##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




FORM 10-Q/A
AMENDMENT NO. 1




box   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended June 30, 2002


box   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________




Commission file number 1-14131




ALKERMES, INC.




(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|PENNSYLVANIA                                                   |  | 23-2472830                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |  |                                     
|                                                              
|                                                              
|                                                              
|                                                              
|88 Sidney Street, Cambridge, MA                                |  | 02139-4136                          
|                                                               |  |                                     
|(Address of principal executive offices)                       |  | (Zip Code)                          

|                                                   |  |                | 
|-------------------------------------------------- |  | -------------- | 
|Registrants telephone number including area code: |  | (617) 494-0171
|                                                   |  |               

64 Sidney Street, Cambridge, MA
02139-4136

---

(Former name, former address, and former fiscal year, if changed since last report)


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  box   No  box

Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the latest practicable date.

|                                        |  |                                         |            | 
|--------------------------------------- |  | --------------------------------------- | ---------- | 
|Class                                   |  | Shares Outstanding as of August 7, 2002
|                                        |  |                                        
|Common Stock, par value $.01            |  |                                         | 64,312,182 | 
|                                       
|                                       
|                                       
|                                       
|Non-Voting Common Stock, par value $.01 |  |                                         | 382,632    | 





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TABLE OF CONTENTS



|                                                 |                                            |                                            |  |  |  |  |  | 
|------------------------------------------------ | ------------------------------------------ | ------------------------------------------ |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                   
|                                                 | Item 1. CONSOLIDATED FINANCIAL STATEMENTS:
|                                                 |                                            | CONSOLIDATED BALANCE SHEETS               
|                                                 |                                            | CONSOLIDATED STATEMENTS OF OPERATIONS     
|                                                 |                                            | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                                                 |                                            | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                 | Item 6. Exhibits and Reports on Form 8-K  
|SIGNATURES                                      
|CERTIFICATIONS                                  
|Exhibit Index                                   
|Ex-99.1 Certification of Chief Executive Officer
|Ex-99.1 Certification of Chief Financial Officer



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##### Table of Contents



ALKERMES, INC. AND SUBSIDIARIES

INDEX




|                               |                                                                                   |  |    |          |  | 
|------------------------------ | --------------------------------------------------------------------------------- |  | -- | -------- |  | 
|                               |                                                                                   |  |    | Page No.
|                               |                                                                                   |  |    |         
|PART I  FINANCIAL INFORMATION |                                                                                   |  |    |         
|                              
|                              
|                              
|                              
|                               | Item 1. Consolidated Financial Statements                                         |  |    |          | 
|                              
|                              
|                              
|                              
|                               | Consolidated Balance Sheets
- June 30, 2002 and March 31, 2002                    |  |    | 3        | 
|                              
|                              
|                              
|                              
|                               | Consolidated Statements of Operations
- Three months ended June 30, 2002 and 2001 |  |    | 4        | 
|                              
|                              
|                              
|                              
|                               | Consolidated Statements of Cash Flows
- Three months ended June 30, 2002 and 2001 |  |    | 5        | 
|                              
|                              
|                              
|                              
|                               | Notes to Consolidated Financial Statements                                        |  |    | 6        | 
|                              
|                              
|                              
|                              
|                               | Item 6. Exhibits and Reports on Form 8-K                                          |  |    | 9        | 
|                              
|                              
|                              
|                              
|SIGNATURES                     |                                                                                   |  | 10 |         
|CERTIFICATIONS                 |                                                                                   |  | 10 |         
|                              
|                              
|                              
|                              
|EXHIBIT INDEX                  |                                                                                   |  | 11 |         




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##### Table of Contents






Explanatory Note







The Registrant is
filing this Amendment No. 1 to its Quarterly Report on Form 10-Q
filed with the Securities and Exchange Commission on August 14, 2002
to include summarized
financial information with regard to a fifty percent or less owned
person accounted for by the equity method by the Registrant in the notes to
its financial statements. Accordingly, in this Form 10-Q/A, the
Registrant is amending Note 4 to its Notes to Consolidated Financial
Statements included in Item 1 to reflect such summarized financial
information. This Form 10-Q/A does not reflect events occurring after
the filing of the original Form 10-Q, or modify or update the
disclosures therein in any way other than as required to reflect the
amendment described above.






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##### Table of Contents












PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements:

ALKERMES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(Unaudited)

|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |              |   |         |             |  
|------------------------------------------ | ---------------------------------------------------------------------------------- | ------------------------------------ | -------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | - | -------- | ----------- | ------------ | - | ------- | ----------- | -
|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   | June 30, |             | March 31,   
|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   | 2002     |             | 2002        
|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |             
|                                           |                                                                                    |                                      |                                                                                                                            | ASSETS                                         |   |          |             |              |   |         |             |  
|                                          
|                                          
|                                          
|                                          
|Current Assets:                            |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |             
|                                          
|                                          
|                                          
|                                          
|                                           | Cash and cash equivalents                                                          |                                      | $                                                                                                                          | 9,488,795                                      |   |          | $           | 16,023,074   |  
|                                          
|                                          
|                                          
|                                          
|                                           | Short-term investments                                                             |                                      |                                                                                                                            | 100,338,942                                    |   |          |             | 136,323,768  |  
|                                          
|                                          
|                                          
|                                          
|                                           | Receivables from collaborative arrangements                                        |                                      |                                                                                                                            | 19,501,908                                     |   |          |             | 19,039,706   |  
|                                          
|                                          
|                                          
|                                          
|                                           | Prepaid expenses and other current assets                                          |                                      |                                                                                                                            | 5,647,655                                      |   |          |             | 5,249,797    |  
|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |              |  
|                                           |                                                                                    |                                      |                                                                                                                            | Total current assets                           |   |          | 134,977,300 |              |   |         | 176,636,345 |  
|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |              |  
|Property, Plant and Equipment:             |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |             
|                                          
|                                          
|                                          
|                                          
|                                           | Land                                                                               |                                      |                                                                                                                            | 235,000                                        |   |          |             | 235,000      |  
|                                          
|                                          
|                                          
|                                          
|                                           | Building                                                                           |                                      |                                                                                                                            | 5,076,961                                      |   |          |             | 5,058,936    |  
|                                          
|                                          
|                                          
|                                          
|                                           | Furniture, fixtures and equipment                                                  |                                      |                                                                                                                            | 51,274,335                                     |   |          |             | 49,558,745   |  
|                                          
|                                          
|                                          
|                                          
|                                           | Leasehold improvements                                                             |                                      |                                                                                                                            | 15,108,993                                     |   |          |             | 15,016,553   |  
|                                          
|                                          
|                                          
|                                          
|                                           | Construction in progress                                                           |                                      |                                                                                                                            | 41,245,053                                     |   |          |             | 26,497,064   |  
|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |              |  
|                                           |                                                                                    |                                      | 112,940,342                                                                                                                |                                                |   |          | 96,366,298  |             
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                                    |                                      |                                                                                                                            | Less accumulated depreciation and amortization |   |          | (36,745,946 | )            |   |         | (34,530,467 | )
|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |              |  
|                                           |                                                                                    |                                      | 76,194,396                                                                                                                 |                                                |   |          | 61,835,831  |             
|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |              |  
|Investments                                |                                                                                    |                                      | 8,823,556                                                                                                                  |                                                |   |          | 9,126,093   |             
|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |              |  
|Investment in Reliant Pharmaceuticals, LLC |                                                                                    |                                      | 70,383,636                                                                                                                 |                                                |   |          | 94,596,536  |             
|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |              |  
|Other Assets                               |                                                                                    |                                      | 7,224,197                                                                                                                  |                                                |   |          | 8,155,472   |             
|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |              |  
|                                           |                                                                                    |                                      |                                                                                                                            | Total Assets                                   |   | $        | 297,603,085 |              |   | $       | 350,350,277 |  
|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |              |  
|                                           |                                                                                    | LIABILITIES AND SHAREHOLDERS EQUITY |                                                                                                                            |                                                |   |          |             |              |   |        
|                                          
|                                          
|                                          
|                                          
|Current Liabilities:                       |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |             
|                                          
|                                          
|                                          
|                                          
|                                           | Accounts payable and accrued expenses                                              |                                      | $                                                                                                                          | 22,703,760                                     |   |          | $           | 20,764,375   |  
|                                          
|                                          
|                                          
|                                          
|                                           | Accrued interest                                                                   |                                      |                                                                                                                            | 2,881,226                                      |   |          |             | 1,013,521    |  
|                                          
|                                          
|                                          
|                                          
|                                           | Deferred revenue                                                                   |                                      |                                                                                                                            | 6,807,177                                      |   |          |             | 7,083,516    |  
|                                          
|                                          
|                                          
|                                          
|                                           | Long-term obligations  current portion                                            |                                      |                                                                                                                            | 3,900,000                                      |   |          |             | 14,025,000   |  
|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |              |  
|                                           |                                                                                    |                                      |                                                                                                                            | Total current liabilities                      |   |          | 36,292,163  |              |   |         | 42,886,412  |  
|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |              |  
|Long-Term Obligations                      |                                                                                    |                                      | 6,825,000                                                                                                                  |                                                |   |          | 7,800,000   |             
|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |              |  
|Convertible Subordinated Notes             |                                                                                    |                                      | 200,000,000                                                                                                                |                                                |   |          | 200,000,000 |             
|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |              |  
|Shareholders Equity:                      |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |             
|                                          
|                                          
|                                          
|                                          
|                                           | Capital stock, par value $.01 per share: authorized, 4,550,000 shares; none issued |                                      |                                                                                                                            |                                                |   |          |             |              |  
|                                          
|                                          
|                                          
|                                          
|                                           | Common stock, par value $.01 per share:                                            |                                      |                                                                                                                            |                                                |   |          |             |              |  
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                                    |                                      | authorized, 160,000,000 shares; issued, 64,290,178 and
64,225,395 shares at
June 30, 2002 and March 31, 2002, respectively |                                                |   | 642,902  |             |              |   | 642,254 |            
|                                          
|                                          
|                                          
|                                          
|                                           | Non-voting common stock, par value $.01 per share:                                 |                                      |                                                                                                                            |                                                |   |          |             |              |  
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                                    |                                      | authorized, 450,000 shares; issued, 382,632 at June 30, 2002 and
March 31, 2002                                            |                                                |   | 3,826    |             |              |   | 3,826   |            
|                                          
|                                          
|                                          
|                                          
|                                           | Additional paid-in capital                                                         |                                      |                                                                                                                            | 444,851,926                                    |   |          |             | 444,425,742  |  
|                                          
|                                          
|                                          
|                                          
|                                           | Deferred compensation                                                              |                                      |                                                                                                                            | (2,587,460                                     | ) |          |             | (3,162,448   | )
|                                          
|                                          
|                                          
|                                          
|                                           | Accumulated other comprehensive income                                             |                                      |                                                                                                                            | 692,198                                        |   |          |             | 1,619,541    |  
|                                          
|                                          
|                                          
|                                          
|                                           | Accumulated deficit                                                                |                                      |                                                                                                                            | (389,117,470                                   | ) |          |             | (343,865,050 | )
|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |              |  
|                                           |                                                                                    |                                      |                                                                                                                            | Total shareholders equity                     |   |          | 54,485,922  |              |   |         | 99,663,865  |  
|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |              |  
|                                           |                                                                                    |                                      |                                                                                                                            | Total Liabilities and Shareholders Equity     |   | $        | 297,603,085 |              |   | $       | 350,350,277 |  
|                                           |                                                                                    |                                      |                                                                                                                            |                                                |   |          |             |              |  

See notes to consolidated financial statements.

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ALKERMES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

|                                                     |                                                                   |                              |              |              |            |              |             |            |            | 
|---------------------------------------------------- | ----------------------------------------------------------------- | ---------------------------- | ------------ | ------------ | ---------- | ------------ | ----------- | ---------- | ---------- | 
|                                                     |                                                                   |                              |              | Three Months |            | Three Months
|                                                     |                                                                   |                              |              | Ended        |            | Ended       
|                                                     |                                                                   |                              |              | June 30,     |            | June 30,    
|                                                     |                                                                   |                              |              | 2002         |            | 2001        
|                                                     |                                                                   |                              |              |              |            |             
|Revenues:                                            |                                                                   |                              |              |              |            |              |             |           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Research and development revenue under
collaborative arrangements |                              | $            | 10,291,391   |            |              | $           | 15,526,675 |           
|                                                     |                                                                   |                              |              |              |            |              |             |            |           
|Expenses:                                            |                                                                   |                              |              |              |            |              |             |           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Research and development                                          |                              |              | 24,599,673   |            |              |             | 20,710,031 |           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | General and administrative                                        |                              |              | 6,016,040    |            |              |             | 5,374,278  |           
|                                                     |                                                                   |                              |              |              |            |              |             |            |           
|                                                     |                                                                   | Total expenses               |              |              | 30,615,713 |              |             |            | 26,084,309 | 
|                                                     |                                                                   |                              |              |              |            |              |             |            |           
|Net operating loss                                   |                                                                   |                              | (20,324,322  | )            |            |              | (10,557,634 | )         
|                                                     |                                                                   |                              |              |              |            |              |             |            |           
|Other income (expense):                              |                                                                   |                              |              |              |            |              |             |           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Interest income                                                   |                              |              | 1,365,936    |            |              |             | 4,525,015  |           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Interest expense                                                  |                              |              | (2,081,134   | )          |              |             | (2,309,927 | )         
|                                                     |                                                                   |                              |              |              |            |              |             |            |           
|                                                     |                                                                   | Total other (expense) income |              |              | (715,198   | )            |             |            | 2,215,088  | 
|                                                     |                                                                   |                              |              |              |            |              |             |            |           
|Equity in losses of Reliant Pharmaceuticals, LLC     |                                                                   |                              | 24,212,900   |              |            |              |            |           
|                                                     |                                                                   |                              |              |              |            |              |             |            |           
|Net loss                                             |                                                                   |                              | ($45,252,420 | )            |            |              | ($8,342,546 | )         
|                                                     |                                                                   |                              |              |              |            |              |             |            |           
|Basic and diluted loss per common share              |                                                                   |                              | ($0.70       | )            |            |              | ($0.13      | )         
|                                                     |                                                                   |                              |              |              |            |              |             |            |           
|Weighted average number of common shares outstanding |                                                                   |                              | 64,260,903   |              |            |              | 63,236,893  |           
|                                                     |                                                                   |                              |              |              |            |              |             |            |           

See notes to consolidated financial statements.

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##### Table of Contents






ALKERMES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited)

|                                                     |  |                                                                             |                                                       |                                             |              |              |             |              |             |           |            |  
|---------------------------------------------------- |  | --------------------------------------------------------------------------- | ----------------------------------------------------- | ------------------------------------------- | ------------ | ------------ | ----------- | ------------ | ----------- | --------- | ---------- | -
|                                                     |  |                                                                             |                                                       |                                             |              | Three Months |             | Three Months
|                                                     |  |                                                                             |                                                       |                                             |              | Ended        |             | Ended       
|                                                     |  |                                                                             |                                                       |                                             |              | June 30,     |             | June 30,    
|                                                     |  |                                                                             |                                                       |                                             |              | 2002         |             | 2001        
|                                                     |  |                                                                             |                                                       |                                             |              |              |             |             
|Cash flows from operating activities:                |  |                                                                             |                                                       |                                             |              |              |             |             
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  | Net loss                                                                    |                                                       |                                             | ($45,252,420 | )            |             |              | ($8,342,546 | )        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  | Adjustments to reconcile net loss to net cash used by
operating activities: |                                                       |                                             |              |              |             |              |             |          
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                                                                             | Depreciation, amortization and other noncash expenses |                                             |              | 3,071,035    |             |              |             | 2,313,341 |           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                                                                             | Equity in losses of Reliant Pharmaceuticals, LLC      |                                             |              | 24,212,900   |             |              |             |          |           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                                                                             | Noncash interest expense                              |                                             |              |             |             |              |             | 138,730   |           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                                                                             | Adjustments to other assets                           |                                             |              |             |             |              |             | 250,447   |           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                                                                             | Changes in assets and liabilities:                    |                                             |              |              |             |              |             |           |           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                                                                             |                                                       | Receivables from collaborative arrangements |              |              | (462,201    | )            |             |           | (6,132,254 | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                                                                             |                                                       | Prepaid expenses and other current assets   |              |              | (400,779    | )            |             |           | 1,011,462  |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                                                                             |                                                       | Accounts payable and accrued expenses       |              |              | 3,823,187   |              |             |           | 1,818,670  |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                                                                             |                                                       | Deferred revenue                            |              |              | (276,341    | )            |             |           | (579,472   | )
|                                                     |  |                                                                             |                                                       |                                             |              |              |             |              |             |          
|                                                     |  |                                                                             |                                                       | Net cash used by operating activities       |              |              | (15,284,619 | )            |             |           | (9,521,622 | )
|                                                     |  |                                                                             |                                                       |                                             |              |              |             |              |             |          
|Cash flows from investing activities:                |  |                                                                             |                                                       |                                             |              |              |             |             
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  | Additions to property, plant and equipment                                  |                                                       |                                             | (16,626,892  | )            |             |              | (2,441,554  | )        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  | Purchases of available-for-sale short-term investments                      |                                                       |                                             | (35,290,276  | )            |             |              | (69,221,396 | )        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  | Sales of available-for-sale short-term investments                          |                                                       |                                             | 71,241,888   |              |             |              | 66,764,763  |          
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  | Purchases of held-to-maturity short-term investments, net                   |                                                       |                                             |             |              |             |              | (19,309,847 | )        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  | Maturities of long-term investments, net                                    |                                                       |                                             |             |              |             |              | 38,739,459  |          
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  | Increase in other assets                                                    |                                                       |                                             |             |              |             |              | (300,000    | )        
|                                                     |  |                                                                             |                                                       |                                             |              |              |             |              |             |          
|                                                     |  |                                                                             |                                                       | Net cash provided by investing activities   |              |              | 19,324,720  |              |             |           | 14,231,425 |  
|                                                     |  |                                                                             |                                                       |                                             |              |              |             |              |             |          
|Cash flows from financing activities:                |  |                                                                             |                                                       |                                             |              |              |             |             
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  | Proceeds from issuance of common stock                                      |                                                       |                                             | 480,681      |              |             |              | 1,402,349   |          
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  | Repayment of loan                                                           |                                                       |                                             | (10,000,000  | )            |             |              |            |          
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  | Payment of long-term obligations                                            |                                                       |                                             | (1,100,000   | )            |             |              | (1,350,000  | )        
|                                                     |  |                                                                             |                                                       |                                             |              |              |             |              |             |          
|                                                     |  |                                                                             | Net cash (used by) provided by financing activities   |                                             |              | (10,619,319  | )           |              |             | 52,349    |           
|                                                     |  |                                                                             |                                                       |                                             |              |              |             |              |             |          
|Effect of exchange rate changes on cash              |  |                                                                             | 44,939                                                |                                             |              |              | (10,948     | )           
|                                                     |  |                                                                             |                                                       |                                             |              |              |             |              |             |          
|Net (decrease) increase in cash and cash equivalents |  |                                                                             | (6,534,279                                            | )                                           |              |              | 4,751,204   |             
|                                                    
|                                                    
|                                                    
|                                                    
|Cash and cash equivalents, beginning of period       |  |                                                                             | 16,023,074                                            |                                             |              |              | 5,923,282   |             
|                                                     |  |                                                                             |                                                       |                                             |              |              |             |              |             |          
|Cash and cash equivalents, end of period             |  | $                                                                           | 9,488,795                                             |                                             |              | $            | 10,674,486  |             
|                                                     |  |                                                                             |                                                       |                                             |              |              |             |              |             |          
|Supplementary information:                           |  |                                                                             |                                                       |                                             |              |              |             |             
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  | Cash paid for interest                                                      |                                                       | $                                           | 213,428      |              |             | $            | 301,123     |          
|                                                     |  |                                                                             |                                                       |                                             |              |              |             |              |             |          

See notes to consolidated financial statements.

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ALKERMES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The consolidated financial statements of Alkermes, Inc. (the Company) for the
three months ended June 30, 2002 and 2001 are unaudited and include all
adjustments which are normal and recurring and, in the opinion of management,
are necessary to present fairly the results of operations for the periods then
ended. All such adjustments are of a normal recurring nature. These financial
statements should be read in conjunction with the Companys Annual Report on
Form 10-K for the year ended March 31, 2002, which includes consolidated
financial statements and notes thereto for the years ended March 31, 2002, 2001
and 2000. In addition, the financial statements include the accounts of
Alkermes Controlled Therapeutics, Inc., Alkermes Controlled Therapeutics Inc.
II, Advanced Inhalation Research, Inc. (AIR), Alkermes Investments, Inc.,
Alkermes Europe, Ltd. and Alkermes Development Corporation II (ADC II),
wholly owned subsidiaries of the Company.

The results of the Companys operations for any interim period are not
necessarily indicative of the results of the Companys operations for any other
interim period or for a full fiscal year.

The preparation of the Companys consolidated financial statements in
conformity with accounting principles generally accepted in the United States
of America necessarily requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

2. COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) is comprised of net income (loss) and other
comprehensive income (loss). Other comprehensive income (loss) includes
certain changes in the shareholders equity of the Company that are excluded
from net income (loss). Specifically, other comprehensive income (loss)
includes unrealized holding gains and losses on the Companys
available-for-sale securities and changes in cumulative foreign currency
translation adjustments.

Comprehensive income (loss) for the three months ended June 30, 2002 and 2001
is as follows:

|                                                |  |               |              |               |  |  |             |  
|----------------------------------------------- |  | ------------- | ------------ | ------------- |  |  | ----------- | -
|                                                |  | Three Months  |              | Three Months 
|                                                |  | Ended         |              | Ended        
|                                                |  | June 30, 2002 |              | June 30, 2001
|                                                |  |               |              |              
|Net loss                                        |  |               | ($45,252,420 | )             |  |  | ($8,342,546 | )
|                                               
|                                               
|                                               
|                                               
|Foreign currency translation adjustments        |  |               | 49,908       |               |  |  | (10,575     | )
|                                               
|                                               
|                                               
|                                               
|Unrealized (loss) gain on marketable securities |  |               | (977,251     | )             |  |  | 9,182       |  
|                                                |  |               |              |               |  |  |             |  
|Comprehensive loss                              |  |               | ($46,179,763 | )             |  |  | ($8,343,939 | )
|                                                |  |               |              |               |  |  |             |  

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##### Table of Contents



3. NET LOSS PER SHARE

Basic and diluted net loss per share are computed using the weighted average
number of common shares outstanding during the period. Basic net loss per
share excludes any dilutive effect from stock options and the 3 3/4%
Convertible Subordinated Notes due 2007 (the 3 3/4% Notes). The Company
continues to be in a net loss position and, therefore, diluted net loss per
share is the same amount as basic net loss per share. Certain securities were
not included in the computations of diluted net loss per share for the three
months ended June 30, 2002 and 2001 because they would have an antidilutive
effect due to net losses for such periods. These securities include
(i) outstanding stock
options and awards with respect to 11,368,201 and 9,455,725 shares of common
stock in the three months ended June 30, 2002 and 2001 and (ii) 2,952,030
shares of common stock issuable upon conversion of the 3 3/4% Notes in the
three months ended June 30, 2002 and 2001.

4. INVESTMENT IN RELIANT PHARMACEUTICALS, LLC

In December 2001, the Company announced a strategic alliance with Reliant
Pharmaceuticals, LLC, a privately held pharmaceutical company marketing
branded, prescription pharmaceutical products to primary care physicians in the
U.S.

As part of the alliance, in December 2001, the Company purchased approximately
63% of an offering by Reliant of its Series C Convertible Preferred Units,
representing approximately 19% of the equity interest in Reliant, for a
purchase price of $100 million. The investment is being accounted for under
the equity method of accounting because Reliant is organized as a limited
liability company which is treated in a manner similar to a partnership.
Because, at the time of the Companys investment, Reliant had an accumulated
deficit from operations and a deficit in members capital, under applicable
accounting rules, the Companys share of Reliants losses from the date of the
investment will be recognized in proportion to the Companys percentage
participation in the Series C financing, and not in proportion to its
percentage ownership interest in Reliant. The Company records its equity in
the income or losses of Reliant three months in arrears. Reliant is a
privately held company over which the Company does not exercise
control and it relies on the
unaudited financial statements prepared by Reliant and provided to
the Company to
calculate its share of Reliants losses in the Companys consolidated statements of
operations. The Company anticipates that Reliant will have substantial net
losses through 2003, and accordingly, recorded its 63% share of such losses in
its consolidated financial statements beginning in the quarter ended March 31,
2002.




Summarized financial information related to Reliant for the
three-month period ended March 31, 2002 is as follows:

|                   |  |   |         |   |  |  |  |  |  |  |  | 
|------------------ |  | - | ------- | - |  |  |  |  |  |  |  | 
|(In thousands)     |  |   |         |   |  |  |  |  |  |  |  | 
|Revenues           |  | $ | 58,609  |  
|Costs and expenses |  |   | 88,461  |  
|Net loss           |  |   | (29,644 | )




In connection with the Companys $100 million equity investment in Reliant, the
Company is in the process of allocating its proportionate share of the assets
acquired and liabilities assumed in accordance with the guidance set forth in
Statement of Financial Accounting Standards (SFAS) No. 141. The Company took
a $2.7 million noncash charge for in-process research and development through
the income statement under the caption Equity in losses of Reliant
Pharmaceuticals, LLC in fiscal 2002. The $2.7 million noncash charge is
related to managements current estimate of the amount of the purchase price to
be allocated to in-process research and development. This analysis of the
purchase price allocation is preliminary and the amount of in-process research
and development is subject to future adjustment.

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##### Table of Contents



Termination of Proposed Merger Transaction with Reliant

On March 20, 2002, we entered into an Agreement and
Plan of Merger (the Merger Agreement) with Reliant. On August 14, 2002, the Company and Reliant
announced the mutual termination of the Merger Agreement. The
companies agreed to terminate due to general market conditions. There
will be no payments triggered by the mutual termination and each
company will bear its own legal and transaction fees.

5. RECENT ACCOUNTING PRONOUNCEMENTS

In August 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS)
No. 146, Accounting for Costs Associated with Exit or Disposal
Activities. SFAS No. 146 addresses financial accounting and
reporting for costs associated with exit or disposal activities and
nullifies Emerging Issues Task Force Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity (including Certain Costs Incurred in a
Restructuring). SFAS No. 146 requires that a liability for a
cost associated with an exit or disposal activity be recognized when
the liability is incurred. The provisions of SFAS No. 146 are
effective for exit or disposal activities that are initiated after
December 31, 2002. The Company does not believe that the adoption of SFAS
No. 146 will have a material impact on its financial
statements and result of operations.

6. SUBSEQUENT EVENT

In August, the Company announced the regulatory
approval and expected commercial launch of Risperdal Consta in Germany
and the United Kingdom. Under the Companys agreements with
Janssen and based on the foregoing, certain minimum revenues are to
be paid to the Company in minimum annual amounts for up to ten years
beginning in calendar 2003. The actual amount of such minimum
revenues will be determined by a formula and are currently estimated to
aggregate approximately $150 million. The minimum revenue obligation
will be satisfied upon receipt by the Company of revenues equalling
such aggregate amount of minimum revenues.

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Item 6. Exhibits and Reports on Form 8-K



| | (a) |  | Exhibits:
| | --- |  | ---------

| |  |        |      |         |  |                                                                                                                                                                                                                                                       
| |  | ------ | ---- | ------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Number |      | Exhibit
| |  |        |      |        
| |  |        | 3.1  |         |  | Third Amended and Restated Articles of
Incorporation as filed with the Pennsylvania Secretary of
State on June 7, 2001. (Incorporated by reference to
Exhibit 3.1 to the Companys Report on Form 10-K for the
fiscal year ended March 31, 2001).     
|
|
|
|
| |  |        |      |         |  |                                                                                                                                                                                                                                                       
|
|
|
|
| |  |        | 3.2  |         |  | Amended and Restated By-Laws of Alkermes,
Inc., effective as of February 11, 2001. (Incorporated by
reference to Exhibit 3.2 to the Companys Report on Form
10-K for the fiscal year ended March 31, 2001).                                          
|
|
|
|
| |  |        |      |         |  |                                                                                                                                                                                                                                                       
|
|
|
|
| |  |        | 4.1  |         |  | Specimen of Common Stock Certificate of
Alkermes, Inc. (Incorporated by reference to Exhibit 4 to
the Companys Registration Statement on Form S-1, as
amended (File No. 33-40250)).                                                                  
|
|
|
|
| |  |        |      |         |  |                                                                                                                                                                                                                                                       
|
|
|
|
| |  |        | 4.2  |         |  | Specimen of Non-Voting Common Stock
Certificate of Alkermes, Inc. (Incorporated by reference to
Exhibit 4.4 to the Companys Report on Form 10-K for the
fiscal year ended March 31, 1999).                                                           
|
|
|
|
| |  |        |      |         |  |                                                                                                                                                                                                                                                       
|
|
|
|
| |  |        | 4.3  |         |  | Indenture, dated as of February 18, 2000,
between Alkermes, Inc. and State Street Bank and Trust
Company, as Trustee. (Incorporated by reference to Exhibit
4.6 to the Companys Registration Statement on Form S-3, as
amended (File No. 333-31354)).
|
|
|
|
| |  |        |      |         |  |                                                                                                                                                                                                                                                       
|
|
|
|
| |  |        | 99.1 |         |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 by Chief Executive Officer.                                                                                                                           
|
|
|
|
| |  |        |      |         |  |                                                                                                                                                                                                                                                       
|
|
|
|
| |  |        | 99.2 |         |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 by Chief Financial Officer.                                                                                                                           



| | (b) |  | During the quarter ended June 30, 2002, the Company filed a Current Report
on Form 8-K, dated April 2, 2002, under Items 7 and 9
and a Current Report on Form 8-K, dated June 28, 2002, under Item 5.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




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##### Table of Contents









SIGNATURES







Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused Amendment No. 1 to this report to be signed on its behalf by the
undersigned thereunto duly authorized.







|                        |  |                             |  |                                                                                                                   
|----------------------- |  | --------------------------- |  | ------------------------------------------------------------------------------------------------------------------
|                        |  | ALKERMES, INC.
(Registrant)
|                       
|                       
|                       
|                       
|                        |  |                             |  |                                                                                                                   
|                       
|                       
|                       
|                       
|Date:
November 14, 2002 |  | By:                         |  | /s/ James M. Frates                                                                                               
|                        |  |                             |  |                                                                                                                   
|                        |  |                             |  | James M. Frates
Vice President, Chief
Financial Officer and Treasurer
(Principal Financial and
Accounting Officer)







CERTIFICATIONS

I, Richard F. Pops, certify that:






|1. |  | I have reviewed this amendment
no. 1 to the quarterly report on Form 10-Q/A of Alkermes, Inc.;                                                                                                                                                                                                                                                                                  
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this
Amendment No. 1 to the quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this Amendment No. 1 to the quarterly
report; and
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this Amendment No. 1 to the quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this Amendment
No. 1 to the quarterly report.                       
|  






|      |  |                   |  |                                                            
|----- |  | ----------------- |  | -----------------------------------------------------------
|Date: |  | November 14, 2002 |  | /s/  Richard F. PopsRichard F. Pops
Chief Executive Officer

CERTIFICATIONS




I, James M. Frates, certify that:



|1. |  | I have reviewed this amendment
no. 1 to quarterly report on Form 10-Q/A of Alkermes, Inc.;                                                                                                                                                                                                                                                                                      
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this
Amendment No. 1 to the quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this Amendment No. 1 to the quarterly
report; and
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this Amendment No. 1 to the quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this Amendment
No. 1 to the quarterly report.                       
|  







|      |  |                   |  |                                                            
|----- |  | ----------------- |  | -----------------------------------------------------------
|Date: |  | November 14, 2002 |  | /s/  James M. FratesJames M. Frates
Chief Financial Officer




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Exhibit Index

| |  |         |      |             |  |                                                                                                                                                                                                                                                       
| |  | ------- | ---- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Exhibit |      |            
| |  | Number  |      | Description
| |  |         |      |            
| |  |         | 3.1  |             |  | Third Amended and Restated Articles of
Incorporation as filed with the Pennsylvania Secretary of
State on June 7, 2001. (Incorporated by reference to
Exhibit 3.1 to the Companys Report on Form 10-K for the
fiscal year ended March 31, 2001).     
|
|
|
|
| |  |         |      |             |  |                                                                                                                                                                                                                                                       
|
|
|
|
| |  |         | 3.2  |             |  | Amended and Restated By-Laws of Alkermes,
Inc., effective as of February 11, 2001. (Incorporated by
reference to Exhibit 3.2 to the Companys Report on Form
10-K for the fiscal year ended March 31, 2001).                                          
|
|
|
|
| |  |         |      |             |  |                                                                                                                                                                                                                                                       
|
|
|
|
| |  |         | 4.1  |             |  | Specimen of Common Stock Certificate of
Alkermes, Inc. (Incorporated by reference to Exhibit 4 to
the Companys Registration Statement on Form S-1, as
amended (File No. 33-40250)).                                                                  
|
|
|
|
| |  |         |      |             |  |                                                                                                                                                                                                                                                       
|
|
|
|
| |  |         | 4.2  |             |  | Specimen of Non-Voting Common Stock
Certificate of Alkermes, Inc. (Incorporated by reference to
Exhibit 4.4 to the Companys Report on Form 10-K for the
fiscal year ended March 31, 1999).                                                           
|
|
|
|
| |  |         |      |             |  |                                                                                                                                                                                                                                                       
|
|
|
|
| |  |         | 5.3  |             |  | Indenture, dated as of February 18, 2000,
between Alkermes, Inc. and State Street Bank and Trust
Company, as Trustee. (Incorporated by reference to Exhibit
4.6 to the Companys Registration Statement on Form S-3, as
amended (File No. 333-31354)).
|
|
|
|
| |  |         |      |             |  |                                                                                                                                                                                                                                                       
|
|
|
|
| |  |         | 99.1 |             |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 by Chief Executive Officer.                                                                                                                           
|
|
|
|
| |  |         |      |             |  |                                                                                                                                                                                                                                                       
|
|
|
|
| |  |         | 99.2 |             |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 by Chief Financial Officer.                                                                                                                           




(11)