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Here's Why You Should Add Alkermes (ALKS) to Your Portfolio

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Alkermes (ALKS - Free Report) , a biotechnology company, is focused on the development and commercialization of therapies targeting major central nervous system (CNS) disorders, including schizophrenia, depression, addiction and multiple sclerosis.

The company derives revenues on net sales of its proprietary products — Vivitrol (alcohol and opioid dependence), Aristada (schizophrenia) and Lybalvi (schizophrenia and bipolar I disorder) — and manufacturing and/or royalty revenues on net sales of products commercialized by the company’s partners.

Currently, Alkermes sports a Zacks Rank #1 (Strong Buy).

Below, we discuss five reasons why adding ALKS stock to your portfolio may prove beneficial in 2023.

Favorable Share Price Movement: Alkermes’ shares have outperformed the industry year to date. The stock has rallied 16.7% against the industry’s 10.2% decline during the same time frame.

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Strong Product Portfolio: The company's primary revenue sources are its proprietary products — Vivitrol, Aristada, Lybalvi and Vumerity. In the first quarter of 2023, Vivitrol recorded sales of $96.7 million, indicating a 14% increase from the previous year’s level. Aristada recorded sales of $80.1 million, implying a 10% year-over-year improvement. This strong momentum in product sales is expected to continue in the coming quarters.

Lybalvi’s Approval: ALKS’ progress with products targeting major CNS disorders has been impressive. In June 2021, the FDA approved Lybalvi (olanzapine and samidorphan) for the treatment of adults with schizophrenia and those suffering from bipolar I disorder. The drug is already generating incremental sales, exceeding management’s expectations.

Encouraging Pipeline Progress: An important candidate in Alkermes’ pipeline is cancer immunotherapy, nemvaleukin alfa (nemvaleukin), which is being evaluated as an intravenous and subcutaneous formulation under the ARTISTRY clinical development program in patients with advanced solid tumors/cancer.

The FDA granted a Fast Track designation to nemvaleukin alfa in combination with Merck’s (MRK - Free Report) Keytruda for the treatment of platinum-resistant ovarian cancer.

Keytruda is approved for the treatment of many cancers globally. Merck is gaining from Keytruda’s strong momentum in metastatic indications, including renal cell carcinoma, head and neck squamous cell carcinoma, and a rapid uptake across recent earlier-stage launches.

Nemvaleukin alfa received the Fast Track and Orphan Drug designations from the FDA to treat mucosal melanoma. Successful development and subsequent commercialization of these candidates would be a huge boost for the company.

Separation of Oncology Business: Alkermes is separating its existing oncology business into an independent, publicly-traded company called Mural Oncology plc.

The separation, which is expected to be completed by the second half of 2023, will allow Alkermes to focus on developing therapies for neurological conditions and improving profitability. 

Conclusion: With a strong market position and diverse CNS portfolio, ALKS presents an attractive investment opportunity. Approval of Lybalvi has provided a significant boost to sales.

Additionally, Alkermes' pipeline progress, particularly with nemvaleukin alfa in cancer immunotherapy, holds potential. Furthermore, the separation of the oncology business is expected to enhance focus and profitability in neurological therapies.

Other Stocks to Consider

A couple of other top-ranked stocks in the overall healthcare sector are Novartis (NVS - Free Report) and Akero Therapeutics (AKRO - Free Report) , both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Novartis’ 2023 earnings has gone up from $6.56 per share to $6.74 in the past 90 days. Shares of Novartis have risen 8.9% year to date.

NVS’ earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 5.15%.

The consensus estimate for Akero Therapeutics has narrowed from a loss of $2.96 per share to a loss of $2.80 for 2023 in the past 90 days. Shares of the company have nosedived 18.8% year to date.

AKRO’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.13%.


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