Alkermes' (ALKS) experimental drug, ALKS-2680, is seen as a potential breakthrough therapy for narcolepsy and idiopathic hypersomnia, BofA Securities said in a report Tuesday.
The investment bank has upgraded the Alkermes' rating to buy from neutral and raised its price target to $42 from $33.
UBS cited findings from a survey of 30 sleep specialists, which showed support for orexin-based therapies like ALKS-2680 despite some safety concerns historically associated with the drug class. The feedback, combined with encouraging phase 1 data, suggests ALKS-2680 could become a competitive option in the fragmented narcolepsy type 1 market, the report said.
UBS expects "strong efficacy and clean safety" from ALKS-2680's upcoming Vibrance-1 study, noting previous data showed significant improvements in wakefulness. Safety concerns like liver toxicity in the orexin class have not been replicated in later-stage trials.
UBS now estimates ALKS-2680 could generate $1.4 billion in peak sales by 2035, up from a previous forecast of $800 million, and attributes $350 million in 2030 sales to the drug under its revised base-case model. The rest of the company's forecasted $1.8 billion in revenue is expected to come from its core business, the report said.
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