AMLN Amylin Pharmaceuticals, Inc. (MM)

Alkermes, Inc. (ALKS) provided revenue guidance for fiscal 2012 (ending March 31, 2012) taking into account its impending merger with Elan Corporation’s (ELN) drug delivery unit - Elan Drug Technologies (EDT). The merger, announced in May 2011, is expected to close in the third quarter of calendar 2011. The guidance was provided at Alkermes’ Analyst and Investor Day.

At the time of announcing the deal, Alkermes stated that the deal is worth approximately $960 million. The merged entity will be known as Alkermes plc and will be headquartered in Dublin, Ireland. The merged entity will primarily focus on developing therapies for treating deficiencies of the central nervous system. It will boast a diversified product portfolio and a robust pipeline.

Alkermes expects adjusted revenues for fiscal 2012 to grow at a single-digit rate from a base of $450 million, which represents adjusted revenues of the merged entity on March 31, 2011 (on a trailing 12-month basis).  Revenues are thus expected to be in the range of $460 million to $480 million. Revenues for Alkermes plc are expected to be driven by drugs such as Risperdal Consta, Invega Sustenna, Ampyra, Vivitrol and Bydureon.

Alkermes also announced that Bydureon has been launched in the UK. The drug was approved in the European Union in June 2011 for treating patients suffering from type II diabetes. The launch makes Alkermes eligible for a $7 million milestone payment. Alkermes has co-developed the drug with Amylin Pharmaceuticals, Inc. (AMLN) and Eli Lilly and Company (LLY). The milestone payment is expected to be received in the second quarter of fiscal 2012. Alkermes also announced that its drug Vivitrol for treating alcohol dependence registered sales of $9.7 million in the first quarter of fiscal 2012, up 14% year over year.

At its Analyst and Investor Day Alkermes also provided an update of its pipeline. The company announced the commencement of a phase IIb study of its pipeline candidate ALKS 37 for treating patients suffering from opioid-induced constipation. Top-line results are expected in mid calendar 2012.

Alkermes also announced that top line data from an early-stage study of its pipeline candidate ALKS 5461 is expected by the end of calendar 2011. ALKS 5461 is a combination of Alkermes’ another pipeline candidate ALKS 33 and buprenorphine. ALKS 5461 is being developed for treating patients suffering from treatment-resistant depression. Alkermes further announced the initiation of a study (VICTORY: n=500) for Vivitrol in opioid dependent patients.

Neutral on Alkermes

Currently, we have a Neutral recommendation for Alkermes for the long run. The stock carries a Zacks #2 Rank (Buy rating) for the short run.

 
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