Alkermes, Swinging For the Fence, Touts New Anti-Addiction Drug

4/7/09Follow @xconomy

Alkermes is in the midst of a makeover. The Cambridge, MA-based company (NASDAQ: ALKS) is morphing from a steady-as-she-goes developer of technology that improves drugs for partners into a more classic biotech that swings for the fence. This means Alkermes is now getting in the high-risk and high-reward game that goes with developing new drugs on its own.

Today, the company is inviting analysts and investors to its headquarters for its first annual R&D day to give them a detailed rundown of what to watch for in the company’s pipeline. Late last week, I got a preview from CEO David Broecker, who wanted to talk about a couple of new drugs for alcohol addiction and pain.

Alkermes (ALK-er-meez) has been around since 1987, and has became known in the biotech industry for its expertise in making existing drugs more stable and longer-lasting in the bloodstream, which allows less frequent dosing. It licensed that technology to partners to help improve their products, and it scored a hit with a long-acting version of the schizophrenia drug risperidone, marketed by Johnson & Johnson as Risperdal Consta. That drug has become a $1.3 billion-a-year hit, has helped mentally ill patients stay on their meds better than older oral pills, and it has turned Alkermes into a consistently profitable company.

The company is trying to take advantage of that financial stability, by building up an internal R&D staff of 80 to 90 people with the capability to develop drugs from start to finish. Those people have been working on two specific drug candidates in very early stages of development that Broecker says he likes for alcohol addiction and pain.

“This is a coming out party for us,” Broecker says. “We’re not your father’s drug delivery company anymore.”

The story of Alkermes’ bid to develop its own drug actually traces its roots back to October 2006, when the company bought a library of experimental compounds from Rensselaer Polytechnic Institute in Troy, NY. These drug candidates were designed to block or stimulate opioid receptors on cells. That means they might have the potential to block pain in the same way that morphine does, and also treat addictive disorders.

The first drug that’s beginning to emerge from this library is called ALKS 33. This drug is designed to be a once-daily pill for people trying to kick an addiction to alcohol. What’s intriguing is that this drug isn’t broken down by the liver, like most other drugs. That can be a problem for people with alcohol addiction, who tend to already have damaged livers, Broecker says. Instead, this drug is filtered out via the kidneys, and excreted via the urine. The drug has the potential to be more potent, or effective in lower doses, than naltrexone (Vivitrol), the product Alkermes currently markets for treating alcohol addiction.

ALKS 33 has already passed through a preliminary clinical trial of 16 healthy volunteers, which shows it can be absorbed rapidly into the bloodstream in high concentrations, and it lasts long enough to support once-daily dosing. Based on the finding, the company plans to start a mid-stage study among alcohol-dependent patients in the second half of this year, Broecker says.

The second drug we talked about, called ALKS 36, is designed to hit opioid receptors for pain relief. Some of the best-known drugs in this class, Oxycontin and Percocet, are known for the side effect of causing constipation. (In fact, the constipation is a big enough deal that Progenics Pharmaceuticals developed a drug solely for relieving opioid-induced constipation, methylnaltrexone (Relistor).

ALKS 36 is a drug in two parts. The first is an opioid pain reliever that crosses the blood-brain barrier. The second component blocks opioid receptors in the intestines, and is intended to keep patients from getting constipated. This drug should be on track for its first clinical trial by the end of this year, Broecker says.

The company still has a long way to go through development, and since that’s traditionally been the role of its partners, I wondered who’s going to do the work. Even though Alkermes has built up more internal R&D capability with veterans from Big Pharma companies—including chief medical officer Elliot Ehrich, formerly of Merck—much of the work will be done by outside contractors, Broecker says. This compound also has competition from a San Carlos, CA-based drugmaker, Nektar Therapeutics (NASDAQ: NKTR).

The company’s isn’t banking on any of these new drugs to really pay the bills, not yet anyway. Alkermes is forecasting earnings per share of $2 to $3 in 2013, without factoring in any help from the new drugs coming down the pipeline, Broecker says. But he says he’s confident to place these bets, because they are based on biology that’s been well-established by other drugs, yet following the Alkermes playbook of making improved compounds. He makes it sound like Alkermes is hungry for a little more risk/reward in its portfolio, but he’s not completely throwing caution to the wind either.

“We want to leverage what’s known and make it dramatically better,” Broecker says.

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