Washington Editor

Alkermes Inc.'s stock plunged 67.8 percent Monday after its partner, Janssen Pharmaceutica Products LP, said the FDA issued a non-approvable letter for Risperdal Consta, a twice-monthly injectable form of the anti-psychotic drug Risperdal.

Alkermes' stock (NASDAQ:ALKS) closed Monday at $5.15, down $10.86. Janssen, of Beerse, Belgium, is a wholly owned subsidiary of New Brunswick, N.J.-based Johnson & Johnson.

Cambridge, Mass.-based Alkermes deferred all questions related to the development to a Janssen media office located in Titusville, N.J. Melissa Katz, a Janssen spokeswoman, told BioWorld Today that the FDA "had some questions about the preclinical data and we are in ongoing conversations with them."

She was unable to estimate a date as to when the companies would meet with the FDA, and she would not discuss a timeline related to resolving concerns associated with the product.

However, Franklin Berger, senior biotechnology analyst with J.P. Morgan Securities Inc. in New York, told BioWorld Today that the issue likely surrounds toxicology. In research notes, Berger said, "[The] FDA, in our analysis, is concerned about an increased risk of cancer found in rodent studies due to hyperprolactinemia or higher levels of the hormone prolactin."

Nevertheless, Berger believes Risperdal Consta will win regulatory approval.

Alkermes was notified by Janssen late Friday of the Risperdal Consta letter, about a day after the company called a conference call to discuss earnings and disclose problems related to a merger with Reliant Pharmaceuticals LLC, a private company. In December, Alkermes made a $100 million equity investment to acquire about 19 percent of Reliant. (See BioWorld Today, Dec. 19, 2001.)

Berger wouldn't speculate as to whether the Janssen deal would impact Reliant, but referred to his research notes, which said, "The Reliant Pharmaceuticals merger will probably be put on hold, renegotiated or cancelled, removing this potential positive from the investment thesis."

A spokeswoman for Alkermes told BioWorld Today that the companies have experienced some delays in completing the regulatory filing associated with the merger, "but at this juncture we are not at liberty to disclose any details."

She said the Janssen and Reliant deals are completely separate.

In the conference call, Alkermes said it had total cash and investments of $161.5 million as of March 31, compared to $328.3 million at March 31 the previous year. The decrease was due to the equity investment in Reliant.

Risperdal Consta could end up being a $200 million product by 2005 or 2006, Berger said. He expects the injectable form to capture about 10 percent of the Risperdal market, which reached $1.8 billion last year. Risperdal is a once-daily oral drug for people with schizophrenia.

Risperdal Consta uses Alkermes' injectable, extended-release, drug delivery technology called Medisorb. The technology is based on the encapsulation of drugs into small polymeric microspheres that degrade slowly and release the medication at a controlled rate following subcutaneous or intramuscular injection, Janssen said.

Janssen believes the injectable product will be valuable because it will eliminate the need for a daily pill. "It has been estimated that as few as 25 percent of persons with schizophrenia take their medication on a consistent basis - a problem that can lead to relapse and re-hospitalization. Because of its two-week duration effect, Risperdal Consta may help increase adherence to treatment," said Harlan Weisman, executive vice president of research and development at Johnson & Johnson, in a prepared statement.

Berger said the 25 percent adherence figure is generous. "These patients don't listen to their doctors," he said.

Alkermes and Janssen filed for FDA approval in September, but the agreement to develop the injectable form dates back to 1996 when the companies entered a $20 million deal. At that time, the drug itself was not disclosed, but upon beginning Phase III trials, the companies indicated that Risperdal was being tested with the Medisorb technology. (See BioWorld Today, Oct. 28, 1996, and April 23, 1999.)

Alkermes has a number of other products in its pipeline, including Vivitrex, an injectable, extended-release formulation of naltrexone, an FDA-approved drug used in the treatment of alcohol and opioid dependence available in a daily oral dosage form. Vivitrex is in Phase III trials, as is Nutropin Depot, an injectable, extended-release formulation of recombinant human growth hormone developed in collaboration with South San Francisco-based Genentech Inc.

In other deals, Alkermes and Indianapolis-based Eli Lilly and Co., of Indianapolis, are developing an inhaled insulin, and San Diego-based Amylin Pharmaceuticals Inc. and Alkermes are working on an injectable, extended-release formulation of AC2993 for diabetes.