Alkermes shares rise after upgrade
Alkermes rises as analyst says Elan deal will make company profitable; pipeline 'interesting'
On Tuesday August 30, 2011, 1:33 pm EDT
NEW YORK (AP) -- Shares of drug developer Alkermes Inc. edged higher Tuesday after a Caris & Co. analyst upgraded the stock, pointing to the company's pending acquisition of a drug technology business.
THE SPARK: Analyst Mario Corso upgraded shares of the Waltham, Mass., company to "buy" from "average," saying the share price drop doesn't reflect the company's value. He said the purchase of Elan Corp. PLC's drug delivery business, which is scheduled to close by the end of September, will make Alkermes profitable.
Corso said that over the next few years, revenue from newer products like the multiple sclerosis treatment Ampyra and antipsychotic drug Invega Sustenna and from its diabetes drug candidate Bydureon will cancel out a drop in sales of older products like Risperdal Consta.
The analyst added that Alkermes has an "interesting" drug pipeline that includes potential treatments for opioid-induced constipation, depression, and schizophrenia.
Alkermes sells the addiction treatment Vivitrol. Most of the other products it helped develop, like Ampyra and Invega Sustenna, are marketed by other companies. It also manufactures Risperdal Consta for Johnson & Johnson.
THE BIG PICTURE: Alkermes agreed to buy Elan Drug Technologies in May for $960 million in cash and stock. It will reincorporate in Ireland after the deal closes. Alkermes, along with its partners Eli Lilly & Co. and Amylin Pharmaceuticals Inc., is waiting for the Food and Drug Administration to make a decision on their long-lasting diabetes treatment Bydureon. They expect the FDA to make decision on the drug in late January.
Corso is the second analyst to upgrade the stock in the last week. On Aug. 23, UBS analyst Ami Fadia upgraded the shares to "buy" from "neutral," citing similar reasons.
SHARE ACTION: Shares of Alkermes gained 65 cents, or 4 percent, to $16.98 in midday trading.
Alkermes shares set a 52-week high of $20 July 8, but had lost almost 25 percent of their value by the time of Fadia's upgrade. The stock is up 5 percent since then. Corso raised his price target to $22 per share from $19.
In the past year, the shares have traded as low as $9.85.
surf's up......crikey
