UPDATE 2-Alkermes' deal with Cephalon ends; raises '09 view
(Adds analysts comments, share movement)
By Vidya L Nathan
BANGALORE, Dec 1 (Reuters) - Biotechnology company Alkermes Inc (ALKS.O) said its collaboration with Cephalon Inc (CEPH.O) on Vivitrol, a treatment for alcohol dependence, was terminated, and raised its 2009 earnings view to reflect revenue and expenses from Vivitrol.
The collaboration ended as a result of a portfolio review by Cephalon, the company said.
Vivitrol is an extended-release version of the generic drug naltrexone marketed by Cephalon.
In August, U.S. health regulators had received 196 reports of complications that included swelling, pain, bleeding, among others, from patients who received Vivitrol.
While Cowen & Co. Ian Sanderson believes Monday's news is Cephalon's way of cutting its losses regarding Vivitrol, Gene Mack, an analyst from Lazard Capital Markets believes the decision to terminate the deal was based more on Cephalon's priorities of focussing more on its treatment for cancer, Treanda.
"I think most people feel the likely next step is that at some point down the road they will just terminate Vivitrol," said Sanderson.
Lazard's Mack disagrees.
"Given the current potential of Vivitrol and its marketed indications, we think that there's certainly a danger for Alkermes to overinvest in the product," Mack said.
The injection has received regulatory approval for usage in Russia.
Alkermes said it will pay $16 million to buy manufacturing equipment for the product, while Cephalon would pay $11 million to cover its losses on Vivitrol for the next 12 months.
The company, which raised its earnings outlook for 2009 to reflect revenues and expenses from Vivitrol, now expects profit in the range of $1.41 to $1.53 per basic share, from a previously forecast range of 20 cents to 25 cents per basic share.
Alkermes also raised its sales forecast for 2009 to $320 to $346 million.
Analysts were expecting earnings of 22 cents a share, on revenue of $218 million, for the same period, according to Reuters Estimates.
Sanderson and Mack noted that the milestone and deferred revenue from Vivitrol would not give any cash benefits to the company.
Alkermes' shares were down 6.5 percent at $6.90 in afternoon trade on Nasdaq. (Editing by Jarshad Kakkrakandy)
