Recently, the U.S. Food and Drug Administration (FDA) announced that inclement weather has forced the agency to delay the review of the new drug application (NDA) of the type II diabetes candidate, exenatide once-weekly.
 
Exenatide once-weekly is co-developed by Alkermes Inc. (ALKS), Eli Lilly (LLY) and Amylin Pharmaceuticals Inc. (AMLN). The U.S. agency has set March 12, 2010 as the new target date. Originally, the FDA was scheduled to decide on the drug by March 5, 2010.
 
In July 2009, the FDA accepted the NDA for the candidate. The NDA was filed by the three companies in May 2009. Exenatide once-weekly is an injectable formulation of Amylin’s Byetta (exenatide). Byetta is an injection administered twice daily. Exenatide once-weekly has enormous market potential in the $13 billion type II diabetes market.
 
We believe the U.S. agency is not likely to approve the type II diabetes candidate inspite of the impressive efficacy data of exenatide once-weekly. We are concerned that the approval of the product could be pushed back, given the current regulatory environment. Our concern stems from the potential safety of the drug. Fears of pancreatitis and new fears of thyroid cancer associated with the use of glucagon-like peptide-1 (GLP-1) molecules such as exenatide lead us to believe that the FDA will want to see additional data before granting approval. Going forward, investor focus will remain on the approvability of exenatide once-weekly.
 
Alkermes has other interesting products in its pipeline, which are in early to mid-stage development. The candidates under development include ALKS 27 for chronic obstructive pulmonary disorder (COPD), ALKS 29 for alcohol dependence, ALKS 33 for addiction and ALKS 37 for treating patients suffering from opioid-induced constipation (OIC). The successful development and commercialization of these candidates should boost the company’s top-line.
 
In addition to the interesting pipeline, Alkermes has two approved products on the market. Its lead product, Risperdal Consta, was developed for the treatment of schizophrenia and bipolar disorder. The drug is marketed worldwide by Johnson & Johnson (JNJ) and manufactured by Alkermes. The other approved product at Alkermes is Vivitrol, for the treatment of alcohol dependence.
 
Currently, we are Neutral on Alkermes. The recommendation implies that the stock is expected to perform in line with the overall U.S. equity market over the next six to twelve months. Therefore, we advise investors to retain the stock over this time period.
Read the full analyst report on “ALKS”
Read the full analyst report on “AMLN”
Read the full analyst report on “JNJ”
Read the full analyst report on “LLY”
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