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Alkermes Testing Schizophrenia Drug

Ahead of its Q4 earnings report due after the bell, Alkermes announced that it is starting testing of aripiprazole, a top-selling schizophrenia treatment.

WALTHAM, Mass. (TheStreet) --Alkermes (ALKS) - Get Alkermes Plc Report announced plans Thursday to begin human testing of a proprietary, once-a-month injectable version of aripiprazole, a top-selling treatment for schizophrenia sold under the Abilify brand name by Bristol-Myer Squibb (BMY) - Get Bristol-Myers Squibb Company Report.

The project to develop a new, long-acting form of Abilify is being done without the cooperation or consent of Bristol-Myers. This is not a partnership between the two companies. Instead, Alkermes is striking out alone, operating under the assumption that its new drug, which it dubs ALKS 9070, will be ready for approval and launch after Abilify's patents begin to expire in 2012.

Abilify is the fastest-growing antipsychotic in its class. Sales of the once-daily pill grew 20% last year to $2.6 billion worldwide.

Alkermes is developing ALKS 9070 using a new long-acting drug delivery technology that the company calls LinkeRx. Drugs created using LinkeRx are designed to be easier to manufacture and more convenient to use than existing long-acting drugs, including those already marketed by Alkermes using older drug delivery systems, says Alkermes CEO Richard Pops, in an interview.

"LinkeRx is a new drug delivery platform that we can use to create new, long-acting drugs that leverage the established efficacy and safety of existing Big Pharma products," he says.

While pills are generally considered more convenient than injectable drugs, that's not necessarily the case in the schizophrenia treatment market, where long-acting injectable drugs have performed very well commercially. Schizophrenia patients sometimes resist taking their medication, so injections can increase compliance and improve outcomes.

Sales of Risperdal Consta, an every-two-week antipsychotic marketed by

Johnson & Johnson

(JNJ) - Get Johnson & Johnson Report

, totaled $1.45 billion in 2009. Alkermes developed the long-acting drug delivery technology used in Risperdal Consta, and the company receives an approximate 10% royalty on worldwide sales of the drug.

Yet J&J recently launched Sustena Invega, a once-monthly injectable antipsychotic that doesn't use Alkermes' drug-delivery technology.

In some respect, Alkermes' decision to develop ALKS 9070 could be seen as a defensive move to protect its revenue base in case Sustena Invega cuts into sales of Risperdal Consta.

Alkermes is completing preclinical work on ALKS 9070 and expects to begin the first human trial in the second half of the year. This study will determine whether the blood levels of ALKS 9070 given once a month are similar to those of Abilify dosed every day. Depending on the outcome of this study, Alkermes will either conduct additional dosing studies of ALKS 9070 or move directly into a phase III study, says Pops.

While ALKS 9070 is considered a new drug, Alkermes hopes to expedite its development and eventual approval by relying, to some degree, on the efficacy and safety data of Abilify. Alkermes has filed U.S. patent applications seeking to protect the LineRx technology and ALKS 9070.

Alkermes reports fourth-quarter results after close of trading Thursday. The company is expected to lose 16 cents a share on total revenue of $39.7 million. Late last month, J&J reported better-than-expected Risperdal Consta sales of $399 million for the fourth quarter.

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Alkermes' stock price has been on a steady rise since the beginning of the year -- up 17% -- as investors anticipate the approval of the diabetes drug Exenatide once weekly, which will be marketed by

Amylin Pharmaceuticals



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Exenatide once weekly was developed with Alkermes' long-acting drug delivery technology, and the company will receive royalties on the drug's sales. The FDA is expected to issue an approval decision for Exenatide once weekly on March 5.

Alkermes shares closed Wednesday at $11.09.

-- Reported by Adam Feuerstein in Boston

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