Alkermes lifts shares with plan after Elliott pressure

BOSTON (Reuters) - Biopharmaceutical company Alkermes responded to pressure from activist investment firm Elliott Management on Thursday with a broad plan designed to boost returns.

Alkermes committed to new profitability targets, reviewing its cost structure, considering alternatives for non-core assets and to keep refreshing its board, pledges which lifted its shares by more than 12% to $20.63.

“Alkermes is significantly undervalued given its attractive assets and growth potential, and we are confident that these new initiatives will yield meaningful share price upside,” an Elliott spokesperson said in a statement.

The U.S. Food and Drug Administration last month dealt Alkermes a setback when it declined to approve its treatment for schizophrenia and bipolar disorder, citing concerns related to a tablet coating process at its manufacturing site.

Industry analysts have said that ALKS 3831 is expected to generate sales of more than $600 million in 2030 and may be approved by the first half of 2021.

“The Value Enhancement Plan is intended to position the company to efficiently execute on its business strategy, support the continued growth of its commercial products, including the potential approval and launch of ALKS 3831, and further the advancement of its pipeline of development programs,” Alkermes said in a statement.

Alkermes also said it plans to host an investor day in early 2021 to update shareholders on its activities, including its research and development portfolio.

The company said that David Daglio and Brian McKeon, who have operational and financial expertise, will join the board and that it will add at least one more independent director in the first half of next year.

Reporting by Svea Herbst-Bayliss; Editing by Alexander Smith