Alkermes plc. (ALKS) Q3 2026 Earnings Call Transcript

Greetings, and welcome to the Alkermes 3rd Quarter 2026 Financial Results Conference Call. My name is Dylan, and I will be your operator for today's call. All participant lines will be placed on mute to prevent background noise. If you should require operator assistance during the call, please press star zero from your telephone keypad. Please note, this conference is being recorded. I will now turn the call over to Sandra Coombs, Senior Vice President of Investor Relations and Corporate Affairs. Sandy, you may now begin.

Welcome to the Alkermes PLC conference call to discuss our financial results and business update for the quarter ended September 30, 2026. With me today are Blair Jackson, our Chief Executive Officer, Todd Nichols, our Chief Commercial Officer, and Joshua Reed, our Chief Financial 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 Actual results could differ materially from these forward-looking statements. Please see slide two 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 After our prepared remarks, we'll open the call for Q&A, and now I'll turn the call over to Blair for some opening remarks.

Thank you, Sandy. Good morning, everyone. On my first quarterly call as CEO of Alkermes, I'd like to start with a few thoughts on the opportunity ahead and the priorities that will guide us. We have a clear strategy and a strong foundation. Our focus now is on execution. That means advancing our pipeline with rigor and urgency, driving strong commercial and financial performance, and allocating capital thoughtfully to our Our commercial business is an important element of our strategy and provides a strong financial foundation to invest in innovation. Our greatest opportunity for growth and value creation lies in our pipeline, particularly our leadership in orexin research and the potential of our orexin development portfolio to yield important new treatment options in neuropsychiatry. I'll discuss the significant momentum across our development pipeline in more detail following the discussion of the quarterly results. The combination of commercial strength, financial performance, and a differentiated pipeline positions Alchemies well for its next chapter and the potential for meaningful long-term value creation for shareholders. I'm incredibly proud and honored to lead Alchemies at this important point in its evolution, and I'm confident in our strategy, our people, and the opportunities ahead. With that, let's Turn to the quarter, Todd.

Thank you, Blair. Good morning, everyone. I'm pleased to report that we delivered strong performance across our commercial portfolio in the third quarter, reflecting contributions across addiction, psychiatry, and sleep medicine. Our teams remain focused on driving demand, broadening patient access, and building on the opportunities across our four proprietary products. In the third quarter, net sales from our proprietary product portfolio increased 31% year-over-year to $417.3 million, reflecting the addition of LoomRise and continued demand growth across our established commercial portfolio. Starting with Vivitrol, net sales in the third quarter were $127.6 million. Vivitrol continued to see strong demand driven by penetration in the alcohol dependence market. Net sales also benefited from approximately $8 million in gross to net favorability, primarily driven by favorable patient mix. For the full year, we continue to expect Vivitrol net sales in the range of $460 to $480 million. We remain confident in the strength and durability of our Vivitrol business and look forward to continuing our impact with this important medicine. Turning to our psychiatry franchise, third quarter net sales for Aristata product family were $103.9 million. Aristota continued to see demand growth driven by expansion and HCP adoption. Net sales also benefited from approximately $7 million of gross to net and inventory favorability. We are encouraged by Aristota's continued strong performance within this category. For the full year, we continue to expect Aristota net sales in the range of $365 to $385 million. LeBalby net sales were $95.9 million in the third quarter, with underlying TRX growth of 18% year-over-year, supported by new patient starts and broader prescriber adoption. Net sales also reflected approximately $2 million of inventory benefit. Last quarter, we implemented a strategic expansion of the Levolvi market access profile that we believe will position Levolvi for long-term growth. Access now stands at Approximately 80% of covered lives, and as a result, we have already seen positive trends on volume demand and prescription fulfillment. As expected, gross to net adjustments were approximately 42% during the third quarter. For the full year, we continue to expect Levolve net sales in the range of $380 to $400 million. Looking ahead to next year, we expect gross to net adjustments for Levolve to be in the 45% range. We expect the benefits of expanded payer access to be reflected first in prescription volume, which we expect will continue to grow nearly 20% year-over-year, with an acceleration in net sales growth expected to follow. Beyond 2027, we expect volume growth and net sales growth to track more closely together again. Turning to our sleep franchise, LUMRI's net sales were $89.9 million in the third quarter. We reached approximately 4,100 patients on therapy a quarter in, reflecting strong underlying demand, broader prescriber adoption, and increased use among existing prescribers. Net sales also reflected the drawdown of approximately $7 million of inventory bill that we highlighted in our second quarter results. Last month, we presented results from the positive Phase III revitalized study of LUMRISE and idiopathic hypersomnia at the Sleep Europe meeting. IH is a fast-growing segment for the Oxabate market. The revitalized data will serve as the foundation for the FNDA submission for IH with a potential launch in March 2028, if approved. IH represents an important potential growth opportunity for LoomRise, and we look forward to updating you on our progress. For the full year, we continue to expect total LUMRISE net sales of $350 to $370 million, of which Alkermes expects to record $315 to $335 million, reflecting the mid-February close of the Avidel transaction. Supporting LUMRISE, we have an established sleep medicine platform that includes an experienced commercial and medical organization with a deep understanding of the market dynamics and HCP and patient journeys. This platform provides a strong foundation to support the potential launch of Elixir-Extin and our broader ambition to become leaders in sleep medicine across multiple treatment modalities. Across our proprietary portfolio, we expect net sales to be in the range of $400 to $420 million in the fourth quarter. We are pleased with what we have accomplished so far this year and remain focused on delivering against our 2026 objectives. As we enter the final quarter, our priorities remain clear, drive demand for our medicines, expand patient access, and position our brands for continued growth. With that, I will pass the call to Joshua to review the financial results for the quarter.

Thank you, Todd. We delivered solid financial results in the third quarter, supported by the strength of our commercial portfolio and disciplined management of the business. Through the first nine months of the year, our financial position has provided the flexibility to advance our strategic priorities and invest in key opportunities that we believe will support our future growth. During the quarter, we generated total revenues of $480.1 million. As Todd outlined, our portfolio of proprietary products generated net sales of $417.3 million. These results reflect contributions from all four of our proprietary products and positive underlying demand trends across the commercial business. Manufacturing and royalty revenues were $62.9 million for the quarter, including $29.5 million from Brumerity and $26.4 million from the long-acting Invega products. Turning to expenses, cost of goods sold in the third quarter was $94.2 million, which includes the purchase price fair value accounting of Loom Rise inventory that we described last quarter. This compared to $51.6 million in Q3 of the prior year. R&D expenses The differences in the quarter were $121.1 million, compared to $81.7 million in Q3 of the prior year, reflecting continued investment in our Erexin development portfolio. Of note, our development activities during the quarter included the Elexorexin Phase III studies initiated earlier this year and clinical development activities to advance OUTS 7290 and ADHD and MDD, as well as outs 4510 and fatigue associated with Parkinson's disease or multiple sclerosis. SG&A expenses were $208.5 million for the quarter, compared to $171.8 million in Q3 of the prior year, with the addition of the Avidel commercial infrastructure as the primary driver of the year-over-year change. During the quarter, we also recorded amortization of acquired intangible assets of $19.7 million and net interest expense of $21.1 million. In Q3, we recorded gap net income of $16.3 million and EBITDA of $63 million. Adjusted EBITDA was $120.1 million, which we believe provides a useful measure of the underlying cash-generating performance of the business during the quarter. From a balance sheet perspective, we entered the third quarter in a strong position with approximately $787.6 million in cash and total investments. For the year, we are reiterating our 2026 financial expectations provided in July across all line items. Our performance through the first nine months of the year positions us well to deliver against these expectations. Our 2026 financial performance and operating expenses reflect a number of Avidel transaction-related costs. As we look ahead to our 2027 operating expense profile, there are a few important dynamics to keep in mind, beginning with cost of goods sold. With the vast majority of the non-cash Loom Rise inventory fair value step-up associated with the Avidel acquisition being recognized in 2026, We expect cost of goods sold to be lower in 2027, reflective of more normalized patterns. For SG&A, excluding the transaction-related costs recorded in early 2026, we expect a broadly similar expense profile for 2027. For R&D, our 2027 investment will reflect the growing number of programs across the portfolio and the broader level of clinical activity plans. Importantly, we expect to deliver strong cash generation and adjusted EBITDA performance in 2027 while continuing to invest in the significant opportunities across our pipeline. We believe this balance demonstrates our ability to fund future growth drivers while maintaining financial discipline. We'll provide our full 2027 expectations on our February call. With that, I'll now hand the call to Blair.

As you've heard from Todd and Joshua, our commercial business continues to perform well with the proprietary product portfolio expected to deliver net sales of nearly $1.6 billion in 2026. That foundation allows us to advance an increasingly broad pipeline led by our portfolio of orexin-2 receptor agonists. We are in the early stages of understanding the full therapeutic potential of orexin biology. Over the past several years, we've been generating a substantial body of clinical evidence across central disorders of hypersomnolence, and we are now generating our first clinical data sets from our orexin portfolio in broader areas of neuroscience. Starting with elixir-rexin, our most advanced orexin candidate, we reached several important milestones across the development program during the quarter. Our Phase III brilliance studies in narcolepsy type 1 and narcolepsy type 2 are underway, and we are pleased with enrollment progress across the program. We continue to expect top-line results from these studies beginning in mid-2027. In idiopathic hypersomnia, we completed enrollment in the Vibrance III Phase II study, which enrolled approximately 130 participants, and will represent the first multi-week clinical data set of an oral orexin-2 receptor agonist in IH. The study is evaluating wakefulness and IH symptom severity with the Epworth sleepiness scale and idiopathic hypersomnia severity scale as primary and secondary endpoints, respectively. Beyond evaluating the safety, tolerability, and efficacy of elixirexin in patients with IH, we expect the study to provide important insights to inform a potential registration program, including dose selection, dosing regimen, and endpoint strategy. The study also includes our first evaluation of split dosing in a hypersomnolence disorder, which we believe could provide additional flexibility to address the diverse needs of patients. We expect top-line results around year-end, or in early 2027, and look forward to sharing those data. Hypersomnose disorders represent a significant market opportunity, and this month, the first orexin-2 receptor agonist is expected to become commercially available for the subset of patients with narcolepsy type 1. As this new therapeutic category enters the commercial landscape, we believe that if approved, orexin's wide therapeutic range, dosing optionality, and Broad anticipated utility across narcolepsy types 1 and 2, and potentially IH, will support a differentiated profile with the potential to provide an important new treatment option to providers and patients. While the commercial opportunity begins to take shape in hypersomnolence disorders, we are advancing our strategy to develop orexin-2 receptor agonists for a range of neuropsychiatric and neurodegenerative disorders. Last month, we reported the first clinical This was a 50-subject Phase 1b proof-of-concept study designed primarily to evaluate safety and tolerability and to generate initial data characterizing the effects of ELK-7290 across a range of established clinical scales for ADHD, CNS biomarkers, and objective cognitive performance tests. In the study, ELK-7290 was generally well-tolerated, with no serious treatment-emergent adverse events and no treatment discontinuations among participants who received ELK-7290. Most treatment-emergent adverse events were mild and largely consistent with on-target effects for orexin-2 receptor agonists. Across the two doses evaluated, ELK 7290 demonstrated dose-dependent clinically meaningful improvements from baseline on exploratory endpoints evaluating established measures of ADHD symptoms and disease severity. We were pleased to observe improvements across both the inattentive and the hyperactivity impulsivity subscales of the adult ADHD Investigator Symptom Rating Scale, or ACERS, with effects emerging as early as the first assessment on day six. ALK7290 also demonstrated clinically meaningful improvements from baseline in overall ADHD disease severity as measured on the CGIS scale. In addition, we observed treatment effects across objective measures related to processing speed, information processing, working memory, and attention. These findings provide the first clinical evidence of the effects of an orexin-2 receptor agonist in the treatment of adults with ADHD and further support the dose range selected for the ongoing Phase II study. That Phase II study is already enrolling adults with ADHD and is designed to evaluate Once daily and split-dose regimens of ALK7290, with change from baseline in ACER's total score compared with placebo at week 4 as the primary endpoint. We expect the ADHD phase 2 data in the second half of 2027. Building our momentum in diseases outside of hypersomulence, last week we announced the expansion of the ALK7290 development program into major depressive disorder, or MDD. With the initiation of a 150-patient Phase II study evaluating ELK7290 as an adjunct to antidepressant treatment in adults with MDD who have had a partial response to standard antidepressant therapy. This randomized, double-blind, placebo-controlled study is designed to evaluate the safety and tolerability of ELK-7290 over six weeks, while also assessing its effects on depressive symptoms as measured by change from baseline on the MADRIS, or CGIS, compared to placebo at week six. The study will enroll adults with and without excessive daytime sleepiness, which will allow us to evaluate the potential effects of ELK7290 in the overall MDD population, as well as in this important subgroup. Turning to orexin biology and neurodegenerative disorders, we plan to initiate a randomized, double-blind, placebo-controlled Phase II study evaluating ELKs 4510 in people with fatigue associated with multiple sclerosis or Parkinson's disease. Fatigue is one of the most common and consequential symptoms across a broad range of neurological and systemic diseases, yet effective treatment options remain limited. Fatigue associated with multiple sclerosis or Parkinson's disease are compelling initial areas for development with clearly defined patient populations, significant unmet need, and established clinical scales focused on fatigue. We believe these disease areas offer a tractable development pathway for establishing clinical proof of concept for Erexin-2 receptor agonism in fatigue while also representing meaningful commercial opportunities in these patient populations. Importantly, this study is intended not only to evaluate the potential of ELX4510 in these specific disorders, but also to deepen our understanding of the role of orexin biology in fatigue more broadly. We believe these insights generated could help establish a foundation for evaluating additional disease areas where fatigue remains the significant source of patient burden and unmet need. Elexa-Rexin and hypersomnolence disorders, ELK-7290 and broader neuropsychiatric disorders, and ELK-4510 and fatigue are components of a broader Rexin portfolio development strategy that allows us to evaluate these distinct molecules across a range of patient population and disease settings. As we advance and expand these development programs, we're also continuing We are continuing to advance additional orexin compounds through preclinical development. We are just beginning to explore the potential clinical utility of orexin compounds, and Alkermes is at the leading edge of research for this emerging therapeutic class. Our focus will remain in neuroscience applications, but with the potential to reach across a broad range of disorders, we believe the opportunity for this class is vast and will be the focus of significant research and development for years to come. Looking ahead, the next year will be a pivotal and data-rich period for Alkermes, with six important studies expected to read out across our orexin portfolio. We start with anticipated data from the Vibrance III Phase II study of elixorexin in idiopathic hypersomnia in the coming months, followed by top-line results from all three Brilliance Phase III studies in narcolepsy beginning in mid-2027. For ALKS 7290, we expect Phase 2 data in ADHD next fall, and for ALKS 4510, Phase 2 proof-of-concept data in fatigue toward the end of the year. Taken together, these studies have the potential to significantly expand our understanding of where orexin-based therapies can make a meaningful difference for patients. Our focus remains on executing with urgency and discipline, generating the clinical evidence needed to unlock the potential of this novel class, and building what we believe can become a leading franchise addressing some of the most significant unmet needs across sleep, neuropsychiatric, and neurological disorders. We plan to pursue these opportunities while continuing to deliver strong commercial performance and investing thoughtfully to support long-term growth and value creation. With that, I'll turn the call back to Sandy for the Q&A.

Thanks, Blair. We'll now open the call for Q&A.

Thank you. We will now be conducting a question and answer session. We ask that you limit yourself to one question and one follow-up. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Linid Temeshev with RBC Capital Markets. Please go ahead.

Hey, guys. Thanks for taking my question. Just wanted to ask one on IH and how you're thinking about what to expect there. You know, maybe can you talk us through, you know, when you see that data, how you'll think about moving forward with the split dose, maybe with the once daily doses, and, you know, maybe how you're thinking about what you could see on the relative magnitudes between those. Thanks.

Sure. So, thanks for the question, Leo. It's Blair. I think when we look at the IH data set that's coming out, there's a wealth of information that we're going to be getting from that trial. As you alluded to, first and foremost, we're going to be getting the once daily dosing for that program. And as we've spoken before, we see the IH population as somewhat similar to the NT2 population in that it's highly variable. These patients have a range of disease and different responses to orexin agonism. So we would expect something similar to that NT2 data set. The main difference, though, being that with IH population, they do have one separate population, which is the long sleepers. Those long sleepers we have less experience with. We expect that we'll have a similar response within them, but this data set will tell us more on that piece. With regards to the split dosing, the split dosing, as you know, is an important component of our overall program in that it provides both flexibility for patients across NT1, NT2, And IH, but also could provide some additional efficacy for those patients who need it in the later afternoon. And so this will be the first opportunity we'll be able to see that split data set as part of a patient program. So all this data will be coming out towards the end of the year, and we're pretty excited to see it.

Okay, thanks. We'll take the next question. Our next question.

Yes, my apologies. Our next question comes from Paul Matias with Stiefel. Please go ahead.

Hi, this is Emily on for Paul. We were just wondering, you know, where do you think Takeda may price? And, you know, like, if there was a chance that they price on the lower end, do you think that you have the possibility to kind of, like, adjust there with the different doses you plan to have available across sleep disorders? Thank you.

Thanks for the question. This is Blair. I think that Takeda is going to be pricing imminently, and we'll see that in the next few weeks. And obviously, that'll set the range for the overall market. As you alluded to in your question, though, we have a lot of flexibility on our pricing moving forward. So we'll see where they price, and we'll adjust accordingly.

Our next question comes from Greg Svanovich with Mizuho Securities. Please go ahead.

Good morning. Thanks for taking my question, and congrats on the progress in the quarter. Just on the pipeline and obviously on the orexin franchise, I was intrigued by the movement into major depressive disorder and psychiatry. Could you give us perhaps a little bit more of the rationale there, and can you give us maybe a sense of if there are other psychiatric indications beyond MDD that you think an orexin might make sense? Thanks so much.

Thanks for the question, Greg. Yeah, we've looked extensively at other areas outside of hypersomnolence where you could apply orexin agonism, and we did some comprehensive preclinical work really looking at the basic biology behind orexin agonism and identified a number of different domains where you could apply this, some of them being cognition, fatigue, mood, wakefulness, all these different areas. And so as part of that, we did some translational work in many of these areas. And within mood, some of the things we noticed is that we saw a really strong synergistic increase in serotonin, the prefrontal cortex, when orexin agonism was given with SSRIs or SNRIs, and so synergistically. And I think that's really telling that there's a benefit you could have here by having adjunctive therapy with orexin agonism. We also did use the highly translational model as part of that early research, which is the chronic social defeat test, which is really a way of establishing rodents who have really a depressive phenotype, and then providing them with therapy and seeing how they respond to treatment. And what we found is we found similar effects to what you'd see if those animals were dosed with ketamine or with fluoxetine. So we felt pretty strongly that there's a potential signal here. And so the desire to move into a patient population is something we've had for some time. And so part of this study that we're looking at is exploratory in that we'll be looking at not only the full MDD population, But we'll also be looking at a subgroup of the population who also have some excessive daytime sleepiness. So that gives us an opportunity to really learn a lot as part of this program and really design our program going forward. To the first part of your question regarding other things, yes, we have a number of other areas that we're looking at within neuroscience, both neurodegenerative and neuropsychiatry. And we'll talk about those as we get closer to additional activity. Thank you.

Our next question comes from Akash Tiwari with Jeffrey. Please go ahead.

Hey, thanks so much. This is Albert on for Akash. Given that your ADHD program will likely need to demonstrate efficacy comparable to existing stimulants to be, you know, competitive, can you discuss the rationale for not modifying the trial design to target a specific patient type? And what gives you confidence that the current trial event can demonstrate a clinical meaningful treatment benefit?

Hi, Albert. Thanks for the question. So, first, I would like to correct a little bit of what you said there. I think there's a wide range of efficacy outcomes that are commercially attractive for a new entrant in the ADHD space, especially an entrant like an orexin agonist, which could bring broader response profiles over and above what you see with existing therapies that are there. So I think for us, the goal moving forward is to establish that efficacy level, flush out some of those broader domains that we started to see in the Phase I-B study, and show and demonstrate that this is a safe profile within this patient area. And I think the early data that we saw in our Phase I-B program support all of those goals. One of the key things that we looked at through that Phase 1b study was our dosage range, making sure we were at the right region of targeting those receptors and engaging that circuitry. And what we found was exactly that, that, yes, we're right in the range. We don't need to lower or raise our dose. We can use the doses that we have. We also found that we were seeing a really robust response early within treatment, and so I think there is no requirement for us to modify the study in any way, nor would it benefit from us based on what we've seen to look at individual subtypes.

Our next question comes from Rudy Lee with Wolf Research. Please go ahead.

Hey, thanks for taking my question. Just a quick follow-up question on 7290's MDD study. So, J&J showed good efficacy data in MDD for its orexin antagonist, but in patient with insomnia. Can maybe talk about the rationale for orexin agonist for MDD? I mean, will be the key difference in the study population, the trial design versus J&J, and will be the key differentiator versus current style of care? Thanks.

Thanks, Rudy. It's a good question, and I think it's important to recognize that using orexin agonism is a fundamentally different approach than using orexin antagonism. In orexin antagonism, what J&J was trying to do there was sort of address the sleep disorder and hoping it would have a knock-on effect on potential mood. This is very different what we're doing. We believe that we directly impact centers of mood within the brain, and we're actually looking at treating the depressive symptoms directly. Now, because we are using a subgroup who has excessive daytime sleepiness, because we think we might be able to drive additional signal through that group, but this is a fundamentally different view than what J&J did with their rexin antagonist.

Our next question comes from David M. Sellin with Piper Sandler. Please go ahead.

Thanks. Got a couple of Lumerize questions. So, regarding the launch of Takeda's oviparexin, do you perceive any potential impact to Lumerize in terms of new starts next year in NT1? So, that's And then looking longer term with the IH launch for Lumerize in 28, how are you envisioning uptake? Do you think there's going to be a sizable switch market from Zywave to Lumerize? Do you think you'll be able to expand the overall Oxabate footprint in IH, or is it a little bit of both?

Yeah. Good morning, David. This is Todd. I appreciate the questions on Lumerize. Yeah, we're really, really excited and pleased with the performance of Lumerize this year, and specifically in Q2, strong net sales, really strong patient demand, up to 4,100 patients. We are watching very closely and thinking very deeply about the impact of orexins. As you know, we're big believers in the mechanisms. We actually believe they're complementary, and we hear that pretty consistently from HCPs around the belief and the desire to use both mechanisms. So we think there's a long-term durability in the Oxabate market and a lot of excitement with Erexins. Initially, we're going to have to see how this plays out with the Cadiz product entering the market. We think initially that will be a switch population for earlier lines of therapy, patients looking to switch, but we hear pretty consistently from HCPs that patients that are on Oxabate, specifically LUMRIs, and that are stable, like to stay on the product overall. So we do believe that there will be an impact on Oxabates, but we think it will be somewhat marginal at the beginning, and we think the category overall will be durable. In terms of IH, yeah, this is something we're really excited about. We did present the data recently at Sleep Europe. There's a lot of anticipation on the IH launch. If it's approved, we will be commercializing no sooner than March 1st of 2028, and there's a lot of anticipation there. This will be the second product potentially approved in the market. We think it's underpenetrated at this point right now. We think that Lumerize actually will compete for new starts in IH, but also there will be a switch market, and that Lumerize will compete in that switch market.

Our next question comes from Jessica Fai with J.P. Morgan. Please go ahead.

Hi, this is Isaiah from Jess. Thanks for taking our question. Any feedback from physicians regarding the ADHD data set? I wonder if you could tell us how the placebo group did in the recent study, or when we could see more detailed data, including placebo response reads. Thank you.

Yeah, so we've had a lot of discussions with physicians with regards to the ADHD data, and I think there's a lot of excitement about the fact that we're able to move a number of these different tools using orexin agonism. And I think in particular, folks were interested in the fact that you were seeing consistent response across these measures, and so not only the internal consistency between patient-reported outcomes, but also physician-reported outcomes as well as objective measures. And just as a reminder, the study itself was a safety study that was designed to look at the wide therapeutic potential that we could have in the therapeutic window we would have with an orexin agonist, and I think that read out really, really well. As such, it's not really appropriate to have a placebo comparison, so what we rely on for that is the objective measures and the subjective measures that we included in that study that we shared in our press release.

Thank you. Our next question comes from David Hong with Deutsche Bank. Please go ahead.

Hi there. Thanks for taking my question. I wanted to ask, once you are post Vibrance III data in IH, either year-end or early 27, once that data is in hand, How quickly would you look to move into a Phase III program for IH, and what would that study design potentially look like? Thank you.

Hi, David. Thanks for the question. I think, you know, we're going to want to move as quick as we can, obviously. Our goal is to get into the Phase III following that data set. What we would like to do, though, is meet with the agency first, and so that actually will probably be our rate-limiting step, as making sure we get that meeting and we'll obviously hope that they'll be very responsive because this is an important patient population. As for the size, our expectations is probably going to be a similar size to the NT2 study, but that'll obviously depend on the signal that we see in the Phase 2 program, and so that'll help set that. But ballpark-wise, think of the Phase 2 for planning purposes. Sorry, think of NT2 for planning purposes.

Our next question comes from Mark Goodman with Liebrink Partners. Please go ahead.

Just back on Oxabate, could you just give us a little sense behind the scenes what you thought happened in the quarter as far as, you know, was it a normal quarter of just new patient starts, discontinuations, the pricing, just, you know, how the market dynamics have just shaped up, you know, since you've owned the asset, is it generally kind of consistent with what you thought, any major changes in the quarter?

Yeah, absolutely, Mark. This is Todd. I'll take that. Yeah, again, we were pleased with the quarter. We were assuming some seasonality, which you typically would during Q3, and I think we saw a little bit of seasonal dynamics. But overall, you know, the growth in LUMRISE was really driven by patient demand. You know, we saw nice increases in overall patients for narcolepsy, 4,100 patients. That was driven by some of the submetrics that we watch very closely, which are new enrollments, conversions, and actually patient persistency. So all three of those dynamics, we believe, really contributed to the NICE patient growth and then also contributed to the net sales growth, which was 16% year-over-year.

And pricing?

Yeah. We didn't see any significant pressures on pricing overall. The pricing was within our range of expectations, and as we've said before, historically, LoomRise has a really strong market access profile. We didn't see any changing dynamics there as well, and we're not anticipating any strong changing dynamics as we head into the last part of the year. Thanks.

Our next question comes from Joseph Tome with TD Cohen. Please go ahead.

Hi, this is Jacob on the line for Joe. Thanks for taking my question. On the MDD study for 7290, I was actually just curious if we might expect any kind of pre-specified subgroup analysis by excessive daytime sleepiness or like stratification by excessive daytime sleepiness and whether we might expect, you know, powering to be sufficient to determine any differences between those patient populations. Or whether we could have an endpoint like ESS, where we could see if the effects on mood were being mediated by sleepiness.

Hi, Jacob. Thanks for the question. Yeah, as I said in the prepared remarks, actually, we do have a pre-specified subgroup, which is a group that has excessive daytime sleepiness. And our goal here is to look at the two populations, both the all-comers MDD versus the group that has the excessive daytime sleepiness. And, you know, one of the goals there is to see, do we see an enriched signal within that group? And you may expect to see that because as you look at the Madras scale, for example, there's some questions there that specify or are highly related to, you know, sleep or the anhedonia associated or lack of urgency and things like that that people get. So, you know, we want to see that and we want to test that in this study. And then that'll allow us to then determine our development path moving forward.

Our next question comes from Alex Nakanoff with Truist Securities. Please go ahead.

Hey, guys. Thanks for taking the question. Another one on ADHD. For the Phase 1B portion, could you explain your rationale why you utilized an inpatient setting and possibly how that may have impacted, if at all, baseline characteristics and if those baseline factors or the inpatient setting may have led to an outsized or suppressed treatment response? I'm just curious if you think I think you had a representative ADHD population where you believe the results will translate in future clinical studies. Thanks so much.

Yep. Thanks, Alex, for the question. So, as we looked at the ADHD program, we had two programs that are studies that we were running at the same time. We have, first and foremost, our large Phase II outpatient study that we're running that is placebo-controlled, multiple doses, et cetera. What we wanted to do in the Phase 1b study was to ensure that we had some information that we would inform on, one, what are some of the types of signals that we would see, and two, whether we were in the right dosage range overall. In order to do that, what we needed to do is learn a lot about how patients respond to orex and agonism. Because remember, this is actually the first asset of this mechanism that's ever been tested outside of hypersomnia indications. And so we needed to learn what we were doing, and that meant we had to put a lot of different tools within the Phase I program. And in order to do that, if you tried to do that in an outpatient-type setting, that would be exhaustive for the patients. It would be very hard for you to operationalize that. So that's why we chose an inpatient setting. What it allows us to do is put those patients in a clinic, look at those different outcomes in a more staggered pace that's appropriate for the patients. And we don't think that has any change on the overall baseline characteristics. I think overall, when we looked at the incoming baseline characteristics, that's consistent with what we see with other ADHD studies. I think where inpatient settings tend to have an impact on some things is on your safety outcomes, because sometimes what you tend to see in inpatient settings is those patients talking about their side effects, and that can sometimes amplify side effects here and there. Again, we saw a very good AE profile from this program, so I think all in all, we got exactly what we wanted from this study, and I think it validates the approach. And as we've always said, the Phase II study that's ongoing is going to be the one that's going to determine what's the characteristics or what's the signal size related to this drug treatment in this population.

Great. Thanks so much. Our next question comes from Umar Rafat with Evercore ISI. Please go ahead.

Morning, guys. Thank you for taking my question. I wanted to touch up on 7290 as well and a couple of points. First, I saw you guys used split dosing when conducting the inpatient ADHD trial. Do you think split dosing could be driving placebo response, and are you intending to continue using split dosing only in your ongoing outpatient ADHD as well as the MDD trial? And then secondly, the fact that you used up to 50 milligram dose of 7290, what does that tell us about the potency relative to your narcolepsy program. Thank you very much.

Hi, Umar. It's nice to hear from you. I think on the first question on the split dosing, so as we went into the ADHD study, one of the things we wanted to do as we're trying to learn on the signals is we didn't want to confound some of the PK differences of single-day dosing versus split dosing. We wanted to take that out of the equation. So we used split dosing just because it's a It just allowed us to standardize. I think as you look at our ongoing phase two study, we're actually using both once daily and split dosing. And I think that's important because as you know, in the ADHD population, it is a bit of a lifestyle drug in some respects in that patients have different needs according to whether they're working, whether they're students, what's happening in the evening, what happens in the morning, etc. And so I would envision that we'll probably introduce other dosing types, maybe PRN and other things in the future after original registration. But we're going to do both moving forward, single-day dosing as well as split dosing through the development program. With regards to the upper dose of 7290, it's actually, you can't really use that to relate to narcolepsy. This is fundamentally a different drug. It has a different potency. It has different pharmacological characteristics. And then also keep in mind that the pharmacologic dose level that you need to activate the ADHD circuit may be different than what you need to activate, say, a wakefulness circuit. And so there's a lot of dynamics that are going on there that don't really allow you to make that comparison.

Our next question comes from Ash Verma with UBS. Please go ahead.

Hi, this is Leland for Ash. Thank you for taking our question. For the IH study, is it fair to assume that the baseline ESS scores are similar to what you had in the NT2 study? Also, is it fair to assume that the placebo arm in this IH study could closely resemble how the placebo did in the NT2 study?

Yeah, I mean, look, we've established very similar entrance criteria in IH versus NT2. Now, who ends up enrolling in the study depends on the study and which patients show up. So we'll know that as we look at the data moving forward. I think as we look at this area overall, I think, you know, we feel pretty good that we're controlling placebo. Obviously, with wakefulness, one of the things to keep in mind is you don't tend to see such a big placebo response like you see in neuropsychiatric indications. So you tend to actually, it really depends more on the treatment arm than it depends on the placebo arm. But again, we do what we can to control that, and we've done that in this program by really trying to standardize how we do the tests, really making sure we have high-quality control on our clinical sites.

Got it. Thank you. And if I may have a follow-up, I think you alluded to the long-form IH patients earlier. Can you talk about roughly what percentage of your IH patients would be the long-form IH?

So, in our study, we haven't disclosed what that is. I think as we look at the general population, though, within IH, typically you see something in the order of around 25% of patients can be deemed long sleepers.

I see. Thank you so much.

You're welcome. Our next question comes from Amy Fabia with Needham & Company. Please go ahead.

Hi, good morning. Thanks for taking my question. With regards to the upcoming IH study readout, I'm trying to understand what, how you're sort of thinking about the outcome of the result, especially in the split dosing arm. As we think about the trade-off between efficacy of having split dose and maybe potentially implications on safety, are there any guardrails in terms of those trade-offs beyond which you may decide not to pursue a split dosing? And then, secondly, is there some process within the study of determining which patients may be best suited for a split dosing versus not that could inform your next clinical trial? Thanks.

Thanks for the questions. I think with the split dosing, we have a wide therapeutic range with this drug. So we remember when we went into our programs before, we studied in the NT2 trial up to 18 milligrams. And we have an ability to go higher if we want to. So split dosing, we don't see sort of a safety question as to what's going to determine whether we move to split dosing. Now, obviously, the data will tell us that. When we look at the NT2 data, if we see something unexpected, we'll adapt accordingly. But a priori, we don't anticipate that being a gating factor. What we're really looking for with the split dosing is really a comparison to the once daily dosing, and in the subset of patients who require additional efficacy in the afternoon, do we see a difference? And if we do see that difference, that's going to add additional flexibility for physicians to provide that dosage option to the patients. And remember, you know, in our NT2 study, we normalized, I would say, about 70% of the patients on the ESS scale using the once daily dosing. So we anticipate even in IH that we're going to see a good response on both dosage forms. But we want to have added flexibility and that added efficacy for patients and that added flexibility that split dosing would provide.

What I was trying to ask is, is there a way to learn from the study as to a priori which patients may be best suited for a split dosing?

Yeah, no, thank you. Thanks for the reminder, yeah. So, you know, it's interesting. It's a priori what we don't know when patients come into the study is, Would you be better on a split dose or would you be better on a single dose? And patients, obviously, in our study are going to be randomized, randomly into those categories. We'll see if we learn anything from this study of whether or not there are any patient characteristics that drive that. I think it would be surprising. I think one of the challenges when you get into NT2 and IH populations is, you know, the science underlying the etiology of the disease is a little unclear, and so, you know, in many ways, it's hard to, you can't just use a standard biomarker to say a patient's going to be responsive or non-responsive or need an afternoon split dose. So, again, we'll learn in the NT2 study, and it may just be that after this study, doctors are going to have to empirically decide, see how their patients respond to the once-daily dose, and then move them on to split dose if it's required. But the data will tell us, and we'll adapt from there.

Our next question comes from Andrea Newkirk with Goldman Sachs. Please go ahead.

Hi, this is Morthan on for Andrea Newkirk. Thanks for taking that question. For ALK7290 in MDD, given antidepressants typically fail to address residual fatigue and anhedonia, what magnitude of difference on MADRS do you consider clinically meaningful for this novel mechanism? Thank you.

Yeah, you know, it's interesting that as you look at the MADRIS scores and you look at things that are out there, I mean, I think typically people see a change versus placebo of somewhere between, you know, two and five as being a meaningful difference on MADRIS. And in fact, the drug that's out now, Velody, which, you know, only had a three-point change, three-and-a-half-point change or so relative to placebo, has strong uptake because it has unique characteristics. And so it has, A, a different mechanism, and, B, it has a rapid onset. And I think as you look at the MDD space, there's a number of areas where you can provide improvement, cognition, anhedonia, fatigue, as you alluded to. And we've seen things like cognition and fatigue benefits in some of our other trials. And so I think the goal for us is to be able to show a statistical difference between placebo as part of Madras, understand the domains of where we see response, and if we can show something that's different, that provides a broader profile than you see with the SSRIs, SNRIs, I think there's a lot of opportunity there. Because remember, this is adjunctive therapy. About 40% of these patients have an inadequate response. I think there's a lot of room for improvement for these patients.

Thank you. Our next question comes from Jason Gerberry with Bank of America. Please go ahead.

Oh, hey. This is Chi-An for Jason. Thanks for taking our question. I have a follow-up on the expectation for Vibrant 3. What do you expect to see from the data for advancing the program to phase three? Is it driven by whether the study meeting the primary endpoint? And what do you want to see as differentiated relative to on-market offerings such as Oxabay? Do you want to see sort of magnitude of benefit on ESS or IHSS for the IH study? And just quickly as a follow-up, on your earlier commentary around expecting to see a similar response as in the Vibrance 2 study, is that commentary related to QD dosing in ESS scale as we think about the overlapping element between Vibrance 2 and Vibrance 3? Thanks so much.

Yeah, I mean, there's a lot in your question there. I think as you look at the Vibrance 3 study, you know, as you look at it, obviously our endpoints are ESS and IHSS, and we want to be able to show a benefit within there. And for us, a Phase II study, remember, is about trying to ensure and understand your signal. It's trying to understand your signal relative to your safety profile, and can you design your Phase III trial in order to get over the line, show the statistical significance, show a benefit to those patients. Obviously, we want to hit statistical significance as part of our Phase II study if we can. If we were to fall a little bit short, does that mean we would stop the program? No, as long as we feel that we have an appropriate signal that trial design would be able to overcome. That being said, you know, when we look at our early treatment within this patient population, remember we had a once-daily dosing, similar to what we did with the NT2 population. We saw a similar effect size between NT2 and IH. So our hope is that we see something similar. We hope that we'll provide additional benefit through the split dosing. And that we'll be able to then design our Phase 3, meet with the agency, and then move that into our Phase 3 program. So, you know, with regards to my previous comment, with regards to Vibrance 2 versus Vibrance 3, what I'm really just trying to say is that there's a lot of heterogeneity in the patient populations, both in NT2 and IH. There's also a lot of overlap between diagnoses. Patients move between an NT2 diagnosis and an IH diagnosis, sometimes frequently, so I would expect that there's an overlap of population there, and that if you have a similar population, that the once-daily drug would perform similarly, with the caveats that I mentioned earlier, that you have this other patient group in there that we're going to be learning about, the long sleepers. So, again, what I'm hoping is that we've designed the study in a way where we can learn what we need to from this program and move forward quickly into phase three.

Thank you. Our next question comes from Luke Herman with Baird. Please go ahead.

Hi, team. Thanks for the question. So, just a follow-up on the erection and oxybate dynamic. Given the view that erections and oxybates can be complementary by HCPs, and, you know, that's intuitively found that they can be complementary. But I guess, what is your early thinking on payer dynamics, if a set of patients could theoretically be in position to step up from one to two branded therapeutics?

Yeah, Luke, this is Todd. I'll take that. Yeah, we're spending a lot of time right now talking to payers overall. As you know, the access profile for oxabates and for lumerizes is quite strong at, you know, north of the 80%. And we don't see that changing over time. There's a significant value to HCPs and to patients. I think a lot will be determined pretty quickly here when we see what the pricing dynamic looks like for the Takeda product overall. As you know, there's a lot that goes into pricing, and one of the considerations that we will be thinking through is not only just the overall value of Elixir Exton with a very broad label and how we plan to differentiate, but also making sure we take into consideration what the reimbursement profile looks like. So our expectation is that we will put forward a profile in a pricing dynamic that will allow broad access to both products.

Our next question comes from Douglas Sow with H.C. Wainwright. Please go ahead.

Hi. Good morning. Thanks for taking the questions. Just on 7290 into MDD, I was just curious. It sounds like you are looking into the drug's effect on sort of some of the specific domains of the madras. I'm just curious, are you looking at things like SHAPS? Because I think there is a rationale to think that a erection could have an effect on anhedonia, And obviously, that's sort of a more refined measure of looking at that specific aspect of the disease. Thank you.

Yeah, I mean, I think as we move forward in the program, we're going to be looking at a lot of different things. I think for the ongoing study right now, our primary is really on the Madras. We're really, yes, are we looking at the individual domains? Of course we do, but we're designed to look at the overall response overall. So, our goal here is to really show whether or not we see an overall effect size, understand the patient population, and as we move into the next phase of the program, we'll dive deeper into some of the areas that we see. Okay.

Our last question comes from Ben Burnett with Wells Fargo. Please go ahead.

Good morning, Jim. This is Orpheus on for Ben. Congratulations on the progress. I had another question on oxidase plus orexins. You've tried this as complementary, and you've also heard similar feedback from my KOLs. With that in mind, could you remind us of your plans to generate data of an orexin agonist in combination with an oxidase? And if you do run such a study, would your oxidase of choice be lume rice or valoxabate? Thank you.

I think it's a great question. And actually, we do want to generate a lot of data with oxabates and orexins together because just like you're hearing, we're hearing from our patients that that would be desirable to be able to have a nighttime treatment with an oxabate and a daytime treatment with an orexin. And we want to be able to support that. We want to support patients and doctors in how to use it, how to use it safely, and also for payers to support it and show those benefits. That being said, what we want to make sure is that we do those studies as we're further along in the registration program. We don't want to put our core registration program at risk, so it'll take a little time, and we will move to that, and of course, we will use Lumerize as the comparator. We think that's the dominant drug moving forward, and that's what we'll want to show.

Thank you.

We have reached the end of our question and answer session. I would now like to turn the floor back over to Sandra Coombs for closing comments.

All right. Thanks, everyone, for joining us on the call today. If you have any follow-up questions, please not hesitate to reach out to us at the company.

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