Greetings, and welcome to the Alkermes Fourth Quarter 2024 Financial Results Conference Call. My name is Melissa, and I will be your operator for today's call. All participant lines will be placed on mute to prevent any background noise. Please note this conference call is being recorded. I will now turn the call over to Sandra Coombs, Senior Vice President of Investor Relations and Corporate Affairs. Thank you. You may begin.

Thank you. Good morning. Welcome to the Alkermes plc conference call to discuss our financial results and business update for the quarter and year ended December 31, 2024. With me today are Richard Pops, our CEO, Blair Jackson, our Chief Operating Officer and Todd Nichols, our Chief Commercial Officer. A slide presentation, along with our press release, related financial tables and reconciliations of the GAAP to non-GAAP financial measures that we'll discuss today are available on the Investors section of alkermes.com. We believe the non-GAAP financial results, in conjunction with the GAAP results, are useful in understanding the ongoing economics of our business. Our discussions during this conference call will include forward-looking statements. Actual results could differ materially from these forward-looking statements. Please see Slide 2 of the accompanying presentation, our press release issued this morning, and our most recent annual report filed with the SEC, for important risk factors that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements. We undertake no obligation to update or revise the information provided on this call or in the accompanying presentation as a result of new information or future results or developments. After our prepared remarks, we will open the call for Q&A. And I'll turn the call over to Richard for some opening remarks.

Thank you, Sandy, and good morning everyone. 2024 was a year characterized by strong commercial execution, efficiency, profitability, and pipeline advancements. Throughout the year, we achieved significant milestones in these areas, bringing us closer to our aim of being a highly profitable, fully integrated neuroscience biopharmaceutical company. This morning, we will review our robust financial performance for 2024, outline our financial expectations for 2025, and discuss key value creation opportunities for Alkermes in the coming year. Blair and Todd will provide the details, but here’s my overall perspective. 2024 was an exceptional financial year for the company. We surpassed $1.5 billion in revenue, mainly due to our proprietary portfolio of medicines discovered, developed, and commercialized by Alkermes. We focused on driving strong profitability and achieved our EBITDA goal, resulting in over $450 million of EBITDA from continuing operations, while also investing in pipeline programs we believe will fuel future growth. We utilized our profits to enhance the balance sheet by repurchasing approximately 8 million shares, eliminating all our debt, and ending the year with $825 million in cash. We plan to maintain this financial approach into 2025, focusing on profitability. As mentioned in our last earnings call, we expect to generate more than $200 million of EBITDA in 2025 while aggressively advancing the orexin program. Blair will outline the financial expectations for 2025, reflecting our insight into current market dynamics with customers and payers. We anticipate flat to modest growth for our established products, VIVITROL and ARISTADA, and continued growth for our newest product, LYBALVI. We will discuss the particulars, especially for Q1, to ensure alignment as we start the year. As we await key ALKS 2680 Phase 2 data readouts later this year, we remain committed to delivering consistent and reliable financial performance. The primary value driver for the company in 2025 is the upcoming data readouts for our lead development candidate, ALKS 2680, which is currently enrolling patients in two well-powered, randomized, placebo-controlled Phase 2 studies for narcolepsy, with a planned enrollment of 160 patients and completion expected in the second half of the year. These studies are designed to yield robust datasets that will showcase this candidate's key characteristics, as well as its commercial potential and competitive positioning. I will share more insights into the 2680 development program later in the call, but for now, it is important to note that ALKS 2680 is on the verge of demonstrating its medical and commercial promise. We are at the forefront of developing new medicines based on orexin biology, which is an exciting potential therapeutic area in neuroscience and represents a transformative opportunity for Alkermes in the coming years. We have been preparing for 2025 for several years and are well positioned as we enter this pivotal year. With that introduction, I’ll turn the call over to Blair.

Thank you, Rich. 2024 was Alkermes' strongest year of financial and operational performance to date. Financially, we generated more than $1 billion in revenue from our proprietary commercial product portfolio, delivered EBITDA from continuing operations of approximately $452 million, repurchased $200 million of the company's shares, retired $290 million of debt and ended the year debt-free with approximately $825 million of cash on the balance sheet. Operationally, we completed the sale of our manufacturing business in Ireland, which streamlined our manufacturing footprint and positioned the company to expand gross margins going forward. We also made significant progress advancing our neuroscience development pipeline and are looking forward to important Phase 2 data readouts this year for our lead candidate, ALKS 2680, in narcolepsy. In 2024, we generated total revenues of more than $1.5 billion, driven primarily by our proprietary product portfolio which grew 18% year-over-year and generated more than $1 billion in net sales. For the year, we recorded VIVITROL net sales of $457.3 million, reflecting 14% growth year-over-year. Net sales of the ARISTADA product family increased 6% year-over-year to $346.2 million in 2024; and LYBALVI net sales increased 46% year-over-year to $280 million. Across the proprietary commercial portfolio, due to the timing of shipments ahead of the holidays, the fourth quarter included an extra ordering cycle to cover the first week of the year. Inventory normalized to pre-holiday levels in early January so you can think about this as pulling in one week of orders from Q1 into Q4. These dynamics resulted in year-end wholesaler inventory build of approximately $20 million, primarily impacting VIVITROL and ARISTADA. Our fourth quarter results also reflected gross-to-net favorability primarily related to lower Medicaid and VA utilization and certain other credits. These factors drove a one-time gross-to-net benefit of approximately $12 million for VIVITROL and approximately $3 million for ARISTADA. Taken together, these inventory and gross-to-net dynamics resulted in a proprietary product revenue tailwind of approximately $35 million in Q4. Moving on to our manufacturing and royalty business. For the year, we recorded manufacturing and royalty revenues of $474.1 million, primarily driven by royalties related to long-acting INVEGA products of $236.4 million and revenues from VUMERITY of $134 million. Now, I'll turn to our full-year 2024 operating expenses and our financial results from continuing operations. These results reflect the separation of our former oncology business which was completed during the fourth quarter of 2023. Costs of goods sold were $245.3 million, compared to $253 million for the prior year. R&D expenses were $245.3 million, compared to $270.8 million in the prior year. This consisted of focused investments in our neuroscience development programs, primarily related to the ALKS 2680 clinical program and support activities for our proprietary commercial products. SG&A expenses were $645.2 million, compared to $689.8 million in 2023, as we continued to invest in the growth of LYBALVI and focus on efficiency. Overall, the business drove significant profitability from continuing operations generating GAAP net income of $372.1 million, non-GAAP net income of $494.4 million, and EBITDA of $452.4 million for the year. Turning to our balance sheet. We ended the year in a strong financial position. As I outlined earlier, during the fourth quarter, we prepaid approximately $290 million of our outstanding debt, ending the year debt-free with approximately $825 million in cash and total investments. We continue to have $200 million of remaining share repurchase authorization and going forward, we may opportunistically repurchase shares dependent on market conditions and the capital needs of the business. In 2025, we plan to manage the business to deliver significant profitability and cash flow while investing in the growth opportunities that we believe will be the key drivers of shareholder value. During our third quarter earnings call, we previewed our expectation to generate EBITDA of greater than $200 million for 2025 and today I'll provide more detailed financial expectations. In addition, given the transformation of our business over the last several years and feedback we have received from shareholders, we are transitioning to an adjusted EBITDA metric going forward in lieu of non-GAAP net income, as we believe adjusted EBITDA better captures the dynamics of our underlying business. Our expectations were outlined in the press release and 8-K issued this morning. Starting with the topline, we expect total revenues for 2025 to be in the range of $1.34 billion to $1.43 billion, driven primarily by net sales from our proprietary products in the range of $1.09 to $1.15 billion. As we've previously disclosed, in 2025, we expect manufacturing and royalty revenues to decrease by approximately $215 million compared to 2024 reflecting the expiration of the INVEGA SUSTENNA U.S. royalty in August 2024 and the conclusion of certain legacy manufacturing revenues following the sale of our manufacturing business in Ireland last year. Turning to expenses. Costs of goods sold are expected to be in the range of $185 million to $205 million, reflecting our streamlined manufacturing footprint. R&D expenses are expected to be in the range of $305 million to $335 million. This level of R&D spend is to accommodate our ongoing ALKS 2680 Phase 2 programs in narcolepsy and the planned initiations of the ALKS 2680 Phase 2 program in idiopathic hypersomnia and first in human studies for ALKS 4510 and ALKS 7290, our next orexin 2 receptor agonist candidate. SG&A expenses are expected to be in the range of $655 million to $685 million, which reflects investments in the expansion of our psychiatry sales team, targeted investments in the promotional support for our commercial products and continued focus on operational efficiency. We expect an effective tax rate of approximately 17% in 2025. We are committed to maintaining a robust cash generating business and expect to deliver GAAP net income in the range of $175 million to $205 million, EBITDA in the range of $215 million to $245 million and adjusted EBITDA in the range of $310 million to $340 million. As we look ahead to Q1, due to more pronounced seasonality related to the year-end ordering patterns in Q4 and the dynamics within our royalty and manufacturing portfolio that I previously outlined, I'll provide some additional color on quarterly trending expectations to facilitate modeling. In the first quarter of 2025, we expect our net sales from our proprietary commercial product portfolio to be in the range of $220 million to $240 million. This reflects our expectation of wholesaler inventory normalization related to the extra order cycle in Q4 and usual first quarter inventory drawdown patterns, typical Q1 patient copay and deductible reset dynamics, and historical demand patterns. The royalty and manufacturing revenue will reflect the annual reset of the royalty tiers on the remaining long-acting INVEGA products, the conclusion of certain manufacturing revenue streams, and typical Q1 end-market seasonality. We expect these factors will drive a sequential decrease of approximately $60 million compared to Q4. On the expense side, we expect costs of goods sold in the first quarter of 2025 to be down sequentially from the fourth quarter, consistent with historical Q1 sales patterns. For the first quarter of 2025, we expect R&D expenses to increase approximately $15 million sequentially from Q4, primarily driven by activities related to the ALKS 2680 Phase 2 programs in narcolepsy, and study start-up activities for the idiopathic hypersomnia Phase 2. We expect SG&A expenses to be similar to the first quarter of 2024, reflecting investments in LYBALVI promotional activities and the expansion of our psychiatry field sales force during the quarter. Taken all together, we expect Q1 to be closer to breakeven on an EBITDA basis, with total revenues and profitability to increase significantly in the second quarter and remain fairly consistent overall in the second half of the year. These expectations for quarterly trending are reflected in the full-year financial expectations that I outlined a few moments ago. We entered 2025 well-positioned financially with a strong balance sheet, a substantial commercial business and a continued focus on operational efficiency and profitability. We are investing in the initiatives that we believe will drive the future growth of the company and significant opportunities to create value for shareholders. With that, I will now hand the call to Todd for a review of the commercial portfolio.

Thank you, Blair and good morning everyone. 2024 was an important year of execution of our commercial strategy and I'm pleased that we achieved our expectations of proprietary net sales in excess of $1 billion in 2024, which reflected 18% year-over-year growth. Blair has taken you through the net sales performance, so for my remarks, I will focus on underlying demand trends and our strategic focus areas and expectations for 2025. Starting with VIVITROL. In 2024, VIVITROL net sales grew 14% year-over-year, driven by 6% underlying demand growth. This demand growth reflects strong traction in the alcohol dependence indication, slightly offset by demand in the opioid dependence indication. The alcohol dependence indication represented approximately 75% of VIVITROL volume and it is where we focus our promotional efforts. As we look ahead to 2025, we expect VIVITROL demand to grow at mid-single-digit rates and net sales to be in the range of $440 million to $460 million. Turning to our psychiatry franchise, which includes both ARISTADA and LYBALVI. We are focused on delivering growth across the franchise and are making strategic investments that we believe will drive underlying demand and profitability. For the ARISTADA product family, in 2024, ARISTADA net sales grew 6% year-over-year. In 2025, we expect underlying demand to remain fairly consistent compared to last year and ARISTADA net sales to be in the range of $335 million to $355 million. In 2024, net sales of LYBALVI grew 46% year-over-year, primarily driven by underlying TRx growth of 39%, with growth coming from both the schizophrenia and bipolar I disorder indications. Our promotional and direct-to-consumer advertising activities will continue to focus on driving adoption in both indications, utilizing tailored approaches to effectively target each segment. During the year, we made significant progress in enhancing the access profile for LYBALVI in the commercial payer channel, with additional plans taking effect in January of this year. Looking ahead, in 2025, we expect these improvements will lead to a slight widening of gross-to-net adjustments to the mid-30s as we previously outlined. We are pleased with LYBALVI's access profile today and will remain focused on additional opportunities to enhance our coverage going forward. In 2025, we expect LYBALVI demand to grow by approximately 25% year-over-year and net sales to be in the range of $320 million to $340 million. For both LYBALVI and ARISTADA, as we enter 2025, we will continue to focus on the competitive dynamics in the antipsychotic space as we invest in, and expand our psychiatry sales team in order to preserve a competitive share of voice for LYBALVI and reaccelerate growth for ARISTADA. We plan to complete our sales force expansion in the first quarter and expect contributions from the new sales positions to be tangible a few quarters from now. With the expansion of the sales team, an enhanced access profile for LYBALVI and a strong value proposition for both brands, we believe we are well positioned to achieve our 2025 goals for ARISTADA and LYBALVI. We look forward to sharing our progress with you. With that, I'll pass the call back to Rich.

Thank you, Todd. We work in commercial environments that require specific capabilities and scale. Our strategy and investments are centered on achieving growth and profitability while ensuring broad access to our medicines. We are positioned to be successful in this regard. Our commercial business acts as the economic engine of the company, providing cash flow that allows us to invest aggressively in our development pipeline without diluting our capital, all while maintaining profitability. This pipeline is now at a stage where it has the potential to significantly change the company. We anticipate clarity on this front by 2025, with planned Phase 2 data readouts for ALKS 2680 in narcolepsy Type 1 and Type 2. ALKS 2680 is our innovative orexin 2 receptor agonist. From the beginning, we designed it with a competitive future in mind, incorporating insights gained from creating medicines for patients in real-world conditions. Our aim for ALKS 2680 is to provide a straightforward, once-daily dosing option and a range of doses to meet the needs of patients with narcolepsy Type 1, narcolepsy Type 2, and idiopathic hypersomnia. Offering multiple doses would allow both patients and physicians to tailor treatment to individual preferences, which is crucial in many CNS disorders. Let's discuss hypersomnolence disorders for a moment. Orexin is the key regulator of wakefulness. Narcolepsy Type 1 is marked by the loss of orexin neurons in the brain. For NT1, an orexin 2 receptor agonist can potentially substitute the missing neuropeptide and restore regular wakefulness, with clinical data providing strong evidence of this effect. Narcolepsy Type 2 and idiopathic hypersomnia involve more typical orexin levels but may be linked to irregular signaling in the orexin system. Existing clinical data indicates that an orexin 2 receptor agonist can also enhance wakefulness in these patients. Our ALKS 2680 Phase 1b study and an early proof-of-concept study conducted by others both showed significant improvements in wakefulness in these conditions. We believe, based on the observed data, that orexin 2 receptor agonists might offer considerable benefits for NT2 and IH. From a regulatory and development standpoint, we are pushing forward with ALKS 2680 following a strategy aimed at FDA approval and strong market positioning. After obtaining proof-of-concept results from a comprehensive Phase 1b program in narcolepsy patients, we progressed into well-structured, confirmatory Phase 2 studies in NT1 and NT2, each designed to enroll 80 patients. These studies will significantly contribute additional data for the field. By completion, we will have data from 160 patients assessing various doses over several weeks in an outpatient context. These studies are designed to thoroughly evaluate safety, tolerability, efficacy, and dose response. The findings will help shape our Phase 3 design for ALKS 2680 and clarify our potential competitive positioning in this category. I’d like to quickly update you on our Phase 2 narcolepsy studies, Vibrance 1 and Vibrance 2, which we started last year. We’re making notable progress with site initiations and patient enrollment, and I'm pleased with our progress. We are currently enrolling patients in the U.S., EU, and Australia, and we expect to have data from both studies in the latter half of this year. As we conclude this first quarter, we should have a clearer estimate of our completion timeline. Regarding idiopathic hypersomnia, we've submitted an IND to the FDA's neurology division and expect to kick off the Phase 2 study, known as Vibrance-3, in early Spring. This study will be structured similarly to our narcolepsy studies, using a randomized, placebo-controlled double-blind design over eight weeks, with doses mirroring those in our NT2 study at 10, 14, and 18 milligrams. Following the pivotal studies that supported approval in idiopathic hypersomnia, we will use the Epworth Sleepiness Scale as the main endpoint and the idiopathic hypersomnia severity scale as a key secondary endpoint. In summary, for both our narcolepsy studies and idiopathic hypersomnia, we view the structure and execution of the Phase 2 program as crucial for Phase 3, registration, and market positioning. We are preparing for success, with efforts in manufacturing, protocol design, and regulatory processes all in motion. This year promises to be exciting and busy. Now, I'll turn the call back to Sandy for the Q&A.

Melissa, we'll open the call for Q&A now please.

Thank you. Our first question comes from Paul Matteis with Stifel. Please proceed with your question.

Hey, thanks so much for taking my question. I appreciate it. I just had one on the Orexin program. I was curious, with these studies now well underway and specifically related to the NT2 study. I was wondering how close you guys are monitoring adverse events, retention, things like that on a blinded basis, especially as one of the questions to the class is how does tolerability look in larger studies outside of NT1. And so any color you could provide there if it is applicable, would be helpful. And maybe just speak to your confidence again in the therapeutic index across broader populations? Thanks.

Hey Paul, it's Rich. I'll take that one. So obviously, these are blinded studies, multicenter, multi-country, but we monitor safety on an ongoing basis and not just ourselves, our team, but we have a DSMB that meets regularly to look at that. Remember, the structure of the design is a six-week double-blind period with a seven-week extension thereafter. And we expect a high degree of retention throughout the whole program, and we haven't seen anything to dissuade us from that at this point. As I said in the prepared remarks, I think that the logic and the data supporting NT2 is pretty strong, recognizing these slightly higher doses, what we saw in our Phase 1b program is clear dose response notwithstanding the baseline variability that you might see in NT2. So we're encouraged at this point and we look forward to completing study.

Great. Thank you.

Hey, good morning Rich and team. Congrats on a good year of progress. I wanted to ask a quick commercial question and then a follow-up on the pipeline. With regard to the commercial setting, I guess I'm wondering if you are not if you're considering what you're considering in terms of competitive dynamics for LYBALVI and ARISTADA given BMS and J&J, becoming more active in the space. And I think Todd mentioned expanding the sales force. Can you give some color on, call it, the magnitude of that expansion?

Yes, definitely. This is Todd. I’ll address that. We continuously monitor the competitive landscape. The growth of the market benefits our portfolio as more companies invest in this category, which is encouraging. However, our strategy remains unchanged. We anticipate strong demand growth for LYBALVI at around 25% in 2025. We will also be increasing our sales force, which we've been preparing for quite some time. This step is crucial for us to maintain a strong presence in the market and not only compete effectively but also maximize our portfolio. As I mentioned earlier, our focus is on demand growth and profitability, and we are on track for that in 2025.

I mentioned the size of the expansion.

Yes, absolutely. The size of the sales force expansion we're looking at, we're going to add approximately 80 representatives that will be online at the end of this quarter, and we expect them to be operational in Q2. All of my experience tells me it just takes a couple of quarters for that to play out. They get trained and get into the marketplace to start educating HCP. So our expectation is we'll start to see the benefit of that expansion in the latter part of the year.

Very good. That's helpful. Quickly on Vibrance-1 and 2, realize that by end of the quarter, you'll give more guidance. But when you consider the NT1 patient population versus NT2. Can you provide some color on the interest in the two studies? And could they read out at the same time or is NT1 ahead of NT2 or reverse?

Hey Charles, it's Rich. It's difficult to determine how the studies will compete as they commence. NT2 began a bit later, but due to limited competition, the initiation phase is progressing really quickly. Vibrance-1, the NT1 study, is now open in several countries and we are actively enrolling participants post-holidays. While it’s still early to provide a definitive timeline, we hope both studies will conclude around the same time in the latter half of the year, and we should be able to provide more detailed updates in the next call. And Charles, I'll just say, as a general matter, the interest in the community of the orexin 2 receptor agonist is extremely high in NT1, NT2 and IH. And I think that, that's the sea change we've seen over the last year or so as more and more practitioners get aware of the developments that are happening in the field, I think the excitement level around the category is building.

Hi, everyone. Thank you for taking my question. I have two inquiries. First, can you remind us if the Type 2 Narcolepsy study is expected to come before the Type 1 study? I recall your previous comments about the recruitment rates for both trials. Secondly, regarding LYBALVI, I'm trying to understand the situation better. If we maintain the current gross to net ratio and continue with the prescription growth trend observed in the third and fourth quarters, it could suggest a figure below the lower end of your guidance. However, we are aware that there were some gross net changes and inventory effects that might have contributed positively. Could you please provide more clarity on these points? Thank you.

Good morning, Umer. It's Rich Pops. The NT2 study is enrolling well, and the NT1 study is enrolling well. And the big change since we talked about last coming out of holiday is that a lot of our European sites in the NT1 study are up and running now in screening patients. So I think it's a horse race between the two of them. We'll have more precision on the actual completion date in a couple of months' time.

Yes, Umer, this is Todd. Regarding LYBALVI, in Q4 we observed approximately 5% TRx growth, which aligns with Q3, indicating a healthy trend. This growth was primarily driven by a year-over-year expansion in our customer base, which increased by about 27%. This is a strong indicator of the brand's health and growth potential. Moving into 2025, we anticipate continued strong demand growth, following the typical patterns mentioned by Blair for Q1. We expect to build on that throughout Q2, Q3, and Q4, largely fueled by the expansion of our sales force. Post-expansion, our sales force will comprise around 400 representatives, providing a significant presence in the market, complemented by enhanced market access. In Q1, we expect our market access position for gross to net to improve to the mid-30s range, before adjusting down in Q2, Q3, and Q4, with an overall expectation for the year to remain in that mid-30s range. This aspect is crucial for our projected demand growth, as we are entering the year with an even stronger market access position, including more patients in both commercial plans and Medicare Part D, which we believe will significantly drive our demand growth for 2025.

Hey, this is Amy on for Akash. Thanks so much for taking her questions. So on orexin 2, what's your confidence that ALKS 2680 can differentiate on safety versus TAC 861 in NT1? And what do you think the bar is? And another one, if we can. Some of your competitors in the orexin 2 space are alluding to the ability to proceed into Phase 3 trials with an expedited Phase 2a. What do you think the FDA wants from their Phase 2 studies when it came to dose exploration in end? Thanks so much.

Hi, Amy. It's Rich. I'm afraid I won't give you a whole lot of information about other people's programs. So I'll just tell you about ours. The whole point of our Phase 2 design is by this design, i.e., 80 patients multi-week parallel design with a primary endpoint of six weeks, followed by an open-label safety evaluation with dose ranging is to establish the safety, tolerability, efficacy dose response profile in a rigorous way. So when we complete those studies, we'll have a very, very clear picture of our drug, and then we'll be able to compare it to any other drug that is a similar stage of development. In terms of particular safety, I think as my earlier comment stands, I think until we have the Phase 2 data, we won't be able to say how we're differentiated on the safety basis. But we believe the program is already differentiating its priority, given the range of doses that we've shown, the dosing flexibility and the overall safety and tolerability we've demonstrated in 1b. All of that needs to be re-perpetuated and expanded in Phase 2, and then we'll have a clear picture. But I think categorically, between ourselves and others in the orexin 2 receptor and its class, it's striking that the overall tolerability we've all demonstrated is largely mild to moderate transient side effects with pretty significant and profound efficacy benefits for patients.

Got it. Thanks so much.

Hey guys. Good morning. Thanks for taking my question. A question on the 2025 guidance. What does that contemplate for INVEGA TRINZA as it relates to any risk of generic entry? And where does that litigation stand? And can you maybe characterize how much it contributes to the royalty revenue line. Thank you.

Yes. Thank you for the question, Jessica. It's Blair. I think as we move into the beginning of the year, we have a little bit of dynamics as associates with INVEGA, recognizing that the U.S. royalty expired in August of last year. So we'll be resetting to the lower rates as we move into Q1 of this year. And then we'll be achieving royalties moving forward, ex U.S. through 2026 and then the rest of the CABENUVA are no longer acting through 2030. So the INVEGA component of our overall manufacturing and royalty line is typically in the range of about 40% to 50% depending on where you are moving forward.

Thank you and good morning. Two maybe broader questions. One, in terms of thinking about clinical development risks for assets for the neuroscience. We've certainly always known that it's very difficult. There's been some recent industry examples where it's been kind of characteristic. Rich, you and your team have been no strangers to going through this. The journey has been long. What are you putting in place with the Orexin program that you think informs and helps mitigate some of the risk? And then second, more of a broad policy related question, Rich, again, you have had seats at some important tables thinking about the implications of health care policy on your business. And I would really appreciate if you could opine on a couple of points, perhaps if I could touch upon NIH-related funding implications on research, tariffs, IRA, a couple of the big pictures, which you have been helpful in the past look to get your insights as it relates to Alkermes and perhaps broadly to the industry? Thank you.

Good morning, Chris. Regarding the clinical development risk associated with CNS, particularly between Phase 2 and Phase 3, that is part of what makes the orexin program attractive. The scenario I mentioned is often found in psychiatric studies where endpoints rely on patients’ self-reports over time, and significant placebo responses can occur when evaluation happens at a point where patients are already responding to the trial's care. In contrast, with narcolepsy Type 1 patients, they are taken off their medications and arrive at randomization with pronounced symptoms before receiving an effective treatment, resulting in a much less pronounced placebo response. This is why we achieved a significant p value in our 1b study with a small sample size, and we anticipate this trend will continue into Phase 2 and Phase 3. Therefore, we believe Phase 2 will be a strong predictor of outcomes in Phase 3, which is why we have designed them to resemble pivotal studies as much as possible. Moving to policy matters, I won’t delve into all the details, but overall, the situation is very dynamic. Regarding NIH funding, it will likely concentrate more on intramural funding, while extramural funding remains crucial for public health and has a proven track record of effectiveness. However, there will be greater scrutiny on the efficiency and allocation of these funds. As for tariffs, we conducted our own analysis and found that our supply chain is not significantly impacted by tariffs, and we are awaiting clarity on their implementation. Potential adjustments to the IRA could be challenging; some specific changes may arise, but in the broader context, they are not currently a top priority. We anticipate some adjustments that could be seen as improvements to the law rather than a complete overhaul. Our main concern from a policy perspective is the potential focus on Medicaid under the IRA, particularly since Medicare Part D is already a central element. We need to ensure that any reconsideration of Medicaid does not disadvantage patients with serious mental illnesses and addictions, and we believe there is a good chance to protect their needs given the emphasis on public health.

Can you provide us with more information about the next-generation products or when we can expect updates on the indications or anything else you can share during this call? Additionally, I have frequently inquired about business development, and while we are investing significantly in orexins, there is excitement around that. I'm curious about what is happening in business development behind the scenes. Should we anticipate any deals or lack thereof this year that would contribute to the pipeline? Thank you.

Good morning, Marc. I’d like to provide you with more information on our next-generation efforts. I believe our teams are ahead in this regard. We recognized a couple of years ago that we needed to look beyond narcolepsy and have since conducted extensive research to identify the best areas to pursue next. In our recent JPMorgan presentation, we gave some hints about our focus on ultra-orphan indications as well as broader areas. We mentioned that both 4510 and 7290 are new compounds entering the clinic this year, and they have unique pharmacologic properties that differentiate them from ALKS 2680. We will provide further details on our direction as we complete the SAD and MAD studies, as these studies are essential to confirming the safety and tolerability of our drugs while engaging the target. Following these studies, we aim to progress into orexin studies with patient trials in Phase 1b or 2a, where we can observe early signs confirming our hypothesis. On the business development side, you can see our pipeline naturally expanding along the orexin wakefulness and hypocretin pathways, and this trend will continue. We are actively seeking clinical-stage assets to broaden our portfolio. We intend to remain an independent pure-play neuroscience company and plan to expand our pipeline with the financial resources we have. While we conduct thorough analyses on the business development side, it’s relatively uncommon for opportunities to pass through our evaluation process, so predicting when a deal may occur is challenging. Regarding the commercial side, we have previously expressed our desire to leverage our commercial infrastructure. Although we currently have limited products available, we are continuously exploring emerging opportunities and those nearing commercialization as well as existing ones in the market. We do not feel an urgent pressure in this area, but we have the financial capacity and intuition to pursue new opportunities.

Hey guys. Thanks for taking the question. Rich, maybe just a follow-up on your brief comment about Medicaid funding. Maybe just help us understand what the sources for VIVITROL are these days given the shift from opioid to alcohol dependents. And maybe just help us kind of think about if there is in Medicaid cut. How should we sort of think about the potential risk to this product? And along that line, maybe just also help us understand the impact, I guess, from IRA Medicare Part D redesigned for this year and potentially next year? Thanks.

Good morning, Uy. I'll address part of that. Blair, Todd, feel free to add your thoughts. Medicaid plays a crucial role for all our products, including LYBALVI, VIVITROL, and ARISTADA. However, there’s no need for alarm at this point. This is largely theoretical. If there’s an ambition to cut $1 trillion from the federal government, eventually the focus will shift to how money is allocated to states for Medicaid. It's important to note that medications for schizophrenia, bipolar disorder, and addiction aren't the major financial burden within Medicaid. There are numerous other areas in Medicaid where savings can be found. If Medicaid reforms occur, expect us to advocate for continued access to these essential medications for patients. They are priced appropriately, and the gross-to-net ratios are advantageous. We are responsible participants in the healthcare ecosystem and are not the major economic forces driving this situation. As attention turns to Medicaid, we believe there's an opportunity to emphasize the benefits these medications provide for individuals suffering from chronic diseases related to addiction and serious mental health issues.

Yes. Absolutely, I can do that. So we look at the total mix. For VIVITROL, it's been relatively stable. About 50% is in the Medicaid channel. 45% or so is in commercial, and that's growing with our focus on alcohol dependence. It's more of a commercial patient, and the remainder is within the PHS segment.

Hi, everyone. Congrats on the quarter and thanks for taking our question. Just really quickly on ALKS 2680. How quickly do you think you also move into pivotal studies in NT1 or NT2 patients upon positive data this year. I guess part of the gating items the initiation of the Phase 3 studies? And do you think we could see a pivotal study before the end of the year.

Yes, let's see how fast we finish up the Phase 2s, but I can tell you a lot of the Phase 2 infrastructure build is anticipatory for Phase 3. And so our hope the way we sequence this, we top-line results in NT2. We schedule end of Phase 2 meeting with FDA. As soon as we can figure out of time based on our completion to have that meeting. Meet with review division in this case, its DPP in divisional psychiatry. Depending on the results, we will probably look to file for breakthrough designation in NT2. And that opens up the line for discussions about accelerated pathways to market. So we're going to be preparing to start Phase 3 as quickly as we can after we complete that in a Phase 2 meeting with FDA.

Hi, good morning. Thanks for taking the questions. Maybe as a starting point, Rich, I think it would be helpful to just provide some perspective on what you think your competitive advantages are in the orexin space. Obviously, you have a head start in terms of clinical development across some indications, and it indicates that in future broader ones outside of to sort of wait for the sleep category, you're ahead. So maybe just from a chemistry standpoint, just because obviously, we started to see other companies begin to focus on the erection space. Maybe just walk through some of the challenges that others might experience and why you think that your sort of first mover advantage will prove to be durable? And then I have a follow-up on the LYBALVI? Thanks.

Doug, good morning. Orexin 2 receptors are debroking couple receptors located in the brain. And so from a municipal chemistry perspective, it's a high degree of difficulty challenge because you need to create a small molecule GPCR agonists, which requires a fair amount of structure generally, they need to be orally bioavailable. They need to cross the blood-brain barrier. They need not to be a pump substrate, so they get bumped out of the brain. And then all that has to happen with a pharmacokinetic profile that's consistent with the natural sleep-wake cycle. To enable once-a-day dosing. So we know the specific amino acid residues one needs to bind in order to have agonists. We'll publish on the data on our patents so that people will see it in more and more. So the question is if you're coming behind us, how do you actually improve on what we and others are doing? In other words, if we have once a day dosing with a range of doses that are well tolerated that are used in NT1 and NT2 and IH. There's not a lot of space there. Now no drug is ever perfect, right? So until we fully elaborate the characteristics of this drug in the Phase 2 study, it remains at radical. But right now, we're quite pleased with the profile that we have. So I think our competitive advantage right now in the current course rate is that we have positive data in all three differential diagnoses, NT1, NT2, IH. We have a range of doses, therefore, showing dose response and dose proportionality and the dosing between NT1 NT2 and IH are adjacent. That is 4 6, 8 milligrams being tested in Phase 2 for NT1 that abuts immediately against 10, 14 and 18 milligrams in NT2 and IH. So if that turns out to be somewhere close to the ultimate commercial range it allows those patients and doctors to flexibly adjust their dose to accommodate their own individual disease needs and/or aspirational life aspirations as well. So I think that we like the position right now. And we also believe that as the field gets more extensively elaborated, others will come in. And if I feel like narcolepsy is going to be well taken care of if ours and other drugs meet their profile. So then the action becomes the other adjacencies, which we think are quite promising. That's why we're putting 4510 and 7290 in the clinic, because we want to be ahead of that as well. So we're already anticipating success in narcolepsy, recognizing the risk that still exists. But operationally, preparing now for narcolepsy from a commercial perspective, and expanding into new indications to capitalize on the increasingly credential pharmacology.

And Richard, I can follow up on your earlier comments. When it comes to the various characteristics that are necessary in the orexin space, it's important to be cautious about companies claiming preclinical data or in vitro assays that showcase the potency of their molecules, especially considering the challenges related to pharmacokinetics and brain penetration. Is that a fair assessment?

I think that's fair. I think I consider potency and selectivity to be seen in practice. I mean you have to have high potency and high selectivity to play. But it's a little bit like saying I have a great race car because it has great tires. You got to have an engine too, and you have some doors and some seatbelts and a helmet and all the other things that make it a race car. So I think that all of those features, any one of those features, the deficiency handling and one of those features is going to lead to some type of competitive disadvantage. The only comment I'd add to that is that in our experience, nothing really matters until you get into patients because healthy volunteers, we found in our hands that even sleep-deprived healthy volunteers do not recapitulate the sleep pressure of an NT1 patient surge. So dosing is going to be indication-specific. And along with that is tolerability because what you find is that healthy volunteers tolerate different doses than in Q1 patients. And so our view is always, until you get into patients, you really can't get a sense of where you are with respect to therapeutic index, tolerability, safety and dose response.

Hi, thanks for taking the question. For VIVITROL, what are the key dynamics that impact whether you'll be able to achieve that mid-single digit growth rate in scripts that was mentioned earlier in the call?

Hi, Joe, this is Todd. I'll take that. Our main focus for VIVITROL is the ongoing expansion in alcohol dependence, which has been the driving force for the brand in 2024. We saw demand growth for alcohol dependence of about 14%, which helped balance out some challenges we've faced with opioid use disorder. We strongly believe the brand will continue to grow. It's important to remember that VIVITROL is a mature brand, so overall demand will align with that, but we still think subnational dynamics outside of retail, such as within the VA, will continue to contribute to our growth. Therefore, our two strategic priorities are the alcohol dependence indication at a sub-national level and ensuring we can enhance access and growth within the VA.

We have time for one more question.

Hi, everyone. Thank you for taking my question. This is Alex for David. I have one question. You mentioned earlier the competitive impacts related to LYBALVI. Could you elaborate on that? I understand there is a long-acting injectable version of olanzapine in development and that they are submitting an NDA later this year. How will this affect the LYBALVI business? Are you expecting any challenges from this? Also, have you noticed any effects from COBENFY yet, or do you anticipate any as that product continues to grow? Thank you.

Sure. This is Todd. I'll address the last question first. Currently, we haven't observed any impact on LYBALVI from COBENFY. In Q4, we experienced overall TRx growth of 5%, which aligns closely with Q3, and we anticipate strong demand growth throughout 2025. It's important to note that LYBALVI targets a broader indication, including bipolar 1 disorder and schizophrenia, while COBENFY is focused solely on schizophrenia. In 2024, we witnessed significant volume growth in both indications, with approximately 20% growth in the bipolar disorder indication alone. The broad target population gives us confidence in our plans for 2025, especially with the expansion of our sales force. Regarding the potential long-acting injectable form of olanzapine, we continuously monitor competitive dynamics. We have a strong grasp of the olanzapine molecule. Historically, the limiting factors for this molecule, regardless of its delivery method, have revolved around issues like weight gain and metabolic factors, which is precisely why we developed LYBALVI. We believe LYBALVI will maintain strong growth, even in the face of any new competition.

The only thing I add to that Todd is typically, an LAI interest doesn't affect your oral side of the market. The LAI is its own sort of rarefied aspect. We wish it were a bigger part of the treatment algorithm, but it's relatively small. And LYBALVI obviously operates in that oral category, which is the vast majority of prescriptions.

All right everyone. Thanks for joining us on the call this morning. If there are any follow-up questions, please don't hesitate to reach out to us at the company.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.