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George Ronan
George Ronan
Articles (33) 

What Markets Are Really Looking for in Alkermes' Schizophrenia Drug

The fate of the drug rests on the results of a phase 3 study

July 05, 2017 | About:

On June 30, Alkermes PLC (NASDAQ:ALKS) released data from a phase 3 study of one of its lead development assets, a drug called ALKS 3831. This study is the first of two phase 3 investigations designed to underpin an application with the U.S. Food and Drug Administration seeking regulatory approval for this drug in a target indication of schizophrenia. If approved, there is a large potential market waiting for the drug when it hits shelves. Ahead of any approval, however, there are a number of points against which it must perform.

With this in mind, and in light of the recent release, here is a look at what the latest numbers tell us and what we are watching for as indicative of the company successfully picking up a regulatory approval for ALKS 3831 going forward.

So, as mentioned, it is a schizophrenia target designed to overcome some of the side effects commonly associated with another already-approved asset in the space – a drug called olanzapine. Some may already know this drug; it was, for a while, a standard-of-care treatment in this indication. As a result of its tolerability profile, however, it has since been downgraded from a first-line therapy to a secondary option in the U.S. markets.

Specifically, the downgrade is rooted in its potential to induce weight gain in patients as well as a number of metabolic issues, which ultimately have the potential to lead to the patient in question developing Type 2 diabetes.

With ALKS 3831, Alkermes has taken olanzapine and combined it with a proprietary opioid antagonist. The idea is the olanzapine part of the drug will take care of the schizophrenia while the opioid antagonist part will, in parallel, take care of the weight gain and metabolic concerns. If proven effective against both these endpoints, the new combined drug could quickly regain status as a first-line therapy and – by proxy – generate substantial revenues for Alkermes in what remains a strongly underserved population of patients, both in the U.S. and internationally.

So that is the drug; what about the data?

The first of the two planned phase 3 trials, the one that read out recently, was called ENLIGHTEN-1 and was set up to compare the efficacy of the combination asset with both a placebo and a single therapy of olanzapine. As per the latest release, the active arm outperformed the placebo to a statistically significant degree, relieving patients of the symptoms of their schizophrenia as measured by an industry standard scale called the Positive and Negative Syndrome Score (PANSS). Against the same scale, the drug also performed comparatively to the olanzapine control arm of the investigation.

This is great, but it is not really what markets are looking for.

If the drug had not translated to a comparable efficacy as olanzapine on its own, it would have been something of a surprise. What markets really want to know is whether the addition of the opioid agonist can reduce the potential for weight gain, and this side of the equation is under investigation as part of the second phase 3 study, called ENLIGHTEN-2.

We did get some degree of insight as to the potential impact on weight gain from the first study, with the data showing no real difference in impact between the active arm and the olanzapine control arm (both groups of patients gained weight across the dosing period). The reliability of this data is questionable, however, since patients were hospitalized and the set feeding schedule associated with hospitalization skews the data somewhat.

For this reason, markets are now squarely focused on the second of the phase 3 studies as indicative of the drug's potential going forward. ENLIGHTEN-2 will pitch ALKS 3831 against olanzapine under a protocol that targets a weight gain endpoint specifically. The future of the asset rests on the outcome of this study.

As such, moving forward, we expect Alkermes to remain relatively steady in terms of market capitalization, with perhaps a degree of appreciation based on the more speculative side of the market loading up in anticipation of a positive result from the second phase 3 study. The unblinding of said study, and the resulting topline data readout, should hit press at some point during the middle of next year.

Disclosure: The author has no positions in any of the stocks mentioned in this article, and does not intend to buy or sell any discussed stocks for the next 30 days.


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