UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the fiscal year ended December 31, 2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-35299
ALKERMES 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 House
1 Burlington Road
Dublin 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 registered
Ordinary shares, $0.01 par value
ALKS
Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate 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 the preceding 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 past 90 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
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in
Rule 12b-2 of the Exchange 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 revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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 in such 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 recently completed second fiscal quarter was $4,657,775,005.
As of February 20, 2026, 166,649,934 ordinary shares were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement for our 2026 Annual General Meeting of Shareholders are incorporated by reference into Part III of this report.
2
ALKERMES PLC AND
SUBSIDIARIES
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2025
INDEX
PART I
Item 1.
Business
7
Item 1A.
Risk Factors
34
Item 1B.
Unresolved Staff Comments
58
Item 1C.
Cybersecurity
58
Item 2.
Properties
59
Item 3.
Legal Proceedings
59
Item 4.
Mine Safety Disclosures
59
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
60
Item 6.
[Reserved]
62
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
63
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
74
Item 8.
Financial Statements and Supplementary Data
75
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
75
Item 9A.
Controls and Procedures
76
Item 9B.
Other Information
77
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
77
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
78
Item 11.
Executive Compensation
78
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
78
Item 13.
Certain Relationships and Related Transactions, and Director Independence
78
Item 14.
Principal Accountant Fees and Services
78
PART IV
Item 15.
Exhibits and Financial Statement Schedules
79
Item 16.
Form 10-K Summary
85
SIGNATURES
86
3
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This document contains and incorporates by reference “forward-looking statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). In some cases, these statements can be identified 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
“Annual Report”) may include, without limitation, statements regarding:
•
our expectations regarding our financial performance, including revenues, expenses, liquidity, capital expenditures, income
taxes and profitability;
•
our expectations regarding our products, including expectations related to product development; regulatory exclusivities,
filings, approvals and timelines; therapeutic and commercial value, scope and potential; and the costs and expenses related to
such activities and expectations;
•
our expectations regarding the timing, design and results of clinical trials of our products;
•
our expectations regarding the competitive, payer, legislative, regulatory and policy landscape, and changes therein, related to
our products, including competition from generic forms of our products or competitive products and development programs;
barriers to access or coverage of our products and potential changes in reimbursement of our products; and legislation,
regulations, executive orders, guidance or other measures that may impact pricing and reimbursement of, and access to, our
products;
•
our expectations regarding the financial impact of currency exchange rate fluctuations and valuations;
•
our expectations regarding acquisitions, collaborations, licensing arrangements and other significant agreements with third
parties, including those related to our products, development programs, and other business development opportunities;
•
our expectations regarding the impacts of new legislation, rules and regulations, the adoption of new accounting
pronouncements, government shutdowns, or other global, political or economic changes, instability or disruptions;
•
our expectations regarding near-term changes in the nature of our market risk exposures or in our management’s objectives
and strategies with respect to managing such exposures;
•
our expectations regarding 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 expenditures for our operations and our ability to finance such
capital requirements and expenditures;
•
our expectations regarding the timing, outcome and impact of administrative, regulatory, legal and other proceedings related
to our products and intellectual property (“IP”), including our patents, know-how, and related rights or obligations;
•
our expectations regarding the Avadel Acquisition (as defined below), including any anticipated benefits and synergies of the
transaction;
•
our expectations regarding the tax treatment and other anticipated benefits of the completed separation of our oncology
business; and
•
other expectations 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 are subject to risks, assumptions and uncertainties. In light of these risks, assumptions and uncertainties,
the forward-looking expectations discussed in this Annual Report might not occur. You are cautioned not to place undue reliance on
the forward-looking statements in this Annual Report, which speak only as of the date of this Annual Report. All subsequent written
and oral forward-looking statements concerning the matters addressed in this Annual Report and attributable to us or any 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 by applicable law or regulation, we do not undertake any obligation to update publicly or revise any forward-looking
statements, whether as a result of new information, future events or otherwise. For information about the risks, assumptions and
uncertainties of our business, see “Item 1A—Risk Factors” in this Annual Report.
This Annual Report may include data that we obtained from industry publications and third-party research, surveys and studies.
Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from
sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe
that any industry publications and third-party research, surveys and studies from which data is included in this Annual Report are
4
reliable, we have not independently verified any such data. This Annual Report may also include data based on our own internal
estimates and research. Our internal estimates and research have not been verified by any independent source and are necessarily
subject to a high degree 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 factors could cause our results to differ materially from those expressed or implied in this Annual
Report.
SUMMARY OF MATERIAL RISKS ASSOCIATED WITH OUR BUSINESS
Our business is subject to numerous material and other risks and uncertainties that you should be aware of. These risks and
uncertainties are described more fully in “Item 1A—Risk Factors” in this Annual Report, and include, but are not limited to, the
following:
•
we receive substantial revenue from our key proprietary products, and our success depends on our ability to successfully
manufacture and commercialize such products;
•
we face competition in the biopharmaceutical industry;
•
our revenues from sales of our products may decrease or grow at a slower than expected rate due to many factors;
•
revenues generated by sales of our products depend, in part, 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) and cost-control measures imposed, and any reductions in payment rate or reimbursement or increases in our or
in patients’ financial obligation to payers could result in decreased sales of our products and/or decreased revenues;
•
we may fail to realize some or all of the anticipated benefits and synergies of the Avadel Acquisition or to successfully
integrate Avadel’s business, which could adversely affect our business and financial condition and the price of our ordinary
shares;
•
if there are changes in, or we fail to comply with, the extensive legal and regulatory requirements affecting the healthcare
industry, we could be subject to investigations, litigation, costs, penalties and business losses;
•
we rely on our licensees in the commercialization and continued development of products from which we receive revenue
and, if our licensees are not effective, or if disputes arise in respect of our contractual arrangements, our revenues could be
materially adversely affected;
•
clinical trials for our product candidates are expensive, may take several years to complete, and their outcomes are uncertain;
•
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 data become available or based on subsequent audit and verification procedures, and may not be
indicative of final data from such trials, data from future trials or real-world results;
•
our success depends, in part, on our ability to successfully obtain and maintain regulatory approval for our products;
•
disruptions at the United States (“U.S.”) Food and Drug Administration (the “FDA”), the U.S. Securities and Exchange
Commission (“SEC”) and other government agencies could negatively impact our business;
•
we may not be able to successfully expand our research and development (“R&D”) pipeline or our commercial product
portfolio, which could limit our growth potential;
•
we are subject to risks related to the manufacture of our products;
•
we rely on third parties to provide goods and services in connection with the manufacture and distribution of our products;
•
LUMRYZ is a controlled substance subject to U.S. federal and state-controlled substance laws and regulations, and any
failure to comply with these laws and regulations, or the cost of compliance with these laws and regulations, could materially
adversely affect our business, financial condition, cash flows and results of operations;
•
our success largely depends upon our ability to attract, recognize and retain key personnel, and the loss of key personnel may
materially and adversely impact our business;
•
patent and other IP protection for our products is key to our business and our competitive position but is uncertain;
•
uncertainty over IP in the biopharmaceutical industry has been the source of litigation and other legal proceedings, and we
and our licensees have previously and may in the future face claims against IP rights covering our products and competition
from generic drug manufacturers;
5
•
litigation or arbitration filed against us, including securities litigation, or actions (such as citizens petitions) filed against
regulatory agencies in respect of our products, may result in financial losses, harm our reputation, divert management
resources, negatively impact the approval of our products, or otherwise negatively impact our business;
•
we may not be able to maintain profitability on a sustained basis;
•
the U.S. Internal Revenue Service (“IRS”) may not agree with our conclusion that we should be treated as a foreign
corporation for U.S. federal income tax purposes;
•
if the separation of our oncology business completed in November 2023 does not ultimately qualify as a transaction that is
generally tax-free for U.S. federal and Irish tax purposes as we anticipate, we and/or our shareholders could be subject to
significant tax liabilities;
•
our debt obligations could adversely affect our business and limit our ability to plan for or respond to changes in our
business;
•
the market price of our ordinary shares has been volatile and may continue to be volatile in the future, and could decline
significantly;
•
our business could be negatively affected as a result of the actions of activist shareholders;
•
information security breaches and other disruptions could compromise our information and expose us to liability, which
could cause our business and reputation to suffer; and
•
changes in global trade or other policies, including tariffs or other restrictions imposed by the U.S. government or
governments of other nations, could have an adverse effect on our business, results of operations, or financial condition.
The material and other risks and uncertainties summarized above should be read together with the text of the full risk factors in
“Item 1A—Risk Factors” in this Annual Report and the other information set forth in this Annual Report, including our consolidated
financial statements and the related notes, and in other documents that we file with the SEC. If any such material or other risks and
uncertainties actually occur, our business, financial condition, cash flows or results of operations could be materially and adversely
affected. The risks and uncertainties summarized above or described below are not the only risks and uncertainties that we face.
Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial may also materially adversely
affect our business, financial condition, cash flows or results of operations.
NOTE REGARDING COMPANY AND PRODUCT REFERENCES
Use of terms such as “us,” “we,” “our,” “Alkermes” or the “Company” in this Annual Report is meant to refer to Alkermes plc
and its consolidated subsidiaries. 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 licensed products, our
product candidates and product candidates using our proprietary technologies, (b) references to the “biopharmaceutical industry” in
this Annual Report are intended to include reference to the “biotechnology industry” and/or the “pharmaceutical industry” and (c)
references to “licensees” in this Annual Report are used interchangeably with references to “partners.”
NOTE REGARDING TRADEMARKS
We are the owner of various U.S. federal trademark registrations (“®”) and other trademarks (“TM”), including ALKERMES®,
ARISTADA®, ARISTADA INITIO®, LINKERX®, LUMRYZ®, LYBALVI®, MICROPUMP®, NANOCRYSTAL®, and
VIVITROL®.
6
The following are trademarks of the respective companies listed: ABILIFY®, ABILIFY ASIMTUFII®and ABILIFY
MAINTENA®—Otsuka Pharmaceutical Co., Ltd. (“Otsuka Pharm. Co.”); ANTABUSE®—Teva Women’s Health, Inc.;
AUBAGIO®and LEMTRADA®—Sanofi Societe Anonyme France; AVONEX®, PLEGRIDY®, TECFIDERA®, TYSABRI® and
VUMERITY®—Biogen MA Inc. (together with its affiliates, “Biogen”); BETASERON®—Bayer Pharma AG; BRIXADI®—Braeburn
Inc.; BRIUMVI®—TG Therapeutics, Inc.; BUNAVAILTM—BioDelivery Sciences; CAMPRAL®—Merck Sante;COPAXONE® and
UZEDY®—Teva Pharmaceutical Industries Ltd. (together with its affiliates, “Teva”) ; EXTAVIA®, GILENYA®, and MAYZENT®—
Novartis AG; BYANNLI®, CABENUVA®, CAPLYTA®, INVEGA®, INVEGA HAFYERA®, INVEGA SUSTENNA®, INVEGA
TRINZA®, PONVORY®, RISPERDAL CONSTA®, TREVICTA® and XEPLION®—Johnson & Johnson or its affiliated companies;
FAMPYRATM—Merz Pharmaceuticals, LLC; MAVENCLAD®—Merck KGaA, REBIF®—Ares Trading S.A.; OCREVUS®—
Genentech, Inc. (“Genentech”); REXULTI®—H. Lundbeck A/S plc; SUBOXONE®, SUBUTEX®and SUBLOCADE®—Indivior plc
(or its affiliates); RYKINDO®—Luye Pharma Group; SUNOSI®—Axsome Therapeutics, Inc.; VRAYLAR®— Forest Laboratories,
LLC; COBENFY® and ZEPOSIA®—Bristol-Myers Squibb Company; and WAKIX®—Harmony Biosciences Holdings, Inc.;
XYWAV® and XYREM®—Jazz Pharmaceuticals plc; ZUBSOLV®—Orexo US, Inc.; and ZYPREXA®and ZYPREXA RELPREVV®
—Eli Lilly and Company (“Lilly”). Other trademarks, trade names and service marks appearing in this Annual Report are the property
of their respective owners. Solely for convenience, the trademarks and trade names in this Annual Report are referred to without the
®or ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest
extent under applicable law, their rights thereto.
7
PART I
Item 1. Business
The following discussion contains forward-looking statements. Actual results may differ significantly from those expressed or
implied 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 from those expressed or implied in the forward-looking statements
include, but are not limited to, those discussed in “Item 1A—Risk Factors” and elsewhere in this Annual Report.
Overview
Alkermes plc is a global biopharmaceutical company that seeks to develop innovative medicines in the field of neuroscience. We
have a portfolio of proprietary commercial products for the treatment of alcohol dependence, opioid dependence, schizophrenia,
bipolar I disorder and narcolepsy, and a pipeline of clinical and preclinical candidates in development for neurological disorders.
Headquartered in Ireland, we also have a corporate office and R&D center in Massachusetts and a manufacturing facility in Ohio.
In October 2025, we and Avadel Pharmaceuticals plc (“Avadel”) entered into a definitive transaction agreement, subsequently
amended in November 2025 (the “Transaction Agreement”), pursuant to which we agreed to acquire the entire issued and to be issued
ordinary share capital of Avadel for consideration of (i) $21.00 per ordinary share, nominal value $0.01 per share, of Avadel (each, an
“Avadel Share”), payable in cash at closing and (ii) a non-transferable contingent value right (the “CVR”) entitling holders of Avadel
Shares to a potential additional cash payment of $1.50 per Avadel Share, contingent upon achievement of a certain specified milestone
(the “Avadel Acquisition”). On February 12, 2026, we successfully completed the Avadel Acquisition, adding both LUMRYZ to our
portfolio of proprietary commercial products and a commercial organization with experience in narcolepsy.
Marketed Products
The key marketed products discussed below have generated, or are expected to generate, significant revenues for us. See the
section entitled “Patents and Proprietary Rights” in “Item 1—Business” in this Annual Report for information with respect to the IP
protection for these marketed products.
8
The following provides summary information regarding our proprietary products that we commercialize:
Proprietary Products
Product
Indicated Disease State
Territory
Initiation or re-initiation of
ARISTADA for the treatment of
Schizophrenia
U.S.
Schizophrenia
U.S.
Narcolepsy
U.S.
Schizophrenia;
Bipolar I disorder
U.S.
Alcohol dependence;
Opioid dependence
U.S.
9
The following provides summary information regarding certain key third-party products using our proprietary technologies under
license and our key licensed product, that are commercialized by our licensees:
Key Third-Party Products Using Our Proprietary Technologies
Product
Indicated Disease State
Licensee
Licensed Territory
RISPERDAL CONSTA
Schizophrenia;
Bipolar I disorder
Janssen
Pharmaceuticals, Inc.
and Janssen
Pharmaceutica
International, a division
of Cilag International
AG (“Janssen
International”)
Worldwide
INVEGA SUSTENNA / XEPLION
INVEGA SUSTENNA:
Schizophrenia;
Schizoaffective disorder
XEPLION:
Schizophrenia
Janssen Pharmaceutica
N.V. (together with
Janssen Pharmaceuticals,
Inc., Janssen
International and their
affiliates “Janssen”)
Worldwide
INVEGA TRINZA / TREVICTA
Schizophrenia
Janssen
Worldwide
INVEGA HAFYERA / BYANNLI
Schizophrenia
Janssen
Worldwide
Our Key Licensed Product
Product
Indicated Disease State
Licensee
Licensed Territory
VUMERITY
Multiple sclerosis
Biogen
Worldwide
Proprietary Products
We have developed and now commercialize products designed to help address the unmet needs of people living with opioid
dependence, alcohol dependence, schizophrenia and bipolar I disorder. See the section entitled “Patents and Proprietary Rights” in
“Item 1—Business” in this Annual Report for information with respect to the IP protection for our proprietary products.
ARISTADA and ARISTADA INITIO
ARISTADA (aripiprazole lauroxil) is an extended-release intramuscular injectable suspension approved in the U.S. for the
treatment of schizophrenia. ARISTADA utilizes our proprietary LINKERX technology. ARISTADA is a prodrug; once in the body,
ARISTADA is likely converted by enzyme-mediated hydrolysis to N-hydroxymethyl aripiprazole, which is then hydrolyzed to
aripiprazole. ARISTADA is available in four dose strengths with once-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 is packaged in a ready-to-use, pre-filled syringe
product format. We exclusively manufacture and commercialize ARISTADA in the U.S.
ARISTADA INITIO (aripiprazole lauroxil) leverages our proprietary LINKERX and NANOCRYSTAL technologies and
provides an extended-release formulation of aripiprazole lauroxil in a smaller particle size compared to ARISTADA, thereby enabling
faster dissolution and more rapid achievement of relevant levels of aripiprazole in the body. ARISTADA INITIO, combined with a
single 30 mg dose of oral aripiprazole, is indicated for the initiation of ARISTADA when used for the treatment of schizophrenia in
adults. The first ARISTADA dose may be administered on the same day as the ARISTADA INITIO regimen or up to 10 days
thereafter. We exclusively manufacture and commercialize ARISTADA INITIO in the U.S.
10
What is schizophrenia?
Schizophrenia is a serious brain disorder marked by positive symptoms (hallucinations and delusions, disorganized speech and
thoughts, and agitated or repeated movements) and negative symptoms (depression, blunted emotions and social withdrawal).
Schizophrenia affects approximately 1.1% of the U.S. population.
LUMRYZ
LUMRYZ (sodium oxybate) is an extended-release oral suspension product approved by the FDA in May 2023 as the first and
only once-at-bedtime treatment for cataplexy or excessive daytime sleepiness (“EDS”) in adults with narcolepsy, and subsequently
approved by the FDA in October 2024 as a once-at-bedtime treatment for cataplexy or EDS in pediatric patients seven years of age
and older with narcolepsy. The FDA has granted seven years of orphan drug exclusivity (“ODE”) to LUMRYZ for the adult and
pediatric narcolepsy patient populations through May 1, 2030 and October 16, 2031, respectively. We exclusively commercialize
LUMRYZ in the U.S. Pursuant to the settlement and license agreement entered into between Jazz and Avadel in October 2025 (the
“Avadel Settlement Agreement”), from October 1, 2025, Jazz receives a royalty of 3.85% (subject to certain adjustments set forth in
the agreement) on net sales of LUMRYZ sold for narcolepsy and additional royalties on net sales of LUMRYZ sold for any other
future FDA-approved non-narcolepsy indications. For more information about the agreement and underlying royalty obligations, see
“Patents and Proprietary Rights – LUMRYZ” in “Item 1— Business” of this Annual Report.
LUMRYZ employs a version of our MICROPUMP technology. LUMRYZ is manufactured by third parties. The FDA has
required implementation of a REMS for LUMRYZ to help ensure the benefits of the drug outweigh any risks of serious adverse
outcomes that may result from inappropriate prescribing, misuse, abuse or diversion of the product. Under the LUMRYZ REMS,
healthcare providers who prescribe the drug must be specially certified, pharmacies that dispense the drug must be specially certified,
and the drug must be dispensed only to patients who have enrolled in the LUMRYZ REMS and completed all REMS requirements,
including documentation of safe use conditions.
What is narcolepsy?
Narcolepsy is a chronic, neurological disorder that affects the brain’s ability to regulate the sleep-wake cycle. The hallmark
symptom of narcolepsy is excessive daytime sleepiness; additional symptoms can include sleep paralysis, disturbed nighttime sleep
and sleep-related hallucinations. There are two types of narcolepsy: narcolepsy type 1 (“NT1”) is characterized by the loss of orexin-
producing neurons and is also associated with cataplexy, a sudden loss of muscle control. Narcolepsy type 2 (“NT2”) shares symptoms
with NT1, but is not associated with cataplexy. An estimated 100,000 people in the U.S. are diagnosed with narcolepsy.
LYBALVI
LYBALVI (olanzapine and samidorphan) is a once-daily, oral atypical antipsychotic drug approved in the U.S. for the treatment
of adults with schizophrenia and for the treatment of adults with bipolar I disorder, as a maintenance monotherapy or for the acute
treatment of manic or mixed episodes, as monotherapy or an adjunct to lithium or valproate. LYBALVI is a combination of
olanzapine, an atypical antipsychotic, and samidorphan, an opioid antagonist, in a single bilayer tablet. LYBALVI is available in fixed
dosage strengths composed of 10 mg of samidorphan and 5 mg, 10 mg, 15 mg or 20 mg of olanzapine. We exclusively manufacture
and commercialize LYBALVI in the U.S.
For a discussion of legal proceedings related to LYBALVI, 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 such legal proceedings, see “Part
I, Item 1A—Risk Factors” in this Annual Report, and specifically the section entitled “Uncertainty over IP in the biopharmaceutical
industry has been the source of litigation and other legal proceedings, and we and our licensees have previously and may in the future
face claims against IP rights covering our products and competition from generic drug manufacturers.”
What is schizophrenia?
See the disease state description in the section entitled “ARISTADA and ARISTADA INITIO” in “Item 1—Business” in this
Annual Report.
What is bipolar I disorder?
Bipolar disorder is a brain disorder that is marked by extreme changes in a person’s mood, energy and ability to function.
Individuals with this brain disorder may experience debilitating mood states, including extreme highs (mania) and extreme lows
(depression). Bipolar I disorder is characterized by the occurrence of at least one manic episode, with or without the occurrence of a
major depressive episode, and affects approximately 1% of the adult population in the U.S. in any given year.
11
VIVITROL
VIVITROL (naltrexone for extended-release injectable suspension) is a once-monthly, non-narcotic, injectable medication
approved in the U.S. for the treatment of alcohol dependence in patients able to abstain from alcohol in an outpatient setting prior to
initiation of treatment with VIVITROL 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 through one intramuscular injection every four weeks. We exclusively manufacture and 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 Financial Statements” in this Annual Report, and for information about risks relating to such legal proceedings, see
“Part I, Item 1A—Risk Factors” in this Annual Report, and specifically the sections entitled “Uncertainty over IP in the
biopharmaceutical industry has been the source of litigation and other legal proceedings, and we and our licensees have previously and
may in the future face claims against IP rights covering our products and competition from generic drug manufacturers” and
“Litigation or arbitration filed against Alkermes, including securities litigation, or actions (such as citizens petitions) filed against
regulatory agencies in respect of our products, may result in financial losses, harm our reputation, divert management 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 used for a medical purpose. According to the 2024 U.S. National Survey on Drug Use and Health, an estimated
4.6 million people aged 18 or older in the U.S. had an opioid use disorder* in the prior 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 2024 U.S. National Survey on Drug Use and Health, an estimated 27.1 million people aged 18
or older in the U.S. had an alcohol use disorder* in the prior year. Adherence to medication is particularly challenging with these
disease states.
*
In 2013, with the publication of the Diagnostic Statistical Manual (“DSM”) 5, the DSM-IV diagnoses of substance use disorders as either dependence or
abuse (i.e., opioid dependence or alcohol dependence), which reflects the approved indications of VIVITROL, were subsumed under a new diagnostic
category of “substance use disorders” (i.e., opioid use disorder or alcohol use disorder) with three categories of disorder severity—mild, moderate or
severe. In determining the applicability of treatments for DSM-IV conditions to persons diagnosed according to DSM-5, one study found agreement
between the DSM-IV diagnoses of alcohol dependence and opioid dependence and moderate to severe alcohol use disorder and opioid use disorder,
respectively, under DSM-5. It was noted in the opioid use disorder table of the 2024 U.S. National Survey on Drug Use and Health that certain estimates
for 2024 may differ from previously published estimates due to changes in how opioids were defined beginning in 2024.
Products Using Our Proprietary Technologies and Licensed Product
We 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. See the sections entitled “Proprietary Technology Platforms”
and “Patents and Proprietary Rights” in “Item 1—Business” in this Annual Report for information with respect to our proprietary
technologies and the IP protection for these products. We receive royalties and/or manufacturing and other revenues from the
commercialization of these products under our collaborative arrangements with these third parties. Such arrangements include, among
others, the following:
Products Using Our Proprietary Technologies
INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and INVEGA HAFYERA/BYANNLI
INVEGA SUSTENNA/XEPLION (paliperidone palmitate), INVEGA TRINZA/TREVICTA (paliperidone palmitate) and
INVEGA HAFYERA/BYANNLI (paliperidone palmitate) (collectively, the “long-acting INVEGA products”) are long-acting atypical
antipsychotics owned and commercialized worldwide by Janssen. We believe that these products incorporate our technologies.
INVEGA SUSTENNA is approved in the U.S. for the treatment of schizophrenia and for the treatment of schizoaffective disorder
as either a monotherapy or adjunctive therapy. Paliperidone palmitate extended-release injectable suspension is approved in the
European Union (“EU”) and other countries outside of the U.S. for the treatment of schizophrenia and is marketed and sold under the
trade name XEPLION. INVEGA SUSTENNA/XEPLION is manufactured by Janssen.
INVEGA TRINZA is approved in the U.S. for the treatment of schizophrenia in patients who have been adequately treated with
INVEGA SUSTENNA for at least 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 manufactured by Janssen.
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INVEGA HAFYERA is approved in the U.S. for the treatment of schizophrenia in patients who have been adequately treated
with INVEGA SUSTENNA for at least four months or INVEGA TRINZA for at least three months. BYANNLI is approved in the EU
for the maintenance treatment of schizophrenia in adult patients who are clinically stable on XEPLION or TREVICTA. INVEGA
HAFYERA/BYANNLI is manufactured by Janssen.
What is schizophrenia?
See the disease state description in the section entitled “ARISTADA and ARISTADA INITIO” in “Item 1—Business” in this
Annual Report.
What is schizoaffective disorder?
Schizoaffective disorder is a condition in which a person experiences a combination of schizophrenia symptoms, such as
delusions, hallucinations or other symptoms characteristic of schizophrenia, and mood disorder symptoms, such as mania or
depression. Schizoaffective disorder is a serious mental illness that affects about one in 300 people.
RISPERDAL CONSTA
RISPERDAL CONSTA (risperidone long-acting injection) is a long-acting atypical antipsychotic owned and commercialized
worldwide by Janssen that incorporates our proprietary technologies. RISPERDAL CONSTA is approved in the U.S. for the treatment
of schizophrenia and as both monotherapy and adjunctive therapy to lithium or valproate in the maintenance treatment of bipolar I
disorder. RISPERDAL CONSTA is approved in numerous countries outside of the U.S. for the treatment of schizophrenia and the
maintenance treatment of bipolar I disorder. RISPERDAL CONSTA uses our polymer-based microsphere injectable extended-release
technology to deliver and maintain therapeutic medication levels in the body through just one intramuscular injection every two
weeks. RISPERDAL CONSTA microspheres are exclusively manufactured by us.
What is schizophrenia?
See the disease state description in the section entitled “ARISTADA and ARISTADA INITIO” in “Item 1—Business” in this
Annual Report.
Licensed Product
VUMERITY
VUMERITY (diroximel fumarate) is a novel, oral fumarate with a distinct chemical structure that is approved in the U.S., the EU
and several other countries for the treatment of relapsing forms of multiple sclerosis in adults, including clinically isolated syndrome,
relapsing-remitting disease and active 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 the “Collaborative
Arrangements—Biogen” section in “Part I, Item 1—Business” in this Annual Report.
What is multiple sclerosis?
Multiple sclerosis (“MS”) is an unpredictable, often disabling disease of the central nervous system (“CNS”), which interrupts the
flow of information within the brain, and between the brain and body. MS symptoms can vary over time and from person to person.
Symptoms may include extreme fatigue, impaired vision, problems with balance and walking, numbness or pain and other sensory
changes, bladder and bowel symptoms, tremors, problems with memory and concentration and mood changes, among others.
Approximately 2.5 million people worldwide have MS, and most are diagnosed between the ages of 15 and 50.
Key Development Programs
Our R&D is focused on the development of innovative medicines in the field of neuroscience that are designed to address unmet
patient needs. As part of our ongoing R&D efforts, we have devoted, and will continue to devote, significant resources to conducting
preclinical work and clinical studies to advance the development of new pharmaceutical products. The discussion below highlights our
current key development program. Drug development involves a high degree of risk and investment, and the status, timing and scope
of our development programs are subject to change. Important factors that could adversely affect our drug development efforts are
discussed in “Item 1A—Risk Factors” in this Annual Report. See the section entitled “Patents and Proprietary Rights” in “Item 1—
Business” in this Annual Report for information with respect to the IP protection for our key development program.
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Alixorexton (formerly referred to as ALKS 2680)
Alixorexton is a novel, investigational, oral, selective orexin 2 receptor agonist in development for the treatment of NT1, NT2 and
idiopathic hypersomnia (“IH”). Orexin, a neuropeptide produced in the lateral hypothalamus, is considered to be the master regulator
of wakefulness due to its activation of multiple, downstream wake-promoting pathways that project widely throughout the brain.
Targeting the orexin system may address excessive daytime sleepiness across hypersomnolence disorders, whether or not deficient
orexin signaling is the underlying cause of disease. Once-daily oral administration of alixorexton was previously evaluated in a phase
1 study in healthy volunteers and patients with NT1, NT2 and IH. In 2025, we completed, and announced positive topline data from,
two phase 2 studies, Vibrance-1 and Vibrance-2, in patients with NT1 and NT2, respectively. We plan to initiate a phase 3 program in
narcolepsy in the first quarter of 2026. Alixorexton is also currently being evaluated in Vibrance-3, a phase 2 study in patients with IH.
In December 2025, the FDA granted Breakthrough Therapy designation to alixorexton for the treatment of NT1.
LUMRYZ (sodium oxybate)
LUMRYZ (sodium oxybate) extended-release oral suspension is currently being evaluated in REVITALYZ, a double-blind,
placebo-controlled, randomized withdrawal, multicenter phase 3 study designed to evaluate efficacy and safety in adult patients with
IH. In December 2025, patient enrollment in REVITALYZ was completed.
Collaborative Arrangements
We have entered into several collaborative arrangements to develop and commercialize products and, in connection with such
arrangements, to access or provide access to, technological, financial, marketing, manufacturing and other resources, including the
arrangements described below.
Janssen
INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and INVEGA HAFYERA/BYANNLI
Under an exclusive license agreement with Janssen, we provided Janssen with rights to, and know-how, training and technical
assistance in respect of, our small particle pharmaceutical compound technology, known as NANOCRYSTAL technology, which was
used to develop the long-acting INVEGA products, and we received milestone payments from Janssen upon the achievement of
certain development goals. There are no further milestones to be earned under this agreement. The agreement also provides for royalty
payments, which 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 the product in such country. As of August 30, 2024, all patent royalties had expired. 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 of between $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
of each calendar year and is payable until 15 years from the first commercial sale of a product in each individual country, subject to
expiry of the agreement. These royalty payments may be reduced in any country based on patent litigation or on competing products
achieving certain minimum sales thresholds. The license agreement, unless earlier terminated, terminates 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 subject to certain surviving obligations.
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 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 or insolvency. In November 2021, we received notice from Janssen of partial termination of the license agreement,
following which Janssen ceased paying us royalties related to U.S. sales of INVEGA SUSTENNA, INVEGA TRINZA and INVEGA
HAFYERA. In April 2022, we commenced binding arbitration proceedings related to, among other things, Janssen’s partial
termination of this license agreement and Janssen’s royalty and other obligations under the agreement. In May 2023, the arbitral
tribunal (the “Tribunal”) in the arbitration proceedings issued a final award (the “Final Award”) that served to reinstate the Janssen
royalties and required payment by Janssen of back royalties and interest for amounts owed but not yet paid since the effective date of
the partial termination. The Final Award also provided, among other things, that we were entitled to royalty revenues from Janssen
related to net sales of INVEGA SUSTENNA through August 20, 2024, INVEGA TRINZA through the second quarter of 2030 (but no
later than May 2030 when the license agreement expires) and INVEGA HAFYERA through May 2030 (when the license agreement
expires).
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RISPERDAL CONSTA
Under 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 the product.
Under two license agreements, we granted Janssen and an affiliate of Janssen exclusive worldwide licenses to use and sell
RISPERDAL CONSTA. Under our license agreements with Janssen, we receive royalty payments equal to 2.5% of Janssen’s end-
market net sales of RISPERDAL CONSTA 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 based on lack of patent coverage and significant competition from generic
versions of the product. Janssen can terminate the license agreements upon 30 days’ prior written notice to us. Either party may
terminate the license agreements by written notice following a breach 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 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 such country, with the exception of Canada, France, Germany, Italy, Japan, Spain and the
United Kingdom, in each case, where the 15-year minimum shall pertain regardless. After expiration, Janssen retains a non-exclusive,
royalty-free license to manufacture, use and sell RISPERDAL CONSTA.
We exclusively manufacture RISPERDAL CONSTA at our Wilmington, Ohio facility for commercial sale. Under our
manufacturing and supply agreement with Janssen, we receive manufacturing revenue based on a percentage of Janssen’s net unit
sales price for RISPERDAL CONSTA for the applicable calendar year. This percentage is determined 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 of a written notice specifying the material breach or upon written notice in the event of the other party’s insolvency or
bankruptcy. Janssen may terminate the agreement upon six months’ written notice to us. In the event that Janssen terminates the
manufacturing and supply agreement without terminating the license agreements, the royalty rate payable to us on Janssen’s net sales
of RISPERDAL CONSTA would increase from 2.5% to 5.0%.
Revenues from our collaborative arrangements with Janssen accounted for approximately 9%, 17% and 31% of our consolidated
revenues for the years ended December 31, 2025, 2024 and 2023, respectively.
Biogen
Under a license and collaboration agreement with Biogen, we granted Biogen a worldwide, exclusive, sublicensable license to
develop, manufacture and commercialize VUMERITY and other products covered by patents licensed to Biogen under that
agreement.
Under this license and collaboration agreement, we received an upfront cash payment and milestone payments related to the
achievement of certain milestones. We are also eligible to receive additional payments upon achievement of certain milestones,
including milestones relating to the first two products other than VUMERITY covered by patents licensed to Biogen under the license
and collaboration agreement.
In addition, we receive a 15% royalty, subject to increases for VUMERITY manufactured and/or packaged by Biogen or its
designees, on worldwide net sales of VUMERITY. We are also entitled to receive royalties on net sales of products other than
VUMERITY covered by patents licensed to Biogen under the license and collaboration agreement, at tiered royalty rates calculated as
percentages of net sales ranging 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) the last-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 the applicable product in the applicable country. Royalties
for all products are subject to customary reductions, as set forth in the license and collaboration agreement.
Following FDA approval of VUMERITY in 2019, Biogen is responsible for all development and commercialization activities for
VUMERITY and all other products covered by the patents that we licensed to Biogen.
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Under the license and collaboration agreement, Biogen appointed us as the toll manufacturer of clinical and commercial supplies
of VUMERITY, subject to Biogen’s right to manufacture or have manufactured commercial supplies as a back-up manufacturer. In
October 2019, we entered into a commercial supply agreement with Biogen for the commercial supply of VUMERITY, an
amendment to such commercial supply agreement and an amendment to the license and collaboration agreement with Biogen,
pursuant to which Biogen has, following a completed technology transfer and an agreed manufacturing transition period, assumed all
responsibility for the manufacture (itself or through a designee) of clinical and commercial supplies of VUMERITY in exchange for
an increase in the royalty rate to be paid by Biogen to us on net sales of product that is manufactured by Biogen or its designee. In
May 2024, we completed the sale of our research and development business and manufacturing facility in Athlone, Ireland (the
“Athlone Facility”) where VUMERITY was manufactured. In connection with the sale of the Athlone Facility, we entered into a
subcontracting arrangement with the purchaser of the Athlone Facility for the manufacture of VUMERITY through the manufacturing
transition period, which concluded in August 2025.
Unless earlier terminated, the license and collaboration agreement will remain in effect until the expiry of all royalty obligations.
Biogen has the right to terminate 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 the right to terminate the license and collaboration agreement following any
governmental prohibition of the transactions effected by the agreement, or in connection with an insolvency event involving the other
party. Upon termination of the license and collaboration agreement by either party, then, at our request, the VUMERITY program will
revert to us.
Revenues from Biogen related to this license and collaboration agreement accounted for approximately 9%, 9% and 8% of our
consolidated revenues for the years ended December 31, 2025, 2024 and 2023, respectively.
Proprietary Technology Platforms
We have used our proprietary technology platforms, which include technologies owned and exclusively licensed to us, to
establish drug development, clinical development and regulatory expertise and in the development of our products.
Injectable Extended-Release Microsphere Technology
Our injectable extended-release microsphere technology allows us to encapsulate small-molecule pharmaceuticals, peptides and
proteins in microspheres made of common medical polymers. The technology is designed to enable novel formulations of
pharmaceuticals by providing controlled, extended release of drugs over time. Drug release from the microsphere is controlled by
diffusion of the drug through the microsphere and by biodegradation of the polymer. These processes can be modulated through a
number of formulation and fabrication variables, including drug substance and microsphere particle sizing and choice of polymers and
excipients.
LINKERX Technology
Our long-acting LINKERX technology platform is designed to enable the creation of extended-release injectable versions of
antipsychotic therapies and may also be useful in other disease areas in which extended duration of action may provide therapeutic
benefits. The technology uses proprietary linker-tail chemistry to create new molecular entities derived from known agents.
NANOCRYSTAL Technology
Our NANOCRYSTAL technology is applicable to poorly water-soluble compounds and involves formulating and stabilizing
drugs into particles that are nanometers in size. A drug in NANOCRYSTAL form can be incorporated into a range of common dosage
forms, including tablets, capsules, inhalation devices and sterile forms for injection, with the potential for enhanced oral
bioavailability, increased therapeutic effectiveness, reduced/eliminated fed/fasted variability and sustained duration of
intravenous/intramuscular release.
Oral Controlled Release Technology
Our oral controlled release (“OCR”) technologies are used to formulate, develop and manufacture oral dosage forms of
pharmaceutical products with varied drug release profiles.
MICROPUMP Technology
Our MICROPUMP technology allows for the development of modified release solid, oral dosage drug formulations.
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Manufacturing and Product Supply
We own and occupy a manufacturing facility in Wilmington, Ohio. For products that we manufacture, we either purchase active
pharmaceutical ingredient (“API”) from third parties or receive it from our third-party licensees. Our manufacturing and development
capabilities include formulation through process development, scale-up and full-scale commercial manufacturing and specialized
capabilities for the development and manufacture of controlled substances. We also contract with third party suppliers and contract
manufacturers for the purchase of certain API or other raw materials or components of our products and for the manufacture of certain
drug product. The manufacture of our products for clinical trials and commercial use, whether by us or third parties, is subject to
Current Good Manufacturing Practices (“cGMP”) regulations and other regulations.
Although some materials and related services for our products are currently only available from a single source or a limited
number of qualified sources, we attempt to acquire an adequate inventory of such materials, establish alternative sources for such
materials and related services and/or negotiate long-term supply arrangements. However, we cannot be certain that we will continue to
be able to obtain long-term supplies of our manufacturing materials or long-term provision of related services.
Our supply chain includes an external network of third-party service providers involved in the manufacture of our products whose
manufacturing facilities and processes are, like ours, subject to inspection by the FDA or comparable agencies in other jurisdictions.
Any delay, interruption or other issues that arise in the acquisition of API, raw materials, 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 our facilities or the facilities
or operations of third parties to pass any regulatory agency inspection, could significantly impair our ability to manufacture and
market our products or advance our development efforts, as the case may be.
In May 2024, we completed the sale of our Athlone Facility and related business to Novo Nordisk (“Novo”) and entered into
subcontracting arrangements to continue certain development and manufacturing activities performed at the Athlone Facility for a
period of time after the closing of the transaction, which concluded by the end of 2025. 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 goods and services in connection with the manufacture and distribution of
our products” and “We are subject to risks related to the manufacture of our products.”
Marketed Products
We manufacture ARISTADA, ARISTADA INITIO, LYBALVI, VIVITROL and microspheres for RISPERDAL CONSTA at our
Wilmington, Ohio facility. We outsource our packaging operations for ARISTADA, ARISTADA INITIO, LYBALVI and VIVITROL
to third-party contractors. Janssen is responsible for packaging operations for RISPERDAL CONSTA. Our Wilmington, Ohio facility
has been inspected by U.S., European (including the UK Medicines and Healthcare products Regulatory Agency), Chinese, Japanese,
Brazilian, Turkish, Russian and Saudi Arabian regulatory authorities for compliance with required cGMP standards for continued
commercial manufacturing. For more information about our Wilmington, Ohio manufacturing facility, see “Item 2—Properties” in
this Annual Report.
We purchase LUMRYZ API and outsource the manufacturing of LUMRYZ drug product to several contract manufacturers in the
U.S. and outside of the U.S. The manufacture and distribution of LUMRYZ is highly restricted, as its API (sodium oxybate) and
finished product are Schedule I and Schedule III controlled substances in the U.S., respectively, subject to regulation by the U.S. Drug
Enforcement Administration of the U.S. Department of Justice (the “DEA”) under the Controlled Substances Act (the “CSA”). Quotas
from the DEA are required in order to manufacture both sodium oxybate and LUMRYZ in the U.S. and the contract manufacturer
facilities are, like ours, subject to inspection and audit by the FDA and the DEA for cGMP compliance.
We were previously party, through various end dates in 2025, to subcontracting arrangements for the manufacture of several
products in the Athlone Facility that are marketed by third parties, including VUMERITY. All of our subcontract manufacturing
arrangements at the Athlone Facility concluded by the end of 2025.
Clinical Products
We manufacture clinical supplies of injectable extended-release products and solid dosage form products at our Wilmington, Ohio
facility. We have also contracted with third-party manufacturers to formulate and manufacture certain products for clinical use. We
require that our contract manufacturers adhere to cGMP in the manufacture of our products or components of our products for clinical
use.
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Research & Development
We devote significant resources to R&D programs. We focus our R&D efforts on developing novel therapeutics in areas of high
unmet medical need. Our R&D efforts include, but are not limited to, areas such as pharmaceutical formulation, analytical chemistry,
process development, engineering, scale-up and drug optimization/delivery. Please see “Item 7—Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in this Annual Report for additional information relating to our R&D
expenditures.
Permits and Regulatory Approvals
We hold various permits, registrations, approvals and/or licenses in respect of our manufacturing and related activities. The
primary licenses that we hold in this regard are FDA Registrations of Drug Establishment, and licenses from the DEA. We also hold
various authorizations, licenses and certificates from the Health Products Regulatory Authority in Ireland, including an Investigational
Medicinal Products Manufacturers Authorization (No. IMP074/00002) and a Manufacturers Authorization (No. M13297/00001) in
respect of our offices located in Dublin, Ireland. We also hold current GMP certificates associated with each of these authorizations.
Due to certain U.S. state law requirements, we also hold state licenses to cover distribution activities conducted in certain states where
required. Additional Manufacturer Authorizations that we previously held in respect of the Athlone Facility were transferred to Novo
with the sale of the facility and related business in May 2024.
We do not generally act as the marketing authorization holder for products incorporating our technologies that have been
developed on behalf of a licensee of such technologies. In such cases, our licensee usually holds the relevant marketing authorization
from the FDA or other relevant regulatory authority, and we support this authorization as needed, including by furnishing a copy of
the product’s Drug Master File, or chemistry, manufacturing and controls data, to the relevant regulator. We generally update this
information annually with the relevant regulator. For our proprietary products, such as ARISTADA, ARISTADA INITIO, LUMRYZ,
LYBALVI and VIVITROL, we hold the marketing authorization and related regulatory documentation ourselves.
Marketing, Sales and Distribution
We are responsible for the marketing of ARISTADA, ARISTADA INITIO, LYBALVI, LUMRYZ and VIVITROL in the U.S.
We focus our sales and marketing efforts on physicians 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, schizophrenia, bipolar I disorder and narcolepsy. We provide,
and contract with third-party vendors to provide, customer services and other related programs for our products, such as product-
specific websites, insurance research services and order, delivery and fulfillment services.
Our sales force for VIVITROL in the U.S. consisted of approximately 105 individuals as of December 31, 2025. VIVITROL is
primarily sold to pharmaceutical wholesalers, pharmacies, specialty distributors and treatment providers. Product sales of VIVITROL
during the year ended December 31, 2025 to McKesson Corporation, Cardinal Health and Cencora, Inc. (formerly known as
Amerisource Bergen, “Cencora”) represented approximately 38%, 15% and 18%, respectively, of total VIVITROL gross sales.
Our sales force for ARISTADA, ARISTADA INITIO and LYBALVI in the U.S. consisted of approximately 435 individuals as of
December 31, 2025. ARISTADA, ARISTADA INITIO and LYBALVI are primarily sold to pharmaceutical wholesalers. Product
sales of ARISTADA and ARISTADA INITIO during the year ended December 31, 2025 to McKesson Corporation, Cardinal Health
and Cencora represented approximately 48%, 22% and 24%, respectively, of total ARISTADA and ARISTADA INITIO gross sales.
Product sales of LYBALVI during the year ended December 31, 2025 to McKesson Corporation, Cardinal Health and Cencora
represented approximately 32%, 29% and 35%, respectively, of total LYBALVI gross sales.
Our sales force for LUMRYZ in the U.S. became a part of the Company in February 2026 when we completed the Avadel
Acquisition. As of the completion of the Avadel Acquisition, this sales force consisted of approximately 60 individuals. LUMRYZ is
distributed through a closed network of three commercial specialty pharmacies: CVS, Accredo, and Optum, and one non-commercial
specialty pharmacy: Assist Rx.
ICS, a division of Cencora, provides warehousing, shipping and administrative services for ARISTADA, ARISTADA INITIO,
LYBALVI and VIVITROL. Eversana provides warehousing, shipping and administrative services for LUMRYZ.
Under our license agreements with Janssen, Biogen and other licensees and sublicensees, the licensees and sublicensees are
typically responsible for the commercialization of any products developed under their respective agreements if and when regulatory
approval is obtained.
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Competition
We face intense competition in the development, manufacture, marketing and commercialization of our products from many and
varied sources, such as research institutions and biopharmaceutical companies, including other companies with similar technologies.
Some of these competitors are also our licensees, who control the commercialization of products from which we receive
manufacturing and/or royalty revenues. In some cases, these competitors may be working to develop and market other products,
systems, or other methods of preventing or reducing disease, or new small-molecule or other classes of drugs.
The biopharmaceutical industry is characterized by intensive research, development and commercialization efforts and rapid and
significant technological change. In many cases, there are already products on the market that may be in direct competition with our
commercial products or products in development. In addition, there are many companies developing products for use in similar
indications or with similar technologies to ours with whom we and our licensees compete, many of whom are larger and have
significantly greater financial, operational and other resources than we do. Other smaller or earlier stage companies may also prove to
be significant competitors, whether through focused or more abbreviated development programs, or collaborative arrangements with
large, established companies. Some of the products being developed by our competitors are being designed to work differently than
our products and may prove to be safer or more effective than our products or achieve regulatory approval and be commercialized
earlier than our products, which may render our products or technology platforms obsolete or noncompetitive or make it more
challenging for us to commercialize 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 or alternative products in the marketplace, including generic
competition, and the relative price of those products; the efficacy, safety and reliability of our products compared to competing or
alternative products; product acceptance by, and preferences of, physicians, other healthcare providers and patients; our ability to
comply with applicable laws, regulations and regulatory requirements with respect to the manufacture and/or commercialization of our
products, including any imposed REMS program or any other changes or increases to regulatory restrictions; protection of our
proprietary rights relating to our products; our ability to obtain reimbursement for our products; our ability to complete clinical
development and obtain regulatory approvals for our products, and the timing and scope of any such regulatory approvals; our, or our
contract manufacturers’, ability to successfully manufacture and provide 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 for pharmaceutical products, including but not limited to technology from Pharmathen S.A., which underpins
aripiprazole formulations in development, and technology underpinning Teva’s once every two weeks injectable microsphere
formulation, each for the treatment of schizophrenia. In the treatment of schizophrenia, ARISTADA, the long-acting INVEGA
products and RISPERDAL CONSTA compete with each other and a number of other injectable products, including 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.; ABILIFY ASIMTUFII (aripiprazole), a once-every-two-months injectable
formulation of ABILIFY (aripiprazole) developed by Otsuka Pharm. Co.; RYKINDO (risperidone), a once-every-two-weeks
injectable formulation of risperidone developed by Luye Pharma Group; UZEDY (risperidone) extended-release injectable
suspension, for subcutaneous use, developed and marketed by MedinCell S.A. and Teva; and generic versions of branded injectable
products, such as risperidone for extended-release injectable suspension marketed by Lupin Limited and by Amneal Pharmaceuticals,
Inc, both of which reference RISPERDAL CONSTA.
In the treatment of schizophrenia, LYBALVI competes with other oral antipsychotic products, including CAPLYTA
(lumateperone) marketed by Johnson & Johnson or its affiliated companies.; REXULTI (brexpiprazole), which is co-marketed by
Otsuka Pharm Co. and H. Lundbeck A/S plc; VRAYLAR (cariprazine), which is marketed and sold by Abbvie Inc.; COBENFY
(xanomeline and trospium chloride), which is marketed and sold by Bristol-Myers Squibb Company; UZEDY; other oral compounds
currently on the market; and generic versions of branded oral products. Other pharmaceutical companies are developing products for
the treatment of schizophrenia that, if approved by the FDA, would compete with LYBALVI.
In the treatment of bipolar I disorder, LYBALVI and RISPERDAL CONSTA compete with antipsychotics such as oral
aripiprazole; VRAYLAR; ABILIFY MAINTENA; ABILIFY ASIMTUFII; CAPLYTA; RYKINDO; UZEDY; risperidone;
quetiapine; olanzapine; and ziprasidone. Other pharmaceutical companies are developing products for the treatment of bipolar I
disorder that, if approved by the FDA, would compete with LYBALVI.
19
In the treatment of alcohol dependence, VIVITROL competes with generic acamprosate calcium (also known as CAMPRAL) and
generic disulfiram (also known as ANTABUSE) as well as currently marketed drugs, including generic drugs, also formulated from
naltrexone. Other pharmaceutical companies are developing products that have shown some potential 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 buprenorphine extended-release injection), each of which is marketed and sold by Indivior plc;
BUNAVAIL buccal film (buprenorphine and naloxone) marketed by BioDelivery Sciences; ZUBSOLV (buprenorphine and naloxone)
marketed by Orexo US, Inc.; and BRIXADI (buprenorphine) extended-release injection for subcutaneous use (CIII), marketed by
Braeburn Inc. VIVITROL also competes with methadone, oral naltrexone and generic versions of SUBUTEX and SUBOXONE
sublingual tablets. Other pharmaceutical companies are developing products that have shown potential in treating opioid dependence
that, if approved by the FDA, would compete with VIVITROL.
In the treatment of MS, VUMERITY competes with AVONEX (interferon beta-1a), TYSABRI (natalizumab), TECFIDERA
(dimethyl fumarate), and PLEGRIDY (peginterferon beta-1a) from Biogen; OCREVUS (ocrelizumab) from Genentech;
BETASERON (interferon beta-1b) from Bayer HealthCare Pharmaceuticals; COPAXONE (glatiramer acetate) from Teva; REBIF
(interferon beta-1a) and MAVENCLAD (cladribine) from EMD Serono, Inc.; GILENYA (fingolimod), EXTAVIA (interferon beta-
1b) and MAYZENT (siponimod) from Novartis AG; AUBAGIO (teriflunomide) and LEMTRADA (alemtuzumab) from Sanofi-
Aventis; ZEPOSIA (ozanimod) from Bristol-Myers Squibb Company; PONVORY (ponesimod) from Janssen; and BRIUMVI
(ublituximab-xiiy) from TG Therapeutics, Inc.
In the treatment of narcolepsy, LUMRYZ competes with twice-nightly oxybate formulations, such as XYWAV (sodium oxybate)
and XYREM (sodium oxybate), as well as a number of daytime wake promoting agents, including VYVANSE (lisdexamfetamine),
dextroamphetamine, methylphenidate, amphetamine, modafinil, and armodafinil, which are widely prescribed, as well as SUNOSI
(solriamfetol) from Axsome Therapeutics, Inc. and WAKIX (pitolisant) from Harmony Biosciences Holdings, Inc. LUMRYZ also
competes with generic versions of XYREM. We and other pharmaceutical companies are developing products, including orexin 2
receptor agonists such as alixorexton and other formulations of sodium oxybate, that have shown or may show potential in treating
narcolepsy that, if approved by the FDA, would compete with LUMRYZ.
With respect to our NANOCRYSTAL technology, we are aware that other technology approaches similarly address poorly water-
soluble drugs. These approaches include nanoparticles, cyclodextrins, lipid-based self-emulsifying drug delivery systems, dendrimers
and micelles, among others, any of which could limit the potential success and growth prospects of products incorporating our
NANOCRYSTAL technology. In addition, there are many competing technologies to our OCR technology, some of which are owned
by large pharmaceutical companies with drug delivery divisions or other, smaller drug-delivery-specific companies.
Patents and Proprietary Rights
Our success depends, in part, on our ability to obtain and maintain patent protection for our products, including those marketed
and sold by our licensees, to maintain trade secret protection and to operate without infringing upon the proprietary rights of others.
We have a proprietary portfolio of patent rights and 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, and processes of
preparation. In the future, we plan to file additional patent applications in the U.S. and in other countries directed to new or improved
products and processes, and we intend to continue to vigorously defend our patent positions. In addition, our licensees may own
additional patents that cover those products from which we receive royalties.
20
ARISTADA and ARISTADA INITIO
We have several U.S. patents and patent applications, and a number of corresponding non-U.S. counterparts, that cover
ARISTADA and/or ARISTADA INITIO. 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
10,351,529
ARISTADA;
ARISTADA INITIO
2030
11,518,745
ARISTADA;
ARISTADA INITIO
2030
12,180,164
ARISTADA;
ARISTADA INITIO
2030
11,273,158
ARISTADA;
ARISTADA INITIO
2039
12,251,381
ARISTADA;
ARISTADA INITIO
2039
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
10,639,376
ARISTADA
2033
11,097,006
ARISTADA
2033
11,969,469
ARISTADA
2033
12,311,027
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
10,813,928
ARISTADA
2035
10,973,816
ARISTADA
2035
11,406,632
ARISTADA
2035
11,883,394
ARISTADA
2035
10,016,415
ARISTADA INITIO
2035
10,688,091
ARISTADA INITIO
2035
10,849,894
ARISTADA INITIO
2035
11,115,552
ARISTADA INITIO
2035
VIVITROL
We have a number of patents and pending patent applications covering our microsphere technology throughout the world, which,
to some extent, cover VIVITROL.
We own one unexpired Orange-Book listed U.S. patent covering VIVITROL, which expires in the U.S. in 2029. For a discussion
of legal proceedings related to VIVITROL, see Note 19, Commitments and Contingent Liabilities in the “Notes to Consolidated
Financial Statements” in this Annual Report.
21
Pursuant to the terms of a confidential settlement and license agreement entered into in August 2023 with Teva, we granted Teva
a non-exclusive, royalty-free, non-transferable, non-sublicensable limited license under the remaining patent covering VIVITROL to
market and sell a generic version of VIVITROL in the U.S. beginning on January 15, 2027 (the “First Entry Date”), or earlier under
certain circumstances. 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 remaining
patent covering VIVITROL in the U.S., to market and sell a generic formulation of VIVITROL in the U.S. beginning on the earlier of
the First Entry Date, sometime in 2028 or earlier under certain circumstances. In September 2025, we entered into an authorized
generic product supply agreement (the “AG Agreement”) with Amneal, pursuant to which we granted Amneal certain rights to
distribute and sell in the U.S. an authorized generic version of VIVITROL (the “Amneal AG Product”) for a one-year term beginning
on the date of a Third Party ANDA Product Launch (as defined in the AG Agreement); provided, however, that if a Third Party
ANDA Product Launch does not occur within ninety (90) days after the First Entry Date (or an earlier launch date under certain
circumstances) (a “Third Party ANDA Product Launch Failure”), Amneal shall no longer have the right to distribute and sell the
Amneal AG Product; provided further, that, in such event, upon written request from Amneal, we agreed to consider, for a period of
thirty (30) days from the date of the Third Party ANDA Product Launch Failure, whether to allow Amneal a second opportunity to
launch the Amneal AG Product. In the event that Amneal launches its own generic version of VIVITROL (other than the Amneal AG
Product) pursuant to the July 2019 license grant described above, we would have a right to terminate the AG Agreement.
INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and INVEGA HAFYERA/BYANNLI
Our NANOCRYSTAL technology patent portfolio, licensed to Janssen, 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 to expire of the patents subject
to our license agreement expires in 2030 in the U.S., the EU and certain other countries. In addition, Janssen has other patents not
subject to our license agreement, including, among others, one that covers INVEGA TRINZA in the U.S. and expires in 2036 and two
that cover INVEGA HAFYERA in the U.S. and expire in 2041.
VUMERITY
We own U.S. patents and patent applications, and a number of corresponding non-U.S. 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.
LYBALVI
We 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 in LYBALVI. In addition, we own U.S. and worldwide patents and patent applications that claim formulations and
methods of treatment that cover LYBALVI. The principal owned or licensed U.S. patents for LYBALVI and their expiration dates are
as follows:
U.S. Patent No.
Product Covered
Expiration Date
8,680,112
LYBALVI
2030
9,119,848
LYBALVI
2031
10,005,790
LYBALVI
2031
9,126,977
LYBALVI
2031
9,517,235
LYBALVI
2031
9,943,514
LYBALVI
2031
10,716,785
LYBALVI
2031
11,185,541
LYBALVI
2031
11,241,425
LYBALVI
2031
11,351,166
LYBALVI
2031
11,793,805
LYBALVI
2031
12,194,035
LYBALVI
2031
8,778,960
LYBALVI
2032
10,300,054
LYBALVI
2033
11,707,466
LYBALVI
2041
11,951,111
LYBALVI
2041
12,390,474
LYBALVI
2041
For a discussion of legal proceedings related to patents covering LYBALVI, see Note 19, Commitments and Contingent
Liabilities in the “Notes to Consolidated Financial Statements” in this Annual Report.
22
LUMRYZ
We own numerous U.S. patents and patent applications, and a number of corresponding non-U.S. counterparts, that cover
LUMRYZ with expiration dates spanning from mid-2037 to early-2042. LUMRYZ was also granted seven years of FDA ODE for its
approved adult and pediatric narcolepsy patient populations through May 2030 and October 2031, respectively.
Our principal U.S. patents for LUMRYZ and their expiration dates are as follows:
U.S. Patent No.
Product Covered
Expiration Date
10,272,062
LUMRYZ
2037
10,736,866
LUMRYZ
2037
10,925,844
LUMRYZ
2040
10,952,986
LUMRYZ
2037
10,973,795
LUMRYZ
2037
11,000,498
LUMRYZ
2037
11,052,061
LUMRYZ
2037
11,065,224
LUMRYZ
2037
11,400,065
LUMRYZ
2037
11,504,347
LUMRYZ
2037
11,583,510
LUMRYZ
2042
11,602,512
LUMRYZ
2037
11,602,513
LUMRYZ
2037
11,766,418
LUMRYZ
2037
11,779,557
LUMRYZ
2042
11,826,335
LUMRYZ
2037
11,839,597
LUMRYZ
2037
11,896,572
LUMRYZ
2037
11,986,451
LUMRYZ
2037
12,097,175
LUMRYZ
2037
12,097,176
LUMRYZ
2037
12,109,186
LUMRYZ
2037
12,115,142
LUMRYZ
2037
12,115,143
LUMRYZ
2037
12,115,144
LUMRYZ
2037
12,115,145
LUMRYZ
2037
12,128,021
LUMRYZ
2037
12,138,239
LUMRYZ
2037
12,144,793
LUMRYZ
2037
12,226,377
LUMRYZ
2037
12,303,478
LUMRYZ
2037
Pursuant to the Avadel Settlement Agreement, we have a worldwide, non-exclusive, royalty-bearing license under any past,
present, or future Jazz patents that could be asserted against LUMRYZ, to market and sell LUMRYZ for narcolepsy and, beginning
March 1, 2028, for any non-narcolepsy indications, including idiopathic hypersomnia. In exchange, from October 1, 2025, Jazz will
receive a royalty of 3.85% (subject to potential reduction as set forth in the agreement) on net sales of LUMRYZ sold for narcolepsy
and, beginning no earlier than March 1, 2028, an additional royalty of 10% (subject to potential reduction as set forth in the
agreement) on net sales of LUMRYZ sold for any future FDA-approved indications (other than narcolepsy), in each case through
February 18, 2036. Avadel also agreed not to market, sell or provide services for LUMRYZ for any non-narcolepsy indications prior
to March 1, 2028, and that any unpermitted sales during such timeframe would be subject to a royalty of 80% of such net sales for any
quarter in which such net sales exceed $2.25 million. Among other things, Jazz also agreed not to challenge the approvability of
LUMRYZ for any present or future indications and Avadel granted Jazz a covenant not to sue under the patents covering LUMRYZ in
connection with Jazz’s marketing and sale of XYWAV and XYREM for any present and future indications.
23
Alixorexton
We have U.S. patent protection that extends to 2041, several U.S. patent applications, and a number of corresponding non-U.S.
counterparts that cover alixorexton.
Protection of Proprietary Rights and Competitive Position
We have exclusive rights through licensing agreements with third parties to issued U.S. patents, pending patent applications and
corresponding patents or patent 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 and patent 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 typically 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 or technologies. The manufacture, use, offer for sale, sale
or import of some of our products might be found 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 their present 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 be resolved
differently in different countries.
If patents exist or are issued that cover our products or technologies, we or our licensees may not be able to manufacture, use,
offer for sale, sell or import some of our products 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 a license 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
technologies, inventions and improvements that are important to the development of our business. Because the patent position of
biopharmaceutical companies involves complex legal and factual questions, enforceability of patents cannot be predicted with
certainty. The ultimate degree of patent protection that will be afforded to products and processes, 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 patent offices, courts
and lawmakers in these countries. Patents, if issued, may be challenged, invalidated or circumvented. Thus, any patents that we own or
license from others may not provide any protection against competitors. Our pending patent applications, those we may file in the
future, or those we may license from third parties, may not result in patents being issued. If issued, such patents may not provide us
with proprietary protection or competitive advantages against competitors with similar technology. Furthermore, others may
independently develop similar technologies or duplicate any technology that we have developed outside the scope of our patents. The
laws of certain countries do not protect our IP rights to the same extent as the laws of the U.S.
We also rely on trade secrets, know-how and inventions, which are not protected by patents, to maintain our competitive position.
We try to protect this information by entering into confidentiality agreements with parties that have access to such information, such
as our corporate partners, collaborators, licensees, employees and consultants. However, any of these parties may breach such
agreements and may disclose our confidential information or our competitors might learn of the information in some other way. If any
trade secret, know-how or other invention not protected by a patent were to be disclosed to, or independently developed by, a
competitor, such event 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 ARISTADA, ARISTADA INITIO, LUMRYZ, LYBALVI and VIVITROL, are important to us and are
generally covered by trademark applications or registrations with the U.S. Patent and Trademark Office (the “USPTO”) and the patent
or trademark offices of other countries. Our licensed products and products using our proprietary technologies also use trademarks that
are owned by our licensees, such as the trademarks for INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA, INVEGA
HAFYERA/BYANNLI and RISPERDAL CONSTA, which are registered trademarks of Johnson & Johnson or its affiliated
companies and VUMERITY, which is a registered trademark of Biogen (and used by us under license). Trademark protection varies in
accordance 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. Trademark registrations generally are for fixed but renewable terms.
24
Regulatory
Regulation of Pharmaceutical Products
United States
Our 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., preclinical studies and clinical trials of the
products must be conducted and the results submitted to the FDA for approval. Clinical trial programs must determine an appropriate
dose and regimen, establish substantial evidence of effectiveness and define the conditions for safe use. This is a high-risk process that
requires stepwise clinical studies in which the product must successfully meet pre-specified endpoints.
Preclinical Testing: Before beginning testing of any compounds with potential therapeutic value in human subjects in the U.S.,
stringent government requirements for preclinical data must be satisfied. Preclinical testing includes both in vitro, or in an artificial
environment outside of a living organism, and in vivo, or within a living organism, laboratory evaluation and characterization of the
safety and efficacy of a drug and its formulation.
Investigational New Drug Application: All available data from animal pharmacology and toxicology studies are included in an
Investigational New Drug application (“IND”) submitted to the FDA and are reviewed by the FDA prior to commencement of first-in-
human clinical trials. The preclinical data must provide an adequate basis for evaluating both the safety and the scientific rationale for
the initial clinical studies in human subjects. In certain cases where human clinical data from ex-U.S. studies are available prior to
submitting the IND, these data would also be included in the IND for review by the FDA prior to commencing clinical trials in the
U.S. In addition, information pertaining to the composition, manufacturer, stability, and controls used for manufacturing the drug
substance and the drug product are included in the IND to support identification, quality, purity, and strength of the investigational
drug product.
Clinical Trials: Clinical trials involve the administration of an investigational drug to healthy human volunteers or to patients
under the supervision of a qualified investigator pursuant to an FDA-reviewed protocol. Human clinical trials are typically conducted
in three sequential phases, although the phases may overlap with one another and, depending upon the nature of the clinical program, a
specific phase or phases may be skipped altogether. Clinical trials must be conducted under protocols 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 be submitted to
the FDA as part of the applicable IND.
•
Phase 1 clinical trials—test for safety, tolerability, absorption, bio-distribution, metabolism, excretion and clinical
pharmacology and, if possible, to gain early evidence regarding efficacy.
•
Phase 2 clinical trials—involve a relatively small sample of the intended patient population and seek to assess the efficacy
of the drug for targeted indications, to determine dose-response and the optimal dose range and to gather additional
information relating to the safety profile.
•
Phase 3 clinical trials—consist of expanded, large-scale studies of patients with the target disease or disorder to obtain
definitive statistical evidence of the efficacy and safety of the proposed product and dosing regimen.
In the U.S., the results of the preclinical and clinical testing of a product are then submitted to the FDA in the form of a New Drug
Application (“NDA”) or a Biologics License Application (“BLA”), depending on the nature of the product. The NDA or BLA also
include information pertaining to the chemistry, manufacturing and controls (“CMC”) of the product as well as the proposed product
packaging and labeling. The submission of an application is not a guarantee that the FDA will find the application complete 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 the applicant 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 some applications, the review process is longer than 10 months). For drugs that, if approved, would represent a
significant improvement in the safety or effectiveness of the treatment, diagnosis, or prevention of serious conditions when compared
to standard applications, the FDA may assign “priority review” designation and review the application within six months of filing. The
FDA has additional review pathways to expedite development and review of new drugs that are intended to treat serious 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
in a timely manner or at all.
25
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 the drug, recommendation as to whether the application should be approved or other guidance that the FDA may
seek. The FDA is not bound by the recommendation of an advisory committee; however, historically, it has often followed such
recommendations. The FDA may determine that a Risk Evaluation and Mitigation Strategy (“REMS”) is necessary to ensure 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, a patient package insert, a communication plan to educate healthcare providers of the drug’s risks, limitations on who may
prescribe or dispense the drug, or other measures that the FDA deems necessary to support the safe use of the drug.
In reviewing an NDA or BLA, the FDA may grant marketing approval, or issue a complete response letter to communicate to the
applicant the reasons the application cannot be approved in its then-current form and provide input on the additional information that
the FDA requires and/or changes that must be made before an application can be approved. Even if such additional information is
submitted to the FDA or such changes made, the FDA may ultimately decide that the NDA or BLA still does not satisfy the FDA’s
criteria for approval. The receipt of regulatory approval often takes a number of years, involves the expenditure of substantial
resources and depends on a number of factors, including the severity of the disease in question, the availability of alternative
treatments, efficacy and potential safety signals observed in preclinical tests or clinical trials, and the risks and benefits demonstrated
in clinical trials. It is impossible to predict with any certainty whether and when the FDA will grant marketing approval for a given
product. Even if a 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 condition of approval, restricted distribution and use, enhanced labeling, special packaging or
labeling, expedited reporting of certain adverse events, pre-approval of promotional materials or restrictions on direct-to-consumer
advertising, any of which could negatively impact the commercial success of a drug. The FDA may also require a sponsor to conduct
additional post-marketing studies as a condition of approval to provide data on safety and effectiveness. In addition, prior to
commercialization, products that may be deemed controlled substances are subject to review and scheduling by the DEA.
The FDA tracks information on side effects and adverse events reported during clinical studies and after marketing approval.
Non-compliance with safety reporting requirements may result in civil or criminal penalties. Side effects or adverse events that are
identified during clinical trials can delay, impede or prevent marketing approval. Based on new safety information that emerges after
approval, the FDA can mandate product labeling changes, impose a REMS or the addition of 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 changing manufacturers or suppliers of certain ingredients or components, the FDA will need to review and
approve such changes in advance. In the case of adding a new indication, we would be required to demonstrate with additional clinical
data that the product is safe and effective for the new intended use. Such regulatory reviews can result in denial or modification of the
planned changes, or requirements to conduct additional tests or evaluations that can substantially delay or increase the cost of the
planned changes.
In addition, the FDA regulates all advertising and promotional activities for products under its jurisdiction. A company can make
only those claims relating to safety and efficacy that are consistent with FDA regulation and guidance, and the product’s approved
label. However, physicians may prescribe legally available drugs for uses that are not described 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 the best treatment for
a particular patient. The FDA does not regulate the behavior of physicians in their choice of treatments, but the FDA regulations do
impose stringent restrictions on manufacturers’ communications regarding off-label uses. Failure to comply with applicable FDA
requirements may subject a company to adverse publicity, enforcement action by the FDA and the U.S. Department of Justice,
corrective advertising and the full range of civil and criminal penalties available 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 appear on one of the five schedules promulgated and administered by the DEA under the CSA. Schedule I substances
by definition have a high potential for abuse, have no currently “accepted medical use” in the U.S., lack accepted safety for use under
medical supervision, and may not be prescribed, marketed or sold in the U.S. Pharmaceutical products approved for use in the U.S.
may be listed as Schedule II, III, IV or V, with Schedule II substances considered to present the highest potential for abuse or
dependence and Schedule V substances the lowest relative risk of abuse. If a product is classified as a controlled substance, it must
undergo the process of scheduling by the DEA into one of these five schedules, which is a process that is separate from FDA approval
of the NDA for such product and may delay the commercial launch of such product even after FDA approval. The CSA also governs,
among other things, the inventory, distribution, recordkeeping, handling, security and disposal of controlled substances. Schedule I
and II drugs are subject to the strictest controls, including manufacturing and procurement quotas, heightened security requirements
and additional criteria for importation. In addition, dispensing of Schedule II drugs is subject to additional requirements. Further,
companies with a scheduled pharmaceutical product are subject to periodic and ongoing inspections by the DEA and similar state drug
enforcement authorities to assess ongoing compliance with the DEA’s regulations.
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Any person or firm that manufactures, distributes, dispenses, imports, or exports any controlled substance, or proposes to do so,
must register with the DEA for a specific business activity related to controlled substances, including manufacturing or distributing,
and may engage in only the activity or activities for which it is registered. The DEA conducts periodic inspections of registered
establishments for compliance with its rules and regulations. Any failure to comply with these regulations could lead to a variety of
sanctions, including the revocation, or a denial of renewal, of any DEA registration and injunctions, or civil or criminal penalties. In
addition to these U.S. federal statutory obligations, there may be additional U.S. state and local laws and regulations relevant to the
handling of controlled substances.
Outside the United States
Certain of our products are commercialized by our licensees in numerous jurisdictions outside the U.S. Most of these jurisdictions
have product approval and post-approval regulatory processes that are similar in principle to those in the U.S. In Europe, there are
several mechanisms for marketing approval, depending on the type 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
evaluated by the Committee for Medicinal Products for Human Use (“CHMP”), the expert scientific committee of the EMA. If the
CHMP determines that the marketing application fulfills the requirements for quality, safety, and efficacy, it will submit a favorable
opinion to the European Commission (“EC”). The CHMP opinion is not binding, but is typically adopted by the EC. A marketing
application approved by the EC is valid in all EU member states.
In addition to this centralized procedure, Europe also has: (i) a nationalized procedure, which requires a separate application to,
and approval determination by, 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, other relevant regulatory authorities and the marketing authorization holder.
Good Manufacturing Practices
The FDA, the EMA, the competent authorities of the EU member states and other regulatory agencies regulate and inspect
equipment, facilities and processes used in the manufacturing of pharmaceutical products prior to approving a product. Once approval
from a regulatory agency is obtained, if a company makes a material change in manufacturing equipment, location or process,
additional regulatory review and approval may be required. Companies also must adhere to cGMP and product-specific regulations
enforced by the FDA and other regulatory agencies both in the manufacture of clinical product and following product approval. The
FDA, the EMA and other regulatory agencies also conduct regular, periodic visits to re-inspect equipment, facilities and processes
following the initial approval of a product and may also request that certain information or records be provided in writing for review in
lieu of an on-site visit. If, as a result of these inspections or records reviews, it is determined that our equipment, facilities or processes
do not comply with applicable 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.
Good Clinical Practices
The FDA, the EMA and other regulatory agencies promulgate regulations and standards, commonly referred to as Good Clinical
Practices (“GCP”), for designing, conducting, monitoring, auditing and reporting the results of clinical trials to ensure that the data and
results are accurate and that the trial participants are 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 perform
additional 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 our clinical trial data or other sanctions.
Hatch-Waxman Act
Under the U.S. Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”), Congress created
an abbreviated FDA review process for generic versions of pioneer, or brand-name, drug products. The law also provides incentives
by awarding, in certain circumstances, non-patent related marketing exclusivities to pioneer drug manufacturers. Newly approved drug
products and changes to the conditions of use of approved products may benefit from periods of non-patent-related marketing
exclusivity in addition to any patent protection the drug product may have. The Hatch-Waxman Act provides five years of new
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 the active drug moiety, not found in any other approved product. The FDA is prohibited from accepting any
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abbreviated new drug application (“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 containing a 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 in which the applicant relies, in part, on data and the FDA’s findings of safety and efficacy from studies not
conducted by or for the applicant 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 full NDA (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 than bioavailability 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 from accepting 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’s Approved Drugs Product List, commonly referred to as the Orange Book. ANDA and 505(b)(2)
applicants must then certify regarding each of the patents listed with 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 accept the
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 holder and 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 or not 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 of receiving 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.
The 30-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. The FDA 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 the period because the parties have failed to cooperate in expediting the
litigation.
Orphan Drug Act
Under the Orphan Drug Act, the FDA may designate drugs or biologics for relatively small patient populations as orphan drugs.
FDA grants orphan drug designation to drugs intended to treat a rare disease or condition, which is one that affects fewer than 200,000
individuals in the U.S., or more than 200,000 individuals, but for which there is no reasonable expectation that the cost of developing
the product and making it available in the U.S. for the disease or condition will be recovered from U.S. sales of the product. Orphan
drug designation does not shorten the duration of the regulatory review process or lower the approval standards, but can provide
important benefits, including consultation with the FDA. If a product is approved for its orphan designated use, it may be entitled to
orphan drug exclusivity (“ODE”), which blocks the FDA from approving for seven years any other application to market a product
that is the same drug for the same indication, except in certain limited circumstances. ODE does not prevent approval of another
sponsor’s application for different indications or uses of the same drug, or for different drugs for the same indication.
Sales and Marketing
We 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 referral of 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 in the form of regulations, and few court decisions
addressing industry practices, it is possible that our practices might be challenged under anti-kickback or similar laws. False claims
laws prohibit anyone from knowingly and willingly presenting, or causing to be presented, for payment to third-party payers
(including Medicare and Medicaid) claims for reimbursed drugs or services that are false or fraudulent, claims for items or services
not provided as claimed or claims for medically unnecessary items or services. Activities relating to the sale and marketing of our
products 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 and civil monetary penalties, as well as the possibility of exclusion from federal healthcare programs
(including Medicare and Medicaid). In addition, federal and state authorities are paying increased attention to enforcement of these
laws within the pharmaceutical industry and private individuals have been active in alleging violations of the laws and bringing suits
on behalf of the U.S. government under the False Claims Act. If we were subject to allegations concerning, or were convicted of
violating, these laws, our business could be harmed. See “Item 1A—Risk Factors” in this Annual Report and specifically those
sections entitled “If there are changes in, or we fail to comply with, the extensive legal and regulatory requirements affecting the
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healthcare industry, we could be subject to investigations, litigation, costs, penalties and business losses,” “Revenues generated by
sales of our products depend, in part, 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) and cost-control measures
imposed, and any reductions in payment rate or reimbursement or increases in our or in patients’ financial obligation to payers could
result in decreased sales of our products and/or decreased revenues” and “The clinical study or commercial use of our products may
cause unintended side effects or adverse reactions, or incidents of misuse may occur, which could adversely affect our products,
business and share price.”
Laws and regulations have been enacted by the U.S. federal government and various states to regulate the sales and marketing
practices of pharmaceutical manufacturers. The laws and regulations generally limit financial interactions between manufacturers and
healthcare providers and require disclosure to the government and public of such interactions. The laws include federal “sunshine”, or
open payments, provisions enacted in 2010 as part of the comprehensive federal healthcare reform legislation and supplemented as
part of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act. Such
provisions apply to pharmaceutical manufacturers with products reimbursed under certain government programs and require those
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 certain payments made to physicians assistants, nurse practitioners,
clinical nurse specialists, certified registered nurse anesthetists and certified nurse-midwives. Certain state laws also require disclosure
of pharmaceutical pricing information and marketing expenditures. Given the ambiguity found in many of these laws and their
implementation, our reporting actions could be subject to the penalty provisions of the pertinent U.S. federal and state laws and
regulations.
Pricing and Reimbursement
United States
In 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 care providers and private insurance plans. Third-party payers are
increasingly challenging the prices charged for medical products and examining the medical necessity and 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 rebate program, 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 by law 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 or non-federal governmental customer. The rebate amount must
be adjusted upward where the AMP for a product’s first full quarter of sales, when adjusted for increases 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 adjusted upwards.
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 Centers for Medicare & Medicaid Services (“CMS”). The terms of our participation in the rebate program impose a
requirement on us to report revisions to AMP or best price 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 or decreasing our rebate liability for prior quarters,
depending on the direction of the revision. In addition, if we were found to have knowingly submitted false information to the
government, the statute provides for civil monetary penalties per item of false information in addition to other penalties available to
the government.
Medicare is a federal program that is administered by the federal government that covers individuals age 65 and over as well as
those with certain disabilities. 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 CMS on a quarterly
basis. This information is used to compute Medicare payment rates, with rates for Medicare Part B drugs outside the hospital
outpatient setting and in the hospital outpatient setting consisting of ASP plus a specified percentage. These rates are adjusted
periodically. If a manufacturer is found to have made a misrepresentation in the reporting of ASP, the statute provides for civil
monetary penalties for each misrepresentation and for each day in which the misrepresentation was applied. In October 2025, CMS
finalized the CY 2026 Medicare Physician Fee Schedule rule, which, among other provisions, increases documentation requirements
for bona fide service fees, establishes a methodology for allocating discounts in bundled arrangements, and requires that sales of
Part B units at the Maximum Fair Price be included in ASP calculations. These changes impose additional, complex reporting and
documentation obligations, may lower ASP of our products and reimbursement under Medicare Part B and may increase our
engagement with CMS in respect of price concessions.
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Medicare Part D provides coverage to enrolled Medicare patients for self-administered drugs (i.e., drugs that do not need to be
injected or otherwise administered by a physician) and certain physician-administered drugs reimbursed under a pharmacy benefit.
Medicare Part D also covers the prescription drug benefit for dual eligible beneficiaries. Medicare Part D is administered by private
prescription drug plans approved by the U.S. government and each drug plan establishes its own Medicare Part D formulary for
prescription drug coverage and pricing, which the drug plan may modify from time-to-time. The prescription drug plans negotiate
pricing with manufacturers and may condition formulary placement on the availability of manufacturer discounts. The Medicare Part
D benefit has distinct phases, where the share of drug costs paid by Medicare Part D enrollees, the Medicare Part D prescription drug
plan, drug manufacturers and Medicare varies. Prior to 2025, the phases consisted of the deductible phase, the initial coverage phase,
the coverage gap and the catastrophic coverage phase and, except for dual eligible Medicare Part D beneficiaries who qualified for
low-income subsidies, drug manufacturers, including us, were required to provide a seventy percent (70%) discount on our brand
name prescription drugs utilized by Medicare Part D beneficiaries when those beneficiaries reached the coverage gap in their drug
benefits. The Inflation Reduction Act of 2022 (the “Inflation Reduction Act”) made substantial changes to the Medicare Part D benefit
design and replaced the manufacturer coverage-gap discount program with a new manufacturer discount program that took effect in
January 2025. Under the new discount program, the Medicare Part D benefit phases consist of the deductible phase, the coverage
phase and the catastrophic coverage phase, and drug manufacturers must provide a ten percent (10%) discount on their brand name
prescription drugs utilized by Medicare Part D beneficiaries during the initial coverage phase and a twenty percent (20%) discount
during the catastrophic coverage phase. For manufacturers that meet the definition of a “specified manufacturer,” the Inflation
Reduction Act provides for Medicare Part D discounts to be phased in over time, starting with a one percent (1%) discount in the
initial coverage phase and a one percent (1%) discount in the catastrophic coverage phase in 2025. These discount amounts increase
each year, stepping up to a ten percent (10%) discount in the initial coverage phase in 2029 and a twenty percent (20%) discount in the
catastrophic coverage phase in 2031. Alkermes meets the criteria of a “specified manufacturer” and, therefore, will follow the phase-in
schedule for discounts to the Medicare Part D program.
Federal law also requires that any company that participates in the Medicaid Drug Rebate Program (“MDRP”) also participate in
the Public Health Services’ (including the Indian Health Services, “PHS”) pharmaceutical pricing program (the “340B program”), in
order for federal funds to be available for the manufacturer’s drugs under Medicaid and Medicare Part B. The 340B program, which is
administered by the Health Resources and Services Administration (“HRSA”), requires participating manufacturers to agree to charge
statutorily defined covered entities no more than the 340B “ceiling price” for the manufacturer’s covered drugs. These 340B covered
entities include certain qualifying community health clinics, a variety of entities that receive health services grants from the Public
Health Service, and multiple categories of hospitals, including children’s hospitals, critical access hospitals, free standing cancer
hospitals and hospitals that serve a disproportionate share of low-income patients. The 340B ceiling price is calculated using a
statutory formula, which is based on the average manufacturer price and rebate amount for the covered outpatient drug as calculated
under the MDRP. A regulation regarding the calculation of the 340B ceiling price and the imposition of civil monetary penalties on
manufacturers that knowingly and intentionally overcharge covered entities became effective on January 1, 2019. The scope and
implementation of the 340B program continue to be the subject of legislative and regulatory interest and ongoing litigation, the
outcomes of which are difficult to predict.
We also make our products available for purchase by authorized users of the Federal Supply Schedule (“FSS”) of the General
Services Administration pursuant 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 offer deeply discounted FSS contract pricing to four federal agencies: the Department of
Veterans Affairs; the Department of Defense; the Coast Guard; and the PHS, in order for federal funding to be made available for
reimbursement of any of our products by such federal agencies and certain federal grantees. Coverage under Medicaid, the Medicare
Part B program and the PHS pharmaceutical pricing program is also conditioned upon FSS participation. FSS pricing is negotiated
periodically with the Department of Veterans Affairs. FSS pricing is intended not to exceed the price that we charge our most-favored,
non-federal customer for a product. In addition, prices for drugs purchased by the Department of Veterans Affairs, Department of
Defense (including drugs purchased by military personnel and dependents through the Tricare Retail Pharmacy (“Tricare”) program),
Coast Guard and PHS are subject to a cap on pricing equal to 76% of the non-federal average manufacturer price (“non-FAMP”). An
additional discount applies if non-FAMP increases more than inflation (measured by the Consumer Price Index—Urban). In addition,
if we are found to have knowingly submitted false information to the government, the VHC Act provides for civil monetary penalties
per false item of information in addition to other penalties available to the government.
In addition, in January 2016, CMS released the final Medicaid covered outpatient drug regulation, which became effective in
April 2016. This regulation implements those changes made by the Patient Protection and Affordable Care Act (the “PPACA”) to the
Medicaid drug rebate statute in 2010 and addresses a number of other issues with respect to the Medicaid program, including, but not
limited to, the eligibility and calculation methodologies for AMP and best price, and the expansion of Medicaid rebate liability to
include Medicaid managed care organizations. The final Medicaid covered outpatient drug regulation established two calculation
methodologies for AMP: one for drugs generally dispensed through retail community pharmacies (“RCP”) and one for so-called “5i
drugs” (inhaled, infused, instilled, implanted or injectable drugs) “not generally dispensed” through RCPs. The regulation further
made clear that 5i drugs would qualify as “not generally dispensed” and, therefore, able to use the alternative AMP calculation, if not
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more than thirty percent (30%) of their sales were to RCPs or to wholesalers for RCPs. The primary difference between the two AMP
calculations is the requirement to include in AMP, for those qualifying 5i drugs not generally dispensed through RCPs, certain
payments, rebates and discounts related to sales to non-RCPs; such inclusion often leads to a lower AMP. The decision of 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 to wholesalers for RCPs.
In September 2024, CMS released a final rule titled “Medicaid Program: Misclassification of Drugs, Program Administration and
Program Integrity Updates Under the Medicaid Drug Rebate Program,” the provisions of which generally took effect in November
2024. The rule includes several provisions affecting manufacturers that participate in the MDRP, including, but not limited to,
addressing manufacturer misclassification of their products in reports required by the MDRP, imposing a 12-quarter deadline for
manufacturer disputes or audits of state rebate invoices, and modifying the definition of “covered outpatient drugs” for which
manufacturers are required to pay rebates to include certain drugs administered in inpatient settings where the drug is part of an
inclusive payment, such inclusive payment includes an amount attributable to the drug and the number of units of the drug
administered to the patient, and where the amount paid that is attributable to the drug is based on a reimbursement methodology
included in the applicable state plan.
U.S. federal and state governments regularly consider reforming healthcare coverage and lessening healthcare costs. Such reforms
may include price controls, value-based pricing and changes to the coverage and reimbursement of our products, which may have a
significant impact on our business. In August 2022, the Inflation Reduction Act was signed into law. The Inflation Reduction Act
includes several provisions that will impact our business to varying degrees, including those that imposed new manufacturer financial
liability on all drugs in Medicare Part D beginning in 2025, allow the U.S. government to negotiate prices for some drugs covered
under Medicare Part D beginning in 2026 and Medicare Part B beginning in 2028, and require companies to pay rebates to Medicare
for drug prices that increase faster than inflation. Additionally, the One Big Beautiful Bill Act (the “OBBBA”), which was enacted in
July 2025, imposes significant reductions in the funding of the Medicaid program, which are expected to decrease the number of
individuals enrolled in Medicaid and reduce the services covered by Medicaid. The OBBBA also modified the Inflation Reduction
Act’s exclusion protecting orphan drugs designated for a single rare disease indication from required Medicare pricing negotiations by
expanding it to apply to drugs designated for multiple rare diseases and by prohibiting Medicare price negotiations until seven years
after an orphan drug is approved for a non-orphan indication.
Throughout 2025, the U.S. federal government pursued multiple initiatives aimed at tying U.S. drug prices to those paid in
certain other developed countries through a “Most‑Favored‑Nation” (“MFN”) pricing framework. These actions included a 2025
Executive Order entitled “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients” in which CMS was
instructed to create plans to impose MFN pricing on drug manufacturers. Following the Executive Order, CMS advanced three MFN-
based payment models through the Center for Medicare and Medicaid Innovation (“CMMI”): the “Global Benchmark for Efficient
Drug Pricing” (“GLOBE”), which would implement a new, mandatory drug rebate program tied to MFN pricing for select drugs in
Medicare Part B and is proposed to go into effect on October 1, 2026; “Guarding U.S. Medicare Against Rising Drug Costs”
(“GUARD”), which would implement a similar mandatory drug rebate program for select drugs in Medicare Part D and is proposed to
go into effect on January 1, 2027; and “GENErating cost Reductions fOr U.S. Medicaid” (“GENEROUS”), launched in January 2026,
under which manufacturers who choose to participate in the model would pay MFN-based supplemental rebates under the Medicaid
program in exchange for standardized coverage criteria in participating states. These models are likely to face legal and operational
challenges, and the implementation of these models remains uncertain. In parallel to these CMS initiatives, several major
pharmaceutical manufacturers have entered into voluntary agreements with the U.S. federal government to provide discounted prices
aligned to MFN prices on certain of the manufacturers’ drugs to the Medicaid program and direct to patients.
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 manage drug cost and utilization by implementing coverage and reimbursement limitations
through means including, but not limited to, formularies, increased out of pocket obligations and various prior authorization
requirements. Even if favorable coverage and reimbursement status is attained for one or more products for which we have received
regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.
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Outside the United States
Within the EU, products are paid for by a variety of payers, with governments being the primary source of payment. Governments
may determine or influence reimbursement of products. Governments may also set prices or otherwise regulate pricing. Negotiating
prices with governmental authorities can delay commercialization of products. Governments may use a variety of cost-containment
measures to control the cost of products, including price cuts, mandatory rebates, value-based pricing and reference pricing (i.e.,
referencing prices in other countries and using those reference prices to set a price). Recent budgetary pressures in many EU countries
are causing governments to consider or implement various cost-containment measures, such as price freezes, increased price cuts and
rebates, and expanded generic substitution and patient cost-sharing. If budget pressures continue, governments may implement
additional cost-containment measures.
Other Regulations
Foreign Corrupt Practices Act: We are subject to the U.S. Foreign Corrupt Practices Act (the “FCPA”) and its Irish equivalent,
which prohibits corporations and their representatives from paying, offering to pay, promising, authorizing, or making payments of
anything of value to any foreign government official, government staff member, 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 many countries, the healthcare
professionals with whom we regularly interact may meet the FCPA’s definition of a foreign government official. The FCPA also
requires public companies to make and keep books and records that accurately and fairly reflect their transactions and to devise and
maintain an adequate system of internal accounting controls.
Environmental, Health and Safety Laws: Our operations are subject to complex and increasingly stringent environmental, health
and safety laws and regulations in the countries where we operate and, in particular, where we have manufacturing facilities, namely
the U.S. and Ireland. Environmental and health and safety authorities in the relevant jurisdictions, including the Environmental
Protection Agency and the Occupational Safety and Health Administration in the U.S. and the Environmental Protection Agency and
the Health and Safety Authority in Ireland, administer laws which regulate, among other matters, the emission of pollutants into the air
(including the workplace), the discharge of pollutants into bodies of water, the storage, use, handling and disposal of hazardous
substances, 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 of hazardous 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 we have 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 became effective in May 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 are established in the EU to the extent that they process personal data as well as any of
its subsidiaries that are established outside the EU to the extent that they process personal data relating to EU residents for certain
purposes, including any such data relating to clinical trial participants in the EU. The GDPR imposes significant obligations on
controllers and processors of personal data, including high standards for obtaining consent from individuals to process their personal
data, robust notification requirements to individuals about the processing of their personal data, a strong individual data rights regime,
mandatory data breach notifications, limitations on the retention of personal data, stringent requirements 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 also imposes additional
obligations on, and required contractual provisions to be included in, contracts between companies subject to the GDPR and their
third-party processors that relate to the processing of personal data. The GDPR allows EU member states to make additional laws and
regulations in order to introduce further conditions, including limitations, with regard to the processing of genetic, biometric or health
data.
Other Laws: We are subject to a variety of financial disclosures, securities trading regulations and U.S. and Irish or EU
governmental regulations as an Irish-incorporated company publicly-listed 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, laboratory
practices, the experimental use of animals, and the purchase, storage, movement, import and export and use and environmental
matters, including disposal of hazardous or potentially hazardous substances used in connection with our research work.
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Human Capital Resources
As a global biopharmaceutical company focused on developing innovative medicines in the field of neuroscience, we have built,
and continue to devote significant resources to further develop and enhance, a comprehensive cross-functional infrastructure designed
to support product development from discovery through commercialization and lifecycle management. We seek to attract, hire,
develop, retain and motivate qualified and highly-skilled employees with experience in areas such as R&D, including early discovery,
medicinal chemistry, translational medicine, formulation development, and clinical trials operations capabilities; IP prosecution,
enforcement and defense; medical affairs; manufacturing operations; U.S. federal and state government affairs; sales and marketing;
and market access, among others. Competition for such personnel in our industry and the geographic regions in which we operate is
intense, with numerous companies also developing, manufacturing or marketing products, including products against which our
products directly compete. We are committed to supporting our employees’ well-being in a transparent, inclusive and collaborative
environment and to providing our employees with access to training, support and resources intended to help them succeed
professionally while appropriately balancing their professional and personal lives.
As of February 20, 2026, we had approximately 2,050 full time employees, of which approximately 1,950 were based in the U.S.
and approximately 100 were based in Ireland. Our 2025 global voluntary attrition rate of 7.0% was below industry benchmarks. None
of our employees are covered by a collective bargaining agreement, and we consider our relations with our employees to be good.
We are an equal opportunity employer and fundamentally committed to creating and maintaining a work environment in which
employees are treated with respect and dignity. All human resources policies, practices and actions related to hiring, promotion,
compensation, benefits and termination are administered in accordance with the principles of equal employment opportunity and other
legitimate criteria without regard to race, color, religion, sex, sexual orientation, gender expression or identity, ethnicity, national
origin, ancestry, age, mental or physical disability, genetic information, any veteran status, any military status or application for
military service, or membership in any other category protected under applicable laws.
In recognition of the value of our employees and their important contributions to the achievement of our business objectives, we
offer market-competitive comprehensive total rewards packages, including bonus opportunities at all levels tied to individual and
company performance, and for employees at certain levels, company equity opportunities. We are committed to designing and
managing our pay programs and decisions to support equitable pay for all employees. We have established our compensation
programs based on market and benchmark data and strive to pay all employees equitably, taking into consideration factors such as
their role, skills, abilities and relevant experience. We routinely monitor our pay programs in order to respond to market trends and
maintain equity within our workforce. We offer our employees healthcare and retirement savings plan benefits, paid time off, tuition
reimbursement and other benefits designed to support healthy lifestyle choices, financial well-being and work-life balance.
In support of our business, we seek to cultivate a work environment that reflects collaboration, respect for each voice, and
unwavering commitment, and strengthens the sense of belonging among our employees. Reflecting the needs of our employees, we
have established a global steering committee, comprised of representatives from all of our locations (including field-based
employees), focused on employee engagement, creating connections, fostering conversations, promoting a culture of understanding
and inclusion, and helping to support alignment of our efforts across the range of perspectives within our organization. In recent years,
we have collaborated with our employees to create five employee resource groups, or ERGs: Limitless, a network to support people
impacted by disability or illness; MOSAIC, a multicultural network; Operation Salute, a network to support active duty military
members, veterans and their families; Pride@Work, an LGBTQ+ and allies network; and Women Inspired Network (WIN), a
women’s network. These ERGs,which are employee-led, voluntary and open to all employees, share a common purpose of building
community, providing opportunities for professional development and networking, and having a positive impact on our culture and
our business.
We encourage active employee engagement to help ensure that employees feel part of our mission and that they have a voice in
the Alkermes community. We conduct periodic employee engagement surveys to understand employee sentiment regarding, and
satisfaction with, their work and experience at Alkermes, and have used, and plan to continue to use, the data collected to help inform
and evolve our human capital management strategy and initiatives. We survey employees at least annually, which allows our
employees to share their insights on a regular basis and provides us with opportunities to regularly assess and address employee
feedback. As many of our office-based employees have adapted to a hybrid work model, we have continued to utilize expanded
employee communications strategies to keep our employees connected and informed.
We are committed to the professional growth and development of our employees. We conduct a comprehensive on-boarding
experience that connects newly hired employees to our business, values, culture, and people. We encourage and support our
employees in their adoption of Individual Development Plans designed to identify professional development and growth opportunities
to help support their career aspirations. We encourage our employees to seek out professional learning opportunities both within
Alkermes and externally, through part-time education and tuition reimbursement programs, and frequent offerings of voluntary
Company-hosted trainings that cover topics including performance management, problem-solving, leadership development, diversity
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education and awareness, communication and mentorship, and as appropriate, more specialized skills-based programs. We also
provide all employees access to our LinkedIn Learning platform, which provides on-demand learning opportunities.
We ask our employees to help us promote and sustain workplace environments that are safe, productive and protective of the
health and well-being of our people and in compliance with applicable laws, rules and regulations. We maintain extensive corporate
environmental, health, safety and security policies, adhere to all health and safety standards set by regulators in the locations in which
we operate, and routinely assess workplace risks, conduct employee trainings and monitor our sites to reduce the risk of workplace
accidents. In 2025, employee health, safety and wellness continued to be of particular focus and importance for the Company.
Available Information and Website Disclosure
Our 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 not form 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, Quarterly Reports 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 electronically filed with, or furnished to, the SEC.
We also make available on the Corporate Governance page of the Investors section of our website at www.alkermes.com (i) the
charters for the standing committees of our board of directors, including the audit and risk committee, compensation committee, and
nominating and corporate governance committee, and (ii) our Code of Business Conduct and Ethics governing our directors, officers
and employees. We intend to disclose on our website any amendments to, or waivers from, our Code of Business Conduct and Ethics
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 and accessible on the Investors section of our website, available at www.alkermes.com. Investors are encouraged
to review the Investors section of our website because we may post material information on that site that is not otherwise disseminated
by us.
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Item 1A. Risk Factors
You should consider carefully the risks described below in addition to the financial and other information contained in this Annual
Report, including our financial statements and related notes thereto and the matters addressed under the caption “Cautionary Note
Concerning Forward-Looking Statements,” and in our other public filings with the SEC. If any events described by the following risks
actually occur, such events could materially adversely affect our business, financial condition, cash flows or results of operations.
This could cause the market price of our ordinary shares to materially decline. The risks described below are not intended to be
exhaustive and are not the only risks that we face. New risk factors can emerge from time to time, and it is not possible to predict the
impact that any factor or combination of factors may have on our business, prospects, financial condition and results of operations.
Risks Related to Our Business and Our Industry
We receive substantial revenue from our key proprietary products and our success depends on our ability to successfully
manufacture and commercialize such products.
Sales of our proprietary products comprise a significant portion of our revenues. We developed and exclusively manufacture
VIVITROL for the treatment of adults with alcohol dependence and opioid dependence, ARISTADA for the treatment of adults with
schizophrenia, ARISTADA INITIO for initiation onto ARISTADA for the treatment of adults with schizophrenia, and LYBALVI for
the treatment of adults with schizophrenia and for the treatment of adults with bipolar I disorder. We exclusively commercialize these
products, and LUMRYZ for the treatment of cataplexy or EDS in patients seven years and older with narcolepsy, in the U.S. Our
success depends in large part on our ability to continue to successfully manufacture and/or commercialize such products in the
complex markets into which they are sold. Any significant negative developments relating to these products could have a material
adverse effect on our revenues from these products and, in turn, on our business, financial condition, cash flows and results of
operations and the market price of our ordinary shares.
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 as research institutions and other biopharmaceutical companies, including companies with similar technologies or
medicines, and manufacturers of generic drugs. Some of these competitors are also our licensees, who control the commercialization
of products from which we receive manufacturing and/or royalty revenues. For example, our proprietary products ARISTADA and
LYBALVI compete with the long-acting INVEGA products and RISPERDAL CONSTA, products from which we receive
manufacturing and/or royalty revenues.
The biopharmaceutical industry is characterized by intensive research, development and commercialization efforts and rapid and
significant technological change. In many cases, there are already products on the market that may be in direct competition with our
commercial products or products in development. In addition, there are many companies with which we and our licensees compete
that are developing generic versions of our products, or products with similar technologies to ours or for use in similar indications, and
many of these competitors are larger and have significantly greater financial, operational and other resources than we do. Smaller or
earlier stage companies may also prove to be significant competitors, whether through focused or more abbreviated development
programs or collaborative arrangements with large, established companies. Some of the products being developed by our competitors
are being designed to work differently than our products and may prove to be safer or more effective than our products or achieve
regulatory approval and be commercialized earlier than our products, which may render our products or technologies obsolete or
noncompetitive or make it more challenging for us to successfully commercialize our products. For a detailed discussion of the
competition that we face with respect to our current marketed products, technologies and product indications, please see the section
entitled “Competition” in “Item 1—Business” in this Annual Report. If we are unable to compete successfully in the highly
competitive biopharmaceutical industry, our business, financial condition, cash flows and results of operations could be materially
adversely affected.
Our revenues from sales of our products may decrease or grow at a slower than expected rate due to many factors.
We cannot be assured that our products will be, or will continue to be, accepted in the U.S. or markets outside the U.S. or that
we will be able to maintain or increase sales of our products. Factors that may cause revenues from our products to grow at a slower
than expected rate, decrease or cease all together, include, among others:
•
the perception of physicians and other members of the healthcare community as to our products’ safety and efficacy relative to
that of current or future competing products and the willingness or ability of physicians and other members of the healthcare
community to prescribe, dispense and/or administer, and patients to use, our products, including those that are scheduled by
the DEA;
35
•
unfavorable publicity concerning us, our licensees, our products, similar classes of drugs or our industry generally;
•
the cost-effectiveness of our products and reimbursement policies of government and third-party payers that may impact use of
our products;
•
our ability to obtain and/or maintain regulatory exclusivities, including orphan drug exclusivity for LUMRYZ;
•
with respect to LUMRYZ, our ability and the ability of our certified pharmacies, physicians and patients to meet the
requirements under the REMS, and physician and patient perception and assessment of the burdens associated with obtaining
LUMRYZ in compliance with the REMS;
•
the cost and availability of raw materials necessary for the manufacture of our products;
•
the successful manufacture of our products on a timely and cost-effective basis;
•
our ability to engage third parties to manufacture, package and/or distribute our products on acceptable terms, or at all;
•
the size of the markets for our products, and patient and physician satisfaction with our products;
•
significant changes in the competitive landscape for our products, including any approvals of generic versions of our products
or other branded products that may compete with our 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 new significant warnings or
restrictions on use;
•
the unfavorable outcome of investigations, arbitrations, litigation or other legal proceedings, including government requests
for information related to one or more of our products, securities litigation, IP litigation, including so-called “Paragraph IV”
litigation relating to products from which we receive revenue, litigation or other proceedings before the USPTO Patent Trial
and Appeal Board (the “PTAB”) or its equivalent in other jurisdictions outside of the U.S., and any other litigation or
arbitration related to any of our products;
•
regulatory developments and actions related to the manufacture, commercialization or continued use of our products, including
FDA actions such as the issuance or modification of a REMS or issuance of an untitled or warning letter, or conduct of an
audit by the FDA, the DEA, or another regulatory authority in which a manufacturing or quality deficiency is identified;
•
the extent and effectiveness of the sales, marketing and distribution support for our products, including the size of our and our
licensees’ sales forces and investments in marketing strategies, and our and our licensees’ decisions as to the timing and
volume of product orders and shipments, the timing of product launches, and product pricing and discounting;
•
disputes with our licensees relating to the use of our technology in, and marketing and sale of, products from which we
received, or currently receive, manufacturing and/or royalty revenue and the amounts and duration of payments to be made
with respect to such products;
•
exchange rate valuations and fluctuations;
•
issuance and/or implementation of rules by CMS or other federal agencies that lessen the net revenue we receive on the sale of
our products or that serve to alter the prices of competitors’ products with which we compete;
•
the impact of participation in the MDRP and 340B programs on the sales of our products, including the net revenue received
from such sales;
•
U.S. and global political and administrative changes, conflicts and/or instability, public health matters, economic conditions
and/or any related changes in applicable laws and regulations or federal and state policy efforts, that may impact resources and
markets for our products or the systems and environments in which we operate; and
•
any other material adverse developments with respect to the commercialization of our products.
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Revenues generated by sales of our products depend, in part, 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)
and cost-control measures imposed, and any reductions in payment rate or reimbursement or increases in our or in patients’
financial obligation to payers could result in decreased sales of our products and/or decreased revenues.
In both U.S. and non-U.S. markets, sales of our products depend, in part, on adequate coverage, pricing and reimbursement from
third-party payers such as state and federal 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 prior authorization, criteria for use or other
requirements), increases in our financial obligation to payers, including government payers, limitations by healthcare providers on
how much, or under what circumstances, they will prescribe or administer our products or unwillingness by patients to pay any
required co-payments, or deductible amounts, could reduce the use of, and revenues generated from, our products and could have a
material adverse effect on our business, financial condition, cash flows and results of operations.
The availability of government and private reimbursement for our products and coverage restrictions that may be imposed for
our products are uncertain, as is the amount for which our products will be reimbursed. Pricing and reimbursement for our products
may be adversely affected by a number of factors, including: changes in, and implementation of, federal or state government
regulations, legislation or private third-party payors’ reimbursement policies; pressure by employers on private health insurance plans
to reduce costs; and consolidation and increasing assertiveness of payors and pharmacy benefit managers (“PBMs”) seeking price
discounts or rebates in connection with the placement of our products on their formularies and, in some cases, the imposition of
restrictions on access or coverage of particular drugs or pricing determined based on perceived value. We cannot predict the
availability, amount, or consistency of reimbursement for, or the prevalence and extent of other access barriers to, 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. The Inflation Reduction Act includes several provisions that will impact our business to varying degrees, including the
Drug Price Negotiation Program applicable to Medicare Parts D and B and those provisions that imposed new manufacturer financial
liability on all drugs in Medicare Part D beginning in 2025, and require companies to pay rebates to Medicare for drug prices that
increase faster than inflation. The negotiated prices for the first ten Part D drugs took effect January 1, 2026. CMS has also identified
an additional fifteen Part D drugs for negotiation for 2027, including VRAYLAR, an oral antipsychotic that competes with LYBALVI
and ARISTADA. We cannot predict how the negotiated price for products in Medicare Part D, including VRAYLAR, may ultimately
affect our products. In addition, the Drug Price Negotiation Program is subject to ongoing litigation, the outcome of which is difficult
to predict.
Additionally, the OBBBA, which was enacted in July 2025, imposes significant reductions in the funding of the Medicaid
program and the enhanced PPACA subsidies expired as of December 31, 2025. Such reductions and loss of subsidies are expected to
decrease the number of individuals enrolled in Medicaid over time and reduce the services covered by Medicaid, which could
adversely affect our business, financial condition, cash flows and results of operations. We also face uncertainties related to the
government’s MFN pricing initiatives, including the GLOBE, GUARD, and GENEROUS models described above, which are
intended to reduce Medicare and Medicaid drug expenditures by tying U.S. prices to those paid in certain other developed countries.
Given the complexity of these models and the likelihood of legal or operational challenges, the potential impact on our business is
difficult to predict.
In addition, economic pressure on state budgets may result in states increasingly seeking to achieve budget savings through
mechanisms that limit coverage or payment for drugs, including but not limited to price control initiatives, discounts and other pricing-
related actions. State Medicaid programs are increasingly requesting that manufacturers pay supplemental rebates and are requiring
prior authorization by the state program for use of any drug. Managed care organizations continue to seek price discounts and, in some
cases, to impose restrictions on the coverage of particular drugs. U.S. government efforts to reduce Medicaid expenses may lead to
increased use of managed care organizations by Medicaid programs. This may result in managed care organizations influencing
prescription decisions for a larger segment of the population and a corresponding constraint on prices and reimbursement for our
products.
Furthermore, we may face uncertainties as a result of efforts to repeal, substantially modify or invalidate some or all of the
provisions of the PPACA, the Inflation Reduction Act and other legislation that impacts us, whether by legislative means or through
litigation, and further potential reforms to government negotiation or regulation of drug pricing. The PPACA significantly expanded
coverage of mental health and substance use disorders and provided federal parity protections to such coverage benefits. If efforts to
reform or repeal PPACA, or to implement differently certain of its provisions, are successful, such efforts and proposed legislation or
other future federal or state legislative or administrative changes relating to healthcare reform and drug pricing could adversely affect
our business and financial results. Additional discounts, rebates, coverage or plan changes, restrictions or exclusions as described
above could have a material adverse effect on sales of our affected products. Any failure to obtain or maintain adequate coverage,
pricing or reimbursement for our products could have an adverse effect on our business, reputation, revenue, results of operations,
financial condition and cash flows.
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Many payors continue to adopt benefit plan changes that shift a greater portion of prescription costs to patients, including more
limited benefit plan designs, higher patient co-pay or co-insurance obligations and limitations on patients' use of commercial
manufacturer co-pay payment assistance programs (including through co-pay accumulator adjustment or maximization programs).
Significant consolidation in the health insurance industry has resulted in a few large insurers and pharmacy benefit managers exerting
greater pressure in pricing and usage negotiations with drug manufacturers, significantly increasing discounts and rebates required of
manufacturers and limiting patient access and usage. In addition, pharmacy benefit managers have merged with or acquired specialty
and mail order pharmacies and provider groups. This consolidation, and any further consolidation, among insurers, pharmacy benefit
managers, other entities in the pharmaceutical supply chain and other payors has increased and will increase, respectively, the
negotiating leverage such entities have over us and other drug manufacturers.
In the U.S., to help patients afford our approved products, we may utilize programs to assist them, including patient assistance
programs and co-pay programs for eligible patients. Government enforcement agencies have shown increased interest in
pharmaceutical companies’ product and patient assistance programs, including reimbursement support services, and a number of
investigations into these programs have resulted in significant civil and criminal settlements. Our patient support programs could
become the target of similar actions. In addition, in November 2013, CMS issued guidance to the issuers of qualified health plans sold
through the PPACA’s marketplaces encouraging such plans to reject patient cost-sharing support from third parties and indicating that
CMS intends to monitor the provision of such support and may take regulatory action to limit it in the future. CMS subsequently
issued a rule requiring individual market qualified health plans to accept third-party premium and cost-sharing payments from certain
government-related entities. In September 2014, the Office of Inspector General of the U.S. Department of Health and Human
Services issued a Special Advisory Bulletin warning manufacturers that they may be subject to sanctions under the federal anti-
kickback statute and/or civil monetary penalty laws if they do not take appropriate steps to exclude Part D beneficiaries from using co-
pay programs. It is possible that changes in insurer policies regarding co-pay programs and/or the introduction and enactment of new
legislation or regulatory action could restrict or otherwise negatively affect these patient support programs, which could result in fewer
patients using affected products, and therefore could have a material adverse effect on our sales, business, and financial condition.
We may fail to realize some or all of the anticipated benefits and synergies of the Avadel Acquisition or to successfully integrate
Avadel’s business, which could adversely affect our business and financial condition and the price of our ordinary shares.
We completed the Avadel Acquisition successfully in February 2026. We are in the process of integrating Avadel’s business
into ours, including integration of a number of complex operational and administrative systems, to form a unified combined company,
including with respect to human resources, intellectual property management, research and development activities, finance, accounting
and internal control processes and systems, sales operations, product distribution, commercialization efforts, government price
reporting, information and information security systems, compliance programs and policies and supply chain systems and third party
relationships (including vendors and third party manufacturers). While our teams are working to ensure an effective and efficient
integration, our and Avadel’s businesses may not be effectively integrated and the anticipated operational, financial, strategic and
other benefits and synergies of the acquisition may not be achieved. These anticipated benefits and synergies are based on a number of
assumptions and uncertainties, which may prove to be incorrect or incomplete. If we are not able to successfully integrate our and
Avadel’s operations, difficulties may arise relating to employee morale, such as the potential loss of key employees that may be
difficult to replace, diversion of management’s attention from operation of the business, failure to harmonize both companies’
corporate cultures, any disruption to each company’s ongoing businesses or inconsistencies in standards, controls, procedures and
policies that may adversely affect our ability to maintain third-party relationships. In addition, we may identify, or regulatory
authorities may assert, instances of non-compliance that occurred prior to the acquisition or that arise following the acquisition as a
result of integration challenges, differences in compliance policies or procedures, or changes in operational requirements or controls,
which may have a negative impact on our business, our interactions with regulatory authorities and our reputation. There may also be
general economic, political, market and business conditions, or future exchange and interest rate changes, or changes in tax laws,
regulations, rates and policies, that could have a negative impact on the combined organization. In addition, LUMRYZ, the marketed
product acquired in the Avadel Acquisition, could be shown to be ineffective or unsafe, may prove difficult to have manufactured, be
precluded from commercialization by the proprietary rights of third parties, or have unintended side effects, adverse reactions or
incidents of misuse and we may not be able to continue to successfully commercialize LUMRYZ or support its revenue growth. Any
of the foregoing or other unanticipated events may result in our not achieving the operational, financial, strategic and other benefits
and synergies we anticipate realizing as a result of the acquisition within the expected timeframe or at all, or they may take longer to
realize or cost more than expected, and in each case, our business, results of operations and financial condition and/or the market price
for our ordinary shares could be adversely affected.
38
If there are changes in, or we fail to comply with, the extensive legal and regulatory requirements affecting the healthcare
industry, we could be subject to investigations, litigation, costs, penalties and business losses.
Our activities, and the activities of our licensees and third-party providers, are subject to extensive government regulation.
Government regulation by various national, state and local agencies includes detailed inspections 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, among others. Achieving and maintaining compliance
with these regulations substantially increases the time, difficulty and costs incurred in obtaining and maintaining approvals to market
newly developed and existing products. Government regulatory actions, including audits, records requests and inspections of
manufacturing facilities, can result in delay in the release of products, seizure or recall of products, suspension or revocation of the
authority necessary for the manufacture and sale of products, and other regulatory enforcement actions, including the levying of civil
fines or criminal penalties, the issuance of a warning letter, or the imposition of an injunction.
Biopharmaceutical companies have also been the target of government lawsuits and investigations alleging violations of
government regulation, including claims asserting submission of incorrect pricing information, impermissible promotion of
pharmaceutical products, improper payments intended to influence the referral of healthcare business, submission of false claims for
government reimbursement, antitrust violations, violations related to anti-corruption and anti-bribery laws, and violations related to
environmental matters. We have been, and may continue to be, the subject of certain government inquiries or requests for
documentation. For example, we have received civil investigative demands from U.S. federal and state authorities and have
cooperated, or are cooperating, with the government in each instance. If, as a result of government requests, proceedings are initiated,
including under the U.S. federal Anti-Kickback Statute or False Claims Act, or under state False Claims Acts or other laws, and we
are found to have violated one or more applicable laws, we may be subject to significant liability, including without limitation, civil
fines, criminal fines and penalties, civil damages and exclusion from U.S. federal funded healthcare programs such as Medicare and
Medicaid, any of which could materially affect our reputation, business, financial condition, cash flows and results of operations.
Conduct giving rise to such liability could also form the basis for private civil litigation by third-party payers or other persons
allegedly harmed by such conduct. Additionally, regardless of whether or not there is merit to claims underlying any investigation or
legal proceedings to which we are subject, or whether or not we are found as a result of such investigations or lawsuits to have
violated any applicable laws, such lawsuits and inquiries can be expensive to defend or respond to, may divert the attention of our
management and other resources that would otherwise be engaged in managing our business, and may further cause significant and
potentially irreparable harm to our public reputation. While we have implemented numerous risk mitigation measures, we cannot
guarantee that we, our employees, our licensees, our consultants or our contractors are, or will be, in compliance with all applicable
laws or regulations. If we or our agents fail to comply with any of those laws or regulations, a range of actions could result, including
the suspension or termination of clinical trials, the failure to approve a product, restrictions on sales of our products or our
manufacturing processes, withdrawal of our products 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 or decisions, related to patent protection and enforcement, access to healthcare, environmental issues or
product pricing and marketing, could also adversely affect our revenues, our public reputation or our potential to be profitable. For
example, and as discussed above, the Inflation Reduction Act includes several provisions that will impact our business to varying
degrees, including those that imposed new manufacturer financial liability on all drugs in Medicare Part D beginning in 2025, allow
the U.S. government to negotiate prices for some drugs covered under Medicare Part B and Part D, and require companies to pay
rebates to Medicare for drug prices that increase faster than inflation. Additionally, in its 2024 decision in Loper Bright Enterprises v.
Raimondo, the U.S. Supreme Court overruled the “Chevron doctrine,” which gave deference to regulatory agencies’ statutory
interpretations in litigation against federal government agencies, such as the FDA, where the law was ambiguous. This U.S. Supreme
Court decision may lead to challenges of longstanding decisions and policies of the FDA, and other federal agencies, which could lead
to uncertainties in the industry and disrupt or alter such federal agencies’ operations. Any further changes in laws, regulations or
decisions or in the interpretation of existing laws, regulations and decisions, could have a material adverse effect on our business,
financial condition, cash flows and results of operations.
We rely on our licensees in the commercialization and continued development of products from which we receive revenue and, if
our licensees are not effective, or if disputes arise in respect of our contractual arrangements, our revenues could be materially
adversely affected.
Our arrangements with licensees are critical to successfully commercializing and/or bringing to market products using our
proprietary technologies and from which we receive manufacturing and/or royalty revenue. We rely on these licensees in various
respects, including commercializing such products, conducting development activities with respect to new formulations or new
indications for such products, and/or managing the regulatory approval process for such products.
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We earn significant royalty revenue from sales by our licensees of our licensed products and third-party products incorporating
our proprietary technologies. We also earn manufacturing revenues for the manufacture of RISPERDAL CONSTA on behalf of
Janssen. The revenues we receive from such products depend primarily upon the success of our licensees in commercializing such
products. For example, we receive substantial revenue from Janssen’s sales of XEPLION, INVEGA TRINZA/TREVICTA, INVEGA
HAFYERA/BYANNLI, and from Biogen’s sales of VUMERITY. We have no involvement in the commercialization efforts for these
and other products sold by third parties from which we receive revenue and cannot control the extent or effectiveness of such
commercialization efforts. In addition, generic versions of certain of these products have been launched, and others could be launched
in the future, and there has been, and may in the future be, adverse impacts on the commercialization of these products and therefore
on the revenue that we receive from sales of these products.
Disputes may also arise between us and a licensee involving the ownership of technology developed under a license, the use of
our technology, including know-how, in third-party products, the terms and amounts of royalty payments to be paid under a license, or
other issues arising out of any licenses or other collaborative agreements. Such disputes may delay related development programs,
impact commercialization or manufacturing activities for the related products, impact the timing or amount of revenue that we receive
in respect of such products, or result in expensive arbitration, litigation or other dispute resolution, which may not be resolved in our
favor and may adversely impact our financial condition.
Further, certain of our license agreements may be terminated, with or without cause, or assigned in connection with a change in
control or other event, and we cannot guarantee that any of these licensing relationships will continue or that our licensees will be able
or willing to continue to perform their obligations, including development, commercialization or payment obligations, under such
agreements. Any significant negative developments relating to our relationships with our licensees could have a material adverse
effect on our business, financial condition, cash flows and results of operations and on the market price of our ordinary shares.
For example, in November 2021 we received notice of partial termination of an exclusive license agreement with Janssen.
Under this license agreement, we provided Janssen with rights to, and know-how, training and technical assistance in respect of, our
small particle pharmaceutical compound technology, known as NANOCRYSTAL technology, which was used to develop INVEGA
SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA, INVEGA HAFYERA/BYANNLI, and CABENUVA. While we ultimately
prevailed in arbitration proceedings related to, among other things, this partial termination and Janssen’s royalty and other obligations
under the license agreement, the announcement of the partial termination, expectations regarding the loss of royalty revenues, actual
delays in receipt of royalty revenues that resulted from such termination, and the ultimate announcement of the resumption of payment
of such royalty revenues, caused the market price of our ordinary shares to fluctuate significantly.
For these and other reasons that may be outside of our control, our revenues from products sold by our licensees, and any related
commercial milestone payments, may fall below our expectations, the expectations of our licensees or those of our shareholders,
which could have a material adverse effect on our results of operations and the market price of our ordinary shares.
Clinical trials for our products are expensive, may take several years to complete, and their outcomes are uncertain.
In order to obtain regulatory approvals for the commercial sale of any product, we or our licensees must demonstrate, through
preclinical testing and clinical trials, that such product is safe and effective for use in humans. Designing, conducting and completing a
clinical development program is often a lengthy, time-consuming and expensive process and the risk of a product not successfully
completing full clinical development and receiving marketing approval is high. We have incurred, and we will continue to incur,
substantial expenses for preclinical testing, clinical trials and other activities related to our clinical development programs.
Our preclinical and clinical development efforts may take several years or more, varying substantially with the type, complexity,
novelty and intended use of the product and the clinical study designs and methodologies employed, and may not be successfully
completed in a timely manner or at all. Timelines for the initiation, conduct and completion of clinical trials may be delayed by many
factors, including:
•
issues with the opening, operation or inspection of a new or ongoing clinical trial site, including those located in or near
geographic areas of conflict or areas impacted by political, environmental, public health or economic events;
•
delays or failures of third-party CROs and other third-party service providers and clinical investigators to manage and
conduct the trials, perform oversight of the trials, including data audit and verification procedures, or to meet expected
timelines;
•
an inability to recruit, enroll and retain clinical trial participants at the expected rate or at all, or to adequately follow
participants after treatment;
•
safety or tolerability issues that may arise during clinical trials;
•
an 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, the DEA and other regulatory
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agencies, that may impact the strategies for, and design, timelines or feasibility of, our clinical development programs.
In addition, we are currently conducting and enrolling patients in clinical studies in a number of countries where our experience
is more limited and in disease areas which are newer to us. In these instances, we must depend on third parties, including independent
clinical investigators, CROs and other third-party service providers, to successfully conduct our clinical trials and to audit, verify and
accurately report results from such trials. Though we do not have much control over many aspects of such third-party activities, we are
responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols
for the trial. Third parties may not complete planned activities on schedule or conduct our trials in accordance with regulatory
requirements or our stated protocols.
The outcome of our clinical trials is uncertain. The results from preclinical testing and early clinical trials often have not
predicted results of later clinical trials. A number of products have shown promising results in early clinical trials but subsequently
failed to establish sufficient safety and/or efficacy data in later clinical trials to obtain necessary regulatory approvals.
If we and/or third parties fail to manage or conduct clinical trials in a timely manner or in accordance with study protocols or
obligations or if a product fails to demonstrate clinical safety and efficacy or to possess features that may give such product a
competitive commercial advantage over other products for the same indication, the development, approval and/or commercialization
of our products may be delayed or prevented or less successful than anticipated, 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 data become available or based on subsequent audit and verification procedures, and may not be indicative of final
data from such trials, data from future trials or real-world results.
From time to time, we may announce, publish or report preliminary, topline or interim data from our clinical trials. Such data are
subject to the risk that one or more of the clinical outcomes may materially change as patients continue progressing through the study,
as patient enrollment continues and/or as more patient data become available, and such data may not be indicative of final data from
such trials, data from future trials or real-world results. In addition, such data may remain subject to audit confirmation and
verification procedures that may result in the final data being materially different from the preliminary, topline or interim data
disclosed. As a result, all preliminary, topline and interim data, and data from early clinical trials with a small number of participants,
should be viewed with caution until the final data or more extensive datasets are available, as applicable. Material adverse differences
between preliminary, topline or interim data and final data, or initial proof-of-concept data and data from later or larger trials, could
significantly harm our business, financial condition, cash flows and results of operations.
Our success depends, in part, on our ability to successfully obtain and maintain regulatory approval for our products.
We must obtain government approvals before marketing or selling our products. The FDA and DEA (to the extent a product is a
controlled substance) in the U.S., and comparable regulatory agencies in other jurisdictions, impose substantial and rigorous
requirements for the development, manufacture and commercialization of medicines, the satisfaction of which can take a significant
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, including as a result of changes in government, and may impose different or more stringent requirements than currently in
effect, which may adversely affect our plans for product development, manufacture and/or commercialization. The approval
procedures and the time and requirements necessary to obtain and maintain approvals may also vary among countries. Regulatory
agencies may have varying interpretations of the same data, and approval by one regulatory agency does not ensure approval by
regulatory agencies in other jurisdictions. In addition, the FDA or other regulatory agencies may choose not to communicate with or
update us during clinical testing and regulatory review periods and the ultimate decision by the FDA or other regulatory agencies
regarding drug approval or post-approval requirements may not be consistent with prior discussions with or communications from
such agencies.
The product approval process can last many years, be very costly and still be unsuccessful. Regulatory approval by the FDA or
other regulatory agencies can be delayed, limited or not granted at all for many reasons, including:
•
a product may not demonstrate sufficient safety and efficacy or a sufficiently favorable benefit/risk profile for each target
indication in accordance with applicable regulatory agencies’ standards;
•
data from preclinical testing and clinical trials may be interpreted by applicable regulatory agencies in different ways than
we or our licensees interpret it;
•
regulatory agencies may not agree with our or our licensees’ regulatory approval strategies, plans for accelerated
development timelines, components of our or our licensees’ filings such as clinical trial designs, conduct and
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methodologies, or the sufficiency of our or our licensees’ submitted data to meet their requirements for product approval;
•
regulatory agencies might not approve our or our licensees’ manufacturing processes or facilities, or those of the CROs
and third-party contract manufacturers who conduct research or manufacturing work on our or our licensees’ behalf;
•
failure by our clinical investigational sites and the records kept at such sites, including any clinical trial data, to be in
compliance with the FDA’s GCP, or EU legislation governing GCP, or to pass FDA, EMA or EU member state
inspections of clinical trials;
•
regulatory agencies may change their requirements for approval or post-approval marketing, including potential
imposition or modification of a REMS; and
•
adverse medical events during our clinical trials or during clinical trials of other product candidates in the same class
could lead to requirements that trials be repeated or extended, or that a development program be terminated or placed on
clinical hold, even if other studies or trials relating to the program are successful.
In addition, disruptions at the FDA and other regulatory agencies that are unrelated to our company or our products, including
those relating to a prolonged U.S. government shutdown, such as the one that occurred in the fall of 2025, significant changes in FDA
leadership or personnel, or other global, political or economic conditions or circumstances, could cause delays to the regulatory
approval process for our products.
Any failure to obtain, or delay in obtaining, regulatory approval for our products will prevent or delay their commercialization
and could have a material adverse effect on our business, financial condition, cash flows and results of operations. In addition, any
failure to obtain, or delay in obtaining, approval for our products could have a material impact on our shareholders’ confidence in the
strength of our development capabilities and/or our ability to generate significant revenue from our development programs and could
result in a significant decline in our share price.
Even if regulatory approval to market a product is granted by the FDA or other regulatory agencies, the approved label for the
product may not be consistent with our initial expectations or commercial plans. For example, the FDA or other regulatory agencies
may impose limitations on the clinical data that may be included in the label for the product or the indicated uses for which, or the
manner in which, the product may be marketed, or may impose additional post-approval requirements, such as a REMS, with which
we would need to comply in order to maintain the approval of such product. Our business could be seriously harmed if we do not
complete these post-approval requirements or if the FDA or other regulatory agencies require us to change the label for any product,
or if such post-approval requirements significantly restrict the marketing, sale or use of any product. For example, we are required to
maintain a REMS for LUMRYZ because its API consists of sodium oxybate, a central nervous system depressant known to be
associated with serious potential side effects. The REMS imposes, among other requirements, controls and restrictions on the
distribution of the product in the U.S. Any failure to demonstrate our substantial compliance with such REMS obligations, including
as a result of business or other interruptions, or a determination by the FDA that the REMS is not meeting its goals, could result in
enforcement action by the FDA , including potential withdrawal of the product from the market or required changes to our REMS
obligations, any of which could negatively affect sales of LUMRYZ, result in additional costs and expenses for us or require us to
invest a significant amount of resources, any of which could significantly affect our business, financial condition, cash flows and
results of operations.
In addition, legislation and regulatory policies relating to post-approval requirements and restrictions on promotional activities
for pharmaceutical products, or FDA or other regulatory agency regulations, guidance or interpretations with respect to such
legislation or regulatory policy may change, which may impact the development and commercialization of our products.
Disruptions at the FDA, the SEC and other government agencies could negatively impact our business.
Disruptions at the FDA and other regulatory agencies that are unrelated to our company or our products, including due to
changes in government or significant changes in leadership or personnel, could increase the time required for new drugs to be
reviewed and approved, or otherwise cause delays to the regulatory approval or post-approval processes for our products, which could
adversely affect our business. The ability of the FDA or other regulatory agencies to review and approve new products or manage
post-approval requirements for marketed products can be affected by a variety of factors, including government budget and funding
levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, political and policy
changes. Average review times for product submissions have fluctuated in recent years as a result. In addition, government funding of
the SEC and other government agencies on which our operations may rely is subject to the impacts of political events, which are
inherently fluid and unpredictable.
For example, over the last several years, the U.S. government has shut down several times, including in the fall of 2025, and
certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees
and stop critical activities. If a prolonged government shutdown occurs, or if other global, political or economic conditions impact the
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regulatory agencies with which we interact, it could significantly impact the ability of the FDA and the SEC or other agencies to
timely review and process our submissions, which could have a material adverse effect on our business.
We may not be able to successfully expand our R&D pipeline or our commercial product portfolio, which could limit our growth
potential.
Our business is focused on the development and commercialization of medicines in the field of neuroscience, and we invest
substantial resources toward the research and development of new potential product candidates to advance into clinical trials.
Notwithstanding this investment, our development programs may not yield viable product candidates in a timely manner or at all, and
our product candidates may not obtain regulatory approval, which could limit our growth potential.
In addition to our internal development programs, our strategy for pipeline and commercial portfolio expansion includes
identifying and evaluating potential transactional opportunities, including mergers and acquisitions, licenses and collaborations, and
development and supply, commercialization or co-promotion arrangements, among others, to acquire or license additional products,
product candidates, or technologies that could be additive to our business and to our strategy to create value for our shareholders. For
example, we recently completed the Avadel Acquisition, which added LUMRYZ to our commercial portfolio and added valiloxybate
to our portfolio of development candidates. However, we may not be able to successfully complete any additional transactions in the
future, as such transactions are often highly competitive, and many other companies may pursue the same or similar assets to those
that we may consider attractive. In particular, larger companies with greater financial resources or development or commercialization
capabilities may have a competitive advantage over us. Furthermore, companies that perceive us to be a competitor may be unwilling
to assign or license rights to us. We may also be unable to enter into transactions on acceptable terms that would allow us to realize an
appropriate return on our investment. Even if we succeed in our efforts to obtain rights to suitable products, product candidates, or
technologies, the competitive business environment may result in high transaction costs, and our investment in these potential assets
remain, or would remain, subject to the inherent risks associated with the development and commercialization of new medicines and
may not yield the growth or success that we anticipate, which could have a material adverse effect on our business and financial
results and the market price of our ordinary shares.
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. We have in the past, and may in the future, face unanticipated interruptions or delays in manufacturing through our internal or
external supply chain and resources. Such disruptions can occur for many reasons, including, but not limited to, the supply and quality
of API, drug product and other product components and any potential shortages of such materials; regulatory actions; failures relating
to materials, manufacturing equipment or processes, quality deviations or safety issues, vendor error, operator error, labor shortages or
disputes, utility or transportation disruptions, or physical or electronic security breaches; site-specific incidents (such as fires),
environmental incidents, natural disasters and other severe weather events, including those that may occur as a result of climate
change; global disruptions such as the COVID-19 pandemic and ongoing conflicts in various regions of the world; and many other
factors.
Any such problems with manufacturing processes, whether at our facilities or those of our licensees or other third parties that
manufacture or package products or components of products on our behalf, could result in product defects or shortages, manufacturing
failures or products not being manufactured to their applicable specifications, which could require us to delay shipment of products or
recall products previously shipped, or could impair our or our licensees’ ability to receive regulatory approval for a product,
commercially launch a product, expand into new markets or supply products in existing markets. We may not be able to resolve any
such issues in a timely manner, or at all, which could result in declines in sales and reputational damage as well as significant
remediation costs to address any issues that arise.
We rely solely on our manufacturing facility in Wilmington, Ohio for the manufacture of ARISTADA, ARISTADA INITIO,
LYBALVI, RISPERDAL CONSTA and VIVITROL. Due to regulatory and technical requirements, we have limited ability to shift
production within our facility or to outsource any portions of our manufacturing to third parties in the event of an interruption in
manufacturing or demand for manufacturing that exceeds our capacity. Any need to transition our manufacturing processes, or
portions thereof, to a third party, whether due to an interruption in our manufacturing or due to demand for a product that exceeds our
manufacturing capacity or otherwise, could take a significant amount of time and resources, may not be successful, and could cause
significant interruption or delay in our ability to supply products.
Manufacturing facilities also require specialized personnel and are expensive to operate and maintain. Any interruption in
manufacturing, delay in a regulatory approval or commercial launch, or recall or suspension of sales of products manufactured in our
facilities, may cause operating losses as we continue to operate our facilities and retain the required specialized personnel. In addition,
any significant personnel shortages at our manufacturing facility, whether temporary or prolonged, including shortages related to the
labor market, may cause significant interruptions to our supply of products.
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We are also dependent in certain cases on third parties who manufacture or distribute certain products that we commercialize or
from which we receive revenue. Supply or manufacturing issues related to products using our proprietary technologies or licensed
products could materially adversely affect sales of such products, and in turn our revenue from such products. For example, LUMRYZ
is manufactured by a number of third-party contract manufacturers on which we rely and, due to regulatory and technical
requirements, we have limited ability to shift production to alternative contract manufacturers in the event of an interruption in
manufacturing or demand for manufacturing that exceeds such contract manufacturers’ capacity. Any need to transition manufacturing
could take a significant amount of time and resources, may not be successful, and could cause significant interruption or delay in our
ability to supply LUMRYZ. In addition, VUMERITY, a licensed product for which we receive royalties, was previously manufactured
by us and is now manufactured exclusively by Biogen and its designees, and we no longer have any control over its manufacturing.
Supply or manufacturing issues related to our proprietary products, products using our proprietary technologies, or our licensed
products could materially and adversely affect sales of such products, and in turn our revenue from such products.
We rely on third parties to provide goods and services in connection with the manufacture and distribution of our products.
We rely on third parties for the timely supply of goods and services that play a role in the manufacture and distribution of our
products, including, among others, specified raw materials, equipment, contract manufacturing, formulation and packaging services,
operation of the LUMRYZ REMS, storage and product distribution services, customer service activities and product returns
processing, and some of these goods and services for our products are currently only available from a single source or a limited
number of qualified sources. These third parties must comply with U.S. federal, state and local regulations applicable to their business,
including FDA and, as applicable, DEA regulations. Although we actively manage these third-party relationships to support
continuity, quality and compliance with applicable regulations, events beyond our control, including natural disasters and other severe
weather events, including those that may occur as a result of climate change, or global disruptions such as the COVID-19 pandemic
and ongoing conflicts in various regions in the world, could negatively impact the continuity of supply of such materials and/or
services, their quality and their compliance with applicable standards. Any such failure could materially 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, packaging, storage and distribution of our products, requires successful coordination among us and multiple third-
party providers. Lack of capacity available at such third-party providers or any other issues with the quality or operations of these
third-party providers, including any issues related to regulatory permits, audits or requirements, could require us to delay shipment of
saleable products, recall products previously shipped or impair our ability to supply products at all.
We endeavor to qualify and register new vendors and to develop contingency plans so that production is not materially impacted
by third-party provider issues. Nonetheless, any such third-party provider issues could increase our costs, cause us to lose revenue or
market share and damage our reputation, and may have a material adverse effect on our business, financial condition, cash flows and
results of operations.
In addition, we rely heavily on the three largest pharmaceutical wholesalers in the U.S. market—Cardinal Health Inc., Cencora,
and McKesson Corp—in the distribution of ARISTADA and ARISTADA INITIO, LYBALVI and VIVITROL. If we are unable to
maintain our business relationships with these wholesalers on commercially acceptable terms, if these wholesalers experience
prolonged business disruptions, if the buying patterns of these wholesalers fluctuate due to seasonality or any other reason or if
wholesaler buying decisions or other factors outside of our control change, our business, financial condition, cash flows and results of
operations could be materially adversely affected.
If we or our third-party providers fail to meet the stringent requirements of governmental regulation in the manufacture of our
products, we could incur substantial remedial costs and experience a reduction in sales and/or revenues.
We and the third-party providers involved in our manufacturing activities are generally required to comply with cGMP
regulations and other applicable non-U.S. standards in the manufacture of our products or components of our products. Additionally,
in the U.S., the DEA and state-level agencies heavily regulate the manufacturing, holding, processing, security, recordkeeping and
distribution of substances, including controlled substances. Our products that are scheduled by the DEA as controlled substances make
us subject to the DEA’s regulations. We and our third-party providers are subject to unannounced inspections by the FDA, the DEA
and other governmental agencies to confirm compliance with all applicable laws. Any changes to our suppliers or modifications of
methods of manufacturing require submission of amendments to our marketing applications to the FDA or other applicable regulatory
agencies, and ultimate acceptance by such agencies of such amendments, prior to release of product to the applicable marketplace. Our
inability, or the inability of our third-party providers, to demonstrate ongoing compliance with cGMP or other regulatory requirements
could require us to withdraw or recall products and interrupt clinical and commercial supply of our products. Any delay, interruption
or other issues that may arise in the manufacture, formulation, packaging or storage of our products as a result of a failure of our
facilities or operations or the facilities or operations of third-party providers to pass any regulatory agency inspection could
significantly impair our ability to develop, obtain and maintain regulatory approval of, and commercialize or supply, products. This
interruption could increase our costs, cause us to lose revenue or market share and damage our reputation with our collaboration
partners or in the market generally.
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In March 2020, in response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES
Act”) was signed into law in the U.S., and served to increase the FDA’s existing authority with respect to drug shortage measures.
Under the CARES Act, for each facility where marketed products for certain serious diseases or conditions are manufactured, or
where components of such products are manufactured, we are required to have a risk management plan in place that identifies and
evaluates risks to the supply of such products or product components, which plans may be subject to review during any FDA
inspection. Each of our facilities operates in accordance with a comprehensive quality management system, which includes risk
assessment, preventive actions and regular review of inventory levels for each of the marketed products that we manufacture;
however, the FDA may not consider our risk management program to be sufficient upon inspection and we may still experience
shortages in the supply of marketed products that we manufacture or that are manufactured on our behalf by third parties, which could
materially adversely affect the patients who rely on such marketed products and our business, financial condition, cash flows and
results of operations. The FDA and various regulatory agencies outside the U.S. have inspected and approved our commercial
manufacturing facility. However, the FDA and any other regulatory agencies may not approve any other facility that we or our third-
party providers may operate and, once approved, any of these facilities may not remain in compliance with cGMP and other
regulations. Any third party we use to manufacture bulk drug product for use in the U.S. must be licensed by the FDA. Failure by us or
our third-party providers to gain or maintain regulatory compliance with and approvals from the FDA or other regulatory agencies
could materially adversely affect our business, financial condition, cash flows and results of operations.
LUMRYZ is a controlled substance subject to U.S. federal and state-controlled substance laws and regulations, and any failure to
comply with these laws and regulations, or the cost of compliance with these laws and regulations, could materially adversely
affect our business, financial condition, cash flows and results of operations.
Controlled substances as defined in the CSA are subject to a number of requirements and restrictions under the CSA and
implementing regulations, including certain registration, security, recordkeeping, reporting, import, export, prescription, distribution
and other requirements administered by the DEA. Individual states have also established controlled substance laws and regulations.
FDA-approved products such as LUMRYZ, which contain sodium oxybate (a Schedule I controlled substance) as their API, are
deemed to be Schedule III controlled substances under the CSA. Although state-controlled substances laws often mirror federal law,
various states may also separately schedule LUMRYZ. We or the third-parties with which we work to develop, manufacture and/or
commercialize controlled substances such as LUMRYZ may be required to obtain separate state registrations, permits or licenses in
order to be able to manufacture, research, distribute, import, export, administer or prescribe such controlled substances for clinical
trials or commercial sale, and failure to meet applicable regulatory requirements could lead to enforcement and sanctions by the states
in addition to those from the DEA or otherwise arising under federal law.
U.S. facilities conducting research, manufacturing, distributing, importing or exporting, or dispensing of controlled substances
such as LUMRYZ must be registered and/or licensed to perform these activities and must comply with the security, control,
recordkeeping and reporting obligations under the CSA, DEA regulations and corresponding state requirements. DEA and state
regulatory bodies conduct periodic inspections of certain registered establishments that handle controlled substances. Obtaining and
maintaining necessary registrations and quotas and complying with the regulatory obligations may result in delays in the development,
manufacture and commercialization of LUMRYZ and future product candidates or products that may contain controlled substances.
Furthermore, failure to maintain compliance with the CSA and DEA and state regulations by us or any of contractors, distributors or
pharmacies with which we work can result in regulatory action that could materially adversely effect our business, financial condition,
cash flows and results of operations. In addition, if we change any third-party upon whom we rely to conduct our research,
manufacturing, distributing, importing, exporting, or dispensing activities, doing so will result in additional costs and expenses and
may take a significant amount of time, and we may be unsuccessful in identifying a new, satisfactory third-party, any of which could
materially and adversely affect our business, financial condition, and results of operations. DEA and state regulatory bodies may seek
civil penalties, refuse to renew necessary registrations or licenses, or initiate proceedings to restrict, suspend or revoke those
registrations or licenses. In certain circumstances, violations could lead to criminal penalties.
We and the third parties that manufacture LUMRYZ in the U.S. are subject to the DEA’s annual manufacturing and
procurement quota requirements. The annual quota allocated to us or our U.S. manufacturing partners for sodium oxybate may not be
sufficient to meet commercial demand of LUMRYZ. Consequently, any delay or refusal by the DEA in establishing our, or U.S.
manufacturing partners’, procurement and/or production quotas for controlled substances could delay or stop our commercial activities
and future development/clinical activities, which could materially adversely effect our business, financial condition, cash flows and
results of operations.
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Our success largely depends upon our ability to attract, recognize 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 products depends largely upon our ability to attract, recognize and retain highly skilled technical, scientific,
manufacturing, management, regulatory, legal, compliance and selling and marketing personnel. Each of our executive officers and all
of our employees are employed “at will,” meaning we or each officer or employee may terminate the employment relationship at any
time. We face intense competition for employees due to, among many factors, the geographic locations in which we operate and the
competitive benefits and compensation practices in our industry, and in recent years, new competition as employees are increasingly
able to work remotely. The loss of key personnel due to any of these or other factors or our inability to hire and retain personnel who
have technical, scientific, manufacturing, management, regulatory, legal, compliance or commercial backgrounds could materially
adversely impact our business, including the achievement of our manufacturing, research and development, commercial, financial and
other operational and strategic business objectives.
Risks Related to Intellectual Property
Patent and other IP protection for our products is key to our business and our competitive position but is uncertain.
Receiving and maintaining patent and/or trademark protection for our products and technologies, including those that are subject
to our licensing arrangements, maintaining our trade secrets, not infringing the proprietary rights of others, and preventing others from
infringing our proprietary rights are each key to our success and our competitive position.
Patent protection provides rights of exclusivity for the term of the patent. We are able to protect our proprietary rights from
unauthorized use by third parties 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 try to protect our proprietary position by filing patent applications in the U.S.
and elsewhere related to our proprietary product inventions and improvements that are important 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 third parties, may not
result in patents being issued. Even if issued, such patents may not provide us with sufficient proprietary protection or competitive
advantages against competitors with similar products or technology. Because the patent positions of biopharmaceutical companies
involve complex legal and factual questions, enforceability of patents cannot be predicted with 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 in other important
markets, remains uncertain and is dependent upon the scope of protection decided upon by the patent offices, courts and lawmakers in
these countries. The development of new technologies or products may take a number of years, and there can be no assurance that any
patents 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 make reasonable efforts to protect our IP rights and to ensure that our proprietary products and technologies do not
infringe the IP rights of third parties, we cannot ascertain the existence of all potentially conflicting IP claims. Therefore, there is a risk
that third parties may make claims of infringement against our products or technologies. If patents exist or are issued that cover our
products or technologies, we may not be able to manufacture, use, offer for sale, sell or import such products 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 a license
at all. This could delay or prevent us from developing, manufacturing, selling or importing those of our products that would require
the license. Claims of IP infringement may also require that we redesign affected products, enter into costly settlement or license
agreements, pay costly damage awards, or face a temporary or permanent injunction prohibiting us from marketing or selling certain
of our products. Even if we have an agreement that may serve to indemnify us against such costs, the indemnifying party may be
unable to uphold its contractual obligations. If we cannot, or do not, license the infringed IP on reasonable terms or at all, or substitute
similar IP from another source, our business, financial condition, cash flows and results of operations could be materially adversely
affected.
The laws of certain countries may not protect our IP rights to the same extent as the laws of the U.S., and any patents that we
own or license from others may not provide any protection against competitors. 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 IP
could materially and adversely affect our business, financial condition, cash flows, and results of operations.
We also rely on trade secrets, know-how and inventions, which are not protected by patents, to maintain our competitive
position. We try to protect this information by entering into confidentiality agreements with parties that have access to it, such as our
licensees, licensors, contract manufacturers, potential business partners, employees and consultants. However, any of these parties
may breach such agreements and may disclose our confidential information, or our competitors might learn 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 may arise
as to the rights in related or resulting know-how and inventions. If any trade secret, know-how or other invention not protected by a
patent were to be disclosed to, or independently developed by, a competitor, such event could materially and adversely affect our
business, financial condition, cash flows and results of operations.
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Uncertainty over IP in the biopharmaceutical industry has been the source of litigation and other legal proceedings, and we and
our licensees have previously and may in the future face claims against IP rights covering our products and competition from
generic drug manufacturers.
There is considerable uncertainty within the biopharmaceutical industry about the validity, scope and enforceability of many
issued patents in the U.S. and elsewhere in the world. We cannot currently determine the ultimate scope, validity and enforceability of
patents which may be granted to third parties in the future or which patents third parties may assert are infringed by the manufacture,
use or sale of our products.
Patents, if issued, may be challenged, invalidated or circumvented. As our products achieve greater commercial sales, potential
competitors are more likely to seek to challenge our patents. In the biopharmaceutical industry, there has been, and we expect that
there may continue to be, significant litigation, inter partes reviews (“IPRs”), post-grant reviews (“PGRs”) and administrative
proceedings regarding patents and other IP rights. A third party may file an IPR, PGR, interference and/or infringement action against
us, including in response to patent certifications required under the Hatch-Waxman Act, claiming that certain claims of one or more of
our 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. For example, in December 2024, Argentum Pharmaceuticals LLC filed a request with the USPTO for ex parte
reexamination (“EPR”) of the validity of certain claims of our U.S. Patent No. 7,919,499 that covers VIVITROL, and in January 2025,
Apotex Inc. filed with the USPTO a petition for IPR of certain claims of the same patent. In July 2025, the USPTO discretionarily
denied institution of the IPR and in October 2025, confirmed the validity of the claims challenged under the EPR and found that
several additional claims we filed were patentable. While both of these challenges were ultimately resolved in our favor, they required
expenditure of time, effort and resources and there can be no assurance that we would achieve similar outcomes if our patents continue
to be challenged in the future.
In addition, we may need to enforce our IP rights against third parties who infringe on our patents and other IP or challenge our
patents, patent applications or trademark applications. In the U.S., generic manufacturers of innovator drug products may file ANDAs
and, in connection with such filings, certify that their products do not infringe the innovator’s patents or that the innovator’s patents
are invalid. This often results in litigation between the innovator and the ANDA applicant, commonly known in the U.S. as
“Paragraph IV” litigation, which can be expensive, protracted and distracting to management, with no certainty of success. For
example, Teva entities filed an ANDA seeking approval to engage in the commercial manufacture, use or sale of a generic version of
VIVITROL and alleged that one of our Orange-Book patents related to VIVITROL was invalid, unenforceable and/or would not be
infringed by Teva’s proposed product. In response, we initiated a Paragraph IV lawsuit against Teva in September 2020 to dispute
such claims.
We may have to expend considerable time, effort and resources to defend such actions, and litigation may be necessary in some
instances to determine the validity and scope of certain of our proprietary rights. In order to avoid or resolve timely and costly IP
litigation or IPR, PGR or other administrative proceedings, we may enter into settlement agreements in which we grant an adverse
party certain rights with respect to our IP. For example, in August 2023, following a trial in the Teva patent infringement lawsuit
discussed above, we entered into a confidential settlement and license agreement (the “Settlement Agreement”) with Teva to resolve
the proceedings between the parties. Pursuant to the terms of the Settlement Agreement, we granted Teva a non-exclusive, royalty-
free, non-transferable, non-sublicensable limited license to market and sell a generic version of VIVITROL in the U.S. beginning on
January 15, 2027, or earlier under certain circumstances. And in July 2019, in order to resolve an IPR instituted by Amneal with the
PTAB, we entered into a settlement and license agreement with Amneal, pursuant to which we granted Amneal a non-exclusive
license under certain patents covering VIVITROL, including the 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 or earlier under certain circumstances, and later
entered into the AG Agreement with Amneal, pursuant to which we granted Amneal certain rights to distribute and sell in the U.S. an
authorized generic version of VIVITROL for a one-year term beginning on the date of a Third Party ANDA Product Launch (as
defined in the AG Agreement), subject to certain conditions set forth in the AG Agreement.
There can be no assurance that we or our licensees will prevail or settle any IP legal proceedings or disputes on favorable terms.
Our and our licensees’ existing patents could be invalidated, found unenforceable or found not to cover generic forms of our or our
licensees’ products. If any ANDA filers were to receive FDA approval to sell generic versions of our products or the products from
which we receive revenue and/or prevail in any patent litigation with respect to such products, our business, financial condition, cash
flows and results of operations could be materially adversely affected.
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Risks Related to Regulatory or Legal Matters
Litigation or arbitration filed against Alkermes, including securities litigation, or actions (such as citizens petitions) filed against
regulatory agencies in respect of our products, may result in financial losses, harm our reputation, divert management resources,
negatively impact the approval of our products, or otherwise negatively impact our business.
We are, and may in the future become, involved in various legal proceedings, including those asserting violations of securities
and/or fraud and abuse laws and those asserting claims related to product liability, class actions or antitrust claims, IP and/or
contractual arrangements. Such proceedings may include claims for, or the possibility of, damages or fines and penalties involving
substantial amounts of money or other relief, including but not limited to civil or criminal fines and penalties. Such legal proceedings
and the preparation therefor may result in substantial costs to us and diversion of management’s attention and resources, which in turn
could harm our business. Moreover, if any of such legal proceedings were to result in an adverse outcome, such outcome could have a
material adverse effect on our business, financial condition, cash flows and results of operations.
Further, our liability insurance coverage may not be sufficient to satisfy, 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 legal proceedings to which we are subject,
or whether or not we are found as a result of such lawsuits to have violated any applicable laws, such lawsuits and inquiries can be
expensive to defend or respond to, may divert the attention of our management and other resources that would otherwise be engaged
in managing our business, and may further cause significant and potentially irreparable harm to our public reputation.
We have been, and may again be, the subject of citizen petitions or litigation that request that the FDA refuse to approve, delay
or withdraw approval of, or impose additional approval requirements on our marketing applications. If successful, such petitions can
significantly delay, or even prevent, the approval of the marketing application in question or cause such marketing application
approval to be withdrawn. Even if the FDA ultimately denies such a petition, the FDA may substantially delay approval while it
considers and responds to the petition, or may impose additional approval or post-approval requirements as a result of such petition.
These outcomes and others could adversely affect our share price as well as our ability to generate revenues from the
commercialization and sale of our products and products using our proprietary technologies.
The clinical study or commercial use of our products may cause unintended side effects or adverse reactions, or incidents of
misuse may occur, which could adversely affect our products, business and share price.
We cannot predict whether the clinical or 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 not the drugs are actually the cause of an injury. Our products
may cause, may appear to have caused or may be claimed to have caused, injury or dangerous drug interactions, and we may not learn
about or understand those claims or effects until the products have been administered to patients for a prolonged period of time.
Additionally, incidents of product misuse may occur.
These events, among others, could result in product recalls or additional regulatory controls (including additional regulatory
scrutiny, REMS programs, and/or requirements for additional labeling) or product liability actions. 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 at all, or our insurer may disclaim coverage as to a
future claim. This could prevent or limit the development or commercialization of our products. In addition, the reporting of adverse
safety events involving our products, including instances of product misuse, and public perceptions about such events, could cause our
product sales or share price to decline or experience periods of volatility. These types of events could have a material adverse effect on
our business, financial condition, cash flows and results of operations.
If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate Program or other governmental
pricing programs, we could be subject to additional reimbursement requirements, penalties, sanctions and fines, which could have
a material adverse effect on our business, financial condition, results of operations and growth prospects.
We participate in the Medicaid Drug Rebate Program, the 340B program, the U.S. Department of Veterans Affairs’ FSS pricing
program, and the Tricare program, and have obligations to report the average sales price for certain of our drugs to the Medicare
program.
Pricing and rebate calculations vary across products and programs, are complex, and are often subject to interpretation by us,
governmental or regulatory agencies and the courts, which can change and evolve over time. In the case of our Medicaid pricing data,
if we become aware that our reporting for a prior quarter was incorrect, or has changed as a result of recalculation of the pricing data,
we are generally obligated to resubmit the corrected data for up to three years after those data originally were due. Such restatements
and recalculations increase our costs for complying with the laws and regulations governing the Medicaid Drug Rebate Program and
could result in an overage or underage in our rebate liability for past quarters. Price recalculations also may affect the ceiling price at
which we are required to offer our products under the 340B program and give rise to an obligation to refund entities participating in
the 340B program for overcharges during past quarters impacted by a price recalculation.
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Civil monetary penalties can be applied if we are found to have knowingly submitted any false price or product information to
the government, if we are found to have made a misrepresentation in the reporting of our average sales price, if we fail to submit the
required price data on a timely basis, or if we are found to have charged 340B covered entities more than the statutorily mandated
ceiling price. CMS could also decide to terminate our Medicaid drug rebate agreement, in which case federal payments may not be
available under Medicaid or Medicare Part B for our covered outpatient drugs. We cannot assure you that our submissions will not be
found by CMS to be incomplete or incorrect.
Our failure to comply with our reporting and payment obligations under the Medicaid Drug Rebate Program and other
governmental programs could negatively impact our financial results. CMS issued a final regulation, which became effective in April
2016, to implement the changes to the Medicaid Drug Rebate Program under the Affordable Care Act. Since that time, CMS has
issued multiple proposed and final rules that change the Medicaid Drug Rebate Program. Regulatory and legislative changes, and
judicial rulings relating to the Medicaid Drug Rebate Program and related policies, have increased and will continue to increase our
costs and the complexity of compliance, have been and will continue to be time-consuming to implement, and could have a material
adverse effect on our results of operations, particularly if CMS or another agency challenges the approach we take in our
implementation.
HRSA issued a final regulation regarding the calculation of the 340B ceiling price and the imposition of civil monetary penalties
on manufacturers that knowingly and intentionally overcharge covered entities, which became effective in January 2019.
Implementation of this regulation could affect our obligations and potential liability under the 340B program in ways we cannot
anticipate. We are also required to report the 340B ceiling prices for our covered outpatient drugs to HRSA, which then publishes
them to 340B covered entities. Any charge by HRSA that we have violated this regulation or other requirements of the program could
negatively impact our financial results. Moreover, HRSA has established an administrative dispute resolution (“ADR”) process, which
is governed by a final regulation effective June 2024, for claims by covered entities that a manufacturer engaged in overcharging,
including claims that a manufacturer limited the ability of a covered entity to purchase the manufacturer’s drugs at the 340B ceiling
price, and by manufacturers that a covered entity violated the prohibitions against diversion or duplicate discounts. Such claims are to
be resolved through an ADR panel of government officials rendering a decision that could be appealed only in federal court. An ADR
proceeding could potentially subject us to discovery by covered entities and other onerous procedural requirements and could result in
additional liability. HRSA could also decide to terminate a manufacturer’s agreement to participate in the 340B program for a
violation of that agreement or other good cause shown, in which case the manufacturer’s covered outpatient drugs may no longer be
eligible for federal payment under the Medicaid or Medicare Part B program.
Further, legislation may be introduced that, if passed, would, among other things, further expand the 340B program to additional
covered entities or would require participating manufacturers to agree to provide 340B discounted pricing on drugs used in an
inpatient setting, and any additional future changes to the definition of average manufacturer price or the Medicaid rebate amount
could affect our 340B ceiling price calculations and negatively impact our results of operations. Additionally, we have implemented a
policy governing the eligibility of covered entities to purchase our products at the 340B price for shipment to a contract pharmacy. We
implemented this policy out of concern that contract pharmacy arrangements are diverting the benefits of the 340B program from
patients to contract pharmacies and contributing to the pervasive lack of transparency within the 340B program, rendering it difficult
to identify inappropriate duplicate discounts and product diversion. Certain pharmaceutical manufacturers and the industry group,
Pharmaceutical Research and Manufacturers of America (“PhRMA”) are involved in ongoing litigation with the HRSA regarding
manufacturer initiatives that restrict covered entities’ ability to purchase products at the 340B program price for shipment through an
unlimited number of contract pharmacies. Additionally, several states have enacted, and many other states are considering, laws that
prohibit manufacturer restrictions on contract pharmacies. Certain pharmaceutical manufacturers and PhRMA have initiated litigation
challenging these state laws. The outcome of pending judicial proceedings and the potential impact on the way in which manufacturers
extend discounts to covered entities through contract pharmacies remain uncertain and negative legal rulings, or the passage of
legislation in respect of this topic, may materially adversely impact our results of operations.
We have obligations to report the average sales price for certain of our drugs to the Medicare program. In addition, we are
required to report the best price for our drugs, as defined under the Medicaid Drug Rebate Program, to CMS. Statutory or regulatory
changes or changes in CMS guidance could affect the average sales price or best price calculations for our products and the resulting
Medicare payment rate or rebates we owe to state Medicaid programs. Such changes could negatively impact our results of operations.
Pursuant to applicable law, knowing provision of false information in connection with price reporting under the U.S.
Department of Veterans Affairs, FSS or Tricare programs can subject a manufacturer to civil monetary penalties. These program
obligations also contain extensive disclosure and certification requirements. If we overcharge the government in connection with our
arrangements with FSS or Tricare, we are required to refund the difference to the government. Failure to make necessary disclosures
and/or to identify contract overcharges can result in allegations against us under the False Claims Act and other laws and regulations.
Unexpected refunds to the government, and responding to a government investigation or enforcement action, would be expensive and
time-consuming, and could have a material adverse effect on our business, financial condition, results of operations and growth
prospects.
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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 to periodic inspections for possible violations of these laws and regulations. Under certain of these laws and
regulations, we could be liable for any contamination at our current or former properties or third-party waste disposal sites. In addition
to significant remediation costs, contamination can give rise to third-party claims for fines, penalties, natural resource damages,
personal injury and damage (including property damage). The costs of compliance with environmental, health and safety laws and
regulations are significant. We have developed and implemented a proprietary risk mitigation program to preemptively identify and
address environmental, health, safety and security risks; however, there can be no assurance that a violation of current or future
environmental, health or safety laws or regulations will not occur. Any violations, even if inadvertent or accidental, or the cost of
compliance with any resulting order, fine or liability that may be imposed, could materially adversely affect our business, financial
condition, cash flows and results of operations.
Risks Related to our Financial Condition and Tax Matters
We may not be able to maintain profitability on a sustained basis.
At December 31, 2025, our accumulated deficit was $0.7 billion, which was primarily the result of net losses incurred from
continuing operations from 1987, the year Alkermes, Inc. was founded, through December 31, 2022, partially offset by net income
from continuing operations over certain fiscal periods, including net income earned during the years ended December 31, 2025, 2024
and 2023.
Our ability to maintain profitability on a sustained basis will depend on our ability to continue to grow and diversify our revenue
and to effectively and efficiently manage our costs. Factors that may impact our future revenue, and in turn our future profitability,
include, among others, our, our third-party contract manufacturers or our licensees’ (as applicable) ability to:
•
successfully commercialize VIVITROL, the ARISTADA product family, LYBALVI, LUMRYZ, VUMERITY,
XEPLION, INVEGA TRINZA/TREVICTA and INVEGA HAFYERA/BYANNLI and any other marketed products from
which we earn revenue in the countries in which such products are approved;
•
successfully develop, and obtain and maintain regulatory approval for, products in the U.S. and/or in other countries;
•
successfully manufacture our products and third-party products efficiently and in a cost-effective manner;
•
obtain adequate reimbursement coverage for our products and third-party products from insurance companies, government
programs and other third-party payers;
•
successfully protect and defend our confidential information and IP rights related to our technologies and our products;
•
maintain regulatory exclusivities or the benefits of such exclusivities;
•
achieve product development or sales milestones under our collaborative arrangements; and
•
resolve favorably any commercial disputes that may arise in respect of collaborative arrangements from which we receive
revenues.
Factors that may impact our future spend, and in turn our future profitability, include, among others:
•
the scope of our research and development activities, including the number of programs, products, indications or new
technologies that we may pursue, and our ability, if sought, to share development costs through potential collaborations;
•
the time and expense required to pursue FDA and/or other regulatory approvals for our products;
•
the time and expense required to prosecute, enforce, defend and/or challenge patent and other IP rights;
•
the costs of operating and maintaining our manufacturing and research facilities, including the costs and availability of
raw materials or components of our products;
•
the costs of doing business with third-party vendors, including suppliers, manufacturers, packagers and distributors and
CROs;
•
the scope and costs of our commercial activities, including expansion of our sales force and our investment in direct-to-
consumer campaigns and other initiatives;
•
the cost of possible business development activities, including licenses or acquisitions of technologies, compounds or
product rights or the potential acquisition of other assets, including equipment, facilities or businesses;
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•
the costs related to potential litigation, arbitration or other legal proceedings or government requests for information;
•
the costs of defending against potential or actual proxy contests or other activist shareholder actions;
•
the costs of compliance with new regulations applicable to us, including those related to the measurement, reporting and
assurance of environmental performance data and other sustainability matters; and
•
the costs associated with recruiting, compensating and retaining a highly-skilled workforce in an environment where
competition for highly-skilled employees is intense.
We have broad discretion regarding use of our cash and cash equivalents and we may not allocate our cash in ways that ultimately
increase the value of our ordinary shares.
We have broad discretion in the allocation of our cash and cash equivalents and we may not allocate our cash in ways that
ultimately increase the value of our ordinary shares. We could make capital allocation decisions to utilize such funds in a way that our
shareholders do not agree with or that do not ultimately generate shareholder value in the manner they, or we, anticipate or at all. If
our cash and cash equivalents are not deployed effectively or do not generate shareholder value, we may fail to achieve expected
financial results or other business objectives, which could have a material negative impact on our financial condition, results of
operations or the market price of our ordinary shares.
Certain 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 foreign corporation”.
In December 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Cuts and Jobs Act”) was signed into law. This legislation
significantly changed U.S. tax law by, among other things, changing the rules which determine whether a foreign corporation is
treated for U.S. tax purposes as a controlled foreign corporation (“CFC”) for taxable years ended December 31, 2017 and onwards.
The impact of this change on certain holders of our ordinary shares is uncertain and could be adverse, including potential income
inclusions and reporting requirements for U.S. persons (as defined in the U.S. Internal Revenue Code of 1986, as amended (the
“Code”)) who are treated as owning (directly or indirectly) at least 10% of the value or voting power of our shares. The determination
of CFC status is complex and includes attribution rules, the application of which are not entirely certain. These changes to the
attribution rules relating to the determination of CFC status make it possible that one or more of our non-U.S. subsidiaries will be
classified as a CFC. The OBBBA reinstated the prohibition on downward attribution of stock from a foreign person to a U.S. person
and therefore we do not expect any of our non-U.S. subsidiaries to be classified as CFCs in 2026. Existing and prospective investors
should consult their tax advisers regarding the potential application of these rules to their investments in our securities.
See “Certain Irish and United States Federal Income Tax Considerations – United States Federal Income Tax Considerations” in
our Form S-1/A, filed with the SEC on February 29, 2012, for additional discussion with respect to other potential U.S. federal income
tax consequences of investments in us.
If goodwill becomes impaired, we may have to take significant charges against earnings.
At December 31, 2025, we had $83.0 million of goodwill. Under accounting principles generally accepted in the U.S.
(“GAAP”), we must assess, at least annually and potentially more frequently, whether the value of goodwill has been impaired. Any
reduction or impairment of the value of goodwill will result in a charge against earnings, which could materially adversely affect our
results of operations 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 a combination of applicable tax rates in the various places that we operate. In preparing our financial
statements, we estimate the amount of tax that will become payable 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 profits or 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 operate may 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 in defending 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 be obligated 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 of operations.
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Changes in tax rules and regulations, or interpretations thereof, may adversely affect our financial condition.
The U.S. Congress, the EU, the Organization for Economic Co-operation and Development (“OECD”), and other government
agencies in jurisdictions where we and our affiliates do business are focused on the taxation of multinational corporations. As a result
of this focus, the tax laws in Ireland and the U.S. could change on a prospective or retroactive basis, and any such changes could
adversely affect us.
In December 2022, the EU implemented a new corporate minimum tax rate of 15% on companies with combined annual
revenue of at least €750.0 million, which was transposed into Irish law effective as of January 1, 2024. We do not expect such rules to
have a material effect on our business in 2026; however, such minimum tax rate rules or other similar rules could have a material
adverse effect on our business, financial condition, cash flows and results of operations in future years.
Our deferred tax assets may not be realized.
As of December 31, 2025, we had $121.4 million of net deferred tax assets in the U.S. It is possible that some or all of the
deferred tax assets will not be realized, especially if we incur losses in the U.S. in the future. Losses may arise from operating events
(including clinical program progression), or the occurrence of significant excess tax benefits arising from the exercise of stock options
and/or the vesting of restricted stock unit awards. Unless we are able to generate sufficient taxable income in the future, a substantial
valuation allowance 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 valuation allowance is recognized and materially adversely affect our financial condition and results of
operations.
Furthermore, we have included within our U.S. net deferred tax assets of $121.4 million an amount of $29.3 million relating to
employee share-based compensation expense. It is possible that a significant portion of this deferred tax asset will not be realized,
especially if the price of our ordinary shares remains at its current level (see “Item 5—Market for Registrant’s Common Equity,
Related Stockholder Matters and Issuer Purchases of Equity Securities” in this Annual Report for details of the price of our ordinary
shares). Unless the price of our ordinary shares increases, we will incur a deferred tax expense as our U.S.-based employees exercise
or forfeit their stock options and their restricted stock unit awards vest. This could significantly increase our tax expense and may
adversely affect our financial condition and results of operations.
The disposition of the Athlone Facility may limit our ability to use our net operating losses and result in unanticipated tax
liabilities.
As of December 31, 2023, we had $94.7 million of net deferred tax assets in Ireland, including $87.5 million relating to net
operating losses (“NOLs”). These NOLs can be carried forward, without time limit, against trading income of the same trade in future
accounting periods. In May 2024, we completed the sale of the Athlone Facility to Novo. The disposition of the Athlone Facility may
be deemed to result in (i) a significant change to the existing trade such that the same trade is no longer continued, and (ii) a complete
discontinuance of the existing trade and the commencement of a new trade. We do not believe that the disposition of the Athlone
Facility would amount to a significant change or a discontinuance of our existing trade; however, the Irish Tax Authority could assert
a contrary position, in which case we could become involved in tax controversy with the Irish Tax Authority regarding possible
additional tax liabilities. If we were to be unsuccessful in resolving any such tax controversy in our favor, we could be liable for
significant additional tax liabilities than that which we anticipate, which would materially adversely affect our financial condition,
cash flows and results of operations.
The IRS may not agree with our conclusion that we should be treated as a foreign corporation for U.S. federal income tax
purposes.
In September 2011, the business of Alkermes, Inc., a U.S. corporation, and the drug technology business of Elan Corporation,
plc, an Irish-incorporated public limited company, were combined under Alkermes plc, an Irish-incorporated public limited company
(the “Business Combination”). For U.S. federal income tax purposes, a corporation is generally considered tax resident in the place of
its incorporation. Because we are incorporated in Ireland, we should be classified as an Irish corporation under these general rules.
However, Section 7874 of the Code generally provides that a corporation organized outside the U.S. that acquires substantially all of
the assets of a corporation organized in the U.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. corporation own 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 the domestic corporation, and the
“expanded affiliated group” (as defined in Section 7874) that includes the acquiring corporation does not have substantial business
activities in the country in which it is organized.
We believe that Alkermes plc should be classified as an Irish tax resident corporation and should not be treated as a U.S.
corporation for U.S. federal income tax purposes. However, the IRS could assert a contrary position, in which case we could become
involved in tax controversy with the IRS regarding 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 significant additional U.S. federal and state income tax than those we
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anticipate, which would materially adversely affect our financial condition, cash flows and results of operations.
If the separation of our oncology business completed in November 2023 does not ultimately qualify as a transaction that is
generally tax-free for U.S. federal and Irish tax purposes as we anticipate, we and/or our shareholders could be subject to
significant tax liabilities.
In connection with the separation of our oncology business into Mural Oncology plc (“Mural”) completed in November 2023,
we sought and received a private letter ruling from the IRS (the “IRS Ruling”) and an opinion from our U.S. tax advisor (the “U.S.
Tax Opinion”) regarding U.S. federal income tax consequences of the separation, including that, among other things, the separation
would be expected to generally qualify as tax-free for U.S. federal income tax purposes under Sections 368(a)(1)(D) and 355 of the
Code. The IRS Ruling and/or the U.S. Tax Opinion were based on and relied on, among other things, certain facts, assumptions,
representations, and undertakings from us and Mural, including those relating to past and future conduct of the companies’ respective
business operations and other matters. If any of these facts, assumptions, representations, statements or undertakings are, or become,
inaccurate or incomplete, or if we or Mural breach any of our respective covenants in the separation documents, the IRS Ruling and/or
the U.S. Tax Opinion may be invalid and the conclusions reached therein could be jeopardized. Notwithstanding the U.S. Tax Opinion
or IRS Ruling, the IRS could determine that a distribution or any related transaction is taxable for U.S. federal income tax purposes if
it determines that any of these facts, assumptions, representations or undertakings are not correct or have been violated, or that the
distribution should be taxable for other reasons, including if the IRS were to disagree with the conclusions in the U.S. Tax Opinion.
The U.S. Tax Opinion will not be binding on the IRS or the courts. Accordingly, the IRS or the courts may challenge the conclusions
stated in the U.S. Tax Opinion and such challenge could prevail. If the separation transaction is ultimately determined to be taxable,
we and/or our shareholders that are subject to U.S. federal income tax could incur significant tax liabilities.
Furthermore, in connection with the separation, we sought and received an opinion from our Irish tax advisor (the “Irish Tax
Opinion”) regarding the Irish tax consequences of the separation. The Irish Tax Opinion was based on and relied on, among other
things, certain facts, assumptions, representations, and undertakings from us, including those relating to past and future conduct of our
business operations and other matters. If any of these facts, assumptions, representations, statements or undertakings are, or become,
inaccurate or incomplete the Irish Tax Opinion may be invalid and the conclusions reached therein could be jeopardized. The Irish Tax
Opinion will not be binding on the Irish Tax Authority or the Irish courts. Accordingly, the Irish Tax Authority or the Irish courts may
challenge the conclusions stated in the Irish Tax Opinion and such challenge could prevail. In such an event, we and/or our
shareholders could incur significant tax liabilities.
In April 2025, Mural announced its intent to discontinue all clinical development of nemvaleukin alfa following a review of
clinical trial data, reduce its workforce by approximately 90% and commence the exploration of strategic alternatives focused on
maximizing shareholder value. In August 2025, Mural and XOMA Royalty Corporation announced a definitive agreement for XOMA
Royalty’s wholly owned subsidiary to acquire all issued and to be issued share capital of Mural, which was completed in December
2025. We do not believe that these events will adversely affect the tax treatment of the separation; however, the IRS or the courts may
challenge this position and should any such challenge prevail, we and/or our shareholders that are subject to U.S. federal income tax
could incur significant tax liabilities.
Our debt obligations could adversely affect our business and limit our ability to plan for or respond to changes in our business.
In connection with the Avadel Acquisition, we entered into the Credit Agreement (as defined below) pursuant to which we
incurred indebtedness of approximately $1.525 billion. The degree of our indebtedness could have important consequences, including:
•
increasing our vulnerability to adverse economic, industry or competitive developments;
•
requiring a substantial portion of our cash flow from operations to be dedicated to the payment of principal and interest on
our indebtedness, thereby reducing our ability to use our cash flow to fund our operations, capital expenditures and other
business opportunities;
•
limiting our flexibility to plan for, or react to, changes in our business and industry, or our ability to take specified actions
to take advantage of certain business opportunities that may be presented to us;
•
exposing us to variability in interest rates;
•
limiting our ability to return capital to our shareholders, including through share repurchases; and
•
placing us at a competitive disadvantage compared to our less leveraged competitors.
In addition, the Credit Agreement requires the maintenance of certain leverage and coverage ratios, in each case with the levels
set forth in the Credit Agreement, as of the last day of any fiscal quarter. In addition, the Credit Agreement contains customary
affirmative and negative covenants, including limitations on indebtedness, liens, mergers, consolidations, sales of assets, investments,
transactions with affiliates, restricted payments and sales and leasebacks. The Credit Agreement is guaranteed by certain of the
53
Company’s subsidiaries and secured by a lien on substantially all of the assets of Alkermes plc, Alkermes, Inc. and the subsidiary
guarantors. Any failure to comply with these restrictions or to make payments could lead to an event of default that could result in an
acceleration of the indebtedness. Our future operating results may not be sufficient to ensure our ability to make our debt payments or
to remedy any such default. See “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations”
in this Annual Report for additional information relating to our indebtedness.
Our business strategy may involve future transactions which may harm the market price of our ordinary shares or require us to
seek additional funds, and such funding may not be available on commercially favorable terms or at all and may cause dilution to
our existing shareholders.
In order to achieve our business strategy, we regularly review potential transactions related to technologies, products or product
rights or other assets, and businesses that are complementary to our business, including mergers and acquisitions, licenses and
collaborations, and development and supply, commercialization or co-promotion arrangements, among others. We may choose to
enter into one or more of these or other transactions at any time, which may cause substantial fluctuations in the market price of our
ordinary shares. Moreover, depending upon the nature of any transaction, we may experience a charge to earnings, which could also
materially adversely affect our results of operations and could harm the market price of our ordinary shares.
In order to finance such transactions, we may require additional funds, and we may seek such funds through various sources,
including debt and equity offerings, corporate collaborations, bank borrowings, arrangements relating to assets, monetization of
royalty streams or other financing methods or structures. For example, as described above, we entered into the Credit Agreement in
connection with the Avadel Acquisition. The source, timing and availability of any future additional financing will depend on global
economic conditions, credit and financial market conditions, interest rates and other factors. If we issue additional equity securities or
securities convertible into equity securities, our shareholders would suffer dilution of their investment, and it may adversely affect the
market price of our ordinary shares. In addition, under Irish law, the directors of an Irish public limited company must have specific
authority, as approved by the company’s shareholders, to allot and issue any ordinary shares (other than pursuant to employee equity
plans) and, if such directors desire to allot and issue ordinary shares for cash, such shares must first be offered on the same or more
favorable terms to the Company’s existing shareholders on a pro-rata basis, unless this statutory pre-emption right is disapplied by
approval of the company’s shareholders. In May 2025, our shareholders renewed our board of directors’ general authority to allot and
issue ordinary shares in an amount equal to approximately 20% of our issued ordinary share capital (as of April 1, 2025), and to issue
ordinary shares for cash on a non-pre-emptive basis in an amount equal to approximately 20% of our issued share capital (as of April
1, 2025); however, these share issuance authorities were granted for eighteen months only, at which point they will lapse unless
renewed by our shareholders. If we are unable to obtain renewal of share issuance authorities from our shareholders, or are otherwise
limited by the terms of new share issuance authorities approved by our shareholders, our ability to use our authorized but unissued
share capital to effect or to fund acquisition or other transaction opportunities, or to otherwise raise capital, could be adversely
affected.
In addition, future investors or lenders may demand, and may be granted, rights superior to those of existing shareholders. If we
issue debt securities, we would likely be subject to restrictive covenants and debt service obligations that may impact our operations
and financial condition. We cannot be certain that additional financing will be available from any of these sources when needed or, if
available, will be on acceptable terms. If we fail to obtain additional capital if needed, we may not be able to execute our business
strategy successfully.
Even if we are able to finance potential transactions without seeking any external financing, expenditure of a significant amount
of cash on such transactions may require difficult capital allocation decisions and may limit our ability to pursue other important
business and strategic objectives, may significantly impact our financial condition and profitability and limit our potential to return
capital to shareholders. As a result of these and other potential impacts, the market price of our ordinary shares may fluctuate
significantly.
Currency exchange rates may affect revenues and expenses.
We conduct a large portion of our business in international markets. For example, we derive all of our XEPLION, TREVICTA
and BYANNLI 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 expenses and 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 a result, currency fluctuations among our reporting currency, USD, and the
currencies in which we do business will affect our results of operations, often in unpredictable ways. See “Item 7A—Quantitative and
Qualitative Disclosures about Market Risk” in this Annual Report for additional information relating to our foreign currency exchange
rate risk.
54
Risks Related to our Ordinary Shares
The market price of our ordinary shares has been volatile and may continue to be volatile in the future, and could decline
significantly.
The market price of our ordinary shares has fluctuated significantly from time to time. During the year ended December 31,
2025, the closing price of our ordinary shares on the Nasdaq Global Select Market ranged from $26.13 to $36.00 per share. The
market price of our ordinary shares is likely to continue to be volatile and subject to significant price and volume fluctuations in
response to market and industry factors, our results of operations, our ability to maintain and increase sales of our products, the
success of our key development programs and expansion of our development pipeline and commercial portfolio, our ability to achieve
and sustain profitability, the outcomes of business development transactions in which we may participate, our capital allocation
decisions, and other factors, including the risk factors described in this Annual Report. We have also experienced significant volatility
in the market price of our ordinary shares based on our business performance, including in relation to our commercial sales and the
financial guidance that we issue for such sales, results from our clinical development programs, and events relating to regulatory
actions and interactions related to our product candidates and commercial products.
In addition, the stock market in general, including the market for biopharmaceutical companies, has experienced extreme price
and trading volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies.
In particular, negative publicity regarding pricing and price increases by pharmaceutical companies, and potential legislation to
regulate drug pricing, has negatively impacted, and may continue to negatively impact, the market for biopharmaceutical companies.
These broad market and industry factors have harmed, and in the future may harm, the market price of our ordinary shares, regardless
of our operating performance.
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 our industry over the last
several years. Activist shareholders may agitate, either publicly or privately, for changes to a company’s board of directors,
management, structure, spend or strategic direction, among other things.
Proxy contests and other actions by activist shareholders can be costly and time-consuming, disrupting operations and diverting
the attention of management and employees, and can lead to perceived uncertainties as to the future direction of the Company or its
business that may result in the loss of potential acquisitions, collaborations or in-licensing opportunities and make it more difficult to
attract and retain qualified personnel and business partners. In addition, if individuals are elected to our board of directors with a
specific agenda, it may adversely affect our ability to effectively implement our strategic plan in a timely manner and create additional
value for our shareholders.
In recent years, we engaged in extensive dialogue with principals of Elliot Investment Management L.P. and Sarissa Capital
Offshore Master Fund LP and their affiliates, resulting in negotiation of settlement arrangements in 2020 and 2021 pursuant to which
directors were elected to our Board and a contested election in 2023. The extensive interactions and activities related to our
engagement with activist shareholders required the expenditure of time, energy and expense by management and our board of
directors and diverted employee and management attention from business operations.
Any future activist shareholder interactions, contests, actions or requests, or the mere public presence of activist shareholders
among our shareholder base, could cause the market price of our ordinary shares to experience periods of significant volatility.
Risks Related to Information Security and Data Privacy
Information security breaches and other disruptions could compromise our information and expose us to liability, which would
cause our business and reputation to suffer.
In the ordinary course of our business, we and our third-party service providers collect, store, maintain and transmit sensitive
data, including IP, proprietary business information of ours and that of our suppliers and partners, as well as personally identifiable
information of persons who use our medicines, clinical trial participants and employees. In addition, we outsource some of our
operations to a number of third-party vendors who may have, or could gain, access to our confidential information. The secure
maintenance of all such information and the secure performance of our information technology (“IT”) systems are critical to our
operations and business strategy.
55
As our dependency on, and the complexity of, our IT systems increases, the confidentiality, integrity and availability of our IT
systems and the data that they store is critical to managing our business. While we take prudent measures to secure our IT systems, the
risk still exists that such systems may become compromised by successful breaches, malfeasance, human error or technological fault.
Moreover, the prevalent use of mobile devices to access confidential information, remote working practices, and the increased use of
artificial intelligence present new and increased risk of security breaches. Cyber-attacks have increased in frequency, persistence,
sophistication and intensity, often conducted by sophisticated and organized groups and individuals with a wide range of motives
(including, but not limited to, industrial espionage, hacktivists and organized crime). In addition to the extraction of important
information, such attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering
and other means to affect service reliability and threaten the confidentiality, integrity and availability of our information. Certain types
of attacks or breaches on our IT systems or infrastructure, or those of our licensees and third-party providers, may go undetected for a
prolonged period. Although to our knowledge we have not experienced any material incident or interruption to date, any breakdown,
invasion, corruption, destruction or breach of our, our partners’ or our third-party providers’ technology systems could compromise
such IT systems, and the information stored there could be accessed, modified, publicly disclosed, lost or stolen. This could result in
legal claims or proceedings and liability under laws that protect the privacy of personal information, demands for ransom or other
forms of blackmail, disruptions to our development programs or commercial operations, damage to our reputation and adverse effects
on our business. We retain cybersecurity insurance to cover costs and expenses related to a breach or similar event; however, there is
no guarantee that such costs and expenses would not exceed the insurance that we retain. See “Item 1C—Cybersecurity” in this
Annual Report for additional information relating to our cybersecurity risk management strategy, governance and oversight.
We may be subject to numerous and varying privacy and security laws, and any failure to comply could result in penalties and
reputational damage.
In the ordinary course of business, we may process personal data and other sensitive information, including proprietary and
confidential business data, trade secrets, intellectual property, data we collect about trial participants in connection with clinical trials,
patient data and sensitive third-party data. Our data processing activities subjects us to laws and regulations covering data privacy and
the protection of personal information, including health information. The legislative and regulatory landscape for privacy and data
protection continues to evolve, and there has been an increasing focus on privacy and data protection issues which may affect our
business.
In the U.S., numerous federal and state laws and regulations, including state security breach notification laws, federal and state
consumer protection laws, and state health information privacy laws (for example, the California Consumer Privacy Act of 2018 and
the California Privacy Rights Act of 2020), govern the collection, use, disclosure, and protection of personal information. Such federal
and state laws and regulations may require businesses to provide specific disclosures and implement processes to permit individuals to
exercise certain privacy rights, which in each case could increase our potential liability, increase our compliance costs, and affect our
ability to collect and use personal information. The privacy regulation landscape is rapidly evolving, and any changes to existing
legislation or adoption of new state or federal regulations may further complicate compliance efforts and further increase legal risk and
compliance costs for us and the third parties upon whom we rely. In addition, each of these current and potential future laws may be
subject to varying interpretations by courts and government agencies, creating complex compliance issues for us and the third parties
upon whom we rely. If we fail to comply with applicable laws and regulations, we could be subject to penalties or sanctions, including
criminal penalties if we knowingly obtain or disclose individually identifiable health information from a covered entity in a manner
that is not authorized or permitted by the Health Insurance Portability and Accountability Act of 1996, as amended by the Health
Information Technology for Economic and Clinical Health Act (HIPAA).
Numerous other countries have, or are developing, laws governing the collection, use and transmission of personal information
as well. The EU and other jurisdictions have adopted data protection laws and regulations, which impose significant compliance
obligations. In the EU, for example, the GDPR governs the processing of personal data. The GDPR imposes significant obligations on
controllers and processors of personal data, including high standards for obtaining consent from individuals to process their personal
data, robust notification requirements to individuals about the processing of their personal data, a strong individual data rights regime,
mandatory data breach notifications, limitations on the retention of personal data and stringent requirements 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 also imposes
additional obligations on, and required contractual provisions to be included in, contracts between companies subject to the GDPR and
their third-party processors that relate to the processing of personal data. The GDPR allows EU member states to adopt additional laws
and regulations in order to introduce further conditions, including limitations, with regard to 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 additional mechanisms to ensure compliance. Any failure to comply with the requirements of GDPR and applicable
national data protection laws of EU member states could lead 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 total worldwide annual turnover of the preceding financial
year, whichever is higher), and could adversely affect our business, financial condition, cash flows and results of operations.
56
General Risk Factors
Changes in global trade or other policies, including tariffs or other restrictions imposed by the U.S. government or governments of
other nations, could have an adverse effect on our business, results of operations, or financial condition.
As a global biopharmaceutical company, changes in and uncertainties from global trade or other policies, including tariffs or
other restrictions imposed by the U.S. government or governments of other nations, may have an adverse effect on us. For example,
since April 2025, the U.S. government and certain other countries have imposed tariffs or negotiated trade agreements for tariffs on
certain imports. Although some of these tariffs are temporarily paused, their impact has already been seen, and we expect will
continue to be seen, in global markets. The majority of our proprietary products are manufactured at our manufacturing facility in the
U.S. and are sold exclusively in the U.S.; however, certain materials in our supply chain are sourced internationally, certain elements
of manufacturing for LUMRYZ are manufactured outside of the U.S., and certain third-party products from which we derive revenue
are manufactured outside the U.S. Our related costs, revenues and/or profits may be impacted to varying degrees by recent or future
changes in global trade or other policies. In addition, the recent changes, tensions and uncertainties related to global trade policies
have caused, and may continue to cause, significant volatility in global markets, including the market for our ordinary shares. The
price of our ordinary shares has fluctuated significantly, and may continue to fluctuate, as a result of these and similar developments.
The U.S. government has also indicated that it may impose a supplemental tariff on all pharmaceutical imports or take additional
actions in respect of pharmaceutical companies incorporated outside of the U.S., which has caused, and may continue to cause,
uncertainty as to the extent of the impacts of changes in global trade on the pharmaceutical industry as a whole and on our business.
Additional changes to the policies of the U.S. or other nations that affect the geopolitical landscape or global trade, economic or
market conditions, and other direct or indirect impacts of such policies, are uncertain and unpredictable, and could, in the future, have
a material adverse effect on our business, results of operations, or financial condition and the market price of our ordinary shares.
A future pandemic, epidemic or outbreak of an infectious disease, may materially and adversely affect our business, financial
condition and results of operations.
Outbreaks of contagious diseases and other adverse public health developments affecting us and/or the third parties on which we
rely could have a material and adverse effect on our business, financial condition and results of operations. For example, the COVID-
19 pandemic, which impacted the operation of healthcare systems, global travel, supply and labor markets and other business and
economic activity worldwide, had a disruptive and adverse impact on our financial condition and results of operations and on those of
many of the third parties on which we rely.
Although the acute COVID-19 public health emergency has lapsed, we will continue to monitor its long-term impacts, including
impacts on market practices and on the labor market, and adjust our policies and practices as needed to mitigate any adverse impacts
to our business operations and financial condition. We will also work with our internal teams and the third-parties on which we rely to
assess, and seek to mitigate, the potential impacts on our business operations and financial condition of any future outbreaks of
contagious diseases or other adverse public health developments that may emerge from time to time.
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 our ordinary 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 possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.
Accordingly, a material weakness increases the risk that the 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 required under the Sarbanes-Oxley Act of 2002 to report annually on our internal control over financial reporting.
Any system of internal controls, however well designed and 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, or our independent registered public accounting
firm, determine that our internal controls over financial reporting are not effective, or we discover areas that need improvement in the
future, these shortcomings could have an adverse effect on our business and financial results, and the price of our ordinary shares
could be negatively affected.
If we cannot conclude that we have effective internal control over our financial reporting, or if our independent registered public
accounting firm is unable to provide an unqualified opinion regarding the effectiveness of our internal control over financial reporting,
investors could lose confidence in the reliability of our financial statements, which could lead to a decline in the trading price of our
ordinary shares. Failure to comply with reporting requirements could also subject us to sanctions and/or investigations by Nasdaq or
the SEC or other regulatory authorities.
57
The increasing use of social media platforms and artificial intelligence tools present new risks and challenges.
Social media is increasingly being used as a means of corporate communications and for purposes of social networking and
commentary. We use social media tools to communicate certain information about our business, our employees, our company values
and initiatives, to support disease state education in our areas of focus, and to provide information about our products or development
programs. Additionally, the use of artificial intelligence (“AI”) tools is increasing in the biopharmaceutical industry and, as with many
developing technologies, presents risks and challenges that could affect its further development, adoption and use. Despite our efforts
to monitor evolving guidance regarding use of social media and AI and to comply with applicable rules, regulations and regulatory
guidance, such practices are evolving and can be unclear. There is a risk that we or our employees may use social media and AI to
communicate about our products or business or for other business purposes that may cause us to be found in violation of applicable
requirements and could result in regulatory actions or legal claims against us, including claims related to off-label marketing or other
prohibited activities. In addition, our employees may knowingly or inadvertently engage on social media and with AI in ways that may
not comply with our social media or AI policies or guidelines with respect to AI or other legal, contractual or regulatory requirements.
Any misuse of social media or AI may give rise to liability, lead to the loss of trade secrets and other IP, result in public disclosure of
personal information of our employees, clinical trial participants, customers, patients using our products, or others, result in
reputational harm or lead to other consequences. Negative or inaccurate posts or comments about us or our products on any social
media or other public platforms could also damage our reputation, brand image and goodwill. Any of these events, if they were to
occur, could cause us to incur liability, face overly restrictive regulatory actions or suffer reputational or other harm to our business.
58
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk Management and Strategy
In the ordinary course of our business, we collect and store sensitive data, including IP, proprietary business information of ours
and that of our suppliers and licensees, and personally identifiable information of persons who use our medicines, clinical trial
participants and employees. Our licensees and third-party providers also possess certain of our sensitive data. The secure maintenance
of such information and the secure performance of our IT systems are critical to our operations and business strategy. As our
dependency on, and the complexity of, our IT systems increases, the confidentiality, integrity and availability of our IT systems and
the data that they store is critical to managing our business.
Our Information Security Management System (“ISMS”) is a key element of our information security program, designed to
identify, assess, help mitigate, and monitor IT risks across our organization, including information security risks. The ISMS is
informed by the structured principles of International Standard- ISO/IEC27001:2022 (Information security, cybersecurity, and privacy
protection), which outlines guidance for the establishment, implementation, maintenance, and improvement of information security
management systems. Our ISMS is comprised of processes designed to identify cybersecurity risks, safeguard information assets and
preserve the confidentiality, integrity, and availability of information owned, managed and maintained by us. Our ISMS includes
formal written policies and procedures, technical security controls, such as automated tools designed to detect and prevent
cybersecurity incidents, and programs designed to promote internal and third-party IT risk management, audit management, incident
response and security awareness, including employee awareness trainings and other initiatives. Our ISMS includes periodic security
audits, vulnerability assessments and penetration testing to proactively identify potential system vulnerabilities. Our ISMS is
periodically assessed by third-party assessors and the results of such assessments, including any cybersecurity risks and related
mitigations identified, are reported to the audit and risk committee of our board of directors, as described below, and are used by us to
improve our ISMS and our broader information security program.
As part of our information security program, we also have processes in place for management of cybersecurity risks associated
with third-party handling of our confidential information, including in such third parties’ provision of critical services on our behalf.
We conduct due diligence of our third-party vendors through an assessment of their security practices and overall risk profile,
including through their completion of vendor assessment questionnaires and ongoing monitoring of such third parties, utilizing tools
such as security ratings services and periodic reassessment questionnaires.
As of the date of this Annual Report, we have not experienced any information security incidents that have materially affected,
or are reasonably likely to materially affect, our business strategy, results of operations, or financial condition, and we have not
identified any current cybersecurity threats that we believe are reasonably likely to materially affect our business strategy, results of
operations, or financial condition.
Governance and Oversight
We have a multi-layered information security governance framework in place to provide oversight of our information security
program and strategy, our ISMS, and related risks and opportunities. This governance framework includes procedures for escalation of
identified information security risks, threats or incidents through various management levels, including up to our Information Security
Governing Body, which is comprised of our Chief Executive Officer, Chief Information Officer, Chief Operating Officer, Chief
Financial Officer, Chief Legal Officer and other members of management, and as appropriate, up to our board of directors.
Our information security team is responsible for developing, implementing and overseeing our Company-wide information
security strategy and related policies and practices. This team works cross-functionally throughout our organization to assess and
prepare the Company for identification and mitigation of, and if necessary respond to, information security risks. The information
security team is led by our Chief Information Officer, who has over 35 years of experience in various information technology roles,
including 19 years at the Company serving in roles with increasing levels of responsibility. Our Vice President of Information Security
and Technology, a Certified Information Systems Security Professional, with over 20 years of global experience in various
information security roles, including 15 years of experience at the Company, is responsible for day-to-day management of information
security team initiatives. The other members of the information security team have extensive IT, IT security and cloud industry
experience, as well as certifications pertaining to information security and privacy (such as Certified Information Security Manager,
Certified Information Privacy Technologist, GIAC Security Essentials and GIAC Information Security Professional certifications).
59
Our board of directors, as a whole and through its committees, has responsibility for the oversight of risk management. The
audit and risk committee of our board of directors specifically oversees critical risks and opportunities facing the Company and, in this
context, reviews and provides feedback on our company-wide enterprise risk management program, which encompasses risks related
to IT and cybersecurity and mitigations put in place, or to be put in place, in response to such risks and opportunities. The audit and
risk committee periodically reports to the full board of directors regarding its oversight of the Company’s enterprise risk management
program and periodic risk assessment results. In addition, our board of directors receives periodic updates from our CIO and Vice
President of Information Security on our ISMS and other information security initiatives, and on our information security governance
framework.
Information Systems Acquired in the Avadel Acquisition
In February 2026, we completed the Avadel Acquisition. The information technology and operational systems utilized by
Avadel prior to the acquisition currently remain separate from those of Alkermes. In advance of integration with our own systems, we
are conducting a comprehensive assessment of the design and effectiveness of Avadel’s systems, processes, and related risks,
including cybersecurity, data protection, and operational resilience considerations. Upon completion of this assessment, we expect to
begin a phased operational and systems integration to align the acquired operations with our enterprise standards and infrastructure.
We plan to address any security events that may arise involving Avadel’s systems in a manner that is consistent with our enterprise
incident response expectations.
Item 2. Properties
We lease an approximately 14,600 square foot corporate office space in Dublin, Ireland, which is our corporate headquarters.
This lease expires in January 2027 and does not include an additional tenant option to further extend the term.
In December 2025, we entered into a lease agreement for an approximately 6,675 square foot corporate office space in Athlone,
Ireland. The initial term of the lease commenced on January 1, 2026, expires on December 31, 2030 and includes an option to extend
for an additional five-year period.
We lease an approximately 231,000 square foot corporate office and R&D center in Waltham, Massachusetts. This lease, which
commenced in January 2020, expires in 2035 and includes a tenant option to extend the term for an additional ten-year period.
We lease an approximately 7,000 square foot corporate office and administrative space in Washington, DC. This lease expires in
2029 and includes a tenant option to extend the term for an additional five-year period.
We lease an approximately 17,065 square foot corporate office and administrative space in Chesterfield, Missouri. This lease
expires in 2029 and includes a tenant option to extend the term for an additional three-year period.
We own an approximately 375,000 square foot manufacturing facility in Wilmington, Ohio.
We believe that our current facilities are suitable and adequate for our current and near-term preclinical, clinical and commercial
requirements.
Item 3. Legal Proceedings
For information regarding legal proceedings, refer to the discussion under the heading “Litigation” in Note 19, Commitments
and Contingent Liabilities in the “Notes to Consolidated Financial Statements” in this Annual Report, which discussion is
incorporated, in relevant part, into this Item 3 by reference.
Item 4. Mine Safety Disclosures
Not Applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market and shareholder information
Our ordinary shares are traded on the Nasdaq Global Select Market under the symbol “ALKS.” There were 79 shareholders of
record of our ordinary shares on February 20, 2026.
Dividends
No 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 anticipate that we will generally retain a significant portion of our earnings to support our operations and our
proprietary drug development programs. Any future determination as to the payment of dividends, if at all, will be at the sole
discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements and other
factors that our board of directors and management deem relevant.
Repurchase of equity securities
In February 2024, our board of directors authorized a share repurchase program to repurchase ordinary shares of the Company
in an aggregate amount of up to $400.0 million (exclusive of any fees, commissions or other expenses related to such repurchases)
from time to time on the open market (the “Repurchase Program”). The timing and amount of any share repurchases under the
Repurchase Program will be based on a variety of factors, including but not limited to ongoing assessments of our capital needs,
alternative investment opportunities, the market price of our ordinary shares and general market conditions. The Repurchase Program
has no set expiration date and may be suspended or discontinued at any time. During the year ended December 31, 2025, we did not
repurchase any ordinary shares under the Repurchase Program. During the year ended December 31, 2024, we repurchased
approximately 7.9 million of our ordinary shares under the Repurchase Program at an average price of $25.33, resulting in a total cost,
exclusive of any fees, commissions or other expenses related to such repurchase, of $200.0 million. All ordinary shares repurchased
were returned to treasury. As of December 31, 2025, the remaining amount authorized under the Repurchase Program was $200.0
million, exclusive of any fees, commissions or other related expenses.
The following table sets forth our share repurchase activity for the three months ended December 31, 2025:
Period
Total Number of
Ordinary Shares
Purchased
(a)
Average Price Paid
per Ordinary Share
(b)
Total Number of
Ordinary Shares
Purchased as Part of
Publicly Announced
Program
(c)
Approximate Dollar
Value (in millions) of
Ordinary Shares that
May Yet Be Purchased
Under the Program
(d)
October 1, 2025 – October 31, 2025
3,902
31.11
— $
200.0
November 1, 2025 – November 30, 2025
3,046
31.60
— $
200.0
December 1, 2025 – December 31, 2025
1,611
29.43
— $
200.0
Totals
8,559 $
30.97
—
(1)
Consists of ordinary shares acquired during the three months ended December 31, 2025 to satisfy tax withholding obligations related to the vesting of
equity awards.
(2)
In February 2024, we announced approval by our board of directors of the Repurchase Program, which authorized the repurchase of our ordinary shares in
an aggregate amount of up to $400.0 million (exclusive of any fees, commissions or other expenses related to such repurchases) from time to time. The
specific timing and amounts of repurchases under the Repurchase Program will depend on a variety of factors, including but not limited to ongoing
assessments of our needs, alternative investment opportunities, the market price of our ordinary shares and general market conditions. The Repurchase
Program has no set expiration date and may be suspended or discontinued at any time.
Irish taxes applicable to U.S. holders
The following is a general summary of the main Irish tax considerations applicable to the purchase, ownership and disposition
of our ordinary shares by U.S. holders. It is based on existing Irish law and practices in effect on January 15, 2026, and on discussions
and correspondence with the Irish Revenue Commissioners. 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 our ordinary shares held as capital assets and does not apply to all categories of shareholders, such as dealers in securities, trustees,
insurance companies, collective investment schemes and shareholders who acquire, or who are deemed to acquire, their ordinary
shares by virtue of an office or employment. The statements are in reference to individuals who are considered non-resident and non-
ordinarily resident of Ireland for tax purposes. This summary is not exhaustive and shareholders 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.
(1)
(2)
(2)
61
Withholding tax on dividends
While 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 Trust Company (“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 the shareholder that is the beneficial owner of such ordinary shares has completed the appropriate Irish DWT
form and this form remains valid. Such shareholders must provide the appropriate Irish DWT form to our transfer 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, they should generally be able to make an
application for a refund from the Irish Revenue Commissioners on the prescribed form.
Income tax on dividends
Irish 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 and who 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 they hold their ordinary shares through a branch or agency in Ireland which
carries out a trade on their behalf.
Irish tax on capital gains
A shareholder who is neither resident nor ordinarily resident in Ireland and does not hold our ordinary shares in connection with
a trade or business carried on by such shareholder in Ireland through a branch or agency, should not be within the scope of the charge
to Irish tax on capital gains on a disposal of our ordinary shares. A shareholder who is an individual and who is temporarily not
resident in Ireland may, under Irish anti-avoidance legislation, still be liable for Irish tax on capital gains on any chargeable gain
realized upon the disposal of our ordinary shares during the period in which such individual is a non-resident.
Capital acquisitions tax
Irish capital acquisitions tax (“CAT”) is comprised principally of gift tax and inheritance tax. CAT could apply to a gift or
inheritance of our ordinary shares irrespective of the place of residence, ordinary residence or domicile of the parties. This is because
our ordinary shares are regarded as property situated in Ireland as 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 the donor 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 of relationship for CAT purposes. Gifts and inheritances passing between spouses
are exempt from CAT. Our shareholders should consult their own tax advisers as to whether CAT is creditable or deductible in
computing any domestic tax liabilities.
Stamp duty
Irish stamp duty, if any, may become payable in respect of ordinary share transfers. However, a transfer of our ordinary shares
effected by means of book-entry interests in DTC will not be subject to Irish stamp duty. A transfer of our ordinary shares (i) by a
seller 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 acquired ordinary 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 shares acquired, 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, all parties 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 that the 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 same proportions, 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 by the shareholder. Similarly, a shareholder who holds
ordinary shares through DTC may transfer those ordinary shares out of DTC without giving rise to Irish stamp duty 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
the time of the transfer out of DTC there is no sale of those ordinary shares to a third party being contemplated by the shareholder.
62
In order for the share registrar to be satisfied as to the application of this Irish stamp duty treatment where relevant, the
shareholder must confirm to us that the 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 same proportions or vice-versa, as a result of the 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.
Stock performance graph
The information contained in the performance graph and related information below shall not be deemed to be “soliciting
material” or to be “filed” with the SEC, and such information shall not be incorporated by reference into any future filing under the
Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.
The following graph compares the cumulative total shareholder return on our ordinary shares from December 31, 2020 through
December 31, 2025 with the cumulative returns of the Nasdaq Composite Total Return Index and the Nasdaq Biotechnology Index.
The comparison assumes $100 was invested on December 31, 2020 in our ordinary shares and in each of the foregoing indices and
further assumes reinvestment of any dividends. We did not declare or pay any dividends on our ordinary shares during the comparison
period.
Year Ended December 31,
2020
2021
2022
2023
2024
2025
Alkermes
100
117
131
141
147
143
Nasdaq Composite Total Return
100
122
82
119
154
187
Nasdaq Biotechnology Index
100
100
90
94
93
125
Item 6. [Reserved]
Not applicable.
63
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following should be read in conjunction with our consolidated financial statements and related notes beginning on page F-1
of this Annual Report. The following 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 from those projected in the forward-looking statements also
include, but are not limited to, those discussed in “Item 1A—Risk Factors” and elsewhere in this Annual Report. A detailed discussion
of our 2023 financial condition and results of operations, and of 2024 year-over-year changes as compared to 2023, can be found in
“Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form
10-K for the year ended December 31, 2024, which was filed with the SEC on February 12, 2025.
Overview
We have a portfolio of proprietary products that we manufacture, market and/or sell in the U.S., which in 2025 was comprised
of ARISTADA, ARISTADA INITIO, LYBALVI and VIVITROL. We also earned manufacturing and/or royalty revenues on net sales
of products commercialized by our licensees, the most significant of which in 2025 were the long-acting INVEGA products and
VUMERITY. We expect ARISTADA, ARISTADA INITIO, LYBALVI, VIVITROL and VUMERITY, and our new product,
LUMRYZ, which we acquired and began to market and sell in the U.S. in February 2026, to generate significant revenues for us in the
near- and medium-term as we believe these products are singular or competitively advantaged products in their classes.
In 2025, our net income from continuing operations was $241.7 million, as compared to $372.1 million in 2024. The decrease in
net income from continuing operations of $130.5 million was primarily due to an increase in total expenses of $84.9 million and a
decrease of $182.8 million in manufacturing and royalty revenues. These items were partially offset by an increase in product sales,
net of $101.1 million and a decrease in our income tax provision of $21.8 million. These items are discussed in further detail within
the “Results of Operations” section below.
Business Update
In October 2025, we entered into the Transaction Agreement with Avadel, which was subsequently amended in November
2025, pursuant to which we agreed to acquire the entire issued and to be issued ordinary share capital of Avadel for consideration of
(i) $21.00 per Avadel Share, payable in cash at closing and (ii) a non-transferable CVR entitling holders of Avadel Shares to a
potential additional cash payment of $1.50 per Avadel Share, contingent upon achievement of a certain specified milestone. On
February 12, 2026, we successfully completed the Avadel Acquisition, adding both LUMRYZ to our portfolio of proprietary
commercial products and a commercial organization with experience in narcolepsy. During the three months ended December 31,
2025, we incurred costs of approximately $10.0 million in connection with the Avadel Acquisition.
In May 2024, we completed the sale of the Athlone Facility to Novo and entered into subcontracting arrangements to continue
certain development and manufacturing activities performed at the Athlone Facility, which concluded by the end of 2025.
64
Results of Operations
Product Sales, Net
Our product sales, net, consisted of sales of ARISTADA, ARISTADA INITIO, LYBALVI and VIVITROL, primarily to
wholesalers, specialty distributors and pharmacies. The following table presents the adjustments deducted from product sales, gross to
arrive at product sales, net, for sales of these products during the years ended December 31, 2025 and 2024:
Year Ended December 31,
(In millions, except for % of Sales)
2025
% of Sales
2024
% of Sales
Product sales, gross
$
2,212.5
100.0 % $
2,119.5
100.0 %
Adjustments to product sales, gross:
Medicaid rebates
(421.8)
(19.1) %
(454.0)
(21.4) %
Chargebacks
(254.3)
(11.5) %
(231.5)
(10.9) %
Product discounts
(166.2)
(7.5) %
(155.1)
(7.3) %
Medicare Part D
(79.5)
(3.5) %
(83.0)
(3.9) %
Other
(106.1)
(4.8) %
(112.4)
(5.4) %
Total adjustments
(1,027.9)
(46.4) %
(1,036.0)
(48.9) %
Product sales, net
$
1,184.6
53.6 % $
1,083.5
51.1 %
The increase in product sales, gross was due to a 19% increase in the number of units sold for LYBALVI and a 3% price
increase for each of LYBALVI, ARISTADA/ARISTADA INITIO and VIVITROL that went into effect in January 2025, partially
offset by decreases of 3% and 2% in the number of units sold for VIVITROL and ARISTADA/ARISTADA INITIO, respectively.
The decrease in Medicaid rebates as a percentage of sales was primarily due to gross-to-net favorability, as actual Medicaid
rebates related to VIVITROL and ARISTADA/ARISTADA INITIO were lower than original estimates by approximately $26.7
million and $13.6 million, respectively.
The following table compares product sales, net earned during the years ended December 31, 2025 and 2024:
Year Ended December 31,
(In millions)
2025
2024
Change
VIVITROL
$
467.9 $
457.3 $
10.6
ARISTADA and ARISTADA INITIO
370.0
346.2
23.8
LYBALVI
346.7
280.0
66.7
Product sales, net
$
1,184.6 $
1,083.5 $
101.1
A number of companies currently market and/or are developing products to treat addiction, including alcohol and opioid
dependence, that may compete with, and negatively impact, future sales of VIVITROL. In addition, the latest to expire of our patents
covering VIVITROL will expire in 2029 in the U.S. and we expect generic versions of VIVITROL to enter the market in 2027.
Pursuant to the terms of a confidential settlement and license agreement entered into in August 2023 with Teva, we granted Teva a
non-exclusive, royalty-free, non-transferable, non-sublicensable limited license under the remaining patent covering VIVITROL to
market and sell a generic version of VIVITROL in the U.S. beginning on the First Entry Date, or earlier under certain circumstances.
Under the terms of a settlement and license agreement entered into in July 2019 with Amneal, we granted Amneal a non-exclusive
license under certain patents covering VIVITROL, including the remaining patent covering VIVITROL in the U.S., to market and sell
a generic formulation of VIVITROL in the U.S. beginning on the earlier of the First Entry Date, sometime in 2028 or earlier under
certain circumstances, and in September 2025, entered into an authorized generic product supply agreement (the “AG Agreement”)
with Amneal, pursuant to which we granted Amneal certain rights to distribute and sell in the U.S. an authorized generic version of
VIVITROL for a one-year term beginning on the date of a Third Party ANDA Product Launch (as defined in the AG Agreement),
subject to certain conditions set forth in the AG Agreement. Increased competition may lead to reduced unit sales of VIVITROL and
increased pricing pressure.
A number of companies currently market and/or are developing products to treat schizophrenia and/or bipolar I disorder that
may compete with and negatively impact future sales of ARISTADA, ARISTADA INITIO and LYBALVI. Increased competition
may lead to reduced unit sales of ARISTADA, ARISTADA INITIO and LYBALVI and increased pricing pressure. The latest to
expire of our patents covering ARISTADA and ARISTADA INITIO in the U.S. will expire in 2039; and, as such, we do not anticipate
any generic versions of these products to enter the market in the near term. The latest to expire of our patents covering LYBALVI in
the U.S. will expire in 2041. We are currently engaged in Paragraph IV litigation with certain entities in respect of certain of the
Company’s patents related to LYBALVI with expiration dates between 2032 and 2041. For a discussion of these legal proceedings,
see Note 19, Commitments and Contingent Liabilities in the “Notes to Consolidated Financial Statements” in this Annual Report and
for information regarding the risks relating to these legal proceedings, see “Risks Related to our Intellectual Property—Uncertainty
65
over IP in the biopharmaceutical industry has been the source of litigation and other legal proceedings, and we and our licensees have
previously and may in the future face claims against IP rights covering our products and competition from generic drug
manufacturers”.
Manufacturing and Royalty Revenues
Substantially all of our manufacturing revenue was recognized at the point in time that the product has been fully manufactured.
Royalties earned on our licensees’ net sales of products using our proprietary technologies and our licensed product were recognized
in the period such products were sold by our licensees. The following table compares manufacturing and royalty revenues earned in
the years ended December 31, 2025 and 2024:
Year Ended December 31,
(In millions)
2025
2024
Change
Manufacturing and royalty revenues:
Long-acting INVEGA products
$
109.6
$
236.5
$
(126.9)
VUMERITY
130.5
134.0
(3.5)
RISPERDAL CONSTA
19.6
23.5
(3.9)
Other
31.6
80.1
(48.5)
Manufacturing and royalty revenues
$
291.3
$
474.1
$
(182.8)
The decrease in royalty revenues related to the long-acting INVEGA products was primarily due to the expiration of our royalty
on net sales of INVEGA SUSTENNA in the U.S. in August 2024. Although we expect royalty revenues related to U.S. net sales of
INVEGA TRINZA and INVEGA HAFYERA through certain specified dates in 2030, total royalty revenues from net sales of the
long-acting INVEGA products have been, and we expect will continue to be lower as the royalty revenues related to U.S. net sales of
INVEGA SUSTENNA comprised a significant portion of the overall royalty revenues from the long-acting INVEGA products. In
addition, INVEGA SUSTENNA is currently subject to Paragraph IV litigation in response to companies seeking to market generic
versions of such product. Though we no longer receive royalties from INVEGA SUSTENNA in the U.S., increased competition from
new products or generic versions of any one or more of the long-acting INVEGA products may lead to reduced unit sales of all of the
long-acting INVEGA products, including those not yet genericized, and increased pricing pressure.
For additional discussion of our agreements with Janssen related to the long-acting INVEGA products, including the royalty
provisions set forth therein and the related completed arbitration proceedings and outcome, see the section entitled “Collaborative
Arrangements—Janssen” in “Item 1—Business” in this Annual Report.
The decrease in VUMERITY revenue was due to a $22.8 million decrease in manufacturing revenue, primarily due to a
reduction in the number of batches manufactured for sale to Biogen, partially offset by a $19.2 million increase in royalty revenue, due
to an increase in end-market sales of the product. For a discussion of our agreements with Biogen related to VUMERITY, including
the manufacturing and royalty revenue provisions set forth therein, see the section entitled “Collaborative Arrangements—Biogen” in
“Item 1—Business” in this Annual Report.
The decrease in revenue related to RISPERDAL CONSTA was primarily due to a $3.6 million decrease in manufacturing
revenue, primarily due to a decrease in the number of batches made available to Janssen for sale in the U.S., which has a higher selling
price than product sold outside of the U.S. We expect revenues from RISPERDAL CONSTA to continue to decrease as patents
covering RISPERDAL CONSTA continue to expire in markets where end-market net sales of RISPERDAL CONSTA occur. We are
aware of generic and other competition to RISPERDAL CONSTA that may lead to reduced unit sales and increased pricing pressure.
For a discussion of our agreements with Janssen related to RISPERDAL CONSTA, including the manufacturing provisions set forth
therein, see the section entitled “Collaborative Arrangements—Janssen” in “Item 1—Business” in this Annual Report.
The decrease in Other manufacturing and royalty revenue was primarily due to a $36.6 million decrease in revenue from
FAMPYRA, as our manufacturing obligations for FAMPYRA concluded on December 31, 2024, and a $10.5 million decrease in
manufacturing revenue from certain of our other legacy products.
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 is sold. See “Item 7A—Quantitative and Qualitative Disclosures about Market Risk” in this Annual Report for
information on currency exchange rate risk related to our revenues and “Item 1A—Risk Factors” in this Annual Report, and
specifically the section entitled “Currency exchange rates may affect revenues and expenses” for risks related to currency exchange
rates.
66
Costs and Expenses
Cost of Goods Manufactured and Sold
Year Ended December 31,
(In millions)
2025
2024
Change
Cost of goods manufactured and sold
$
196.5 $
245.3 $
(48.8)
The decrease in the cost of goods manufactured and sold was primarily related to a $43.7 million decrease in the cost of goods
manufactured for certain legacy products following the sale of the Athlone Facility in May 2024. We also had decreases in the cost of
goods sold for certain of our proprietary products, primarily due to decreases in costs related to out-of-specification batches and
investigation costs. These decreases were partially offset by an increase in the cost of goods sold for LYBALVI due to an increase in
the number of units sold, as discussed above.
Research and Development Expenses
For each of our R&D programs, we incur both external and internal expenses. External R&D expenses include fees for clinical
and preclinical activities performed by CROs, consulting fees, and costs related to laboratory services, the purchase of drug product
materials and third-party manufacturing development activities. Internal R&D expenses include 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 can benefit multiple development programs or our
products or technologies in general.
The following table sets forth our external R&D expenses for the years ended December 31, 2025 and 2024 relating to our then-
current development programs and our internal R&D expenses, listed by the nature of such expenses:
Year Ended December 31,
(In millions)
2025
2024
Change
External R&D expenses:
Development programs:
Alixorexton
$
95.8 $
46.0 $
49.8
LYBALVI
18.8
18.7
0.1
Other external R&D expenses
52.7
36.6
16.1
Total external R&D expenses
167.3
101.3
66.0
Internal R&D expenses:
Employee-related
126.0
114.5
11.5
Occupancy
13.0
11.2
1.8
Depreciation
5.6
5.7
(0.1)
Other
12.1
12.6
(0.5)
Total internal R&D expenses
156.7
144.0
12.7
Research and development expenses
$
324.0 $
245.3 $
78.7
These amounts are not necessarily predictive of future R&D expenses. In an effort to allocate our spending most effectively, we
continually evaluate our products under development based on the performance of such products in preclinical and/or clinical trials,
our expectations regarding the likelihood of their regulatory approval and our view of their future potential commercial viability,
among other factors.
The increase in expenses related to alixorexton was primarily due to increased spend related to the advancement of the
development program for the product, including initiation of our Vibrance-3 phase 2 clinical study, costs related to the completion of
our Vibrance-1 and Vibrance-2 phase 2 studies, startup costs related to planning for our phase 3 clinical program and costs related to
our long-term extension study for the product. The increase in other external R&D expenses was primarily due to activities associated
with our preclinical development programs. We expect R&D expense to increase in 2026, as we plan to initiate the phase 3 program
for alixorexton and as ALKS 4510 and ALKS 7290, two internal early-stage development candidates which entered the clinic in 2025,
advance.
The increase in employee-related expenses was primarily due to increases in labor and benefits expense related to a 7% increase
in R&D-related headcount during 2025.
67
Selling, General and Administrative Expenses
Year Ended December 31,
(In millions)
2025
2024
Change
Selling and marketing expense
$
480.0 $
446.2 $
33.8
General and administrative expense
221.5
199.0
22.5
Selling, general and administrative expense
$
701.5 $
645.2 $
56.3
The increase in selling and marketing expense was primarily due to increases of $33.3 million and $9.4 million in employee-
related expenses and certain sales and marketing-related training programs and materials, respectively, due to a 10% increase in sales
and marketing-related headcount, partially offset by a $9.5 million decrease in marketing spend, primarily related to decreases in
media spend for our proprietary products.
The increase in general and administrative expense was primarily due to a $12.5 million increase in employee-related expenses,
primarily due to a 9% increase in general and administrative-related headcount and a $10.7 million increase in professional service
fees, primarily related to the Avadel Acquisition.
Other Income, Net
Year Ended December 31,
(In millions)
2025
2024
Change
Interest income
$
45.3 $
42.5 $
2.8
Interest expense
(12.3)
(22.6)
10.3
Other income, net
4.5
3.2
1.3
Total other income, net
$
37.5 $
23.1 $
14.4
Interest income consists of interest earned on our cash and available-for-sale investments. Interest expense consisted, in 2025, of
financing costs related to the amended and restated bridge term loan credit agreement that we entered into on November 18, 2025,
which provided for a senior secured bridge term loan facility in an aggregate amount of up to approximately $1.5 billion to fund the
Avadel Acquisition (the “Bridge Credit Agreement”) and, in 2024, of previously outstanding term loans (the “Former Term Loans”)
that were scheduled to become due in 2026 under our former amended and restated credit agreement, which we prepaid in full and
terminated in December 2024. See Note 11, Long-Term Debt in the “Notes to Consolidated Financial Statements” in this Annual
Report for additional information regarding the Bridge Credit Agreement and Former Term Loans.
Income Tax Provision
Year Ended December 31,
(In millions)
2025
2024
Change
Income tax provision
$
49.8 $
71.6 $
(21.8)
The income tax provisions in 2025 and 2024 were primarily due to taxes on income earned in Ireland. Our effective tax rate
during the year ended December 31, 2025 was 17.1%, which exceeds the Irish statutory tax rate of 12.5%, primarily due to non-
deductible expenses and income that was taxable at rates higher than the Irish statutory tax rate. Our effective tax rate during the year
ended December 31, 2024 was 16.1%. The increase in the effective tax rate was primarily due to an increase in income taxable at
rates higher than the Irish statutory tax rate. The new corporate minimum tax rate of 15% did not have a material impact on our
business in 2025 and 2024.
Cumulative unremitted earnings of U.S. subsidiaries totaled approximately $965.7 million as of December 31, 2025. In the
event of a repatriation of those earnings in the form of dividends or otherwise, we may be liable for income taxes, subject to
adjustment, if any, for foreign tax credits and foreign withholding taxes payable to foreign tax authorities. We estimate that
approximately $70.0 million of income taxes would be payable on the repatriation of the unremitted earnings to Ireland.
As of December 31, 2025, we had $210.2 million of Irish NOL carryforwards, $13.6 million of U.S. federal NOL
carryforwards, $43.2 million of state NOL carryforwards and $35.2 million of state tax credits which will either expire on various
dates through 2040 or can be carried forward indefinitely. These loss and credit carryforwards are available to reduce certain
future Irish and foreign taxable income and tax. These loss and credit carryforwards are subject to review and possible adjustment
by the appropriate taxing authorities, and may be subject to limitations based upon changes in the ownership of our ordinary
shares. Included within these loss and credit carryforwards are $13.6 million of U.S. federal NOL carryforwards and $5.3 million
of state NOL carryforwards, acquired as part of the acquisition of Rodin Therapeutics, Inc. in November 2019, each of which are
subject to a $0.5 million annual limitation.
68
Liquidity and Capital Resources
Our financial condition is summarized as follows:
December 31, 2025
December 31, 2024
(In millions)
U.S.
Ireland
Total
U.S.
Ireland
Total
Cash and cash equivalents
$
129.1 $
259.5 $
388.6 $
70.3 $
220.8 $
291.1
Restricted cash
—
731.2
731.2
—
—
—
Investments—short-term
199.1
0.5
199.6
203.6
256.9
460.5
Investments—long-term
0.1
—
0.1
24.6
48.5
73.1
Total cash, restricted cash and investments
$
328.3 $
991.2 $
1,319.5 $
298.5 $
526.2 $
824.7
At December 31, 2025, our investments consisted of the following:
Gross
Amortized
Unrealized
Allowance for
Estimated
(In millions)
Cost
Gains
Losses
Credit Losses
Fair Value
Investments—short-term available-for-sale
$
198.7 $
0.9 $
— $
— $
199.6
Investments—long-term available-for-sale
—
—
—
—
—
Investments—long-term held-to-maturity
0.1
—
—
—
0.1
Total
$
198.8 $
0.9 $
— $
— $
199.7
Sources and Uses of Cash
We generated $520.8 million and $439.1 million of cash from operating activities during the years ended December 31, 2025
and 2024, respectively. In connection with the Avadel Acquisition, we placed $731.2 million in escrow to finance the portion of the
consideration in excess of the commitments secured under the Bridge Credit Agreement. In December 2024, we prepaid our
previously outstanding long-term debt without penalty in the amount of $289.5 million and, during the course of 2024, repurchased
approximately $200.0 million of our ordinary shares. We expect that our existing cash, cash equivalents, restricted cash and
investments will be sufficient to finance our anticipated working capital and other cash requirements, including debt services and
capital expenditures, 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 financing in the future, including debt and
equity offerings, corporate collaborations, bank borrowings, arrangements relating to assets or other financing methods or structures.
Our investment objectives are, first, to preserve liquidity and conserve capital and, second, to generate investment income. We
mitigate credit risk in our cash reserves by maintaining a well-diversified portfolio that limits the amount of investment exposure as to
institution, maturity and investment type. Our available-for-sale investments consist primarily of short and long-term U.S. government
and agency debt securities and corporate debt securities. Our held-to-maturity investments consist of investments that are held as
collateral under certain letters of credit related to certain of our lease agreements.
We classify available-for-sale investments in an unrealized loss position that do not mature within 12 months as long-term
investments. We have the intent and ability to hold 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 before recovery of their amortized cost.
We have no off-balance sheet arrangements that are reasonably likely to have a material effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources in the
next 12 months.
69
Information about our cash flows, by category, is presented in the accompanying consolidated statements of cash flows. The
discussion of our cash flows that follows does not include the impact of any adjustments to remove discontinued operations and is
stated on a total company consolidated basis. The following table summarizes our cash flows for the years ended December 31, 2025
and 2024:
Year Ended December 31,
(In millions)
2025
2024
Cash, cash equivalents and restricted cash, beginning of period
$
291.1 $
457.5
Cash flows provided by operating activities
520.8
439.1
Cash flows provided by (used in) investing activities
295.5
(111.3)
Cash flows provided by (used in) financing activities
12.4
(494.1)
Cash, cash equivalents and restricted cash, end of period
$
1,119.8 $
291.2
Operating Activities
Cash flows provided by operating activities represent the cash receipts and disbursements related to all of our activities other
than investing and financing activities. Operating cash flow is derived by adjusting our net income for non-cash operating items such
as depreciation, amortization and share-based compensation and changes in operating assets and liabilities, which reflect timing
differences between the receipt and payment of cash associated with transactions and when they are recognized in our results of
operations.
Cash flows provided by operating activities during 2025 primarily consisted of net income of $241.7 million, adjusted for non-
cash items, including share-based compensation of $98.7 million, depreciation and amortization of $27.2 million, deferred income
taxes of $28.8 million and $119.1 million of changes in working capital.
Cash flows provided by operating activities during 2024 primarily consisted of net income of $367.1 million, adjusted for non-
cash items, including share-based compensation of $96.6 million, depreciation and amortization of $28.5 million and deferred income
taxes of $40.5 million, partially offset by changes in working capital of $97.4 million.
Investing Activities
Cash flows provided by investing activities during 2025 primarily consisted of $333.1 million of net proceeds from the sale and
maturities of investments, partially offset by the purchase of $40.4 million of property, plant and equipment. Cash flows used in
investing activities during 2024 primarily consisted of $176.2 million in net purchases of investments and the purchase of $33.5
million of property, plant and equipment. These outflows were partially offset by proceeds from the sale of the Athlone Facility and
related business of $97.9 million.
We expect to spend approximately $40.0 million to $50.0 million during the year ending December 31, 2026 for capital
expenditures. We continue to evaluate our manufacturing capacity based on expectations of demand for the products that we
manufacture and will continue to record such amounts within construction in progress until such time as 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
would recognize an impairment charge. We continue to periodically evaluate whether facts and circumstances indicate that the
carrying value of these long-lived assets to be held and used may not be recoverable.
Financing Activities
Cash flows provided by financing activities during 2025 were due to $43.4 million of cash that we received upon exercises of
employee stock options, partially offset by $31.0 million of employee taxes paid related to the net share settlement of equity awards.
Cash flows used in financing activities during 2024 primarily related to the prepayment of our previously outstanding long-term debt
in the full amount of $289.5 million, payment for the repurchase of our ordinary shares and related expenses in the amount of $200.3
million, and $29.6 million of employee taxes paid related to net share settlements of equity awards, partially offset by $27.6 million of
cash that we received upon exercises of employee stock options.
70
Debt
On February 12, 2026, in connection with the Avadel Acquisition, we entered into a credit agreement (the “Credit Agreement”),
by and among Alkermes plc, as the TopCo Borrower, Alkermes, Inc., as the U.S. Borrower, Alkermes Finance LLC, as the U.S. Co-
Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, Joint Lead Arranger and Joint Bookrunner, BofA Securities, Inc., as
Joint Lead Arranger and Joint Bookrunner, and the lenders party thereto. The Credit Agreement provides for (i) a senior secured term
loan A facility in an aggregate principal amount of up to $750.0 million (the “TLA Facility”) and (ii) a senior secured term loan B
facility in an aggregate principal amount of up to $775.0 million (the “TLB Facility” and together with the TLA Facility, the
“Facilities”). The TLA Facility matures on February 12, 2031, and the TLB Facility matures on August 12, 2031. On the closing date
of the Facilities (the “Closing Date”), we borrowed the full $1.525 billion available under the Facilities.
Borrowings under the TLA Facility will bear interest at an annual rate of, at our option, either (i) the Term SOFR Rate (as
defined in the Credit Agreement) plus a Secured Net Leverage Ratio (as defined in the Credit Agreement)-based margin, which will
initially be 2.75% per annum or (ii) the Alternate Base Rate (as defined in the Credit Agreement) plus a Secured Net Leverage Ratio-
based margin, which will initially be 1.75% per annum. Borrowings under the TLB Facility will bear interest at an annual rate of, at
our option, either (i) the Term SOFR Rate plus a margin of 2.75% per annum or (ii) the Alternate Base Rate plus a margin of 1.75%
per annum. We have agreed to pay certain fees and expenses in connection with the Facilities, as set forth in the Credit Agreement and
certain related fee letters.
The Credit Agreement (other than with respect to the TLB Facility) requires the maintenance of a maximum Secured Net
Leverage Ratio and a minimum Consolidated Interest Coverage Ratio (as defined in the Credit Agreement), in each case, with the
levels set forth in the Credit Agreement, as of the last day of any of our fiscal quarters ending after the Closing Date. In addition, the
Credit Agreement contains customary affirmative and negative covenants that apply after the Closing Date, including limitations on
indebtedness, liens, mergers, consolidations, sales of assets, investments, transactions with affiliates, restricted payments and sales and
leasebacks. The Credit Agreement also contains certain customary events of default, including upon a change of control.
The Credit Agreement is guaranteed by subsidiary guarantors and secured by a lien on substantially all of the assets of the
borrowers and the subsidiary guarantors, whether owned as of the Closing Date or thereafter acquired.
Also on February 12, 2026, in connection with completion of the Avadel Acquisition and our entry into the Credit Agreement,
we terminated the Bridge Credit Agreement entered into in order to fund the Avadel Acquisition, as the commitments under the Credit
Agreement, together with our cash on hand, were sufficient to fund the Avadel Acquisition.
In December 2024, we prepaid in full all Former Term Loans under the Company’s then-in-effect amended and restated credit
agreement (the “Former Credit Agreement”) for a total of $289.5 million and terminated the agreement. We did not incur any early
termination penalties in connection with the termination of the Former Credit Agreement (other than customary breakage costs). All
liens on the collateral securing the obligations under the Former Credit Agreement were released in connection with the termination.
Such prepayment was accounted for as a debt extinguishment. See Note 11, Long-Term Debt, in the “Notes to Consolidated Financial
Statements” in this Annual Report for additional discussion related to our Former Term Loans.
Discontinued Operations
Net loss from discontinued operations consists of the results of our former oncology business and is reported as a separate
component of income. For additional information, see Note 15, Discontinued Operations, in the “Notes to Consolidated Financial
Statements” in this Annual Report.
Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our
financial statements, we are required to make assumptions and estimates about future events, and apply judgments based on historical
experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements
are prepared. On a regular basis, we review these accounting policies, assumptions, estimates and judgments to ensure that our
financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be
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 Financial Statements” in this Annual Report. We believe that the following accounting estimates are the most critical to
aid in fully understanding and evaluating our reported financial results, and they require our most difficult, subjective or complex
judgments, resulting from the need to make estimates about the effects of matters that are inherently uncertain. We have reviewed
these critical accounting estimates and related disclosures with the audit and risk committee of our board of directors.
71
Revenue from Contracts with Customers
We recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the
consideration which we expect to receive in exchange for those goods or services. We recognize revenue following the five-step
model prescribed under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue
from Contracts with Customers, (“Topic 606”): (i) identify contract(s) with a customer; (ii) identify the performance obligations in the
contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v)
recognize revenue when (or as) we satisfy the performance obligations.
Product Sales, Net
Our product sales, net in 2025 and 2024 consisted of sales in the U.S. of ARISTADA, ARISTADA INITIO, LYBALVI and
VIVITROL primarily to wholesalers, specialty distributors and pharmacies. 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 our customers, healthcare providers or payers. Our process for estimating reserves established for these variable
consideration components does 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 cumulative revenues recognized will 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 an effect 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 U.S. states under the Medicaid Drug Rebate Program as a reduction
of sales when the product is shipped into the distribution channel using the expected value. We rebate individual U.S.
states for all eligible units purchased under the Medicaid program based on a rebate per unit calculation, which is based on
our average manufacturer prices. We estimate expected unit sales to individuals covered by Medicaid and rebates per unit
under the Medicaid program and adjust our rebate accrual based on actual unit sales and rebates per unit and changes in
trends in Medicaid utilization. In 2025, actual Medicaid utilization rates related to VIVITROL and
ARISTADA/ARISTADA INITIO, were lower than original estimates by approximately $26.7 million and $13.6 million,
respectively. In 2024, actual Medicaid utilization rates related to VIVITROL were lower than original estimates, due, in
part, to $8.7 million in actual credits received from certain states in the fourth quarter of 2024 related to duplicate
Medicaid billings;
•
Chargebacks—discounts that occur when contracted indirect customers purchase directly from wholesalers and specialty
distributors. Contracted customers generally purchase a product at its contracted price. The wholesaler or specialty
distributor, in turn, then generally charges back to us the difference between the wholesale acquisition cost and the
contracted price paid to the wholesaler or specialty distributor by the customer. The allowance for chargebacks is made
using the expected value and is based on actual and expected utilization of these programs. Chargebacks could exceed
historical experience and our estimates of future participation in these programs. To date, actual chargebacks have not
differed materially from our estimates;
•
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 the expected 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 using the expected returns of product sold based on our historical return levels and specifically
identified anticipated returns due to known business conditions and product expiry dates. Return amounts are recorded as
a reduction of sales. Once product is returned, it is destroyed. Actual product returns have not differed materially from our
estimates; and
•
Medicare Part D—we record accruals for Medicare Part D liabilities under the Medicare Manufacturer Discount Program
as a reduction of sales. Under an agreement with the Centers for Medicare and Medicaid Services, manufacturers are
responsible for reimbursing Medicare for a specified percentage discount on the cost of applicable drugs during the initial
coverage phase and a specified percentage discount during the catastrophic coverage phase of the Medicare Part D benefit.
Actual Medicare Part D rebates have not differed materially from our estimates.
72
A rollforward of our provisions for sales and allowances is as follows:
(In millions)
Contractual
Adjustments
Discounts
Product
Returns
Other
Total
Balance, December 31, 2023
$
234.4 $
28.7 $
41.1 $
10.2 $
314.4
Provision:
Current year
557.7
386.6
28.6
87.4
1,060.3
Prior year
(20.6)
—
(3.7)
—
(24.3)
Total
537.1
386.6
24.9
87.4
1,036.0
Payments and credits related to:
Current year sales
(369.9)
(353.6)
—
(70.8)
(794.3)
Prior year sales
(172.6)
(18.1)
(15.5)
(13.5)
(219.7)
Total
(542.5)
(371.7)
(15.5)
(84.3)
(1,014.0)
Balance, December 31, 2024
$
229.0 $
43.6 $
50.5 $
13.3 $
336.4
Provision:
Current year
544.5
420.4
29.9
89.1
1,083.9
Prior year
(43.3)
0.2
(12.6)
(0.4)
(56.1)
Total
501.2
420.6
17.3
88.7
1,027.8
Payments and credits related to:
Current year sales
(392.8)
(398.9)
—
(80.1)
(871.8)
Prior year sales
(127.5)
(23.9)
(12.4)
(12.6)
(176.4)
Total
(520.3)
(422.8)
(12.4)
(92.7)
(1,048.2)
Balance, December 31, 2025
$
209.9 $
41.4 $
55.4 $
9.3 $
316.0
(1)
“Contractual Adjustments” include “Medicaid Rebates” and “Medicare Part D” accruals
(2)
“Discounts” include “Chargebacks” and “Product Discounts”
Manufacturing Revenue
We recognize manufacturing revenues from the sale of products we manufacture for resale by our licensees. Substantially all of
our manufacturing revenues are recognized at a point in time when control of the product passes to the licensee. 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 generally
occur after we have recorded manufacturing revenue, we estimate the sales price for such products based on information supplied to us
by our licensees, our historical transaction experience and other third-party data. Differences between actual manufacturing revenues
and estimated manufacturing revenues are reconciled and adjusted for in the period in which they become known, which is generally
within the same quarter. The differences between our actual and estimated manufacturing revenues have not been material to date.
Royalty Revenue
We recognize royalty revenues related to the sale by our licensees of products that incorporate our technology. All of our
royalties qualify for the sales-and-usage exemption under Topic 606 as (i) such 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 on this exemption, such
royalties are earned in the period the products are sold by our licensees and we have a present right to payment.
Certain of our royalty revenues are recognized based on information supplied to us by our licensees and require estimates to be
made. Differences between actual royalty revenues and estimated royalty revenues are reconciled and adjusted for in the period in
which they become known, which is generally within the same quarter. The differences between our actual and estimated royalty
revenues have not been material to date.
Discontinued Operations
We determined that the separation of our former oncology business, which was completed on November 15, 2023, represented a
disposal plan that met the criteria for classification of the oncology business as a discontinued operation in accordance with ASC 205-
20, Discontinued Operations. Accordingly, the accompanying consolidated financial statements for all periods have been updated to
present the assets and liabilities associated with the oncology business separately as discontinued operations on the consolidated
balance sheet and the results of such discontinued operations reported as a separate component of income in the consolidated
statements of operations and comprehensive income.
For additional information related to discontinued operations, see Note 15, Discontinued Operations, in our “Notes to
Consolidated Financial Statements” in this Annual Report.
(1)
(2)
73
Impairment of Long-Lived Assets
Long-lived assets, other than goodwill which is separately tested for impairment, are evaluated for impairment whenever events
or changes in circumstances indicate the carrying value of an asset may not be recoverable. When evaluating long-lived assets for
potential impairment, we first compare the carrying 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 the carrying 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 fair value, 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’s
carrying 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 cash flows are largely independent of the cash flows of other assets and liabilities. Our impairment loss
calculations contain uncertainties because they require management to make assumptions and to apply judgment to estimate future
cash flows and asset fair values, including forecasting useful lives of the assets and selecting the discount rate that reflects the risk
inherent in future cash flows.
Valuation of Deferred Tax Assets
We evaluate the need for deferred tax asset valuation allowances based on a more-likely-than-not standard. The ability to realize
deferred tax assets depends on the ability to generate sufficient taxable income within the carryback or carryforward periods provided
for in the tax law for each applicable tax jurisdiction. 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 evidence factors 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.
We utilize a rolling three years of actual and current year anticipated results as the primary measures of cumulative income
(losses) in recent years. For additional information related to our assessment of our valuation allowance, see Note 17, Income Taxes in
the “Notes to Consolidated Financial Statements” in this Annual Report.
The evaluation of deferred tax assets requires judgment in assessing the likely future tax consequences of events that have been
recognized in our financial statements or tax returns and future profitability. Our accounting for deferred tax consequences represents
our best estimate of those future events. Changes in our current estimates, due to unanticipated events or otherwise, could have a
material effect on our financial condition and results of operations. For information related to risks surrounding our deferred tax assets,
see “Item 1A—Risk Factors” in this Annual Report and specifically the section entitled “Our deferred tax assets may not be realized.”
74
Recent Accounting Pronouncements
See Note 2, Summary of Significant Accounting Policies, “New Accounting Pronouncements” in our “Notes to Consolidated
Financial Statements” in this Annual Report for discussion, if any, of new accounting standards.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We hold securities in our investment portfolio that are sensitive to market risks. Our securities with fixed interest rates may have
their market value adversely 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 expectations due to a fall in interest
rates or we may suffer losses in principal if we are forced to sell securities that decline 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 are recognized 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 a material exposure to interest rate risk as our investment policies specify credit quality standards for our
investments and limit the amount of credit exposure from any single issue, issuer or type of investment.
We do not believe our exposure to liquidity and credit risk to be significant as approximately 49% and 51% of our investments
at December 31, 2025 are in corporate debt securities with a minimum rating of A2 (Moody’s)/A (Standard and Poor’s) and debt
securities issued by the U.S. government or its agencies, respectively. We have the intent and ability to hold these securities until
recovery, which may be at maturity.
Currency Exchange Rate Risk
Manufacturing and royalty revenues that we receive on certain of our products and services are a percentage of the net sales
made by our licensees, and a portion 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. The manufacturing 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 to determine 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
USD weakens 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 December 31, 2025, an average 10% strengthening of the USD relative to the currencies in which these
products are sold would have resulted in revenues being reduced by approximately $13.9 million, as compared to a reduction in
revenues of approximately $8.9 million for the year ended December 31, 2024.
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 and payables 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 revenues earned 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 expenses and payables incurred at our Irish operations that are
settled in euro. For the year ended December 31, 2025, an average 10% weakening in the USD relative to the euro would have
resulted in an increase to our expenses denominated in euro of approximately $3.7 million, as compared to an increase in our expenses
of approximately $3.9 million for the year ended December 31, 2024.
75
Item 8. Financial Statements and Supplementary Data
Selected Quarterly Financial Data (unaudited)
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Total
2025
(In thousands, except per share data)
Year Ended December 31, 2025
Total revenues
$
306,510 $
390,657 $
394,185 $
384,547 $ 1,475,899
Total operating expenses
292,718
297,679
305,103
326,443 1,221,943
Operating income from continuing operations
13,792
92,978
89,082
58,104
253,956
Net income
$
22,464 $
87,098 $
82,761 $
49,341 $
241,664
Earnings per share—basic:
From continuing operations
$
0.14 $
0.53 $
0.50 $
0.30 $
1.47
From discontinued operations
—
—
—
—
—
From net income
$
0.14 $
0.53 $
0.50 $
0.30 $
1.47
Earnings per share—diluted:
From continuing operations
$
0.13 $
0.52 $
0.49 $
0.29 $
1.43
From discontinued operations
—
—
—
—
—
From net income
$
0.13 $
0.52 $
0.49 $
0.29 $
1.43
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Total
2024
(In thousands, except per share data)
Year Ended December 31, 2024
Total revenues
$
350,372 $
399,131 $
378,143 $
429,986 $ 1,557,632
Total operating expenses
307,063
289,248
273,387
267,298 1,136,996
Operating income from continuing operations
43,309
109,883
104,756
162,688
420,636
Net income from continuing operations
$
38,948 $
94,658 $
92,795 $
145,737 $
372,138
Net (loss) income from discontinued operations
(2,120)
(3,300)
(414)
766
(5,068)
Net income
$
36,828 $
91,358 $
92,381 $
146,503 $
367,070
Earnings (loss) per share—basic:
From continuing operations
$
0.23 $
0.56 $
0.57 $
0.90 $
2.24
From discontinued operations
$
(0.01) $
(0.02) $
(0.00) $
0.00 $
(0.03)
From net income
$
0.22 $
0.54 $
0.57 $
0.90 $
2.21
Earnings (loss) per share—diluted:
From continuing operations
$
0.23 $
0.55 $
0.56 $
0.88 $
2.19
From discontinued operations
$
(0.01) $
(0.02) $
(0.00) $
0.00 $
(0.03)
From net income
$
0.21 $
0.53 $
0.55 $
0.88 $
2.16
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
76
Item 9A. Controls and Procedures
Disclosure Controls and Procedures and Internal Control Over Financial Reporting
Controls and Procedures
Our management has evaluated, with the participation of our principal executive officer and principal financial officer, the
effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of
December 31, 2025. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the
end of the period covered by this report, our disclosure controls and procedures were 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 Act is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and forms, and (b) such information is accumulated and
communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow
timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management
recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-
benefit relationship of possible controls and procedures.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2025 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting as
defined in Rules 13a-15(f) and 15d-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 the supervision of, the issuer’s principal executive and principal financial
officers, or persons performing similar functions, and effected by the issuer’s board of directors, management and other personnel to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements 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 the issuer;
•
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 that could 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 of effectiveness for future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. 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, 2025, our internal control over financial
reporting was effective.
The effectiveness of our internal control over financial reporting as of December 31, 2025 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is included in this
Annual Report, beginning on page F-1.
77
Item 9B. Other Information
Trading Plans
During the three months ended December 31, 2025, the following contracts, instructions or written plans for the purchase or sale
of the Company’s securities that are or were intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the
Exchange Act (each, a “Rule 10b5-1 plan”) were adopted by officers (as defined in Rule 16a-1(f) under the Exchange Act) and
directors of the Company: (i) on November 7, 2025, Samuel Parisi, our Vice President, Finance and Interim Principal Accounting
Officer, adopted a Rule 10b5-1 plan providing for the sale of up to 10,055 ordinary shares of the Company that may be obtained from
the vesting of restricted stock unit awards; this plan is scheduled to expire on December 31, 2026; (ii) on November 19, 2025, David
Gaffin, our Executive Vice President, Chief Legal Officer, Chief Compliance Officer and Secretary, adopted a Rule 10b5-1 plan
providing for the sale of up to 77,518 ordinary shares of the Company that may be obtained from the exercise of vested stock options
and the sale of up to 20,341 ordinary shares of the Company; this plan is scheduled to expire on February 17, 2027; (iii) on November
19, 2025, Blair Jackson, our Executive Vice President, Chief Operating Officer, adopted a Rule 10b5-1 plan providing for the sale of
up to 45,899 ordinary shares of the Company that may be obtained from the exercise of vested and expiring stock options; this plan is
scheduled to expire on February 27, 2026; (iv) on November 19, 2025, Christian Todd Nichols, our Senior Vice President, Chief
Commercial Officer, adopted a Rule 10b5-1 plan providing for the sale of up to 6,000 ordinary shares of the Company; this plan is
scheduled to expire on December 31, 2026; and (v) on November 19, 2025, Richard Pops, our Chairman and Chief Executive Officer,
adopted a Rule 10b5-1 plan providing for the sale of up to 305,999 ordinary shares of the Company that may be obtained from the
exercise of vested and expiring stock options; this plan is scheduled to expire on February 27, 2026. During the three months ended
December 31, 2025, no other directors or officers of the Company adopted or terminated a Rule 10b5-1 plan or a trading plan not
intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
78
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this item is incorporated herein by reference to our definitive proxy statement for our 2026 annual
general meeting of shareholders. We expect this information will be provided under sections of the proxy statement entitled “Proposal
1—Election of Directors,” “The Role of the Board and Its Committees,” “Executive Officers,” “Other Corporate Governance Matters”
and “Board Nominations, Evaluations and Refreshment” and, if required, “Delinquent Section 16(a) Reports”.
Item 11. Executive Compensation
The information required by this item (excluding, for clarity, the information required by Item 402(v) of Regulation S-K) is
incorporated herein by reference to our definitive proxy statement for our 2026 annual general meeting of shareholders. We expect
this information will be provided under sections of the proxy statement entitled “The Role of the Board and Its Committees,”
“Director Compensation,” “Executive Compensation—Compensation Discussion and Analysis,” “Executive Compensation Tables,”
“Additional Compensation Information,” “Compensation Committee Report” and “Pay Ratio”.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is incorporated herein by reference to our definitive proxy statement for our 2026 annual
general meeting of shareholders. We expect this information will be provided under sections of the proxy statement entitled
“Ownership of the Company’s Ordinary Shares” and “Equity Compensation Plan Information”.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated herein by reference to our definitive proxy statement for our 2026 annual
general meeting of shareholders. We expect this information will be provided under sections of the proxy statement entitled “Certain
Relationships and Related Person Transactions” and “The Board of Directors”.
Item 14. Principal Accountant Fees and Services
The information required by this item is incorporated herein by reference to our definitive proxy statement for our 2026 annual
general meeting of shareholders. We expect this information will be provided under a section of the proxy statement entitled “Audit
Fees”.
79
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)(1)
Consolidated Financial Statements—The consolidated financial statements of Alkermes plc, as required by this item,
are submitted in a separate section beginning on page F-1 of this Annual Report, as follows:
Financial Statement
Page Number
Report of Independent Registered Public Accounting Firm (PCAOB ID: 238)
F-1
Consolidated Balance Sheets
F-3
Consolidated Statements of Operations and Comprehensive Income
F-4
Consolidated Statements of Shareholders’ Equity
F-5
Consolidated Statements of Cash Flows
F-6
Notes to the Consolidated Financial Statements
F-7
(2) Financial Statement Schedules—All schedules have been omitted because the absence of conditions under which they are
required or because the required 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 by reference.
EXHIBIT INDEX
Incorporated by reference herein
Exhibit No.
Description of Exhibit
Form
Date
2.1 §
Separation Agreement, dated as of November 13, 2023, by and
between Alkermes plc and Mural Oncology plc.
Exhibit 2.1 to the Alkermes
plc Current Report on Form
8-K (File No. 001-35299)
November 15,
2023
2.2 §
Transaction Agreement, dated as of October 22, 2025 by and
among Alkermes plc and Avadel Pharmaceuticals plc.
Exhibit 2.1 to the Alkermes
plc Current Report on Form
8-K (File No. 001-35299)
October 22, 2025
2.2A
Amendment No. 1 to the Transaction Agreement, dated as of
November 18, 2025, by and between Alkermes plc and Avadel
Pharmaceuticals plc.
Exhibit 2.1 to the Alkermes
plc Current Report on Form
8-K (File No. 001-35299)
November 19,
2025
2.2B
Appendix III to the Rule 2.7 Announcement, dated as of October
22, 2025 (Conditions Appendix).
Exhibit 2.2 to the Alkermes
plc Current Report on Form
8-K (File No. 001-35299)
October 22, 2025
3.1
Memorandum and Articles of Association of Alkermes plc.
Exhibit 3.1 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
May 1, 2024
4.1 #
Description of Securities.
10.1
Lease, dated March 23, 2018, by and between Alkermes, Inc.
and PDM 900 Unit, LLC.
Exhibit 10.4 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 011-35299)
April 26, 2018
10.1A
First Amendment to Lease, dated June 21, 2018, by and between
Alkermes, Inc. and PDM 900 Unit, LLC.
Exhibit 10.2 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
July 26, 2018
10.1B
Second Amendment to Lease, dated May 10, 2019, by and
between Alkermes, Inc. and PDM 900 Unit, LLC.
Exhibit 10.2 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
July 25, 2019
10.2
License Agreement, dated as of February 13, 1996, between
Medisorb Technologies International L.P. and Janssen
Pharmaceutica Inc. (United States) (assigned to Alkermes, Inc.
in July 2006).
Exhibit 10.2 to the Alkermes
plc Annual Report on Form
10-K (File No. 001-35299)
February 25, 2016
10.2A *
Third Amendment to Development Agreement, Second
Amendment to Manufacturing and Supply Agreement and First
Amendment to License Agreements by and between Janssen
Pharmaceutica International, Janssen Pharmaceutica Inc. and
Exhibit 10.5 to the Alkermes,
Inc. Quarterly Report on
Form 10-Q (File No. 001-
14131)
February 8, 2005
80
Incorporated by reference herein
Exhibit No.
Description of Exhibit
Form
Date
Alkermes Controlled Therapeutics Inc. II, dated April 1, 2000
(assigned to Alkermes, Inc. in July 2006).
10.2B *
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 of February 21, 1996, as amended,
by and between Alkermes, Inc. and JPI Pharmaceutica
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
plc Quarterly Report on Form
10-Q (File No. 001-35299)
November 1, 2012
10.3
License Agreement, dated as of February 21, 1996, between
Medisorb Technologies International L.P. and Janssen
Pharmaceutica International (worldwide except United States)
(assigned to Alkermes, Inc. in July 2006).
Exhibit 10.3 to the Alkermes
plc Annual Report on Form
10-K (File No. 001-35299)
February 25, 2016
10.4
Manufacturing and Supply Agreement, dated August 6, 1997, 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 to the Alkermes
plc Annual Report on Form
10-K (File No. 001-35299)
February 25, 2016
10.4A *
Fourth Amendment to Development Agreement and First
Amendment to Manufacturing and Supply Agreement by and
between Janssen Pharmaceutica International, Janssen
Pharmaceutica Products, L.P. and Alkermes Controlled
Therapeutics Inc. II, dated December 20, 2000 (assigned to
Alkermes, Inc. in July 2006).
Exhibit 10.4 to the Alkermes,
Inc. Quarterly Report on
Form 10-Q (File No. 001-
14131)
February 8, 2005
10.4B
Addendum to the Manufacturing and Supply Agreement by and
among JPI Pharmaceutica International, Janssen Pharmaceutica
Inc. and Alkermes Controlled Therapeutics Inc. II, dated August
1, 2001.
Exhibit 10.4.2 to the
Alkermes plc Annual Report
on Form 10-K (File No. 001-
35299)
February 25, 2016
10.4C
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 plc Annual Report
on Form 10-K (File No. 001-
35299)
February 25, 2016
10.4D *
Amendment to Manufacturing and Supply Agreement by and
between JPI Pharmaceutica International, Janssen Pharmaceutica
Inc. and Alkermes Controlled Therapeutics Inc. II, dated
December 22, 2003 (assigned to Alkermes, Inc. in July 2006).
Exhibit 10.6 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 011-35299)
July 30, 2015
10.4E *
Fourth Amendment to Manufacturing and Supply Agreement by
and between JPI Pharmaceutica International, Janssen
Pharmaceutica Inc. and Alkermes Controlled 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, 2005
10.4F *
Sixth Amendment to Manufacturing and Supply Agreement by
and between JPI Pharmaceutica International, Janssen
Pharmaceutica Inc. and Alkermes Controlled Therapeutics Inc.
II (assigned to Alkermes, Inc. in July 2006), effective as of July
1, 2018.
Exhibit 10.11 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 011-35299)
October 23, 2018
10.5 *
Agreement by and between JPI Pharmaceutica International,
Janssen Pharmaceutica Inc. and Alkermes Controlled
Therapeutics Inc. II, dated December 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, 2005
10.5A *
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, 2005
81
Incorporated by reference herein
Exhibit No.
Description of Exhibit
Form
Date
10.6 **
License Agreement by and among Elan Pharmaceutical
Research Corp., d/b/a Nanosystems and Elan Pharma
International Limited and Janssen Pharmaceutica N.V. dated as
of March 31, 1999.
Exhibit 10.1 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
April 26, 2023
10.6A
First Amendment, dated as of July 31, 2003, to the License
Agreement by and among Elan Drug Delivery, Inc. (formerly
Elan Pharmaceutical Research Corp.) and Elan Pharma
International Limited and Janssen Pharmaceutica NV dated
March 31, 1999.
Exhibit 10.24 to the Alkermes
plc Annual Report on Form
10-K (File No. 001-35299)
May 23, 2013
10.6B **
Agreement Amendment No. 2, dated as of July 31, 2009, to the
License Agreement by and among Elan Pharmaceutical
Research Corp., d/b/a Nanosystems and Elan Pharma
International Limited and Janssen Pharmaceutica N.V. dated as
of March 31, 1999, as amended by the First Amendment, dated
as of July 31, 2003.
Exhibit 10.2 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
April 26, 2023
10.7 *
License and Collaboration Agreement, dated November 27,
2017, by and between Alkermes Pharma Ireland Limited and
Biogen International GmbH (as successor to Biogen Swiss
Manufacturing GmbH).
Exhibit 10.10 to the Alkermes
plc Annual Report on Form
10-K (File No. 011-35299)
February 16, 2018
10.7A *
First Amendment to License and Collaboration Agreement
between Alkermes Pharma Ireland Limited and Biogen
International GmbH (as successor to Biogen Swiss
Manufacturing GmbH), effective as of October 3, 2018.
Exhibit 10.12 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 011-35299)
October 23, 2018
10.7B
Second Amendment to License and Collaboration Agreement
between Alkermes Pharma Ireland Limited and Biogen
International GmbH (as successor to Biogen Swiss
Manufacturing GmbH), effective as of January 31, 2019.
Exhibit 10.1 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 011-35299)
April 25, 2019
10.7C **
Third Amendment to License and Collaboration Agreement
between Alkermes Pharma Ireland Limited and Biogen
International GmbH (as successor to Biogen Swiss
Manufacturing GmbH), effective as of October 30, 2019.
Exhibit 10.10.3 to the
Alkermes plc Annual Report
on Form 10-K (File No. 011-
35299)
February 13, 2020
10.7D **
Fourth Amendment to License and Collaboration Agreement
between Alkermes Pharma Ireland Limited and Biogen
International GmbH (as successor to Biogen Swiss
Manufacturing GmbH), effective as of August 25, 2022.
Exhibit 10.1 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 011-35299)
November 2, 2022
10.7E **
Fifth Amendment to License and Collaboration Agreement
between Alkermes Pharma Ireland Limited and Biogen
International GmbH (as successor to Biogen Swiss
Manufacturing GmbH), effective as of June 7, 2024.
Exhibit 10.1 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 011-35299)
July 24, 2024
10.8 **
Confidential Settlement and License Agreement, dated August
29, 2023, by and among Alkermes, Inc., Alkermes Pharma
Ireland Limited and Teva Pharmaceuticals USA, Inc.
Exhibit 10.1 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
October 25, 2023
10.9 §
Tax Matters Agreement, dated November 13, 2023, by and
between Alkermes plc and Mural Oncology plc.
Exhibit 10.1 to the Alkermes
plc Current Report on Form
8-K (File No. 001-35299)
November 15,
2023
10.10 **§
Asset Purchase Agreement, dated December 13, 2023, by and
between Alkermes Pharma Ireland Limited, Novo Nordisk
Production Ireland Limited and Novo Nordisk A/S.
Exhibit 10.16 to the Alkermes
plc Annual Report on Form
10-K (File No. 001-35299)
February 21, 2024
10.11 **§
Authorized Generic Product Supply Agreement, dated
September 9, 2025, by and between Alkermes Pharma Ireland
Limited and Amneal Pharmaceuticals LLC.
Exhibit 10.1 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
October 28, 2025
10.12 §
Credit Agreement, dated as of February 12, 2026, by and among
Alkermes plc, as the TopCo Borrower, Alkermes, Inc., as the
U.S. Borrower, Alkermes Finance LLC, as the U.S. Co-
Borrower, JPMorgan Chase Bank, N.A., as Administrative
Agent, Joint Lead Arranger and Joint Bookrunner, BofA
Exhibit 10.1 to the Alkermes
plc Current Report on Form
8-K (File No. 001-35299)
February 12, 2026
82
Incorporated by reference herein
Exhibit No.
Description of Exhibit
Form
Date
Securities, Inc., as Joint Lead Arranger and Joint Bookrunner,
and the lenders party thereto.
10.13
Settlement and License Agreement by and between Jazz
Pharmaceuticals, Inc. and Jazz Pharmaceuticals Ireland Limited
and Avadel CNS Pharmaceuticals, LLC and Flamel Ireland
Limited.
Exhibit 10.3 to the Avadel
Pharmaceuticals plc
Quarterly Report on Form 10-
Q (File No. 001-37977)
November 4, 2025
10.14 †
Employment Agreement, dated as of December 12, 2007, by and
between Richard F. Pops and Alkermes, Inc.
Exhibit 10.1 to the Alkermes,
Inc. Quarterly Report on
Form 10-Q (File No. 001-
14131)
February 11, 2008
10.14A †
Amendment to Employment Agreement, dated as of October 7,
2008, by and between Alkermes, Inc. and Richard F. Pops.
Exhibit 10.5 to the Alkermes,
Inc. Current Report on Form
8-K (File No. 001-14131)
October 7, 2008
10.14B †
Amendment No. 2 to Employment Agreement, dated as of
September 10, 2009 by and between Richard F. Pops and
Alkermes, Inc.
Exhibit 10.2 to the Alkermes,
Inc. Current Report on Form
8-K (File No. 001-14131)
September 11,
2009
10.15 †
Form of Employment Agreement, as amended by the Form of
Amendment to Employment Agreement set forth in 10.12.1,
entered into by and between Alkermes, Inc. and Blair C.
Jackson.
Exhibit 10.3 to the Alkermes,
Inc. Quarterly Report on
Form 10-Q (File No. 001-
14131)
February 11, 2008
10.15A †
Form of Amendment to Employment Agreement with Alkermes,
Inc.
Exhibit 10.7 to the Alkermes,
Inc. Current Report on Form
8-K (File No. 001-14131)
October 7, 2008
10.16 †
Form of Employment Agreement entered into by and between
Alkermes, Inc. and each of David J. Gaffin, Craig C. Hopkinson,
M.D. Christian Todd Nichols and Joshua Reed.
Exhibit 10.1 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 011-35299)
November 2, 2016
10.17†
Offer Letter, effective as of April 24, 2017, by and between
Alkermes, Inc. and Craig C. Hopkinson M.D.
Exhibit 10.17.1 to the
Alkermes plc Annual Report
on Form 10-K (File No. 011-
35299)
February 16, 2018
10.18 †
Offer Letter, dated March 29, 2019, by and between Alkermes,
Inc. and Christian Todd Nichols.
Exhibit 10.1 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 011-35299)
July 29, 2020
10.19 †
Offer Letter, dated August 27, 2025, by and between Alkermes,
Inc. and Joshua Reed.
Exhibit 10.3 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 011-35299)
October 28, 2025
10.20 †
Form of Indemnification Agreement entered into by and between
Alkermes, Inc. and each of the Directors and Secretaries of
Alkermes plc and its Irish subsidiaries.
Exhibit 10.2 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
April 29, 2020
10.21 †
Form of Deed of Indemnification entered into by and between
each of the Directors, Secretaries and executive officers of
Alkermes plc and its subsidiaries.
Exhibit 10.1 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
April 29, 2020
10.22†
Alkermes plc Amended and Restated 2008 Stock Option and
Incentive Plan, as amended.
Exhibit 10.1 to the Alkermes
plc Quarterly Report on Form
10-Q for the quarter ended
March 31, 2017 (File No.
001-35299)
April 27, 2017
10.22A †
Form of Stock Option Award Certificate (Non-Employee
Director) under the Alkermes plc Amended and Restated 2008
Stock Option and Incentive Plan, as amended.
Exhibit 10.4 to the Alkermes
plc Quarterly Report on Form
10-Q for the quarter ended
March 31, 2016 (File No.
001-35299)
April 28, 2016
10.22B †
Form of Restricted Stock Unit Award Certificate (Time Vesting
Only – Irish) under the Alkermes plc Amended and Restated
2008 Stock Option and Incentive Plan, as amended.
Exhibit 10.5 to the Alkermes
plc Quarterly Report on Form
10-Q for the quarter ended
March 31, 2016 (File No.
001-35299)
April 28, 2016
83
Incorporated by reference herein
Exhibit No.
Description of Exhibit
Form
Date
10.22C †
Form of Restricted Stock Unit Award Certificate (Time Vesting
Only – U.S.) under the Alkermes plc Amended and Restated
2008 Stock Option and Incentive Plan, as amended.
Exhibit 10.6 to the Alkermes
plc Quarterly Report on Form
10-Q for the quarter ended
March 31, 2016 (File No.
001-35299)
April 28, 2016
10.22D †
Form of Stock Option Award Certificate (Time Vesting Non-
Qualified Option – Irish) under the Alkermes plc Amended and
Restated 2008 Stock Option and Incentive Plan, as amended.
Exhibit 10.7 to the Alkermes
plc Quarterly Report on Form
10-Q for the quarter ended
March 31, 2016 (File No.
001-35299)
April 28, 2016
10.22E †
Form Stock Option Award Certificate (Time Vesting Non-
Qualified Option – U.S.) under the Alkermes plc Amended and
Restated 2008 Stock Option and Incentive Plan, as amended.
Exhibit 10.8 to the Alkermes
plc Quarterly Report on Form
10-Q for the quarter ended
March 31, 2016 (File No.
001-35299)
April 28, 2016
10.22F †
Form of Stock Option Award Certificate (Incentive Stock Option
– U.S.) under the Alkermes plc Amended and Restated 2008
Stock Option and Incentive Plan, as amended.
Exhibit 10.9 to the Alkermes
plc Quarterly Report on Form
10-Q for the quarter ended
March 31, 2016 (File No.
001-35299)
April 28, 2016
10.22G †
Form of 2008 Restricted Stock Unit Award Certificate
(Performance Vesting Only) under the Alkermes plc Amended
and Restated 2008 Stock Option and Incentive Plan, as amended.
Exhibit 10.2 to the Alkermes,
Inc. Current Report on Form
8-K (File No. 001-14131)
May 22, 2009
10.23†
Alkermes plc 2011 Stock Option and Incentive Plan, as
amended.
Exhibit 10.1 to the Alkermes
plc Current Report on Form
8-K (File No. 011-35299)
May 24, 2017
10.23A †
Form of Incentive Stock Option Award Certificate under the
Alkermes plc 2011 Stock Option and Incentive Plan, as
amended.
Exhibit 10.1 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
October 23, 2018
10.23B †
Form of Non-Qualified Stock Option (Employee) Award
Certificate under the Alkermes plc 2011 Stock Option and
Incentive Plan, as amended.
Exhibit 10.2 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
October 23, 2018
10.23C †
Form of Restricted Stock Unit (Time-Vesting) Award Certificate
under the Alkermes plc 2011 Stock Option and Incentive Plan,
as amended.
Exhibit 10.3 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
October 23, 2018
10.23D †
Form of Restricted Stock Unit (Performance-Vesting) Award
Certificate under the Alkermes plc 2011 Stock Option and
Incentive Plan, as amended.
Exhibit 10.4 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
October 23, 2018
10.23E †
Form of Non-Qualified Stock Option (Non-Employee Director)
Award Certificate under the Alkermes plc 2011 Stock Option
and Incentive Plan, as amended.
Exhibit 10.5 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
October 23, 2018
10.24 # †
Alkermes plc 2018 Stock Option and Incentive Plan, as
amended.
10.24A †
Form of Incentive Stock Option Award Certificate under the
Alkermes plc 2018 Stock Option and Incentive Plan, as
amended.
Exhibit 10.6 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
October 23, 2018
10.24B †
Form of Non-Qualified Stock Option (Employee) Award
Certificate under the Alkermes plc 2018 Stock Option and
Incentive Plan, as amended.
Exhibit 10.7 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
October 23, 2018
10.24C †
Form of Restricted Stock Unit (Time-Vesting) Award Certificate
under the Alkermes plc 2018 Stock Option and Incentive Plan,
as amended.
Exhibit 10.8 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
October 23, 2018
10.24D †
Form of Restricted Stock Unit (Performance-Vesting) Award
Certificate under the Alkermes plc 2018 Stock Option and
Incentive Plan, as amended.
Exhibit 10.6 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
July 29, 2020
84
Incorporated by reference herein
Exhibit No.
Description of Exhibit
Form
Date
10.24E †
Form of Non-Qualified Stock Option (Non-Employee Director)
Award Certificate under the Alkermes plc 2018 Stock Option
and Incentive Plan, as amended.
Exhibit 10.4 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
July 29, 2020
10.24F †
Form of Non-Employee Director Restricted Stock Unit (Time-
Vesting) Award Certificate under the Alkermes plc 2018 Stock
Option and Incentive Plan, as amended.
Exhibit 10.5 to the Alkermes
plc Quarterly Report on Form
10-Q (File No. 001-35299)
July 29, 2020
10.24G †
Form of Non-Employee Director New Director Grant Non-
Qualified Stock Option Award Certificate under the Alkermes
plc 2018 Stock Option and Incentive Plan, as amended.
Exhibit 10.1.1 to the
Alkermes plc Quarterly
Report on Form 10-Q (File
No. 001-35299)
July 27, 2022
10.24H †
Form of Non-Employee Director New Director Grant Restricted
Stock Unit (Time-Vesting) Award Certificate under the
Alkermes plc 2018 Stock Option and Incentive Plan, as
amended.
Exhibit 10.1.2 to the
Alkermes plc Quarterly
Report on Form 10-Q (File
No. 001-35299)
July 27, 2022
10.24I †
Form of Incentive Stock Option Award Certificate for Reporting
Officers under the Alkermes plc 2018 Stock Option and
Incentive Plan, as amended.
Exhibit 10.19-9 to the
Alkermes plc Annual Report
on Form 10-K (File No. 001-
35299)
February 16, 2023
10.24J †
Form of Non-Qualified Stock Option Award Certificate for
Reporting Officers under the Alkermes plc 2018 Stock Option
and Incentive Plan, as amended.
Exhibit 10.19-10 to the
Alkermes plc Annual Report
on Form 10-K (File No. 001-
35299)
February 16, 2023
10.24K †
Form of Restricted Stock Unit (Time-Vesting) Award Certificate
for Reporting Officers under the Alkermes plc 2018 Stock
Option and Incentive Plan, as amended.
Exhibit 10.19-11 to the
Alkermes plc Annual Report
on Form 10-K (File No. 001-
35299)
February 16, 2023
10.24L †
Form of Restricted Stock Unit (Performance-Vesting) Award
Certificate for Reporting Officers under the Alkermes plc 2018
Stock Option and Incentive Plan, as amended.
Exhibit 10.19-12 to the
Alkermes plc Annual Report
on Form 10-K (File No. 001-
35299)
February 16, 2023
10.24M †
Form of Restricted Stock Unit (Performance-Vesting) Award
Certificate (rev. 2024) for Reporting Officers under the
Alkermes plc 2018 Stock Option and Incentive Plan, as
amended.
Exhibit 10.25M to the
Alkermes plc Annual Report
on Form 10-K (File No. 001-
35299)
February 21, 2024
10.24N †
Form of Restricted Stock Unit (Performance-Vesting) Award
Certificate (rev. 2024) under the Alkermes plc 2018 Stock
Option and Incentive Plan, as amended.
Exhibit 10.25N to the
Alkermes plc Annual Report
on Form 10-K (File No. 001-
35299)
February 21, 2024
10.24O †
Form of Non-Employee Director Non-Qualified Stock Option
Award Certificate (rev. 2024) under the Alkermes plc 2018
Stock Option and Incentive Plan, as amended.
Exhibit 10.2A to the
Alkermes plc Quarterly
Report on Form 10-Q (File
No. 001-35299)
July 24, 2024
10.24P †
Form of Non-Employee Director Restricted Stock Unit Award
(Time-Vesting) Award Certificate (rev. 2024) under the
Alkermes plc 2018 Stock Option and Incentive Plan, as
amended.
Exhibit 10.2A to the
Alkermes plc Quarterly
Report on Form 10-Q (File
No. 001-35299)
July 24, 2024
19.1 #
Alkermes plc Insider Trading Policy.
21.1 #
List of subsidiaries.
23.1 #
Consent of PricewaterhouseCoopers LLP, an independent
registered public accounting 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
Securities Exchange Act of 1934.
31.2 #
Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the
Securities Exchange Act of 1934.
32.1 ‡
Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
85
Incorporated by reference herein
Exhibit No.
Description of Exhibit
Form
Date
97 †
Alkermes plc Incentive Compensation Recoupment Policy.
Exhibit 97 to the Alkermes
plc Annual Report on Form
10-K (File No. 001-35299)
February 21, 2024
101.SCH # Inline XBRL Taxonomy Extension Schema with Embedded
Linkbases Document.
104
Cover Page Interactive Data File (formatted as Inline XBRL
with applicable taxonomy 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 SEC pursuant to a confidential treatment request.
**
Portions of this exhibit (indicated by “[**]”) have been omitted pursuant to Item 601(b) of Regulation S-K. The
Company undertakes to furnish an unredacted copy of this exhibit upon request by the SEC.
§
Schedules and similar attachments to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The
Company undertakes to furnish copies of any omitted schedules and similar attachments upon request by the SEC.
Item 16. Form 10-K Summary
None.
86
SIGNATURES
Pursuant 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 its behalf by the undersigned, thereunto duly authorized.
ALKERMES PLC
By
:
/s/ Richard F. Pops
Richard F. Pops
Chairman and Chief Executive Officer
February 25, 2026
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and 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 Joshua
Reed, and each of them, his true 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 Exchange Commission any and all amendments to this Annual Report, with
exhibits thereto and other documents in connection therewith, and hereby ratifies and confirms all 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. Pops
Richard F. Pops
Chairman and Chief Executive Officer (Principal Executive
Officer)
February 25, 2026
/s/ Joshua Reed
Joshua Reed
Senior Vice President, Chief Financial Officer (Principal
Financial Officer)
February 25, 2026
/s/ Samuel J. Parisi
Samuel J. Parisi
Vice President, Finance (Interim Principal Accounting
Officer)
February 25, 2026
/s/ Shane M. Cooke
Shane M. Cooke
Director
February 25, 2026
/s/ Richard B. Gaynor
Richard B. Gaynor
Director
February 25, 2026
/s/ Cato T. Laurencin
Director
February 25, 2026
Cato T. Laurencin
/s/ Nancy S. Lurker
Nancy S. Lurker
Director
February 25, 2026
/s/ Brian P. McKeon
Brian P. McKeon
Director
February 25, 2026
/s/ Nancy L. Snyderman
Nancy L. Snyderman
Director
February 25, 2026
/s/ Frank Anders Wilson
Frank Anders Wilson
Director
February 25, 2026
/s/ Christopher I. Wright
Christopher I. Wright
Director
February 25, 2026
F-1
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Alkermes plc
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Alkermes plc and its subsidiaries (the "Company") as of
December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive income, of
shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2025, including the
related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's
internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee 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 of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the
United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the COSO.
Basis for Opinions
The 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 Financial Reporting appearing under Item 9A. Our
responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal
control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (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 and regulations 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 reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud, and whether effective internal control 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 financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our
opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
F-2
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to
accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our
opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit
matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it
relates.
Rebate Accruals – Medicaid Drug Rebate Program
As described in Notes 2 and 10 to the consolidated financial statements, the Company’s revenues from product sales are
recorded net of reserves established for applicable discounts and allowances that are offered within contracts with the
Company’s customers, health care providers or payers. The Company records accruals for rebates to U.S. states under the
Medicaid Drug Rebate Program as a reduction of sales when the product is shipped into the distribution channel using the
expected value method. As of December 31, 2025, accrued Medicaid rebates were $186.1 million, of which a significant
amount related to the Medicaid Drug Rebate Program. The Company rebates individual U.S. states for all eligible units
purchased under the Medicaid program based on a rebate per unit calculation, which is based on the Company’s average
manufacturer prices. The Company estimates expected unit sales to individuals covered by Medicaid and rebates per unit
under the Medicaid program and adjusts its rebate accrual based on actual unit sales and rebates per unit and changes in
trends in Medicaid utilization.
The principal considerations for our determination that performing procedures relating to rebate accruals for the
Medicaid Drug Rebate Program is a critical audit matter are (i) the significant judgment by management due to significant
measurement uncertainty involved in developing the reserves, as the reserves are based on assumptions developed using
historical experience, current contractual requirements, specific known market events and payment patterns and (ii) a
high degree of auditor judgment, subjectivity and effort in applying procedures and evaluating evidence related to these
assumptions.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls
relating to rebate accruals for the Medicaid Drug Rebate Program, including controls over the assumptions used to
estimate the rebate accruals. These procedures also included, among others, (i) developing an independent estimate of the
rebate accruals by utilizing third-party data related to product sales, the historical trend of actual rebate claims paid and
consideration of contractual requirement changes and market events; (ii) comparing the independent estimate to
management’s estimate; and (iii) testing rebate claims processed by the Company.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
February 25, 2026
We have served as the Company’s auditor since 2007.
F-3
ALKERMES PLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2025 and 2024
December 31, 2025
December 31, 2024
(In thousands, except share and per share amounts)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
388,570 $
291,146
Restricted cash
731,206
—
Investments—short-term
199,645
460,522
Receivables, net
334,025
384,528
Inventory
196,625
182,887
Prepaid expenses and other current assets
79,090
91,282
Contract assets
—
4,990
Total current assets
1,929,161
1,415,355
PROPERTY, PLANT AND EQUIPMENT, NET
221,722
227,564
INVESTMENTS—LONG-TERM
145
73,148
RIGHT-OF-USE ASSETS
77,209
84,245
INTANGIBLE ASSETS, NET AND GOODWILL
83,842
83,917
DEFERRED TAX ASSETS
125,815
154,835
OTHER ASSETS
49,099
16,503
TOTAL ASSETS
$
2,486,993 $
2,055,567
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses
$
289,565 $
185,332
Accrued sales discounts, allowances and reserves
247,126
272,452
Operating lease liabilities—short-term
6,746
6,166
Contract liabilities—short-term
—
1,249
Total current liabilities
543,437
465,199
OPERATING LEASE LIABILITIES—LONG-TERM
63,253
69,372
OTHER LONG-TERM LIABILITIES
61,008
56,019
Total liabilities
667,698
590,590
COMMITMENTS AND CONTINGENT LIABILITIES (Note 19)
SHAREHOLDERS’ EQUITY:
Preferred shares, par value, $0.01 per share; 50,000,000 shares authorized; and
zero issued and outstanding at December 31, 2025 and 2024
—
—
Ordinary shares, par value, $0.01 per share; 450,000,000 shares authorized;
181,011,166 and 176,670,785 shares issued; and 165,607,028 and
162,176,994 shares outstanding at December 31, 2025 and 2024, respectively
1,810
1,767
Treasury shares, at cost (15,404,138 and 14,493,791 shares at December 31, 2025
and 2024, respectively)
(450,287)
(419,255)
Additional paid-in capital
3,004,666
2,860,890
Accumulated other comprehensive loss
(2,100)
(1,967)
Accumulated deficit
(734,794)
(976,458)
Total shareholders’ equity
1,819,295
1,464,977
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
2,486,993 $
2,055,567
The accompanying notes are an integral part of these consolidated financial statements.
F-4
ALKERMES PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years Ended December 31, 2025, 2024 and 2023
Year Ended December 31,
2025
2024
2023
(In thousands, except per share amounts)
REVENUES:
Product sales, net
$
1,184,643 $
1,083,534 $
919,998
Manufacturing and royalty revenues
291,256
474,095
743,388
Research and development revenue
—
3
19
Total revenues
1,475,899
1,557,632
1,663,405
EXPENSES:
Cost of goods manufactured and sold (exclusive of amortization of acquired intangible
assets shown below)
196,457
245,331
253,037
Research and development
323,964
245,326
270,806
Selling, general and administrative
701,522
645,238
689,751
Amortization of acquired intangible assets
—
1,101
35,689
Total expenses
1,221,943
1,136,996
1,249,283
OPERATING INCOME FROM CONTINUING OPERATIONS
253,956
420,636
414,122
OTHER INCOME, NET:
Interest income
45,304
42,450
30,854
Interest expense
(12,277)
(22,578)
(23,032)
Other income (expense), net
4,467
3,242
(425)
Total other income, net
37,494
23,114
7,397
INCOME BEFORE INCOME TAXES
291,450
443,750
421,519
INCOME TAX PROVISION (BENEFIT)
49,786
71,612
(97,638)
NET INCOME FROM CONTINUING OPERATIONS
241,664
372,138
519,157
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX
—
(5,068)
(163,400)
NET INCOME
$
241,664 $
367,070 $
355,757
EARNINGS PER ORDINARY SHARE:
Earnings per ordinary share from continuing operations - basic
$
1.47 $
2.25 $
3.12
Loss per ordinary share from discontinued operations - basic
$
— $
(0.03) $
(0.98)
Earnings per ordinary share - basic
$
1.47 $
2.22 $
2.14
Earnings per ordinary share from continuing operations - diluted
$
1.43 $
2.20 $
3.06
Loss per ordinary share from discontinued operations - diluted
$
— $
(0.03) $
(0.96)
Earnings per ordinary share - diluted
$
1.43 $
2.17 $
2.10
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES OUTSTANDING:
Basic
164,703
165,392
166,223
Diluted
168,743
169,198
169,730
COMPREHENSIVE INCOME:
Net income
$
241,664 $
367,070 $
355,757
Holding (loss) gain, net of a tax (benefit) provision of $(55), $292, and $1,195,
respectively
(133)
1,143
7,779
COMPREHENSIVE INCOME
$
241,531 $
368,213 $
363,536
The accompanying notes are an integral part of these consolidated financial statements.
F-5
ALKERMES PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Years Ended December 31, 2025, 2024 and 2023
Accumulated
Additional
Other
Ordinary Shares
Paid-In
Comprehensiv
e
Accumulated
Treasury Stock
Shares
Amount
Capital
Loss
Deficit
Shares
Amount
Total
(In thousands, except share data)
BALANCE — December 31, 2022
168,951,193 $
1,690 $
2,913,099 $
(10,889) $ (1,699,285)
(4,574,184) $
(160,862) $
1,043,753
Issuance of ordinary shares under employee stock plans
3,617,858
36
16,724
—
—
—
—
16,760
Receipt of Alkermes' ordinary shares for the purchase of stock
options or to satisfy minimum tax withholding obligations
related to share-based awards
—
—
—
—
—
(1,015,034)
(28,474)
(28,474)
Share-based compensation
—
—
100,871
—
—
—
—
100,871
Unrealized gain on marketable securities, net of tax provision
of $1,195
—
—
—
7,779
—
—
—
7,779
Distribution of Mural Oncology plc
—
—
(293,760)
—
—
—
—
(293,760)
Net income
—
—
—
—
355,757
—
—
355,757
BALANCE — December 31, 2023
172,569,051 $
1,726 $
2,736,934 $
(3,110) $ (1,343,528)
(5,589,218) $
(189,336) $
1,202,686
Issuance of ordinary shares under employee stock plans
4,101,734
41
27,531
—
—
—
—
27,572
Receipt of Alkermes' ordinary shares for the purchase of stock
options or to satisfy minimum tax withholding obligations
related to share-based awards
—
—
—
—
—
(1,010,156)
(29,637)
(29,637)
Repurchase of Alkermes' ordinary shares
—
—
—
—
—
(7,894,417)
(200,282)
(200,282)
Share-based compensation
—
—
96,425
—
—
—
—
96,425
Unrealized gain on marketable securities, net of tax provision
of $292
—
—
—
1,143
—
—
—
1,143
Net income
—
—
—
—
367,070
—
—
367,070
BALANCE —December 31, 2024
176,670,785 $
1,767 $
2,860,890 $
(1,967) $
(976,458)
(14,493,791) $
(419,255) $
1,464,977
Issuance of ordinary shares under employee stock plans
4,340,381
43
43,368
—
—
—
—
43,411
Receipt of Alkermes' ordinary shares for the purchase of stock
options or to satisfy minimum tax withholding obligations
related to share-based awards
—
—
—
—
—
(910,347)
(31,032)
(31,032)
Repurchase of Alkermes' ordinary shares
—
—
—
—
—
—
—
—
Share-based compensation
—
—
100,408
—
—
—
—
100,408
Unrealized loss on marketable securities, net of tax benefit of
$55
—
—
—
(133)
—
—
—
(133)
Net income
—
—
—
—
241,664
—
—
241,664
BALANCE —December 31, 2025
181,011,166 $
1,810 $
3,004,666 $
(2,100) $
(734,794)
(15,404,138) $
(450,287) $
1,819,295
The accompanying notes are an integral part of these consolidated financial statements.
F-6
ALKERMES PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2025, 2024 and 2023
Year Ended December 31,
2025
2024
2023
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
241,664 $
367,070 $
355,757
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization
27,165
28,533
74,927
Share-based compensation expense
98,716
96,637
100,905
Deferred income taxes
28,774
40,522
(99,902)
Other non-cash charges
5,311
4,512
6,329
Changes in assets and liabilities:
Receivables
50,503
(52,052)
(44,510)
Contract assets
4,990
(4,284)
8,223
Inventory
(14,061)
3,091
(2,712)
Prepaid expenses and other assets
852
2,254
(34,847)
Right-of-use assets
7,549
7,215
15,387
Accounts payable and accrued expenses
100,893
(57,967)
23,009
Accrued sales discounts, allowances and reserves
(25,326)
8,811
11,526
Contract liabilities
(1,249)
(3,525)
(5,926)
Operating lease liabilities
(10,320)
(10,123)
(16,147)
Other long-term liabilities
5,293
8,430
9,334
Cash flows provided by operating activities
520,754
439,124
401,353
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions of property, plant and equipment
(40,420)
(33,484)
(48,048)
Proceeds from the sale of property, plant and equipment
1,086
461
354
Return of Fountain Healthcare Partners II, L.P. investment
—
43
—
Proceeds from the sale of the Athlone Facility
1,708
97,933
—
Purchases of investments
(364,369)
(486,547)
(254,471)
Sales and maturities of investments
697,492
310,286
355,522
Cash flows provided by (used in) investing activities
295,497
(111,308)
53,357
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash transferred to Mural Oncology plc at separation
—
—
(275,000)
Proceeds from the issuance of ordinary shares under share-based compensation arrangements
43,411
27,572
16,760
Employee taxes paid related to net share settlement of equity awards
(31,032)
(29,637)
(28,474)
Payment for the repurchase of ordinary shares
—
(200,282)
—
Prepayment of long-term debt
—
(289,542)
—
Principal payments of long-term debt
—
(2,250)
(3,000)
Cash flows provided by (used in) financing activities
12,379
(494,139)
(289,714)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED
CASH
828,630
(166,323)
164,996
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period
291,146
457,469
292,473
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period
$
1,119,776 $
291,146 $
457,469
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents
$
388,570 $
291,146 $
457,469
Restricted cash
731,206
—
—
Total cash, cash equivalents and restricted cash
$
1,119,776 $
291,146 $
457,469
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest
$
— $
23,010 $
22,748
Cash paid for taxes
$
5,237 $
2,592 $
44,243
Non-cash investing and financing activities:
Purchased capital expenditures included in accounts payable and accrued expenses
$
3,128 $
2,254 $
2,645
The accompanying notes are an integral part of these consolidated financial statements.
F-7
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Alkermes plc is a global biopharmaceutical company that seeks to develop innovative medicines in the field of neuroscience.
Alkermes has a portfolio of proprietary commercial products for the treatment of alcohol dependence and opioid dependence,
schizophrenia, bipolar I disorder and narcolepsy and a pipeline of clinical and preclinical candidates in development for neurological
disorders. Headquartered in Ireland, Alkermes also has a corporate office and research and development (“R&D”) center in
Massachusetts and a manufacturing facility in Ohio.
In October 2025, the Company and Avadel Pharmaceuticals plc (“Avadel”) entered into a definitive transaction agreement,
subsequently amended in November 2025 (the “Transaction Agreement”), pursuant to which the Company agreed to acquire the entire
issued and to be issued ordinary share capital of Avadel for consideration of (i) $21.00 per ordinary share, nominal value $0.01 per
share, of Avadel (each, an “Avadel Share”), payable in cash at closing and (ii) a non-transferable contingent value right (the “CVR”)
entitling holders of Avadel Shares to a potential additional cash payment of $1.50 per Avadel Share, contingent upon achievement of a
certain specified milestone (the “Avadel Acquisition”). The Company incurred costs of approximately $10.0 million in connection
with the Avadel Acquisition during the fourth quarter of 2025. On February 12, 2026, the Company successfully completed the
Avadel Acquisition, adding both LUMRYZ to the Company’s portfolio of proprietary commercial products and a commercial
organization with experience in narcolepsy.
In May 2024, the Company completed the sale of its development and manufacturing facility in Athlone, Ireland (the “Athlone
Facility”) and related business to Novo Nordisk (“Novo”) pursuant to an asset purchase agreement entered into in December 2023.
The Company and Novo also entered into subcontracting arrangements to continue certain development and manufacturing activities
performed at the Athlone Facility for a period of time after the closing of the transaction, which activities concluded by the end of
2025. In connection with the sale of the Athlone Facility, the Company received $97.9 million from Novo, which included a payment
of approximately $91.0 million for the facility and certain related assets, and recorded a gain of approximately $1.5 million within
“Other income (expense), net” in the accompanying consolidated statements of operations and comprehensive income for the year
ended December 31, 2024.
In November 2023, the Company completed the separation of its former oncology business into Mural Oncology plc (“Mural”),
a new, independent, publicly-traded company (the “Separation”). The Separation was effected by means of a distribution of all of the
outstanding ordinary shares of Mural to the Company’s shareholders (the “Distribution”), in which each of the Company’s
shareholders received one ordinary share, nominal value $0.01 per share, of Mural for every ten ordinary shares, par value $0.01 per
share, of the Company (the “Distribution Ratio”) held by such shareholder as of the close of business on November 6, 2023, the record
date for the Distribution (the “Record Date”). The historical results of the oncology business have been reflected as discontinued
operations in the Company’s consolidated financial statements through November 15, 2023 (the “Separation Date”). For additional
information related to the Separation, see Note 15, Discontinued Operations in these “Notes to Consolidated Financial Statements” in
this Annual Report.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Alkermes plc and its wholly-owned subsidiaries that were
subsidiaries of Alkermes plc during the year ended December 31, 2025 and do not include any accounts of subsidiaries acquired in
February 2026 as part of the Avadel Acquisition. Intercompany accounts and transactions have been eliminated. Columns and rows
within tables may not sum due to rounding.
Reclassification
The Company has presented its former oncology business as discontinued operations in its consolidated statement of operations
and comprehensive income as of December 31, 2023. See Note 15, Discontinued Operations in these “Notes to Consolidated
Financial Statements” in this Annual Report for additional information.
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-8
Discontinued Operations
The Company determined that the Separation met the criteria for classification of the former oncology business as discontinued
operations in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 205,
Discontinued Operations. Accordingly, the accompanying consolidated financial statements have been updated to present the results
of the oncology business as discontinued operations through the Separation Date for the year ended December 31, 2023 in the
consolidated statements of operations and comprehensive income.
Use of Estimates
The 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, revenues and expenses, and related disclosure of contingent assets and liabilities. On
an on-going basis, the Company evaluates its estimates, judgments and methodologies, including but not limited to, those related to
revenue from contracts with its customers and related allowances, impairment of intangibles and long-lived assets, share-based
compensation, income taxes including the valuation allowance for deferred tax assets, valuation of investments and litigation. The
Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results
of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these
estimates under different assumptions or conditions.
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents
The Company values its cash and cash equivalents at cost plus accrued interest, which the Company believes approximates its
market value. The Company considers as cash equivalents only those investments that are highly liquid, readily convertible into cash
and so near their maturity (three months from the date of purchase) that they present insignificant risk of change in value because of
interest rate changes.
Restricted Cash
The Company’s restricted cash balance as of December 31, 2025 represents cash held in escrow to finance the portion of the
consideration for the Avadel Acquisition that is in excess of the amounts secured under the bridge term loan credit agreement, as
amended and restated on November 18, 2025 (the “Bridge Credit Agreement”).
Investments
The Company has investments in various types of securities, consisting primarily of United States (“U.S.”). government and
agency obligations and corporate debt securities. The Company generally holds its interest-bearing investments with major financial
institutions and in accordance with documented investment policies. The Company limits the amount of credit exposure to any one
financial institution or corporate issuer. The Company classifies these investments as available-for-sale, with such investments carried
at fair value and unrealized gains and losses included in accumulated other comprehensive income, net of related tax. Realized gains
and losses on available-for-sale debt securities are included in other income (expense), net. The Company reviews its portfolio of
available-for-sale debt securities, using both quantitative and qualitative factors, to determine if declines in fair value below cost have
resulted from a credit-related loss or other factors. If the decline in fair value is due to credit-related factors, a loss is recognized in net
income, whereas if the decline in fair value is not due to credit-related factors, the loss is recorded in other comprehensive income.
The Company’s held-to-maturity investments are restricted investments held as collateral under letters of credit related to certain
of the Company’s agreements and are included in “Investments—long-term,” in the accompanying consolidated balance sheets.
Fair Value of Financial Instruments
The 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 in the accounting standards for fair value measurement. At December 31, 2025, the Company’s financial assets
consisted of cash equivalents and investments 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 do not require a significant degree of judgment. Assets utilizing Level 1 inputs at December
31, 2025 included U.S. treasury securities, marketable securities classified as cash equivalents and a fixed term deposit
account;
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-9
•
Level 2–these valuations are based on quoted prices for identical or similar assets in active markets or other market
observable inputs such as interest rates, yield curves, foreign currency spot rates and option pricing valuation models.
Assets utilizing Level 2 inputs at December 31, 2025 included U.S. government agency debt securities and investments in
corporate debt securities that are trading in the credit markets; and
•
Level 3- these valuations are based on significant inputs not observable in markets. Assets utilizing Level 3 inputs at
December 31, 2025 included an investments in a corporate debt security.
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 and accrued sales discounts, allowances and reserves approximate
fair value due to their short-term nature.
Inventory
Inventory is stated at the lower of cost and net realizable value. The Company utilizes a standard cost basis, which approximates
cost determined using the first-in first-out method. Cost is determined using the first-in, first-out method. Included in inventory are
raw materials used in production of preclinical and clinical products, which have alternative future use and are charged to R&D
expense when consumed. The cost elements included within inventory include three primary categories for commercial products: cost
of raw materials; direct labor; and overhead. Overhead is based on the normal capacity of the Company’s production facility and does
not include costs from abnormally low production or idle capacity, which are expensed directly to the consolidated statement of
operations and comprehensive income.
The Company capitalizes inventory costs associated with its products prior to regulatory approval when, based on
management’s judgment, future commercialization of the product is considered probable and future economic benefit from such
product is expected to be realized. The Company assesses the regulatory approval process and where the particular product stands in
relation to that approval process, including any known safety, efficacy or quality concerns, potential labeling restrictions and other
potential impediments to approval. The Company also considers the shelf life of the product in relation to the expected timeline for
approval and considers issues that may prevent or delay commercialization, including issues that may arise in relation to the
manufacturing of the product. The Company expenses previously capitalized costs related to pre-approval inventory upon a change in
such judgment, due to, among other potential factors, a denial or significant delay of approval by relevant regulatory agencies or other
issues that may make the pre-approval inventory batches less likely or unlikely to be commercialized and to result in future economic
benefit.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost, subject to review for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be recoverable. Expenditures for repairs and maintenance are
charged to expense as incurred and major renewals and improvements are capitalized. Depreciation is calculated using the straight-line
method over the following estimated useful lives of the assets:
Asset group
Term
Buildings and improvements
25 years
Furniture, fixtures and equipment
5 - 7 years
Leasehold improvements
Shorter of useful life or lease term
Goodwill
Goodwill represents the excess cost of the Company’s investment in the net assets of acquired companies over the fair value of
the underlying identifiable net 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 Drug Technologies (“EDT”) from Elan Corporation, plc (such acquisition, the “Business
Combination”) in September 2011 and has been assigned to one reporting unit. A reporting unit is 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 indicate that 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 necessary to 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-not that 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 quantitative
impairment 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 unit exceeds the fair value of the reporting unit, then the Company would record an impairment loss equal to
the difference.
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-10
When some, but not all, of a reporting unit is to be disposed of, the accounting for that reporting unit’s goodwill will depend on
whether the disposal group constitutes a business. If the disposal group constitutes a business, the Company attributes a portion of the
reporting unit’s goodwill to the disposal group based on the relative fair values of: (i) the disposal group; and (ii) the portion of the
reporting unit that will be retained.
Impairment of Long-Lived Assets
The Company reviews long-lived assets to be held and used for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable. Conditions that would necessitate an impairment assessment
include a significant decline in the observable market value of an asset; a significant change in the extent or manner in which an asset
is used; a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset; an
accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset;
a current-period operating or cash flow loss combined with a history of operating or cash-flow losses or a projection or forecast that
demonstrates continuing losses associated with the use of a long-lived asset; or a current expectation that, more likely than not, a long-
lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. Determination of
recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset 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 are written-
down to their estimated fair values. Long-lived assets to be disposed of are carried at fair value less costs to sell them.
Revenue from Contracts with Customers
The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects
the consideration which it expects to receive in exchange for those goods or services. The Company recognizes revenue following the
five-step model prescribed in accordance with FASB ASC 606, Revenue from Contracts with Customers (“Topic 606”): (i) identify
contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate
the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies the
performance obligations.
Product Sales, Net
The Company’s product sales, net in 2025 and 2024 consisted of sales in the U.S. of ARISTADA®, ARISTADA INITIO®
LYBALVI® and VIVITROL®, primarily to wholesalers, specialty distributors and pharmacies. 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 the Company’s customers, healthcare providers or payers. The Company’s process for estimating reserves
established for these variable consideration components does 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 cumulative revenues
recognized will not occur in a future period. Actual amounts may ultimately differ from the Company’s estimates. If actual results
vary, the Company adjusts these estimates, which could have an effect on earnings in the period of adjustment. The following are the
Company’s significant categories of sales discounts and allowances:
•
Medicaid Rebates—the Company records accruals for rebates to U.S. states under the Medicaid Drug Rebate Program as a
reduction of sales when the product is shipped into the distribution channel using the expected value method. The
Company rebates individual U.S. states for all eligible units purchased under the Medicaid program based on a rebate per
unit calculation, which is based on the Company’s average manufacturer prices. The Company estimates expected unit
sales to individuals covered by Medicaid and rebates per unit under the Medicaid program and adjusts its rebate accrual
based on actual unit sales and rebates per unit and changes in trends in Medicaid utilization. In 2025, actual Medicaid
utilization rates related to VIVITROL and ARISTADA/ARISTADA INITIO, were lower than original estimates by
approximately $26.7 million and $13.6 million, respectively. In 2024, actual Medicaid utilization rates related to
VIVITROL were lower than original estimates, due, in part, to $8.7 million in actual credits received from certain states in
the fourth quarter of 2024 related to duplicate Medicaid billings;
•
Chargebacks—discounts that occur when contracted indirect customers purchase directly from wholesalers and specialty
distributors. Contracted customers generally purchase a product at its contracted price. The wholesaler or specialty
distributor, in turn, then generally charges back to the Company the difference between the wholesale acquisition cost and
the contracted price paid to the wholesaler or specialty distributor by the customer. 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
chargebacks have not differed materially from the Company’s estimates;
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-11
•
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 made using 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 its customers take control of their
product. The Company estimates this liability using the expected returns of product sold based on historical return levels
and specifically identified anticipated returns due to known business conditions and product expiry dates. Return amounts
are recorded as a reduction of sales. Once product is returned, it is destroyed. To date, actual product returns have not
differed materially from the Company’s estimates; and
•
Medicare Part D—the Company records accruals for Medicare Part D liabilities under the Medicare Manufacturer
Discount Program as a reduction of sales. Under an agreement with the Centers for Medicare and Medicaid Services,
manufacturers are responsible for reimbursing Medicare for a specified percentage discount on the cost of applicable
drugs during the initial coverage phase and a specified percentage discount during the catastrophic coverage phase of the
Medicare Part D benefit. Actual Medicare Part D rebates have not differed materially from the Company’s estimates.
A rollforward of the Company’s provisions for sales and allowances is as follows:
Year Ended December 31, 2025
(In thousands)
Contractual
Adjustments
Discounts
Product
Returns
Other
Total
Beginning balance — December 31, 2024
$
228,978 $
43,645 $
50,507 $
13,297 $
336,427
Current provisions relating to sales in current year
544,520
420,368
29,914
89,083 1,083,885
Adjustments relating to prior years
(43,310)
174
(12,561)
(358)
(56,055)
Payments relating to sales in current year
(392,801)
(398,925)
—
(80,080)
(871,806)
Payments relating to sales in prior years
(127,476)
(23,935)
(12,405)
(12,600)
(176,416)
Ending balance — December 31, 2025
$
209,911 $
41,327 $
55,455 $
9,342 $
316,035
Year Ended December 31, 2024
(In thousands)
Contractual
Adjustments
Discounts
Product
Returns
Other
Total
Beginning balance — December 31, 2023
$
234,414 $
28,690 $
41,064 $
10,164 $
314,332
Current provisions relating to sales in current year
557,651
386,625
28,627
87,373 1,060,276
Adjustments relating to prior years
(20,562)
—
(3,700)
—
(24,262)
Payments/credits relating to sales in current year
(369,869)
(353,629)
—
(70,752)
(794,250)
Payments/credits relating to sales in prior years
(172,656)
(18,041)
(15,484)
(13,488)
(219,669)
Ending balance — December 31, 2024
$
228,978 $
43,645 $
50,507 $
13,297 $
336,427
Year Ended December 31, 2023
(In thousands)
Contractual
Adjustments
Discounts
Product
Returns
Other
Total
Beginning balance — December 31, 2022
$
226,741 $
26,175 $
29,666 $
7,938 $
290,520
Current provisions relating to sales in current year
509,780
326,860
33,417
71,449
941,506
Adjustments relating to prior years
(8,921)
—
2,841
—
(6,080)
Payments/credits relating to sales in current year
(308,353)
(293,785)
—
(56,224)
(658,362)
Payments/credits relating to sales in prior years
(184,833)
(30,560)
(24,860)
(12,999)
(253,252)
Ending balance — December 31, 2023
$
234,414 $
28,690 $
41,064 $
10,164 $
314,332
(1)
“Contractual Adjustments” include “Medicaid Rebates” and “Medicare Part D” accruals
(2)
“Discounts” include “Chargebacks” and “Product Discounts”
(1)
(2)
(1)
(2)
(1)
(2)
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-12
Total revenue-related reserves as of December 31, 2025 and 2024, included in our consolidated balance sheets, are summarized
as follows:
December 31,
(In thousands)
2025
2024
Reduction of accounts receivable
$
21,049 $
22,031
Components of accrued sales discounts, allowances and reserves
247,126
272,452
Components of other long-term liabilities
47,860
41,944
Total revenue-related reserves
$
316,035 $
336,427
Collaborative Arrangements
The Company has entered into collaborative arrangements with pharmaceutical companies including, among others, Janssen
Pharmaceuticals, Inc. (“Janssen, Inc.”), Janssen Pharmaceutica International, a division of Cilag International AG (“Janssen
International”), and Janssen Pharmaceutica N.V. (together with Janssen, Inc., Janssen International and their affiliates, “Janssen”)
related to INVEGA SUSTENNA®/XEPLION®, INVEGA TRINZA®/TREVICTA®, INVEGA HAFYERA®/BYANNLI® (collectively,
the “long-acting INVEGA products”) and RISPERDAL CONSTA®, and Biogen International GmbH (together with its affiliates,
“Biogen”) related to VUMERITY®. Substantially all of the products developed under these arrangements are currently being marketed
as approved products for which the Company received or receives payments for manufacturing services and/or royalties on net
product sales.
Manufacturing Revenue
The Company recognizes manufacturing revenues from the sale of products it manufactures for resale by its licensees.
Substantially all of the manufacturing revenues are recognized at a point in time when control of the product passes to the licensee.
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 sales generally occur after the Company has recorded manufacturing revenue, the Company estimates the sales price for
such products based on information supplied to it by the Company’s licensees, its historical transaction experience and other third-
party data. Differences between actual manufacturing revenues and estimated manufacturing revenues are reconciled and adjusted for
in the period in which they become known, which is generally within the same quarter. The differences between the Company’s actual
and estimated manufacturing revenues have not been material to date.
Royalty Revenue
The Company recognizes royalty revenues related to the sale by its licensees of products that incorporate the Company’s
technologies. All of the Company’s royalties qualify for the sales-and-usage exemption under Topic 606 as (i) such 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 on this exemption, these royalties are earned in the period that the products are sold by the Company’s licensee and the
Company has a present right to payment.
Certain of the Company’s royalty revenues are recognized by the Company based on information supplied to the Company by
its licensees and require estimates to be made. Differences between actual royalty revenues and estimated royalty revenues are
reconciled and adjusted for in the period in which they become known, which is generally within the same quarter. The differences
between the Company’s actual and estimated royalty revenues have not been material to date.
Receivables, net
Receivables, net, include amounts billed and amounts unbilled but currently unconditionally due from customers. The amounts
due are stated at their net estimated realizable value. The Company’s unbilled receivable balance was $65.8 million and $69.5 million
at December 31, 2025 and 2024, respectively, and related primarily to royalty revenue. The Company maintains an allowance for
doubtful accounts to provide for the estimated amounts of receivables that will not be collected. The allowance is based 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 approximately $0.4 million and $0.3 million at December 31, 2025
and 2024, respectively.
Contract Assets
Contract assets include unbilled amounts that will result in a sale under certain of the Company’s manufacturing contracts. The
amounts included in the contract assets table below are classified as “Current assets” in the accompanying consolidated balance sheets,
as they relate to manufacturing processes that are completed in ten days to eight weeks.
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-13
Contract assets consisted of the following:
(In thousands)
Contract Assets
Contract assets at January 1, 2024
$
706
Additions
6,615
Transferred to receivables, net
(2,331)
Contract assets at December 31, 2024
$
4,990
Additions
4,483
Transferred to receivables, net
(9,473)
Contract assets at December 31, 2025
$
—
Contract Liabilities
Contract liabilities consist of contractual obligations related to deferred revenue. At December 31, 2025 and 2024, none and
$1.2 million of the contract liabilities, respectively, were classified as “Contract liabilities–short-term” in the accompanying
consolidated balance sheets and none of the contract liabilities in either period were classified as “Other long-term liabilities” in the
accompanying consolidated balance sheets.
Contract liabilities consisted of the following:
(In thousands)
Contract Liabilities
Contract liabilities at January 1, 2024
$
4,775
Additions
34
Amounts recognized into revenue
(3,560)
Contract liabilities at December 31, 2024
$
1,249
Additions
1,313
Amounts recognized into revenue
(2,562)
Contract liabilities at December 31, 2025
$
—
Foreign Currency
The Company’s functional and reporting currency is the U.S. dollar. Transactions in foreign currencies are recorded at the
exchange rate prevailing on the date of the transaction. The resulting monetary assets and liabilities are translated into U.S. dollars at
exchange rates prevailing on the subsequent balance sheet date. Gains and losses as a result of translation adjustments are recorded
within “Other income (expense), net” in the accompanying consolidated statements of operations and comprehensive income. During
the years ended December 31, 2025, 2024 and 2023, the Company recorded a gain of $1.0 million and losses of $0.8 million and $0.5
million, respectively, on foreign currency translation.
Concentrations
Financial instruments that potentially subject the Company to concentrations of credit risk are receivables and marketable
securities. Billings to large pharmaceutical companies and pharmaceutical wholesalers account for the majority of the Company’s
receivables, and collateral is not required from these customers. To mitigate credit risk, the Company monitors the financial
performance and credit-worthiness of its customers. The following represents revenue and receivables from the Company’s customers
exceeding 10% of the total in each category as of, and for the years ended, December 31, 2025, 2024 and 2023:
Year Ended December 31,
2025
2024
2023
Customer
Receivables
Revenue
Receivables
Revenue
Receivables
Revenue
McKesson
33%
31%
36%
25%
14%
14%
Cencora
26%
20%
17%
15%
16%
12%
Cardinal Health
17%
17%
16%
19%
24%
20%
Janssen
12%
*
14%
17%
23%
31%
Biogen
*
*
*
11%
*
11%
*
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 ended December 31, 2025, 2024 and 2023, as noted.
The Company holds its interest-bearing investments with major financial institutions and, in accordance with documented
investment policies, the Company limits the amount of credit exposure to any one financial institution or corporate issuer. The
Company’s investment objectives are, first, to ensure liquidity and conservation of capital and, second, to generate investment income.
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-14
Geographic Information
Company revenues by geographic location for the years ended December 31, 2025, 2024 and 2023, as determined by the
location of the customer, are as follows:
Year Ended December 31,
(In thousands)
2025
2024
2023
Revenue by region:
U.S.
$
1,372,787 $
1,410,159 $
1,491,939
Ireland
754
1,294
1,179
Rest of world
102,358
146,179
170,287
The location of the Company’s assets are as follows:
December 31,
(In thousands)
2025
2024
Assets by region:
Current assets:
U.S.:
Cash and cash equivalents
$
129,103 $
70,303
Investments—short-term
199,145
203,631
Receivables, net
265,440
306,259
Other current assets
146,834
129,332
Ireland:
Cash and cash equivalents
$
259,467 $
220,843
Restricted cash
731,206
—
Investments—short-term
500
256,891
Receivables, net
68,585
78,269
Other current assets
128,883
149,827
Long-term assets:
U.S.:
Property, plant and equipment, net
$
221,683 $
226,646
Investments—long-term
145
24,629
Other
235,183
210,792
Ireland:
Property, plant and equipment, net
$
39 $
918
Investments—long-term
—
48,519
Intangible assets, net and goodwill
83,842
83,917
Other
16,938
44,791
Research and Development Expenses
For each of its R&D programs, the Company incurs both external and internal expenses. External R&D expenses include fees
related to clinical and preclinical activities performed by contract research organizations, consulting fees and costs related to
laboratory services, purchases of drug product materials and third-party manufacturing development costs. Internal R&D expenses
include employee-related expenses, occupancy costs, depreciation and general overhead. The Company tracks external R&D expenses
for each of its development programs, however, internal R&D expenses are not tracked by individual program as they benefit multiple
development programs or the Company’s products or technologies in general.
Selling, General and Administrative Expenses
Selling, general and administrative (“SG&A”) expenses are primarily comprised of employee-related expenses associated with
selling and marketing, finance, human resources, legal, information technology and other administrative personnel, outside marketing,
advertising, financial and legal expenses and other general and administrative costs.
Advertising costs are expensed as incurred. During the years ended December 31, 2025, 2024 and 2023, advertising costs
totaled $89.7 million, $107.6 million and $127.6 million, respectively.
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-15
Share-Based Compensation
The Company’s share-based compensation programs permit grants of awards in the form of stock options and restricted stock
unit awards (“RSUs”), which vest with the passage of time and/or based on the achievement of certain performance criteria. The
Company issues new shares upon the exercise of stock options or the vesting of RSUs. Under the terms of the Company’s stock option
and incentive plans (the “Plans”), the Company’s employees may, at the discretion of the plan administrator, become eligible in
certain circumstances set forth in the Plans for accelerated vesting of certain awards granted to them under the Plans. In such
circumstances, if there are no effective future service requirements for such employees, the remaining fair value of any such
accelerated awards would be expensed as of the date of acceleration.
Time-Based Stock Options
Except as otherwise provided in the applicable Plan or award certificate, stock option grants to employees expire ten years from
the date of grant and generally vest in four equal annual installments, commencing on the first anniversary of the date of grant,
provided the employee remains continuously employed or in a service relationship with the Company during the applicable vesting
period. Except as otherwise provided in the applicable Plan or Award Certificate (as defined in the 2018 Plan): (i) annual stock option
grants to non-employee directors expire ten years from the date of grant and generally vest over a one-year period; and (ii) stock
option grants to new non-employee directors expire ten years from the date of grant and generally vest over a three-year period. The
estimated fair value of options is recognized over the requisite service period, which is generally the vesting period. Share-based
compensation expense is based on awards ultimately expected to vest. Forfeitures are estimated based on historical experience at the
time of grant and revised in subsequent periods if actual forfeitures differ from those estimates.
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 uses historical data as the basis for estimating stock option terms and forfeitures. Separate groups of employees that
have similar historical stock option exercise and forfeiture behavior are considered separately for valuation purposes. The ranges of
expected terms disclosed below reflect different expected behavior among certain groups of employees. Expected stock volatility
factors are based on a weighted average of implied volatilities from traded options of the Company’s ordinary shares and historical
share price volatility of the Company’s ordinary shares, which is determined based on a review of the weighted average of historical
weekly price changes of the Company’s ordinary shares. The risk-free interest rate for periods commensurate with the expected term
of the stock option is based on the U.S. treasury yield 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 dividends and does not expect to pay dividends in the near future.
The exercise price of options granted is equal to the closing price of the Company’s ordinary shares traded on the Nasdaq Global
Select Market on the date of grant.
The fair value of each stock option granted was estimated on the grant date with the following weighted-average assumptions:
Year Ended December 31,
2025
2024
2023
Expected option term
5 - 7 years
5 - 7 years
5 - 8 years
Expected stock volatility
38 % - 41 %
38 % - 42 %
40 % - 44 %
Risk-free interest rate
3.75 % - 4.45 % 3.64 % - 4.60 % 3.34 % - 4.75 %
Expected annual dividend yield
—
—
—
Time-Based Restricted Stock Unit Awards
Except as otherwise provided in the applicable Plan or award certificate, time-based RSUs awarded to employees generally vest
in four equal annual installments, commencing on the first anniversary of the date of grant, provided the employee remains
continuously employed or in a service relationship with the Company during the applicable vesting period. Shares subject to these
RSUs are delivered to the employee upon vesting, subject to payment of applicable withholding taxes. The fair value of time-based
RSUs is equal to the closing price of the Company’s ordinary shares traded on the Nasdaq Global 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 Unit Awards
Performance-based RSUs awarded to employees vest upon the achievement of certain performance criteria, typically during or
following the end of a specified performance period. The estimated fair value of these performance-based RSUs are generally based
on the closing price of the Company’s ordinary shares traded on the Nasdaq Global Select Market on the date of grant, unless the
performance-based RSU is also subject to a market condition. In that case, the fair value of the performance-based RSU is based on a
Monte Carlo simulation model. Compensation expense for performance-based RSUs is recognized from the date the Company
determines the performance criteria probable of being achieved to the date the award, or relevant portion of the award, is expected to
vest. Cumulative adjustments are recorded on a quarterly basis to reflect subsequent changes to the estimated outcome of the
performance criteria until the date that the final outcome of the performance criteria is determined.
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-16
Income Taxes
The Company recognizes income taxes under the asset and liability method. Deferred income taxes are recognized for
differences between the financial reporting 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 on deferred 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 its deferred tax assets, the Company considers
all available positive and negative evidence including its past operating results, the existence of cumulative income in the most recent
fiscal years, changes in the business in which the Company operates and its forecast of future taxable income. In determining future
taxable income, the Company is responsible for assumptions utilized including the amount of Irish and non-Irish pre-tax operating
income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These
assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates
that the Company is using to manage the underlying business.
The Company accounts for uncertain tax positions using a more-likely-than-not threshold for recognizing and resolving
uncertain tax positions. The evaluation 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 be taken 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. The Company evaluates its tax position on a quarterly
basis. The Company also accrues for potential interest and penalties related to unrecognized tax benefits in income tax expense.
Comprehensive Income
Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes changes
in equity that are excluded from net income, such as unrealized holding gains and losses on available-for-sale investments.
Earnings Per Share
Basic earnings per ordinary share from continuing operations is calculated based upon net income from continuing operations
available to holders of ordinary shares divided by the weighted average number of ordinary shares outstanding. Basic loss per ordinary
share from discontinued operations is calculated based upon net loss from discontinued operations available to holders of ordinary
shares, divided by the weighted average number of ordinary shares outstanding. For the calculation of diluted earnings (loss) per
ordinary share from continuing operations and discontinuing operations, the Company utilizes the treasury stock method and adjusts
the weighted average number of ordinary shares outstanding for the potential dilutive effect of outstanding ordinary share equivalents
such as stock options and RSUs.
Segment Information
In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting: Improvements to
Reportable Segment Disclosure (“Topic 280”) to establish standards for reporting information about operating segments. Operating
segments are defined as components of an enterprise engaging in business activities for which separate financial information is
available and regularly reviewed by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in
assessing performance. The Company has utilized the management approach to determine that the Company is managed as one
segment on a consolidated basis and is the business of developing, manufacturing and commercializing medicines designed to address
unmet medical needs of patients in major therapeutic areas. The Company’s CODM, the Chairman and Chief Executive Officer,
reviews the Company’s operating results on an aggregate basis and manages the Company’s operations as a single operating unit. The
CODM measures profitability on a reportable segment basis using net income (loss) and utilizes this information in allocating
resources and in assessing performance by monitoring budget versus actual results. Please refer to Note 18, Segment Reporting, in
these “Notes to Consolidated Financial Statements” in this Annual Report for further information.
Employee Benefit Plans
401(k) Plan
The Company maintains a 401(k) retirement savings plan (the “401(k) Plan”), which covers all of its eligible U.S.-based
employees. Eligible employees may contribute up to 100% of their eligible compensation, subject to certain Internal Revenue Service
(“IRS”) limitations. The Company matches 100% of employee contributions up to the first 5% of employee pay, up to IRS limits.
Employee and Company contributions are fully vested when made. During the years ended December 31, 2025, 2024 and 2023, the
Company contributed $16.3 million, $15.1 million and $15.0 million, respectively, to match employee deferrals under the 401(k) Plan.
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-17
Defined Contribution Plan
The Company maintains a defined contribution plan for its Ireland-based employees (the “Defined Contribution Plan”). The
Defined Contribution Plan provides 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 December 31, 2025, 2024 and 2023, the Company
contributed $2.5 million, $3.4 million and $5.6 million, respectively, in contributions to the Defined Contribution Plan.
New Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the FASB or other standard-setting bodies that are adopted by
the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued
standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (“Topic 740”): Improvements to Income Tax Disclosures, to
enhance the transparency and decision usefulness of income tax disclosures in order to provide information to assist key stakeholders
in better assessing how the Company’s operations and related tax risks and tax planning and operational opportunities affect the
Company’s tax rate and prospects for future cash flows. This ASU became effective for public companies for annual periods
beginning after December 15, 2024. This guidance was applied on a retrospective basis. See Note 17, Income Taxes in these “Notes to
Consolidated Financial Statements” in this Annual Report for additional information.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income-Expense
Disaggregation Disclosures, to improve disclosures about a public business entity’s expenses and address requests from investors for
more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation,
amortization and depletion) in commonly-presented expense captions, such as cost of sales, selling, general and administrative
expenses, and research and development. All disclosure requirements under this guidance are required for public business entities and
effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. Early
adoption is permitted and the amendments in this guidance will be applied prospectively to financial statements for periods after the
effective dates. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements and
related disclosures.
In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software. This
ASU updates the requirements for capitalization of internal-use software, removing all reference to prescriptive and sequential
software development stages (referred to as “project stages”). This ASU is effective for annual periods beginning after December 15,
2027, and for interim periods within those fiscal years. The Company is currently assessing the impact this ASU will have on its
consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting. The amendments in this update clarify current interim
disclosure requirements and provide a comprehensive list of required interim disclosures. The update also incorporates a disclosure
principle that requires entities to disclose events that occur after the end of the reporting period. This update is effective for interim
periods within annual periods beginning after December 15, 2027, though early adoption is permitted. The Company is currently
assessing the impact this ASU will have on its consolidated financial statements and related disclosures.
3. REVENUE FROM CONTRACTS WITH CUSTOMERS
During the years ended December 31, 2025, 2024 and 2023, the Company recorded product sales, net, as follows:
Year Ended December 31,
(In thousands)
2025
2024
2023
VIVITROL
$
467,912 $
457,315 $
400,419
ARISTADA and ARISTADA INITIO
370,044
346,187
327,690
LYBALVI
346,687
280,032
191,889
Total product sales, net
$
1,184,643 $ 1,083,534 $
919,998
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-18
During the years ended December 31, 2025, 2024 and 2023, the Company recorded manufacturing and royalty revenues from its
collaboration arrangements as follows:
Year Ended December 31, 2025
(In thousands)
Manufacturing
Revenue
Royalty
Revenue
Total
Long-acting INVEGA products
$
— $
109,572 $
109,572
VUMERITY
16,539
113,929
130,468
RISPERDAL CONSTA
19,569
55
19,624
Other
9,887
21,705
31,592
$
45,995 $
245,261 $
291,256
Year Ended December 31, 2024
(In thousands)
Manufacturing
Revenue
Royalty
Revenue
Total
Long-acting INVEGA products
$
— $
236,386 $
236,386
VUMERITY
39,292
94,755
134,047
RISPERDAL CONSTA
23,172
272
23,444
Other
56,962
23,256
80,218
$
119,426 $
354,669 $
474,095
Year Ended December 31, 2023
(In thousands)
Manufacturing
Revenue
Royalty Revenue
Total
Long-acting INVEGA products
$
— $
486,101 $
486,101
VUMERITY
42,886
86,440
129,326
RISPERDAL CONSTA
36,123
1,153
37,276
Other
63,489
27,196
90,685
$
142,498 $
600,890 $
743,388
(1) “long-acting INVEGA products”: INVEGA SUSTENNA/XEPLION (paliperidone palmitate), INVEGA TRINZA/TREVICTA
(paliperidone palmitate) and INVEGA HAFYERA/BYANNLI (paliperidone palmitate).
In November 2021, the Company received notice of partial termination of an exclusive license agreement with Janssen. Under
this license agreement, the Company provided Janssen with rights to, and know-how, training and technical assistance in respect of,
the Company’s small particle pharmaceutical compound technology, known as NANOCRYSTAL technology, which was used to
develop the long-acting INVEGA products. When the partial termination became effective in February 2022, Janssen ceased paying
royalties related to sales of INVEGA SUSTENNA, INVEGA TRINZA and INVEGA HAFYERA. Accordingly, the Company ceased
recognizing royalty revenue related to sales of these products in February 2022. In April 2022, the Company commenced binding
arbitration proceedings related to, among other things, Janssen’s partial termination of this license agreement and Janssen’s royalty
and other obligations under the agreement. In May 2023, the arbitral tribunal (the “Tribunal”) in the arbitration proceedings issued a
final award (the “Final Award”) which concluded the arbitration proceedings. The Final Award provided, among other things, that the
Company was due back royalties of $195.4 million, inclusive of $8.1 million in late-payment interest related to 2022 U.S. net sales of
the long-acting INVEGA products, which amount the Company received from Janssen in the second quarter of 2023, and is entitled to
2023 and future royalty revenues from Janssen related to net sales of INVEGA SUSTENNA through August 20, 2024, INVEGA
TRINZA through the second quarter of 2030 (but no later than May 2030 when the license agreement expires) and INVEGA
HAFYERA through May 2030 (when the license agreement expires).
Following issuance of the Final Award, the Company recognized royalty revenues related to the back royalties noted above and
resumed recognizing royalty revenue related to ongoing U.S. sales of the long-acting INVEGA products. During 2023, the Company
recorded $486.1 million in royalty revenue from sales of the long-acting INVEGA products, including $195.4 million in back royalties
and associated interest related to net sales of the long-acting INVEGA in the U.S. in 2022, and approximately $290.7 million related to
resumed recognition of royalty revenue related to worldwide net sales of the long-acting INVEGA products.
(1)
(1)
(1)
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-19
4. INVESTMENTS
Investments consist of the following:
Gross Unrealized
Losses
Amortized
Less than
Greater than
Estimated
December 31, 2025
Cost
Gains
One Year
One Year
Fair Value
Short-term investments:
Available-for-sale securities:
U.S. government and agency debt securities
$
101,033 $
338 $
— $
— $
101,371
Corporate debt securities
97,740
534
—
—
98,274
Total short-term investments
198,773
872
—
—
199,645
Held-to-maturity securities:
Certificates of deposit
145
—
—
—
145
Total long-term investments
145
—
—
—
145
Total investments
$
198,918 $
872 $
— $
— $
199,790
December 31, 2024
Short-term investments:
Available-for-sale securities:
U.S. government and agency debt securities
$
266,506 $
763 $
(58) $
(6) $
267,205
Corporate debt securities
192,617
762
(58)
(4)
193,317
Total short-term investments
459,123
1,525
(116)
(10)
460,522
Long-term investments:
Available-for-sale securities:
U.S. government and agency debt securities
48,856
—
—
(179)
48,677
Corporate debt securities
24,484
—
—
(158)
24,326
73,340
—
—
(337)
73,003
Held-to-maturity securities:
Certificates of deposit
145
—
—
—
145
Total long-term investments
73,485
—
—
(337)
73,148
Total investments
$
532,608 $
1,525 $
(116) $
(347) $
533,670
Realized gains and losses on the sales and maturities of investments, which were identified using the specific identification
method, were as follows:
Year Ended December 31,
(In thousands)
2025
2024
2023
Proceeds from the sales and maturities of investments
$
697,492 $
310,286 $
355,522
Realized gains
$
1,753 $
— $
—
Realized losses
$
(16) $
— $
—
The Company’s available-for-sale and held-to-maturity securities at December 31, 2025 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
$
104,442 $
104,680 $
145 $
145
After 1 year through 5 years
94,331
94,965
—
—
Total
$
198,773 $
199,645 $
145 $
145
In February 2025, the Company entered into an agreement whereby it is committed to provide up to €10.0 million to a
partnership, Fountain Healthcare Partners Fund IV, L.P. (“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. The Company’s
commitment represents approximately 9.2% of the partnership’s total funding, and the Company is accounting for its investment in
Fountain under the equity method. As of December 31, 2025, the Company had made payments of, and its investment is equal to, $0.7
million (€0.7 million), which is included within “Other assets” in the accompanying condensed consolidated balance sheets.
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-20
5. FAIR VALUE
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a
recurring basis and indicates the fair value hierarchy and the valuation techniques the Company utilized to determine such fair value:
December 31,
(In thousands)
2025
Level 1
Level 2
Level 3
Assets:
Cash equivalents
$
18,583 $
18,583 $
— $
—
U.S. government and agency debt securities
101,371
94,246
7,125
—
Corporate debt securities
98,274
—
97,774
500
Total
$
218,228 $
112,829 $
104,899 $
500
December 31,
2024
Level 1
Level 2
Level 3
Assets:
Cash equivalents
$
8,388 $
8,388 $
— $
—
U.S. government and agency debt securities
315,882
265,090
50,792
—
Corporate debt securities
217,643
—
217,643
—
Total
$
541,913 $
273,478 $
268,435 $
—
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 each reporting period. There were no transfers of any securities between levels during the year ended
December 31, 2025.
The following table is a rollforward of the fair value of the Company’s assets with fair values that were determined using Level
3 inputs at December 31, 2025:
(In thousands)
Fair Value
Balance, January 1, 2025
$
—
Purchase of a corporate debt security
500
Balance, December 31, 2025
$
500
The Company’s investments in U.S. government and agency debt securities, non-U.S. government agency debt securities and
corporate debt securities classified 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 market values from
other pricing sources, analyzing pricing data in certain instances and confirming that the relevant markets are active.
6. INVENTORY
Inventory consists of the following:
December 31,
December 31,
(In thousands)
2025
2024
Raw materials
$
68,387 $
72,139
Work in process
90,498
79,871
Finished goods
37,740
30,877
Total inventory
$
196,625 $
182,887
(1)
At December 31, 2025 and 2024, the Company had $31.7 million and $22.7 million, respectively, of finished goods inventory located at its third-party
warehouse and shipping service provider.
(1)
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-21
7. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
December 31,
December 31,
(In thousands)
2025
2024
Land
$
957 $
957
Building and improvements
150,672
134,699
Furniture, fixtures and equipment
255,773
244,113
Leasehold improvements
42,535
42,416
Construction in progress
38,795
58,391
Subtotal
488,732
480,576
Less: accumulated depreciation
(267,010)
(253,012)
Total property, plant and equipment, net
$
221,722 $
227,564
Depreciation expense was $31.1 million, $27.4 million and $25.7 million for the years ended December 31, 2025, 2024 and
2023, respectively.
Amounts included as construction in progress in the consolidated balance sheets primarily include capital expenditures at the
Company’s manufacturing facility in Wilmington, Ohio. The Company continues to evaluate its manufacturing capacity based on
expectations of demand for its products and will continue to record such amounts within construction in progress until such time as the
underlying assets are placed into service. The Company continues to periodically evaluate whether facts and circumstances indicate
that the carrying value of its long-lived assets to be held and used may not be recoverable.
In December 2023, the Company determined that $2.9 million of its construction in progress at its Wilmington, Ohio
manufacturing facility had no future value and was written off through “cost of goods manufactured and sold” in the accompanying
consolidated statements of operations and comprehensive income during the year ended December 31, 2023.
8. INTANGIBLE ASSETS AND GOODWILL
Intangible assets and goodwill consists of the following:
December 31, 2025
December 31, 2024
(In thousands)
Weighted
Amortizable
Life (Years)
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Goodwill
$
83,027 $
— $
83,027 $
83,027 $
— $
83,027
Finite-lived intangible assets:
Collaboration agreements
12
$
465,590 $
(465,590) $
— $
465,590 $
(465,590) $
—
Capitalized IP
11-13
118,160
(117,345)
815
118,160
(117,270)
890
Total
$
583,750 $
(582,935) $
815 $
583,750 $
(582,860) $
890
The Company’s finite-lived intangible assets primarily consisted of collaborative agreements and the NANOCRYSTAL and
oral controlled release technologies acquired as part of the EDT acquisition. These intangible assets were fully amortized in the year
ended December 31, 2024. The Company recorded less than $0.1 million, $1.1 million and $35.7 million of amortization expense
related to its finite-lived intangible assets during the years ended December 31, 2025, 2024 and 2023, respectively.
The Company performed its annual goodwill impairment test as of October 31, 2025. The Company elected to perform a
qualitative impairment test and determined that based on the weight of all available evidence, the fair value of the reporting unit more-
likely-than-not exceeded its carrying value.
9. LEASES
All of the Company’s leases are accounted for as operating leases. At December 31, 2025 and 2024, the operating leases held by
the Company had a weighted average incremental borrowing rate of 3.6% and 4.0%, respectively, and a weighted average remaining
lease term of 5.8 years and 7.2 years, respectively. During the years ended December 31, 2025, 2024 and 2023, cash paid for amounts
included for the measurement of lease liabilities was $10.3 million, $10.1 million and $10.3 million, respectively. The Company
recorded operating lease expense of $7.5 million, $7.2 million and $10.2 million for the years ended December 31, 2025, 2024 and
2023, respectively.
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-22
Future lease payments under non-cancelable leases as of December 31, 2025 consisted of the following:
December 31,
(In thousands)
2025
2026
10,480
2027
9,613
2028
9,677
2029
9,611
2030
9,345
Thereafter
41,026
Total operating lease payments
$
89,752
Less: imputed interest
(19,753)
Total operating lease liabilities
$
69,999
10. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consists of the following:
December 31,
December 31,
(In thousands)
2025
2024
Accounts payable
$
107,950 $
45,630
Accrued compensation
82,450
70,960
Accrued other
99,165
68,742
Total accounts payable and accrued expenses
$
289,565 $
185,332
A summary of the Company’s current provision for sales discounts, allowances and reserves is as follows:
December 31,
December 31,
(In thousands)
2025
2024
Medicaid rebates
$
186,068 $
202,044
Product discounts
18,688
19,351
Medicare Part D
23,843
26,933
Other
18,527
24,124
Total accrued sales discounts, allowances and reserves
$
247,126 $
272,452
Included in accounts payable was approximately $59.6 million and $11.4 million of amounts payable related to state Medicaid
rebates as of December 31, 2025 and 2024, respectively.
11. LONG-TERM DEBT
In November 2025, the Company entered into the Bridge Credit Agreement in order to fund the Avadel Acquisition. The Bridge
Credit Agreement provided for a senior secured bridge term loan facility (the “Bridge Credit Facility”) in an aggregate principal
amount of up to approximately $1.5 billion that was available to finance the Avadel Acquisition. In addition, the Company placed
approximately $731.2 million of its cash into an escrow account to finance the remainder of the consideration for the Avadel
Acquisition. Loans under the Bridge Credit Facility were available, subject to the satisfaction of certain conditions set forth in the
Bridge Credit Agreement, and were scheduled to mature on the date that is 364 days after the date on which the loans were funded
under the Bridge Credit Facility. The commitments under the Bridge Credit Facility were to terminate on the earlier of (i) the date on
which all of the consideration payable in respect of the Avadel Acquisition was paid in full without the making of any loans under the
Bridge Credit Facility and (ii) the date on which a Mandatory Cancellation Event (as defined in the Bridge Credit Agreement)
occurred or existed. Accordingly, on February 12, 2026, in connection with completion of the Avadel Acquisition and the Company’s
entry into the Credit Agreement (as defined below), the Company terminated the Bridge Credit Agreement, as the commitments under
the Credit Agreement, together with the Company’s cash on hand, were sufficient to fund the Avadel Acquisition. During the year
ended December 31, 2025, the Company incurred approximately $12.3 million in financing costs related to the Bridge Credit
Agreement which was recorded within “Interest expense” in the accompanying consolidated statements of operations and
comprehensive income.
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-23
On February 12, 2026, in connection with the Avadel Acquisition, the Company entered into a credit agreement (the “Credit
Agreement”), by and among Alkermes plc, as the TopCo Borrower, Alkermes, Inc., as the U.S. Borrower, Alkermes Finance LLC, as
the U.S. Co-Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, Joint Lead Arranger and Joint Bookrunner, BofA
Securities, Inc., as Joint Lead Arranger and Joint Bookrunner, and the lenders party thereto. The Credit Agreement provides for (i) a
senior secured term loan A facility in an aggregate principal amount of up to $750.0 million (the “TLA Facility”) and (ii) a senior
secured term loan B facility in an aggregate principal amount of up to $775.0 million (the “TLB Facility” and together with the TLA
Facility, the “Facilities”). The TLA Facility matures on February 12, 2031, and the TLB Facility matures on August 12, 2031. On the
closing date of the Facilities (the “Closing Date”), the Company borrowed the full $1.525 billion available under the Facilities.
Borrowings under the TLA Facility will bear interest at an annual rate of, at the Company’s option, either (i) the Term SOFR
Rate (as defined in the Credit Agreement) plus a Secured Net Leverage Ratio (as defined in the Credit Agreement)-based margin,
which will initially be 2.75% per annum or (ii) the Alternate Base Rate (as defined in the Credit Agreement) plus a Secured Net
Leverage Ratio-based margin, which will initially be 1.75% per annum. Borrowings under the TLB Facility will bear interest at an
annual rate of, at the Company’s option, either (i) the Term SOFR Rate plus a margin of 2.75% per annum or (ii) the Alternate Base
Rate plus a margin of 1.75% per annum. The Company has agreed to pay certain fees and expenses in connection with the Facilities,
as set forth in the Credit Agreement and certain related fee letters.
The Credit Agreement (other than with respect to the TLB Facility) requires the maintenance of a maximum Secured Net
Leverage Ratio and a minimum Consolidated Interest Coverage Ratio (as defined in the Credit Agreement), in each case, with the
levels set forth in the Credit Agreement, as of the last day of any fiscal quarter of the Company ending after the Closing Date. In
addition, the Credit Agreement contains customary affirmative and negative covenants that apply after the Closing Date, including
limitations on indebtedness, liens, mergers, consolidations, sales of assets, investments, transactions with affiliates, restricted
payments and sales and leasebacks. The Credit Agreement also contains certain customary events of default, including upon a change
of control.
The Credit Agreement is guaranteed by subsidiary guarantors and secured by a lien on substantially all of the assets of the
borrowers and the subsidiary guarantors, whether owned as of the Closing Date or thereafter acquired.
In December 2024, the Company prepaid in full all previously outstanding term loans (the “Former Term Loans”) under, and
terminated, the Company’s then-in-effect amended and restated credit agreement without penalty, through paying off the remaining
principal amount due thereunder of $289.5 million. The Company accounted for such prepayment as a debt extinguishment and
recorded a loss of approximately $0.8 million within “Other income (expense), net” in the accompanying consolidated statements of
operations and comprehensive income for the year ended December 31, 2024.
12. EARNINGS PER SHARE
Basic earnings per ordinary share from continuing operations is calculated based upon net income from continuing operations
available to holders of ordinary shares divided by the weighted average number of ordinary shares outstanding. Basic loss per ordinary
share from discontinued operations is calculated based upon net loss from discontinued operations available to holders of ordinary
shares, divided by the weighted average number of ordinary shares outstanding. For the calculation of diluted earnings (loss) per
ordinary share from continuing operations and discontinuing operations, the Company utilizes the treasury stock method and adjusts
the weighted average number of ordinary shares outstanding for the potential dilutive effect of outstanding ordinary share equivalents
such as stock options and RSUs.
Year Ended December 31,
(In thousands)
2025
2024
2023
Numerator:
Net income from continuing operations
$
241,664
$
372,138
$
519,157
Net loss from discontinued operations
—
(5,068)
(163,400)
Net income
$
241,664
$
367,070
$
355,757
Denominator:
Weighted average number of ordinary shares outstanding
164,703
165,392
166,223
Effect of dilutive securities:
Stock options
1,867
1,377
1,093
Restricted stock unit awards
2,173
2,429
2,414
Dilutive ordinary share equivalents
4,040
3,806
3,507
Shares used in calculating diluted earnings per ordinary share
168,743
169,198
169,730
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-24
The following potential ordinary share equivalents were not included in the net income (loss) per share calculation because the
effect would have been anti-dilutive:
Year Ended December 31,
(In thousands)
2025
2024
2023
Stock options
9,468
11,517
12,422
Restricted stock unit awards
2,243
2,391
2,378
Total
11,711
13,908
14,800
13. SHAREHOLDERS’ EQUITY
Share Repurchase Program
In February 2024, the Company’s board of directors approved a share repurchase program authorizing the Company to
repurchase ordinary shares of the Company in an aggregate amount of up to $400.0 million (exclusive of any fees, commissions or
other expenses related to such repurchases) from time to time on the open market (the “Repurchase Program”). The specific timing
and amounts of repurchases under the Repurchase Program will depend on a variety of factors, including but not limited to ongoing
assessments of the Company’s needs, alternative investment opportunities, the market price of the Company’s ordinary shares and
general market conditions. The Repurchase Program has no set expiration date and may be suspended or discontinued at any time.
During the year ended December 31, 2025, the Company did not repurchase any of its ordinary shares under the Repurchase Program.
During the year ended December 31, 2024, the Company repurchased approximately 7.9 million of its ordinary shares under the
Repurchase Program at an average price of $25.33 per share, resulting in a total cost, exclusive of any fees, commissions or other
expenses related to such repurchase of $200.0 million. All ordinary shares repurchased were returned to treasury. As of December 31,
2025, the remaining amount authorized under the Repurchase Program was $200.0 million.
14. SHARE-BASED COMPENSATION
Share-Based Compensation Expense
The following table presents share-based compensation expense from continuing and discontinued operations included in the
Company’s consolidated statements of operations and comprehensive income:
Year Ended December 31,
(In thousands)
2025
2024
2023
Cost of goods manufactured and sold
$
6,757 $
5,798 $
11,353
Research and development
25,659
28,085
25,753
Selling, general and administrative
66,300
62,754
55,611
Share-based compensation expense from continuing operations
98,716
96,637
92,717
Research and development
—
—
3,255
Selling, general and administrative
—
—
4,933
Share-based compensation expense from discontinued operations
—
—
8,188
Total share-based compensation expense
$
98,716 $
96,637 $
100,905
During the years ended December 31, 2025, 2024 and 2023, $3.2 million, $3.1 million and $3.2 million, respectively, of share-
based compensation expense was capitalized and recorded as “Inventory” and $1.6 million, none and none, respectively, of share-
based compensation expense was capitalized and recorded as “Other assets” in the accompanying consolidated balance sheets.
Share-Based Compensation Plans
The Company has one share-based compensation plan pursuant to which awards are currently being made: the 2018 Stock
Option and Incentive Plan, as amended (the “2018 Plan”). The Company has two share-based compensation plans pursuant to which
outstanding awards have been made, but from which no further awards can or will be made: the Alkermes plc Amended and Restated
2008 Stock Option and Incentive Plan, as amended, (the “2008 Plan”) and the Alkermes plc 2011 Stock Option and Incentive Plan, as
amended (the “2011 Plan,” and together with the 2018 Plan and the 2008 Plan, the “the Alkermes Stock Option and Incentive Plans”).
Effective May 20, 2020, the 2018 Plan was amended such that any shares underlying any outstanding awards granted under the 2011
Plan or the 2008 Plan that are forfeited, canceled, repurchased or otherwise terminated (other than by exercise) from and after such
date will become available for issuance pursuant to the 2018 Plan, notwithstanding anything to the contrary in the terms of the 2011
Plan or the 2008 Plan.
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-25
The 2018 Plan allows for the issuance of non-qualified and incentive stock options, restricted stock, restricted stock unit awards,
cash-based awards and performance shares to employees, officers and directors of, and consultants to, the Company in such amounts
and with such terms and conditions as may be determined by the compensation committee of the Company’s board of directors,
subject to the provisions of the 2018 Plan, as applicable.
On May 21, 2025, the Company’s shareholders approved an amended version of the then-current version of the 2018 Plan that
served to, among other things, increase the number of ordinary shares authorized for issuance thereunder by 4.25 million. At
December 31, 2025, there were 17.9 million ordinary shares available for issuance in the aggregate under the 2018 Plan. The 2018
Plan provides 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.
Stock Options
A summary of stock option activity is presented in the following table:
Number of
Weighted Average
Shares
Exercise Price
Outstanding, January 1, 2025
17,478,619 $
31.73
Granted
1,807,610 $
35.03
Exercised
(1,826,407) $
23.77
Expired
(1,034,094) $
63.52
Forfeited
(190,358) $
30.42
Outstanding, December 31, 2025
16,235,370 $
30.98
Exercisable, December 31, 2025
10,855,664 $
31.20
The weighted average grant date fair value of stock options granted during the years ended December 31, 2025, 2024 and 2023
was $16.30, $14.08 and $13.74, respectively. The aggregate intrinsic value of stock options exercised during the years ended
December 31, 2025, 2024 and 2023 was $16.3 million, $10.9 million and $6.0 million, respectively.
At December 31, 2025, there were 5.2 million stock options expected to vest, with a weighted average exercise price of $30.46
per share, a weighted average contractual remaining life of 7.7 years and an aggregate intrinsic value of $3.2 million. At December 31,
2025, the aggregate intrinsic value of stock options exercisable was $34.6 million with a weighted average remaining contractual term
of 4.3 years. The number of stock options expected to vest was determined by applying the pre-vesting forfeiture rate to the total
number of outstanding unvested options. The intrinsic value of a stock option is the amount by which the market value of the
underlying shares exceeds the exercise price of the stock option.
At December 31, 2025, there was $28.8 million of unrecognized share-based compensation expense related to unvested stock
options, which is expected to be recognized over a weighted average period of 1.9 years.
Time-Based Restricted Stock Unit Awards
A summary of time-based RSU activity is presented in the following table:
Weighted Average
Number of
Shares
Grant Date
Fair Value
Unvested, January 1, 2025
4,905,206 $
26.80
Granted
2,115,535 $
35.24
Forfeited
(343,414) $
30.78
Vested
(2,044,461) $
25.24
Unvested, December 31, 2025
4,632,866 $
31.08
The weighted average grant date fair values of time-vesting RSUs granted during the years ended December 31, 2025, 2024 and
2023 were $35.24, $29.51 and $27.65, respectively. The total fair value of time-vesting RSUs that vested during the years ended
December 31, 2025, 2024 and 2023, was $51.6 million, $51.6 million and $63.0 million, respectively.
At December 31, 2025, there was $59.8 million of total unrecognized share-based compensation expense related to unvested
time-vesting RSUs, which will be recognized over a weighted average remaining contractual term of 1.9 years.
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-26
Performance-Based Restricted Stock Unit Awards
In February 2025, 2024 and 2023, the compensation committee of the Company’s board of directors approved the Company’s
long-term incentive plans, pursuant to which awards of performance-based RSUs are granted to employees of the Company at the
Senior Vice President level and above, in each case subject to vesting based on the achievement of certain financial, commercial
and/or R&D performance criteria to be assessed over a performance period of three years from the date of the grant, and subject, at the
end of such three-year performance period, to upward or downward adjustment based on a market condition tied to relative share price
performance over the three-year performance period.
A summary of performance-based RSU activity is presented in the following table:
Weighted Average
Number of
Shares
Grant Date
Fair Value
Unvested, January 1, 2025
1,335,658 $
32.13
Granted
533,031 $
40.15
Forfeited
(145,745) $
30.13
Vested
(469,513) $
30.13
Unvested, December 31, 2025
1,253,431 $
36.53
The weighted average grant date fair values of performance-based RSUs granted during the years ended December 31, 2025,
2024 and 2023 were $40.15, $32.46 and $29.91, respectively. The total fair value of performance-based RSUs that vested during the
years ended December 31, 2025, 2024 and 2023 were $8.2 million, $10.1 million and $5.9 million, respectively. At December 31,
2025, there was $5.2 million of unrecognized share-based compensation expense related to unvested performance-based RSUs which
would be recognized in accordance with the terms of the awards when the Company deems it probable that the performance criteria
will be met.
During the year ended December 31, 2024, the Company recognized share-based compensation expense related to certain
performance-based RSUs that were granted during 2021. As of December 31, 2023, the financial performance criteria for these awards
were deemed not probable of being achieved; however, in February 2024, the compensation committee of the Company’s board of
directors determined that the Company partially achieved the financial performance criteria. This was considered a modification in
accordance with FASB ASC 718, Compensation—Stock Compensation and resulted in a modification charge of approximately $6.8
million. In February 2024, the compensation committee of the Company’s board of directors also determined that the Company
achieved the pipeline performance criteria for these awards, resulting in a $2.6 million incremental share-based compensation expense,
as it was deemed such pipeline performance criteria had been met. The share-based compensation expense related to these
achievements was recognized in 2024.
15. DISCONTINUED OPERATIONS
Mural Oncology Separation
In November 2023, the Company completed the Separation. In connection with the Separation, the Company entered into a
separation agreement with Mural, dated as of November 13, 2023, that, among other things, set forth the Company’s agreements with
Mural regarding the principal actions taken or to be taken in connection with the Separation, including the Distribution. The separation
agreement identified those assets to be transferred to, liabilities to be assumed by and contracts to be assigned to Mural as part of the
Separation and it provided for when and how such transfers, assumptions and assignments were to occur. The purpose of the
separation agreement was to provide Mural and the Company with those assets necessary to operate their respective businesses and to
retain or assume the respective liabilities related to those assets.
Each of Mural and the Company agreed to releases with respect to pre-Distribution claims, and cross-indemnities with respect to
post-Distribution claims, that are principally designed to place financial responsibility for the obligations and liabilities allocated to
Mural under the separation agreement with Mural, and financial responsibility for the obligations and liabilities allocated to the
Company under the separation agreement with the Company.
The Company determined that the Separation and related Distribution qualified as tax-free for U.S. federal income tax purposes,
which required significant judgment by management. In making such determinations, the Company applied U.S. federal tax law to
relevant facts and circumstances and obtained: (i) a favorable private letter ruling from the IRS; (ii) a tax opinion; and (iii) other
external tax advice related to the concluded tax treatment. If the Separation and Distribution were to ultimately fail to qualify for tax-
free treatment for U.S. federal income tax purposes, the Company and/or its shareholders could be subject to significant liabilities,
which could have material adverse impacts on the Company’s business, financial condition, results of operations and cash flows in
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-27
future reporting periods. Furthermore, other than taxes recorded on the transfer of intellectual property, the Company determined that
the Separation and related Distribution qualified as tax-free for Irish tax purposes, which required significant judgment by
management. In making such determinations, the Company applied Irish tax law to relevant facts and circumstances and obtained: (i)
a tax opinion; and (ii) other external tax advice related to the concluded tax treatment. If the Separation and Distribution were to
ultimately fail to qualify for tax-free treatment for Irish tax purposes, the Company and/or its shareholders could be subject to
significant liabilities, which could have material adverse impacts on the Company’s business, financial condition, results of operations
and cash flows in future reporting periods.
In connection with the Separation, the Company also entered into a tax matters agreement with Mural, dated as of November 13,
2023. The tax matters agreement governs the Company’s and Mural’s respective rights, responsibilities and obligations with respect to
taxes (including taxes arising in the ordinary course of business and taxes, if any, incurred as a result of any failure of the Distribution,
together with certain related transactions, to qualify as tax-free for U.S. federal income tax purposes), tax attributes, the preparation
and filing of tax returns, the control of audits and other tax proceedings, and assistance and cooperation in respect of tax matters.
Discontinued Operations
The results of the former oncology business and transaction costs related to the Separation have been reflected as “Loss from
discontinued operations, net of taxes” in the accompanying consolidated statement of operations and comprehensive income through
the Separation Date in November 2023. The transaction costs related to the Separation were $36.0 million during 2023, primarily
related to professional fees for separation activities within the finance, tax, legal and information technology functions.
The following table summarizes expenses of the discontinued operations for the years ended December 31, 2024 and 2023:
Year Ended December 31,
(In thousands)
2024
2023
Operating expenses from discontinued operations
Cost of goods manufactured
$
— $
39
Research and development
5,790
116,177
Selling, general and administrative
—
48,587
Total operating expenses from discontinued operations
5,790
164,803
Operating loss from discontinued operations
(5,790)
(164,803)
Income tax benefit from discontinued operations
(722)
(1,403)
Net loss and comprehensive loss from discontinued operations
$
(5,068) $
(163,400)
The following table summarizes the significant non-cash items and capital expenditures of the discontinued operations that are
included in the consolidated statements of cash flows for the year ended December 31, 2023:
Year Ended December 31,
(In thousands)
2023
OPERATING ACTIVITIES:
Depreciation
$
2,319
Share-based compensation expense
8,188
Right-of-use assets
3,803
Operating lease liabilities
(3,938)
INVESTING ACTIVITIES:
Additions of property, plant and equipment
$
(1,798)
16. COLLABORATIVE ARRANGEMENTS
The Company has entered into several collaborative arrangements to develop and commercialize products and, in connection
with such arrangements, to access technologies, financial, marketing, manufacturing and other resources. Refer to the “Patents and
Proprietary Rights” section in “Item 1— Business” of this Annual Report for information with respect to IP protection for these
products. The collaboration revenue the Company has earned in the years ended December 31, 2025, 2024 and 2023 is summarized in
Note 3, Revenue from Contracts with Customers within the notes to the consolidated financial statements in this Annual Report.
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-28
The Company’s significant collaborative arrangements are described below:
Janssen
INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and INVEGA HAFYERA/BYANNLI
Under an exclusive license agreement with Janssen, the Company provided Janssen with rights to, and know-how, training and
technical assistance in respect of, the Company’s small particle pharmaceutical compound technology, known as NANOCRYSTAL
technology, which was used to develop the long-acting INVEGA products, and the Company received milestone payments from
Janssen upon the achievement of certain development goals from Janssen; there are no further milestones to be earned under this
agreement. The agreement also provides for tiered royalty payments, which 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 the product in such country. As of August 30, 2024, all
patent royalties had expired. 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 is payable until 15 years from first commercial sale of a product in each
individual country, subject to expiry of the agreement. These royalty payments may be reduced in any country based on patent
litigation or on competing products achieving certain minimum sales thresholds. The license agreement, unless earlier terminated,
terminates 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, subject to certain surviving obligations. 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 to terminate 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 or insolvency.
In November 2021, the Company received notice from Janssen of partial termination of the license agreement, following which
Janssen ceased paying the Company royalties related to U.S. sales of INVEGA SUSTENNA, INVEGA TRINZA and INVEGA
HAFYERA. In April 2022, the Company commenced binding arbitration proceedings related to, among other things, Janssen’s partial
termination of this license agreement and Janssen’s royalty and other obligations under the agreement. In May 2023, the Tribunal in
the arbitration proceedings issued a Final Award that served to reinstate the Janssen royalties and required payment by Janssen of back
royalties and interest for amounts owed but not yet paid since the effective date of the partial termination. The Final Award also
provided, among other things, that the Company was entitled to royalty revenues from Janssen related to net sales of INVEGA
SUSTENNA through August 20, 2024, INVEGA TRINZA through the second quarter of 2030 (but no later than May 2030 when the
license agreement expires) and INVEGA HAFYERA through May 2030 (when the license agreement expires).
RISPERDAL CONSTA
Under a product development agreement, the Company collaborated with Janssen on the development of RISPERDAL
CONSTA. Under the development agreement, Janssen provided funding to the Company for the development of RISPERDAL
CONSTA and Janssen is responsible for securing all necessary regulatory approvals for the product.
Under two license agreements, the Company granted Janssen and an affiliate of Janssen exclusive worldwide licenses to use and
sell RISPERDAL CONSTA. Under its license agreements with Janssen, the Company receives royalty payments equal to 2.5% of
Janssen’s end-market net sales of RISPERDAL CONSTA 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 based on lack of patent coverage and significant competition
from generic versions of the product. Janssen can terminate the license agreements upon 30 days’ prior written notice to the Company.
Either party may terminate the license agreements by written notice following a breach 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 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 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 sell RISPERDAL CONSTA.
The Company exclusively manufactures RISPERDAL CONSTA at its Wilmington, Ohio facility for commercial sale. Under its
manufacturing and supply agreement with Janssen, the Company records manufacturing revenues when product is fully manufactured
and approved for shipment by both Janssen and the Company. Revenue is based on a percentage of Janssen’s net unit sales price for
RISPERDAL CONSTA for the applicable calendar year. This percentage is determined 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 of a written notice specifying the material breach or upon written notice in the event of the other party’s insolvency or
bankruptcy. Janssen may terminate the agreement upon six months’ written notice to the Company. In the event that Janssen
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-29
terminates the manufacturing and supply agreement without terminating the license agreements, the royalty rate payable to the
Company on Janssen’s net sales of RISPERDAL CONSTA would increase from 2.5% to 5.0%.
Biogen
Under a license and collaboration agreement with Biogen, the Company granted Biogen a worldwide, exclusive, sublicensable
license to develop, manufacture and commercialize VUMERITY and other products covered by patents licensed to Biogen under the
agreement.
Under this license and collaboration agreement, the Company received an upfront cash payment and milestone payments related
to the achievement of certain milestones. The Company is also eligible to receive additional payments upon achievement of certain
milestones, including milestones relating to the first two products, other than VUMERITY, covered by patents licensed to Biogen
under the license and collaboration agreement.
In addition, the Company receives a 15% royalty on worldwide net sales of VUMERITY, subject to increases for VUMERITY
manufactured and/or packaged by Biogen or its designees. The Company is also entitled to receive royalties on net sales of products
other than VUMERITY covered by patents licensed to Biogen under the license and collaboration agreement, at tiered royalty rates
calculated as percentages of net sales ranging 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) the last-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 the applicable product in the applicable country.
Royalties for all products are subject to customary reductions, as set forth in the license and collaboration agreement.
Following FDA approval of VUMERITY in 2019, Biogen is responsible for all development and commercialization activities
for VUMERITY and all other products covered by the patents that we licensed to Biogen.
Under the license and collaboration agreement, Biogen appointed the Company as the toll manufacturer of clinical and
commercial supplies of VUMERITY, subject to Biogen’s right to manufacture or have manufactured commercial supplies as a back-
up manufacturer. In October 2019, the Company entered into a commercial supply agreement with Biogen for the commercial supply
of VUMERITY, an amendment to such commercial supply agreement and an amendment to the license and collaboration agreement
with Biogen, pursuant to which Biogen has, following a completed technology transfer and an agreed manufacturing transition period,
assumed all responsibility for the manufacture (itself or through a designee) of clinical and commercial supplies of VUMERITY in
exchange for an increase in the royalty rate to be paid by Biogen to the Company on net sales of product that is manufactured by
Biogen or its designee. In May 2024, the Company completed the sale of the Athlone Facility where VUMERITY was manufactured.
In connection with the sale of the Athlone Facility, the Company entered into a subcontracting arrangement with the purchaser of the
Athlone Facility for the manufacture of VUMERITY through the manufacturing transition period, which concluded in August 2025.
Unless earlier terminated, the license and collaboration agreement will remain in effect until the expiry of all royalty obligations.
Biogen has the right to terminate 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 party has the right to terminate the license and collaboration agreement following any
governmental prohibition of the transactions effected by the agreement, or in connection with an insolvency event involving the other
party. Upon termination of the license and collaboration agreement by either party, then, at the Company’s request, the VUMERITY
program will revert to the Company.
17. INCOME TAXES
The Company’s provision (benefit) for income taxes from continuing operations consists of the following:
Year Ended December 31,
(In thousands)
2025
2024
2023
Current income tax provision (benefit):
Domestic - Ireland
$
12,928 $
1,192 $
—
Foreign - U.S.
8,084
29,898
(259)
Total current income tax provision (benefit)
21,012
31,090
(259)
Deferred income tax provision (benefit):
Domestic - Ireland
$
28,620 $
61,783 $
(107,064)
Foreign - U.S.
154
(21,261)
9,685
Total deferred income tax provision (benefit)
28,774
40,522
(97,379)
Total income tax provision (benefit)
$
49,786 $
71,612 $
(97,638)
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-30
The income tax provisions in 2025 and 2024 were primarily due to taxes on income earned in Ireland. The income tax benefit in
2023 was primarily due to the partial release of the valuation allowance maintained against certain Irish deferred tax assets, partially
offset by taxes on income earned in the U.S. and Ireland.
In December 2022, the EU implemented a new corporate minimum tax rate of 15% on companies with consolidated annual
revenue of at least €750.0 million, which was transposed into Irish law effective as of January 1, 2024. The Company has determined
that this new minimum tax had no material impact for the years ended December 31, 2025 and 2024.
The income tax benefit associated with the Company’s former oncology business, and the tax impact of the Separation, are
discussed in further detail in Note 15, Discontinued Operations, in these “Notes to Consolidated Financial Statements” in this Annual
Report. The tax benefits included within discontinued operations were $0.7 million, and $1.4 million for the years ended December
31, 2024, and 2023, respectively.
No provision for income tax has been provided on undistributed earnings of the Company’s foreign subsidiaries because such
earnings are indefinitely reinvested in the foreign operations. Cumulative unremitted earnings of U.S. subsidiaries totaled
approximately $965.7 million at December 31, 2025. In the event of a repatriation of those earnings in the form of dividends or
otherwise, the Company may be liable for income taxes, subject to adjustment, if any, for foreign tax credits and foreign withholding
taxes payable to foreign tax authorities. The Company estimates that approximately $70.0 million of income taxes would be payable
on the repatriation of the unremitted earnings to Ireland.
The distribution of the Company’s income before the provision (benefit) for income taxes by geographical area consists of the
following:
Year Ended December 31,
(In thousands)
2025
2024
2023
Domestic - Ireland
$
280,129 $
440,674 $
411,767
Foreign - U.S.
11,321
3,076
9,752
Income from continuing operations before provision (benefit) for income taxes
$
291,450 $
443,750 $
421,519
The components of the Company’s net deferred tax assets consist of the following:
December 31,
December 31,
(In thousands)
2025
2024
Deferred tax assets:
Net Operating Loss ("NOL") carryforwards
$
58,850 $
80,209
Tax credits
28,716
26,882
Share-based compensation
32,483
33,773
Accrued expenses and reserves
45,635
41,189
Research and development expenses
65,843
71,167
Lease liability
16,293
17,537
Other
4,621
3,695
Less: valuation allowance
(83,364)
(79,727)
Total deferred tax assets
169,077
194,725
Deferred tax liabilities:
Inventory
(3,845)
—
Property, plant and equipment
(22,458)
(21,917)
Right-to-use asset
(15,010)
(16,337)
Other
(1,949)
(1,940)
Total deferred tax liabilities
(43,262)
(40,194)
Net deferred tax assets
$
125,815 $
154,531
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-31
The activity in the valuation allowance associated with deferred taxes consists of the following:
(In thousands)
Balance at
Beginning of
Period
(Additions) /
Reductions
Balance at End
of Period
Deferred tax asset valuation allowance for the year ended December 31, 2023
$
(271,517) $
142,221 $
(129,296)
Deferred tax asset valuation allowance for the year ended December 31, 2024
$
(129,296) $
49,569 $
(79,727)
Deferred tax asset valuation allowance for the year ended December 31, 2025
$
(79,727) $
(3,637) $
(83,364)
(1)
The beginning balance as of January 1, 2023 is inclusive of continuing and discontinued operations.
(2)
(Additions) reductions represent continuing and discontinued operations for the periods prior to the Separation in November 2023. The additions during
the year ended December 31, 2025 primarily relate to the realization of Irish capital losses on foreign exchange transactions. The reductions during the
year ended December 31, 2024 primarily relate to the abandonment of certain Irish NOLs following the sale of the Athlone Facility to Novo. These NOLs
were transferred from Elan Corporation, plc as part of the combination of the drug technology business of Elan Corporation, plc with the business of
Alkermes, Inc. A number of restrictions applied to these NOLs thereby restricting the Company’s ability to utilize such NOLs. Following the sale of the
Athlone Facility, the Company believes that its ability to utilize these NOLs is remote. The reduction during the year ended December 31, 2023 primarily
relates to the partial release of the valuation allowance maintained by the Company against certain Irish net deferred tax assets.
The Company regularly assesses the need for a valuation allowance against its deferred tax assets. In making such assessment,
the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to
determine, based on the weight of available evidence, whether it is more-likely-than-not that some or all of the deferred tax assets will
not be realized. At December 31, 2025, the Company maintained a valuation allowance of $30.5 million against certain U.S. state
deferred tax assets and $52.8 million against certain Irish deferred tax assets, as the Company has determined that it is more-likely-
than-not that these deferred tax assets will not be realized and some may be abandoned.
If the Company incurs losses in the U.S. or in Ireland in the future, or fails to achieve sufficient profitability in a timely manner,
the evaluation of the recoverability of the deferred tax assets could change and a valuation allowance against such deferred tax assets
may be required in part or in whole. The Company will continue to monitor the need for a valuation allowance against its deferred tax
assets on a quarterly basis.
As of December 31, 2025, the Company had $210.2 million of Irish NOL carryforwards, $13.6 million of U.S. federal NOL
carryforwards, $43.2 million of state NOL carryforwards and $35.2 million of state tax credits which will either expire on various
dates through 2040 or can be carried forward indefinitely. These loss and credit carryforwards are available to reduce certain future
Irish and foreign taxable income and tax. These loss and credit carryforwards are subject to review and possible adjustment by the
appropriate taxing authorities and may be subject to limitations based upon changes in the ownership of the Company’s ordinary
shares. Included within these loss and credit carryforwards are $13.6 million of U.S. federal NOL carryforwards and $5.3 million of
state NOL carryforwards, acquired as part of the acquisition of Rodin Therapeutics, Inc. in November 2019, each of which are subject
to a $0.5 million annual limitation.
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)
2025
2024
2023
Statutory tax rate
$
36,431
12.5 % $
55,469
12.5 % $
52,690
12.5 %
Foreign tax effects—U.S.
State and local income tax, net of federal
income tax effect
2,526
0.9 %
2,802
0.6 %
348
0.1 %
Tax Credits
Research and Development
(6,975)
(2.4)%
(7,815)
(1.8)%
(2,823)
(0.7)%
Nontaxable or nondeductible items
Share-based compensation
5,565
1.9 %
8,347
1.9 %
5,959
1.4 %
Other
6,313
2.2 %
5,591
1.3 %
4,956
1.2 %
Changes in valuation allowances
2,706
0.9 %
(1,948)
(0.4)% (159,496) (37.8)%
Nontaxable or nondeductible items
Nonoperating income
1,474
0.5 %
5,798
1.3 %
235
0.1 %
Other
1,108
0.4 %
4,035
0.9 %
727
0.1 %
Worldwide changes in unrecognized tax benefits
638
0.2 %
(667)
(0.2)%
(234)
(0.1)%
Total
$
49,786
17.1 % $
71,612
16.1 % $ (97,638) (23.2)%
(1)
Other items include, but are not limited to, foreign valuation allowance, foreign rate differential, non-deductible meals and entertainment expenses, non-
deductible lobbying expenses, and non-deductible compensation of senior officers of the Company.
(2)
Other items include, but are not limited to non-deductible transaction costs and non-deductible compensation. For the year ended December 31, 2024,
other items also included amounts relating to the sale of the Athlone Facility.
(1)
(2)
(1)
(2)
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-32
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Unrecognized
(In thousands)
Tax Benefits
Balance, December 31, 2022
$
8,973
Reductions based on the lapse of applicable statutes of limitations
(1,073)
Additions based on tax positions related to prior periods
281
Additions based on tax positions related to the current period
558
Balance, December 31, 2023
$
8,739
Reductions based on the lapse of applicable statutes of limitations
(1,306)
Additions based on tax positions related to the prior period
59
Additions based on tax positions related to the current period
581
Balance, December 31, 2024
$
8,073
Reductions based on the lapse of applicable statutes of limitations
(1,081)
Additions based on tax positions related to the prior period
1,037
Additions based on tax positions related to the current period
681
Balance, December 31, 2025
$
8,710
The unrecognized tax benefits at December 31, 2025, if recognized, would affect the Company’s effective tax rate. The
Company has elected to include interest and penalties related to uncertain tax positions as a component of its provision for taxes. For
the years ended December 31, 2025, 2024 and 2023, the Company’s accrued interest and penalties related to uncertain tax positions
were $1.0 million, $0.1 million and $0.3 million, respectively.
The Company’s major taxing jurisdictions include Ireland and the U.S. (federal and state). These jurisdictions have varying
statutes of limitations. In the U.S., the 2022 through 2025 fiscal years remain subject to examination by the respective tax authorities,
however, some states have longer statutes of limitations and additional fiscal years remain subject to examination. In Ireland, the 2021
through 2025 fiscal years remain subject to examination by the Irish tax authorities. Additionally, because of the Company’s Irish and
U.S. loss carryforwards and credit carryforwards, certain tax returns from fiscal years 2002 onward may also be examined. These
years generally remain open for three to four years after the loss carryforwards and credit carryforwards have been utilized.
For the years ended December 31, 2025, 2024, and 2023, the Company paid cash for income taxes, net of refunds received, of
$5.2 million, $2.6 million, and $44.2 million, respectively.
A reconciliation of the Company’s cash paid for income taxes, net of refunds received, is as follows:
Year Ended December 31,
(In thousands)
2025
2024
2023
Domestic - Ireland
$
2,455
$
— $
—
Foreign - U.S.
Federal
$
(4)
$
— $
38,850
State
California
1,216
2,365
*
Mississippi
750
*
*
Other States
820
227
5,393
Foreign - U.S. subtotal
2,782
2,592
44,243
Total
$
5,237
$
2,592 $
44,243
*
Below the disclosure threshold for the period presented.
(1)
This number includes amounts due to the Company under other tax heads that was reallocated to the income tax account.
(1)
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-33
18. SEGMENT REPORTING
Segment Information
The Company’s significant segment expenses that are regularly provided to the CODM are as follows:
Year Ended December 31,
(In thousands)
2025
2024
2023
REVENUES:
Total revenue
$
1,475,899
$
1,557,632 $
1,663,405
EXPENSES:
Cost of goods manufactured and sold (exclusive of
amortization of acquired intangible assets shown below)
196,457
245,331
253,037
External R&D expenses:
Development programs:
Alixorexton
95,763
45,947
31,321
LYBALVI
18,757
18,737
15,379
Other external R&D expenses
52,759
36,627
51,668
Total external R&D expenses
167,279
101,311
98,368
Internal R&D expenses:
Employee-related
125,955
114,496
128,282
Occupancy
13,001
11,206
12,299
Depreciation
5,605
5,701
9,578
Other internal R&D expenses
12,124
12,612
22,279
Total internal R&D expenses
156,685
144,015
172,438
R&D expenses
323,964
245,326
270,806
Selling, general and administrative expenses:
Selling and marketing expense
480,011
446,214
490,154
General and administrative expense
221,511
199,024
199,597
Total selling, general and administrative
expense
701,522
645,238
689,751
Other segment (expense) income
(12,292)
(49,599)
69,346
NET INCOME FROM CONTINUING OPERATIONS
241,664
372,138
519,157
LOSS ON DISCONTINUED OPERATIONS, NET OF
TAX
—
(5,068)
(163,400)
NET INCOME
$
241,664
$
367,070 $
355,757
(1)
“Other segment (expense) income” during the years ended December 31, 2025, 2024 and 2023 includes “Amortization of acquired intangible assets”,
“Other income (expense), net” and “Income tax provision (benefit)”.
19. COMMITMENTS AND CONTINGENT LIABILITIES
Litigation
From time to time, the Company may be subject to legal proceedings and claims in the ordinary course of business. On a
quarterly basis, the Company reviews the status of each significant matter and assesses its potential financial exposure. If the potential
loss from any claim, asserted or unasserted, or legal proceeding is considered probable and the amount can be reasonably estimated,
the Company would accrue a liability for the estimated loss. Because of uncertainties related to claims and litigation, accruals are
based on the Company’s best estimates, utilizing all available information. On a periodic basis, as additional information becomes
available, or based on specific events such as the outcome of litigation or settlement of claims, the Company may reassess the
potential liability related to these matters and may revise these estimates, which could result in material adverse adjustments to the
Company’s operating results. At December 31, 2025, there were no potential material losses from claims, asserted or unasserted, or
legal proceedings that the Company determined were probable of occurring.
INVEGA TRINZA ANDA Litigation
In September 2020, Janssen Pharmaceutica, Janssen Pharmaceuticals, Inc., and Janssen Research & Development, LLC initiated
a patent infringement lawsuit in the U.S. District Court for the District of New Jersey (the “NJ District Court”) against Mylan
Laboratories Limited (“Mylan Labs”) and other Mylan entities following the filing by Mylan Labs of an abbreviated new drug
application (“ANDA”) seeking approval from the U.S. Food and Drug Administration (“FDA”) to market a generic version of
(1)
ALKERMES PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
F-34
INVEGA TRINZA before the expiration of U.S. Patent No. 10,143,693 (the “’693 Patent”). Requested judicial remedies include
recovery of litigation costs and injunctive relief. In May 2023, the NJ District Court issued an opinion in favor of the Janssen entities
on the issues of infringement and validity of the ’693 Patent and the Mylan entities filed a notice of appeal of the decision. In March
2025, the U.S. Court of Appeals for the Federal Circuit (the “Federal Circuit Court”) issued a decision affirming the NJ District Court
opinion. In May 2025, Mylan Labs filed a petition for panel rehearing or rehearing en banc, and in July 2025, the petition was denied
and the Federal Circuit Court issued a mandate to the NJ District Court which terminated the proceeding. The Company was not a
party to this proceeding.
LYBALVI ANDA Litigation
In August 2025, Alkermes Pharma Ireland Limited (“APIL”) and Alkermes, Inc., two wholly-owned subsidiaries of the
Company, filed a patent infringement lawsuit against Teva (as defined herein) in the NJ District Court and a patent infringement
lawsuit against Apotex in each of the NJ District Court and the U.S. District Court for the District of Delaware. In September 2025,
APIL and Alkermes, Inc. filed a patent infringement lawsuit against MSN (as defined herein) in the NJ District Court. As used herein,
Teva refers to Teva Pharmaceuticals, Inc., Apotex refers to Apotex Inc. and Apotex Corp., and MSN refers to MSN Laboratories
Private Limited (“MSN Labs”), MSN Pharmaceuticals, Inc. and Novadoz Pharmaceuticals LLC. These lawsuits were filed following
receipt of a “paragraph IV certification” notice from each of Teva, Apotex and MSN Labs regarding their respective filings of an
ANDA with the FDA seeking approval to engage in the commercial manufacture, use or sale of a generic version of LYBALVI
(olanzapine and samidorphan tablets, 5mg/10mg, 10mg/10mg, 15mg/10mg and 20mg/10mg) in the U.S. prior to the expiration of
certain of the Company’s U.S. patents. The notices alleged that certain of the Company’s patents related to LYBALVI, with expiration
dates between 2032 and 2041, are invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of
the proposed generic products. The Company intends to vigorously defend its intellectual property. The filing of each lawsuit within
45 days of receipt of each of the respective notices triggered stays of FDA approval of each of the respective ANDAs for up to 30
months in accordance with the U.S. Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”).
Antitrust Class Action Litigation
On October 2, 2025, Value Drug Company filed a complaint asserting antitrust claims against Alkermes, Inc. and APIL in the
U.S. District Court for the District of Massachusetts (the “MA District Court”). The complaint was filed on behalf of a putative class
of direct purchasers of VIVITROL and alleges that the Company’s U.S. Patent No. 7,919,499 related to VIVITROL was fraudulently
obtained, improperly listed in the Orange Book, and wrongfully enforced, resulting in delayed market entry for generic forms of
VIVITROL. The lawsuit seeks, among other things, unspecified money damages plus interest, reasonable attorneys’ fees and other
costs. The Company intends to vigorously defend itself in this matter. On December 19, 2025, Alkermes, Inc. and APIL filed a motion
to dismiss the complaint with the MA District Court.
Government Matters
The Company has received a civil investigative demand from a U.S. state governmental authority. The Company is cooperating
with the investigation.
Product Liability and Other Legal Proceedings
The Company is involved in litigation and other legal proceedings incidental to its normal business activities. The Company
intends to vigorously defend itself in these matters.
In addition, in January 2023, Acorda Therapeutics, Inc. (“Acorda”) filed a petition with the U.S. District Court for the Southern
District of New York (the “NY Southern District Court”) asking the court to confirm in part and modify in part the final arbitral award
rendered by an arbitration panel in October 2022 and, as part of the requested modification, seeking an additional approximately $66.0
million in damages. In August 2023, the NY Southern District Court confirmed the final arbitral award and declined to modify the
final award to increase the damages awarded thereunder. In September 2023, Acorda filed a notice of appeal of the NY Southern
District Court decision to the Federal Circuit Court. In July 2025, the Federal Circuit Court transferred the appeal due to lack of
jurisdiction to the U.S. Court of Appeals for the Second Circuit.
Purchase Commitments
The Company has open purchase orders for plant and equipment as part of its normal course of business. At December 31, 2025,
the Company’s open purchase orders were $17.7 million for capital commitments.
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 is qualified in its entirety by reference to the Irish Companies Act 2014
(the “Companies Act”) and the complete text of our memorandum and articles of association, as they may
be amended from time to time (together, our “Constitution”). A copy of our Constitution is incorporated
by reference as Exhibit 3.1 to the Annual Report on Form 10-K of which this Exhibit 4.1 is a part. 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 Structure
Authorized Share Capital
Our authorized share capital is €40,000 and $5,000,000, which is divided into 40,000 ordinary
shares of €1.00 each, 450,000,000 ordinary shares of $0.01 each and 50,000,000 undesignated preferred
shares 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,
and subject to the issuance and allotment authorities approved by our shareholders. Our authorized share
capital may be increased or reduced by a resolution approved by a simple majority of the votes of our
shareholders cast in person or by proxy 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 public limited company (“plc”) like
Alkermes may issue new ordinary or preferred shares without shareholder approval once authorized to do
so by the company’s constitution or by an ordinary resolution adopted by the company’s shareholders at a
general meeting. The authorization may be granted for a maximum period of five years, after which it
must be renewed by the shareholders by an ordinary resolution. In May 2025, our shareholders authorized
our board of directors (the “Board”) to allot and issue shares in an amount equal to approximately 20% of
our issued share capital as of April 1, 2025. This current authorization extends until November 21, 2026,
at which point it will lapse unless renewed by our shareholders.
The rights and restrictions applicable to our ordinary shares are prescribed in our Constitution. Our
Constitution permits the Board, without shareholder approval, to determine the terms of any preferred
shares issued by us. Our Board is authorized, without obtaining any vote or consent of the holders of any
class or series of shares, unless expressly provided by the terms of that 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 the
characteristics of each class or series, including the number of shares, designations, relative voting rights,
dividend rights, liquidation and other rights, redemption, repurchase or exchange rights and any other
preferences and relative, participating, optional or other rights and limitations not inconsistent with
applicable law.
Irish law does not recognize fractional shares held of record. Accordingly, our Constitution does not
provide for the issuance of fractional shares, and our official Irish register of members (shareholders) will
not reflect any fractional shares.
Pre-emption Rights, Warrants and Options
Under Irish law, unless otherwise authorized, when an Irish plc issues shares for cash to new
shareholders, it is required to first offer those shares on the same or more favorable terms to existing
shareholders of the company on a pro rata basis (commonly referred to as the “statutory pre-emption
right”). However, Irish law permits such companies to opt out of the statutory pre-emption right for a
period of up to five years if authorized by a resolution approved by not less than 75% of the votes of the
company’s shareholders cast in person or by proxy at a general meeting (referred to under Irish law as a
“special resolution”). In May 2025, our shareholders authorized our Board to allot and issue shares for
cash on a non-pre-emptive basis up to the amount of approximately 20% of our issued share capital as of
April 1, 2025. This current authorization extends until November 21, 2026, at which point it will lapse
unless renewed by our shareholders. The statutory pre-emption right does not apply where shares are
issued for non-cash consideration (such as in a stock-for-stock acquisition) and does not apply to the issue
of non-equity shares (that is, shares that have the right to participate only up to a specified amount in any
income or capital distribution) or where shares are issued pursuant to an employee stock option or similar
equity plan.
Our Constitution provides that, subject to any shareholder approval requirement under any laws,
regulations or the stock exchange rules to which we are subject, the Board is authorized, from time to
time, in its discretion, to grant to such persons, for such periods and upon 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 class
as the Board may deem advisable, and to cause warrants or other appropriate instruments evidencing such
options to be issued. The Companies Act provides that a board of directors may issue warrants or options
without shareholder approval once authorized to do so by its constitution or an ordinary resolution of
shareholders. We are subject to the applicable rules and regulations of The Nasdaq Stock Market
(“Nasdaq”) and the Internal Revenue Code of 1986, as amended, that require shareholder approval of
certain equity plan and share issuances. Our Board may issue shares upon exercises of warrants or options
without shareholder approval or authorization (up to the relevant authorized share capital limit).
Dividends
Under Irish law, dividends and distributions may only be made from distributable reserves.
Distributable reserves generally means accumulated realized profits less accumulated realized losses and
includes reserves created by way of capital reduction. In addition, no distribution or dividend may be
made unless our net assets are equal to, or in excess of, the aggregate of our called-up share capital plus
undistributable reserves and the distribution does not reduce our net assets below such aggregate.
Undistributable reserves include: (i) our undenominated capital; (ii) the amount by which our
accumulated unrealized profits, so far as not previously utilized by any capitalization, exceed our
accumulated unrealized losses, so far as not previously written off in a reduction or reorganization of
capital; and (iii) any other reserve we are prohibited, at law, from distributing.
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 other financial statements properly prepared in
accordance with the Companies Act, which give a “true and fair view” of our unconsolidated financial
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 shareholder approval to the extent they appear justified by the profits of the
Company. The Board may also recommend a dividend to be approved and declared by the shareholders at
a general meeting. The Board may direct that the payment of a dividend be made by distribution of assets,
shares or cash, and 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 our shares.
The Board may also authorize us to issue shares with preferred rights to participate in dividends we
declare. The holders of preferred shares 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 to ordinary shareholders.
Share Repurchases, Redemptions and Conversions
Overview
Our Constitution provides that any ordinary share that we have agreed to acquire shall be deemed to
be a redeemable share, unless the Board elects to treat such share acquisition otherwise. Accordingly, for
Irish law purposes, repurchases of ordinary shares by us are effected as redemptions of those shares as
described below under “—Our Repurchases and Redemptions.” If our Constitution did not contain such
provision, our repurchases would be subject to many of the same rules that apply to purchases of our
ordinary shares by subsidiaries described below under “—Purchases by Our Subsidiaries” including the
shareholder approval requirements described below and the requirement that any open-market purchases
be effected on a “recognized stock exchange.” Except where otherwise noted, references herein to
repurchasing our ordinary shares refer to our or one of our subsidiaries’ redemption of ordinary 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 issue of shares for that purpose. Please see also the “—Dividends”
section above. We may only issue redeemable shares if the nominal value of the issued share capital that
is not redeemable is not less than 10% of the nominal value of our total issued share capital. All
redeemable shares must also be fully paid. Redeemable shares may, upon redemption, be canceled or held
in treasury. Based on the provision of our Constitution described above, shareholder approval is not
required to redeem our shares.
We may also be given an additional general authority to purchase our own shares on-market which
would take effect on the same 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 on the 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 held by 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 of any 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, a subsidiary may purchase our shares either on-market (an overseas market
purchase) or off-market. For one of our subsidiaries to make on-market purchases of our ordinary shares,
our shareholders must provide general authorization for such purchase by way of ordinary resolution.
However, as long as this general authority has been granted, no specific shareholder authority is required
for a particular on-market purchase of our ordinary shares by one of our subsidiaries. For an off-market
purchase by one of our subsidiaries, the proposed purchase contract must be authorized by special
resolution of our shareholders before the contract is entered into. The person whose shares are to be
bought back cannot vote in favor of the special resolution and, for at least 21 days prior to the special
resolution being passed, the purchase contract must be on display or must be available for inspection by
shareholders at our registered office.
In order for one of our subsidiaries to make an overseas market purchase of our shares, such shares
must be purchased on a “recognized stock exchange.” The Nasdaq Global Select Market, on which our
shares are listed, is specified as a recognized stock exchange for this purpose by Irish law.
The number of shares held by our subsidiaries at any time will be included in any calculation of the
permitted treasury share threshold of 10% of the nominal value of our issued share capital. While a
subsidiary holds our shares, it cannot exercise any voting rights in respect of those shares. The acquisition
of our shares by a subsidiary must be funded out of distributable reserves of the subsidiary.
Share Repurchase Program
On February 15, 2024, our Board authorized a share repurchase program to repurchase our ordinary
shares in an aggregate amount of up to $400.0 million (exclusive of any fees, commissions or other
expenses related to such repurchases) from time to time on the open market (the “Repurchase Program”),
with the timing and amount of any repurchases under the Repurchase Program to be based on a variety of
factors, including but not limited to ongoing assessments of our capital needs, alternative investment
opportunities, the market price of our ordinary shares and general market conditions. The Repurchase
Program has no set expiration date and may be suspended or discontinued at any time. During the year
ended December 31, 2025, we did not repurchase any of our ordinary shares under the Repurchase
Program. During the year ended December 31, 2024, we repurchased approximately 7.9 million of our
ordinary shares under the Repurchase Program at an average price of $25.33, at a total cost (exclusive of
any fees, commissions or other expenses related to such repurchase) of $200.0 million. All ordinary
shares repurchased were returned to treasury. As of December 31, 2025, the remaining amount authorized
under the Repurchase Program was $200.0 million.
As noted above, shareholder approval for repurchases under the Repurchase Program will not be
required because all repurchases of our shares under the Repurchase Program will be effected as
redemptions by the Company 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 any rights 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 amounts payable 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 in respect of any shares to be paid,
and if payment is not made, the shares may be forfeited. These provisions are standard inclusions in the
constitution 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 larger nominal 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 the authorized share capital to an amount less than the issued share capital at
such time. We also may, by special resolution and subject to confirmation by the Irish High Court, reduce
or cancel our issued share capital in any way we think expedient.
Annual General 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 is held 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 technological
means without leaving Ireland.
Notice of each annual general meeting must be given to all our shareholders and to our auditors. Our
Constitution provides for a minimum notice period of 21 clear days (as defined in our Constitution),
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 the Company’s statutory financial statements and the reports of our Board and
our statutory auditors thereon; (ii) the review by our shareholders of the Company’s affairs; (iii) the
authorization of our Board to approve the remuneration of the statutory auditors; and (iv) the election
and/or re-election of members of our Board in accordance with our Constitution. If no resolution is made
in respect of the reappointment of an existing auditor at an annual general meeting, the existing auditor
will be deemed to have continued in office.
Extraordinary General Meetings of Shareholders
Extraordinary general meetings may be convened by: (i) our Board; (ii) at the request of
shareholders holding not less than 10% of our paid-up share capital carrying voting rights; or (iii) at the
request of our auditors in certain circumstances in accordance with the Companies Act. Extraordinary
general meetings are generally held for the purposes of approving Board or shareholder resolutions as
may be required 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 clear days’ notice in writing for
an extraordinary general meeting to approve a special resolution and 14 clear days’ notice in writing for
any other extraordinary general meeting.
In the case of an extraordinary general meeting convened on the requisition of our shareholders, the
proposed purpose of the meeting must be set out in the requisition notice. Upon receipt of this required
notice, the Board has 21 days to convene a meeting of our shareholders to vote on the matters set out in
the required notice. This meeting must be held within two months of the receipt of the requisition notice.
If the Board does not convene the meeting within such 21-day period, the requisitioning shareholders, or
any of them representing more than one half of the total voting rights of all of them, may themselves
convene a meeting, which meeting must be held within three months of our receipt of the requisition
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 must convene an extraordinary general meeting of our shareholders not later
than 28 days from the date that they learn of this fact to consider how to 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 more shareholders present in person or by proxy holding not less than a
majority of our issued and outstanding shares entitled to vote at the meeting 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 each meeting and the manner in which the votes are to be counted.
Every shareholder is entitled to one vote for each ordinary share that they hold as of the record date
for the meeting. Voting rights may be exercised by shareholders registered in our share register as of the
record date for the meeting or by a duly appointed proxy, which proxy need not be a shareholder. Where
interests in shares are held by a nominee trust company, this company may exercise the rights of the
beneficial holders on their behalf as their proxy. All proxies must be appointed in the manner prescribed
by our Constitution, which permit shareholders 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 shares may have such voting rights as may be specified in the terms of
such preferred shares (e.g., they may carry more votes per share than ordinary shares or may entitle their
holders to a class vote on such matters as may be specified in the terms of the preferred shares). Treasury
shares 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 requiring special resolutions include:
a)
amending our Constitution;
b)
approving a change of our name;
c)
authorizing the entering into of a guarantee or provision of security in connection with a loan,
quasi-loan or credit transaction to a director or connected person;
d)
opting out of pre-emption rights on the issuance of new shares;
e)
creating a new class of shares;
f)
re-registration from a public limited company to a private company;
g)
variation of class rights attaching to classes of shares (where the Constitution does not provide
otherwise);
h)
purchase of our own shares off-market;
i)
reduction of issued share capital;
j)
sanctioning a compromise/scheme of arrangement;
k)
resolving that we be wound up by the Irish courts;
l)
resolving in favor of a shareholders’ voluntary winding-up;
m) re-designation of shares into different share classes; and
n)
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 special resolution 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 class of shares.
The provisions of our Constitution relating to general meetings apply to general meetings of the
holders of any class of shares except that the necessary quorum is determined by reference to the shares of
the holders of the applicable class. Accordingly, for general meetings of holders of a particular class of
shares, a quorum consists of the holders present in person or by proxy representing not less than a
majority of the issued shares 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 court order from the Irish High Court and the approval of a majority
in number representing 75% in value of the shareholders present and voting in person or by proxy
at a meeting of each scheme class 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 have accepted an offer for such shares, the remaining shareholders may also
be statutorily required to transfer their shares. If the bidder does not exercise its “squeeze out”
right, then the non-accepting shareholders also have a statutory right to require the bidder to
acquire their shares on the same terms. If our shares were to be listed on the Irish Stock Exchange
or another regulated stock exchange 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 Mergers Directive (EU) 2019/2121 or with another Irish company under the
Companies Act. Such a merger must be approved by a special resolution of the shareholders.
Under certain circumstances, shareholders also may be entitled to have their shares acquired for
cash.
Irish law does not generally require shareholder approval for a sale, lease or exchange of all or
substantially all of a company’s property and assets.
Appraisal Rights
Irish law generally does not provide for “appraisal rights”. However, it does provide for dissenters’
rights in certain situations, as described below.
Under a tender or takeover offer, the bidder may require any remaining shareholders to transfer their
shares on the terms of the offer (i.e., a “squeeze out”) if it has acquired, pursuant to the offer, not less than
80% of the target shares to which the offer relates (in the case of a company like Alkermes that is not
listed on an EEA regulated market). Dissenting shareholders have the right to apply to the Irish High
Court for relief.
A scheme of arrangement which has been approved by the requisite shareholder majority and sanctioned
by the Irish High Court will be binding on all shareholders. Dissenting shareholders have the right to
appear at the Irish High Court hearing and make representations in objection to the scheme.
Under the European Union (Cross-Border Conversions, Mergers and Divisions) Regulations 2023
governing the merger of an Irish company limited by shares such as us and a company incorporated in the
EEA, a shareholder who voted against the special resolution approving the merger has the right to request
that the company acquire its shares for the cash compensation specified in the common draft terms of
merger agreement.
Similar rights apply in the case of a merger of an Irish plc into another company to which the
provisions of the Companies Act apply.
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% or more 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 that brings his or her total holding through the nearest whole percentage number,
whether an increase or a reduction. The relevant percentage figure is calculated by reference to the
aggregate nominal value of the shares in which the shareholder is interested as a proportion of the entire
nominal value of our issued share capital of (or any such class of share capital in issue). Where the
percentage level of the shareholder’s interest does not amount to a whole percentage this figure may be
rounded down to the next whole number. We must be notified within five business days of the transaction
or alteration of the shareholder’s interests that gave rise to the notification requirement. If a shareholder
fails to comply with these notification requirements, the shareholder’s rights in respect of any shares it
holds will not be enforceable, 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 or have reasonable cause to believe to be, or at any time during
the three years immediately preceding the date on which such notice is issued to have been, interested in
shares comprised in our relevant share capital to: (i) indicate whether or not it is the case; and (ii) where
such person holds or has during that time held an interest in our shares, to provide additional information,
including the person’s own past or present interests in our shares. If the recipient of the notice fails to
respond within the reasonable time period specified in the notice, we may apply to court 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 of shares, 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 of the 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 “Irish Takeover Rules”), accelerated disclosure provisions apply for
persons holding an interest in our securities of 1% or more.
In addition, the beneficial ownership disclosure requirements of U.S. federal securities laws apply
with respect to beneficial ownership of our shares.
Anti-Takeover Provisions
Irish 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 Act 1997 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 Irish Takeover 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 transaction regulated 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 person acquires 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 properly informed decision on the offer; where it advises the holders of
securities, the board of the target company must give its views on the effects of implementation of
the offer on employment, conditions of employment and the locations of the target company’s
places 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 the opportunity 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 the offer in such a way that the rise or fall of the prices of the
securities becomes artificial and the normal functioning of the markets is distorted;
e)
a bidder must announce an offer only after ensuring that it can fulfill in full, any cash
consideration if such is offered, and after 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) shall take 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 mandatory cash offer for our remaining outstanding shares at a price not less
than the highest price paid for the shares by that acquirer (or any parties acting in concert with the
acquirer) during the previous twelve months. This mandatory bid requirement is triggered if an
acquisition of shares would increase the aggregate holding of an acquirer (including the holdings of any
parties acting in concert with the acquirer) to shares representing 30% or more of our voting rights, unless
the Irish Takeover Panel otherwise consents. An acquisition of shares by a person holding (together with
its concert parties) shares representing between 30% and 50% of our voting rights would also trigger the
mandatory bid requirement if, after giving effect to the acquisition, the percentage of the voting rights
held by that person (together with its concert parties) would increase by 0.05% within a twelve-month
period. Any person (excluding any parties acting in concert with the holder) holding shares 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 paid for our ordinary shares by the bidder or its concert parties during the
three-month period prior to the commencement of the offer period. The Irish Takeover Panel has the
power to extend the “look back” period to twelve months if the Irish Takeover Panel, taking into account
the General 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 the commencement of the offer period which represent more than 10% of our total
ordinary shares; or (ii) at any time after the commencement of the 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 than the
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 the offer 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 concert parties, has acquired less than 10% of
our total ordinary shares in the 12-month period prior to the commencement of the offer period if the Irish
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.
Any announcement by us which commences an offer period must identify the potential bidder with
which we are in talks or from which an approach was received. Any such bidder will then have a period
of 42 days following such announcement (i.e. the announcement in which they are first identified) to
announce a firm intention to make an offer or announce that they do not intend to do so, in which case
they will then be restricted from making an offer for six months.
Substantial Acquisition Rules
The Irish Takeover Rules also contain rules governing substantial acquisitions of shares which
restrict the speed at which a person may increase his or her holding of shares and rights over shares to an
aggregate of between 15% and 30% of our voting rights. Except in certain circumstances, an acquisition
or series of acquisitions of shares or rights over shares representing 10% or more of our voting rights is
prohibited, if such acquisition(s), when aggregated with shares or rights already held, would result in the
acquirer holding 15% or more but less than 30% of our voting rights and such acquisitions are made
within a period of seven days. These rules also require accelerated disclosure of acquisitions of shares or
rights over shares relating to such holdings.
Shareholder Rights Plan
Under our Constitution, our Board is authorized to adopt a shareholder rights plan (a “Shareholder
Rights Plan”), upon such terms and conditions 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 shares
in the share capital of the Company in accordance with the terms of any Shareholder Rights Plan. The
Board or any duly appointed committee 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 the Board has received an approach which may lead to an offer or has reason
to believe an offer is or may be imminent, subject to certain exceptions. Potentially frustrating actions
such as: (i) the issue of shares, options or convertible securities; (ii) material acquisitions or disposals; (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 to believe 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 a 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 of it 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 partially implemented 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 described under the following captions: “—Authorized Share Capital” (regarding
issuance of preferred shares), “—Pre-emption Rights, Warrants and Options,” “—Disclosure of Interests
in Shares,” and “—Corporate Governance.”
Appointment of Directors of the Board
At each annual general meeting of shareholders, each director who is nominated for election or re-
election at that annual general meeting of shareholders shall be eligible for election for a one-year term.
Except as otherwise set forth in our Constitution, directors will be elected by way of ordinary resolution at
a general meeting. In the event of a contested election (where the number of persons validly nominated
for election exceeds the number of available director positions to be elected), only those directors in
number equal to the number of available director positions and who receive the highest number of votes
in favor of their election shall be elected. In no case will a decrease in the size of the Board shorten the
term of any incumbent director. A director shall hold office until the close of the annual general meeting
of shareholders for the year in which their term expires and until their 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 size of the Board or
from the death, resignation, retirement, disqualification or removal of a director, shall be deemed a casual
vacancy, and subject to the terms of any one or more classes or series of preferred shares (if any), shall
only be filled by decision of a majority of the Board then in office. Any director appointed to fill a
vacancy shall hold office until the next annual general meeting. A director retiring from the Board at a
general meeting shall retain office until the close or adjournment of such meeting.
During any vacancy in the Board, the remaining directors have full power to act as the Board. If, at
any general meeting of the Company (other than in the event of a contested election), the number of
directors is reduced below the minimum prescribed by the Board due to the failure of any persons
nominated to be directors to be elected, then in those circumstances, the nominee or nominees who
receive the highest number of votes in favor of election shall be elected in order to maintain the
prescribed minimum number of directors and each such director shall remain a director (subject to the
provisions of the Companies Act and our Constitution) only until the conclusion of the next annual
general meeting of the Company unless such director is re-elected by the our shareholders 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 a creditors’ winding up. In the case of a shareholders’ voluntary
winding-up, a special resolution of shareholders is required. We may also be dissolved by way of court
order on the application of a creditor, or by the Companies Registration Office as an enforcement measure
where we 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 preferred shares in particular may have the
right to priority in our dissolution or winding up. If the Constitution contains no specific provisions in
respect of a dissolution or winding up then, subject to the priorities of any creditors, the assets will be
distributed to shareholders in proportion to the paid-up nominal value of the shares held. Our Constitution
provides 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 rights of 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 nominal fee.
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 shares beneficially are not the holders of record of such shares. Instead, the
depository (for example, Cede & Co., as nominee for DTC) or other nominee is the holder of record of
those shares. Accordingly, a transfer of shares from a person who holds such shares beneficially to a
person who also holds such shares beneficially through a depository or other nominee will not be
registered in our official share register, as the 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 who holds such shares directly; or (iii) from
a person who holds such shares beneficially to another person who holds such shares beneficially where
the transfer involves a change in the depository or other nominee that is the record owner of the
transferred shares. An instrument of transfer 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 Irish
share 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 transfer and 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 an instrument of transfer is duly stamped and provided to the transfer agent. Our
Constitution allows us, in our absolute discretion, to create an instrument 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 such
payment, 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 lien against the ordinary shares on which
we have paid stamp duty. Parties to a share transfer may assume that any stamp duty arising in respect of
a transaction in our ordinary shares has been paid unless one or both of such parties is otherwise notified
by us.
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 through normal electronic systems, we intend to regularly produce any required
instruments of transfer in connection with any transactions for which we 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
a share 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, the parties may either themselves arrange for the execution of the required
instrument of transfer (and may request a form of instrument of transfer from us for this purpose) or
request that we execute an instrument of transfer on behalf of the transferring party in a form
determined by us. In either event, if the parties to the share transfer have the instrument of transfer duly
stamped (to the extent required) and then provide it 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 the matters 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 10.24
ALKERMES PLC
2018 Stock Option and Incentive Plan, as amended
SECTION 1.
GENERAL PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the Alkermes plc 2018 Stock Option and Incentive Plan (the “Plan”). The purpose
of the Plan is to encourage and enable the officers, employees, Non-Employee Directors and consultants of
Alkermes plc, an Irish public limited company (the “Company”), and its Subsidiaries upon whose judgment,
initiative and efforts the Company and its Subsidiaries largely depend for the successful conduct of their
business to acquire a proprietary interest in the Company. It is anticipated that providing such persons with a
direct stake in the Company’s future value will create a closer alignment of their interests with those of the
Company and its shareholders, thereby incentivizing their efforts on the Company’s and its Subsidiaries’ behalf
and strengthening their desire to remain with the Company and its Subsidiaries.
The following terms shall be defined as set forth below:
“2008 Plan” means the Alkermes plc Amended and Restated 2008 Stock Option and Incentive Plan, as
amended.
“2011 Plan” means the Alkermes plc 2011 Stock Option and Incentive Plan, as amended.
“2011 Plan Available Shares” means the 1,199,965 Shares that remained available for grant under the
2011 Plan as of the 2020 Annual Meeting (which Shares, as of the 2020 Annual Meeting, ceased to be
available for grant under the 2011 Plan and became available for issuance pursuant to Awards under this Plan).
“2020 Annual Meeting” means the 2020 Annual General Meeting of Shareholders of the Company.
“2024 Annual Meeting” means the 2024 Annual General Meeting of Shareholders of the Company.
“Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
“Administrator” means the compensation committee of the Board or a similar committee performing the
functions of the compensation committee and which is comprised of not less than two Non-Employee Directors
who are independent.
“Award” or “Awards,” except where referring to a particular category of grant under the Plan, shall include
Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards,
Restricted Stock Unit Awards, Cash-Based Awards and Performance Share Awards.
“Award Certificate” means a written or electronic certificate setting forth the terms and provisions applicable
to an Award granted under the Plan. Each Award Certificate is subject to the terms and conditions of the Plan.
“Board” means the Board of Directors of the Company.
“Cash-Based Award” means an Award entitling the recipient to receive a cash-denominated payment.
“Code” means the Internal Revenue Code of 1986, as amended, and any successor Code, and related
rules, regulations and interpretations.
“Companies Act” means the Irish Companies Act 2014, all enactments which are to be read as one, or
construed or read together as one with the Irish Companies Act 2014 and every statutory modification or
reenactment thereof for the time being in force.
“Disability” means, with respect to a grantee, the inability of such grantee to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment that can be expected to
result in death or that has lasted or can be expected to last for a continuous period of not less than 12 months,
as provided in Sections 22(e)(3) and 409A(a)(2)(c)(i) of the Code, and will be determined by the Company on
the basis of such medical evidence as the Company deems warranted under the circumstances. For clarity, any
reference to “disability” or “permanent disability” in any Award Certificate shall mean “Disability,” as defined
herein.
“Effective Date” means the date set forth in Section 18.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
“Fair Market Value” of the Shares on any given date for purposes of the Plan, unless otherwise required by
any applicable provision of the Code or any regulations issued thereunder, means the fair market value of the
Shares determined in good faith by the Administrator; provided, however, that if the Shares are admitted to
quotation on the Nasdaq Global Select Market (“Nasdaq”) or another national securities exchange, the
determination shall be made by reference to the closing price reported by Nasdaq or such other exchange for
such date. If the market is closed on such date, the determination shall be made by reference to the last date
preceding such date for which the market is open.
“Incentive Stock Option” means any Stock Option designated and qualified as an “incentive stock option” as
defined in Section 422 of the Code.
“Non-Employee Director” means a member of the Board who is not also an employee of the Company or
any Subsidiary.
“Non-Qualified Stock Option” means any Stock Option that is not an Incentive Stock Option.
“Option” or “Stock Option” means any option to purchase Shares granted pursuant to Section 5.
“Performance-Based Award” means any Restricted Stock Award, Restricted Stock Unit Award,
Performance Share Award or Cash-Based Award granted pursuant to Section 10.
“Performance Criteria” means the criteria that the Administrator selects for purposes of establishing the
Performance Goal or Performance Goals for an individual for a Performance Cycle. The Performance Criteria
(which shall be applicable to the organizational level specified by the Administrator, including, but not limited to,
the Company or a unit, division, group, or a Subsidiary) that will be used to establish Performance Goals are the
following: earnings before interest, taxes, depreciation and amortization, net income (loss) (either before or after
interest, taxes, depreciation and/or amortization), changes in the market price of the Shares, economic value-
added, initiation or completion of clinical trials, results of clinical trials, drug development or commercialization
milestones, collaboration milestones, operational measures including production capacity and capability, hiring
and retention of key managers, expense management, capital raising transactions, sales or revenue,
acquisitions or strategic transactions, operating income (loss), cash flow (including, but not limited to, operating
cash flow and free cash flow), return on capital, assets, equity, or investment, shareholder returns, gross or net
profit levels, operating margins, earnings (loss) per Share, sales or market shares, and any other measures of
performance selected by the Administrator, any of which may be measured either in absolute terms or as
compared to any incremental increase or as compared to results of a peer group.
“Performance Cycle” means one or more periods of time, which may be of varying and overlapping
durations, as the Administrator may select, over which the attainment of one or more Performance Criteria will
be measured for the purpose of determining a grantee’s right to and the payment of a Restricted Stock Award,
Restricted Stock Unit Award, Performance Share Award or Cash-Based Award. Each such period shall not be
less than 12 months.
“Performance Goals” means the specific goals established in writing by the Administrator for a Performance
Cycle based upon the Performance Criteria.
“Performance Share Award” means an Award entitling the recipient to acquire Shares upon the attainment
of specified Performance Goals.
“Prior Plans Returning Shares” means any Shares underlying any outstanding awards granted under the
2011 Plan or the 2008 Plan, in each case that are forfeited, canceled, repurchased or otherwise terminated
(other than by exercise) from and after the 2020 Annual Meeting (which Shares, as and when they become
Prior Plans Returning Shares, shall become available for issuance pursuant to Awards under this Plan,
notwithstanding anything to the contrary in the terms of the 2011 Plan or the 2008 Plan).
“Restricted Stock Award” means an Award entitling the recipient to acquire, at such purchase price (which
may be zero) as determined by the Administrator, Shares subject to such restrictions and conditions as the
Administrator may determine at the time of grant.
“Restricted Stock Unit Award” means an Award of phantom stock units to a grantee.
“Sale Event” shall mean (i) the sale of all or substantially all of the assets of the Company on a consolidated
basis to an unrelated person or entity, (ii) a merger, reorganization or consolidation in which the outstanding
Shares are converted into or exchanged for securities of the successor entity and the holders of the Company’s
outstanding voting power immediately prior to such transaction do not own a majority of the outstanding voting
power of the successor entity immediately upon completion of such transaction, or (iii) the sale of all of the
Shares to an unrelated person or entity.
“Section 409A” means Section 409A of the Code and the regulations and other guidance promulgated
thereunder.
“Share” or “Shares” means the ordinary shares, $0.01 par value per share, of the Company, subject to
adjustments pursuant to Section 3.
“Stock Appreciation Right” means a right to receive the appreciation on Shares granted pursuant to Section
5.
“Subsidiary” means any corporation or other entity in which the Company has at least a 50 percent interest,
either directly or indirectly.
“Ten Percent Owner” means an employee who owns or is deemed to own (by reason of the attribution rules
of Section 424(d) of the Code) more than 10 percent of the combined voting power of all classes of shares of
the Company or any subsidiary corporation of the Company, within the meaning of Section 424 of the Code.
SECTION 2.
ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES AND
DETERMINE AWARDS
(a) Administration of Plan. The Plan shall be administered by the Administrator.
(b) Powers of Administrator. The Administrator shall have the power and authority to grant Awards
consistent with the terms of the Plan, including the power and authority:
(i)
to select the individuals to whom Awards may from time to time be granted;
(ii)
to determine the time or times of grant, and the extent, if any, of Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock
Unit Awards, Cash-Based Awards and Performance Share Awards, or any combination of the
foregoing, granted to any one or more grantees;
(iii) to determine the number of Shares to be covered by any Award;
(iv) to determine and modify from time to time the terms and conditions, including restrictions,
not inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among
individual Awards and grantees, and to approve the form of written (or electronic) instruments
evidencing the Awards;
(v) subject to the provisions of Sections 5(a)(iii), 6(d) and 7(a), to accelerate at any time the
exercisability or vesting of all or any portion of any Award;
(vi) subject to the provisions of Section 5(a)(ii), to extend at any time the period in which Stock
Options or Stock Appreciation Rights may be exercised; and
(vii) at any time to adopt, alter and repeal such rules, guidelines and practices for
administration of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret
the terms and provisions of the Plan and any Award (including related written and electronic
instruments); to make all determinations it deems advisable for the administration of the Plan; to decide
all disputes arising in connection with the Plan; and to otherwise supervise the administration of the
Plan.
All decisions and interpretations of the Administrator shall be binding on all persons, including the
Company, Subsidiaries and Plan grantees.
(c) Delegation of Authority to Grant Awards. Subject to applicable law, the Administrator, in its
discretion, may delegate to a subcommittee comprised of one or more members of the Board all or part of the
Administrator’s authority and duties with respect to the granting of Awards to employees who are not subject to
the reporting and other provisions of Section 16 of the Exchange Act. Any such delegation by the Administrator
shall include a limitation as to the amount of the Awards that may be granted during the period of the delegation
and shall contain guidelines as to the determination of the exercise price, in the case of Stock Options and
Stock Appreciation Rights, and the vesting criteria for the Award. The Administrator may revoke or amend the
terms of a delegation at any time, but such action shall not invalidate any prior actions of the Administrator’s
delegate or delegates that were consistent with the terms of the Plan.
(d) Award Certificates. Awards under the Plan shall be evidenced by Award Certificates that set forth the
terms, conditions and limitations for each Award which may include, without limitation, the term of an Award and
the provisions applicable in the event employment or service terminates.
(e) Indemnification. Subject to Section 235 of the Companies Act, neither the Board nor the
Administrator, nor any member of either or any delegate thereof, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in connection with the Plan, and the members of
the Board and the Administrator (and any delegate thereof) shall be entitled in all cases to indemnification and
reimbursement by the Company in respect of any claim, loss, damage or expense (including, without limitation,
reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under the
Company’s articles or bylaws or any directors’ and officers’ liability insurance coverage which may be in effect
from time to time and/or any indemnification agreement between such individual and the Company.
(f)
Foreign Award Recipients. Notwithstanding any provision of the Plan to the contrary, in order to
comply with the laws in other countries in which the Company and its Subsidiaries operate or have employees
or other individuals eligible for Awards, the Administrator, in its sole discretion, shall have the power and
authority to: (i) determine which Subsidiaries shall be covered by the Plan; (ii) determine which individuals
outside the United States are eligible to participate in the Plan; (iii) modify the terms and conditions of any
Award granted to individuals outside the United States to comply with applicable foreign laws; (iv) establish
subplans and modify exercise procedures and other terms and procedures, to the extent the Administrator
determines such actions to be necessary or advisable (and such subplans and/or modifications shall be
attached to the Plan as appendices); provided, however, that no such subplans and/or modifications shall
increase the Share limitations contained in Section 3(a) hereof; and (v) take any action, before or after an
Award is made, that the Administrator determines to be necessary or advisable to obtain approval or comply
with any local governmental regulatory exemptions or approvals. Notwithstanding the foregoing, the
Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate the
Exchange Act or any other applicable United States securities law, the Code, or any other applicable United
States governing statute or law.
(g) Minimum Vesting Requirement.
Awards granted under the Plan shall not vest and, if applicable,
become exercisable) until at least one year from the date of grant (excluding, for this purpose, any Award
granted to a Non-Employee Director on or after February 5, 2026, that vests (or, if applicable, becomes
exercisable) on the earlier of the one-year anniversary of the date of grant or the date of the Company’s next
annual general meeting of shareholders that occurs at least 50 weeks after the date of grant); provided,
however, that Shares up to 5% of the Shares available for issuance under the Plan as set forth in Section 3(a)
may be issued pursuant to Awards that do not meet such minimum vesting (and, if applicable, exercisability)
requirement. Notwithstanding the foregoing provisions of this Section 2(g) and without limiting otherwise
applicable provisions of the Plan, the Administrator may accelerate vesting of an Award during the minimum
vesting period in the case of a grantee’s death, Disability or retirement or upon a Sale Event.
SECTION 3.
SHARES ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
(a) Shares Issuable. The maximum number of Shares reserved and available for issuance under the
Plan shall be equal to the sum of: (i) 53,447,405 Shares; (ii) 1,199,965 Shares, which is the number of 2011
Plan Available Shares; and (iii) the Prior Plans Returning Shares, as such Shares become available from time
to time. For purposes of this limitation, the Shares underlying any Awards that are forfeited, canceled,
repurchased or otherwise terminated (other than by exercise) shall be added back to the number of Shares
available for issuance under the Plan. Shares tendered or held back upon exercise of an Option or Stock
Appreciation Right or settlement of an Award to cover the exercise price or tax withholding shall not be added
back to the number of Shares available for issuance under the Plan. In addition, upon net exercise of Options,
the gross number of Shares exercised shall be deducted from the total number of Shares available for issuance
under the Plan. Shares purchased in the open market with proceeds from the exercise of Options and Stock
Appreciation Rights shall not be added to the number of Shares available for issuance under the Plan. In the
event that a Stock Appreciation Right is settled in Shares, the gross number of Shares subject to the Stock
Appreciation Right shall be deducted from the total number of Shares available for issuance under the Plan.
Subject to such overall limitations, Shares may be issued up to such maximum number pursuant to any type or
types of Award; provided, however, that no more than 62,950,000 Shares may be issued in the form of
Incentive Stock Options. The Shares issued under the Plan may be issued from treasury or otherwise.
(b) Effect of Awards. The grant of any full value Award (i.e., an Award other than an Option or Stock
Appreciation Right) shall be deemed, for purposes of determining the number of Shares available for issuance
under Section 3(a), an Award of 1.8 Shares for each such Share actually subject to the Award and shall be
treated similarly if added back to the number of Shares available for issuance when forfeited, canceled,
repurchased or otherwise terminated as provided in Section 3(a). Any Prior Plans Returning Share subject to a
full value award (i.e., an award other than a stock option or stock appreciation right with respect to which the
exercise price is at least 100% of the fair market value of the shares subject to such stock option or stock
appreciation right on the date of grant) shall be added to the number of Shares available for issuance under
Section 3(a) as 1.8 Shares. The grant of an Option or Stock Appreciation Right shall be deemed, for purposes
of determining the number of Shares available for issuance under Section 3(a), an Award for one Share for
each such Share actually subject to the Award and shall be treated similarly if added back to the number of
Shares available for issuance when forfeited, canceled, repurchased or otherwise terminated as provided in
Section 3(a). Any Prior Plans Returning Share subject to a stock option or stock appreciation right with respect
to which the exercise price is at least 100% of the fair market value of the shares subject to such stock option or
stock appreciation right on the date of grant shall be added to the number of Shares available for issuance
under Section 3(a) as one Share.
(c) Changes in Shares. Subject to Section 3(d) hereof, if, as a result of any reorganization,
recapitalization, reclassification, share dividend, share split, reverse share split or other similar change in the
Company’s capital shares, the outstanding Shares are increased or decreased or are exchanged for a different
number or kind of shares or other securities of the Company, or additional shares or new or different shares or
other securities of the Company or other non-cash assets are distributed with respect to such Shares or other
securities, or, if, as a result of any merger or consolidation, or sale of all or substantially all of the assets of the
Company, the outstanding Shares are converted into or exchanged for securities of the Company or any
successor entity (or a parent or subsidiary thereof), the Administrator shall make an appropriate or
proportionate adjustment in (i) the maximum number of Shares reserved for issuance under the Plan, including
the maximum number of Shares that may be issued in the form of Incentive Stock Options, (ii) the number and
kind of Shares or other securities subject to any then outstanding Awards under the Plan, (iii) the repurchase
price, if any, per Share subject to each outstanding Restricted Stock Award, and (iv) the price for each Share
subject to any then outstanding Stock Options and Stock Appreciation Rights under the Plan, without changing
the aggregate exercise price (i.e., the exercise price multiplied by the number of Shares subject to the Stock
Option or Stock Appreciation Right) as to which such Stock Options and Stock Appreciation Rights remain
exercisable. The Administrator shall also make equitable or proportionate adjustments in the number of Shares
subject to outstanding Awards and the exercise price and the terms of outstanding Awards to take into
consideration cash dividends paid other than in the ordinary course or any other extraordinary corporate event.
The adjustment by the Administrator shall be final, binding and conclusive. No fractional Shares shall be issued
under the Plan resulting from any such adjustment, but the Administrator in its discretion may make a cash
payment in lieu of fractional Shares.
(d) Mergers and Other Transactions. In the event of a Sale Event, the provisions of this Section 3(d) will
apply to each outstanding Award granted on or after the date of the 2024 Annual Meeting, unless otherwise
provided in the applicable Award Certificate for such Award, in any other written agreement between a grantee
and the Company or a Subsidiary, or in any director compensation policy of the Company. For clarity, in the
event of a Sale Event, the provisions of Section 3(d) of the Plan, as in effect immediately prior to the date of the
2024 Annual Meeting, will apply to any outstanding Awards granted prior to the date of the 2024 Annual
Meeting.
(i)
Awards May Be Assumed. In the event of a Sale Event, any surviving corporation or
acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or
continue any or all outstanding Awards or may substitute similar awards for any or all outstanding
Awards (including, but not limited to, awards to acquire the same consideration paid to the shareholders
of the Company pursuant to the Sale Event), and any reacquisition or repurchase rights held by the
Company in respect of Shares issued pursuant to any outstanding Awards may be assigned by the
Company to the surviving corporation or acquiring corporation (or the surviving or acquiring
corporation’s parent company). For clarity, in the event of a Sale Event, any surviving corporation or
acquiring corporation (or the surviving or acquiring corporation’s parent company) may choose to
assume or continue only a portion of an outstanding Award, to substitute a similar award for only a
portion of an outstanding Award, or to assume or continue, or substitute similar awards for, the
outstanding Awards held by some, but not all, individuals. The terms of any such assumption,
continuation or substitution will be set by the Board or the Administrator.
(ii)
Awards Held by Current Grantees. In the event of a Sale Event in which the surviving
corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) does
not assume or continue outstanding Awards, or substitute similar awards for outstanding Awards, then
with respect to any such Awards that have not been assumed, continued or substituted and that are
held by grantees whose employment (or other service relationship) with the Company and its
Subsidiaries has not terminated prior to the effective time of the Sale Event (referred to as the “Current
Grantees”), the vesting (and exercisability, if applicable) of such Awards will be accelerated in full (and
with respect to any such Awards that are subject to performance-based vesting conditions or
requirements, vesting will be deemed to be satisfied at the greater of (x) the target level of performance
or (y) the actual level of performance measured in accordance with the applicable performance goals
as of the date of the Sale Event) to a date prior to the effective time of the Sale Event (contingent upon
the closing or completion of the Sale Event) as the Administrator will determine (or, if the Administrator
does not determine such a date, to the date that is five days prior to the effective time of the Sale
Event), and such Awards will terminate if not exercised (if applicable) prior to the effective time of the
Sale Event in accordance with the exercise procedures determined by the Administrator, and any
reacquisition or repurchase rights held by the Company with respect to such Awards will lapse
(contingent upon the closing or completion of the Sale Event).
(iii) Awards Held by Individuals other than Current Grantees. In the event of a Sale Event in
which the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s
parent company) does not assume or continue outstanding Awards, or substitute similar awards for
outstanding Awards, then with respect to any such Awards that have not been assumed, continued or
substituted and that are held by individuals other than Current Grantees, such Awards will terminate if
not exercised (if applicable) prior to the effective time of the Sale Event in accordance with the exercise
procedures determined by the Administrator; provided, however, that any reacquisition or repurchase
rights held by the Company with respect to such Awards will not terminate and may continue to be
exercised notwithstanding the Sale Event.
(iv) Payment for Awards in Lieu of Exercise. Notwithstanding the foregoing, in the event any
outstanding Award held by an individual will terminate if not exercised prior to the effective time of a
Sale Event, the Administrator may provide that such individual may not exercise such Award but
instead will receive a payment, in such form as may be determined by the Administrator, equal in value
to the excess, if any, of (x) the value of the property such individual would have received upon the
exercise of such Award immediately prior to the effective time of the Sale Event, over (y) any exercise
price payable by such individual in connection with such exercise. For clarity, such payment may be
zero if the value of such property is equal to or less than the exercise price. Payments under this
provision may be delayed to the same extent that payment of consideration to the shareholders of the
Company in connection with the Sale Event is delayed as a result of escrows, earn outs, holdbacks or
any other contingencies.
(e) Substitute Awards. The Administrator may grant Awards under the Plan in substitution for stock and
stock-based awards held by employees, directors or consultants of another corporation in connection with the
merger or consolidation of the employing corporation with the Company or a Subsidiary or the acquisition by the
Company or a Subsidiary of property or stock of the employing corporation. The Administrator may direct that
the substitute awards be granted on such terms and conditions as the Administrator considers appropriate in
the circumstances. Any substitute Awards granted under the Plan shall not count against the Share limitation
set forth in Section 3(a).
SECTION 4.
ELIGIBILITY
Grantees under the Plan will be such full or part-time officers and other employees, Non-Employee
Directors and consultants of the Company and its Subsidiaries as are selected from time to time by the
Administrator in its sole discretion.
SECTION 5.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
Any Stock Option or Stock Appreciation Right granted under the Plan shall be in such form as the
Administrator may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock
Options. Incentive Stock Options may be granted only to employees of the Company or any Subsidiary that is a
“subsidiary corporation” within the meaning of Section 424(f) of the Code. To the extent that any Option does
not qualify as an Incentive Stock Option, it shall be deemed a Non-Qualified Stock Option.
(a) Grant of Stock Options and Stock Appreciation Rights. The Administrator in its discretion may grant
Stock Options and Stock Appreciation Rights to eligible employees, Non-Employee Directors, and consultants
of the Company or any Subsidiary. Stock Options and Stock Appreciation Rights granted pursuant to this
Section 5(a) shall be subject to the following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable. Conditions
may be based on continuing employment (or other service relationship) and/or achievement of pre-established
performance goals and objectives. If the Administrator so determines, Stock Options and Stock Appreciation
Rights may be granted in lieu of cash compensation at the grantee’s election, subject to such terms and
conditions as the Administrator may establish. Each Stock Appreciation Right will be denominated in Share
equivalents.
(i)
Exercise Price. The exercise price per Share covered by a Stock Option or Stock
Appreciation Right granted pursuant to this Section 5(a) shall be determined by the Administrator at the
time of grant but shall not be less than 100 percent of the Fair Market Value on the date of grant. In the
case of an Incentive Stock Option that is granted to a Ten Percent Owner, the exercise price per Share
of such Incentive Stock Option shall be not less than 110 percent of the Fair Market Value on the grant
date.
(ii)
Term and Termination. The term of each Stock Option and Stock Appreciation Right
shall be fixed by the Administrator, but no Stock Option or Stock Appreciation Right shall be exercisable
more than ten years after the date the Stock Option or Stock Appreciation Right is granted. In the case
of an Incentive Stock Option that is granted to a Ten Percent Owner, the term of such Stock Option
shall be no more than five years from the date of grant. Unless otherwise determined by the
Administrator on or after the date of grant, if a grantee’s employment (or other service relationship) with
the Company and its Subsidiaries terminates for any reason (including if a Subsidiary ceases to be a
Subsidiary of the Company), the portion of each Stock Option and Stock Appreciation Right held by the
grantee that is not then exercisable shall be immediately forfeited. Unless otherwise determined by the
Administrator on or after the date of grant, the grantee may exercise the exercisable portion of his Stock
Options and Stock Appreciation Rights until the earlier of three months after such date of termination or
the expiration of the stated term of such Stock Option or Stock Appreciation Right.
(iii) Vesting and Exercisability; Rights of a Shareholder. Rights of a Shareholder. Subject
to the provisions of Section 2(g), Stock Options and Stock Appreciation Rights shall become vested and
exercisable at such time or times, whether or not in installments, as shall be determined by the
Administrator at or after the grant date. A grantee shall have the rights of a shareholder only as to
Shares acquired upon the exercise of a Stock Option or Stock Appreciation Right and not as to
unexercised Stock Options or Stock Appreciation Rights. The Administrator may accelerate vesting
during the minimum vesting period as set forth in Section 2(g), and otherwise may accelerate the
vesting of all or any portion of any Stock Option or Stock Appreciation Right at any time.
(iv) Method of Exercise for Stock Options. Stock Options may be exercised in whole or in
part, by giving written or electronic notice of exercise to the Company’s delegate, specifying the number
of Shares to be purchased. In the case of a Stock Option that is not an Incentive Stock Option, unless
otherwise determined by the Administrator on or after the date of grant, payment of the purchase price
must be made by reduction in the number of Shares issuable upon such exercise, based, in each case,
on the Fair Market Value of the Shares on the date of exercise. If the Administrator determines not to
use the above payment method or in the case of the exercise of Incentive Stock Options, then payment
of the purchase price may be made by one or more of the following methods:
(A) In cash, by certified or bank check or other instrument acceptable to the
Administrator;
(B) Subject to the consent of the Administrator and on the basis of such form of
surrender agreement as the Administrator may specify, through the delivery (or attestation to the
ownership) of Shares owned by the optionee. Such surrendered Shares shall be valued at Fair
Market Value on the exercise date; or
(C) By the optionee delivering to the Company a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check
payable and acceptable to the Company for the purchase price; provided that in the event the
optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply
with such procedures and enter into such agreements of indemnity and other agreements as the
Administrator shall prescribe as a condition of such payment procedure.
Payment instruments will be received subject to collection. The transfer to the optionee on the records of
the Company or of the transfer agent of the Shares to be purchased pursuant to the exercise of a Stock Option
will be contingent upon receipt from the optionee (or a purchaser acting in his stead in accordance with the
provisions of the Stock Option) by the Company of the full purchase price for such Shares and the fulfillment of
any other requirements contained in the Option Award Certificate or applicable provisions of laws (including the
satisfaction of any withholding taxes that the Company is obligated to withhold with respect to the optionee). In
the event an optionee chooses to pay the purchase price by previously-owned Shares through the attestation
method, the number of Shares transferred to the optionee upon the exercise of the Stock Option shall be net of
the number of attested Shares. In the event that the Company establishes, for itself or using the services of a
third party, an automated system for the exercise of Stock Options, such as a system using an internet website
or interactive voice response, then the paperless exercise of Stock Options may be permitted through the use of
such an automated system.
(v) Method of Exercise for Stock Appreciation Rights and Payment upon Exercise. Stock
Appreciation Rights may be exercised in whole or in part, by giving written or electronic notice of
exercise to the Company’s delegate, specifying the number of Shares to be exercised. The appreciation
distribution payable on the exercise of a Stock Appreciation Right will be not greater than an amount
equal to the excess of (A) the aggregate Fair Market Value (on the date of exercise of the Stock
Appreciation Right) of a number of Shares equal to the number of Share equivalents in which the
grantee is vested under the Stock Appreciation Right, and with respect to which the grantee is
exercising the Stock Appreciation Right on such date, over (B) the aggregate exercise price of the
number of Share equivalents with respect to which the grantee is exercising the Stock Appreciation
Right on such date. The appreciation distribution may be paid in Shares, in cash, in any combination of
the two or in any other form of consideration, as determined by the Administrator and contained in the
Stock Appreciation Right Award Certificate.
(vi) Annual Limit on Incentive Stock Options. To the extent required for “incentive stock
option” treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of
the time of grant) of the Shares with respect to which Incentive Stock Options granted under the Plan
and any other plan of the Company or its subsidiary corporations become exercisable for the first time
by an optionee during any calendar year shall not exceed $100,000. To the extent that any Stock
Option exceeds this limit, it shall constitute a Non-Qualified Stock Option.
SECTION 6.
RESTRICTED STOCK AWARDS
(a) Nature of Restricted Stock Awards. The Administrator shall determine the restrictions and conditions
applicable to each Restricted Stock Award at the time of grant. Conditions may be based on continuing
employment (or other service relationship) and/or achievement of pre-established performance goals and
objectives. The terms and conditions of each Restricted Stock Award Certificate shall be determined by the
Administrator, and such terms and conditions may differ among individual Awards and grantees.
(b) Rights as a Shareholder. Upon the grant of a Restricted Stock Award and payment of any applicable
purchase price, a grantee shall have the rights of a shareholder with respect to the voting of the Shares subject
to the Restricted Stock Award and receipt of dividends (if any), subject to such conditions contained in the
Restricted Stock Award Certificate. Unless the Administrator shall otherwise determine, (i) uncertificated Shares
subject to the Restricted Stock Award shall be accompanied by a notation on the records of the Company or the
transfer agent to the effect that they are subject to forfeiture until such Shares are vested as provided in Section
6(d) below, and (ii) certificated Shares subject to the Restricted Stock Award shall remain in the possession of
the Company until such Shares are vested as provided in Section 6(d) below, and the grantee shall be required,
as a condition of the grant, to deliver to the Company such instruments of transfer as the Administrator may
prescribe. Notwithstanding anything herein to the contrary, any dividends paid by the Company during the
vesting period of any Restricted Stock Award shall accrue and shall not be paid until the Shares subject to the
Restricted Stock Award have vested and if any such Shares are forfeited, the grantee shall have no rights to
any such accrued dividends.
(c) Restrictions. Shares subject to a Restricted Stock Award may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of except as specifically provided herein or in the Restricted
Stock Award Certificate. If a grantee’s employment (or other service relationship) with the Company and its
Subsidiaries terminates for any reason (including if a Subsidiary ceases to be a Subsidiary of the Company),
any Shares subject to a Restricted Stock Award that have not vested at the time of termination shall
automatically, without any requirement of notice to such grantee from, or other action by or on behalf of, the
Company or its Subsidiaries, be deemed to have been reacquired by the Company at its original purchase price
(if any) from such grantee or such grantee’s legal representative simultaneously with such termination of
employment (or other service relationship), and thereafter shall cease to represent any ownership of the
Company by the grantee or rights of the grantee as a shareholder. Following such deemed reacquisition of
unvested Shares subject to a Restricted Stock Award that are represented by physical certificates, a grantee
shall surrender such certificates to the Company upon request without consideration.
(d) Vesting of Restricted Stock Awards. Subject to the provisions of Section 2(g), the Administrator at
the time of grant shall specify the date or dates and/or the attainment of pre-established performance goals,
objectives and other conditions on which the non-transferability of the Restricted Stock Award and the
Company’s right of repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or the attainment
of such pre-established performance goals, objectives and other conditions, the Shares on which all restrictions
have lapsed shall no longer be subject to the Restricted Stock Award and shall be deemed “vested”. Except as
may otherwise be provided by the Administrator pursuant to the authority reserved in this Section 6, a grantee’s
rights in any Shares subject to a Restricted Stock Award that have not vested shall automatically terminate
upon the grantee’s termination of employment (or other service relationship) with the Company and its
Subsidiaries for any reason (including if a Subsidiary ceases to be a Subsidiary of the Company) and such
Shares shall be subject to the provisions of Section 6(c) above. The Administrator may accelerate vesting
during the minimum vesting period as set forth in Section 2(g), and otherwise may accelerate the vesting of all
or any portion of any Restricted Stock Award at any time.
SECTION 7.
RESTRICTED STOCK UNIT AWARDS
(a) Nature of Restricted Stock Unit Awards. Subject to the provisions of Section 2(g), the Administrator
shall determine the restrictions and conditions applicable to each Restricted Stock Unit Award at the time of
grant. Conditions may be based on continuing employment (or other service relationship) and/or achievement of
pre-established performance goals and objectives. The terms and conditions of each Restricted Stock Unit
Award Certificate shall be determined by the Administrator, and such terms and conditions may differ among
individual Awards and grantees.. At the end of the restriction period, the Restricted Stock Unit Award, to the
extent vested, shall be settled in the form of Shares. To the extent that a Restricted Stock Unit Award is subject
to Section 409A, it may contain such additional terms and conditions as the Administrator shall determine in its
sole discretion in order for such Award to comply with the requirements of Section 409A. The Administrator may
accelerate vesting during the minimum vesting period as set forth in Section 2(g), and otherwise may accelerate
the vesting of all or any portion of any Restricted Stock Unit Award at any time.
(b) Election to Receive Restricted Stock Unit Awards in Lieu of Compensation. The Administrator may,
in its sole discretion, permit a grantee to elect to receive a portion of future cash compensation otherwise due to
such grantee in the form of a Restricted Stock Unit Award. Any such election shall be made in writing and shall
be delivered to the Company no later than the date specified by the Administrator and in accordance with
Section 409A and such other rules and procedures established by the Administrator. Any such future cash
compensation that the grantee elects to defer shall be converted to a fixed number of phantom stock units
(which may be fully vested) based on the Fair Market Value of the Shares on the date the compensation would
otherwise have been paid to the grantee if such payment had not been deferred as provided herein. The
Administrator shall have the sole right to determine whether and under what circumstances to permit such
elections and to impose such limitations and other terms and conditions thereon as the Administrator deems
appropriate.
(c) Rights as a Shareholder. A grantee shall have the rights as a shareholder only as to Shares
acquired by the grantee upon settlement of a Restricted Stock Unit Award; provided, however, that the grantee
may be credited with dividend equivalent rights with respect to the phantom stock units underlying his
Restricted Stock Unit Award, subject to such terms and conditions as the Administrator may determine;
provided that no payment of any such dividend equivalents shall be made unless and until such Restricted
Stock Unit Award has vested, and if such Restricted Stock Unit Award is forfeited, the grantee shall have no
right to such dividend equivalents.
(d) Termination. Except as may otherwise be provided by the Administrator pursuant to the authority
reserved in Section 7(a), a grantee’s right in all Restricted Stock Unit Awards that have not vested shall
automatically terminate upon the grantee’s termination of employment (or cessation of service relationship) with
the Company and its Subsidiaries for any reason (including if a Subsidiary ceases to be a Subsidiary of the
Company).
SECTION 8.
CASH-BASED AWARDS
Grant of Cash-Based Awards. The Administrator may, in its sole discretion, grant Cash-Based Awards to
any grantee in such number or amount and upon such terms, and subject to such conditions, as the
Administrator shall determine at the time of grant. The Administrator shall determine the maximum duration of
the Cash-Based Award, the amount of cash to which the Cash-Based Award pertains, the conditions upon
which the Cash-Based Award shall become vested or payable, and such other provisions as the Administrator
shall determine. Each Cash-Based Award shall specify a cash-denominated payment amount, formula or
payment ranges as determined by the Administrator. Payment, if any, with respect to a Cash-Based Award shall
be made in accordance with the terms of the Award and may be made in cash or in Shares, as the
Administrator determines. Except as may otherwise be provided by the Administrator pursuant to the authority
reserved in this Section 8, a grantee’s right in all Cash-Based Awards that have not vested shall automatically
terminate upon the grantee’s termination of employment (or cessation of service relationship) with the Company
and its Subsidiaries for any reason (including if a Subsidiary ceases to be a Subsidiary of the Company).
SECTION 9.
PERFORMANCE SHARE AWARDS
(a) Nature of Performance Share Awards. The Administrator may, in its sole discretion, grant
Performance Share Awards independent of, or in connection with, the granting of any other Award under the
Plan. The Administrator shall determine whether and to whom Performance Share Awards shall be granted, the
Performance Goals, the Performance Cycles (which, as defined above, shall not be less than 12 months), and
such other limitations and conditions as the Administrator shall determine.
(b) Rights as a Shareholder. A grantee receiving a Performance Share Award shall have the rights of a
shareholder only as to Shares actually received by the grantee under the Plan and not with respect to Shares
subject to the Award but not actually received by the grantee. A grantee shall be entitled to receive Shares
under a Performance Share Award only upon satisfaction of all conditions specified in the Performance Share
Award Certificate (or in a performance plan adopted by the Administrator).
(c) Termination. Except as may otherwise be provided by the Administrator either in the Award
Certificate or, subject to Section 15 below, in writing after the Award Certificate is issued, a grantee’s rights in all
Performance Share Awards shall automatically terminate upon the grantee’s termination of employment (or
cessation of service relationship) with the Company and its Subsidiaries for any reason (including if a
Subsidiary ceases to be a Subsidiary of the Company).
SECTION 10. PERFORMANCE-BASED AWARDS
(a) Performance-Based Awards. Any grantee who is selected by the Administrator may be granted one
or more Performance-Based Awards payable upon the attainment of Performance Goals that are established by
the Administrator and relate to one or more of the Performance Criteria, in each case on a specified date or
dates or over any period or periods determined by the Administrator (which, for clarification, shall not be less
than 12 months). The Administrator shall define the manner of calculating the Performance Criteria it selects to
use for any Performance Cycle (which, as defined above, shall not be less than 12 months). Depending on the
Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in
terms of overall performance of the Company or the performance of a Subsidiary, division, business unit, or an
individual. The Administrator, in its discretion, may adjust or modify the calculation of Performance Goals for
such Performance Cycle to make adjustments deemed appropriate by the Administrator, including but not
limited to, in order to prevent the dilution or enlargement of the rights of an individual (i) in the event of, or in
anticipation of, any unusual or extraordinary corporate item, transaction, event or development, (ii) in
recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company or its
Subsidiaries, or the financial statements of the Company or its Subsidiaries, or (iii) in response to, or in
anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions. Each
Performance-Based Award shall comply with the provisions set forth below.
(b) Grant of Performance-Based Awards. With respect to each Performance-Based Award granted to a
grantee, the Administrator shall select the Performance Criteria for such grant and the Performance Goals with
respect to each Performance Criterion (including a threshold level of performance below which no amount will
become payable with respect to such Award). Each Performance-Based Award will specify the amount payable,
or the formula for determining the amount payable, upon achievement of the various applicable performance
targets. The Performance Criteria established by the Administrator may be (but need not be) different for each
Performance Cycle and different Performance Goals may be applicable to Performance-Based Awards to
different grantees.
(c) Payment of Performance-Based Awards. Following the completion of a Performance Cycle, the
Administrator shall meet to review and certify in writing whether, and to what extent, the Performance Goals for
the Performance Cycle have been achieved and, if so, to also calculate and certify in writing the amount of the
Performance-Based Awards earned for the Performance Cycle. The Administrator shall then determine the
actual size of each grantee’s Performance-Based Award, and, in doing so, may reduce or eliminate the amount
of the Performance-Based Award for a grantee if, in its sole judgment, such reduction or elimination is
appropriate.
SECTION 11. TRANSFERABILITY OF AWARDS
(a) Transferability. Except as provided in Section 11(b) below, during a grantee’s lifetime, the grantee’s
Awards shall be exercisable only by the grantee, or by the grantee’s legal representative or guardian in the
event of the grantee’s incapacity. No Awards shall be sold, assigned, transferred or otherwise encumbered or
disposed of by a grantee other than by will or by the laws of descent and distribution or pursuant to a domestic
relations order. No Awards shall be subject, in whole or in part, to attachment, execution, or levy of any kind,
and any purported transfer in violation hereof shall be null and void.
(b) Administrator Action. Notwithstanding Section 11(a), the Administrator, in its discretion, may provide
either in the Award Certificate regarding a given Award or by subsequent written approval that the grantee (who
is an employee or director) may transfer their Non-Qualified Stock Options and Stock Appreciation Rights to
their immediate family members, to trusts for the benefit of such family members, or to partnerships in which
such family members are the only partners, provided that the transferee agrees in writing with the Company to
be bound by all of the terms and conditions of the Plan and the applicable Award.
(c) Family Member. For purposes of Section 11(b), “family member” shall mean a grantee’s child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-
in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, any person sharing the grantee’s household (other than a tenant of the grantee), a trust in which
these persons (or the grantee) have more than 50 percent of the beneficial interest, a foundation in which these
persons (or the grantee) control the management of assets, and any other entity in which these persons (or the
grantee) own more than 50 percent of the voting interests.
(d) Designation of Beneficiary. Each grantee to whom an Award has been made under the Plan may
designate a beneficiary or beneficiaries to exercise any Award or receive any payment under any Award
payable on or after the grantee’s death. Any such designation shall be on a form provided for that purpose by
the Administrator and shall not be effective until received by the Administrator. If no beneficiary has been
designated by a deceased grantee, or if the designated beneficiaries have predeceased the grantee, the
beneficiary shall be the grantee’s estate.
SECTION 12. TAX WITHHOLDING
(a) Payment by Grantee. Each grantee shall pay to the Company or its Subsidiaries, or make
arrangements satisfactory to the Administrator regarding payment of, any U.S. federal, state or local taxes, and
non-U.S. or other taxes of any kind required by law to be withheld by the Company or its Subsidiaries with
respect to any Award. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise due to the grantee. The Company’s obligation
to deliver evidence of book entry (or share certificates) to any grantee is subject to and conditioned on tax
withholding obligations being satisfied by the grantee.
(b) Payment in Shares. In connection with its obligations to withhold any U.S. federal, state or local
taxes, and non-U.S. or other taxes from amounts paid to grantees, the Company or its Subsidiaries may make
any arrangements that are consistent with the Plan as it may deem appropriate. Without limitation of the
preceding sentence, the Company shall have the right to reduce the number of Shares otherwise required to be
issued to a grantee (or other recipient) in an amount that would have a Fair Market Value on the date of such
issuance equal to all such taxes as shall be required to be withheld by the Company or its Subsidiaries pursuant
to any statute or other governmental regulation or ruling and paid to any U.S. federal, state or local, or non-U.S.
taxing authority, or such other amount as may be permitted while still avoiding classification of the Award as a
liability for financial accounting purposes.
SECTION 13. SECTION 409A AWARDS
To the extent that any Award is determined to constitute “nonqualified deferred compensation” within the
meaning of Section 409A (a “409A Award”), the Award shall be subject to such additional rules and
requirements as specified by the Administrator from time to time in order to comply with Section 409A. In this
regard, if any amount under a 409A Award is payable upon a “separation from service” (within the meaning of
Section 409A) to a grantee who is then considered a “specified employee” (within the meaning of Section
409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day
after the grantee’s separation from service, or (ii) the grantee’s death, but only to the extent such delay is
necessary to prevent such payment from being subject to interest, penalties and/or additional tax imposed
pursuant to Section 409A. Further, the settlement of any such Award may not be accelerated except to the
extent permitted by Section 409A.
SECTION 14. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary,
or from one Subsidiary to another;
(b) an approved leave of absence for military service or sickness, or for any other purpose approved by
the Company or its Subsidiaries, as the case may be, if the employee’s right to re-employment is guaranteed
either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if
the Administrator otherwise so provides in writing; or
(c) the transfer in status from one eligibility category under Section 4 hereof to another category.
SECTION 15. AMENDMENTS AND TERMINATION
The Board or the Administrator may, at any time, amend or discontinue the Plan and the Administrator may,
at any time, amend or cancel any outstanding Award for the purpose of satisfying changes in law or for any
other lawful purpose, but, except as otherwise provided in the applicable Award Certificate, no such action shall
adversely affect rights under any outstanding Award without the holder’s consent. Except as provided in Section
3(c) or 3(d), without prior shareholder approval, in no event may the Administrator exercise its discretion to
reduce the exercise price of outstanding Stock Options or Stock Appreciation Rights, or effect repricing through
cancellation and re-grants or cancellation in exchange for cash or another Award. To the extent required under
the rules of any securities exchange or market system on which the Shares are listed or any other applicable
rules, or to the extent approval by shareholders is determined by the Administrator to be required by the Code
to ensure that Incentive Stock Options granted under the Plan are qualified under Section 422 of the Code, Plan
amendments shall be subject to approval by the shareholders of the Company entitled to vote at a meeting of
shareholders. Nothing in this Section 15 shall limit the Administrator’s authority to take any action permitted
pursuant to Section 3(d).
SECTION 16. STATUS OF PLAN
With respect to the portion of any Award that has not been exercised and any payments in cash, Shares or
other consideration not received by a grantee, a grantee shall have no rights greater than those of a general
creditor of the Company unless the Administrator shall otherwise expressly determine in connection with any
Award or Awards. In its sole discretion, the Administrator may authorize the creation of trusts or other
arrangements to meet the Company’s obligations to deliver Shares or make payments with respect to Awards
hereunder, provided that the existence of such trusts or other arrangements is consistent with the foregoing
sentence.
SECTION 17. GENERAL PROVISIONS
(a) No Distribution. The Administrator may require each person acquiring Shares pursuant to an Award
to represent to and agree with the Company in writing that such person is acquiring the Shares without a view
to distribution thereof.
(b) Delivery of Share Certificates. Share certificates to grantees under the Plan shall be deemed
delivered for all purposes when the Company or a share transfer agent of the Company shall have mailed such
certificates in the United States mail, addressed to the grantee, at the grantee’s last known address on file with
the Company. Uncertificated Shares shall be deemed delivered for all purposes when the Company or a share
transfer agent of the Company shall have given to the grantee by electronic mail (with proof of receipt) or by
United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company or
any Subsidiary, notice of issuance and recorded the issuance in its records (which may include electronic “book
entry” records). Notwithstanding anything herein to the contrary, the Company shall not be required to issue or
deliver any certificates evidencing Shares pursuant to the exercise of any Award, unless and until the
Administrator has determined, with advice of counsel (to the extent the Administrator deems such advice
necessary or advisable), that the issuance and delivery of such certificates is in compliance with all applicable
laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the
Shares are listed, quoted or traded. All share certificates delivered pursuant to the Plan shall be subject to any
stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with
any U.S. federal, state or local or non-U.S. jurisdiction, securities or other laws, rules and quotation system on
which the Shares are listed, quoted or traded. The Administrator may place legends on any share certificate to
reference restrictions applicable to the Shares. In addition to the terms and conditions provided herein, the
Administrator may require that an individual make such reasonable covenants, agreements, and
representations as the Administrator, in its discretion, deems necessary or advisable in order to comply with any
such laws, regulations, or requirements. The Administrator shall have the right to require any individual to
comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including a
window-period limitation, as may be imposed in the discretion of the Administrator.
(c) Shareholder Rights. Until Shares are deemed delivered in accordance with Section 17(b), no right to
vote or receive dividends or any other rights of a shareholder will exist with respect to Shares to be issued in
connection with an Award, notwithstanding the exercise of a Stock Option or Stock Appreciation Right or any
other action by the grantee with respect to an Award; provided further that, to the extent the terms of any Award
provide for the accrual of dividends, in no event shall any such dividends be paid until such Award has vested.
(d) Other Compensation Arrangements; No Employment Rights. Nothing contained in the Plan shall
prevent the Board from adopting other or additional compensation plans or arrangements, including trusts, and
such arrangements may be either generally applicable or applicable only in specific cases. The adoption of the
Plan and the grant of Awards do not confer upon any employee any right to continued employment with the
Company or any Subsidiary.
(e) Trading Policy Restrictions. Option and Stock Appreciation Right exercises and other Awards under
the Plan shall be subject to the Company’s insider trading policies and procedures, as in effect from time to
time.
(f)
Forfeiture of Awards. All Awards granted under the Plan will be subject to recoupment in accordance
with the following, as applicable: (i) the Clawback Policy of Alkermes plc; (ii) the Alkermes plc Incentive
Compensation Recoupment Policy; (iii) any clawback policy that the Company is required to adopt pursuant to
the listing standards of any national securities exchange or association on which the Company’s securities are
listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other
applicable law; and (iv) any other clawback policy that the Company adopts. In addition, the Administrator may
impose such other clawback, recovery or recoupment provisions in an Award Certificate as the Administrator
determines necessary or appropriate, including, but not limited to, a reacquisition right in respect of previously
acquired Shares or other cash or property upon the occurrence of cause. No clawback, recovery or recoupment
of compensation pursuant to any such policy or Award Certificate shall be deemed an event giving rise to a right
to resign for “good reason” or “constructive termination” (or similar term) under any plan of or agreement with
the Company or a Subsidiary.
(g) Section 82 and Section 1043 of the Companies Act. The Company and any Subsidiary incorporated
in Ireland may do all such things as are contemplated by the Plan except to the extent that they are prohibited
by Section 82 and Section 1043 of the Companies Act. Nothing in this Section 17(g) shall prohibit anything
which may be done as contemplated by the Plan by a Subsidiary which is incorporated outside of Ireland.
SECTION 18. EFFECTIVE DATE OF PLAN
The Plan was approved by the Board on March 29, 2018. The Plan became effective upon approval by the
holders of a majority of the votes cast at the 2018 Annual General Meeting of Shareholders of the Company. No
grants of Incentive Stock Options may be made hereunder after March 29, 2028, which is the tenth anniversary
of the date that the Plan was approved by the Board.
SECTION 19. GOVERNING LAW
The Plan and all Awards and actions taken hereunder shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts, applied without regard to conflict of law principles.
SECTION 20. DISPUTE RESOLUTION
All disputes and differences arising out of the Plan or otherwise in connection herewith may be referred by
the Company to arbitration pursuant to the procedures set forth in the applicable grant agreement of any
grantee so affected.
Exhibit 19.1
ALKERMES plc
INSIDER TRADING POLICY
In the normal course of business, officers, directors, employees (including contract employees) and
independent contractors of Alkermes plc and its subsidiaries (the “Company”) may come into
possession of material, nonpublic information about the Company, its business or other companies with
which the Company interacts. This information is legally considered the property of the Company. If
you are in possession of any such information in respect of the Company or one or more companies with
which the Company interacts, you may not seek to benefit from it by transacting in any securities of the
Company or such other companies, or passing on the information to others to enable them to benefit.
It is also the policy of the Company to transact in Company securities in compliance with all applicable
securities laws and regulations.
The misuse of material, nonpublic information is contrary to Company policy and U.S. securities laws
and may lead to severe consequences. The purpose of this Insider Trading Policy (this “Policy”) is to
inform you of your legal responsibilities in this area.
What is Insider Trading?
Insider trading, which entails transacting in a security with knowledge of material, nonpublic
information about that security or the issuer of that security, is a crime that may be penalized by civil
fines or reimbursement of amounts unduly received from such trading, and punitive payments of up to
three times the profit gained or loss avoided by such trading, as well as criminal fines of up to
$5,000,000 (USD) and up to 20 years in jail for individuals. Under some circumstances, individuals
convicted of insider trading may be subjected to civil liability in private lawsuits.
In addition to these consequences to the person engaging in insider trading, employers and other
controlling persons (including supervisory personnel) are at risk under U.S. federal law for the actions of
their employees. Controlling persons may, among other things, face major criminal and/or civil penalties
if they recklessly fail to take preventive steps to control insider trading. Even if the Company is not
prosecuted, the fact that a director, officer, employee or contractor of the Company was under
investigation or prosecuted for insider trading could severely damage the reputation of the Company.
Thus, it is important both to you and the Company to prevent the occurrence of insider trading
violations. You should be aware that stock market surveillance techniques designed to identify potential
insider trading transactions have become extremely sophisticated and are being improved all the time.
Insider trading cases have been successfully prosecuted against employees based on their trading
through foreign accounts, trading by their family members and friends, and trading only involving a
small number of shares. The chance that federal authorities or exchange regulators will detect even
small-level trading is significant.
The Insider Trading Laws
As an officer, director, employee (including contract employee) or independent contractor of the
Company, you may not seek to benefit personally by transacting in securities while in possession of
material, nonpublic information. This rule applies to transacting, or your directing others to transact, in
the Company’s securities (whether ordinary shares, preferred shares, convertible securities, stock
options or any other derivative securities that provide the economic equivalent of ownership of any of
the Company’s securities or an opportunity, direct or indirect, to benefit from any change in the value of
the Company’s securities) and in the securities of other companies if you learn something in the course
of your employment or other service relationship with the Company that might affect the value of any
such other company.
2
For instance, if you learned that the Company was about to acquire ABC Corporation prior to a public
announcement, it would almost certainly be an insider trading violation for you to transact in ABC
Corporation's securities as well as the Company’s securities. If you learned something about XYZ
Corporation which was not publicly known while you were working for us on a collaboration with XYZ
Corporation, transacting in XYZ Corporation's securities might well be considered illegal, even if the
information learned was not related to the collaboration. The insider trading rules apply to purchases,
sales and gifts of securities. Sometimes material nonpublic information about the Company or another
company with which the Company is working comes to your attention even though you are not directly
involved in the project. You are nonetheless prohibited from transacting in the Company’s securities or
the securities of such other company.
What is “Material” Information?
“Material” information is information that a typical investor would likely consider significant. There is
no fixed quantitative threshold amount for determining materiality; even very small quantitative changes
can be qualitatively material if they would result in a movement in the price of the Company’s ordinary
shares. If you learn something that leads you to want to buy, sell or gift securities, that information could
be considered material. Both positive and negative information may be material. It is important to keep
in mind that material information need not be definitive information; information that something is
likely to happen, or even just that it may happen, can be considered material. Examples of information
that could be potentially material include changes in Company management, threatened litigation,
Company or product performance above or below issued financial guidance, the Company’s
involvement in merger or licensing negotiations (even if the deal has not yet been agreed to), or the
success of a feasibility or clinical study for a development compound. Keep in mind that the U.S.
Securities and Exchange Commission (the “SEC”) takes the view that the mere fact that you are in
possession of the material, nonpublic information is enough to bar you from trading. Therefore, trading
while in possession of material, nonpublic information or tipping this information to others to trade,
even if such trades were not based on such information, is violative of this Policy and the law. If you
have questions as to whether information in your possession may be deemed “material”, you may seek
guidance from the Chief Financial Officer or the Chief Legal Officer or their designees to assist in that
determination. It is important, however, that you bear in mind that the ultimate responsibility for
determining whether you are in possession of material, nonpublic information belongs to you, and that
any advice or action on the part of the Company, the Chief Financial Officer and/or the Chief Legal
Officer or their respective designees, or any other employee or director pursuant to this Policy (or
otherwise) does not in any way constitute legal advice or insulate you from liability under applicable
U.S. securities laws.
What is “Nonpublic” Information?
“Nonpublic” information is any information that is not reasonably accessible to the investing public. To
show that information is public, it is necessary to point to some fact that establishes that the information
has become publicly available, such as the filing of a report with the SEC, the distribution of a press
release through a widely disseminated news or wire service, or by other means that are reasonably
designed to provide broad public access. Before a person who possesses material, nonpublic information
can trade, there must also be adequate time for the market as a whole to absorb the information that has
been disclosed. Once the Company releases information through public channels (for instance, in a press
release or an SEC filing), it may take up to 48 hours for it to be considered broadly disseminated. For
purposes of this Policy, information will be considered public after the close of trading on the second full
trading day following the Company’s public release of the information.
3
Policy
Prohibited Use of Material, Nonpublic Information
When you are in possession of material, nonpublic information about the Company, or about any other
company if such information is gained in the course of your employment or other service relationship
with us, or when you are in a “blackout period” (as described below), you are prohibited from engaging
in any activity that would be considered unlawful trading or tipping under the U.S. securities laws,
whether in the Company’s securities or the securities of another company. These prohibitions extend to
your family members living in the same home as you, family members who do not live in the same
home as you but whose transactions are directed by you or subject to your influence or control and to
any investment fund, trust, retirement plan, partnership, corporation or other entity over which you have
the ability to influence or direct investment decisions concerning securities, and continues whenever and
for as long as you know or are in possession of material, nonpublic information or the blackout period is
in place. You are responsible for ensuring compliance with this Policy by all such persons affiliated with
you. The SEC and federal prosecutors may presume that trading by your family members (including
those that do not live in the same home as you) and friends is based on information you supplied and
may treat any such transactions as if you had traded. There is no exception for small transactions or
transactions that may seem necessary or justifiable for personal financial emergency or hardship.
Tipping Information to Others
Besides your obligation to refrain from trading or having others trade on your behalf while you are in
possession of material, nonpublic information, you are also prohibited from “tipping” others. The concept
of unlawful tipping includes passing on material, nonpublic information to friends, family members or
others under circumstances that suggest that you were trying to help them make a profit or avoid a loss or
enjoy some other benefit. When tipping occurs, both the “tipper” and the “tippee” may be held liable, and
this liability may extend to all those to whom the tippee gives information. Besides being considered a
form of insider trading, tipping is also a serious breach of corporate confidentiality. You should be careful
to avoid discussing confidential information in any place (for instance, at lunch, on public transportation,
on a cell phone in a public place, in elevators, etc.) where such information may be overheard or
intercepted by others. You should exercise care when discussing any material, nonpublic information with
other members of the Company who do not have a “need to know” such information, even though they
are also subject to this Policy, so as to reduce the possibility of leaks.
Transacting in Company Securities
If you want to buy, sell, gift (which term, as used in this Policy, includes charitable donations) or
otherwise transact in any Company securities, you must first determine if you are in possession of
material, nonpublic information. If so, you may not buy, sell, gift or otherwise transact in, or provide such
information to others to transact in, any Company securities, no matter what position you hold with the
Company. This includes the exercise of stock options using cash from the sale of shares to pay the
exercise price (also known as a “cashless exercise”), and bona fide gifts of Company securities. If you are
not sure whether or not you are in possession of material, nonpublic information, you should not buy, sell,
gift or otherwise transact in, or tip others to transact in, any Company securities.
From time to time, the Chief Financial Officer or Chief Legal Officer or their designees may determine
that certain persons within the Company or everyone within the Company may not buy, sell, gift or
otherwise transact in Company securities, also known as a “blackout period.” You will be notified when a
blackout period is in place. A determination by the Chief Financial Officer or Chief Legal Officer or their
designees that no purchases, sales or other transactions may be made is itself deemed to be material,
nonpublic information that should not be discussed outside the Company.
4
Since financial information about the Company can significantly affect trading in the Company’s
securities, all officers, directors, employees (including contract employees) and independent contractors
are subject to a blackout period beginning at the end of the 15th day of the final month of each fiscal
quarter, and ending after the close of trading on the second full trading day following the Company’s
public release of its quarterly or annual financial results or other financial information (the “Quarterly
Blackout Period”). You may not buy, sell, gift or otherwise transact in, or tip others to transact in, any
Company securities or enter into a planned sales program for transactions in Company securities, during
any Quarterly Blackout Period.
The Company may also issue material information to the public at other times, which may result in
additional blackout periods outside of the Quarterly Blackout Periods. In such circumstances, you will be
notified of the applicable blackout period.
Please note that stock options issued by the Company have an expiration date. It is your responsibility to
track the expiration date of any stock options which you have been granted and to plan accordingly if you
wish to exercise such options, whether via a cashless exercise or otherwise.
Transacting in Securities of Other Companies
As previously discussed in this Policy, if you want to transact in any securities (including, without
limitation, common or ordinary shares, preferred shares, convertible securities, or warrants) of a company
that is a corporate partner, a collaborator or a possible acquisition target, or any other company about
which you’ve received information in the course of your employment or other service relationship with
us, you must first determine whether you are in possession of any nonpublic information related to such
company and whether that information is material to that company. If you are not sure whether you are in
possession of material, nonpublic information, you should not buy, sell, gift or otherwise transact in, or tip
others to transact in, any securities of such other company.
Post-Termination Transactions
This Policy continues to apply even after termination of your employment or other service relationship
with the Company. If an individual is in possession of material, nonpublic information received in the
course of their employment or other service relationship with us when their employment or other service
relationship terminates, that individual may not trade in the securities of the company to which such
information relates until that information has become public or is no longer material.
Additional Prohibited Transactions
Officers, directors, employees (including contract employees) and independent contractors are prohibited
from engaging in speculative transactions in the Company’s securities, including by way of the purchase
or sale of “put” or “call” options or other derivative securities directly linked to the Company’s equity;
short sales of the Company’s equity; the use of Company securities as a pledge or as collateral in a margin
account; and trading in straddles, equity swaps, or other hedging transactions directly linked to Company
securities, even if such persons do not possess material, nonpublic information.
Preclearance
To provide assistance in preventing inadvertent insider trading violations and avoiding the appearance of
an improper transaction (which could result, for example, when an employee engages in a trade while
unaware of a pending major Company development) and for purposes of compliance with the reporting
and other disclosure requirements relating to insider transactions, the Company has implemented the
following preclearance policy:
5
•
Members of the Alkermes plc board of directors, management committee and disclosure
committee, “officers” of the Company (as such term is defined in Section 16a-1(f) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and each such officer, a
“Section 16 Reporting Officer”), Company employees in a position of vice president (or
equivalent) or higher, Company employees in the finance, business development, alliance
management, business planning, corporate affairs, investor relations, legal, and certain
employees designated by management in the research and development, commercial and
information technology organizations, must obtain preclearance from the Chief Financial
Officer or Chief Legal Officer or their designees before they may transact in Company
securities, which, for the avoidance of doubt, also includes gifting Company securities
(whether directly or through a donor advised fund), even if no blackout period is in effect such
that the “window” for trading in Company securities is then open and transactions in Company
securities would otherwise be allowed under this Policy.
•
Additionally, from time to time, certain additional individuals may be exposed to material,
nonpublic information because of their job or other relationship with the Company and shall be
required to seek preclearance from the Chief Financial Officer or Chief Legal Officer or their
designees before transacting in any Company securities.
•
A list of individuals requiring preclearance by the Chief Financial Officer or Chief Legal
Officer or their designees will be periodically generated by the Company's Legal department
and communicated to the employees on the list (the “Preclearance List”).
Be advised that preclearance from the Chief Financial Officer or Chief Legal Officer or their designees
does not constitute legal advice, does not constitute confirmation that you do not possess material,
nonpublic information and does not relieve you of your obligations under the U.S. securities laws; it is a
safeguard that the Company has put in place to help protect you and the Company.
If you are an individual who requires preclearance and you are contemplating a transaction in the
Company’s securities, you should contact the Company's Legal department at least two business days in
advance by sending your preclearance request or any related inquiries to
preclearancerequest@alkermes.com.
You are responsible for ensuring that you do not have material, nonpublic information about the
Company, or about other companies if you learn something in the course of your employment or other
service relationship with the Company that might affect the value of any such other company, before
engaging in a transaction involving such company’s securities and that you comply with any and all
other legal obligations. Therefore, before you make a request for preclearance, you should carefully
consider whether you are aware of any material, nonpublic information and should describe fully any
relevant circumstances in your preclearance request. The Chief Financial Officer or Chief Legal Officer
or their designees are under no obligation to approve any trade request submitted for preclearance.
If you are precleared to trade, your transaction must be executed within 48 hours after receiving
preclearance approval and, even if so precleared, may not be executed if you acquire material, nonpublic
information after preclearance approval and before executing the trade. If the transaction does not take
place during that permitted time, you must re-request preclearance for the proposed transaction through
the same process.
6
Special Types of Permitted Transactions
C ash Exercises of Stock Options
This Policy does not apply to an exercise of stock options when payment of the exercise price is made
entirely in cash. However, this Policy does apply to any shares acquired through an option exercise
made entirely in cash, and you may not sell any of those acquired shares for so long as you are in
possession of material, nonpublic information. This Policy also applies to the use of Company shares to
constitute part, or all, of the exercise price of a stock option (referred to as a “cashless exercise” of a
stock option), or any other market sale for the purpose of generating the cash needed to pay the exercise
price of a stock option. No matter how you exercise or otherwise acquire Company securities, during
your employment or other service relationship with the Company, you may only sell Company
securities, including those obtained through a stock option exercise, at the times outlined in this Policy.
Restricted Stock Unit Awards (“RSUs”)
This Policy does not apply to the vesting of RSUs, or to the Company’s withholding of shares upon
vesting of RSUs to satisfy tax withholding requirements.
Planned Sales Programs under Rule 10b5-1
Entry into a trading plan, arrangement or instruction that meets the requirements of Rule 10b5-1 of the
Exchange Act (a “Rule 10b5-1 Plan” or a “Plan”) enables you to trade in Company securities outside of
our open trading windows, even when in possession of material, nonpublic information.
If you are a member of the Alkermes plc board of directors, management committee or disclosure
committee, a Section 16 Reporting Officer, or a member of one of the functions listed above that are
subject to preclearance, the Company strongly encourages you to transact in the Company’s securities
under a Rule 10b5-1 Plan. In addition, if you routinely have access to material, nonpublic information as
part of your responsibilities with the Company, you may find a Rule 10b5-1 Plan to be useful as well.
Members of the Alkermes plc board of directors and Section 16 Reporting Officers should also be
mindful of their respective share ownership and/or holding requirements under the Alkermes plc
Amended and Restated Share Ownership and Holding Guidelines when considering establishing a Rule
10b5-1 Plan or any other transaction in the Company’s securities.
If you intend to trade pursuant to a Rule 10b5-1 Plan, such plan, arrangement or instruction must:
•
satisfy the requirements of Rule 10b5-1;
•
be documented in writing and include a written representation by you that you are not aware of
any material nonpublic information concerning the Company and that you are adopting the
Plan in good faith and not as part of a plan or scheme to evade the prohibitions of Section 10(b)
and Rule 10b-5 of the Exchange Act;
•
be entered into during an open trading window (in accordance with this Policy) and at a time
when you do not possess material, nonpublic information about the Company; and
•
be pre-approved by the Chief Financial Officer or the Chief Legal Officer or their designees.
In order to satisfy Rule 10b5-1, all Rule 10b5-1 Plans are subject to a mandatory cooling off period
(consisting of at least 30 days or more under certain circumstances for employees other than Section 16
Reporting Officers and at least 90 days or more under certain circumstances for Section 16 Reporting
Officers and members of the Alkermes plc board of directors) prior to the date of the first planned sale
or other transaction under such Plan. All Rule 10b5-1 Plans must also adhere to certain prescribed
limitations on the number and nature of Plans that may be in effect at a given time (e.g., minimum
7
number of trades requirement, term limitations) and such other Plan parameters as the Chief Financial
Officer or the Chief Legal Officer or their designees deem to be in the best interests of the Company.
Modifications to, or terminations of, Rule 10b5-1 Plans are highly discouraged and require the approval
of the Chief Financial Officer or the Chief Legal Officer or their designees. If you are a director or a
Section 16 Reporting Officer, the Company will be required to disclose any adoption, modification or
termination of a 10b5-1 Plan by you and certain details relating to such Plan in its periodic reports filed
with the SEC. Any questions in respect of a Rule 10b5-1 Plan, requests for approval of entry into,
modification or termination of a Rule 10b5-1 Plan or the required disclosure relating to such Plans,
should be submitted to preclearancerequest@alkermes.com.
Transactions effected pursuant to a pre-approved and executed Rule 10b5-1 Plan will not be subject to the
Company’s blackout periods or other preclearance procedures.
Investing in Mutual Funds
You may invest in any mutual fund which invests in the Company’s securities or the securities of any
company with which the Company has a relationship without regard to this Policy.
Reports of purchases, sales and gifts for Board members and Section 16 Reporting Officers
If you are a member of the Alkermes plc board of directors or a Section 16 Reporting Officer, keep in
mind the various restrictions on securities transactions imposed under Section 16 of the Exchange Act
and the corresponding reporting requirements. You must immediately report to the Chief Financial
Officer or the Chief Legal Officer or their designees all transactions made in the Company’s securities
by you, any family member, and any trusts or entities that you control, including gifts and cash exercises
of stock options. The Company requires same-day reporting to it of any such transaction due to SEC
requirements that certain insider reports be filed with the SEC by the second day after the date on which
a reportable transaction occurs. In addition, you must comply with the preclearance procedures set forth
above in respect of any such transactions.
Disclosure of Confidential Information
The confidentiality of all material, nonpublic information that you learn while working at the Company
(whether or not such information is about the Company) must be strictly maintained within the
Company. Only certain executive officers and certain members of the Corporate Affairs and Investor
Relations departments are authorized to disclose material, nonpublic information about the Company to
the public, members of the investment community (including analysts), or to shareholders, unless one of
these executive officers expressly authorizes disclosure by another employee in advance.
In addition, with advances in electronic communications and the corresponding increased use of the
Internet, email communications, social networking sites, video sharing websites, electronic bulletin
boards, chat rooms and blogs, electronic discussions about companies and their business prospects
(collectively, “Electronic and Social Media”) have become common. Inappropriate communications
disseminated on the Internet may pose an inherently greater risk due to the size of the audience they can
reach. It is important for Company employees who choose to participate in Electronic and Social Media
to understand what is recommended, expected and required when discussing Company-related topics. In
this context, you are prohibited from sharing any nonpublic information about the Company and from
discussing revenues, future plans, prospects, products or the share price of the Company in any
comments, responses, or postings on any Electronic and Social Media and are subject in all respects to
the Company’s social media policy, available on the Company’s internal intranet.
8
You should not, under any circumstances, recommend or express opinions as to the Company’s
securities or comment on rumors or predictions about the Company, regardless of whether the rumor is
false and whether you think your recommendation, opinion or comment is being made on an anonymous
basis (for example, in any Electronic and Social Media). If you are ever asked a direct question about the
Company or any prevailing rumor about the Company, you should respond that it is Company policy not
to comment on such matters and that any questions should be directed to the Company’s Investor
Relations department or Chief Financial Officer or their designees. This Policy operates in addition to
any other Company policies relating to safeguarding the confidentiality of the Company’s internal,
proprietary information.
Reporting of Violations
If you violate this Policy or any U.S. federal or state laws governing insider trading, or know of any such
violation by any director, officer, employee, or independent contractor of the Company, you must report
the violation immediately to your supervisor, or to the Chief Financial Officer or the Chief Legal Officer
of the Company or their designees. Persons violating this Policy will be subject to disciplinary action
by the Company, up to and including termination.
Modifications
The Company may at any time change this Policy or adopt such other policies or procedures which it
considers appropriate to carry out the purposes of this Policy. A current copy of this Policy is maintained
on the Corporate Governance section of the Investors tab of the Company’s website.
Questions
You are encouraged to ask questions and seek any follow-up information that you may require with
respect to the matters set forth in this Policy. Please direct all questions to
preclearancerequest@alkermes.com.
* * *
Your failure to observe this Policy could lead to significant legal and other consequences, including the
potential termination of your employment or other service relationship with the Company.
Exhibit 21.1
SUBSIDIARIES
Name
Jurisdiction
Alkermes Ireland Holdings Limited
Ireland
Alkermes Pharma 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
Alkermes, Inc.
Pennsylvania
Alkermes US Holdings, Inc.
Delaware
Rodin Therapeutics, Inc.
Delaware
Alkermes Finance LLC
Delaware
Avadel Pharmaceuticals plc
Ireland
Flamel Ireland Limited
Ireland
Avadel Finance Ireland Designated Activity Company
Ireland
Avadel US Holdings, LLC
Delaware
Avadel Management, LLC
Delaware
Avadel CNS Pharmaceuticals, LLC
Delaware
Avadel France Holding SAS
France
Avadel Research SAS
France
Avadel Investment Company Limited
Cayman Islands
Avadel Finance Cayman Limited
Cayman Islands
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We 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, 333-232831, 333-240170, 333-258229, 333-266350, 333-
273456, 333-280984 and 333-289037) of Alkermes plc of our report dated February 25, 2026 relating to the financial
statements and the effectiveness of internal control over financial reporting, which appears in this Form 10‑K.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
February 25, 2026
Exhibit 31.1
CERTIFICATIONS
I, 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 the statements 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 the financial 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 in Exchange 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, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, 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 our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external 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 the effectiveness 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 recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially 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 the registrant'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 are reasonably 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 internal control over financial reporting.
Date: February 25, 2026
/s/ Richard F. Pops
Richard F. Pops
Chairman and Chief Executive Officer
(Principal Executive Officer)
Exhibit 31.2
CERTIFICATIONS
I, Joshua Reed, 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 the statements 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 the financial 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 in Exchange 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, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, 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 our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external 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 the effectiveness 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 recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially 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 the registrant'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 are reasonably 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 internal control over financial reporting.
Date: February 25, 2026
/s/ Joshua Reed
Joshua Reed
Senior Vice President, Chief Financial Officer
(Principal Financial Officer)
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Alkermes plc (the "Company") for the period ended December 31, 2025
as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Richard F. Pops, Chairman and Chief
Executive Officer of the Company, and Joshua Reed, Senior Vice President, Chief Financial Officer of the Company, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-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.
Date: February 25, 2026
/s/ Richard F. Pops
Richard F. Pops
Chairman and Chief Executive Officer
(Principal Executive Officer)
Date: February 25, 2026
/s/ Joshua Reed
Joshua Reed
Senior Vice President, Chief Financial Officer
(Principal Financial Officer)