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, 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.

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

The number of the registrant’s ordinary shares, $0.01 par value, outstanding as of April ~~22, 2019~~24, 2020 was ~~156,904,489~~158,739,019 shares.

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 Quarterly Report on Form 10-Q ~~(“Form~~(this “Form 10-Q”) include, without limitation, statements regarding:

Actual results might differ materially from those expressed or implied by these forward-looking ~~statements because these~~statements. These forward-looking statements are subject to risks, assumptions and uncertainties. In light of these risks, assumptions and uncertainties, the forward-looking events discussed in this Form 10-Q might not occur. You are cautioned not to place undue reliance on the forward-looking statements in this Form 10-Q, which speak only as of the date of this Form 10-Q. All subsequent written and oral forward-looking statements concerning the matters addressed in this Form 10-Q 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. ~~In light of these risks, assumptions and uncertainties, the forward-looking events discussed in this Form 10-Q might not occur.~~ For

more information regarding the risks, assumptions and uncertainties of our business, see “Part I, Item 1A—Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 (the “Annual Report”). and “Part II, Item 1A—Risk Factors” in this Form 10-Q.

This Form 10-Q ~~includes~~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. This Form 10-Q also ~~includes~~may include data based on our own internal estimates and research. Our internal estimates and research have not been verified by any independent source and, while we believe the industry publications and third-party research, surveys and studies are reliable, we have not independently verified such data. Such third-party data and our internal estimates and research are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Part I, Item 1A—Risk Factors” in our Annual Report and “Part II, Item 1A—Risk Factors” in ~~subsequent reports filed with the SEC.~~this Form 10-Q. These and other factors could cause our results to differ materially from those expressed in this Form 10-Q.

Alkermes plc (as used in this report, together with our subsidiaries, “Alkermes,” the “Company,” “us,” “we” and “our”) is a fully integrated, global biopharmaceutical company that applies its scientific expertise and proprietary technologies to research, develop and commercialize, both with partners and on its own, pharmaceutical products that are designed to address unmet medical needs of patients in major therapeutic areas. We have a diversified portfolio of ~~commercial drug~~marketed products ~~and a clinical pipeline of product candidates~~ focused on central nervous system (“CNS”) disorders such as ~~schizophrenia, depression,~~ addiction and ~~multiple sclerosis (“MS”),~~schizophrenia and a pipeline of product candidates in the fields of neuroscience and oncology. Except as otherwise suggested by the context, (a) references to “products” or “our products” in this Form 10-Q include our marketed products, marketed products using our proprietary technologies, our product candidates and product candidates ~~using our proprietary technologies, development products and development products~~ using our proprietary technologies, (b) references to the “biopharmaceutical industry” in this Form 10-Q are intended to include reference to the “biotechnology industry” and/or the “pharmaceutical industry” and (c) references to “licensees” in this Form 10-Q ~~to “licensees”~~ are used interchangeably with references to “partners.”

We are the owner of various United States (“U.S.”) federal trademark registrations (“^®”) and other trademarks (“^TM”), including ALKERMES^®, ARISTADA^®, ARISTADA INITIO^®, LinkeRx^®, NanoCrystal^®, and VIVITROL^® ~~and VUMERITY~~^TM.

The following are trademarks of the respective companies listed: AMPYRA^® and FAMPYRA^®—Acorda Therapeutics, Inc. (“Acorda”); ANJESO^TM—Baudax Bio, Inc.; INVEGA SUSTENNA^®, INVEGA TRINZA^®, TREVICTA^®, XEPLION^®, and RISPERDAL CONSTA^®—Johnson & Johnson (or its affiliates); TECFIDERA^®and ~~TECFIDERA~~VUMERITY^®—Biogen MA Inc. (together with its affiliates, “Biogen”); and ZYPREXA^®—Eli Lilly and Company. Other trademarks, trade names and service marks appearing in this Form 10-Q are the property of their respective owners. Solely for convenience, the trademarks and trade names in this Form 10-Q are referred to without the ^® and ^TM 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.

	March 31, 2019	December 31, 2018	March 31, 2020	December 31, 2019
	(In thousands, except share and per share amounts)		(In thousands, except share and per share amounts)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$225,234	$266,762	$176,067	$203,771
Investments—short-term	356,894	272,533	319,927	331,208
Receivables, net	222,811	292,223	246,716	257,086
Contract assets	8,447	8,230	14,199	8,386
Inventory	92,861	90,196	109,314	101,803
Prepaid expenses and other current assets	56,492	53,308	46,361	59,716
Total current assets	962,739	983,252	912,584	961,970
PROPERTY, PLANT AND EQUIPMENT, NET	320,004	309,987	362,539	362,168
INTANGIBLE ASSETS, NET	181,049	191,001	140,915	150,643
RIGHT-OF-USE ASSETS			114,548	12,379
GOODWILL			92,873	92,873
DEFERRED TAX ASSETS			92,781	96,558
INVESTMENTS—LONG-TERM	43,005	80,744	53,744	79,391
GOODWILL	92,873	92,873
CONTINGENT CONSIDERATION	37,600	65,200	39,200	32,400
RIGHT-OF-USE ASSETS	18,010	—
DEFERRED TAX ASSETS	87,605	85,807
OTHER ASSETS	13,651	16,143	16,762	17,021
TOTAL ASSETS	$1,756,536	$1,825,007	$1,825,946	$1,805,403
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$313,969	$333,762	$313,592	$373,037
Operating lease liabilities—short-term			16,595	8,466
Contract liabilities—short-term	2,078	3,169	6,819	6,766
Operating lease liabilities—short-term	8,795	—
Long-term debt—short-term	2,843	2,843	2,843	2,843
Total current liabilities	327,685	339,774	339,849	391,112
LONG-TERM DEBT	275,923	276,465	273,751	274,295
OTHER LONG-TERM LIABILITIES	28,425	27,958
OPERATING LEASE LIABILITIES—LONG-TERM	11,020	—	101,006	5,342
CONTRACT LIABILITIES—LONG-TERM	11,342	9,525	21,156	22,068
OTHER LONG-TERM LIABILITIES			27,166	27,144
Total liabilities	654,395	653,722	762,928	719,961
COMMITMENTS AND CONTINGENT LIABILITIES (Note 14)
COMMITMENTS AND CONTINGENT LIABILITIES (Note 15)
SHAREHOLDERS’ EQUITY:
Preferred shares, par value, $0.01 per share; 50,000,000 shares authorized; zero issued and outstanding at March 31, 2019 and December 31, 2018, respectively	—	—
Ordinary shares, par value, $0.01 per share; 450,000,000 shares authorized; 159,577,874 and 158,180,833 shares issued; 156,885,028 and 155,757,344 shares outstanding at March 31, 2019 and December 31, 2018, respectively	1,593	1,579
Treasury shares, at cost (2,692,846 and 2,423,489 shares at March 31, 2019 and December 31, 2018, respectively)	(117,949)	(108,969)
Preferred shares, par value, $0.01 per share; 50,000,000 shares authorized; 0 issued and outstanding at March 31, 2020 and December 31, 2019, respectively			—	—
Ordinary shares, par value, $0.01 per share; 450,000,000 shares authorized; 161,768,535 and 160,489,888 shares issued; 158,684,803 and 157,779,002 shares outstanding at March 31, 2020 and December 31, 2019, respectively			1,615	1,602
Treasury shares, at cost (3,083,732 and 2,710,886 shares at March 31, 2020 and December 31, 2019, respectively)			(125,669)	(118,386)
Additional paid-in capital	2,502,773	2,467,323	2,609,213	2,586,030
Accumulated other comprehensive loss	(2,510)	(3,280)	(1,499)	(1,816)
Accumulated deficit	(1,281,766)	(1,185,368)	(1,420,642)	(1,381,988)
Total shareholders’ equity	1,102,141	1,171,285	1,063,018	1,085,442
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$1,756,536	$1,825,007	$1,825,946	$1,805,403

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2019			2018			2020			2019
	(In thousands, except per share amounts)						(In thousands, except per share amounts)
REVENUES:
Product sales, net							$	129,726		$	99,481
Manufacturing and royalty revenues	$	108,915		$	114,601			116,251			108,915
Product sales, net		99,481			91,842
Research and development revenue		14,706			18,707			243			14,706
Total revenues		223,102			225,150			246,220			223,102
EXPENSES:
Cost of goods manufactured and sold (exclusive of amortization of acquired intangible assets shown below)		45,361			44,476			47,211			45,361
Research and development		102,570			108,346			93,279			102,570
Selling, general and administrative		141,220			118,147			133,372			141,220
Amortization of acquired intangible assets		9,952			16,069			9,728			9,952
Total expenses		299,103			287,038			283,590			299,103
OPERATING LOSS		(76,001	)		(61,888	)		(37,370	)		(76,001	)
OTHER EXPENSE, NET:
OTHER INCOME (EXPENSE), NET:
Interest income		3,570			1,485			2,760			3,570
Interest expense		(3,500	)		(5,487	)		(2,857	)		(3,500	)
Change in the fair value of contingent consideration		(22,600	)		(1,900	)		6,800			(22,600	)
Other (expense) income, net		(1,721	)		792
Total other expense, net		(24,251	)		(5,110	)
Other expense, net								(658	)		(1,721	)
Total other income (expense), net								6,045			(24,251	)
LOSS BEFORE INCOME TAXES		(100,252	)		(66,998	)		(31,325	)		(100,252	)
INCOME TAX BENEFIT		(3,854	)		(4,493	)
INCOME TAX PROVISION (BENEFIT)								7,329			(3,854	)
NET LOSS	$	(96,398	)	$	(62,505	)	$	(38,654	)	$	(96,398	)
LOSS PER ORDINARY SHARE:
Basic and diluted	$	(0.62	)	$	(0.40	)	$	(0.24	)	$	(0.62	)
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES OUTSTANDING:
Basic and diluted		156,336			154,424			158,095			156,336
COMPREHENSIVE LOSS:
Net loss	$	(96,398	)	$	(62,505	)	$	(38,654	)	$	(96,398	)
Holding gain (loss), net of a tax provision (benefit) of $229 and $(100), respectively		770			(336	)
Unrealized gain, net of a tax provision of $87 and $229, respectively								317			770
COMPREHENSIVE LOSS	$	(95,628	)	$	(62,841	)	$	(38,337	)	$	(95,628	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2019			2018			2020			2019
	(In thousands)						(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(96,398	)	$	(62,505	)	$	(38,654	)	$	(96,398	)
Adjustments to reconcile net loss to cash flows from operating activities:
Depreciation and amortization		19,642			25,722			20,608			19,642
Share-based compensation expense		24,616			20,042			19,813			24,616
Deferred income taxes		(3,225	)		(4,101	)		3,665			(3,225	)
Change in the fair value of contingent consideration		22,600			1,900			(6,800	)		22,600
Loss on debt refinancing		—			2,298
Payment made for debt refinancing		—			(1,840	)
Other non-cash charges		1,116			(75	)		283			1,116
Changes in assets and liabilities:
Receivables		69,411			19,430			10,370			69,411
Contract assets		(217	)		(16,959	)		(5,813	)		(217	)
Inventory		(1,700	)		(431	)		(6,842	)		(1,700	)
Prepaid expenses and other assets		(69	)		890			13,615			(69	)
Right-of-use assets		2,131			—			3,926			2,131
Accounts payable and accrued expenses		(15,888	)		(14,123	)		(51,254	)		(15,888	)
Contract liabilities		725			245			(859	)		725
Operating lease liabilities		(2,297	)		—			(2,378	)		(2,297	)
Other long-term liabilities		1,765			2,669			48			1,765
Cash flows provided by (used in) operating activities		22,212			(26,838	)
Cash flows (used in) provided by operating activities								(40,272	)		22,212
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions of property, plant and equipment		(23,639	)		(18,485	)		(19,799	)		(23,639	)
Proceeds from the sale of equipment		85			324			3			85
Proceeds from contingent consideration		5,000			—			—			5,000
Purchases of investments		(102,127	)		(35,995	)		(27,212	)		(102,127	)
Sales and maturities of investments		55,978			79,500			64,500			55,978
Cash flows (used in) provided by investing activities		(64,703	)		25,344
Cash flows provided by (used in) investing activities								17,492			(64,703	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of ordinary shares under share-based compensation arrangements		10,554			13,164			3,070			10,554
Employee taxes paid related to net share settlement of equity awards		(8,880	)		(15,724	)		(7,283	)		(8,880	)
Principal payments of long-term debt		(711	)		—			(711	)		(711	)
Payment made for debt refinancing		—			(737	)
Cash flows provided by (used in) financing activities		963			(3,297	)
Cash flows (used in) provided by financing activities								(4,924	)		963
NET DECREASE IN CASH AND CASH EQUIVALENTS		(41,528	)		(4,791	)		(27,704	)		(41,528	)
CASH AND CASH EQUIVALENTS—Beginning of period		266,762			191,296			203,771			266,762
CASH AND CASH EQUIVALENTS—End of period	$	225,234		$	186,505		$	176,067		$	225,234
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Non-cash investing and financing activities:
Purchased capital expenditures included in accounts payable and accrued expenses	$	7,850		$	7,516		$	5,242		$	7,850

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

							Accumulated																						Accumulated
					Additional		Other																			Additional			Other
	Ordinary Shares				Paid-In		Comprehensive			Accumulated			Treasury Stock									Ordinary Shares				Paid-In			Comprehensive			Accumulated			Treasury Stock
	Shares		Amount		Capital		Loss			Deficit			Shares			Amount			Total			Shares		Amount		Capital			Loss			Deficit			Shares			Amount			Total
	(In thousands, except share data)																					(In thousands, except share data)
BALANCE — December 31, 2018		158,180,833	$	1,579	$	2,467,323	$	(3,280	)	$	(1,185,368	)		(2,423,489	)	$	(108,969	)	$	1,171,285
BALANCE — December 31, 2019																							160,489,888		1,602		2,586,030			(1,816	)		(1,381,988	)		(2,710,886	)		(118,386	)		1,085,442
Issuance of ordinary shares under employee stock plans		656,352		7		10,547		—			—			—			—			10,554			258,137		3		3,068			—			—			—			—			3,071
Receipt of Alkermes' shares for the exercise of stock options or to satisfy minimum tax withholding obligations related to share-based awards		740,689		7		93		—			—			(269,357	)		(8,980	)		(8,880	)		1,020,510		10		(10	)		—			—			(372,846	)		(7,283	)		(7,283	)
Share-based compensation expense		—		—		24,810		—			—			—			—			24,810			—		—		20,125			—			—			—			—			20,125
Unrealized gain on marketable securities, net of tax provision of $229		—		—		—		770			—			—			—			770
Unrealized gain on marketable securities, net of tax provision of $87																							—		—		—			317			—			—			—			317
Net loss		—		—		—		—			(96,398	)		—			—			(96,398	)		—		—		—			—			(38,654	)		—			—			(38,654	)
BALANCE — March 31, 2019		159,577,874	$	1,593	$	2,502,773	$	(2,510	)	$	(1,281,766	)		(2,692,846	)	$	(117,949	)	$	1,102,141
BALANCE — March 31, 2020																							161,768,535	$	1,615	$	2,609,213		$	(1,499	)	$	(1,420,642	)		(3,083,732	)	$	(125,669	)	$	1,063,018

								Accumulated																					Accumulated
					Additional			Other																			Additional		Other
	Ordinary Shares				Paid-In			Comprehensive			Accumulated			Treasury Stock									Ordinary Shares				Paid-In		Comprehensive			Accumulated			Treasury Stock
	Shares		Amount		Capital			Loss			Deficit			Shares			Amount			Total			Shares		Amount		Capital		Loss			Deficit			Shares			Amount			Total
	(In thousands, except share data)																						(In thousands, except share data)
BALANCE — December 31, 2017		156,057,632	$	1,557	$	2,338,755		$	(3,792	)	$	(1,044,365	)		(2,048,176	)	$	(89,347	)	$	1,202,808
BALANCE — December 31, 2018																								158,180,833	$	1,579	$	2,467,323	$	(3,280	)	$	(1,185,368	)		(2,423,489	)	$	(108,969	)	$	1,171,285
Issuance of ordinary shares under employee stock plans		539,563	6			13,159			—			—			—			—			13,165			656,352	7			10,547		—			—			—			—			10,554
Receipt of Alkermes' shares for the exercise of stock options or to satisfy minimum tax withholding obligations related to share-based awards		716,123	7			(7	)		—			—			(261,159	)		(15,724	)		(15,724	)		740,689	7			93		—			—			(269,357	)		(8,980	)		(8,880	)
Share-based compensation expense		—		—		20,176			—			—			—			—			20,176			—		—		24,810		—			—			—			—			24,810
Unrealized loss on marketable securities, net of tax benefit of $(100)		—		—		—			(337	)		—			—			—			(337	)
Cumulative effect adjustment related to the adoption of new accounting standards		—		—		—			—			(1,692	)		—			—			(1,692	)
Unrealized gain on marketable securities, net of tax provision of $229																								—		—		—		770			—			—			—			770
Net loss		—		—		—			—			(62,505	)		—			—			(62,505	)		—		—		—		—			(96,398	)		—			—			(96,398	)
BALANCE — March 31, 2018		157,313,318	$	1,570	$	2,372,083		$	(4,129	)	$	(1,108,562	)		(2,309,335	)	$	(105,071	)	$	1,155,891
BALANCE — March 31, 2019																								159,577,874	$	1,593	$	2,502,773	$	(2,510	)	$	(1,281,766	)		(2,692,846	)	$	(117,949	)	$	1,102,141

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Alkermes plc ~~(the “Company”)~~ is a fully integrated, global biopharmaceutical company that applies its scientific expertise and proprietary technologies to research, develop and commercialize, both with partners and on its own, pharmaceutical products that are designed to address unmet medical needs of patients in major therapeutic areas. ~~The Company~~Alkermes has a diversified portfolio of ~~commercial drug~~marketed products ~~and a clinical pipeline of product candidates~~ focused on central nervous system ~~(“CNS”)~~ disorders such as ~~schizophrenia, depression,~~ addiction and ~~multiple sclerosis (“MS”),~~schizophrenia and a pipeline of product candidates in the fields of neuroscience and oncology. Headquartered in Dublin, Ireland, the Company has a research and development (“R&D”) center in Waltham, Massachusetts; an R&D and manufacturing facility in Athlone, Ireland; and a manufacturing facility in Wilmington, Ohio.

The accompanying condensed consolidated financial statements of the Company for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 are unaudited and have been prepared on a basis substantially consistent with the audited financial statements for the year ended December 31, ~~2018.~~2019. The year-end condensed consolidated balance sheet data, which is presented for comparative purposes, was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the ~~United States (“~~U.S.”) (commonly referred to as “GAAP”). In the opinion of management, the condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, that are necessary to state fairly the results of operations for the reported periods.

These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of the Company, which are contained in the ~~Company’s~~ Annual ~~Report that has been filed with the SEC.~~Report. The results of the Company’s operations for any interim period are not necessarily indicative of the results of the Company’s operations for any other interim period or for aany full fiscal year.

The condensed consolidated financial statements include the accounts of Alkermes plc and its wholly-owned subsidiaries as disclosed in Note 2, Summary of Significant Accounting Policies, in the “Notes to Consolidated Financial Statements” accompanying the Annual Report. Intercompany accounts and transactions have been eliminated.

The preparation of the Company’s condensed consolidated financial statements in accordance with GAAP requires management to 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 ongoing basis, the Company evaluates its estimates, judgments and methodologies, including those related to revenue ~~recognition~~from contracts with its customers and related allowances, ~~its collaborative relationships, clinical trial expenses, the valuation of inventory,~~ impairment and amortization of intangibles and long-lived assets, share-based compensation, income taxes including the valuation allowance for deferred tax assets, valuation of investments, contingent consideration 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.

The Company operates as ~~one~~1 business segment, which is the business of developing, manufacturing and commercializing medicines. The Company’s chief decision maker, the Chief Executive Officer and Chairman of the ~~Board and Chief Executive Officer,~~Company’s board of directors, reviews the Company’s operating results on an aggregate basis and manages the Company’s operations as a single operating unit.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

In March 2020, COVID-19 was declared a global pandemic by the World Health Organization. To date, COVID-19 has surfaced in nearly all regions around the world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas. The Company is closely monitoring and rapidly responding to the impact of COVID-19 on its employees, communities and business operations. Due to numerous uncertainties surrounding the COVID-19 pandemic, the Company is unable to predict the extent of the impact that the COVID-19 pandemic may have on the Company’s ~~income tax benefit~~future financial condition and operating results. These uncertainties include, among other things, the ultimate severity and duration of the pandemic; governmental, business or other actions that have been, or will be, taken in response to the pandemic, including restrictions on travel and mobility, business closures and imposition of social distancing measures; impacts of the pandemic on the vendors or distribution channels in the Company’s supply chain and on the Company’s ability to continue to manufacture its products; impacts of the pandemic on the conduct of the Company’s clinical trials, including with respect to enrollment rates, availability of investigators and clinical trial sites or monitoring of data; impacts of the pandemic on healthcare systems that serve people living with opioid dependence, alcohol dependence and schizophrenia; impacts of the pandemic on the regulatory agencies with which the Company interacts in the development, review, approval and commercialization of its medicines; impacts of the pandemic on reimbursement for the Company’s products, including the Company’s Medicaid rebate liability, and for services related to the use of its products; and impacts of the pandemic on the U.S., Irish and global economies more broadly.

Despite disruptions to the Company’s business operations and the business operations of third parties on which it relies, the COVID-19 pandemic did not significantly impact the Company’s operating results and financial condition for the three months ended March 31, ~~2019~~2020.

We rely upon third parties for many aspects of our business, including the provision of goods and ~~2018 primarily~~services related to ~~U.S. federal~~the manufacture of our clinical products and ~~state taxes.~~our, and our partners’, marketed products, the conduct of our clinical trials, and the sale of marketed products from which we receive manufacturing and royalty revenue.

The marketed products from which the Company derives revenue, including manufacturing and royalty revenue, are primarily injectable medications administered by healthcare professionals, and given developments that have transpired to date, and may continue to transpire, in response to the pandemic, including the implementation of “shelter-in-place” policies, social distancing and other measures, the Company expects commercial sales of these marketed products to be adversely impacted.

As it relates to its proprietary marketed products, VIVITROL and ARISTADA, the Company has begun to see commercial impacts of the COVID-19 pandemic in the second quarter. As of the date of this Form 10-Q, April VIVITROL shipments are down from pre-COVID-19 expectations, and the Company has seen a flattening in prescription data and factory shipments of ARISTADA. The Company ~~records a deferred tax asset or liability based on~~is actively working to respond to these developments, including by working to increase the ~~difference between the financial statement~~number of providers able to administer these products and ~~tax basis of~~otherwise support uninterrupted access to these products.

The Company continues to operate its ~~assets~~manufacturing facilities and ~~liabilities, as measured by enacted jurisdictional tax rates assumed to be in effect when these differences reverse. At March 31, 2019,~~supply its medicines, and it does not currently anticipate any supply interruptions. While the Company ~~maintained a valuation allowance against~~continues to conduct R&D activities, including its ongoing clinical trials, the COVID-19 pandemic has impacted, and may continue to impact, the timelines of certain of its ~~U.S.~~early-stage discovery efforts and ~~foreign deferred tax assets.~~clinical trials. The Company ~~evaluates, at each reporting period,~~is working with its internal teams, its clinical investigators, R&D vendors and critical supply chain vendors, to continually assess, and mitigate, the ~~need for a valuation allowance~~potential impact of COVID-19 on its ~~deferred tax assets on a jurisdiction-by-jurisdiction basis.~~manufacturing operations and R&D activities.

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“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 ~~guidance~~standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

~~Effective January 1, 2019, the Company adopted the requirements under Accounting Standards Update (“ASU”) 2016-02,~~ ~~Leases~~ (“Topic 842”) using the optional modified retrospective transition method and recognized a cumulative-effect adjustment to the condensed consolidated balance sheet on the date of adoption. Comparative periods have not been restated. Topic 842 was issued in order to increase transparency and comparability among organizations by recognizing right-of-use lease assets and operating lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The main difference between previous GAAP (“Topic 840”) and Topic 842 is the recognition of right-of-use lease assets and lease liabilities by lessees for those leases classified as operating leases under Topic 840. At January 1, 2019, the Company recorded a right-of-use asset of $20.1 million and an operating lease liability of $22.1 million. For additional information regarding how the Company is accounting for leases under Topic 842, refer to Note 9, ~~Leases, in the “Notes to Condensed Consolidated Financial Statements” in this Form 10-Q.~~

In June 2016, the FASB issued ~~ASU~~Accounting Standards Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments, to provide financial statement users with more decision-useful information about the expected

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in this ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This ~~ASU becomes effective~~standard primarily impacts how firms account for credit losses and requires an impairment model, known as the current expected credit loss model, that is based on expected losses rather than incurred losses. Companies are required to carry an allowance for expected credit losses for most debt instruments (except those carried at fair value), trade receivables, lease receivables, reinsurance receivables, financial guarantee contracts and loan commitments. For available-for-sale debt securities with unrealized losses, the standard now requires allowances to be recorded instead of reducing the amortized cost of the investment. The standard limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which the carrying value exceeds fair value and requires the reversal of previous recognized credit losses if fair value increases. The Company’s investment portfolio primarily consists of available-for-sale securities carried at fair value. Further, the Company’s trade receivables do not have abnormally long terms and the Company ~~in the year ending December 31, 2020, with early adoption permitted for the Company in the year ending December 31, 2019.~~has historically rarely written off trade receivables. The Company ~~is currently assessing the impact that~~adopted this ~~ASU will have~~standard on ~~its consolidated financial statements.~~

~~In June 2018, the FASB issued ASU 2018-07,~~ ~~Improvements to Nonemployee Share-Based Payment Accounting~~, which addresses the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation – Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. This ASU became effective for and was adopted by the Company in the year ending December 31, 2019January 1, 2020 and the adoption of ~~the ASU~~this standard did not have ana material impact on ~~its~~the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU ~~2018-14,~~2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which aims to improve the effectiveness of fair value measurement disclosures. The amendments in this ASU modify the disclosure requirements on fair value measurements based on the concepts in FASB Concepts Statement, Conceptual Framework for Financial Reporting - Chapter 8: Notes to Financial Statements, including the consideration of costs and benefits. ~~This ASU becomes effective for the~~The Company ~~in the year ending December 31,~~adopted this standard on January 1, 2020 and ~~early~~the adoption ~~is permitted. The Company is currently assessing~~of this standard did not have any impact on the ~~impact that this ASU will have on its consolidated~~Company’s financial ~~statements.~~statement disclosures.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)~~

In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This ASU also requires the entity to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement, which includes reasonably certain renewals. ~~This ASU becomes effective for the Company in the year ending December 31, 2020 and early adoption is permitted.~~ The Company ~~is currently assessing~~adopted this standard on January 1, 2020 using the ~~impact that this ASU will have on its consolidated financial statements.~~prospective transition method, whereby it applied the requirements to any eligible costs incurred after adoption. The Company did not incur any material eligible costs during the three months ended March 31, 2020.

In ~~November 2018,~~December 2019, the FASB issued ASU ~~2018-18,~~2019-12, ~~Clarifying~~Simplifying the ~~Interaction Between Topic 808 and Topic 606~~Accounting for Income Taxes, which ~~clarifies when~~simplifies the accounting for income taxes by removing certain exceptions to the general principles of Accounting Standards Codification (“ASC”) 740, Income Taxes (“Topic 740”). The amendments also improve consistent application of, and simplify, GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The Company adopted this standard on January 1, 2020 and the adoption of this standard had no material impact on the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform, which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. This amendment applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions ~~between participants in a collaborative arrangement are within the scope~~that reference LIBOR or another reference rate expected to be discontinued because of ~~the FASB’s revenue standard, Topic 606.~~reference rate reform. This ASU ~~becomes~~is effective ~~for the Company in the year ending~~immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, ~~2020 and early adoption is permitted.~~2022. The Company is currently assessing the impact that this ASU will have on its consolidated financial statements.

Under FASB ASC 606, Revenue from Contracts with Customers (“Topic ~~606,~~606”), the Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company recognizes revenues following the five-step model prescribed under Topic 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract(s); (iii) determine the transaction price; (iv) allocate the transaction price to the performance

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

obligation(s) in the contract(s); and (v) recognize revenues when (or as) the Company satisfies the performance obligation(s).

~~During the three months ended March 31, 2019 and 2018, the Company recorded manufacturing and royalty revenues as follows:~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)~~

The Company’s product sales, net consist of sales of VIVITROL and ARISTADA (together with ARISTADA INITIO) in the U.S., primarily to wholesalers, specialty distributors and specialty 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.

During the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, the Company recorded product sales, net, as follows:

During the three months ended March 31, 2020 and 2019, the Company recorded manufacturing and royalty revenues as follows:

The Company recorded ~~research and development (“~~R~~&D”)~~&D revenue of ~~$13.9~~$0.2 million and ~~$17.5~~$14.7 million during the three months ended March 31, 2020 and 2019, respectively, of which $0.1 million and ~~2018,~~$13.9 million, respectively, related to its license and collaboration agreement with Biogen for ~~Diroximel fumarate (“BIIB098”).~~VUMERITY. The Company expects to earn an additional ~~$77.6~~$0.4 million in R&D revenue under this agreement with Biogen through ~~2021.~~the end of 2020.

Contract Assets——Contract assets include unbilled amounts resulting from sales under certain of the Company’s ~~manufacturing~~ contracts where revenue is recognized over time. ~~The products included~~Total contract assets as of March 31, 2020 include $14.2 million of assets that are classified as “Current assets” in the ~~contract assets table below complete the~~accompanying condensed consolidated balance sheet, as they related to manufacturing ~~process~~processes that are completed in ten days to eight ~~weeks. Contract assets are~~weeks, and $5.0 million that is classified as ~~current.~~

~~Contract assets consisted~~“Other assets” in the accompanying condensed consolidated balance sheet, as it consists of consideration from the ~~following:~~

~~Contract Liabilities—Contract liabilities consist of contractual obligations~~Company’s collaboration with Biogen related to ~~deferred revenue.~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

Gross Unrealized

Losses

Amortized

Less than

Greater than

Estimated

March 31, 2019

Cost

Gains

One Year

One Year

Fair Value

Short-term investments:

Available-for-sale securities:

Corporate debt securities

$
156,443

$
349

$
(11
)

$
(149
)

$
156,632

U.S. government and agency debt securities

108,113

257

(4
)

(45
)

108,321

International government agency debt securities

91,818

193

—

(70
)

91,941

Total short-term investments

356,374

799

(15
)

(264
)

356,894

Long-term investments:

Available-for-sale securities:

Corporate debt securities

28,570

—

(84
)

(45
)

28,441

U.S. government and agency debt securities

10,984

—

(4
)

(5
)

10,975

39,554

—

(88
)

(50
)

$
39,416

Held-to-maturity securities:

Certificates of deposit

1,820

—

—

—

1,820

Fixed term deposit account

1,667

102

—

—

1,769

3,487

102

—

—

3,589

Total long-term investments

43,041

102

(88
)

(50
)

43,005

Total investments

399,415

901

(103
)

(314
)

399,899

December 31, 2018

Short-term investments:

Available-for-sale securities:

Corporate debt securities

$
120,197

$
57

$
(62
)

$
(274
)

$
119,918

U.S. government and agency debt securities

80,055

115

(11
)

(87
)

80,072

International government agency debt securities

72,091

85

(8
)

(117
)

72,051

272,343

257

(81
)

(478
)

272,041

Held-to-maturity securities:

Corporate debt securities

492

—

—

—

492

Total short-term investments

272,835

257

(81
)

(478
)

272,533

Long-term investments:

Available-for-sale securities:

Corporate debt securities

53,505

—

(185
)

(93
)

$
53,227

U.S. government and agency debt securities

18,474

—

(21
)

(12
)

18,441

International government agency debt securities

5,457

—

(4
)

—

5,453

77,436

—

(210
)

(105
)

77,121

Held-to-maturity securities:

Certificates of deposit

1,820

—

—

—

1,820

Fixed term deposit account

1,667

136

—

—

1,803

3,487

136

—

—

3,623

Total long-term investments

80,923

136

(210
)

(105
)

80,744

Total investments

$
353,758

$
393

$
(291
)

$
(583
)

$
353,277

(In thousands)	Contract Assets
Contract assets at December 31, 2019	$	13,386
Additions		14,146
Transferred to receivables, net		(8,333	)
Contract assets at March 31, 2020	$	19,199

~~The proceeds from the sales and maturities~~Contract Liabilities—Contract liabilities consist of ~~marketable securities, which were identified using the specific identification method and were primarily reinvested,~~contractual obligations related to deferred revenue.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

~~The Company’s available-for-sale and held-to-maturity securities at March 31, 2019 had contractual maturities in~~4. INVESTMENTS

Available-for-sale

Held-to-maturity

Amortized

Estimated

Amortized

Estimated

(In thousands)

Cost

Fair Value

Cost

Fair Value

Within 1 year

$
213,318

$
213,172

$
1,820

$
1,820

After 1 year through 5 years

182,610

183,138

1,667

1,769

Total

$
395,928

$
396,310

$
3,487

$
3,589

			Gross Unrealized
					Losses
	Amortized				Less than			Greater than			Estimated
March 31, 2020	Cost		Gains		One Year			One Year			Fair Value
Short-term investments:
Available-for-sale securities:
Corporate debt securities	$	136,494	$	450	$	(270	)	$	—		$	136,674
U.S. government and agency debt securities		103,418		1,232		—			(1	)		104,649
International government agency debt securities		77,627		977		—			—			78,604
Total short-term investments		317,539		2,659		(270	)		(1	)		319,927
Long-term investments:
Available-for-sale securities:
Corporate debt securities		45,899		—		(701	)		(1	)		45,197
International government agency debt securities		5,011		—		(9	)		—			5,002
		50,910		—		(710	)		(1	)		50,199
Held-to-maturity securities:
Certificates of deposit		1,820		—		—			—			1,820
Fixed term deposit account		1,667		58		—			—			1,725
		3,487		58		—			—			3,545
Total long-term investments		54,397		58		(710	)		(1	)		53,744
Total investments	$	371,936	$	2,717	$	(980	)	$	(2	)	$	373,671

December 31, 2019
Short-term investments:
Available-for-sale securities:
Corporate debt securities	$	144,161	$	676	$	—		$	—		$	144,837
U.S. government and agency debt securities		112,948		434		(1	)		(1	)		113,380
International government agency debt securities		72,753		248		(10	)		—			72,991
Total short-term investments		329,862		1,358		(11	)		(1	)		331,208
Long-term investments:
Available-for-sale securities:
Corporate debt securities		51,070		—		(45	)		(7	)		51,018
International government agency debt securities		20,806		—		(18	)		—			20,788
U.S. government and agency debt securities		4,000		—		(4	)		—			3,996
		75,876		—		(67	)		(7	)		75,802
Held-to-maturity securities:
Certificates of deposit		1,820		—		—			—			1,820
Fixed term deposit account		1,667		102		—			—			1,769
		3,487		102		—			—			3,589
Total long-term investments		79,363		102		(67	)		(7	)		79,391
Total investments	$	409,225	$	1,460	$	(78	)	$	(8	)	$	410,599

At March 31, ~~2019,~~2020, the Company believed that the unrealized losses on its available-for-sale investments were ~~temporary.~~temporary and were not due to credit losses. The investments with unrealized losses consisted primarily of corporate debt securities. In making the determination that the decline in fair value of these securities was temporary, the Company considered various factors, including, but not limited to: the length of time each security was in an unrealized loss position; the extent to which fair value was less than cost; financial condition and near-term prospects of the ~~issuers;~~issuers of the securities; the Company’s intent not to sell these securities; and the assessment that it is more likely than not that the Company would not be required to sell these securities before the recovery of their amortized cost basis.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

The proceeds from the ~~Company entered into an agreement whereby it is committed to provide up to €7.4 million to a partnership, Fountain Healthcare Partners II, L.P.~~sales and maturities of ~~Ireland (“Fountain”),~~marketable securities, which ~~was created to carry on~~were identified using the ~~business of investing exclusively in companies~~specific identification method and ~~businesses engaged in the healthcare, pharmaceutical and life sciences sectors. As of March 31, 2019, the Company’s total contribution in Fountain was equal to €5.5 million.~~ were primarily reinvested, were as follows:

The Company’s commitment represents approximately 7% of the partnership’s total funding. The Company is accounting for its investment in Fountain under the equity method. During the three months ended March 31, 2019available-for-sale and ~~2018, the Company recorded a decrease in its investment in Fountain of less than $0.1 million.~~ ~~The changes recorded~~ ~~represent the Company’s proportional share of Fountain’s net losses for these periods. The Company’s $5.6~~ ~~million and $5.5 million net investment in Fountain~~held-to-maturity securities at March 31, ~~2019 and December 31, 2018, respectively, was included within “Other assets”~~2020 had contractual maturities in the ~~accompanying condensed consolidated balance sheets.~~following periods:

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 of the valuation techniques the Company utilized to determine such fair value:

	March 31,								March 31,
(In thousands)	2019		Level 1		Level 2		Level 3		2020		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	62,556	$	62,556	$	—	$	—	$	5,950	$	5,950	$	—	$	—
U.S. government and agency debt securities		119,296		68,704		50,592		—		104,649		60,565		44,084		—
Corporate debt securities		185,073		—		185,073		—		181,871		—		179,918		1,953
International government agency debt securities		91,941		—		91,941		—		83,606		—		83,606		—
Contingent consideration		37,600		—		—		37,600		39,200		—		—		39,200
Common stock warrants		772		—		—		772
Total	$	497,238	$	131,260	$	327,606	$	38,372	$	415,276	$	66,515	$	307,608	$	41,153

	December 31,								December 31,
	2018		Level 1		Level 2		Level 3		2019		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	54,590	$	54,590	$	—	$	—	$	8,064	$	8,064	$	—	$	—
U.S. government and agency debt securities		98,513		60,107		38,406		—		117,376		73,795		43,581		—
Corporate debt securities		173,637		—		173,145		492		195,855		—		193,902		1,953
International government agency debt securities		77,504		—		77,504		—		93,779		—		93,779		—
Contingent consideration		65,200		—		—		65,200		32,400		—		—		32,400
Common stock warrants		1,205		—		—		1,205
Total	$	470,649	$	114,697	$	289,055	$	66,897	$	447,474	$	81,859	$	331,262	$	34,353

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)~~

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 no0 transfers of any securities between the fair value hierarchies during the three months ended March 31, ~~2019.~~2020. The following table is a rollforward of the fair value of the Company’s assets whose fair values were determined using Level 3 inputs at March 31, ~~2019:~~2020:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

The Company’s investments in U.S. government and agency debt securities, international 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.

The Company’s contingent consideration relates to the ~~divestiture~~Company’s sale in April 2015 of its Gainesville, GA manufacturing facility, ~~in March 2015 (the “Gainesville Transaction”). On December 20, 2018,~~ the ~~Company entered into a Second Amendment~~related manufacturing and royalty revenue associated with certain products manufactured at the facility, and the rights to the Purchase and Sale Agreement (“Purchase and Sale Agreement Amendment”) with Recro Pharma, Inc. (“Recro”), pursuant to which the Company received one $5.0 million payment in the first quarter of 2019 and will receive another $5.0 million payment in the second quarter of 2019; the Company is eligible to receive low double-digit royalties on net sales of IV/IM and parenteral forms of Meloxicam (collectively, the “Gainesville Transaction”) to Recro Pharma, Inc. (“Recro”) and ~~any other Meloxicam Product(s); and is eligible~~Recro Pharma LLC. As part of the Gainesville Transaction, the Company obtained rights to receive ~~up to $130.0 million in milestone~~contingent payments upon the achievement by Meloxicam products of certain regulatory and sales milestones ~~related~~and royalties on future net sales of Meloxicam products. Additional details regarding the Gainesville Transaction can be found in Note 5, Fair Value, in the Notes to Consolidated Financial Statements in the ~~Meloxicam Products.~~Annual Report.

In ~~accordance with the accounting standard for fair value measurements, the Company’s contingent consideration has been classified as~~November 2019, Recro completed a ~~Level 3 asset as~~spin out of its ~~fair value is based on significant inputs not observable in the market. The fair value~~acute care segment into a new entity named Baudax Bio, Inc. (“Baudax”), a publicly traded pharmaceutical company. As part of this transaction, Recro’s obligations to pay certain of the contingent consideration ~~at March 31, 2019~~from the Gainesville Transaction were assigned and/or transferred to Baudax.

On February 20, 2020, ANJESO (formerly referred to as Meloxicam IV/IM), was ~~determined as follows:~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)~~

Significant judgment was employed in determining the appropriateness of these assumptions at the acquisition date and for each subsequent period. Accordingly, changes in assumptions described above could have a material impact on the increase or decrease in the fair value of contingent consideration recorded in any given period.

~~In March 2019, Recro received a second complete response letter (“CRL”) from~~ the U.S. Food and Drug Administration ~~(“FDA”~~(the “FDA”) regarding its NDA for IV Meloxicam. As a result of Recro’s receipt of this second CRL, the Company delayed its anticipated date for the FDA’s approval of the IV Meloxicam NDA and reduced the probability of success and amount of forecasted sales due to this delay in our valuation model.. At March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company determined that the value of the contingent consideration related to the Gainesville Transaction was ~~$37.6~~$39.2 million and ~~$65.2~~$32.4 million, respectively. The Company recorded an increase of $6.8 million and a decrease of $22.6 ~~million and $1.9~~ million during the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively, within “Change in the fair value of contingent consideration” in the accompanying condensed consolidated statements of operations and comprehensive loss. The fair value of the contingent consideration was developed using the same valuation approaches as described in Note 5, Fair Value, in the Notes to Consolidated Financial Statements in the Annual Report, using a discount rate of 19% in all three valuation approaches at March 31, 2020 as compared to a discount rate of 16% in all three valuation approaches at December 31, 2019.

The carrying amounts reflected in the ~~condensed~~ consolidated balance sheets for cash and cash equivalents, accounts receivable, contract assets, other current assets, accounts payable and accrued expenses approximate fair value due to their short-term nature.

The estimated fair value of the Company’s long-term debt under the amended and restated credit agreement (such debt, the “2023 Term Loans”), which was based on quoted market price indications (Level 2 in the fair value hierarchy) and which may not be representative of actual values that could have been, or will be, realized in the future, was $243.0 million and $277.9 million at March 31, 2020 and December 31, 2019, respectively. Please refer to Note 11, Long-Term Debt within these “Notes to Condensed Consolidated Financial Statements” in this Form 10-Q for additional information.

Inventory is stated at the lower of cost and net realizable value. Cost is determined using the first-in, first-out method. Inventory consisted of the following:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

Based on the Company’s most recent analysis, amortization of intangible assets included within its condensed consolidated balance sheet at March 31, ~~2019~~2020 is expected to be approximately $40.0 million, $40.0 million, ~~$40.0~~$35.0 million, $35.0 million and ~~$35.0~~$1.0 million in the years ending December 31, ~~2019~~2020 through ~~2023,~~2024, respectively. Although the Company believes such available information and assumptions are reasonable, given the inherent risks and uncertainties underlying its expectations regarding such future revenues, there is the potential for the Company’s actual results to vary significantly from such expectations. If revenues are projected to change, the related amortization of the intangible assets will change in proportion to the change in revenues.

~~The Company adopted Topic 842 on January 1, 2019. Topic 842 allows~~In March 2018, the Company ~~to elect~~entered into a ~~package of practical expedients, which include: (i) an entity need not reassess whether any expired or existing contracts are or contain leases; (ii) an entity need not reassess the~~ lease ~~classification~~agreement for any expired or existing leases; and (iii) an entity need not reassess any initial direct costs for any existing leases. Another practical expedient allows the Company to use hindsight in determining the lease term when considering lessee options to extend or terminate the lease and to purchase the underlying asset. The Company has elected to utilize this package of practical expedients and has not elected the hindsight methodology in its implementation of Topic 842.

The Company elected to adopt this standard using the optional modified retrospective transition method and recognized a cumulative-effect adjustment to the condensed consolidated balance sheet on the date of adoption. Comparative periods have not been restated. With the adoption of Topic 842~~, the Company’s condensed consolidated balance sheet now contains the following line items: Right-of-use assets, Operating lease liabilities—short-term and Operating lease liabilities—long-term.~~

~~The Company determined that it held the following significant operating leases~~approximately 220,000 square feet of office and laboratory space asat 900 Winter Street, Waltham, Massachusetts (“900 Winter Street”). The initial term of the operating lease for 900 Winter Street commenced on January ~~1, 2019:~~

20, 2020 and expires in 2035, with an option to extend for an additional 10 years. The Company ~~also has two additional operating leases that are included~~did not assume this option would be exercised in the calculation of its right-of-use asset and lease ~~accounting but are not considered significant.~~liability amounts.

The Company has ~~elected~~determined that the identified operating lease did not contain non-lease components and required no further allocation of the total lease cost. Additionally, the agreement in place did not contain information to ~~not recognize right-of-use assets~~determine the rate implicit in the lease.

At March 31, 2020, the weighted average incremental borrowing rate and the weighted average remaining lease term for all operating leases held by the Company were 5.55% and 14.2 years, respectively. During the three months ended March 31, 2020 and 2019, cash paid for amounts included for the measurement of lease liabilities ~~arising from short-term leases, which are leases that, at~~was $2.4 million and $2.3 million, respectively, and the ~~commencement date, have a~~Company recorded operating lease ~~term~~expense of ~~12 months or less~~$3.9 million and ~~do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise.~~$2.1 million, respectively.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

As all the existing leases subject to the new lease standard were previously classified as operating leases by the Company, they were similarly classified as operating leases under the new standard. The Company has determined that the identified operating leases did not contain non-lease components and require no further allocation of the total lease cost. Additionally, the agreements in place did not contain information to determine the rate implicit in the leases. As such, the Company calculated the incremental borrowing rate based on the assumed remaining lease term for each lease in order to calculate the present value of the remaining lease payments. At March 31, 2019, the weighted average incremental borrowing rate and the weighted average remaining lease term for the operating leases held by the Company were 4.46% and 4.1 years, respectively.

As of March 31, 2019, right-of-use assets and liabilities arising from operating leases were $18.0 million and $19.8 million, respectively. During the three months ended March 31, 2019, cash paid for amounts included for the measurement of lease liabilities was $2.3 million and the Company recorded operating lease expense of $2.1 million.

Future lease payments under non-cancelable leases as of March 31, ~~2019~~2020 and December 31, ~~2018:~~2019 consisted of the following:

In March 2018, the Company entered into a lease agreement for approximately 220,000 square feet of office and laboratory space located in a building that is being built at 900 Winter Street, Waltham, Massachusetts (“900 Winter Street”). The Company plans to occupy the premises in early 2020. The initial term of the lease shall commence on the earlier of: (i) the Delivery Date (defined as (a) the later of January 20, 2020, or (b) the date on which the landlord substantially completes its work in accordance with the terms of the lease), or (ii) the date the Company enters into possession of all or any substantial portion of 900 Winter Street for the conduct of its business (the “Commencement Date”). The initial lease term expires on the last day of the calendar month in which the fifteenth (15^th~~) anniversary of the Commencement Date occurs, with an option to extend for an additional ten (10) years.~~

~~As the Company (a) does~~ not have the right to obtain or control the leased premises during the construction period; (b) does not have the right of payment for the partially constructed assets and, thus, could be potentially leased to another tenant; and (c) does not legally own or control the land on which the property improvements are being constructed, it was not included as a right-of-use asset at March 31, 2019. Additionally, the future lease payments, outlined above, included the 900 Winter Street payments as of December 31, 2018; these payments are not included in the table under Topic 842.

The 2023 Term Loans have a due date of March 26, 2023 and interest payable of LIBOR plus 2.25% with a LIBOR floor of 0%. As of March 31, 2020, the Company was in compliance with its debt covenants.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

In March 2018, the Company amended and refinanced its existing term loan, referred to as Term Loan B-1 (as so amended and refinanced, the “2023 Term Loans”), in order to, among other things, extend the due date of the loan from September 25, 2021 to March 26, 2023, reduce the interest payable from LIBOR plus 2.75% with a LIBOR floor of 0.75% to ~~LIBOR~~ ~~plus~~ ~~2.25% with a~~ 0~~% LIBOR floor and increase covenant flexibility (the “Refinancing”).~~12. SHARE-BASED COMPENSATION

The Refinancing involved multiple lenders who were considered members of a loan syndicate. In determining whether the Refinancing was to be accounted for as a debt extinguishment or a debt modification, the Company considered whether creditors remained the same or changed and whether the changes in debt terms were substantial. A changefollowing table presents share-based compensation expense included in the debt terms was considered to be substantial if the present value of the remaining cash flows under the new terms of the 2023 Term Loans was at least 10% different from the present value of the remaining cash flows under the former Term Loan B-1 (commonly referred to as the “10% Test”). The Company performed a separate 10% Test for each individual creditor participating in the loan syndication. With the exception of one lender, who owned 1% of the total outstanding principal amount of Term Loan B-1 at the date of the Refinancing and was accounted for as a debt extinguishment, the Refinancing was accounted for as a debt modification.

~~The Refinancing resulted in a $2.3 million charge in the three months ended March 31, 2018, which was included in “Interest expense” in the accompanying~~Company’s condensed consolidated ~~statement~~statements of operations and comprehensive ~~loss.~~

~~The estimated fair value of the 2023 Term Loans, which was based on quoted market price indications (Level 2 in the fair value hierarchy, as described in Note 5,~~ ~~Fair Value Measurements~~, above) and which may not be representative of actual values that could have been, or will be, realized in the future, was $277.5 million and $274.7 million at March 31, 2019 and December 31, 2018, respectively.

At March 31, ~~2019~~2020 and December 31, ~~2018, $2.9~~2019, $1.8 million and ~~$2.7~~$1.5 million, respectively, of share-based compensation ~~cost~~expense was capitalized and recorded as “Inventory” in the accompanying condensed consolidated balance sheets.

In February 2017, the compensation committee of the Company’s board of directors approved awards of restricted stock units (“RSUs”) to all employees employed by the Company during 2017, in each case subject to vesting on the achievement of ~~the following~~three specified performance criteria: (i) FDA approval of the NDA for ALKS 5461, (ii) the achievement of the pre-specified primary efficacy endpoints in each of two phase 3 studies of ALKS 3831, and (iii) revenues equal to or greater than a pre-specified amount for the year ending December 31, 2019. These performance criteria ~~are being assessed~~ over a performance period of three years from the date of the grant.

In December 2018, the Company achieved ~~the pre-specified primary efficacy endpoints on its second~~one of the ~~two phase 3 studies of ALKS 3831,~~three performance criteria, resulting in the vesting of a portion of the performance-based RSUs and the recognition

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)~~

of $17.1 million in share-based compensation expense related to these awards. ~~The~~Of this expense, the Company recognized $2.1 million, $6.7 million and $8.3 million ~~of this expense~~ in cost of goods manufactured and ~~sold;~~sold, R&D ~~expense;~~expense and selling, general and administrative (“SG&A&A”) expense, respectively.

AtDuring the three months ended March 31, ~~2019, there was $33.2 million~~2020, the compensation committee of ~~unrecognized compensation cost related~~the Company’s board of directors acknowledged that the two remaining performance criteria had not been achieved prior to the ~~remaining unvested portion~~expiration of the ~~performance-based RSUs, which would be recognized in accordance with~~three-year performance period and the ~~terms of the award if and when the Company deems it probable that the performance criteria will be met. The~~ unvested portion of the awards ~~will expire if the performance conditions have not been met on or before the three-year anniversary of the grant date.~~expired.

Basic loss per ordinary share is calculated based upon net loss available to holders of ordinary shares divided by the weighted average number of shares outstanding. For the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, as the Company was in a net loss position, the diluted loss per share calculation did not assume conversion or exercise of stock options and awards as they would have had an anti-dilutive effect on loss per share.

The following potential ordinary ~~equivalent shares have~~share equivalents were not ~~been~~ included in the net loss per ordinary share calculation because the effect would have been anti-dilutive:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

In October 2019, the Company approved a restructuring plan following a review of its operations, cost structure and growth opportunities (the “Restructuring”). The Restructuring included a reduction in headcount of approximately 160 employees across the Company. The Company recorded a charge of $13.4 million in the fourth quarter of 2019 as a result of the Restructuring, which consisted of one-time termination benefits for employee severance, benefits and related costs, all of which are expected to result in cash expenditures and substantially all of which will be paid out over the next 12 months. Restructuring activity during the three months ended March 31, 2020 was as follows:

At March 31, 2020 and December 31, 2019, $4.6 million and $9.0 million of the restructuring accrual was included within “Accounts payable and accrued expenses”, respectively, and NaN and $0.2 million of the restructuring accrual was included within “Other long-term liabilities”, respectively, in the accompanying condensed consolidated balance sheets.

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 March 31, ~~2019,~~2020, there were no0 potential material losses from claims, asserted or unasserted, or legal proceedings that the Company determined were probable of occurring.

In January 2018 and in August 2019, Janssen Pharmaceuticals NV and Janssen Pharmaceuticals, Inc. initiated a patent infringement ~~lawsuit~~lawsuits in the ~~United States~~U.S. District Court for the District of New Jersey against Teva entities (Teva Pharmaceuticals USA, Inc. (“Teva”) and Teva Pharmaceuticals Industries, Ltd. (“Teva PI”)) and Mylan entities (Mylan Laboratories Limited (“Mylan Labs”), ~~who filed~~Mylan Pharmaceuticals Inc. (“Mylan”), and Mylan Institutional LLC), respectively, following filings by each of Teva and Mylan Labs of an abbreviated new drug application (“ANDA”) seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of U.S. Patent No. 9,439,906. Requested judicial remedies in each of the lawsuits included recovery of litigation costs and injunctive relief. The Company is not a party to either of these proceedings.

For information about risks relating to the INVEGA SUSTENNA Paragraph IV litigation, see “Part I, Item 1A—Risk Factors” ofin the ~~Company’s~~ Annual Report, including the section entitled “—We or our licensees may face claims against ~~intellectual property~~IP rights covering our products and competition from generic drug manufacturers.”

Eleven separate Paragraph IV Certification Notices have been received by the Company and/or its partner Acorda from: Accord Healthcare, Inc. (“Accord”); Actavis Laboratories FL, Inc. (“Actavis”); Alkem Laboratories Ltd.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)~~

(“Alkem”); Apotex Corporation and Apotex, Inc. (collectively, “Apotex”); Aurobindo Pharma Ltd. (“Aurobindo”); MicroLabs Limited (“MicroLabs”); Mylan Pharmaceuticals, Inc. (“Mylan”); Par Pharmaceutical, Inc. (“Par”); Roxane Laboratories, Inc. (“Roxane”); Sun Pharmaceutical Industries Limited and Sun Pharmaceuticals Industries Inc. (collectively, “Sun”); and Teva (collectively with Accord, Actavis, Alkem, Apotex, Aurobindo, MicroLabs, Mylan, Par, Roxane and Sun, the “ANDA Filers”) advising that each of the ANDA Filers had submitted an ANDA to the FDA seeking marketing approval for generic versions of AMPYRA (dalfampridine) Extended-Release Tablets, 10 mg. The ANDA Filers challenged the validity of one or more of the Orange Book-listed patents for AMPYRA, and they also asserted that their generic versions do not infringe certain claims of these patents. In response, the Company and/or Acorda filed lawsuits against the ANDA Filers asserting infringement of one or more of the Orange Book-listed patents for AMPYRA. Requested judicial remedies included recovery of litigation costs and injunctive relief.

All lawsuits were filed within 45 days from the date of receipt of each of the Paragraph IV Certification Notices from the ANDA Filers. As a result, a 30-month statutory stay of approval period applied to each of the ANDA Filers’ ANDAs under the U.S. Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”). The first 30-month stay restricted the FDA from approving the ANDA Filers’ ANDAs until July 2017 at the earliest, unless a Federal district court issued a decision adverse to all of the asserted Orange Book-listed patents prior to that date. Lawsuits with eight of the ANDA Filers were consolidated into a single case.

The Company and/or Acorda entered into a settlement agreement with each of Accord, Actavis, Alkem, Apotex, Aurobindo, MicroLabs, Par and Sun to resolve the patent litigation that the Company and/or Acorda brought against these settling ANDA Filers. The settlements with these settling ANDA Filers did not impact the patent litigation that the Company and Acorda brought against the remaining ANDA Filers, including as described below.

In March 2017, after a bench trial, the U.S. District Court for the District of Delaware (the “Delaware Court”) issued an opinion (the “Delaware Court Decision”), which, among other things, invalidated U.S. Patent Nos. 8,007,826; 8,354,437; 8,440,703; and 8,663,685. The Delaware Court also upheld the validity of the U.S. Patent No. 5,540,938 which pertained to the formulation of AMPYRA, but that patent expired on July 30, 2018. In May 2017, Acorda filed an appeal with the Federal Circuit of the Delaware Court Decision with respect to the findings on U.S. Patent Nos. 8,007,826; 8,354,437; 8,440,703; and 8,663,685. On July 27, 2018, Acorda and the Company entered into a settlement agreement with Mylan, pursuant to which, among other things, Mylan was permitted to market an authorized generic version of AMPYRA in the U.S. in the event of an affirmance by the Federal Circuit of the Delaware Court Decision. On September 10, 2018, the Federal Circuit affirmed the Delaware Court Decision, which invalidated U.S. Patent Nos. 8,007,826; 8,354,437; 8,440,703; and 8,663,685. On October 24, 2018, Acorda filed a petition for rehearing and rehearing en banc of the Federal Circuit’s decision. On January 4, 2019, the Federal Circuit denied Acorda’s petition. On April 4, 2019, Acorda filed a petition for writ of certiorari to the Supreme Court of the United States.

For information about risks relating to the AMPYRA Paragraph IV litigations and other proceedings see “Part I, Item 1A—Risk Factors” of the Company’s Annual Report, including the section entitled “—We or our licensees may face claims against intellectual property rights covering our products and competition from generic drug manufacturers.”

On April 20, 2018, Amneal Pharmaceuticals LLC filed a petition with the Patent Trial and Appeal Board (the “PTAB”) of the U.S. Patent and Trademark Office seeking an inter partes review (“IPR”) of U.S. Patent Number 7,919,499 (the “ ‘499 Patent”), which is an Orange Book-listed patent for VIVITROL, seeking cancellation of claims 1-13 of the ’499 Patent. On November 7, 2018, the PTAB issued an order instituting an IPR of all challenged claims. On February 7, 2019, the Company filed its patent owner’s response. Amneal’s reply is due on May 7, 2019. A decision on the matter is expected by November 7, 2019. The Company will vigorously defend the ’499 Patent in the IPR proceedings. For information about risks relating to the ’499 Patent IPR proceedings see “Part I, Item 1A—Risk Factors” in the Company’s Annual Report, including the sections entitled “— Patent protection for our products is important and uncertain” and “— Uncertainty over intellectual property in the biopharmaceutical industry has been the source of litigation, which is inherently costly and unpredictable, could significantly delay or prevent approval or commercialization of our products, and could adversely affect our business.”

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)~~

In December 2016, Nanjing Luye Pharmaceutical ~~Co Ltd,~~Co., Ltd., Pharmathen SA, Teva ~~Pharmaceutical Industries Ltd~~PI and Dehns Ltd (a law firm representing an unidentified opponent) filed notices of opposition with the European Patent Office (the “EPO”) in

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Unaudited) (Continued)

respect of EP 2 269 577 B (the “EP ’577” Patent), which is a patent directed to certain risperidone microsphere compositions, including RISPERDAL CONSTA. Following a hearing on the matter onin January ~~23, 2019, on April 8,~~ 2019, the EPO issued a written decision revoking the EP’577 ~~Patent.~~Patent in April 2019. The Company ~~has approximately two months from the date~~filed a notice of ~~the decision to~~ appeal of the decision to the EPO’s Technical Boards of ~~Appeal.~~Appeal in June 2019. Pharmathen SA submitted a reply on November 5, 2019 and Nanjing Luye Pharmaceutical Co Ltd. and Teva Pharmaceutical Industries Ltd. submitted replies on December 20, 2019. The Company will continue to vigorously defend the EP ’577 Patent. For information about risks relating to the EP ’577 Patent opposition proceedings see “Part I, Item 1A—Risk Factors” ofin the ~~Company’s~~ Annual Report, including the sections entitled “—Patent protection for our products is important and uncertain” and “—Uncertainty over ~~intellectual property~~IP in the biopharmaceutical industry has been the source of litigation, which is inherently costly and unpredictable, could significantly delay or prevent approval or commercialization of our products, and could adversely affect our business.”

~~On June 22, 2017 and January 17, 2019, the~~The Company has received a subpoena and a civil investigative ~~demand, respectively, each~~demands from ~~an Office of the~~state and U.S. ~~Attorney~~governmental authorities for documents related to VIVITROL. The Company is cooperating with the ~~government.~~investigations.

~~On November 22, 2017, a~~In December 2018 and January 2019, purported ~~stockholder~~stockholders of the Company filed a putative class ~~action~~actions against the Company and certain of its officers ~~(collectively, “Defendants”)~~ in the ~~United States~~U.S. District Court for the ~~Southern~~Eastern District of New York (the “EDNY District Court”) captioned ~~Gagnon~~Karimian v. Alkermes plc, et al., No. 1:~~17-cv-09178. This~~18-cv-07410 and McDermott v. Alkermes plc, et al., No. 1:19-cv-00624, respectively. In March 2019, the EDNY District Court consolidated the two cases and appointed a lead plaintiff. The plaintiff filed an amended complaint ~~was amended twice since its initial filing.~~on July 9, 2019 naming one additional officer of the Company and one former officer of the Company as defendants. The ~~second~~ amended complaint was filed on behalf of a putative class of purchasers of Alkermes securities during the period of ~~February 24, 2015~~July 31, 2014 through November ~~14, 2017~~1, 2018 and ~~alleged~~alleges violations of Sections 10(b) and 20(a) of the ~~Securities~~ Exchange Act ~~of 1934, as amended,~~ based on allegedly false or misleading statements and omissions regarding the Company’s ~~marketing practices related to VIVITROL.~~clinical methodologies and regulatory submission for ALKS 5461 and the FDA’s review and consideration of that submission. The lawsuit ~~sought,~~seeks, among other things, unspecified money damages, ~~for alleged inflation in~~prejudgment and postjudgment interest, reasonable attorneys’ fees, expert fees and other costs. In August 2019, the ~~price~~defendants filed a pre-motion letter (in respect of ~~securities,~~a requested motion to dismiss filing) with the EDNY District Court and ~~reasonable costs and expenses, including attorneys’ fees.~~plaintiff filed a response. On ~~June 29, 2018, Defendants filed~~November 27, 2019, the defendants served the plaintiff with a motion to dismiss, ~~the second amended complaint. On March 28,~~and on December 27, 2019, the ~~United States~~plaintiff served the defendants with its opposition to such motion. On January 17, 2020, the defendants filed the fully-briefed motion, including a reply to the plaintiff’s opposition, with the EDNY District Court for the Southern District of New York issued an order granting Defendants’ motion to dismiss and dismissing the case in its entirety and with prejudice. On April 11, 2019, the lead plaintiff filed a motion for reconsideration. Briefing on the motion for reconsideration will be completed on May 2, 2019.Court. For information about risks relating to this action, see “Part I, Item 1A—Risk Factors” ofin the ~~Company’s~~ Annual Report, including the section entitled “—Litigation, arbitration or ~~arbitration~~regulatory action (such as citizens petitions) filed against regulatory agencies related to our product or Alkermes, including securities litigation, ~~or citizen petitions filed with the FDA,~~ may result in financial losses, harm our reputation, divert management resources, negatively impact the approval of our products, or otherwise negatively impact our business.”

The Company has recently been named in 2 product liability lawsuits incidental to its normal business activities involving allegations that the FDA-approved VIVITROL labelling was inadequate and caused the users of the product to suffer from an opioid overdose and death. The Company ~~filed a putative class action against~~believes the ~~Company~~approved labelling was appropriate and ~~certain of its officers in~~intends to vigorously defend the United States District Court for the Eastern District of New York captioned Karimian v. Alkermes plc, et al., No. 1:18-cv-07410. On January 31, 2019, a purported stockholder of the Company filed a similar putative class action against the Company and the same officers in the United States District Court for the Eastern District of New York captioned McDermott v. Alkermes plc, et al., No. 1:19-cv-00624. These complaints were filed on behalf of putative classes of purchasers of Alkermes securities during the period of February 17, 2017 through November 1, 2018 and allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, based on allegedly false or misleading statements and omissions regarding the Company’s regulatory submission for ALKS 5461 and the FDA’s review and consideration of that submission. The lawsuits seek, among other things, unspecified money damages, prejudgment and postjudgment interest, reasonable attorneys’ fees, expert fees and other costs. On March 12, 2019, the United States District Court for the Eastern District of New York consolidated the two cases and appointed a lead plaintiff. For information about risks relating to these actions, see “Part I, Item 1A—Risk Factors” of the Company’s Annual Report, including the section entitled “—Litigation or arbitration against Alkermes, including securities litigation, or citizen petitions filed with the FDA, may result in financial losses, harm our reputation, divert management resources, negatively impact the approval of our products, or otherwise negatively impact our business.”cases.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our condensed consolidated financial statements and related notes beginning on page 5 ofin this Form 10-Q, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited financial statements and notes thereto included in our Annual Report, which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on February ~~15, 2019.~~13, 2020.

Net loss for the three months ended March 31, ~~2019~~2020 was ~~$96.4~~$38.7 million, or ~~$0.62~~$0.24 per ordinary share—basic and diluted, as compared to a net loss of ~~$62.5~~$96.4 million, or ~~$0.40~~$0.62 per ordinary share—basic and diluted, for the three months ended March 31, ~~2018.~~2019.

The ~~increase~~decrease in the net loss in the three months ended March 31, ~~2019,~~2020, as compared to the three months ended March 31, ~~2018,~~2019, was ~~primarily~~ due to a ~~$22.6~~$23.1 million ~~reduction~~increase in our revenue, primarily in product sales, net, partially offset by a decrease in R&D revenues, and a decrease in our operating expenses of $15.5 million, primarily in R&D expense and SG&A expense. In addition, we recorded an increase of $6.8 million in the fair value of our contingent consideration ~~related to the CRL that Recro received regarding its NDA for IV Meloxicam in March 2019 and an increase in selling, general and administrative (“SG&A”) expenses of 20%~~ in the three months ended March 31, ~~2019,~~2020, as compared to a reduction of $22.6 million in the three months ended March 31, ~~2018.~~2019. These items are discussed in greater detail later in the ““Results of Operations” section in this “Part I, Item 2—Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~Operations” in this Form 10-Q.~~” section~~

We have adopted a series of precautionary measures in an effort to protect our employees and mitigate the potential spread of COVID-19 in a community setting. At the same time, we have worked to continue our critical business functions and support uninterrupted access to our medicines. For example, we have instituted a global remote work policy for those of our employees who can work remotely, including our field-based employees, and have temporarily replaced all in-person meetings and interactions with virtual interactions. For those of our employees who work in our manufacturing facilities and laboratories, we have instituted additional safety precautions, including increased sanitization of our facilities, use of personal protective equipment and physical distancing practices to help protect their health and safety as they continue to advance important research for the benefit of patients and manufacture and deliver important medicines for patients. We have also taken actions to support people living with schizophrenia, opioid dependence and alcohol dependence to help assure that they have access to the information, resources and medicines that may assist in their treatment.

Despite disruptions to our business operations and the business operations of third parties on which we rely, the COVID-19 pandemic did not significantly impact our operating results and financial condition for the three months ended March 31, 2020. However, the marketed products from which we derive revenue, including manufacturing and royalty revenue, are primarily injectable medications administered by healthcare professionals, and given developments that have transpired to date, and may continue to transpire, in response to the pandemic, including the implementation of “shelter-in-place” policies, social distancing and other measures, we expect commercial sales of these marketed medicines to be adversely impacted.

As it relates to our proprietary marketed products, VIVITROL and ARISTADA, we have begun to see commercial impacts of the COVID-19 pandemic in the second quarter. As of the date of this Form 10-Q, April VIVITROL shipments are down from our pre-COVID-19 expectations, and we have seen a flattening in prescription data and factory shipments of ARISTADA. We are actively working to respond to these developments, including by working to increase the number of providers able to administer these products and otherwise support uninterrupted access to these products.

We continue to operate our manufacturing facilities and supply our medicines, and we do not currently anticipate any supply interruptions. While we continue to conduct R&D activities, including our ongoing clinical trials, the COVID-19 pandemic has impacted, and may continue to impact, the timelines of certain of our early-stage discovery

efforts and clinical trials. We are working with our internal teams, our clinical investigators, R&D vendors and critical supply chain vendors, to continually assess, and mitigate, the potential impact of COVID-19 on our manufacturing operations and R&D activities.

Due to numerous uncertainties surrounding the COVID-19 pandemic, we are unable to predict the extent of the impact that it may have on our future financial condition and operating results. These uncertainties include, among other things, the ultimate severity and duration of the pandemic; governmental, business or other actions that have been, or will be, taken in response to the pandemic, including restrictions on travel and mobility, business closures and imposition of social distancing measures; impacts of the pandemic on the vendors or distribution channels in our supply chain and on our ability to continue to manufacture our products; impacts of the pandemic on the conduct of our clinical trials, including with respect to enrollment rates, availability of investigators and clinical trial sites or monitoring of data; impacts of the pandemic on healthcare systems that serve people living with opioid dependence, alcohol dependence and schizophrenia; impacts of the pandemic on the regulatory agencies with which we interact in the development, review, approval and commercialization of our medicines; impacts of the pandemic on reimbursement for our products, including our Medicaid rebate liability, and for services related to the use of our products; and impacts of the pandemic on the U.S., Irish and global economies more broadly. For additional information about risks and uncertainties related to the COVID-19 pandemic that may impact our business, our financial condition or our results of operations, see “Part II, Item 1A—Risk Factors” below in this Form 10-Q.

Our portfolio of marketed products is designed to address unmet medical needs of patients in major therapeutic areas. See the ~~description~~descriptions of the marketed products below, and ~~refer to~~see “Part I, Item 1A—Risk Factors” ofin our Annual Report and “Part II, Item 1A—Risk Factors” in this Form 10-Q for important factors that could adversely affect our marketed products. For information with respect to the IP protection for these marketed products, see the descriptions of the marketed products below and tosee the “Patents and Proprietary Rights” section in “Part I, Item 1—Business” ofin our Annual ~~Report for information with respect to the IP protection for these marketed products.~~Report.

~~Summary~~The following provides summary information regarding our proprietary products ~~includes:~~that we commercialize:

The following provides summary information regarding our key licensed products, and third-party products using our proprietary technologies under license, that are commercialized by our licensees:

~~Summary information regarding products that use our proprietary technologies includes:~~

We develop and commercialize products designed to address the unmet needs of patients suffering from ~~addiction~~opioid dependence, alcohol dependence and schizophrenia. For additional information about the proprietary technologies underlying our proprietary products, see the “Proprietary Product Platforms” section in “Part I, Item 1—Business” in our Annual Report.

ARISTADA (aripiprazole lauroxil) is an extended-release intramuscular injectable suspension approved in the U.S. for the treatment of schizophrenia. ARISTADA is the first of our products to utilize our proprietary LinkeRx technology. ARISTADA is a prodrug; once in the body, ARISTADA is likely converted by enzyme-mediated hydrolysis to ~~N-hydroxymethyl~~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 product format. We developed ARISTADA and exclusively manufacture and commercialize it in the U.S.

~~In April 2019, we announced positive topline results from ALPINE (“~~A~~ripiprazole~~ L~~auroxil and~~ P~~aliperidone palmitate:~~ IN~~itiation~~ E~~ffectiveness”), a six-month study evaluating the efficacy, safety and tolerability of ARISTADA~~

and INVEGA SUSTENNA when used to initiate patients experiencing an acute exacerbation of schizophrenia in the hospital and maintain treatment in an outpatient setting. Data were presented at the 2019 Congress of the Schizophrenia International Research Society (“SIRS”).

In March 2019, U.S. Patent Nos. 10,226,458 and 10,238,651 relating to ARISTADA were granted. These patents have claims to methods of treating schizophrenia and expire in 2032 and 2035, respectively.

ARISTADA INITIO (aripiprazole lauroxil), leverages our proprietary NanoCrystal technology and provides an extended-release formulation of aripiprazole lauroxil in ~~combination~~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. ARISTADA INITIO leverages our proprietary NanoCrystal technology and provides an extended-release formulation of aripiprazole lauroxil in a smaller particle size compared to ARISTADA. This smaller particle size enables faster dissolution and leads to more rapid achievement of relevant levels of aripiprazole. The ARISTADA INITIO regimen, consisting of a single injection of 675 mg ARISTADA INITIO in combination with a single 30 mg dose of oral aripiprazole, when used to initiate onto any dose of ARISTADA, provides patients with relevant levels of aripiprazole within four days of treatment initiation. The first ARISTADA dose may be administered on the same day as the ARISTADA INITIO regimen or up to 10 days thereafter. We developed ARISTADA INITIO and exclusively manufacture and commercialize it in the U.S.

VIVITROL (naltrexone for extended-release injectable suspension) is a once-monthly, non-narcotic, injectable medication approved in the U.S., Russia and certain countries of the CIS for the treatment of alcohol dependence and for the prevention of relapse to opioid dependence, following opioid detoxification. VIVITROL uses our polymer-based microsphere injectable extended-release technology to deliver and maintain therapeutic medication levels in the body through one intramuscular injection every four weeks. We developed and exclusively manufacture ~~VIVITROL. We~~VIVITROL and we commercialize VIVITROL in the U.S.~~, and Cilag commercializes VIVITROL in Russia and certain countries of the CIS.~~

For a discussion of legal proceedings related to ~~the patents covering~~ VIVITROL, see Note ~~14,~~15, Commitments and Contingent Liabilitiesin the “Notes to Condensed Consolidated Financial Statements” section in this Form 10-Q, and for information about risks relating to such legal proceedings, see “Part I, Item 1A—Risk Factors” in our Annual Report, including the sections entitled “—Patent protection for our products is important and uncertain,” “—Uncertainty over ~~intellectual property~~IP in the biopharmaceutical industry has been the source of litigation, which is inherently costly and unpredictable, could significantly delay or prevent approval or commercialization of our products, and could adversely affect our business” and “—Litigation, arbitration or regulatory action (such as citizens petitions) filed against regulatory agencies related to our product or Alkermes, including securities litigation, 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 have ~~granted licenses under~~licensed products to third parties for commercialization and have licensed our proprietary technologies to ~~enable~~ third parties to enable them to develop, commercialize ~~and, in some cases,~~and/or manufacture ~~products for which we~~products. We receive royalties and/or manufacturing ~~revenues.~~and other revenues from the commercialization of these products. Such arrangements include the following:

INVEGA SUSTENNA/XEPLION (paliperidone palmitate), INVEGA TRINZA/TREVICTA (paliperidone palmitate 3-month injection) and RISPERDAL CONSTA (risperidone long-acting injection) are long-acting atypical antipsychotics owned and commercialized worldwide by Janssen that incorporate our proprietary technologies. For additional information about our proprietary technologies, see the “Proprietary Product Platforms” section in “Part I, Item 1—Business” in our Annual Report.

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 uses our nanoparticle injectable extended-release technology to increase the rate of dissolution and enable the formulation of an

aqueous suspension for once-monthly intramuscular administration. INVEGA SUSTENNA/XEPLION is manufactured by Janssen. For a discussion of legal proceedings related to the patents covering INVEGA SUSTENNA, see Note ~~14,~~ 15,

Commitments and Contingent Liabilities in the “Notes to Condensed Consolidated Financial Statements” in this Form 10-Q and for information about risks relating to such legal proceedings, see “Part I, Item 1A—Risk Factors” in our Annual Report, including the section entitled “—We or our licensees may face claims against ~~intellectual property~~IP rights covering our products and competition from generic drug manufacturers.”

INVEGA TRINZA is approved in the U.S. for the treatment of schizophrenia ~~used~~ in ~~people~~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 ~~the first schizophrenia treatment to be taken~~dosed once every three months. INVEGA TRINZA/TREVICTA uses our proprietary technology and is manufactured by Janssen.

RISPERDAL CONSTA is approved in the U.S. for the treatment of schizophrenia and as both monotherapy and adjunctive therapy to lithium or 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. For a discussion of legal proceedings related to ~~one~~certain of the patents covering RISPERDAL CONSTA, see Note ~~14,~~15, Commitments and Contingent Liabilities in the “Notes to Condensed Consolidated Financial Statements” in this Form 10-Q and for information about risks relating to such legal proceedings, see “Part I, Item 1A—Risk Factors” in our Annual Report, including the section entitled “—We or our licensees may face claims against ~~intellectual property~~IP rights covering our products and competition from generic drug manufacturers.”

For a description of VIVITROL, including its approved indications and dosing, please refer to the heading “Proprietary Products” above in this Form 10-Q. We developed and exclusively manufacture VIVITROL for Cilag. Cilag exclusively commercializes VIVITROL in Russia and certain countries of the CIS.

VUMERITY (diroximel fumarate), formerly referred to as BIIB098, is a novel, oral fumarate with a distinct chemical structure that was approved in the U.S. in October 2019 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 our Annual Report.

Our R&D is focused on ~~leveraging our formulation expertise and proprietary product platforms to develop~~the development of novel, competitively advantaged medications designed to enhance patient ~~outcomes in major CNS disorders, such as schizophrenia, addiction, depression and MS, and in oncology.~~outcomes. As part of our ongoing R&D efforts, we have devoted, and will continue to devote, significant resources to conducting pre-clinical work and clinical studies to advance the development of new pharmaceutical products. The discussion below highlights our current key R&D programs. 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 “Part I, Item 1A—Risk Factors” ofin our Annual Report. ~~Refer to~~See the “Patents and Proprietary Rights” section in “Part I, Item 1—Business” ofin our Annual Report for information with respect to the IP protection for our key development candidates.

Diroximel fumarate (“BIIB098”), formerly referred to as ALKS 8700, is a novel, oral fumarate in development for the treatment of relapsing forms of MS. Diroximel fumarate is designed to rapidly convert to monomethyl fumarate in the body and may have the potential to offer differentiated gastrointestinal tolerability due to its chemical structure as compared to the currently marketed dimethyl fumarate, TECFIDERA.

The pivotal clinical program for diroximel fumarate consists of pharmacokinetic bridging studies comparing diroximel fumarate and TECFIDERA and a two-year, multicenter, open-label study designed to assess the safety of diroximel fumarate, which we initiated in December 2015. We submitted a 505(b)(2) NDA for diroximel fumarate in December 2018, which was accepted for review by the FDA in February 2019. The NDA was assigned a Prescription Drug User Fee Act (“PDUFA”) target action date in the fourth quarter of 2019. For more information about 505(b)(2) NDAs, see “Part 1, Item 1—Business, Regulatory, Hatch-Waxman Act” of our Annual Report. In addition, EVOLVE-MS-2, an elective, randomized, head-to-head phase 3 study of the gastrointestinal tolerability of diroximel fumarate versus TECFIDERA is ongoing, with topline results expected in mid-2019.

In November 2017, we entered into an exclusive license and collaboration agreement with Biogen relating to diroximel fumarate. For more information about the license and collaboration agreement with Biogen, see “Part 1, Item

1—Business, Collaborative Arrangements” of our Annual Report. If approved, Biogen intends to market diroximel fumarate under the brand name VUMERITY, which has been conditionally accepted by the FDA and will be confirmed upon approval.

ALKS 3831 is an investigational, novel, once-daily, oral atypical antipsychotic drug candidate for the treatment of

~~schizophrenia.~~ adults with schizophrenia and for the treatment of adults with bipolar I disorder. ALKS 3831 is composed of samidorphan, a novel, new molecular entity, co-formulated with the established antipsychotic agent, olanzapine, in a single bilayer tablet.

ALKS 3831 is designed to provide the robust antipsychotic efficacy of olanzapine while mitigating olanzapine-associated weight gain.

The ENLIGHTEN clinical development program for ALKS 3831 includes two key phase 3 ~~studies:~~studies in patients with schizophrenia: ENLIGHTEN-1, a four-week study ~~evaluating~~which evaluated the antipsychotic efficacy of ALKS 3831 compared to placebo, and ENLIGHTEN-2, a six-month study ~~assessing~~which assessed weight gain with ALKS 3831 compared to ~~olanzapine in patients with schizophrenia.~~ZYPREXA (olanzapine). The program also includes supportive studies to evaluate the pharmacokinetic (“PK”) and metabolic profile and long-term safety of ALKS ~~3831.~~3831, and PK bridging studies comparing ALKS 3831 and ZYPREXA.

In November 2018, we announced positive topline results from ENLIGHTEN-2. ALKS 3831 met the prespecified co-primary endpoints, demonstrating both a lower mean percent weight gain from baseline at six months compared to the olanzapine group, and a lower proportion of patients who gained 10% or more of their baseline body weight at six months compared to the olanzapine group. The most common adverse events reported in the ALKS 3831 treatment group were weight gain, somnolence and dry mouth. In AprilMay 2019, we ~~presented additional data from the ENLIGHTEN-2 study and interim results from an ongoing ENLIGHTEN-2 52-week open-label, safety extension study at SIRS.~~

~~We plan to conduct~~conducted a pre-NDA meeting with the FDA ~~in the second quarter of 2019~~ to discuss the FDA’s key requirements for the new drug application (“NDA”) for ALKS 3831, including ~~the~~those related to efficacy, safety, weight and metabolic profile, and the expansion of ~~ALKS 3831, and plan to submit an~~the planned NDA for ALKS 3831 to encompass the treatment of bipolar I disorder in ~~mid-2019.~~addition to the treatment of schizophrenia. In November 2019, we submitted our NDA to the FDA, seeking approval for ALKS 3831 for the treatment of schizophrenia and for the treatment of manic and mixed episodes associated with bipolar I disorder as a monotherapy or adjunct to lithium or valproate and for maintenance treatment of bipolar I disorder. In January 2020, the FDA accepted the ALKS 3831 NDA and assigned a Prescription Drug User Fee Act (“PDUFA”) target action date of November 15, 2020. The FDA plans to hold an advisory committee meeting for the ALKS 3831 NDA. The ALKS 3831 NDA includes data from the ENLIGHTEN clinical development program in patients with schizophrenia, as well as PK bridging data comparing ALKS 3831 and ZYPREXA. We are seeking approval of fixed dosage strengths of ALKS 3831 composed of 10 mg of samidorphan co-formulated with 5 mg, 10 mg, 15 mg or 20 mg of olanzapine. For more information about 505(b)(2) NDAs, see the “Regulatory, Hatch-Waxman Act” section of “Part I, Item 1—Business” in our Annual Report.

ALKS 4230 is aan investigational, novel, engineered fusion protein comprised of modified interleukin-2 (“IL-2”) and the high affinity IL-2 alpha receptor chain, designed to selectively ~~activate~~expand tumor-killing immune cells while avoiding the ~~expansion~~IL-2-induced activation of immunosuppressive cells by preferentially binding to the ~~intermediate affinity interleukin-2 (“IL-2”)~~intermediate-affinity IL-2 receptor complex. The selectivity of ALKS 4230 is designed to leverage the proven anti-tumor effects of existing IL-2 therapy while mitigating certain limitations. ~~Our phase 1 study for~~

ARTISTRY is our clinical development program that evaluates ALKS 4230 ~~is designed to evaluate~~in patients with advanced solid tumors. ARTISTRY-1, an ongoing phase 1/2 study of ALKS 4230 administered via intravenous infusion as a monotherapy ~~agent~~ and in combination with the anti-PD-1 therapy, ~~pembrolizumab.~~

~~ARTISTRY-1, a phase 1 study for ALKS 4230 in which ALKS 4230 is administered as an intravenous infusion,~~pembrolizumab, is designed to evaluate the safety profile and anti-tumor activity of ~~ALKS 4230 as a monotherapy agent and in combination with the anti-PD-1 therapy, pembrolizumab. A dose-escalation stage designed to determine the maximum tolerated dose of~~ ALKS 4230 in a monotherapy setting and to identify the optimal dose range of ALKS 4230 based on measures of immunological-pharmacodynamic effects is ongoing. Upon completion of the dose-escalation stage, we expect to initiate a monotherapy dose-expansion stage of ARTISTRY-1 in patients with ~~renal cell carcinoma or melanoma. Initial data from the~~select advanced solid tumors. ARTISTRY-1 has three distinct stages: an ongoing monotherapy dose-escalation ~~stage of ARTISTRY-1, demonstrating dose-dependent pharmacodynamic effects on circulating CD8+ T cells~~stage; an ongoing monotherapy expansion stage; and ~~natural killer cells with minimal and non-dose dependent effect on immunosuppressive regulatory T cells, were presented at the 2018 Society for Immunotherapy of Cancer meeting.~~ ~~The~~an ongoing combination therapy stage ~~of ARTISTRY-1 is also ongoing, assessing ALKS 4230 in combination~~ with the PD-1 inhibitor pembrolizumab in patients with select advanced solid tumors.

~~In February 2019, we announced the initiation of~~ ARTISTRY-2, ~~a new~~an ongoing phase 1/2 study of ALKS 4230 administered subcutaneously as monotherapy and in combination with pembrolizumab in patients with advanced solid ~~tumors.~~tumors, is designed to explore the safety, tolerability and efficacy of ALKS 4230 and assess once-weekly and once-every-three-week subcutaneous dosing schedules. ARTISTRY-2, ~~will be~~which we initiated in February 2019, is being conducted in two stages: an ongoing dose-escalation stage, to be followed by dose-expansion. The dose-escalation stage is designed to evaluate the safety and tolerability of ascending doses of ALKS 4230 administered subcutaneously once-weekly and once-every-three-weeks as both lead-in monotherapy and in combination with pembrolizumab. Following identification of the optimal dose and recommended dosing schedule, thea dose-expansion ~~stage of the study will evaluate ALKS 4230 administered subcutaneously in combination with pembrolizumab in patients with advanced solid tumors.~~stage.

~~The dose-expansion stage will evaluate overall response rate, duration of response, non-progression rate at specific time points and overall survival.~~

ALKS 5461 is a proprietary, once-daily, oral investigational medicine with a novel mechanism of action for the adjunctive treatment of major depressive disorder (“MDD”) in patients with an inadequate response to standard antidepressant therapies. ALKS 5461 is a fixed-dose combination of buprenorphine, a partial mu-opioid receptor agonist and kappa-opioid receptor antagonist, and samidorphan, a mu-opioid receptor antagonist.

The clinical development program for ALKS 5461 included three core phase 3 efficacy studies (FORWARD-3, FORWARD-4 and FORWARD-5), one core phase 2 efficacy study (Study 202), and additional supportive studies to evaluate the long-term safety, dosing, pharmacokinetic profile and human abuse potential of ALKS 5461. Our NDA for ALKS 5461, submitted to the FDA in January 2018, and accepted for review by the FDA in April 2018 after the issuance, and then rescission, of a refusal to file letter, was based on a comprehensive clinical efficacy and safety package with data from more than 30 clinical trials and more than 1,500 patients with MDD.

In February 2019, we announced receipt of a CRL from the FDA for the ALKS 5461 NDA. The CRL states that the FDA is unable to approve the ALKS 5461 NDA in its present form and requests additional clinical data to provide substantial evidence of effectiveness of ALKS 5461 for the adjunctive treatment of MDD. We are evaluating next steps for ALKS 5461.

~~The following table compares manufacturing and royalty revenues earned in the three months ended March 31, 2019 and 2018:~~

The increase in INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA royalty revenues was due to an increase in Janssen’s end-market sales of INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA. During the three months ended March 31, 2019, Janssen’s end-market sales of INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA were $790.0 million, as compared to $696.0 million during the three months ended March 31, 2018. Under our agreement with Janssen, we earn royalty revenues on end-market net sales of INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA of: 5% on calendar year net sales up to $250 million; 7% on calendar year net sales of between $250 million and $500 million; and 9% on calendar year net sales exceeding $500 million. The royalty rate resets to 5% at the beginning of each calendar year.

The decrease in revenues from RISPERDAL CONSTA was primarily due to an 11% decrease in RISPERDAL CONSTA royalty revenue. End-market sales of RISPERDAL CONSTA were $179.0 million in the three months ended March 31, 2019 as compared to $196.0 million in the three months ended March 31, 2018. We recognize manufacturing revenue, equal to 7.5% of Janssen’s unit net sales price of RISPERDAL CONSTA, at the point in time when RISPERDAL CONSTA has been fully manufactured, which is when the product is approved for shipment. We record royalty revenue, equal to 2.5% of end-market net sales, when the end-market sale of RISPERDAL CONSTA occurs.

The decrease in the amount of manufacturing and royalty revenue recognized for AMPYRA and FAMPYRA was primarily due to the entry of generic forms of AMPYRA to the U.S. market in September 2018. AMPYRA revenues

decreased by 80% in the three months ended March 31, 2019, as compared to the three months ended March 31, 2018. We do not anticipate manufacturing any AMPYRA for Acorda during the remainder of 2019. This decrease related to AMPYRA was partially offset by a 30% increase in FAMPYRA revenues. The increase in FAMPYRA revenues was due to a 43% increase in manufacturing revenue due to an increase in the amount of FAMPYRA we manufactured and a 10% increase in royalty revenue due to higher estimated net sales of FAMPYRA. We recognize manufacturing revenues for AMPYRA and FAMPYRA and royalty revenue from AMPYRA over time as the products move through the manufacturing process, using an input method based on costs as a measure of progress. Royalty revenue from FAMPYRA is recognized in the period FAMPYRA is sold by Biogen.

Our product sales, net, consist of sales of VIVITROL, ARISTADA and ARISTADA INITIO in the U.S., primarily to wholesalers, specialty distributors and specialty pharmacies. The following table presents the adjustments deducted from product sales, gross to arrive at product sales, net, for the sales of VIVITROL, ARISTADA and ARISTADA INITIO in the U.S. during the three months ended March 31, ~~2019~~2020 and ~~2018:~~2019:

	March 31,														Three Months Ended
(In millions)	2019			% of Sales				2018			% of Sales
															March 31,
(In millions, except for % of Sales)															2020			% of Sales				2019			% of Sales
Product sales, gross	$	196.1			100.0		%	$	177.6			100.0		%	$	260.2			100.0		%	$	196.1			100.0		%
Adjustments to product sales, gross:
Medicaid rebates		(47.2	)		(24.1	)	%		(41.6	)		(23.4	)	%		(61.9	)		(23.8	)	%		(47.2	)		(24.1	)	%
Chargebacks		(16.8	)		(8.6	)	%		(14.7	)		(8.3	)	%		(22.6	)		(8.7	)	%		(16.8	)		(8.6	)	%
Product discounts		(15.1	)		(7.7	)	%		(14.1	)		(7.9	)	%		(20.2	)		(7.8	)	%		(15.1	)		(7.7	)	%
Medicare Part D		(7.5	)		(3.8	)	%		(5.4	)		(3.0	)	%		(12.3	)		(4.7	)	%		(7.5	)		(3.8	)	%
Other		(10.0	)		(5.1	)	%		(10.0	)		(5.7	)	%		(13.5	)		(5.2	)	%		(10.0	)		(5.1	)	%
Total adjustments		(96.6	)		(49.3	)	%		(85.8	)		(48.3	)	%		(130.5	)		(50.2	)	%		(96.6	)		(49.3	)	%
Product sales, net	$	99.5			50.7		%	$	91.8			51.7		%	$	129.7			49.8		%	$	99.5			50.7		%

Our product sales, net, for VIVITROL in the three months ended March 31, 2020 were $78.8 million, as compared to $69.2 million in the three months ended March 31, 2019. Product sales, net for ARISTADA and ~~ARISTADA/~~ARISTADA INITIO in the three months ended March 31, ~~2019~~2020 were ~~$69.2~~$50.9 million, ~~and $30.3 million, respectively,~~ as compared to ~~$62.7 million and $29.1~~$30.3 million in the three months ended March 31, ~~2018, respectively.~~2019.

The increase in product sales, gross was primarily due to increased unit sales of ~~both~~ VIVITROL, ARISTADA and ~~ARISTADA.~~ARISTADA INITIO. VIVITROL product sales, gross, increased by ~~8%,~~13% in the three months ended March 31, 2020, as compared to the three months ended March 31, 2019, which was due to ana 13% increase in the number of VIVITROL units sold. ~~We did not have a price increase for VIVITROL in 2018 or~~ARISTADA and ARISTADA INITIO product sales, gross, increased by 78% in the three months ended March 31, ~~2019. ARISTADA and ARISTADA INITIO collective product sales, gross, increased by 15%,~~2020, as compared to the three months ended March 31, 2019, which was primarily due to a 4%70% increase in the number of ARISTADA and ARISTADA INITIO ~~collective~~ units ~~sold and a 4% and~~sold. In addition, a 6% price increase ~~that~~for ARISTADA and ARISTADA INITIO went into effect in ~~July 2018~~February 2019.

The following table compares manufacturing and royalty revenues earned in the three months ended March 31, 2020 and 2019:

The increase in INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA royalty revenues during the three months ended March 31, 2020, as compared to the three months ended March 31, 2019, ~~respectively. This~~ was primarily due to an increase in Janssen’s end-market sales of INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA. During the three months ended March 31, 2020, Janssen’s end-market sales of INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA were $883.0 million as compared to $790.0 million during the three months ended March 31, 2019. Under our agreements with Janssen related to INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA we earn 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 royalty-bearing patents with valid claims applicable to the product in

such country. The know-how royalty is a tiered royalty of 3.5% on calendar year net sales up to $250 million; 5.5% on calendar year net sales 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 the expiry of the license agreement.

The increase in revenues from RISPERDAL CONSTA in the three months ended March 31, 2020, as compared to the three months ended March 31, 2019, was due to a $5.7 million increase in manufacturing revenue, partially offset by a ~~41%~~$0.7 million decrease in royalty revenue. The increase in ~~Medicaid rebates and~~manufacturing revenue was primarily due to a ~~34%~~57% increase in ~~Medicare Part D claims related~~the amount of RISPERDAL CONSTA shipped to ~~ARISTADA and ARISTADA INITIO.~~Janssen, partially offset by a 16% decrease in the average selling price per unit. The decrease in royalty revenue was due to a decrease in end-market sales of RISPERDAL CONSTA, which were $170.0 million in the three months ended March 31, 2020, as compared to $179.0 million in the three months ended March 31, 2019.

~~The decrease in R&D revenue was primarily due to the revenue earned under the license and collaboration agreement with Biogen for BIIB098. Our~~ R&D revenues earned under our license and collaboration agreement with Biogen for ~~BIIB098~~VUMERITY were $0.1 million during the three months ended March 31, 2020 as compared to $13.9 million ~~and $17.5 million in~~during the three months ended March 31, 2019, and ~~2018, respectively, and~~ the decrease isin revenue was due to a decrease in services performed by us under the ~~timing of activity within~~agreement as the ~~program. As previously discussed,~~ ~~we submitted a 505(b)(2)~~ NDA for ~~BIIB098 in December 2018, which~~VUMERITY was ~~accepted~~approved by the FDA ~~for review~~ in ~~February~~October 2019.

The increase in cost of goods manufactured and sold was primarily due to a ~~19%~~$1.1 million increase in cost of goods ~~sold related to VIVITROL~~manufactured for RISPERDAL CONSTA, which was primarily due to an increase in ~~sales~~the number of ~~VIVITROL. This increase was partially offset by a~~ ~~restructuring charge of $3.2 million within cost of goods~~units manufactured ~~and sold recorded~~ during the ~~three months ended March 31, 2018 due to~~ ~~management’s~~ approval of a restructuring plan at our Athlone, Ireland manufacturing facility designed to streamline future operational performance. The restructuring plan consisted of severance and outplacement services for a reduction in headcount of 24 employees.period as discussed above.

For each of our R&D programs, we incur both external and internal expenses. External R&D expenses include fees for clinical and ~~non~~‑~~clinical~~non-clinical activities performed by contract research organizations, consulting fees, and costs related to laboratory services, ~~purchases~~the purchase of drug product materials and ~~third~~‑~~party~~third-party manufacturing development ~~costs.~~activities. Internal R&D expenses include ~~employee~~‑~~related~~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 programs or our technologies in general.

The following table sets forth our external R&D expenses for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 relating to ~~each of~~ our then current key development programs and all other development programs, and our internal R&D expenses, listed by the nature of such expenses:

	Three Months Ended				Change			Three Months Ended
	March 31,				Favorable/			March 31,
(In millions)	2019		2018		(Unfavorable)			2020		2019		Change
External R&D Expenses:
Development programs:
BIIB098	$	9.3	$	11.5	$	2.2
ALKS 4230								$	12.3	$	5.2	$	(7.1	)
ALKS 3831		7.7		15.1		7.4			8.1		7.7		(0.4	)
ALKS 5461		6.4		8.3		1.9			3.3		6.4		3.1
ALKS 4230		5.2		7.1		1.9
ARISTADA and ARISTADA line extensions		3.0		4.6		1.6
VUMERITY									—		9.3		9.3
Other external R&D expenses		12.5		11.2		(1.3	)		14.9		15.5		0.6
Total external R&D expenses		44.1		57.8		13.7			38.6		44.1		5.5
Internal R&D expenses:
Employee-related		46.3		39.6		(6.7	)		40.7		46.3		5.6
Occupancy									4.8		3.0		(1.8	)
Depreciation		3.3		2.7		(0.6	)		3.7		3.3		(0.4	)
Occupancy		3.0		2.9		(0.1	)
Other		5.9		5.3		(0.6	)		5.5		5.9		0.4
Total internal R&D expenses		58.5		50.5		(8.0	)		54.7		58.5		3.8
Research and development expenses	$	102.6	$	108.3	$	5.7		$	93.3	$	102.6	$	9.3

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 ~~pre~~‑~~clinical~~pre-clinical and/or clinical trials, our expectations regarding the likelihood of their regulatory approval and our view of their commercial viability, among other factors.

The ~~decrease~~increase in expenses related to ~~BIIB098~~ALKS 4230 was primarily due to the ~~timing~~advancement of ~~activity within~~ the two-year, multicenter, open-label phase 3 study designed to assess the safety of BIIB098, which was initiated in December 2015. We also initiated an elective, randomized, head-to-head phase 3 study designed to compare the gastrointestinal tolerability of BIIB098 and TECFIDERA in patients with relapsing-remitting MS in March 2017.ARTISTRY development program for ALKS 4230. The decrease in expenses related to ~~ALKS 3831~~VUMERITY was primarily due to the ~~decrease in activity within the ENLIGHTEN-1 and~~

~~ENLIGHTEN-2 pivotal trials, which were initiated in December 2015 and February 2016, respectively, partially offset by an increase in activity within a~~completion of our elective, randomized, head-to-head phase 3 ~~study~~study. The FDA approved the NDA for VUMERITY in the fourth quarter of ~~ALKS 3831 in young adults, which was initiated in June 2017.~~2019. The decrease in expenses related to ALKS 5461 was primarily due to a decrease in activity within the ~~program as we completed submission~~program. For additional details on the status of our ~~NDA to~~key development programs, see the ~~FDA seeking marketing approval~~“Key Development Programs” section of ~~ALKS 5461 for the adjunctive treatment~~this “Part I, Item 2— Management’s Discussion and Analysis of ~~MDD~~Financial Condition and Results of Operations” in ~~January 2018.~~ this Form 10-Q.

The decrease in employee-related expenses ~~related to ARISTADA and ARISTADA line extensions~~ was primarily due to a decrease in R&D headcount of 14% from March 31, 2019 to March 31, 2020, due primarily to the ~~timing of the ALPINE study, as described under the heading “Key Development Programs” above.~~ Restructuring.

The decrease in ~~expenses related to ALKS 4230~~sales and marketing expense was primarily ~~related~~due to a decrease in marketing expense of $4.6 million, partially offset by an increase in employee-related expenses of $2.6 million. The decrease in marketing expense was primarily due to a reduction in the ~~timing~~number of ~~the ARTISTRY development program for ALKS 4230, as described under the heading “Key Development Programs” above.~~

speaker programs and speaker trainings. The increase in employee-related expenses was primarily due to an increase in ~~R&D~~wages as our marketing-related headcount ~~of 14%~~was unchanged from March 31, ~~2018~~2019 to March 31, ~~2019.~~

The ~~increase~~decrease in ~~SG&A~~general and administrative expense was primarily due to ~~an increase~~a decrease in employee-related expenses of ~~$17.0~~$3.7 million, ~~and marketing and professional services fees of $5.5 million. The increase in employee-related expenses~~which was primarily due to ~~an increase~~a decrease in ~~our SG&A-related headcount of 22% from March 31, 2018 to March 31, 2019.~~ The increase in marketing and professional services fees was primarily due to additional brand investments in VIVITROL, ARISTADA and ARISTADA INITIO, as well as an increase in patient access support services, such as reimbursement and transition assistance, for all of these products.share-based compensation expense.

We amortize our amortizable intangible assets using the economic-use method, which reflects the pattern that the economic benefits of the intangible assets are consumed as revenue is generated from the underlying patent or contract. Based on our most recent analysis, amortization of intangible assets included within our consolidated balance sheet at March 31, ~~2019~~2020 is expected to be approximately $40.0 million, $40.0 million, ~~$40.0~~$35.0 million, $35.0 million and ~~$35.0~~$1.0 million in the years ending December 31, ~~2019~~2020 through ~~2023,~~2024, respectively.

The increase in the fair value of contingent consideration in the three months ended March 31, 2020 was primarily due to the approval of the NDA for ANJESO by the FDA in February 2020. As a result of the product’s approval, we increased the probability of success in our fair value analysis to 100%. The $22.6 million decrease in the fair value of contingent consideration recorded in the three months ended March 31, 2019 was primarily due to Recro’s receipt of a second ~~CRL~~complete response letter in March 2018 from the FDA ~~in March 2019~~ regarding its NDA for ~~IV Meloxicam.~~ANJESO. As a result of ~~this second CRL,~~the receipt of that complete response letter, we delayed ~~our~~the expectation of the anticipated date ~~for~~of the FDA’s approval of the ~~IV Meloxicam NDA and reduced~~product, resulting in a corresponding reduction in the ~~probability of success and~~ amount of forecasted sales ~~due to this delay~~used in ~~our~~the valuation model. The valuation approach used to determine the fair value of the contingent consideration is discussed in greater detail in Note 5, Fair Value Measurements, in the “Notes to ~~Condensed~~ Consolidated Financial Statements” in ~~this Form 10-Q.~~our Annual Report.

The income tax provision in the three months ended March 31, 2020 primarily related to a $2.6 million tax expense on income earned in the U.S. and a $4.7 million discrete tax expense related to employee equity activity during the period. The income tax benefit in the three months ended March 31, 2019 was primarily ~~relates~~related to a $7.9 million discrete tax benefit to take account of proposed foreign derived intangible income regulations issued by the Department of the Treasury and the U.S. Internal Revenue Service in March ~~2019. The benefit is~~2019, partially offset by a $4.9 million discrete tax expense for employee equity activity during the ~~quarter. The income tax benefit in the three months ended March 31, 2018 primarily relates to U.S. federal and state taxes on employee equity activity during the~~ period.

On March 27, 2020 the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was passed by Congress and signed into law by the President of the U.S. The CARES Act, among other things, includes certain income tax provisions for individuals and corporations; however, these benefits do not impact our income tax provision. We will continue to evaluate the impact of tax legislation and will update our disclosures as additional information and interpretive guidance becomes available.

	March 31, 2019						December 31, 2018						March 31, 2020						December 31, 2019
(In millions)	U.S.		Ireland		Total		U.S.		Ireland		Total		U.S.		Ireland		Total		U.S.		Ireland		Total
Cash and cash equivalents	$	140.4	$	84.8	$	225.2	$	139.3	$	127.5	$	266.8	$	109.5	$	66.6	$	176.1	$	63.3	$	140.5	$	203.8
Investments—short-term		285.3		71.6		356.9		203.3		69.2		272.5		252.8		67.1		319.9		285.3		45.9		331.2
Investments—long-term		17.8		25.2		43.0		51.5		29.2		80.7		36.6		17.1		53.7		40.3		39.1		79.4
Total cash and investments	$	443.5	$	181.6	$	625.1	$	394.1	$	225.9	$	620.0	$	398.9	$	150.8	$	549.7	$	388.9	$	225.5	$	614.4
Outstanding borrowings—short and long-term	$	278.8	$	—	$	278.8	$	279.3	$	—	$	279.3	$	276.6	$	—	$	276.6	$	277.1	$	—	$	277.1

Our investment objectives are to preserve capital, provide sufficient liquidity to satisfy operating requirements and 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. However, the value of these securities may be adversely affected by the instability of the global financial markets, which could, in turn, adversely impact our financial position and our overall liquidity. Our available-for-sale investments consist primarily of short- and long-term U.S. government and agency debt securities, corporate debt securities and debt securities issued by foreign agencies and backed by foreign governments. Our held-to-maturity investments consist of investments that are restricted and 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 ~~which~~that do not mature within 12 months as long-term investments. Available-for-sale investments in an unrealized gain position are classified as short-term investments, regardless of maturity date. 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. At March 31, ~~2019,~~2020, we performed an analysis of our investments with unrealized losses for impairment and determined that they were temporarily impaired.

We expect that our existing cash and investments balance will be sufficient to finance our anticipated working capital and other cash requirements, such as capital expenditures and principal and interest payments, for at least ~~twelve~~12 months following the date on which this Form 10-Q is filed. Subject to market conditions, interest rates and other factors, we may pursue opportunities to obtain additional financing in the future, including debt and equity offerings, corporate collaborations, bank borrowings, debt refinancings, arrangements relating to assets or other financing methods or structures. We are closely monitoring ongoing developments in connection with the COVID-19 pandemic, which may have an adverse impact on our commercial prospects and projected cash position.

Information about our cash flows, by category, is presented in “Part I, Item 1–1—Condensed Consolidated Financial Statements of Cash Flows” ofin this Form 10-Q. The following table summarizes our cash flows for the three months ended March 31, ~~2019~~2020 and ~~2018:~~2019:

The change in cash flows from operating activities in the three months ended March 31, ~~2019,~~2020, as compared to the three months ended March 31, ~~2018,~~2019, was primarily due to a ~~33% increase~~15% decrease in the amount of cash received from our customers ~~which was driven in large part by the license~~ and ~~collaboration agreement with Biogen for BIIB098, as described above. This was partially offset by~~ a ~~24%~~13% increase in cash paid to our ~~employees, which was primarily due to a 12% increase in our headcount from March 31, 2018 to March 31, 2019.~~suppliers.

The increase in cash flows ~~from~~provided by investing activities in the three months ended March 31, ~~2019,~~2020, as compared to the three months ended March 31, ~~2018,~~2019, was primarily due to ~~an $89.7~~a $83.4 million increase in ~~the~~ net ~~purchases~~sales of investments and a $3.8 million decrease in cash paid for property, plant and equipment, partially offset by athe $5.0 million payment that we received from Recro in connection with the contingent consideration from the Gainesville ~~Transaction.~~Transaction in the three months ended March 31, 2019.

The change in cash flows from financing activities in the three months ended March 31, ~~2019,~~2020, as compared to the three months ended March 31, ~~2018,~~2019, was ~~primarily~~ due to a ~~$4.2~~$5.9 million ~~increase~~decrease in the amount of cash we received from our employees upon the exercise of stock options, net of employee taxes.

At March 31, ~~2019,~~2020, the principal balance of our borrowings consisted of ~~$281.4~~$278.6 million outstanding under our 2023 Term Loans. See Note 11, Long-Term Debt, in the “Notes to ~~condensed~~Condensed Consolidated Financial Statements” in this Form 10-Q for a further discussion of our 2023 Term Loans.

~~Refer to~~See the “Contractual Obligations” section ~~within~~in “Part II, Item ~~7 –~~ 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” ofin our Annual Report for a discussion of our contractual obligations. In addition, in January 2020, our lease at 900 Winter Street commenced and our operating lease liabilities increased as a result. Our ~~contractual obligations have not materially changed from~~future operating lease liabilities are disclosed in Note 9, Leases, in the ~~date of our Annual Report.~~“Notes to Condensed Consolidated Financial Statements” in this Form 10-Q.

At March 31, ~~2019,~~2020, we were not party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources material to investors.

The discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates under different assumptions or conditions. ~~Refer to~~See the “Critical Accounting Estimates” ~~within~~section in “Part II, Item ~~7 –~~ 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” ofin our Annual Report for a discussion of our critical accounting estimates.

~~Refer to~~See the “New Accounting Pronouncements” ~~included~~section in Note 2, Summary of Significant Accounting Policies in the “Notes to Condensed Consolidated Financial Statements” in this Form 10-Q for a discussion of certain new accounting standards applicable to us. ~~In addition, refer to Note 9,~~ ~~Leases, in this Form 10-Q for a discussion of how we changed the way we account for leases under Topic 842.~~

Market risks related to our investment portfolio, and the ways we manage such risks, are summarized in “Part II, Item ~~7A –~~ 7A—Quantitative and Qualitative Disclosures About Market Risk” ofin our Annual Report. We regularly review our marketable securities holdings and shift our investment holdings to those that best meet our investment objectives, which are to preserve capital, provide sufficient liquidity to satisfy operating requirements and generate investment income. Apart from such adjustments to our investment portfolio, there have been no material changes to our market risks since December 31, ~~2018,~~2019, and we do not anticipate any 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.

We are exposed to foreign currency exchange risk related to manufacturing and royalty revenues we receive on certain of our products, partially offset by certain operating costs arising from expenses and payables in connection with our Irish operations that are settled predominantly in Euro. These foreign currency exchange rate risks are summarized in “Part II, Item ~~7A –~~ 7A–Quantitative and Qualitative Disclosures About Market Risk” ofin our Annual Report. There has been no material change in our assessment of our sensitivity to foreign currency exchange rate risk since December 31, ~~2018.~~2019.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the ~~Securities~~ Exchange ~~Act of 1934, as amended (the “Exchange Act”))~~Act), as of March 31, ~~2019.~~2020. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer each concluded that our disclosure controls and procedures were effective as of March 31, ~~2019~~2020 to provide reasonable assurance that the information required to be disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief 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.

During the period covered by this report, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

For information regarding legal proceedings, ~~refer to~~see the discussion of legal proceedings in Note ~~14,~~15, Commitments and Contingent Liabilities in the “Notes to Condensed Consolidated Financial Statements” in this Form 10-Q, which discussion is incorporated into this Part II, Item 1 by reference.

Our business, financial condition and results of operations may be adversely affected by the COVID-19 global pandemic or other similar outbreaks of contagious diseases.

We rely upon third parties for many aspects of our business, including the provision of goods and services related to the manufacture of our clinical products and our, and our partners’, marketed products, the conduct of our clinical trials, and the sale of marketed products from which we receive manufacturing and royalty revenue.

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.

As of the date of this Form 10-Q, COVID-19 has been declared by the World Health Organization to be a global pandemic. It has impacted, and is continuing to impact, all aspects of society, including the operation of the healthcare system and other business and economic activity worldwide. The COVID-19 pandemic has, to varying degrees, disrupted our business operations and the business operations of the third parties on which we rely, including our suppliers, packagers, distributors, contract research organizations, customers, clinical site investigators, community advocacy partners, and others.

This pandemic, and other similar outbreaks of contagious diseases, may adversely impact our business, financial condition and results of operations. For example, commercial sales of the medicines from which we derive revenue–consisting primarily of injectable medications administered by healthcare professionals—have been, and we expect will continue to be, adversely impacted as a result of developments that have transpired, and may continue to transpire, in response to this pandemic, including the implementation of “shelter-in-place” policies, social distancing and other measures. In addition, we, and the third-party clinical trial sites or investigators involved in our clinical trials, may experience significant interruptions or delays as a result of this pandemic, and these could impact the conduct of our clinical trials and our ability to complete them in a timely manner or at all, which in turn could delay and/or negatively impact the regulatory review and approval of our product candidates. The COVID-19 pandemic may also impact the third parties on which we rely for goods and services in the manufacture of our products, which may negatively impact our ability to continue to manufacture and supply our medicines and investigational products, or the ability of third-parties in our distribution channels to deliver our medicines and investigational products in a timely manner or at all. Further, this pandemic and measures to mitigate the spread of COVID-19 have had, and may continue to have, an adverse effect on global economic conditions, which could have an adverse effect on our business and financial condition, including the demand for, and ability of patients to access, our medicines, or our ability to obtain financing if needed on favorable terms or at all.

The extent to which the COVID-19 pandemic may impact our business, financial condition and results of operations will depend on the manner in which this pandemic continues to evolve and future developments in response thereto, which are highly uncertain and cannot be predicted with confidence as of the date of this Form 10-Q and which may include, among other things, the ultimate severity and duration of this pandemic; governmental, business or other actions that have been, or will be, taken in response to this pandemic, including restrictions on travel and mobility, business closures and imposition of social distancing measures; impacts of the pandemic on the vendors or distribution channels in our supply chain and on our ability to continue to manufacture our products; impacts of the pandemic on the conduct of our clinical trials, including with respect to enrollment rates, availability of investigators and clinical trial sites or monitoring of data; impacts of the pandemic on healthcare systems that serve people living with opioid dependence, alcohol dependence and schizophrenia; impacts of the pandemic on the regulatory agencies with which we interact in the development, review, approval and commercialization of our medicines; impacts of the pandemic on reimbursement for our products, including our Medicaid rebate liability, and for services related to the use of our products; and impacts of the pandemic on the U.S., Irish and/or global economies more broadly. For example, if the U.S. Consumer Price

Index—Urban (CPI-U) become negative, this would increase our Medicaid rebate liability. For a discussion of ~~our risk factors, refer to~~the Medicaid rebate liability, please see the “Pricing and Reimbursement” section in “Part I, Item ~~1A—Risk Factors”~~1—Business” in our Annual Report.

~~Annual~~ ~~Report.~~ There have been no other material changes from the risk factors disclosed in our Annual Report. Further discussion of our risk factors appears in “Part I, Item 1A—Risk Factors” in our Annual Report.

On September 16, 2011, our board of directors authorized the continuation of the Alkermes, Inc. program to repurchase up to $215.0 million of our ordinary shares at the discretion of management from time to time in the open market or through privately negotiated transactions. We did not purchase any shares under this program during the three months ended March 31, ~~2019.~~2020. As of March 31, ~~2019,~~2020, we had purchased a total of 8,866,342 shares under this program at a cost of $114.0 million.

During the three months ended March 31, ~~2019~~2020, we acquired ~~266,319~~372,846 of our ordinary shares, at an average price of ~~$33.35~~$19.54 per share, related to the vesting of employee equity awards to satisfy withholding tax obligations. During the three months ended March 31, 2019, we acquired 3,038 of our ordinary shares, at an average price of $32.92 per share, tendered by employees as payment of the exercise price of stock options granted under our equity compensation plans.

The ~~Company's~~Company’s policy governing transactions in its securities by its directors, officers and employees permits its officers, directors and employees to enter into trading plans in accordance with Rule 10b5-1 under the Exchange Act. During the quarter ended March 31, ~~2019, Messrs. James~~2020, Mr. Iain M. ~~Frates, David J. Gaffin, Craig C. Hopkinson, Michael J. Landine and Richard F. Pops, each~~Brown, an executive officer of the Company, entered into a trading plan in accordance with Rule 10b5-1 and the Company’s policy governing transactions in its securities by its directors, officers and employees. The Company undertakes no obligation to update or revise the information provided herein, including for any revision or termination of an established trading plan.

Pursuant to the requirements 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.


Ireland		98-1007018
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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


Large accelerated filer ☒		Accelerated filer ☐
Non-accelerated filer ☐		Smaller reporting company ☐
		Emerging growth company ☐


		Page No.
PART I - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited):
	Condensed Consolidated Balance Sheets — March 31, ~~2019~~2020 and December 31, ~~2018~~2019	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss — For the Three Months Ended March 31, ~~2019~~2020 and ~~2018~~2019	6
	Condensed Consolidated Statements of Cash Flows — For the Three Months Ended March 31, ~~2019~~2020 and ~~2018~~2019	7
	Condensed Consolidated Statements of Shareholders’ Equity — For the Three Months Ended March 31, ~~2019~~2020 and ~~2018~~2019	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2322
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35
Item 4.	Controls and Procedures	35

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3637
Item 5.	Other Information	3637
Item 6.	Exhibits	3738
Signatures		3839

	Three Months Ended March 31, 2019
(In thousands)	Manufacturing Revenue		Royalty Revenue		Total
INVEGA SUSTENNA/XEPLION & INVEGA TRINZA/TREVICTA	$	—	$	53,298	$	53,298
RISPERDAL CONSTA		17,921		4,385		22,306
AMPYRA/FAMPYRA		5,680		6,506		12,186
Other		7,346		13,779		21,125
	$	30,947	$	77,968	$	108,915

	Three Months Ended March 31, 2018
(In thousands)	Manufacturing Revenue			Royalty Revenue		Total
INVEGA SUSTENNA/XEPLION & INVEGA TRINZA/TREVICTA	$	—		$	46,086	$	46,086
AMPYRA/FAMPYRA		13,563			14,696		28,259
RISPERDAL CONSTA		17,792	��		4,912		22,704
Other		6,236			11,316		17,552
	$	37,591		$	77,010	$	114,601

	Three Months Ended March 31,				Three Months Ended March 31,
(In thousands)	2019		2018		2020		2019
VIVITROL	$	69,183	$	62,682	$	78,769	$	69,183
ARISTADA		30,298		29,160
ARISTADA/ARISTADA INITIO						50,957		30,298
Total product sales, net	$	99,481	$	91,842	$	129,726	$	99,481

	Three Months Ended March 31, 2020
(In thousands)	Manufacturing Revenue		Royalty Revenue		Total
INVEGA SUSTENNA/XEPLION & INVEGA TRINZA/TREVICTA	$	—	$	54,927	$	54,927
RISPERDAL CONSTA		23,583		3,733		27,316
Other		16,628		17,380		34,008
	$	40,211	$	76,040	$	116,251

(In thousands)	Contract Assets
Contract assets at January 1, 2019	$	8,230
Additions		7,346
Transferred to receivables, net		(7,129	)
Contract assets at March 31, 2019	$	8,447

(In thousands)	Contract Liabilities
Contract liabilities at January 1, 2019	$	12,694
Additions		1,516
Amounts recognized into revenue		(790	)
Contract liabilities at March 31, 2019	$	13,420

(In thousands)	Contract Liabilities
Contract liabilities at December 31, 2019	$	28,834
Additions		—
Amounts recognized into revenue		(859	)
Contract liabilities at March 31, 2020	$	27,975

	Available-for-sale				Held-to-maturity
	Amortized		Estimated		Amortized		Estimated
(In thousands)	Cost		Fair Value		Cost		Fair Value
Within 1 year	$	213,318	$	213,172	$	1,820	$	1,820
After 1 year through 5 years		182,610		183,138		1,667		1,769
Total	$	395,928	$	396,310	$	3,487	$	3,589

(In thousands)	Fair Value
Balance, January 1, 2019	$	66,897
Change in the fair value of contingent consideration		(22,600	)
Payment received for contingent consideration		(5,000	)
Impairment of corporate debt security		(492	)
Decrease in the fair value of warrants		(433	)
Balance, March 31, 2019	$	38,372

(In thousands)	Fair Value
Balance, January 1, 2020	$	34,353
Change in the fair value of contingent consideration		6,800
Balance, March 31, 2020	$	41,153

(In thousands)
Balance, December 31, 2019	$	9,201
Amounts paid during the period:
Severance		(3,759	)
Outplacement services		(62	)
Benefits		(767	)
Balance, March 31, 2020	$	4,613


Product	Indication(s)	~~Party Responsible for Commercialization~~			Territory

	Initiation or re- initiation of ARISTADA for the treatment of Schizophrenia	~~Alkermes~~		U.S.
	Schizophrenia	~~Alkermes~~	U.S.


	Alcohol dependence and Opioid dependence		U.S.


Product		Indication(s)	Licensee	Licensed Territory

RISPERDAL CONSTA		Schizophrenia and Bipolar I disorder	Janssen Pharmaceutica Inc. (“Janssen, Inc.”) and Janssen Pharmaceutica International, a division of Cilag International AG (“Janssen International”)	Worldwide
	~~INVEGA SUSTENNA~~
INVEGA SUSTENNA / XEPLION		INVEGA SUSTENNA: Schizophrenia and Schizoaffective disorder XEPLION: Schizophrenia	Janssen Pharmaceutica N.V. (together with Janssen, Inc., Janssen International and their affiliates “Janssen”)	~~U.S.~~Worldwide
~~XEPLION~~		~~Schizophrenia~~	~~Janssen~~	~~All countries~~ ~~outside of the~~ ~~U.S. (“ROW”)~~
INVEGA TRINZA / TREVICTA		Schizophrenia	Janssen	~~U.S.~~Worldwide

Product	~~TREVICTA~~Indication(s)	Licensee		Licensed Territory
	~~Schizophrenia~~		~~Janssen~~
VIVITROL	Alcohol dependence and Opioid dependence	Cilag GmbH ~~ROW~~International (“Cilag”)		Russia and Commonwealth of Independent States (“CIS”)
VUMERITY	Multiple sclerosis	Biogen		Worldwide

			Gross									Gross
	Amortized		Unrealized					Estimated		Amortized		Unrealized					Estimated
(In millions)	Cost		Gains		Losses			Fair Value		Cost		Gains		Losses			Fair Value
Investments—short-term available-for-sale	$	356.4	$	0.8	$	(0.3	)	$	356.9	$	317.5	$	2.7	$	(0.3	)	$	319.9
Investments—long-term available-for-sale		39.5		—		(0.1	)		39.4		50.9		—		(0.7	)		50.2
Investments—long-term held-to-maturity		3.5		0.1		—			3.6		3.5		0.1		—			3.6
Total	$	399.4	$	0.9	$	(0.4	)	$	399.9	$	371.9	$	2.8	$	(1.0	)	$	373.7

Exhibit No.		Description of Exhibit
10.1 ##†		~~Second Amendment, effective as~~Form of ~~January 31, 2019, to License and Collaboration Agreement~~Deed of Indemnification entered into by and between Alkermes ~~Pharma Ireland Limited~~plc and ~~Biogen Swiss Manufacturing GmbH dated November 27, 2017.~~the directors and Secretary of Alkermes plc.
10.2 #†		Form of Indemnification Agreement entered into by and between Alkermes, Inc. and the executive officers and directors of Alkermes plc.
31.1 #		Rule 13a-14(a)/15d-14(a) Certification.
31.2 #		Rule 13a-14(a)/15d-14(a) Certification.
32.1 ‡		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
~~101.INS~~		~~XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.~~
101.SCH #		Inline XBRL Taxonomy Extension Schema Document.
101.CAL #		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB #		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE #		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF #		Inline XBRL Taxonomy Extension Definition Linkbase Document.
~~101.LAB~~104 #		Cover Page Interactive Data File (formatted as Inline XBRL ~~Taxonomy Extension Label Linkbase Document.~~
~~101.PRE #~~		~~XBRL Taxonomy Extension Presentation Linkbase Document.~~with applicable taxonomy extension information contained in Exhibits 101)


	ALKERMES plc

	(Registrant)


	By:	/s/ Richard F. Pops
		Chairman and Chief Executive Officer
		(Principal Executive Officer)


	By:	/s/ James M. Frates
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer)