Vtrade Capital Services Proposes to BUY Alkermes Plc. @ USD 45 (NASDAQ: ALKS)

Alkermes Plc

NASDAQ: ALKS

COMPANY DESCRIPTION

Alkermes Plc is a biopharmaceutical company, which engages in the development, research, and commercialization of medicines that are designed to address unmet medical needs of patients in major therapeutic areas. It operates through the following geographical segments: U.S., Ireland, Rest of the World, and Other. Its products include the brands Aristada and Vivitrol. The company was founded on May 4, 2011 and is headquartered in Dublin, Ireland.

RECOMMENDATIONS

We rate Alkermes Plc a Buy at USD 45. Below are the basic reasons to recommend this stock as a Buy.

CURRENT STOCK CHART

STRENGTHS OF THE STOCK

Increasing share price:

Share price of the company have outperformed the industry in the past one month. Shares have increased 4% against the industry's decline of 0.7%.

Strong Product Portfolio:

Alkermes’ revenues are being driven by its proprietary products, Vivitrol and Aristada, and the five partnered products – Risperdal Consta, Invega Sustenna/Xeplion, Invega Trinza/Trevicta, Ampyra/Fampyra and Bydureon. We expect these products to continue contributing to the company’s top-line growth in the coming quarters.

Alkermes continues to witness robust sales of Vivitrol in both the Medicaid and commercial setting. The company expects Vivitrol to be the primary growth driver.

On the other hand, Aristada is growing impressively in a long-acting injectable (LAI) market, The United States LAI market could cross $4 billion in 2020. The company expects Aristada net sales to double to be in the range of $140 million to $160 million in 2018. In June 2017, the FDA approved and launched two-month Aristada extended-release injectable suspension for the treatment of schizophrenia. Currently, it is approved in four doses and three dosing duration options (441 mg, 662 mg or 882 mg once monthly, 882 mg once every six weeks and 1064 mg once every two months). As a result, Aristada provides several options to help clinicians tailor treatment to the individual needs of their patients. On Jul 2, 2018, the FDA approved Aristada Initio (aripiprazole lauroxil) extended-release product for the treatment of schizophrenia in adults. The approval of Aristada Initio makes Aristada the first and only long-acting atypical antipsychotic that can be initiated on day one, which plays a significant role to treat a complex disease like schizophrenia.  Previously, the standard regimen included being dosed with Aristada for 21 consecutive days once the first dose started. However, the Aristada Initio regimen provides patients with relevant levels of aripiprazole within 4 days of initiation. This is an alternative initiation regimen, which allows the physicians and caregivers to fully dose patients with up to two months of coverage with a proven medication in their system.

Promising Pipeline:

Alkermes’ pipeline has expanded significantly following the acquisition of the EDT unit. The company’s progress with pipeline candidates targeting major CNS disorders, such as schizophrenia, addiction, depression and multiple sclerosis, has been impressive. An important pipeline candidate is ALKS 5461 being developed for the treatment of MDD. In January 2018, a new drug application (NDA) was submitted to the FDA for ALKS 5461. If approved, this would be the first therapeutic option for patients with depression with a novel mechanism of action. On Apr 16, the FDA accepted for review the NDA for ALKS 5461. The FDA had initially issued a Refusal to File letter on Mar 30 for the candidate stating that the NDA did not have enough evidence for the oral medication to work.  The FDA suggested that additional studies might be required to demonstrate the drug’s overall effectiveness for the proposed indication. The FDA has set an action date of Jan 31, 2019.

Other interesting candidates include ALKS 3831 (phase III – schizophrenia): Top-line data on which is expected in the fourth quarter of 2018 and if the study is positive, the company expects to submit the NDA in the first half of 2019: also, in phase I metabolic study to assess its effects on insulin sensitivity, lipid metabolism and other important metabolic parameters in comparison with Lilly’s Zyprexa).

BIIB098 (initially known as ALKS 8700) is being developed in collaboration with Biogen to treat relapsing forms of multiple sclerosis (MS). Alkermes expects to submit a new drug application (NDA) for BIIB098 to the FDA later in 2018. Alkermes may also receive a $150 million milestone payment from Biogen upon the FDA approval of the NDA for BIIB098, on or before Dec. 31, 2021. The company may also receive mid-teens percentage royalty on worldwide net sales.

ALKS 6428 (phase III – to help physicians transition patients from physical dependence on opioids to Vivitrol) and ALKS 4230 (phase I – cancer immunotherapy the study is expected to be complete in 2018 and the company expects to move into the expansion stage in 2018, where it will begin to assess objective measures of efficacy in various tumor types in a larger number of patients).

Successful development and subsequent commercialization of these candidates would be a huge boost for the company.

 Divestments & Restructuring Initiatives Encouraging:

In Apr 2015, Alkermes divested its manufacturing facility in Gainesville, GA, along with manufacturing and royalty revenues associated with certain products manufactured at the facility and the rights to IV/IM and other parenteral forms of Meloxicam to Recro Pharma. Alkermes is eligible to receive low double-digit royalties on net sales of IV/IM and other parenteral forms of Meloxicam and up to $120 million in milestone payments depending on the achievement of certain regulatory and sales milestones related to IV/IM and other parenteral forms of Meloxicam.

In the fourth quarter of 2015, Alkermes completed the two-year restructuring plan related to its manufacturing facility at Athlone, Ireland, following which the company terminated manufacturing services for certain products whose demand had waned due to generic competition and that were no longer expected to be economically practicable to produce. Alkermes also cut down its headcount by roughly 130 employees. Apart from reducing costs, the company has eliminated some uneconomic products from its portfolio. These initiatives are expected to drive both the top and the bottom line at Alkermes.

STRONG FINANCIALS:

Year-on-Year Sales Revenue:

From the past three years the sales growth is growing positively year-on-year  

·       2015 – USD 628.34M (1.54%)

·       2016 – USD 745.69M (18.68%)

·       2017 – USD 903.37M (21.15%)

Net Income:

Compared to 2015 the company's Net income grew to 8.24% in 2016, and the same further grew to a big leap of 24.23% in 2017.

Earnings:

Alkermes reported adjusted earnings of 29 cents per share in the second quarter of 2018, beating the Consensus Estimate of 10 cents. The bottom line also exceeded the adjusted earnings of 1 cent recorded in the year-ago quarter.

The company’s revenues of $304.6 million in the quarter were up 17% year over year. The top line beat the Consensus Estimate of $263 million.

Disclaimer:

Views are strictly personal. This Interim Financial Results & News posts or updates includes forecasts, projections and other predictive statements that represent Vtrade's assumptions and expectations in light of currently available information. These forecasts, etc., are based on industry trends, circumstances involving companies and other factors, and they involve risks, variables and uncertainties. The Group’s actual performance results may differ from those projected in these Interim Financial Results. Consequently, no guarantee is presented or implied as to the accuracy of specific forecasts, projections or predictive statements contained herein.