West Coast Editor

Pending final work on labeling and delivery of some preclinical pharmacokinetic data to the FDA, Alkermes Inc. and Cephalon Inc. have won marketing clearance for Vivitrol (formerly Vivitrex), their injectable drug against alcohol dependence.

Alkermes' stock (NASDAQ:ALKS) closed Thursday at $19.65, up $1.86. Cephalon's shares (NASDAQ:CEPH) ended the day at $64.45, down 22 cents.

Under the terms of their deal for the drug, Cephalon will pay Alkermes $110 million when the FDA officially grants approval. The two firms are preparing for launch in the second quarter of 2006, although it's unclear whether the data wanted by the FDA are already available.

Rebecca Peterson, vice president of corporate communications for Cambridge, Mass.-based Alkermes said the firms are "evaluating the FDA's request to determine whether additional preclinical work is necessary." Any work that might need to be done likely would be "brief," and would not have an impact on the launch timeline, she said.

Lawrence Neibor, analyst with Robert Baird & Co. in Milwaukee noted that the companies previously had targeted the "first half" of 2006 for launch - not specifically the second quarter - but said in a research note that even if the FDA had approved Vivitrol outright, the product probably would not have reached the market until late in the first quarter or possibly the second.

Neibor is keeping his "outperform" rating on the stock, with a $25 price target, and still models a launch of Vivitrol in the second quarter, with $35.7 million in end market revenues estimated for the calendar year. Aside from Vivitrol, Alkermes has diabetes programs under way with Eli Lilly and Co., of Indianapolis, and San Diego-based Amylin Pharmaceuticals Inc.

An update on Vivitrol could come as early as Jan. 10, when Alkermes is presenting at the annual JPMorgan Healthcare Conference in San Francisco.

The firm at the moment is "not providing any granularity into FDA's draft label or into potential points of contention, and it is possible that Vivitrol will get the same black box warning (liver safety) that is already on the label for oral naltrexone," which is the active ingredient in Vivitrol, Neibor wrote.

Partnered mid-year with Cephalon, Vivitrol is the subject of a 50-50 profit-sharing deal worth $150 million in cash up front, the $110 million approval payment, and up to $220 million more in milestones related to undisclosed sales levels of the drug. (See BioWorld Today, June 27, 2005.)

Frazer, Pa.-based Cephalon will market the compound in the U.S., and Alkermes is handling manufacturing as well as further development in other indications. The two firms are splitting all costs and profits, with profit sharing to begin after Alkermes assumes up to $120 million in cumulative losses by Dec. 31, 2007, or 18 months after FDA approval, whichever is later. If losses exceed $120 million within that time frame, they will be borne by Cephalon.

Alkermes submitted the new drug application for Vivitrol in March. Naltrexone, originally developed as a therapy for opioid abuse, made headlines recently through South San Francisco based-Pain Therapeutics Inc., whose pain drug Oxytrex (a combination of ultra-low-dose naltrexone with oxycodone) ran into trouble in a Phase III trial when too many patients dropped out, which means another trial is required. The news put a 19-percent dent in Pain Therapeutics' stock. (See BioWorld Today, Nov. 23, 2005.)

At a much earlier stage, Elite Pharmaceuticals Inc., of Northvale, N.J., has Oxynal for opioid abuse, which also combines oxycodone with naltrexone. The company reported positive Phase I data earlier this month.

Center stage for now, though, is Vivitrol, with its long-acting naltrexone, shown to reduce the incidence of heavy drinking from 20 days per month to three days. The drug is to be used in a treatment program that includes psychosocial support, but the market is "poorly served, with 2.3 million patients seeking treatment annually," which Neibor called a "small percentage of those who could."

Oral naltrexone "has been available for treatment of alcohol dependence for a long time and has not been very successful, nor have other compounds," Neibor wrote in his research note. "Creation of a new therapeutic market will not be easy," and "aggressive forecasts" for the stock might not pan out, he added.