Alkermes shares rise on outlook for 2009 profit

The stock rose 78 cents, or 6.6 percent, to $12.68 in afternoon trading. Shares have traded between $10.32 and $18.78 over the last 52 weeks.

Eli Lilly will pay the company $25.5 million, the remainder from its development partnership on AIR inhaled insulin. An additional $15.5 million had been paid during the fiscal 2008 fourth quarter.

Indianapolis-based Eli Lilly ended that program in February, citing expectations for a tough regulatory process and a weak market if approved. Pfizer Inc. made the only inhaled insulin to reach the market, but discontinued the product last year because of lagging sales.

Cambridge, Mass.-based Alkermes now expects profit between 11 cents and 16 cents per share on revenue between $200 million and $225 million, up from prior guidance for a loss of 11 cents to 16 cents per share on revenue between $175 million and $200 million.

Analysts polled by Thomson Financial expect, on average, a loss of 10 cents per share on revenue of $194.9 million.

In May, Alkermes had forecast a fiscal 2009 loss, as it cut 150 jobs and closed a manufacturing plant in Chelsea, Mass. in the wake of the AIR inhaled insulin decision. But, the company remains partners with Eli Lilly and Amylin Pharmaceuticals Inc. on Exenatide LAR, a longer-lasting version of the diabetes drug Byetta.

Neponse Equity Research analyst Noelle Tune, for Soleil Securities Group Inc., reaffirmed a "Buy" rating with a $17 price target on the stock, and said the company is likely to dodge full-year losses going forward.

"Of note, while additional minor payments from Eli Lilly may trickle in over the coming months, we expect this $25.5 million payment, along with ALKS receiving (patent) rights to the Chelsea facility, to close the chapter on AIR Insulin," Tune said, in a note to investors.

Alkermes has also expanded its stock buyback program by $40 million to $215 million.