Less than one month after issuing a dreaded Refusal to File letter on ALKS-5461, the Food and Drug Administration has changed its mind, deciding that it will review Alkermes' (NASDAQ:ALKS) depression drug for approval after all. The FDA's staying mum on its surprising turnabout, but the company appears back on track to securing a go/no-go decision early next year.

In this clip from The Motley Fool's Industry Focus: Healthcare, analyst Kristine Harjes and Todd Campbell update investors on the latest development and the important decision date investors should now have on their calendar.

A full transcript follows the video.

This video was recorded on April 18, 2018.

Kristine Harjes: Let's dive into the first one.

Todd Campbell: For the first one, you're going to have to put the car in reverse and back it up a little bit to the end of March. April 2nd actually was when they reported this. The company I'm going talk about first is Alkermes. And listeners, you might remember that we did a show where we talked about Alkermes on April 4th. Specifically, we talked about a refusal to file letter that the company had received from the FDA. Now, that's a dreaded thing. We talked about how that's not good news. It was for a drug, ALKS-5461, for major depressive disorder. And the FDA shot it back and said, "No, we're not even going to review this drug." And of course, as you can imagine, that caused the share price to fall dramatically. Now, Kristine, in the April 4th episode, you said that management sounded a little incredulous.

Harjes: They did, yeah. When you listen to their reaction to this refuse to file -- I mean, this is not something that you see happen a lot, especially not to companies that are talking to the FDA and seem like they have a good handle on things. So, I think everybody, management included, was surprised.

Campbell: Yeah, and you know, it turns out that they had a reason, maybe, to sound a little incredulous, because this week, Alkermes put out a very short couple of paragraphs note saying the FDA has changed its mind, and they will now review ALKS-5461 after all.

Harjes: That's insane. Is the timeline the same as it was?

Campbell: This is fascinating to me. I've been doing this for over 20 years, Kristine, I cannot remember something like this happening, a refusal to file and then so quickly thereafter the FDA being willing to accept it. There is a new PDUFA date, a new decision date. The decision will be expected January 31st, 2019.

And of course, what's probably on everybody's mind, especially investors who maybe owned the stock higher, sold it on the news, and are now looking at it going well, wait a minute, did I just sell it for the wrong reason, because now, could 5461 get approved, is -- why was that refusal to file even sent back to Alkermes if they were going to change their minds so rapidly or so quickly? And I think that's a valid question. Unfortunately, the FDA is very tight-lipped about these kinds of things. Scott Gottlieb, the FDA commissioner, he actually was in front of Congress recently and he said that they really don't have a system in place where they can go back, and they can take a look at the specific reasons behind decisions that they have made in the past. So, I think investors are just going to be scratching their heads for the next however many months, until we get to January 2019, wondering whether or not they had a real reason to be concerned about the data that they were seeing in this application, and thus won't approve it, or whether or not simply the schedule A meeting that Alkermes has had with the FDA, they sat down and they were able to explain away all of the questions that they had.

Alkermes did say though, Kristine, that they didn't have to submit any new data to the FDA, that the FDA was completely fine with just a sit down and talk and some clarification.

Harjes: Which is just crazy to me, because couldn't that have happened before now? Why did they have to send the refused to file first in order to have this conversation? I'm sure Alkermes shareholders and management are equally frustrated by that decision. But I think you're right that there's a little bit of an uncertainty here now, and that was reflected in the share price movement. I think the stock gained around 8%, if I'm recalling this correctly, and that was not as much as they initially lost when the refuse to file was first received.

Campbell: Yeah, shares are still trading at quite a discount. It seems that investors really aren't factoring in much of a likelihood of 5461 getting a go-ahead in next January. That could create an opportunity, though, right? In the past, when we've seen Alkermes get beat up, this happened in 2016 when the first two 5461 trials came up shy of their endpoints, the shares fell dramatically. Then, when the third trial panned out, shares shot up significantly. So, I suppose that you could say we're back to where we were before in 2016, where there's not a lot of expectation for an approval of 5461. And then, if they do manage to successfully get it across the finish line, then maybe the shares will trade up fairly substantially, because as we said on the show on the 4th, a significant percentage of people with major depressive disorder don't respond to existing treatments. And this is a big indication, it's a multi-billion-dollar indication.

Harjes: Yeah, absolutely. There are a lot of people out here that do not have their depression fully met with existing drugs. The company claims that it's the first new approach to depression medication since Prozac, which was approved about 30 years ago. So, if it's approved, it's expected to be the company's first blockbuster drug. But, of course, that's a big if. And as you mentioned, Todd, this drug has had a bit of a roller coaster ride. So, we'll keep our eyes on it, we'll see what happens.