Tuesday, Mizuho reiterated its Buy rating and $35.00 stock price target for Alkermes (NASDAQ:ALKS), emphasizing the potential of ALKS 2680, the company's orexin 2 receptor agonist, to lead the narcolepsy treatment market.
The firm highlighted recent Phase 1b trial results for the narcolepsy type 2 (NT2) cohort, which, when combined with previous data from the narcolepsy type 1 cohort, suggests that ALKS 2680 could be a best-in-class option with a first-mover advantage.
The efficacy data from the NT2 cohort and idiopathic hypersomnia (IH) cohort were particularly promising, showing dose-dependent improvements in wakefulness at every dose level. This was measured using the Maintenance of Wakefulness Test (MWT), which assesses the ability to stay awake under quiet conditions.
The recent data demonstrated significant improvements from baseline in both cohorts.
Safety data from the trial also supported the drug's commercial prospects, with doses up to 25mg not exhibiting visual disturbances or OX2R-class liver toxicity, which are common concerns for this drug class. Mizuho's stance is that while the data is compelling, investors may remain cautious until these results can be replicated in a larger and longer-duration Phase 2 study.
Despite this, Mizuho is confident in the future of ALKS 2680, believing that the market has yet to fully recognize its value. The firm's maintained Buy rating reflects their positive outlook on the drug's commercial viability and its potential impact on Alkermes' growth.
InvestingPro Insights
As Alkermes (NASDAQ:ALKS) continues to make strides with its promising narcolepsy treatment, ALKS 2680, the financial metrics provided by InvestingPro offer a snapshot of the company's current market position.
With an adjusted market capitalization of $4.57 billion and a robust revenue growth of 49.61% in the last twelve months as of Q4 2023, Alkermes is demonstrating significant financial progress. The company's gross profit margin stands impressively at 84.79%, underscoring efficient operations and strong pricing power.
InvestingPro Tips also shed light on the company's financial health, highlighting that Alkermes holds more cash than debt on its balance sheet, and its cash flows can sufficiently cover interest payments.
These factors, along with the fact that analysts predict the company will be profitable this year, provide a reassuring picture for potential investors. It's also noteworthy that Alkermes does not pay a dividend, which could indicate that it is reinvesting earnings back into the business for further growth.
For those interested in deeper financial analysis and additional InvestingPro Tips, Alkermes has a total of 7 tips available on the InvestingPro platform, which can be accessed at https://www.investing.com/pro/ALKS. Moreover, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing even more value to those looking to make informed investment decisions.
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