JP Morgan Healthcare Conference 2014 – Expectations build around Alkermes to deliver

An 18% jump in Alkermes’ share price already this year, after the stock more than doubled in 2013, reveals the expectations that have built around this company’s CNS pipeline – unusual given how renowned this area is for disappointment.

But investors are getting excited about once-monthly injectable Abilify and a novel anti-depressant. Speaking at the JP Morgan conference in San Francisco this week, Richard Pops, Alkermes’ chief executive, said both had attracted partnering attention, but rights could still be retained. “We’re talking to pharma – there’s a scarcity value for products so it’s worth talking – but we’re loath to break up these assets into too many different sections,” he told EP Vantage.

Phase III data on the Abilify version, aripiprazole lauroxil, will be reported in the next few months, while the novel anti-depressant ALKS 5461 is about to enter pivotal studies. Abilify, an Otsuka blockbuster, loses patent protection in 2015, and Otsuka and Lundbeck have already launched their own injected form, Abilify Maintena; consensus sales forecasts for this already top $1bn by 2017.

Long-acting, injectable anti-psychotics is a growth area despite the genericisation of their original oral versions – sales of J&J’s Invega Sustenna, a version of the off-patent Risperdal, topped $1bn last year, its fifth on the market. The products can improve outcomes – an important theme for physicians and payers these days – and demand is being driven by a realisation that with improved compliance comes better efficacy and, ultimately, reduced healthcare costs as events such as hospitalisations are reduced.

But oral anti-psychotics are entrenched, particularly in the US, and building a market in the presence of well-known generics certainly sounds the territory of big pharma. Mr Pops insists that Alkermes is undecided about partnering; the promise of ALKS 5461 is adding to the hesitation.

Novel add-on

Very encouraging phase II data and confirmation that the FDA had granted fast-track status and is happy for the company to repeat its novel trial design across the pivotal programme for ‘5461 has stoked these hopes.

Alkermes is pursuing patients who have already failed on other agents, a setting in which the phase II trial generated a 7-point improvement in the MADRS depression scale. If this were to be replicated it would be the best data ever seen in this refractory setting, the company says.

The phase III programme will use a sequential parallel comparison design (SPCD), which is structured to identify and eliminate the placebo responders who so frequently derail CNS trials.

The trials have two stages: patients are first randomised into a drug or a heavily weighted placebo arm, and non-responders from the placebo group are then identified and re-randomised either to stay on a dummy pill or move onto active drug. At this stage the placebo effect disappears and the drug response remains robust, Mr Pops says.

“So that’s why, with a SPCD, with small patient trial sizes you can drive strong statistics. The days of enrolling all-comers and powering up and hoping to see a subtle difference are over.”

Tax benefits

Data are unlikely to emerge before the end of 2015, and Alkermes intends to complete development alone, but beyond that Mr Pops is in no hurry to map out a path forward.

The company has been generating cash since it bought the Elan Drug Discovery business in 2011, and is now making sustainable profits. The sale of a stake to Invesco Perpetual last week added $250m of cash, and Alkermes ended the third quarter with $395m.

“There’s no urgency to do anything. The programme is fundable in our budget and we are moving at the rate we want to move,” Mr Pops says.

The Elan deal also resulted in an Irish domicile that will bring tax benefits for any business development deals struck in the future, he says, acknowledging that this aspect could make Alkermes more attractive to a suitor.

“There are precious few high-quality assets outside the US for big pharma, and there is a tremendous amount of capital trapped overseas. We’re not oblivious of that fact.” But adding Invesco brings another investor with a long-term view, he says.

Mr Pops clearly has ambitions to be at the head of the table in any M&A talks, but the company’s market performance over the past 12 months suggests that many investors hope he will be taking the opposite position. At the very least, most would certainly prefer to see the company bring on a partner to help commercialise its psychiatric portfolio.

With a value approaching $7bn, Alkermes’ market cap arguably already prices in a deal of some sort. Investors are waiting for Mr Pops to deliver more than just data.

To contact the writer of this story email Amy Brown in San Francisco at or follow @AmyEPVantage on Twitter

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