Alkermes, Inc. (ALKS) reported a fourth quarter fiscal 2010 net loss of $0.12 per share compared with a loss of $0.13 in the year-ago period. Revenues in the quarter slipped 12.3% due to lower manufacturing revenues for Risperdal Consta.
We believe that even if Alkermes diabetes candidate Bydureon is approved by the US FDA later in the year (target date: October 22, 2010), the final label will contain warnings regarding the risk of pancreatitis and thyroid cancer. Furthermore, the candidate will face intense competition once it enters the market.
In view of these factors, we downgrade the stock to Underperform from Neutral with a price target of $11.00.