Remember that philosophy-class question -- the one that goes, "If a tree falls in the forest and no one hears it, did it make a sound?"
In the corporate world, the question is: If a CEO abruptly resigns and the stock barely budges, does it really matter?
That's the issue at Alkermes
Richard Pops, who held the CEO job for 16 years before becoming chairman in April 2007 when Broecker took over, resumed his previous position.
Besides the traditional "thank you for your service" comments, Pops said in the press release announcing the change, "Alkermes is an exciting company and David [Broecker] leaves it in a strong position." Um, maybe.
First, in March 2008, Eli Lilly
Second, last December, Cephalon
Third, last month, Johnson & Johnson
Although Alkermes is working on other products, the triumvirate of setbacks leaves no margin for error. Manufacturing and royalty revenue from J&J for Risperdal Consta accounted for 77% of Alkermes' $47.5 million in revenue for the most recently completed quarter.
That's three big disappointments under Broecker's watch. However, it's hard to gauge the blame, because these projects were initiated when Pops was CEO.
Waiting for the FDA
Broecker also left with one big question unanswered -- a question that holds the key to Alkermes future.
In July, the Food and Drug Administration began reviewing a once-a-week version of the diabetes drug exenatide. Alkermes' contender seeks to improve on the convenience of Byetta exenatide, from Lilly and Amylin Pharmaceuticals
If the FDA says "yes," Alkermes could enjoy a big payday, because clinical trials indicate the drug performs better than Januvia and Actos, from Merck
If the FDA says "no," or if it asks for more information or tests, Alkermes will have a hard time elevating its stock, which is down by one-third since before its setbacks began.
Alkermes needs a more diversified portfolio, and investors need a favorable FDA verdict on exenatide.
Is Alkermes a good investment now? Head on over to CAPS and give it a thumbs-up or -down. While you're there, add a comment as to why you think that way. It won't cost you a dime.