AMLN Amylin Pharmaceuticals, Inc. (MM)

We are maintaining our Neutral recommendation on Alkermes, Inc. (ALKS) with a target price of $18.00.

Alkermes is a drug delivery biotech company which uses its proprietary specialized drug delivery technologies to develop drugs for the treatment of central nervous system (CNS) disorders, alcoholism and diabetes.

We are positive on Alkermes’ decision to buy  Elan Corporation’s (ELN) drug delivery unit. The deal is expected to boost Alkermes’ cash earnings immediately following its closure. The product portfolio at Alkermes will be strengthened following the merger.

Alkermes currently has two marketed drugs namely Risperdal Consta and Vivitrol in its product portfolio. Risperdal Consta is marketed worldwide by Johnson & Johnson (JNJ) for the treatment of schizophrenia and bipolar disorder. The drug is manufactured by Alkermes. The other approved product at Alkermes is Vivitrol for the treatment of alcohol dependence and for the prevention of relapse to opioid dependence after opioid detoxification.

We are impressed with the recent approval of diabetes candidate, Bydureon in the European Union. Even though Bydureon has been cleared in the EU, the candidate had to face quite a few regulatory hurdles in U.S. where it has already received two complete response letters (CRLs) from the US Food and Drug Administration (FDA) . Alkermes has co-developed Bydureon with Eli Lilly and Company (LLY) and Amylin Pharmaceuticals, Inc. (AMLN).

Alkermes and its partners are currently conducting a thorough QT (tQT) study with Bydureon as per the requirements of the second CRL. The agency has also asked the partners to submit data from the DURATION-5 study which was conducted to compare the safety and efficacy of Bydureon versus Amylin’s Byetta (exenatide). Alkermes and its partners intend to submit a response to the second CRL in the second half of calendar 2011.

Going forward, we expect investor focus to remain on the commercial potential of Bydureon in the EU (following its launch) and its fate in the US. We see limited upside potential from current levels. Consequently, we retain our Neutral stance on the stock.

 

 

 
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