Alkermes Sinks as FDA Refuses to Approve Depression Drug

Alkermes Plc. ALKS announced that the FDA has issued a Complete Response Letter (“CRL”) related to its new drug application (“NDA”) for ALKS 5461. The NDA sought approval for the candidate as an adjunctive treatment of major depressive disorder (“MDD”). The regulatory authority refused approval due to a lack of evidence supporting efficacy of the oral medication.

Importantly, the FDA requested for additional clinical data to demonstrate substantial evidence of effectiveness of ALKS 5461 for the proposed indication. The company is planning to meet with the FDA to discuss the issues raised in the CRL and future steps related to the development of ALKS 5461.

Shares of Alkermes fell 4.8% in after-hours trading on Feb 1 following the news. The company’s shares have fallen 26.6% in the past six months compared with the industry’s decline of 12.9%.

The decision was likely based on the fact that an advisory panel to the FDA had voted against approval of the drug in November. Moreover, the FDA had issued a Refusal to Accept letter in March 2017 during the submission of the NDA citing similar reason. However, the company appealed against the decision and the NDA was accepted in April.

Depression and other psychological disorders have been a tricky area for researchers with respect to developing treatments. There are only a few antipsychotic drugs, which are approved as add-on treatment for MDD, which includes AstraZeneca’s AZN Seroquel.

Alkermes’ ALKS 5461 targets a significant market, which had approximately 16.2 million patients in the United States in 2016. The company stated that the majority of these patients are unlikely to have adequate response after initial treatment with antidepressants. The CRL is likely to delay or result in a missed opportunity for the company. The prospect of the candidate depends on the outcome of the company’s discussion with the FDA.

The company, however, has a strong pipeline of candidates targeting major central nervous system disorders. Alkermes is developing ALKS 3831 for schizophrenia and BIIB098 in collaboration with Biogen BIIB for treating multiple sclerosis. In December, an NDA was filed with the FDA for BIIB098.

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Zacks Rank & Key Pick

Alkermes currently carries a Zacks Rank #2 (Buy). Galectin Therapeutics Inc. GALT is another top-ranked stock from the healthcare space, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Galectin’s loss estimates have narrowed from 44 cents to 38 cents for 2018 and from $1.12 to 98 cents for 2019 over the past 60 days. The company delivered a positive earnings surprise in all the last four quarters, with the average beat being 18.65%. Share price of the company has risen 16.7% in the past year.

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