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Alkermes (NASDAQ: ALKS ) hit a snag recently when its partnered painkiller raised concerns at an FDA panel. But the developer of innovative drugs for serious conditions has a portfolio strengthened by its 2011 purchase of Elan's (UNKNOWN: ELN.DL2 ) drug technology unit. What's to come as the renovated company hits its stride?
Here are three things to watch this year at Alkermes.
1. Growing pain
Zogenix developed the painkiller Zohydro using Alkermes' technology. If the drug makes it to market, Alkermes will serve as exclusive distributor and producer and will receive royalties
Zohydro recently failed to win over an FDA panel, which voted 11-2 against approval. The panel deemed the drug effective, but it's pure hydrocodone composition raised alarms about possible abuse. Hydrocodone typically comes as the lower dose half of a combo pill with acetaminophen.
The official FDA decision should come in early March, but the Agency wants to crackdown on painkiller abuse, making an acceptance seem unlikely. Luckily for Alkermes, its pipeline strengths lie in another indication.
2. Schizophrenia pipeline
The schizophrenia market is in a state of transition. Several top drugs will come off patent before 2015 , allowing for a flood of generics. But long-acting injectable treatments, called depots, might still forge a path to the front. At least that's what Alkermes hopes with its once-monthly aripiprazole lauroxil, formerly called ALKS 9070.
Aripiprazole lauroxil began a phase 3 trial in late 2011, and should report data near year end. The drug metabolizes into the molecule that comprises Abilify, the blockbuster oral medication from Otsuka and Bristol-Myers Squibb that's among the upcoming patent expirations.
But Otsuka also has a once-monthly depot form of Abilify in the pipelines, now back on track after an FDA setback last summer. With a PDUFA deadline in February, Otsuka's drug would launch ahead of Alkermes. Time will tell if there's room in the market for both drugs to have a decent slice of the pie.
Aripiprazole lauroxil appears to have a better chance than Alkermes' other schizophrenia contender, ALKS 3831. This combination drug aims to mimic the efficacy of Eli Lilly's (NYSE: LLY ) off-patent Zyprexa, without the weight gain side effect.
The idea has potential, but early trial results showed that those on Zyprexa alone only gained two more pounds than those on the combo pill Zyprexa over a period of three weeks. The weight difference could increase with a longer study. Phase 2 should initiate later this year and report in 2014.
3. Commercial Portfolio
Alkermes also has schizophrenia drugs among the five key commercial products that will serve as the revenue foundation until the pipeline pans out.
The Elan buy brought Alkermes its second partnered atypical antipsychotic with Johnson & Johnson (NYSE: JNJ ) . Invega Sustenna's in a phase 3 trial as a three-month injectable -- a dosage first for an atypical drug -- and data should report next year. Invenga joined the already held Risperdal Consta, which Johnson developed using Alkermes technology.
Alkermes technology helped create Bydureon, the long-acting diabetes drug developed by Amylin, and approved last year. Bydureon is a once-weekly form of the blockbuster Byetta, which earned $500 million in 2011. The strength of these drugs inspired Bristol-Myers and AstraZeneca to acquire Amylin last summer.
Ampyra for improved mobility in multiple sclerosis earned $266 million in 2012 for its U.S. distributor Acordia. Biogen sells Ampyra overseas, and Alkermes receives 18% of top line global sales. Vivitrol for alcohol and opioid dependence is currently undergoing testing in criminal justice settings to prevent relapses.
Foolish bottom line
Alkermes' finances in the third quarter still reflected the settling following the Elan unit purchase. That makes year-over-year comparisons a bit misleading at this point. But 2013 should provide a better look at where Alkermes stands once the dust settles. Expect to see positive phase 3 results from aripiprazole lauroxil mid-year.
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