) has made an impressive comeback, thanks to the new products and
expertise that came with last year's merger with Elan Drug
There's nothing like the launch of a blockbuster drug to fuel a
biotech outfit's growth engine.
Add to that an emerging product pipeline and a transformational
merger and you have the prescription that's helping to nurse
Alkermes back to health.
The biopharma company has made an impressive comeback from its
unprofitable years, thanks to the new products and expertise that
came with last year's merger with Elan Drug Technologies, the drug
formulation and manufacturing arm ofElan Corp (
After operating in the red the past three years, Alkermes kicked
off fiscal 2013 with a blowout first quarter. Earnings soared 875%
to 39 cents a share, smashing views. Sales climbed 146% to $152.2
million, reflecting the expansion of its product portfolio
resulting from the merger.
Alkermes paid roughly $1 billion for Elan in a stock and cash
deal that closed Sept. 16, 2011. The newly formed company is
headquartered in Elan's home base in Dublin, Ireland, where it
reaps a tax advantage. Its R&D center is in Alkermes'
pre-merger base of Waltham, Mass.
The deal vaulted Alkermes' annual revenue from $180 million
pre-merger to $500 million, estimates Cowen and Co. analyst Anant
"It was a transformational deal," said Padmanabhan. "EDT
diversifies Alkermes revenue base, adds broad drug formulation and
technology manufacturing capabilities, brings tax benefits and
catapults Alkermes to a midsize cash generating biopharma
Alkermes develops innovative treatments for major clinical
conditions with a focus on central nervous system disorders, such
as schizophrenia, addiction and depression. The combined company
has a diversified portfolio of more than 20 commercial drug
products and a large pipeline of candidates.
Alkermes expects near-term growth to be driven by five key
products: Risperdal Consta, Invega Sustenna/Xeplion,
Ampyra/Fampyra, Vivitrol and Bydureon. Almost all of these products
are early in their commercial life with long patent protection,
said CEO Richard Pops at the Morgan Stanley Global Healthcare
Conference on Sept. 11.
Elan added two of the five key products, Invega Sustenna for the
treatment of schizophrenia and Ampyra for the treatment of multiple
The addition of Invega Sustenna to Alkermes' portfolio was
especially important, says Padmanabhan. Invega Sustenna is marketed
by Johnson & Johnson's (
) Janssen Pharmaceuticals. Janssen also markets Risperdal Consta
for schizophrenia and bipolar 1 disorder, a key product made by
Alkermes prior to the merger.
Padmanabhan says prior to the deal with Elan, there had been
speculation as to whether Johnson & Johnson would move patients
from Risperdal Consta to Invega Sustenna, which is a newer drug. If
that happened, Alkermes'royalty revenue from Risperdal Consta would
Padmanabhan says now that the two drugs are under the same
corporate umbrella, that risk is gone.
"What's even better is that combined, these two long-acting
drugs for schizophrenia are growing at double-digit rates," he
adds. "Together, they're actually growing the market and more
people are taking long-acting schizophrenia medication."
Risperdal Consta and Invega Sustenna are Alkermes' biggest
top-line contributors. In the first quarter, Alkermes posted
manufacturing and royalty revenue of $47.9 million from the two
drugs. Their combined end-market sales were $550 million, up more
than 14% from a year earlier.
Padmanabhan says Risperdal Consta and Invega Sustenna also
generate the most profits for Alkermes and should continue to do
But Alkermes is not a one-trick pony. Soon after the merger
closed, Alkermes' business got another lift with the launch of a
potential blockbuster. In January, Bydureon, a drug Alkermes
developed before the deal, was approved by the FDA. Bydureon, the
only once-weekly treatment for type 2 diabetes, is marketed through
an alliance betweenBristol-Myers Squibb's (
) Amylin Pharmaceuticals subsidiary andAstraZeneca (
"Bydureon will become very important in the next two or three
years," said Padmanabhan.
His optimism comes a few weeks after Bristol-Myers paid $7
billion for Amylin.
"Now that Bristol-Meyers and AstraZeneca are marketing Bydureon,
there's much more marketing muscle behind it," said Padmanabhan.
"Bydureon has the potential to be much more than the $1 billion in
peak sales Wall Street had anticipated. Given Bristol-Myers paid $7
billion for Amylin, and Bydureon is its most important product,
they have to make it a success. And Alkermes is the silent
Alkermes gets an 8% royalty on Bydureon's end market sales.
Padmanabhan says Bristol-Myers' valuation of Amylin suggests
Bristol-Myers believes that Bydureon could easily be over $1.5
billion in peak sales.
Alkermes officials are also upbeat about Bristol-Myers and
AstraZeneca marketing Bydureon.
"Bristol-Myers and AstraZeneca will bring significant scale to
Bydureon by deploying additional primary care resources and
leveraging their international footprint and experience in markets
outside the U.S.," said Pops on the first-quarter conference
Bydureon is still early in its commercial life, he adds, has a
long patent life, and new dosage forms based on Alkermes'
technology are under development.
In the last quarter, Alkermes' entire portfolio did well, says
That includes Vivitrol, developed, manufactured and marketed by
Alkermes. Vivitrol was a part of Alkermes' portfolio before the
Vivitrol's first quarter net sales were $12.4 million, up 28%
from a year earlier. It was the product's 12th straight quarter of
The buck doesn't start with Alkermes' current portfolio. It has
a number of drugs in development. Among them is ALKS 9070,
Alkermes' proprietary long-acting injectable drug for the treatment
of schizophrenia. It's in a phase 3 clinical trial. Alkermes
expects to see the results of the trial in 2013.
Padmanabhan says ALKS 9070 could be worth $500 million plus in
Followers expect Alkermes to continue on the comeback trail.
Analysts polled by Thomson Reuters see full-year fiscal 2013
earnings rising 231% to 76 cents a share. They forecast a 25%
increase in 2014 and a 43% pop in 2015.