Q2 2021 Alkermes Plc Earnings Call

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Greetings and welcome to the Alkermes Q2, 2020.1 financial results Conference call. My name is Alex and I will be your operator for today's call.

Alex: Greetings and welcome to the Alkermes Q2 2021 financial results conference call. My name is Alex, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the call over to Sandra Coombs, Vice President of Investor Relations. Sandy, you may begin. Good morning. Welcome to the Alkermes Plc conference call to discuss our

At this time all.

Vince are in a listen only mode.

A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star zero and your telephone keypad. Please.

Please note that this conference is being recorded.

I will now turn the call over to Sandra Coombs, Vice President of Investor Relations Sandy you may begin.

Good morning, welcome to the Alkermes plc conference call to discuss our financial results and business update for the quarter ended June 32021 with me today are Richard Pops, our CEO and Brown, our Chief Financial Officer, and Todd Nichols, Our Chief commercial officer before we begin I encourage everyone to go to the investors section of Alkermes com.

Sandra Coombs: Our Financial Results and Business Update for the Quarter Ended June 30, 2021. With me today are Richard Pops, our CEO; Iain Brown, our Chief Financial Officer; and Todd Nichols, our Chief Commercial Officer. Before we begin, I encourage everyone to go to the Investors section of Alkermes.com to find our products.

Com to find our press release and related financial tables, including a reconciliation of the GAAP to non-GAAP 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 actual results.

Sandra Coombs: Press Release and Related Financial Tables, including a reconciliation of the Gap to Non-Gap Financial Measures that will

Sandra Coombs: We believe the non-GAAP financial results, in conjunction with the GAAP results, are useful in understanding the ongoing economics of our business. However, our discussions during this conference call will include forward-looking statements, and actual results could differ materially from those forward-looking statements.

Else could differ materially from these forward looking statements. Please see slide 2 of the accompanying presentation. Our press release issued this morning, and our most recent annual report filed with the SEC for important risk factors that could cause our actual results to differ materially from those expressed or implied in the forward looking statements. We undertake no obligation to update.

Sandra Coombs: Please see slide 2 of the accompanying presentation, our press release issued this morning, and our most recent annual report filed with the SEC for important risk factors that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements. We undertake no obligation to update or revise the information provided in 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 Richard. Richard Pops: That's great.

Date or revise the information provided on this call or EMEA 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 Richard that's great. Thank you Sandy and good morning, everyone. We had a strong second quarter.

Richard F. Pops: Thank you, Sandy. Good morning, everyone. We had a strong second quarter. A number of good things happened. Excellent commercial performance and other positive developments all demonstrating continued execution against the priorities we outlined at the beginning of the year. Vivitrol, Aristata, and Vumerity each showed strong year-over-year and sequential growth. These elements of the revenue line, coupled with a disciplined focus on costs, drove our financial results.

Number of good things happened excellent commercial performance.

Vince and other positive developments, all demonstrating continued execution against the priorities we outlined at the beginning of the year.

Vivek troll and <unk> and <unk>, each showed strong year over year and sequential growth.

These elements of the revenue line, coupled with a disciplined focus on.

Drove our financial results.

We reported robust non-GAAP net income for the second quarter, and we are increasing our guidance for the year.

Richard F. Pops: We've reported robust non-GAAP net income for the second quarter, and we're increasing our guidance for the year. The FDA approval of Libolvi represents another meaningful growth opportunity for the company. And the value of the pipeline has also become more evident, with Nemba Lucan advancing and other candidates progressing as planned. Current Revenues, Emerging Revenue Streams, an Advancing Pipeline, and a Focus on Efficient Management of the Business. Each of these elements of the company's strategy provides a significant opportunity to create value. Let's start with a bit on Levalvy.

The FDA approvals and <unk> represents another meaningful growth opportunity for the company.

And the value of the pipeline has also become more evident.

Cost and the look and advancing and other candidates progressing as planned.

Current revenues emerging revenue streams, and advancing pipeline and our focus on efficient management of the business. Each of these elements of the company's strategy provides a significant opportunity to create value.

I'm going to start.

With nymphet on La <unk>, our first approved oral antipsychotic and the <unk> will leverage our commercial infrastructure and represents our next revenue growth opportunity.

Richard F. Pops: Our first approved oral antipsychotic, Levalvy, will leverage our commercial infrastructure and represents our next revenue growth opportunity. La Balvie is indicated for the treatment of adults with schizophrenia and for the treatment of adults with bipolar 1 disorder. The label is strong, and it reflects La Balvie's features.

<unk> is indicated for the treatment of adults with schizophrenia and for the treatment of adults with bipolar 1 disorder. The label was strong and it reflects.

And with as Lowball vs features we believe we'll be able to differentiate this medicine and a large market based on its clear attributes and a simple message laboratory captures the established efficacy of Olanzapine with last weekend.

Richard F. Pops: We believe we'll be able to differentiate this medicine in a large market based on its clear attributes and a simple message. Libaldi captures the established efficacy of olanzapine with vaswaicaine. We've been establishing our commercial capabilities and presence in the schizophrenia market for five years with Aerostata, our long-acting injectable antipsychotic. Building on these capabilities and developing a franchise of treatments for serious mental illness has been a centerpiece of our long-term strategy. The commercialization of Lebalvi will leverage our experience and expertise in this complex commercial setting, and this is already underway.

We have been establishing our commercial capabilities and presence and the schizophrenia market for 5 years with arrow startup.

<unk>, our long acting injectable antipsychotic.

Building on these capabilities and developing a franchise of treatments for serious mental illness has been a centerpiece of our long term strategy.

The commercialization of the body will leverage our experience and expertise in this complex commercial setting and this is already underway.

And since approval, we've engaged with hundreds of thought leaders and health care providers and expect to launch will evolve into a market with a strong baseline awareness of the medicine, and it's differentiating attributes and Youll hear more about this from Todd and just a couple of minutes.

Richard F. Pops: Since approval, we've engaged with hundreds of thought leaders and health care providers and expect to launch Lebalvi into a market with a strong baseline awareness of the medicine and its differentiating attributes. And you'll hear more about that from Todd in just a couple minutes.

Olanzapine is widely recognized as being highly efficacious.

Richard F. Pops: Olanzapine is widely recognized as being highly efficacious, but physicians and patients often avoid prolonged utilization due to concerns about its propensity for weight gain. Levallaby provides an opportunity to harness the efficacy of olanzapine as a maintenance therapy in schizophrenia and bipolar 1 disorder with less weight. When we set out to develop innovative medicines, our guiding principle has always been to make medicines that address the real-world challenges faced by people living with complex and serious diseases, and LeBaldi reflects this focus. I think we can tell a similar story about nembolucan.

But physicians and patients often avoid prolonged utilization due to concerns about its propensity for weekend.

<unk> provides an opportunity to harness the efficacy of olanzapine as a maintenance therapy and schizophrenia and bipolar 1 disorder with last weekend.

And when we set out to develop innovative medicines, our guiding principle has always.

He has been to make medicines that address the real world challenges faced by people living with complex and serious diseases and the <unk> reflects this focus.

I think we can tell a similar story about nimble Luke and nimble Luke and is our novel investigational engineered IL 2 variant immunotherapy.

Richard F. Pops: Nembolucan is our novel, investigational, engineered IL-2 variant immunotherapy designed to capture and expand the proven efficacy of IL-2 while engineering out certain of its limiting side effects. The development program has progressed rapidly. In the last 12 months, we've achieved clinical proof of concept in two indications that we plan to advance into registrational studies. We enrolled over 200 patients in the Clinical Development Program, entered into a clinical trial and supply agreement with Merck for our planned Phase III study in platinum-resistant ovarian cancer, secured FDA orphan drug designation for mucosal melanoma, and worked with FDA to agree upon registrational pathways in both of these difficult-to-treat indications.

Designed to capture and expand.

Expand the proven efficacy of IL, 2 while engineering out certain of its limiting side effects.

And the development program has progressed rapidly and last 12 months, we've achieved clinical proof of concept in 2 indications that we plan to advance into Registrational studies.

We enrolled over 200 patients and the clinical development program entered into a clinical.

Trial and supply agreement with Merck for our planned phase III study in platinum resistant ovarian cancer secured FDA orphan drug designation for mucosal melanoma and worked with FDA to agree upon registrational pathways in both of these difficult to treat indications.

And last month, we provided a substantive clinical update at <unk>.

Richard F. Pops: Last month, we provided a substantive clinical update at ASCO and were joined by the lead investigators for both Artistry I and Artistry II studies, who shared their clinical perspectives and experience with membolism. That presentation is on our website. If you haven't seen it, I recommend taking a few minutes to watch it.

And we're joined by the lead investigators for both artistry, 1 and artistry 2 studies, who shared their clinical perspectives and experience with nimble Luca.

That presentation is on our website, if you haven't seen it I recommend taking a few minutes to watch it and give you a sense of the current status of the program and the significant progress that we've made.

Richard F. Pops: It'll give you a sense of the current status of the program and the significant progress that we've made. Namva Lukan is accumulating a clinical data set that we believe differentiates it from the other IL-2 variants in development. It has demonstrated responses in high unmet need populations across a range of tumor types, including durable and deepening responses in ART3-1. Our clinical development strategy is focused on addressing unmet needs, and we focus on difficult-to-treat patient populations, including patients with checkpoint inhibitor unapproved tumor types and patients in the post-checkpoint inhibitor setting. The studies planned for this year, including the Artistry 6 study in melanoma, which we've already initiated, and the planned Artistry 7 Phase 3 study in platinum-resistant ovarian cancer, are designed to support potential registration.

Nimbler, Luke and is accumulating and clinical data set that we believe differentiates it from the other IL 2 variance and development it.

It has demonstrated responses and high unmet need populations across a range of tumor types, including durable and deepening responses and artistry 1.

Our clinical development strategy is focused on addressing unmet need.

And we focus on difficult to treat patient populations, including patients with checkpoint inhibitor unapproved tumor types and patients and the post checkpoint inhibitor setting.

The study is planned for this year, including the artistry 6 study in melanoma, which we've already initiated and planned artistry 7 phase III study in platinum resistant.

<unk>, Barry and cancer are designed to support potential registration. We're moving ahead now with momentum and look forward to sharing our progress across the program with you.

Richard F. Pops: We're moving ahead now with momentum and look forward to sharing our progress across the program. But before I conclude, I want to take a moment to acknowledge the efforts of our talented and dedicated employees who've remained focused and committed to the patients we serve over the past 18 months, despite the challenges and the constantly changing environment. Our commercial and operational success during this time is a testament to their agility, innovation, and perseverance.

So before I conclude I wanted to take a moment to acknowledge the efforts of our talented and dedicated employees, who have remained focused and committed to the patients we serve over the past 18.

And overall, despite the challenges and the constantly changing environment, our commercial and operational success. During this time is a testament to their agility innovation and perseverance.

Q2 was a pivotal quarter for the company.

Richard F. Pops: Q2 is a pivotal quarter for the company, with strong Commercial, Operational, and Financial Execution, and FDA approval of Libalvi. The accumulating data and the operational progress across the Nambalookan Development Program provide a strong foundation for growth and execution for the balance of the year. I'm going to turn it over now to Todd and Iain to take you through the Q2 results and our improved financial expectations for the year. Great, thanks Rich, and good morning everyone.

Strong commercial operational and financial execution FDA approval.

And my Aldi.

And the accumulating data and the operational progress across the number Luca and development program. All of these provide a strong foundation for growth and execution for the balance of the year.

I'll turn it over now to Todd and Ian to take you through the Q2 results and our improved financial expectations for the year.

Thanks Rich.

<unk> and good morning, everyone.

Our commercial team delivered strong performance and the second quarter, our execution together with continued improvement and new patient starts contributed to the highest quarterly net sales for aerostar to date.

Unknown Attendee: Our commercial team delivered strong performance in the second quarter. Our execution, together with continued improvement and new patient starts, contributed to the highest quarterly net sales for Aristotle to date and a return to pre-pandemic volumes for Vivitrol. Based on our results in the first half of the year and our expectation that current trends in the treatment landscape will continue, we are raising the bottom end of our full year net sales expectation ranges for both Aristot and Vivitrol. Iain will fully outline these revised expectations shortly. Starting with Vivitrol,

And a return to pre pandemic volumes for Vishal.

Based on our results and the first.

And at year, and our expectation that current trends and the treatment landscape will continue we are raising the bottom end of our full year net sales expectation ranges for both aerostar and Vishal.

And we'll fully outlined these revised expectations shortly.

Starting with <unk> net.

Net sales in the second quarter increased approximately.

Unknown Attendee: Net sales in the second quarter increased approximately 23% year-over-year to $88.4 million. Q2 Vivitrol Unit Demand reflects improved access to treatment since the height of the pandemic. The recovery of Vivitrol has been driven by increased adoption in the alcohol dependence indication, and we continue to focus on our strategy of increasing awareness of Vivitrol as a treatment option for alcohol dependence among providers, caregivers, and patients. Our recent market research shows that 80% of healthcare providers surveyed believe the prevalence of alcohol dependence has increased in the past year.

Half of 23% year over year to $88.4 million.

Q2, vivid trial unit demand reflects improve access to treatment since the height of the pandemic.

The recovery of every trial has been driven by increased adoption and the alcohol dependence indication and we continue to focus on our strategy of increasing awareness of victory.

<unk>.

As a treatment option for alcohol dependence among providers caregivers and patients.

Our recent market research showed that 80% of health care provider survey believed the prevalence of alcohol dependence has increased and the past year.

<unk> with this research the alcohol dependence treatment market has grown at a 5.

Unknown Attendee: Consistent with this research, the alcohol dependence treatment market has grown at a faster pace than the overall addiction market over the same time frame. However, the recovery of prescriptions for opioid dependence has been slower, both for Vivitrol and other treatments.

Vivid picture pace and the overall addiction market over the same timeframe.

The recovery of prescriptions for opioid dependence has been slower both for <unk> and other treatments, despite increasing opioid overdose deaths across the country.

Unknown Attendee: Despite increasing opioid overdose deaths across the country, we believe this is in part driven by pandemic-related disruptions that persist in the treatment system, as certain settings of care, including residential treatment centers and government treatment locations, have yet to fully return to their pre-pandemic operational capacity.

We believe this is in part driven by pandemic related disruptions that persist and the.

Treatment system.

As certain settings of care, including residential treatment centers and government treatment locations have yet to fully return to their pre pandemic operational capacity.

We are committed to continuing our work to support patients and health care providers. During this pressing public health crisis.

Unknown Attendee: We are committed to continuing our work to support patients and healthcare providers during this pressing public health crisis. Turning now to the Aristotle product family, net sales in the second quarter increased approximately 23% year over year to $72.4 million, driven by strong TRX growth on a monthly therapy basis of 15% year over year. This growth outpaced the broader long-acting atypical antipsychotic market growth of 5%. We have continued to see positive recovery trends in the long-acting antipsychotic market in recent months. Healthcare providers reported an increase in patient visits as offices reopened.

Turning now to the.

Fastener product family net sales and the second quarter increased approximately 23% year over year to $72.4 million.

Driven by strong tier ex growth on a months of therapy basis of 15% year over year.

This growth outpaced the broader long acting atypical antipsychotic market growth of 5%.

<unk>, we have continued to see positive recovery trends and the long acting antipsychotic market in recent months.

Health care providers reported an increase and patient visits as offices reopened and.

The number of diagnosed patients increase and prescriptions volume grew sequentially.

Unknown Attendee: The number of diagnosed patients increased sequentially, and prescription volumes grew sequentially. While the COVID-19 pandemic is not behind us, recent trends in prescription and patient volumes and access to health care providers in both the addiction and LAI markets are encouraging. Notably, our sales force expanded the percentage of their in-person calls to approximately 70% in June from 50% in March. As we enter the second half of the year, we are monitoring the emergence of variants and local conditions carefully as potential new COVID-19 hotspots arise, and we'll make adjustments to our commercial strategy as necessary.

While the COVID-19 pandemic is.

Sent behind US recent trends and prescription and patient volumes and access to health care providers and both the addiction and la markets are encouraging.

Notably our sales force expand as a percentage of their and person calls to approximately 70% in June.

And from 50% in March.

As we entered.

For the second half of the year, we are monitoring the emergence of variance and local conditions carefully as potential new COVID-19, hotspots arise and we will make adjustments to our commercial strategy as necessary.

I'll end with an update on our launch activities for <unk>, our new oral antipsychotic agents during.

Unknown Attendee: I'll end with an update on our launch activities for LaValvie, our new oral anti-psychotic agent. During the second quarter, the FDA approved Libalbi for the treatment of adults with schizophrenia and the treatment of adults with Bipolar I Disorder.

Is not that quarter, the FDA approval of all day for the treatment of adults with schizophrenia.

And the treatment of adults with bipolar 1 disorder.

We are pleased with the approved label, which includes data showing that treatment with low ball was associated with less weight gain and treatment with olanzapine improve and antipsychotic efficacy.

Unknown Attendee: We are pleased with the approved label, which includes data showing that treatment with libalbi was associated with less weight gain than treatment with olanzapine and proven antipsychotic efficacy. Initial feedback on the label from thought leaders and the treatment community has been encouraging, and we believe that anticipation for product availability is building. This will also be our first opportunity to realize the synergies of adding an additional product to our psychiatry franchise. All in all, we will join Aristotle in our psychiatric product portfolio and leverage our existing commercial infrastructure and expertise in this market.

Initial feedback.

During the <unk> label from thought leaders and the treatment community has been encouraging and we believe that anticipation for product availability is building.

This will also be our first opportunity to realize the synergies of adding an additional product to our psychiatry franchise.

As evolving will join air start and our psychiatry product portfolio and leverage our existing.

And commercial infrastructure and expertise in this market.

We are currently laying the foundation for a full commercial launch as we engage with health care providers to build awareness and demand ahead of putting product in the channel and the fourth quarter.

Unknown Attendee: We are currently laying the foundation for a full commercial launch as we engage with healthcare providers to build awareness and demand ahead of putting the product on the channel in the fourth quarter. HCP awareness of Lobavi has been steadily increasing over time, and we believe we are well positioned for launch. Hiring is underway for our Open Salesforce positions, and we are impressed by the caliber of talent that Libavi Launch is attracting. With the label now in hand, we submitted our promotional materials to OPDP for review, and we are excited to launch our new campaign.

HCP awareness of <unk> has been steadily increasing over time and we believe we.

Back on the whole position for launch.

Hiring is underway for our open sales force positions and we are impressed by the caliber of talent that laboratory and launch is attracting.

With a label now in hand, we submitted our promotional materials to <unk> for review and are excited to launch our new campaign.

And this first phase of launch.

Unknown Attendee: In this first phase of launch activities, prior to product availability, we finalized our Speakers Bureau, which we will begin to deploy in the fourth quarter, and have also focused on increasing our engagement with payers. The large potential patient population, the clear need for additional efficacious treatment, and the features of La Balvie as reflected in the label provide a meaningful opportunity in the oral anti-psychotic space.

Activities prior to product availability, we finalize our speakers Bureau, which we will begin to deploy and the fourth quarter and are also focused on increasing our engagement with payers.

The large potential patient population the clear need for additional efficacious treatments and the features and level of Bobby is reflected and the layer will provide a meaningful opportunity.

And the oral antipsychotic space.

As the country continues to reopen and the frequency of and person promotional activities increasing increases we believe we will be well positioned for a successful launch and the fourth quarter.

Unknown Attendee: As the country continues to reopen and the frequency of in-person promotional activities increases, we believe we will be well positioned for a successful launch in the fourth quarter. Looking ahead, we are focused on execution as we advance launch activities for Labalvi, work to achieve our expectations for Vivitrol and Aristata, and continue to drive awareness of the value proposition of these important medicines. Now I'll turn the call over to Iain to review our second quarter results and our updated financial expectations for 2021. Thank you, Todd. And Hello everybody.

Looking ahead, we are focused on execution as we advance launch activities for <unk> work to achieve our expectations.

<unk> for vitro and air starter and continue to drive awareness of the value proposition and these important medicines.

Now I will turn the call over to Ian to review, our second quarter results and our updated financial expectations for 2021.

Thank you Todd and Hello, everybody.

And we're pleased with our Q2 results as we delivered.

Iain Michael Brown: We're pleased with our Q2 results as we delivered strong top-line growth and reported both positive gap net income and robust non-gap net income. Based on these results and our expectations with respect to the ongoing recovery from the COVID-19 pandemic, today we're raising our financial expectations for 2021. I'll provide additional detail on these expectations in a moment, but first, I'll start with an overview of our second quarter financial highlights. For the second quarter of 2021, we generated total revenues of $303.7 million, representing a year over year increase of approximately 23% and a sequential improvement of 21%.

And top line growth and reported both positive GAAP net income and robust non-GAAP net income.

Based on these results and our expectations with respect to the ongoing recovery from the COVID-19 pandemic today, we are raising our financial expectations for 2021.

I'll provide additional detail on these expectations and a moment.

Moment, but first I'll start with an overview of our second quarter financial highlights.

For the second quarter of 2021, we generated total revenues of $303.7 million representing.

Representing a year over year increase of approximately 23% and a sequential improvement of 21%.

This was driven by the strong performance of both our proprietary commercial products and key products from our diverse portfolio of manufacturing and royalty revenues.

Iain Michael Brown: This was driven by the strong performance of both our proprietary commercial products and key products from our diverse portfolio of manufacturing and royalty revenues. The strong revenue growth combined with our continued focus on disciplined operating expense management drove a gap net income of $2.4 million and a non-gap net income of $49.2 million for the quarter. Vivitrol net sales in the second quarter were $88.4 million, driven by a 29% increase in units year-over-year, due in part to an improvement from the significant pandemic-related disruptions in the treatment system in the second quarter of 2020, and also the execution of our strategy to increase awareness of Vivitrol as a treatment option for alcohol dependents. This unit growth was partially offset by higher gross-to-net adjustments in the quarter of 51.8%, as compared to 46.4% in the second quarter of last year.

The strong revenue growth combined with our continued focus on disciplined operating expense management drove our GAAP net income of $2.4 million and.

And our non-GAAP net income of $49.2 million for the quarter.

<unk> net sales and the second quarter were $88.4 million driven by a 29% increase in units year over year.

And <unk> in part 2 and improvement from the significant pandemic related disruptions and the treatment system and.

And the second quarter of 2020.

And also the execution of our strategy to increase awareness of <unk> as a treatment option for alcohol dependence.

This unit growth was partially offset by higher gross to net adjustments and the quarter of 51, 8% as compared to 46, 4% and the second quarter.

And of last year.

Iain Michael Brown: Q2 growth nets were consistent with Q1, and in Q2, inventory levels increased sequentially by less than $2 million, in line with both increasing demand trends and typical seasonal patterns. Driven by these results and favorable gross to net adjustments, we're raising the bottom end of our 2021 expectations for Vivitrol net sales by $15 million, from a range of $315 to $345 million to a range of $330 to $345 million. We now expect growth to net adjustments to be approximately 52.5% for the full year, driven by lower than expected Medicaid rebating and an improved product return rate.

Q2, gross to net sort of consistent with Q1 and in Q2 inventory levels increased sequentially by less than $2 million in line with both increasing demand trends and typical seasonal patterns.

Driven by these results and favorable gross to net adjustments, we're raising the bottom end.

Our 2021 expectations for Vishal net sales by $15 million from a range of $315 million to $345 million to a range of $330 million to $345 million.

We now expect gross to net adjustments to be approximately 52, 5% for the full year driven by.

Lower than expected Medicaid rebating, and and improved product return rate.

Iain Michael Brown: Turning to the Aristata product family, net sales in the second quarter increased 23% year-over-year to $72.4 million, primarily driven by underlying unit growth. During the second quarter, gross net adjustments for Aristarta were 54.8%, consistent with our expectations for the year.

Turning to the <unk> product family net sales and the second quarter increased 23% year over year to $72.4 million primarily.

Primarily driven by underlying unit growth.

During the second.

<unk> quarter gross to net adjustments for Arris started with 54, 8% consistent with our expectations for the year.

Inventory levels did increase during the quarter by approximately $6 million as a number of key customers adjusted their inventory to support the growing demand.

Iain Michael Brown: Inventory levels did increase during the quarter by approximately $6 million as the number of key customers adjusted their inventory to support the growing demand. Based on the current trends outlined by Todd, we're updating our expectations for Aristarda net sales for the full year, raising the bottom end of the range by $15 million, from a range of $260 to $290 million to a range of $275 to $290 million. Moving on to our manufacturing and royalty business, in the second quarter, our manufacturing and royalty revenues were $142.3 million, compared to $116.5 million in the prior year.

Based on the current trends outlined.

But we are updating our expectations for a restart and net sales for the full year raising the bottom end of the range by $15 million from a range of $260 million to $290 million to a range of $275 million to $290 million.

Moving on to our manufacturing and royalty business.

And by Tom and the second quarter, our manufacturing and royalty revenues were $142.3 million compared to $116.5 million and the prior year.

This increase was driven primarily by accelerated uptake of <unk>, which contributed $23 million of total revenue in the quarter and also.

Iain Michael Brown: This increase was driven primarily by the accelerated uptake of Umerity, which contributed $20.3 million of total revenue in the quarter, and also growth of royalty revenues from Invegas, Estena, and Trinza. This continued growth is reflected in our increased financial expectations for the year. Total operating expenses increased 6% compared to the same period in the prior year, driven primarily by higher cost of goods sold, largely due to increased revenues and increased sales and marketing investments for the upcoming launch of Libolvi.

<unk> growth of royalty revenues from and Invega sustainer and trends.

This continued growth is reflected and our increased financial expectations for the year.

Total operating expenses increased 6% compared to the same period and the prior year, driven primarily by higher cost of goods sold largely due.

Also please revenues and increased sales and marketing investments for the upcoming launch of <unk>.

Specifically cost of goods sold increased to $53.1 million compared to $45.1 million and the same period of the prior year.

Iain Michael Brown: Specifically, cost of goods sold increased to $53.1 million compared to $45.1 million in the same period of the prior year. R&D expenses for the second quarter were $97.5 million, compared to $94.2 million for the prior year, reflecting increased patient enrollment in the ongoing Nambalukan clinical studies and the initiation of the Artistry VI Phase II melanoma study. SG&A expenses for the second quarter were $139.2 million compared to $132.0 million for the prior year, which included incremental investment to support the approaching launch of Libolvi.

R&D expenses for the second quarter and $97.5 million.

Compared to 90.

To <unk> 2 million for the prior year, reflecting increased patient enrollment and the ongoing number look and clinical studies and the initiation of the artistry 6 phase III melanoma study.

SG&A expenses for the second quarter were $139.2 million compared to 132.0 million for the prior year.

19th which included incremental investment to support the approaching launch of <unk>.

As we.

Iain Michael Brown: As we continue to lay the foundation to achieve the profitability targets that we set forth for 2023 and 2024, we're focused on carefully managing our operating expenses and prioritizing investments in the company's strategic priorities and future growth drivers. Turning to our balance sheet, we ended the second quarter in a strong financial position with approximately $670 million in cash and total investments and total debt outstanding of $297 million. I'll shift now to our revised financial expectations for 2021, which reflect our strong operational performance in the first half of the year, continued recovery from the pandemic, and our focus on disciplined expense management.

And you to lay the foundation to achieve the profitability targets that we set forth for 2023 and 2024, we're focused on carefully managing our operating expenses and prioritizing investments and the company's strategic priorities.

Here and future growth drivers.

Turning to our balance sheet, we ended the second quarter and a strong financial position with approximately $670 million and cash and total investments and total debt outstanding of $297 million.

I'll shift now to our revised financial expectations for 2020.

<unk>.

Which reflect the strong operational performance and the first half of the year.

<unk> recovery from the pandemic and our focus on disciplined expense management.

Our full expectations are outlined in the press release, we issued earlier this morning.

Iain Michael Brown: Our full expectations are outlined in the press release we issued earlier this morning. We believe these revised ranges are appropriate based on current trends and our expectation that treatment provider practices and patient flow will continue to normalize. However, any new COVID-related disruptions may impact our ability to meet these expectations.

We believe these revised ranges are appropriate based on current trends and our expectation.

And the treatment provider practices and patient flow, we will continue to normalize however, any new COVID-19 related disruptions may impact our ability to meet these expectations.

For the top line, we now expect total revenues to be and the range of 1.1 and 4.5 to $1.185 billion.

Iain Michael Brown: For the top line, we now expect total revenues to be in the range of $1.145 to $1.185 billion, an increase of $30 million at the midpoint, driven by both higher proprietary revenues and higher manufacturing and royalty revenues. We're also adjusting the ranges for certain operating expense line items with changes to the respective midpoints of each range, as follows. Our expectation for cost of goods sold increased by approximately $5 million, driven primarily by higher revenues. Our expectation for SG&A expenses decreased by $10 million, primarily due to refinements to our launch plans for Libolvi.

And increase of $30 million at the midpoint, driven by both higher proprietary revenues and higher manufacturing and royalty revenues.

We're also adjusting the ranges for certain operating expense line items with changes of the respective midpoint of each range as follows.

Our expectation for cost of goods sold increased.

<unk> by approximately $5 million driven primarily by the higher revenues.

Our expectation for SG&A expenses decreased by $10 million, primarily due to refinements to our launch plans for <unk>.

And while R&D expense expectations remain unchanged recall that we are anticipating a 25 million.

Iain Michael Brown: And while R&D expense expectations remain unchanged, recall that we are anticipating a $25 million milestone payment in the third quarter related to the submission of an IND or equivalent for ALKS1140, the first clinical candidate to emerge from our HDAC inhibitor platform. The strength of our top line and our disciplined expense management are together driving improvements in our profitability. Our expectation for the gap net loss has improved by $30 million, and our expectation for the non-gap net income increased by $20 million to a new range of $85 to $115 million.

<unk> milestone payment and the third quarter related to the submission of an IND or equivalent for Alex 11, 40, the first clinical candidate to emerge from our <unk> inhibitor platform.

The strength of our topline and our disciplined expense management are together driving improvements and our profitability.

Our.

Patient for GAAP net losses improved by $30 million and our expectation for non-GAAP net income increased by $20 million to a new range of $85 million to $115 million.

Looking ahead, we're focused on driving continued growth of our proprietary commercial portfolio and capturing operating.

Iain Michael Brown: Looking ahead, we're focused on driving continued growth of our proprietary commercial portfolio and capturing operating leverage as we launch Libalvi, while at the same time, advancing the Nemberluken development program and investing in our early stage pipeline. We believe we are financially well positioned to execute on our business strategy, drive profitability, and support shareholder value creation in the years to come. And with that, I'll hand the call back over to Rich. I'll finish briefly.

Operating leverage as we launched <unk>, while at the same time advancing the number look and development program and investing and our early stage pipeline.

We believe we are financially well positioned to execute and our business strategy drive profitability and support shareholder value creation and the years to come.

And with that I'll hand, the call.

And back over to rich and that's great. Thank you Ian I'll finish briefly I'll just say looking ahead.

Richard F. Pops: I'll just say, looking ahead... I'm encouraged by the outlook for the business. Vivitrol, Aristata, Libvalvy, and Vumerity each represent a growing or new revenue stream. Our infrastructure has adapted to support these products as efficiently as possible.

And I'm encouraged by the outlook for the business vivid role, Eric <unk>, <unk> and <unk>, each represent a growing or new revenue stream.

Our infrastructure has adapted to support these products as efficiently as possible vitriol.

<unk> was supported by a bespoke and efficient set of capabilities designed specifically to maximize and medical and economic value of the singular medicine addiction market.

Richard F. Pops: Vivitrol is supported by a bespoke and efficient set of capabilities designed specifically to maximize the medical and economic value of the singular medicine addiction market. Aristotle and Libalvi are synergistic and provide significant opportunity to drive operating leverage with our purpose-built psychiatric infrastructure. Umerity is growing, and our commercial partnership with Biogen delivers pre-tax profit directly to the bottom line. Together, the revenues from these products have the potential to drive significant growth over the coming years.

And <unk> and <unk> are synergistic and provide significant opportunity to drive operating leverage with our purpose built psychiatry infrastructure.

<unk> is growing.

And our commercial partnership with Biogen delivered pre tax profit directly to the bottom line.

Together the revenues from these products have the potential to drive significant growth over the coming years.

The longer term potential growth drivers for the business or the development programs and our neuroscience and oncology pipeline.

Richard F. Pops: The longer-term potential growth drivers for the business are the development programs in our neuroscience and oncology pipeline. Each program is designed to address specific unmet needs, leveraging our scientific strength. Our objective is to develop truly innovative medicines with a clear value proposition. Numbulucan is the most prominent and advanced asset in the pipeline, but we're equally excited about our earlier stage programs. I look forward to sharing updates from our HDAC, Orexin, and engineered cytokine portfolios as they advance toward the clinic.

Each program is designed.

And as specific unmet needs leveraging our scientific strengths.

Our objective is to develop truly innovative medicines with a clear value proposition.

<unk> is the most prominent and advanced asset and the pipeline, but we're equally excited about our earlier stage programs and.

Look forward to sharing updates from our <unk> <unk>.

And to win and the engineered cytokines portfolio as they advance towards the clinic.

With an intense focus on business excellence financial discipline and effective capital allocation, we believe we're well positioned to create value for our stakeholders, including patients health care providers caregivers, our employees and our shareholders and with that I'll turn.

Richard F. Pops: With an intense focus on business excellence, financial discipline, and effective capital allocation, we believe we're well positioned to create value for our stakeholders, including patients, healthcare providers, caregivers, our employees, and our shareholders. With that, I'll turn the call back to Sandy for the Q&A.

Rex and back to Sandy for the Q&A, great. Thanks, Rich and Alex will open the call for Q&A now.

Sandra Coombs: Great. Thanks, Rich. Alex, we'll open the call for Q&A now. Thank you.

Thank you at this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star 1 on your telephone keypad, a confirmation tone will indicate your line is and the question queue you May Press star.

Alex: At this time, we will be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the questioning queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Vamil Devon of Mizzou Securities. Please proceed with your question.

Turn the call to you if you'd like to remove your question from the queue.

For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.

Our first question comes from the male Javan with Mizuho Securities. Please proceed with your question.

Hi, great. Thanks for taking my question, so maybe if I could just add.

Vamil Devon: Hi, great. Thanks for taking my question.

Vamil Devon: I have two, so one on.

So 1 on <unk>.

Vamil Devon: Vivek Troll, I heard the comments you made around the sort of dynamics in the alcohol versus opioid market. Can you maybe just quantify your performance, you know, in this?

And the virtual I heard the comments you made around the sort of dynamics and the alcohol versus opioid market can you, maybe just quantify and performance.

And this quarter just to get a sense of how much of it is coming from what I'll call or is it helping or is there maybe talk about sort of looking forward I expect the growth between the 2.

Vamil Devon: I'm going to go through a little bit of the order, just to give you a sense of how much of it is coming from alcohol versus opioids. Or maybe, if you want to talk about sort of looking forward, how you expect the growth between the two to differ. And then the other one would just be on nembalucan and obviously some of the updates you guys had at ASCO. Maybe you can just sort of comment on what we should expect from that product in terms of data in the second half of the year, whether it's asthma or tsetse or otherwise, and any updates you might have in terms of the collaboration discussions that you've been having with larger partners for that program. Thank you. Good

To to defer and then the other 1 would just be on nimble who can and.

And obviously some of the updates you guys had and ESCO, maybe if you can just sort of come in and what we should expect from that product in terms of the data.

And the second half me or whether that's more let's see otherwise and any updates you might have into the collaboration discussions.

And I think you've been having with larger partners for that program.

And <unk>.

Okay, Okay, I'll I'll start off with with Vitol.

Unknown Attendee: Okay, I'll start off with Vivitrol. You know, the visibility that we have is through claims data and also through our own hub reported data, it's a little bit lagging. Our belief from what we see in the data so far is that the mix of business between alcohol and opioids is remaining about a 50-50 split. We are expecting that the alcohol dependence indication will continue to grow, and we're encouraged by that. One of the areas that we're encouraged to look at is diagnosed patients.

You know the visibility.

City that we have is through claims data and through also are our own hub reported day, and it's a little bit lagging our belief.

We see it and the data so far is that the mix of business between alcohol and opioid is remaining about a 50.50 split.

We are expecting that the alcohol dependence indication will continue to grow and we're encouraged by that 1 of the areas that were encouraged and is really looking at diagnosed.

<unk> when you look at the diagnoses right now.

Unknown Attendee: When you look at the diagnoses right now, Quarter of a quarter, we're seeing alcohol dependence as a market at large growing at approximately 5%. And then we also take a look at just new patient starts, or NBRXs, which is also a leading indicator for us. Overall, the market for NBRXs is up approximately 2-3%, and Vivitrol and BRXs are up about 10% quarter over quarter. So again, we believe it's about a 50-50 split right now.

Quarter over quarter, we're seeing alcohol dependence is a market at large growing at approximately 5%.

And then when you. We also take a look and just new patient starts for <unk>, which is also a leading indicator for us overall, the market and payer access.

<unk> is up approximately 2% to 3% and vivid Troy and payer access are up about 10% quarter over quarter. So.

Again, we believe it's about a 50.50 split right now all of the indications are telling us and all of our qualitative research from physicians are telling us that alcohol dependence is growing and that utilization for vivid trial and alcohol dependence is growing.

Unknown Attendee: All of the indications are telling us, and all of our qualitative research from physicians is telling us that alcohol dependence is growing, and that utilization for Vivitrol and for treatment for alcohol dependence is growing. So we're expecting that to continue into the back half of the year. And Bob, maybe I'll take the second part of your question. I'll have Sandy give you an update on the data.

<unk> is expecting that to continue into the back half of the year.

And bubble and maybe I'll take the first part of <unk>.

And part of your question have to and to give you the update on data.

So the important part about the <unk> presentation.

Richard F. Pops: So the important part about the ASCO presentation, Just to summarize, I think the real differentiation of nembolucan is becoming clear on at least three different fronts. One is the molecule itself in terms of its intrinsic pharmacologic properties and the way it's driving. Then the second differentiating feature, which is the clinical data, where we're showing monotherapy efficacy as well as efficacy in combination with PEMBRO and ACRA in a range of different tumor types in both checkpoint inhibitor unapproved and approved settings.

Just to summarize it.

I think that the real differentiation of nimble Luke and is becoming.

And clear and at least 3 different fronts..1 is the molecule itself in terms of its intrinsic pharmacologic properties and the way it's driving than the second different differentiate feature which is the clinical data where we're showing.

Monotherapy efficacy as well as efficacy and combinations with <unk> and Accra and a range of different tumor types.

Times and both.

Checkpoint inhibitor unapproved and approved settings, and then the third point of differentiation I think is the registration strategy going for this white space and the serious unmet needs as evidenced at the beginning by mucosal melanoma and platinum resistant ovarian cancer. So all of this together provides a foundation for.

Richard F. Pops: And then the third point of differentiation, I think, is the registration strategy, going for this white space of serious unmet needs as evidenced at the beginning by mucosal melanoma and platinum-resistant ovarian cancer. So all of this together provides a foundation for advancing these discussions with potential partners because partnering nembolucan remains a centerpiece of the strategy because of its potential utilization in so many different categories and different combinations and different tumor types So I won't comment on specific discussions about that. Just know that that's something that's an intense focus within the company, and we'll update you as we make progress.

Or are advancing these discussions with potential partners, because partnering nimble Luke and remains the centerpiece of the strategy because of its potential utilization and so many different categories and different combinations and different tumor types. So I won't comment on specific discussions on that and just know that thats something thats and intense focus within the company and we will update you.

As we make progress.

Okay and in terms of data flow Fernando Logan.

Richard F. Pops: And in terms of data flow for nembolucan, we did just provide a fairly comprehensive and substantive update at ASCO. The data from Artistry 1 and Artistry 2 continue to mature, and we'll monitor that data and determine the appropriate medical meeting form to present those data at in the future. We'll intend to have a present set at ESMO and SISI, but it's premature to commit to which data sets will be highlighted at those meetings. Okay, thank you. Thank you. The next question comes from Corey Kasimov with J.P. Morgan. Please proceed with your question.

And just provide that.

Fairly comprehensive and substantive update at <unk> and <unk>.

Data from artistry, 1 and artistry, 2 continue to mature and well well monitor that data and and determine the appropriate medical meeting form.

And that those data and.

In the future.

And we'll intend to have a presence at ESMO and city, but it's premature to commit to which datasets will be highlighted at those meetings.

Okay. Thank you.

Thank you our next question.

And typically comes from core cash them off with Jpmorgan. Please proceed with your question.

Hey, good morning, guys. Thanks for taking my questions 2 for me as well I guess, 1 I just wanted to follow on and vitriol.

Corey Kasimov: Hey, good morning guys. Thanks for taking my questions. Two for me as well.

Corey Kasimov: I guess one, I just wanted to follow up on Vivitrol and this notion of alcohol versus opioids. I understand the dynamics of COVID and what's happening in the marketplace today, but longer term, how has your thinking evolved here in what and how you're looking at the relative contribution from these two segments? And then I wanted to also ask if you can comment a little bit more on the SG&A expectations. You have the lower anticipated guide ahead of the launch.

And this is this notion of the alcohol versus opioids.

And I understand what the dynamics of Covid.

And what's happening in the marketplace today, but longer term has your thinking evolved here and what.

And how youre looking at the relative contribution from these 2 segments and then wanted to also ask if you can comment a little bit more on the SG&A expectations.

And the.

And for anticipated guide ahead of the laboratory and launch it is not a lot, but it's not off also typical situations like this so im wondering is this just a function of some of that spend being pushed into 2022 or more about leveraging era start or is there something else there that I'm missing. Thank you.

Corey Kasimov: It's not a lot, but it's not also typical of a situation like this. So I'm wondering, is this just a function of some of that spend being pushed into 2022, or more about leveraging Aristotle, or is there something else there that I'm missing? Thank you.

Thanks, Good morning, I'll take the.

Unknown Attendee: I'll take the first question on Vivitrol and how we're thinking about alcohol and also opioids. We've worked on the evolution of our strategy for the last 12 months or so, and we really believe that there is an opportunity to further expand growth in the brand for not only opioids but more holistically for the alcohol indication. If you think about the market at large, there are 14 million patients that actually have a diagnosis of AUD, but there are only 400,000 that are actually on treatment right now, so the penetration... of treatment is relatively low.

The lower first question on Vishal and how we're thinking about at Alkermes, We've always had a focus on alcohol and also opioid.

We've worked on and on the evolution of our strategy for the last 12 months or so.

And.

And we really believe that there's an opportunity to further expand growth and the brand.

And for not only opioid, but more holistically for the alcohol indication.

If you think about the market at large theres 14 million patients that actually have a diagnosis of <unk>, but there is only 400000 they were actually on treatment right now so the penetration.

Ford for treatment is relatively low.

And when we when we do all of our research right now and we talk to physicians and 80% of physicians right now are telling us that they believe that they're seeing an increase and alcohol dependence what the origination levels that are that are very strong at this point and we.

Unknown Attendee: When we do all of our research right now, we talk to physicians. Again, 80% of physicians right now are telling us that they believe that they're seeing an increase in alcohol dependence with origination levels that are very strong at this point. We also ask them very consistently their view on medication. 70% of physicians report to us that they believe that medication is important.

He also asked and very consistently their view on medication, 70% of physicians report to us and they believe that medication.

<unk> is important so our opportunity is really to build awareness and the patient community right now around medication and not just the stigma because this is and medical condition as well.

Unknown Attendee: So our opportunity is really to build awareness in the patient community right now around medication and not just the stigma because this is a medical condition as well. When we look overall at just the overall dynamics of the business at a subnational level, we're actually seeing consistent growth in the majority of the states right now and also within outpatient settings. For example, community mental health centers are actually showing strong double-digit growth. However, most of these centers are really focused on alcohol at this point right now.

And when we look overall at just the overall dynamics of the business at a sub national level, we're actually seeing consistent growth and the majority of the states right now.

Now and also within the outpatient settings.

For example.

Community mental health centers are actually showing strong double digit growth. Most of these centers are really focus on alcohol at this point right. Now. So we do believe that there is an opportunity long term to drive awareness and to drive a greater penetration.

Unknown Attendee: So we do believe that there is an opportunity, long-term, to drive awareness and to drive greater penetration for patients that suffer from this disease, and we believe that Vivitrol can play a big part in that. And then, Corey, on the SG&A expectation side, I would say we've really been able to fine-tune the launch expectations subsequent to approval and with the label on board, which we're obviously very happy with. The focus is very much on leveraging the existing infrastructure that we have for Aristata.

For patients that suffer from this disease and we believe that <unk> can play a big part and that.

And then Corey on the SG&A expects and expectation side I would say, we've really been able to fine tune the launch expectations subsequent to approval and with the label onboard which we're obviously very happy.

With.

The focus is very much to leverage the existing infrastructure that we have for arris data and.

Unknown Attendee: And I think as you look at the timing of spend, we'll increase investment into Q3, and then there'll be a bigger step up in the fourth quarter as we'll have all the reps on board, and all the marketing materials will be available for the launch, which we expect to happen in the fourth quarter. So I think that's how we look at SG&A expense in the second half of the year. Great, thank you very much.

And.

I think as you look at the timing of spend will increase investment into Q3, and then there'll be a biggest step up and the fourth quarter as we'll have all the reps onboard all the marketing materials will be available.

For the launch, which we expect to happen and the fourth quarter.

So I think thats the way, we look at SG&A expense and the second half of the year.

Great. Thank you very much.

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

Brandon Richard Folkes: Thank you. Our next question comes from Brandon Folkes with Cantor Fitzgerald. Please proceed with your question.

Hi, Thanks for taking my questions and congratulations on a very good quarter and.

Brandon Richard Folkes: Hi, thanks for taking my questions and congratulations on a very good quarter. I just want to drill down on the literal opioid headwinds you called out. Can you just elaborate?

I just wanted to drill down on the virtual opioids headwinds you called out.

Can you just elaborate and.

These headwinds were seeing at the moment compared to your expectations, maybe at the beginning of the year.

Brandon Richard Folkes: And how these headwinds we're seeing at the moment...

unknown: [inaudible]

Brandon Richard Folkes: We think opioid deaths go, unfortunately, the wrong way.

Are we seeing improving.

And a little bit worse any color there and then if you can just elaborate obviously, we've seen IPO desk or unfortunately, the wrong way.

Brandon Richard Folkes: So, are these headwinds really just coming from patient demand going into a facility, or is there some funding gap at states as they grapple with COVID? Any color in terms of how you may see these headwinds in the opioid space reversing? Thank you.

And so all these headwinds really just coming from patient demand going into a facility or is there some funding GAAP at stake.

Grapple with Covid, just any color in terms of how you may see.

Unknown Attendee: Yes, absolutely. Brandon, first and foremost, there are no gaps in funding at this point right now. I'll just make a quick comment on that.

Trend towards an IPO and space progressing thank you yes.

Yes, absolutely, Brian and first and foremost.

There's no gaps and funding at this point right now I'll just make a quick comment on that Medicaid is the primary source of access for <unk>, we have very strong access within the Medicaid segment. There has been additional federal fun.

Unknown Attendee: Medicaid is the primary source of access for Vivitrol. We have very strong access within the Medicaid segment. There have been additional federal funds released. We don't have visibility, as we've said in the past, on state-level grants that are available, but we know there's a significant amount of funding that is available, and our belief is that eventually that will trickle down at the subnational level. It will be used for MAT programs and programs such as Vivitrol.

These taste and we don't have visibility as we've said in the past at state level grants that are available, but we know there's a significant amount of funding that is available and our belief is that eventually that will trickle down at the sub national level and we used 4.

Programs and programs such as vivid trial. So we're very we're very encouraged by that as well when.

Unknown Attendee: So we're very encouraged by that as well. When we think about the overall market and the landscape in the market, as well. I would characterize it this way: we're actually starting to see a stabilization for opioid dependence. We knew there would be significant headwinds in 2020 based upon access to treatment providers and access to injections. You know, we adapted our commercial strategy to a hybrid personal promotion and did a lot of work in the pharmacy space to make sure that patients had access to treatment overall.

When we think about overall the market and the landscape of what the market.

As well I would characterize it this way that we're actually starting to see a stabilization.

Opioid dependence we knew there were significant headwinds in 2020 based upon.

Access to treatment providers access to injections.

We adapted.

<unk>, our commercial strategy to our hybrid personal promotion and did a lot of work and the and the pharmacy space to make sure that that patients had access to treatment overall.

We're continuing to see some headwinds mainly and the controlled settings of care and that's really the primary space that that <unk> for opioid dependence.

Unknown Attendee: We're continuing to see some headwinds, mainly in the controlled settings of care, and that's really the primary space where Vivitrol is used for opioid dependence. These are going to be residential treatment centers; these are going to be certain federal facilities such as the VA, Indian Health Services, and so forth. I would say in Q2, we're starting to see some encouraging trends there. On a quarter-over-quarter basis, we're seeing growth in those segments, but it's still not back to the levels that we would expect from 2019.

These are going to be residential treatment centers. These are going to be certain federal and federal facilities.

Such as the VA Indian health services and so forth.

I would say in Q2, we're starting to see some encouraging trends there on a quarter over quarter basis, we're seeing growth in those segments, but it's still not back to the levels that we would expect.

2019, so so the headwinds mainly that we're seeing with and opioid dependents right now are based upon the controlled settings of care improving access for patients.

Unknown Attendee: So the headwinds mainly that we're seeing within opioid dependence right now are based upon controlled settings of care, improving access for patients that need detox services, and our belief is that as the pandemic continues to improve, access to providers, and access to services will improve, and we'll continue to see stabilization in that business.

That need detox services and our belief is that as the as the pandemic continues to improve access to providers access to services will improve.

And from tools, and we will continue to see a stabilization with that business.

Very helpful. Thank you.

Unknown Attendee: Very helpful; thank you.

Thanks Brendan.

Thank you. Our next question comes from Paul Matisse with Stifel. Please proceed with your question.

Paul Andrew Matteis: Thank you. Our next question comes from Paul Matteis with Stiefel. Please proceed with your question.

Great.

Paul Andrew Matteis: Great, thanks so much for taking my questions and congrats on the quarter. For Livalvi, I was wondering if you could kind of lay out what you think the payer landscape is going to look like at launch and what your goal is over time, maybe in 2022 or 2023. Specifically, what do you think the step edits will look like for prescribing this drug initially? Do you think people will have to step through Zyprexa, and what do you think that looks like over the mid to long term? What's a realistic goal? Thanks so much. Yeah, absolutely.

Thanks, so much for taking my questions and congrats on the on the quarter.

<unk> I was wondering if you could kind of lay out what you think the payer landscape is going to look like at launch and what's your goal over time, maybe in 2022 or 2023, specifically what do you think the step at it still look like for prescribing. The drug initially do you think.

And people will have to step through Zyprexa and what do you think that looks like over the mid to long term, what's a realistic goal. Thanks so much.

Yes, absolutely.

Unknown Attendee: Yeah, absolutely. I'll tell you, we are really excited about the launch of Libolvi. You know, as you heard Rich say, we are actually in the first phase of our launch right now, which started on June 1st.

I will tell you we are really excited about the launch of <unk>.

And as you heard rich say.

We actually are and the first phase of our launch right now that started with.

Approval on June 1st.

And the first phase the way that we think about this is we are extremely focused right now and building awareness and the awareness numbers are increasing which is very encouraging we're doing that with with acp's, but we're also doing it with payers right now as well too and.

Unknown Attendee: And the first phase, the way that we think about this, is that we are extremely focused right now on building awareness. And the numbers for awareness are increasing, which is very encouraging. We're doing that with HCPs, but we're also doing it with payers right now as well.

And we are executing our engagement.

Unknown Attendee: And we are executing engagement plans with payers and sharing the clinical profile. Payers are most interested in our clinical profile at this point. That was our expectation.

Plans with payers and sharing the clinical profile payers are most interested and our clinical profile at this point that was our expectations of our medical team is out sharing the clinical profile.

Unknown Attendee: So our medical team is out sharing the clinical profile. We've had, you know, well over 60 different presentations on our clinical profile, and it is encouraging. I think the way that we think about, you know, the payer landscape and the payer environment is, you know, there are three key segments of the business: Medicaid, Medicare, and commercial. They're roughly going to contribute an equal proportion overall. The profile of Access will really emerge over the first 12 to 18 months, and that's very consistent with what you see with other branded competitors as well.

We've had well over 60 different presentations on our clinical profile and and it is encouraging.

The way that that we think about the payer landscape.

Our payer environment is there's 3 key segments of the business Medicaid Medicare and commercial they're roughly <unk> to contribute and equal proportion overall.

The profile of access will really emerge over the first 12 months to 18 months and that's very consistent with what you see with other branded competitors as.

Well, so what we know and our assumptions are that the payers are on different different timelines.

Unknown Attendee: So what we know and our assumptions are that payers are on different timelines. For Medicaid, it's a state-by-state plan. You know, we know where the top volume states are.

And for Medicaid is a state by state plan.

No. We're the top volume states are we know when their decisions and their coverage decisions will be made we know with Medicare that coverage decisions will be made when product is and the channel within the first 90.

Unknown Attendee: We know when their decisions and their coverage decisions will be made. We know with Medicare that coverage decisions will be made when the product is in the channel within the first 90 days. And we also know with commercial that, you know, you're going to see quite a bit of NDC blocks at launch, these payer restrictions, and that's not uncommon outside of just this category. And our belief is that it'll be, you know, anywhere from six to nine months.

<unk> 90 days and we also know with commercial that youre going to see quite a bit of MDC blocks at launch these payer restrictions and that's that's not uncommon outside of just this category and our belief is that will be anywhere from 6 to 9 months. So the way that we're thinking about this and we're going to have access programs that launch.

Unknown Attendee: So, you know, the way that we're thinking about this is we're going to have access programs at launch, you know, PA support, benefits investigation, co-pay programs at launch, sampling programs at launch to help support access to the product, to help support trial and usage at launch. And the profile for access will really evolve over the first 12 to 18 months. Comment on a step through. That's right, yes, the question on step-through, we are, you know, the feedback that we receive from payers is that Libavi will be treated similar to another branded agent, so it's very common in the marketplace to have, you know, PAs, prioritization, step-throughs, it can be one step-through, one step-edit, two step-edits, there is the potential to have a step-edit through a Lanzapine, so we are prepared for that with the programs that we have in place.

PAA support benefits investigation copay programs that launch sampling programs that launch to help support access to the product to help support trial and usage at launch and the profile for axis will really evolve over the first 12 to 18 months.

And to comment on the step through.

That's right yes. The question on step through we are the feedback that we received from from payers is that live all of it will be treated similar to another other branded agent and so it's very common and the marketplace to have.

Ph prioritization step through.

It can be 1 step through it 1 step at a 2 step edits there is the potential to have a step edit through Atlanta pain. So we are prepared for that with the programs that we have in place.

Great. Thanks very much.

Thank you. Our next question comes from Omar Saad.

Umer Raffat: Thank you. Our next question comes from Umer Raffat with Evercore. Please proceed with your question.

<unk> with Evercore. Please proceed with your question.

Hi, This is Erik and signs of here speaking for humor. Thanks for taking time for a question.

Eric Masanza: Hi, this is Eric Masanza here speaking for Umer. Thanks for taking time for our question. Just a follow-up on Lybalvi, the consensus is modeling about 70 to 80 million dollars in sales for fiscal year 22. How are you thinking about those numbers relative to your learnings from recent anti-psychotic launches?

Just a follow up on <unk>.

Consensus is modeling about $70 million to $80 million sales for fiscal year 'twenty..2 how are you thinking about those numbers relative.

What your learnings from recent anti psychotic launches.

And separately different question on <unk> could.

Eric Masanza: And, separately, a different question on Boomerity. Could you clarify your policies on royalty rates and revenue recognition? We know the nominal rate's about 15%, but today's numbers imply about 23% of Biogen's reported net sales. Any detail you could give there?

Could you clarify your policies on royalty rates and revenue recognition.

We know there was a nominal rates about 15%, but today's numbers imply about 23% of bio.

<unk> reported net sales any detail you can give there.

Richard F. Pops: So, this is Rich. Why don't I start on the Maldy question?

Okay.

So while this is Richard why don't I start on the multi question, obviously, we're not ready to give guidance for 2022, yet, but I do think recent launches indicated a couple of things about the gradual miss of the AV access is it opens up over the course of the first year.

Richard F. Pops: Obviously, we're not ready to give guidance for 2022 yet, but I do think recent launches indicate a couple things about the gradualness of access as it opens up over the course of the first year. And Todd referred to that, and it's built into our operational plan. We're actually funding our launch sequentially as access grows across the nation, so we can then dedicate more marketing and personal resources to the launch of the product.

And Todd referred to that and it's built into our operational plan and we're actually funding our launch.

Sequentially as access grows across the nation. We can then dedicate more marketing and personal resources to the launch of the product. So I think our view is that you can hold these 2 thoughts simultaneously and that is a that the relaunch can be gradual.

Richard F. Pops: So, I think our view is that you can hold these two thoughts simultaneously, and that is A, that the launch can be gradual, and B, the ultimate market potential can be substantial. But these are not square wave launches in those different aspects of the business. Iain, do you want to comment on the numeracy? Sure.

Be the ultimate market potential can be substantial but these are not square wave launches in those different aspects of the business.

And you want to comment on the on the primary sure on the <unk> question, we really have 2 sources of revenue for <unk>. The larger 1 is the royalty, which as you say it's 15.

Iain Michael Brown: On the numerity question, we really have two sources of revenue for numeracy. The larger one is the royalty, which, as you say, is 15% of end-market net sales. So, if you take Biogen's net sales for the quarter, multiply by 15%, that's our royalty. The other element is that we do manufacture the product for Biogen as well on a cost-plus basis. So, that difference is really the manufacturing revenue that we earned in the period.

Percentage of end market net sales. So if you take biogen's net sales for the quarter multiplied by 15%, that's our royalty and the other elements as we do manufacture the product for Biogen as well on a cost plus basis. So that difference is really the menu is the manufacturing revenue that we earned in the period.

And I'll just add.

And 1 comment to that to rich's low quality comments and that said not all the models that we've seen has been updated to reflect a Q4 launch timing and so some of those models are going to get pushed out a little bit. So I would expect that number to come down a bit.

Iain Michael Brown: I'll just add one comment to Rich's Lavalvie comments, and that's that not all of the models that we've seen have been updated to reflect a Q4 launch timing, so some of those models are going to get pushed out a little bit, so I would expect that number to come down a bit.

Got you. Thank you.

Thank you our.

Marc Harold Goodman: Thank you. Our next question comes from Mark Goodman with SVB Lyrinc. Please continue with your question. Hey, good morning.

Our next question comes from Marc Goodman with SBB Leerink. Please proceed with your question.

Hey, Good morning, Richard I was wondering if you can give us an update on the.

Marc Harold Goodman: Hey, good morning. Rich, I was wondering if you could give us an update on the original strategic review with respect to how you're thinking about partnerships, how you're thinking about the divestitures, and how you're thinking about your original margin goals that you laid out for us at that time. Thanks. Yeah, I'm happy to do it, Mark. Obviously, the margin goals are a lot easier to achieve when you have the royalties, I'm sorry, when the revenue line is looking as robust as it is.

The original strategic review with respect to how Youre thinking about partnerships. How are you thinking about the divestitures, how youre thinking about your original margin goals that you've laid.

Laid out for us at that time.

And I'm happy to margin.

Obviously the margin goals.

Easier to achieve.

Achieve when you have the royalties and I'm sorry, when the revenue line is looking as and as robust as it is and that's why it's so important and emphasize today resumption of growth and vivid troll aerostar.

Marc Harold Goodman: That's why it's so important, I emphasize today, the resumption of growth in Vivitrol, Aristata, Vumerity, and now with the turning on of the spigot for Libvalvy, we have the top line looking like it's going to be in really good shape. We've been very focused on cost management, as you know, for the past couple of years. And I think that that's, you know, Iain spends a lot of time focusing on that, tuning it so that we'll be able to hit those profitability targets.

And to.

And <unk> and now with the turning on the spigot for evolving and we have the topline and looks like it's going to be really good shape. We've been very focused on cost management as you know for the past couple of years and I think that thats.

<unk> and spends a lot of time and focusing on that's tuning that so that will be able to hit those profitability targets.

Marc Harold Goodman: Central to that is this idea of partnering Nivolucan, both from a financial perspective to offset certain R&D expenses associated with it. It's our largest R&D expense right now. But also just to realize the full medical potential of the drug because it's actually designed for use in combination with other agents and in multiple cancer settings.

To.

Is this idea of partnering nimble Luka, both from a financial perspective to offset certain R&D expenses associated with it is our largest R&D expense right now, but also just to realize the full medical potential of the drug because it's actually designed for use in combination with other agents and in multiple cancer settings.

Settings, So I think partnering remains.

Richard F. Pops: So I think partnering remains a really central part of the plan as well. Are we in discussions about these partnerships? Are they going well? Can you give us any sense of when you might have some, you know, help to defray some of these costs?

And I really central part of the plan as well.

Our RV and transfer these partnerships are they going well can you give us any sense of.

You know when you might have some help.

To defray some of these causes.

Marc Harold Goodman: Is this, you know, by the end of the year? Yeah, I'm not going to put a timeline on that for obvious reasons, but they're important for us to do, and they're also important for us to do in the right configuration with the right partner. This will hopefully be a long-term relationship that's going to have substantial strategic value to the company, so we're going to make sure we do it correctly. But the only thing, I'll give you a color, I'll give you a mark, is that data is the tailwind for partnering.

And by the end of the year.

Yes, im not going to put a timeline on that for obvious reasons, but they're important for us to do and most important for us to do and the right configuration with the right partner.

And this will be hopefully a long a long term relationship that's going to have substantial strategic value.

Company, So we're going and we're going to make sure we do it correctly.

Okay.

Thanks Mark.

The only thing and color I'll give you mark is that and just that.

What is the tailwind for partnering or the data and Thats whats that was so important about the ESCO presentation that we made.

Marc Harold Goodman: And that's what's so important about the ASCO presentation that we made just a month or so ago, that the data are really coming together nicely. And that's been a necessary prerequisite for serious partnering discussions. So we're encouraged by the way that that data set is building, and I think that's going to continue to help.

A month or so ago is that the data are really coming together nicely and thats been and necessary prerequisite for serious partnering discussions. So we're encouraged by the way that that data set is building and I think that's going to continue to help us.

Thanks, Yes.

Terrence Flynn: Thank you. Our next question comes from Terrence Flynn with Goldman Sachs. Please proceed with your question.

Thank you. Our next question comes from Terence Flynn with.

Valued and Sac. Please proceed with your question.

Matt: Hey, good morning. This is Matt on behalf of Terrance.

Hey, Good morning. This is Matt on for Terence Thanks for taking our question.

Matt: Thanks for taking our question. With regard to the Nimba-Lucan partnership, can you talk about what you view as an ideal structure for such a partnership? And then also, in terms of monetizing any non-core assets, what will be your focus for cash? Yeah, I think that the features of an involucum partnership are a couple of key ones. One is with a partner or a counterparty that's a strong oncology developer or someone who would just augment our development capabilities substantially.

With regards to the and involution partnership could you talk about what you would view us and ideal structure for such a partnership.

And then also in terms of monetizing any non core assets will be your focus for cash.

Yes, I think that I think that the.

Features of a number Luca partnership or are a couple of principal ones 1 is with <unk>.

With a partner and a counterparty that is a strong oncology.

Development.

Or someone who just augment our.

Matt: Number two is obviously offsetting significant amounts of the R&D spend, but that's associated with number three, which is broadening the indications that we're going after for net-publica. We have intentionally, after a period of time in the clinic of signal exploration, coned down the program now into these registrational pathways in mucosal melanoma as monotherapy and in platinum-resistant ovarian cancer in combination with PEMBRO But there are other indications that we get indications from clinicians regularly now looking for additional combinations, and different places to go.

Development capability.

Goldman substantially number 2 is obviously offsetting significant amounts and the R&D spend but thats associated with number 3 which is broadening the indications that we're going after and for nimble because we are intentionally after a period of time and the clinic of signal exploration, we've cone down the program now into these registrational pathways and mucosal melanoma as.

The ability of therapy and in platinum resistant ovarian cancer in combination with <unk>, but there are other indications and we get indications from clinicians regularly now looking for additional combinations different different places to go we've been we've been avoiding those focusing the spend on these these most advanced registration pathways. So the.

Matt: We've been avoiding those, focusing the spend on these most advanced registration pathways. So the quality of the partner, the financial commitment to it, and the ability to expand the footprint of the development program, both in terms of indications as well as regionally or globally, those are the important features for us.

As monitoring of the partner the financial commitment to it and the ability to expand the footprint for the development program. Both in terms of indications as well as regionally or globally does it would be important features for us to consider.

Richard F. Pops: Try it.

Got it thanks.

unknown: Thank you. Our next question comes from Kelly Shee with Jeffries. Please proceed with your question.

Thank you. Our next question comes from Kelly <unk> with Jefferies. Please proceed with your question.

Hi, Good morning. This is Jason Bouvier on for Kelly, She and you may have just addressed my question, but we're wondering just for nimble Luke and besides melanoma and ovarian cancer. What do you think there is some of the other.

Kelly Shee: Hi, good morning. This is Jason Bouvier on behalf of Kelly Shee, and you may have just addressed my question, but we're wondering just for nimbolucan, besides melanoma and ovarian cancer, what do you think are some of the other most promising indications based on efficacy?

Quality honestly and indications based on efficacy.

Jason Bouvier: next phase, and then the clinical bar and regulatory bar for the melanoma registrational trial. Thanks.

And then which ones do you think are the most promising to move to the next phase and then the clinical bar and regulatory bar for the melanoma Registrational trial.

unknown: Yeah, I think in general, in the NEMVA program, we're really interested in this white space and places where patients are being treated where checkpoint inhibitors have not shown robust efficacy or post-checkpoint inhibitor failure. That's both in combination with a checkpoint inhibitor like Pembroke, but also potentially with other combinations. You saw us present some data at Investor Day, and we presented publicly on some work we've been doing with tyrosine kinase inhibitors.

Thanks.

Yeah, I think in general.

Most plant and the nimble liquid program, we're really interested and this white space and places where patients.

And are being treated.

Checkpoint inhibitors have not shown robust efficacy or post checkpoint inhibitor failure. That's both in combination with the checkpoint inhibitor like Pembroke, but also potentially.

All other combinations you saw us present, some data at the Investor day, and we've presented publicly on some work we've been doing with tyrosine kinase inhibitors that teekay I combination with IL 2 variance is really encouraging as well so the white spaces, both and different combinations as well as different tumor types, but again I think our preference.

unknown: The TKI combination with IL-2 variants is really encouraging as well. So the white space is both different combinations as well as different tumor types, but again, I think our preference at this point is to look at tumor types where we're looking for NEMVA-Lucan plus a checkpoint inhibitor to increase efficacy in approved tumor types in indications where there is currently no checkpoint inhibitor therapy or that checkpoint inhibitor therapy is limited. I forget the second part of the question. The bar for, um, the clinical bar for ARDIS 3-6 and ARDIS 3-7, what type of response rates are we looking for?

And at this point is to it rather than looking at tumor types, where we're looking for NIM will look and plus a checkpoint inhibitor to increase efficacy and approved tumor types in indications where there is currently no checkpoint inhibitor therapy or that checkpoint inhibitor therapy is limited.

And I forget.

Preference and part of the question.

For and <unk>.

Clinical buyer for our industry and artist Jason.

And our response rates are and you're looking for it today and we Havent, we havent disclosed the study design details for artist 3.7 yet provided details on that so that will be <unk>.

unknown: We haven't disclosed the study design details for our...

unknown: https://www.globalonenessproject.org

Worth coming once we initiate that study.

unknown: once we initiate that study. For Rd3-6 in melanoma, this is a

For our industry.

And melanoma, this isn't and intended to support potential registration and mucosal melanoma.

unknown: In melanoma, this is intended to support potential registration in mucosal melanoma, which is severely underserved and has high need. So there's not a lot of treatment options that these patients have left.

And as severely underserved and has high unmet need.

Theres not a lot of treatment options that these patients have left we haven't provided a specific.

unknown: We haven't provided a specific ORR or a durability response rate that we're looking for, but we'll really look at it as a holistic data set and review that with the agency to support potential approval once we have the data from that study. Yeah, I think that's an important point that Sandy makes because it's not just an overall numerical response rate. One of the promises of IL-2 therapy, of course, has been the durability of these responses. So it's this combination of response rate and the durability of those responses that will provide the overall profile of the medicine that could support registration.

And <unk>.

Durability of response rates that we're looking for.

The second really look at it as a holistic dataset and review that with the agency to support potential approval. Once we have the data from that study.

And I think that's important point and <unk> because it's not just an overall numerical response rate 1 of the promises of IL..2 therapy of course has been the durability of these responses. So it's this combination of response rate.

<unk> durability of those responses and will provide the overall.

Profile of the medicine that could support registration.

unknown: Great. Thank you. Very useful.

Great. Thank you very useful.

Jason Matthew Gerberry: Thank you. Our final question comes from Jason Gerberry with Bank of America. Please proceed with your question.

Alright, Thanks, Jason.

Yes.

Thank you. Our final question comes from Jason <unk> with Bank of America. Please proceed with your.

And then.

Chi Ang: Hi, this is Chi Ang for Jason. Thanks for squeezing me in.

Hi, This is chi on for Jason and Thanks for squeezing me and I would like to go back to the vet trough. Thanks for auto Callouts that you provided regarding the opioid and alcohol contributions.

Chi Ang: I would like to go back to Vivitrol. Thanks for all the information that you have provided regarding the OPR and the alcohol contributions. But curious, on a net basis, it looks like 2Q cells are pretty similar to 2Q19 levels. So on a net basis, do you feel like you're back to pre-COVID levels in terms of how the franchise is operating? Just curious, as we look ahead to 2022, how should we think about the franchise growing?

Curious on a net basis, it looks like <unk> pretty similar.

Question, <unk> 19 and level.

And so on a net basis do you feel like you're back to pre Covid and tablets in terms of how the franchise is operating.

Just curious as we look ahead to 2022.

Do you how should we think about the defined tries to growth do you should we look at 2021 as the base year.

Chi Ang: Should we look at 2021 as the base year, or do you expect an accelerated surge in demand if things as a whole haven't quite fully materialized yet, or normalized yet? Do you expect OPR to pick out whereas the tailwind to alcohol may be moderating as COVID subsides? And then secondarily, a related question, how should we think about the growth in the adjustment for Vivitrol? You have lowered the growth expectation for the full year by about 250 basis points.

Or do you expect a and accelerate its search and demand.

Things as a whole habits quite fully mature lives, yet I normalize that and I guess do you expect.

And opioids.

OPI to pick out where us.

<unk> alcohol maybe.

Moderating as Covid subsides, and then secondarily.

A question how should we think about the gross to net I guess menthol and so that trough.

You have sort of what the gross to net expectation for the full year by about 250 basis point should we think about 52, 5% and as a go forward basis.

Chi Ang: Should we think about 52.5% as a go-forward basis, or should we think about more in the mid-50% range as a go-forward basis? Maybe it also goes back to the contribution of the OPR and alcohol dependency, but any color you can provide would be great. Thanks.

And we think about more and the mid 50% range as the go forward basis, maybe it also goes back to the contribution of the opioid and alcohol dependency, but any color you can provide that would be great. Thanks.

Chi Ang: Yeah, I'll start with, you know, the comparisons of what we're looking at.

Yeah, I'll start first with them you know the comparisons of what we're looking at.

Unknown Attendee: Comparisons of what we're looking at. We're taking a sharp look at performance relative to 2020, but we're also really looking hard at 2019. You know, the performance that the brand contributed in 2019. Our belief, based upon our market research and what we're seeing in the marketplace right now, is that the contribution to alcohol dependence will continue to grow. So our expectation is that when you look at just overall market growth, you're going to continue to see stronger market growth for the alcohol dependence market, which we're seeing, you know, we're expecting that to grow at approximately 15% this year, and we're expecting the opioid market to grow at approximately 7%.

And we're taking.

And a sharp look at and performance relative to 2020, but we're also really looking hard at 2019.

The performance that the brand contributed in 2019, our belief based upon our market research and what we're seeing.

And the marketplace right now is that the that the that the contribution to alcohol dependence will continue to growth.

Our expectations are when you look and just overall market growth that youre going to continue to see stronger market growth for the alcohol dependence market what we're seeing.

And we're expecting that to grow at approximately 15%. This year, we're expecting the opioid market to grow at approximately 7% and so we're adjusting our.

Unknown Attendee: And so we're adjusting our strategy, our commercial strategy to maximize that. And one of the things that we're pretty excited about is we actually realigned our sales force, we expanded our targeting, we actually added 24 additional 2400 additional targets in Q2 of this year to actually maximize that opportunity. So our plan is to maximize the full asset to continue to see stabilization in the opioid-dependent indication but also to fully maximize and grow the alcohol dependency.

Our strategy, our commercial strategy to maximize that and 1 of the things that we're pretty excited about is we actually realigned our sales force we expanded our targeting we actually added 24 additional 2400 additional targets and Q2 of this year to actually maximize that opportunity. So our plan is to maximize the full asset to continue.

Gross stabilization and the opioid dependent indication, but also to fully maximize and grow alcohol dependence.

Iain Michael Brown: And on the gross to net front, I think that the premise for us as we came into 2021 was that there was going to be a larger Medicaid population. And that's what really drove that 54% gross to net assumption that we made at the beginning of the year. What we're finding is that while Medicaid is growing, it's not growing by as much as we originally thought. So we have some favorable adjustments coming through in the first two quarters, as a result of which, as you noted, we're reducing our expectation for the remainder of the year to 52.5%.

And then on the gross to net from I think the premise for US as we came into 2021 was there was going to be a large and Medicaid population and thats, what really drove that 54% gross to net assumption.

And since we made at the beginning of the year.

We are finding is that while Medicaid is growing it's not growing by as much as we originally thought so we have some favorable adjustments coming through and the first 2 quarters as a result of which as you noted we are reducing our expectation for the remainder of the year to the 52, 5%.

And that.

Iain Michael Brown: And one of the things with gross to net is that the information that comes in from the states is always lagged by six to nine months. So the data has been a little bit choppy. So we're not 100% sure as to what the future looks like. But obviously, it's something we're monitoring very closely. And we'll provide guidance for 2022 when we go out with year-end earnings in February.

And 1 of the things with gross to net says the information that comes in from the states has always lagged by 6 to 9 months. So the data has been a little bit choppy. So we're not 100% sure as to what the future looks like.

But obviously, it's something we're monitoring very closely and we'll provide guidance for 2020.

When we go out with year end earnings in February.

unknown: Thank you. Ladies and gentlemen, we have no further questions. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Thank you.

Thanks Chi.

Thank you ladies and gentlemen, we have no further questions. This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.

Thank you.