Alkermes Sees 2012 Revenue Up to $480 Million on Elan Deal
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Alkermes Inc. (ALKS) forecast fiscal 2012 revenue will grow as much as 6.7 percent to $480 million after the pharmaceutical company completes the purchase of Elan Corp.’s drug technology unit this year.
Sales of the combined company will rise to $460 million to $480 million for the 12 months ending in March 2012 from $450 million a year earlier, Waltham, Massachusetts-based Alkermes said today in a statement. Earnings before interest, taxes, depreciation and amortization, excluding one-time items, will be $70 million to $90 million, the company said.
Alkermes agreed to buy the Elan Drug Technologies unit in May in a deal valued at $960 million, combining two businesses that aim to improve the way medicines are delivered. The combined company has partnerships for drugs such as Bydureon for diabetes and Invega Sustenna for schizophrenia. With those products driving revenue growth, Alkermes will turn its focus to developing medicines internally, producing potentially bigger payoffs, Chief Executive Officer Richard Pops said.
“We’re absolutely heading toward the proprietary products business,” Pops said. “We’re still going to be a partnering company, but we’re not going to do partnerships as much where we do a drug-delivery deal for a low percentage royalty early on.”
Alkermes now will focus on taking drugs through clinical trials and potentially seeking marketing partners after showing proof-of-concept in humans, Pops said.
Alkermes declined 35 cents, or 1.8 percent, to $18.92 at 4 p.m. in Nasdaq Stock Market trading. The shares have gained 54 percent this year.
In addition to Invega Sustenna and Bydureon, the combined company has the drugs Risperdal Consta, Ampyra and Vivitrol.
“Immediately Alkermes goes from a money-losing company to a money-making company” with the Elan deal, Pops said. “What’s interesting about this list of products is that most of them have patent life into the ‘20s, so they’ve got a long way ahead of them.”
Alkermes reported net losses of $45.5 million in fiscal 2011 and $39.6 million in fiscal 2010.
Starting in fiscal 2013, adjusted earnings as a proportion of sales will grow to 30 percent to 35 percent, from as much as 20 percent the year before, the company said.
Alkermes has partnerships with Johnson & Johnson (JNJ) on Risperdal Consta and Invega Sustenna for schizophrenia; with Acorda Therapeutics Inc. (ACOR) on Ampyra to improve walking in patients with multiple sclerosis; and with Eli Lilly & Co. (LLY) and Amylin Pharmaceuticals Inc. (AMLN) on the diabetes drug Bydureon. Invega Sustenna and Ampyra came from Elan Drug Technologies.
Bydureon, still under regulatory review in the U.S., has entered the market in Europe and made its first sale in the United Kingdom, Alkermes said. The company expects to receive a $7 million milestone payment in the second quarter of fiscal 2012.
Alkermes’s internally developed drug, Vivitrol, is for alcohol and opioid dependence. Sales of the medicine rose to $9.7 million in first quarter of fiscal 2012, a 14 percent increase from the previous three months, the company said today.
Alkermes is developing a once-monthly schizophrenia medicine, ALKS 9070. Once in the body, the drug converts to aripiprazole, the molecule that makes up Otsuka Pharmaceutical Co. and Bristol-Myers Squibb Co. (BMY)’s Abilify. The company plans to move the medicine into “pivotal clinical development” by the end of this year.
Alkermes is also developing a medicine for the treatment of opioid-induced constipation, ALKS 37. The company is starting a mid-stage study of the treatment and expects data next year. Results from a study of another experimental drug, ALKS 5461, in treatment-resistant depression, are expected by the end of 2011.
Pops said he’s considering partnerships for those medicines, and is in “continuous dialogue” with larger pharmaceutical companies. The right time for a deal is “after human proof-of-concept,” he said.
“Right now with 9070, now that we have these data in hand, and right about now with 37 as well,” Pops said. “This is when pharma has the appetite and has the ability to come in and look at hard data and make decisions.”
The Elan unit purchase is expected to close in the third quarter, and the new company, which will go by the name Alkermes Plc, will have its headquarters in Ireland, where Elan is based. Pops said he’s excited about the move, and planned to celebrate by serving a local delicacy at the company’s analyst and investor day today in Boston: Guinness stout.
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