Q2 2020 Alkermes Plc Earnings Call

Greetings and welcome to the Alchemy <unk> second quarter 2020 earnings call My Name's, Melissa and I'll be your operator for today's call.

Operator: Greetings and welcome to the Alkermes second quarter 2020 earnings call. My name is Melissa, and I will be your operator for today's call. At this time, all participants are in a listen-only mode.

This time all participants are in listen only mode. A question answer session will follow the formal presentation.

Operator: A question-and-answer session will follow the formal... If anyone should need operator assistance during today's call, please press star zero on your, Please note that this conference is being recorded. I'll now turn the call over to Sandy Coombs, Vice President of Investor Relations. Sandy, you may begin. Thank you. Good morning.

If anyone should need operator assistance during today's call. Please press star zero on your telephone keypad.

Please note that this conference is being recorded.

During the call over to Santa Cruz, Vice President of Investor Relations Sandy.

Thank you good morning, welcome to the Alkermes plc conference call to discuss our financial results and business update for the quarter ended June 30, 2020 with me today or Richard Parkes, Our CEO, Jim Friday's, our CFO and Todd Nichols, our Chief commercial officer during the Q any section will also be joined by the end Brown, our SVP of finance.

Sandra Coombs: Welcome to the Alkermes Plc conference call to discuss our financial results and business update for the quarter ended June 30, 2020. With me today are Richard Pops, our CEO; Jim Fradies, our CFO; and Todd Nichols, our Chief Commercial Officer. During the Q&A section, we'll also be joined by Iain Brown, our SVP of Finance. Before we begin, I encourage everyone to go to the investor section of Alkermes.com to find our press release and related financial tables, including a reconciliation of the gap to non-gap financial measures that we'll discuss today. 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. However, actual results could differ materially from these forward-looking statements.

Before we begin I encourage everyone to go the Investor section of El Camino Dotcom Tonight, Our press release and related financial people, including a reconciliation of the GAAP to non-GAAP financial measures that will discuss today, 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 statement actual results could differ materially from that these forward looking statements. Please see slide two of the accompanying presentation. Our press release issued this morning, and our most recent annual and quarterly reports filed with the FCC for important risk factors that could cause our actual results could differ.

Sandra Coombs: Please see slide two of the accompanying presentation, our press release, 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 look. 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. Now, I'll turn the call over to Rick. Thank you, Sandy. Good morning, everyone.

We are 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 are developing.

After our prepared remarks, well open the call for acuity now I'll turn the call over to rich.

Thank you Sandy good morning, everyone.

So we're now midway through 2020.

Richard F. Pops: So we're now midway through 2020, an unprecedented year in terms of the health and social challenges facing our country. In this setting, we've actively responded to protect the health and safety of our employees and to help ensure that healthcare providers and patients have uninterrupted access to our medicines. We were pleased with the progress and execution of our business objectives in a complex environment during the second quarter. Three strategic imperatives currently drive our management of the business.

Unprecedented year in terms of the health and social challenges facing our country. In this setting we've actively responded to protect the health and safety our employees and to help ensure that health care providers and patients have on interrupted access to our medicines. We were pleased with the progress and execution of our business.

It's in a complex environment during the second quarter.

Three strategic imperatives crew, we drive or management of the business. The first is commercial execution.

Richard F. Pops: The first is commercial execution, maximizing the opportunities for both Aristata and Vivitrol and preparing to leverage our commercial infrastructure with the potential launch of ALCS 3831. The second is aggressive development of our most promising pipeline candidates, focusing on those high-value opportunities that we believe have the potential to drive significant value in both the near term and the long term. The most prominent of these is ALK4230 in oncology.

Maximizing the opportunities for both ARISTOTLE and Gepetrol and preparing to leverage our commercial infrastructure with the potential launch of Alcs 30 31.

The second is aggressive development of our most promising pipeline candidates.

Focusing on those high value opportunities that we believe have the potential to drive significant value in both the near term and a long term.

The most prominent these ox 42 30 in oncology.

The third is efficient management of the operating structure and governance of the company.

Richard F. Pops: Thirdly, efficient management of the operating structure and governance of the company, with a focus on rigorous expense management and careful prioritization of our investments. Taken together, these present meaningful opportunities for value creation in 2020 and beyond. COVID-19 continues to be deeply disruptive across the country. In response, we've evolved the way we conduct our business to suit this new environment and are identifying new efficiencies as part of that process. Efficiency that we expect will endure throughout the pandemic and beyond. In the market, Aristata has demonstrated resilience, and we were encouraged to see a stabilization for Vivitrol in June and July, following declines in new patient starts in April and May. While we expect it will take some time for patient flow patterns to return to pre-pandemic levels, with disciplined management of our operating expenses, we believe we're well positioned to maintain our commitment to non-gap profitability.

With a focus on rigorous expense management and careful prioritization of our investments.

Taken together these present meaningful opportunities for value creation 2020 and beyond.

Cobot 19 continues to PDP disruptive across the country.

In response, we've evolved the way we conduct our business. The suit this new environment and I are identifying new efficiencies as part of that process efficiencies that we expect expect will endure throughout the pandemic and beyond.

In the market ARISTOTLE has demonstrated resilience we were encouraged to see a stabilization for Vivitrol in June and July following declines in new patient starts in April and May.

While we expect it will take some time for patient flow patterns to returned to pre pandemic levels.

Disciplined management of our operating expenses, we believe we're well positioned to maintain our commitment to non-GAAP profitability.

Consistent with that commitment and with a deeper understanding of Cobiz expected impact on our business today, we're re establishing financial expectations for 2020.

Richard F. Pops: Consistent with that commitment and with a deeper understanding of COVID's expected impact on our business today, we're reestablishing financial expectations for 2020. Turning briefly to the performance in the quarter, for Vivitrol, our commercial team quickly adapted to virtual engagement and worked to provide important digital tools and resources to healthcare providers and patients. Aristotle continued to demonstrate strong growth in the market for long-acting antipsychotics.

Turning briefly to performance in the quarter for Vivitrol, our commercial team quickly adapting to virtual engagement.

Work to provide important digital tools and resources to health care providers and patients.

Aristada continue to demonstrate strong growth in the market for long acting anti Psychotics ARISTOTLE has features that suit the current environment with its proven clinical efficacy, it's two month dosing interval and its tolerability profile.

Richard F. Pops: Aristotle has features that suit the current environment, with its proven clinical efficacy, its two-month dosing interval, and its tolerability profile. ALCS 3831 is designed to provide a similar profile, anti-psychotic efficacy, and tolerability in a convenient dosage form. The ALCS 3831 Regulatory Review is ongoing, and launch preparations continued in Q2. For ALCS 4230 in Oncology, we believe this program is entering a stage now where first the medical and then the economic value of our investment is going to become clear. Each of these assets represents a valuable element of our business.

Okay 30, 31 is designed to provide similar profile anti psychotic efficacy and tolerability when a convenient dosage form.

The Oxforty 31 regulatory review is ongoing and launch preparations continued in Q2.

For Ox 42 30 in oncology. We believe this program is entering a stage now where first the medical and then the economic value of our investment is going to become clear.

Each of these assets represents a valuable element of our business. Our focus is on maximizing that value and positively impacting the lives of patient struggling with serious mental illness addiction cancer.

Richard F. Pops: Our focus is on maximizing that value and positively impacting the lives of patients struggling with serious mental illness, addiction, and cancer. Over the past several years, we've invested significantly in our development programs and our commercial capabilities in order to position the company for long-term growth, as evidenced by our psychiatry portfolio.

Over the past several years, we've invested significantly in our development programs and our commercial capabilities in order to position the company for long term growth.

This is evident in our psychiatry portfolio.

Restaurants, we've made in the Aristada product family, including the development of book two months dose and Irrs studies this year.

Richard F. Pops: The investments we've made in the Aristata product family, including the development of both the two-month dose and Aristata Initio, as well as in our psychiatry commercial infrastructure, are yielding solid results, with momentum behind the growth of that product family. Specialized commercial and medical capabilities in psychiatry, which include marketing, medical affairs, sales leadership, commercial field operations, national account infrastructure, state and federal policy, are distinctive We've also been investing in the ALCS 4230 Development Program in Oncology. 4230 diversifies our portfolio and represents a different value proposition from our addiction and psychiatric care aspects. Yet at the same time, it also leverages the significant in-house capabilities we've established in research, discovery, clinical trial operations, and medical affairs through our work in CNS.

As well as in our psychiatry commercial infrastructure are yielding solid results with momentum behind the growth of that product family.

Our specialized commercial and medical capabilities in psychiatry, which include marketing Medical Affairs sales leadership commercial field operations National account infrastructure state and federal policy.

Distinctive assets in their own right and we believe can provide operating leverage is for other psychiatry products, including Oxforty 31.

We've also been investing in the Alex 42, 30 development program in oncology.

42, three diversifies, our portfolio and represents a different value proposition from our addiction in psychiatry assets.

Given the same time it also leverages the significant in house capabilities. We've established in research discovery clinical trial operations Medical affairs through our work in CNS.

Yeah, I'm College, you therapeutic space is characterized by challenging clinical development and rapidly developing rapidly evolving treatment landscapes.

Richard F. Pops: The oncology therapeutic space is characterized by challenging clinical development and rapidly evolving treatment landscapes. However, it's also characterized by significant unmet medical needs, the potential for rapid adoption of efficacious new products, and a recognition of the value of medicines, both in the market and earlier in the development phase. Immunotherapies have revolutionized the way cancer is treated, providing hope for patients that previously would have exhausted all available treatment options.

However, it's also characterized by significant unmet medical needs the potential for rapid adoption of efficacious, new products and a recognition of the value medicines, both in the market and earlier in the development phase.

Immunotherapies have revolutionized the way cancer is treated providing hope for patients. It previously would have exhausted all available treatment options.

We believe that Ox 42, 30 development program is an important potential growth and value driver data from the program and the opportunity for strategic collaboration has the potential to significantly shift its value profile within our own portfolio and the growth potential of the company moving forward.

Jim Fradies: We believe that the ALCS 4230 Development Program is an important potential growth and value driver. Data from the program and the opportunity for strategic collaboration have the potential to significantly shift its value profile within our own portfolio and the growth potential of the company moving forward. Collectively, we believe these programs have the potential to enhance our profitability and create significant value in the future. So with that as an introduction, I'm gonna turn the call over to Jim to review the financial results and financial outlook for the remainder of 2020. Thank you, Richard, and good morning, everyone.

Collectively we believe these programs have the potential to enhance our profitability and create significant value in its future.

So with that as an introduction I'm going to turn the call a rich him to review the financial results and financial outlook for the remainder 2020.

Thank you Richard and good morning, everyone.

We're pleased with our Q2 results, which were largely in line with or ahead of our expectations as we delivered another quarter of non-GAAP profitability in spite of a difficult environment.

Jim Fradies: We are pleased with our Q2 results, which were largely in line with or ahead of our expectations, as we delivered another quarter of non-gap profitability in spite of a difficult environment. As we discussed in our April earnings call, Vivitrol was significantly impacted by issues arising from COVID-19. However, with four months of insight into provider and patient behavior in response to COVID-19, we have adapted our approach in order to stabilize our business and support continued patient access to our medicine. Today we're issuing updated financial expectations for 2020, which reflect our understanding of the current environment and our commitment to non-gap profitability. I'll provide additional detail on our expectations for the remainder of the year in a moment. But first, I'll start with an overview of our second quarter financial highlights.

As we discussed in our April earnings call Vivitrol was significantly impacted by issues arising from Tobey 19.

However, with foremost of insight into provider in patient behavior in response to cover 90.

Adapted our approach in order to stabilize our business and support continued patient access to our medicines.

Today, we're issuing updated financial expectations for 2020.

Which reflect our understanding of the current environment.

In our commitment to non-GAAP profitability.

Ill provide additional detail on our expectations for the remainder of the year in a moment, but first I'll start with an overview of our second quarter financial highlights.

In the second quarter 2020, we generated $247.5 million and total revenues, reflecting year over year decline of approximately 12%.

Jim Fradies: In the second quarter of 2020, we generated $247.5 million in total revenue, reflecting a year-over-year decline of approximately 12 million. This was driven primarily by the impact of COVID-19 on Vivitrol and lower R&D revenues following FDA approval of Umerity in 2019, partially offset by the solid growth in our Aristotle. We recorded a gap net loss of $29.4 million and non-GAAP net income of $8.9 million for the quarter.

This was driven primarily by the impact of Tobin 19 on Vivitrol net sales and lower R&D revenues following FDA approval its merits and 29.

Partially offset by the solid growth in our ARISTOTLE franchise.

We recorded a GAAP net loss of $29.4 million.

Non-GAAP net income of $8.9 million for the quarter.

Starting with Vivitrol net sales in the second quarter decreased 19% year over year to $71.6 million.

Jim Fradies: Starting with Vivitrol, net sales in the second quarter decreased 19% year-over-year to $71.6 million, driven primarily by an underlying unit decline of 22% due to the impact of COVID-19 disruptions on patient volume and access to healthcare, partially offsetting this unit decline during the second quarter. Visit TrollNet sales were positively impacted by approximately $6.5 million in gross to net adjustment, reflecting a lower return rate and favorable Medicaid true-ups As a result, growth-to-net adjustments decreased to 46.4% in the second quarter from 49% in Q1. Excluding the favorable adjustments, growth-to-net adjustments would have been 51.2% in Q2. In addition, inventory levels decreased by just over 5,100 units during the... and are now at their lowest levels in almost three years.

Driven primarily by underlying unit decline of 22% due to the impact of covert 19 disruptions on patient volume and access to health care providers.

Partially offsetting this unit decline during the second quarter.

Control net sales were positively impacted by approximately $6.5 million in gross to net adjustments, reflecting a lower return rate and favorable Medicaid true ups from a number of states.

As a result gross to net adjustment decreased to 46.4% in the second quarter from 49% in Q1.

Excluding the favorable adjustments gross to net adjustments would have been 51.2% in Q2.

In addition inventory levels decreased by just over 5100 units during the quarter and are now at their lowest levels in almost three years.

Looking ahead, we expect gross to net adjustments to be approximately 51% for the full year.

Jim Fradies: Looking ahead, we expect gross net adjustments to be approximately 51% for the full year. We expect an increased Medicaid utilization resulting from current elevated unemployment rates will drive an increase in gross net adjustments in the second half of 2020 to 54 percent. Reflecting the higher rebate associated with Medicaid, our current expectation is for Vivitrol net sales for the full year to be in the range of $270 to $300 million. We believe this range accommodates a spectrum of scenarios based on current trends and current expectations of continued normalization of patient volume and access to healthcare providers. The decrease in patient volume in Q2, particularly the decrease in new patient starts, is expected to have a prolonged impact on overall unit demand into the back half of 2020. Looking ahead to Q3, we expect net sales for Vivitrol to be in the range of $60-65 million. This is comparable to Q2 when excluding the favorable growth-to-net adjustments recorded during the second...

We expect that increase Medicaid utilization, resulting from current elevated unemployment rates will drive an increase in gross to net adjustments in the second half of 2020% to 54%, reflecting the higher rebate associated with Medicaid use.

Our current expectation is for Vivitrol net sales for the full year to be in the range of $270 million to $300 million.

We believe this range accommodates a spectrum of scenarios based on current trends and current expectations of continued normalization to patient volume and access to health care providers.

The decrease in patient volume in Q2, particularly the decrease in new patient starts is expected to have a prolonged impact on overall unit demand into the back half of Twentytwenty.

Looking ahead to Q3, we expect net sales for vivitrol to be in the range of $60 million to $65 million.

This is comparable to Q2, when excluding the favorable gross to net adjustments recorded during the second quarter.

Jim Fradies: Turning to the Aristotle product family, we were encouraged to see net sales in the second quarter increase by 15% sequentially and 21% year-over-year to $58.8 million, driven primarily by UNICEF. We've made progress with Aristata as underlying total prescription data demonstrated solid growth of 29% year-over-year in terms of months of therapy. During the second quarter, gross net adjustments for Aristotle were 53.1% as compared to 48% in Q2 2019, reflecting increased utilization amongst the Medicaid patient population. Inventory levels increased by approximately 1,000 units during the quarter, within normal levels.

Turning to the Arizona product family, we were encouraged to see net sales in the second quarter increased by 15% sequentially and 21% year over year to $58.8 million driven primarily by unit growth.

We've made progress with aerostar as underlying total prescription data demonstrated solid growth of 29% year over year in terms of months of therapy.

During the second quarter gross to net adjustments for aerostar were 53.1% as compared to 48% in Q2, 2019, reflecting increased utilization amongst the Medicaid patient population.

Inventory levels increased by approximately 1000 units during the quarter within normal levels.

Today, we are reinstating our expectation of ARISTOTLE net sales for the full year in the range of $220 million to $235 million.

Jim Fradies: Today we are reinstating our expectation of Aristotle Net Sales for the full year in the range of $220 to $235 million. This is in line with our expectations that we previously provided for Aristotle in February. Reflecting the solid performance in the first half of 2020 and continued stability as we enter the third quarter. Moving on to our manufacturing and royalty business, we recorded revenues of $116.5 million in the second quarter, compared to $127.9 million in the prior. This decline was driven primarily by lower revenues from Risperdal Constitu- All of these are reflecting a continued decline in end market sales and lower manufacturing shipments in Q2 as compared to the same quarter last Turning now to expenses, our total operating expenses were $281.2 million for the second quarter, down from $315.8 million in the same period in the prior year.

This is inline with our expectations that we previously provided for Aerostar February reflecting the solid performance in the first half of 2020 and continued stability as we entered the third quarter.

Moving onto our manufacturing and royalty business, we recorded revenues of $116.5 million in the second quarter compared to $127.9 million in the prior year.

This decline was driven primarily by lower revenues from Risperdal Consta, reflecting a continued decline in end market sales and lower manufacturing shipments in Q2 as compared to the same quarter last year.

Turning now to expenses, our total operating expenses were $281.2 million for the second quarter down from $315.8 million in the same period in the prior year.

Our cost base reflects our full range of capabilities across research discovery and development manufacturing commercialization as well as the resources needed to advance our business objectives.

Jim Fradies: Our cost base reflects our full range of capabilities across research, discovery, and development, manufacturing, and commercialization, as well as the resources needed to advance our business objectives, including execution of our strategy to grow the top line, advance our pipeline of development candidates, and manufacture commercial supply of our proprietary and partner products. R&D expenses for the second quarter were $94.2 million, compared to $104.4 million for the prior year.

Including execution of our strategy to grow the topline advance our pipeline of development candidates and manufacturer commercial supply of our proprietary and partner products.

R&D expenses for the second quarter were $94.2 million compared to $104.4 million for the prior year.

Reflecting the completion of the humidity development program in 2019, which was somewhat offset by increased activity in patient enrollment in the out 42 30 clinical program.

Jim Fradies: Reflecting the completion of the Vumerity Development Program in 2019, which was somewhat offset by increased activity in patient enrollment in the ALCS 4230 clinical... SG&A expenses for the second quarter were $132 million, compared to $155.1 million in Q2 2019. This reflects lower expenses due to the restructuring that occurred in late 2019, as well as impacts from COVID-19. Looking ahead, we currently expect a small increase in SG&A expense as we invest in pre-launch activities for ALCS3831. Turning to our balance sheet, we ended the second quarter with approximately $540 million in cash in total investment, compared to approximately $550 million at the end of the first quarter, primarily due to impact, Changes in Working Capital and Capital Expenditure. The company's total debt outstanding was approximately $276 million at the end of the second quarter.

As gene expenses for the second quarter were $132 million compared to $155.1 million in Q2 2019.

Reflecting lower expenses due to the restructuring that occurred in late 2019, as well as impacts from coven 90.

Looking ahead, we currently expect a small increase in SJ expense as we invest in prelaunch activities for ALN Atthree Athree one.

Turning to our balance sheet, we ended the second quarter with approximately $540 million in cash and total investments.

Compared to approximately $550 million at the end of the first quarter.

Generally effect impacting changes in working capital and capital expenditures.

The company's total debt outstanding was approximately $276 million at the end of the second quarter.

We believe we're well positioned financially to execute on our business strategy.

Jim Fradies: We believe we're well positioned financially to execute on our business strategy and withstand currently expected COVID-19-related market disruptions. I'll shift now to our financial expectations for 2020, which are fully outlined in the press release we issued earlier this week. These expectations reflect our best estimates for the remaining five months of 2020, acknowledging that the impact of the pandemic continues to be dynamic and is rapidly evolving. We believe these ranges are appropriate based on current trends and our expectation that treatment provider practices and patient flow will continue to normalize. Additional COVID-related restrictions or shutdowns could result in a decrease in patient flows or access to health care, which could impact our ability to meet these expectations. For the top line, we expect total revenues to be in the range of $970 million to $1,005,000,000.

And with stand currently expected coven 19 related market disruptions.

Ill shift out of our financial expectations for 2020.

What's your fully outlined in the press release, we issued earlier this morning.

These expectations reflect our best estimates for the remaining five months of 2020 acknowledging that the impacted a pandemic continues to be dynamic and is rapidly evolving.

We believe these ranges are appropriate based on current trends and our expectation to treatment provider practices and patient flow will continue to normalize.

Additional coven related restrictions or shutdowns could result in a decrease in patients flows or access to healthcare, which could impact our ability to meet these expectations.

So for the topline we expect total revenues to be in the range of 970 million to $1.005 billion.

This includes ARISTOTLE net sales in the range of $220 million to $235 million and Vivitrol net sales in the range of $270 million to $300 million.

Jim Fradies: This includes Aristata Net Sales in the range of $220 to $235 million and Vivitrol Net Sales in the range of $270 to $300 million. Operating expenses are expected to be approximately $50 million lower than our previous expectations announced in February, driven primarily by a reduction in R&D expenses and other savings across the business. Some as a result of COVID-19. R&D expenses are now expected to be in the range of $370 to $395 million. And SG&A expenses are now expected to be in the range of $525 to $550 million. We expect the 2020 gap net loss to be in the range of $145 to $175 million, and Non-Gap Net Income to be in the range of $0 to $30 million.

Operating expenses are expected to be approximately $50 million lower than our previous expectations announced in February.

Driven primarily by a reduction in R&D expenses and other savings across the business. Some as a result of covered 90.

R&D expenses are now expected to be the range of $370 million to $395 million.

And SGN expenses are now expected to be in the range of $525 million to $550 million.

We expect 2020, GAAP net loss to be in the range of $145 million to $175 million.

And non-GAAP net income to be in the range of zero to $30 million, reflecting our continuing commitment to non-GAAP profitability. Despite the current headwinds.

Jim Fradies: Reflecting on our continuing commitment to non-gap profitability despite the current headwinds, over the past five years, we've dramatically transformed the composition of our revenues and grown both our top line and bottom line. Concurrently, we've invested significantly in the future growth drivers of our business. As a result of these investments, we established Vivitrol as an important therapeutic option for patients suffering from opioid and alcohol dependence. We secured FDA approvals for the Aristata product family and developed ALKS3831, with regulatory action expected in the fourth quarter. We've built commercial psychiatry capabilities that support the growth of Aristata and that are fully leverageable for the potential launch of ALKS3831. We've successfully developed Umerity and entered into a collaboration agreement with a leading MS company that provides 100% gross margin royalty revenues from the net sales of that product.

Reflecting on the past five years, we've dramatically transform the composition of our revenues and drone, both our topline and Bottomline.

Concurrently we've invested significantly in the future growth drivers of our business.

Directly as a result of these investments we've established Vivitrol is an important therapeutic option for patients suffering from opioid and alcohol dependence.

We secured FDA approvals for the Arysta product family and developed out through everyone with regulatory action expected in the fourth quarter.

We have built commercial psychiatry capabilities.

To support the growth of our Stada ended or fully leverageable for the potential launch for about three entry one.

We have successfully developed through Mary and entered into a collaboration agreement with a leading LMS company that provides 100% gross margin royalty revenues from the net sales of that product.

And we've advanced the development about 42 third while retaining optionality for strategic collaboration.

Unknown Attendee: And we've advanced the development of ALCS 4230 while retaining optionality for strategic collaboration. We believe these key investments have positioned the business for margin expansion, and we're focused on executing on our business strategy in order to efficiently drive profitability in the years ahead. Now, I'll turn the call over to Todd for a more detailed review of our recent trends for our commercial products. Thanks, Jim. And good morning, everyone.

We believe these key investments in position the business for margin expansion and we're focused on executing on our business strategy in order to efficiently drive profitability in the years ahead.

Now I'll turn the call over to talk for a more detailed review of our recent trends for our commercial products.

Thanks, Jim and good morning, everyone. As we entered the second quarter, we began to see the effect of the coven 19 pandemic on our commercial portfolio.

Unknown Attendee: As we entered the second quarter, we began to see the effect of the COVID-19 pandemic on our commercial portfolio, with a more pronounced impact on Vivitrol than Aristotle. Early on, our commercial team pivoted our sales tax, rapidly transitioning healthcare provider engagement to virtual domains and introducing a hybrid promotional model. Evolving our Digital Awareness Campaigns. Introducing virtual speaker programs.

With a more pronounced impact on Vivitrol and Aristada early on our commercial team pivoted our sales tactics.

Rapidly transitioning healthcare provider engagement to virtual data domains, and introducing a hyper promotional model evolving our digital awareness campaigns.

Introducing virtual speaker programs.

Rolling out innovative initiatives to increase access to our medicines and supporting certified community behavioral health clinics.

Unknown Attendee: Rolling out innovative initiatives to increase access to our medicines and supporting certified community behavioral health clinics that were recently awarded funding for addiction and mental health treatment services. The agility with which our team implemented these mitigation tactics contributed to the resilience of Aristotle. After moving to virtual engagement for the majority of Q2, our representatives are now making progress returning to the field as appropriate. In accordance with state and local guidelines, in June, 30% of our interactions with health care providers were in person. Our efforts to address the impact of COVID-related disruptions and support greater patient access to treatment include expanding our network of injection providers at alternate sites of care, such as pharmacies. Since the pandemic began, we have added approximately 1,000 additional locations to our provider network and will continue to engage with other potential injection providers to further expand patient access.

There were recently awarded funding for addiction, and mental health treatment services.

The agility with which our team implemented these mitigation tactics.

Contributed to the resilience of Aerostar.

After moving to virtual engagement for the majority of Q2, our representatives are now making progress are turning to the field as appropriate and.

In accordance with state and local guidelines in June 30% of our interactions with health care providers were in person.

Our efforts to address the impact of covert related disruptions and support greater patient access to treatment.

Include expanding our network of injection providers at alternate sites of care such as pharmacies.

Since the pandemic began we have added approximately 1000 additional locations to our provider network and we'll continue to engage with other potential injection providers to further expand patient access.

I'll now provide a review of our Q2 results as well as an outlook for our products for the remainder of the year.

Unknown Attendee: I'll now provide a review of our Q-Tube results, as well as an outlook for our products for the remainder of the year. Starting with Vivitrol, net sales in the quarter were $71.6 million, driven by a decline in units of 22% year over year and 15% sequentially, as a result of limited access to addiction treatment providers and a reduced volume of patients seeking treatment during COVID-19.

Starting with Vivitrol net sales in the quarter were $71.6 million.

Driven by declining units of 22% year over year, and 15% sequentially as a result of limited access to addiction treatment providers and reduced volume the patients seeking treatment during cover 19.

As I mentioned on our Q1 call Vivitrol factory shipments began declining or approximately 25% later than our pre cobot expectations in April.

Unknown Attendee: As I mentioned on our Q1 call, Vivitrol factory shipments began declining or approximately 25% lighter than our pre-COVID expectations in April. Volume stabilized in May, and we started to see indications of a gradual recovery in unit demand in June. During the quarter, the decrease in Vivitrol demand had a more pronounced impact on new patient starts than continuing patients, as detox services became more limited and as prescribers reconsidered initiating patients on long-acting medication. While we've observed encouraging neutrobran prescription trends over the last several weeks, we expect a decrease in patient volume in Q2 to have a prolonged tail effect on overall unit demand in the second half of 2020. Over the past year, we have seen alcohol dependence increase in the indication mix for Vivitrol, with utilization for alcohol dependence growing at a faster pace than opioid dependence.

Well I am stabilized in May and we started to see indications of a gradual recovery in unit demand in June.

During the quarter the decrease individual demand had a more pronounced impact on new patient starts been continuing patients.

As Detox services became more limited and as prescribers reconsidered initiating patients a long acting medication.

Well, we've observed encouraging new to brand prescription trends over the last several weeks, we expected decrease in patient volume in Q2 to have a pro long tail effect on overall unit demand in the second half a 2020.

Over the past year, we have seen alcohol dependence increase in the indication mix for vivitrol with utilization for alcohol dependence growing at a faster paced an opioid dependence.

With alcohol consumption on the rise across the country is a secondary consequence of distressed and social isolation resulted in took from cover 19, there may be increased need for treatment for alcohol dependence in the future. Similarly against the backdrop of covert 19, the opioid epidemic continues to rage and is even intensive.

Unknown Attendee: With alcohol consumption on the rise across the country as a secondary consequence of the stress and social isolation resulting from COVID-19, there may be an increased need for treatment for alcohol dependence in the future. Similarly, against the backdrop of COVID-19, the opioid epidemic continues to rage and is even intensified in parts of the country. Thirty-five states have reported an increase in opioid-related mortality as of July. So we have important work to do in order to continue to drive awareness of Vivitrol and support patient access to treatment, turning into the Aristotle product family. Net sales in the second quarter increased approximately 21% year-over-year to $58.8 million.

Slide and parts of the country.

35 States have reported an increase in opioid related mortality as of July. So we have important work to do in order to continue to drive awareness of Vivitrol and support patient access to treatment.

Turning to the aerostat of product family.

Net sales in the second quarter increase approximately 21% year over year to $58.8 million.

Reflect reflecting underlying demand growth underlying total prescription data for aerostar demonstrated solid growth of 29% year over year in terms of months of therapy and outpace the broader long acting a typical anti psychotic market, which grew at 7% in the same period.

Unknown Attendee: Reflecting underlying demand growth, underlying total prescription data for Aristata demonstrated solid growth of 29% year-over-year in terms of months of therapy and outpaced the broader long-acting atypical antipsychotic market, which grew at 7% in the same period. In May, market share for new-to-brand prescriptions was 13.2% in terms of months of therapy, which we believe is a useful leading indicator for the trajectory of growth for The two-month dose remained at its highest share of the brand, at 37% in terms of months of therapy.

In may market share for new to bat brand prescriptions was 13.2% in terms of months of therapy, which we believe is a useful leading indicator for the trajectory of growth for aerostar.

Two month dose remained at its highest share of brand at 37% in terms of months of therapy.

While we are encouraged by aerostat as resilience during the first half a 2020, we have seen the growth rate of the overall la market began to moderate from 13% year over year growth in Q1 to 7% year over year growth in Q2.

Unknown Attendee: While we are encouraged by Aristotle's resilience during the first half of 2020, we have seen the growth rate of the overall LAM market begin to moderate, from 13% year-over-year growth in Q1 to 7% year-over-year growth in Q2, likely as a result of COVID-19. Because Aristotle Utilization relies on healthcare provider administration, our work to expand our injection site network is an important undertaking to support Aristo Despite the sequential softening in the market, the progress we are making with Aristata in the midst of this pandemic highlights the agility of our organization to adapt to the changing market, with an intense focus on execution as we communicate the value proposition of Aristotle and its differentiated positioning in the market. Attorney to Alex 3831.

Likely as a result of coven 19.

Because ARISTOTLE utilization relies on healthcare provider administration, our work to expand our injection site network is an important undertaking to support Aristotle's continued growth potential.

Despite the sequential softening in the market the progress, we're making with ARISTOTLE in the midst of this pandemic highlights the agility of our organization to adapt to the changing market.

With an intense focus on execution as we communicate the value proposition of aerostat in is differentiated positioning in the market.

Turning to Alex 38 31.

30, 31 represents an important potential treatment option for patients suffering from schizophrenia, and bipolar one disorder, and who are a need for additional treatment options.

Unknown Attendee: 3831 represents an important potential treatment option for patients suffering from Schizophrenia and Bipolar I Disorder and who are in need of additional treatment options. Annually, there are more than 10.5 million prescriptions for oral atypical antipsychotics for schizophrenia and more than 8 million prescriptions for Bipolar I Disorder. As a testament to its efficacy, olanzapine is the fourth most prescribed atypical for bipolar I disorder and among the three most prescribed atypicals for schizophrenia, despite its weight gain profile and treatment guidelines that relegate olanzapine to a second-line treatment.

Annually, there are more than 10.5 million prescriptions for oral atypical antipsychotics for schizophrenia.

And more than 8 million prescriptions for bipolar one disorder.

As a testament to its efficacy a land subpoenas the fourth most prescribed a typical for bipolar one disorder and among the three most prescribe atypicals for schizophrenia. Despite us weight gain profile in treatment guidelines that relegate Atlanta pain to a second line treatment.

Despite the availability of many generic options branded atypical antipsychotics represent significant market opportunities.

Unknown Attendee: Despite the availability of many generic options, branded atypical antipsychotics represent significant market opportunities. However, branded entrants represent only 10% of the total, a typical antipsychotic market. Yet, in 2019, they generated total net sales of approximately $7 billion across all indications. We believe this reflects the significant unmet need of patients struggling with serious mental illness and patient treatment journeys that commonly cycle through multiple therapeutic options. Our launch preparations have focused on three primary domains: Driving Awareness Through Scientific Exchange. Establishing Meaningful Market Access and Salesforce Planning

Branded entrance represent only 10% the total atypical antipsychotic market yet in 2019, they generated total net sales of approximately $7 billion across all indications.

We believe this reflects the significant unmet need of patient struggling with serious mental illness, and patient treatment journeys that commonly cycle through multiple therapeutic options.

Our launch preparations have focused on three primary domains.

Driving awareness through scientific exchange.

Establishing meaningful market access and Salesforce planning.

In order to drive awareness, we had a strong presence at virtual medical meetings. This brings with new datasets from the enlighten pivotal program.

Unknown Attendee: In order to drive awareness, we had a strong presence at virtual medical meetings this spring with new data sets from the Enlightened Pivotal Program. These congresses afford us an important opportunity to engage with thought leaders and build awareness of the clinical data underpinning Alex 3831 among the clinical community. We have engaged with a number of the largest payers in the country thus far, accounting for more than half of the potential class volume, in addition to key federal and regional accounts.

These congresses afford us an important opportunity to engage with thought leaders and bill and awareness of the clinical data underpinning Alex three athree, one among the clinical community.

We have engaged with a number the largest pairs in the country, thus far accounting for more than half of the potential class volume. In addition to key federal and regional accounts.

We're currently working to engage with the remaining pairs and key accounts in the fall.

Unknown Attendee: We are currently working to engage with the remaining pairs in key accounts in the fall. Based on the feedback that we have received to date, we believe payers recognize the importance of offering patients with serious mental illnesses a wide variety of treatment options. As a new molecular entity, we would expect ALX3831 to be treated just like other branded entrants in the space, with certain requirements for patients to step through generic options. However, the disruptions driven by COVID-19 have necessitated the implementation of a new commercial model.

Based on the feedback that we have received to date, we believe payers recognize the importance of offering patients with serious mental illness, a wide variety of treatment options.

As a new molecular molecular entity, we would expect Alex Threethree one to be treated just like other branded entrants in the space with certain requirements for patients who stepped through generic options.

The disruptions driven by Cobot 19 have necessitated implementation of a new commercial model.

One less dependent on face to face business between sales representatives and prescribers.

Unknown Attendee: One less dependent on face-to-face visits between sales representatives and prescribers. For our Salesforce planning efforts, this opens up new possibilities and structures as we consider the commercial configurations of our teams going forward. Upon potential approval of Alex3831, our existing Aristotle team will be the core of the commercial effort for Alex3831. We believe that a new hybrid promotional model that permanently incorporates virtual engagements will allow us to efficiently accommodate the broader footprint of prescribers for oral antipsychotics with a smaller commercial field infrastructure than we would have anticipated prior to COVID-19-related disruption. All of the strategies and configurations that we are considering can leverage and build upon our current psychiatry field sales organization, and we're excited about the possibility of bringing Alex331 to patients.

For our Salesforce planning efforts this opens up new possibilities and structures as we consider the commercial configurations of our teams going forward.

A potential approval of out 331, our existing aerostat a team will be the core the commercial effort for Alex rate three one.

We believe that a new hybrid promotional model the permanently incorporates virtual engagements will allow us to efficiently accommodate the broader footprint prescribers for oral anti psychotics with a smaller commercial field infrastructure than we would have anticipated prior to cobot 19 related disruptions.

All of the strategies and configurations that we're considering can leverage and build upon our current psychiatry field sales organization and we're excited about the possibility bring Alex threethree once a patients.

We distinguish ourselves from other biopharmaceutical companies by our focus on serious mental illness and addiction.

Unknown Attendee: We distinguish ourselves from other biopharmaceutical companies by our focus on serious mental illness and addiction. These are chronic, highly prevalent conditions that affect millions of people and represent some of the most challenging public health issues of our time. They impact not only patients, their families, and loved ones, but entire communities as well. Alkermes has been addressing the public health challenges posed by these conditions for many years.

Chronic highly prevalent conditions that affect millions of people and represent some of the most challenging public health issues of our time.

The impact not only patients their families and loved ones that entire communities as well.

Alkermes has been addressing the public health challenges posed by these conditions for many years.

Our work focuses on the multitude of factors not only medical but also systemic and social that impact health outcomes.

Unknown Attendee: Our work focuses on the multitude of factors, not only medical but also systemic and social, that impact health outcomes. We have built our organization with purpose and invested in specialized commercial capabilities to navigate fragmented treatment systems as we help address the complex challenges patients with these diseases face. Moving forward, we will continue to enhance our engagement model to support the value proposition of our medicines, regardless of modality. We remain deeply committed to serving the vulnerable populations that suffer from serious mental illness and addiction, particularly as COVID-related disruptions are compounding the typical challenges these patients face in accessing treatment, and we look forward to sharing our progress with you. And with that, I'll hand the call back over to Rich.

We have built our organization with purpose and invested in specialized commercial capabilities to navigate fragmented treatment systems as we help address the complex challenges patients with these diseases face.

Moving forward, we will continue to enhance our engagement model to support the value proposition of our medicines regardless of modality.

We remain deeply committed to serving the vulnerable populations that suffer from Sears mental illness, and addiction, particularly as coated related disruptions are compounding. The typical challenges these patients face and accessing treatment and we look forward to sharing our progress with you.

And with that I'll hand, the call back over to rich.

Thats great. Thank you Todd our mission to make innovative medicines for people, who truly need them begins with a patient centered approach to drug development, that's driven by science and by compassion.

Richard F. Pops: That's great. Thank you, Todd. Our mission to make innovative medicines for people who truly need them begins with a patient-centered approach to drug development that's driven by science and by compassion. Alkermes R&D efforts build on our heritage of innovative drug formulation and deep scientific expertise. These capabilities and insights enable us to pursue new medicines for chronic disorders where there remains significant unmet need. The Ops 3831 Development Program is an example of our commitment to developing new treatment options to help people living with serious mental illness. Alkis 3831 is our novel, oral, atypical antipsychotic.

Alkermes R&D efforts built on our heritage of innovative drug formulation and deep scientific expertise.

These capabilities and insights.

Enable us to pursue new medicines for chronic disorders, where the remained significant unmet patient needs.

The up 30 31 development program is an example of our commitments developing new treatment option to help people living with serious medical elements.

Our next 30 31 is our novel oral atypical antipsychotic. It is designed to provide the established efficacy philanthropy, while mitigating it's associated weakening.

Richard F. Pops: It is designed to provide the established efficacy of olanzapine while mitigating its associated weight gain. The ALKS3831 NDA for Schizophrenia and Bipolar I Disorder is currently under review with the FDA, with a PDUFA target action date in November of this year. We're preparing for an advisory committee meeting in October, which we expect will focus on the clinical meaningfulness of the ALKS3831 weight data. Now, turning to ALCS 4230. We're making progress in the clinical development program. We believe that harnessing the anti-tumor activity of the IL-2 pathway continues to be one of the most promising opportunities in immuno-oncology.

For the out 30, 31, India for schizophrenia and bipolar one disorder is currently under review with the FDA with due for target action date in November of this year.

We're preparing for an advisory Committee meeting in October, which we expect will focus on the clinical meaningfulness of the Oxforty 31 week data.

Turning to Alcs 42, 30 were making progress into clinical development program.

We believe that harnessing the anti tumor activity the ill to pathway continues to be one of the most promising opportunities and immuno oncology.

And Alex 42, 30 differentiated from other aisle to variant programs and active clinical development number of important ways, it's molecular structure, which potential for subcutaneous administration and its current evaluation in the clinic as monotherapy.

Richard F. Pops: And ALKS4230 is differentiated from other IL-2 variant programs in active clinical development in a number of important ways, including its molecular structure, its potential for subcutaneous administration, and its current evaluation in the clinic as monotherapy. The accumulating clinical data across our intravenous and subcutaneous dosing studies continue to support its potential utility, advancement, and broadening of this development program as investigators gain more clinical experience with 4230. Enrollment has accelerated in the Artistry Studies with approximately 60 patients enrolling since the beginning of March. This is despite the impact of COVID-19 on clinical trial enrollment more broadly across the sector. Data from Artistry 1, a study evaluating the IV administration of 4230, have recently been accepted for an oral presentation at the European Society for Medical Oncology (ESMO).

Yes, accumulating clinical data across our intravenous subcutaneous dosing study continued to support potential utility advancement and broadening of this development program.

As investigators gain more clinical experience with 42 30.

Enrollment has accelerated in the Arts District studies with approximately 60 patients enrolling beginning in March. This is despite the impact of cobot 19 clinical trial enrollment more broadly across the sector.

Data from artistry one.

Study evaluating Ivy administration 42 30.

Has recently been except the current oral presentation at the European Society for medical oncology ESMO.

That annual meeting in September and slated to occur virtually this year.

Artistry to.

Our study evaluating subcutaneous dosing, we're continuing to dose escalate for both once weekly and once every three week dosing schedules and we plan to present initial data from need studies in fall.

Across the program the accumulating data has reinforced our belief at 42 30 has the potential to be an important agent for use in multiple tumor types lines of therapy and combinations.

Richard F. Pops: That annual meeting is in September, and it's expected to occur virtually this year for Artistry 2, our study evaluating the subcutaneous dose. We're continuing to dose-escalate for both once-weekly and once-every-three-week dosing schedules, and we plan to present initial data from these studies in the fall. Across the program, the accumulating data has reinforced our belief that 4230 has the potential to be an important agent for use in multiple tumor types, lines of therapy, and combinations.

So taking step back I'd like to highlight some of the plan changes to our board composition and governance as part of our ongoing commitment to corporate governance best practices.

These actions reflect feedback from our extensive shareholder engagement efforts over the past year.

We believe will serve to further align the company's interest with those of our shareholders.

First at the company's next annual General meeting and.

Shareholders.

From his board of directors will recommend that shareholders approve approach proposal to declassify the board.

Richard F. Pops: So taking a step back, I'd like to highlight some of the planned changes to our board composition and governance as part of our ongoing commitment to corporate governance best practice. These actions reflect feedback from our extensive shareholder engagement efforts over the past year and we believe will serve to further align the company's interests with those of our shareholders, first at the company's next Annual General Meeting of Shareholders. The Alkermes Board of Directors will recommend that shareholders approve a proposal to declassify the board. Once declassified, Alkermes shareholders will vote annually on the election of all directors.

One declassified alkermes shareholders will vote annually on the election of all directors.

Second we've commenced a new search for independent director candidates to his experience expertise can provide valuable insights and thoughtful leadership at this stage in our dilution.

As part of this refreshment effort, we expect certain of our longer serving directors will retire from import prior to our next annual general meeting.

This process will continue and build upon the board refreshment effort that we began last fall with the appointment of two highly qualified independent directors.

Having a strong board with the expertise to provide insights and thoughtful leadership is a priority for us and we will continue the dialogue that we've been having with our shareholders.

Richard F. Pops: Second, we've commenced a new search for independent director candidates whose experience and expertise can provide valuable insights and thoughtful leadership at this stage in our evolution. As part of this refreshment effort, we expect certain of our longer-serving directors to retire from the board prior to our next annual general meeting. This process will continue and build upon the board refreshment efforts that we began last fall with the appointment of two highly qualified independent directors. Having a strong board with the expertise to provide insights and thoughtful leadership is a priority. And we will continue the dialogue that we've been having with our shareholders. So I'll end there.

So all in there the second half of 2020 will be an important and busy time. It out could you were focused on executing our business objectives and delivering value for our many stakeholders. So with that I'll turn the call over sandy to moderate the QNX.

Great. Thank you rich Melissa will now open the call for Q and HP.

Thank you.

I'd like to ask your question. Please press star one on your telephone keypad confirmation Todd will indicate your line is in the question Q you may Prestart Q, if you'd like to remove your question from the Q for participants you think speaker equipment and may be necessary to pick up your handset before pressing Ms dark.

Operator: The second half of 2020 will be an important and busy time at Alkermes. We're focused on executing our business objectives and delivering value for our many stakeholders. So with that, I'll turn the call over to Sandy to moderate the Q&A. Great. Thank you, Rich.

And the interest of time, we ask that you each keep to one question and one follow up thank you.

Our first question comes from the line of Chris Shibutani with Cowen. Please proceed with your question.

Thank you good morning, everybody.

Operator: Melissa, we'll now open the call for Q&A. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question area. You may press star 2 if you'd like to remove your question.

More nuts and bolts question, perhaps on Vivitrol and then the bigger picture question on the AD comments coming up with Vivitrol can you just provide us with a little bit more granularity in the past few talk somewhat about duration of use really highlighted the limitations to new patient starts.

Operator: For participants using speaker equipment, it may be necessary to pick up your equipment for Pressing the Star. In the interest of time, we ask that you ask one question and one. Our first question comes from the line of Chris Shibutani. Thank you. Good morning, everybody.

Independent what kind of trends you've seen as we've gone from first to second quarter and what I assumed in the second half of guidance and you've also commented about the knicks between opioid and alcohol use the alcohol seems to be strengthening and maybe you can comment there as well as the implications on payers and my follow up question is on the three Athree one ad com.

Chris Shibutani: A more nuts and bolts question perhaps on Vivitrol and then a bigger picture question. The ad comments are coming up. With Vivitrol, can you just provide us with a little bit more granularity? In the past, you've talked somewhat about duration of use. You really highlighted the limitations to new patient starts. Comment on what kind of trends you've seen as we've gone from the first to second quarter and what's assumed in the second half of guidance. And you've also commented on the mix between opioid and alcohol use. Alcohol seems to be strengthening, and maybe you can comment there as well.

You mentioned this is going to focus on clinical meaningfulness of the weight loss can you remind us what you're expecting in terms of committee presence, there and perhaps any interactions you packed with the agency.

This point thank you.

Good morning, Chris I'll have Todd answer the first block a questions on good patrolling Jim had some to chime in as well and I will take 30 31. So Todd once you start yes, great. Yeah. Good morning, Chris Yes, Thats an important question couple of important questions, you're asking with in terms of.

Chris Shibutani: My follow-up question is on 3831 adcom. You mentioned this is going to focus on clinical meaningfulness of weight loss. Can you remind us what you are expecting in terms of committee presence there? And any interactions you've had with the agency to this point. Thank you. Good morning, Chris.

Persistency right now from Q1 Q2, we're not seeing any change at this point Vivitrol remains at about 3.93.

3.9 months of therapy.

In terms of your comment.

Is correct, we're very encouraged by the mix of indication use it's a little early to give concrete specifics on on the actual increase but I can tell you to our qualitative research we see and also Theres. Some claims data we are seeing a faster growth rate with alcohol dependence claims versus.

Richard F. Pops: I'll have Todd answer the first block of questions on Vivitrol. If Jim has some to chime in as well, then I'll take 30 to 31. So, Todd, why don't you start? Yes, great. Yeah, good morning, Chris.

It depends claims.

Unknown Attendee: Yeah, that's an important question. There are a couple of important questions you're asking. In terms of persistency right now, from Q1 to Q2, we're not seeing any change at this point. Vivitrol remains at about 3.9 months of therapy.

Yes, I'd just add Chris that the range, we're providing vivitrol related to dynamics going on we're seeing.

That reengagement an increase in patient flow again, we started to see in June and ended July which is very important for us but against that is our expectation that given the unemployment rate across the country, we're going to see more Medicaid utilization. So our gross to nets are going to be giving up a little bit.

Unknown Attendee: In terms of your comment, it is correct. We're very encouraged by the mix of indication use. It's a little early to give concrete specifics on the actual increase, but through the qualitative research we see and also through some claims data, we are seeing a faster growth rate with alcohol-dependent claims versus opioid-dependent claims. Yeah, and I might just add, Chris, that the range we're providing with Vivitrol really has two dynamics going on. We're seeing that, you know, that re-engagement and increase in patient flow that we started to see in June and into July, which is very important for us, you know, but against that is our expectation that, given the unemployment rate across the country, we're going to see more Medicaid utilization. So our gross nets are going to be moving up a little bit.

And so thats, where you get the founding of our range on expectations with Vivitrol.

And Chris on the on the 30 31 question.

So the NDA submitted to the.

Division in psychiatry within the office of nerve sides, but we know it's being reviewed in consultation with the divisions diabetes lipid disorders and obesity. So it it's actually interesting because it.

There are currently there are all types of guidances for weight loss agents, but there's there's no guidance for fleet mitigation.

So this is in some ways of precedent setting application we of course care less about the broader implications of weak mitigation hasn't as it has a therapeutic category were interested specifically in the in the weight gain associated with the administration of Atlanta repeat in the context of anti psychotic so.

Jim Fradies: And so that's where you get the bounding of our range on expectation, and Chris on the 3831 question. So the NDA is submitted to Division of Psychiatry within the Office of Neuroscience, but we know it's being reviewed in consultation with the Division of Diabetes, Epidisorders, and Obesity. So it's actually interesting because there are all types of guidance for weight loss agents, but there's no guidance for weight mitigation. So this is, in some ways, a precedent-setting application. But we, of course, care less about the broader implications of weight mitigation as a therapeutic category.

We expect.

We had come we'll focus on just that how important is it to mitigate week in patients who would be gaining significant amounts of late.

The lands in the will of course, we believe the case for that is very very strong.

Thank you. Our next question comes from the line of Brandon Folkes with Cantor Fitzgerald. Please proceed with your question.

Richard F. Pops: We're interested specifically in the weight gain associated with administration of lansipine in the context of an antipsychotic, so we expect the outcome will focus on just that, how important is it to mitigate weight gain in patients who would be gaining significant amounts of weight with lansipine. So, of course, we believe the case for that is very, very strong. Thank you. Hi, thanks for taking my question. So maybe just, can you remind us of the process to initiate the patient on Vivitrol for alcohol dependency? And then maybe just talk us through the steps that patients have to go through before they are actually prescribed Vivitrol for alcohol. And then, just on Aristotle, obviously, it's a great product for COVID. Can you just talk us through how much of the growth you're seeing now, obviously, with the two month dose. What's wrong with COVID? Have you, or is it too early?

Hi, Thanks for taking my question.

So maybe just can you remind us all the crisis to initiate the patient on Vivitrol alcohol dependent I mean, maybe just talk us through the steps that patients after three before they're actually prescribed.

Vivitrol alcohol and then add just on ARISTOTLE, obviously, it's a great products will carry that can you just talk us through how much of the growth you're seeing now obviously the with the two my guys.

So on target.

Have you is it or is it too early have you received feedback from prescribing that you think that this growth. We see now is actually going to persist in the post private 19 growth. Thank you.

Operator: Have you received feedback from prescribers that you think that this growth we're seeing now is actually going to persist in a post COVID-19 world? Thank you. Why don't you go ahead and get on. Absolutely. Why don't I start with the last question first?

Todd Once you go ahead and get them.

Absolutely when I start with the last question first.

As we are seeing encouraging trends it as you heard in my my comments with for Air started with the two month dosing and that's actually part of our strategy. So the strategy around executing against the air side of family is really starting to take all the our strategy airside. It provides the opportunity with enough.

Unknown Attendee: I think we are seeing encouraging trends, as you heard in my comments, for Aristotle with the two-month dose. And that's actually part of our strategy. So the strategy around executing against the Aristotle family is really starting to take hold. Our strategy, Aristotle provides the opportunity with initio to be the only long-acting injectable that you can initiate on day one for up to two months. And that is really responding very well with our customers at this point. In terms of trends, as I said earlier, the two-month dose now represents about 37% of total months of therapy. We're also seeing encouraging trends with our NBRXs as well, too. It represents approximately 39% of NBRXs.

This year, though to be the only long acting injectable that you can initiate on day, one for up to two months and that is really resonating very well.

Our customers at this point.

In terms of trends as I said said earlier the two month those now represents about 37%.

Of of total months of therapy were also seeing encouraging trends.

With our NBR axis as well to references represents approximately 39% of NVR axis.

We spent a lot of time with our customers over the last quarter talking to them about the impact of covert related disruptions and how they're thinking about the long acting market as well and our belief is that.

Unknown Attendee: We've spent a lot of time with our customers over the last quarter, talking to them about the impact of COVID-related disruptions and how they're thinking about the long-acting market as well. And our belief is that there's going to continue to be a shift toward long-acting injectables, and we're seeing the benefits with Aristotle right now. In terms of the question with Vivitrol, again, as I stated earlier, we're seeing encouraging trends with alcohol adoption. It's a little early at this point to give definitive answers on what the growth looks like. The qualitative feedback is very strong at this point as well, and we're seeing a stronger demand in general for the alcohol use indication as well. Patients don't have to go through detox services as well, which can be perceived as a barrier at times for opioid dependence. So you don't have to do that with alcohol.

There's going to continue to be a shift towards long acting injectables and we're seeing the benefit with ARISTOTLE right now.

In terms of the question with Habitrol.

Again as I stated earlier, we are seeing encouraging trends with with alcohol adoption. It's a it's a little early at this point to give definitive answer on on what the growth looks looks like the the qualitative feedback is very strong at this point as well too we're seeing a stronger demand in general.

For the alcohol use indication as well to patients don't have to go through detox services as well too which is also can be perceived as a barrier at times for opioid dependence. So you don't have to do that with alcohol. So we're very encouraged and we believe there's an opportunity to continue to build awareness for vivitrol with alcohol use indication.

Unknown Attendee: So we're very encouraged, and we believe there's an opportunity to continue to build awareness for Vivitrol with the alcohol use indication. Melissa will take the next question. Our next question comes from the line of Corey Kazimoff with JPMorgan. Hey, thank you for taking my question. This is Turner on for Corey.

Okay, Martha will take the next question please.

Thank you. Our next question comes from the line of Cory Kasimov with Jpmorgan. Please proceed with your question.

Hey, Thank you for taking my question. This is turnarounds are Corey I was hoping to get a little bit more granularity on the guidance. It seems as though it's really based a lot on current trends, you're seeing but how much does the guidance manage since your expectations or reflect.

Operator: I'm just hoping to get a little bit more granularity on the guidance. It seems as though it's really based a lot on current trends you're seeing, but how much does the guidance manage future expectations or reflect or incorporate ongoing second waves of COVID-19 or potential waves in the future? Yeah, good morning, Turner.

Our incorporate ongoing second waves of Copel 19 or potential waves in the future.

Yes, good morning Turner.

Jim Fradies: Well, I think we tried to take that into consideration. I think the other thing that we're seeing is, you know, the initial shock of the lockdowns and social distancing moves that various governors made across the states really had a very dramatic impact on what happened with our Vivitrol patient flow. And we're seeing providers, you know, like many of us are; they need to see their patients; they want to see their patients. That's why they're in business as well.

Well I think we tried to take that into consideration I think the other thing that we're seeing is.

The initial shock of Lockdowns and social distancing moves that various governors made across the states really had a very dramatic impact on what happened with vivitrol patient flow and we're seeing providers like many of us are.

They need to see their patients they want us either patients thats why they are in business as well and these patients need treatment is we know in many ways the isolation and issues with over 19, our stressing our patients with addiction issues and so as did the treatment paradigm across the different states starts to ramp.

Jim Fradies: And these patients need to see treatment. You know, as we know, in many ways, the isolation and issues with COVID-19 are stressing our patients with addiction issues. And so as the treatment paradigm across the different states starts to reopen, we think there's going to be a little bit more resiliency there, you know, even as states might be changing their responses to the varied levels of COVID diagnoses across the country that we're seeing. So we're seeing strength bounce off the bottom that we saw in April and May; the market's growing. And, of course, we don't have a crystal ball as to what's happening in the future.

Open we think there's going to be a little bit more resiliency. There you know even as states might be changing their responses to the very levels of coded.

Diagnoses across the country to proceed so we're seeing strength bounce off the bottom that we saw in April and May the market's growing and of course, we don't have a crystal ball to what's happening in the future but.

Jim Fradies: But, you know, that's why we give ourselves ranges in the guidance because we feel like that's an appropriate place where we can target. Great, thanks. That's helpful. You're welcome. Our next question comes from the line of Jason Gerberry with. Hi, good morning.

That's why we give ourselves ranges in the guidance because we feel like that's an appropriate place where where we can target.

Great. Thanks, that's helpful.

You're welcome.

Thank you. Our next question comes from line of Jason Gerberry with Bank of America. Please proceed with your question.

Operator: Thanks for taking my questions. Yes, my first question is just coming to the 3831 adcom again. I'm just curious, the lack of worsening of some of the key metabolic parameters, it's encouraging, but I guess you could argue it's inconclusive, and so I'm wondering, you know, how you might anticipate this issue kind of rearing its head in the context of an adcom, be it a question for the panelists to vote on as it pertains to label claims and or post-market requirements. And Can you give us a sense of how much shipments were down in your most recent month? I may have missed that. And then also, you know, what sort of impact you're seeing from these alternative injection sites. Page PAGE of NUMPAGES www.verbalink.com Page PAGE of NUMPAGES. Good morning, Jason. It's Rich.

Hi, good morning, Thanks for taking my questions.

Yes. My first question is just coming to three Athree White AD com again.

Im just curious the lack of worsening of some of the key metabolic parameters, it's encouraging but I guess you could argue its inconclusive and so I'm wondering.

Hi, how you might envision this this issue kind of rearing its head in the context of an AD com be it.

A question for the the panelists to vote on as it pertains to label claims and or post market requirements and then my follow up questions just on the Vivitrol guidance for second half.

Look at Twoq, you look at what's implied for second half based on your full year number you kind of down 20% to 25% can you give us a sense of how much shipments were down in euros. Most recent month I may have missed that and then also what sort of impact you're seeing from these alternative injections sites like Albertsons that you talked about.

In the.

And last quarter. Thanks.

Good morning, Jason its rich I'll take the 30 31 question, then then Tod and Jim can take the second stuff on the so it's really important for people understand what we're doing 30, 31, which is aging thats designed for the mitigation of weight gain not a weight loss agent.

Richard F. Pops: I'll take the 3831 question, then Todd and Jim can take the second stuff on the VIV. So it's really important for people to understand what we're doing with 3831, which is an agent that's designed for the mitigation of weight gain. It's not a weight loss agent.

Richard F. Pops: The patients who were included in this six-month study, in the weight study, had normal BMIs. We needed that in order to be able to see the weight difference, and so they didn't have baseline metabolic aberrations.

Patients who enrolled in this six months study in the efficacy in the weight study had normal deemphasize that was we needed that in order to be able to see the weight the weight difference and that so they didnt have baseline metabolic aspirations. So in a six month period of time, we wouldn't expect to see a huge change in.

Richard F. Pops: So in a six-month period of time, we wouldn't expect to see a huge change in elancipy control that we could offset. I think clinicians understand that the benefit of the metabolic consequence is that it comes from not gaining 60, 70, 80 pounds over time. And that's exactly what we will be prepared to talk about with ourselves and our experts at ADDCOM. And I think it's reasonable for FDA to not have had any exposure to this type of clinical setting. So I don't think it's an unreasonable question to ask at ADDCOM. However, I cannot speculate how they'll frame the question as it relates to labeling or PMRs. I have no idea why.

Let's be control that we could we could offset I think clinicians I understand that.

The benefit of the metabolic consequences comes from not and gaining 60, 70 80 pounds overtime and that's exactly what we will be prepared to talk about with ourselves and our experts at the I'd comment I think it's reasonable traffic to not have had any exposure to this type of.

Clinical settings. So I don't think is unreasonable question to ask that come I cannot speculate how how they'll framed the question, how it relates the labeling or or or PM ours, and I have no idea will wait to see as we get further into the review if we can get any more clarity on that.

Richard F. Pops: We'll wait to see, as we get further into the review, if we can get any more clarity. I'll turn it over to the guys now for the other questions. Yeah, maybe I'll start, Jason. Thanks. You know, in terms of patient flow for Vivitrol, we really saw the nadir occur in April and into May. And in June, the patient census started to grow again, but it's not back to pre-COVID levels yet.

I'll turn it over to two to the guys now for the other questions.

Yes, maybe I'll start Jason Thanks.

Turn to patient flow for Vivitrol, we really saw the Nader occur in April and engineering and in June that patient census started to grow again, it's not back to pre cobot levels, yet, but we're seeing encouraging growth trends on the patient side, So thats, where our guidance comes in you know I would also point out that in Q.

Jim Fradies: But we're seeing encouraging growth trends on the patient side. So that's where our guidance comes in. You know, I would also point out that in Q2, we did have roughly $6 and a half million in benefits from those Medicaid adjustments and an adjustment to our return reserve, which is coming down. So if you look at the baseline of what we saw in Q2, we're seeing patient growth at modest levels, you know, sort of single-digit levels are where our expectations are based around for Q3 and Q4, with a little bit of headwind from the increased So for the full year, around 51% of growth to NETs.

Two we did have roughly $6.5 million the benefits from those Medicaid adjustments and an adjustment to our return reserve coming down. So if you look at the baseline of what we saw in Q2, we're seeing patient growth and modest levels. You know sort of single digit levels is where our expectations are based around into Q3 and.

Q4, with a little bit of.

Headwinds from the increased gross to nets, which were assuming you're going to going to be again in that 54% range for the second half of the year. So for the full year around 51% for gross to nets, because again, we have that expectation that given the unemployment rates across the country, you know more and more of our patients on vivitrol are going to be accessing.

Jim Fradies: Because again, we have that expectation that given the unemployment rates across the country, more and more of our patients on Vivitrol are going to be accessing the medication through Medicaid, which has slightly higher discounts. So, a modest increase in patient flow. And then the headwind with the gross to net gives us that range of 270 to 300. Hi Jason, this is Todd. I'll address the questions on alternative injection sites. I'm actually glad you asked that question.

The medication through Medicaid, which has slightly higher discount so modest increase in patient flow.

And then headwind with the gross to nets gives us that range up to 70 to 300 million.

Yeah, Hi, Jason This is Todd I'll address the questions on alternative injection site I'm actually glad you asked that question.

You'll remember in May we did issue a press release and made at that we did add a majority of stores from from the Albertsons network umbrella to our provider locator. We added approximately 900 alternative injection sites to Albertsons and made that number now is close to a thousand so we're very pleased.

Unknown Attendee: You'll remember in May, we issued a press release in May that we did add a majority of stores from the Albertsons Network umbrella to our provider locator. We added approximately 900 alternative injection sites through Albertsons in May. That number is now close to 1,000. So we're very pleased with, in approximately, a little over two months, just the progress that we're making and just expanding our footprint. I think that's really the key message, that we are actively expanding our footprint. It's a little early to give you any type of specifics on the type of volume that is flowing through there, but we do hear qualitatively from our customers that they are seeing increased patient appointments that are coming through the pharmacy channel. So we are very encouraged by that. Our next question comes from the line of Umer Raffat with Evercore ISI. Hi, thanks so much for taking my questions. I have two for Richard and one for Jim, if I may.

And approximately a little over two months of just the progress that we're making and just providing expanding our footprint and I think thats really the key messages that we are actively expanding our footprint. It's a little early to give you any type of specifics on the type of volume that is flowing through there, but we do here qualitatively.

From our customers.

They are seeing increased patient appointments that are coming through the pharmacy channel. So we are very encouraged by that.

Thank you. Our next question comes from the line.

With Evercore ISI. Please proceed with your question.

Hi, Thanks, so much we're making for taking my questions.

I have two for Richard and one for Jim If I may.

Richard first can you remind us what percentage of Elanzapine volumes are in bipolar.

Umer Raffat: Richard, first, can you remind us what percentage of olanzapine volumes are bipolar? And if you could also remind us what studies you guys ran in bipolar outside of the DDI work, I ask because I wonder if there's more risk to getting the bipolar indication than Street may understand, so it might be just very helpful to understand that broadly.

And if you if you could also remind us what studies you guys ran and bipolar outside of the Dbi work and I ask because.

I wonder if there's more risk to getting the bipolar indication then treat me understand so it might be just very helpful to understand that broadly.

Richard F. Pops: Jim, for you, on OPEX, I feel like I'm always puzzled by the sheer magnitude of SGNA that Alkermes as a company spends and the amount it has increased over the years. And I was more puzzled today because R&D was pared back 10%, SGNA was only pared back 2% in the guidance, and a lot of biopharma companies have talked about how interactions have gone down, and sales spend has come down, but we didn't quite see that in Alkermes' guidance. So if you could speak to that, and perhaps on that note, then, Richard, if you could talk about, are there any out-of-the-box possibilities for Alkermes with other neuropsych players? Several of them are now either in the commercial stage or late clinical stage. I realize you don't have the balance sheet to do any meaningful transactions, but are there any out-of-the-box possibilities where this SGNA expense can be shared? Oh, good morning, Umer. Yeah, so there's a bunch in there. See if I can pick through them all.

Jim for you on Opex I feel like I'm always puzzled on the sheer magnitude of open of SGN a.

That alchemy as a company spends.

The amount it has increased over the years and I was more puzzle today because.

R&D was pared back 10% as she and I was only pared back 2% in the guidance and a lot of Biopharma companies I've talked about how interactions have gone down opex sales spend has come down, but we didn't quite see that and alchemy. His guidance. If you could speak to that and perhaps on that note then Richard if you could talk about is there any out of the box posture.

Abilities for.

Alchemy with other Eurosite player several of them are now either commercial state or lead clinical stage I realize you don't have the balance sheet to any meaningful transaction was there any out of the box possibilities, where this actually an expense can be shared.

Okay.

Good morning were so there's a button theres a bunch in there to see if I can you if I could pick through them all.

Richard F. Pops: Sandy can probably give you the specific percentage of lansipine use that's used in bipolar disorder, but it's significant in both bipolar disease and in schizophrenia, which is interesting because, obviously, it's not promoted, and it's not indicated first line in schizophrenia. But what we found in the market research is that clinicians are very receptive to the idea of olanzapine efficacy. You don't need to spend time convincing prescribers that olanzapine is a highly efficacious drug. On the bipolar indication, there are a couple of points I want to make. One is that the studies that we did to support the inclusion of the Bipolar I label were agreed with FDA in advance, which was essentially PK bridging to show that exposures in these patients would be similar, and drug-drug interactions with other commonly used bipolar agents. At the mid-cycle meeting, we confirmed with them that the Bipolar I registration strategy was intact. They were satisfied with that, so we've had no indication that there's any issue with receiving the Bipolar I label at the same time as we receive the schizophrenia label. And your last one, what was the last one you just asked me, Umer?

Sandy can probably give you the specifics percentage of lands between use that's used in bipolar.

But it's.

Nipigon in both.

Bipolar disease and in.

Schizophrenia interesting because it obviously, it's not promoted and it's not indicated first line.

In schizophrenia, so where we found in the market research is that clinicians are very receptive to the idea of the Atlanta, Pete efficacy, we don't need to spend time convincing.

Prescribers of rents being highly efficacious drug on the bipolar indication Theres a couple of points I want to make one is that the studies that we did to support the inclusion of the by poor one label were agreed with FDA and advance, which essentially PK bridging to show that exposures in these patients would be similar.

And the drug drug interactions with other commonly used pipe color agents at the mid cycle meeting, we confirmed with them that the bipolar one registration strategy with impact. So they were they were they were satisfied with that so we've had no indication that there is an issue with receiving the bipolar one label at same time, we received the schizophrenia.

Label.

Yes.

And your last one what was the last when you just asking humor.

I guess my question really was Richard that.

Richard F. Pops: I guess my question really was, Richard, that... With so many players in the neuropsych space now, either commercially or at the clinical stage? I think it's a great question and it's part of the reason why we emphasize on this call the investments that we've made in the psychiatric commercial infrastructure. I think investors, and I think certain companies, have minimized the amount of fixed costs or infrastructure you need to be able to address these patient populations, particularly those for drugs that span commercial, Medicaid, and Medicare with dual eligibility because it's a very complicated reimbursement and commercial environment, as well as a complicated medical affairs environment, and a complicated payer environment. So absolutely, our belief is that what we're building in terms of a commercial foundation is leverageable, and 3831 will be the first example of that.

With so many players and Aerosat space now either Camaro, Yeah, Yeah, I know I I think it's a great question and it's part of the reason why we emphasized in this call. The investments that we made in the psychiatry commercial infrastructure I think investors and I think certain companies.

Have minimize the amount of of of fixed cost or or infrastructure, you need to be able to address these patient populations, particularly those that for drugs that span commercial Medicaid and Medicare with the dual eligibles, because it's a very comp.

Located reimbursement and and commercial environment.

As well as a complicated medical affairs environment accommodated pair environment. So absolutely our belief is that what we're building in terms of a commercial foundation. We Leverageable 30, 31 will be the first example of that.

Richard F. Pops: But we hope to put additional products through that process, and particularly as other companies begin to realize the daunting amount of expense they might have to undertake to launch a single product. So that's part of our long-term corporate objective. And I'll just close the loop on the bipolar question. So about nearly 25% of olanzapine's total prescriptions are for bipolar disorder, and that represents about 11% of the atypical antipsychotic market share. And I might just chime in, Umer.

But we hope to put additional products through that in particularly as other companies begin to realize that daunting amount of expense they might have to undertake to launch a single product. So thats part of our long term corporate objective.

And I'll just close the loop on the bipolar questions about 20, nearly 25% of Elanzapine total prescriptions are in bipolar disorder and that represents about 11% of atypical antipsychotic market share.

Yes, and I might just chime in numerous Jim on the on the Opex side and our investments there I mean, I think we're trying to we've demonstrated our commitment to non-GAAP profitability I think we look at our cost structure.

Operator: It's Jim on the OPEC side and our investments there. You know, I mean, I think we're trying to – we've demonstrated our commitment to non-gap profitability. I think we look at our cost structure every year and make sure that we're justified in what we're spending.

Every year and make sure that were justified and what we're spending I think rich touched on the importance of the infrastructure that's required to sell in psychiatry and addiction. These are unique areas and the most important thing I think we can do is continue to leverage that as we've built these capabilities. If we can put more products through with Vivitrol with.

Jim Fradies: I think Rich touched on the importance of the infrastructure that's required to sell in psychiatry and addiction. These are unique areas, and the most important thing I think we can do is continue to leverage that as we've built these capabilities so that we can put more products through, you know, with Vivitrol, with Aristata, with 3831, and potentially others. We'll certainly work to do that.

There are started with three Athree wanted potentially others will certainly work to do that I am I. Just also say we are increasing our spend on the on the marketing side and sales side in preparation for the three Athree. One launch. This has the potential will be a very important drugs for us and we have the resources that we want to make sure that this year, we don't under it.

Jim Fradies: I might also say we are increasing our spend on the marketing side and the sales side in preparation for the 3831 launch. This has the potential to be a very important drug for us, and we have the resources, and we want to make sure that this year we don't underinvest in preparations for the launch of 3831. So we're sharing some of those expenses in 2020, even though the launch expectation will obviously be in 2021. So we'll continue to keep an eye on those operating expenses and work to leverage those as much as we can and to be as efficient as possible. Thank you very much.

Yes, and preparations for the launch of Treasury, one that so we're sharing some of those expenses in 2020, yes, even though the launch expectation will obviously be in 2021. So we'll continue to keep an eye on those operating expenses in work.

Leverages as much as we can and to be as efficient as again.

Thank you very much.

Yep.

Operator: Melissa, we'll take the next question, please. Our next question comes from the line of Paul Matteis. Hey, this is Nate on for Paul.

We'll take the next question please.

Our next question comes from the line of policies with Stifel. Please proceed with your question.

Hi, This is Nate on for Paul Thanks for taking my question. Maybe first question I think I heard you guys mentioned, maybe reducing slightly your expectations around the salesforce build for 331 could you elaborate on that and was I correct am I correct in stating you guys had originally expected.

Operator: Thanks for taking the question. Maybe my first question is, I think I heard you guys mentioned maybe reducing slightly your expectations around the Salesforce build for 3.8.3.1. Could you elaborate on that? And was I correct? Am I correct in stating you guys originally expected somewhere around 150 to 200 new sales reps. Yeah, hi Nate. This is Todd.

Somewhere around 150 to 200, new sales reps.

Yes, Hi, Nate this is tied to I'll take that that question.

Unknown Attendee: I'll take that question. And you're correct. Our original assumption prior to COVID was that we would add between 100 to 200 sales representatives. COVID has allowed us to take stock and take a look at the marketplace. As I mentioned earlier, you know, our focus right now is really building this capability and hybrid personal promotion, and we believe we have had some good results to date with that. And we're going to continue to improve with it. So our original assumption was 100 200 sales representatives; we believe that's going to be in the mid to low range of that number now. And we're going to be finalizing that as we get closer to launch. Akash, and then maybe I haven't heard from Emerity brought up yet. Do you guys have any visibility into what's happening on the ground? I mean, we heard a significant shift in tone from Biogen this quarter. Hey Nate, it's Rich.

And you're correct our original assumption prior to co that is that we would add between 100 to 200 sales representatives.

Coded as as allowed us to take stock take a look at the marketplace.

As I mentioned earlier, our focus right now is really building this capability and hybrid personal promotion and we believe we have some some good results to date with that we're going to continue to improve with it. So our original assumption was 100 200 sales representatives, we believe that's going to be in the mid to low range.

That number now and we're going to be finalizing that as we get closer to launch.

Gotcha, and then maybe either numerically brought up yet do you guys have any visibility into what's happening on the ground I mean, we heard a significant shifts in Cohen from Biogen this quarter.

Hey, this rich I would I wouldn't say that that that.

Richard F. Pops: I would say that the secret to understanding Vimerides is to go to Biogen. They're in charge of this launch, and we're really hopeful that we're just in the beginning, early days of Vimerides. Fair enough. Thanks, Rich. Our next question comes from the line Mark. Morning.

The secret to understanding the marries Dakota, Biogen [laughter] there in charge it there in charger. This this launch and.

We're really hopeful that we're just beginning early days of remarrying.

Fair enough thanks rich.

Thank you. Our next question comes from the line of Marc Goodman with maybe please proceed with your question.

Good morning, first can you give us a little more color on your payer interactions you were mentioning in your prepared remarks for 30 31.

Operator: First, can you give us a little more color on your payer interactions you were mentioning in your prepared remarks for 38? Second, you've talked about... profitability. So I was just curious.

Second you've talked about.

To profitability site was just curious should we be assuming that with the additional spend to launch 31 next year you will be managing.

Operator: Assuming that with the additional spend to launch 3831, and still driving profitability on a non-gap, and just very quickly, you're cutting $35 million in R&D. Any specific programs that were cut, or is that just a little bit across the board? Yeah, hi, Mark. This is Todd.

To still driving profitability on a non-GAAP basis, just third quickly you're cutting 35 million of R&D any specific programs that were cut or is that just a little bit across the board.

Unknown Attendee: I'll take the first part on pair interactions. As I said in my prepared remarks, thus far, we've had interactions with pairs in the U.S. that represent approximately 50% of the covered lives within the oral antipsychotic category. I would say the interactions have been as expected. The payers' number one, their first question, their number one priority is understanding the clinical value of the product of any product coming into the category. They also believe that, in general, the class is somewhat settled, meaning that 90% of the class of the market right now is generic, and about 10% is branded. And so it's a very common occurrence within branded agents to have some type of step through generic products. As you know, ALX3831 is a new molecular entity; it is a branded product.

Yes, Hi, Mark this is Todd I'll take the first part on pair interactions as I said in my prepared remarks.

Thus far we've had interactions with with payers in the U.S. that represent approximately 50% of the of the covered lives within the oral anti psychotic category.

I would say the interactions have been as expected.

The payers number one there first question there number one priority is understanding the clinical value of the product of any product coming into the category.

They also believed that in general the class is somewhat settled meaning that 90% of the class of the market right now as generic and about 10% as branded and so it's a very common occurrence within branded agents to have some type of stepped through generic products.

As you know Alex 30, 31 is a new molecular entity is a branded product our expectation is that it's going to be treated such as a brand to product and that there will be situations, where that where there will be stepped through therapy as well till we are prepared for that.

Unknown Attendee: Our expectation is that it's going to be treated as a branded product and that there will be situations where there will be step-through therapy as well, and we are prepared for that. Yeah morning, Mark; I'll touch on the financial questions. You know, as for the commitment to profitability in 2021, we're obviously not guiding for 2021 yet. And a lot can happen in the world, you know, between now and February.

Yes, good morning, Mark I'll touch on the financial questions.

For the commitments of profitability in 2021, we're obviously not guiding yet for 2021 and a lot can happen in the world.

We now in February, but we've demonstrated our commitment to working to non-GAAP profitability. This year and that will certainly be our intention, but a lot will depend on obviously, how the topline grows through 2021 for us so stay tuned on that front.

Jim Fradies: But we've demonstrated our commitment to working to non-gap profitability this year, and that'll certainly be our intention. But a lot will obviously depend on how the top line grows through 2021 for us, so stay tuned on that front. On the R&D side, you know, it's been a real mix of prioritization of refacing some things and some COVID-related savings. So we've worked on each of those things across the board to bring R&D savings down.

On the R&D side, you know it's been a it's been a real mix of prioritization rephasing of some things and some kogan related savings. So we work in each of those things across the board to bring R&D savings down so you're right. It's a little bit of everything as we as we talk and Reprioritize things to focus on our key programs.

Jim Fradies: So you're right, it's a little bit of everything as we talk and reprioritize things to focus on our key programs, particularly 4230. Thanks. Our next question comes from the line of Emile Devon with Mizzou.

Particularly 42 third.

Thanks.

Well.

Thank you. Our next question comes from the line.

With Mizuho Securities. Please proceed with your question.

Operator: Hi, great. Thanks for taking my question. Maybe one of you can just follow up on the last question about 3831, and then I have one separate question on the payer interactions. And maybe you want to kind of bring in any kind of feedback from the physician side. Just curious. Obviously, it sounds like you would have to go through a generic report and get on 3831, which makes sense.

Okay, great. Thanks for taking my question, maybe one if I could just follow up on the last question around create three one of that had one separate question.

Appear interactions and maybe going it kind of bring in any kind of feedback from that additional side. Just curious obviously it sounds like you would want to go through a generic pregnant and create three one which makes sense curious about sort of Jericho landscaping, specifically that's come up in the discussions deeply the payers as sort of course pace of these generic Atlanta, Beone and only come on to.

Unknown Attendee: Curious about sort of generic Olanzapine specifically, if that's come up in the discussions, do you think the payer is going to sort of force patients to use generic Olanzapine and only come on to 3831 if they've shown weight gain on Olanzapine or how that dynamic would work? And then my other question is really more around sort of funding at the state level or at the federal level around opioid addiction. Obviously, that's been a big driver of Vivitrol uptake with all the focus here. It does seem like the pandemic has worsened the opioid crisis in some ways, but it's also not clear to me yet if there's any real push for much greater funding to help deal with this crisis, given all the other needs that now exist because of the pandemic. So maybe just talk about what you're sensing from the government level in terms of support for more funding around the opioid epidemic. This is Todd.

Great three to one if they've shown.

We gain on.

How that dynamic would work and then my other question is way more around sort of bonding.

The state level or at the federal level around opioid addiction, obviously, that's been a big driver of Vivitrol uptake with all the focus here. It does seem like dependent because works and they will be accretive in some ways, but also not clear to me yet if there's any real push for a much greater funding to help deal with this crisis that given all the other needs that now exists.

Within Pemex, So maybe just talk about what you're thinking from the government level in terms of support for more.

Finding around the opioid epidemic. Thanks.

The type of mail. This is a this is Todd let me start with that last question first.

Unknown Attendee: Let me start with that last question first and then spend just a few minutes on that. At this point right now, we're not seeing any type of decline in funding that's available for the opioid epidemic. There are primary and secondary sources of funding. The primary sources of funding are at the federal level. An example of that is the state opioid response grants, which are north of $1.4 billion that's currently available. We, most recently, as well, and I said this in my prepared remarks, are working very closely with certified community behavioral health centers. This is a program that was introduced this year. There are going to be up to 172 awardees of $450 million that's available over a two-year period. We've mapped that to approximately 32 states in the U.S. to actually address this epidemic as well. But we're not seeing any changes at the federal level.

And then spend just a few minutes on that.

At this point right now, we're not seeing any type of decline and funding that's available for for opioid for the opioid epidemic.

There is primary and secondary sources of funding the primary sources of funding or at the federal level. An example of that is a state opioid response grants, which is north of $1.4 billion. That's currently available.

We most recently as well and I said this in my prepared remarks are working very closely with certified community behavioral health centers. This is a program that was introduced this year, there's there's going to be up too.

172, Awardees, a $450 million that's available over a two year period, we've mapped out to approximately 32 states in the us too to actually address. This this this epidemic as well so we're not seeing any changes at the federal level Secondly, the primary source of funds.

Unknown Attendee: Secondly, the primary source of funding for Vivitrol really comes through state Medicaid. Vivitrol is available and has wide access on state Medicaid plans, with 50% of lives actually having access to a pharmacy benefit. We are in very good shape with that.

Thing for for Vivitrol is really comes through state Medicaid Vivitrol is available and has wide access on state Medicaid plans was 50% of lives actually having access to a pharmacy benefit. So were so so we are in very good shape with that.

The areas that we're watching very closely with funding is really the secondary funding sources that happen at the state level that could impact our recovery programs that could impact providers that it could impact local sites as well too we haven't seen any major disruptions there at this point as well, but we're getting watching that very.

Unknown Attendee: The areas that we're watching very closely with funding are really the secondary funding sources that happen at the state level that could impact recovery programs, that could impact providers, and that could impact local sites as well. We haven't seen any major disruptions there at this point, either, but we're going to be watching that very closely. The key message, the key takeaway is that funding is available for Vivitrol, and Vivitrol has wide, broad access and is available to patients. In terms of patient interactions with 3831, in general, having a step through any generic, including Lanzapine, is not ideal for all patients, but as I said just a few minutes ago, payers believe that the market is somewhat settled with 90% of the prescriptions being generic.

Closely so the key message the key takeaway is that funding is available for Vivitrol and Vivitrol has wide broad access is available to patients in terms of the patient interactions with three athree one.

In general having a step through any generic including Elanzapine pain is not ideal for for all patients, but as I said, just a few minutes ago payers believed that the market is somewhat settled with 90% of the prescriptions being generic.

Branded agents are typically reserved for a second third or fourth line option after generic failure as well as something that we watch very closely with the market opportunity is about 20% of patients at any given time have already cycle through Atlanta paying about 20% of patients.

Unknown Attendee: Branded agents are typically reserved for a second, third, or fourth line option after generic failure as well. Something that we watch very closely with the market opportunity is that about 20% of patients at any given time have already cycled through Lanzapine. About 20% of patients. Patients with schizophrenia, on average, you know, cycle through about five different products. Patients with Bipolar I Disorder cycle through about seven different products.

Patients for on schizophrenia on average cycle to about five different products patients for bipolar one to sort of cycle through about seven different products. So even in the in light. If there is a step to a product like Atlanta team. There is a market opportunity for those patients do not tolerate Atlanta pain to have an option like Alex 33.

Unknown Attendee: So even in light, if there is a step to a product like Lanzapine, there is a market opportunity for those patients that do not tolerate Lanzapine to have an option like Alex3831. Thank you. Our next question comes from the line of Douglas Tsao with H.T. Hi, good morning.

The one.

Thank you. Our next question comes from the line of Douglas So with HC Wainwright. Please proceed with your question.

Hi, good morning, Thanks for taking the questions just.

Unknown Attendee: Thanks for taking the questions. In terms of Vivitrol, as we've seen a resurgence in terms of COVID-19 across many states, I was just curious, you know, if you've seen any sort of pullback in the sensitivity you've seen, because even though we've seen a resurgence, we haven't seen quite as dramatic a statewide action in terms of shelter-in-place And so have you sort of continued to see that growth into the early weeks of July? And also, how much sensitivity are you seeing on a state-by-state basis based on sort of the conditions in a particular state?

In terms of pitch all as we've seen.

The resurgence in terms of.

Covert 19 across many states I was just curious if you've seen any sort of pull back in the sensitivity you've seen.

Because even though we've seen a resurgence we haven't seen quite as dramatic sort of statewide actions in terms of shelter in place orders being implemented.

And so have you sort of continued to see that growth into the early weeks of July and also how much sensitivity are you seeing out of state by state basis based on.

So to that that conditions in a particular state.

State like I know, Massachusetts is an important state for you for Vivitrol and that seems to have had a lot of success recently in terms of controlling the virus and that but there are other states that have obviously seen more significant outbreaks. Thank you.

Unknown Attendee: You know, you see a state like Massachusetts is an important state for you and for Vivitrol, and that state seems to have had a lot of success recently in terms of controlling the virus, but there are other states that have obviously seen more significant outbreaks. Thank you. Thanks for asking that question. At this point, we haven't seen any pullback in terms of the trends, the gradual recovery with Vivitrol. We haven't seen that with any of the resurgence in certain states across the country. The real impact, as Jim said earlier, really happened towards the beginning to middle of Q2, and that was really in the April and May timeframe. We haven't seen any pullback in terms of controlled settings.

Hey, Doug Thanks for asking that question.

At this point, we haven't seen any pullback in terms of the trends that the gradual recovery with vivitrol.

We haven't seen that with any of the resurgence in certain states across the country.

The real impact as Jim said earlier really happened towards the beginning to middle of Q2 and that was really into April and May timeframe.

We haven't seen any any any pull back in terms of controlled settings as rich said earlier, we're actually starting to see and we hear this qualitatively from our customers as well that the controlled settings of care or are starting to loosen up and more patients are getting access to treatment. So the main message is that we are.

Unknown Attendee: As Rich said earlier, we're actually starting to see, and we hear this qualitatively from our customers as well, that the controlled settings of care are starting to loosen up, and more patients are getting access to treatment. So the main message is that we aren't seeing any pullback at this point. Okay, great. Thank you very much. Thank you. Our next question comes from Akash Tewari with Wolf Research. Hey, thanks so much.

Seeing any pullback at this point.

Okay, great. Thank you very much.

Thank you. Our next question comes from the line of a cost with Wolfe Research. Please proceed with your question.

Hey, thanks, so much so to mostly on just margin for error SATA can you remind us what current margins are for that product given the increased gross to net and how we should think about profitability evolving over the next few years, particularly as a bill if I may Tonight goes off patent.

Akash Tewari: So, two, mostly on just margins. For Aristata, can you remind us what current margins are for that product, given the increased growth to net, and how we should think about profitability evolving over the next few years, particularly as Abilify and Magenet go off-patent? And then, you know, kind of in your outreach with shareholders, this is kind of an out-of-the-box idea, but have you ever thought about digesting the Vivitrol business and focusing solely on schizophrenia with 3831 and Aristata? You know, it looks like scripts really haven't ticked up over the last few years, and, you know, there's kind of uncertainty with the Teva settlement on how the free drug So, is that something that is even in the realm of possibility?

And then.

Out of in your out reach with shareholders.

This kind of an out of the box that yet but have you ever thought about divesting the be petrol business focusing solely on schizophrenia with 30, 31 and Eric data.

You know it looks like script really havent picked up over the last few years and theres kind of uncertainty with its habits settlement on how free drug will kind of evolve that market. So is that something that is even in the rockabilly. Thanks a lot.

Jim Fradies: Thanks a lot. Sure. On the margin side, the Aristotle margins are in the, gross margins are in the high 80% level. You know, we're seeing those, as top line grows, those margins can improve as we see some manufacturing efficiencies. You know, at this stage, as well, both of our commercial products, you know, if you understand them, they're profitable, and our growth is profitable, and so that's an important area where we're going to continue to invest to drive top-line growth, because obviously, we can get more leverage out of our infrastructure as the top line continues to grow. In terms of outsourcing or divesting of Vivitrol, I think that, you know, we It's a very unique product. It's still, you know, even after years on the market, the treatment paradigm hasn't really shifted to understand the value of a non-addictive treatment for opioid dependence or the value, frankly, of medication in the treatment of alcohol dependence.

Sure on the margin side.

Aristada margins are in a gross margins are in the high 80% level.

We're seeing knows as as topline growth as margins can improve as we see some manufacturing efficiencies.

At this stage as well both of our commercial products.

I understand them.

They are profitable and our growth is profitable and so thats important area, where we're going to continue to invest to drive the topline growth because obviously, we can get more leverage out of our infrastructure as the topline continues to grow.

In terms of outsourcing or or divesting of Vivitrol I think that.

We see growth opportunities for vivitrol being quite important and quite substantial as we look into years ahead, it's a very unique product it's still even after.

A year is on the market is still I think.

The the treatment paradigm hasn't really shifted to understand the value of a non addictive treatment and opioid dependence or that value frankly of medication in the treatment of alcohol dependence and part of this crisis is I think that there would be a highlight of treating addiction and serious mental illness and vivitrol can play an important.

Jim Fradies: And part of this crisis is, I think, that there will be a focus on treating addiction and serious mental illness, and Vivitrol can play an important role there. You know, that said, we always look at strategic options, and we consider those sorts of things, but we feel like the growth opportunity for Vivitrol, you know, I'll just remind you back in the 16, 17 timeframe when some of the states were changing their policies, and we were seeing Vivitrol growth rates of 60 or 70% overall, and the top five states, you know, now while that's coming down, it used to be 50% of sales. The top five states now account for 41% of sales. We really have nice opportunities in places like California and Texas as they shift and understand the opportunities to treat addiction, where we can see Vivitrol growth accelerating. It's hard to make predictions on a state-by-state basis, but the market there is real.

Role there.

That said, we always look at strategic options and we consider those sorts of things, but we feel like the growth opportunity for Vivitrol I'll, just remind you back into 16 17 timeframe. When some of the states were changing their policies and we were seeing vivitrol growth rates in 60, or 70% overall and the top five states.

Yes, now well that's coming down it used to be 50% of sales. The top five states are now 41% of sales, we really have nice opportunities in places like California, and Texas as they shift and understand the opportunities to treat addition, where we can see vivitrol growth accelerating hard to make predictions on a state by state basis, but.

The market there is real we have the infrastructure, it's profitable for us and so at this stage.

Jim Fradies: We have the infrastructure. It's profitable for us, and so, you know, at this stage, we see upside potential from here. Thanks so much. You're welcome. Thank you. Our next question comes from the line of Terrence Flynn with Goldman Sachs. Hi, thanks for taking the question. Maybe just two for me.

We see upside potential from here for Vivitrol.

Thanks, so much.

Youre welcome.

Thank you. Our next question comes from the line of Terence Flynn with Goldman Sachs. Please proceed with your question.

Hi, Thanks for taking the question.

Maybe just to for me I'm 38, 31 was wondering if you had any more clarity yet from FDA on if a virtual inspection will be sufficient and.

Terrence Flynn: On 3831, I was wondering if you'd gotten any more clarity yet from FDA on if a virtual inspection would be sufficient. And you mentioned you'd be targeting a larger prescriber base with 3831. Can you just quantify that for us?

You mentioned, you'll be targeting a larger prescriber base with 30 31 can you just quantify.

That for US and then for 42 30 at ESMO just what are you hoping to see here to continue investing in the program. Thank you.

Terrence Flynn: And then, for 4230 at ESMO, just what are you hoping to see here to continue investing in the program? Thank you. This is Rich. Sandy, can you guys hear me? Yeah, we can hear you.

Okay.

This is rich Sandy can can you guys hear me, yes, we can hear yet okay. Good I lost my phone connection before so morning Terence.

Richard F. Pops: Okay. Good morning, Terrence.

Richard F. Pops: On the 3831, interestingly, FDA has said publicly... Blown Down Their Bidoof Obligation. In the case of 3831, because it's manufactured at Wilmington, we have the advantage, at a site that in a facility that FDA has inspected. They've pointed out their concerns with brand new facilities or facilities with existing inspectional. So we've gotten CMC questions from FDA; we expect and hope that the inspection will be able to be done remotely or virtually in that case. 4230. As Mo, we're excited that the Artistry 1 data has been accepted for oral presentation. Recall that Artistry 1 has three components.

On the 31 30 31 interesting FDA has said publicly that that inspection issues may be the only things that could slow down there to do fall obligations are there and we're in the case of 30 31, because its manufactured in Wilmington, we have the advantage that its.

In a site that facility that the has inspect and they've pointed out their concerns with brand new facilities or facilities with existing inspection all issues. So we've gotten CMC questions from from FDA, We we expect and hope that the inspection will be able to be done remotely or virtually in that case.

43.

As mower, we're excited that the artistry one data has been except for oral presentation recall that artistry. One has has three components. The first component we presented data at Citi last year, which at the dose escalation, which led to our determination of the recommended phase two dose when we had that recommended phase two dose than.

Richard F. Pops: The first component, we presented data at CITSE last year, which was the dose escalation, which led to our determination of the recommended phase 2 dose. When we had that recommended phase 2 dose, then we moved into two expansion cohorts. One is monotherapy, in renal cell carcinoma and in melanoma, and what we call Part C, which is the combination with Pembro.

And we moved into two expansion cohorts one is in monotherapy.

Within renal cell carcinoma, and in melanoma, and what we call part C, which is to combinations with pembro. So you'll you'll see data from parts being part C.

Unknown Attendee: So you'll see data from Parts B and Part C at ESMO and then data from Artistry 2, which is the subcutaneous protocol we expect to share with you later in the course. Hi Terrence, this is Todd.

At ESMO, and then data from artistry too, which is the subcutaneous protocol, we expect to share with you later in the quarter.

Hi, Terrence this is Todd I'm going to address that question on the target HCP audience and we've given that a lot of thought and we will continue to do so this is actually something we're really excited about as you know we're not new.

Unknown Attendee: I'm going to address the question about the target HCP audience. And we've given that a lot of thought, and we will continue to do so. This is actually something we're really excited about.

Unknown Attendee: As you know, we're not new to serious mental illness, and this is an excellent opportunity as a company that we're going to be leveraging the full power of our commercial capabilities and our commercial infrastructure. Our current thinking right now is that the target audience would be somewhere in the neighborhood of around 20,000 HCPs. Currently, we cover about 60% of that, a little bit north of 12,000.

So serious mental illness, and this is a an excellent opportunity as a company that we're going to be leveraging the full power of our commercial capabilities. Our commercial infrastructure. Our current thinking right now is that the target audience would be somewhere in the neighborhood of around 20000 HCP is currently we cover about 60%.

That a little bit north of 12000 so.

Our launch preparation will fully be able will allow us to maximize our current infrastructure and we won't be starting.

Unknown Attendee: So our launch preparation will allow us to maximize our current infrastructure, and we won't be starting fresh or new with the majority of those HCPs. Great. We have time for one more question, please. Our final question this morning will come from the line, "Hey guys, thanks for managing to get my question in. I'm on for Baron today."

Fresher knew what the majority of those AC fees.

Great. We have time for one more question. Please Melissa.

Thank you Sir our final question. This morning will come from the line.

With Jefferies. Please proceed with your question.

Hey, guys. Thanks for managing to get my question on for Baron Today, just two quick questions. Just could you remind us on patrol and turning on a percentage terms how much did new patient starts decline.

Operator: Just two quick questions. Could you remind us, on Vivitrol, in percentage terms, how much did new patients start to decline? And on Aristotle, clearly, its growth seems to be exceeding that of the LAI class.

And on our Stada clearly.

Growth seems to be exceeding that of the I class is this basically conversion from other ela eyes compared to newly diagnosed patients. Thanks.

Operator: Is this basically conversion from other LAIs compared to newly diagnosed patients? Thanks. I'll take both of those. So in terms of the first with Vivitrol, the overall market for new patient starts declined quarter over quarter. Vivitrol saw approximately a 28% decline in new patient starts.

Hi, This is Todd I'll take both of those so in terms first with Vivitrol. The overall market for new patient starts declined quarter over quarter, Vivitrol Sol approximately a 28% decline and new patient starts.

In terms of Aristada the conversion I think the key point. The key question is really the source of business for aerostar, approximately 30% of the source of business.

Unknown Attendee: In terms of Aristotle, the conversion, I think the key point, the key question is really the source of business for Aristotle. Approximately 30% of the source of business actually comes from other LAIs, and the remaining actually comes from orals. And so Aristotle and LAIs are typically not products that naive patients use, so there is a conversion from other products, including shorter acting LAIs and also orals as

Actually comes from other Elie eyes, and the remaining actually comes from from Orals and.

And so yes, aristada and lay eyes are typically not products that naive patients use. So there is a conversion from other products, including shorter acting lay eyes and also orals as well.

Great great. Thank you.

Unknown Attendee: Great, thank you. Alright, thanks everyone for joining us on the call today. I appreciate your time. If you have any questions..., http://TheBusinessProfessor.com, Thank you. This concludes today's conference. You may disconnect your lines at this time.

Hi, Thanks, everyone for joining us on the call today appreciate your time I get any.

Hesitate to recap the company. Thank you.

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