actions, including the levying of civil fines orcriminal penalties, the issuance of a warning letter, or the imposition of an injunction. Biopharmaceutical companies also have been the target of governmentlawsuits and investigations alleging violations of government regulation, including claims asserting submission of incorrect pricing information, impermissible off-label promotion of pharmaceutical products, payments intended to influence the referral of healthcare business, submission of false claims for governmentreimbursement, antitrust violations and violations related to environmental matters. In addition, we may be the subject of securities law claims and derivativeactions.While we have implemented numerous risk mitigation measures, we cannot guarantee that we, our employees, our licensees, our consultants or ourcontractors are, or will be, in compliance with all applicable U.S. federal and state laws and regulations, applicable laws and regulations outside the U.S., andinterpretations of the applicability of these laws to marketing practices. If we or our agents fail to comply with any of those regulations or laws, a range of actionscould result, including the termination of clinical trials, the failure to approve a product, restrictions on our products or manufacturing processes, withdrawal of ourproducts from the market, significant fines, exclusion from government healthcare programs or other sanctions or litigation.Changes affecting the healthcare industry, including new laws, regulations or judicial decisions, or new interpretations of existing laws, regulations ordecisions, related to patent protection and enforcement, healthcare availability, and product pricing and marketing, could also adversely affect our revenues andour potential to be profitable. For example, the costs of prescription pharmaceuticals in the U.S. has been the subject of considerable discussion in the U.S. and thecurrent administration has stated that it35 Table of Contentswill address such costs through new legislative and administrative measures. Such changes in law, regulation and the interpretation of existing laws and regulationscould have a material adverse effect on our business, financial condition, cash flows and results of operations.The commercial use of our products may cause unintended side effects or adverse reactions, or incidents of misuse may occur, which could adversely affectour business and share price.We cannot predict whether the commercial use of our products will produce undesirable or unintended side effects that have not been evident in the use of,or in clinical trials conducted for, such products to date. The administration of drugs in humans carries the inherent risk of product liability claims whether or notthe drugs are actually the cause of an injury. Our products may cause, or may appear to have caused, injury or dangerous drug interactions, and we may not learnabout or understand those effects until the products have been administered to patients for a prolonged period of time. Additionally, incidents of product misusemay occur.These events, among others, could result in product recalls, product liability actions or withdrawals or additional regulatory controls (including additionalregulatory scrutiny, REMS programs, and requirements for additional labeling). As our development activities progress and we continue to have commercial sales,our product liability insurance coverage may be inadequate to satisfy liabilities that arise, we may be unable to obtain adequate coverage at an acceptable cost or atall, or our insurer may disclaim coverage as to a future claim. This could prevent or limit our commercialization of our products. In addition, the reporting ofadverse safety events involving our products, including instances of product misuse, and public rumors about such events could cause our product sales or shareprice to decline or experience periods of volatility. These types of events could have a material adverse effect on our business, financial condition, cash flows andresults of operations.Our business involves environmental, health and safety risks.Our business involves the use of hazardous materials and chemicals and is subject to numerous environmental, health and safety laws and regulations and toperiodic inspections for possible violations of these laws and regulations. Under certain of these laws and regulations, we could be liable for any contamination atour current or former properties or third-party waste disposal sites. In addition to significant remediation costs, contamination can give rise to third-party claims forfines, penalties, natural resource damages, personal injury and damage (including property damage). The costs of compliance with environmental, health and safetylaws and regulations are significant. Any violations, even if inadvertent or accidental, of current or future environmental, health or safety laws or regulations, or thecost of compliance with any resulting order or fine and any liability imposed in connection with any contamination for which we may be responsible, couldmaterially adversely affect our business, financial condition, cash flows and results of operations.We may not become profitable on a sustained basis.At December 31, 2019, our accumulated deficit was $1.4 billion, which was primarily the result of net losses incurred from 1987, the year Alkermes, Inc.,was founded, through December 31, 2019, partially offset by net income over certain fiscal periods. There can be no assurance we will achieve sustainedprofitability.A major component of our revenue is dependent on our and our licensees’ ability to commercialize our products and to manufacture our productseconomically. Our ability to achieve sustained profitability in the future depends, in part, on our or our licensees’ (as applicable) ability to: •successfully commercialize VIVITROL, ARISTADA and ARISTADA INITIO and any other products that may be marketed in the U.S. or in othercountries in which such products are approved; •obtain and maintain regulatory approval for products both in the U.S. and in other countries; •efficiently manufacture our products; •support the commercialization of products by our licensees; •enter into agreements to develop and commercialize our products; •develop, have manufactured or expand our capacity to manufacture successfully and cost effectively, and market, our products; •obtain adequate reimbursement coverage for our products from insurance companies, government programs and other third-party payers; •obtain additional research and development funding for our proprietary products; and •achieve certain product development milestones.36 Table of ContentsIn addition, the amounts we spend will impact our profitability. Our spending will depend, in part, on: •the progress of our research and development programs for our products, including pre-clinical and clinical trials; •the time and expense that will be required to pursue FDA and/or other regulatory approvals for our products and whether such approvals areobtained; •the time that will be required for the DEA to provide its final scheduling designation for our approved products that are controlled substances; •the time and expense required to prosecute, enforce, defend and/or challenge patent and other IP rights; •the cost of building, operating and maintaining manufacturing and research facilities; •the cost of third-party manufacturers; •the number of products we pursue, particularly proprietary products; •how competing technological and market developments affect our products; •the cost of possible acquisitions of technologies, compounds, product rights or companies; •the cost of obtaining licenses to use technology or IP rights owned by others for proprietary products and otherwise; •the costs related to potential litigation, arbitration or government requests for information; and •the costs associated with recruiting, compensating and retaining a highly skilled workforce in an environment where competition for such employeesis intense.We may not achieve all or any of these goals, and thus we cannot provide assurances that we will ever be profitable on a sustained basis or achievesignificant revenues. Even if we do achieve some or all of these goals, we may not achieve significant or sustained commercial success.Our level of indebtedness could adversely affect our business and limit our ability to plan for or respond to changes in our business.In March 2018, we amended and refinanced the term loan under our credit agreement (previously referred to as “Term Loan B-1”, and as so amended andrefinanced, the “2023 Term Loans”), in order to, among other things, extend the due date of the loan from September 25, 2021 to March 26, 2023, reduce theinterest payable thereon from LIBOR plus 2.75% with a LIBOR floor of 0.75% to LIBOR plus 2.25% with a 0% LIBOR floor and increase covenant flexibility.As of December 31, 2019, our borrowings consisted of $279.3 million outstanding under the 2023 Term Loans.The 2023 Term Loans are secured by a first priority lien on substantially all of the combined company assets and properties of Alkermes plc and most of itssubsidiaries, which serve as guarantors. The agreements governing the 2023 Term Loans include a number of restrictive covenants that, among other things, andsubject to certain exceptions and baskets, impose operating and financial restrictions on us. Our level of indebtedness and the terms of these financingarrangements could adversely affect our business by, among other things: •requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability ofour cash flow for other purposes, including business development efforts, research and development, commercial and capital expenditures; •limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate, thereby placing us at acompetitive disadvantage compared to competitors with less debt; •limiting our ability to take advantage of significant business opportunities, such as potential acquisition opportunities; and •increasing our vulnerability to adverse economic and industry conditions.Our failure to comply with these restrictions or to make these payments could lead to an event of default that could result in an acceleration of theindebtedness. Our future operating results may not be sufficient to ensure compliance with these covenants or to remedy any such default. In the event of anacceleration of this indebtedness, we may not have, or be able to obtain, sufficient funds to make any accelerated payments.37 Table of ContentsDiscontinuation, reform or replacement of LIBOR, or uncertainty related to the potential for any of the foregoing, may adversely affect us.In July 2017, the U.K. Financial Conduct Authority announced that LIBOR could be effectively discontinued after 2021. In addition, other regulatorshave suggested reforming or replacing other benchmark rates. The discontinuation, reform or replacement of LIBOR or any other benchmark rates may have anunpredictable impact on contractual mechanics in the credit markets or cause disruption to the broader financial markets. Uncertainty as to the nature of suchpotential discontinuation, reform or replacement may negatively impact the volatility of LIBOR rates, liquidity, our access to funding required to operate ourbusiness, or the trading market for our 2023 Term Loans.Under our 2023 Term Loans, if the administrative agent determines that LIBOR is not reasonably ascertainable, or is notified by our lenders that LIBORdoes not adequately and fairly reflect the costs to our lenders of maintaining the loans, we would be required to pay interest under an alternative base rate whichcould cause the amount of interest payable on the 2023 Term Loans to be materially different than expected. We may choose in the future to pursue an amendmentto our 2023 Term Loans to provide for a transition mechanism or other alternative reference rate in anticipation of LIBOR’s discontinuation, but we can give noassurance that we will be able to reach agreement with our lenders on any such amendment.We may require additional funds to execute on our business strategy, and such funding may not be available on commercially favorable terms or at all andmay cause dilution to our existing shareholders.We may require additional funds in the future to execute on our business strategy, and we may seek funds through various sources, including debt andequity offerings, corporate collaborations, bank borrowings, arrangements relating to assets, sale of royalty streams we receive on our products or other financingmethods or structures. The source, timing and availability of any financings will depend on market conditions, interest rates and other factors. If we issue additionalequity securities or securities convertible into equity securities to raise funds, our shareholders will suffer dilution of their investment, and it may adversely affectthe market price of our ordinary shares. In addition, as a condition to providing additional funds to us, future investors or lenders may demand, and may be granted,rights superior to those of existing shareholders. If we issue additional debt securities in the future, our existing debt service obligations will increase further. If weare unable to generate sufficient cash to meet these obligations and need to use existing cash or liquidate investments in order to fund our debt service obligationsor to repay our debt, we may be forced to delay or terminate clinical trials or curtail operations. We cannot be certain, however, that additional financing will beavailable from any of these sources when needed or, if available, will be on acceptable terms, if at all, particularly if the credit and financial markets are constrainedat the time we require funding. If we fail to obtain additional capital when we need it, we may not be able to execute our business strategy successfully and mayhave to give up rights to our product platforms, and/or products, or grant licenses on terms that may not be favorable to us.Adverse financial market conditions may exacerbate certain risks affecting our business.As a result of adverse financial market conditions, organizations that reimburse for use of our products, such as government health administrationauthorities and private health insurers, may be unable to satisfy such obligations or may delay payment. In addition, federal and state health authorities may reducereimbursements (including Medicare and Medicaid reimbursements in the U.S.) or payments, and private insurers may increase their scrutiny of claims. We arealso dependent on the performance of our licensees, and we sell our products to our licensees through contracts that may not be secured by collateral or othersecurity. Accordingly, we bear the risk if our licensees are unable to pay amounts due to us thereunder. Due to volatility in the financial markets, there may be adisruption or delay in the performance of our third-party contractors, suppliers or licensees. If such third parties are unable to pay amounts owed to us or satisfytheir commitments to us, or if there are reductions in the availability or extent of reimbursement available to us, our business, financial condition, cash flows andresults of operations would be adversely affected.Currency exchange rates may affect revenues and expenses.We conduct a large portion of our business in international markets. For example, we derive a majority of our RISPERDAL CONSTA revenues and all ofour FAMPYRA, XEPLION and TREVICTA revenues from sales in countries other than the U.S., and these sales are denominated in non-U.S. dollar (“USD”)currencies. We also incur substantial operating costs in Ireland and face exposure to changes in the exchange ratio of the USD and the Euro arising from expensesand payables at our Irish operations that are settled in Euro. Our efforts to mitigate the impact of fluctuating currency exchange rates may not be successful. As aresult, currency fluctuations among our reporting currency, USD, and the currencies in which we do business will affect our results of operations, often inunpredictable ways. See “Item 7A—Quantitative and Qualitative Disclosures about Market Risk” in this Annual Report for additional information relating to ourforeign currency exchange rate risk.Our future success largely depends upon our ability to attract and retain key personnel.Our ability to compete and succeed in the highly competitive biopharmaceutical industry and in the disease states in which we market and sell productsdepends largely upon the continued service of our management and scientific and commercial teams and our ability to attract, retain and motivate highly skilledtechnical, scientific, manufacturing, management, regulatory, compliance and38 Table of Contentsselling and marketing personnel. Each of our executive officers and all of our employees are employed “at will,” meaning we or each officer or employee mayterminate the employment relationship at any time. The loss of key personnel or our inability to hire and retain personnel who have technical, scientific,manufacturing, management, regulatory, compliance or commercial backgrounds could materially adversely impact our business, including the achievement of ourmanufacturing, research and development, commercial and other business objectives.Future transactions may harm our business or the market price of our ordinary shares.We regularly review potential transactions related to technologies, products or product rights and businesses complementary to our business. Thesetransactions could include: •mergers; •acquisitions; •strategic alliances; •licensing agreements; and •co-promotion agreements.We may choose to enter into one or more of these transactions at any time, which may cause substantial fluctuations in the market price of our ordinaryshares. Moreover, depending upon the nature of any transaction, we may experience a charge to earnings, which could also materially adversely affect our resultsof operations and could harm the market price of our ordinary shares.If we are unable to successfully integrate the companies, businesses or assets that we acquire, or we are unable to integrate successfully with a companywho acquires our company, business or assets, such events could materially adversely affect our business, financial condition, cash flows and results of operations.Mergers, acquisitions and other strategic transactions involve various inherent risks, including: •uncertainties in assessing the value, strengths and potential profitability of, and identifying the extent of all weaknesses, risks, contingent and otherliabilities of, the respective parties; •the potential loss of key customers, management and employees of an acquired business; •the consummation of financing transactions, acquisitions or dispositions and the related effects on our business; •the ability to achieve identified operating and financial synergies from an acquisition in the amounts and within the timeframe predicted; •problems that could arise from the integration of the respective businesses, including the application of internal control processes to the acquiredbusiness; •difficulties that could be encountered in managing international operations; and •unanticipated changes in business, industry, market or general economic conditions that differ from the assumptions underlying our rationale forpursuing the transaction.Any one or more of these factors could cause us not to realize the benefits anticipated from a transaction. Moreover, any acquisition opportunities wepursue could materially affect our liquidity and capital resources and may require us to incur additional indebtedness, seek equity capital or both, which couldresult in significant dilution to our shareholders. Future acquisitions could also result in our assuming more long-term liabilities relative to the value of the acquiredassets than we have assumed in our previous acquisitions.The market price of our ordinary shares has been volatile and may continue to be volatile in the future, and the value of our ordinary shares coulddecline significantly.The market price for our ordinary shares has fluctuated significantly from time to time. The market price of our ordinary shares is likely to continue to bevolatile and subject to significant price and volume fluctuations in response to market and industry factors, our results of operations, our ability to maintain andincrease sales of our products, the success of our key development programs, and other factors, including the risk factors described in this Annual Report. Thestock market in general, including the market for biopharmaceutical companies, has experienced extreme price and trading volume fluctuations that have oftenbeen unrelated or disproportionate to the operating performance of those companies. In particular, negative publicity regarding pricing and price increases bypharmaceutical companies has negatively impacted, and may continue to negatively impact, the market for biopharmaceutical companies. These broad market andindustry factors have harmed, and in the future may seriously harm, the market price of our ordinary shares, regardless of our operating performance.39 Table of ContentsCertain U.S. holders of our ordinary shares may suffer adverse tax consequences if any of our non-U.S. subsidiaries are characterized as a “controlled foreigncorporation”.In December 2017, the Tax Cuts and Jobs Act was signed into law. This legislation significantly changes U.S. tax law by, among other things, changing therules which determine whether a foreign corporation is treated for U.S. tax purposes as a controlled foreign corporation, (“CFC”), for taxable years endedDecember 31, 2017 and onwards. The impact of this change on certain holders of our ordinary shares is uncertain and could be adverse, including potentialincome inclusions and reporting requirements for U.S. persons (as defined in the Internal Revenue Code) who are treated as owning (directly or indirectly) at least10% of the value or voting power of our shares. The determination of CFC status is complex and includes attribution rules, the application of which is not entirelycertain. Recent changes to these attribution rules relating to the determination of CFC status make it possible that one or more of our non-U.S. subsidiaries will beclassified as a CFC. Existing and prospective investors should consult their tax advisers regarding the potential application of these rules to their investments in us.See “Certain Irish and United States Federal Income Tax Considerations – United States Federal Income Tax Considerations” in our Form S-1/A, filedwith the SEC on February 29, 2012, for additional discussion with respect to other potential U.S. federal income tax consequences of investments in us.Our business could be negatively affected as a result of the actions of activist shareholders.Proxy contests and other actions by activist shareholders have been waged against many companies in the biopharmaceutical industry over the last fewyears. If faced with a proxy contest or other activist shareholder action, we may not be able to respond successfully to the contest or action, which could bedisruptive to our business. Even if we are successful, our business could be adversely affected by any proxy contest or activist shareholder action involving usbecause: •responding to proxy contests and other actions by activist shareholders can be costly and time-consuming, disrupting operations and diverting theattention of management and employees, and can lead to uncertainty; •perceived uncertainties as to future direction may result in the loss of potential acquisitions, collaborations or in-licensing opportunities, and maymake it more difficult to attract and retain qualified personnel and business partners; and •if individuals are elected to our board of directors with a specific agenda, it may adversely affect our ability to effectively implement our strategicplan in a timely manner and create additional value for our shareholders.These actions could cause the market price of our ordinary shares to experience periods of volatility.If goodwill or other intangible assets become impaired, we could have to take significant charges against earnings.At December 31, 2019, we had $150.6 million of amortizable intangible assets and $92.9 million of goodwill. Under accounting principles generallyaccepted in the U.S. (“GAAP”), we must assess, at least annually and potentially more frequently, whether the value of goodwill and other indefinite‑livedintangible assets have been impaired. Amortizing intangible assets will be assessed for impairment in the event of an impairment indicator. Any reduction orimpairment of the value of goodwill or other intangible assets will result in a charge against earnings, which could materially adversely affect our results ofoperations and shareholders’ equity in future periods.Our effective tax rate may increase.As a global biopharmaceutical company, we are subject to taxation in a number of different jurisdictions. As a result, our effective tax rate is derived from acombination of applicable tax rates in the various places that we operate. In preparing our financial statements, we estimate the amount of tax that will becomepayable in each of these places. Our effective tax rate may fluctuate depending on a number of factors, including, but not limited to, the distribution of our profitsor losses between the jurisdictions where we operate and differences in interpretation of tax laws. In addition, the tax laws of any jurisdiction in which we operatemay change in the future, which could impact our effective tax rate. Tax authorities in the jurisdictions in which we operate may audit us. If we are unsuccessful indefending any tax positions adopted in our submitted tax returns, we may be required to pay taxes for prior periods, interest, fines or penalties, and may beobligated to pay increased taxes in the future, any of which could have a material adverse effect on our business, financial condition, cash flows and results ofoperations.Our deferred tax assets may not be realized.As of December 31, 2019, we had $96.6 million in net deferred tax assets in the U.S. Included in this amount was approximately $2.9 million of U.S.federal net operating loss (“NOL”) carryforwards and $42.8 million of research and development tax credit carryforwards that can be used to reduce U.S. taxableincome or offset federal tax in future periods. These carryforwards will expire within the next twenty years. It is possible that some or all of the deferred tax assetswill not be realized, especially if we incur losses in the U.S. in the future. Losses may arise from unforeseen operating events (see “—We may not becomeprofitable on a sustained basis” for additional information relating to operating losses) or the occurrence of significant excess tax benefits arising from the40 Table of Contentsexercise of stock options and/or the vesting of restricted stock units. Unless we are able to generate sufficient taxable income in the future, a substantial valuationallowance to reduce the carrying value of our U.S. deferred tax assets may be required, which would materially increase our expenses in the period the allowanceis recognized and materially adversely affect our business, financial condition and results of operations.Furthermore, we have included within our U.S. net deferred tax assets of $96.6 million an amount of $41.5 million relating to employee share-basedcompensation expense. It is possible that a material portion of this deferred tax asset will not be realized, especially if the price of our ordinary shares remains atits current level (refer to “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” for details ofthe price of our ordinary shares). Unless the price of our ordinary shares increase we will incur a deferred tax expense as our employees exercise or forfeit theirshare options and the restricted stock units vest. This could materially increase our tax expense and may materially adversely affect our financial condition andresults of operations.The business combination of Alkermes, Inc. and the drug technology business (“EDT”) of Elan Corporation, plc may limit our ability to use our tax attributesto offset taxable income, if any, generated from such business combination.On September 16, 2011, the businesses of Alkermes, Inc. and EDT were combined under Alkermes plc (this combination is referred to as the “BusinessCombination”). For U.S. federal income tax purposes, a corporation is generally considered tax resident in the place of its incorporation. Because we areincorporated in Ireland, we should be deemed an Irish corporation under these general rules. However, Section 7874 of the Internal Revenue Code of 1986, asamended (the “Code”) generally provides that a corporation organized outside the U.S. that acquires substantially all of the assets of a corporation organized in theU.S. will be treated as a U.S. corporation (and, therefore, a U.S. tax resident) for U.S. federal income tax purposes if shareholders of the acquired U.S. corporationown at least 80% (of either the voting power or the value) of the stock of the acquiring foreign corporation after the acquisition by reason of holding stock in thedomestic corporation, and the “expanded affiliated group” (as defined in Section 7874) that includes the acquiring corporation does not have substantial businessactivities in the country in which it is organized.In addition, Section 7874 provides that if a corporation organized outside the U.S. acquires substantially all of the assets of a corporation organized in theU.S., the taxable income of the U.S. corporation during the period beginning on the date the first assets are acquired as part of the acquisition, through the datewhich is ten years after the last date assets are acquired as part of the acquisition, shall be no less than the income or gain recognized by reason of the transferduring such period or by reason of a license of property by the expatriated entity after such acquisition to a foreign affiliate during such period, which is referred toas the “inversion gain,” if shareholders of the acquired U.S. corporation own at least 60% (of either the voting power or the value) of the stock of the acquiringforeign corporation after the acquisition by reason of holding stock in the domestic corporation, and the “expanded affiliated group” of the acquiring corporationdoes not have substantial business activities in the country in which it is organized. If this rule was to apply to the Business Combination, among other things,Alkermes, Inc. would have been restricted in its ability to use the approximately $274.0 million of U.S. federal NOL carryforwards and $38.0 million of U.S. stateNOL carryforwards that it had as of March 31, 2011. We do not believe that either of these limitations should apply as a result of the Business Combination.However, the U.S. Internal Revenue Service (the “IRS”) could assert a contrary position, in which case we could become involved in tax controversy with the IRSregarding possible additional U.S. tax liability. If we were to be unsuccessful in resolving any such tax controversy in our favor, we could be liable for significantlygreater U.S. federal and state income tax than we anticipate being liable for through the Business Combination, which would place further demands on our cashneeds.Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation tosuffer.In the ordinary course of our business, we collect and store sensitive data, including IP, our proprietary business information and that of our suppliers andpartners, as well as personally identifiable information of patients, clinical trial participants and employees. Similarly, our partners and third-party providerspossess certain of our sensitive data. The secure maintenance of this information is critical to our operations and business strategy. Despite our security measures,our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Certaintypes of information technology or infrastructure attacks or breaches may go undetected for a prolonged period of time. Any such breach could compromise ournetworks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information, includingour data being breached at our partners or third-party providers, could result in legal claims or proceedings and liability under laws that protect the privacy ofpersonal information, disrupt our operations, and damage our reputation which could adversely affect our business.We may be subject to numerous and varying privacy and security laws, and our failure to comply could result in penalties and reputational damage.We are subject to laws and regulations covering data privacy and the protection of personal information, including health information. The legislative andregulatory landscape for privacy and data protection continues to evolve, and there has been an increasing focus on privacy and data protection issues which mayaffect our business. In the U.S., numerous federal and state laws and41 Table of Contentsregulations, including state security breach notification laws, state health information privacy laws, and federal and state consumer protection laws, govern thecollection, use, disclosure, and protection of personal information. Each of these laws is subject to varying interpretations by courts and government agencies,creating complex compliance issues for us. If we fail to comply with applicable laws and regulations we could be subject to penalties or sanctions, includingcriminal penalties if we knowingly obtain or disclose individually identifiable health information from a covered entity in a manner that is not authorized orpermitted by the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and ClinicalHealth Act, or HIPAA.Numerous other countries have, or are developing, laws governing the collection, use and transmission of personal information as well. The EU and otherjurisdictions have adopted data protection laws and regulations, which impose significant compliance obligations. In the EU, for example, effective May 25, 2018,the GDPR replaced the prior EU Data Protection Directive (95/46) that governed the processing of personal data in the European Union. The GDPR imposessignificant obligations on controllers and processors of personal data, including, as compared to the prior directive, higher standards for obtaining consent fromindividuals to process their personal data, more robust notification requirements to individuals about the processing of their personal data, a strengthened individualdata rights regime, mandatory data breach notifications, limitations on the retention of personal data and increased requirements pertaining to health data, and strictrules and restrictions on the transfer of personal data outside of the EU, including to the U.S. The GDPR also imposes additional obligations on, and requiredcontractual provisions to be included in, contracts between companies subject to the GDPR and their third-party processors that relate to the processing of personaldata. The GDPR allows EU member states to make additional laws and regulations further limiting the processing of genetic, biometric or health data.Adoption of the GDPR increased our responsibility and liability in relation to personal data that we process and may require us to put in place additionalmechanisms to ensure compliance. Any failure to comply with the requirements of GDPR and applicable national data protection laws of EU member states, couldlead to regulatory enforcement actions and significant administrative and/or financial penalties against us (fines of up to €20,000,000 or up to 4% of the totalworldwide annual turnover of the preceding financial year, whichever is higher), and could adversely affect our business, financial condition, cash flows andresults of operations.If we identify a material weakness in our internal control over financial reporting, our ability to meet our reporting obligations and the trading price of ourordinary shares could be negatively affected.A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibilitythat a material misstatement of our financial statements will not be prevented or detected on a timely basis. Accordingly, a material weakness increases the risk thatthe financial information we report contains material errors.We regularly review and update our internal controls, disclosure controls and procedures, and corporate governance policies. In addition, we are requiredunder the Sarbanes-Oxley Act of 2002 to report annually on our internal control over financial reporting. Any system of internal controls, however well designedand operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. If we, orour independent registered public accounting firm, determine that our internal controls over financial reporting are not effective, or we discover areas that needimprovement in the future, these shortcomings could have an adverse effect on our business and financial results, and the price of our ordinary shares could benegatively affected.If we cannot conclude that we have effective internal control over our financial reporting, or if our independent registered public accounting firm is unableto provide an unqualified opinion regarding the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability ofour financial statements, which could lead to a decline in the trading price of our ordinary shares. Failure to comply with reporting requirements could also subjectus to sanctions and/or investigations by the SEC, the Nasdaq or other regulatory authorities.The increasing use of social media platforms presents new risks and challenges.Social media is increasingly being used to communicate about our products and the diseases our medicines are designed to treat. Social media practices inthe biopharmaceutical industry continue to evolve, as do the regulations relating to such use. This evolution creates uncertainty and risk of noncompliance withregulations applicable to our business. For example, patients may use social media channels to comment on the effectiveness of a product or to report an allegedadverse event. When such disclosures occur, there is a risk that we fail to monitor and comply with applicable adverse event reporting obligations or we may notbe able to defend the company or the public’s legitimate interests in the face of the political and market pressures generated by social media due to restrictions onwhat we may say about our products. There is also a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about uson any social networking website. If any of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur liability, faceoverly restrictive regulatory actions or incur other harm to our business.42 Table of ContentsItem 1B. Unresolved Staff CommentsNone.Item 2. PropertiesWe lease approximately 14,600 square feet of corporate office space in Dublin, Ireland, which houses our corporate headquarters. This lease expires in2022. We lease two properties in Waltham, Massachusetts. One facility has approximately 175,000 square feet of space and houses corporate offices,administrative areas and laboratories. This lease expires in 2021 and includes a tenant option to extend the term for up to two five-year periods. The secondproperty we lease in Waltham, Massachusetts has approximately 67,000 square feet of office space. This lease expires in 2020 and includes a tenant option toextend the term for up to two one-year periods. We lease approximately 7,000 square feet of corporate office and administrative space in Washington, DC. Thislease expires in 2029 and includes a tenant option to extend the term for an additional five-year period.In March 2018, the Company entered into a lease agreement for approximately 220,000 square feet of office and laboratory space located in a building tobe built at 900 Winter Street, Waltham, Massachusetts (“900 Winter Street”). The initial term of the lease commenced on January 20, 2020 (the “CommencementDate”). The initial lease term expires on January 31, 2035, with an option to extend for an additional ten years.As a result of the acquisition of Rodin, we assumed a lease in Boston, Massachusetts. The facility has approximately 5,300 square feet of office space,expires in 2021 and includes an option to extend the term for one additional year.We own an R&D and manufacturing facility in Athlone, Ireland (approximately 400,000 square feet) and a manufacturing facility in Wilmington, Ohio(approximately 370,000 square feet).We believe that our current and planned facilities are suitable and adequate for our current and near‑term pre-clinical, clinical and commercialrequirements.Item 3. Legal ProceedingsFor information regarding legal proceedings, refer to the discussion under the heading “Litigation” in Note 19, Commitments and Contingent Liabilities inthe “Notes to Consolidated Financial Statements” in this Annual Report, which discussion is incorporated into this Item 3 by reference.Item 4. Mine Safety DisclosuresNot Applicable.43 Table of ContentsPART IIItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket and shareholder informationOur ordinary shares are traded on the Nasdaq Global Select Market under the symbol “ALKS.” There were 112 shareholders of record for our ordinaryshares on February 4, 2020. In addition, the last reported sale price of our ordinary shares as reported on the Nasdaq Global Select Market on February 4, 2020 was$17.52.DividendsNo dividends have been paid on our ordinary shares to date, and we do not expect to pay cash dividends thereon in the foreseeable future. We anticipatethat we will retain all earnings, if any, to support our operations and our proprietary drug development programs. Any future determination as to the payment ofdividends will be at the sole discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements and otherfactors our board of directors deems relevant.Repurchase of equity securitiesOn September 16, 2011, our board of directors authorized the continuation of the Alkermes, Inc. program to repurchase up to $215.0 million of ourordinary shares at the discretion of management from time to time in the open market or through privately negotiated transactions. We did not purchase any sharesunder this program during the year ended December 31, 2019. As of December 31, 2019, we had purchased a total of 8,866,342 shares at a cost of $114.0 million.The 2023 Term Loans include restrictive covenants that impose certain limitations on our ability to repurchase our ordinary shares.During the three months ended December 31, 2019, we acquired 4,428 Alkermes ordinary shares, at an average price of $19.42 per share related to thevesting of employee equity awards to satisfy withholding tax obligations.Irish taxes applicable to U.S. holdersThe following is a general summary of the main Irish tax considerations applicable to the purchase, ownership and disposition of our ordinary shares byU.S. holders. It is based on existing Irish law and practices in effect on January 13, 2020, and on discussions and correspondence with the Irish RevenueCommissioners. Legislative, administrative or judicial changes may modify the tax consequences described below.The statements do not constitute tax advice and are intended only as a general guide. Furthermore, this information applies only to ordinary shares held ascapital assets and does not apply to all categories of shareholders, such as dealers in securities, trustees, insurance companies, collective investment schemes andshareholders who acquire, or who are deemed to acquire, their ordinary shares by virtue of an office or employment. This summary is not exhaustive andshareholders should consult their own tax advisers as to the tax consequences in Ireland, or other relevant jurisdictions where we operate, including the acquisition,ownership and disposition of ordinary shares.Withholding tax on dividendsWhile we have no current plans to pay dividends, dividends on our ordinary shares would generally be subject to Irish dividend withholding tax (“DWT”)at 25%, unless an exemption applies. Dividends on our ordinary shares that are owned by residents of the U.S. and held beneficially through the Depositary TrustCompany (“DTC”) will not be subject to DWT provided that the address of the beneficial owner of the ordinary shares in the records of the broker is in the U.S.Dividends on our ordinary shares that are owned by residents of the U.S. and held directly (outside of DTC) will not be subject to DWT provided that theshareholder has completed the appropriate Irish DWT form and this form remains valid. Such shareholders must provide the appropriate Irish DWT form to ourtransfer agent at least seven business days before the record date for the first dividend payment to which they are entitled.If any shareholder who is resident in the U.S. receives a dividend subject to DWT, he or she should generally be able to make an application for a refundfrom the Irish Revenue Commissioners on the prescribed form.44 Table of ContentsIncome tax on dividendsIrish income tax, if any, may arise in respect of dividends paid by us. However, a shareholder who is neither resident nor ordinarily resident in Ireland andwho is entitled to an exemption from DWT, generally has no liability for Irish income tax or to the universal social charge on a dividend from us unless he or sheholds his or her ordinary shares through a branch or agency in Ireland which carries out a trade on his or her behalf.Irish tax on capital gainsA shareholder who is neither resident nor ordinarily resident in Ireland and does not hold our ordinary shares in connection with a trade or business carriedon by such shareholder in Ireland through a branch or agency should not be within the charge to Irish tax on capital gains on a disposal of our ordinary shares.Capital acquisitions taxIrish capital acquisitions tax (“CAT”) is comprised principally of gift tax and inheritance tax. CAT could apply to a gift or inheritance of our ordinary sharesirrespective of the place of residence, ordinary residence or domicile of the parties. This is because our ordinary shares are regarded as property situated in Irelandas our share register must be held in Ireland. The person who receives the gift or inheritance has primary liability for CAT.CAT is levied at a rate of 33% above certain tax‑free thresholds. The appropriate tax‑free threshold is dependent upon (i) the relationship between thedonor and the recipient, and (ii) the aggregation of the values of previous gifts and inheritances received by the recipient from persons within the same category ofrelationship for CAT purposes. Gifts and inheritances passing between spouses are exempt from CAT. Our shareholders should consult their own tax advisers as towhether CAT is creditable or deductible in computing any domestic tax liabilities.Stamp dutyIrish stamp duty, if any, may become payable in respect of ordinary share transfers. However, a transfer of our ordinary shares from a seller who holdsshares through DTC to a buyer who holds the acquired shares through DTC should not be subject to Irish stamp duty. A transfer of our ordinary shares (i) by aseller who holds ordinary shares outside of DTC to any buyer, or (ii) by a seller who holds the ordinary shares through DTC to a buyer who holds the acquiredordinary shares outside of DTC, may be subject to Irish stamp duty, which is currently at the rate of 1% of the price paid or the market value of the ordinary sharesacquired, if greater. The person accountable for payment of stamp duty is the buyer or, in the case of a transfer by way of a gift or for less than market value, allparties to the transfer.A shareholder who holds ordinary shares outside of DTC may transfer those ordinary shares into DTC without giving rise to Irish stamp duty provided thatthe shareholder would be the beneficial owner of the related book‑entry interest in those ordinary shares recorded in the systems of DTC, and in exactly the sameproportions, as a result of the transfer and at the time of the transfer into DTC there is no sale of those book‑entry interests to a third party being contemplated bythe shareholder. Similarly, a shareholder who holds ordinary shares through DTC may transfer those ordinary shares out of DTC without giving rise to Irish stampduty provided that the shareholder would be the beneficial owner of the ordinary shares, and in exactly the same proportions, as a result of the transfer, and at thetime of the transfer out of DTC there is no sale of those ordinary shares to a third party being contemplated by the shareholder. In order for the share registrar to besatisfied as to the application of this Irish stamp duty treatment where relevant, the shareholder must confirm to us that the shareholder would be the beneficialowner of the related book‑entry interest in those ordinary shares recorded in the systems of DTC, and in exactly the same proportions or vice‑versa, as a result ofthe transfer and there is no agreement for the sale of the related book‑entry interest or the ordinary shares or an interest in the ordinary shares, as the case may be,by the shareholder to a third party being contemplated.45 Table of ContentsStock performance graphThe information contained in the performance graph below shall not be deemed to be “soliciting material” or to be “filed” with the SEC, and suchinformation shall not be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that we specificallyincorporate it by reference into such filing.The following graph compares the cumulative total shareholder return on our ordinary shares from December 31, 2014 through December 31, 2019 withthe cumulative returns of the Nasdaq Composite Total Return Index and the Nasdaq Biotechnology Index. The comparison assumes $100 was invested onDecember 31, 2014 in our ordinary shares and in each of the foregoing indices and further assumes reinvestment of any dividends. We did not declare or pay anydividends on our ordinary shares during the comparison period. Year Ended December 31, 2014 2015 2016 2017 2018 2019 Alkermes 100 136 95 93 50 35 Nasdaq Composite Total Return 100 107 116 151 147 200 Nasdaq Biotechnology Index 100 112 88 107 97 122 46 Table of ContentsItem 6. Selected Financial DataThe selected historical financial data set forth below at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017 arederived from our audited consolidated financial statements, which are included elsewhere in this Annual Report. The selected historical financial data set forthbelow at December 31, 2017 and for the years ended December 31, 2016 and 2015 are derived from audited consolidated financial statements, which are notincluded in this Annual Report.The following selected consolidated financial data should be read in conjunction with our consolidated financial statements, the related notes and “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report. The historical results are not necessarilyindicative of the results to be expected for any future period. Year Ended December 31, (In thousands, except per share data) 2019 2018 2017 2016 2015 Consolidated Statements of Operations Data: REVENUES(1): Product sales, net $524,499 $450,334 $362,834 $256,146 $149,028 Manufacturing and royalty revenues (2) 447,882 526,675 505,308 487,247 475,288 License revenue 145,750 48,370 28,000 — — Research and development revenue 52,816 68,895 7,232 2,301 4,019 Total revenues 1,170,947 1,094,274 903,374 745,694 628,335 EXPENSES: Cost of goods manufactured and sold 180,385 176,420 154,748 132,122 138,989 Research and development(3) 512,833 425,406 412,889 387,148 344,404 Selling, general and administrative 599,449 526,408 421,578 374,130 311,558 Amortization of acquired intangible assets 40,358 65,168 62,059 60,959 57,685 Restructuring(4) 13,401 — — — — Total expenses 1,346,426 1,193,402 1,051,274 954,359 852,636 OPERATING LOSS (175,479) (99,128) (147,900) (208,665) (224,301)OTHER (EXPENSE) INCOME, NET(5) (21,577) (27,839) 4,626 (5,722) 296 LOSS BEFORE INCOME TAXES (197,056) (126,967) (143,274) (214,387) (224,005)(BENEFIT) PROVISION FOR INCOME TAXES (436) 12,344 14,671 (5,943) 3,158 NET LOSS $(196,620) $(139,311) $(157,945) $(208,444) $(227,163)LOSS PER ORDINARY SHARE: BASIC AND DILUTED $(1.25) $(0.90) $(1.03) $(1.38) $(1.52)WEIGHTED AVERAGE NUMBER OF ORDINARY SHARESOUTSTANDING: BASIC AND DILUTED 157,051 155,112 153,415 151,484 149,206 Consolidated Balance Sheet Data: Cash, cash equivalents and investments $614,370 $620,039 $590,716 $619,165 $798,849 Total assets 1,805,403 1,825,007 1,797,227 1,726,423 1,855,744 Long-term debt 277,138 279,308 281,436 283,666 349,944 Shareholders’ equity 1,085,442 1,171,285 1,202,808 1,209,481 1,314,275 (1)On January 1, 2018, we adopted the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenuefrom Contracts with Customers (“Topic 606”). (2)Included in manufacturing and royalty revenues in 2018 is $26.7 million of royalty revenue representing our proportional share of the proceedsZealand Pharma A/S (“Zealand”) sale to Royalty Pharma of certain royalty streams for products that utilize technology we had previously licensed toZealand. (3)In the fourth quarter of 2019, we acquired Rodin in a transaction accounted for as an asset acquisition and we expensed $86.6 million of in-processresearch and development (“IPR&D”) acquired as part of the transaction, as it was determined to have no alternative future use. (4)In the fourth quarter of 2019, our board of directors approved a restructuring plan following a review of our operations, cost structure and growthopportunities (the “Restructuring”). (5)2015 includes a $9.6 million gain on the sale of our Gainesville, GA manufacturing facility, the related manufacturing and royalty revenue associatedwith certain products manufactured at the facility, and the rights to IV/IM and parenteral forms of Meloxicam (the “Gainesville Transaction”). 2014includes a gain on the sale of property, plant and equipment of $41.9 million, a gain on the sale of an investment in Civitas Therapeutics, Inc. of $29.6million and a gain on the sale of an investment in Acceleron Pharma Inc. of $15.3 million. 47 Table of ContentsItem 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe following should be read in conjunction with our consolidated financial statements and related notes beginning on page F‑1 of this Annual Report. Thefollowing discussion contains forward‑looking statements. Actual results may differ significantly from those projected in the forward‑looking statements. See“Cautionary Note Concerning Forward‑Looking Statements” on page 3 of this Annual Report. Factors that might cause future results to differ materially fromthose projected in the forward‑looking statements also include, but are not limited to, those discussed in “Item 1A—Risk Factors” and elsewhere in this AnnualReport. A detailed discussion of our 2017 financial condition and results of operations, and of 2018 year-over-year changes as compared to 2017, can be found in“Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the yearended December 31, 2018, which was filed with the SEC on February 15, 2019.OverviewWe earn revenue on net sales of VIVITROL, ARISTADA and ARISTADA INITIO, which are proprietary products that we manufacture, market and sell inthe U.S., and manufacturing and/or royalty revenues on net sales of products commercialized by our licensees. These key marketed products are expected togenerate significant revenues for us in the near‑ and medium‑term and we believe are singular or competitively advantaged products in their classes. In 2019, thesekey marketed products consisted of VIVITROL; ARISTADA and ARISTADA INITIO; INVEGA SUSTENNA/XEPLION; INVEGA TRINZA/TREVICTA; andRISPERDAL CONSTA.In 2019, we incurred an operating loss of $175.5 million, as compared to $99.1 million in 2018. Revenues increased by 7% in 2019, as compared to 2018,which was primarily due to revenue earned under our license and collaboration agreement with Biogen for VUMERITY and increased sales of VIVITROL andARISTADA. This was partially offset by a 13% increase in operating expenses, which were primarily due to the $86.6 million charge related to the IPR&Dacquired as part of the acquisition of Rodin, support for the increase in sales of our proprietary products and a $13.4 million charge in the fourth quarter of 2019related to the Restructuring. These items are discussed in further detail within the “Results of Operations” section below.Results of OperationsProduct Sales, NetOur product sales, net consist of sales of VIVITROL, ARISTADA and ARISTADA INITIO in the U.S., primarily to wholesalers, specialty distributors andpharmacies. The following table presents the adjustments deducted from product sales, gross to arrive at product sales, net for sales of VIVITROL, ARISTADAand ARISTADA INITIO in the U.S. during the years ended December 31, 2019 and 2018: Year Ended December 31, (In millions, except for % of Sales)2019 % of Sales 2018 % of Sales Product sales, gross$1,019.4 100.0 % $846.5 100.0 %Adjustments to product sales, gross: Medicaid rebates (237.0) (23.3)% (197.0) (23.3)%Chargebacks (84.4) (8.3)% (65.5) (7.7)%Product discounts (78.9) (7.7)% (65.1) (7.7)%Medicare Part D (45.2) (4.4)% (29.8) (3.5)%Other (49.4) (4.8)% (38.8) (4.6)%Total adjustments (494.9) (48.5)% (396.2) (46.8)%Product sales, net$524.5 51.5 % $450.3 53.2 % Our product sales, net for VIVITROL and ARISTADA/ARISTADA INITIO in 2019 were $335.4 million and $189.1 million, respectively, as compared to$302.6 million and $147.7 million in 2018, respectively.The increase in product sales, gross was due to a 12% increase in VIVITROL gross sales and a 40% increase in ARISTADA and ARISTADA INITIOgross sales. The increase in VIVITROL gross sales was due to a 12% increase in the number of units sold as there was no change to the selling price of VIVITROLin 2019. The increase in sales of ARISTADA and ARISTADA INITIO was primarily due to a 27% increase in the number of units sold and 4% and 6% priceincreases that went into effect in July 2018 and February 2019, respectively. The increase in the adjustments to product sales, gross were all primarily due to theincrease in sales.A number of companies, including us, are working to develop products to treat addiction, including alcohol and opioid dependence that may compete with,and negatively impact, future sales of VIVITROL. Increased competition may lead to reduced unit sales of VIVITROL and increased pricing pressure. The latest toexpire of our patents covering VIVITROL in the U.S. will expire in 2029 and in Europe will expire in 2021. We do not anticipate generic versions of this productto enter the market until 2028. Under the terms of a settlement and license agreement, we granted Amneal a license under certain patents covering VIVITROL,including48 Table of Contentsthe latest to expire patent covering VIVITROL in the U.S., to market and sell a generic formulation of VIVITROL in the U.S. beginning sometime in 2028 orearlier under certain circumstances. A number of companies, including us, currently market and/or are developing products to treat schizophrenia that may competewith and negatively impact future sales of ARISTADA and ARISTADA INITIO. Increased competition may lead to reduced unit sales of ARISTADA andARISTADA INITIO and increased pricing pressure. The latest to expire of our patents covering ARISTADA and ARISTADA INITIO in the U.S. will expire in2035; and, as such, we do not anticipate any generic versions of this product to enter the market in the near term. We expect our product sales, net will continue togrow as VIVITROL continues to penetrate the opioid and alcohol dependence markets in the U.S., and as ARISTADA and ARISTADA INITIO continue to gainmarket share in the U.S.Manufacturing and Royalty RevenuesManufacturing revenues for third-party products using our proprietary technologies, except for those from Janssen related to RISPERDAL CONSTA, arerecognized over time as products move through the manufacturing process, using an input method based on costs as a measure of progress. Manufacturing revenuefrom RISPERDAL CONSTA is recognized at the point in time the product has been fully manufactured. Royalties are generally earned on our licensees’ net salesof third-party products using our proprietary technologies and are recognized in the period such products are sold by our licensees. The following table comparesmanufacturing and royalty revenues earned in the years ended December 31, 2019 and 2018: Change Year Ended December 31, Favorable/(Unfavorable) (In millions) 2019 2018 2019–2018 Manufacturing and royalty revenues: INVEGA SUSTENNA/XEPLION & INVEGA TRINZA/TREVICTA $256.9 $241.4 $15.5 RISPERDAL CONSTA 66.4 71.1 (4.7)AMPYRA/FAMPYRA 37.2 107.1 (69.9)Other 87.4 107.1 (19.7)Manufacturing and royalty revenues $447.9 $526.7 $(78.8) Under our agreements with Janssen related to INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA, we earn tiered royalty paymentswhich consist of a patent royalty and a know-how royalty, both of which are determined on a country-by-country basis. The patent royalty, which equals 1.5% ofnet sales, is payable in each country until the expiration of the last of the patents with valid claims applicable to the product in such country. The know-how royaltyis a tiered royalty of 3.5% on calendar year net sales up to $250 million; 5.5% on calendar year net sales of between $250 million and $500 million; and 7.5% oncalendar year net sales exceeding $500 million. The know-how royalty rate resets to 3.5% at the beginning of each calendar year and is payable until 15 years fromthe first commercial sale of a product in each individual country, subject to the expiry of the license agreement. The increase in INVEGA SUSTENNA/XEPLIONand INVEGA TRINZA/TREVICTA royalty revenues was due to an increase in Janssen’s end‑market net sales of INVEGA SUSTENNA/XEPLION and INVEGATRINZA/TREVICTA. Janssen’s end‑market net sales of INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA were $3.3 billion and $2.9 billionduring the years ended December 31, 2019 and 2018, respectively.We recognize manufacturing revenue, equal to 7.5% of Janssen’s unit net sales price of RISPERDAL CONSTA, at the point in time when RISPERDALCONSTA has been fully manufactured, which is deemed to have occurred when the product is approved for shipment by both us and Janssen. We record royaltyrevenue, equal to 2.5% of end-market net sales, when the end-market sale of RISPERDAL CONSTA occurs. The decrease in RISPERDAL CONSTA revenue wasdue to a 4% decrease in manufacturing revenue and a 13% decrease in royalty revenue. The decrease in manufacturing revenues was primarily due to a decrease inthe number of units of RISPERDAL CONSTA manufactured for Janssen. The decrease in royalty revenue was due to a decline in Janssen’s end-market net sales ofRISPERDAL CONSTA. Janssen’s end‑market net sales of RISPERDAL CONSTA were $688.0 million and $737.0 million during the years ended December 31,2019 and 2018, respectively. The latest to expire patent covering RISPERDAL CONSTA will expire in 2021 in the EU and 2023 in the U.S. For a discussion oflegal proceedings related to patents covering RISPERDAL CONSTA, see Note 19, Commitments and Contingent Liabilities in the “Notes to ConsolidatedFinancial Statements” in this Annual Report, and for risks relating to such legal proceedings, see “Item 1A—Risk Factors” in this Annual Report and specificallythe section entitled “—We or our licensees may face claims against intellectual property rights covering our products and competition from generic drugmanufacturers.”We expect revenues from our long‑acting, atypical antipsychotic franchise to continue to grow as INVEGA SUSTENNA/XEPLION and INVEGATRINZA/TREVICTA grow around the world. A number of companies, including us, are working to develop products to treat schizophrenia and/or bipolar disorderthat may compete with INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and RISPERDAL CONSTA. Increased competition may lead toreduced unit sales of INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and RISPERDAL CONSTA, and increasing pricing pressure. The latestof the patents subject to our license agreement with Janssen covering INVEGA SUSTENNA/XEPLION expires in 2030 in the U.S. and certain other countries andin 2022 in the EU. The latest of the licensed patents covering INVEGA TRINZA/TREVICTA expired in49 Table of Contents2017 in the U.S. and will expire in 2022 in the EU. In addition, Janssen has other patents not subject to our license agreement, including one that covers INVEGASUSTENNA in the U.S. and expires in 2031 and one that covers INVEGA TRINZA in the U.S. and expires in 2036. In August 2019, Janssen Pharmaceuticals NVand Janssen Pharmaceuticals, Inc. initiated a patent infringement lawsuit in the U.S. District Court for the District of New Jersey against Mylan entities (MylanLaboratories Limited (“Mylan Labs”), Mylan Pharmaceuticals Inc. (“Mylan”), and Mylan Institutional LLC), following filings by Mylan Labs of an abbreviatednew drug application (“ANDA”) seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of U.S. Patent No. 9,439,906. Forfurther discussion of the legal proceedings related to the patents covering INVEGA SUSTENNA, see Note 19, Commitments and Contingent Liabilities in the“Notes to Consolidated Financial Statements” in this Annual Report and for information about risks relating to the INVEGA SUSTENNA Paragraph IV litigation,see “Item 1A—Risk Factors” in this Annual Report, and specifically the section entitled “—We or our licensees may face claims against intellectual propertyrights covering our products and competition from generic drug manufacturers.” We record manufacturing and royalty revenue for AMPYRA as the product is being manufactured, rather than when it is shipped to Acorda. ForFAMPYRA, we record manufacturing revenue as the product is being manufactured and record royalty revenue when the end-market sale of FAMPYRA occurs.The decrease in the amount of manufacturing and royalty revenue recognized for AMPYRA and FAMPYRA was primarily due to a 93% decrease inAMPYRA revenues due to the entry of generic forms of AMPYRA to the U.S. market in September 2018. This was partially offset by a 23% increase inFAMPYRA revenues, which was primarily due to a 40% increase in FAMPYRA manufacturing revenues due primarily to a 38% increase in FAMPYRAmanufacturing activity. For further discussion of the legal proceedings related to the patents covering AMPYRA, see Note 19, Commitments and ContingentLiabilities in this Annual Report, and for information about risks relating to such legal proceedings see “Item 1A—Risk Factors” in this Annual Report andspecifically the section entitled “—We or our licensees may face claims against IP rights covering our products and competition from generic drugmanufacturers.” We expect revenues from AMPYRA to continue to decline due to the entry of generic forms of AMPYRA in the U.S. The legal proceedingsrelated to the patents covering AMPYRA do not involve the patents covering FAMPYRA, and the latest of the patents covering FAMPYRA expires in 2025 in theEU.Included in other manufacturing and royalty revenue in 2018 is $26.7 million of royalty revenue representing our proportional share of the proceedsZealand’s sale to Royalty Pharma of certain royalty streams for products that utilize technology that we had previously licensed to Zealand.Certain of our manufacturing and royalty revenues are earned in countries outside of the U.S. and are denominated in currencies in which the product issold. See “Item 7A—Quantitative and Qualitative Disclosures about Market Risk” in this Annual Report for information on currency exchange rate risk related toour revenues.License Revenue Change Year Ended December 31, Favorable/(Unfavorable) (In millions)2019 2018 2019 - 2018 License revenue$145.8 $48.4 $97.4 Amounts earned as license revenue in both periods presented primarily relate to our license and collaboration agreement with Biogen for VUMERITY. Theincrease in license revenue in 2019 was primarily due to the $150.0 million milestone payment we received upon approval of the NDA for VUMERITY by theFDA in 2019. The license revenue in 2018 was triggered by Biogen’s decision to pay a $50.0 million option payment following its review of preliminarygastrointestinal tolerability data from the ongoing clinical development program for VUMERITY, including certain data from the long-term safety clinical trial andpart A of the elective, randomized, head-to-head phase 3 gastrointestinal tolerability clinical trial comparing VUMERITY and dimethyl fumarate.Research and Development Revenue Change Year Ended December 31, Favorable/(Unfavorable) (In millions)2019 2018 2019 - 2018 Research and development revenue$52.8 $68.9 $(16.1)The decrease in R&D revenue was primarily due to a decrease in the revenue earned under our license and collaboration agreement with Biogen forVUMERITY, as discussed in further detail within the “Critical Accounting Estimates” section below. R&D revenues earned under our license and collaborationagreement with Biogen for VUMERITY were $50.0 million and $65.4 million in 2019 and 2018, respectively, and the decrease in revenue was due to a decrease inservices performed as the NDA for VUMERITY was approved by the FDA in October 2019.50 Table of ContentsCosts and ExpensesCost of Goods Manufactured and Sold Change Year Ended December 31, Favorable/(Unfavorable) (In millions)2019 2018 2019 - 2018 Cost of goods manufactured and sold$180.4 $176.4 $(4.0) The increase in cost of goods manufactured and sold was primarily due to an 18% increase in cost of goods sold related to VIVITROL, driven by theincrease in the sales of this product, partially offset by an 11% decrease in cost of goods manufactured for RISPERDAL CONSTA, which was primarily due to adecrease in the number of units manufactured.Research and Development ExpensesFor each of our R&D programs, we incur both external and internal expenses. External R&D expenses include clinical and non‑clinical activities performedby CROs, consulting fees, laboratory services, purchases of drug product materials and third‑party manufacturing development costs. Internal R&D expensesinclude employee‑related expenses, occupancy costs, depreciation and general overhead. We track external R&D expenses for each of our development programs;however, internal R&D expenses are not tracked by individual program as they benefit multiple programs or our technologies in general.The following table sets forth our external R&D expenses for the years ended December 31, 2019 and 2018 relating to our then-current key developmentprograms and all other development programs, and our internal R&D expenses, listed by the nature of such expenses: Change Year Ended December 31, Favorable/(Unfavorable) (In millions) 2019 2018 2019 - 2018 External R&D Expenses: Development programs: ALKS 4230 $45.2 $23.3 $(21.9)ALKS 3831 33.4 52.0 18.6 VUMERITY 27.7 43.1 15.4 ALKS 5461 21.3 30.3 9.0 ARISTADA and ARISTADA line extensions 7.2 20.1 12.9 IPR&D acquired from Rodin 86.6 — (86.6)Other external R&D expenses 65.5 49.7 (15.8)Total external R&D expenses 286.9 218.5 (68.4)Internal R&D expenses: Employee-related 175.8 163.9 (11.9)Depreciation 14.0 11.9 (2.1)Occupancy 12.3 11.0 (1.3)Other 23.8 20.1 (3.7)Total internal R&D expenses 225.9 206.9 (19.0)Research and development expenses $512.8 $425.4 $(87.4) These amounts are not necessarily predictive of future R&D expenses. In an effort to allocate our spending most effectively, we continually evaluate ourproducts under development based on the performance of such products in pre-clinical and/or clinical trials, our expectations regarding the likelihood of theirregulatory approval and our view of their commercial viability, among other factors. The increase in expenses related to ALKS 4230 was primarily due to the advancement of the ARTISTRY development program for ALKS 4230. Thedecrease in expenses related to ALKS 3831 was primarily due to the decrease in activity within the ENLIGHTEN-1 and ENLIGHTEN-2 pivotal trials, which wereinitiated in December 2015 and February 2016, respectively, partially offset by an increase in activity within a phase 3 study of ALKS 3831 in young adults, whichwas initiated in June 2017. In the fourth quarter of 2019, we submitted our NDA for ALKS 3831 to the FDA. The decrease in expenses related to VUMERITY wasprimarily due to the completion of our elective, randomized, head-to-head phase 3 study, which compared the gastrointestinal tolerability of VUMERITY andTECFIDERA in patients with relapsing-remitting MS. The FDA approved the NDA for VUMERITY in the fourth quarter of 2019. The decrease in expensesrelated to ALKS 5461 was primarily due to a decrease in activity within the program as we completed submission of our NDA to the FDA seeking marketingapproval of ALKS 5461 for the adjunctive treatment of MDD in January 2018. The decrease in expenses related to ARISTADA and ARISTADA line extensionswas primarily due to the timing of ALPINE, our six-month study that evaluated the efficacy, safety and tolerability of ARISTADA and INVEGA SUSTENNAwhen used to initiate patients experiencing an acute exacerbation of schizophrenia in the hospital and to maintain treatment in an outpatient setting. For additionaldetail on the status of our key development programs, see “Key Development Programs” within “Item 1—Business” in this Annual Report.51 Table of ContentsIncluded in external R&D expenses is a charge of $86.6 million related to IPR&D acquired when we acquired Rodin in the fourth quarter of 2019. Theacquisition of Rodin was treated as an asset acquisition and not a business combination for accounting purposes as substantially all of the fair value of the assetsacquired in the acquisition of Rodin was tied to their IPR&D, which is largely in the preclinical stage. As the IPR&D was determined to have no alternative futureuse, the value ascribed to the IPR&D was charged to R&D expense upon its acquisition.The increase in employee-related expenses was primarily due to an increase in R&D headcount of 5% prior to the Restructuring. The overall R&D-relatedheadcount decreased by 2% from December 31, 2018 to December 31, 2019, due primarily to the Restructuring. Selling, General and Administrative Expenses Change Year Ended December 31, Favorable/(Unfavorable) (In millions) 2019 2018 2019 - 2018 Selling, general and administrative expense $599.4 $526.4 $(73.0) The increase in selling, general and administrative (“SG&A”) expense was primarily due to increases in employee-related expenses and marketing andprofessional services fees. Employee-related expenses increased by 17%, primarily due to an increase in our SG&A-related headcount of 10% prior to theRestructuring. The overall SG&A related headcount increase was 5% at December 31, 2019, as compared to December 31, 2018. Marketing and professionalservices fees increased by 11% in 2019 and were primarily due to additional brand investments in VIVITROL, ARISTADA and ARISTADA INITIO, as well as anincreased investment in patient access support services, such as reimbursement and transition assistance, for these products.Amortization of Acquired Intangible Assets Change Year Ended December 31, Favorable/(Unfavorable) (In millions) 2019 2018 2019 - 2018 Amortization of acquired intangible assets $40.4 $65.2 $24.8 Our amortizable intangible assets consist of technology and collaborative arrangements acquired as part of the acquisition of EDT in September 2011,which are being amortized over 12 to 13 years. We amortize our amortizable intangible assets using the economic use method, which reflects the pattern that theeconomic benefits of the intangible assets are consumed as revenue is generated from the underlying patent or contract.Based on our most recent analysis, amortization of intangible assets included within our consolidated balance sheet at December 31, 2019 is expected to beapproximately $40.0 million, $40.0 million, $35.0 million, $35.0 million and $1.0 million in the years ending December 31, 2020 through 2024, respectively.Restructuring Change Year Ended December 31, Favorable/(Unfavorable) (In millions) 2019 2018 2019 - 2018 Restructuring expense $13.4 $— $(13.4) In the fourth quarter of 2019, our board of directors approved a restructuring plan following a review of our operations, cost structure and growthopportunities. The Restructuring included a reduction in headcount of approximately 160 employees across the Company. We recorded a charge of $13.4 millionin the fourth quarter of 2019 as a result of the Restructuring, which consisted of one-time termination benefits for employee severance, benefits and related costs,all of which are expected to result in cash expenditures and substantially all of which will be paid out by the end of 2020. We paid $4.2 million of the total $13.4million accrued for the Restructuring during the year ended December 31, 2019.Other (Expense) Income, Net Change Year Ended December 31, Favorable/(Unfavorable) (In millions) 2019 2018 2019 - 2018 Interest income $14.0 $9.2 $4.8 Interest expense (13.6) (15.4) 1.8 Change in the fair value of contingent consideration (22.8) (19.6) (3.2)Other income (expense), net 0.8 (2.0) 2.8 Total other (expense) income, net $(21.6) $(27.8) $6.252 Table of Contents The increase in interest income was primarily due to a greater percentage of our cash and investments residing in investment accounts in 2019 as comparedto 2018, and an increase in interest rates in 2019 as compared to 2018. In April 2015, we completed the Gainesville Transaction with Recro Pharma, Inc. (“Recro”) and Recro Pharma LLC and received $54.0 million in cash,$2.1 million in warrants to acquire Recro common stock (which were exercised in the fourth quarter of 2019) and $57.6 million in contingent consideration tied tolow double digit royalties on net sales of the IV/IM and parenteral forms of Meloxicam and any other product with the same active ingredient as Meloxicam IV/IMthat is discovered or identified using certain of our IP to which Recro was provided a right of use, through license or transfer, pursuant to the GainesvilleTransaction (the “Meloxicam Products”), and up to $120.0 million in milestone payments upon the achievement of certain regulatory and sales milestones relatedto the Meloxicam Products. We determined the fair value of the contingent consideration through three valuation approaches, which are described in greater detailin “Critical Accounting Estimates, Contingent Consideration”, later in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results ofOperations” in this Annual Report. At each reporting date, we update our assessment of the fair value of this contingent consideration and reflect any changes tothe fair value within the consolidated statements of operations and comprehensive loss and will continue to do so until the milestones and/or royalties included inthe contingent consideration have been settled.During the years ended December 31, 2019 and 2018, we determined that the fair value of the contingent consideration decreased by $22.8 million and$19.6 million, respectively. The decrease in 2019 was primarily due to a decrease in the probability of success used at December 31, 2019, as compared toDecember 31, 2018, due to Recro’s receipt of a second Complete Response Letter (“CRL”) in March 2019 regarding its NDA for IV Meloxicam. As a result of thereceipt of the second CRL, we delayed the expectation of the anticipated date for the FDA’s approval of the IV Meloxicam NDA, resulting in a correspondingreduction in the amount of forecasted sales used in the valuation model. The decrease in 2018 was primarily due to the first CRL Recro received from the FDA inMay 2018 regarding its NDA for IV Meloxicam. As a result of the receipt of that first CRL, we had delayed our expectation of the anticipated date for the FDA’sIn addition, in December 2018, we amended our agreements with Recro and its affiliates relating to certain development milestone payments owed to us by Recro,such that the $45.0 million previously due to us upon approval by the FDA of the IV Meloxicam NDA was replaced with: $5.0 million which was paid in the firstquarter of 2019, $5.0 million which was paid in the second quarter of 2019, $5.0 million to be paid within 180 days following FDA approval of the NDA for IVMeloxicam, and $45.0 million payable in seven equal annual installments of approximately $6.4 million beginning on the first anniversary of such NDA approvaldate. In November 2019, Recro spun out its acute care segment to Baudax Bio, Inc. (“Baudax”), a publicly-traded pharmaceutical company. As part of thistransaction, Recro’s obligations to pay certain contingent consideration from the Gainesville Transaction were assigned and/or transferred to Baudax.(Benefit) Provision for Income Taxes Change Year Ended December 31, Favorable/(Unfavorable) (In millions) 2019 2018 2019 - 2018 Income tax (benefit) provision $(0.4) $12.3 $12.7The income tax benefit in 2019 and the income tax provision in 2018 was primarily due to U.S. federal and state taxes. The favorable change in incometaxes in 2019, as compared to 2018, was primarily due to the foreign derived intangible income (“FDII”) proposed regulations issued by the U.S. Department ofthe Treasury and the U.S. Internal Revenue Service in March 2019.No provision for income tax has been provided on undistributed earnings of the Company's foreign subsidiaries because such earnings are indefinitelyreinvested in the foreign operations or may be repatriated to Ireland without incurring any tax liability. Cumulative unremitted earnings of overseas subsidiariestotaled approximately $418.1 million at December 31, 2019. In the event of a repatriation of those earnings in the form of dividends or otherwise, the Companymay be liable for income taxes, subject to adjustment, if any, for foreign tax credits and foreign withholding taxes payable to foreign tax authorities. The Companyestimates that approximately $12.9 million of income taxes would be payable on the repatriation of the unremitted earnings to Ireland.As of December 31, 2019, the Company had $1.5 billion of Irish NOL carryforwards, $49.6 million of U.S. federal NOL carryforwards, $44.5 million ofstate NOL carryforwards, $49.6 million of federal R&D credits and $18 million of state tax credits which will either expire on various dates through 2039 or canbe carried forward indefinitely. These loss and credit carryforwards are available to reduce certain future Irish and foreign taxable income and tax. These loss andcredit carryforwards are subject to review and possible adjustment by the appropriate taxing authorities. These loss and credit carryforwards, which may be utilizedin a future period, may be subject to limitations based upon changes in the ownership of the Company's ordinary shares.53 Table of ContentsLiquidity and Capital ResourcesOur financial condition is summarized as follows: December 31, 2019 December 31, 2018 (In millions) U.S. Ireland Total U.S. Ireland Total Cash and cash equivalents $63.3 $140.5 $203.8 $139.3 $127.5 $266.8 Investments—short-term 285.3 45.9 331.2 203.3 69.2 272.5 Investments—long-term 40.3 39.1 79.4 51.5 29.2 80.7 Total cash and investments $388.9 $225.5 $614.4 $394.1 $225.9 $620.0 Outstanding borrowings—short and long-term $277.1 $— $277.1 $279.3 $— $279.3 At December 31, 2019, our investments consisted of the following: Gross Amortized Unrealized Estimated (In millions) Cost Gains Losses Fair Value Investments—short-term available-for-sale $329.8 $1.4 $— $331.2 Investments—long-term available-for-sale 75.9 — (0.1) 75.8 Investments—long-term held-to-maturity 3.5 0.1 — 3.6 Total $409.2 $1.5 $(0.1) $410.6Sources and Uses of CashWe generated $72.0 million and $99.3 million of cash from operating activities during the years ended December 31, 2019 and 2018, respectively. Weexpect that our existing cash and investments will be sufficient to finance our anticipated working capital and other cash requirements, such as capital expendituresand principal and interest payments on our long‑term debt, for at least the twelve months following the date from which our financial statements were issued.Subject to market conditions, interest rates and other factors, we may pursue opportunities to obtain additional financing in the future, including debt and equityofferings, corporate collaborations, bank borrowings, arrangements relating to assets or other financing methods or structures. In addition, the 2023 Term Loanshave an incremental facility capacity in an amount of $175.0 million, plus additional amounts as long as we meet certain conditions, including a specified leverageratio.Our investment objectives are, first, to preserve liquidity and conserve capital and, second, to generate investment income. We mitigate credit risk in ourcash reserves by maintaining a well‑diversified portfolio that limits the amount of investment exposure as to institution, maturity and investment type. Ouravailable‑for‑sale investments consist primarily of short‑ and long‑term U.S. government and agency debt securities and corporate debt securities. We classifyavailable‑for‑sale investments in an unrealized loss position, which do not mature within 12 months, as long‑term investments. We have the intent and ability tohold these investments until recovery, which may be at maturity, and it is more‑likely‑than‑not that we would not be required to sell these securities beforerecovery of their amortized cost. At December 31, 2019, we performed an analysis of our investments with unrealized losses for impairment and determined thatthey were temporarily impaired.Information about our cash flows, by category, is presented in the accompanying consolidated statements of cash flows. The following table summarizesour cash flows for the years ended December 31, 2019 and 2018: Year Ended December 31, (In millions) 2019 2018 Cash and cash equivalents, beginning of period $266.8 $191.3 Cash flows provided by operating activities 72.0 99.3 Cash flows used in investing activities (141.8) (22.2)Cash flows provided by (used in) financing activities 6.8 (1.6)Cash and cash equivalents, end of period $203.8 $266.8Operating ActivitiesThe increase in cash provided by operating activities was primarily due to a 17% increase in the amount of cash collected from our customers, partiallyoffset by a 19% increase in employee-related cash payments and the expense related to the IPR&D acquired in the acquisition of Rodin. The increase in the amountof cash we collected from our customers is primarily due to the increase in revenues previously discussed. The increase in the amount of cash paid to ouremployees is primarily due to increases in headcount, particularly in the R&D and SG&A areas, as discussed in greater detail in the “Selling, General andAdministrative Expenses” section above. The cash flows related to the acquisition of Rodin are described below in the “Investing Activities” section.54 Table of ContentsInvesting ActivitiesThe increase in cash used in investing activities was primarily due to the net purchase of investments of $52.9 million in 2019, as compared to the net salesof investments of $46.7 million in 2018. We also had an increase in property, plant and equipment additions of $21.5 million, primarily due to the construction offacilities and equipment at our Wilmington, Ohio location for the manufacture of clinical products and commercial products, and the acquisition of equipment for anew leased facility in Waltham, Massachusetts. Amounts included as construction in progress at December 31, 2019 primarily consist of capital expenditures atthese two facilities.We expect to spend approximately $50.0 million during the year ended December 31, 2020 for capital expenditures. We continue to evaluate ourmanufacturing capacity based on expectations of demand for our products and will continue to record such amounts within construction in progress until such timeas the underlying assets are placed into service, or we determine we have sufficient existing capacity and the assets are no longer required, at which time we wouldrecognize an impairment charge. We continue to periodically evaluate whether facts and circumstances indicate that the carrying value of these long‑lived assets tobe held and used may not be recoverable.In the fourth quarter of 2019, we acquired Rodin for an upfront cash payment of approximately $100.0 million and potential future milestone payments ofup to $850.0 million. We accounted for the transaction as an asset acquisition, as substantially all of the fair value of the assets acquired in the acquisition of Rodinwere tied to their IPR&D, which is largely in the preclinical stage. As the IPR&D was determined to have no alternative future use, the value ascribed to theIPR&D, $86.6 million, was charged to R&D expense upon its acquisition and was included in our net loss in 2019. The remaining $8.9 million of net assetsacquired, net of cash transferred as part of the acquisition of $2.7 million, has been included as an investing activity in the 2019 cash flow statement.The increase in investment cash outflows was partially offset by $10.0 million received from Recro in the form of two $5.0 million milestone payments inconnection with the December 2018 amendments to our agreements with Baudax (as successor in interest to Recro), as discussed in the “Other (Expense) Income,Net” section above.Financing ActivitiesThe increase in cash flows from financing activities was primarily due to an $8.4 million increase in the net cash provided from stock option exercises byour employees.BorrowingsAt December 31, 2019, our borrowings consisted of $279.3 million outstanding under the 2023 Term Loans. Please refer to Note 11, Long‑Term Debt, inthe “Notes to Consolidated Financial Statements” in this Annual Report for a discussion of our outstanding term loans.Contractual ObligationsThe following table summarizes our obligations to make future payments under our current contracts at December 31, 2019: Less Than One to Three to More than One Year Three Years Five Years Five Years Contractual Obligations (In thousands) Total (2020) (2021 - 2022) (2023 - 2024) (After 2024) 2023 Term Loans—Principal $279,276 $2,843 $5,686 $270,747 $— 2023 Term Loans—Interest 35,662 11,101 21,861 2,700 — Operating lease obligations 15,888 9,053 3,227 1,029 2,579 Purchase obligations 428,745 428,745 — — — Total contractual cash obligations $759,571 $451,742 $30,774 $274,476 $2,579As interest on the 2023 Term Loans is based on a one, three or six-month LIBOR rate of our choosing, for the purposes of this disclosure, we are using theone-month LIBOR rate, which was 1.74% at December 31, 2019 as this exceeds the LIBOR rate floor under the terms of the 2023 Term Loans and is the rate wewere using at December 31, 2019 for interest payments under the 2023 Term Loans.This table excludes up to $850.0 million in milestone payments that we would be obligated to make upon achievement by the platform of developmentcandidates acquired in the acquisition of Rodin of certain specified clinical and regulatory milestones, and attainment of certain sales thresholds, as we cannotmake a reliable estimate of the period of payment. At December 31, 2019, we have not recorded a liability related to these milestone payments, as none of thefuture events which would trigger a milestone payment are considered probable of occurring.This table also excludes any liabilities pertaining to uncertain tax positions as we cannot make a reliable estimate of the period of cash settlement with therespective taxing authorities. At December 31, 2019, we had $6.9 million of net liabilities associated with55 Table of Contentsuncertain tax positions. We do not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease within the next 12 months.Off‑Balance Sheet ArrangementsAt December 31, 2019, we were not a party to any off‑balance sheet arrangements that have, or are reasonably likely to have, a current or future effect onour financial condition, results of operations, liquidity, capital expenditures or capital resources.Critical Accounting EstimatesOur consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our financial statements, we arerequired to make assumptions and estimates about future events, and apply judgments on historical experience, current trends and other factors that managementbelieves to be relevant at the time our consolidated financial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimatesand judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannotbe determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.Our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, of the “Notes to Consolidated FinancialStatements” in this Annual Report. We believe that the following accounting estimates are the most critical to aid in fully understanding and evaluating ourreported financial results, and they require our most difficult, subjective or complex judgments, resulting from the need to make estimates about the effects ofmatters that are inherently uncertain. We have reviewed these critical accounting estimates and related disclosures with the Audit and Risk Committee of our boardof directors.Revenue from Contracts with CustomersWhen entering into arrangements with customers, we identify whether our performance obligations under each arrangement represent a distinct good orservice or a series of distinct goods or services. If a contract contains more than one performance obligation, we allocate the total transaction price to eachperformance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performanceobligation. The fair value of performance obligations under each arrangement may be derived using an estimate of selling price if we do not sell the goods orservices separately.We recognize revenue when or as we satisfy a performance obligation by transferring an asset or providing a service to a customer. Management judgmentis required in determining the consideration to be earned under an arrangement and the period over which we are expected to complete our performance obligationsunder an arrangement. Steering committee services that are not inconsequential or perfunctory and that are determined to be performance obligations arecombined with other research services or performance obligations required under an arrangement, if any, in determining the level of effort required in anarrangement and the period over which we expect to complete our aggregate performance obligations.Manufacturing RevenueWe recognize manufacturing revenues from the sale of products we manufacture for resale by our licensees. Manufacturing revenues for our partneredproducts, with the exception of those from Janssen related to RISPERDAL CONSTA, are recognized over time as products move through the manufacturingprocess, using a standard cost-based model as a measure of progress, which represents a faithful depiction of the transfer of control of the goods. We recognizemanufacturing revenue from these products over time as we determined, in each instance, that we would have a right to payment for performance completed to dateif our customer were to terminate the manufacturing agreement for reasons other than our non-performance and the products have no alternative use. We invoiceour licensees upon shipment with payment terms between 30 to 90 days.We are the exclusive manufacturer of RISPERDAL CONSTA for commercial sale under our manufacturing and supply agreement with Janssen. Wedetermined that it is appropriate to record revenue under this agreement at the point in time when control of the product passes to Janssen, which is determined tobe when the product has been fully manufactured, since Janssen does not control the product during the manufacturing process and, in the event Janssen terminatesthe manufacturing and supply agreement, it is uncertain whether, and at what amount, we would be reimbursed for performance completed to date for product notyet fully manufactured. The manufacturing process is considered fully complete once the finished goods have been approved for shipment by both us and Janssen.The sales price for certain of our manufacturing revenues is based on the end-market sales price earned by our licensees. As end-market sales generallyoccur after we have recorded manufacturing revenue, we estimate the sales price for such products based on information supplied to us by our licensees, ourhistorical transaction experience and other third-party data. Differences between actual manufacturing revenues and estimated manufacturing revenues arereconciled and adjusted for in the period in which they become known, which is generally within the same quarter. The differences between our actual andestimated manufacturing revenues has not been material to date.Royalty RevenueWe recognize royalty revenues related to the sale by our licensees of products that incorporate our technology. Royalties, with the exception of those earnedon sales of AMPYRA as set forth below, qualify for the sales-and-usage exemption under Topic 606 as56 Table of Contents(i) royalties are based strictly on the sales-and-usage by the licensee; and (ii) a license of IP is the sole or predominant item to which such royalties relate. Based onthis exemption, these royalties are earned in the period the products are sold by our partner and we have a present right to payment. Royalties on AMPYRAmanufactured under our license and supply agreements with Acorda are incorporated into the standard cost-based model described in the manufacturing revenuessection, above, as the terms of such agreements entitle us to royalty revenue as the product is being manufactured, which represents a faithful depiction of thetransfer of goods, and not based on the actual end-market sales of the licensee.Certain of our royalty revenues are recognized based on information supplied to us by our licensees and require estimates to be made. Differences betweenactual royalty revenues and estimated royalty revenues are reconciled and adjusted for in the period in which they become known, which is generally within thesame quarter. The difference between our actual and estimated royalty revenues has not been material to date.Research and Development Revenue and License RevenueUnder a license and collaboration agreement with Biogen, which we entered into in November 2017 and amended in October 2018, January 2019 andOctober 2019, we granted Biogen a worldwide, exclusive, sublicensable license to develop, manufacture and commercialize VUMERITY and other productscovered by patents licensed to Biogen under the agreement. Upon entering into the November 2017 license and collaboration agreement, we received an up-frontcash payment of $28.0 million and were also eligible to receive additional payments upon achievement of developmental milestones with respect to VUMERITY.In June 2018, we received an additional cash payment of $50.0 million following Biogen’s review of preliminary gastrointestinal tolerability data from the clinicaldevelopment program for VUMERITY. In November 2019, we also received an additional payment of $150.0 million following FDA approval of the NDA forVUMERITY and transfer of such NDA to Biogen. We are also eligible to receive additional payments upon achievement of developmental milestones with respectto the first two products other than VUMERITY covered by patents licensed to Biogen under the November 2017 license and collaboration agreement. Biogenpaid a portion of the VUMERITY development costs we incurred in 2017 and, since January 1, 2018, Biogen has been responsible for all VUMERITYdevelopment costs we incur, subject to annual budget limitations. Following FDA approval of the NDA for VUMERITY in October 2019, the NDA and anyfurther development responsibilities with respect to VUMERITY were transferred to Biogen.We evaluated the license and collaboration agreement under Topic 606 and determined that it had four deliverables: (i) the grant of a distinct, right-to-uselicense of IP to Biogen; (ii) future development services; (iii) clinical supply; and (iv) participation on a joint steering committee with Biogen. Our participation onthe joint steering committee was considered to be perfunctory and thus not recognized as a performance obligation. The deliverables, aside from the participationin the joint steering committee which was considered to be perfunctory, were determined to be separate performance obligations as the license is separatelyidentifiable from the development services and clinical supply, and the development services are not expected to significantly modify or customize the IP.We allocated the arrangement consideration to each performance obligation using the standalone selling prices based on our estimate of selling price for thelicense and other deliverables. We used a discounted cash flow model to estimate the standalone selling price of the license in order to allocate the consideration tothe performance obligations. To estimate the standalone selling price of the license, we assessed the likelihood of the FDA’s approval of VUMERITY andestimated the expected future cash flows assuming FDA approval and maintenance of the IP protecting VUMERITY. We then discounted these cash flows using adiscount rate of 8.0%, which we believe captures a market participant’s view of the risk associated with the expected cash flows. The estimate of selling price ofthe development services and clinical supply were determined through third-party evidence. We believe that a change in the assumptions used to determine ourestimate of selling price for the license most likely would not have a significant effect on the allocation of consideration transferred.Under Topic 606, we allocated the $28.0 million up-front payment and the $50.0 million June 2018 payments as follows: $27.0 million and $48.3 millionto the delivery of the license; $0.9 million and $1.5 million to future development services; and $0.1 million and $0.2 million to clinical supply, respectively. In November 2019, following FDA approval of the NDA for VUMERITY and transfer of such NDA to Biogen, we received a $150.0 million milestonepayment, $144.8 million of which was allocated to the delivery of the license; and $5.2 million of which was allocated to future development services and clinicalsupply. The amounts allocated to the license were recognized upon receipt of the payments as delivery of the license occurred upon entry into the agreement in2017. The amounts allocated to the development services and clinical supply will be recognized over the course of the development work and as clinical supply isdelivered to Biogen, which is expected to continue into 2020. We expect to earn an additional $0.3 million in research and development revenue under thisagreement with Biogen through 2020. In addition, we will receive a 15% royalty on worldwide net sales of VUMERITY, subject to, under certain circumstances, minimum annual payments forthe first five years following FDA approval of VUMERITY. We are also entitled to receive royalties on net sales of products other than VUMERITY covered bypatents licensed to Biogen under the license and collaboration agreement, at tiered royalty rates calculated as percentages of net sales ranging from high-singledigits to sub-teen double digits. All royalties are payable on a product-by-product and country-by-country basis until the later of (i) the last-to-expire patent rightcovering the57 Table of Contentsapplicable product in the applicable country and (ii) a specified period of time from the first commercial sale of the applicable product in the applicable country.Royalties for all products and the minimum annual payments for VUMERITY are subject to customary reductions, as set forth in the license and collaborationagreement. We determined that the future development milestones and sales-based royalties that we may be entitled to receive are variable consideration. We are usingthe most likely amount method for estimating the variable consideration to be received related to the milestones under this arrangement. The royalties are subject tothe sales-based exception and will be recorded when the corresponding sale occurs. Under the license and collaboration agreement, Biogen appointed us as the toll manufacturer of clinical and commercial supplies of VUMERITY, subjectto Biogen’s right to manufacture or have manufactured commercial supplies as a back-up manufacturer and subject to good faith agreement by the parties on theterms of such manufacturing arrangements. In October 2019, we entered into a commercial supply agreement with Biogen for the commercial supply ofVUMERITY, an amendment to such commercial supply agreement and an amendment to the November 2017 license and collaboration agreement with Biogen.Under these agreements, Biogen has an option to assume responsibility, subject to a transition period, for the manufacture (itself or through a designee) of clinicalsupplies of VUMERITY and up to 100% of commercial supplies of VUMERITY in exchange for an increase in the royalty rate to be paid by Biogen to us on netsales of product that is manufactured by Biogen or its designee. We evaluated the commercial supply agreement and the related amendments under Topic 606 anddetermined that these agreements should be combined and accounted for as a separate contract since the commercial supply agreement and amendment to theNovember 2017 license and collaboration agreement were negotiated together to achieve a common economic objective and the additional performance obligationsunder the commercial supply agreement are considered distinct obligations priced at their standalone selling prices. We determined that we had two separateperformance obligations, the commercial supply of VUMERITY and, upon an election by Biogen to commence a transfer of technology relating to themanufacture of VUMERITY (a “Tech Transfer”), services to be performed by us in connection with such Tech Transfer. There are other deliverables under theagreements that were determined to be perfunctory or immaterial. In connection with the entry into the commercial supply agreement and the related amendments, we received payments in the aggregate amount of $5.8million in the fourth quarter of 2019 and, if Biogen opts to assume responsibility for the manufacture of VUMERITY, we will be eligible to receive an additional$5.0 million payment upon the earlier of successful completion of the Tech Transfer or a date in the fourth quarter of 2022. The $5.8 million received in the fourthquarter of 2019 plus amounts received in connection with the Tech Transfer, if any, will be allocated to each of the performance obligations using the standaloneselling prices based on the Company’s estimate of selling price for the commercial supply of VUMERITY and the services related to the Tech Transfer, and thisadditional arrangement consideration will be recognized as we deliver commercial supply of VUMERITY and/or provide services relating to the Tech Transfer.We expect to begin performing under this commercial supply agreement in the first quarter of 2020.Product Sales, NetOur product sales, net consist of sales of VIVITROL, ARISTADA and ARISTADA INITIO in the U.S. primarily to wholesalers, specialty distributors andpharmacies. Product sales, net are recognized when the customer obtains control of the product, which is when the product has been received by the customer.Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with ourcustomers, health care providers or payers. Our process for estimating reserves established for these variable consideration components does not differ materiallyfrom historical practices. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances, may be subject toconstraint and is included in the net sales price only to the extent that it is probable that a significant reversal of the amount of the cumulative revenues recognizedwill not occur in a future period. Actual amounts may ultimately differ from our estimates. If actual results vary, we adjust these estimates, which could have aneffect on earnings in the period of adjustment. The following are our significant categories of sales discounts and allowances: •Medicaid Rebates—we record accruals for rebates to states under the Medicaid Drug Rebate Program as a reduction of sales when the product isshipped into the distribution channel using the expected value. We rebate individual states for all eligible units purchased under the Medicaidprogram based on a rebate per unit calculation, which is based on our average manufacturer prices. We estimate expected unit sales and rebates perunit under the Medicaid program and adjust our rebate based on actual unit sales and rebates per unit. To date, actual Medicaid rebates have notdiffered materially from our estimates; •Chargebacks—discounts that occur when contracted indirect customers purchase directly from wholesalers and specialty distributors. Contractedcustomers generally purchase a product at its contracted price. The wholesaler or specialty distributor, in turn, then generally charges back to us thedifference between the wholesale acquisition cost and the contracted price paid to the wholesaler or specialty distributor by the customer. Theallowance for chargebacks is made using the expected value and is based on actual and expected utilization of these programs. Chargebacks couldexceed58 Table of Contents historical experience and our estimates of future participation in these programs. To date, actual chargebacks have not differed materially from ourestimates; •Product Discounts—cash consideration, including sales incentives, given by us under agreements with a number of wholesaler, distributor,pharmacy, and treatment provider customers that provide them with a discount on the purchase price of products. The reserve is made using theexpected value and to date, actual product discounts have not differed materially from our estimates; •Product Returns—we record an estimate for product returns at the time our customers take control of our product. We estimate this liability usingthe expected value based on our historical return levels and specifically identified anticipated returns due to known business conditions and productexpiry dates. Return amounts are recorded as a deduction to arrive at product sales, net. Once product is returned, it is destroyed; and •Medicare Part D—We record accruals for Medicare Part D liabilities under the Medicare Coverage Gap Discount Program (“CGDP”) as a reductionof sales. Under the CGDP, patients reaching the annual coverage gap threshold are eligible for reimbursement coverage for out-of-pocket costs forcovered prescription drugs. Under an agreement with the Center for Medicare and Medicaid, manufacturers are responsible to reimburse prescriptionplan sponsors for the portion of out-of-pocket expenses not covered under their Medicare plans.Our provisions for sales and allowances reduced gross product sales as follows: (In millions) MedicaidRebates Chargebacks ProductDiscounts ProductReturns Medicare PartD Other Total Balance, December 31, 2017 $89.9 $1.9 $8.6 $18.8 $3.9 $4.6 $127.7 Provision: Current year 203.1 65.5 65.2 6.6 29.8 32.1 402.3 Prior year (6.1) — (0.1) — — — (6.2)Total 197.0 65.5 65.1 6.6 29.8 32.1 396.1 Actual: Current year (80.5) (63.7) (51.1) — (17.8) (27.5) (240.6)Prior year (83.0) (1.4) (10.4) (3.5) (4.8) (3.7) (106.8)Total (163.5) (65.1) (61.5) (3.5) (22.6) (31.2) (347.4)Balance, December 31, 2018 $123.4 $2.3 $12.2 $21.9 $11.1 $5.5 $176.4 Provision: Current year 243.0 84.4 78.9 10.7 45.2 40.8 503.0 Prior year (5.9) — — (2.2) — — (8.1)Total 237.1 84.4 78.9 8.5 45.2 40.8 494.9 Actual: Current year (128.6) (81.6) (66.3) — (33.9) (32.0) (342.4)Prior year (105.9) (1.6) (13.2) (5.8) (13.2) (5.8) (145.5)Total (234.5) (83.2) (79.5) (5.8) (47.1) (37.8) (487.9)Balance, December 31, 2019 $126.0 $3.5 $11.6 $24.6 $9.2 $8.5 $183.4Amortization and Impairment of Long‑Lived AssetsLong‑lived assets, other than goodwill which is separately tested for impairment, are evaluated for impairment whenever events or changes incircumstances indicate the carrying value of an asset may not be recoverable. When evaluating long‑lived assets for potential impairment, we first compare thecarrying value of the asset to the asset’s estimated future cash flows (undiscounted and without interest charges). If the estimated future cash flows are less than thecarrying value of the asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset’s estimated fairvalue, which may be based on estimated future cash flows (discounted and with interest charges). We recognize an impairment loss if the amount of the asset’scarrying value exceeds the asset’s estimated fair value. If we recognize an impairment loss, the adjusted carrying amount of the asset becomes its new cost basis.For a depreciable long‑lived asset, the new cost basis will be depreciated over the remaining useful life of that asset.When reviewing long‑lived assets for impairment, we group long‑lived assets with other assets and liabilities at the lowest level for which identifiable cashflows are largely independent of the cash flows of other assets and liabilities. Our impairment loss calculations contain uncertainties because they requiremanagement to make assumptions and to apply judgment to estimate future cash flows and asset fair values, including forecasting useful lives of the assets andselecting the discount rate that reflects the risk inherent in future cash flows.Our amortizable intangible assets include technology and collaborative arrangements that were acquired as part of the Business Combination. Theseintangible assets are being amortized as revenue is generated from these products, which we refer to as the economic benefit amortization model. This amortizationmethodology involves calculating a ratio of actual current period sales to total anticipated sales for the life of the product and applying this ratio to the carryingamount of the intangible asset.59 Table of ContentsIn order to determine the pattern in which the economic benefits of our intangible assets are consumed, we estimated the future revenues to be earned underour collaboration agreements and our NanoCrystal and OCR technology‑based intangible assets from the date of acquisition to the end of their respective usefullives. The factors used to estimate such future revenues included: (i) our and our licensees’ projected future sales of the existing commercial products based onthese intangible assets; (ii) our projected future sales of new products based on these intangible assets which we anticipate will be launched commercially; (iii) thepatent lives of the technologies underlying such existing and new products; and (iv) our expectations regarding the entry of generic and/or other competingproducts into the markets for such existing and new products. These factors involve known and unknown risks and uncertainties, many of which are beyond ourcontrol and could cause the actual economic benefits of these intangible assets to be materially different from our estimates.Based on our most recent analysis, amortization of intangible assets included within our consolidated balance sheet at December 31, 2019, is expected tobe approximately $40.0 million, $40.0 million, $35.0 million, $35.0 million and $1.0 million in the years ending December 31, 2020 through 2024, respectively.Although we believe such available information and assumptions are reasonable, given the inherent risks and uncertainties underlying our expectations regardingsuch future revenues, there is the potential for our actual results to vary significantly from such expectations. If revenues are projected to change, the relatedamortization of the intangible asset will change in proportion to the change in revenue.If there are any indications that the assumptions underlying our most recent analysis would be different than those utilized within our current estimates, ouranalysis would be updated and may result in a significant change in the anticipated lifetime revenue of the products associated with our amortizable intangibleassets. For example, the occurrence of an adverse event could substantially increase the amount of amortization expense associated with our acquired intangibleassets as compared to previous periods or our current expectations, which may result in a significant negative impact on our future results of operations.GoodwillWe evaluate goodwill for impairment for our reporting units annually, as of October 31, and whenever events or changes in circumstances indicate itscarrying value may not be recoverable. A reporting unit is an operating segment, as defined by the segment reporting accounting standards, or a component of anoperating segment. A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information isavailable and is reviewed by management. Two or more components of an operating segment may be aggregated and deemed a single reporting unit for goodwillimpairment testing purposes if the components have similar economic characteristics. As of December 31, 2019, we have one operating segment and two reportingunits. Our goodwill, which solely relates to the Business Combination, has been assigned to one reporting unit which consists of the former EDT business.We have the option to first assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test. If we elect this optionand determine, as a result of the qualitative assessment, that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, thequantitative impairment test is required; otherwise, no further testing is required. Among other relevant events and circumstances that affect the fair value ofreporting units, we consider individual factors, such as microeconomic conditions, changes in the industry and the markets in which we operate as well as historicaland expected future financial performance. Alternatively, we may elect to not first assess qualitative factors and instead immediately perform the quantitativeimpairment test.In 2017, we elected to early adopt guidance issued by the FASB in January 2017 that simplifies the test for goodwill impairment. This guidance removesStep 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Under the amended guidance, a goodwill impairment charge willnow be recognized for the amount by which the carrying value of a reporting unit exceeds its fair value, not to exceed the carrying amount of goodwill.On October 31, 2019, we elected to perform a qualitative assessment to determine whether it was necessary to perform a quantitative impairment test.Based on the weight of all available evidence, we determined that the fair value of the reporting unit more-likely-than-not exceeded its carrying value.Contingent ConsiderationWe record contingent consideration we receive at fair value on the acquisition date. We estimate the fair value of contingent consideration through valuationmodels that incorporate probability-adjusted assumptions related to the achievement of milestones and thus likelihood of receiving related payments. We revalueour contingent consideration each reporting period, with changes in the fair value of contingent consideration recognized within the consolidated statements ofoperations and comprehensive loss. Changes in the fair value of contingent consideration can result from changes to one or multiple assumptions, includingadjustments to the discount rates, changes in the amount and timing of cash flows, changes in the assumed achievement and timing of any development and sales-based milestones and changes in the assumed probability associated with regulatory approval.The period over which we discount contingent consideration is based on the current development stage of the product candidates, the specific developmentplan for that product candidate adjusted for the probability of completing the development step,60 Table of Contentsand the date on which contingent payments would be triggered. In estimating the probability of success, we utilize data regarding similar milestone events fromseveral sources, including industry studies and our own experience. These fair value measurements are based on significant inputs not observable in the market.Significant judgment was employed in determining the appropriateness of these assumptions at the acquisition date and for each subsequent period. Accordingly,changes in assumptions described above could have a material impact on the increase or decrease in the fair value of contingent consideration recorded in anygiven period.At December 31, 2019, our contingent consideration related to consideration to be received as part of the Gainesville Transaction. We received one $5.0million payment in the first quarter of 2019 and another $5.0 million payment in the second quarter of 2019; we are eligible to receive low double-digit royalties onnet sales of IV/IM and parenteral forms of Meloxicam and any other Meloxicam Product(s); and we are eligible to receive up to $130.0 million in milestonepayments upon the achievement of certain regulatory and sales milestones related to the Meloxicam Products.In accordance with the accounting standard for fair value measurements, our contingent consideration has been classified as a Level 3 asset as its fair valueis based on significant inputs not observable in the market. The fair value of the contingent consideration was determined as follows: •We received $5.0 million in the first quarter of 2019 and another $5.0 million in the second quarter of 2019; we are entitled to receive $5.0 millionupon regulatory approval of an NDA for the first Meloxicam Product; and $45.0 million in seven equal, annual installments beginning on the firstanniversary of such approval. The fair value of the regulatory milestone was estimated based on applying the likelihood of achieving the regulatorymilestone and applying a discount rate from the expected time the milestone occurs to the balance sheet date. We expect the regulatory milestoneevent to occur in the first quarter of 2020 and used a discount rate of 16.0%; •We are entitled to receive future royalties on net sales of Meloxicam Products. To estimate the fair value of the future royalties, we assessed thelikelihood of a Meloxicam Product being approved for sale and estimated the expected future sales given approval and IP protection. We thendiscounted these expected payments using a discount rate of 16.0%, which we believe captures a market participant’s view of the risk associatedwith the expected payments; and •We are entitled to receive payments of up to $80.0 million upon achieving certain sales milestones on future sales of the Meloxicam Product. Thesales milestones were determined through the use of a real options approach, where net sales are simulated in a risk-neutral world. To employ thismethodology, we used a risk-adjusted expected growth rate based on our assessments of expected growth in net sales of the approved MeloxicamProduct, adjusted by an appropriate factor capturing their respective correlation with the market. A resulting expected (probability-weighted)milestone payment was then discounted at a cost of debt of 16.0%.Significant judgment was employed in determining the appropriateness of these assumptions at the acquisition date and for each subsequent period.Accordingly, changes in assumptions described above could have a material impact on the increase or decrease in the fair value of contingent consideration werecord in any given period.Valuation of Deferred Tax AssetsWe evaluate the need for deferred tax asset valuation allowances based on a more‑likely‑than‑not standard. The ability to realize deferred tax assetsdepends on the ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for each applicable taxjurisdiction. We consider the following possible sources of taxable income when assessing the realization of deferred tax assets: •future reversals of existing taxable temporary differences; •future taxable income exclusive of reversing temporary differences and carryforwards; •taxable income in prior carryback years; and •tax‑planning strategies.The assessment regarding whether a valuation allowance is required or should be adjusted also considers all available positive and negative evidencefactors including, but not limited to: •nature, frequency and severity of recent losses; •duration of statutory carryforward periods; •historical experience with tax attributes expiring unused; and •near‑ and medium‑term financial outlook.61 Table of ContentsWe utilize a rolling three years of actual and current year anticipated results as the primary measures of cumulative losses in recent years.The evaluation of deferred tax assets requires judgment in assessing the likely future tax consequences of events that have been recognized in our financialstatements or tax returns and future profitability. Our accounting for deferred tax consequences represents our best estimate of those future events. Changes in ourcurrent estimates, due to unanticipated events or otherwise, could have a material effect on our financial condition and results of operations. For informationrelated to risks surrounding our deferred tax assets, see “Item 1A—Risk Factors” in this Annual Report and specifically the section entitled “—Our deferred taxassets may not be realized.”Recent Accounting PronouncementsPlease refer to Note 2, Summary of Significant Accounting Policies, “New Accounting Pronouncements” in our “Notes to Consolidated FinancialStatements” in this Annual Report for a discussion of new accounting standards.Item 7A. Quantitative and Qualitative Disclosures about Market RiskWe hold securities in our investment portfolio that are sensitive to market risks. Our securities with fixed interest rates may have their market valueadversely impacted by a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors,our future investment income may fall short of expectation due to a fall in interest rates or we may suffer losses in principal if we are forced to sell securities thatdecline in market value due to changes in interest rates. However, because we classify our investments in debt securities as available‑for‑sale, no gains or losses arerecognized due to changes in interest rates unless such securities are sold prior to maturity or declines in fair value are determined to be other‑than‑temporary.Should interest rates fluctuate by 10%, our interest income would change by an immaterial amount over an annual period. We do not believe that we have amaterial exposure to interest rate risk as our investment policies specify credit quality standards for our investments and limit the amount of credit exposure fromany single issue, issuer or type of investment.We do not believe that inflation and changing prices have had a material impact on our results of operations, and as approximately 48% and 29% of ourinvestments at December 31, 2019 are in corporate debt securities with a minimum rating of Aa2 (Moody’s)/AA (Standard and Poor’s) and debt securities issuedby the U.S. government or its agencies, respectively, our exposure to liquidity and credit risk is not believed to be significant.At December 31, 2019, our borrowings consisted of $279.3 million outstanding under the 2023 Term Loans. The 2023 Term Loans bear interest at aLIBOR rate of our choosing (one, three or six months), plus 2.25% with a 0% LIBOR floor. We are currently using the one-month LIBOR rate, which was 1.74%at December 31, 2019. A 10% increase in the one-month LIBOR rate would have increased the amount of interest we owe under this agreement during the yearended December 31, 2019 by approximately $0.5 million. At December 31, 2018, a 10% increase in the one-month LIBOR rate, which was the LIBOR rate in useat the time, would have increased the amount of interest we owed by approximately $0.8 million. For a discussion about risks relating to LIBOR, see “Item 1A—Risk Factors” in this Annual Report and specifically the section entitled “—Discontinuation, reform or replacement of LIBOR, or uncertainty related to thepotential for any of the foregoing, may adversely affect us.”Currency Exchange Rate RiskManufacturing and royalty revenues we receive on certain of our products and services are a percentage of the net sales made by our licensees, and aportion of these sales are made in countries outside the U.S. and are denominated in currencies in which the product is sold, which is predominantly the Euro. Themanufacturing and royalty payments on these non‑U.S. sales are calculated initially in the currency in which the sale is made and are then converted into USD todetermine the amount that our licensees pay us for manufacturing and royalty revenues. Fluctuations in the exchange ratio of the USD and these non‑U.S.currencies will have the effect of increasing or decreasing our revenues even if there is a constant amount of sales in non‑U.S. currencies. For example, if the USDweakens against a non‑U.S. currency, then our revenues will increase given a constant amount of sales in such non‑U.S. currency. For the year ended December31, 2019, an average 10% strengthening of the USD relative to the currencies in which these products are sold would have resulted in revenues being reduced byapproximately $26.5 million, as compared to a reduction in revenues of approximately $36.1 million for the year ended December 31, 2018.We incur significant operating costs in Ireland and face exposure to changes in the exchange ratio of the USD and the Euro arising from expenses andpayables at our Irish operations that are settled in Euro. The impact of changes in the exchange ratio of the USD and the Euro on our USD denominated revenuesearned in countries other than the U.S. is partially offset by the opposite impact of changes in the exchange ratio of the USD and the Euro on operating expensesand payables incurred at our Irish operations that are settled in Euro. For the year ended December 31, 2019, an average 10% weakening in the USD relative to theEuro would have resulted in an increase to our expenses denominated in Euro of approximately $7.1 million, as compared to an increase in our expenses ofapproximately $9.3 million in the year ended December 31, 2018.62 Table of ContentsItem 8. Financial Statements and Supplementary DataSelected Quarterly Financial Data (unaudited) (In thousands, except per share data) First Quarter Second Quarter Third Quarter Fourth Quarter Total Year Ended December 31, 2019 REVENUES: Product sales, net $99,481 $136,635 $138,774 $149,609 $524,499 Manufacturing and royalty revenues 108,915 127,897 103,783 107,287 447,882 License revenue — 1,000 — 144,750 145,750 Research and development revenue 14,706 14,340 12,686 11,084 52,816 Total revenues 223,102 279,872 255,243 412,730 1,170,947 EXPENSES: Cost of goods manufactured and sold 45,361 46,223 42,319 46,482 180,385 Research and development(1) 102,570 104,435 107,671 198,157 512,833 Selling, general and administrative 141,220 155,075 148,701 154,453 599,449 Amortization of acquired intangible assets 9,952 10,062 10,173 10,171 40,358 Restructuring expense — — — 13,401 13,401 Total expenses 299,103 315,795 308,864 422,664 1,346,426 OPERATING LOSS (76,001) (35,923) (53,621) (9,934) (175,479)OTHER (EXPENSE) INCOME, NET (24,251) (4,463) (240) 7,377 (21,577)LOSS BEFORE INCOME TAXES (100,252) (40,386) (53,861) (2,557) (197,056)INCOME TAX (BENEFIT) PROVISION (3,854) 1,604 (983) 2,797 (436)NET LOSS $(96,398) $(41,990) $(52,878) $(5,354) $(196,620)LOSS PER SHARE—BASIC AND DILUTED $(0.62) $(0.27) $(0.34) $(0.03) $(1.25) First Quarter Second Quarter Third Quarter Fourth Quarter Total Year Ended December 31, 2018 REVENUES: Product sales, net $91,842 $109,807 $116,035 $132,650 $450,334 Manufacturing and royalty revenues 114,601 128,241 116,411 167,422 526,675 Research and development revenue 18,707 18,344 16,274 15,570 68,895 License revenues — 48,250 — 120 48,370 Total revenues 225,150 304,642 248,720 315,762 1,094,274 EXPENSES: Cost of goods manufactured and sold 44,476 43,417 39,410 49,117 176,420 Research and development 108,346 106,823 101,265 108,972 425,406 Selling, general and administrative 118,147 138,257 128,777 141,227 526,408 Amortization of acquired intangible assets 16,069 16,247 16,426 16,426 65,168 Total expenses 287,038 304,744 285,878 315,742 1,193,402 OPERATING (LOSS) INCOME (61,888) (102) (37,158) 20 (99,128)OTHER (EXPENSE) INCOME, NET (5,110) (24,343) 3,325 (1,711) (27,839)LOSS BEFORE INCOME TAXES (66,998) (24,445) (33,833) (1,691) (126,967)INCOME TAX PROVISION (BENEFIT) (4,493) 8,204 611 8,022 12,344 NET LOSS $(62,505) $(32,649) $(34,444) $(9,713) $(139,311)LOSS PER SHARE—BASIC AND DILUTED $(0.40) $(0.21) $(0.22) $(0.06) $(0.90) (1)Included in research and development expenses in the fourth quarter of 2019 is $86.6 million of expense related to the IPR&D acquired as part of theacquisition of Rodin, as it was determined that the IPR&D did not have an alternative future use. All financial statements required to be filed hereunder, other than the quarterly financial data required by Item 302 of Regulation S‑K summarized above,are filed as exhibits hereto, are listed under Item 15(a) (1) and (2) and are incorporated herein by reference.Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNot applicable.63 Table of ContentsItem 9A. Controls and ProceduresDisclosure Controls and Procedures and Internal Control Over Financial ReportingControls and ProceduresOur management has evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosurecontrols and procedures (as defined in Rules 13a‑15(e) and 15d‑15(e) under the Exchange Act), as of December 31, 2019. Based upon that evaluation, ourprincipal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedureswere effective to provide reasonable assurance that (a) the information required to be disclosed by us in the reports that we file or submit under the Exchange Actis recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (b) such information is accumulated andcommunicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regardingrequired disclosure. In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procedures, no matterhow well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was requiredto apply its judgment in evaluating the cost‑benefit relationship of possible controls and procedures.Changes in Internal Control over Financial ReportingThere were no changes in our internal control over financial reporting during the quarter ended December 31, 2019 that have materially affected, or arereasonably likely to materially affect, our internal control over financial reporting.Management’s Annual Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over our financial reporting as defined in Rules 13a‑15(f) and15d‑15(f). Internal control over financial reporting is defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act as a process designed by, or under thesupervision of, the issuer’s principal executive and principal financial officers, or persons performing similar functions, and effected by the issuer’s board ofdirectors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with GAAP and includes those policies and procedures that: •pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of the assets of theissuer; •provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP,and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer;and •provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets thatcould have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation ofeffectiveness for future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate.Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2019. In making this assessment,management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in its 2013 Internal Control—Integrated Framework.Based on this assessment, our management has concluded that, as of December 31, 2019, our internal control over financial reporting was effective.The effectiveness of our internal control over financial reporting as of December 31, 2019 has been audited by PricewaterhouseCoopers LLP, anindependent registered public accounting firm, as stated in their report, which is included in this Annual Report, beginning on page F-1.Item 9B. Other InformationNone.64 Table of ContentsPART IIIItem 10. Directors, Executive Officers and Corporate GovernanceThe information required by this item is incorporated herein by reference to the Proxy Statement for our 2020 Annual General Meeting of Shareholders.Item 11. Executive CompensationThe information required by this item is incorporated herein by reference to the Proxy Statement for our 2020 Annual General Meeting of Shareholders.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by this item is incorporated herein by reference to the Proxy Statement for our 2020 Annual General Meeting of Shareholders.Item 13. Certain Relationships and Related Transactions, and Director IndependenceThe information required by this item is incorporated herein by reference to the Proxy Statement for our 2020 Annual General Meeting of Shareholders.Item 14. Principal Accounting Fees and ServicesThe information required by this item is incorporated herein by reference to the Proxy Statement for our 2020 Annual General Meeting of Shareholders.65 Table of ContentsPART IVItem 15. Exhibits and Financial Statement Schedules (a)(1)Consolidated Financial Statements—The consolidated financial statements of Alkermes plc, required by this item, are submitted in a separatesection beginning on page F‑1 of this Annual Report. (2)Financial Statement Schedules—All schedules have been omitted because the absence of conditions under which they are required or because therequired information is included in the consolidated financial statements or notes thereto. (3)The exhibits listed in the below Exhibit Index are filed or furnished as part of this Annual Report or are incorporated into this Annual Report byreference.EXHIBIT INDEX Incorporated by reference hereinExhibit No. Description of Exhibit Form Date2.1 * Purchase and Sale Agreement, dated March 7, 2015, by and among AlkermesPharma Ireland Limited, Daravita Limited, Eagle Holdings USA, Inc., RecroPharma, Inc., and Recro Pharma LLC (assigned by Recro to Baudax Bio, Inc.in November 2019). Exhibit 2.1 to the Alkermes plcCurrent Report on Form 8-K/A (FileNo. 001-35299) April 16, 20152.1.1 First Amendment to Purchase and Sale Agreement, dated December 8, 2016by and among Alkermes Pharma Ireland Limited, Daravita Limited, EagleHoldings USA, Inc., Recro Pharma, Inc., and Recro Gainesville LLC (assignedby Recro to Baudax Bio, Inc. in November 2019). Exhibit 2.1.1 to the Alkermes plcAnnual Report on Form 10-K (FileNo. 001-35299) February 17, 20172.1.2 Second Amendment to Purchase and Sale Agreement, dated December 20,2018, by and among Alkermes Pharma Ireland Limited, Daravita Limited,Alkermes US Holdings, Inc. (as successor in interest to Eagle Holdings USA,Inc.), Recro Pharma, Inc. and Recro Gainesville LLC (assigned by Recro toBaudax Bio, Inc. in November 2019). Exhibit 2.1.2 to the Alkermes plcAnnual Report on Form 10-K (FileNo. 001-35299) February 15, 20192.2 ** Agreement and Plan of Merger, dated November 14, 2019 by and amongAlkermes, Inc., Thinker Merger Sub, Inc., Alkermes plc, Rodin Therapeutics,Inc., and Shareholder Representative Services LLC, as Company EquityholderRepresentative. Exhibit 2.1 to the Alkermes plcCurrent Report on Form 8-K (FileNo. 001-35299) November 25, 20193.1 Memorandum and Articles of Association of Alkermes plc. Exhibit 3.1 to the Alkermes plcCurrent Report on Form 8-K (FileNo. 001-35299) May 26, 20164.1 # Description of Securities. 10.1 Lease between Alkermes, Inc. and PDM Unit 850, LLC, dated as of April 22,2009. Exhibit 10.5 to the Alkermes, Inc.Annual Report on Form 10-K (FileNo. 001-14131) May 28, 200910.1.1 First Amendment to Lease between Alkermes, Inc. and PDM Unit 850, LLC,dated as of June 18, 2009. Exhibit 10.2 to the Alkermes, Inc.Quarterly Report on Form 10-Q(File No. 001-14131) August 6, 200910.1.2 Second Amendment to Lease between Alkermes, Inc. and PDM Unit 850,LLC, dated as of November 12, 2013. Exhibit 10.74 to the Alkermes plcTransition Report on Form 10-KT(File No. 001-35299) February 27, 201410.1.3 Third Amendment to Lease between Alkermes, Inc. and PDM 850 Unit, LLC,dated as of May 15, 2014. Exhibit 10.2 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 001-35299) July 31, 201410.1.4 Fourth Amendment to Lease between Alkermes, Inc. and GI TC 850 WinterStreet, LLC, dated as of December 30, 2014. Exhibit 10.7 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 001-35299) July 30, 201566 Table of Contents Incorporated by reference hereinExhibit No. Description of Exhibit Form Date10.1.5 Fifth Amendment to Lease between Alkermes, Inc. and GI TC 850 WinterStreet, LLC, dated as of October 31, 2018. Exhibit 10.1.5 to the Alkermes plcAnnual Report on Form 10-K (FileNo. 001-35299) February 15, 201910.2 License Agreement, dated as of February 13, 1996, between MedisorbTechnologies International L.P. and Janssen Pharmaceutica Inc. (UnitedStates) (assigned to Alkermes, Inc. in July 2006). Exhibit 10.2 to the Alkermes plcAnnual Report on Form 10-K (FileNo. 001-35299) February 25, 201610.2.1 * Third Amendment to Development Agreement, Second Amendment toManufacturing and Supply Agreement and First Amendment to LicenseAgreements by and between Janssen Pharmaceutica International, JanssenPharmaceutica Inc. and Alkermes Controlled Therapeutics Inc. II, dated April1, 2000 (assigned to Alkermes, Inc. in July 2006). Exhibit 10.5 to the Alkermes, Inc.Quarterly Report on Form 10-Q(File No. 001-14131) February 8, 200510.2.2 * Second Amendment, dated as of August 16, 2012, to the License Agreement,dated as of February 13, 1996, as amended, by and between Alkermes, Inc.and Janssen Pharmaceutica Inc. and the License Agreement, dated as ofFebruary 21, 1996, as amended, by and between Alkermes, Inc. and JPIPharmaceutica International, and the Fifth Amendment, dated as of August 16,2012, to the Manufacturing and Supply Agreement, dated as of August 6,1997, as amended, by and between Alkermes, Inc., Janssen Pharmaceutica Inc.and JPI Pharmaceutica International. Exhibit 10.3 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 001-35299) November 1, 201210.3 License Agreement, dated as of February 21, 1996, between MedisorbTechnologies International L.P. and Janssen Pharmaceutica International(worldwide except United States) (assigned to Alkermes, Inc. in July 2006). Exhibit 10.3 to the Alkermes plcAnnual Report on Form 10-K (FileNo. 001-35299) February 25, 201610.4 Manufacturing and Supply Agreement, dated August 6, 1997, by and amongJPI Pharmaceutica International, Janssen Pharmaceutica, Inc. and AlkermesControlled Therapeutics Inc. II (assigned to Alkermes, Inc. in July 2006). Exhibit 10.4 to the Alkermes plcAnnual Report on Form 10-K (FileNo. 001-35299) February 25, 201610.4.1 * Fourth Amendment to Development Agreement and First Amendment toManufacturing and Supply Agreement by and between Janssen PharmaceuticaInternational, Janssen Pharmaceutica Products, L.P. and Alkermes ControlledTherapeutics Inc. II, dated December 20, 2000 (assigned to Alkermes, Inc. inJuly 2006). Exhibit 10.4 to the Alkermes, Inc.Quarterly Report on Form 10-Q(File No. 001-14131) February 8, 200510.4.2 Addendum to the Manufacturing and Supply Agreement by and among JPIPharmaceutica International, Janssen Pharmaceutica Inc. and AlkermesControlled Therapeutics Inc. II, dated August 1, 2001. Exhibit 10.4.2 to the Alkermes plcAnnual Report on Form 10-K (FileNo. 001-35299) February 25, 201610.4.3 Letter Agreement and Exhibits to Manufacturing and Supply Agreement,dated February 1, 2002, by and among JPI Pharmaceutica International,Janssen Pharmaceutica Inc. and Alkermes Controlled Therapeutics Inc. II(assigned to Alkermes, Inc. in July 2006). Exhibit 10.4.3 to the Alkermes plcAnnual Report on Form 10-K (FileNo. 001-35299) February 25, 201610.4.4 * Amendment to Manufacturing and Supply Agreement by and between JPIPharmaceutica International, Janssen Pharmaceutica Inc. and AlkermesControlled Therapeutics Inc. II, dated December 22, 2003 (assigned toAlkermes, Inc. in July 2006). Exhibit 10.6 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 011-35299) July 30, 201510.4.5 * Fourth Amendment to Manufacturing and Supply Agreement by and betweenJPI Pharmaceutica International, Janssen Pharmaceutica Inc. and AlkermesControlled Therapeutics Inc. II, dated January 10, 2005 (assigned to Alkermes,Inc. in July 2006). Exhibit 10.9 to the Alkermes, Inc.Quarterly Report on Form 10-Q(File No. 001-14131) February 8, 200567 Table of Contents Incorporated by reference hereinExhibit No. Description of Exhibit Form Date10.4.6 * Sixth Amendment to Manufacturing and Supply Agreement by and betweenJPI Pharmaceutica International, Janssen Pharmaceutica Inc. and AlkermesControlled Therapeutics Inc. II (assigned to Alkermes, Inc. in July 2006),effective as of July 1, 2018. Exhibit 10.11 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 011-35299) October 23, 201810.5 * Development and License Agreement, dated as of May 15, 2000, by andbetween Alkermes Controlled Therapeutics Inc. II and AmylinPharmaceuticals, Inc., as amended on October 24, 2005 and July 17, 2006(assigned, as amended, to Alkermes, Inc. in July 2006). Exhibit 10.28 to the Alkermes, Inc.Annual Report on Form 10-K (FileNo. 001-14131) May 21, 201010.5.1 * Third Amendment to Development and License Agreement, dated March 20,2018, by and between Amylin Pharmaceuticals, LLC and Alkermes PharmaIreland Limited (as successor-in-interest to Alkermes Controlled TherapeuticsInc. II), amending that certain Development and License Agreement, by andbetween ACTII and Amylin, dated May 15, 2000, as amended on October 24,2005 and July 17, 2006. Exhibit 10.3 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 011-35299) April 26, 201810.6 * Agreement by and between JPI Pharmaceutica International, JanssenPharmaceutica Inc. and Alkermes Controlled Therapeutics Inc. II, datedDecember 21, 2002 (assigned to Alkermes, Inc. in July 2006). Exhibit 10.6 to the Alkermes, Inc.Quarterly Report on Form 10-Q(File No. 001-14131) February 8, 200510.6.1 * Amendment to Agreement by and between JPI Pharmaceutica International,Janssen Pharmaceutica Inc. and Alkermes Controlled Therapeutics Inc. II,dated December 16, 2003 (assigned to Alkermes, Inc. in July 2006). Exhibit 10.7 to the Alkermes, Inc.Quarterly Report on Form 10-Q(File No. 001-14131) February 8, 200510.7 Amended and Restated License Agreement, dated September 26, 2003, by andbetween Acorda Therapeutics, Inc. and Elan Corporation, plc. Exhibit 10.14 to the AcordaTherapeutics, Inc. Quarterly Reporton Form 10-Q/A (File No.000-50513; film No. 11821367) July 20, 201110.7.1 * Supply Agreement, dated September 26, 2003, by and between AcordaTherapeutics, Inc. and Elan Corporation, plc. Exhibit 10.22 to the Alkermes plcAnnual Report on Form 10-K (FileNo. 001-35299) May 23, 201310.7.2 Amendment No. 1 Agreement, dated June 30, 2009, to the Amended andRestated License Agreement dated September 26, 2003 and the SupplyAgreement dated September 26, 2003, and Consent to Sublicense, by andamong Elan Pharma International Limited (as successor in interest to ElanCorporation, plc), Acorda Therapeutics, Inc. and Biogen Idec InternationalGmbH. Exhibit 10.56 to AcordaTherapeutics, Inc.’s QuarterlyReport on Form 10-Q (File No.000-50513; film No. 09999376) August 10, 200910.7.3 Amendment No. 2, dated March 29, 2012, to the Amended and RestatedLicense Agreement, dated September 26, 2003, as amended, and the SupplyAgreement, dated September 26, 2003, as amended, in each case by andbetween Acorda Therapeutics, Inc. and Alkermes Pharma Ireland Limited (assuccessor in interest to Elan Corporation, plc). Exhibit 10.46 to the AcordaTherapeutics, Inc. Annual Report onForm 10-K (File No.000-50513;film no. 13653677) February 28, 201310.7.4 Amendment No. 3, dated February 14, 2013, to the Amended and RestatedLicense Agreement, dated September 26, 2003, as amended and the SupplyAgreement, dated September 26, 2003, as amended, in each case by andbetween Acorda Therapeutics, Inc. and Alkermes Pharma Ireland Limited (assuccessor in interest to Elan Corporation, plc). Exhibit 10.1 to the AcordaTherapeutics, Inc. Quarterly Reporton Form 10-Q (File No. 000-50513;film No. 13831684) May 10, 201310.8 * License Agreement by and among Elan Pharmaceutical Research Corp., d/b/aNanosystems and Elan Pharma International Limited and JanssenPharmaceutica N.V. dated as of March 31, 1999. Exhibit 10.23 to the Alkermes plcAnnual Report on Form 10-K (FileNo. 001-35299) May 23, 201368 Table of Contents Incorporated by reference hereinExhibit No. Description of Exhibit Form Date10.8.1 First Amendment, dated as of July 31, 2003, to the License Agreement by andamong Elan Drug Delivery, Inc. (formerly Elan Pharmaceutical ResearchCorp.) and Elan Pharma International Limited and Janssen Pharmaceutica NVdated March 31, 1999. Exhibit 10.24 to the Alkermes plcAnnual Report on Form 10-K (FileNo. 001-35299) May 23, 201310.8.2 * Agreement Amendment No. 2, dated as of July 31, 2009, to the LicenseAgreement by and among Elan Pharmaceutical Research Corp., d/b/aNanosystems and Elan Pharma International Limited and JanssenPharmaceutica N.V. dated as of March 31, 1999, as amended by the FirstAmendment, dated as of July 31, 2003. Exhibit 10.25 to the Alkermes plcAnnual Report on Form 10-K (FileNo. 001-35299) May 23, 201310.9 Amendment to First Lien Credit Agreement, dated September 25, 2012,among Alkermes, Inc., Alkermes plc, the guarantors party thereto, the lendersparty thereto, Morgan Stanley Senior Funding, Inc. as Administrative Agentand Collateral Agent and the arrangers and agents party thereto. Exhibit 10.1 to the Alkermes plcCurrent Report on Form 8-K (FileNo. 011-35299) September 25, 201210.9.1 Amendment No. 2, dated as of February 14, 2013, to Amended and RestatedCredit Agreement, dated as of September 16, 2011, as amended and restatedon September 25, 2012, among Alkermes, Inc., Alkermes plc, the guarantorsparty thereto, the lenders party thereto, Morgan Stanley Senior Funding, Inc.as Administrative Agent and Collateral Agent and the arrangers and agentsparty thereto. Exhibit 10.1 to the Alkermes plcCurrent Report on Form 8-K (FileNo. 011-35299) February 19, 201310.9.2 Amendment No. 3 and Waiver to Amended and Restated Credit Agreement,dated as of May 22, 2013, among Alkermes, Inc., Alkermes plc, AlkermesPharma Ireland Limited, Alkermes US Holdings, Inc., Morgan Stanley SeniorFunding, Inc. as Administrative Agent and Collateral Agent and the lendersparty thereto. Exhibit 10.52 to the Alkermes plcAnnual Report on Form 10-K (FileNo. 011-35299) May 23, 201310.9.3 Amendment No. 4, dated as of October 12, 2016, to Amended and RestatedCredit Agreement, dated as of September 16, 2011, as amended and restatedon September 25, 2012, as further amended by Amendment No. 2 on February14, 2013 and as amended by Amendment No. 3 and Waiver to Amended andRestated Credit Agreement dated as of May 22, 2013, among Alkermes, Inc.,Alkermes plc, the guarantors party thereto, the lenders party thereto andMorgan Stanley Senior Funding, Inc. as Administrative Agent and CollateralAgent. Exhibit 10.2 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 011-35299) November 2, 201610.9.4 Amendment No. 5, dated as of March 26, 2018, to Amended and RestatedCredit Agreement, dated as of September 16, 2011, as amended and restatedon September 25, 2012, as further amended by Amendment No. 2 on February14, 2013, as amended by Amendment No. 3 and Waiver to Amended andRestated Credit Agreement dated as of May 22, 2013, and as amended byAmendment No. 4, dated as of October 12, 2016, among Alkermes, Inc.,Alkermes plc, the guarantors party thereto, the lenders party thereto andMorgan Stanley Senior Funding, Inc. as Administrative Agent and CollateralAgent. Exhibit 10.5 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 011-35299) April 26, 201810.10 * License and Collaboration Agreement, dated November 27, 2017, by andbetween Alkermes Pharma Ireland Limited and Biogen Swiss ManufacturingGmbH. Exhibit 10.10 of the Alkermes plcAnnual Report on Form 10-K (FileNo. 011-35299) February 16, 201810.10.1 * First Amendment to License and Collaboration Agreement between AlkermesPharma Ireland Limited and Biogen Swiss Manufacturing GmbH, effective asof October 3, 2018. Exhibit 10.12 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 011-35299) October 23, 201810.10.2 Second Amendment to License and Collaboration Agreement betweenAlkermes Pharma Ireland Limited and Biogen Swiss Manufacturing GmbH,effective as of January 31, 2019. Exhibit 10.1 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 011-35299) April 25, 201969 Table of Contents Incorporated by reference hereinExhibit No. Description of Exhibit Form Date10.10.3 #** Third Amendment to License and Collaboration Agreement betweenAlkermes Pharma Ireland Limited and Biogen Swiss Manufacturing GmbH,effective as of October 30, 2019. 10.11 Lease between Alkermes, Inc. and PDM 900 Unit, LLC, dated March 23,2018. Exhibit 10.4 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 011-35299) April 26, 201810.11.1 First Amendment to Lease, dated June 21, 2018, by and between Alkermes,Inc. and PDM 900 Unit, LLC. Exhibit 10.2 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 001-35299) July 26, 201810.11.2 Second Amendment to Lease, dated May 10, 2019, by and between Alkermes,Inc. and PDM 900 Unit, LLC. Exhibit 10.2 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 001-35299) July 25, 201910.12 † Employment agreement, dated as of December 12, 2007, by and betweenRichard F. Pops and Alkermes, Inc. Exhibit 10.1 to the Alkermes, Inc.Quarterly Report on Form 10-Q(File No. 001-14131) February 11, 200810.12.1 † Amendment to Employment Agreement, dated as of October 7, 2008, by andbetween Alkermes, Inc. and Richard F. Pops. Exhibit 10.5 to the Alkermes, Inc.Current Report on Form 8-K (FileNo. 001-14131) October 7, 200810.12.2 † Amendment No. 2 to Employment Agreement by and between Alkermes, Inc.and Richard F. Pops, dated September 10, 2009. Exhibit 10.2 to the Alkermes, Inc.Current Report on Form 8-K (FileNo. 001-14131) September 11, 200910.13 † Form of Employment Agreement, dated as of December 12, 2007, entered intoby and between Alkermes, Inc. and each of James M. Frates and Michael J.Landine. Exhibit 10.3 to the Alkermes, Inc.Quarterly Report on Form 10-Q(File No. 001-14131) February 11, 200810.13.1 † Form of Amendment to Employment Agreement entered into by and betweenAlkermes, Inc. and each of James M. Frates and Michael J. Landine. Exhibit 10.7 to the Alkermes, Inc.Current Report on Form 8-K (FileNo. 001-14131) October 7, 200810.14 † Form of Covenant Not to Compete, of various dates, by and betweenAlkermes, Inc. and James M. Frates. Exhibit 10.15 to the Alkermes, Inc.Annual Report on Form 10-K (FileNo. 001-14131) May 30, 200810.15 † Form of Covenant Not to Compete, of various dates, by and betweenAlkermes, Inc. and Michael J. Landine. Exhibit 10.15(a) to theAlkermes, Inc. Annual Report onForm 10-K (File No. 001-14131) May 30, 200810.17 † Form of Employment Agreement entered into by and between Alkermes, Inc.and each of Iain M. Brown, David J. Gaffin, Craig C. Hopkinson, M.D. andJames R. Robinson, Jr. Exhibit 10.1 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 011-35299) November 2, 201610.17.1† Offer Letter between Alkermes, Inc. and Craig C. Hopkinson M.D., effectiveas of April 24, 2017. Exhibit 10.17.1 to the Alkermes plcAnnual Report on Form 10-K (FileNo. 011-35299) February 16, 201810.17.2 † Offer Letter between Alkermes, Inc. and James R. Robinson, Jr., datedFebruary 28, 2018. Exhibit 10.1 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 011-35299) April 26, 201810.18 † Form of Indemnification Agreement by and between Alkermes, Inc. and eachof its directors and executive officers. Exhibit 10.1 to the Alkermes, Inc.Current Report on Form 8-K (FileNo. 001-14131) March 25, 201010.19 † Form of Deed of Indemnification for Alkermes plc Officers. Exhibit 10.1 to the Alkermes plcCurrent Report on Form 8-K (FileNo. 011-35299) September 20, 201170 Table of Contents Incorporated by reference hereinExhibit No. Description of Exhibit Form Date10.20 † Form of Deed of Indemnification for Alkermes plc Directors/Secretary. Exhibit 10.2 to the Alkermes plcCurrent Report on Form 8-K (FileNo. 011-35299) September 20, 201110.21 † Form of Deed of Indemnification for Alkermes, Inc. and SubsidiariesDirectors/Secretary. Exhibit 10.3 to the Alkermes plcCurrent Report on Form 8-K (FileNo. 011-35299) September 20, 201110.22† Alkermes plc Amended and Restated 2008 Stock Option and Incentive Plan,as amended. Exhibit 10.1 to the Alkermes plcQuarterly Report on Form 10-Q forthe quarter ended March 31, 2017(File No. 001-35299) April 27, 201710.22.1 † Form of Stock Option Award Certificate (Non-Employee Director) under theAlkermes plc Amended and Restated 2008 Stock Option and Incentive Plan,as amended. Exhibit 10.4 to the Alkermes plcQuarterly Report on Form 10-Q forthe quarter ended March 31, 2016(File No. 001-35299) April 28, 201610.22.2 † Form of Restricted Stock Unit Award Certificate (Time Vesting Only – Irish)under the Alkermes plc Amended and Restated 2008 Stock Option andIncentive Plan, as amended. Exhibit 10.5 to the Alkermes plcQuarterly Report on Form 10-Q forthe quarter ended March 31, 2016(File No. 001-35299) April 28, 201610.22.3 † Form of Restricted Stock Unit Award Certificate (Time Vesting Only – U.S.)under the Alkermes plc Amended and Restated 2008 Stock Option andIncentive Plan, as amended. Exhibit 10.6 to the Alkermes plcQuarterly Report on Form 10-Q forthe quarter ended March 31, 2016(File No. 001-35299) April 28, 201610.22.4 † Form of Stock Option Award Certificate (Time Vesting Non-Qualified Option– Irish) under the Alkermes plc Amended and Restated 2008 Stock Option andIncentive Plan, as amended. Exhibit 10.7 to the Alkermes plcQuarterly Report on Form 10-Q forthe quarter ended March 31, 2016(File No. 001-35299) April 28, 201610.22.5 † Form Stock Option Award Certificate (Time Vesting Non-Qualified Option –U.S.) under the Alkermes plc Amended and Restated 2008 Stock Option andIncentive Plan, as amended. Exhibit 10.8 to the Alkermes plcQuarterly Report on Form 10-Q forthe quarter ended March 31, 2016(File No. 001-35299) April 28, 201610.22.6 † Form of Stock Option Award Certificate (Incentive Stock Option – U.S.)under the Alkermes plc Amended and Restated 2008 Stock Option andIncentive Plan, as amended. Exhibit 10.9 to the Alkermes plcQuarterly Report on Form 10-Q forthe quarter ended March 31, 2016(File No. 001-35299) April 28, 201610.22.7 † Form of 2008 Restricted Stock Unit Award Certificate (Performance VestingOnly) under the Alkermes plc Amended and Restated 2008 Stock Option andIncentive Plan, as amended. Exhibit 10.2 to the Alkermes, Inc.Current Report on Form 8-K (FileNo. 001-14131) May 22, 200910.23† Alkermes plc 2011 Stock Option and Incentive Plan, as amended. Exhibit 10.1 to the Alkermes plcCurrent Report on Form 8-K (FileNo. 011-35299) May 24, 201710.23.1 † Form of Incentive Stock Option Award Certificate under the Alkermes plc2011 Stock Option and Incentive Plan, as amended. Exhibit 10.1 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 001-35299) October 23, 201810.23.2 † Form of Non-Qualified Stock Option (Employee) Award Certificate under theAlkermes plc 2011 Stock Option and Incentive Plan, as amended. Exhibit 10.2 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 001-35299) October 23, 201810.23.3 † Form of Restricted Stock Unit (Time-Vesting) Award Certificate under theAlkermes plc 2011 Stock Option and Incentive Plan, as amended. Exhibit 10.3 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 001-35299) October 23, 201871 Table of Contents Incorporated by reference hereinExhibit No. Description of Exhibit Form Date10.23.4 † Form of Restricted Stock Unit (Performance-Vesting) Award Certificate underthe Alkermes plc 2011 Stock Option and Incentive Plan, as amended. Exhibit 10.4 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 001-35299) October 23, 201810.23.5 † Form of Non-Qualified Stock Option (Non-Employee Director) AwardCertificate under the Alkermes plc 2011 Stock Option and Incentive Plan, asamended. Exhibit 10.5 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 001-35299) October 23, 201810.24 † Alkermes plc 2018 Stock Option and Incentive Plan. Exhibit 10.1 to the Alkermes plcCurrent Report on Form 8-K (FileNo. 011-35299) May 23, 201810.24.1 † Form of Incentive Stock Option Award Certificate under the Alkermes plc2018 Stock Option and Incentive Plan. Exhibit 10.6 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 001-35299) October 23, 201810.24.2 † Form of Non-Qualified Stock Option (Employee) Award Certificate under theAlkermes plc 2018 Stock Option and Incentive Plan. Exhibit 10.7 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 001-35299) October 23, 201810.24.3 † Form of Restricted Stock Unit (Time-Vesting) Award Certificate under theAlkermes plc 2018 Stock Option and Incentive Plan. Exhibit 10.8 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 001-35299) October 23 ,201810.24.4 † Form of Restricted Stock Unit (Performance-Vesting) Award Certificate underthe Alkermes plc 2018 Stock Option and Incentive Plan. Exhibit 10.9 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 001-35299) October 23, 201810.24.5 † Form of Non-Qualified Stock Option (Non-Employee Director) AwardCertificate under the Alkermes plc 2018 Stock Option and Incentive Plan. Exhibit 10.10 to the Alkermes plcQuarterly Report on Form 10-Q(File No. 001-35299) October 23, 201821.1 # List of subsidiaries 23.1 # Consent of PricewaterhouseCoopers LLP, an independent registered publicaccounting firm 24.1 # Power of Attorney (included on the signature pages hereto) 31.1 # Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the SecuritiesExchange Act of 1934 31.2 # Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the SecuritiesExchange Act of 1934 32.1 ‡ Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002 101.SCH # Inline XBRL Taxonomy Extension Schema Document. 101.CAL # Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.LAB # Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE # Inline XBRL Taxonomy Extension Presentation Linkbase Document. 101.DEF # Inline XBRL Taxonomy Extension Definition Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL with applicabletaxonomy extension information contained in Exhibits 101) † Indicates a management contract or any compensatory plan, contract or arrangement.# Filed herewith.‡ Furnished herewith.* Confidential treatment has been granted or requested for certain portions of this exhibit. Such portions have been filed separately with the SECpursuant to a confidential treatment request.** In accordance with Item 601(b)(2)(ii) of Regulation S-K, certain information (indicated by “[**]”) has been excluded from this exhibit because itis both not material and would likely cause competitive harm to the Company if publicly disclosed.Item 16. Form 10-K SummaryNot applicable.72 Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. ALKERMES PLC By:/s/ Richard F. PopsRichard F. PopsChairman and Chief Executive Officer February 13, 2020 POWER OF ATTORNEYPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrantand in the capacities and on the dates indicated.Each person whose signature appears below in so signing also makes, constitutes and appoints Richard F. Pops and James M. Frates, and each of them, histrue and lawful attorney‑in‑fact, with full power of substitution, for him in any and all capacities, to execute and cause to be filed with the Securities and ExchangeCommission any and all amendments to this Annual Report, with exhibits thereto and other documents in connection therewith, and hereby ratifies and confirmsall that said attorney‑in‑fact or his substitute or substitutes may do or cause to be done by virtue hereof. Signature Title Date /s/ Richard F. PopsRichard F. Pops Chairman and Chief Executive Officer (Principal Executive Officer) February 13, 2020 /s/ James M. FratesJames M. Frates Senior Vice President and Chief Financial Officer (Principal FinancialOfficer) February 13, 2020 /s/ Iain M. BrownIain M. Brown Senior Vice President and Chief Accounting Officer(Principal Accounting Officer) February 13, 2020 /s/ David W. AnsticeDavid W. Anstice Director February 13, 2020 /s/ Robert A. BreyerRobert A. Breyer Director February 13, 2020 /s/ Shane CookeShane Cooke Director February 13, 2020 /s/ Richard GaynorRichard Gaynor Director February 13, 2020 /s/ Wendy L. DixonWendy L. Dixon Director February 13, 2020 /s/ Paul J. MitchellPaul J. Mitchell Director February 13, 2020 /s/ Nancy L. SnydermanNancy L. Snyderman Director February 13, 2020 /s/ Frank Anders WilsonFrank Anders Wilson Director February 13, 2020 /s/ Nancy J. WysenskiNancy J. Wysenski Director February 13, 2020 73 Table of ContentsReport of Independent Registered Public Accounting FirmTo the Board of Directors and Shareholders of Alkermes plcOpinions on the Financial Statements and Internal Control over Financial ReportingWe have audited the accompanying consolidated balance sheets of Alkermes plc and its subsidiaries (the “Company”) as of December 31, 2019 and 2018,and the related consolidated statements of operations and comprehensive loss, of shareholders' equity and of cash flows for each of the three years in the periodended December 31, 2019, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company'sinternal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission (COSO).In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as ofDecember 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019 in conformitywith accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effectiveinternal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by theCOSO. Changes in Accounting PrinciplesAs discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019, the manner inwhich it accounts for revenue from contracts with customers in 2018, and the manner in which it accounts for share-based compensation in 2017.Basis for OpinionsThe Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting,and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over FinancialReporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internalcontrol over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (UnitedStates) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules andregulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internalcontrol over financial reporting was maintained in all material respects.Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financialstatements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidenceregarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significantestimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financialreporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing andevaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as weconsidered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control overfinancial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.F-1 Table of ContentsBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate.Critical Audit MattersThe critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that werecommunicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financialstatements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any wayour opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separateopinions on the critical audit matters or on the accounts or disclosures to which they relate.Fair Value of Contingent ConsiderationAs described in Notes 2 and 5 to the consolidated financial statements, contingent consideration is recorded at fair value on the acquisition date and isrevalued each reporting period, with changes in the fair value recognized within the consolidated statement of operations and comprehensive loss. As of and for theyear ended December 31, 2019, management recorded a total contingent consideration asset of $32.4 million and expense of $22.8 million. Management estimatedthe fair value of contingent consideration through valuation models that incorporate probability-adjusted assumptions related to the achievement of milestones andthus the likelihood of receiving related payments. Changes in the fair value of contingent consideration can result from changes to one or multiple assumptions,including adjustments to discount rates, changes in the amount and timing of cash flows, changes in the assumed achievement and timing of any development andsales-based milestones and changes in the assumed probability associated with regulatory approval. These fair value measurements are based on significant inputsnot observable in the market.The principal considerations for our determination that performing procedures relating to the fair value of contingent consideration is a critical audit matterare there was significant judgment by management in developing the assumptions used in the fair value measurement, including the discount rate, the amount andtiming of cash flows, the assumed achievement and timing of any development and sales-based milestones, and the assumed probability associated with regulatoryapproval. This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures related to the fair value of contingent considerationand the audit effort involved the use of professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained.Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidatedfinancial statements. These procedures included testing the effectiveness of controls relating to management’s estimation of the fair value of contingentconsideration, including controls over the assumptions used to estimate the fair value. These procedures also included, among others, testing management’s processfor developing the fair value of contingent consideration, evaluating the reasonableness of valuation models and assumptions used, including the discount rate, theamount and timing of cash flows, the assumed achievement and timing of any development and sales-based milestones, and the assumed probability associatedwith regulatory approval. Evaluating management’s assumptions related to cash flows, probability of success, and achievement and timing of milestone paymentsinvolved evaluating whether the assumptions used by management were reasonable considering the agreements associated with the transaction, the consistencywith industry studies and the stage of product development. Professionals with specialized skill and knowledge were used to assist in evaluating theappropriateness of management’s valuation models and evaluating the reasonableness of the assumptions used in the models.Rebate Accruals - Medicaid Drug Rebate ProgramAs described in Note 2 and Note 10 to the consolidated financial statements, the Company’s revenue from product sales are recorded net of reservesestablished for applicable discounts and allowances that are offered within contracts with the Company’s customers, health care providers or payers. Accruals forrebates to states under the Medicaid Drug Rebate Program are recorded as a reduction of sales when the product is shipped into the distribution channel using theexpected value method. As of December 31, 2019, total accrued sales discounts, allowances and reserves were $153.9 million, of which a significant amountrelated to Medicaid rebates. The Company rebates individual states for all eligible units purchased under the Medicaid program based on a rebate per unitcalculation, which is based on the Company’s average manufacturer prices. Management estimated expected unit sales and rebates per unit under the Medicaidprogram and adjusted its rebate accrual based on actual unit sales and rebates per unit.The principal considerations for our determination that performing procedures relating to rebate accruals for the Medicaid Drug Rebate Program is a criticalaudit matter are there was significant judgment by management in developing the rebate accruals,F-2 Table of Contentsincluding developing assumptions related to the estimates of units sold and rebates per unit under the Medicaid program. This in turn led to a high degree of auditorjudgment, effort, and subjectivity in performing procedures related to rebate accruals for the Medicaid Drug Rebate Program.Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidatedfinancial statements. These procedures included testing the effectiveness of controls relating to rebate accruals for the Medicaid drug rebate program, includingcontrols over the assumptions used to estimate the rebate accruals. These procedures also included, among others, (i) obtaining an understanding of management’sprocess and methodology for determining the Medicaid rebate accruals, (ii) assessing the appropriateness of management’s methodology, (iii) comparing accrualbalances and deduction to sales year over year, (iv) assessing the reasonableness of management’s forecast of Medicaid units by comparing to historical results andconsidering the historical accuracy of the accrual for management bias, and (v) testing rebate claims processed by the Company. /s/ PricewaterhouseCoopers LLPBoston, MassachusettsFebruary 13, 2020We have served as the Company’s auditor since 2007.F-3 Table of ContentsALKERMES PLC AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSDecember 31, 2019 and 2018 December 31, 2019 December 31, 2018 (In thousands, except share and per share amounts) ASSETS CURRENT ASSETS: Cash and cash equivalents $203,771 $266,762 Investments—short-term 331,208 272,533 Receivables, net 257,086 292,223 Contract assets 8,386 8,230 Inventory 101,803 90,196 Prepaid expenses and other current assets 59,716 53,308 Total current assets 961,970 983,252 PROPERTY, PLANT AND EQUIPMENT, NET 362,168 309,987 INTANGIBLE ASSETS, NET 150,643 191,001 GOODWILL 92,873 92,873 DEFERRED TAX ASSETS 96,558 85,807 INVESTMENTS—LONG-TERM 79,391 80,744 CONTINGENT CONSIDERATION 32,400 65,200 RIGHT-OF-USE ASSETS 12,379 — OTHER ASSETS 17,021 16,143 TOTAL ASSETS $1,805,403 $1,825,007 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $373,037 $333,762 Operating lease liabilities—short-term 8,466 — Contract liabilities—short-term 6,766 3,169 Long-term debt—short-term 2,843 2,843 Total current liabilities 391,112 339,774 LONG-TERM DEBT 274,295 276,465 CONTRACT LIABILITIES—LONG-TERM 22,068 9,525 OPERATING LEASE LIABILITIES—LONG-TERM 5,342 — OTHER LONG-TERM LIABILITIES 27,144 27,958 Total liabilities 719,961 653,722 COMMITMENTS AND CONTINGENT LIABILITIES (Note 19) SHAREHOLDERS’ EQUITY: Preferred shares, par value, $0.01 per share; 50,000,000 shares authorized; zero issuedand outstanding at December 31, 2019 and 2018, respectively — — Ordinary shares, par value, $0.01 per share; 450,000,000 shares authorized; 160,489,888 and158,180,833 shares issued; 157,779,002 and 155,757,344 shares outstanding at December 31, 2019and 2018, respectively 1,602 1,579 Treasury shares, at cost (2,710,886 and 2,423,489 shares at December 31, 2019 and 2018,respectively) (118,386) (108,969)Additional paid-in capital 2,586,030 2,467,323 Accumulated other comprehensive loss (1,816) (3,280)Accumulated deficit (1,381,988) (1,185,368)Total shareholders’ equity 1,085,442 1,171,285 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $1,805,403 $1,825,007 The accompanying notes are an integral part of these consolidated financial statements.F-4 Table of ContentsALKERMES PLC AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSSYears Ended December 31, 2019, 2018 and 2017 Year Ended December 31, 2019 2018 2017 (In thousands, except per share amounts) REVENUES: Product sales, net $524,499 $450,334 $362,834 Manufacturing and royalty revenues 447,882 526,675 505,308 License revenue 145,750 48,370 28,000 Research and development revenue 52,816 68,895 7,232 Total revenues 1,170,947 1,094,274 903,374 EXPENSES: Cost of goods manufactured and sold (exclusive of amortization of acquired intangibleassets shown below) 180,385 176,420 154,748 Research and development 512,833 425,406 412,889 Selling, general and administrative 599,449 526,408 421,578 Amortization of acquired intangible assets 40,358 65,168 62,059 Restructuring expense 13,401 — — Total expenses 1,346,426 1,193,402 1,051,274 OPERATING LOSS (175,479) (99,128) (147,900)OTHER (EXPENSE) INCOME, NET: Interest income 13,976 9,238 4,649 Interest expense (13,601) (15,437) (12,008)Change in the fair value of contingent consideration (22,800) (19,600) 21,600 Other income (expense), net 848 (2,040) (9,615)Total other (expense) income, net (21,577) (27,839) 4,626 LOSS BEFORE INCOME TAXES (197,056) (126,967) (143,274)INCOME TAX (BENEFIT) PROVISION (436) 12,344 14,671 NET LOSS $(196,620) $(139,311) $(157,945)LOSS PER ORDINARY SHARE: Basic and diluted $(1.25) $(0.90) $(1.03)WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES OUTSTANDING: Basic and diluted 157,051 155,112 153,415 COMPREHENSIVE LOSS: Net loss $(196,620) $(139,311) $(157,945)Holding gain (loss), net of a tax provision (benefit) of $426, $159, $(295), respectively 1,464 512 (518)COMPREHENSIVE LOSS $(195,156) $(138,799) $(158,463) The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of ContentsALKERMES PLC AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITYYears Ended December 31, 2019, 2018 and 2017 Accumulated Additional Other Ordinary Shares Paid-In Comprehensive Accumulated Treasury Stock Shares Amount Capital Loss Deficit Shares Amount Total (In thousands, except share data) BALANCE — December 31, 2016 154,191,281 $1,539 $2,231,797 $(3,274) $(947,942) (1,760,767) $(72,639) $1,209,481 Issuance of ordinary shares under employee stockplans 1,850,084 16 23,501 — — — — 23,517 Receipt of Alkermes' shares for the purchase of stockoptions or to satisfy minimum tax withholdingobligations related to share-based awards 16,267 2 273 — — (287,409) (16,708) (16,433)Share-based compensation expense — — 83,184 — — — — 83,184 Unrealized loss on marketable securities, net of taxbenefit of $(295) — — — (518) — — — (518)Cumulative effect adjustment related to change inaccounting for excess tax benefits — — — — 61,522 — — 61,522 Net loss — — — — (157,945) — — (157,945)BALANCE — December 31, 2017 156,057,632 $1,557 $2,338,755 $(3,792) $(1,044,365) (2,048,176) $(89,347) $1,202,808 Issuance of ordinary shares under employee stockplans 1,087,815 11 20,866 — — — — 20,877 Receipt of Alkermes' shares for the purchase of stockoptions or to satisfy minimum tax withholdingobligations related to share-based awards 1,035,386 11 (11) — — (375,313) (19,622) (19,622)Share-based compensation expense — — 107,713 — — — — 107,713 Unrealized loss on marketable securities, net of taxprovision of $159 — — — 512 — — — 512 Cumulative effect adjustment related to the adoptionof new accounting standards — — — — (1,692) — — (1,692)Net loss — — — — (139,311) — — (139,311)BALANCE — December 31, 2018 158,180,833 $1,579 $2,467,323 $(3,280) $(1,185,368) (2,423,489) $(108,969) $1,171,285 Issuance of ordinary shares under employee stockplans 1,510,177 15 18,910 — — — — 18,925 Receipt of Alkermes' shares for the purchase of stockoptions or to satisfy minimum tax withholdingobligations related to share-based awards 798,878 8 92 — — (287,397) (9,417) (9,317)Share-based compensation expense — — 99,705 — — — — 99,705 Unrealized loss on marketable securities, net of taxprovision of $426 — — — 1,464 — — — 1,464 Net loss — — — — (196,620) — — (196,620)BALANCE — December 31, 2019 160,489,888 $1,602 $2,586,030 $(1,816) $(1,381,988) (2,710,886) $(118,386) $1,085,442The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of ContentsALKERMES PLC AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSYears Ended December 31, 2019, 2018 and 2017 Year Ended December 31, 2019 2018 2017 (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(196,620) $(139,311) $(157,945)Adjustments to reconcile net loss to cash flows from operating activities: Depreciation and amortization 80,413 103,660 98,523 Share-based compensation expense 100,977 105,357 83,917 Deferred income taxes (319) 10,623 7,234 Change in the fair value of contingent consideration 22,800 19,600 (21,600)Loss on debt refinancing — 2,298 — Payment made for debt refinancing — (2,251) — Impairment of property, plant and equipment — 5,746 — Impairment of investment in Synchronicity Pharma, Inc. — — 10,471 Other non-cash charges (580) 979 3,471 Changes in assets and liabilities, excluding the effect of acquisitions: Receivables 35,136 (58,632) (42,489)Contract assets (5,156) 880 — Inventory (13,077) (2,665) (30,191)Prepaid expenses and other assets (1,784) (5,990) (9,506)Right-of-use assets 8,399 — — Accounts payable and accrued expenses 34,847 46,739 72,658 Contract liabilities 16,140 3,252 (1,447)Operating lease liabilities (9,117) — — Other long-term liabilities 18 8,996 6,094 Cash flows provided by operating activities 72,077 99,281 19,190 CASH FLOWS FROM INVESTING ACTIVITIES: Additions of property, plant and equipment (90,942) (69,431) (51,300)Proceeds from the sale of equipment 900 507 162 Proceeds from contingent consideration 10,000 — — Purchases of investments (277,518) (397,727) (431,712)Sales and maturities of investments 224,602 444,456 464,494 Acquisition of Rodin Therapeutics, Inc.'s net assets, net of cash acquired (8,875) — — Cash flows used in investing activities (141,833) (22,195) (18,356)CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from the issuance of ordinary shares under share-based compensation arrangements 18,925 20,877 23,517 Employee taxes paid related to net share settlement of equity awards (9,317) (19,622) (16,433)Principal payments of long-term debt (2,843) (743) — Payment made for debt refinancing — (2,132) (3,000)Cash flows provided by (used in) financing activities 6,765 (1,620) 4,084 NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (62,991) 75,466 4,918 CASH AND CASH EQUIVALENTS—Beginning of period 266,762 191,296 186,378 CASH AND CASH EQUIVALENTS—End of period $203,771 $266,762 $191,296 SUPPLEMENTAL CASH FLOW DISCLOSURE: Cash paid for interest $13,254 $12,526 $11,143 Cash paid for taxes $2,508 $754 $2,992 Non-cash investing and financing activities: Purchased capital expenditures included in accounts payable and accrued expenses $13,789 $11,720 $11,151 The accompanying notes are an integral part of these consolidated financial statements. F-7 Table of Contents ALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATIONAlkermes plc (the “Company”) is a fully integrated, global biopharmaceutical company that applies its scientific expertise and proprietary technologies toresearch, develop and commercialize, both with partners and on its own, pharmaceutical products that are designed to address unmet medical needs of patients inmajor therapeutic areas. Alkermes has a diversified portfolio of marketed products focused on central nervous system disorders such as addiction andschizophrenia and a pipeline of product candidates in the fields of neuroscience and oncology. Headquartered in Dublin, Ireland, the Company has a research anddevelopment (“R&D”) center in Waltham, Massachusetts; R&D and manufacturing facilities in Athlone, Ireland; and a manufacturing facility in Wilmington,Ohio.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESPrinciples of ConsolidationThe consolidated financial statements include the accounts of Alkermes plc and its wholly-owned subsidiaries: Alkermes Ireland Holdings Limited;Daravita Pharma Ireland Limited; Daravita Limited; Alkermes Science Four Limited; Alkermes Science Five Limited; Alkermes Pharma Ireland Limited;Alkermes U.S. Holdings, Inc.; Alkermes, Inc.; Alkermes Controlled Therapeutics, Inc.; Alkermes Europe, Ltd.; Alkermes Finance Ireland Limited; AlkermesFinance Ireland (No. 2) Limited; Alkermes Finance Ireland (No. 3) Limited; Alkermes Finance S.à r.l; and Rodin Therapeutics, Inc. Intercompany accounts andtransactions have been eliminated.Use of EstimatesThe preparation of the Company’s consolidated financial statements in accordance with accounting principles generally accepted in the United States(“GAAP”) requires that Company management make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, revenuesand expenses, and related disclosure of contingent assets and liabilities. On an on‑going basis, the Company evaluates its estimates and judgments andmethodologies, including those related to revenue from contracts with its customers and related allowances, impairment and amortization of intangibles andlong‑lived assets, share‑based compensation, income taxes including the valuation allowance for deferred tax assets, valuation of investments, contingentconsideration and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, theresults of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates underdifferent assumptions or conditions.Cash and Cash EquivalentsThe Company values its cash and cash equivalents at cost plus accrued interest, which the Company believes approximates their market value. TheCompany considers only those investments which are highly liquid, readily convertible into cash and so near their maturity, generally three months from the dateof purchase, that they present insignificant risk of change in value because of interest rate changes to be cash equivalents.InvestmentsThe Company has investments in various types of securities, consisting primarily of United States (“U.S.”) government and agency obligations, corporatedebt securities and debt securities issued by foreign agencies and backed by foreign governments. The Company generally holds its interest-bearing investmentswith major financial institutions and in accordance with documented investment policies. The Company limits the amount of credit exposure to any one financialinstitution or corporate issuer. At December 31, 2019, substantially all these investments were classified as available for sale and were recorded at fair value.Holding gains and losses on available-for-sale investments are considered “unrealized” and are reported within “Accumulated other comprehensive loss,” acomponent of shareholders’ equity. The Company uses the specific identification method for reclassifying unrealized gains and losses into earnings wheninvestments are sold. The Company conducts periodic reviews to identify and evaluate each investment that has an unrealized loss, in accordance with the meaningof other-than-temporary impairment and its application to certain investments, as required by GAAP. An unrealized loss exists when the current fair value of anindividual security is less than its amortized cost basis. Unrealized losses on available-for-sale securities that are determined to be temporary, and not related tocredit loss, are recorded in “Accumulated other comprehensive loss.”F-8 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)For securities with unrealized losses, the Company performs an analysis to assess whether it intends to sell or whether it would more likely than not berequired to sell the security before the expected recovery of its amortized cost basis. If the Company intends to sell a security, or may be required to do so, thesecurity’s decline in fair value is deemed to be other-than-temporary and the full amount of the unrealized loss is recorded within earnings as an impairment loss.Regardless of the Company’s intent to sell a security, the Company performs additional analysis on all securities with unrealized losses to evaluate lossesassociated with the creditworthiness of the security. Credit losses are identified where the Company does not expect to receive cash flows sufficient to recover theamortized cost basis of a security.The Company's held-to-maturity investments are restricted investments held as collateral under letters of credit related to certain of the Company'sagreements and are included in “Investments—long-term,” in the accompanying consolidated balance sheets.Fair Value of Financial InstrumentsThe Company’s financial assets and liabilities are recorded at fair value and are classified as Level 1, 2 or 3 within the fair value hierarchy, as described inthe accounting standards for fair value measurement. At December 31, 2019, the Company’s financial assets consisted of cash equivalents, investments andcontingent consideration and are classified within the fair value hierarchy as follows: •Level 1–these valuations are based on a market approach using quoted prices in active markets for identical assets. Valuations of these products donot require a significant degree of judgment. Assets utilizing Level 1 inputs at December 31, 2019 included U.S. treasury securities, marketablesecurities classified as cash equivalents and a fixed term deposit account; •Level 2–these valuations are based on a market approach using quoted prices obtained from brokers or dealers for similar securities or for securitiesfor which the Company has limited visibility into their trading volumes. Valuations of these financial instruments do not require a significant degreeof judgment. Assets utilizing Level 2 inputs at December 31, 2019 included U.S. government agency debt securities, debt securities issued byforeign agencies and backed by foreign governments and investments in corporate debt securities that are trading in the credit markets; and •Level 3–these valuations are based on an income approach using certain inputs that are unobservable and are significant to the overall fair valuemeasurement. Valuations of these products require a significant degree of judgment. At December 31, 2019, assets utilizing Level 3 inputs includedcontingent consideration and an investment in a corporate debt security.The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, accounts receivable, other current assets, accounts payableand accrued expenses approximate fair value due to their short‑term nature.InventoryInventory is stated at the lower of cost and net realizable value. Cost is determined using the first-in, first-out method. Included in inventory are rawmaterials used in production of pre-clinical and clinical products, which have alternative future use and are charged to R&D expense when consumed. The costelements included within inventory include three primary categories for commercial products: cost of raw materials; direct labor; and overhead. Overhead is basedon the normal capacity of the Company’s production facilities and does not include costs from abnormally low production or idle capacity, which are expenseddirectly to the consolidated statement of operations and comprehensive loss.Property, Plant and EquipmentProperty, plant and equipment are recorded at cost, subject to review for impairment whenever events or changes in circumstances indicate that the carryingamount of the assets may not be recoverable. Expenditures for repairs and maintenance are charged to expense as incurred and major renewals and improvementsare capitalized. Depreciation is calculated using the straight‑line method over the following estimated useful lives of the assets: Asset group TermBuildings and improvements 15 - 40 yearsFurniture, fixtures and equipment 3 - 10 yearsLeasehold improvements Shorter of useful life or lease term F-9 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Contingent ConsiderationThe Company records contingent consideration it is entitled to receive at fair value on the acquisition date. The Company estimates the fair value ofcontingent consideration through valuation models that incorporate probability-adjusted assumptions related to the achievement of milestones and thus likelihoodof receiving related payments. The Company revalues its contingent consideration each reporting period, with changes in the fair value of contingent considerationrecognized within the consolidated statements of operations and comprehensive loss. Changes in the fair value of contingent consideration can result from changesto one or multiple assumptions, including adjustments to discount rates, changes in the amount and timing of cash flows, changes in the assumed achievement andtiming of any development and sales-based milestones and changes in the assumed probability associated with regulatory approval.The period over which the Company discounts its contingent consideration is based on the current development stage of the product candidate, the specificdevelopment plan for that product candidate, adjusted for the probability of completing the development steps, and when contingent payments would be triggered.In estimating the probability of success, the Company utilizes data regarding similar milestone events from several sources, including industry studies and theCompany’s own experience. These fair value measurements are based on significant inputs not observable in the market. Significant judgment was employed indetermining the appropriateness of these assumptions at the acquisition date and for each subsequent period. Accordingly, changes in assumptions described abovecould have a material impact on the increase or decrease in the fair value of contingent consideration recorded in any given period.Goodwill and Intangible AssetsGoodwill represents the excess cost of the Company’s investment in the net assets of acquired companies over the fair value of the underlying identifiablenet assets at the date of acquisition. The Company’s goodwill consists solely of goodwill created as a result of the Company’s acquisition of Elan DrugTechnologies (“EDT”) from Elan Corporation, plc (the “Business Combination”) in September 2011 and has been assigned to one reporting unit. A reporting unitis an operating segment or one level below an operating segment or a component to which goodwill is assigned when initially recorded.Goodwill is not amortized but is reviewed for impairment on an annual basis, as of October 31, and whenever events or changes in circumstances indicatethat the carrying value of the goodwill might not be recoverable. The Company has the option to first assess qualitative factors to determine whether it is necessaryto perform the quantitative impairment test. If the Company elects this option and believes, as a result of the qualitative assessment, that it is more-likely-than-notthat the fair value of its reporting unit is less than its carrying amount, the quantitative impairment test is required; otherwise, no further testing is required.Alternatively, the Company may elect to not first assess qualitative factors and immediately perform the quantitative impairment test. In the quantitativeimpairment test, the Company compares the fair value of its reporting unit to its carrying value. If the carrying value of the net assets assigned to the reporting unitexceeds the fair value of its reporting unit, then the Company would record an impairment loss equal to the difference.The Company’s finite-lived intangible assets, consisting of core developed technology and collaboration agreements acquired as part of the acquisition ofEDT, were recorded at fair value at the time of their acquisition and are stated within the Company’s consolidated balance sheets net of accumulated amortization.The finite-lived intangible assets are amortized over their estimated useful lives using the economic use method, which reflects the pattern that the economicbenefits of the intangible assets are consumed as revenue is generated from the underlying patent or contract. The useful lives of the Company’s intangible assetsare primarily based on the legal or contractual life of the underlying patent or contract, which does not include additional years for the potential extension orrenewal of the contract or patent.Impairment of Long‑Lived AssetsThe Company reviews long‑lived assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying amountof the assets may not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value ofan asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of anasset or group of assets is not recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of theasset and its eventual disposition. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the assets, the assets arewritten‑down to their estimated fair values. Long‑lived assets to be disposed of are carried at fair value less costs to sell them.F-10 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Revenue from Contracts with CustomersEffective January 1, 2018, the Company adopted the requirements of the Financial Accounting Standards Board (“FASB”) Accounting StandardsCodification (“ASC”) 606, Revenue from Contracts with Customers (“Topic 606”) using the modified retrospective method. As part of the adoption, the Companyreviewed all contracts that were not yet completed as of the date of initial application in determining the cumulative-effect impact related to the adoption of Topic606. The cumulative-effect impact recorded to retained earnings resulted in an adjustment of approximately $0.8 million, which was primarily due to theacceleration of manufacturing revenue, offset by an adjustment to deferred revenue for license and milestone payments that will now be recognized over time. Thefollowing balance sheet accounts were impacted: (In thousands) Topic 606Adjustment Contract assets $9,110 Inventory (8,209)Deferred tax asset 109 Contract liabilities—short-term (1,104)Contract liabilities—long-term (724)Accumulated deficit 818 $— When entering into arrangements with customers, the Company identifies whether its performance obligations under the arrangement represent a distinctgood or service or a series of distinct goods or services. If a contract contains more than one performance obligation, the Company allocates the total transactionprice to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying eachperformance obligation. The fair value of performance obligations under the arrangement may be derived using an estimate of selling price if the Company doesnot sell the goods or services separately. The Company recognizes revenue when or as it satisfies a performance obligation by transferring an asset or providing a service to a customer.Management judgment is required in determining the consideration to be earned under an arrangement and the period over which the Company is expected tocomplete its performance obligations under an arrangement. Steering committee services that are not inconsequential or perfunctory and that are determined to beperformance obligations are combined with other research services or performance obligations required under an arrangement, if any, in determining the level ofeffort required in an arrangement and the period over which the Company expects to complete its aggregate performance obligations. Because the Company adopted Topic 606 using the modified retrospective method, the Company recognized the cumulative effect of initially applyingTopic 606 as an adjustment to the opening balance of shareholders’ equity at January 1, 2018. Therefore, the comparative information at December 31, 2017 hasnot been adjusted and continues to be reported under the old revenue recognition guidance (“Topic 605”).Product Sales, NetThe Company’s product sales, net consist of sales of VIVITROL®, ARISTADA® and ARISTADA INITIO® in the U.S. primarily to wholesalers, specialtydistributors and pharmacies. Product sales, net are recognized when the customer obtains control of the product, which is when the product has been received bythe customer.Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with theCompany’s customers, health care providers or payers. The Company’s process for estimating reserves established for these variable consideration componentsdoes not differ materially from historical practices. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances,may be subject to constraint and is included in the net sales price only to the extent that it is probable that a significant reversal of the amount of the cumulativerevenues recognized will not occur in a future period. Actual amounts may ultimately differ from the Company’s estimates. If actual results vary, the Companyadjusts these estimates, which could have an effect on earnings in the period of adjustment. The following are the Company’s significant categories of salesdiscounts and allowances: •Medicaid Rebates—the Company records accruals for rebates to states under the Medicaid Drug Rebate Program as a reduction of sales when theproduct is shipped into the distribution channel using the expected value method. The Company rebates individual states for all eligible unitspurchased under the Medicaid program based on a rebate per unit calculation, which is based on the Company’s average manufacturer prices. TheCompany estimates expected unit sales and rebates per unit under the Medicaid program and adjusts its rebate based on actual unit sales and rebatesper unit. To date, actual Medicaid rebates have not differed materially from the Company’s estimates; F-11 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) •Chargebacks—discounts that occur when contracted indirect customers purchase directly from wholesalers and specialty distributors. Contractedcustomers generally purchase a product at its contracted price. The wholesaler or specialty distributor, in turn, then generally charges back to theCompany the difference between the wholesale acquisition cost and the contracted price paid to the wholesaler or specialty distributor by thecustomer. The allowance for chargebacks is made using the expected value method and is based on actual and expected utilization of these programs.Chargebacks could exceed historical experience and the Company’s estimates of future participation in these programs. To date, actual chargebackshave not differed materially from the Company’s estimates; •Product Discounts—cash consideration, including sales incentives, given by the Company under agreements with a number of wholesaler,distributor, pharmacy, and treatment provider customers that provide them with a discount on the purchase price of products. The reserve is madeusing the expected value method and to date, actual product discounts have not differed materially from the Company’s estimates; •Product Returns—the Company records an estimate for product returns at the time our customers take control of their product. The Companyestimates this liability using the expected value based on historical return levels and specifically identified anticipated returns due to known businessconditions and product expiry dates. Return amounts are recorded as a deduction to arrive at product sales, net. Once product is returned, it isdestroyed; and •Medicare Part D—the Company records accruals for Medicare Part D liabilities under the Medicare Coverage Gap Discount Program (“CGDP”) asa reduction of sales. Under the CGDP, patients reaching the annual coverage gap threshold are eligible for reimbursement coverage for out-of-pocket costs for covered prescription drugs. Under an agreement with the Center for Medicare and Medicaid, manufacturers are responsible toreimburse prescription plan sponsors for the portion of out-of-pocket expenses not covered under their Medicare plans.Collaborative ArrangementsThe Company has entered into collaboration agreements with pharmaceutical companies including Janssen Pharmaceutica Inc. (“Janssen, Inc.”), JanssenPharmaceutica International, a division of Cilag International AG (“Janssen International”), and Janssen Pharmaceutica N.V. (together with Janssen, Inc., JanssenInternational and their affiliates, “Janssen”) for INVEGA SUSTENNA®/XEPLION® and INVEGA TRINZA®/TREVICTA® as well as RISPERDAL CONSTA®,Acorda Therapeutics, Inc. (“Acorda”) for AMPYRA®/FAMPYRA®, and Biogen Swiss Manufacturing GmbH (together with its affiliates, “Biogen”) forVUMERITY® (diroximel fumarate, formerly known as BIIB098). Substantially all of the products developed under these arrangements are currently beingmarketed as approved products for which the Company receives payments for manufacturing services and/or royalties on net product sales.Manufacturing RevenueThe Company recognizes manufacturing revenues from the sale of products it manufactures for resale by its licensees. Manufacturing revenues for theCompany’s partnered products, with the exception of those from Janssen related to RISPERDAL CONSTA, are recognized over time as products move throughthe manufacturing process, using a standard cost-based model as a measure of progress, which represents a faithful depiction of the transfer of control of thegoods. The Company recognizes manufacturing revenue from these products over time as it determined, in each instance, that it would have a right to payment forperformance completed to date if its customer were to terminate the manufacturing agreement for reasons other than the Company’s non-performance and theproducts have no alternative use. The Company invoices its licensees upon shipment with payment terms between 30 to 90 days.The Company is the exclusive manufacturer of RISPERDAL CONSTA for commercial sale under its manufacturing and supply agreement with Janssen.The Company determined that it is appropriate to record revenue under this agreement at the point in time when control of the product passes to Janssen, which isdetermined to be when the product has been fully manufactured, since Janssen does not control the product during the manufacturing process and, in the eventJanssen terminates the manufacturing and supply agreement, it is uncertain whether, and at what amount, the Company would be reimbursed for performancecompleted to date for product not yet fully manufactured. The manufacturing process is considered fully complete once the finished goods have been approved forshipment by both the Company and Janssen.The sales price for certain of the Company’s manufacturing revenues is based on the end-market sales price earned by its licensees. As end-market salesgenerally occur after the Company has recorded manufacturing revenue, the Company estimates the sales price for such products based on information supplied toit by the Company’s licensees, its historical transaction experience and other third-party data. Differences between actual manufacturing revenues and estimatedmanufacturing revenues are reconciled and adjusted for in the period in which they become known, which is generally within the same quarter. The differencebetween the Company’s actual and estimated manufacturing revenues has not been material to date.F-12 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Royalty RevenueThe Company recognizes royalty revenues related to the sale by its licensees of products that incorporate the Company’s technologies. Royalties, with theexception of those earned on sales of AMPYRA as set forth below, qualify for the sales-and-usage exemption under Topic 606 as (i) royalties are based strictly onthe sales-and-usage by the licensee; and (ii) a license of intellectual property (“IP”) is the sole or predominant item to which such royalties relate. Based on thisexemption, these royalties are earned in the period the products are sold by the Company's partner and the Company has a present right to payment. Royalties onAMPYRA manufactured under our license and supply agreements with Acorda are incorporated into the standard cost-based model described in the manufacturingrevenues section, above, as the terms of such agreements entitle the Company to royalty revenue as the product is being manufactured, which represents a faithfuldepiction of the transfer of goods, and not based on the actual end-market sales of the licensee. Certain of the Company’s royalty revenues are recognized by theCompany based on information supplied to the Company by its licensees and require estimates to be made. Differences between actual royalty revenues andestimated royalty revenues are reconciled and adjusted for in the period in which they become known, which is generally within the same quarter. The differencebetween the Company’s actual and estimated royalty revenues has not been material to date.Research and Development RevenueR&D revenue consists of funding that compensates the Company for formulation, pre‑clinical and clinical testing under R&D arrangements with itspartners. The Company generally bills its partners under R&D arrangements using a full‑time equivalent or hourly rate, plus direct external costs, if any. Revenueis recognized as the obligations under the R&D arrangements are performed.License RevenueThe Company recognizes revenue from the grant of distinct, right-to-use licenses of IP when control of the license is transferred to the customer, which isthe point in time the customer is able to direct the use of and obtain substantially all of the benefits from the license.Receivables, netReceivables, net, include amounts billed and currently unconditionally due from customers. The amounts due are stated at their net estimated realizablevalue. The Company maintains an allowance for doubtful accounts to provide for the estimated amounts of receivables that will not be collected. The allowance isbased upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and collateral to the extent applicable.The Company’s allowance for doubtful accounts was $0.2 million at each of December 31, 2019 and 2018.Contract AssetsContract assets include unbilled amounts resulting from sales under certain of the Company’s manufacturing contracts where revenue is recognized overtime, except for $5.0 million of consideration related to the Company’s collaboration with Biogen related to Vumerity, which the Company expects to receive inapproximately three years, and is included in “Other assets” in the accompanying consolidated balance sheets. The manufacturing related amounts included in thecontract assets table below complete the manufacturing process in ten days to eight weeks and are classified as current assets.Contract assets consisted of the following: (In thousands) Contract Assets Contract assets at January 1, 2018 $9,110 Additions 57,617 Transferred to receivables, net (58,497)Contract assets at December 31, 2018 8,230 Additions 37,911 Transferred to receivables, net (32,755)Contract assets at December 31, 2019 $13,386 F-13 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Contract LiabilitiesThe Company’s contract liabilities consist of contractual obligations related to deferred revenue.Contract liabilities consisted of the following: (In thousands) Contract Liabilities Contract liabilities at January 1, 2018 $9,442 Additions 6,381 Amounts recognized into revenue (3,129)Contract liabilities at December 31, 2018 12,694 Additions 18,677 Amounts recognized into revenue (2,537)Contract liabilities at December 31, 2019 $28,834 Foreign CurrencyThe Company’s functional and reporting currency is the U.S. dollar. Transactions in foreign currencies are recorded at the exchange rate prevailing on thedate of the transaction. The resulting monetary assets and liabilities are translated into U.S. dollars at exchange rates prevailing on the subsequent balance sheetdate. Gains and losses as a result of translation adjustments are recorded within “Other (expense) income, net” in the accompanying consolidated statements ofoperations and comprehensive loss. During the years ended December 31, 2019, 2018 and 2017, the Company recorded a (loss) gain on foreign currencytranslation of $(0.9) million, $(2.3) million and $3.7 million, respectively.ConcentrationsFinancial instruments that potentially subject the Company to concentrations of credit risk are receivables and marketable securities. Billings to largepharmaceutical companies and pharmaceutical wholesalers account for the majority of the Company’s receivables, and collateral is generally not required fromthese customers. To mitigate credit risk, the Company monitors the financial performance and credit worthiness of its customers. The following represents revenueand receivables from the Company’s customers exceeding 10% of the total in each category as of, and for the years ended, December 31, 2019, 2018 and 2017: Year Ended December 31, 2019 2018 2017 Customer Receivables Revenue Receivables Revenue Receivables Revenue Janssen 29%28%27%29%31%33%Biogen * 17%* 10%* * Cardinal Health 12%* * 13%* * AmerisourceBergen 10%* * * * * Acorda * * 15%10%14%13% * Indicates the revenues or receivables for the customer did not exceed 10% of the Company’s total in each category as of or for the years endedDecember 31, 2019, 2018 and 2017, as noted. The Company holds its interest‑bearing investments with major financial institutions and, in accordance with documented investment policies, theCompany limits the amount of credit exposure to any one financial institution or corporate issuer. The Company’s investment objectives are, first, to assureliquidity and conservation of capital and, second, to obtain investment income.F-14 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Geographic InformationCompany revenues by geographic location, as determined by the location of the customer, and the location of its assets, are as follows: Year Ended December 31, (In thousands) 2019 2018 2017 Revenue by region: U.S. $966,929 $884,600 $700,090 Ireland 3,195 4,915 9,706 Rest of world 200,823 204,759 193,578 Assets by region: Current assets: U.S. $551,799 $546,533 $402,481 Ireland 407,791 433,837 403,167 Rest of world 2,381 2,882 3,196 Long-term assets: U.S.: Other $382,029 $312,243 $360,641 Ireland: Intangible assets $150,643 $191,001 $256,168 Goodwill 92,873 92,873 92,873 Other 217,887 245,638 278,701 Research and Development ExpensesFor each of its R&D programs, the Company incurs both external and internal expenses. External R&D expenses include costs related to clinical andnon‑clinical activities performed by contract research organizations, consulting fees, laboratory services, purchases of drug product materials and third‑partymanufacturing development costs. Internal R&D expenses include employee‑related expenses, occupancy costs, depreciation and general overhead. The Companytracks external R&D expenses for each of its development programs, however, internal R&D expenses, with the exception of those expenses related toVUMERITY, are not tracked by individual program as they benefit multiple programs or the Company’s technologies in general.Selling, General and Administrative ExpensesSelling, general and administrative (“SG&A”) expenses are primarily comprised of employee-related expenses associated with sales and marketing,finance, human resources, legal, information technology and other administrative personnel, outside marketing, advertising and legal expenses and other generaland administrative costs.Advertising costs are expensed as incurred. During the years ended December 31, 2019, 2018 and 2017, advertising costs totaled $31.1 million, $54.7million and $34.4 million, respectively.Share‑Based CompensationThe Company’s share‑based compensation programs grant awards in the form of stock options and restricted stock units (“RSUs”), which vest with thepassage of time and/or vest based on the achievement of certain performance criteria. The Company issues new shares upon the exercise of stock option or thevesting of RSUs. Under the terms of the Company’s stock option plans (the “Plans”), certain of the Company’s employees may become eligible upon retirementfor accelerated vesting of certain awards granted to them under the Plans. Since there are no effective future service requirements for such employees, the fair valueof awards to such employees is expensed in full on the grant date or upon meeting the retirement eligibility criteria, whichever is later.Time-Based Stock OptionsStock option grants to employees expire ten years from the grant date and generally vest one fourth per year over four years from the anniversary of thedate of grant, provided the employee remains continuously employed with the Company, except as otherwise provided in the applicable Plan. Stock option grantsto non-employee directors expire ten years from the grant date and generally vest over a one year period provided that the director continues to serve on theCompany’s board of directors through the vesting date, except as otherwise provided in the applicable Plan. The estimated fair value of options is recognized overthe requisite service period, which is generally the vesting period. Share‑based compensation expense is based on awards ultimately expected to vest. Forfeituresare estimated based on historical experience at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates.F-15 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The fair value of stock option grants is based on estimates as of the date of grant using a Black‑Scholes option valuation model. The Company useshistorical data as the basis for estimating option terms and forfeitures. Separate groups of employees that have similar historical stock option exercise and forfeiturebehavior are considered separately for valuation purposes. The ranges of expected terms disclosed below reflect different expected behavior among certain groupsof employees. Expected stock volatility factors are based on a weighted average of implied volatilities from traded options on the Company’s ordinary shares andhistorical share price volatility of the Company’s ordinary shares, which is determined based on a review of the weighted average of historical daily price changesof the Company’s ordinary shares. The risk‑free interest rate for periods commensurate with the expected term of the share option is based on the U.S. treasuryyield curve in effect at the time of grant. The dividend yield on the Company’s ordinary shares is estimated to be zero as the Company has not paid and does notexpect to pay dividends. The exercise price of options granted is equal to the closing price of the Company’s ordinary shares traded on the Nasdaq Global SelectMarket on the date of grant.The fair value of each stock option grant was estimated on the grant date with the following weighted‑average assumptions: Year Ended December 31, 2019 2018 2017Expected option term 5 - 7 years 5 - 8 years 5 - 8 yearsExpected stock volatility 46 % - 50 % 44 % - 49 % 43 % - 47 %Risk-free interest rate 1.34 % - 2.59 % 2.25 % - 3.10 % 1.69 % - 2.38 %Expected annual dividend yield — — — Performance-Based Stock Options Certain of the Company’s granted stock options are subject to achievement of a specified market condition prior to vesting in addition to being subject totime-based vesting. The estimated fair value of these stock options that vest upon the achievement of a market condition was determined through the use of aMonte Carlo simulation model, which utilizes input variables that determine the probability of satisfying the market condition stipulated in the award andcalculates the fair market value for the award. The Monte Carlo simulation model used the following assumptions: Grant Date Weighted-AverageExpected Volatility Cost of Equity Risk-FreeInterest Rate February 21, 2019 45.0% 12.0% 2.69% Compensation expense for the stock options that vest upon the achievement of a market condition is recognized over a derived service period as determinedby the Monte Carlo simulation model. The vesting of these stock options is also subject to continued employment of the grantee. Time‑Based Restricted Stock UnitsTime‑based RSUs awarded to employees generally vest one‑fourth per year over four years, commencing on the first anniversary of the date of grant,provided the employee remains continuously employed with the Company. Shares subject to these RSUs are delivered to the employee upon vesting, subject topayment of applicable withholding taxes. The fair value of time‑vested RSUs is equal to the closing price of the Company’s ordinary shares traded on the NasdaqGlobal Select Market on the date of grant. Compensation expense, including the effect of forfeitures, is recognized over the applicable service period.Performance-Based Restricted Stock UnitsPerformance-based RSUs awarded to employees vest upon the achievement of certain performance criteria. The estimated fair value of these RSUs is basedon the closing price of the Company’s ordinary shares traded on the Nasdaq Global Select Market on the date of grant. Compensation expense for performance-based RSUs is recognized from the moment the Company determines the performance criteria probable to the date the Company deems the event is likely to occur.Cumulative adjustments are recorded quarterly to reflect subsequent changes in the estimated outcome of performance-related conditions until the date results aredetermined.Income TaxesThe Company recognizes income taxes under the asset and liability method. Deferred income taxes are recognized for differences between the financialreporting and tax bases of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected to reverse. The effect ondeferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. In evaluating the Company’s ability to recover itsdeferred tax assets, the Company considers all available positive and negative evidence including its past operating results, the existence of cumulative income inthe most recent fiscal years, changes in the business in which the Company operates and its forecast of future taxable income. In determining future taxableincome, the Company is responsible for assumptions utilized including the amount of Irish, U.S. and other foreign pre‑taxF-16 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions requiresignificant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that the Company is using to manage theunderlying business.The Company accounts for uncertain tax positions using a more‑likely‑than‑not threshold for recognizing and resolving uncertain tax positions. Theevaluation of uncertain tax positions is based on factors including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to betaken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. TheCompany evaluates its tax position on a quarterly basis. The Company also accrues for potential interest and penalties related to unrecognized tax benefits inincome tax expense.Comprehensive LossComprehensive loss consists of net loss and other comprehensive loss. Other comprehensive loss includes changes in equity that are excluded from net loss,such as unrealized holding gains and losses on available‑for‑sale marketable securities.Loss Per ShareBasic loss per share is calculated based upon net loss available to holders of ordinary shares divided by the weighted average number of ordinary sharesoutstanding. For the calculation of diluted earnings per share, the Company uses the weighted average number of ordinary shares outstanding, as adjusted for theeffect of potential dilutive securities, including stock options and RSUs.Segment InformationThe Company operates as one business segment, which is the business of developing, manufacturing and commercializing medicines designed to yieldbetter therapeutic outcomes and improve the lives of patients with serious diseases. The Company’s chief decision maker, the Chairman and Chief ExecutiveOfficer, reviews the Company’s operating results on an aggregate basis and manages the Company’s operations as a single operating unit.Employee Benefit Plans401(k) PlanThe Company maintains a 401(k) retirement savings plan (the “401(k) Plan”), which covers substantially all of its U.S.‑based employees. Eligibleemployees may contribute up to 100% of their eligible compensation, subject to certain Internal Revenue Service (“IRS”) limitations. The Company matches100% of employee contributions up to the first 5% of employee pay, up to IRS limits. Employee and Company contributions are fully vested when made. Duringthe years ended December 31, 2019, 2018 and 2017, the Company contributed $14.8 million, $12.1 million and $9.8 million, respectively, to match employeedeferrals under the 401(k) Plan.Defined Contribution PlanThe Company maintains a defined contribution plan for its Ireland‑based employees (the “Defined Contribution Plan”). The Defined Contribution Planprovides for eligible employees to contribute up to a maximum of 40%, depending upon their age, of their total taxable earnings subject to an earnings cap of€115,000. The Company provides a match of up to 18% of taxable earnings depending upon an individual’s contribution level. During the years ended December31, 2019, 2018 and 2017, the Company contributed $4.1 million, $4.0 million and $3.7 million, respectively, in contributions to the Defined Contribution Plan.New Accounting PronouncementsFrom time to time, new accounting pronouncements are issued by the FASB or other standard‑setting bodies that are adopted by the Company as of thespecified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have amaterial impact on its financial position or results of operations upon adoption.Effective January 1, 2019, the Company adopted the requirements under Accounting Standards Update (“ASU”) 2016-02, Leases (“Topic 842”) using theoptional modified retrospective transition method and recognized a cumulative-effect adjustment to the consolidated balance sheet on the date of adoption.Comparative periods have not been restated. Topic 842 was issued in order to increase transparency and comparability among organizations by recognizing right-of-use lease assets and operating lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The main difference betweenprevious GAAP (“Topic 840”) and Topic 842 is the recognition of right-of-use lease assets and lease liabilities by lessees for those leases classified as operatingleases under Topic 840. At January 1, 2019, the Company recorded a right-of-use asset of $20.1 million and an operating lease liability of $22.1 million. Foradditional information regarding how the Company is accounting for leases under Topic 842, refer to Note 9, Leases, in the “Notes to Consolidated FinancialStatements” in this Annual Report.In April 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, as part of its simplification initiative thatinvolves several aspects of the accounting for share-based payment transactions. The amendments in thisF-17 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)update established that: (i) all excess tax benefits and tax deficiencies be recognized as income tax expense or benefit in the income statement; (ii) excess taxbenefits be classified as an operating activity in the statement of cash flows; (iii) the entity make an entity-wide accounting policy election to either estimate thenumber of awards that are expected to vest, which is current GAAP, or account for forfeitures as they occur; (iv) the threshold to qualify for equity classificationpermits withholding up to the maximum statutory tax rates in the applicable jurisdictions; and (v) cash paid by an employer when directly withholding shares fortax withholding purposes be classified as a financing activity in the statement of cash flows. This ASU became effective for the Company on January 1, 2017. Theamendments related to (i), (iii) and (iv) were adopted by the Company on a modified retrospective basis, which resulted in a cumulative-effect adjustment to reduceaccumulated deficit by $61.5 million related to the timing of when excess tax benefits are recognized. The Company elected to continue to record expense only forthose awards that are expected to vest. The amendments related to (ii) and (v) were adopted using the prospective transition method.In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments, to provide financial statement users with moredecision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at eachreporting date. To achieve this objective, the amendments in this ASU replace the incurred loss impairment methodology in current GAAP with a methodologythat reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ThisASU becomes effective for the Company in the year ending December 31, 2020. This standard primarily impacts how firms account for credit losses and requiresan impairment model, known as the current expected credit loss model (“CECL”), that is based on expected losses rather than incurred losses. Companies arerequired to carry an allowance for expected credit losses for most debt instruments (except those carried at fair value), trade receivables, lease receivables,reinsurance receivables, financial guarantee contracts and loan commitments. Available-for-sale debt securities are scoped out of this guidance. The Company’sinvestment portfolio primarily consists of available-for-sale securities carried at fair value. Further, the Company’s trade receivables do not have abnormally longterms and the Company has rarely ever written off trade receivables. Accordingly, the Company has determined that the adoption of this standard will not have amaterial impact on the Company’s financial statements.In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which addresses the accounting fornonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation – Stock Compensation, to include share-basedpayment transactions for acquiring goods and services from nonemployees. This ASU became effective for and was adopted by the Company in the year endingDecember 31, 2019 and the adoption of this ASU did not have an impact on the Company’s consolidated financial statements.In August 2018, the FASB issued ASU 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, whichaims to improve the effectiveness of fair value measurement disclosures. The amendments in this ASU modify the disclosure requirements on fair valuemeasurements based on the concepts in FASB Concepts Statement, Conceptual Framework for Financial Reporting - Chapter 8: Notes to Financial Statements,including the consideration of costs and benefits. This ASU becomes effective for the Company in the year ending December 31, 2020 and early adoption ispermitted. Adoption of this standard only impacts the Company’s financial statement disclosures.In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is aService Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with therequirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-usesoftware license). This ASU also requires the entity to expense the capitalized implementation costs of a hosting arrangement that is a service contract over theterm of the hosting arrangement, which includes reasonably certain renewals. This ASU becomes effective for the Company in the year ending December 31,2020 and early adoption is permitted. The Company will adopt the standard as of January 1, 2020 using the prospective transition method, whereby it will apply therequirements to any eligible costs incurred after adoption. As such, there should be no impact to the Company’s consolidated financial statements.In November 2018, the FASB issued ASU 2018-18, Clarifying the Interaction Between Topic 808 and Topic 606, which clarifies when transactionsbetween participants in a collaborative arrangement are within the scope of the FASB’s revenue standard, Topic 606. This ASU becomes effective for theCompany in the year ending December 31, 2020. The Company reviewed its collaborative arrangements and determined that there are no collaborativearrangements that are considered within the scope of this standard.In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes byremoving certain exceptions to the general principles of ASC 740, Income Taxes. The amendments also improve consistent application of and simplify GAAP forother areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for fiscal years beginning after December 15, 2020 and earlyadoption is permitted. Depending on theF-18 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)amendment, adoption may be applied on a retrospective, modified retrospective or prospective basis. The Company is currently assessing the impact that this ASUwill have on its consolidated financial statements.3. REVENUE FROM CONTRACTS WITH CUSTOMERS During the years ended December 31, 2019, 2018 and 2017, the Company recorded product sales, net, as follows: Year Ended December 31, (In thousands) 2019 2018 2017 VIVITROL $335,365 $302,609 $269,321 ARISTADA/ARISTADA INITIO 189,134 147,725 93,513 Total product sales, net $524,499 $450,334 $362,834During the years ended December 31, 2019, 2018 and 2017, the Company recorded manufacturing and royalty revenues from its collaborationarrangements as follows: Year Ended December 31, 2019 (In thousands) ManufacturingRevenue Royalty Revenue Total INVEGA SUSTENNA/XEPLION & INVEGA TRINZA/TREVICTA $— $256,947 $256,947 RISPERDAL CONSTA 50,433 15,950 66,383 AMPYRA/FAMPYRA 22,071 15,170 37,241 Other 31,750 55,561 87,311 $104,254 $343,628 $447,882 Year Ended December 31, 2018 (In thousands) ManufacturingRevenue Royalty Revenue Total INVEGA SUSTENNA/XEPLION & INVEGA TRINZA/TREVICTA $— $241,423 $241,423 RISPERDAL CONSTA 52,770 18,352 71,122 AMPYRA/FAMPYRA 53,044 54,009 107,053 Other 27,214 79,863 107,077 $133,028 $393,647 $526,675 Year Ended December 31, 2017 (In thousands) ManufacturingRevenue Royalty Revenue Total INVEGA SUSTENNA/XEPLION & INVEGA TRINZA/TREVICTA $— $214,931 $214,931 RISPERDAL CONSTA 64,793 20,129 84,922 AMPYRA/FAMPYRA 55,373 61,646 117,019 Other 32,655 55,781 88,436 $152,821 $352,487 $505,308 The research and development revenue and license revenue recorded during the years ended December 31, 2019, 2018 and 2017 primarily related torevenue earned under the Company’s license and collaboration agreement with Biogen for VUMERITY.Under a license and collaboration agreement with Biogen, which the Company entered into in November 2017 and amended in October 2018, January 2019and October 2019, the Company granted Biogen a worldwide, exclusive, sublicensable license to develop, manufacture and commercialize VUMERITY and otherproducts covered by patents licensed to Biogen under the agreement. Upon entering into the November 2017 license and collaboration agreement, the Companyreceived an up-front cash payment of $28.0 million and was also eligible to receive additional payments upon achievement of developmental milestones withrespect to VUMERITY. In June 2018, the Company received an additional cash payment of $50.0 million following Biogen’s review of preliminarygastrointestinal tolerability data from the clinical development program for VUMERITY. In November 2019, the Company also received an additional payment of$150.0 million following FDA approval of the NDA for VUMERITY and transfer of such NDA to Biogen. The Company is also eligible to receive additionalpayments upon achievement of developmental milestones with respect to the first two products other than VUMERITY covered by patents licensed to Biogenunder the November 2017 license and collaboration agreement. Biogen paid a portion of the VUMERITY development costs the Company incurred in 2017 and,since January 1, 2018, Biogen has been responsible for all VUMERITY development costs the Company incurs, subject to annual budget limitations. FollowingFDA approval of the NDA for VUMERITY in October 2019, the NDA and any further development responsibilities with respect to VUMERITY were transferredto Biogen.F-19 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The Company evaluated the license and collaboration agreement under Topic 606 and determined that it had four deliverables: (i) the grant of a distinct,right-to-use license of IP to Biogen; (ii) future development services; (iii) clinical supply; and (iv) participation on a joint steering committee with Biogen. TheCompany’s participation on the joint steering committee was considered to be perfunctory and thus not recognized as a performance obligation. The deliverables,aside from the participation in the joint steering committee which was considered to be perfunctory, were determined to be separate performance obligations as thelicense is separately identifiable from the development services and clinical supply, and the development services are not expected to significantly modify orcustomize the IP.The Company allocated the arrangement consideration to each performance obligation using the standalone selling prices based on its estimate of sellingprice for the license and other deliverables. The Company used a discounted cash flow model to estimate the standalone selling price of the license in order toallocate the consideration to the performance obligations. To estimate the standalone selling price of the license, the Company assessed the likelihood of the FDA’sapproval of VUMERITY and estimated the expected future cash flows assuming FDA approval and maintenance of the IP protecting VUMERITY. The Companythen discounted these cash flows using a discount rate of 8.0%, which it believes captures a market participant’s view of the risk associated with the expected cashflows. The estimate of selling price of the development services and clinical supply were determined through third-party evidence. The Company believes that achange in the assumptions used to determine its estimate of selling price for the license most likely would not have a significant effect on the allocation ofconsideration transferred.Under Topic 606, the Company allocated the $28.0 million up-front payment and the $50.0 million June 2018 payments as follows: $27.0 million and$48.3 million to the delivery of the license; $0.9 million and $1.5 million to future development services; and $0.1 million and $0.2 million to clinical supply,respectively. In November 2019, following FDA acceptance of the NDA for VUMERITY and transfer of such NDA to Biogen, the Company received a $150.0 millionmilestone payment, $144.8 million of which was allocated to the delivery of the license; and $5.2 million of which was allocated to future development servicesand clinical supply. The amounts allocated to the license were recognized upon receipt of the payments as delivery of the license occurred upon entry into theagreement in 2017. The amounts allocated to the development services and clinical supply will be recognized over the course of the development work and asclinical supply is delivered to Biogen, which is expected to continue into 2020. The Company expects to earn an additional $0.3 million in research anddevelopment revenue under this agreement with Biogen through 2020. In addition, the Company will receive a 15% royalty on worldwide net sales of VUMERITY, subject to, under certain circumstances, minimum annualpayments for the first five years following FDA approval of VUMERITY. The Company is also entitled to receive royalties on net sales of products other thanVUMERITY covered by patents licensed to Biogen under the license and collaboration agreement, at tiered royalty rates calculated as percentages of net salesranging from high-single digits to sub-teen double digits. All royalties are payable on a product-by-product and country-by-country basis until the later of (i) thelast-to-expire patent right covering the applicable product in the applicable country and (ii) a specified period of time from the first commercial sale of theapplicable product in the applicable country. Royalties for all products and the minimum annual payments for VUMERITY are subject to customary reductions, asset forth in the license and collaboration agreement. The Company determined that the future development milestones and sales-based royalties that it may be entitled to receive are variable consideration. TheCompany is using the most likely amount method for estimating the variable consideration to be received related to the milestones under this arrangement. Theroyalties are subject to the sales-based exception and will be recorded when the corresponding sale occurs. Under the license and collaboration agreement, Biogen appointed the Company as the toll manufacturer of clinical and commercial supplies ofVUMERITY, subject to Biogen’s right to manufacture or have manufactured commercial supplies as a back-up manufacturer and subject to good faith agreementby the parties on the terms of such manufacturing arrangements. In October 2019, the Company entered into a commercial supply agreement with Biogen for thecommercial supply of VUMERITY, an amendment to such commercial supply agreement and an amendment to the November 2017 license and collaborationagreement with Biogen. Under these agreements, Biogen has an option to assume responsibility, subject to a transition period, for the manufacture (itself orthrough a designee) of clinical supplies of VUMERITY and up to 100% of commercial supplies of VUMERITY in exchange for an increase in the royalty rate tobe paid by Biogen to the Company on net sales of product that is manufactured by Biogen or its designee. The Company evaluated the commercial supplyagreement and the related amendments under Topic 606 and determined that these agreements should be combined and accounted for as a separate contract sincethe commercial supply agreement and amendment to the November 2017 license and collaboration agreement were negotiated together to achieve a commoneconomic objective and the additional performance obligations under the commercial supply agreement are considered distinct obligations priced at theirstandalone selling prices. The Company determined that it had two separate performance obligations, the commercial supply of VUMERITY and, upon an electionby Biogen to commence a transfer of technology relating to the manufacture ofF-20 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)VUMERITY (a “Tech Transfer”), services to be performed by the Company in connection with such Tech Transfer. There are other deliverables under theagreements that were determined to be perfunctory or immaterial. In connection with the entry into the commercial supply agreement and the related amendments, the Company received payments in the aggregate amountof $5.8 million in the fourth quarter of 2019 and, if Biogen opts to assume responsibility for the manufacture of VUMERITY, the Company will be eligible toreceive an additional $5.0 million payment upon the earlier of successful completion of the Tech Transfer or a date in the fourth quarter of 2022. The $5.8 millionreceived in the fourth quarter of 2019 plus amounts received in connection with the Tech Transfer, if any, will be allocated to each of the performance obligationsusing the standalone selling prices based on the Company’s estimate of selling price for the commercial supply of VUMERITY and the services related to the TechTransfer, and this additional arrangement consideration will be recognized as the Company delivers commercial supply of VUMERITY and/or provides servicesrelating to the Tech Transfer. The Company expects to begin performing under this commercial supply agreement in the first quarter of 2020.F-21 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)4. INVESTMENTSInvestments consist of the following: Gross Unrealized Losses Amortized Less than Greater than Estimated December 31, 2019 Cost Gains One Year One Year Fair Value Short-term investments: Available-for-sale securities: Corporate debt securities $144,161 $676 $— $— $144,837 U.S. government and agency debt securities 112,948 434 (1) (1) 113,380 International government agency debt securities 72,753 248 (10) — 72,991 Total short-term investments 329,862 1,358 (11) (1) 331,208 Long-term investments: Available-for-sale securities: Corporate debt securities 51,070 — (45) (7) 51,018 International government agency debt securities 20,806 — (18) — 20,788 U.S. government and agency debt securities 4,000 — (4) — 3,996 75,876 — (67) (7) $75,802 Held-to-maturity securities: Certificates of deposit 1,820 — — — 1,820 Fixed term deposit account 1,667 102 — — 1,769 3,487 102 — — 3,589 Total long-term investments 79,363 102 (67) (7) 79,391 Total investments $409,225 $1,460 $(78) $(8) $410,599 December 31, 2018 Short-term investments: Available-for-sale securities: Corporate debt securities $120,197 $57 $(62) $(274) $119,918 U.S. government and agency debt securities 80,055 115 (11) (87) 80,072 International government agency debt securities 72,091 85 (8) (117) 72,051 272,343 257 (81) (478) 272,041 Held-to-maturity securities: Corporate debt securities 492 — — — 492 Total short-term investments 272,835 257 (81) (478) 272,533 Long-term investments: Available-for-sale securities: Corporate debt securities 53,505 — (185) (93) $53,227 U.S. government and agency debt securities 18,474 — (21) (12) 18,441 International government agency debt securities 5,457 — (4) — 5,453 77,436 — (210) (105) 77,121 Held-to-maturity securities: Certificates of deposit 1,820 — — — 1,820 Fixed term deposit account 1,667 136 — — 1,803 3,487 136 — — 3,623 Total long-term investments 80,923 136 (210) (105) 80,744 Total investments $353,758 $393 $(291) $(583) $353,277 Realized gains and losses on the sales and maturities of marketable securities, which were identified using the specific identification method, were asfollows: Year Ended December 31, (In thousands) 2019 2018 2017 Proceeds from the sales and maturities of marketable securities $224,602 $444,456 $464,494 Realized gains $997 $4 $9 Realized losses $497 $268 $3F-22 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The Company’s available‑for‑sale and held‑to‑maturity securities at December 31, 2019 had contractual maturities in the following periods: Available-for-sale Held-to-maturity Amortized Estimated Amortized Estimated (In thousands) Cost Fair Value Cost Fair Value Within 1 year $216,084 $216,764 $1,820 $1,820 After 1 year through 5 years 189,654 190,246 1,667 1,769 Total $405,738 $407,010 $3,487 $3,589 At December 31, 2019, the Company believed that the unrealized losses on its available-for-sale investments were temporary. The investments withunrealized losses consisted of U.S. government and agency debt securities, corporate debt securities and international government agency debt securities. Theunrealized losses are a result of market conditions related to increasing interest rates. In making the determination that the decline in fair value of these securitieswas temporary, the Company considered various factors, including, but not limited to: the length of time each security was in an unrealized loss position; theextent 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 theassessment 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.In February 2016, the Company entered into a collaboration and license option agreement with Synchronicity Pharma, Inc. (“Synchronicity”) formerlyReset Therapeutics, Inc., a related party. The Company made a $15.0 million investment in exchange for shares of Synchronicity’s Series B Preferred Stock. TheCompany was accounting for its investment in Synchronicity under the equity method based on its percentage of ownership, its seat on the board of directors andits belief that it could exert significant influence over the operating and financial policies of Synchronicity.In September 2017, the Company recorded an other-than-temporary impairment charge of $10.5 million within “Other (expense) income, net” in theaccompanying consolidated statements of operations and comprehensive loss, which represented the Company’s remaining investment in Synchronicity, as theCompany believed that Synchronicity was unable to generate future earnings that justify the carrying amount of the investment. In November 2017, thecollaboration and license option agreement with Synchronicity was terminated. During the year ended December 31, 2017, the Company recorded a reduction inits investment in Synchronicity of $2.8 million, which represented the Company’s proportional share of Synchronicity’s net loss for the period.In May 2014, the Company entered into an agreement whereby it is committed to provide up to €7.4 million to a partnership, Fountain Healthcare PartnersII, L.P. of Ireland (“Fountain”), which was created to carry on the business of investing exclusively in companies and businesses engaged in the healthcare,pharmaceutical and life sciences sectors. As of December 31, 2019, the Company’s total contribution in Fountain was equal to €6.0 million, and its commitmentrepresents approximately 7% of the partnership’s total funding. The Company is accounting for its investment in Fountain under the equity method. During theyears ended December 31, 2019, 2018 and 2017 the Company recorded a reduction in its investment in Fountain of $0.4 million, an increase of $0.5 million and areduction of $0.1 million, respectively, which represented the Company’s proportional share of Fountain’s net (losses) gains for the period. The Company’s $5.9million and $5.5 million net investment in Fountain at December 31, 2019 and 2018, respectively, was included within “Other assets” in the accompanyingconsolidated balance sheets.5. FAIR VALUEThe following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis and indicates the fairvalue hierarchy and the valuation techniques the Company utilized to determine such fair value: December 31, (In thousands) 2019 Level 1 Level 2 Level 3 Assets: Cash equivalents $8,064 $8,064 $— $— U.S. government and agency debt securities 117,376 73,795 43,581 — Corporate debt securities 195,855 — 193,902 1,953 International government agency debt securities 93,779 — 93,779 — Contingent consideration 32,400 — — 32,400 Total $447,474 $81,859 $331,262 $34,353F-23 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2018 Level 1 Level 2 Level 3 Assets: Cash equivalents $54,590 $54,590 $— $— U.S. government and agency debt securities 98,513 60,107 38,406 — Corporate debt securities 173,637 — 173,145 492 International government agency debt securities 77,504 — 77,504 — Contingent consideration 65,200 — — 65,200 Common stock warrants 1,205 — — 1,205 Total $470,649 $114,697 $289,055 $66,897 The Company transfers its financial assets and liabilities, measured at fair value on a recurring basis, between the fair value hierarchies at the end of eachreporting period.There were no transfers of any securities from Level 1 to Level 2 or from Level 2 to Level 1 during the year ended December 31, 2019. The following tableis a rollforward of the fair value of the Company’s investments whose fair value was determined using Level 3 inputs at December 31, 2019: (In thousands) Fair Value Balance, January 1, 2019 $66,897 Purchase of corporate debt security 1,953 Change in the fair value of warrants 1,837 Change in the fair value of contingent consideration (22,800)Payments received from contingent consideration (10,000)Proceeds from the sale of shares acquired upon exercise of warrants (3,042)Impairment of corporate debt security (492)Balance, December 31, 2019 $34,353 The Company’s investments in U.S. government and agency debt securities, international government agency debt securities and corporate debt securitiesclassified as Level 2 within the fair value hierarchy were initially valued at the transaction price and subsequently valued, at the end of each reporting period,utilizing market-observable data. The market-observable data included reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers,current spot rates and other industry and economic events. The Company validated the prices developed using the market-observable data by obtaining marketvalues from other pricing sources, analyzing pricing data in certain instances and confirming that the relevant markets are active.In April 2015, the Company completed the sale of its Gainesville, GA manufacturing facility, the related manufacturing and royalty revenue associatedwith certain products manufactured at the facility, and the rights to IV/IM and parenteral forms of Meloxicam. On December 20, 2018, the Company entered into aSecond Amendment to the Purchase and Sale Agreement (“Purchase and Sale Agreement Amendment”) dated March 7, 2015 with Recro and Recro GainesvilleLLC and a Second Amendment to the Asset Transfer and License Agreement dated April 10, 2015 with Recro Gainesville LLC (the “License AgreementAmendment” and, together with the Purchase and Sale Agreement Amendment, the “Amendments”).Under the terms of the Amendments, the milestone payment of $45.0 million previously due to the Company upon approval of an NDA for IV/IM andparenteral forms of Meloxicam or any other product with the same active ingredient as Meloxicam IV/IM that is discovered or identified using certain of theCompany’s IP to which Recro was provided a right of use, through license or transfer (the “Meloxicam Product(s)”) was amended and replaced with (i) a$5.0 million payment due within 30 days of signing of the Amendments; (ii) a $5.0 million payment due by April 23, 2019; (iii) a $5.0 million payment due within180 days following approval of an NDA for injectable Meloxicam; and (iv) an additional $45.0 million following approval of an NDA for Meloxicam Product(s),payable in seven equal annual payments of approximately $6.4 million beginning on the first anniversary of such approval.At December 31, 2019, the Company determined the value of the contingent consideration receivable using the following valuation approaches: •Based upon the terms of the Amendments, the fair value of the regulatory milestone was estimated based on the likelihood of achieving thisregulatory milestone and applying a discount rate from the expected time the milestone occurs to the balance sheet date. The Company received thefirst $5.0 million milestone payment in January 2019 and received the second $5.0 million in April 2019. Additionally, the Company expects theregulatory milestone event to occur in the first quarter of 2020 and to receive milestone payments on the subsequent seven anniversary yearsthereafter. A discount rate of 16.0% was utilized in this analysis;F-24 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) •The Company is entitled to receive future royalties on net sales of Meloxicam Products. To estimate the fair value of the future royalties, theCompany assessed the likelihood of a Meloxicam Product being approved for sale and estimated the expected future sales of such MeloxicamProduct assuming approval and IP protection. The Company then discounted these expected payments using a discount rate of 16.0%, which itbelieves captures a market participant’s view of the risk associated with the expected payments; and •The Company is entitled to receive payments of up to $80.0 million upon achieving certain sales milestones on future sales of the MeloxicamProducts. The fair value of the sales milestones was determined through the use of a real options approach, where net sales are simulated in a risk-neutral world. To employ this methodology, the Company used a risk-adjusted expected growth rate based on its assessments of expected growth innet sales of the approved Meloxicam Product, adjusted by an appropriate factor capturing their respective correlation with the market. A resultingexpected (probability-weighted) milestone payment was then discounted at a cost of debt, which was 16.0%.At December 31, 2019 and 2018, the Company determined that the value of the contingent consideration was $32.4 million and $65.2 million, respectively.The Company recorded a decrease of $22.8 million and $19.6 million and an increase of $21.6 million during the years ended December 31, 2019, 2018 and2017, respectively, within “Change in the fair value of contingent consideration” in the accompanying consolidated statements of operations and comprehensiveloss.In November 2019, Recro completed a spin out of its acute care segment, Baudax Bio, Inc. (“Baudax”), a publicly traded pharmaceutical company. As partof this transaction, Recro’s obligations to pay certain of the contingent consideration from the Gainesville Transaction were assigned and/or transferred to Baudax.In addition to the signing of the Amendments, as described above, on December 20, 2018, the Company and Recro entered into a First Amendment to theWarrant to Purchase Stock (the “Warrant Amendment”), pursuant to which the exercise price of the warrant to purchase 350,000 shares of Recro’s common stock,was decreased to a per share exercise price of $8.26 from $19.46, subject to adjustment as set forth therein. In November 2019, the Company elected to convertthose warrants into shares and sell those shares. The Company sold the shares for $3.0 million and recorded a realized gain of $0.9 million within “Other (expense)income, net” in the accompanying consolidated statement of operations and comprehensive loss during the year ended December 31, 2019. During the years endedDecember 31, 2018 and 2017, the Company recorded a decrease of $0.2 million and an increase of less than $0.1 million, respectively, in the fair value of thewarrants. These changes were recorded within “Other (expense) income, net” in the accompanying consolidated statements of operations and comprehensive loss.The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, accounts receivable, contract assets, other current assets,accounts payable and accrued expenses approximate fair value due to their short-term nature.The estimated fair value of the Company’s long-term debt under the 2023 Term Loans, which was based on quoted market price indications (Level 2 in thefair value hierarchy) and which may not be representative of actual values that could have been, or will be, realized in the future, was $277.9 million and $274.7million at December 31, 2019 and 2018, respectively. Please refer to Note 11, Long-Term Debt within these “Notes to Consolidated Financial Statements” in thisAnnual Report. 6. INVENTORYInventory consists of the following: December 31, December 31, (In thousands) 2019 2018 Raw materials $34,577 $31,824 Work in process 54,061 38,019 Finished goods(1) 13,165 20,353 Total inventory $101,803 $90,196 (1)At December 31, 2019 and 2018, the Company had $7.6 million and $11.0 million, respectively, of finished goods inventory located at its third‑partywarehouse and shipping service provider.F-25 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)7. PROPERTY, PLANT AND EQUIPMENTProperty, plant and equipment consist of the following: December 31, December 31, (In thousands) 2019 2018 Land $6,560 $6,486 Building and improvements 177,087 157,053 Furniture, fixtures and equipment 340,146 314,831 Leasehold improvements 20,737 20,105 Construction in progress 134,683 88,983 Subtotal 679,213 587,458 Less: accumulated depreciation (317,045) (277,471)Total property, plant and equipment, net $362,168 $309,987 Depreciation expense was $40.1 million, $38.5 million and $36.5 million for the years ended December 31, 2019, 2018 and 2017, respectively. Also,during the years ended December 31, 2019, 2018 and 2017, the Company wrote off furniture, fixtures and equipment that had a carrying value of approximately$0.9 million, $0.5 million and $0.1 million, respectively, at the time of disposition.Amounts included as construction in progress in the consolidated balance sheets primarily include capital expenditures at the Company’s manufacturingfacility in Wilmington, Ohio. The Company continues to evaluate its manufacturing capacity based on expectations of demand for its products and will continue torecord such amounts within construction in progress until such time as the underlying assets are placed into service. The Company continues to periodicallyevaluate whether facts and circumstances indicate that the carrying value of its long‑lived assets to be held and used may not be recoverable. 8. GOODWILL AND INTANGIBLE ASSETSGoodwill and intangible assets consist of the following: December 31, 2019 December 31, 2018 (In thousands) WeightedAmortizableLife (Years) GrossCarryingAmount AccumulatedAmortization Net CarryingAmount GrossCarryingAmount AccumulatedAmortization Net CarryingAmount Goodwill $92,873 $— $92,873 $92,873 $— $92,873 Finite-lived intangible assets: Collaboration agreements 12 $465,590 $(348,595) $116,995 $465,590 $(319,311) $146,279 NanoCrystal technology 13 74,600 (46,773) 27,827 74,600 (38,942) 35,658 OCR(1) technologies 12 42,560 (36,739) 5,821 42,560 (33,496) 9,064 Total $582,750 $(432,107) $150,643 $582,750 $(391,749) $191,001 (1)OCR refers to the Company’s oral controlled release technologies. The Company’s finite‑lived intangible assets consist of collaborative agreements and the NanoCrystal and OCR technologies acquired as part of the EDTacquisition. The Company recorded $40.4 million, $65.2 million and $62.1 million of amortization expense related to its finite‑lived intangible assets during theyears ended December 31, 2019, 2018 and 2017, respectively. Based on the Company’s most recent analysis, amortization of intangible assets included within itsconsolidated balance sheets at December 31, 2019 is expected to be approximately $40.0 million, $40.0 million, $35.0 million, $35.0 million and $1.0 million inthe years ending December 31, 2020 through 2024, respectively. Although the Company believes such available information and assumptions are reasonable,given the inherent risks and uncertainties underlying its expectations regarding such future revenues, there is the potential for the Company’s actual results to varysignificantly from such expectations. If revenues are projected to change, the related amortization of the intangible assets will change in proportion to the change inrevenues. The Company performed its annual goodwill impairment test as of October 31, 2019. The Company elected to perform a qualitative assessment todetermine whether it was necessary to perform a quantitative impairment test. Based on the weight of all available evidence, the Company determined that the fairvalue of the reporting unit more-likely-than-not exceeded its carrying value.F-26 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)9. LEASES The Company adopted Topic 842 on January 1, 2019. Upon adoption, the Company elected the package of transition practical expedients, which allowed itto carry forward prior conclusions related to whether any expired or existing contracts are or contain leases, the lease classification for any expired or existingleases and initial direct costs for existing leases. The Company also elected the practical expedient to not reassess certain land easements and made an accountingpolicy election to not recognize leases with an initial term of 12 months or less within its consolidated balance sheets and to instead recognize those lease paymentson a straight-line basis in its consolidated statements of operations over the lease term. The Company elected to adopt this standard using the optional modified retrospective transition method with no restatement of its prior periods orcumulative adjustment to retained earnings. With the adoption of Topic 842, the Company’s consolidated balance sheet now contains the following line items:Right-of-use assets, Operating lease liabilities—short-term and Operating lease liabilities—long-term. The Company determined that it held the following significant operating leases of office and laboratory space as of January 1, 2019: •An operating lease for 175,000 square feet of office and laboratory space in Waltham, Massachusetts that expires in 2021, with an option to extendthe term for up to two five year periods, both of which the Company assumed would be exercised in its right-of-use asset and lease liability amounts; •An operating lease for 67,000 square feet of office space in Waltham, Massachusetts that expires in 2020, with an option to extend the term for up totwo one year periods, which the Company did not assume would be exercised in its right-of-use asset and lease liability amounts; •An operating lease for 14,600 square feet of office space in Dublin, Ireland that expires in 2022, with an option to extend the term for an additionalfive year period which the Company did not assume would be exercised in its right-of-use asset and lease liability amounts; and •An operating lease for 7,000 square feet of corporate office and administrative space in Washington, D.C. that expires in 2029 and includes anoption to extend the term for an additional five year period which the Company did not assume would be exercised in its right-of-use asset and leaseliability amounts. The Company also has two additional operating leases that are included in its lease accounting but are not considered significant. As all the existing leases subject to the new lease standard were previously classified as operating leases by the Company, they were similarly classified asoperating leases under the new standard. The Company has determined that the identified operating leases did not contain non-lease components and require nofurther allocation of the total lease cost. Additionally, the agreements in place did not contain information to determine the rate implicit in the leases. As such, theCompany calculated the incremental borrowing rate based on the assumed remaining lease term for each lease in order to calculate the present value of theremaining lease payments. At December 31, 2019, the weighted average incremental borrowing rate and the weighted average remaining lease term for theoperating leases held by the Company were 4.73% and 4.0 years, respectively. On November 18, 2019, the Company entered into a definitive agreement to acquire Rodin Therapeutics, Inc. (“Rodin”), a privately held biopharmaceuticalcompany focused on developing novel, small molecule therapeutics for synaptopathies. As part of this transaction, the Company assumed an operating lease for5,300 square feet of office space in Boston, Massachusetts that expires in 2021, with an option to extend the term for an additional year. As of December 31, 2019, right-of-use assets and liabilities arising from operating leases were $12.4 million and $13.8 million, respectively. During theyear ended December 31, 2019, cash paid for amounts included for the measurement of lease liabilities was $9.1 million. The Company recorded operating leaseexpense of $8.1 million, $10.8 million and $9.4 million for the years ended December 31, 2019, 2018 and 2017, respectively. F-27 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Future lease payments under non-cancelable leases as of December 31, 2019 consisted of the following: December 31, (In thousands) 2019 2020 $9,053 2021 2,727 2022 500 2023 509 2024 520 Thereafter 2,579 Total lease payments $15,888 Less: imputed interest (2,080)Total operating lease liabilities $13,808 For comparable purposes, future lease payments under non-cancelable leases as of December 31, 2018 consisted of the following: December 31, (In thousands) 2018 2019 $9,394 2020 10,717 2021 4,706 2022 2,455 2023 2,389 Thereafter 23,940 Total lease payments $53,601 In March 2018, the Company entered into a lease agreement for approximately 220,000 square feet of office and laboratory space located in a building to bebuilt at 900 Winter Street, Waltham, Massachusetts (“900 Winter Street”). The initial term of the lease commenced on January 20, 2020 (the “CommencementDate”). The initial lease term expires on January 31, 2035, with an option to extend for an additional ten years.As the Company (a) did not have the right to obtain or control the leased premises during the construction period; (b) did not have the right of payment forthe partially constructed assets and, thus, could have been potentially leased to another tenant; and (c) did not legally own or control the land on which theproperty improvements are being constructed, it was not included as a right-of-use asset at December 31, 2019. Additionally, the future lease payments, outlinedabove, did not include the 900 Winter Street payments as of December 31, 2019 under Topic 842.10. ACCOUNTS PAYABLE AND ACCRUED EXPENSESAccounts payable and accrued expenses consist of the following: December 31, December 31, (In thousands) 2019 2018 Accounts payable $54,261 $39,767 Accrued compensation 72,072 67,613 Accrued sales discounts, allowances and reserves 153,902 152,911 Accrued other 92,802 73,471 Total accounts payable and accrued expenses $373,037 $333,762 11. LONG‑TERM DEBTLong‑term debt consists of the following: December 31, December 31, (In thousands) 2019 2018 2023 Term Loans, due March 26, 2023 $277,138 $279,308 Less: current portion (2,843) (2,843)Long-term debt $274,295 $276,465F-28 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)2023 Term LoansIn March 2018, the Company amended and refinanced its existing term loan, referred to as Term Loan B-1 (as so amended and refinanced, the “2023 TermLoans”), in order to, among other things, extend the due date of the loan from September 25, 2021 to March 26, 2023, reduce the interest payable from LIBORplus 2.75% with a LIBOR floor of 0.75% to LIBOR plus 2.25% with a 0% LIBOR floor and increase covenant flexibility (the “Refinancing”).The Refinancing involved multiple lenders who were considered members of a loan syndicate. In determining whether the Refinancing was to beaccounted for as a debt extinguishment or a debt modification, the Company considered whether creditors remained the same or changed and whether the changesin debt terms were substantial. A change in the debt terms was considered to be substantial if the present value of the remaining cash flows under the new terms ofthe 2023 Term Loans was at least 10% different from the present value of the remaining cash flows under the former Term Loan B-1 (commonly referred to as the“10% Test”). The Company performed a separate 10% Test for each individual creditor participating in the loan syndication. With the exception of one lender,who owned 1% of the total outstanding principal amount of Term Loan B-1 at the date of the Refinancing and was accounted for as a debt extinguishment, theRefinancing was accounted for as a debt modification.The Refinancing resulted in a $2.3 million charge in the three months ended March 31, 2018, which was included in “Interest expense” in theaccompanying consolidated statement of operations and comprehensive loss.Scheduled maturities with respect to the 2023 Term Loans are as follows (in thousands): Year Ending December 31: 2020 $2,843 2021 2,843 2022 2,843 2023 270,747 2024 — Total $279,276 Beginning on January 1, 2014, the Company became subject to mandatory prepayments of principal if certain excess cash flow thresholds, as defined in the2023 Term Loans, were met. To date, the Company has not been required to make any such mandatory prepayments.The 2023 Term Loans have an incremental facility capacity in an amount of $175.0 million, plus additional amounts as long as the Company meets certainconditions, including a specified leverage ratio. The 2023 Term Loans include a number of restrictive covenants that, among other things and subject to certainexceptions and baskets, impose operating and financial restrictions on the Company and certain of its subsidiaries. The 2023 Term Loans also contain customaryaffirmative covenants and events of default. The Company was in compliance with its debt covenants at December 31, 2019.At December 31, 2019, the Company’s balance of unamortized deferred financing costs and unamortized original issue discount costs were $0.6 millionand $1.5 million, respectively. These costs are being amortized to interest expense over the estimated repayment period of the 2023 Term Loans using the effectiveinterest method. During the years ended December 31, 2019, 2018 and 2017, the Company had amortization expense of $0.7 million, $0.7 million and $0.8million, respectively, related to deferred financing costs and original issue discount.F-29 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)12. LOSS PER SHAREBasic loss per ordinary share is calculated based upon net loss available to holders of ordinary shares divided by the weighted average number of sharesoutstanding. For the years ended December 31, 2019, 2018 and 2017, as the Company was in a net loss position, the diluted loss per share did not assumeconversion or exercise of stock options and awards as they would have an anti-dilutive effect on loss per share.The following potential ordinary equivalent shares were not included in the net loss per ordinary share calculation because the effect would have been anti-dilutive: Year Ended December 31, (In thousands) 2019 2018 2017 Stock options 13,814 11,331 9,540 Restricted stock units 3,177 2,592 2,119 Total 16,991 13,923 11,659 13. SHAREHOLDERS’ EQUITYShare Repurchase ProgramOn September 16, 2011, the board of directors authorized the continuation of the Alkermes, Inc. share repurchase program to repurchase up to$215.0 million of the Company’s ordinary shares at the discretion of management from time to time in the open market or through privately negotiatedtransactions. At December 31, 2019, approximately $101.0 million was available to repurchase ordinary shares pursuant to the repurchase program. All sharesrepurchased are recorded as treasury stock. The repurchase program has no set expiration date and may be suspended or discontinued at any time. During the yearsended December 31, 2019 and 2018, the Company did not acquire any ordinary shares under the repurchase program.14. SHARE‑BASED COMPENSATIONShare‑Based Compensation ExpenseThe following table presents share‑based compensation expense included in the Company’s consolidated statements of operations and comprehensive loss: Year Ended December 31, (In thousands) 2019 2018 2017 Cost of goods manufactured and sold $9,948 $9,174 $7,596 Research and development 29,924 32,943 22,635 Selling, general and administrative 61,105 63,240 53,686 Total share-based compensation expense $100,977 $105,357 $83,917 During the years ended December 31, 2019, 2018 and 2017, $1.5 million, $2.7 million and $0.4 million, respectively, of share‑based compensation expensewas capitalized and recorded as “Inventory” in the accompanying consolidated balance sheets.Share‑Based Compensation PlansThe Company has two share-based compensation plan pursuant to which awards are currently being made: the 2011 Stock Option and Incentive Plan, asamended (the “2011 Plan”) and the 2018 Stock Option and Incentive Plan, as amended (the “2018 Plan”). The Company has one share‑based compensation planpursuant to which outstanding awards have been made, but from which no further awards can or will be made: the 2008 Stock Option and Incentive Plan, asamended. The 2018 Plan and the 2011 Plan allow for the issuance of non-qualified and incentive stock options, restricted stock, restricted stock units, cash-basedawards and performance shares to employees, officers and directors of, and consultants to, the Company in such amounts and with such terms and conditions asmay be determined by the compensation committee of the Company's board of directors, subject to the provisions of the 2018 Plan and the 2011 Plan, asapplicable.At December 31, 2019, there were 10.6 million ordinary shares available for issuance in the aggregate under the Company’s stock plans. The 2018 Plan andthe 2011 Plan each provide that awards other than stock options will be counted against the total number of shares available under the plan in a 1.8-to‑1 ratio.F-30 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Stock OptionsA summary of stock option activity is presented in the following table: Number of Weighted Average Shares Exercise Price Outstanding, January 1, 2019 14,852,457 $40.48 Granted 3,812,103 $31.49 Exercised (1,515,957) $12.55 Expired (1,104,967) $48.42 Forfeited (807,791) $42.32 Outstanding, December 31, 2019 15,235,845 $40.34 Exercisable, December 31, 2019 9,874,065 $39.15 The weighted average grant date fair value of stock options granted during the years ended December 31, 2019, 2018 and 2017 was $15.57, $30.47 and$25.81, respectively. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2019, 2018 and 2017 was $21.3 million, $35.5million and $40.4 million, respectively.At December 31, 2019, there were 5.2 million stock options expected to vest with a weighted average exercise price of $42.64 per share, a weightedaverage contractual remaining life of 8.5 years with an aggregate intrinsic value of less than $0.1 million. At December 31, 2019, the aggregate intrinsic value ofstock options exercisable was $12.9 million with a weighted average remaining contractual term of 4.5 years. The number of stock options expected to vest wasdetermined by applying the pre‑vesting forfeiture rate to the total outstanding options. The intrinsic value of a stock option is the amount by which the market valueof the underlying stock exceeds the exercise price of the stock option.At December 31, 2019, there was $48.0 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognizedover a weighted average period of 1.9 years. Cash received from option exercises under the Company’s award plans during the years ended December 31, 2019,2018 and 2017 was $18.9 million, $20.9 million and $23.5 million, respectively.Time‑Vested Restricted Stock UnitsA summary of time‑vested RSU activity is presented in the following table: Weighted Average Number ofShares Grant DateFair Value Unvested, January 1, 2019 2,266,286 $55.32 Granted 2,826,092 $30.47 Vested (791,484) $53.62 Forfeited (556,094) $41.44 Unvested, December 31, 2019 3,744,800 $38.99 The weighted average grant date fair value of time‑vested RSUs granted during the years ended December 31, 2019, 2018 and 2017 were $30.47, $63.01and $54.85, respectively. The total fair value of time‑vested RSUs that vested during the years ended December 31, 2019, 2018 and 2017, was $42.4 million, $34.5million and $31.5 million, respectively.At December 31, 2019, there was $66.6 million of total unrecognized compensation cost related to unvested time‑vested RSUs, which will be recognizedover a weighted average remaining contractual term of 1.9 years.F-31 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Performance-Based Restricted Stock UnitsIn February 2017, the compensation committee of the Company’s board of directors approved awards of RSUs to all employees employed by the Companyduring 2017, in each case subject to vesting on the achievement of the following performance criteria: (i) FDA approval of the NDA for ALKS 5461, (ii) theachievement of the pre-specified primary efficacy endpoints in each of two phase 3 studies of ALKS 3831, and (iii) revenues equal to or greater than a pre-specified amount for the year ending December 31, 2019. These performance criteria were to be assessed over a performance period of three years from the date ofthe grant.A summary of performance-based RSU activity is presented in the following table: Weighted Average Number ofShares Grant DateFair Value Unvested, January 1, 2019 626,168 $54.75 Granted — $— Forfeited (81,000) $54.77 Vested (1,614) $48.48 Unvested, December 31, 2019 543,554 $54.75 The grant date fair value of the performance-based RSUs was equal to the closing price of the Company’s stock on the Nasdaq Global Select Market on thedate of grant.In December 2018, the Company achieved the pre-specified primary efficacy endpoints on its second of the two phase 3 studies of ALKS 3831, resulting inthe vesting of a portion of the granted performance-based RSUs and the recognition of $17.1 million in share-based compensation expense related to these awards.The Company recognized $2.1 million, $6.7 million and $8.3 million of this expense in cost of goods manufactured and sold, R&D expense and SG&A expense,respectively. In the first quarter of 2020, the compensation committee of the Company’s board of directors will meet to determine whether the two remainingperformance criteria were achieved. At December 31, 2019, the Company does not consider it probable that the performance criteria will be met on theseremaining performance obligations and has not recognized any additional share-based compensation expense related to these performance-based RSUs. AtDecember 31, 2019, there was $29.8 million of unrecognized compensation cost related to the remaining unvested portion of the performance-based RSUs, whichwould be recognized in accordance with the terms of the award should the Company deem that the performance criteria were met. The unvested awards will expireif it is determined that the performance conditions were not met on or before the three year anniversary of the grant date.15. RESTRUCTURINGOn October 18, 2019, the Company approved a restructuring plan following a review of its operations, cost structure and growth opportunities (the“Restructuring”). The Restructuring included a reduction in headcount of approximately 160 employees across the Company. The Company recorded a charge of$13.4 million in the fourth quarter of 2019 as a result of the Restructuring, which consisted of one-time termination benefits for employee severance, benefits andrelated costs, all of which are expected to result in cash expenditures and substantially all of which will be paid out over the next 12 months. Restructuring activityduring the year ended December 31, 2019 was as follows: (In thousands) Balance, January 1, 2019 $— Restructuring charge 13,401 Amounts paid during the period: Severance (3,621)Outplacement services (398)Benefits (181)Balance, December 31, 2019 $9,201At December 31, 2019, $9.0 million and $0.2 million of the restructuring accrual were included within “Accounts payable and accrued expenses” and“Other long-term liabilities” in the accompanying consolidated balance sheets, respectively.F-32 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)16. ACQUISITION On November 18, 2019, the Company entered into a definitive agreement to acquire Rodin, a privately held biopharmaceutical company focused ondeveloping novel, small molecule therapeutics for synaptopathies. The acquisition was completed on November 25, 2019 and, under the terms of the agreement,the Company made an upfront cash payment of $98.1 million to Rodin's security holders and may make up to $850.0 million in future payments, $225.0 million ofwhich are triggered upon achievement by the development candidates acquired in the acquisition of Rodin of certain specified clinical milestones, $300.0 millionof which are triggered by the development candidates acquired in the acquisition of Rodin of certain regulatory milestones and $325.0 million of which aretriggered upon the attainment of certain sales thresholds. The Company accounted for the transaction, as an asset acquisition as substantially all of the fair value of Rodin’s gross assets acquired were concentratedin its in-process research and development (“IPR&D”), which is largely in the pre-clinical stage. As the IPR&D was determined to not have an alternative futureuse, the Company recorded a charge to R&D expense in the accompanying consolidated statements of operations and comprehensive loss of $86.6 million, whichwas the amount determined to be the relative fair value of the $98.1 million payment attributed to the acquired IPR&D. The Company has not recorded any of the$850.0 million in contingent consideration as a liability in the accompanying consolidated balance sheet as none of the future events which would trigger amilestone payment are considered probable of occurring at December 31, 2019. The following were the amounts allocated to the assets acquired, liabilities assumed and amounts expensed at the acquisition date based on their respectivefair values: (In thousands) Cash 2,658 Prepaid expenses and other current assets 461 Deferred tax assets 11,642 Right-of-use assets 637 Other assets 137 Accounts payable and accrued expenses (3,364)Operating lease liabilities—short-term (400)Operating lease liabilities—long-term (237)Research and development expense 86,594 17. COLLABORATIVE ARRANGEMENTSThe Company has entered into several collaborative arrangements to develop and commercialize products and, in connection with such arrangements, toaccess technologies, financial, marketing, manufacturing and other resources. Refer to the “Patents and Proprietary Rights” section in “Item 1— Business” of thisAnnual Report for information with respect to IP protection for these products. The collaboration revenue the Company has earned in the years ended December31, 2019, 2018 and 2017 is summarized in Note 3, Revenue from Contracts with Customers within the notes to the consolidated financial statements in this AnnualReport.The Company’s significant collaborative arrangements are described below:JanssenINVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTAUnder a license agreement with Janssen Pharmaceutica N.V., the Company granted Janssen a worldwide exclusive license under its NanoCrystaltechnology to develop, commercialize and manufacture INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA and related products.Under this license agreement, the Company received milestone payments upon the achievement of certain development goals from Janssen; there are nofurther milestones to be earned under this agreement. The Company receives tiered royalty payments between 5% and 9% of INVEGA SUSTENNA/XEPLIONand INVEGA TRINZA/TREVICTA end-market net sales in each country where the license is in effect, with the exact royalty percentage determined based onaggregate worldwide net sales. The tiered royalty payments consist of a patent royalty and a know‑how royalty, both of which are determined on acountry‑by‑country basis. The patent royalty, which equals 1.5% of net sales, is payable in each country until the expiration of the last of the patents claiming theproduct in such country. The know‑how royalty is a tiered royalty of 3.5%, 5.5% and 7.5% on aggregate worldwide net sales of below $250 million, between$250 million and $500 million, and greater than $500 million, respectively. The know‑how royalty rate resets to 3.5% at the beginning of each calendar year and ispayable until 15 years from first commercial sale of a product, subject to theF-33 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)expiry of the license agreement. These royalty payments may be reduced in any country based on patent litigation or on competing products achieving certainminimum sales thresholds. The license agreement expires upon the expiration of the last of the patents subject to the agreement. After expiration, Janssen retains anon‑exclusive, royalty‑free license to develop, manufacture and commercialize the products.Janssen may terminate the license agreement in whole or in part upon three months’ notice to the Company. The Company and Janssen have the right toterminate the agreement upon a material breach of the other party, which is not cured within a certain time period, or upon the other party’s bankruptcy orinsolvency.RISPERDAL CONSTAUnder a product development agreement, the Company collaborated with Janssen on the development of RISPERDAL CONSTA. Under the developmentagreement, Janssen provided funding to the Company for the development of RISPERDAL CONSTA and Janssen is responsible for securing all necessaryregulatory approvals for the product.Under two license agreements, the Company granted Janssen and an affiliate of Janssen exclusive worldwide licenses to use and sell RISPERDALCONSTA. Under its license agreements with Janssen, the Company receives royalty payments equal to 2.5% of Janssen’s end-market net sales of RISPERDALCONSTA in each country where the license is in effect based on the quarter when the product is sold by Janssen. This royalty may be reduced in any country basedon lack of patent coverage and significant competition from generic versions of the product. Janssen can terminate the license agreements upon 30 days’ priorwritten notice to the Company. Either party may terminate the license agreements by written notice following a breach which continues for 90 days after thedelivery of written notice thereof or upon the other party’s insolvency. The licenses granted to Janssen expire on a country‑by‑country basis upon the later of:(i) the expiration of the last patent claiming the product in such country; or (ii) 15 years after the date of the first commercial sale of the product in such country,provided that in no event will the license granted to Janssen expire later than the twentieth anniversary of the first commercial sale of the product in each suchcountry, with the exception of Canada, France, Germany, Italy, Japan, Spain and the United Kingdom, in each case where the fifteen‑year minimum shall pertainregardless. After expiration, Janssen retains a non‑exclusive, royalty‑free license to manufacture, use and sell RISPERDAL CONSTA.The Company exclusively manufactures RISPERDAL CONSTA for commercial sale. Under its manufacturing and supply agreement with Janssen, theCompany records manufacturing revenues when product fully manufactured and approved for shipment by both Janssen and the Company. Revenue is based on apercentage of Janssen’s net unit sales price for RISPERDAL CONSTA for the applicable calendar year. This percentage is determined based on Janssen’s unitdemand for such calendar year and varies based on the volume of units shipped, with a minimum manufacturing fee of 7.5%. Either party may terminate themanufacturing and supply agreement upon a material breach by the other party, which is not resolved within 60 days after receipt of a written notice specifying thematerial breach or upon written notice in the event of the other party’s insolvency or bankruptcy. Janssen may terminate the agreement upon six months’ writtennotice to the Company. In the event that Janssen terminates the manufacturing and supply agreement without terminating the license agreements, the royalty ratepayable to the Company on Janssen’s net sales of RISPERDAL CONSTA would increase from 2.5% to 5.0%.BiogenUnder a license and collaboration agreement with Biogen, which the Company entered into in November 2017 and amended in October 2018, January 2019and October 2019, the Company granted Biogen a worldwide, exclusive, sublicensable license to develop, manufacture and commercialize VUMERITY and otherproducts covered by patents licensed to Biogen under the agreement.Under this license and collaboration agreement, the Company received an upfront cash payment of $28.0 million in November 2017, and milestonepayments of $50.0 million, $150.0 million and $5.0 million in June 2018, November 2019 and December 2019, respectively, upon the achievement of certaindevelopmental milestones, including FDA approval of the NDA for VUMERITY in October 2019, and amendment of the license and collaboration agreement inOctober 2019. The Company is also eligible to receive additional payments upon achievement of milestones with respect to the first two products, other thanVUMERITY, covered by patents licensed to Biogen under the license and collaboration agreement.F-34 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)In addition, the Company receives a 15% royalty on worldwide net sales of VUMERITY, subject to, under certain circumstances, minimum annualpayments for the first five years following FDA approval of VUMERITY. The Company is also entitled to receive royalties on net sales of products other thanVUMERITY covered by patents licensed to Biogen under the license and collaboration agreement, at tiered royalty rates calculated as percentages of net salesranging from high-single digits to sub-teen double digits. All royalties are payable on a product-by-product and country-by-country basis until the later of (i) thelast-to-expire patent right covering the applicable product in the applicable country and (ii) a specified period of time from the first commercial sale of theapplicable product in the applicable country. Royalties for all products and the minimum annual payments for VUMERITY are subject to customary reductions, asset forth in the license and collaboration agreement.Except in limited circumstances, we were responsible for the development of VUMERITY until it was approved by the FDA. Following FDA approval ofVUMERITY in October 2019 and except for the manufacturing responsibilities discussed below, Biogen is now responsible for all development andcommercialization activities for VUMERITY and all other products covered by patents licensed to Biogen.Under the license and collaboration agreement, Biogen appointed the Company as the toll manufacturer of clinical and commercial supplies ofVUMERITY, subject to Biogen’s right to manufacture or have manufactured commercial supplies as a back-up manufacturer and subject to good faith agreementby the parties on the terms of such manufacturing arrangements. In October 2019, the Company entered into a commercial supply agreement with Biogen for thecommercial supply of VUMERITY, an amendment to such commercial supply agreement and an amendment to the November 2017 license and collaborationagreement with Biogen. Under these agreements, Biogen has an option to assume responsibility, subject to a transition period, for the manufacture (itself orthrough a designee) of clinical supplies of VUMERITY and up to 100% of commercial supplies of VUMERITY in exchange for an increase in the royalty rate tobe paid by Biogen to the Company on net sales of product that is manufactured by Biogen or its designee.If VUMERITY discontinuations due to gastrointestinal adverse events in VUMERITY’s long-term safety clinical trial exceed a certain pre-definedthreshold, then “GI Inferiority” shall be deemed to exist, and (i) Biogen shall have the right to recapture from the Company its $50.0 million option paymentthrough certain temporary reductions in royalty rates, and (ii) the minimum annual payments Biogen owes to the Company shall terminate.Unless earlier terminated, the license and collaboration agreement will remain in effect until the expiry of all royalty obligations. Biogen has the right toterminate the license and collaboration agreement at will, on a product-by-product basis or in its entirety upon 180 days’ prior notice to the Company. Either partyhas the right to terminate the license and collaboration agreement following any governmental prohibition of the transactions effected by the agreement, or inconnection with an insolvency event involving the other party. Upon termination of the license and collaboration agreement by either party, then, at the Company’srequest, the VUMERITY program will revert to the Company.AcordaUnder an amended and restated license agreement, the Company granted Acorda an exclusive worldwide license to use and sell and, solely in accordancewith its supply agreement, to make or have made AMPYRA/FAMPYRA. The Company receives certain commercial and development milestone payments,license revenues and a royalty of approximately 10% based on net selling price of AMPYRA and FAMPYRA by Acorda and its sub‑licensee, Biogen, respectively.This royalty payment may be reduced in any country based on lack of patent coverage, competing products achieving certain minimum sales thresholds andwhether Alkermes manufactures the product.In June 2009, the Company entered into an amendment of the amended and restated license agreement and the supply agreement with Acorda and, pursuantto such amendment, consented to the sublicense by Acorda to Biogen of Acorda’s rights to use and sell FAMPYRA in certain territories outside of the U.S. (to theextent that such rights were to be sublicensed to Biogen pursuant to its separate collaboration and license agreement with Acorda). Under this amendment, theCompany agreed to modify certain terms and conditions of the amended and restated license agreement and the supply agreement with Acorda to reflect thesublicense by Acorda to Biogen.Acorda has the right to terminate the amended and restated license agreement upon 90 days’ written notice. The Company has the right to terminate theamended and restated license agreement for countries in which Acorda fails to launch a product within a specified time after obtaining the necessary regulatoryapproval or fails to file regulatory approvals within a commercially reasonable time after completion of and receipt of positive data from all pre-clinical andclinical studies required for filing a marketing authorization application. Either party has the right to terminate the amended and restated license agreement bywritten notice following a material breach of the other party, which is not cured within a certain time period, or upon the other party’s entry intoF-35 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)bankruptcy or dissolution proceedings. If the Company terminates Acorda’s license in any country, the Company is entitled to a license from Acorda of its patentrights and know-how relating to the product as well as the related data, information and regulatory files, and to market the product in the applicable country,subject to an initial payment equal to Acorda’s cost of developing such data, information and regulatory files and to ongoing royalty payments to Acorda. Subjectto the termination of the amended and restated license agreement, licenses granted under the license agreement terminate on a country-by-country basis upon theexpiration of the last to expire of our patents or the existence of a threshold level of competition in the marketplace.Under its commercial manufacturing supply agreement with Acorda, the Company manufactures and supplies AMPYRA/FAMPYRA for Acorda (and itssub‑licensee, Biogen). Under the terms of the agreement, Acorda may obtain up to 25% of its total annual requirements of product from a second‑sourcemanufacturer. The Company receives manufacturing royalties equal to 8% of net selling price (or higher under certain circumstances) for all product manufacturedby it and a compensating payment for product manufactured and supplied by a third party. The Company may terminate the commercial manufacturing supplyagreement upon 12 months’ prior written notice to Acorda and either party may terminate the commercial manufacturing supply agreement following a materialand uncured breach of the commercial manufacturing supply agreement or amended and restated license agreement or the entry into bankruptcy or dissolutionproceedings by the other party. In addition, subject to early termination of the commercial manufacturing supply agreement noted above, the commercialmanufacturing supply agreement terminates upon the expiry or termination of the amended and restated license agreement.The Company is entitled to receive the following milestone payments under its amended and restated license agreement with Acorda for each of the thirdand fourth new indications of the product developed thereunder: •initiation of a phase 3 clinical trial: $1.0 million; •acceptance of an NDA by the FDA: $1.0 million; •approval of the NDA by the FDA: $1.5 million; and •the first commercial sale: $1.5 million.18. INCOME TAXESThe Company’s (benefit) provision for income taxes is comprised of the following: Year Ended December 31, (In thousands) 2019 2018 2017 Current income tax (benefit) provision: U.S. federal $(471) $(53) $6,964 U.S. state 354 1,774 350 Rest of world — — 123 Deferred income tax (benefit) provision: U.S. federal (1,503) 10,624 8,188 U.S. state 881 62 (933)Ireland 303 (63) (21)Total tax (benefit) provision $(436) $12,344 $14,671 The income tax benefit in 2019 and the income tax provision in 2018 and 2017 were primarily due to U.S. federal and state taxes. The favorable change inincome taxes in 2019, as compared to 2018, was primarily due the foreign derived intangible income proposed regulations issued by the U.S. Department of theTreasury and the U.S. Internal Revenue Service (“IRS”) in March 2019. The favorable change in income taxes in 2018, as compared to 2017, was due to the one-off nature of a $21.5 million tax expense in 2017 from the enactment of the Tax Cuts and Jobs Act, partially offset by increased taxes on income earned in the U.S.No provision for income tax has been provided on undistributed earnings of the Company's foreign subsidiaries because such earnings are indefinitelyreinvested in the foreign operations or may be repatriated to Ireland without incurring any tax liability. Cumulative unremitted earnings of overseas subsidiariestotaled approximately $418.1 million at December 31, 2019. In the event of a repatriation of those earnings in the form of dividends or otherwise, the Companymay be liable for income taxes, subject to adjustment, if any, for foreign tax credits and foreign withholding taxes payable to foreign tax authorities. The Companyestimates that approximately $12.9 million of income taxes would be payable on the repatriation of the unremitted earnings to Ireland.F-36 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The distribution of the Company’s loss before the (benefit) provision for income taxes by geographical area consisted of the following: Year Ended December 31, (In thousands) 2019 2018 2017 Ireland $(141,869) $(180,195) $(172,363)U.S. (55,102) 53,287 2,414 Rest of world (85) (59) 26,675 Loss before (benefit) provision for income taxes $(197,056) $(126,967) $(143,274) The components of the Company’s net deferred tax assets (liabilities) were as follows: December 31, December 31, (In thousands) 2019 2018 Deferred tax assets: NOL carryforwards $227,872 $198,633 Tax credits 57,385 52,395 Share-based compensation 45,214 44,873 Accrued expenses and reserves 20,337 15,892 Other 8,756 8,669 Less: valuation allowance (242,059) (219,093)Total deferred tax assets 117,505 101,369 Deferred tax liabilities: Intangible assets — — Property, plant and equipment (19,926) (14,533)Other (1,590) (1,274)Total deferred tax liabilities (21,516) (15,807)Net deferred tax assets $95,989 $85,562 In February 2016 the FASB issued Topic 842, Leases, which includes the requirement for lessees to record a right-of-use asset and lease liability forvirtually all leases. In addition, lessees are required to record deferred taxes resulting from any book versus tax basis differences upon the adoption of the standard.On January 1, 2019, the Company adopted this standard and recorded a cumulative-effect adjustment of $4.3 million to deferred tax asset in respect of the accruedlease liability and a $4.3 million deferred tax liability in respect of the right to use asset. There was no net impact to the income statement or to equity as a resultof the adoption.The activity in the valuation allowance associated with deferred taxes consisted of the following: (In thousands) Balance atBeginning ofPeriod Additions (1) Balance atEnd of Period Deferred tax asset valuation allowance for the year ended December 31, 2017 $(141,859) $(30,938) $(172,797)Deferred tax asset valuation allowance for the year ended December 31, 2018 $(172,797) $(46,296) $(219,093)Deferred tax asset valuation allowance for the year ended December 31, 2019 $(219,093) $(22,966) $(242,059) (1)The additions in each of the periods presented relate primarily to Irish NOLs. Additionally, in 2019 the Company’s valuation allowance was increased by$3.0 million as a result of the attributes acquired as part of the acquisition of Rodin.At December 31, 2019, the Company maintained a valuation allowance of $17.3 million against certain U.S. state deferred tax assets and $224.8 millionagainst certain Irish deferred tax assets as the Company has determined that it is more-likely-than-not that these net deferred tax assets will not be realized. If theCompany demonstrates consistent profitability in the future, the evaluation of the recoverability of these deferred tax assets could change and the remainingvaluation allowances could be released in part or in whole. If the Company incurs losses in the U.S. in the future, or experiences significant excess tax benefitsarising from the future exercise of stock options and/or the vesting of RSUs, the evaluation of the recoverability of the U.S. deferred tax assets could change and avaluation allowance against the U.S. deferred tax assets may be required in part or in whole.As of December 31, 2019, the Company had $1.5 billion of Irish NOL carryforwards, $49.5 million of U.S. federal NOL carryforwards, $44.5 million ofstate NOL carryforwards, $49.6 million of federal R&D credits and $18.0 million of state tax credits which will either expire on various dates through 2039 or canbe carried forward indefinitely. These loss and credit carryforwards are available to reduce certain future Irish and foreign taxable income and tax. These loss andcredit carryforwards are subject to reviewF-37 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)and possible adjustment by the appropriate taxing authorities. These loss and credit carryforwards, which may be utilized in a future period, may be subject tolimitations based upon changes in the ownership of the Company's ordinary shares.As a result of the acquisition of Rodin, the Company acquired $51.4 million of U.S. federal NOL carryforwards, $43.3 million of state NOL carryforwards,$0.8 million of U.S. federal R&D credit carryforwards and $0.4 million of state R&D credit carryforwards. These attributes are subject to multiple limitationsbased upon prior changes in the ownership of the ordinary shares of Rodin.A reconciliation of the Company’s statutory tax rate to its effective tax rate is as follows: Year Ended December 31, (In thousands, except percentage amounts) 2019 2018 2017 Statutory tax rate 12.5 % 12.5 % 12.5 % Income tax provision at statutory rate $(24,632) $(15,871) $(17,909) Change in valuation allowance 19,882 28,371 26,771 In-process R&D(1) 10,824 — — Share-based compensation 6,287 1,163 (1,205) Foreign rate differential(2) 5,390 5,405 (682) U.S. state income taxes, net of U.S. federal benefit 1,051 1,732 (558) Foreign derived intangible income (3,450) — — Intercompany amounts(3) (1,125) (751) (5,041) R&D credit (8,846) (7,698) (9,326) Federal tax law change(4) (8,111) — 21,453 Irish rate differential(5) (146) (2,350) (2,675) Impairment on equity method investment — — 1,662 Other permanent items(6) 2,440 2,343 2,181 Income tax (benefit) provision $(436) $12,344 $14,671 Effective tax rate 0.2 % (9.7)% (10.2)% (1)Represents the tax effect of the research and development expense recorded on the acquisition of Rodin.(2)Represents income or losses of non-Irish subsidiaries, including U.S. subsidiaries, subject to tax at a rate other than the Irish statutory rate.(3)Intercompany amounts include cross-territory eliminations, the pre-tax effect of which has been eliminated in arriving at the Company's consolidated lossbefore taxes.(4)During the year ended December 31, 2019, federal tax law change represents federal income tax benefit related to the foreign derived intangible incomedeductions for 2018 following the publications by the IRS and the Department of Treasury of proposed regulations in March 2019. During the year endedDecember 31, 2017, federal tax law change resulted in a $21.5 million deferred tax expense related to the reduction in the U.S. federal tax rate from 35% to21%.(5)Represents income or losses of Irish companies subject to tax at a rate other than the Irish statutory rate.(6)Other permanent items include, but are not limited to, non-deductible meals and entertainment expenses, non-deductible lobbying expenses, the impact ofthe tax treatment of the FDA branded prescription drug fee and non-deductible compensation of senior officers of the Company.A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Unrecognized (In thousands) Tax Benefits Balance, December 31, 2016 $4,688 Reductions based on tax positions related to prior periods (47)Additions based on tax positions related to the current period 877 Balance, December 31, 2017 $5,518 Additions based on tax positions related to prior periods 4 Additions based on tax positions related to the current period 559 Balance, December 31, 2018 $6,081 Additions based on tax positions related to prior periods 38 Additions based on tax positions related to the current period 738 Balance, December 31, 2019 $6,857 F-38 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The unrecognized tax benefits at December 31, 2019, if recognized, would affect the Company's effective tax rate. The Company does not anticipate thatthe amount of existing unrecognized tax benefits will significantly increase or decrease within the next 12 months. The Company has elected to include interest andpenalties related to uncertain tax positions as a component of its provision for taxes. For the years ended December 31, 2019, 2018 and 2017, the Company'saccrued interest and penalties related to uncertain tax positions were not material.The Company’s major taxing jurisdictions include Ireland and the U.S. (federal and state). These jurisdictions have varying statutes of limitations. In theU.S., the 2016 through 2019 fiscal years remain subject to examination by the respective tax authorities. In Ireland, the years 2015 to 2019 remain subject toexamination by the Irish tax authorities. Additionally, because of the Company’s Irish and U.S. loss carryforwards and credit carryforwards, certain tax returnsfrom fiscal years 1999 onward may also be examined. These years generally remain open for three to four years after the loss carryforwards and creditcarryforwards have been utilized.The years ended December 31, 2018 and 2017 for Alkermes U.S. Holdings, Inc. are currently under examination by the State of California. The yearsended December 31, 2015 and 2014 for Alkermes U.S. Holdings, Inc. are currently under examination by the State of Illinois. There are no uncertain tax positionsor adjustments associated with the audits at this time.19. COMMITMENTS AND CONTINGENT LIABILITIESLitigationFrom time to time, the Company may be subject to legal proceedings and claims in the ordinary course of business. On a quarterly basis, the Companyreviews the status of each significant matter and assesses its potential financial exposure. If the potential loss from any claim, asserted or unasserted, or legalproceeding is considered probable and the amount can be reasonably estimated, the Company would accrue a liability for the estimated loss. Because ofuncertainties related to claims and litigation, accruals are based on the Company’s best estimates based on available information. On a periodic basis, as additionalinformation becomes available, or based on specific events such as the outcome of litigation or settlement of claims, the Company may reassess the potentialliability related to these matters and may revise these estimates, which could result in material adverse adjustments to the Company’s operating results. AtDecember 31, 2019, there were no potential material losses from claims, asserted or unasserted, or legal proceedings that the Company determined were probableof occurring.INVEGA SUSTENNA ANDA LitigationIn January 2018 and in August 2019, Janssen Pharmaceuticals NV and Janssen Pharmaceuticals, Inc. initiated patent infringement lawsuits in the UnitedStates District Court for the District of New Jersey against Teva entities (Teva Pharmaceuticals USA, Inc.(“Teva”) and Teva Pharmaceuticals Industries, Ltd.(“Teva PI”)) and Mylan entities (Mylan Laboratories Limited (“Mylan Labs”), Mylan Pharmaceuticals Inc. (“Mylan”), and Mylan Institutional LLC), respectively,following filings by each of Teva and Mylan Labs of an abbreviated new drug application (“ANDA”) seeking approval to market a generic version of INVEGASUSTENNA before the expiration of U.S. Patent No. 9,439,906. Requested judicial remedies in each of the lawsuits included recovery of litigation costs andinjunctive relief. The Company is not a party to either of these proceedings.For information about risks relating to the INVEGA SUSTENNA Paragraph IV litigation, see “Item 1A—Risk Factors” in this Annual Report andspecifically the section entitled “—We or our licensees may face claims against intellectual property rights covering our products and competition from genericdrug manufacturers.”F-39 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)AMPYRA ANDA LitigationEleven separate Paragraph IV Certification Notices had been received by the Company and/or its partner Acorda from: Accord Healthcare, Inc. (“Accord”);Actavis Laboratories FL, Inc. (“Actavis”); Alkem Laboratories Ltd. (“Alkem”); Apotex Corporation and Apotex, Inc. (collectively, “Apotex”); Aurobindo PharmaLtd. (“Aurobindo”); MicroLabs Limited (“MicroLabs”); Mylan; Par Pharmaceutical, Inc. (“Par”); Roxane Laboratories, Inc. (“Roxane”); Sun PharmaceuticalIndustries Limited and Sun Pharmaceuticals Industries Inc. (collectively, “Sun”); and Teva (collectively with Accord, Actavis, Alkem, Apotex, Aurobindo,MicroLabs, Mylan, Par, Roxane and Sun, the “ANDA Filers”) advising that each of the ANDA Filers had submitted an ANDA to the FDA seeking marketingapproval for generic versions of AMPYRA (dalfampridine) Extended-Release Tablets, 10 mg. The ANDA Filers challenged the validity of one or more of theOrange Book-listed patents for AMPYRA, and they also asserted that their generic versions do not infringe certain claims of these patents. In response, theCompany and/or Acorda filed lawsuits against the ANDA Filers asserting infringement of one or more of the Orange Book-listed patents for AMPYRA. Requestedjudicial remedies included recovery of litigation costs and injunctive relief. All lawsuits were filed within 45 days from the date of receipt of each of the Paragraph IV Certification Notices from the ANDA Filers. As a result, a 30-month statutory stay of approval period applied to each of the ANDA Filers’ ANDAs under the U.S. Drug Price Competition and Patent Term Restoration Act of1984 (the “Hatch-Waxman Act”). The first 30-month stay restricted the FDA from approving the ANDA Filers’ ANDAs until July 2017 at the earliest, unless aFederal district court issued a decision adverse to all of the asserted Orange Book-listed patents prior to that date. Lawsuits with eight of the ANDA Filers wereconsolidated into a single case.The Company and/or Acorda entered into a settlement agreement with each of Accord, Actavis, Alkem, Apotex, Aurobindo, MicroLabs, Par and Sun toresolve the patent litigation that the Company and/or Acorda brought against these settling ANDA Filers. The settlements with these settling ANDA Filers did notimpact the patent litigation that the Company and Acorda brought against the remaining ANDA Filers, including as described below.In March 2017, after a bench trial, the U.S. District Court for the District of Delaware (the “Delaware Court”) issued an opinion (the “Delaware CourtDecision”), which, among other things, invalidated U.S. Patent Nos. 8,007,826; 8,354,437; 8,440,703; and 8,663,685. The Delaware Court also upheld the validityof the U.S. Patent No. 5,540,938, which pertained to the formulation of AMPYRA, but that patent expired on July 30, 2018. In May 2017, Acorda filed an appealwith the Federal Circuit of the Delaware Court Decision with respect to the findings on U.S. Patent Nos. 8,007,826; 8,354,437; 8,440,703; and 8,663,685. OnSeptember 10, 2018, the Federal Circuit affirmed the Delaware Court Decision, which invalidated U.S. Patent Nos. 8,007,826; 8,354,437; 8,440,703; and8,663,685. In October 2018, Acorda filed a petition for rehearing and rehearing en banc of the Federal Circuit’s decision. In January 2019, the Federal Circuitdenied Acorda’s petition. In April 2019, Acorda filed a petition for writ of certiorari to the Supreme Court of the United States (the “Supreme Court”). On October7, 2019, the Supreme Court denied Acorda’s petition requesting review of the case, rendering the Federal Circuit decision as final.For information about risks relating to the AMPYRA Paragraph IV litigations and other proceedings see “Item 1A—Risk Factors” of this Annual Reportand specifically the section entitled “—We or our licensees may face claims against intellectual property rights covering our products and competition fromgeneric drug manufacturers.”RISPERDAL CONSTA European Opposition ProceedingsIn December 2016, Nanjing Luye Pharmaceutical Co., Ltd., Pharmathen SA, Teva PI and Dehns Ltd (a law firm representing an unidentified opponent)filed notices of opposition with the European Patent Office (the “EPO”) in respect of EP 2 269 577 B (the “EP ’577” Patent), which is a patent directed to certainrisperidone microsphere compositions, including RISPERDAL CONSTA. Following a hearing on the matter in January 2019, the EPO issued a written decisionrevoking the EP’577 Patent in April 2019. The Company filed a notice of appeal of the decision to the EPO’s Technical Boards of Appeal in June 2019.Pharmathen SA submitted a reply on November 5, 2019. The Company will continue to vigorously defend the EP ’577 Patent. For information about risks relatingto the EP ’577 Patent opposition proceedings see “Item 1A—Risk Factors” in this Annual Report, including the sections entitled “—Patent protection for ourproducts is important and uncertain” and “—Uncertainty over intellectual property in the biopharmaceutical industry has been the source of litigation, which isinherently costly and unpredictable, could significantly delay or prevent approval or commercialization of our products, and could adversely affect our business.”F-40 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)RISPERDAL CONSTA ANDA LitigationOn July 17, 2019, the Company, together with Janssen Pharmaceuticals, Inc., initiated a patent infringement lawsuit in the United States District Court forthe District of Delaware (the “Delaware District Court”) against Luye Pharma Group Ltd., Luye Pharma (USA) Ltd., Nanjing Luye Pharmaceutical Co., Ltd. andShandong Luye Pharmaceutical Co., Ltd. (collectively, “Luye”). Luye filed a 505(b)(2) NDA seeking approval to market a competing product to RISPERDALCONSTA before the expiration of U.S. Patent No. 6,667,061. Requested judicial remedies included, among other things, recovery of litigation costs and injunctiverelief. On July 23, 2019, Luye filed its answer and affirmative defenses. On November 22, 2019, the parties submitted a stipulation and order of dismissal to theDelaware District Court stating that the parties had resolved the litigation. On December 2, 2019, the Delaware District Court signed the stipulation and order ofdismissal terminating the lawsuit.Government MattersOn June 22, 2017 and January 17, 2019, the Company received a subpoena and a civil investigative demand, respectively, each from an Office of the U.S.Attorney for documents related to VIVITROL. The Company is cooperating with the government.Securities LitigationIn December 2018 and January 2019, purported stockholders of the Company filed putative class actions against the Company and certain of its officers inthe United States District Court for the Eastern District of New York (the “EDNY District Court”) captioned Karimian v. Alkermes plc, et al., No. 1:18-cv-07410and McDermott v. Alkermes plc, et al., No. 1:19-cv-00624, respectively. In March 2019, the EDNY District Court consolidated the two cases and appointed a leadplaintiff. The plaintiff filed an amended complaint on July 9, 2019 naming one additional officer of the Company and one former officer of the Company asdefendants. The amended complaint was filed on behalf of a putative class of purchasers of Alkermes securities during the period of July 31, 2014 throughNovember 1, 2018 and alleges violations of Sections 10(b) and 20(a) of the Exchange Act based on allegedly false or misleading statements and omissionsregarding the Company’s clinical methodologies and regulatory submission for ALKS 5461 and the FDA’s review and consideration of that submission. Thelawsuit seeks, among other things, unspecified money damages, prejudgment and postjudgment interest, reasonable attorneys’ fees, expert fees and other costs. InAugust 2019, the defendants filed a pre-motion letter (in respect of a requested motion to dismiss filing) with the EDNY District Court and plaintiff filed aresponse. On November 27, 2019, the defendants served the plaintiff with a motion to dismiss, and on December 27, 2019, the plaintiff served the defendants withits opposition to such motion. On January 17, 2020, the defendants filed the fully-briefed motion, including a reply to the plaintiff’s opposition, with the EDNYDistrict Court. For information about risks relating to this action, see “Item 1A—Risk Factors” in the Annual Report, including the section entitled “—Litigation orarbitration against Alkermes, including securities litigation, or citizen petitions filed with the FDA, may result in financial losses, harm our reputation, divertmanagement resources, negatively impact the approval of our products, or otherwise negatively impact our business.”Purchase Commitments The Company has open purchase orders for materials, supplies, services and property, plant and equipment as part of the normal course of business. AtDecember 31, 2019, the Company had open purchase orders totaling $395.3 million and $33.5 million for non-capital and capital commitments, respectively. F-41 Exhibit 4.1 DESCRIPTION OF ALKERMES PLC ORDINARY SHARES The following is a summary description of the ordinary shares of Alkermes plc. This summary does not purport to be complete and isqualified in its entirety by reference to the Irish Companies Act 2014 (the “Companies Act”) and the complete text of our memorandum andarticles of association, as they may be amended from time to time (together, the “Constitution”). A copy of the Constitution has been filedwith the Securities and Exchange Commission (the “SEC”) as exhibit 3.1 to the Annual Report on Form 10-K of which this Exhibit 4.1 is apart. You should read the Companies Act and our Constitution carefully. Use of terms such as “us,” “we,” “our,” “Alkermes” or the“Company” in this Exhibit 4.1 is meant to refer to Alkermes plc.Capital StructureAuthorized Share Capital Our authorized share capital is €40,000 and $5,000,000, which is divided into 40,000 ordinary shares with a nominal value of €1.00each, 450,000,000 ordinary shares with a nominal value of $0.01 each and 50,000,000 undesignated preferred shares with a nominal value of$0.01 each. Our ordinary shares are registered under Section 12(b) of the Securities Exchange Act of 1934, as amended. We may issue shares subject to the maximum authorized share capital contained in our Constitution. Our authorized share capital maybe increased or reduced by a resolution approved by a simple majority of the votes of the Company’s shareholders cast at a general meeting(referred to under Irish law as an “ordinary resolution”). As a matter of Irish law, the board of directors of a company may issue new ordinaryor preferred shares without shareholder approval once authorized to do so by the constitution or by an ordinary resolution adopted by theshareholders at a general meeting. The authorization may be granted for a maximum period of five years, after which it must be renewed bythe shareholders by an ordinary resolution. Our current authorization extends until May 2022. The rights and restrictions applicable to our ordinary shares are prescribed in our Constitution. Our Constitution permits the board ofdirectors of the Company (the “Board”), without shareholder approval, to determine the terms of the preferred shares issued by us. Our Boardis authorized, without obtaining any vote or consent of the holders of any class or series of shares, unless expressly provided by the terms ofthat class or series of shares, to provide from time to time for the issuance of other classes or series of preferred shares and to establish thecharacteristics of each class or series, including the number of shares, designations, relative voting rights, dividend rights, liquidation andother rights, redemption, repurchase or exchange rights and any other preferences and relative, participating, optional or other rights andlimitations not inconsistent with applicable law. Irish law does not recognize fractional shares held of record. Accordingly, our Constitution does not provide for the issuance offractional shares, and our official Irish register of members will not reflect any fractional shares.Preemption Rights, Share Warrants and Share Options Under Irish law, certain statutory preemption rights apply automatically in favor of shareholders where shares are to be issued for cash.We have opted out of these preemption rights in our Constitution as permitted under Irish law. However, Irish law requires this opt-out to berenewed at least every five years by a resolution approved by not less than 75% of the votes of our shareholders cast at a general meeting(referred to under Irish law as a “special resolution”). If the opt-out is not renewed, shares issued for cash must be offered to our existing shareholders on a pro rata basis to their existing shareholding before the shares can be issued to anynew shareholders. Our current authorization extends until May 2022. The statutory preemption rights do not apply where shares are issuedfor non-cash consideration (such as in a stock-for-stock acquisition) and do not apply to the issue of non-equity shares (that is, shares thathave the right to participate only up to a specified amount in any income or capital distribution) or where shares are issued pursuant to anemployee stock option or similar equity plan. Our Constitution provides that, subject to any shareholder approval requirement under any laws, regulations or the rules of any stockexchange to which we are subject, the Board is authorized, from time to time, in its discretion, to grant such persons, for such periods andupon such terms as the Board deems advisable, options to purchase such number of shares of any class or classes or of any series of any classas the Board may deem advisable, and to cause warrants or other appropriate instruments evidencing such options to be issued. TheCompanies Act provides that a board of directors may issue share warrants or options without shareholder approval once authorized to do soby its constitution or an ordinary resolution of shareholders. We are subject to the applicable rules and regulations of The Nasdaq StockMarket (“Nasdaq”) and the Internal Revenue Code of 1986, as amended, that require shareholder approval of certain equity plan and shareissuances. Our Board may issue shares upon exercise of warrants or options without shareholder approval or authorization (up to the relevantauthorized share capital limit).Dividends Under Irish law, dividends and distributions may only be made from distributable reserves. Distributable reserves generally meansaccumulated realized profits less accumulated realized losses and includes reserves created by way of capital reduction. In addition, nodistribution or dividend may be made unless our net assets are equal to, or in excess of, the aggregate of our called-up share capital plusundistributable reserves and the distribution does not reduce our net assets below such aggregate. Undistributable reserves include the sharepremium account, the capital redemption reserve fund and the amount by which our accumulated unrealized profits, so far as not previouslyutilized by any capitalization, exceed our accumulated unrealized losses, so far as not previously written off in a reduction or reorganizationof capital. The determination as to whether or not we have sufficient distributable reserves to fund a dividend must be made by reference to our“relevant accounts.” The “relevant accounts” will be either the last set of unconsolidated annual audited financial statements or otherfinancial statements properly prepared in accordance with the Companies Act, which give a “true and fair view” of our unconsolidatedfinancial position and accord with accepted accounting practice. The relevant accounts must be filed in the Companies Registration Office(the official public registry for companies in Ireland). Our Constitution authorizes the Board to declare dividends, out of funds lawfully available for distribution, without shareholderapproval to the extent they appear justified by the profits of the Company. The Board may also recommend a dividend to be approved anddeclared by the shareholders at a general meeting. The Board may direct that the payment be made by distribution of assets, shares or cashand no dividend issued may exceed the amount recommended by the Board. Dividends may be declared and paid in the form of cash or non-cash assets and may be paid in United States Dollars or any other currency. Our Board may deduct from any dividend payable to any shareholder any amounts payable by such shareholder to us in relation to ourshares. The Board may also authorize us to issue shares with preferred rights to participate in dividends we declare. The holders of preferredshares may, depending on their terms, rank senior to our ordinary shares in terms of dividend rights and/or be entitled to claim arrears of a declared dividend out of subsequently declared dividends in priority toordinary shareholders.Share Repurchases, Redemptions and ConversionsOverview Our Constitution provides that any ordinary share that Alkermes has agreed to acquire shall be deemed to be a redeemable share, unlessthe Board elects to treat such share acquisition otherwise. Accordingly, for Irish law purposes, a repurchase of ordinary shares by us wouldtechnically be effected as a redemption of those shares as described below under “—Our Repurchases and Redemptions.” If our Constitutiondid not contain such provision, our repurchases would be subject to many of the same rules that apply to purchases of our ordinary shares bysubsidiaries described below under “—Purchases by Our Subsidiaries” including the shareholder approval requirements described below andthe requirement that any open-market purchases be effected on a “recognized stock exchange.” Except where otherwise noted, referenceselsewhere in this prospectus to repurchasing or buying back our ordinary shares refer to our or one of our subsidiaries’ redemption ofordinary shares, in each case in accordance with our Constitution and Irish law as described below.Our Repurchases and Redemptions Under Irish law, a company may issue redeemable shares and redeem them out of distributable reserves or the proceeds of a new issueof shares for that purpose. Please see also the “—Dividends” section above. We may only issue redeemable shares if the nominal value of theissued share capital that is not redeemable is not less than 10% of the nominal value of our total issued share capital. All redeemable sharesmust also be fully-paid. Redeemable shares may, upon redemption, be canceled or held in treasury. Based on the provision of ourConstitution described above, shareholder approval will not be required to redeem our shares. We may also be given an additional general authority to purchase our own shares on the open-market which would take effect on thesame terms and be subject to the same conditions as applicable to purchases by our subsidiaries as described below. Our Board may also issue preferred shares that may be redeemed at our option or the option of the preferred shareholder, depending onthe terms of such preferred shares. Please see “—Authorized Share Capital” above for additional information on preferred shares. Under Irish law, repurchased and redeemed shares may be canceled or held as treasury shares. The nominal value of treasury shares heldby us at any time must not exceed 10% of the nominal value of our issued share capital. We may not exercise any voting rights in respect ofany shares held as treasury shares. Treasury shares may be canceled by us or re-issued subject to certain conditions.Purchases by Our Subsidiaries Under Irish law, an Irish or non-Irish subsidiary may purchase our shares either on-market or off-market. For one of our subsidiaries tomake on-market purchases of our ordinary shares, our shareholders must provide general authorization for such purchase by way of ordinaryresolution. However, as long as this general authority has been granted, no specific shareholder authority for a particular on-market purchaseby a subsidiary of our ordinary shares is required. For an off-market purchase by one of our subsidiaries, the proposed purchase contract mustbe authorized by special resolution of the shareholders before the contract is entered into. The person whose shares are to be bought backcannot vote in favor of the special resolution and, for at least 21 days prior to the special resolution being passed, the purchase contract mustbe on display or must be available for inspection by shareholders at our registered office. In order for one of our subsidiaries to make an on-market purchase of our shares, such shares must be purchased on a “recognized stockexchange.” The Nasdaq Global Select Market, on which our shares are listed, is specified as a recognized stock exchange for this purpose byIrish law. The number of shares held by our subsidiaries at any time will be included in any calculation of the permitted treasury share threshold of10% of the nominal value of our issued share capital. While a subsidiary holds our shares, it cannot exercise any voting rights in respect ofthose shares. The acquisition of our shares by a subsidiary must be funded out of distributable reserves of the subsidiary.Share Repurchase Program Our share repurchase program authorizes us to repurchase up to $215 million of our ordinary shares at the discretion of managementfrom time to time in the open market or through privately negotiated transactions. The repurchase program has no set expiration date and maybe suspended or discontinued at any time. As of December 31, 2019, we had purchased a total of 8,866,342 ordinary shares under thisprogram at a cost of $114,029,664. As noted above, shareholder approval for such repurchases will not be required because a repurchase of our shares will be effected as aredemption pursuant to our Constitution.Bonus Shares Under our Constitution, the Board may resolve to capitalize any amount standing to the credit of the reserves of the Company(including, but not limited to, the share premium account, capital redemption reserve, capital conversion reserve and profit and loss account),whether or not available for distribution, for any purpose, including, but not limited to, for the purposes of effecting any exchange of anyrights and applying any such sum arising from such capitalization to pay up any shares of the Company and allot them, credited as fully paid,to any holders of such rights.Lien on Shares, Calls on Shares and Forfeiture of Shares Our Constitution provides that we will have a first and paramount lien on every share that is not a fully paid up share for all amountspayable at a fixed time or called in respect of that share. Subject to the terms of their allotment, our Board may call for any unpaid amounts inrespect of any shares to be paid, and if payment is not made, the shares may be forfeited. These provisions are standard inclusions in theconstitution of an Irish company limited by shares such as ours and will only be applicable to our shares that have not been fully paid up.Consolidation and Division; Subdivision Under our Constitution, we may, by ordinary resolution, consolidate and divide all or any of our share capital into shares of largernominal value than our existing shares or subdivide our shares into smaller amounts than is fixed by our Constitution.Reduction of Share Capital We may, by ordinary resolution, reduce our authorized share capital in any way provided that such resolution does not reduce theauthorized share capital to an amount less than the issued share capital at such time. We also may, by special resolution and subject toconfirmation by the Irish High Court, reduce or cancel our issued share capital in any way we think expedient. Annual Meetings of Shareholders We are required to hold annual general meetings at intervals of no more than 15 months, provided that an annual general meeting isheld in each calendar year and no more than nine months after our fiscal year-end. Any annual general meeting may be held outside Ireland,provided that the Company makes all necessary arrangements to ensure that shareholders can participate in such meeting by technologicalmeans without leaving Ireland. Notice of each annual general meeting must be given to all our shareholders and to our auditors. Our Constitution provides for aminimum notice period of 21 days, which is the minimum permitted under Irish law. The only matters which must, as a matter of Irish law, be transacted at an annual general meeting are: (i) the consideration of theCompany’s statutory financial statements and the report of the Board and the report of the statutory auditors on those statements and thatreport; (ii) the review by the members of the Company’s affairs; (iii) the declaration of a dividend (if any) of an amount not exceeding theamount recommended by the Board; (iv) the authorization of the Board to approve the remuneration of the statutory auditors; and (v) theelection and/or re-election of members of the Board. If no resolution is made in respect of the reappointment of an existing auditor at anannual general meeting, the existing auditor will be deemed to have continued in office.Extraordinary General Meetings of Shareholders Extraordinary general meetings of our shareholders may be convened by: (i) the Board; (ii) at the request of shareholders holding notless than 10% of our paid-up share capital carrying voting rights; or (iii) at the request of our auditors in certain circumstances in accordancewith the Companies Act. Extraordinary general meetings are generally held for the purposes of approving shareholder resolutions as may berequired from time to time. At any extraordinary general meeting only such business shall be conducted as is set forth in the notice thereof. Notice of an extraordinary general meeting must be given to our shareholders and to our auditors. Under Irish law and our Constitution,the minimum notice periods are 21 days’ notice in writing for an extraordinary general meeting to approve a special resolution and 14 days’notice in writing for any other extraordinary general meeting. In the case of an extraordinary general meeting convened by our shareholders, the proposed purpose of the meeting must be set out inthe requisition notice. Upon receipt of this required notice, the Board has 21 days to convene a meeting of our shareholders to vote on thematters set out in the required notice. This meeting must be held within two months of the receipt of the requisition notice. If the Board doesnot convene the meeting within such 21-day period, the requisitioning shareholders, or any of them representing more than one half of thetotal voting rights of all of them, may themselves convene a meeting, which meeting must be held within three months of our receipt of therequisition notice. If the Board becomes aware that our net assets are not greater than half of the amount of our called-up share capital, our Board mustconvene an extraordinary general meeting of our shareholders not later than 28 days from the date that they learn of this fact to consider howto address the situation.Quorum for General Meetings Our Constitution provides that no business shall be transacted at any general meeting unless a quorum is present. One or moreshareholders present in person or by proxy holding not less than a majority of our issued and outstanding shares entitled to vote at themeeting in question constitute a quorum for such meeting. Voting Our Constitution provides that the Board or the chairman of the Board may determine the manner in which the poll is to be taken at eachmeeting and the manner in which the votes are to be counted. Every shareholder is entitled to one vote for each ordinary share that he or she holds as of the record date for the meeting. Voting rightsmay be exercised by shareholders registered in our share register as of the record date for the meeting or by a duly appointed proxy, whichproxy need not be a shareholder. Where interests in shares are held by a nominee trust company, this company may exercise the rights of thebeneficial holders on their behalf as their proxy. All proxies must be appointed in the manner prescribed by our Constitution, which permitshareholders to notify us of their proxy appointments electronically in such manner as may be approved by the Board. In accordance with our Constitution, our Board may from time to time authorize us to issue preferred shares. These preferred sharesmay have such voting rights as may be specified in the terms of such preferred shares (e.g., they may carry more votes per share thanordinary shares or may entitle their holders to a class vote on such matters as may be specified in the terms of the preferred shares). Treasuryshares or shares of the Company that are held by our subsidiaries will not be entitled to be voted at general meetings of shareholders. Irish law requires special resolutions of the shareholders at a general meeting to approve certain matters. Examples of matters requiringspecial resolutions include: a)amending our objects or memorandum of association; b)amending our articles of association; c)approving a change of our name; d)authorizing the entering into of a guarantee or provision of security in connection with a loan, quasi-loan or credit transaction to adirector or connected person; e)opting out of preemption rights on the issuance of new shares; f)authorizing the issuance of new shares; g)our re-registration from a public limited company to a private company; h)variation of class rights attaching to classes of shares (where the Constitution do not provide otherwise); i)purchase of our own shares off-market; j)reduction of issued share capital; k)sanctioning a compromise/scheme of arrangement; l)resolving that we be wound up by the Irish courts; m)resolving in favor of a shareholders’ voluntary winding-up; n)re-designation of shares into different share classes; and o)setting the re-issue price of treasury shares.Variation of Rights Attaching to a Class or Series of Shares Under our Constitution and the Companies Act, any variation of class rights attaching to our issued shares must be approved by a specialresolution of the shareholders of the affected class or with the consent in writing of the holders of three-quarters of all the votes of that classof shares. The provisions of our Constitution relating to general meetings apply to general meetings of the holders of any class of shares exceptthat the necessary quorum is determined by reference to the shares of the holders of the class. Accordingly, for general meetings of holders ofa particular class of shares, a quorum consists of the holders present in person or by proxy representing not less than a majority of the issuedshares of that class entitled to vote at the meeting.Acquisitions An Irish public limited company may be acquired in a number of ways, including: a)a court-approved scheme of arrangement under the Companies Act. A scheme of arrangement with shareholders requires a courtorder from the Irish High Court and the approval of a majority in number representing 75% in value of the shareholders presentand voting in person or by proxy at a meeting called to approve the scheme; b)through a tender or takeover offer by a third party for all of our shares. Where the holders of 80% or more of our shares haveaccepted an offer for such shares, the remaining shareholders may also be statutorily required to transfer their shares. If the bidderdoes not exercise its “squeeze out” right, then the non-accepting shareholders also have a statutory right to require the bidder toacquire their shares on the same terms. If our shares were to be listed on the Irish Stock Exchange or another regulated stockexchange in the EU, this threshold would be increased to 90%; and c)by way of a merger with a company incorporated in the European Economic Area (“EEA”) under the EU Cross-Border MergersDirective (EU) 2017/1132 or with another Irish company under the Companies Act. Such a merger must be approved by a specialresolution of the shareholders. Under certain circumstances, shareholders also may be entitled to have their shares acquired forcash. Irish law does not generally require shareholder approval for a sale, lease or exchange of all or substantially all of a company’s propertyand assets.Appraisal Rights Generally, under Irish law, shareholders of an Irish company do not have dissenters’ or appraisal rights. Under the EuropeanCommunities (Cross-Border Mergers) Regulations 2008 governing the merger of an Irish company limited by shares such as we are and acompany incorporated in the EEA, a shareholder: (i) who voted against the special resolution approving the merger; or (ii) of a company inwhich 90% of the shares are held by the other party to the merger, has the right to request that the company acquire its shares for cash at aprice determined in accordance with the share exchange ratio set out in the merger agreement.Disclosure of Interests in Shares Under the Companies Act, shareholders must notify us if, as a result of a transaction, the shareholder will become interested in 3% ormore of our shares; or if as a result of a transaction a shareholder who was interested in more than 3% of our shares ceases to be so interested.Where a shareholder is interested in more than 3% of our shares, the shareholder must notify us of any alteration of his or her interest thatbrings his or her total holding through the nearest whole percentage number, whether an increase or a reduction. The relevant percentagefigure is calculated by reference to the aggregate nominal value of the shares in which the shareholder is interested as a proportion of theentire nominal value of our issued share capital of (or any such class of share capital in issue). Where the percentage level of theshareholder’s interest does not amount to a whole percentage this figure may be rounded down to the next whole number. We must benotified within five business days of the transaction or alteration of the shareholder’s interests that gave rise to the notification requirement. Ifa shareholder fails to comply with these notification requirements, the shareholder’s rights in respect of any shares it holds will not beenforceable, either directly or indirectly. However, such person may apply to the court to have the rights attaching to such shares reinstated. In addition to these disclosure requirements, we may, under the Companies Act, by notice in writing, require a person whom we know orhave reasonable cause to believe to be, or at any time during the three years immediately preceding the date on which such notice is issued tohave been, interested in shares comprised in our relevant share capital to: (i) indicate whether or not it is the case; and (ii) where such personholds or has during that time held an interest in our shares, to provide additional information, including the person’s own past or presentinterests in our shares. If the recipient of the notice fails to respond within the reasonable time period specified in the notice, we may apply tocourt for an order directing that the affected shares be subject to certain restrictions, as prescribed by the Companies Act, as follows: a)any transfer of those shares or, in the case of unissued shares, any transfer of the right to be issued with shares and any issue ofshares, shall be void; b)no voting rights shall be exercisable in respect of those shares; c)no further shares shall be issued in right of those shares or in pursuance of any offer made to the holder of those shares; and d)no payment shall be made of any sums due from us on those shares, whether in respect of capital or otherwise. The court may also order that shares subject to any of these restrictions be sold with the restrictions terminating upon the completion ofthe sale. In the event that we are in an offer period pursuant to the Irish Takeover Rules made under the Irish Takeover Panel Act 1997 (the “IrishTakeover Rules”), accelerated disclosure provisions apply for persons holding an interest in our securities of 1% or more.In addition, the beneficial ownership disclosures of the U.S. federal securities laws will apply with respect to beneficial ownership ofour shares.Anti-Takeover ProvisionsIrish Takeover Rules and Substantial Acquisition Rules A transaction in which a third party seeks to acquire 30% or more of our voting rights will be governed by the Irish Takeover Panel Act1997 and the Irish Takeover Rules made thereunder and will be regulated by the Irish Takeover Panel. The “General Principles” of the Irish Takeover Rules and certain important aspects of the IrishTakeover Rules are described below.General Principles The Irish Takeover Rules are built on the following general principles (the “General Principles”), which will apply to any transactionregulated by the Irish Takeover Panel: a)in the event of an offer, all holders of securities of the target company should be afforded equivalent treatment and, if a personacquires control of a company, the other holders of securities must be protected; b)the holders of the securities of the target company must have sufficient time and information to enable them to reach a properlyinformed decision on the offer; where it advises the holders of securities, the board of the target company must give its views onthe effects of implementation of the offer on employment, conditions of employment and the locations of the target company’splaces of business; c)the board of the target company must act in the interests of the company as a whole and must not deny the holders of securities theopportunity to decide on the merits of the offer; d)false markets must not be created in the securities of the target company, the bidder or of any other company concerned by theoffer in such a way that the rise or fall of the prices of the securities becomes artificial and the normal functioning of the markets isdistorted; e)a bidder must announce an offer only after ensuring that he or she can fulfill in full, any cash consideration, if such is offered, andafter taking all reasonable measures to secure the implementation of any other type of consideration; f)a target company must not be hindered in the conduct of its affairs for longer than is reasonable by an offer for its securities; and g)a substantial acquisition of securities (whether such acquisition is to be effected by one transaction or a series of transactions) shalltake place only at an acceptable speed and shall be subject to adequate and timely disclosure.Mandatory Bid Under certain circumstances, a person who acquires our shares may be required under the Irish Takeover Rules to make a mandatorycash offer for our remaining outstanding shares at a price not less than the highest price paid for the shares by the acquirer (or any partiesacting in concert with the acquirer) during the previous twelve months. This mandatory bid requirement is triggered if an acquisition ofshares would increase the aggregate holding of an acquirer (including the holdings of any parties acting in concert with the acquirer) to sharesrepresenting 30% or more of our voting rights, unless the Irish Takeover Panel otherwise consents. An acquisition of shares by a personholding (together with its concert parties) shares representing between 30% and 50% of our voting rights would also trigger the mandatorybid requirement if, after giving effect to the acquisition, the percentage of the voting rights held by that person (together with its concertparties) would increase by 0.05% within a twelve-month period. Any person (excluding any parties acting in concert with the holder) holdingshares representing more than 50% of the voting rights of a company is not subject to these mandatory offer requirements.Voluntary Bid; Requirements to Make a Cash Offer and Minimum Price Requirements If a person makes a voluntary offer to acquire our outstanding ordinary shares, the offer price must be no less than the highest price paidfor our ordinary shares by the bidder or its concert parties during the three-month period prior to the commencement of the offer period. TheIrish Takeover Panel has the power to extend the “look back” period to twelve months if the Irish Takeover Panel, taking into account theGeneral Principles, believes it is appropriate to do so. If the bidder or any of its concert parties has acquired our ordinary shares: (i) during the period of twelve months prior to thecommencement of the offer period which represent more than 10% of our total ordinary shares; or (ii) at any time after the commencement ofthe offer period, the offer must be in cash (or accompanied by a full cash alternative) and the price per ordinary share must not be less thanthe highest price paid by the bidder or its concert parties during, in the case of (i), the 12-month period prior to the commencement of theoffer period and, in the case of (ii), the offer period. The Irish Takeover Panel may apply this rule to a bidder who, together with its concertparties, has acquired less than 10% of our total ordinary shares in the 12-month period prior to the commencement of the offer period if theIrish Takeover Panel, taking into account the General Principles, considers it just and proper to do so. An offer period will generally commence from the date of the first announcement of the offer or proposed offer.Substantial Acquisition Rules The Irish Takeover Rules also contain rules governing substantial acquisitions of shares which restrict the speed at which a person mayincrease his or her holding of shares and rights over shares to an aggregate of between 15% and 30% of our voting rights. Except in certaincircumstances, an acquisition or series of acquisitions of shares or rights over shares representing 10% or more of our voting rights isprohibited, if such acquisition(s), when aggregated with shares or rights already held, would result in the acquirer holding 15% or more butless than 30% of our voting rights and such acquisitions are made within a period of seven days. These rules also require accelerateddisclosure of acquisitions of shares or rights over shares relating to such holdings.Shareholder Rights PlanUnder our Constitution, the Board is authorized to adopt a shareholder rights plan (a “Shareholder Rights Plan”), upon such terms andconditions as the Board deems expedient and in the best interests of the Company, subject to applicable law, including the grant of rights(including approving the execution of any documents relating to the grant of such rights) to subscribe for ordinary shares or preferred sharesin the share capital of the Company in accordance with the terms of any Shareholder Rights Plan. The Board or any duly appointedcommittee thereof may effect an exchange of rights in accordance with such Shareholder Rights Plan.Frustrating Action Under the Irish Takeover Rules, our Board is not permitted to take any action which might frustrate an offer for our shares once theBoard has received an approach which may lead to an offer or has reason to believe an offer is or may be imminent, subject to certainexceptions. Potentially frustrating actions such as: (i) the issue of shares, options or convertible securities; (ii) material acquisitions ordisposals; (iii) entering into contracts other than in the ordinary course of business; or (iv) any action, other than seeking alternative offers,which may result in frustration of an offer, are prohibited during the course of an offer or at any time during which the Board has reason tobelieve an offer is imminent. Exceptions to this prohibition are available where: a)the action is approved by our shareholders at a general meeting; or b)the Irish Takeover Panel has given its consent, where: 1.it is satisfied the action would not constitute frustrating action; 2.the holders of 50% of the voting rights state in writing that they approve the proposed action and would vote in favor ofit at a general meeting; 3.the action is taken in accordance with a contract entered into prior to the announcement of the offer; or 4.the decision to take such action was made before the announcement of the offer and either has been at least partiallyimplemented or is in the ordinary course of business. Certain other provisions of Irish law or our Constitution may be considered to have anti-takeover effects, including those describedunder the following captions: “—Authorized Share Capital” (regarding issuance of preferred shares), “—Preemption Rights, ShareWarrants and Share Options,” “—Disclosure of Interests in Shares,” and “—Corporate Governance.”Appointment of Directors of the BoardThe directors of the Board are divided into three classes, each class consisting, as nearly as may be possible, of one-third of the totalnumber of directors constituting the entire Board. At each annual general meeting, successors to the class of directors whose term expires atthat annual general meeting are elected for a three-year term. Except as otherwise permitted in our Constitution, directors will be elected byway of ordinary resolution at a general meeting. If the number of directors is changed, any increase or decrease shall be apportioned amongthe classes so as to maintain the number of directors in each class as nearly equal as possible. In no case will a decrease in the number ofdirectors shorten the term of any incumbent director. A director shall hold office until the annual general meeting for the year in which her orhis term expires and until her or his successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement,disqualification or removal from office. Any vacancy on the Board, including a vacancy that results from an increase in the number ofdirectors or from the death, resignation, retirement, disqualification or removal of a director, shall be deemed a casual vacancy. Subject to theterms of any one or more classes or series of preferred shares, any casual vacancy shall only be filled by decision of a majority of the Boardthen in office, provided that a quorum is present. Any director of any class elected to fill a vacancy resulting from an increase in the numberof directors of such class shall hold office for a term that shall coincide with the remaining term of that class. Any director elected to fill avacancy not resulting from an increase in the number of directors shall have the same remaining term as that of her predecessor. A directorretiring at a meeting shall retain office until the close or adjournment of the meeting.During any vacancy in the Board, the remaining directors have full power to act as the Board. If, at any general meeting of theCompany, the number of directors is reduced below the minimum prescribed by the Board due to the failure of any persons nominated to bedirectors to be elected, then in those circumstances, the nominee or nominees who receive the highest number of votes in favor of electionshall be elected in order to maintain the prescribed minimum number of directors and each such director shall remain a director (subject to theprovisions of the Companies Act and our Constitution) only until the conclusion of the next annual general meeting of the Company unlesssuch director is elected by the Members (as defined in our Constitution) during such meeting.Duration; Dissolution; Rights upon Liquidation Our duration is unlimited. We may be dissolved and wound up at any time by way of a shareholders’ voluntary winding up or acreditors’ winding up. In the case of a shareholders’ voluntary winding-up, a special resolution of shareholders is required. We may also bedissolved by way of court order on the application of a creditor, or by the Companies Registration Office as an enforcement measure wherewe have failed to file certain returns. The rights of the shareholders to a return of our assets on dissolution or winding up, following the settlement of all claims of creditors,may be prescribed in our Constitution or the terms of any preferred shares issued by our Board from time to time. The holders of preferredshares in particular may have the right to priority in our dissolution or winding up. If the Constitution contain no specific provisions inrespect of a dissolution or winding up then, subject to the priorities ofany creditors, the assets will be distributed to shareholders in proportion to the paid-up nominal value of the shares held. Our Constitutionprovide that our ordinary shareholders are entitled to participate pro rata in a winding up, but their right to do so may be subject to the rightsof any preferred shareholders to participate under the terms of any series or class of preferred shares.Uncertificated Shares Pursuant to the Companies Act, a shareholder is entitled to be issued a share certificate on request and subject to payment of a nominalfee.No Sinking Fund Our ordinary shares have no sinking fund provisions.No Liability for Further Calls or Assessments Our ordinary shares are duly and validly issued and fully-paid.Transfer and Registration of Shares Our transfer agent maintains our share register, which is determinative of ownership of our shares. Our shareholders who hold sharesbeneficially are not the holders of record of such shares. Instead, the depository (for example, Cede & Co., as nominee for DTC) or othernominee is the holder of record of those shares. Accordingly, a transfer of shares from a person who holds such shares beneficially to aperson who also holds such shares beneficially through a depository or other nominee will not be registered in our official share register, asthe depository or other nominee will remain the record holder of any such shares. A written instrument of transfer is required under Irish law in order to register on our official share register any transfer of shares:(i) from a person who holds such shares directly to any other person; (ii) from a person who holds such shares beneficially to a person whoholds such shares directly; or (iii) from a person who holds such shares beneficially to another person who holds such shares beneficiallywhere the transfer involves a change in the depository or other nominee that is the record owner of the transferred shares. An instrument oftransfer is also required for a shareholder who directly holds shares to transfer those shares into his or her own broker account (or vice versa).Such instruments of transfer may give rise to Irish stamp duty, which must be paid prior to registration of the transfer on our official Irishshare register. However, a shareholder who directly holds shares may transfer those shares into his or her own broker account (or vice versa)without giving rise to Irish stamp duty provided there is no change in the ultimate beneficial ownership of the shares as a result of the transferand the transfer is not made in contemplation of a sale of the shares. Any transfer of our ordinary shares that is subject to Irish stamp duty will not be registered in the name of the buyer unless aninstrument of transfer is duly stamped and provided to the transfer agent. Our Constitution allows us, in our absolute discretion, to create aninstrument of transfer and pay (or procure the payment of) any stamp duty, which is the legal obligation of a buyer. In the event of any suchpayment, we are (on our behalf or on behalf of our affiliates) entitled to: (i) seek reimbursement from the buyer or seller (at our discretion);(ii) set-off the amount of the stamp duty against future dividends payable to the buyer or seller (at our discretion); and (iii) claim a lienagainst the ordinary shares on which we have paid stamp duty. Parties to a share transfer may assume that anystamp duty arising in respect of a transaction in our ordinary shares has been paid unless one or both of such parties is otherwise notified byus. Our Constitution delegates to our secretary the authority to execute an instrument of transfer on behalf of a transferring party. In order to help ensure that the official share register is regularly updated to reflect trading of our ordinary shares occurring throughnormal electronic systems, we intend to regularly produce any required instruments of transfer in connection with any transactions for whichwe pay stamp duty (subject to the reimbursement and set-off rights described above). In the event that we notify one or both of the parties to ashare transfer that we believe stamp duty is required to be paid in connection with the transfer and that we will not pay the stamp duty, theparties may either themselves arrange for the execution of the required instrument of transfer (and may request a form of instrument oftransfer from us for this purpose) or request that we execute an instrument of transfer on behalf of the transferring party in a form determinedby us. In either event, if the parties to the share transfer have the instrument of transfer duly stamped (to the extent required) and then provideit to our transfer agent, the buyer will be registered as the legal owner of the relevant shares on our official Irish share register (subject to thematters described below). The Board may suspend registration of transfers from time to time, with such suspensions not to exceed 30 days in aggregate each year. Exhibit 10.10.3 In accordance with Item 601(b)(2)(ii) of Regulation S-K, certain information (indicated by “[**]”) has been excluded fromthis exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed. THIRD AMENDMENT TO LICENSE AND COLLABORATION AGREEMENT THIS THIRD AMENDMENT (the “Amendment”) is made and entered into as of October 30, 2019 (the “AmendmentEffective Date”) to amend that certain License and Collaboration Agreement dated November 27, 2017, as amended (the“Agreement”), by and between ALKERMES PHARMA IRELAND LIMITED (“Alkermes”) and BIOGEN SWISSMANUFACTURING GMBH (“Biogen”). Unless explicitly noted otherwise, capitalized terms used but not defined herein shall havethe meanings set forth in the Agreement. RECITALS: WHEREAS, Alkermes and Biogen have entered into the Agreement; WHEREAS, Alkermes and Biogen now wish to amend the Agreement to effect the transfer of Manufacturing of Clinical Suppliesand up to one-hundred percent (100%) of Commercial Supplies of the Alkermes 8700 Product from Alkermes to Biogen; NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, thereceipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: 1.Section 1.1 of the Agreement is hereby amended to add the following new defined terms: “Commercial Supply Agreement” means that certain Commercial Supply Agreement dated October 30, 2019, as may beamended, by and among Biogen, Biogen International GmbH and Alkermes. “Equipment” means Existing Equipment and New Equipment as such terms are defined in the Commercial SupplyAgreement. “Exclusive Manufacturing End Date” means the earlier of (i) the date of [**] and (ii) [**] after the date of [**]. “Technology Transfer” means the transfer from Alkermes to Biogen or its designee of all technology Controlled byAlkermes that is necessary to enable Manufacture of the Alkermes 8700 Product and other then-existing Products inaccordance with Section 3.2.3(iv) of the Agreement. For the avoidance of doubt, the term “technology” as used in thisdefinition shall not include Equipment. 2.A new Section 4.5 is hereby added to the Agreement with the following text: 4.5. Forecasting. For the Alkermes 8700 Product, Biogen will provide Alkermes with (a) a [**] written forecast ofBiogen’s anticipated product demand, in units, broken down on a country-by-country basis for each month of suchperiod, which forecast will be updated by Biogen [**] and provided to Alkermes no later than [**]; (b) an [**] good faith[**] written forecast in respect of Biogen’s anticipated product demand, in units, broken down by U.S., Europe and rest-of-world, which forecast will be updated by Biogen [**] and provided to Alkermes no later than [**]; and (c) a quarterlyinventory report providing inventory levels for work in progress (including, but not limited to, active pharmaceuticalingredients and drug product) and finished goods, which will be updated by Biogen and provided to Alkermes on aquarterly basis. 3.Section 5.1.2 of the Agreement is deleted in its entirety and replaced with the following text: 5.1.2 Commercial Supplies. Pursuant to this Agreement, Biogen has the right to Manufacture or have ManufacturedCommercial Supplies. Biogen has considered in good faith, and hereby appoints, Alkermes as the toll manufacturer forsuch Commercial Supplies for Commercialization in the Territory at a site outside of the United States, and Biogen andits Affiliates and Sublicensees will purchase Commercial Supplies exclusively from Alkermes; provided that, (A) withrespect to the Alkermes 8700 Product only and subject to the Manufacturing transition plan referenced in this Section5.1.2, Biogen’s appointment of Alkermes as toll manufacturer, Alkermes’ obligation to Manufacture, and the obligationsof Biogen and its Affiliates and Sublicensees to purchase Clinical Supplies and Commercial Supplies exclusively fromAlkermes will each expire on the Exclusive Manufacturing End Date and (B) for Products other than the Alkermes 8700Product, Biogen may qualify to Manufacture, or engage and qualify a Third Party to Manufacture, Commercial Suppliesas a back-up manufacturer so long as such Third Party Manufacturer does not Manufacture more than [**] percent([**]%) of Commercial Supplies in the aggregate in any Calendar Year, except in the event of a Force Majeure Delay or aSerious Failure to Supply. Upon Biogen’s written request, Alkermes and Biogen shall work in good faith to (a) enter into a technology transfer planpursuant to which Alkermes will undertake a Technology Transfer in accordance with Section 3.2.3(iv) of the Agreement,including the reimbursement provisions therein, as promptly as reasonably practicable and, in any event, to be completedno later than [**] after Biogen’s written request to transition manufacturing and enter into a technology transfer plan, and(b) enter into a Manufacturing transition plan ([**]) to ensure the orderly transition after the Exclusive ManufacturingEnd Date to Biogen or its designee of Manufacturing responsibility for Clinical Supplies and Commercial2 Supplies of the Alkermes 8700 Product in an effort to prevent any interruption in the supply of such product. Notwithstanding anything to the contrary set forth in this Section 5.1.2, if (i) Alkermes foregoes its exclusive right toManufacture or have Manufactured Commercial Supplies, (ii) Alkermes undergoes a Change of Control in which theacquirer is a competitor of Biogen set forth on Schedule 5.1 or a Third Party toll manufacturer that Manufactures acompeting fumarate product or (iii) there is a Serious Failure to Supply, then in any case ((i)-(iii)), (a) Biogen and itsAffiliates and Sublicensees will have no further obligation to exclusively purchase Commercial Supplies from Alkermes,(b) Biogen will have the exclusive right to Manufacture or have Manufactured Commercial Supplies and (c) Alkermeswill promptly conduct a transfer (to the extent not already conducted pursuant to any Technology Transfer) of allnecessary Manufacturing technology to Biogen or its designee to enable Biogen or such designee to ManufactureCommercial Supplies. In addition, in the event of a Force Majeure Delay (and for the duration thereof), until such time asAlkermes is able to resume sufficient Manufacturing to meet Biogen’s demand for Commercial Supplies, Biogen mayManufacture itself or have Manufactured by its back-up manufacturer, all Commercial Supplies for so long as Alkermesis unable to meet Biogen’s demand. 4.Section 9.4 of the Agreement is hereby deleted in its entirety and replaced with the following text: 9.4Milestone Payments. 9.4.1Commercial Milestones for the Alkermes 8700 Product. As further consideration of the grant of thelicenses set forth in Section 6.1 and the performance of Alkermes’ other obligations hereunder, Biogen willpay to Alkermes the amounts set forth below no later than [**] days after the earliest date on which thecorresponding milestone event has first been achieved: Commercial Milestone EventAmountParties’ execution of amendments to the Commercial Supply Agreement and theClinical Supply Agreement reflecting the transition of Manufacturing of ClinicalSupplies and up to 100% of Commercial Supplies of the Alkermes 8700 Productto Biogen$5,000,000Exclusive Manufacturing End Date$5,000,000 9.4.2Development Milestones for Products other than the Alkermes 8700 Product. As further consideration ofthe grant of the licenses set forth in Section 6.1 and the performance of Alkermes’ other obligations3 hereunder, Biogen will pay to Alkermes the amounts set forth below no later than [**] days after the earliestdate on which the corresponding milestone event has first been achieved with respect to the first two Productsother than the Alkermes 8700 Product: Development Milestone EventAmountThe first administration to the first patient in a Clinical Trial of such Product.$[**]The first administration of such Product to the first patient in a phase 3 ClinicalTrial.$[**]Receipt of Regulatory Approval of an NDA from the FDA in the U.S. for suchProduct.$[**] The milestone payments set forth in this Section 9.4.2 will be paid on a Product-by-Product basis on the firstoccurrence of each such applicable milestone for each of the first two Products other than the Alkermes 8700Product. 5.Section 9.5.1(i) of the Agreement is hereby deleted in its entirety and replaced with a new Section 9.5.1(i)(A) and a newSection 9.5.1(i)(B) with the following text: (i)(A) Royalty Percentages for Alkermes 8700 Product Manufactured by Alkermes. As furtherconsideration of the grant of the licenses set forth in Section 6.1 and the performance of Alkermes’ otherobligations hereunder for Alkermes 8700 Product Manufactured by Alkermes, Biogen will pay to Alkermesroyalty payments on Net Sales of the Alkermes 8700 Product in the Territory on a country-by-country basisduring the applicable Royalty Term at the rate of fifteen percent (15%) of Net Sales. Notwithstanding theforegoing, in the event of a determination of GI Inferiority, then the royalty rate during each Royalty Term forthe Alkermes 8700 Product in each country in the Territory will be [**] percent ([**]%) of Net Sales untilsuch time as the aggregate royalty payments paid to Alkermes across all countries equal Fifty Million U.S.Dollars ($50,000,000), after which time such royalty rate will return to its prior level, before the determinationof GI Inferiority that resulted in such royalty rate of [**] percent ([**]%) (but subject in any event to Section9.5.5, Section 9.5.6 and Section 9.5.7). (B) Royalty Percentages for Alkermes 8700 Product Manufactured by Biogen. As further consideration ofthe grant of the licenses set forth in Section 6.1 and the performance of Alkermes’ other obligations hereunderwith respect to the Alkermes 8700 Product Manufactured by Biogen or its designee, Biogen will pay toAlkermes royalty payments on Net Sales of the Alkermes 8700 Product in the Territory on a country-by-country basis4 during the applicable Royalty Term at the rate of [**] percent ([**]%) of Net Sales. Notwithstanding theforegoing, in the event of a determination of GI Inferiority, then the royalty rate during the Royalty Term forthe Alkermes 8700 Product in each country in the Territory will be [**] percent ([**]%) of Net Sales until suchtime as the aggregate royalty payments paid to Alkermes across all countries equal Fifty Million U.S. Dollars($50,000,000), after which time such royalty rate will return to its prior level, before the determination of GIInferiority that resulted in such royalty rate of [**] percent ([**]%) (but subject in any event to Section 9.5.5,Section 9.5.6 and Section 9.5.7). 6.Section 9.6 of the Agreement is hereby deleted in its entirety and replaced with a new Section 9.6 with the following text: 9.6. Reporting and Paying Net Sales. For each Calendar Quarter for which royalties are payable by Biogen to Alkermespursuant to Section 9.5.1(i) or Section 9.5.2, Biogen will (i) deliver to Alkermes, within five (5) days after the end of eachsuch Calendar Quarter, a nonbinding estimated report prepared in good faith, (ii) deliver to Alkermes, within forty-five(45) days after the end of each such Calendar Quarter a true and accurate report, in each case of (i) and (ii), providing inreasonable detail (A) an accounting of all Net Sales made on a country-by-country and Product-by-Product basis in theTerritory during such Calendar Quarter, including the amount of gross sales of Products and the aggregate allowabledeductions therefrom, (B) the number of units of Products sold, (C) the currency conversion rates used, (D) the U.S.Dollar-equivalent of such Net Sales during such Calendar Quarter and (E) a calculation of the amount of royalty paymentdue on such Net Sales, and (iii) within forty-five (45) days after the end of each such Calendar Quarter, pay Alkermes theroyalties due under Section 9.5.1(i) and Section 9.5.2 with respect to such Calendar Quarter as provided for in the reportdelivered under (ii) above. Each of the reports set forth in (i) and (ii) of this Section 9.6 will be organized to distinguishwhether the Alkermes 8700 Product was Manufactured by Alkermes or Biogen or their respective designees and, in thecase of the report set forth in (ii), the amount of Alkermes 8700 Product in inventory as of the end of the CalendarQuarter to which the report relates. In addition, within forty-five (45) days after the end of the first Calendar Quarterfollowing each twelve (12)-month period during the Minimum Annual Payment Term, Biogen shall pay Alkermes anyamount due under Section 9.5.1(ii) for such twelve (12)-month period. Each report delivered hereunder shall beconsidered Confidential Information of Biogen, subject to the terms and conditions of Article 8. Any payments duehereunder for less than a full Calendar Quarter will be prorated. 7.The Parties agree that all terms relating to the Manufacture of Commercial Supplies of the Alkermes 8700 Product areset forth in the Commercial Supply Agreement and that the terms set forth in Exhibit E of the Agreement do not apply tothe Manufacture of Commercial Supplies of the Alkermes 8700 Product.5 8.Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of NewYork without regard to its conflict of law provisions. 9.Integration. Except as expressly provided in this Amendment, all other terms, conditions and provisions of theAgreement shall continue in full force and effect as provided therein. The Agreement (as amended by this Amendment),this Amendment, the Clinical Supply Agreement and the Commercial Supply Agreement constitute the entire agreementbetween the parties hereto and thereto relating to the subject matter hereof and thereof and supersede all prior andcontemporaneous negotiations, agreements, representations, understandings and commitments with respect thereto. [Signature page follows]6 IN WITNESS WHEREOF, Alkermes and Biogen have executed and delivered this Amendment effective as of theAmendment Effective Date. ALKERMES PHARMA IRELAND LIMITED By: /s/ Kevin BradyName: Kevin BradyTitle: Director BIOGEN SWISS MANUFACTURING GMBH By:/s/ Peter PuypeName: Peter PuypeTitle: VP, Global Supply Chain 7 Exhibit 21.1SUBSIDIARIESName Jurisdiction Alkermes Ireland Holdings Limited Ireland Alkermes Pharma Ireland Limited Ireland Alkermes Finance Ireland Limited Ireland Daravita Pharma Ireland Limited Ireland Alkermes Finance Ireland (No. 3) Limited Ireland Alkermes Science Four Limited Ireland Alkermes Science Five Limited Ireland Daravita Limited Ireland Alkermes Finance S.à r.l. Luxembourg Alkermes Finance Ireland (No. 2) Limited Ireland Alkermes US Holdings, Inc. Delaware Alkermes, Inc. Pennsylvania Alkermes Controlled Therapeutics, Inc. Pennsylvania Alkermes Europe, Ltd. United Kingdom Rodin Therapeutics, Inc. Delaware Exhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form S‑8 (Nos. 333‑179545, 333‑184621, 333‑200777, 333-214952, 333-226359 and 333-232831) of Alkermes plc of our report dated February 13, 2020 relating to the financial statements and the effectiveness of internalcontrol over financial reporting, which appears in this Form 10‑K./s/ PricewaterhouseCoopers LLPBoston, MassachusettsFebruary 13, 2020 Exhibit 31.1CERTIFICATIONSI, Richard F. Pops, certify that: 1.I have reviewed this annual report on Form 10-K of Alkermes plc; 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 thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange 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, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness 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 registrant's internal control over financial reporting that occurred during the registrant's most recentfiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant's internal control over financial reporting; and 5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's 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 arereasonably likely to adversely affect the registrant's 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 registrant's internalcontrol over financial reporting. By:/s/ Richard F. Pops Chairman and Chief Executive Officer (Principal Executive Officer) Date:February 13, 2020 Exhibit 31.2CERTIFICATIONSI, James M. Frates, certify that: 1.I have reviewed this annual report on Form 10-K of Alkermes plc; 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 thestatements 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 thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange 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, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness 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 registrant's internal control over financial reporting that occurred during the registrant's most recentfiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant's internal control over financial reporting; and 5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's 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 arereasonably likely to adversely affect the registrant's 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 registrant's internalcontrol over financial reporting. By:/s/ James M. Frates Senior Vice President and Chief Financial Officer (Principal Financial Officer) Date:February 13, 2020 Exhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report on Form 10-K of Alkermes plc (the "Company") for the period ended December 31, 2019 as filed with the Securitiesand Exchange Commission on the date hereof (the "Report"), we, Richard F. Pops, Chairman and Chief Executive Officer of the Company, and James M. Frates,Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002, that to our knowledge: (1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. By:/s/ Richard F. Pops Richard F. Pops Chairman and Chief Executive Officer (Principal Executive Officer) By:/s/ James M. Frates James M. Frates Senior Vice President and Chief Financial Officer (Principal Financial Officer) Date:February 13, 2020

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