Forced to rethink its previous financial guidance after a decision to drop a marketed drug, Alkermes Inc. revised its fiscal-year expectations downward.

The Cambridge, Mass.-based company expects to see lower revenues across the board as a result of jointly deciding with Genentech Inc. to discontinue commercialization of Nutropin Depot (somatropin [rDNA origin] for injectable suspension). Citing manufacturing and commercialization expenses, the companies said the drug's production is no longer cost-effective.

Representatives from the partners declined to comment further, though the sales suspension also reflects a decision to not pursue a broader label for the product. Approved four years ago by the FDA for growth hormone deficiency in pediatric patients, Nutropin Depot is a long-acting form of Genentech's human growth hormone that uses Alkermes' ProLease injectable extended-release drug delivery system.

The partners will not look to expand the drug's use for adults, though in 2003's fourth quarter, a study of Nutropin Depot in patients with adult growth hormone deficiency met its primary endpoint. Neither company indicated plans to out-license the asset to a third party.

Alkermes has performed all manufacturing operations, which cost $6 million during the company's last fiscal year ended March 31, converting Genentech's bulk somatropin product into the long-acting dosage form. It always has produced the product at a loss.

South San Francisco-based Genentech, which markets the product in the U.S., said it would work to ensure that existing Nutropin Depot patients would be informed of the news and transitioned to alternative therapies.

Nutropin Depot represents one of five products in Genentech's growth hormone franchise that generated $321.9 million in sales last year. The company does not break down sales figures for individual growth hormone products.

In addition to Nutropin Depot, that franchise includes Nutropin, a powdered form that requires a solution before injection; Nutropin AQ, as an injectable formulation in solution; Nutropin AQ in a prefilled delivery pen; and Protropin (somatrem for injection).

The company has submitted a supplemental new drug application to the FDA to expand Nutropin's label to include long-term treatment of idiopathic short stature. (See BioWorld Today, Jan. 16, 2004.)

For Alkermes, the discontinuation of the product will result in restructuring charges estimated to be from $15 million to $20 million and recorded this quarter. After the charges, the company expects a net loss of $55 million to $60 million, or about 61 cents to 67 cents per share, on a GAAP basis.

Its total revenues now are expected to range from $90 million to $120 million, revised slightly downward from earlier expectations of $95 million to $125 million. Full-year revenues totaled $39.1 million for the period ended March 31 at Alkermes, which posted a $102.4 million net loss over the same span. The company also lowered manufacturing and royalty revenue forecasts to $45 million to $55 million, down from $50 million to $60 million.

Nevertheless, Alkermes expects that the resulting reduction in revenue will be offset by a decrease in operating expenses. As a result, its anticipated net loss on a pro-forma basis before restructuring charges remains unchanged from previous guidance ranging from $35 million to $45 million, or about 39 cents to 50 cents per share.

All its royalty revenues will stem from sales of Risperdal Consta (risperidone long-acting injection), which the company now expects to range from $7 million to $9 million, revised from earlier expectations of $8 million to $10 million for both Risperdal Consta and Nutropin Depot. The schizophrenia drug is marketed worldwide by Janssen, a division of New Brunswick, N.J.-based Johnson & Johnson.

Alkermes said it receives an average of about 10 percent of net sales on its partnered products.

Another product with sales potential for Alkermes is Vivitrex (naltrexone long-acting injection), a once-a-month injection for alcohol dependence. The company, which expects to partner the drug, had $148.9 million in cash and investments through March 31.

Alkermes' shares (NASDAQ:ALKS) fell 35 cents to close at $14.34 on Wednesday, while Genentech's stock (NYSE:DNA) gained 63 cents to close at $61.05.