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Alkermes plc Message Board

  • jimiclee Oct 20, 2010 10:47 AM Flag

    JP Morgan Maintains OW $14.00 PT

    • ALKS: Diversified enough to withstand this harsh blow…maintaining OW. We
    should have known. Every time Alkermes appears poised to finally break out to a
    higher level, something knocks this perpetual trading stock down. However, unlike
    AMLN, there’s a lot more to the ALKS story than Bydureon. This novel diabetes drug
    is certainly a key component, but there are other upside levers going forward. Most
    notably, we believe the recent approval of Vivitrol for opioid addiction offers
    potentially underappreciated leverage. Moreover, the assumed demise of Risperdal
    Consta continues to appear premature. Then there is also the company’s solid balance
    sheet (net cash of $280M, or nearly $3/sh) and platform technologies. So while we
    expect near term pain, we do have greater conviction in this company’s resiliency.
    • Lowering ALKS Dec 2011 PT to $14. As is the case with AMLN, we’ve applied
    similar drastic cuts to our Bydureon assumptions for ALKS. We lowered the
    probability of ultimate approval to 65% from 85%, more conservatively skewed
    commercial scenarios, and pushed out the peak sales year. We also implemented a
    catalyst/sentiment discount of 10% on the heels of Tuesday’s development. Taken
    together, this prompts us to lower our target to $14 from $19. Prior to the 10%
    discount, the key components of this target include Consta (~$5/sh), Vivitrol ($3+),
    Bydureon (~$3), and cash (~$3).

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