In response to receiving an analyst downgrade, shares of Alkermes (NASDAQ:ALKS), a commercial-stage biopharma focused on diseases of the central nervous system, fell 11% as of 3:15 p.m. EST on Thursday.
An analyst at Jeffries downgraded shares of Alkermes today to "hold" from "buy." The logic behind the downgrade was that shares are "fairly valued and factor significant value for the late-stage pipeline."
Specifically, the analyst is worried that ALKS-4230 -- which is an Alkermes compound that is currently being tested as a treatment for various types of cancer -- might not be as effective of a treatment as Nektar Therapeutics' (NASDAQ:NKTR) NKTR-214, which is another pipeline cancer compound that could compete with ALKS-4230 someday.
When combined with the recent run-up in Alkermes' stock thanks to good-looking earnings, the analyst felt that downgrading the stock made sense.
Short-term price movements aside, this Fool thinks that Alkermes bulls still have plenty of positives to look forward to in 2018. The company is slated to hear from regulators on two drug submissions and could also earn a big milestone payment if a third is sent off for review. There are also a number of clinical readouts that are slated to be released through the year, not to mention the continued ramp in sales of Vivitrol and Aristada.
All in all, I continue to agree with Alkermes CFO James Frates that Alkermes is set up to have a "transformative" 2018. If you feel the same way, then today's downward slide shouldn't bother you one bit.