Alkermes’ Ambitious Builder, Richard Pops, Grabs Reins to Re-Ignite Growth Phase
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for Alkermes, in a note to clients.
Pops has been working hard to downplay the significance of J&J’s decision ever since. For starters, the new once-monthly J&J drug is only approved in the U.S., and only for schizophrenia. The standard twice-monthly Risperdal Consta, which generated $1.3 billion in sales last year, is approved in more than 70 countries, and cleared for sale in the U.S. for both schizophrenia and bipolar disorder. About 60 percent of the sales come from outside the U.S., where patients don’t currently have the option to switch to a once-monthly treatment, Pops says.
Consta’s ability to hold its own in the market with a once-monthly injection is important. Pops calls it “a flywheel of economic value,” for Alkermes that enabled the company to amass a cash stockpile of $380 million at the end of June.
So, naturally, anything that might threaten or even slow down the growth prospects of that flywheel is bound to concern investors. The debate over whether a once-monthly schizophrenia drug will supplant Alkermes’ twice-monthly version was clearly on a lot of investors’ minds as they questioned Pops a few weeks ago at the Morgan Stanley conference. There was a lot less interest in the Alkermes pipeline, which the company tried to showcase to investors back in April, when it unveiled wholly owned proprietary pills in development for alcohol addiction and pain relief.
The pipeline is important too, because Pops has been trying to position Alkermes in investors’ minds as that rarest of animals—a break-even to profitable company that still has upside potential. Collecting royalties on other people’s products will only quicken the pulse to a degree, compared with proprietary drugs that have a chance to shake up the standard of care in big markets.
So what does Pops have in mind when he talks about putting the company back in building mode? He spoke about how the company is doing a lot of work with its own sales and marketing team to try to lift naltrexone (Vivitrol) out of obscurity, by simplifying the reimbursement process, introducing the product in Russia (which certainly has its share of alcohol dependence), and by running a pivotal trial of the treatment to help people get off opioid narcotics.
But that’s not all. Alkermes, partly because it has the luxury of $380 million in cash in the bank from its success with Risperdal Consta, may also be poised to snap up some promising treatments with depressed values, Pops says. Alkermes has the money, and the development capability with a staff that’s now up to about 550 people, to absorb some new pipeline projects that could ignite future growth, he says.
Pops wouldn’t be too much more specific about what drugs or companies he has his eye on. But he made it clear that Alkermes has already put operational capability in place for things like manufacturing and global supply chains. Someone else can make sure the trains run on time while he scopes out ways for Alkermes to grow.