Alkermes Nabs $250M It Doesn’t Need, But Could Fend Off Barbarians
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in a note to clients on Jan. 8 that “[Alkermes] is one of our top picks headed into 2014, as we believe the company is well positioned for this year and beyond, with a diversified commercial story coupled with an increasingly compelling new product pipeline.”
This year, the story investors want to hear from Alkermes is mostly about its R&D pipeline. The company is awaiting results from a pivotal clinical trial of its longer-lasting, once-monthly injectable version of aripiprazole. The original drug marketed as Abilify, used mainly for schizophrenia or bipolar disorder, generated worldwide sales of $2.8 billion in 2012. Results for the new version from Alkermes are expected in the first half of 2014. Alkermes also recently disclosed that it is developing an even longer-lasting version that may be injected as little as once every two months.
Another key Alkermes program investors are watching this year is ALKS 5461, a treatment for major depressive disorder that passed a mid-stage clinical trial last year. This year, the company has teed up a clinical development plan that calls for three pivotal trials that will start this year and collectively enroll about 1,500 patients.
Pops, who has been with Alkermes since he joined as CEO in 1991, has said for many years he wants the company to grow into the category of “Big Biotechs” populated by much larger enterprises like Amgen, Biogen Idec, Celgene, and Gilead Sciences. Alkermes, at a $6 billion market cap, is still a long way from that ballpark. But to get there, the company may choose use a combination of its own internal R&D, combined with the occasional acquisition.
In one breath during our interview, he noted that “We have one of the best CNS portfolios in the business.” And then, a minute later, he added that he admires what Forest Laboratories and Valeant Pharmaceuticals have done in building strong companies through acquisitions. Adding $250 million in cash is really just one step in executing on a grander plan, Pops says.
“It’s a strategic move, it gives us additional flexibility to be strategic should we choose to,” he says. “This is what’s exciting about being a $5-6 billion company, instead of $500m (market cap) company. In that stage, it’s about funding R&D. We now have sufficient cash flow for R&D. This is about how you think about becoming a $50 billion company.”