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WALTHAM, Mass. (


) --


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has received U.S. regulatory approval to market its addiction drug Vivitrol as a once-monthly injection to treat people addicted to opioid painkillers, the company announced Tuesday night.

This is the second and more significant U.S. approval for Vivitrol, which was originally cleared in 2006 to treat alcohol addiction. Vivitrol has not performed well commercially to date -- just $20 million in sales last fiscal year -- because doctors are not accustomed to treating alcoholics with drugs.

Alkermes is expected to do much better with Vivitrol now that the U.S. Food and Drug Administration approved an expanded label for opioid addiction, including a claim that Vivitrol can prevent relapse.

Addiction specialists routinely use other narcotic drugs like methadone and Suboxone to treat people hooked on heroin and opioid painkillers. Suboxone, for instance, generates almost $1 billion in annual sales worldwide.

Vivitrol is the first non-narcotic, non-addictive treatment option for opioid addiction. The drug is given via a monthly injection and works by blocking the receptors in the brain, which when activated by opioids, causes the euphoria or high that addicts crave.

By comparison, methadone and Suboxone are both narcotics and addictive, giving addicts a partial or controlled high but which keeps them from seeking drugs on the street.

"Addiction is a serious problem in this country, and can have devastating effects on individuals who are drug-dependent, and on their family members and society," said Janet Woodcock, director of FDA’s Center for Drug Evaluation and Research. "This drug approval represents a significant advancement in addiction treatment."

Tuesday's approval of Vivitrol for opioid addiction was widely expected by investors after an FDA advisory panel voted in September to recommend the drug's clearance. Alkermes shares are up about 10% since that Sept. 16 panel, closing Tuesday at $15.68.

While the Street expected Vivitrol's new approval, sales forecasts are still relatively modest mainly due to the drug's prior poor performance. J.P. Morgan analyst Cory Kasimov, for example, models $51 million in Vivitrol sales in fiscal year 2013.

In a note to clients Wednesday, however, Kasimov lays out the case for why Vivitrol's new approval could have meaningful upside for Alkermes' bottom line and valuation:

"If we were to hypothetically bump that '13 number to $200M (still only one-fifth of what Suboxone is currently generating), our

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Alkermes EPS estimate would jump to $1.48 from $0.65. We think very few investors currently appreciate this degree of leverage," he writes. Kasimov rates Alkermes at overweight with a $19 price target.

The challenge for Alkermes is convincing opioid addiction specialists to embrace Vivitrol as a new way of treating addicts. According to the new FDA-approved label, patients must not have any opioids in their system when they start taking Vivitrol; otherwise, they may experience withdrawal symptoms. Also, patients may be more sensitive to opioids while taking Vivitrol at the time their next scheduled dose is due. If they miss a dose or after treatment with Vivitrol has ended, patients can accidentally overdose if they restart opioid use.

Alkermes currently uses a 50-person sales force to market Vivitrol in alcohol addiction but is adding another 10 people to expand marketing into opioid addiction. Vivitrol sales in the fiscal first quarter ended June 30 were $6 million, which put the drug on a break-even basis for the company.

Vivitrol's approval for the treatment of opioid addiction was based on a clinical trial demonstrating that 36% of patients treated with Vivitrol were able to stay in treatment for six months without using drugs, compared to 23% of patients treated with a placebo.

Next up for Alkermes is an FDA approval decision on the diabetes drug Bydureon, expected on October 22. Alkermes will receive royalties on Bydureon sales if approved. The drug will be marketed by

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--Written by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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