Alkermes CEO Leans on Internal Pipeline as Bydureon Hangs Out in the Penalty Box
When biotech firms get bad news from the FDA, the fallout can have a dramatic impact on everyone from the CEO to the bench scientists. But Waltham, MA-based biotech firm Alkermes (NASDAQ:ALKS) was able to escape a disappointing regulatory ruling last month without any impact on its day-to-day operations, Richard Pops, the company’s chairman and CEO, says.
Perhaps it’s a testament to the 23-year old biotech company’s strength. Last month, the FDA turned down a request for approval of a once-weekly version of the diabetes drug exenatide (Bydureon), which has been co-developed by San Diego-based Amylin Pharmaceuticals (NASDAQ:AMLN), drug giant Eli Lilly (NYSE:LLY), and Alkermes. Though Alkermes’s stock price has dropped by more than 20 percent since the news, the company’s operations have remained the same and it hasn’t made any dreaded layoffs.
“The energy level around the company is so high,” Pops says. “It’s so interesting because when you’ve seen the Bydureon actions at the FDA, if you came to Alkermes, you’d realize that operationally nothing has changed.”
It often takes genuine optimism and stamina to overcome lumps in the biotech game. Pops certainly has both traits. He took over as CEO last September after taking a two-year break from the job, which he previously held from 1991 to 2007. Even more, however, the company has steady revenue from two marketed products, primarily from the long-acting schizophrenia drug risperidone (Risperdal Consta), which is marketed by its partner Johnson & Johnson (NYSE:JNJ). Its second product is its naltrexone formulation (Vivitrol) to treat patients trying to kick alcohol and opioid dependence.
Indeed, the Bydureon news was a setback for Alkermes’s bottom line. The drug was expected to be a new and important source of product revenue for the company in the years ahead. That potential income stream will be delayed by more than a year as Amylin expects to reply to the agency’s request for more data on the treatment by the end of 2011. Though the drug relies on Alkermes’s drug-delivery technology, the company has no day-to-day responsibility for producing the drug or working with regulators to get it approved, Pops says.
This is important because it allows Alkermes to focus its internal research and development, while letting Amylin and Lilly do the heavy lifting to satisfy the FDA. The company has been long known for making money on producing and licensing its drug-delivery micro-spheres made of biodegradable polymers—designed to extend the duration and improve the stability of a drug in a patient’s system—for other companies such as J&J. Yet in recent years the firm has put more emphasis on developing its pipeline of experimental drugs. Some of those drugs include its anti-addiction treatment ALKS 33, ALKS 37 for opioid-induced constipation, and its experimental schizophrenia drug ALKS 9070.
“We have a major economic interest in Bydureon,” Pops says, “but we also have this really robust pipeline that’s been shaping up over the past couple of years with 33, 37, 9070, and some others.”
Last month, the company reported positive results of a Phase I study of ALKS 33, which patients took in combination with buprenorphine for treating cocaine addiction. The plan is to advance the combination therapy into mid-stage clinical trials in the first half of next year with the help of a $2.4 million grant from the National Institute on Drug Abuse.
Over the next year, Alkermes will be able to say whether some of these experimental drugs will continue down the path to FDA approval. The firm plans to report the results of an ongoing Phase II trial of ALKS 37 for opioid-induced constipation in the first half of next year. Also in the first half of next year, the firm plans to report the results of a Phase I clinical trial of ALKS 9070, a long-acting formulation of the blockbuster schizophrenia drug aripiprazole (Abilify). (Otsuka Pharmaceutical of Japan discovered the drug, which is marketed in the U.S. by Bristol-Myers Squibb (NYSE:BMY).)
Importantly, the ALKS 9070 formulation is also the company’s first clinical candidate to use its LinkeRx technology, which is intended to extend the duration of a therapy in the bloodstream while being simpler to manufacture than previous extended-release drug technology. (Pops explained the intended advantages of the drug-delivery technology to Luke early this year.) The firm’s second drug candidate to use the LinkeRx technology is ALKS 7921, which is intended to be a once-per-month injection of the schizophrenia drug olanzapine (marketed by Eli Lilly as Zyprexa). The firm plans to begin human testing of the drug next year.
Boston-based investment firm Leerink Swann said in a note to investors last month that Alkermes has “an interesting and diverse early stage pipeline that could result in relatively near-term partnerships.” (Like many others, Leerink thinks that the FDA will eventually approve Bydureon.)
Yet the way Pops sees it, Wall Street isn’t really factoring Alkermes’s early-stage programs very much into its estimates of how much the company is worth. (The firm, which had $178.3 million in total revenue for its fiscal 2010, had a market cap of nearly $1.1 billion and a share price of $11.13 at the close of the market on Friday, November 12). But given the pause in the Bydureon story, the CEO says, it’s a good time to take a closer look at the company’s future prospects for revenue growth.