More than two years after stepping down as CEO of Alkermes Inc., Richard Pops returned to the helm of the Cambridge, Mass.-based biotech, armed with an aggressive growth strategy that, in the long-term, could offset competitive threats to royalty streams for Risperdal Consta and potentially exenatide LAR.

It's a bold move, given that many biotechs these days are trimming costs in an effort to stretch their cash far enough to get through the economic downturn. But Alkermes has nearly $370 million in the bank as of Sept. 30, making it one of a handful of companies well positioned for a flurry of in-licensing and R&D activities.

"The environment is better than ever for companies with good products, the ability to develop them and the capital," Pops told investors during the firm's fiscal year second-quarter earnings call, his first public announcement since returning as CEO in September.

Pops, who also serves as chairman, had headed up Alkermes from 1991 until the first part of 2007. And his return seems to signal a throwback, at least for Alkermes, to the hard-hitting innovative drive that characterized the industry before the tough financial times began taking their toll.

"What's going to change is the scope and reach of our business plan," he said. The firm will move away from the consolidation efforts and positive cash flow goals of the last couple of years and get back to building the company via increased internal R&D efforts and looking for business development opportunities.

Shares of Alkermes (NASDAQ:ALKS) slipped 39 cents to close Friday at $7.70, as some investors mulled the near-term impact on the company's financial performance, but as Leerink Swann analyst Steve Yoo pointed out, it "could result in a bigger long-term payout."

For now, Alkermes appears to be sitting pretty. It's pulling in a 2.5 percent royalty on sales of Risperdal Consta (risperidone), which totaled $8.8 million for the most recent quarter based on worldwide sales of $353 million, as reported by partner Johnson & Johnson unit Janssen. And execs are confident that Byetta LAR, a once-weekly version of exenatide partnered with Amylin Pharmaceuticals Inc. and Eli Lilly and Co., will gain approval by its March 5, 2010, PDUFA date.

Under the terms of the three-way partnership, Alkermes would get royalties of 7 percent on Byetta LAR sales.

But some worry that a recent approval of J&J's Sustenna (paliperidone), a four-week version of Invega, might eat into Consta's revenues in the already crowded, though fragmented, antipsychotic market. It's also possible that the New Brunswick, N.J.-based pharma firm might start promoting Sustenna over its Alkermes-partnered drug, though Consta has come out on top in head-to-head studies to date, a worry that may have been heightened when Janssen put the kibosh on a once-month version of Consta a month after Sustennna's July 31 approval. (See BioWorld Today, Aug. 26, 2009.)

Hanging over Byetta LAR's PDUFA date is a mixed panel vote in April for potential competitor liraglutide (Novo Nordisk), another glucagon-like peptide-1 drug, based on preclinical data showing thyroid C-cell tumors in rodents. While Byetta LAR's developers have been quick to point out that preclinical testing of their product has shown no similar risk, lingering concerns about the entire drug class could end up delaying market launch. (See BioWorld Today, July 28, 2009.)

Alkermes also markets alcohol-dependence drug Vivitrol (naltrexone for extended-release injectable suspension), which recorded modest net sales of $4.6 million for the three months ending Sept. 30. The company is hoping to expand the drug's use into opioid dependence, with results from a pivotal study expected late this year.

But Pops asked investors not to "infer any lack of enthusiasm or faith in our late-stage programs" as a prompt for the company's new growth plan. It's just that "we consider ourselves to be back in investment mode."

But don't look for Alkermes to jump into bidding wars with big pharma.

The company's not seeking huge, "game-changing" deals, Pops said, preferring an "amalgam of smaller, more considered, insightful deals."

He expects to report the first of a series of business development transactions "in due course."

In the meantime, the firm is pushing ahead with a couple of early stage programs. It expects to start a Phase II study of ALKS 33, an oral opioid modulator, in alcohol addiction by the end of this year, and anticipates results in the first half of 2010 from a Phase I study of ALKS 37, an oral peripherally restricted opioid antagonist, in opioid-induced constipation.

One analyst on the call asked whether Alkermes could monetize its 2.5 percent royalty stream for Consta - for proceeds to fund its R&D expansion and in-licensing activities. Other firms have done it, most recently PDL BioPharma Inc., of Incline Village, Nev., which leveraged its royalty stream from partnered antibody products against a $300 million loan to pay shareholder dividends. (See BioWorld Today, Oct. 29, 2009.)

But, as Pops noted, Alkermes has plenty of capital. "Pricing on those deals has gotten more and more expensive, too," he added. "So it's not really as low cost financing as it used to be."

Alkermes reported a net loss of $8.7 million, or 9 cents per share, for the quarter, in line with analyst expectations. It also updated its full-year earnings projections, estimating a net loss of between $45 million to $55 million, wider than the original range of $30 million to$40 million.