Alkermes continues to climb ahead of FDA decisions Print
By Patrick Crutcher   
Saturday, 09 October 2010 18:28

Shares of Alkermes Inc.(NASDAQ:ALKS) were up $15.92 +0.30 (1.92%) and continued climbing in after hours trading after the last session: $15.99 +0.07 (0.44%). As we first told our subscribers in early September, ALKS has two PDUFA dates this month and one as early as Tuesday (10/12) next week for the sNDA of VIVITROL. They were also recently rated  “Buy”  with a $18 price target by UBS citing the potential for 2 FDA approvals this year. Let’s hope the uptrend continues going forward.

If approved for opioid dependence, VIVITROL would be the first and only non-narcotic, non-addictive medication for the treatment of opioid dependence available in a once-monthly formulation. ALKS received an 11-2 positive vote of approval on September 16th from the FDA panel of experts. Expansion of the labeling to include opioid dependence could certainly make their sales more interesting.

  Additionally, ALKS has another PDUFA date on October 22, 2010(Friday) for the NDA of BYDUREON. BYDUREON is a once-weekly formulation of exenatide, the active ingredient in BYETTA. This has been available in the U.S. since June 2005 and approximately 60 countries worldwide for glycemic control in adults with Type 2 diabetes. A recent report(see link below) suggested that Bydureon's “superior glucose-lowering and weight-loss capabilities are particularly useful for the significant proportion of type 2 diabetics who are obese.” So Bydureon has some serious potential to be stellar product in the $13-19B Type 2 diabetes market. ALKS receives an 8% royalty of worldwide sales(first 40M units sold), a rate decreasing to 5.5% on subsequent units resetting annually. That’s some serious potential cash.

Also consider the fact that the options volume is way up on this: 7,110 call contracts traded at 3 times the 10-day average volume with 669 put contracts. Put/Call ratio of 0.09. Seems like someone is positioning themselves for a nice move-up in October. We’re also looking at about 10%(~6M) shares short, some of which will cover before October 12th. Look out for the uptrend to continue and more volatility. Approval has the potential to take them to the $17-18 range. ALKS is up about 18% from our initial coverage on August 30th.

Disclosure: No position.

Our take:

FiercePharma: Continued Uptake of Key Agents Such as Januvia, Bydureon and Byetta Will Drive Type 2 Diabetes Drug Market to Nearly Double

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