Earnings Call Transcript - ALKS Q1 2024

Operator, Operator

Greetings, and welcome to the Alkermes First Quarter 2024 Financial Results Conference Call. My name is Maria, and I'll be the operator for today's call. Please note that this conference is being recorded. I'll now turn the call over to Sandra Coombs, Senior Vice President of Investor Relations and Corporate Affairs. Sandy, you may begin.

Sandra Coombs, Senior Vice President of Investor Relations and Corporate Affairs

Good morning. Welcome to the Alkermes plc conference call to discuss our financial results and business update for the quarter ended March 31, 2024. With me today are Richard Pops, our CEO; Blair Jackson, our Chief Operating Officer; and Todd Nichols, our Chief Commercial Officer. During today's call, we will be referencing slides. These slides, 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 and quarterly reports 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'll open the call for Q&A. And now I'll turn the call over to Blair for a review of our quarterly financial results.

Blair Jackson, Chief Operating Officer

Thank you, Sandy. Over the past 2 years, we've been executing a plan to streamline our business and drive the growth of our proprietary products, our pipeline, and our profitability. We entered 2024 as a pure-play neuroscience company with a top line driven by VIVITROL, ARISTADA, and LYBALVI. Our 2024 financial expectations provided in February assumed Q1 seasonality, followed by growth in the second quarter and beyond. This continues to be our expectation. And today, we are reiterating our 2024 financial guidance. Our first quarter performance reflects continued year-over-year growth of our proprietary product portfolio net sales, investment in LYBALVI and advancement of the ALKS 2680 development program, as well as our ongoing focus on efficient management of our cost structure to drive profitability. We're in a strong financial position and confident in the growth opportunities ahead of us. For the first quarter, we generated total revenues of $350.4 million, driven by our proprietary product portfolio, which grew 9% year-over-year. This top line result also reflected the impact of a combined $10.2 million drawdown of inventory in the channel for our three proprietary products. Starting with VIVITROL. Net sales in the quarter were $97.7 million, driven primarily by the alcohol dependence indication, compared to $96.7 million in the same period last year. For the ARISTADA product family, net sales were $78.9 million for the first quarter compared to $80.1 million for the same period last year. For LYBALVI, consistent with the expectations we outlined in February, net sales during the quarter were fairly flat sequentially at $57 million, which represented 50% year-over-year growth. Gross to net adjustments were stable sequentially. Moving on to our manufacturing and royalty business. In the first quarter, we recorded manufacturing and royalty revenues of $116.8 million compared to $72.9 million for Q1 last year. Revenues from the long-acting INVEGA products were $62.7 million compared to $13.6 million for Q1 last year, reflecting the reinstatement of royalties related to these products in the second quarter of 2023. Revenues from VUMERITY were $31.3 million compared to $28.9 million for Q1 last year. Turning to expenses. Following the separation of our oncology business last year, expenses associated with the oncology business are considered discontinued operations. Today, I'll focus on results from continuing operations, as those results are more relevant to the financial profile of the company going forward. Our first quarter results reflect slightly elevated operating expenses, driven by the phasing of certain investments in clinical development, commercial support activities, labor-related costs, and recognition of certain share-based compensation expenses. We expect total operating expenses will decrease sequentially throughout the remaining quarters of the year. Cost of goods sold of $58.6 million were flat compared to $58.2 million for Q1 last year. R&D expenses were $67.6 million compared to $63.8 million for Q1 last year. This reflects focused investments in our neuroscience development programs, primarily related to the ALKS 2680 clinical program and support activities for our proprietary commercial products. We expect R&D expense to decrease by approximately $10 million in Q2, and then remain relatively steady at that level through the end of the year. SG&A expenses were $179.7 million, compared to $167.8 million for Q1 last year, primarily reflecting continued investment in the launch of LYBALVI. Looking ahead, we expect phased investments in selling and marketing initiatives to remain fairly consistent in the second quarter, followed by decreases in the second half of the year, reflecting the timing and mix of promotional activities. Within our noncash expenses across R&D and SG&A, we recorded $3.2 million and $6.2 million, respectively, of nonrecurring share-based compensation expenses during the first quarter related to the achievement of certain performance award criteria. We continue to focus on driving profitability, and during the first quarter, we delivered GAAP net income from continuing operations of $38.9 million. Non-GAAP net income from continuing operations of $76.2 million and EBITDA from continuing operations of $51.5 million, reflecting significantly enhanced profitability year-over-year, primarily driven by the growth of our proprietary commercial product portfolio, the separation of the oncology business completed during the fourth quarter of 2023, and our continued focus on operational efficiencies and disciplined expense management. Turning to our balance sheet. We ended the first quarter in a strong financial position with $807.8 million in cash and total investments and total debt outstanding of $290.1 million. Additionally, we expect to close the sale of our Athlone, Ireland manufacturing facility to Novo Nordisk within the next day or two. In connection with the closing, Alkermes will receive a one-time cash payment of approximately $91 million. This transaction represents a significant element of our multiyear program to drive operational efficiency and further align our infrastructure and cost framework with the anticipated needs of our business. Taking a step back, our first quarter results were largely consistent with our expectations, and we believe provide a solid foundation for growth through the rest of the year. We expect top line growth to accelerate into the second quarter and are pleased with our trajectory thus far. We remain focused on disciplined management of our expenses and expect enhanced profitability as we move through the remaining quarters of the year. With that, I'll now hand the call to Todd.

Todd Nichols, Chief Commercial Officer

Great, and thank you, Blair. Good morning, everyone. In the first quarter, net sales from our proprietary product portfolio grew 9% year-over-year, even with meaningful reductions in inventory in the channel for all three products. As we enter the second quarter, we are reiterating our 2024 financial expectations for each of our three proprietary products, LYBALVI, ARISTADA, and VIVITROL. Starting with LYBALVI. During the first quarter, we generated net sales of $57 million, which was relatively flat sequentially compared to the fourth quarter, consistent with our expectations. Total prescriptions of approximately 49,600 during the quarter reflect underlying prescription growth of 6% sequentially and 50% year-over-year as well as continued expansion of prescriber breadth. This growth in demand was partially offset by a decrease in inventory in the channel equal to approximately $2.3 million. During the first quarter, LYBALVI continued to be the fastest-growing oil brand in the market on a prescription basis. Optimizing LYBALVI's access profile is an important element of our long-term growth strategy for the brand. Payer coverage across Medicare and Medicaid is established, with most patients having a pathway to access. For the commercial payer channel, our disciplined contracting strategy is playing out as we seek to maximize net sales of LYBALVI while expanding patient access. We recently enhanced the access profile for LYBALVI through selective contracting with a large pharmacy benefit manager to improve formulary positioning. This contracting is not expected to significantly impact our anticipated gross to net adjustments this year. We have additional opportunities to further enhance commercial payer access for patients and believe we are well positioned to continue to execute our strategy. For the full year, we continue to expect LYBALVI net sales in the range of $275 million to $295 million. Turning to the ARISTADA product family. Net sales in the first quarter were $78.9 million, reflecting pronounced seasonality in prescriptions and a substantial decrease of inventory in the channel, equal to approximately $3.6 million. We expect inventory levels to approach more normal levels in the second quarter. We continue to focus on highlighting ARISTADA's differentiated features in supporting clinical data. For the full year, we continue to expect ARISTADA net sales in the range of $340 million to $360 million. Moving to VIVITROL. Net sales in the first quarter were $97.7 million, reflecting normal seasonal trends in patient flow and a decrease of inventory in the channel equal to approximately $4.3 million. VIVITROL performance continues to be largely driven by the opportunity in the alcohol dependence indication, which currently accounts for approximately 75% of VIVITROL volume. Alcohol dependence is an important growth opportunity, and our team is energized about driving awareness and uptake in that underserved disease area. Looking ahead to the full year, we continue to expect VIVITROL net sales in the range of $410 million to $430 million. With the first quarter now behind us, we have a solid foundation for growth into the second quarter and the second half of the year. For all three of our products, inventory levels have started to rebound in recent weeks and prescription growth has been in line with our Q2 expectations. Our commercial team is focused on execution across our portfolio, and we look forward to sharing our progress. With that, I will pass the call to Richard.

Richard F. Pops, CEO

Good. Thank you, Todd. Good morning, everybody. Alkermes is now a profitable pure-play neuroscience company with an advancing pipeline. This profile drives our objectives for 2024, commercial execution, advancing ALKS 2680 in the clinic and expanding our development pipeline. Blair and Todd covered the financial and commercial elements. I'm going to spend a few minutes on recent developments within our R&D pipeline, particularly ALKS 2680, our novel once-daily oral orexin-2 receptor agonist in development for narcolepsy. Starting with our progress in Narcolepsy Type 1 or NT1. Based on the biology, the core of the ALKS 2680 development program is in NT1, which is associated with an absence of significant deficiency in orexin levels. We are moving quickly in this indication. Last year, we had generated important proof-of-concept data in patients with NT1. Based on the compelling initial data from our first four patients, we made the decision to accelerate the Phase II planning. Toward year-end, the data from the full NT1 cohort of 10 patients reinforced our conviction in that decision. So we entered 2024 with work well underway to finalize the Phase II protocol, manufacture clinical supplies of the Phase II dose strength, interact with FDA and clinical study sites and investigators. These activities culminated in the recent initiation of Vibrance-1, a Phase II randomized placebo-controlled multinational study, which we announced last week. Vibrance-1 is planned to enroll approximately 80 subjects, randomized to single daily doses of either 4, 6 or 8 milligrams of ALKS 2680 or placebo over a 6-week double-blind treatment period. Data from this study will further characterize the safety and efficacy profile of ALKS 2680, utilizing well-established efficacy endpoints, including the maintenance of wakefulness test, or MWT, Epworth Sleepiness Scale and weekly cataplexy rates. We expect the study will take approximately 1 year to fully enroll. As we gain more experience with clinical site initiations and patient enrollment trends, we'll look to put a finer point on the timelines. As we launched this Phase II study, we're also looking forward to sharing additional data from the full NT1 cohort from the Phase Ib study with the clinical community at the Sleep 2024 meeting in June. These data will include safety, tolerability and MWT improvements for the full cohort of 10 patients, as well as our first presentation of improvements in subjective levels of sleepiness as measured by the Karolinska Sleepiness Scale, or KSS. Narcolepsy Type 2 or NT2 represents another significant potential opportunity for ALKS 2680. Last month, we announced positive top line data from the Phase Ib cohorts in NT2 and idiopathic hypersomnia. In these cohorts, participants were randomized in a 4-way crossover design in which each participant received single oral doses of 5, 12 and 25 milligrams of ALKS 2680 and placebo with washout periods between each treatment. ALKS 2680 was generally well tolerated and resulted in clinically meaningful and statistically significant improvements in wakefulness as measured by MWT sleep latency scores at all doses tested. We’ll refer you to the press release we issued on April 9 for more details related to the safety, tolerability, and efficacy observed in these cohorts in the Ib study. Importantly, the data showed dose-dependent effects in a pharmacodynamic profile that supports advancement into a planned Phase II study in NT2 patients, which will be known as Vibrance-2. We recently finalized our dose selection for that Phase II study and plan to move forward with 10, 14, and 18-milligram doses of ALKS 2680. ALKS 2680 is currently the only orexin-2 receptor agonist moving into later-stage clinical evaluation in Narcolepsy Type 2. We are working to initiate Vibrance-2 as quickly as possible, which we expect to be in the second half of 2024. The data from the Ib cohort validate our hypothesis and orexin agonist with appropriate pharmaceutical properties, has the potential to provide clinical benefits for both NT1 and NT2 patient populations. Importantly, the data also demonstrate that orexin-2 receptor agonist such as ALKS 2680 may have utility in treating other disorders in patients without known orexin deficiency. This represents a significant opportunity to evaluate expansion into broader disorders where excessive daytime sleepiness is a feature. To explore these opportunities, we continue to advance our portfolio of preclinical orexin-2 receptor agonist and recently nominated our next candidate, which is now in IND-enabling studies. We look forward to sharing additional details about our plans in this space later this year. So 4 months into the year, we're continuing to execute against our strategic priorities. Across the commercial business, the team is focused on delivering growth and strong financial performance. The ALKS 2680 development program is well on track and represents a potentially transformative opportunity for our business. And consistent with the capital allocation framework we unveiled earlier this year, we continue to evaluate opportunities for our external business development and to return capital to shareholders. We look forward to sharing our progress with you. And now with that, I'll turn it back to Sandy to run the Q&A.

Sandra Coombs, Senior Vice President of Investor Relations and Corporate Affairs

Thanks, Rich. Maria, could you please poll the audience for questions?

Operator, Operator

Our first question comes from Charles Duncan with Cantor Fitzgerald.

Charles Duncan, Analyst

Rich and team, congrats on a good quarter of progress. I had a couple of pipeline questions, and that is primarily around 2680. I think it was mentioned that R&D is coming down by $10 million. And despite all of the progress that you're making in the clinic, I'm trying to reconcile that. In addition, I had a question on Vibrance too, but I'll hold that for the first answer.

Blair Jackson, Chief Operating Officer

Charles, this is Blair. Thanks for the question. With regards to R&D, there's a couple of dynamics associated with this spend this year. One is that we have a number of nonrecurring expenses in the first quarter that apply to the R&D group that imply payroll taxes and things like share-based comp. Those won't recur. And so you would expect declines from that through the course of the year. And then also, there's a phasing of the payments associated with the programs. As you know, with ALKS 2680, we had a lot of activity in closing out our Phase Ib program in NT1 and NT2 and IH, and we had expenses associated with that. And then as we kick off the Phase II program, there's a lot of contractual dictated spend, and that leads to some phasing over the course of the year.

Richard F. Pops, CEO

Charles, the only thing I'll add is, from a capital allocation perspective, 2680 gets what it needs. We're not throttling that back at all, on the contrary. We're leaning into that one as aggressively as we can.

Charles Duncan, Analyst

It seems that you are indeed moving into NT2, and I want to confirm if that includes Vibrance as well. Do you have any additional insights on IH? Or could it be a sign that it might be more appropriate for a second candidate? Also, could you share any details about the target product profile for that second candidate, especially how it distinguishes itself from 2680?

Richard F. Pops, CEO

Yes, it's a great question. We're really pleased with those IH data and taking it in whole with the NT1, NT2, IH. You just see this very consistent profile for ALKS 2680 and driving wakefulness almost irrespective of the orexin tone in the underlying disease. But clearly, the most aggressive path to first approval is in narcolepsy, that indication. That's why we're prioritizing NT1, NT2, Vibrance-1, Vibrance-2 go as fast as we can. We are very interested in the IH population as a disease indication itself. But also as it reads on to other indications that might be characterized by excessive daytime sleepiness with orexin tone in the brain. It may be something we would do subsequent with 2680 or may be indeed something with an additional compound. I'm not going to give you specifics necessarily on the backup or the next-generation compounds because there are some competitive aspects to the profiles that we're working on. But I expect you'll hear more about that later this year.

Operator, Operator

Our next question comes from David Amsellem with Piper Sandler.

David Amsellem, Analyst

So one question on the orexin and one on LYBALVI. First on the orexin. There's a number of these agents that are kicking around, I think, recently, Harmony in-license, the preclinical stage, orexin 2 receptor agonist and there are certainly others. So Richard, maybe help us understand how you're thinking about the extent to which multiple orexins can coexist, maybe not just in narcolepsy, but as you're thinking about IH and other disorders where hypersomnia is a hallmark symptoms. So I just wanted to get your high-level thoughts there.

Richard F. Pops, CEO

David, yes, I'll start on the orexin and give you a thought on LYBALVI too and then I'll ask Todd to give you his perspective from the front lines on it. But the one thing we've learned about this orexin space, if we've learned anything, is that each of these molecules is quite different when they get into the clinic. And we anticipated that. If you recall the slide that we've presented multiple times, which shows the various optimization parameters that one needs to consider when developing an oral small molecule GPCR agonist that gets into the brain. And what we saw from competitive programs is that the programs that the molecules, when they get into humans separate pretty distinctively. So to your question, it presupposes that there's multiple co-existing commercial orexin agonists that are similar in the profile. I just don't believe that's going to be the case. Now that will yield the data, of course, but I think that in our case, we're focused on developing a once daily, very well-tolerated orexin agonist that is approved for narcolepsy NT1, NT2. And so far, we're right on track for that. With respect to LYBALVI, I think the first approval for KarXT we expect will be in schizophrenia. And remember that LYBALVI is competing in a broader market, which is both schizophrenia and bipolar. And most of the big oral brands in this space need multiple indications to really drive sales across multiple patient populations. With that said, in the focus in schizophrenia, I think that our differentiating feature in schizophrenia is the efficacy of LYBALVI. And if physicians and patients are talking about efficacy, that's a good setup for LYBALVI. Todd, what's your thoughts?

Todd Nichols, Chief Commercial Officer

Yes, I would agree with that. I think it's important to remember, we look at the category overall, is a very large category for LYBALVI in general, I'm speaking about, Bipolar 1 and schizophrenia. The dynamics of the market are switch. So this is a switch market. So you have to be able to compete within the switch market. KarXT coming out in the market, the first indication, as Rich said, is going to be schizophrenia. This is obviously a market that we know very well. But the core attribute has to be efficacy. And LYBALVI is very well positioned. Through all of our research, HCP continue to tell us that the core value proposition for LYBALVI is efficacy, but you have to have a good balance of tolerability and safety as well. So we believe LYBALVI is extremely well positioned now and in the future, even with new products coming into the marketplace.

Operator, Operator

Our next question comes from Joel Beatty with Baird.

Joel Beatty, Analyst

First one is on 2680. With the recent NT2 IH data, do you think original disturbance is on or off target? And if it's on target, why hasn't it been seen with other agents such as with Takeda's?

Richard F. Pops, CEO

Well, as I said earlier, I think that each of these agents is quite different. And this is, the 2680 is a very potent, very selective molecule in the clinic. Just to be clear, when we talk about visual disturbances, what we've observed in patients so far is very mild and very transient and very infrequent. We saw no visual disturbances in patients with NT1 at the doses tested. And we saw one event in patients with NT1 and one in patients with IH, both were mild, transient, self-limiting single occurrences. And just to understand what the parlance is with respect to adverse event characterization, when something is characterized as mild, it means that it's noticeable by the patient, but it's easily tolerated and doesn't impact their activities. So to the extent that it may be on target, we'll need more data across a wide dose range to know that for sure. But the profile is currently configured, we're very comfortable with.

Joel Beatty, Analyst

Great. And then for LYBALVI, what's the outlook for the DTC campaign? Does it seem to be having the impact you were hoping for?

Todd Nichols, Chief Commercial Officer

Yes, I'll take that one. I would say right now, we're really pleased with our DTC program. We've been executing the program over the last couple of quarters as planned. The lead indicators, the trends are positive, as we've discussed in the past, such as website visits, branded searches. In fact, they're significantly up year-over-year. And our early indicators, our early analysis shows that the overall program, which is TV and digital, is contributing to TRx growth. So our data actually shows that there is a meaningful contribution. So our plan is to continue to execute that program throughout the year.

Operator, Operator

Our next question comes from Akash Tewari with Jefferies.

Katherine Wang, Analyst

This is Kathy on for Akash. I just have a couple of questions. So when tech presents full data at sleep in June, what data points are you looking for that will give you confidence that oxy won't need to be combined with sodium oxybate? And then also, what measurements do you think are the most important regarding sleep architecture? And then finally, for your NT2 study, will you require any driving restrictions?

Richard F. Pops, CEO

Yes. I mean we look forward to seeing Takeda's presentation of data at Sleep in Houston in June because there, we should see the results of the randomized Phase II study in multiple doses dosed twice a day for that drug, both safety as well as efficacy. So we'll look forward to seeing what they're presenting. And obviously, we don't know at this point what they will present. With respect to the effect of the orexin agonist on sleep architecture, I think that's yet to be fully characterized. Perhaps we'll see some data in June that begin to describe that. But I think that the theory is that with a full day of wakefulness, that sleep should be consolidated and resume more normal architecture. But that needs to be proven in the lab. We'll be doing that in our Phase II study looking at polysomnography in our Phase II study for both Vibrance-1 and Vibrance-2. And no, there's no need for any driving restrictions in our study.

Operator, Operator

Our next question comes from Paul Matteis with Stifel.

James Condulis, Analyst

This is James on for Paul. I just had one question around kind of like margins going forward and specifically on EBITDA. I guess as you look ahead and as some of these royalties kind of start to peel off, I guess, do you think the current EBITDA margin profile is sustainable in the midterm repeatable? I guess just kind of what do you see as your goal looking forward? And then I guess, in that context, how are you thinking about investing in R&D or looking at BD opportunities?

Blair Jackson, Chief Operating Officer

I'll begin with the margins. We have a healthy margin moving forward and expect to generate significant cash for the business. Our plan is to continue operating profitably within this range while allowing for substantial investment in both our portfolio and commercial business. This is our overall strategy.

Richard F. Pops, CEO

Just if you look at our long-range plan, what you see is you see, as Blair indicated, you see growing profitability with a growing top line. And so that accommodates both expansion in R&D spending as well as potential return to capital to shareholders while maintaining significant profitability. So we think we can do all this at the same time, and it's all driven by that advancing top line.

Operator, Operator

Our next question comes from Umer Raffat, Evercore ISI.

Umer Raffat, Analyst

I have a couple of questions, starting with the one on Part D reform. What impact do you anticipate on your top line and EPS for next year? I know this is relevant, so I'm interested in your insights. For the second question regarding orexin, I would like to delve a bit deeper into its potency. You've previously provided impressive data, particularly at the world sleep conference. I believe it was the IP1 assay where 2680 demonstrated about 10 times the potency of native orexin. However, other studies indicate that native orexin may underperform in IP1 assays. Could you clarify how your potency compares to native orexin in a flipper assay?

Richard F. Pops, CEO

Umer, those are both unexciting questions, I must say. The Part D aspect is interesting because we are among the companies that qualify for the phase-in. To provide some context, as companies take on more liability during the catastrophic phase-in of Part D, certain companies begin this gradual phase-in. In 2025, the exposure is 1%, which is small but marks a progression towards full participation in the program by the end of the decade. Therefore, it won't significantly impact 2025. I mentioned potency because the relevant potency is human potency. We are significantly ahead of others in demonstrating the high potency of ALKS 2680 across doses of 4, 6, 8, 10, 14, and 18 in NT1 and NT2, where we are achieving meaningful efficacy. While we can discuss various in-vitro systems concerning selectivity and potency, I would argue that they are necessary but not sufficient to determine actual potency as a medicine. Consequently, I don't actually know our flipper values because we have advanced far beyond that in our development program, making it essentially irrelevant at this stage.

Umer Raffat, Analyst

And sorry, Richard, just to clarify, on the Part D point that you made, you said there's a phase-in obviously. Whatever the max impact is by 2030, how much of the max is in by 2025? Is it 1/4 of that or 1/10 of that?

Richard F. Pops, CEO

No, no. 2025 is 1%. Literally. It's the absolute value is 1% participation in that catastrophe phase. But that's from 0. We have 0 right now. So we add 1% and then it scales over the next several years until it ultimately hits the full level. But it's a specific carve out for companies that are smaller companies with dependence on that Part D population as a significant source of income. And it was specifically oriented by the policymakers to make sure that companies like ours weren't devastated by going from 0 exposure in catastrophic to a 10% or 20% exposure in catastrophic.

Umer Raffat, Analyst

Correct. So it's 1% of the max 20%, correct? It's not...

Richard F. Pops, CEO

It's not 1% of 20%, it's 1% absolute.

Operator, Operator

Our next question comes from Jason Gerberry with Bank of America.

Jason Gerberry, Analyst

I have got a couple of boring questions as well. Just...

Richard F. Pops, CEO

I'll be the judge of that, Jason.

Jason Gerberry, Analyst

Yes. Regarding your comments about the LYBALVI-PBM contract not affecting 2024, I'm curious about 2025 and beyond. Specifically, how do we view the high 20% gross to net figures? As we transition to a more commercially contracted model, what does that look like? Also, can you provide an update on the CAR T impact? Is the distribution between bipolar and schizophrenia still 50-50, or has it shifted more towards bipolar? I understand there were expectations with direct-to-consumer efforts that might lead to more bipolar patients and possibly an increased shift in that direction.

Todd Nichols, Chief Commercial Officer

Yes. Jason, this is Todd. I'll take that. For gross to net, we were really pleased that we were actually able to continue to execute on our strategy, our commercial contracting strategy. So as I said in the prepared remarks, we did enter into a new agreement with a really large PBM that we're really pleased with, to improve the formulary positioning to get more patient access to LYBALVI. Even with that, for 2024, we had a range of scenarios for gross to net plus net sales. So that fits perfectly in the range that we've outlined. For the full year, we still expect gross to net to be in that high 20s. Going into '25 and beyond, we're not guiding to '25 and beyond. But that may widen a little bit as we continue to execute our strategy and get more access for patients on formulary for commercial. In terms of the mix overall for schizophrenia and bipolar, the mix for TRx is still approximately 50% for schizophrenia and bipolar. We continue to see new patients start skew more towards Bipolar 1, which, again, was part of our strategy. So it's approaching a little north of 55% for new patient starts, and the volume growth overall, most of the volume growth we're seeing within the brand right now is coming from Bipolar 1. So we think that's a combination of, obviously, of growing breadth of prescribing and also the activation we have with patients right now.

Operator, Operator

Our next question comes Uy Ear with Mizuho Securities.

Uy Ear, Analyst

Just high level. Just curious, given the recent in-licensing by Harmony of an orexin 2 agonist, the deal was kind of strained. It just went from one company to the next. And curious to see what the landscape is like. Is an orexin molecule this rare? Or is it easily, I guess, can be generated? Maybe just provide a little color on the ability to have access to one of these molecules.

Richard F. Pops, CEO

I believe it's quite unusual. That's likely the reason why there has been such a challenge in achieving chemical diversity in this area. These molecules are complex to produce because they must be orally bioavailable and able to cross the blood-brain barrier. Once they achieve that, they also need to interact with a G-protein-coupled receptor as an agonist to activate signaling in the brain and specific target neurons. Furthermore, they need to maintain a pharmacokinetic profile that aligns with a normal sleep-wake cycle, allowing individuals to wake up in the morning and sleep at night. This makes the process particularly challenging. Consequently, despite the considerable commercial and medical potential, there are currently very few products in clinical development. In comparison, other systemically available kinase inhibitors and various drug types exhibit a broader range of chemical diversity. Here, however, the field is very limited. While it's possible to find molecules available for licensing, the critical issue is whether they are effective ones.

Uy Ear, Analyst

Just a follow-up on that. Could you maybe also speak a bit about the number of molecules that you perhaps have in-house, if you can share that? And what is it about your platform that gives you an advantage, I guess?

Richard F. Pops, CEO

I believe our platform is based on a clear understanding of the essential features we needed to incorporate when we started our work in medical chemistry. While potency is certainly important, it alone is not enough. Our screening and chemistry efforts were designed to optimize across various domains, resulting in unique chemical structures. However, within our patent portfolio, there is a finite number of structures that can provide all the desired attributes, making our patents a crucial part of our foundation. Through our patent suite, we can develop a wide range of compounds. Our task in the preclinical phase is to categorize these compounds based on the specific indications we aim to pursue. The primary focus is narcolepsy, which represents a straightforward example of how we can replace a deficient neurotransmitter in NT1 with a small molecule analog. This sets a strong foundation for our chemistry and biology efforts. Additionally, by exploring the brain circuits that regulate wakefulness, we can uncover implications that extend beyond just narcolepsy.

Operator, Operator

Our next question comes from Jessica Fye with JPMorgan.

Jessica Fye, Analyst

Curious, did you see any impact of volumes from the Change Health cyberattack in the first quarter? And separately on the orexin, I think for the recent NT2 and IH update, the description on AEs was just listing those that happened in more than one participant. And I think you'll have certain investors wondering about the rates that you saw, for example, if that just meant some of these occurred in only two patients versus more than that. So curious if there's any color you can provide there?

Todd Nichols, Chief Commercial Officer

Yes, definitely. Jessica. Regarding Change Healthcare, there were many reports in the market about operational issues for HCP offices, pharmacies, and hospitals related to processing claims. The most significant overall impact for the market was in the processing of co-pay cards and co-pay claims. However, our three brands with co-pay cards were unaffected. We did not experience any impact at all from the Change Healthcare cyberattack.

Richard F. Pops, CEO

And Jess, I don't have the AE table in front of me, but remember, we were very pleased with the AE profile in the NT2 IH cohort. And remember that across all the doses, it was observed to be generally well tolerated. The treatment-emergent adverse events assessed as related to study drug were mild transient resolved without treatment, no severe or serious AEs were reported and there are no AEs that led to study drug discontinuations. So we'll provide the full data tables when we present the data later this year, but the overall profile is just as I described.

Operator, Operator

Our next question comes from Marc Goodman with SVB Securities.

Guofang Li, Analyst

This is Rudy on the line for Marc. So you mentioned increased breadth for LYBALVI prescribers. So what percentage of these 20,000 prescribers have you reached? And what is your strategy to increase the breadth and depth in prescribers moving forward?

Todd Nichols, Chief Commercial Officer

Yes, I’ll address that. Our sales force is targeting around 22,000 prescribers, and we have made a significant impact in both the range and volume of prescriptions. For the first quarter, we have approximately 6,600 prescribers, reflecting a year-over-year growth of about 34, which we find encouraging. Much of this growth is due to timing, as we continuously onboard new prescribers weekly and monthly. This growth is largely driven by the brand's utility. Healthcare professionals consistently indicate that the efficacy of our product sets it apart and allows for broad applicability in treating schizophrenia and Bipolar 1. Recent market research shows that approximately 90% of healthcare professionals plan to maintain or increase their prescribing activity over the next year, which we see as a positive trend for expanding both the breadth and depth of our prescribing.

Operator, Operator

Our next question comes from Douglas Tsao with HC Wainwright.

Douglas Tsao, Analyst

Just first, on LYBALVI, I'm just curious, as a follow-up to that last question. I mean, do you see the bigger opportunity in improving the depth of prescribing with individual prescribers? Or is it just expanding the universe of writers?

Todd Nichols, Chief Commercial Officer

Yes. Actually, it's both. But overall, we're still in the early stages, I would say, of our launch. And so prescriber breadth has obviously been primary job #1. Prescriber depth, every single quarter actually is improving. So we continue to see that. We've done a lot of research with that. And really, the key insight is once an HCP has a positive experience with LYBALVI, whether it's schizophrenia or bipolar they tend to expand utilization pretty rapidly. So we're really pleased with that. So the overall profile of the product for a broad population with schizophrenia bipolar will ultimately, over time, drive a lot of depth. But primarily job #1 right now is continuing to drive prescriber breadth. And we think we're still really early with that. So at large, I would say it's usually a couple of months really based upon the issue with the patient based upon the tolerability, their efficacy they're receiving on the current medication.

Sandra Coombs, Senior Vice President of Investor Relations and Corporate Affairs

Maria, I think we have time for one more question.

Operator, Operator

Okay. Our last question then is from Chris Shibutani with Goldman Sachs.

Karishma Raghuram, Analyst

This is Karishma on for Chris. So with the schizophrenia and bipolar markets, in particular with regard to long-acting injectables and the progress there, are your assets here, namely LYBALVI and ARISTADA, continuing to increase in terms of penetration in the U.S.? Or is this kind of plateauing at this point in time? And then I have a follow-up as well.

Todd Nichols, Chief Commercial Officer

Yes, absolutely. So we continue to see encouraging trends overall with both products, and they're not plateauing at all. LYBALVI is still in the initial phase, obviously, our view on launching. And I think the to support that is LYBALVI for Q1 in year-over-year continues to be the fastest-growing branded product in the category, not only for TRx's but also for new patient starts. And that's a really important leading indicator right now. So it gives us a lot of confidence in the growth opportunity long term. And in terms of ARISTADA, ARISTADA has quite a bit of seasonality in the LAI category in Q1, but we've already seen encouraging trends going into Q2. And in fact, we see in Q2 already, we're seeing encouraging new patient starts. So the lifeblood of the brand is new patient starts and we don't see that slowing down for ARISTADA as well.

Karishma Raghuram, Analyst

Okay. Great. And then one follow-up, if I could. What potential implications do you see to the legacy products when potential new mechanisms such as muscarinic agonists are introduced? Should they be successfully developed?

Todd Nichols, Chief Commercial Officer

Yes, absolutely. So we watch the competitive landscape category really clearly. I think the key for us right now is the addressable market that we're focused on. We have a very clearly differentiated market that we're focused on for LYBALVI and also for ARISTADA. The value proposition for both brands resonates very well. For LYBALVI, it's about efficacy. LYBALVI is considered one of the most efficacious branded products in the category. And so that's a really, really strong position to be in at this point in launch. In terms of ARISTADA, you don't typically see a lot of market growth with LAIs coming into the category. They typically trade within the molecule themselves. HCP's continue to report to us that ARISTADA has a differentiated profile. It's the only LAI that you were able to initiate on day 1 for up to 2 months, and HCPs tell us that, that differentiates the brand. So we feel really confident regardless of new market entrants on how these products can compete now and into the future.

Operator, Operator

We have reached the end of our Q&A session. I would now like to turn the floor back over to Sandy Coombs for closing comments.

Sandra Coombs, Senior Vice President of Investor Relations and Corporate Affairs

Thanks, Maria, and thank you, everyone, for joining us on the call this morning. Please don't hesitate to reach out to the company if you have any follow-up questions. Have a good day.

Operator, Operator

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