What most Alkerme investors really want Print E-mail
By Patrick Crutcher   
Wednesday, 13 October 2010 02:31

Alkermes Inc. (NASDAQ:ALKS) has already received news from the FDA that they had approved their sNDA of Vivitrol for Prevention of Relapse to Opioid Dependence. This comes after unanimous support for Vivitrol during their FDA advisory panel back in mid-September. More importantly, there also appears to be excitement in the medical community for the new treatment option.

"The FDA's just approved monthly drug treatment with Vivitrol could be a game changer," said the country's largest substance abuse treatment provider, CRC Health Group, Recovery Division President Jerry Rhodes, whose company has 140 facilities across the country. Rhodes said the new treatment regimen "will provide addicts seeking help one decision a month instead of 30, and a new way to reduce or eliminate relapse. We are pleased to play a part in rolling out this potentially life-saving treatment."

With the expanded label of Vivitrol to cover opioid dependence, ALKS has more incentive and a larger patient population(12-16M people) to market the drug. Analysts see Vivitrol sales reaching $100-125M by 2015; we should state that these estimates are likely conservative given the previous history of addiction treatment drugs. It’s important to realize VIVITROL is the first and only once-monthly, extended-release injectable medication for the treatment of alcohol dependence and opioid dependence. Alkermes will hold a conference call at 8:00 a.m. ET on Wednesday, October 13, 2010.

Now onto what most ALKS investors really want: approval of Bydureon. Bydureon is by far the most important asset for ALKS. Bydureon can fight off Novo Nordisks’ Victoza, but LLY/AMLN will need to push harder against it. Approval will certainly be an incentive. Recent scripts still show Byetta still has a significant share of the GLP1 market. Victoza goes off patent in 2017. ALKS gets $7M once the first product is sold and 8% royalty on the first 40M units and 5.5% royalty thereafter each year. Pricing of Bydureon will be very important in order to fight off Victoza sales.

We believe Bydureon will be the most significant player in the GLP-1 market. Note this market is expected to grow significantly over the next 5-10 years. We expect Bydureon to be a blockbuster and beat out Victoza in sales, based on it’s efficacy and conveniece. Bydureon might also have something most diabetes treatments don’t: better cardio safety and weight loss.

   "The real key to actual expanded use of Bydureon is and still remains the demonstration of a cardiovascular outcomes benefit," Thomas Wei, an analyst with Jefferies & Co., told the San Diego Union-Tribune. "If positive, Bydureon could be the first drug to demonstrate a reduction in cardiovascular events in diabetics, which we suspect would change the way the GLP-1 class is used."

   We still feel strongly that ALKS has approval coming for Bydureon. 3rd time is the charm! FDA had no qualms with the drug’s safety, but wanted AMLN/LLY to work on the labeling and address some manufacturing questions. You can expect shares of ALKS to appreciate nicely tomorrow. There are still roughly 5-6M shares short. Don’t forget this: ALKS is developing a new, long-acting form of Abilify. Abilify is a blockbuster antipsychotic drug from BMY; sales grew 20% last year to $2.6 billion. Abilify's patents begin to expire in 2012. Big potential.

Disclosure: Long ALKS

Initial coverage on ALKS back in mid-August. http://biomedreports.com/2010081850985/well-positioned-low-risk-good-reward-play.html

ALKS receives FDA approval of Vivitrol - http://bit.ly/cgnI7H

Vivitrol Could Be 'Game Changer' - http://bit.ly/c5pbnW

Bydureon Separates From the Pack - http://bit.ly/d7wOOa

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