Goldman downgrades Alkermes to Sell ahead of potential schizophrenia launch

Goldman Sachs analyst Terence Flynn downgraded Alkermes to Sell from Neutral and lowered his price target for the shares to $26 from $49. The drugmaker closed the trading day down 3%, or $1.13, to $31.82. The analyst downgraded the shares after removing sales of ALKS 5461 for depression from his model as well as the "M&A component" from his price target. He now sees 21% downside to his price target. Recent channel checks suggest the current profile of ALKS 3831 for schizophrenia, based on weight gain alone, is unlikely to be "practice changing," Flynn tells investors in a research note. Further, the checks suggest that the metabolic data is viewed as equally if not more important than the weight data. He also believes Alkermes' level of investment ahead of a potential ALKS 3831 launch is underappreciated. On depression drug ALKS 5461, Flynn expects the FDA to issue a complete response letter on or before the January 31 action date. The analyst does not expect Study 217 to be sufficient to address potential FDA issues following the negative panel outcome.