PDUFA represents the Prescription Drug User Free Act, which is a U.S. law stating that the Food and Drug Administration (FDA) can receive manufacturer funding for time-sensitive drug review processes. Additionally, a PDUFA date is a day on which a pharmaceutical company expects a decision to be reached regarding the safety of its product.
Also known as an FDA Action Date, June 1, 2021, is an important PDUFA date for Alkermes plc (ALKS), a biopharmaceutical company, as it will receive a decision from the FDA on whether or not it can take its investigational antipsychotic drug candidate Lybalvi to market. Lybalvi is an oral, once-daily treatment for adults with schizophrenia and bipolar I disorder.
Vamil Divan of Mizuho Securities published a report on May 20th in anticipation of the upcoming results. He assigned a Buy rating and a price target of $29 reflecting approximately 28% upside potential over the next 12 months.
Divan explained that an FDA approval on Lybalvi could provide some support for the stock in the short term, but that the uncertainty would keep investors away until the PDUFA date.
Looking beyond the upcoming Lybalvi PDUFA date, Divan stated he is bullish on Alkermes due to more fundamental factors, like new members joining the Board of Directors resulting from cooperation deals signed with Elliott Advisors and Sarissa Capital. These entities have invested heavily in Alkermes and according to Divan will “likely provide support and a floor for the stock.”
He went on to explain that the company’s other products, including Nemvaleukin, Vivitrol, and Aristada, will hopefully bring an increase in revenue. These drugs are key franchises, and their success or lack thereof could significantly impact Alkermes’ stock price in the coming years.
Going back to Lybalvi, Divan mentioned that sales are expected to land around $700 million. He admits that his estimate is far beyond current consensus estimates.
In a separate analyst report from April 29, Douglas Tsao of H.C. Wainwright & Co. reiterated a Hold rating on ALKS, raising his price target to $24 from $23 per share. This reflects upside potential of approximately 6%.
He explained that Alkermes beat its Q1FY21 earnings estimates and reiterated February’s 2021 guidance. Sales from Alkermes’ key products Vivitrol and Aristada both outperformed in the quarter, and Tsao was optimistic about Nemvaleukin’s progressing development.
Although the company is “casting a wide net and aims to target about 80% of prescribing psychiatrists,” Tsao was cautious about how well Lybalvi will sell in a “highly genericized” market.
Consensus among analysts on TipRanks for ALKS stock is a Hold based on 1 Buy, 4 Hold, and 1 Sell ratings. The average analyst price target of $22.33 implies that the stock is fully priced at current levels with 1.5% downside potential over the next 12 months.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment decisions.