AMLN Amylin Pharmaceuticals, Inc. (MM)

We recently upgraded Alkermes plc (ALKS) to Outperform from Neutral following the completion of its purchase of Elan Corporation’s (ELN) drug delivery unit in September 2011. The product portfolio and the pipeline at Alkermes have been boosted significantly following the merger.

Following the merger, Alkermes has shifted its headquarters to Dublin, Ireland from Waltham, Massachusetts. Management expects that it will be able to enter the market in the European Union and gradually expand operations across the globe by having its headquarters in Ireland.

The company primarily focuses on developing therapies for treating deficiencies of the central nervous system. More than 1,200 people are employed by the company globally including over 450 people in Ireland.

The marketed products at Alkermes include Risperdal Consta (schizophrenia and bipolar disorder), Xeplion (schizophrenia), Vivitrol (alcohol dependence and the prevention of relapse to opioid dependence after opioid detoxification), Ampyra/Fampyra (the improvement of walking and motor function in patients with multiple sclerosis or spinal cord injury and Bydureon (approved in the EU for type II diabetes).

Moreover, the company has a robust pipeline. The candidates under development at Alkermes include ALKS-37 for opioid-induced constipation, ALKS-6931 for treating rheumatoid arthritis, ALKS-33 for treating multiple indications, ALKS-36 for the treatment of pain without the side-effects of constipation, ALKS-5461 for treating patients suffering from treatment-resistant depression and cocaine addiction, ALKS-9070 and ALKS-7921 for treating schizophrenia, Zohydro and Meloxicam IV (pain) among others. Successful development and commercialization of the pipeline would further boost the stock.

Apart from the merger, another highly anticipated event at Alkermes is the potential US approval of its type II diabetes treatment Bydureon. Alkermes has co-developed the drug with Amylin Pharmaceuticals, Inc. (AMLN) and Eli Lilly and Company (LLY). US approval of Bydureon, potentially in early 2012, will be a major boost for the stock since the type II diabetes market offers significant commercial potential. 

We believe that the current price represents an attractive entry point for long-term investors and hence we upgrade the stock to Outperform.

 
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