Alkermes shares dive 22% as FDA refuses to review drug

Shares in Irish drug company Alkermes continued to slide as the company comes to terms with an FDA refusal to consider approval for a depression drug for which it had high expectations.

The Food and Drug Administration (FDA) said there was, as yet, a lack of evidence of the drug’s effectiveness in a decision that saw the company’s shares dive more than 20 per cent on Monday, knocking nearly $2 billion off its market capitalisation.

The shares continued to fall on Tuesday, slumping a further 7 per cent to $42.06, for a cumulative loss of just under 29 per cent. Analyst JP Morgan cut its price target sharply – to $63 from $77 – on the back of the “relatively extreme nature of the language” of the FDA refusal letter.

Alkermes has been told more clinical trials are required before any further submission. At a minimum, the FDA’s decision spells extra cost and a delay of up to two years for the Dublin-based drugmaker, which has two major drugs already in the market but for whom the ALKS 5461 depression treatment was seen as a driver of future revenue.

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"To say we were surprised would be an understatement," Alkermes' chief executive Richard Pops said on a conference call with analysts.

JP Morgan analyst Cory Kasimov removed ALKS 5461 completely from his pricing model “pending additional updates”.

Two of the three late-stage trials conducted on the drug two years ago failed to meet efficacy goals before a third study in October 2016 showed significantly reduced symptoms of depression compared to a placebo. The company initiated another late-stage trial of the drug in June. Mr Pops said it was not clear if this study could be adapted to meet the FDA’s request for data.

Alkermes said it will request a meeting with the regulator to hash out the next steps in its efforts to bring the drug to market.

Alkermes became an Irish company in what is known as a corporate inversion following its takeover of Elan Drug Technologies, the Athlone-based division of the former Iseq heavyweight Elan, in 2011.– Additional reporting Reuters