We are moving back to a Neutral recommendation on
) as we believe the stock is fairly valued at current levels. Our
target price is $20.00. The stock carries a Zacks #3 Rank (Hold
rating) in the short run.
The purchase of
) Elan Drug Delivery unit in September 2011 has strengthened
Alkermes' product portfolio as well as its pipeline. Alkermes'
revenues jumped 146% to $152.2 million in the first quarter of
fiscal 2013 (ended June 30, 2012) due to the expanded product
Alkermes' pipeline has expanded significantly following the merger.
Interesting candidates include Zohydro (under review by the US Food
and Drug Administration: target date - March 1, 2013) for pain,
ALKS 9070 (phase III: data expected in mid-calendar 2013) for
treating schizophrenia, three-month injectable version of
schizophrenia drug Invega Sustenna (phase III), ALKS 5461 (a
combination of ALKS 33 and buprenorphine) for cocaine dependence
(phase Ib completed) and major depressive disorder (phase II, data
expected in the first half of calendar 2013). The successful
development and commercialization of these candidates should boost
the company's top line.
Management at Alkermes reiterated their guidance for fiscal 2013 on
the first quarter fiscal 2013 conference call. Fiscal 2013 revenues
are still expected in the range of $490-$530 million. Given the
expanded product portfolio, we expect the company to achieve the
The US approval and subsequent launch of type II diabetes drug,
Bydureon, co-developed with Amylin (now a wholly-owned subsidiary
Bristol-Myers Squibb Company
)), earlier this calendar year, is a major positive for Alkermes.
Despite being impressed by the event, we believe that Bydureon, a
glucagon-like peptide- 1 receptor agonist, might struggle for
market share in the highly crowded diabetes market. The market
already has big players, such as
). Competition will intensify further as several companies are
working on bringing their type II diabetes treatments to market.
Lower-than-expected sales of Bydureon would be a dampener for
Moreover, Alkermes is highly dependent on partners for most of the
products in its portfolio. For example, Risperdal Consta is
Johnson & Johnson
), Ampyra/ Fampyra is marketed by
Acorda Therapeutics, Inc.
) in the US and by
) in ex-US markets. Partnership related setbacks would weigh
heavily on Alkermes.
In view of the challenges facing Alkermes, we see limited upside
from current levels.
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