) recently announced the approval of a restructuring plan by the
board of directors related to its manufacturing facility at
Athlone, Ireland. Alkermes Pharma Ireland Ltd., a wholly owned
subsidiary of Alkermes, will stop manufacturing certain older
products whose demand has waned due to generic competition in the
It was estimated that if produced these products would
contribute less than 5% to fiscal 2013 total revenues. Alkermes
will also cut down on its employee headcount by roughly 130
Under this plan, Alkermes expects to incur a one-time cash
restructuring charge of roughly $12.5 million which will be taken
into account in fiscal quarter ended, Mar 31, 2013. Additionally,
the company expects to incur non-cash expenditure in the form of
depreciation of a few manufacturing assets of $10 million in
fiscal 2014 and $7 million in fiscal 2015.
By fiscal year 2016 and beyond, annual cost savings from these
restructuring initiatives are forecast in the range of $15-$20
We find this restructuring plan prudent as it will eliminate
some of the uneconomic products from the company's portfolio and
will strengthen Alkermes' product portfolio.
Alkermes, in fact, boasts a diversified pipeline. Interesting
candidates include aripiprazole lauroxil (phase III, data
expected by the end of calendar 2013) for schizophrenia and ALKS
5461 (a combination of ALKS 33 and buprenorphine) for
treatment-resistant depression (phase II, data expected in the
second quarter of calendar 2013).
Alkermes carries a Zacks Rank #3 (Hold). Right now,
Cleveland BioLabs, Inc.
Osiris Therapeutics, Inc.
) look more attractive with a Zacks Rank #1 (Strong Buy).
ALKERMES INC (ALKS): Free Stock Analysis
ATHERSYS INC (ATHX): Free Stock Analysis
CLEVELAND BIOLB (CBLI): Free Stock Analysis
OSIRIS THERAPTC (OSIR): Free Stock Analysis
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