Alkermes plc. 10-K

Item 9A. Controls and Procedures Disclosure Controls and Procedures and Internal Control Over Financial Reporting Controls and Procedures Our management has evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a‑15(e) and 15d‑15(e) under the Exchange Act), as of December 31, 2022. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that (a) the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (b) such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost‑benefit relationship of possible controls and procedures. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over our financial reporting as defined in Rules 13a‑15(f) and 15d‑15(f). Internal control over financial reporting is defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act as a process designed by, or under the supervision of, the issuer’s principal executive and principal financial officers, or persons performing similar functions, and effected by the issuer’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of the assets of the issuer; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material effect on the financial statements. 69 Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness for future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in its 2013 Internal Control—Integrated Framework. Based on this assessment, our management has concluded that, as of December 31, 2022, our internal control over financial reporting was effective. The effectiveness of our internal control over financial reporting as of December 31, 2022 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is included in this Annual Report, beginning on page F-1. Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 70 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by this item is incorporated herein by reference to our definitive proxy statement for our 2023 annual general meeting of shareholders. Item 11. Executive Compensation The information required by this item (excluding, for clarity, the information required by Item 402(v) of Regulation S-K) is incorporated herein by reference to our definitive proxy statement for our 2023 annual general meeting of shareholders. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item is incorporated herein by reference to our definitive proxy statement for our 2023 annual general meeting of shareholders. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this item is incorporated herein by reference to our definitive proxy statement for our 2023 annual general meeting of shareholders. Item 14. Principal Accounting Fees and Services The information required by this item is incorporated herein by reference to our definitive proxy statement for our 2023 annual general meeting of shareholders. 71 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules (a)(1) Consolidated Financial Statements—The consolidated financial statements of Alkermes plc, as required by this item, are submitted in a separate section beginning on page F‑1 of this Annual Report, as follows: Financial Statement Page Number Report of Independent Registered Public Accounting Firm (PCAOB ID: 238 ) F-1 Consolidated Balance Sheets F-3 Consolidated Statements of Operations and Comprehensive Loss F-4 Consolidated Statements of Shareholders’ Equity F-5 Consolidated Statements of Cash Flows F-6 Notes to the Consolidated Financial Statements F-7 (2) Financial Statement Schedules—All schedules have been omitted because the absence of conditions under which they are required or because the required information is included in the consolidated financial statements or notes thereto. (3) The exhibits listed in the below Exhibit Index are filed or furnished as part of this Annual Report or are incorporated into this Annual Report by reference. EXHIBIT INDEX Incorporated by reference herein Exhibit No. Description of Exhibit Form Date 2.1 * Purchase and Sale Agreement, dated March 7, 2015, by and among Alkermes Pharma Ireland Limited, Daravita Limited, Eagle Holdings USA, Inc., Recro Pharma, Inc., and Recro Pharma LLC (assigned by Recro to Baudax Bio, Inc. in November 2019). Exhibit 2.1 to the Alkermes plc Current Report on Form 8-K/A (File No. 001-35299) April 16, 2015 2.1-1 First Amendment to Purchase and Sale Agreement, dated December 8, 2016 by and among Alkermes Pharma Ireland Limited, Daravita Limited, Eagle Holdings USA, Inc., Recro Pharma, Inc., and Recro Gainesville LLC (assigned by Recro to Baudax Bio, Inc. in November 2019). Exhibit 2.1.1 to the Alkermes plc Annual Report on Form 10-K (File No. 001-35299) February 17, 2017 2.1-2 Second Amendment to Purchase and Sale Agreement, dated December 20, 2018, by and among Alkermes Pharma Ireland Limited, Daravita Limited, Alkermes US Holdings, Inc. (as successor in interest to Eagle Holdings USA, Inc.), Recro Pharma, Inc. and Recro Gainesville LLC (assigned by Recro to Baudax Bio, Inc. in November 2019). Exhibit 2.1.2 to the Alkermes plc Annual Report on Form 10-K (File No. 001-35299) February 15, 2019 2.1-3 Third Amendment to Purchase and Sale Agreement, dated August 17, 2020, by and among Alkermes Pharma Ireland Limited, Daravita Limited, Alkermes US Holdings, Inc. (as successor in interest to Eagle Holdings USA, Inc.) and Baudax Bio, Inc. (as successor in interest to Recro Pharma, Inc. and Recro Gainesville LLC). Exhibit 2.1 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) October 29, 2020 2.2 ** Agreement and Plan of Merger, dated November 14, 2019 by and among Alkermes, Inc., Thinker Merger Sub, Inc., Alkermes plc, Rodin Therapeutics, Inc., and Shareholder Representative Services LLC, as Company Equityholder Representative. Exhibit 2.1 to the Alkermes plc Current Report on Form 8-K (File No. 001-35299) November 25, 2019 3.1 Memorandum and Articles of Association of Alkermes plc. Exhibit 3.1 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) July 27, 2022 4.1 # Description of Securities. 10.1 Lease between Alkermes, Inc. and PDM Unit 850, LLC, dated as of April 22, 2009. Exhibit 10.5 to the Alkermes, Inc. Annual Report on Form 10-K (File No. 001-14131) May 28, 2009 10.1-1 First Amendment to Lease between Alkermes, Inc. and PDM Unit 850, LLC, dated as of June 18, 2009. Exhibit 10.2 to the Alkermes, Inc. Quarterly Report on Form 10-Q (File No. 001-14131) August 6, 2009 72 Table of Contents Incorporated by reference herein Exhibit No. Description of Exhibit Form Date 10.1 - 2 Second Amendment to Lease between Alkermes, Inc. and PDM Unit 850, LLC, dated as of November 12, 2013. Exhibit 10.74 to the Alkermes plc Transition Report on Form 10-KT (File No. 001-35299) February 27, 2014 10.1-3 Third Amendment to Lease between Alkermes, Inc. and PDM 850 Unit, LLC, dated as of May 15, 2014. Exhibit 10.2 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) July 31, 2014 10.1-4 Fourth Amendment to Lease between Alkermes, Inc. and GI TC 850 Winter Street, LLC, dated as of December 30, 2014. Exhibit 10.7 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) July 30, 2015 10.1-5 Fifth Amendment to Lease between Alkermes, Inc. and GI TC 850 Winter Street, LLC, dated as of October 31, 2018. Exhibit 10.1.5 to the Alkermes plc Annual Report on Form 10-K (File No. 001-35299) February 15, 2019 10.1-6 Sixth Amendment to Lease between Alkermes, Inc. and GI TC 850 Winter Street, LLC, dated as of July 24, 2020. Exhibit 10.1 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) October 29, 2020 10.2 License Agreement, dated as of February 13, 1996, between Medisorb Technologies International L.P. and Janssen Pharmaceutica Inc. (United States) (assigned to Alkermes, Inc. in July 2006). Exhibit 10.2 to the Alkermes plc Annual Report on Form 10-K (File No. 001-35299) February 25, 2016 10.2-1 * Third Amendment to Development Agreement, Second Amendment to Manufacturing and Supply Agreement and First Amendment to License Agreements by and between Janssen Pharmaceutica International, Janssen Pharmaceutica Inc. and Alkermes Controlled Therapeutics Inc. II, dated April 1, 2000 (assigned to Alkermes, Inc. in July 2006). Exhibit 10.5 to the Alkermes, Inc. Quarterly Report on Form 10-Q (File No. 001-14131) February 8, 2005 10.2-2 * Second Amendment, dated as of August 16, 2012, to the License Agreement, dated as of February 13, 1996, as amended, by and between Alkermes, Inc. and Janssen Pharmaceutica Inc. and the License Agreement, dated as of February 21, 1996, as amended, by and between Alkermes, Inc. and JPI Pharmaceutica International, and the Fifth Amendment, dated as of August 16, 2012, to the Manufacturing and Supply Agreement, dated as of August 6, 1997, as amended, by and between Alkermes, Inc., Janssen Pharmaceutica Inc. and JPI Pharmaceutica International. Exhibit 10.3 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) November 1, 2012 10.3 License Agreement, dated as of February 21, 1996, between Medisorb Technologies International L.P. and Janssen Pharmaceutica International (worldwide except United States) (assigned to Alkermes, Inc. in July 2006). Exhibit 10.3 to the Alkermes plc Annual Report on Form 10-K (File No. 001-35299) February 25, 2016 10.4 Manufacturing and Supply Agreement, dated August 6, 1997, by and among JPI Pharmaceutica International, Janssen Pharmaceutica, Inc. and Alkermes Controlled Therapeutics Inc. II (assigned to Alkermes, Inc. in July 2006). Exhibit 10.4 to the Alkermes plc Annual Report on Form 10-K (File No. 001-35299) February 25, 2016 10.4-1 * Fourth Amendment to Development Agreement and First Amendment to Manufacturing and Supply Agreement by and between Janssen Pharmaceutica International, Janssen Pharmaceutica Products, L.P. and Alkermes Controlled Therapeutics Inc. II, dated December 20, 2000 (assigned to Alkermes, Inc. in July 2006). Exhibit 10.4 to the Alkermes, Inc. Quarterly Report on Form 10-Q (File No. 001-14131) February 8, 2005 10.4-2 Addendum to the Manufacturing and Supply Agreement by and among JPI Pharmaceutica International, Janssen Pharmaceutica Inc. and Alkermes Controlled Therapeutics Inc. II, dated August 1, 2001. Exhibit 10.4.2 to the Alkermes plc Annual Report on Form 10-K (File No. 001-35299) February 25, 2016 10.4-3 Letter Agreement and Exhibits to Manufacturing and Supply Agreement, dated February 1, 2002, by and among JPI Pharmaceutica International, Janssen Pharmaceutica Inc. and Alkermes Controlled Therapeutics Inc. II (assigned to Alkermes, Inc. in July 2006). Exhibit 10.4.3 to the Alkermes plc Annual Report on Form 10-K (File No. 001-35299) February 25, 2016 73 Table of Contents Incorporated by reference herein Exhibit No. Description of Exhibit Form Date 10.4 - 4 * Amendment to Manufacturing and Supply Agreement by and between JPI Pharmaceutica International, Janssen Pharmaceutica Inc. and Alkermes Controlled Therapeutics Inc. II, dated December 22, 2003 (assigned to Alkermes, Inc. in July 2006). Exhibit 10.6 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 011-35299) July 30, 2015 10.4-5 * Fourth Amendment to Manufacturing and Supply Agreement by and between JPI Pharmaceutica International, Janssen Pharmaceutica Inc. and Alkermes Controlled Therapeutics Inc. II, dated January 10, 2005 (assigned to Alkermes, Inc. in July 2006). Exhibit 10.9 to the Alkermes, Inc. Quarterly Report on Form 10-Q (File No. 001-14131) February 8, 2005 10.4-6 * Sixth Amendment to Manufacturing and Supply Agreement by and between JPI Pharmaceutica International, Janssen Pharmaceutica Inc. and Alkermes Controlled Therapeutics Inc. II (assigned to Alkermes, Inc. in July 2006), effective as of July 1, 2018. Exhibit 10.11 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 011-35299) October 23, 2018 10.5 * Development and License Agreement, dated as of May 15, 2000, by and between Alkermes Controlled Therapeutics Inc. II and Amylin Pharmaceuticals, Inc., as amended on October 24, 2005 and July 17, 2006 (assigned, as amended, to Alkermes, Inc. in July 2006). Exhibit 10.28 to the Alkermes, Inc. Annual Report on Form 10-K (File No. 001-14131) May 21, 2010 10.5-1 * Third Amendment to Development and License Agreement, dated March 20, 2018, by and between Amylin Pharmaceuticals, LLC and Alkermes Pharma Ireland Limited (as successor-in-interest to Alkermes Controlled Therapeutics Inc. II), amending that certain Development and License Agreement, by and between ACTII and Amylin, dated May 15, 2000, as amended on October 24, 2005 and July 17, 2006. Exhibit 10.3 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 011-35299) April 26, 2018 10.6 * Agreement by and between JPI Pharmaceutica International, Janssen Pharmaceutica Inc. and Alkermes Controlled Therapeutics Inc. II, dated December 21, 2002 (assigned to Alkermes, Inc. in July 2006). Exhibit 10.6 to the Alkermes, Inc. Quarterly Report on Form 10-Q (File No. 001-14131) February 8, 2005 10.6-1 * Amendment to Agreement by and between JPI Pharmaceutica International, Janssen Pharmaceutica Inc. and Alkermes Controlled Therapeutics Inc. II, dated December 16, 2003 (assigned to Alkermes, Inc. in July 2006). Exhibit 10.7 to the Alkermes, Inc. Quarterly Report on Form 10-Q (File No. 001-14131) February 8, 2005 10.7 * License Agreement by and among Elan Pharmaceutical Research Corp., d/b/a Nanosystems and Elan Pharma International Limited and Janssen Pharmaceutica N.V. dated as of March 31, 1999. Exhibit 10.23 to the Alkermes plc Annual Report on Form 10-K (File No. 001-35299) May 23, 2013 10.7-1 First Amendment, dated as of July 31, 2003, to the License Agreement by and among Elan Drug Delivery, Inc. (formerly Elan Pharmaceutical Research Corp.) and Elan Pharma International Limited and Janssen Pharmaceutica NV dated March 31, 1999. Exhibit 10.24 to the Alkermes plc Annual Report on Form 10-K (File No. 001-35299 ) May 23, 2013 10.7-2 * Agreement Amendment No. 2, dated as of July 31, 2009, to the License Agreement by and among Elan Pharmaceutical Research Corp., d/b/a Nanosystems and Elan Pharma International Limited and Janssen Pharmaceutica N.V. dated as of March 31, 1999, as amended by the First Amendment, dated as of July 31, 2003. Exhibit 10.25 to the Alkermes plc Annual Report on Form 10-K (File No. 001-35299) May 23, 2013 10.8 Amendment to First Lien Credit Agreement, dated September 25, 2012, among Alkermes, Inc., Alkermes plc, the guarantors party thereto, the lenders party thereto, Morgan Stanley Senior Funding, Inc. as Administrative Agent and Collateral Agent and the arrangers and agents party thereto. Exhibit 10.1 to the Alkermes plc Current Report on Form 8-K (File No. 011-35299) September 25, 2012 10.8-1 Amendment No. 2, dated as of February 14, 2013, to Amended and Restated Credit Agreement, dated as of September 16, 2011, as amended and restated on September 25, 2012, among Alkermes, Inc., Alkermes plc, the guarantors party thereto, the lenders party thereto, Morgan Stanley Senior Funding, Inc. as Administrative Agent and Collateral Agent and the arrangers and agents party thereto. Exhibit 10.1 to the Alkermes plc Current Report on Form 8-K (File No. 011-35299) February 19, 2013 74 Table of Contents Incorporated by reference herein Exhibit No. Description of Exhibit Form Date 10. 8 - 2 Amendment No. 3 and Waiver to Amended and Restated Credit Agreement, dated as of May 22, 2013, among Alkermes, Inc., Alkermes plc, Alkermes Pharma Ireland Limited, Alkermes US Holdings, Inc., Morgan Stanley Senior Funding, Inc. as Administrative Agent and Collateral Agent and the lenders party thereto. Exhibit 10.52 to the Alkermes plc Annual Report on Form 10-K (File No. 011-35299) May 23, 2013 10.8-3 Amendment No. 4, dated as of October 12, 2016, to Amended and Restated Credit Agreement, dated as of September 16, 2011, as amended and restated on September 25, 2012, as further amended by Amendment No. 2 on February 14, 2013 and as amended by Amendment No. 3 and Waiver to Amended and Restated Credit Agreement dated as of May 22, 2013, among Alkermes, Inc., Alkermes plc, the guarantors party thereto, the lenders party thereto and Morgan Stanley Senior Funding, Inc. as Administrative Agent and Collateral Agent. Exhibit 10.2 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 011-35299) November 2, 2016 10.8-4 Amendment No. 5, dated as of March 26, 2018, to Amended and Restated Credit Agreement, dated as of September 16, 2011, as amended and restated on September 25, 2012, as further amended by Amendment No. 2 on February 14, 2013, as amended by Amendment No. 3 and Waiver to Amended and Restated Credit Agreement dated as of May 22, 2013, and as amended by Amendment No. 4, dated as of October 12, 2016, among Alkermes, Inc., Alkermes plc, the guarantors party thereto, the lenders party thereto and Morgan Stanley Senior Funding, Inc. as Administrative Agent and Collateral Agent. Exhibit 10.5 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 011-35299) April 26, 2018 10.8-5 Amendment No. 6, dated as of March 12, 2021, to Amended and Restated Credit Agreement, dated as of September 16, 2011, as amended and restated on September 25, 2012, as further amended by Amendment No. 2 on February 14, 2013, as amended by Amendment No. 3 and Waiver to Amended and Restated Credit Agreement dated as of May 22, 2013, as amended by Amendment No. 4, dated as of October 12, 2016, and as amended by Amendment No. 5, dated as of March 26, 2018, among Alkermes, Inc., Alkermes plc, the guarantors party thereto, the lenders party thereto and Morgan Stanley Senior Funding, Inc. as Administrative Agent and Collateral Agent. Exhibit 10.1 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 011-35299) April 28, 2021 10.9 * License and Collaboration Agreement, dated November 27, 2017, by and between Alkermes Pharma Ireland Limited and Biogen Swiss Manufacturing GmbH. Exhibit 10.10 of the Alkermes plc Annual Report on Form 10-K (File No. 011-35299) February 16, 2018 10.9-1 * First Amendment to License and Collaboration Agreement between Alkermes Pharma Ireland Limited and Biogen Swiss Manufacturing GmbH, effective as of October 3, 2018. Exhibit 10.12 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 011-35299) October 23, 2018 10.9-2 Second Amendment to License and Collaboration Agreement between Alkermes Pharma Ireland Limited and Biogen Swiss Manufacturing GmbH, effective as of January 31, 2019. Exhibit 10.1 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 011-35299) April 25, 2019 10.9-3 ** Third Amendment to License and Collaboration Agreement between Alkermes Pharma Ireland Limited and Biogen Swiss Manufacturing GmbH, effective as of October 30, 2019. Exhibit 10.10.3 of the Alkermes plc Annual Report on Form 10-K (File No. 011-35299) February 13, 2020 10.9-4 ** Fourth Amendment to License and Collaboration Agreement between Alkermes Pharma Ireland Limited and Biogen Swiss Manufacturing GmbH, effective as of August 25, 2022. Exhibit 10.1 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 011-35299) November 2, 2022 10.10 Lease, dated March 23, 2018, by and between Alkermes, Inc. and PDM 900 Unit, LLC. Exhibit 10.4 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 011-35299) April 26, 2018 10.10-1 First Amendment to Lease, dated June 21, 2018, by and between Alkermes, Inc. and PDM 900 Unit, LLC. Exhibit 10.2 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) July 26, 2018 10.10-2 Second Amendment to Lease, dated May 10, 2019, by and between Alkermes, Inc. and PDM 900 Unit, LLC. Exhibit 10.2 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) July 25, 2019 75 Table of Contents Incorporated by reference herein Exhibit No. Description of Exhibit Form Date 10.1 1 † Employment Agreement, dated as of December 12, 2007, by and between Richard F. Pops and Alkermes, Inc. Exhibit 10.1 to the Alkermes, Inc. Quarterly Report on Form 10-Q (File No. 001-14131) February 11, 2008 10.11-1 † Amendment to Employment Agreement, dated as of October 7, 2008, by and between Alkermes, Inc. and Richard F. Pops. Exhibit 10.5 to the Alkermes, Inc. Current Report on Form 8-K (File No. 001-14131) October 7, 2008 10.11-2 † Amendment No. 2 to Employment Agreement, dated as of September 10, 2009 by and between Richard F. Pops and Alkermes, Inc. Exhibit 10.2 to the Alkermes, Inc. Current Report on Form 8-K (File No. 001-14131) September 11, 2009 10.12 † Form of Employment Agreement, as amended by the Form of Amendment to Employment Agreement set forth in 10.12.1, entered into by and between Alkermes, Inc. and each of Blair C. Jackson and Michael J. Landine. Exhibit 10.3 to the Alkermes, Inc. Quarterly Report on Form 10-Q (File No. 001-14131) February 11, 2008 10.12-1 † Form of Amendment to Employment Agreement with Alkermes, Inc. Exhibit 10.7 to the Alkermes, Inc. Current Report on Form 8-K (File No. 001-14131) October 7, 2008 10.13 † Form of Covenant Not to Compete, of various dates, by and between Alkermes, Inc. and Michael J. Landine. Exhibit 10.15(a) to the Alkermes, Inc. Annual Report on Form 10-K (File No. 001-14131) May 30, 2008 10.14 † Form of Employment Agreement entered into by and between Alkermes, Inc. and each of Iain M. Brown, David J. Gaffin, Craig C. Hopkinson, M.D. and Christian Todd Nichols. Exhibit 10.1 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 011-35299) November 2, 2016 10.14-1† Offer Letter by and between Alkermes, Inc. and Craig C. Hopkinson M.D., effective as of April 24, 2017. Exhibit 10.17.1 to the Alkermes plc Annual Report on Form 10-K (File No. 011-35299) February 16, 2018 10.14-2 † Offer Letter, dated March 29, 2019, by and between Alkermes, Inc. and Christian Todd Nichols. Exhibit 10.1 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 011-35299) July 29, 2020 10.15 † Form of Indemnification Agreement entered into by and between Alkermes, Inc. and each of the Directors and Secretaries of Alkermes plc and its Irish subsidiaries. Exhibit 10.2 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) April 29, 2020 10.16 † Form of Deed of Indemnification entered into by and between each of the Directors, Secretaries and executive officers of Alkermes plc and its subsidiaries. Exhibit 10.1 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) April 29, 2020 10.17† Alkermes plc Amended and Restated 2008 Stock Option and Incentive Plan, as amended. Exhibit 10.1 to the Alkermes plc Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (File No. 001-35299) April 27, 2017 10.17-1 † Form of Stock Option Award Certificate (Non-Employee Director) under the Alkermes plc Amended and Restated 2008 Stock Option and Incentive Plan, as amended. Exhibit 10.4 to the Alkermes plc Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (File No. 001-35299) April 28, 2016 10.17-2 † Form of Restricted Stock Unit Award Certificate (Time Vesting Only – Irish) under the Alkermes plc Amended and Restated 2008 Stock Option and Incentive Plan, as amended. Exhibit 10.5 to the Alkermes plc Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (File No. 001-35299) April 28, 2016 76 Table of Contents Incorporated by reference herein Exhibit No. Description of Exhibit Form Date 10. 1 7 - 3 † Form of Restricted Stock Unit Award Certificate (Time Vesting Only – U.S.) under the Alkermes plc Amended and Restated 2008 Stock Option and Incentive Plan, as amended. Exhibit 10.6 to the Alkermes plc Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (File No. 001-35299) April 28, 2016 10.17-4 † Form of Stock Option Award Certificate (Time Vesting Non-Qualified Option – Irish) under the Alkermes plc Amended and Restated 2008 Stock Option and Incentive Plan, as amended. Exhibit 10.7 to the Alkermes plc Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (File No. 001-35299) April 28, 2016 10.17-5 † Form Stock Option Award Certificate (Time Vesting Non-Qualified Option – U.S.) under the Alkermes plc Amended and Restated 2008 Stock Option and Incentive Plan, as amended. Exhibit 10.8 to the Alkermes plc Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (File No. 001-35299) April 28, 2016 10.17-6 † Form of Stock Option Award Certificate (Incentive Stock Option – U.S.) under the Alkermes plc Amended and Restated 2008 Stock Option and Incentive Plan, as amended. Exhibit 10.9 to the Alkermes plc Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (File No. 001-35299) April 28, 2016 10.17-7 † Form of 2008 Restricted Stock Unit Award Certificate (Performance Vesting Only) under the Alkermes plc Amended and Restated 2008 Stock Option and Incentive Plan, as amended. Exhibit 10.2 to the Alkermes, Inc. Current Report on Form 8-K (File No. 001-14131) May 22, 2009 10.18† Alkermes plc 2011 Stock Option and Incentive Plan, as amended. Exhibit 10.1 to the Alkermes plc Current Report on Form 8-K (File No. 011-35299) May 24, 2017 10.18-1 † Form of Incentive Stock Option Award Certificate under the Alkermes plc 2011 Stock Option and Incentive Plan, as amended. Exhibit 10.1 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) October 23, 2018 10.18-2 † Form of Non-Qualified Stock Option (Employee) Award Certificate under the Alkermes plc 2011 Stock Option and Incentive Plan, as amended. Exhibit 10.2 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) October 23, 2018 10.18-3 † Form of Restricted Stock Unit (Time-Vesting) Award Certificate under the Alkermes plc 2011 Stock Option and Incentive Plan, as amended. Exhibit 10.3 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) October 23, 2018 10.18-4 † Form of Restricted Stock Unit (Performance-Vesting) Award Certificate under the Alkermes plc 2011 Stock Option and Incentive Plan, as amended. Exhibit 10.4 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) October 23, 2018 10.18-5 † Form of Non-Qualified Stock Option (Non-Employee Director) Award Certificate under the Alkermes plc 2011 Stock Option and Incentive Plan, as amended. Exhibit 10.5 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) October 23, 2018 10.19 † A lkermes plc 2018 Stock Option and Incentive Plan, as amended. Exhibit 10.1 to the Alkermes plc Current Report on Form 8-K (File No. 001-35299) July 7, 2022 10.19-1 † Form of Incentive Stock Option Award Certificate under the Alkermes plc 2018 Stock Option and Incentive Plan, as amended . Exhibit 10.6 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) October 23, 2018 10.19-2 † Form of Non-Qualified Stock Option (Employee) Award Certificate under the Alkermes plc 2018 Stock Option and Incentive Plan, as amended. Exhibit 10.7 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) October 23, 2018 10.19-3 † Form of Restricted Stock Unit (Time-Vesting) Award Certificate under the Alkermes plc 2018 Stock Option and Incentive Plan, as amended. Exhibit 10.8 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) October 23, 2018 10.19-4 † Form of Restricted Stock Unit (Performance-Vesting) Award Certificate under the Alkermes plc 2018 Stock Option and Incentive Plan, as amended. Exhibit 10.6 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) July 29, 2020 10.19-5 † Form of Non-Qualified Stock Option (Non-Employee Director) Award Certificate under the Alkermes plc 2018 Stock Option and Incentive Plan, as amended. Exhibit 10.4 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) July 29, 2020 77 Table of Contents Incorporated by reference herein Exhibit No. Description of Exhibit Form Date 10. 19 - 6 † Form of Non-Employee Director Restricted Stock Unit (Time-Vesting) Award Certificate under the Alkermes plc 2018 Stock Option and Incentive Plan, as amended. Exhibit 10.5 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) July 29, 2020 10.19-7 † Form of Non-Employee Director New Director Grant Non-Qualified Stock Option Award Certificate under the Alkermes plc 2018 Stock Option and Incentive Plan, as amended. Exhibit 10.1.1 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) July 27, 2022 10.19-8 † Form of Non-Employee Director New Director Grant Restricted Stock Unit (Time-Vesting) Award Certificate under the Alkermes plc 2018 Stock Option and Incentive Plan, as amended. Exhibit 10.1.2 to the Alkermes plc Quarterly Report on Form 10-Q (File No. 001-35299) July 27, 2022 10.19-9 †# Form of Incentive Stock Option Award Certificate for Reporting Officers under the Alkermes plc 2018 Stock Option and Incentive Plan, as amended. 10.19-10 †# Form of Non-Qualified Stock Option Award Certificate for Reporting Officers under the Alkermes plc 2018 Stock Option and Incentive Plan, as amended. 10.19-11 †# Form of Restricted Stock Unit (Time-Vesting) Award Certificate for Reporting Officers under the Alkermes plc 2018 Stock Option and Incentive Plan, as amended. 10.19-12 †# Form of Restricted Stock Unit (Performance-Vesting) Award Certificate for Reporting Officers under the Alkermes plc 2018 Stock Option and Incentive Plan, as amended. 21.1 # List of subsidiaries . 23.1 # Consent of PricewaterhouseCoopers LLP, an independent registered public accounting firm . 24.1 # Power of Attorney (included on the signature pages hereto) . 31.1 # Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 . 31.2 # Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 . 32.1 ‡ Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 . 101.SCH # Inline XBRL Taxonomy Extension Schema Document. 101.CAL # Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.LAB # Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE # Inline XBRL Taxonomy Extension Presentation Linkbase Document. 101.DEF # Inline XBRL Taxonomy Extension Definition Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101). † Indicates a management contract or any compensatory plan, contract or arrangement. # Filed herewith. ‡ Furnished herewith. * Confidential treatment has been granted or requested for certain portions of this exhibit. Such portions have been filed separately with the SEC pursuant to a confidential treatment request. ** In accordance with Item 601(b)(2)(ii) of Regulation S-K, certain information (indicated by “[**]”) has been excluded from this exhibit because it is both not material and would likely cause competitive harm to the Company if publicly disclosed. Item 16. Form 10-K Summary None. 78 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ALKERMES PLC By: /s/ Richard F. Pops Richard F. Pops Chairman and Chief Executive Officer February 16, 2023 POWER OF ATTORNEY Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Each person whose signature appears below in so signing also makes, constitutes and appoints Richard F. Pops and Iain M. Brown, and each of them, his true and lawful attorney‑in‑fact, with full power of substitution, for him in any and all capacities, to execute and cause to be filed with the Securities and Exchange Commission any and all amendments to this Annual Report, with exhibits thereto and other documents in connection therewith, and hereby ratifies and confirms all that said attorney‑in‑fact or his substitute or substitutes may do or cause to be done by virtue hereof. Signature Title Date /s/ Richard F. Pops Richard F. Pops Chairman and Chief Executive Officer (Principal Executive Officer) February 16, 2023 /s/ Iain M. Brown Iain M. Brown Senior Vice President, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) February 16, 2023 /s/ Emily Peterson Alva Emily Peterson Alva Director February 16, 2023 /s/ Shane M. Cooke Shane M. Cooke Director February 16, 2023 /s/ David A. Daglio, Jr. Director February 16, 2023 David A. Daglio, Jr. /s/ Richard B. Gaynor Richard B. Gaynor Director February 16, 2023 /s/ Cato T. Laurencin Director February 16, 2023 Cato T. Laurencin /s/ Brian P. McKeon Brian P. McKeon Director February 16, 2023 /s/ Nancy L. Snyderman Nancy L. Snyderman Director February 16, 2023 /s/ Frank Anders Wilson Frank Anders Wilson Director February 16, 2023 /s/ Christopher I. Wright Christopher I. Wright Director February 16, 2023 /s/ Nancy J. Wysenski Nancy J. Wysenski Director February 16, 2023 79 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Alkermes plc Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Alkermes plc and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations and comprehensive loss, of shareholders’ equity and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. F-1 Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Rebate Accruals – Medicaid Drug Rebate Program As described in Note 2 and Note 10 to the consolidated financial statements, the Company’s revenue from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with the Company’s customers, health care providers or payers. The Company records accruals for rebates to U.S. states under the Medicaid Drug Rebate Program as a reduction of sales when the product is shipped into the distribution channel using the expected value method. As of December 31, 2022, accrued Medicaid rebates were $208.3 million, of which a significant amount related to the Medicaid Drug Rebate Program. The Company rebates individual U.S. states for all eligible units purchased under the Medicaid program based on a rebate per unit calculation, which is based on the Company’s average manufacturer prices. The Company estimates expected unit sales to individuals covered by Medicaid and rebates per unit under the Medicaid program and adjusts its rebate accrual based on actual unit sales and rebates per unit and changes in trends in Medicaid utilization. The principal considerations for our determination that performing procedures relating to rebate accruals for the Medicaid Drug Rebate Program is a critical audit matter are (i) the significant judgment by management due to significant measurement uncertainty involved in developing the reserves, as the reserves are based on assumptions developed using historical experience, current contractual requirements, specific known market events and payment patterns and (ii) a high degree of auditor judgment, effort, and subjectivity in applying procedures related to these assumptions. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to rebate accruals for the Medicaid Drug Rebate Program, including controls over the assumptions used to estimate the rebate accruals. These procedures also included, among others, (i) developing an independent estimate of the rebate accruals by utilizing third-party data related to product sales, the historical trend of actual rebate claims paid and consideration of contractual requirement changes and market events; (ii) comparing the independent estimate to management’s estimate; and (iii) testing rebate claims processed by the Company. /s/ PricewaterhouseCoopers LLP Boston, Massachusetts February 16, 2023 We have served as the Company’s auditor since 2007. F-2 Table of Contents ALKERMES PLC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2022 and 2021 December 31, 2022 December 31, 2021 (In thousands, except share and per share amounts) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 292,473 $ 337,544 Investments—short-term 315,992 198,767 Receivables, net 287,967 313,193 Inventory 181,418 150,335 Contract assets 8,929 13,363 Prepaid expenses and other current assets 43,527 48,967 Total current assets 1,130,306 1,062,169 PROPERTY, PLANT AND EQUIPMENT, NET 325,361 341,054 INVESTMENTS—LONG-TERM 131,610 229,430 RIGHT-OF-USE ASSETS 115,855 115,627 INTANGIBLE ASSETS, NET 37,680 74,043 GOODWILL 92,873 92,873 DEFERRED TAX ASSETS 115,602 81,833 OTHER ASSETS 14,691 27,455 TOTAL ASSETS $ 1,963,978 $ 2,024,484 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 220,089 $ 208,491 Accrued sales discounts, allowances and reserves 252,115 237,216 Operating lease liabilities—short-term 15,722 16,240 Contract liabilities—short-term 6,816 6,339 Current portion of long-term debt 3,000 3,000 Total current liabilities 497,742 471,286 LONG-TERM DEBT 290,270 292,804 OPERATING LEASE LIABILITIES—LONG-TERM 89,829 104,162 OTHER LONG-TERM LIABILITIES 42,384 43,648 Total liabilities 920,225 911,900 COMMITMENTS AND CONTINGENT LIABILITIES (Note 17) SHAREHOLDERS’ EQUITY: Preferred shares, par value, $ 0.01 per share; 50,000,000 shares authorized; zero issued and outstanding at December 31, 2022 and 2021, respectively — — Ordinary shares, par value, $ 0.01 per share; 450,000,000 shares authorized; 168,951,193 and 165,790,549 shares issued; 164,377,009 and 161,937,327 shares outstanding at December 31, 2022 and 2021, respectively 1,690 1,658 Treasury shares, at cost ( 4,574,184 and 3,853,222 shares at December 31, 2022 and 2021, respectively) ( 160,862 ) ( 142,658 ) Additional paid-in capital 2,913,099 2,798,325 Accumulated other comprehensive loss ( 10,889 ) ( 3,723 ) Accumulated deficit ( 1,699,285 ) ( 1,541,018 ) Total shareholders’ equity 1,043,753 1,112,584 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,963,978 $ 2,024,484 The accompanying notes are an integral part of these consolidated financial statements. F-3 Table of Contents ALKERMES PLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS Years Ended December 31, 2022, 2021 and 2020 Year Ended December 31, 2022 2021 2020 (In thousands, except per share amounts) REVENUES: Product sales, net $ 777,552 $ 627,424 $ 551,760 Manufacturing and royalty revenues 331,983 541,807 484,000 License revenue 2,000 3,500 1,050 Research and development revenue 260 1,020 1,946 Total revenues 1,111,795 1,173,751 1,038,756 EXPENSES: Cost of goods manufactured and sold (exclusive of amortization of acquired intangible assets shown below) 218,108 197,387 178,316 Research and development 393,842 406,526 394,588 Selling, general and administrative 605,747 560,977 538,827 Amortization of acquired intangible assets 36,363 38,148 39,452 Total expenses 1,254,060 1,203,038 1,151,183 OPERATING LOSS ( 142,265 ) ( 29,287 ) ( 112,427 ) OTHER (EXPENSE) INCOME, NET: Interest income 7,629 2,408 6,960 Interest expense ( 13,040 ) ( 11,219 ) ( 8,659 ) Change in the fair value of contingent consideration ( 21,750 ) ( 1,427 ) 3,945 Other income, net 2,122 219 13,644 Total other (expense) income, net ( 25,039 ) ( 10,019 ) 15,890 LOSS BEFORE INCOME TAXES ( 167,304 ) ( 39,306 ) ( 96,537 ) INCOME TAX (BENEFIT) PROVISION ( 9,037 ) 8,863 14,324 NET LOSS $ ( 158,267 ) $ ( 48,169 ) $ ( 110,861 ) LOSS PER ORDINARY SHARE: Basic and diluted $ ( 0.97 ) $ ( 0.30 ) $ ( 0.70 ) WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES OUTSTANDING: Basic and diluted 163,541 160,942 158,803 COMPREHENSIVE LOSS: Net loss $ ( 158,267 ) $ ( 48,169 ) $ ( 110,861 ) Holding loss, net of a tax (benefit) provision of $( 973 ), $( 706 ) and $ 130 , respectively ( 7,166 ) ( 2,374 ) 467 COMPREHENSIVE LOSS $ ( 165,433 ) $ ( 50,543 ) $ ( 110,394 ) The accompanying notes are an integral part of these consolidated financial statements. F-4 Table of Contents ALKERMES PLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY Years Ended December 31, 2022, 2021 and 2020 Accumulated Additional Other Ordinary Shares Paid-In Comprehensive Accumulated Treasury Stock Shares Amount Capital Loss Deficit Shares Amount Total (In thousands, except share data) BALANCE — December 31, 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 682,122 7 8,366 — — — — 8,373 Receipt of Alkermes' shares for the purchase of stock options or to satisfy minimum tax withholding obligations related to share-based awards 1,097,210 11 ( 11 ) — — ( 397,193 ) ( 7,701 ) ( 7,701 ) Share-based compensation — — 91,262 — — — — 91,262 Unrealized gain on marketable securities, net of tax provision of $ 130 — — — 467 — — — 467 Net loss — — — — ( 110,861 ) — — ( 110,861 ) BALANCE — December 31, 2020 162,269,220 $ 1,620 $ 2,685,647 $ ( 1,349 ) $ ( 1,492,849 ) ( 3,108,079 ) $ ( 126,087 ) $ 1,066,982 Issuance of ordinary shares under employee stock plans 3,521,329 38 25,281 — — — — 25,319 Receipt of Alkermes' shares for the purchase of stock options or to satisfy minimum tax withholding obligations related to share-based awards — — — — — ( 745,143 ) ( 16,571 ) ( 16,571 ) Share-based compensation — — 87,397 — — — — 87,397 Unrealized loss on marketable securities, net of tax benefit of $ 706 — — — ( 2,374 ) — — — ( 2,374 ) Net loss — — — — ( 48,169 ) — — ( 48,169 ) BALANCE —December 31, 2021 165,790,549 $ 1,658 $ 2,798,325 $ ( 3,723 ) $ ( 1,541,018 ) ( 3,853,222 ) $ ( 142,658 ) $ 1,112,584 Issuance of ordinary shares under employee stock plans 3,160,644 32 19,598 — — — — 19,630 Receipt of Alkermes' shares for the purchase of stock options or to satisfy minimum tax withholding obligations related to share-based awards — — — — — ( 720,962 ) ( 18,204 ) ( 18,204 ) Share-based compensation — — 95,176 — — — — 95,176 Unrealized loss on marketable securities, net of tax benefit of $ 973 — — — ( 7,166 ) — — — ( 7,166 ) Net loss — — — — ( 158,267 ) — — ( 158,267 ) BALANCE —December 31, 2022 168,951,193 $ 1,690 $ 2,913,099 $ ( 10,889 ) $ ( 1,699,285 ) ( 4,574,184 ) $ ( 160,862 ) $ 1,043,753 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents ALKERMES PLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2022, 2021 and 2020 Year Ended December 31, 2022 2021 2020 (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 158,267 ) $ ( 48,169 ) $ ( 110,861 ) Adjustments to reconcile net loss to cash flows from operating activities: Depreciation and amortization 77,862 78,652 81,854 Share-based compensation expense 94,254 87,622 90,164 Deferred income taxes ( 32,795 ) 5,081 9,985 Change in the fair value of contingent consideration 21,750 1,427 ( 3,945 ) Other non-cash charges 5,531 2,650 2,514 Changes in assets and liabilities: Receivables 25,250 ( 38,011 ) ( 18,050 ) Contract assets 4,434 6,037 ( 6,015 ) Inventory ( 31,021 ) ( 24,769 ) ( 22,933 ) Prepaid expenses and other assets ( 5,328 ) 11,481 4,022 Right-of-use assets 16,569 17,051 17,336 Accounts payable and accrued expenses 15,534 11,514 ( 14,375 ) Accrued sales discounts, allowances and reserves 14,899 18,339 64,975 Contract liabilities ( 7,129 ) ( 6,080 ) ( 4,924 ) Operating lease liabilities ( 33,225 ) ( 16,777 ) ( 16,273 ) Other long-term liabilities 12,726 ( 4,333 ) 9,368 Cash flows provided by operating activities 21,044 101,715 82,842 CASH FLOWS FROM INVESTING ACTIVITIES: Additions of property, plant and equipment ( 38,255 ) ( 28,020 ) ( 42,219 ) Proceeds from the sale of equipment — 287 643 Proceeds from contingent consideration 1,273 7,937 3,886 Return of Fountain Healthcare Partners II, L.P. investment 485 — 2,751 Payment made for licensed Intellectual Property ("IP") — ( 1,000 ) — Purchases of investments ( 309,671 ) ( 340,418 ) ( 229,543 ) Sales and maturities of investments 281,627 295,010 253,001 Cash flows used in investing activities ( 64,541 ) ( 66,204 ) ( 11,481 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from the issuance of ordinary shares under share-based compensation arrangements 19,630 25,319 8,373 Employee taxes paid related to net share settlement of equity awards ( 18,204 ) ( 16,571 ) ( 7,701 ) Proceeds from the issuance of long-term debt — 23,567 — Payment made for debt extinguishment — ( 993 ) — Principal payments of long-term debt ( 3,000 ) ( 2,250 ) ( 2,843 ) Cash flows (used in) provided by financing activities ( 1,574 ) 29,072 ( 2,171 ) NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 45,071 ) 64,583 69,190 CASH AND CASH EQUIVALENTS—Beginning of period 337,544 272,961 203,771 CASH AND CASH EQUIVALENTS—End of period $ 292,473 $ 337,544 $ 272,961 SUPPLEMENTAL CASH FLOW DISCLOSURE: Cash paid for interest $ 13,563 $ 6,904 $ 8,288 Cash paid for taxes $ 20,749 $ 1,888 $ 620 Non-cash investing and financing activities: Purchased capital expenditures included in accounts payable and accrued expenses $ 2,950 $ 6,025 $ 2,420 The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION 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 the fields of neuroscience and oncology. Alkermes has a portfolio of proprietary commercial products focused on alcohol dependence, opioid dependence, schizophrenia and bipolar I disorder and a pipeline of product candidates in development for neurological disorders and cancer . Headquartered in Dublin, Ireland, the Company has a research and development (“R&D”) center in Waltham, Massachusetts; R&D and manufacturing facilities in Athlone, Ireland; and a manufacturing facility in Wilmington, Ohio. On November 2, 2022, the Company announced its intent, as approved by its board of directors, to separate its neuroscience business and oncology business. The Company is exploring a separation of the oncology business into an independent, publicly- traded company (referred to herein as “Oncology Co.”) as part of an ongoing review of strategic alternatives for the oncology business. Following the planned separation, the Company would retain its focus on driving growth of its proprietary commercial products: LYBALVI, ARISTADA/ARISTADA INITIO and VIVITROL, and advancing the development of pipeline programs focused on neurological disorders. The Company also expects to retain manufacturing and royalty revenues related to its licensed products and third-party products using its proprietary technologies under license. Oncology Co. would focus on the discovery and development of cancer therapies, including the continued development of nemvaleukin alfa and the Company’s portfolio of novel, preclinical engineered cytokines. The separation, if consummated, is expected to be completed in the second half of 2023 and is subject to customary closing conditions, including final approval by the Company’s board of directors and, if sought, receipt of a private letter ruling from the IRS and/or tax opinion from the Company’s tax advisors. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of Alkermes plc and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated. Reclassification The Company reclassified certain prior year amounts on the consolidated balance sheet to conform to the current year presentation. These reclassifications had no impact on the previously reported total assets, liabilities or shareholders’ equity. Use of Estimates The preparation of the Company’s consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”) requires that Company management make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on‑going basis, the Company evaluates its estimates and judgments and methodologies, including but not limited to, those related to revenue from contracts with its customers and related allowances, 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. Cash and Cash Equivalents The Company values its cash and cash equivalents at cost plus accrued interest, which the Company believes approximates their market value. The Company considers cash equivalents only those investments that are highly liquid, readily convertible into cash and so near their maturity, generally three months from the date of purchase, that they present insignificant risk of change in value because of interest rate changes. Investments The Company has investments in various types of securities, consisting primarily of United States (“U.S.”) government and agency obligations, corporate debt securities and debt securities issued by non-U.S. agencies and backed by non-U.S. governments. The Company generally holds its interest-bearing investments with major financial institutions and in accordance with documented investment policies. The Company limits the amount of credit exposure to any one financial institution or corporate issuer. At December 31, 2022, substantially all these investments were classified as available-for-sale and were recorded at fair value. F-7 Table of Contents U nrealized gains and losses are included in accumulated other comprehensive loss in equity, net of related tax, in accumulated other comprehensive loss unless : ( i ) the security has experienced a credit loss ; (ii) the Company has determined that it has the intent to sell the security ; or (iii) it has determined that it is more likely than not that the Company will have to sell the security before its expected recovery. P eriodic reviews are conducted to identify and evaluate each investment that has an unrealized loss in accordance with the meaning of other-than-temporary impairment. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. For available-for-sale debt securities with unrealized losses, the Company performs an analysis to assess whether it intends to sell or whether it would more likely than not be required to sell the security before the expected recovery of the amortized cost basis. Where the Company intends to sell a security, or may be required to do so, the security’s decline in fair value is deemed to be other-than-temporary and the full amount of the unrealized loss is reflected in earnings as an impairment loss. Regardless of the Company’s intent to sell a security, the Company performs additional analysis on all securities with unrealized losses to evaluate losses associated with the creditworthiness of the security. Credit losses are identified where the Company does not expect to receive cash flows sufficient to recover the amortized cost basis of a security. The Company’s held-to-maturity investments are restricted investments held as collateral under letters of credit related to certain of the Company’s agreements and are included in “Investments—long-term,” in the accompanying consolidated balance sheets. Fair Value of Financial Instruments The Company’s financial assets and liabilities are recorded at fair value and are classified as Level 1, 2 or 3 within the fair value hierarchy, as described in the accounting standards for fair value measurement. At December 31, 2022, the Company’s financial assets consisted of cash equivalents, investments and contingent consideration and are classified within the fair value hierarchy as follows: • Level 1 –these valuations are based on a market approach using quoted prices in active markets for identical assets. Valuations of these products do not require a significant degree of judgment. Assets utilizing Level 1 inputs at December 31, 2022 included U.S. treasury securities, marketable securities classified as cash equivalents and a fixed term deposit account; • Level 2 –these valuations are based on quoted prices for identical or similar assets in active markets or other market observable inputs such as interest rates, yield curves, foreign currency spot rates and option pricing valuation models. Assets utilizing Level 2 inputs at December 31, 2022 included U.S. government agency debt securities, debt securities issued by non-U.S. agencies and backed by non-U.S. governments and investments in corporate debt securities that are trading in the credit markets; and • Level 3 –these valuations are based on an income approach using certain inputs that are unobservable and are significant to the overall fair value measurement. Valuations of these products require a significant degree of judgment. At December 31, 2022, no assets utilized Level 3 inputs. The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued expenses approximate fair value due to their short‑term nature. Inventory Inventory is stated at the lower of cost and net realizable value. Cost is determined using the first-in, first-out method. Included in inventory are raw materials used in production of preclinical and clinical products, which have alternative future use and are charged to R&D expense when consumed. The cost elements included within inventory include three primary categories for commercial products: cost of raw materials; direct labor; and overhead. Overhead is based on the normal capacity of the Company’s production facilities and does not include costs from abnormally low production or idle capacity, which are expensed directly to the consolidated statement of operations and comprehensive loss. The Company capitalizes inventory costs associated with its products prior to regulatory approval when, based on management’s judgment, future commercialization of the product is considered probable and future economic benefit from such product is expected to be realized. The Company assesses the regulatory approval process and where the particular product stands in relation to that approval process, including any known safety, efficacy or quality concerns, potential labeling restrictions and other potential impediments to approval. The Company also considers the shelf life of the product in relation to the expected timeline for approval and considers issues that may prevent or delay commercialization, including issues that may arise in relation to the manufacturing of the product. The Company expenses previously capitalized costs related to pre-approval inventory upon a change in such judgment, due to, among other potential factors, a denial or significant delay of approval by relevant regulatory agencies or other issues that may make the pre-approval inventory batches less likely or unlikely to be commercialized and to result in future economic benefit. F-8 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Property, Plant and Equipment Property, plant and equipment are recorded at cost, subject to review for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Expenditures for repairs and maintenance are charged to expense as incurred and major renewals and improvements are capitalized. Depreciation is calculated using the straight‑line method over the following estimated useful lives of the assets: Asset group Term Buildings and improvements 15 - 40 years Furniture, fixtures and equipment 3 - 10 years Leasehold improvements Shorter of useful life or lease term Contingent Consideration The Company records contingent consideration it is entitled to receive related to the sale of a business at fair value on the acquisition date. The Company estimates the fair value of contingent consideration through valuation models that incorporate probability-adjusted assumptions related to the likelihood of achievement of milestones and the corresponding likelihood of receiving related payments. The Company revalues its contingent consideration each reporting period, with changes in the fair value of contingent consideration recognized within the consolidated statements of operations and comprehensive loss. Changes in the fair value of contingent consideration can result from changes to one or multiple assumptions, including adjustments to the discount rates, changes in the amount and timing of cash flows, changes in the assumed achievement and timing of any development and sales-based milestones, changes in the assumed probability associated with regulatory approvals and changes in the probability of collection or default of portions of the contingent consideration due to the Company. These fair value measurements are based on significant inputs, including inputs not observable in the market. Significant judgment was employed in determining the appropriateness of these assumptions at the acquisition date and for each subsequent period. Accordingly, changes in assumptions described above could have a material impact on the increase or decrease in the fair value of contingent consideration recorded in any given period. Goodwill and Intangible Assets Goodwill represents the excess cost of the Company’s investment in the net assets of acquired companies over the fair value of the underlying identifiable net assets at the date of acquisition. The Company’s goodwill consists solely of goodwill created as a result of the Company’s acquisition of Elan Drug Technologies (“EDT”) from Elan Corporation, plc (such acquisition, the “Business Combination”) in September 2011 and has been assigned to one reporting unit. A reporting unit is an operating segment or one level below an operating segment or a component to which goodwill is assigned when initially recorded. Goodwill is not amortized but is reviewed for impairment on an annual basis, as of October 31, and whenever events or changes in circumstances indicate that the carrying value of the goodwill might not be recoverable. The Company has the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. If the Company elects this option and believes, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of its reporting unit is less than its carrying amount, the quantitative impairment test is required; otherwise, no further testing is required. Alternatively, the Company may elect to not first assess qualitative factors and immediately perform the quantitative impairment test. In the quantitative impairment test, the Company compares the fair value of its reporting unit to its carrying value. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company would record an impairment loss equal to the difference. The Company’s finite-lived intangible assets, consisting of core developed technology and collaboration agreements acquired as part of the Business Combination, were recorded at fair value at the time of their acquisition and are stated within the Company’s consolidated balance sheets net of accumulated amortization. The finite-lived intangible assets are amortized over their estimated useful lives using the economic use method, which reflects the pattern that the economic benefits of the intangible assets are consumed as revenue is generated from the underlying patent or contract. The useful lives of the Company’s intangible assets are primarily based on the legal or contractual life of the underlying patent or contract, which does not include additional years for the potential extension or renewal of the contract or patent. Impairment of Long‑Lived Assets The Company reviews long‑lived assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset; a significant change in the extent or manner in which an asset F-9 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) is used ; a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset; an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset; a current-period operating or cash flow loss combined with a history of operating or cash - flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset; or a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the assets, the assets are written ‑down to their estimated fair values. Long ‑lived assets to be disposed of are carried at fair value less costs to sell them. In April 2015, the Company sold its Gainesville, GA manufacturing facility, the related manufacturing and royalty revenue associated with certain products manufactured at the facility, and the rights to IV/IM and parenteral forms of Meloxicam to Recro Pharma, Inc. (“Recro”) and Recro Gainesville LLC (such transaction the “Gainesville Transaction”). The Gainesville Transaction included in the purchase price contingent consideration tied to low double digit royalties on net sales of the IV/IM and parenteral forms of Meloxicam and any other product with the same active ingredient as Meloxicam IV/IM that is discovered or identified using certain of the Company’s IP to which Recro was provided a right of use, through license or transfer, pursuant to the Gainesville Transaction (such products, the “Meloxicam Products”), and milestone payments upon the achievement of certain regulatory and sales milestones related to the Meloxicam Products. In the third quarter of 2022, the Company determined that certain construction in progress related to the manufacture of ANJESO ® , the first approved Meloxicam Product, was impaired, as it had no alternative future use. See Note 7, Property, Plant and Equipment , within the “Notes to Consolidated Financial Statements” in this Annual Report for details related to such construction in progress. In the fourth quarter of 2022, the Company determined that an impairment triggering event occurred related to an arbitration panel’s ruling relative to the Company’s manufacturing and royalty revenue arrangement with Acorda related to AMPYRA ® . Following this triggering event, the Company evaluated certain of its intangible assets for impairment under a held-and-used model. The Company concluded in this instance that the long-lived assets evaluated for impairment were recoverable based on an analysis of the undiscounted cash flows to be generated from the use of these assets and that there was no impact to the remaining useful lives of these assets. Revenue from Contracts with Customers The Company recognizes revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“Topic 606”). When entering into arrangements with customers, the Company identifies whether its performance obligations under the arrangement represent a distinct good or service or a series of distinct goods or services. If a contract contains more than one performance obligation, the Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. The fair value of performance obligations under the arrangement may be derived using an estimate of selling price if the Company does not sell the goods or services separately. The Company recognizes revenue when or as it satisfies a performance obligation by transferring an asset or providing a service to a customer. Management judgment is required in determining the consideration to be earned under an arrangement and the period over which the Company is expected to complete its performance obligations under an arrangement. Steering committee services that are not inconsequential or perfunctory and that are determined to be performance obligations are combined with other research services or performance obligations required under an arrangement, if any, in determining the level of effort required in an arrangement and the period over which the Company expects to complete its aggregate performance obligations. Product Sales, Net The Company’s product sales, net consist of sales in the U.S. of VIVITROL ® , ARISTADA ® and ARISTADA INITIO ® and, following its commercial launch in October 2021, LYBALVI ® , primarily to wholesalers, specialty distributors and pharmacies. Product sales, net are recognized when the customer obtains control of the product, which is when the product has been received by the customer. Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with the Company’s customers, healthcare providers or payers. The Company’s process for estimating reserves established for these variable consideration components does not differ materially from historical practices. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances, may be subject to constraint and is included in the net sales price only to the extent that it is probable that a significant reversal of the amount of the cumulative revenues recognized will not occur in a future period. Actual amounts may ultimately differ from the Company’s estimates. If actual results vary, the Company adjusts these estimates, which could have an effect on earnings in the period of adjustment. The following are the Company’s significant categories of sales discounts and allowances: F-10 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) • Medicaid Rebates — the Company records accruals for rebates to U.S. states under the Medicaid Drug Rebate Program as a reduction of sales when the product is shipped into the distribution channel using the expected value method. The Company rebates individual U.S. states for all eligible units purchased under the Medicaid program based on a rebate per unit calculation, which is based on the Company’s average manufacturer prices. The Company estimates expected unit sales to individuals covered by Medicaid and rebates per unit under the Medicaid program and adjusts its rebate accrual based on actual unit sales and rebates per unit and changes in trends in Medicaid utilization . To date, actual Medicaid rebates have not differed materially from the Company’s estimates; • Chargebacks — discounts that occur when contracted indirect customers purchase directly from wholesalers and specialty distributors. Contracted customers generally purchase a product at its contracted price. The wholesaler or specialty distributor, in turn, then generally charges back to the Company the difference between the wholesale acquisition cost and the contracted price paid to the wholesaler or specialty distributor by the customer. The allowance for chargebacks is made using the expected value method and is based on actual and expected utilization of these programs. Chargebacks could exceed historical experience and the Company’s estimates of future participation in these programs. To date, actual chargebacks have not differed materially from the Company’s estimates; • Product Discounts — cash consideration, including sales incentives, given by the Company under agreements with a number of wholesaler, distributor, pharmacy, and treatment provider customers that provide them with a discount on the purchase price of products. The reserve is made using the expected value method and to date, actual product discounts have not differed materially from the Company’s estimates; • Product Returns —the Company records an estimate for product returns at the time its customers take control of their product. The Company estimates this liability using the expected returns of product sold based on historical return levels and specifically identified anticipated returns due to known business conditions and product expiry dates. Return amounts are recorded as a reduction of sales. Once product is returned, it is destroyed; and • Medicare Part D — the Company records accruals for Medicare Part D liabilities under the Medicare Coverage Gap Discount Program (“CGDP”) as a reduction of sales. Under the CGDP, patients reaching the annual coverage gap threshold are eligible for reimbursement coverage for out-of-pocket costs for covered prescription drugs. Under an agreement with the Centers for Medicare and Medicaid Services, manufacturers are responsible to reimburse prescription plan sponsors for the portion of out-of-pocket expenses not covered under their Medicare plans. Collaborative Arrangements The Company has entered into collaboration agreements with pharmaceutical companies including, among others, Janssen Pharmaceuticals, Inc. (“Janssen, Inc.”), Janssen Pharmaceutica International, a division of Cilag International AG (“Janssen International”), and Janssen Pharmaceutica N.V. (together with Janssen, Inc., Janssen International and their affiliates, “Janssen”) related to INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA, INVEGA HAFYERA/BYANNLI (the “long-acting INVEGA products”) and RISPERDAL CONSTA ® , and Biogen Swiss Manufacturing GmbH (together with its affiliates, “Biogen”) related to VUMERITY ® . Substantially all of the products developed under these arrangements are currently being marketed as approved products for which the Company receives payments for manufacturing services and/or royalties on net product sales. Manufacturing Revenue The Company recognizes manufacturing revenues from the sale of products it manufactures for resale by its licensees. Manufacturing revenues for the Company’s partnered products, with the exception of those from Janssen related to RISPERDAL CONSTA and from Biogen related to VUMERITY, are recognized over time as products move through the manufacturing process, using a standard cost-based model as a measure of progress, which represents a faithful depiction of the transfer of control of the goods. The Company recognizes manufacturing revenue from these products over time as it determined, in each instance, that it would have a right to payment for performance completed to date if its customer were to terminate the manufacturing agreement for reasons other than the Company’s non-performance and the products have no alternative use. The Company invoices its licensees upon shipment with payment terms between 30 to 90 days . The Company is the exclusive manufacturer of RISPERDAL CONSTA for commercial sale under its manufacturing and supply agreement with Janssen. The Company determined that it is appropriate to record revenue under this agreement at the point in time when control of the product passes to Janssen, which is determined to be when the product has been fully manufactured, since Janssen does not control the product during the manufacturing process and, in the event Janssen terminates the manufacturing and supply agreement, it is uncertain whether, and at what amount, the Company would be reimbursed for performance completed to date for product not yet fully manufactured. The manufacturing process is considered fully complete once the finished goods have been approved for shipment by both the Company and Janssen. F-11 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The Company recognize s manufacturing revenue related to VUMERITY at cost plus 15 %, upon making available bulk batches of VUMERITY to Biogen , to the extent the Company package s such product, then also when packaged batches of VUMERITY are made available to Biogen . Control of the product passes to Biogen when VUMERITY , in either bulk or finished form, is made available to Biogen . The sales price for certain of the Company’s manufacturing revenues is based on the end-market sales price earned by its licensees. As end-market sales generally occur after the Company has recorded manufacturing revenue, the Company estimates the sales price for such products based on information supplied to it by the Company’s licensees, its historical transaction experience and other third-party data. Differences between actual manufacturing revenues and estimated manufacturing revenues are reconciled and adjusted for in the period in which they become known, which is generally within the same quarter. The difference between the Company’s actual and estimated manufacturing revenues has not been material to date. Royalty Revenue The Company recognizes royalty revenues related to the sale by its licensees of products that incorporate the Company’s technologies. Substantially all of the Company’s royalties qualify for the sales-and-usage exemption under Topic 606 as (i) such royalties are based strictly on the sales-and-usage by the licensee; and (ii) a license of IP is the sole or predominant item to which such royalties relate. Based on this exemption, these royalties are earned in the period that the products are sold by the Company's licensee and the Company has a present right to payment. Certain of the Company’s royalty revenues are recognized by the Company based on information supplied to the Company by its licensees and require estimates to be made. Differences between actual royalty revenues and estimated royalty revenues are reconciled and adjusted for in the period in which they become known, which is generally within the same quarter. The difference between the Company’s actual and estimated royalty revenues has not been material to date. Research and Development Revenue R&D revenue consists of funding that compensates the Company for formulation, preclinical and clinical testing under R&D arrangements with its partners. The Company generally bills its partners under R&D arrangements using a full‑time equivalent or hourly rate, plus direct external costs, if any. Revenue is recognized as the obligations under the R&D arrangements are performed. License Revenue The Company recognizes revenue from the grant of distinct, right-to-use licenses of IP when control of the license is transferred to the licensee, which is the point in time that the licensee is able to direct the use of and obtain substantially all of the benefits from the license. Receivables, net Receivables, net, include amounts billed and amounts unbilled but currently unconditionally due from customers. The amounts due are stated at their net estimated realizable value. The Company’s unbilled receivable balance was $ 72.0 million and $ 127.6 million at December 31, 2022 and 2021, respectively, and related primarily to royalty revenue. The Company maintains an allowance for doubtful accounts to provide for the estimated amounts of receivables that will not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and collateral to the extent applicable. The Company’s allowance for doubtful accounts was approximately $ 0.2 million at December 31, 2022 and 2021, respectively. Contract Assets Contract assets include unbilled amounts resulting from sales under certain of the Company’s manufacturing contracts where revenue is recognized over time, except for $ 5.0 million of consideration related to the Company’s collaboration with Biogen related to VUMERITY, which was included in contract assets at December 31, 2021 and transferred to receivables, net, as the milestone related to such amount was achieved in November 2022 . The manufacturing-related amounts included in the contract assets table below are classified as “Current assets” in the accompanying consolidated balance sheets, as they related to manufacturing processes that are completed in ten days to eight weeks. F-12 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Contract assets consisted of the following: (In thousands) Contract Assets Contract assets at January 1, 2021 $ 19,401 Additions 30,609 Transferred to receivables, net ( 36,647 ) Contract assets at December 31, 2021 $ 13,363 Additions 42,218 Transferred to receivables, net ( 46,652 ) Contract assets at December 31, 2022 $ 8,929 Contract Liabilities The Company’s contract liabilities consist of contractual obligations related to deferred revenue. Contract liabilities consisted of the following: (In thousands) Contract Liabilities Contract liabilities at January 1, 2021 $ 23,909 Additions — Amounts recognized into revenue ( 6,079 ) Contract liabilities at December 31, 2021 $ 17,830 Additions 6,769 Amounts recognized into revenue ( 7,514 ) Amounts recognized into other income, net ( 6,384 ) Contract liabilities at December 31, 2022 $ 10,701 Foreign Currency The Company’s functional and reporting currency is the U.S. dollar. Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. The resulting monetary assets and liabilities are translated into U.S. dollars at exchange rates prevailing on the subsequent balance sheet date. Gains and losses as a result of translation adjustments are recorded within “Other income, net” in the accompanying consolidated statements of operations and comprehensive loss. During the years ended December 31, 2022, 2021 and 2020, the Company recorded a gain of $ 0.7 million, a loss of $ 0.3 million and a gain of $ 2.4 million, respectively, on foreign currency translation. Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk are receivables and marketable securities. Billings to large pharmaceutical companies and pharmaceutical wholesalers account for the majority of the Company’s receivables, and collateral is generally not required from these customers. To mitigate credit risk, the Company monitors the financial performance and credit-worthiness of its customers. The following represents revenue and receivables from the Company’s customers exceeding 10 % of the total in each category as of, and for the years ended, December 31, 2022, 2021 and 2020: Year Ended December 31, 2022 2021 2020 Customer Receivables Revenue Receivables Revenue Receivables Revenue Janssen * 15 % 30 % 30 % 30 % 33 % Biogen 19 % 13 % 11 % 10 % * * Cardinal Health 24 % 24 % 17 % 20 % 16 % 21 % AmerisourceBergen 18 % 14 % 13 % 11 % 11 % 10 % McKesson 12 % 16 % 11 % 13 % * 14 % * Indicates the revenues or receivables for the customer did not exceed 10 % of the Company’s total in each category as of or for the years ended December 31, 2022, 2021 or 2020, as noted. The Company holds its interest‑bearing investments with major financial institutions and, in accordance with documented investment policies, the Company limits the amount of credit exposure to any one financial institution or corporate issuer. The Company’s investment objectives are, first, to ensure liquidity and conservation of capital and, second, to obtain investment income. F-13 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Geographic Information Company revenues by geographic location, as determined by the location of the customer, and the location of its assets, are as follows: Year Ended December 31, (In thousands) 2022 2021 2020 Revenue by region: U.S. $ 931,991 $ 984,235 $ 838,995 Ireland 1,829 2,175 3,233 Rest of world 177,975 187,341 196,528 Assets by region: Current assets: U.S. $ 702,564 $ 485,083 $ 662,615 Ireland 427,742 577,086 448,356 Rest of world — — — Long-term assets: U.S.: Other $ 529,002 $ 591,217 $ 472,999 Ireland: Intangible assets $ 37,680 $ 74,043 $ 111,191 Goodwill 92,873 92,873 92,873 Other 174,117 204,182 161,696 Research and Development Expenses For each of its R&D programs, the Company incurs both external and internal expenses. External R&D expenses include fees related to clinical and non‑clinical activities performed by contract research organizations, consulting fees and costs related to laboratory services, purchases of drug product materials and third‑party manufacturing development costs. Internal R&D expenses include employee‑related expenses, occupancy costs, depreciation and general overhead. The Company tracks external R&D expenses for each of its development programs, however, internal R&D expenses are not tracked by individual program as they benefit multiple programs or the Company’s technologies in general. Selling, General and Administrative Expenses Selling, general and administrative (“SG&A”) expenses are primarily comprised of employee-related expenses associated with selling and marketing, finance, human resources, legal, information technology and other administrative personnel, outside marketing, advertising, financial and legal expenses and other general and administrative costs. Advertising costs are expensed as incurred. During the years ended December 31, 2022, 2021 and 2020, advertising costs totaled $ 41.4 million, $ 38.9 million and $ 25.5 million, respectively. Share‑Based Compensation The Company’s share‑based compensation programs grant awards in the form of stock options and restricted stock unit awards (“RSUs”), which vest with the passage of time and/or based on the achievement of certain performance criteria. The Company issues new shares upon the exercise of stock options or the vesting of RSUs. Under the terms of the Company’s stock option and incentive plans (the “Plans”), certain of the Company’s employees may, at the discretion of the plan administrator, become eligible upon retirement for accelerated vesting of certain awards granted to them under the Plans. Since there are no effective future service requirements for such employees, the fair value of awards to such employees would be expensed in full on the grant date or upon meeting the retirement eligibility criteria, whichever is later. Time-Based Stock Options Except as otherwise provided in the applicable Plan, stock option grants to employees expire ten years from the date of grant and generally vest in four equal annual installments, commencing on the first anniversary of the date of grant, provided the employee remains continuously employed with the Company during the applicable vesting period. Except as otherwise provided in the applicable Plan, annual stock option grants to non-employee directors expire ten years from the grant date and generally vest over a one-year period provided that the director continues to serve on the Company’s board of directors through the vesting date. The estimated fair value of options is recognized over the requisite service period, which is generally the vesting period. Share‑based compensation expense is based on awards ultimately expected to vest. Forfeitures are estimated based on historical experience at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates. F-14 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The fair value of stock option grants is based on estimates as of the date of grant using a Black‑Scholes option valuation model. The Company uses historical data as the basis for estimating stock option terms and forfeitures. Separate groups of employees that have similar historical stock option exercise and forfeiture behavior are considered separately for valuation purposes. The ranges of expected terms disclosed below reflect different expected behavior among certain groups of employees. Expected stock volatility factors are based on a weighted average of implied volatilities from traded options of the Company’s ordinary shares and historical share price volatility of the Company’s ordinary shares, which is determined based on a review of the weighted average of historical weekly price changes of the Company’s ordinary shares. The risk‑free interest rate for periods commensurate with the expected term of the stock option is based on the U.S. treasury yield curve in effect at the time of grant. The dividend yield on the Company’s ordinary shares is estimated to be zero as the Company has not paid dividends and does not expect to pay dividends in the near future. The exercise price of options granted is equal to the closing price of the Company’s ordinary shares traded on the Nasdaq Global Select Market on the date of grant. The fair value of each stock option grant was estimated on the grant date with the following weighted‑average assumptions: Year Ended December 31, 2022 2021 2020 Expected option term 5 - 8 years 5 - 7 years 5 - 7 years Expected stock volatility 43 % - 51 % 43 % - 54 % 47 % - 54 % Risk-free interest rate 1.83 % - 4.26 % 0.67 % - 1.46 % 0.24 % - 1.69 % Expected annual dividend yield — — — Time‑Based Restricted Stock Unit Awards Except as otherwise provided in the applicable Plan, time‑based RSUs awarded to employees generally vest in four equal annual installments, commencing on the first anniversary of the date of grant, provided the employee remains continuously employed with the Company during the applicable vesting period. Shares subject to these RSUs are delivered to the employee upon vesting, subject to payment of applicable withholding taxes. The fair value of time‑based RSUs is equal to the closing price of the Company’s ordinary shares traded on the Nasdaq Global Select Market on the date of grant. Compensation expense, including the effect of forfeitures, is recognized over the applicable service period. Performance-Based Restricted Stock Unit Awards Performance-based RSUs awarded to employees vest upon the achievement of certain performance criteria, typically during or at the end of a specified performance period. The estimated fair value of these RSUs are generally based on the closing price of the Company’s ordinary shares traded on the Nasdaq Global Select Market on the date of grant, unless the RSU is also subject to a market condition. In that case, the fair value of the RSU is based on a Monte Carlo simulation model. Compensation expense for performance-based RSUs is recognized from the date the Company determines the performance criteria probable of being achieved to the date the award, or relevant portion of the award, is expected to vest. Cumulative adjustments are recorded on a quarterly basis to reflect subsequent changes to the estimated outcome of the performance criteria until the date results are determined. Income Taxes The Company recognizes income taxes under the asset and liability method. Deferred income taxes are recognized for differences between the financial reporting and tax bases of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. In evaluating the Company’s ability to recover its deferred tax assets, the Company considers all available positive and negative evidence including its past operating results, the existence of cumulative income in the most recent fiscal years, changes in the business in which the Company operates and its forecast of future taxable income. In determining future taxable income, the Company is responsible for assumptions utilized including the amount of Irish and non-Irish pre‑tax operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that the Company is using to manage the underlying business. The Company accounts for uncertain tax positions using a more‑likely‑than‑not threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. The Company evaluates its tax position on a quarterly basis. The Company also accrues for potential interest and penalties related to unrecognized tax benefits in income tax expense. F-15 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Comprehensive Loss Comprehensive loss consists of net loss and other comprehensive loss. Other comprehensive loss includes changes in equity that are excluded from net loss, such as unrealized holding gains and losses on available‑for‑sale investments. Loss Per Share Basic loss per share is calculated based upon net loss available to holders of ordinary shares divided by the weighted average number of ordinary shares outstanding. For the calculation of diluted earnings per share, the Company uses the weighted average number of ordinary shares outstanding, as adjusted for the effect of potential dilutive securities, including stock options and RSUs. Segment Information The Company operates as one business segment, which is the business of developing, manufacturing and commercializing medicines designed to address unmet medical needs of patients in major therapeutic areas. The Company’s chief decision maker, the Chairman and Chief Executive Officer, reviews the Company’s operating results on an aggregate basis and manages the Company’s operations as a single operating unit. Employee Benefit Plans 401(k) Plan The Company maintains a 401(k) retirement savings plan (the “401(k) Plan”), which covers substantially all of its U.S.‑based employees. Eligible employees may contribute up to 100 % of their eligible compensation, subject to certain Internal Revenue Service (“IRS”) limitations. The Company matches 100 % of employee contributions up to the first 5 % of employee pay, up to IRS limits. Employee and Company contributions are fully vested when made. During the years ended December 31, 2022, 2021 and 2020, the Company contributed $ 15.3 million, $ 14.6 million and $ 14.7 million, respectively, to match employee deferrals under the 401(k) Plan. Defined Contribution Plan The Company maintains a defined contribution plan for its Ireland‑based employees (the “Defined Contribution Plan”). The Defined Contribution Plan provides for eligible employees to contribute up to a maximum of 40 %, depending upon their age, of their total taxable earnings subject to an earnings cap of € 115,000 . The Company provides a match of up to 18 % of taxable earnings depending upon an individual’s contribution level. During the years ended December 31, 2022, 2021 and 2020, the Company contributed $ 5.1 million, $ 5.2 million and $ 4.4 million, respectively, in contributions to the Defined Contribution Plan. Risks and Uncertainties The COVID-19 pandemic has impacted, and may continue to impact, many aspects of society, including the operation of healthcare systems, global travel, supply and labor markets and other business and economic activity worldwide. A number of the marketed products from which the Company derives revenue, including manufacturing and royalty revenue, are injectable medications administered by healthcare professionals, which have been, and the Company expects may continue to be, adversely impacted to varying degrees as a result of COVID-19 related closures restrictions, labor shortages and other disruptions that have transpired, and may continue to transpire, while the pandemic persists. The COVID-19 pandemic has caused, and the Company expects may continue to cause, varying degrees of disruption to its employees and business operations. While the Company has continued to operate its manufacturing facilities and supply its medicines throughout the pandemic, the Company has at times during the pandemic experienced labor or supply chain disruptions at its manufacturing facilities and may continue to experience such disruptions while the pandemic persists, which could impact the Company’s ability to manufacture its products and the third-party products from which it receives revenue in a timely matter or at all. In addition, while the Company has continued to conduct R&D activities, including its ongoing clinical trials, the COVID-19 pandemic has at times impacted the timelines of certain of its early-stage discovery efforts and clinical trials, and may continue to impact such timelines while the pandemic persists. The Company works with its internal teams, its clinical investigators, R&D vendors and critical supply chain vendors to continually assess, and mitigate, the potential impact of COVID-19 on its manufacturing operations and R&D activities. The degree to which the COVID-19 pandemic may continue to impact the Company’s employees, business, financial condition and results of operations will depend on the ultimate severity and duration of the pandemic and the manner in which it continues to evolve, including the emergence, prevalence and severity of new COVID-19 variants, and future developments in response thereto. Due to these and numerous other uncertainties surrounding the ongoing COVID-19 pandemic, the actual impact of the pandemic on the Company’s financial condition and operating results may differ from its current projections. For additional information about risks F-16 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) and uncertainties related to the COVID-19 pandemic that may impact the Company’s business, financial condition or results of operations, see “Part I, Item 1A—Risk Factors” in this Annual Report and specifically the section entitled “—Our business, financial condition and results of operations have been, and may continue to be, adversely affected by the ongoing COVID-19 pandemic or other similar outbreaks of contagious diseases.” New Accounting Pronouncements From time to time, new accounting pronouncements are issued by the FASB or other standard‑setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. 3. REVENUE FROM CONTRACTS WITH CUSTOMERS During the years ended December 31, 2022, 2021 and 2020, the Company recorded product sales, net, as follows: Year Ended December 31, (In thousands) 2022 2021 2020 VIVITROL $ 379,478 $ 343,853 $ 310,722 ARISTADA and ARISTADA INITIO 302,052 275,356 241,038 LYBALVI 96,022 8,215 — Total product sales, net $ 777,552 $ 627,424 $ 551,760 During the years ended December 31, 2022, 2021 and 2020, the Company recorded manufacturing and royalty revenues from its collaboration arrangements as follows: Year Ended December 31, 2022 (In thousands) Manufacturing Revenue Royalty Revenue Total Long-acting INVEGA products (1) $ — $ 115,655 $ 115,655 VUMERITY 32,493 83,003 115,496 RISPERDAL CONSTA 42,670 7,243 49,913 Other 37,211 13,708 50,919 $ 112,374 $ 219,609 $ 331,983 Year Ended December 31, 2021 (In thousands) Manufacturing Revenue Royalty Revenue Total Long-acting INVEGA products (1) $ — $ 303,106 $ 303,106 VUMERITY 25,808 61,614 87,422 RISPERDAL CONSTA 40,413 10,456 50,869 Other 39,407 61,003 100,410 $ 105,628 $ 436,179 $ 541,807 Year Ended December 31, 2020 (In thousands) Manufacturing Revenue Royalty Revenue Total Long-acting INVEGA products (1) $ — $ 274,200 $ 274,200 VUMERITY 8,848 13,693 22,541 RISPERDAL CONSTA 56,893 14,468 71,361 Other 53,293 62,605 115,898 $ 119,034 $ 364,966 $ 484,000 (1) “Long-acting INVEGA products”: INVEGA SUSTENNA/XEPLION (paliperidone palmitate), INVEGA TRINZA/TREVICTA (paliperidone palmitate) and INVEGA HAFYERA/BYANNLI (paliperidone palmitate). In October 2022, an arbitration panel found that the Company must return to Acorda $ 16.5 million (inclusive of prejudgment interest and administrative fees) previously paid by Acorda under a license agreement between the Company and Acorda and in November 2022, the panel found that the Company must pay to Acorda an additional $ 1.8 million (inclusive of prejudgment interest). These amounts represent a portion of the royalty revenue paid to the Company by Acorda since July 2020 related to AMPYRA. The Company paid the $ 16.5 million in October 2022 and paid the additional $ 1.8 million in December 2022. In addition, during the three months ended June 30, 2022, the Company had recorded $ 3.2 million of royalty revenue related to AMPYRA as the Company believed that it had met the necessary revenue recognition criteria under the Financial Accounting Standards Board Accounting F-17 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Standards Codification 606, Revenue from Contracts with Customers (“Topic 606”). However, as a result of the arbitration ruling, the Company reversed the $ 3.2 million as the panel found that the Company was no longer entitled to be paid those royalties. During the three months ended September 30, 2022, the Company recorded both the $ 18.3 million in repayments and the $3.2 million reversal as reversals of royalty revenue within “Manufacturing and royalty revenue” in the accompanying consolidated statements of operations and comprehensive loss. As a result of the arbitration ruling, the Company no longer has a contractual obligation to manufacture and supply AMPYRA or a contractual right to receive future manufacturing or royalty revenue related to AMPYRA. In January 2023, Acorda filed a petition with the U.S. District Court for the Southern District of New York asking the court to confirm in part and modify in part the final arbitral award rendered by the arbitration panel in October 2022 and, as part of the requested modification, seeking an additional approximately $ 66.0 million in damages. The Company intend s to contest this petition and believe it is without merit. In November 2021, the Company received notice of partial termination of an exclusive license agreement with Janssen. Under this license agreement, the Company provided Janssen with rights to, and know-how, training and technical assistance in respect of, the Company’s small particle pharmaceutical compound technology, known as NanoCrystal technology, which it used to develop INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and INVEGA HAFYERA/BYANNLI. When the partial termination became effective in February 2022, Janssen ceased paying royalties related to sales of INVEGA SUSTENNA, INVEGA TRINZA and INVEGA HAFYERA in the U.S. and the Company stopped recognizing royalty revenue related to net sales of these products in the U.S. In April 2022, the Company commenced binding arbitration proceedings related to, among other things, Janssen’s partial termination of the license agreement and Janssen’s royalty and other obligations under the agreement. On December 21, 2022, the Company received an interim award (the “Interim Award”) in these proceedings from the arbitral tribunal (the “Tribunal”), in which the Tribunal agreed with the Company’s position that, while Janssen may terminate the agreement, it may not continue to sell Products (as defined in the agreement) developed during the term of the agreement without paying royalties pursuant to the terms of the agreement. This award is not yet final. The Company will engage with Janssen and the Tribunal in additional proceedings prior to the Tribunal’s issuance of a final award. Accordingly, the Company has not recognized royalty revenue related to U.S. sales of the long-acting INVEGA products since February 2022. Refer to Note 17, Commitments and Contingent Liabilities within the “Notes to Consolidated Financial Statements” in this Annual Report for additional information regarding the arbitration proceedings with Janssen. F-18 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 4. INVESTMENTS Investments consist of the following: Gross Unrealized Losses Amortized Less than Greater than Estimated December 31, 2022 Cost Gains One Year One Year Fair Value Short-term investments: Available-for-sale securities: Corporate debt securities $ 145,421 $ — $ ( 432 ) $ ( 2,054 ) $ 142,935 U.S. government and agency debt securities 143,710 16 ( 266 ) ( 1,289 ) 142,171 Non-U.S. government debt securities 31,452 — ( 20 ) ( 546 ) 30,886 Total short-term investments 320,583 16 ( 718 ) ( 3,889 ) 315,992 Long-term investments: Available-for-sale securities: Corporate debt securities 68,229 — ( 1,550 ) ( 676 ) 66,003 U.S. government and agency debt securities 62,220 — ( 917 ) ( 1,424 ) 59,879 Non-U.S. government debt securities 4,099 — — ( 191 ) 3,908 134,548 — ( 2,467 ) ( 2,291 ) 129,790 Held-to-maturity securities: Certificates of deposit 1,820 — — — 1,820 Total long-term investments 136,368 — ( 2,467 ) ( 2,291 ) 131,610 Total investments $ 456,951 $ 16 $ ( 3,185 ) $ ( 6,180 ) $ 447,602 December 31, 2021 Short-term investments: Available-for-sale securities: Corporate debt securities $ 85,201 $ 177 $ ( 39 ) $ — $ 85,339 U.S. government and agency debt securities 45,349 35 ( 24 ) — 45,360 Non-U.S. government debt securities 68,046 75 ( 53 ) — 68,068 Total short-term investments 198,596 287 ( 116 ) — 198,767 Long-term investments: Available-for-sale securities: Corporate debt securities 111,793 — ( 654 ) — 111,139 U.S. government and agency debt securities 81,296 — ( 517 ) — 80,779 Non-U.S. government debt securities 35,902 — ( 210 ) — 35,692 228,991 — ( 1,381 ) — 227,610 Held-to-maturity securities: Certificates of deposit 1,820 — — — 1,820 Total long-term investments 230,811 — ( 1,381 ) — 229,430 Total investments $ 429,407 $ 287 $ ( 1,497 ) $ — $ 428,197 At December 31, 2022, the Company reviewed its investment portfolio to assess whether the unrealized losses on its available-for-sale investments were temporary. Investments with unrealized losses consisted primarily of corporate debt securities and debt securities issued by non-U.S. agencies and backed by non-U.S. governments. At December 31, 2022, 280 of the Company’s 289 investment securities were in an unrealized loss position and had an aggregate estimated fair value of $ 422.7 million. Approximately 47 % and 45 % of the Company’s investment securities at December 31, 2022 are in corporate debt securities, with a minimum rating of A2 (Moody’s)/A (Standard and Poor’s), and debt securities issued by the U.S. government or its agencies, respectively. In a rising interest rate environment, the Company expects its fixed-rate investment securities will carry unrealized losses. In making the determination whether the decline in fair value of these securities was other-than-temporary, the Company evaluated whether it intended to sell the security and whether it was more likely than not that the Company would be required to sell the security before recovering its amortized cost basis. The Company has the intent and ability to hold these investments until recovery, which may be at maturity. In September 2019, the Company purchased $ 1.9 million of convertible promissory notes from Synchronicity Pharma, Inc. (“Synchronicity”), a related party. The notes were due to mature on the earlier of June 30, 2021 , the closing of a preferred equity financing, the closing of a merger, business combination or sale of stock resulting in Synchronicity’s stockholders owning less than 50 % of the surviving entity, or an event of default. During the years ended December 31, 2021 and 2020, the Company recorded an other-than-temporary credit loss of $ 0.9 million and $ 1.0 million, respectively, against the value of this investment and at December F-19 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 31, 2021, this investment was fully impaired . The loss es w ere recorded within “Other incom e , net” in the accompanying consolidated statements of operations and comprehensive loss. In January 2022, the Company purchased $ 0.5 million of convertible promissory notes from Synchronicity that matured on the earlier of September 30, 2022 , the closing of a preferred equity financing, the closing of a merger, business combination or sale of stock resulting in Synchronicity’s stockholders owning less than 50 % of the surviving entity, or an event of default . During the year ended December 31, 2022, the Company determined there was an other-than-temporary loss related to this investment in Synchronicity and the $ 0.5 million was recorded within “Other income, net” in the accompanying consolidated statements of operations and comprehensive loss. In May 2014, the Company entered into an agreement whereby it is committed to provide up to € 7.4 million to a partnership, Fountain Healthcare Partners II, L.P. of Ireland (“Fountain”), which was created to carry on the business of investing exclusively in companies and businesses engaged in the healthcare, pharmaceutical and life sciences sectors. As of December 31, 2022, the Company’s total contribution in Fountain was equal to € 7.4 million, and its commitment represented approximately 7 % of the partnership’s total funding. The Company is accounting for its investment in Fountain under the equity method. During the year ended December 31, 2020, two of the companies within the Fountain portfolio were acquired by third parties. The Company’s proportional share of the proceeds from these transactions was $ 11.1 million, of which $ 10.4 million was received during the year ended December 31, 2020 and the remaining $ 0.7 million was received during the year ended December 31, 2021. The transactions were accounted for under the cumulative earnings approach whereby the return on investment of $ 8.3 million was recorded as a gain within “Other income, net” in the accompanying consolidated statements of operations and comprehensive loss and the return of investment of $ 2.8 million was recorded as a reduction in the Company’s net investment in Fountain. During the three months ended March 31, 2022, one of the companies within the Fountain portfolio was acquired by a third party. The Company’s proportional share of the proceeds from this transaction was $ 1.1 million, of which $ 1.0 million was received during the three months ended March 31, 2022 and the remaining $ 0.1 million is being held in escrow until May 2023. The transaction was accounted for under the cumulative earnings approach whereby the return on investment of $ 0.6 million was recorded as a gain within “Other income, net” in the accompanying consolidated statements of operations and comprehensive loss and the return of investment of $ 0.5 million was recorded as a reduction in the Company’s net investment in Fountain. The Company’s net investment in Fountain was $ 7.9 million and $ 6.1 million at December 31, 2022 and 2021, respectively, and was included within “Other assets” in the accompanying consolidated balance sheets. During the years ended December 31, 2022, 2021 and 2020, the Company recorded an increase in its investment in Fountain of $ 1.8 million, a decrease of $ 0.4 million and an increase of $ 0.3 million, respectively, which represented the Company’s proportional share of Fountain’s net gains or losses for such periods. Realized gains and losses on the sales and maturities of investments, which were identified using the specific identification method, were as follows: Year Ended December 31, (In thousands) 2022 2021 2020 Proceeds from the sales and maturities of investments $ 281,627 $ 295,010 $ 253,001 Realized gains $ — $ 34 $ 76 Realized losses $ 529 $ 977 $ 977 The Company’s available‑for‑sale and held‑to‑maturity securities at December 31, 2022 had contractual maturities in the following periods: Available-for-sale Held-to-maturity Amortized Estimated Amortized Estimated (In thousands) Cost Fair Value Cost Fair Value Within 1 year $ 318,592 $ 313,994 $ 1,820 $ 1,820 After 1 year through 5 years 136,539 131,788 — — Total $ 455,131 $ 445,782 $ 1,820 $ 1,820 F-20 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 5. FAIR VALUE The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis and indicates the fair value hierarchy and the valuation techniques the Company utilized to determine such fair value: December 31, (In thousands) 2022 Level 1 Level 2 Level 3 Assets: Cash equivalents $ 19,857 $ 19,857 $ — $ — U.S. government and agency debt securities 202,050 168,639 33,411 — Corporate debt securities 208,938 — 208,938 — Non-U.S. government debt securities 34,794 — 34,794 — Total $ 465,639 $ 188,496 $ 277,143 $ — December 31, 2021 Level 1 Level 2 Level 3 Assets: U.S. government and agency debt securities $ 126,139 $ 96,597 $ 29,542 $ — Corporate debt securities 196,478 — 196,478 — Non-U.S. government debt securities 103,760 — 103,760 — Contingent consideration 23,048 — — 23,048 Total $ 449,425 $ 96,597 $ 329,780 $ 23,048 The Company transfers its financial assets and liabilities, measured at fair value on a recurring basis, between the fair value hierarchies at the end of each reporting period. There were no transfers of any securities between levels during the year ended December 31, 2022. The following table is a rollforward of the fair value of the Company’s investments whose fair value was determined using Level 3 inputs at December 31, 2022: (In thousands) Fair Value Balance, January 1, 2022 $ 23,048 Purchase of corporate debt security 500 Change in the fair value of contingent consideration ( 21,750 ) Milestone and royalty payments received by the Company related to contingent consideration ( 1,298 ) Impairment of corporate debt security ( 500 ) Balance, December 31, 2022 $ — The Company’s investments in U.S. government and agency debt securities, non-U.S. government agency debt securities and corporate debt securities classified as Level 2 within the fair value hierarchy were initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing market-observable data. The market-observable data included reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers, current spot rates and other industry and economic events. The Company validated the prices developed using the market-observable data by obtaining market values from other pricing sources, analyzing pricing data in certain instances and confirming that the relevant markets are active. In November 2019, Recro Pharma, Inc. (“Recro”) spun out its acute care segment to Baudax Bio, Inc. (“Baudax”), a publicly-traded pharmaceutical company. As part of this transaction, Recro’s obligations to pay certain contingent consideration from the Gainesville Transaction were assigned and/or transferred to Baudax. In Baudax’s Quarterly Report on Form 10-Q for the period ended September 30, 2022, Baudax continued to include disclosures regarding its ability to continue as a going concern, which first appeared in its Annual Report on Form 10-K for the period ended December 31, 2021. In March 2022, Baudax reduced its workforce by approximately 80 %, which was designed to reduce its operational expenses and conserve its cash resources. As a result of these events and the fact that, as of March 31, 2022, Baudax had only paid $ 0.5 million of the $ 6.4 million milestone payment that was due to the Company in March 2022, the Company recorded a reduction in the fair value of the contingent consideration of $ 19.1 million during the three months ended March 31, 2022. In light of Baudax’s disclosures and the fact that, as of September 30, 2022, Baudax had only paid $ 1.2 million of the $ 6.4 million that was due to the Company in March 2022, the Company determined, during the three months ended September 30, 2022, that it was unlikely to collect any further proceeds under this arrangement and recorded a $ 3.6 million charge to reduce the fair value of the contingent consideration to zero within “Change in the fair value of contingent consideration”. In addition, during the three months ended September 30, 2022, the Company determined that certain construction in progress related to the manufacture of ANJESO had no future value. See Note 7, Property, Plant and Equipment , within the “Notes to Consolidated Financial Statements” in this Annual Report for details related to such construction in progress. F-21 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) In December 2022, Baudax announced that it would discontinue the sale of ANJESO and on December 28, 2022, the U.S. Food and Drug Administration (“FDA”) acknowledged the discontinuation of sale of ANJESO via listing in the Orange Book. The estimated fair value of the Company’s long-term debt under the 2026 Term Loans (as defined in Note 11, Long-Term Debt within these “Notes to Consolidated Financial Statements” in this Annual Report), 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 $ 278.9 million and $ 285.8 million at December 31, 2022 and 2021, respectively. 6. INVENTORY Inventory consists of the following: December 31, December 31, (In thousands) 2022 2021 Raw materials $ 61,064 $ 56,125 Work in process 76,228 59,105 Finished goods (1) 44,126 35,105 Total inventory $ 181,418 $ 150,335 (1) At December 31, 2022 and 2021, the Company had $ 30.9 million and $ 25.1 million, respectively, of finished goods inventory located at its third‑party warehouse and shipping service provider. 7. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consists of the following: December 31, December 31, (In thousands) 2022 2021 Land $ 6,560 $ 6,560 Building and improvements 195,144 192,920 Furniture, fixtures and equipment 418,448 398,099 Leasehold improvements 54,152 52,526 Construction in progress 84,715 86,512 Subtotal 759,019 736,617 Less: accumulated depreciation ( 433,658 ) ( 395,563 ) Total property, plant and equipment, net $ 325,361 $ 341,054 Depreciation expense was $ 41.7 million, $ 40.5 million and $ 42.4 million for the years ended December 31, 2022, 2021 and 2020, respectively. Also, during the years ended December 31, 2022, 2021 and 2020, the Company wrote off furniture, fixtures and equipment that had an approximate carrying value of $ 0.5 million, $ 0.1 million and less than $ 0.1 million, respectively, at the time of disposition. Amounts included as construction in progress in the consolidated balance sheets primarily include capital expenditures at the Company’s manufacturing facility in Wilmington, Ohio. The Company continues to evaluate its manufacturing capacity based on expectations of demand for its products and will continue to record such amounts within construction in progress until such time as the underlying assets are placed into service. The Company expects that approximately $ 44.3 million of construction in progress will be placed into service in the second half of 2023. The Company continues to periodically evaluate whether facts and circumstances indicate that the carrying value of its long‑lived assets to be held and used may not be recoverable. In September 2022, the Company determined that $ 8.7 million of its construction in progress that related to the manufacture of ANJESO had no future value. The Company had previously received $ 6.4 million from Baudax related to such equipment which it had recorded as contract liabilities within “Other long-term liabilities” in the accompanying consolidated balance sheets and the net amount of $ 2.3 million was written off through “other income, net” in the accompanying consolidated statements of operations and comprehensive loss. F-22 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 8. GOODWILL AND INTANGIBLE ASSETS Goodwill and intangible assets consists of the following: December 31, 2022 December 31, 2021 (In thousands) Weighted Amortizable Life (Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Goodwill $ 92,873 $ — $ 92,873 $ 92,873 $ — $ 92,873 Finite-lived intangible assets: Collaboration agreements 12 $ 465,590 $ ( 435,887 ) $ 29,703 $ 465,590 $ ( 407,012 ) $ 58,578 Capitalized IP 11-13 118,160 ( 110,183 ) 7,977 118,160 ( 102,695 ) 15,465 Total $ 583,750 $ ( 546,070 ) $ 37,680 $ 583,750 $ ( 509,707 ) $ 74,043 The Company’s finite‑lived intangible assets consist of collaborative agreements and the NanoCrystal and oral controlled release technologies acquired as part of the EDT acquisition. The Company recorded $ 36.4 million, $ 38.1 million and $ 39.5 million of amortization expense related to its finite‑lived intangible assets during the years ended December 31, 2022, 2021 and 2020, respectively. Based on the Company’s most recent analysis, amortization of intangible assets included within its consolidated balance sheets at December 31, 2022 is expected to be approximately $ 35.0 million and $ 1.0 million in the years ending December 31, 2023 and 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 performed its annual goodwill impairment test as of October 31, 2022. The Company elected to perform a qualitative impairment test and based on the weight of all available evidence, determined that the fair value of the reporting unit more-likely-than-not exceeded its carrying value. 9. LEASES All of the Company’s leases are accounted for as operating leases. The Company’s two significant operating leases at December 31, 2022 include the following: 900 Winter Street The Company leases approximately 231,000 square feet of office and laboratory space located at 900 Winter Street in Waltham, Massachusetts (the “900 Winter Street Lease”). The initial term of the lease commenced on January 20, 2020 , expires in 2035 and includes an option to extend the term for an additional ten-year period. In December 2022, the Company exercised an early payment option included within the terms of the 900 Winter Street Lease. The election of such early payment option resulted in a remeasurement of the remaining lease liability and right-of-use asset as of the remeasurement date of December 1, 2022 of $ 12.8 million. Subsequently, the Company made the early lease payment of $ 15.3 million in December 2022. As of December 31, 2022, the remeasurement and subsequent payment resulted in an increase in the right-of-use asset of $ 12.8 million and a net decrease in the lease liability of $ 2.5 million. 852 Winter Street The Company leases approximately 180,000 square feet of corporate office space, administrative areas and laboratories at 852 Winter Street in Waltham, Massachusetts. The original lease commenced in 2010 and was extended, at the Company’s option, for five years in 2020. The lease extension commenced in March 2021 for 163,000 square feet of space and in September 2021 for the remaining 17,000 square feet of space. The lease expires in 2026 and includes a tenant option to extend the term of the lease for an additional five-year period. At December 31, 2022 and 2021, the operating leases held by the Company had a weighted average incremental borrowing rate of 5.25 % and 5.25 %, respectively, and a weighted average remaining lease term of 8.9 years and 11.7 years, respectively. During the years ended December 31, 2022, 2021 and 2020, cash paid for amounts included for the measurement of lease liabilities was $ 33.2 million, $ 16.8 million and $ 16.3 million, respectively. The Company recorded operating lease expense of $ 16.6 million, $ 17.1 million and $ 17.3 million for the years ended December 31, 2022, 2021 and 2020, respectively. F-23 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Future lease payments under non-cancelable leases as of December 31, 2022 consisted of the following: December 31, (In thousands) 2022 2023 $ 16,665 2024 16,608 2025 16,855 2026 12,767 2027 9,506 Thereafter 69,474 Total operating lease payments $ 141,875 Less: imputed interest ( 36,324 ) Total operating lease liabilities $ 105,551 10. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consists of the following: December 31, December 31, (In thousands) 2022 2021 Accounts payable $ 32,843 $ 55,721 Accrued compensation 79,085 77,256 Accrued other 108,161 75,514 Total accounts payable and accrued expenses $ 220,089 $ 208,491 A summary of the Company’s current provision for sales discounts, allowances and reserves is as follows: December 31, December 31, (In thousands) 2022 2021 Medicaid rebates $ 208,332 $ 195,413 Product discounts 13,204 14,951 Medicare Part D 18,409 14,348 Other 12,170 12,504 Total accrued sales discounts, allowances and reserves $ 252,115 $ 237,216 11. LONG‑TERM DEBT Long‑term debt consists of the following: December 31, December 31, (In thousands) 2022 2021 2026 Term Loans, due March 12, 2026 $ 293,270 $ 295,804 Less: current portion ( 3,000 ) ( 3,000 ) Long-term debt $ 290,270 $ 292,804 In March 2021, the Company amended and refinanced its existing term loan, previously referred to as the 2023 Term Loans, in order to, among other things, provide for a new class of replacement term loans equal to $ 300.0 million; extend the due date of the loan from March 26, 2023 to March 12, 2026 ; amend the interest payable from LIBOR plus 2.25 % with no LIBOR floor to LIBOR plus 2.50 % with a LIBOR floor of 0.5 %; and increase covenant flexibility (such refinancing, the “Term Loan Refinancing” and the 2023 Term Loans as so amended and refinanced the “2026 Term Loans”). The 2026 Term Loans were also amended to include customary ARRC hardwired benchmark replacement language. The 2026 Term Loans have an incremental facility capacity in an amount of $ 175.0 million, plus additional potential amounts, provided that the Company meets certain conditions, including a specified leverage ratio. The 2026 Term Loans include a number of restrictive covenants that, among other things and subject to certain exceptions and baskets, impose operating and financial restrictions on the Company and certain of its subsidiaries. The 2026 Term Loans also contain customary affirmative covenants and events of default. The Company was in compliance with its debt covenants at December 31, 2022. The Term Loan Refinancing involved multiple lenders who were considered members of a loan syndicate. In determining whether the Term Loan 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 change in the debt terms was considered to be substantial if the present value of the remaining cash flows under the new terms of the 2026 Term Loans was at least 10 % different from the present value of the remaining cash flows under the 2023 Term Loans (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 three lenders, who owned between 2 %- 7 % of the total outstanding principal amount of the 2023 Term Loans immediately prior to the Term Loan Refinancing whose holding amounts were accounted for as a debt extinguishment, the Term Loan Refinancing was otherwise accounted for as a debt modification. F-24 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The Term Loan Refinancing resulted in a $ 2.1 million charge in the year ended December 31, 2021, which was included in “Interest expense” in the accompanying consolidated statement of operations and comprehensive loss. Scheduled maturities with respect to the 2026 Term Loans are as follows (in thousands): Year Ending December 31: 2023 $ 3,000 2024 3,000 2025 3,000 2026 285,750 Total $ 294,750 The Company is subject to mandatory prepayments of principal if certain excess cash flow thresholds, as defined in the 2026 Term Loans, are met. To date, the Company has not been required to make any such mandatory prepayments. At December 31, 2022, the Company’s balance of unamortized deferred financing costs and unamortized original issue discount costs were $ 0.5 million and $ 1.0 million, respectively. These costs are being amortized to interest expense over the estimated repayment period of the 2026 Term Loans using the effective interest method. During each of the years ended December 31, 2022, 2021 and 2020, the Company had amortization expense of $ 0.5 million, $ 0.5 million and $ 0.7 million, respectively, related to deferred financing costs and original issue discount. 12. LOSS PER SHARE 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 years ended December 31, 2022, 2021 and 2020, 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 restricted stock unit awards, as they would have had an anti-dilutive effect on loss per share. The following potential ordinary share equivalents were not included in the net loss per share calculation because the effect would have been anti-dilutive: Year Ended December 31, (In thousands) 2022 2021 2020 Stock options 12,777 14,794 15,274 Restricted stock unit awards 5,040 3,981 3,279 Total 17,817 18,775 18,553 13. SHAREHOLDERS’ EQUITY Share Repurchase Program On September 16, 2011, the Company’s board of directors authorized the continuation of the Alkermes, Inc. share repurchase program to repurchase up to $ 215.0 million of the Company’s ordinary shares at the discretion of management from time to time in the open market or through privately negotiated transactions. At December 31, 2022, approximately $ 101.0 million was available to repurchase ordinary shares pursuant to the repurchase program. All shares repurchased are recorded as treasury stock. The repurchase program has no set expiration date and may be suspended or discontinued at any time. During the years ended December 31, 2022 and 2021, the Company did no t acquire any ordinary shares under the repurchase program. F-25 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 14. SHARE‑BASED COMPENSATION Share‑Based Compensation Expense The following table presents share‑based compensation expense included in the Company’s consolidated statements of operations and comprehensive loss: Year Ended December 31, (In thousands) 2022 2021 2020 Cost of goods manufactured and sold $ 10,284 $ 9,175 $ 8,430 Research and development 27,941 24,877 26,408 Selling, general and administrative 56,029 53,570 55,326 Total share-based compensation expense $ 94,254 $ 87,622 $ 90,164 During the years ended December 31, 2022, 2021 and 2020, $ 3.3 million, $ 2.3 million and $ 2.6 million, respectively, of share‑based compensation expense was capitalized and recorded as “Inventory” in the accompanying consolidated balance sheets. Share‑Based Compensation Plans The Company has one share-based compensation plan pursuant to which awards are currently being made: the 2018 Stock Option and Incentive Plan, as amended (the “2018 Plan”). The Company has two share-based compensation plans pursuant to which outstanding awards have been made, but from which no further awards can or will be made: the Alkermes plc Amended and Restated 2008 Stock Option and Incentive Plan, as amended, (the “2008 Plan”) and the Alkermes plc 2011 Stock Option and Incentive Plan, as amended (the “2011 Plan”). Effective May 20, 2020, the 2018 Plan was amended such that any shares underlying any outstanding awards granted under the 2011 Plan or the 2008 Plan that are forfeited, canceled, repurchased or otherwise terminated (other than by exercise) from and after such date will become available for issuance pursuant to the 2018 Plan, notwithstanding anything to the contrary in the terms of the 2011 Plan or the 2008 Plan. The 2018 Plan allows for the issuance of non-qualified and incentive stock options, restricted stock, restricted stock unit awards, cash-based awards and performance shares to employees, officers and directors of, and consultants to, the Company in such amounts and with such terms and conditions as may be determined by the compensation committee of the Company's board of directors, subject to the provisions of the 2018 Plan, as applicable. On July 7, 2022, the Company’s shareholders approved an amended version of the Alkermes plc 2018 Stock Option and Incentive Plan that served to, among other things, increase the number of ordinary shares authorized for issuance thereunder by 8.3 million. At December 31, 2022, there were 12.9 million ordinary shares available for issuance in the aggregate under the 2018 Plan. The 2018 Plan provides that awards other than stock options will be counted against the total number of shares available under the plan in a 1.8 -to‑1 ratio. Stock Options A summary of stock option activity is presented in the following table: Number of Weighted Average Shares Exercise Price Outstanding, January 1, 2022 16,747,819 $ 34.02 Granted 3,164,468 $ 25.39 Exercised ( 1,108,772 ) $ 17.70 Expired ( 660,093 ) $ 48.03 Forfeited ( 546,461 ) $ 22.75 Outstanding, December 31, 2022 17,596,961 $ 33.32 Exercisable, December 31, 2022 10,138,673 $ 40.52 The weighted average grant date fair value of stock options granted during the years ended December 31, 2022, 2021 and 2020 was $ 12.62 , $ 10.09 and $ 9.52 , respectively. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2022, 2021 and 2020 was $ 11.6 million, $ 8.3 million and $ 2.0 million, respectively. F-26 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) At December 31, 2022, there were 7.2 million stock options expected to vest with a weighted average exercise price of $ 23.46 per share, a weighted average contractual remaining life of 8.2 years with an aggregate intrinsic value of $ 24.8 million. At December 31, 2022, the aggregate intrinsic value of stock options exercisable was $ 14.8 million with a weighted average remaining contractual term of 4.6 years. The number of stock options expected to vest was determined by applying the pre‑vesting forfeiture rate to the total number of outstanding options. The intrinsic value of a stock option is the amount by which the market value of the underlying shares exceeds the exercise price of the stock option. At December 31, 2022, there was $ 32.7 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 1.9 years. Included within the outstanding stock option balances at December 31, 2022 consisted of 382,200 performance-based stock options that were granted in 2019 and valued using a Monte Carlo simulation model. The weighted average grant date fair value of such performance-based stock options was $ 16.78 . The unrecognized compensation cost related to these performance-based stock options was less than $ 0.1 million at December 31, 2022 and is included in the unrecognized compensation cost noted above. Time‑Based Restricted Stock Unit Awards A summary of time-based RSU activity is presented in the following table: Weighted Average Number of Shares Grant Date Fair Value Unvested, January 1, 2022 6,322,685 $ 23.38 Granted 3,031,864 $ 25.27 Vested ( 2,051,872 ) $ 26.45 Forfeited ( 677,255 ) $ 22.96 Unvested, December 31, 2022 6,625,422 $ 23.34 The weighted average grant date fair value of time‑vesting RSUs granted during the years ended December 31, 2022, 2021 and 2020 were $ 25.27 , $ 20.83 and $ 20.22 , respectively. The total fair value of time-vesting RSUs that vested during the years ended December 31, 2022, 2021 and 2020, was $ 54.3 million, $ 56.3 million and $ 45.9 million, respectively. At December 31, 2022, there was $ 62.4 million of total unrecognized compensation cost related to unvested time-vesting RSUs, which will be recognized over a weighted average remaining contractual term of 1.9 years. Performance-Based Restricted Stock Unit Awards In February 2022, 2021 and 2020, the compensation committee of the Company’s board of directors approved awards of performance-based RSUs to employees of the Company at the Senior Vice President level and above, in each case subject to vesting based on the achievement of certain financial, commercial and/or R&D performance criteria to be assessed over a performance period of three years from the date of the grant, and subject, at the end of such three-year performance period, to upward or downward adjustment based on a market condition tied to relative share price performance over the three-year performance period. A summary of performance-based RSU activity is presented in the following table: Weighted Average Number of Shares Grant Date Fair Value Unvested, January 1, 2022 877,862 $ 23.20 Granted 517,683 $ 30.73 Forfeited ( 45,911 ) $ 24.46 Vested — $ — Unvested, December 31, 2022 1,349,634 $ 26.05 The weighted average grant date fair value of performance-based RSUs granted during the years ended December 31, 2022, 2021 and 2020 were $ 30.73 , $ 23.09 and $ 23.43 , respectively. The total fair value of performance-based RSUs that vested during the years ended December 31, 2022, 2021 and 2020 were none , $ 4.2 million and none , respectively. At December 31, 2022, there was $ 5.1 million of unrecognized compensation cost related to the performance-based RSUs, which would be recognized in accordance with the terms of the award when the Company deems it probable that the performance criteria will be met. The unvested awards will expire if it is determined that the performance criteria have not been met during the applicable three-year performance period. F-27 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 15. COLLABORATIVE ARRANGEMENTS The Company has entered into several collaborative arrangements to develop and commercialize products and, in connection with such arrangements, to access technologies, financial, marketing, manufacturing and other resources. Refer to the “Patents and Proprietary Rights” section in “Item 1— Business” of this Annual Report for information with respect to IP protection for these products. The collaboration revenue the Company has earned in the years ended December 31, 2022, 2021 and 2020 is summarized in Note 3, Revenue from Contracts with Customers within the notes to the consolidated financial statements in this Annual Report. The Company’s significant collaborative arrangements are described below: Janssen INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and INVEGA HAFYERA/BYANNLI In November 2021, the Company received notice of partial termination of an exclusive license agreement with Janssen. Under this license agreement, the Company provided Janssen with rights to, and know-how, training and technical assistance in respect of, the Company’s small particle pharmaceutical compound technology, known as NanoCrystal technology, which was used to develop INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA, and INVEGA HAFYERA/BYANNLI. When the partial termination became effective in February 2022, Janssen ceased paying royalties related to sales of INVEGA SUSTENNA, INVEGA TRINZA and INVEGA HAFYERA in the U.S. and the Company stopped recognizing royalty revenue related to net sales of these products. In April 2022, the Company commenced binding arbitration proceedings related to, among other things, Janssen’s partial termination of this license agreement and Janssen’s royalty and other obligations under the agreement. On December 21, 2022, we received the Interim Award in these proceedings from the Tribunal, in which the Tribunal agreed with our position that, while Janssen may terminate the agreement, it may not continue to sell Products (as defined in the agreement) developed during the term of the agreement without paying royalties pursuant to the term of the agreement. This award is not yet final. We will engage with Janssen and the Tribunal in additional proceedings prior to the Tribunal’s issuance of a final award. Accordingly, the Company has not recognized royalty revenue related to U.S. sales of the long-acting INVEGA products since February 2022. For additional information about these proceedings, see Note 17, Commitments and Contingent Liabilities in the “Notes to Consolidated Financial Statements” in this Annual Report. Under this license agreement, the Company granted Janssen a worldwide exclusive license under the Company’s NanoCrystal technology to develop, commercialize and manufacture injectable pharmaceutical products containing paliperidone palmitate, which include the long-acting INVEGA products, and the Company received milestone payments from Janssen upon the achievement of certain development goals from Janssen; there are no further milestones to be earned under this agreement. The agreement also provides for tiered royalty payments between 5 % and 9 % of net sales of products subject to this agreement in each country where the license is in effect, with the exact royalty percentage determined based on aggregate worldwide net sales. The tiered royalty payments consist of a patent royalty and a know‑how royalty, both of which are determined on a country‑by‑country basis. The patent royalty, which equals 1.5 % of net sales, is payable in each country until the expiration of the last of the patents claiming the product in such country. The know‑how royalty is a tiered royalty of 3.5 %, 5.5 % and 7.5 % on aggregate worldwide net sales of below $ 250 million, between $ 250 million and $ 500 million, and greater than $ 500 million, respectively. The know‑how royalty rate resets to 3.5 % at the beginning of each calendar year and is payable until 15 years from first commercial sale of a product in each individual country, subject to expiry of the agreement. These royalty payments may be reduced in any country based on patent litigation or on competing products achieving certain minimum sales thresholds. The license agreement, unless earlier terminated, terminates upon the expiration of the last of the patents subject to the agreement. After expiration, Janssen retains a non‑exclusive, royalty‑free license to develop, manufacture and commercialize the products, subject to certain surviving obligations. Janssen may terminate the license agreement in whole or in part upon three months’ notice to the Company. The Company and Janssen have the right to terminate the agreement upon a material breach of the other party, which is not cured within a certain time period, or upon the other party’s bankruptcy or insolvency. F-28 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) RISPERDAL CONSTA Under a product development agreement, the Company collaborated with Janssen on the development of RISPERDAL CONSTA. Under the development agreement, Janssen provided funding to the Company for the development of RISPERDAL CONSTA and Janssen is responsible for securing all necessary regulatory approvals for the product. Under two license agreements, the Company granted Janssen and an affiliate of Janssen exclusive worldwide licenses to use and sell RISPERDAL CONSTA. Under its license agreements with Janssen, the Company receives royalty payments equal to 2.5 % of Janssen’s end-market net sales of RISPERDAL CONSTA in each country where the license is in effect based on the quarter when the product is sold by Janssen. This royalty may be reduced in any country based on lack of patent coverage and significant competition from generic versions of the product. Janssen can terminate the license agreements upon 30 days’ prior written notice to the Company. Either party may terminate the license agreements by written notice following a breach which continues for 90 days after the delivery of written notice thereof or upon the other party’s insolvency. The licenses granted to Janssen expire on a country‑by‑country basis upon the later of: (i) the expiration of the last patent claiming the product in such country; or (ii) 15 years after the date of the first commercial sale of the product in such country, provided that in no event will the license granted to Janssen expire later than the twentieth anniversary of the first commercial sale of the product in each such country, with the exception of Canada, France, Germany, Italy, Japan, Spain and the United Kingdom, in each case where the fifteen‑year minimum shall pertain regardless. After expiration, Janssen retains a non‑exclusive, royalty‑free license to manufacture, use and sell RISPERDAL CONSTA. The Company exclusively manufactures RISPERDAL CONSTA for commercial sale. Under its manufacturing and supply agreement with Janssen, the Company records manufacturing revenues when product is fully manufactured and approved for shipment by both Janssen and the Company. Revenue is based on a percentage of Janssen’s net unit sales price for RISPERDAL CONSTA for the applicable calendar year. This percentage is determined based on Janssen’s unit demand for such calendar year and varies based on the volume of units shipped, with a minimum manufacturing fee of 7.5 %. Either party may terminate the manufacturing and supply agreement upon a material breach by the other party, which is not resolved within 60 days after receipt of a written notice specifying the material breach or upon written notice in the event of the other party’s insolvency or bankruptcy. Janssen may terminate the agreement upon six months ’ written notice to the Company. In the event that Janssen terminates the manufacturing and supply agreement without terminating the license agreements, the royalty rate payable to the Company on Janssen’s net sales of RISPERDAL CONSTA would increase from 2.5 % to 5.0 %. Biogen Under a license and collaboration agreement with Biogen, the Company granted Biogen a worldwide, exclusive, sublicensable license to develop, manufacture and commercialize VUMERITY and other products covered by patents licensed to Biogen under the agreement. Under this license and collaboration agreement, the Company received an upfront cash payment and milestone payments related to the achievement of certain milestones, including FDA approval of the NDA for VUMERITY and amendment of the license and collaboration agreement. The Company is also eligible to receive additional payments upon achievement of certain milestones, including milestones relating to the first two products, other than VUMERITY, covered by patents licensed to Biogen under the license and collaboration agreement. In addition, the Company receives a 15 % royalty on worldwide net sales of VUMERITY, subject to increases for VUMERITY manufactured and/or packaged by Biogen or its designees, and subject to, under certain circumstances, minimum annual payments for the first five years following FDA approval of VUMERITY. The Company is also entitled to receive royalties on net sales of products other than VUMERITY covered by patents licensed to Biogen under the license and collaboration agreement, at tiered royalty rates calculated as percentages of net sales ranging from high-single digits to sub-teen double digits. All royalties are payable on a product-by-product and country-by-country basis until the later of (i) the last-to-expire patent right covering the applicable product in the applicable country and (ii) a specified period of time from the first commercial sale of the applicable product in the applicable country. Royalties for all products and the minimum annual payments for VUMERITY are subject to customary reductions, as set forth in the license and collaboration agreement. Under the license and collaboration agreement, Biogen appointed the Company as the toll manufacturer of clinical and commercial supplies of VUMERITY, subject to Biogen’s right to manufacture or have manufactured commercial supplies as a back-up manufacturer and subject to good faith agreement by the parties on the terms of such manufacturing arrangements. In October 2019, the Company entered into a commercial supply agreement with Biogen for the commercial supply of VUMERITY, an amendment to such commercial supply agreement and an amendment to the license and collaboration agreement with Biogen, pursuant to which Biogen has elected to conduct a technology transfer and, following a transition period, assume responsibility for the manufacture (itself or through a designee) of clinical supplies of VUMERITY and up to 100 % of commercial supplies of VUMERITY in exchange for an increase in the royalty rate to be paid by Biogen to the Company on net sales of that portion of product that is manufactured by Biogen or its designee. F-29 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Unless earlier terminated, the license and collaboration agreement will remain in effect until the expiry of all royalty obligations. Biogen has the right to terminate the license and collaboration agreement at will, on a product-by-product basis or in its entirety upon 180 days’ prior notice to the Company. Either party has the right to terminate the license and collaboration agreement following any governmental prohibition of the transactions effected by the agreement, or in connection with an insolvency event involving the other party. Upon termination of the license and collaboration agreement by either party, then, at the Company’s request, the VUMERITY program will revert to the Company. 16. INCOME TAXES The Company’s (benefit) provision for income taxes consists of the following: Year Ended December 31, (In thousands) 2022 2021 2020 Current income tax provision: U.S. federal $ 18,105 $ 2,700 $ 2,943 U.S. state 5,653 1,079 1,396 Rest of world — 3 — Deferred income tax (benefit) provision: U.S. federal ( 28,123 ) 5,908 9,876 U.S. state ( 4,672 ) ( 827 ) 109 Ireland — — — Total tax (benefit) provision $ ( 9,037 ) $ 8,863 $ 14,324 The income tax benefit in 2022 was primarily due to an enhanced foreign derived intangible income deduction as a result of a change to Section 174 of the Tax Cuts and Jobs Act in relation to capitalization and amortization of R&D expenses. The income tax provisions in 2021 and 2020 were primarily due to U.S. federal and state taxes on income earned in the U.S. and the tax impact of employee equity activity. No provision for income tax has been provided on undistributed earnings of the Company’s foreign subsidiaries because such earnings are indefinitely reinvested in the foreign operations. Cumulative unremitted earnings of U.S. subsidiaries totaled approximately $ 812.8 million at December 31, 2022. In the event of a repatriation of those earnings in the form of dividends or otherwise, the Company may be liable for income taxes, subject to adjustment, if any, for foreign tax credits and foreign withholding taxes payable to foreign tax authorities. The Company estimates that approximately $ 55.0 million of income taxes would be payable on the repatriation of the unremitted earnings to Ireland. The distribution of the Company’s loss before income taxes by geographical area consists of the following: Year Ended December 31, (In thousands) 2022 2021 2020 Ireland $ ( 183,828 ) $ ( 54,070 ) $ ( 138,070 ) U.S. 16,524 14,764 41,599 Rest of world — — ( 66 ) Loss before income taxes $ ( 167,304 ) $ ( 39,306 ) $ ( 96,537 ) F-30 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The components of the Company’s net deferred tax assets consist of the following: December 31, December 31, (In thousands) 2022 2021 Deferred tax assets: NOL carryforwards $ 238,128 $ 222,508 Research and development expenses 66,464 — Accrued expenses and reserves 55,755 52,308 Share-based compensation 41,075 40,455 Tax credits 22,932 58,704 Other 9,993 7,758 Less: valuation allowance ( 271,517 ) ( 249,112 ) Total deferred tax assets 162,830 132,621 Deferred tax liabilities: Property, plant and equipment ( 46,274 ) ( 50,187 ) Other ( 1,502 ) ( 1,150 ) Total deferred tax liabilities ( 47,776 ) ( 51,337 ) Net deferred tax assets $ 115,054 $ 81,284 The activity in the valuation allowance associated with deferred taxes consists of the following: (In thousands) Balance at Beginning of Period (Additions) / Reductions (1) Balance at End of Period Deferred tax asset valuation allowance for the year ended December 31, 2020 $ ( 242,059 ) $ ( 11,590 ) $ ( 253,649 ) Deferred tax asset valuation allowance for the year ended December 31, 2021 $ ( 253,649 ) $ 4,537 $ ( 249,112 ) Deferred tax asset valuation allowance for the year ended December 31, 2022 $ ( 249,112 ) $ ( 22,405 ) $ ( 271,517 ) (1) The (additions)/reductions in each of the periods presented relate primarily to Irish NOLs. At December 31, 2022, the Company maintained a valuation allowance of $ 25.7 million against certain U.S. state deferred tax assets and $ 245.8 million against certain Irish deferred tax assets as the Company has determined that it is more-likely-than-not that these net deferred tax assets will not be realized. If the Company demonstrates consistent profitability in the future, the evaluation of the recoverability of these deferred tax assets could change and the remaining valuation allowances could be released in part or in whole. If the Company incurs losses in the U.S. in the future, the evaluation of the recoverability of the U.S. deferred tax assets could change and a valuation allowance against the U.S. deferred tax assets may be required in part or in whole. As of December 31, 2022, the Company had $ 1.7 billion of Irish NOL carryforwards, $1 F-31 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 5 .1 million of U.S. federal NOL carryforwards, $ 43.2 million of state NOL carryforwards, $ 5.7 million of federal R&D credits and $ 29.0 million of state tax credits which will either expire on various dates through 204 2 or can be carried forward indefinitely. These loss and credit carryforwards are available to reduce certain future Irish and foreign taxable income and tax. These loss and credit carryforwards are subject to review and possible adjustment by the appropriate taxing authorities. These loss and credit carryforwards, which may be utilized in a future period, may be subject to limitations based upon changes in the ownership of the Company's ordinary shares. Included within these loss and credit carryforwards are $ 15.1 million of U.S. federal NOL carryforwards and $ 6.8 million of state NOL carryforwards, acquired as part of the acquisition of Rodin, each of which are subject to a $ 0.5 million annual limitation. A reconciliation of the Company’s statutory tax rate to its effective tax rate is as follows: Year Ended December 31, (In thousands, except percentage amounts) 2022 2021 2020 Statutory tax rate 12.5 % 12.5 % 12.5 % Loss before income taxes at statutory rate $ ( 20,913 ) $ ( 4,913 ) $ ( 12,067 ) Share-based compensation 4,461 7,841 8,972 Foreign rate differential (1) ( 2,122 ) 5,811 7,798 Change in valuation allowance 21,455 ( 4,537 ) 11,590 Intercompany amounts (2) ( 1,694 ) 10,707 6,234 Irish rate differential (3) 4,926 1,817 2,511 Uncertain tax positions 602 704 811 Non-deductible lobbying expenses 775 637 683 U.S. state income taxes, net of U.S. federal benefit 598 248 1,298 In-process R&D (4) — 2,724 332 Foreign derived intangible income ( 10,405 ) ( 3,875 ) ( 3,125 ) R&D credit ( 7,863 ) ( 8,488 ) ( 11,198 ) Other permanent items (5) 1,143 187 485 Income tax (benefit) provision $ ( 9,037 ) $ 8,863 $ 14,324 Effective tax rate 5.4 % ( 22.5 ) % ( 14.8 ) % ( 1 ) Represents income or losses of U.S. subsidiaries, subject to tax at a rate other than the Irish statutory rate. ( 2 ) Intercompany amounts include cross-territory eliminations, the pre-tax effect of which has been eliminated in arriving at the Company's consolidated loss before taxes. (3) Represents income or losses of Irish companies subject to tax at a rate other than the Irish statutory rate. ( 4 ) Represents the tax effect of the research and development expense recorded in connection with the acquisition of Rodin. ( 5 ) Other permanent items include, but are not limited to, non-deductible meals and entertainment expenses and non-deductible compensation of senior officers of the Company. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Unrecognized (In thousands) Tax Benefits Balance, December 31, 2019 $ 6,857 Additions based on tax positions related to prior periods 15 Additions based on tax positions related to the current period 796 Balance, December 31, 2020 $ 7,668 Reductions based on tax positions related to prior periods ( 27 ) Additions based on tax positions related to the current period 731 Balance, December 31, 2021 $ 8,372 Reductions based on the lapse of applicable statues of limitations ( 438 ) Additions based on tax positions related to prior periods 449 Additions based on tax positions related to the current period 590 Balance, December 31, 2022 $ 8,973 The unrecognized tax benefits at December 31, 2022, if recognized, would affect the Company's effective tax rate. The Company does not anticipate that the amount of existing unrecognized tax benefits will materially increase or decrease within the next 12 months. The Company has elected to include interest and penalties related to uncertain tax positions as a component of its provision for taxes. For the years ended December 31, 2022, 2021 and 2020, the Company's accrued interest and penalties related to uncertain tax positions were not material. F-32 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The Company’s major taxing jurisdictions include Ireland and the U.S. (federal and state). These jurisdictions have varying statutes of limitations. In the U.S., the 2019 through 2022 fiscal years remain subject to examination by the respective tax authorities, however, some states have longer statutes of limitations and additional fiscal years remain subject to examination. In Ireland, the 2018 through 2022 fiscal years remain subject to examination by the Irish tax authorities. Additionally, because of the Company’s Irish and U.S. loss carryforwards and credit carryforwards, certain tax returns from fiscal years 2002 onward may also be examined. These years generally remain open for three to four years after the loss carryforwards and credit carryforwards have been utilized. The years ended December 31, 2018 and 2017 for Alkermes Finance S.à.r.l, a former indirect subsidiary of Alkermes plc that was liquidated during the year ended December 31, 2020, are currently under examination by the Tax Authorities in Luxembourg (the “LTA”). In November 2022, the Company received a notice of assessment in the amount of € 2.2 million for the year ended December 31, 2017 from the LTA. The Company disagrees with this assessment and believes this assessment to be incorrect. The Company will timely appeal the notice of assessment and pursue available administrative and judicial avenues as may be necessary or appropriate. As of December 31, 2022, the Company had no t received a notice of assessment from the LTA in relation to the year ended December 31, 2018. 17. COMMITMENTS AND CONTINGENT LIABILITIES Litigation From time to time, the Company may be subject to legal proceedings and claims in the ordinary course of business. On a quarterly basis, the Company reviews the status of each significant matter and assesses its potential financial exposure. If the potential loss from any claim, asserted or unasserted, or legal proceeding is considered probable and the amount can be reasonably estimated, the Company would accrue a liability for the estimated loss. Because of uncertainties related to claims and litigation, accruals are based on the Company’s best estimates, utilizing all available information. On a periodic basis, as additional information becomes available, or based on specific events such as the outcome of litigation or settlement of claims, the Company may reassess the potential liability related to these matters and may revise these estimates, which could result in material adverse adjustments to the Company’s operating results. At December 31, 2022, there were no potential material losses from claims, asserted or unasserted, or legal proceedings that the Company determined were probable of occurring. Janssen Arbitration Proceedings In April 2022, Alkermes Pharma Ireland Limited commenced binding arbitration proceedings to settle, among other things, whether, notwithstanding Janssen Pharmaceutica N.V.’s partial termination of two license agreements with the Company, Janssen Pharmaceutica has a continuing obligation to pay royalties on sales in the U.S. of INVEGA SUSTENNA, INVEGA TRINZA, INVEGA HAFYERA and CABENUVA. The request for arbitration seeks, among other remedies, a declaration that Janssen Pharmaceutica N.V. is in breach of the license agreements and a resumption of royalty payments for sales of the relevant products in the U.S. On December 21, 2022, the Company received the Interim Award in these proceedings from the Tribunal. In the Interim Award, the Tribunal agreed with the Company’s position that, while Janssen Pharmaceutica N.V. may terminate the agreements, it may not continue to sell Products (as defined in the agreements) developed during the term of the agreements without paying royalties pursuant to the terms of the respective agreements. The Company will engage with Janssen Pharmaceutica N.V. and the Tribunal in additional proceedings prior to the Tribunal’s issuance of a final award. The arbitration is to be conducted pursuant to the Institute for Conflict Prevention and Resolution (CPR) Rules for Non-Administered Arbitration. INVEGA SUSTENNA ANDA Litigation Janssen Pharmaceutica N.V. and Janssen Pharmaceuticals, Inc. initiated patent infringement lawsuits in the U.S. District Court for the District of New Jersey (the “NJ District Court”) in January 2018 against Teva Pharmaceuticals USA, Inc. (“Teva”) and Teva Pharmaceuticals Industries, Ltd. (“Teva PI”) (such lawsuit, the “Teva Lawsuit”), in August 2019 against Mylan Laboratories Limited (“Mylan Labs”) and other Mylan entities (the “Mylan Lawsuit”) and in December 2019 against Pharmascience, Inc. (“Pharmascience”), Mallinckrodt plc, and SpecGX LLC (the “Pharmascience Lawsuit”), and in the U.S. District Court for the District of Delaware in December 2021 against Tolmar Holding, Inc., Tolmar Pharmaceuticals, Inc., Tolmar Therapeutics, Inc., and Tolmar, Inc. (“Tolmar” and such lawsuit, the “Tolmar Lawsuit”), following the respective filings by each of Teva, Mylan Labs, Pharmascience and Tolmar of an Abbreviated New Drug Application (“ANDA”) seeking approval from the FDA to market a generic version of INVEGA SUSTENNA before the expiration of U.S. Patent No. 9,439,906. In October 2021, the NJ District Court entered a judgment in favor of the Janssen entities in the Teva Lawsuit. In December 2021, the NJ District Court entered a judgment in favor of the Janssen entities in the Mylan Lawsuit, based on the parties’ prior stipulation to be bound by the judgment in the Teva Lawsuit. The Teva entities and Mylan Labs each filed notices of appeal of their respective judgments with the U.S. Court of Appeals for the Federal Circuit, which were consolidated in January 2022 (the “Teva Appeal”). A trial has been scheduled in the Tolmar Lawsuit for October 2023. The Pharmascience Lawsuit was administratively terminated in July 2022, pending the outcome of the Teva Appeal. The Company is not a party to any of these proceedings. F-33 Table of Contents ALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) INVEGA TRINZA ANDA Litigation In September 2020, Janssen Pharmaceutica N.V., Janssen Pharmaceuticals, Inc., and Janssen Research & Development, LLC, initiated a patent infringement lawsuit in the NJ District Court against Mylan Labs, Mylan, and Mylan Institutional LLC following the filing by Mylan Labs of an ANDA seeking approval from the FDA to market a generic version of INVEGA TRINZA before the expiration of U.S. Patent No. 10,143,693. Requested judicial remedies include recovery of litigation costs and injunctive relief. A bench trial concluded on December 9, 2022. The Company is not a party to this proceeding. VIVITROL ANDA Litigation In September 2020, Alkermes, Inc. and Alkermes Pharma Ireland Limited filed a patent infringement lawsuit in the NJ District Court against Teva and Teva PI following the filing by Teva of an ANDA seeking approval from the FDA to engage in the commercial manufacture, use or sale of a generic version of VIVITROL (naltrexone for extended-release injectable suspension) before the expiration of the Company’s U.S. Patent No. 7,919,499. A bench trial, adjourned from its prior scheduled start date due to COVID-19, is now scheduled to begin on February 16, 2023. The Company intends to vigorously defend its IP. Government Matters The Company has received a subpoena and civil investigative demands from U.S. state and federal governmental authorities for documents related to VIVITROL. The Company is cooperating with the investigations. Product Liability and Other Legal Proceedings The Company is involved in litigation and other legal proceedings incidental to its normal business activities, including product liability cases alleging that the FDA-approved VIVITROL labeling was inadequate and caused the users of the product to suffer from opioid overdose and death. The Company intends to vigorously defend itself in these matters. In addition, on January 10, 2023, Acorda filed a petition with the U.S. District Court for the Southern District of New York asking the court to confirm in part and modify in part the final arbitral award rendered by an arbitration panel in October 2022 and, as part of the requested modification, seeking an additional approximately $ 66.0 million in damages. The Company intends to contest this petition and believes it is without merit. While the outcome of any of these proceedings cannot be accurately predicted, the Company does not believe the ultimate resolution of any of these existing proceedings would have a material adverse effect on the Company’s business or financial condition. Purchase Commitments The Company has open purchase orders for plant and equipment as part of its normal course of business. At December 31, 2022, the Company’s open purchase orders were $ 9.9 million for capital commitments. F-34