Risk Reward Balances Alkermes - Analyst Blog
August 31 2011 - 9:00AM
Zacks
We are maintaining our Neutral recommendation on
Alkermes, Inc. (ALKS). 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.
In August 2011, Alkermes disclosed financial results for the
first quarter of fiscal 2012. Alkermes suffered a net loss
(excluding special items but including stock-based compensation
expense) of $0.04 per share which compared favorably with the
year-ago loss of $0.14 per share. The Zacks Consensus Estimate was
a loss of $0.11 per share. The narrower year-over-year loss was
attributable to higher revenues recorded in the reported
quarter.
(Read our full coverage on the earnings report at Revenues Rise
at Alkermes)
The lead product at Alkermes is Risperdal Consta for the
treatment of schizophrenia and bipolar disorder. The drug is
marketed worldwide by Johnson & Johnson (JNJ)
and manufactured by Alkermes.
In October 2010, the FDA dealt a huge blow to Alkermes by
issuing a second complete response letter (CRL) to its type II
diabetes drug Bydureon. The first CRL was issued in March 2010.
Bydureon has been co-developed by Eli Lilly and
Company (LLY), Alkermes and Amylin
Pharmaceuticals, Inc. (AMLN). While issuing the second
CRL, the US agency asked the co-developers to conduct a thorough QT
study and submit data from the DURATION-5 study, which was
conducted to compare the safety and efficacy of Bydureon versus
Byetta.
The tQT study was completed in July 2011. The study evaluated
the potential of exenatide to increase the QT interval across a
wide range of plasma concentrations. A response to the CRL was
submitted in July 2011, following which the FDA assigned a target
date of January 28, 2012. We note that Bydureon has already been
cleared in the European Union (EU). Following the approval in the
EU, the diabetes drug was launched in the UK and is expected to be
launched in other major European countries in the near future.
We note that even if Bydureon manages to clear the regulatory
hurdles in the US, it will face tough competition. The drug will
compete with Novo Nordisk’s (NVO) Victoza, a
once-daily injection that was launched earlier in 2010. Other
glucagon-like peptide-1 (GLP-1) molecules under development include
GlaxoSmithKline’s (GSK) Syncria (albiglutide),
also a once-weekly injection.
Going forward, we expect investor focus to remain on the
approval process for Bydureon in the US. We see limited upside
potential for Alkermes prior to an FDA decision on the drug and
retain our Neutral stance on the stock.
ALKERMES INC (ALKS): Free Stock Analysis Report
AMYLIN PHARMA (AMLN): Free Stock Analysis Report
GLAXOSMITHKLINE (GSK): Free Stock Analysis Report
JOHNSON & JOHNS (JNJ): Free Stock Analysis Report
LILLY ELI & CO (LLY): Free Stock Analysis Report
NOVO-NORDISK AS (NVO): Free Stock Analysis Report
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