Benzinga | Nov 9, 2021 11:08AM EST

Alkermes Announces Receipt Of Notices Of Partial Termination From Janssen Pharmaceutica In Respect Of Two License Agreements; Says 'The terminations impact know-how royalties related to sales of long-acting paliperidone products'

Alkermes plc (NASDAQ:ALKS) today announced that it received notices of partial termination (the "Notices") in respect of two license agreements with Janssen Pharmaceutica N.V. ("Janssen"), a subsidiary of Johnson & Johnson and, under these agreements, a licensee and recipient of Alkermes' nanoparticulate formulation technology, known as NanoCrystal(r) technology. The terminations impact know-how royalties related to sales of long-acting paliperidone products, such as INVEGA SUSTENNA(r) and INVEGA TRINZA(r), and other products in the United States. Pursuant to the agreements, the partial termination is to become effective three months from the date of receipt of the Notices. Janssen maintains that it has not utilized, and does not utilize, Alkermes' NanoCrystal technology licensed under the agreements. Alkermes strongly disagrees with Janssen's position and will explore all options at its disposal to enforce its contractual rights and address any unauthorized use of its intellectual property.

"For years, Janssen has highlighted the use of our NanoCrystal(r) technology in its long-acting INVEGA(r) products and has paid us know-how royalties consistent with this fact. We are not aware of any changes that have occurred to these products that would have altered their use of our intellectual property. We will continue our efforts to engage with Janssen to explore if a mutually agreeable resolution can be reached and will consider all options to enforce our contractual and intellectual property rights," said Richard Pops, Chief Executive Officer of Alkermes. "Over the last several years, we have been engineering the business to become less reliant on revenues from partnered products. For the expected growth drivers within our commercial portfolio -- LYBALVI(r), ARISTADA(r), VIVITROL(r) and VUMERITY(r) -- nothing has changed. We are energized by the opportunities in our pipeline and remain focused on advancing the assets that we believe will drive the future growth of the business and value for our shareholders."

"With the exception of VUMERITY, royalty revenue streams have become less core to Alkermes' growth. We had been planning for a wind down of the Janssen royalty payments in the coming years and, while the potential earlier loss of these royalty streams will adversely impact our cash flow over the next few years, our long-term outlook remains unchanged," stated Iain Brown, Chief Financial Officer of Alkermes. "We do not expect any impact on our 2021 financial results related to these events. As we look ahead to 2022, we will incorporate any necessary changes from these developments when we provide our financial expectations for the year in February. We will continue to focus on driving operational efficiencies and managing expenses across the business, and we believe we are well-positioned to advance our business objectives and drive profitable growth in the business in the long-term."