(Note: The author of this fundamental analysis is a financial writer and portfolio manager. He and his clients own shares of ALKS.)

Alkermes Plc. (ALKS​) shares have struggled in 2017, with the stock of the biopharmaceutical declining by nearly 13.5 percent, while the broader Nasdaq Biotechnology ETF (IBB​) has risen by over 15 percent. But a study recently published in the Lancet, a weekly peer-reviewed medical journal, noted that Alkermes' treatment for opioid addiction, Vivitrol, was as safe and effective as Suboxone, once initiated. Vivitrol could be an essential drug used in the fight against opiate addiction, while helping to boost revenue growth for the drugmaker, Alkermes.

Vivitrol currently only has a 2 percent market share. But that could rise to between 7 and 10 percent with increased awareness by doctors and treatment centers, potentially more than tripling its 2016 revenue. 

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What Is Vivitrol

Vivitrol is a once-monthly injectable treatment for the prevention of relapse to opioid dependence, where Suboxone is self-administered on once a day. The study noted, as it was expected, that Vivitrol had a much harder time getting patients on the treatment compared to Suboxone. However, the study also stated that relapse events were similar in both groups once treatment began.

Large Opportunities

According to a presentation by Alkermes, Vivitrol only controls 2 percent of the market in opioid treatments. The recently published data could help to boost awareness among doctors and treatment centers about Vivitrol and its benefits, helping to boost revenue growth. In 2016, Vivitrol saw total sales growth of 45 percent, to $209 million, representing nearly 30 percent of the Alkermes' total revenue of $745 million in 2016. The company is forecasting sales in Vivitrol to grow to approximately $270 million in 2017, a growth rate of roughly 30 percent. 

ALKS Annual Revenue Estimates Chart

Strong Growth Outlook

One could imagine that growth in Vivitrol is likely only to continue, especially given its small market share. If its share were to continue to grow to between 7 to 10 percent, opportunities for revenue could be significant and help Vivitrol sales rise north of $750 million. That would sharply boost the company's earnings - and likely its share price.

Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdingsInformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.