Alkermes ALKS announced that it intends to file an Investigational New Drug (IND) application with the FDA for a new candidate, ALKS 7119, in the second quarter of 2015. The candidate will be developed for the treatment of agitation in patients suffering from Alzheimer’s disease, major depressive disorder (MDD) and other central nervous system (CNS) indications.

The company intends to move the new candidate into clinical trials in the third quarter of 2015. Alkermes said that it has filed a number of patent applications to the U.S. Patent and Trademark Office related to the candidate.

Last month, Alkermes received a setback when its pain candidate, ALKS 7106, failed to meet the company’s pre-specified criteria needed to advance the candidate into phase II studies. Based on data from the study, Alkermes has decided to discontinue the development of ALKS 7106.

We note that although the Alzheimer’s disease market represents a huge commercial potential, the successful development of therapies for the treatment of Alzheimer’s disease is challenging and several companies including Eli Lilly LLY have faced setbacks. More disappointing news on Alkermes’ pipeline will weigh heavily on the stock.

Meanwhile, Alkermes’ aripiprazole lauroxil is under review in the U.S. for schizophrenia with a response expected by Aug 22, 2015. Alkermes expects to launch aripiprazole lauroxil later this year depending on approval. Alkermes also has ALKS 5461 (phase III – major depressive disorder), ALKS 3831 (phase II – schizophrenia) and ALKS 8700 (phase I – multiple sclerosis) in its pipeline. We expect investor focus to remain on the company’s pipeline.

Alkermes currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the health care space include Affymetrix Inc. AFFX and Cytokinetics, Incorporated CYTK. Both stocks hold a Zacks Rank #1 (Strong Buy).

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