Alkermes bounces back after disappointments as depression drug meets study goal
Shares of Alkermes (ALKS) are on the rise after the company said its ALKS 5461 for the treatment of major depressive disorder in patients not helped by standard antidepressants met the main goal in a third late-stage trial. JPMorgan analyst Cory Kasimov upgraded Alkermes to Overweight after yesterday's announcement, which follows two other trial disappointments earlier this year that had significantly lowered the price of the company's shares. STUDY RESULTS: Last night, Alkermes announced positive topline results from FORWARD-5, the third Phase 3 efficacy study to read out from the FORWARD pivotal program for ALKS 5461, a once-daily, oral investigational medicine with a novel mechanism of action for the treatment of major depressive disorder, or MDD, in patients with an inadequate response to standard antidepressant therapies. The study met its pre-specified primary endpoint showing treatment with ALKS 5461 significantly reduced symptoms of depression in patients with MDD compared to placebo. ALKS 5461 was generally well tolerated. The company plans to request a meeting with the U.S. Food and Drug Administration's Division of Psychiatric Products to discuss the filing strategy for this Fast Track designated medicine. TOTALITY OF DATA APPROVABLE: This morning, JPMorgan analyst Cory Kasimov upgraded Alkermes to Overweight after adding ALKS 5461 for major depressive disorder back into his model following last night's positive Phase 3 data. The positive FORWARD-5 data makes the totality of the data approvable, Kasimov told investors. The analyst also noted that Alkermes is an Irish domiciled company with two wholly owned and approved central nervous system assets, and now a third product that "appears to be well on its way," which is "not a common set up across the sector." Kasimov raised his price target on the shares to $78 from $51. His peer at Leerink also upped the stock's price target to $70 from $57. In a research note of his own, analyst Paul Matteis told investors that the drug has a "realistic chance" with the FDA on the data package generated to date. The analyst assumes a 50% probability of approval without the need for an additional study and a 60% chance of approval overall. While the totality of the ALKS 5461 data package is clearly mixed, Matteis pointed out that his diligence on regulatory dynamics in depression/psychiatry renders him cautiously optimistic that the drug may have a shot at approval. He reiterated an Outperform rating on the shares. WHAT'S NOTABLE: Back in January, Alkermes had announced that both FORWARD-3 and FORWARD-4, the first two Phase 3 efficacy studies to read out from the FORWARD pivotal program, did not meet the pre-specified primary efficacy endpoint. At the time, the company said that a clear positive outcome for FORWARD-5, together with the previously completed successful Phase 2 study and supportive evidence from FORWARD-4, could provide substantial evidence of efficacy for ALKS 5461 for the adjunctive treatment of major depressive disorder. In February, in an interview with Forbes contributor John LaMattina, Alkermes CEO Richard Pops said he remained optimistic about ALKS 5461, adding that he was surprised by his stock's selloff after announcing the two clinical trials missed their primary endpoints, referring to the reaction as reflecting a "shoot first and ask questions later" attitude. On a subsequent call with analysts following the company's earnings report in February, Pops reiterated that his company was "far from" stopping on ALKS 5461. PRICE ACTION: In morning trading, shares of Alkermes have gained over 30% to $56.85. Year-to-date, though, the stock is still down about 28%.