FDA Refuses Alkermes Depression Drug Review: 4 Stocks in Focus

The FDA’s refusal to review Alkermes plc’s ALKS depression candidate ALKS 5461 this week was a major setback for the company. The decision sent Alkermes’ stock tumbling more than 21%.

ALKS 5461, a once-daily oral medication has been developed for the adjunctivetreatment of major depressive disorder (“MDD”) in patients, who have not responded to standard antidepressant therapies.

The FDA refused to review the candidate stating that the new drug application (“NDA”) did not have enough evidence that the oral medication will work. The FDAwas of the opinion that additional studies should be conducted to ascertain the drug’s effectiveness for the proposed indication.

It goes without saying that unexpected pipeline setbacks like these, shift investors’ focus to companies that market or are developing drugs for the treatment of depression. Alkermes’ latest pipeline setback has shifted investors’ focus to this market.

 Depression and Types

Depression is a medical condition that affects the brain. Individuals with depression feel melancholic and have intricacy in enjoying routine activities. Factors such as stress and brain chemistry are the most common causes of depression. It can also be genetic.

There are different forms of depression such as persistent depressive disorder, perinatal depression disorder, psychotic depression, seasonal affective disorder and bipolar depression. Psychotic depression, persistent depressive disorder and bipolar disorder are the most severe forms of depression. 

According to WHO as of May 30, 2016, an estimated 350 million people worldwide are affected by depression and have been seen to carry suicidal tendencies. Thus, there rose a pressing need to develop drugs for this condition. Known as antidepressants, these drugs are instrumental in identifying the signs and symptoms of the ailment.

Several pharma and biotech companies are involved in developing and selling of anti-depressantdrugs.

4 Stocks in Focus

Let us look at some of the companies that are actively pursuing the development of treatment for various types of depression.

Allergan plc AGN: This Zacks Rank #3 (Hold) stock, looks well-positioned in the depression market. The company has quite a few products in its portfolio including Vraylar (schizophrenia and bipolar I disorder), Viibryd (major depressive disorder) and Saphris (bipolar I disorder). These drugs are also in several label expansion studies. Earlier this week, Allergan announced that a pivotal study evaluating Vraylar for the treatment of adults with major depressive episodes associated with bipolar I disorder (bipolar I depression) met the primary endpoint.

Moreover, Allergan moved rapastinel, its NMDA receptor modulator, into phase III development for major depressive disorder. Rapastinel, a potentially game-changing treatment, is expected to be launched in 2021. The drug is expected to generate revenues of $1-$2 billion. Rapastinel was granted breakthrough therapy status for adjunction major depressive disorder by the FDA in 2016.

Allergan is also evaluating its flagship product, Botox, for the treatment of major depressive disorder. Allergan has outperformed the industry year to date. The company’s shares have moved up 1.7% against the industry decline of 4.7%.

Johnson & Johnson JNJ: Healthcare giant, J&J has a strong presence in the neuroscience segment, which is one of its core therapeutic areas. While the company has products like Risperdal Consta (schizophrenia and bipolar I disorder) in its portfolio, one of the most promising candidates in J&J’s pipeline is esketamine, an investigational antidepressant medication with blockbuster potential. Esketamine, an NMDA receptor antagonist, which has a novel mechanism of action, got breakthrough therapy designation from the FDA for major depressive disorder with imminent risk for suicide in 2016. Esketamine has been granted breakthrough therapy designation for treatment-resistant depression and a regulatory application for this indication in the United States is expected to be filed this year.

J&J, a Zacks Rank #2 (Buy) stock, has underperformed the industry year to date. The company’s stock has lost 6.7% compared with the industry decline of 3.3%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Eli Lilly and Company LLY: The pharmaceutical giant Lilly’s major drug Cymbalta is used for the treatment of major depressive disorder, generalized anxiety disorder, fibromyalgia and neuropathic pain.The neuroscience portfolio of Lilly includes drugs like Prozac for the treatment of major depressive disorder, obsessive-compulsive disorder, bulimia nervosa, and panic disorder, Zyprexa for the treatment of schizophrenia, acute mixed or manic episodes associated with bipolar I disorder, and bipolar maintenance.

Lilly, a Zacks Rank #2 stock, has underperformed the industry. The company’s shares have declined 6.9% compared with the industry’sdecline of 3.2%.

Sage Therapeutics, Inc. SAGE: Sage is another company working on the development of CNS treatments. The company’s portfolio includes novel pipeline candidates targeting critical CNS receptor systems, GABA and NMDA. The company’s lead program, brexanolone (SAGE-547), is in late-stage development for super-refractory status epilepticus, a rare and severe seizure disorder, as well as for postpartum depression (“PPD”). Brexanolone has been granted breakthrough therapy designation in the United States and PRIority MEdicines designation in the EU for the treatment of postpartum depression.

SAGE-217 is scheduled to move into a phase II placebo-controlled study for four therapeutic indications — MDD, PPD, essential tremorand Parkinson’s disease.

Sage, a Zacks Rank #3 stock, underperformed the industry year to date. The company’s shares have lost 11.2% compared with the industry’s decline of 1.1%.

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