Five analysts have raised their earnings estimates for this biopharma in the past 30 days.
Alkermes plc (ALKS)
From The Medical Technology Stock Letter
Last week, Alkermes plc (ALKS) released its Q1:19 financial results that showed a big miss for Aristada coming in at $30 million after guiding for $40 million. While a disappointment, the company did not change overall FY guidance and stated that an inventory work down was the primary cause.
At current prices, we believe ALKS is getting zero credit for any pipeline potential. In our view, ALKS fumarate, branded “VUMERITY” by partner MS drug leading Biogen, has been de-risked and represents an important asset for BIIB and importantly a significant potential royalty stream for ALKS beginning next year. BIIB’s Tecfidera has very real IP risk and BIIB is already planning a possible switch to Vumerity (ALKS fumarate).
This is the BIIB CEO quote from yesterday’s earnings call: “We continue to believe we have valid patents. Nonetheless, we are appropriately preparing for all possible outcomes. Importantly, ahead of the outcome of the IPR and District Court and the litigations, we shall have the opportunity to launch VUMERITY, a novel oral fumarate disease-modifying treatment that has the potential to be another important choice for MS patients. VUMERITY has a composition of matter patent with a base expiration date in 2033. It is a priority that we appropriately maximize the potential of VUMERITY.”
ALKS expects POC data for ALKS-4230 (IL-2 for cancer) later this year. ‘4230 is very similar to NKTR’s ‘214 which also targets IL-2 selectively. The company recently started the second ALK S-4230 trial (Phase I/II ARTISTRY-2), which will evaluate sub-q dosing (QW and Q3W) as monotherapy and in combination with Keytruda and expects to pick a dosing regimen for broad Phase II development by the end of this year.
The IV ALKS-4230 formulation continues to be evaluated in Phase I ARTISTRY-1 trial and once an MTD is achieved in the monotherapy dose-escalation cohort, ALKS plans to initiate monotherapy arm in RCC and melanoma. On the call, management commented that the patients in the combination study are likely to demonstrate responses as these patients have better prognoses. This arm is actively enrolling, and management anticipates data by YE19 which could be significant as most of Wall Street assigns little or no value to ALKS pipeline.
The Vumerity PDUFA is in the Q4 of this year. If BIIB loses in court the company will be highly motivated to start switching MS patients from Tecfidera to Vumerity. This would be great for ALKS, as 25% of the Tecfidera market is $750 million, or over $100 million in revenue for ALKS at a mid-teens royalty rate. In our view, today’s sell off is overdone, particularly when factoring in the Aristada miss should be made up this year. BIIB’s enthusiastic comments last week in its Q1 release regarding its launch plans for Vumerity also increase the odds that ALKS will receive a significant royalty stream that could begin as soon as next year.
RECOMMENDATION: ALKS is a BUY under 55 with a TARGET PRICE of 75
John McCamant, The Medical Technology Stock Letter, www.bioinvest.com, May 2, 2019