2023-03-29 06:38:25 ET
Summary
- Alkermes' recent clinical trial results for Lybalvi demonstrate a promising treatment option for young adults with schizophrenia or bipolar I disorder who are early in the progression of their illness.
- The combination of olanzapine and samidorphan in Lybalvi may reduce olanzapine-induced weight gain, a common side effect in patients with these conditions.
- In addition to Lybalvi, Alkermes has a diversified portfolio of marketed products and a pipeline of product candidates in various stages of development.
- Investors may see the potential for long-term growth in Alkermes as the company continues to advance its pipeline and gain regulatory approvals for new treatments.
Alkermes ( ALKS ) is a biopharmaceutical company that focuses on creating treatments for serious mental health issues, addiction, and cancer. It has a wide array of market-ready drugs as well as newer products in the development phase. Several medications by Alkermes-such as Lybalvi, Aristada, and Vivitrol-have demonstrated superior efficacy and safety compared to their competitors when treating schizophrenia, bipolar I disorder, and addiction. However, the company's current financial results have been underwhelming, with revenues and profits dropping. Despite this, its dedication to improving therapies through unique mechanisms and responding to unmet medical necessities renders it appealing to investors who are willing to take on some short-term unpredictability while aiming towards long-term success.
Mixed Financials
Alkermes' financial performance in the quarter ending December 31, 2022, showed mixed outcomes, with overall revenues reaching $304.7 million, a decrease from $324.5 million the previous year. On the other hand, net sales of owned products improved, with Vivitrol sales rising around 11%, Aristada sales growing close to 1%, and Lybalvi sales reaching $34.9 million after its commercial introduction in October 2021. The growth in owned product sales, combined with reduced operating costs, led to a non-GAAP net income of $24.2 million for the quarter.
For the year ending December 31, 2022, Alkermes experienced a total revenue of $1.11 billion; lower than the previous year. Net sales of owned products increased by approximately 24%, largely due to growth in Vivitrol, Aristada and Lybalvi sales. Unfortunately, manufacturing and royalty revenues from INVEGA fell substantially after Janssen partially terminated their licensing agreement resulting in revenues dropping from $541.8 million to $332.0 million. Despite this decline, the company was still able to grow its revenues from owned products and cut operating costs, ultimately leading to a non-GAAP net income of $57.9 million for the year.
Despite the overall revenue decrease, Alkermes' financial prospects remain robust. The growth in net sales of owned products indicates that the company's research and development investments are yielding positive results, with Lybalvi's commercial debut in particular demonstrating significant growth potential. Additionally, the reduction in operating costs, especially in R&D and SG&A, implies that Alkermes is effectively managing its resources and preparing for future expansion.
The company's cash position is also solid, with $740.1 million in cash, cash equivalents, and total investments as of December 31, 2022, offering sufficient resources for ongoing investment in research and development and other expansion initiatives. Although the company has an outstanding debt of $293.3 million, its strong cash position ensures it can handle this debt while continuing to invest in future growth.
Solid Product Pipeline
Alkermes has a well-diversified portfolio of marketed products, such as Lybalvi, Aristada, and Vivitrol, and a pipeline of product candidates in various stages of development. Lybalvi , for instance, is an oral atypical antipsychotic for adults with schizophrenia and bipolar I disorder. It is a combination of olanzapine and samidorphan, which mitigates olanzapine-associated weight gain. Aristada and Aristada INITIO are long-acting injectable antipsychotics based on Alkermes' proprietary Medisorb technology. Vivitrol is a monthly injectable medication for alcohol dependence and prevention of relapse to opioid dependence.
Alkermes is also developing several product candidates, including Nemvaleukin alfa, an engineered interleukin-2 (IL-2) variant immunotherapy for the treatment of platinum-resistant ovarian cancer and mucosal melanoma. The company is also developing ALKS 2680, a novel dopamine D3 receptor antagonist for the treatment of narcolepsy, olanzapine, and samidorphan for pediatric patients with schizophrenia or bipolar I disorder, HDAC inhibitors for neurology/neuropsychiatry indications, and IL-12 and IL-18 cytokine-based therapies for oncology indications. These products are designed to selectively expand tumor-killing immune cells, modulate dopamine signaling, address unmet needs of younger patients with mental illness, improve synaptic function, and stimulate the production and activation of natural killer cells and CD8+ T cells.
ENLIGHTEN-Early Meets Primary Endpoint
Alkermes has reported the publication of findings from its phase 3 ENLIGHTEN-Early trial of Lybalvi in the Journal of Clinical Psychiatry. The research assessed the impact of Lybalvi versus olanzapine on body weight in young adults suffering from schizophrenia, schizophreniform disorder, or bipolar I disorder who were in the early stages of their condition. The study's outcomes are favorable, indicating that patients receiving Lybalvi experienced significantly less weight gain than those treated with olanzapine after 12 weeks. This crucial information benefits clinicians who treat patients in the early phase of their illness and enhances our comprehension of Lybalvi as a therapeutic option for adult patients with schizophrenia or bipolar I disorder.
The ENLIGHTEN-Early trial was a multi-center, randomized, double-blind, phase 3 investigation that compared the effects of Lybalvi to olanzapine on body weight over a three-month period in young adults with schizophrenia or bipolar I disorder who were in the initial stages of their condition. Participants were required to have less than 24 weeks of total lifetime antipsychotic exposure and less than four years since the onset of active symptoms. The trial achieved its predefined primary endpoint, and Lybalvi's safety profile aligned with previous research. All participants who completed the double-blind phase of the trial were eligible to proceed in a long-term safety extension study, receiving Lybalvi for up to an additional 4 years of treatment.
The publication of the ENLIGHTEN-Early findings exemplifies Alkermes' commitment to broadening the evidence base supporting Lybalvi's use for adults with schizophrenia or bipolar I disorder. As healthcare professionals and patients become more familiar with Lybalvi, Alkermes anticipates supplementing this clinical information with real-world perspectives.
Drug Risks and Competitors
Alkermes faces competition from various pharmaceutical companies that have developed or are developing products in similar therapeutic areas. For schizophrenia and bipolar I disorder treatments, Alkermes' Lybalvi competes with established atypical antipsychotics such as AstraZeneca's (NASDAQ: AZN ) Seroquel (quetiapine) and Johnson & Johnson's (NYSE: JNJ ) Invega Sustenna (paliperidone). However, the unique combination of olanzapine and samidorphan in Lybalvi offers the advantage of reduced weight gain, a common side effect associated with olanzapine. This enhanced safety profile makes Lybalvi a more appealing choice for patients and healthcare providers.
In the long-acting injectable antipsychotics space, Aristada and Aristada INITIO face competition from Janssen's Invega Trinza (paliperidone palmitate) and Lundbeck's Abilify Maintena (aripiprazole). Alkermes' proprietary technology used in Aristada and Aristada INITIO allows for a more extended-release formulation , providing patients with a more consistent therapeutic effect and potentially improving adherence to treatment compared to competitors' products.
Vivitrol competes with other medications for alcohol dependence and opioid relapse prevention, such as Indivior's Suboxone (buprenorphine and naloxone) and Hikma Pharmaceuticals' Probuphine (buprenorphine). Vivitrol's extended-release injectable formulation offers a monthly dosing schedule, which may improve treatment adherence and provide a more consistent therapeutic effect compared to daily oral medications like Suboxone. Additionally, Vivitrol is an opioid antagonist , which may reduce the risk of misuse and diversion compared to partial agonists such as buprenorphine.
Alkermes' pipeline candidates also face competition from other investigational agents in the industry. Nemvaleukin alfa, for instance, will face competition from other immunotherapies for platinum-resistant ovarian cancer and mucosal melanoma, including Merck's (NYSE: MRK ) Keytruda (pembrolizumab) and Bristol-Myers Squibb's (NYSE: BMY ) Opdivo (nivolumab). However, the engineered IL-2 variant in Nemvaleukin alfa demonstrates potential for selectively expanding tumor-killing immune cells with a favorable safety profile, which may distinguish it from other immunotherapies in the market.
Takeaways
In conclusion, Alkermes is a company that is poised for growth in the pharmaceutical industry. With a diversified portfolio of marketed products and a pipeline of product candidates in various stages of development, the company is well-positioned to continue to develop innovative medicines for serious mental illness, addiction, and cancer. Despite facing competition in the market, Alkermes has demonstrated its ability to create best-in-class drugs such as Lybalvi, Aristada, and Vivitrol. The positive results of the ENLIGHTEN-Early study, as well as the potential of its product candidates in development such as Nemvaleukin alfa and ALKS 2680, further strengthen the company's outlook.
Moreover, the recent changes in the healthcare industry towards increased investment in mental health and addiction treatments are likely to provide a supportive backdrop for Alkermes. As the demand for such treatments grows, the company is likely to see increased revenue and profitability. While the pharmaceutical industry can be volatile, Alkermes has demonstrated its ability to weather challenges and emerge as a leader in the field. With a strong commitment to research and development and a focus on addressing unmet needs in the market, Alkermes is well-positioned for continued success.
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Alkermes' Strong Pipeline Positions It For Future Growth