Alkermes (ALKS) Proprietary Drugs Aid Growth Amid Competition
Alkermes plc ALKS derives revenues on net sales of its proprietary products — Vivitrol (alcohol and opioid dependence), Aristada (schizophrenia) and Lybalvi (schizophrenia and bipolar I disorder) as well as manufacturing and/or royalty revenues on net sales of products commercialized by its partners.
The continued growth in the alcohol-dependence treatment market has driven new patients toward Vivitrol, while Aristada sales have been driven by underlying demand in recent quarters.
In August 2023, Alkermes started negotiations with Teva Pharmaceuticals USA, Inc. TEVA to settle the ongoing patent litigation between the parties in the U.S. District Court regarding Vivitrol (naltrexone for extended-release injectable suspension).
Per the terms of the settlement agreement, Alkermes granted Teva the license to market a generic version of Vivitrol in the United States from Jan 15, 2027, or earlier under certain customary circumstances.
However, ALKS and TEVA are required to submit the agreement to the U.S. Federal Trade Commission and the U.S. Department of Justice for review.
In June 2021, the FDA approved Lybalvi (olanzapine and samidorphan) for the treatment of adults with schizophrenia and adults who have bipolar I disorder. Lybalvi has witnessed strong sales uptake so far, and has exceeded management’s expectations.
Shares of Alkermes have lost 8.2% year to date compared with the industry’s 24.1% decline.
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Meanwhile, Alkermes is making progress in separating its oncology business into a new, publicly traded company called Mural Oncology plc. The separation will allow the company to focus solely on developing therapies for neurological conditions and improving profitability.
ALKS expects to complete the separation later in November 2023, subject to various customary conditions.
We note that Alkermes remains highly dependent on manufacturing and/or royalty revenues on sales of products that are commercialized by the company’s partners. The company’s heavy dependence on partners for revenues is concerning.
Also, competition looms large on Alkermes, as many companies have developed medicines for the treatment of schizophrenia and bipolar I disorder. Several other companies are also actively looking to develop treatments for schizophrenia and bipolar I disorder. A potential approval for any of these treatments is likely to pose a threat to Alkermes in the days ahead.
Alkermes plc Price and Consensus
Alkermes plc price-consensus-chart | Alkermes plc Quote
Zacks Rank & Stocks to Consider
Alkermes currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the biotech sector are Dynavax Technologies Corporation DVAX and Ligand Pharmaceuticals Incorporated LGND, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, estimates for Dynavax Technologies’ 2023 loss per share have narrowed from 24 cents to 12 cents. Meanwhile, during the same period, earnings per share estimates for 2024 have improved from 2 cents to 18 cents. Year to date, shares of DVAX have rallied 27.3%.
Earnings of Dynavax Technologies beat estimates in two of the last four quarters while missing the same on the remaining two occasions. DVAX delivered a four-quarter average earnings surprise of 293.21%.
In the past 60 days, estimates for Ligand Pharmaceuticals’ 2023 earnings per share have improved from $4.98 to $5.10. During the same period, earnings per share estimates for 2024 have moved up from $4.26 to $4.59. Year to date, shares of LGND have lost 17.4%.
Earnings of Ligand Pharmaceuticals beat estimates in each of the trailing four quarters. On average, LGND came up with a four-quarter earnings surprise of 67.19%.
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