Richard Pops is not the sort of guy to sit still and patiently wait for good things to happen. He took the CEO job at Cambridge, MA-based Alkermes when he was just 28 years old, built it from 20 employees to more than 400, and made it profitable by the end of his 16-year run at the helm in 2007. But when we had breakfast earlier this year at the JP Morgan Healthcare conference in San Francisco, he made it clear he wouldn’t be satisfied until Alkermes cracked the top tier of biotech companies with multi-billion dollar valuations, like Amgen, Genzyme, and Biogen Idec.
So when Alkermes’ stock (NASDAQ: [[ticker:ALKS]]) turned in an anemic performance this year, sliding down 11 percent in the first nine months, it shouldn’t have come as a surprise that a shakeup was coming. Pops—a still youthful and energetic age 47—swooped back in from the chairman’s role on Sept. 10 and replaced his onetime operations deputy, David Broecker, as CEO. When I spoke with Pops by phone a few days later to ask him why he did that, he essentially said the company needed an operations guy two years ago to manage global supplies and manufacturing for partners, but now it needs to get back to its roots and build itself up some more.
“David was well-suited to the strategy of the company at the time,” Pops says. “Now we’re going back into building mode again.” At the Morgan Stanley healthcare conference a few days after he took over, Pops elaborated a bit, telling investors, “you’ll see more energy around building our proprietary platform and doing business deals, and action around building the company.”
Alkermes (ALK-er-meez) was founded in 1987, and like the usual biotech company, it lost money for its first 20 years. The company’s forte has always been its expertise in making existing drugs more stable and longer-lasting in the bloodstream, allowing for less frequent dosing. Instead of betting the company on one in-house compound, a common boom-or-bust strategy in biotech, Pops struck deals with various partners who could help pay the R&D bills along the way, and mitigate the company’s risk.
That strategy had its benefits in making Alkermes profitable by 2006, but all those partnerships mean that Alkermes today isn’t as independent as some of its biotech peers. Alkermes’ biggest cash cow, risperidone (Risperdal Consta), is marketed by a partner, Johnson & Johnson. The next big thing in the pipeline, which Pops calls “maybe the most important diabetes drug ever developed,” is an injectable treatment for diabetes called exenatide once-weekly. Alkermes provided key enabling technology, and stands to collect a 7 percent sales royalty on the drug. But how much cash that generates for Alkermes will depend on marketing decisions made by Eli Lilly and Amylin Pharmaceuticals—if those companies can win FDA approval.
Alkermes has the full commercial rights to a treatment to help people kick alcoholism, naltrexone (Vivitrol), but it has never become a big seller. The company is hoping to re-ignite Wall Street enthusiasm for that drug by proving it works to help people kick addictions to opioid-based narcotics.
Alkermes was put on the defensive by Wall Street on Aug. 26, and it was partly due to a decision by one of its partners. That was when Alkermes disclosed in a regulatory filing that Johnson & Johnson decided to quit developing a once-monthly version of risperidone, which could potentially offer even greater convenience than the existing Risperdal Consta, which patients take twice a month. J&J made the decision to drop the less frequently dosed Alkermes drug after it won FDA approval in July for a different treatment, paliperidone palmitate (Invega Sustenna), that is also dosed once a month. JP Morgan analyst Cory Kasimov, who has an “overweight” rating on Alkermes stock, called J&J’s termination decision”disappointing”
