Alkermes (ALKS) recently reported their financials and reiterated fiscal year 2023 guidance which was updated in mid-June, when the company announced the final award from arbitration with Johnson & Johnson (JNJ), recalls John McCamant, biotech expert and editor of The Medical Technology Stock Letter.

Total revenues are projected to be within the range of $1.55-$1.68 billion compared to the consensus estimate of $1.59 billion. 2Q23 Lybalvi sales of $47 million beat the consensus estimate of $44 million.

While FY23 guidance was reiterated (range of $180-$205M), management did express their optimism that results were on track to come in at the upper end of the range.

Demand trends remain solid and the inventory dynamics that contributed to the slight 1Q23 revenue miss, have normalized. Notably, GTN (glycerol trinitrate) was stable at 26% (in-line with 1Q23) and are now expected to remain at these levels for the balance of the year, as management no longer anticipates pursuing additional contracting negotiations with commercial payors.

We would look for potential impact in the 4Q23 results from the broadened direct-to-consumer TV campaign aimed at bipolar patients that was launched in May. In our view, we expect further outperformance for Lybalvi as the campaign raises both awareness and sales through the balance of the year.

In our view, the most important and anticipated pipeline update will be for ALKS 2680 which is currently in a Phase 1b proof-of-concept trial in narcolepsy. The trial will conclude sometime this quarter with a target to present data during 2H23.

A likely venue occurs in October, the World Sleep Congress 2023 (Rio de Janeiro, October 20-25). There were no new disclosures beyond stating that planning for Phase II trials are underway which is a positive sign for ‘2680.

ALKS reiterated their plans to complete separation of the oncology business around nemvaleukin alfa by year-end 2023. Remaining tasks include ensuring with the IRS the tax-free nature of the spinoff, and with the SEC, that shares will trade publicly.

Following the appointment of CEO Caroline Loew, the search to fill other senior management positions continues and efforts are underway to build out the cancer company infrastructure. 

In our view, nemvaleukin alfa is a risky drug development candidate and it is better off in a separate company. This helps de-risk ALKS which is focused on growth from Lybalvi and an emerging early stage pipeline lead by ‘2680 in narcolepsy.

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