Q1 2022 Alkermes Plc Earnings Call

Rob: Greetings, and welcome to Alkermes' first quarter 2022 financial results conference call. My name is Rob, and I'll be your operator for today's call. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Greetings and welcome to Alkermes first quarter 2022 financial results Conference call.

My name is Rob and I'll be your operator for today's call.

If anyone should require operator assistance during the conference. Please press star zero from your telephone keypad.

Rob: Please note, this conference is being recorded. At this time, I'll now turn the call over to Sandra Coombs, Senior Vice President of Investor Relations and Corporate Affairs. Sandy, you may now begin.

Please note this conference is being recorded.

At this time I'll now turn the call over to Sandra Coombs Senior Vice President of Investor Relations and corporate Affairs.

Sandy you may now begin.

Sandra Coombs: Thank you. Good morning. Welcome to the Alkermes Plc conference call to discuss our financial results and business updates for the quarter ended March 31, 2022. With me today are Richard Pops, our CEO; Iain Brown, our CFO; and Todd Nichols, our Chief Commercial Officer. Before we begin, I encourage everyone to go to the investor section at alkermes.com to find our press release financial tables and reconciliations of the GAAP to non-GAAP financial measures that we'll discuss today.

Thank you good morning, welcome to the Alkermes plc conference call to discuss our financial results and business update for the quarter ended March 31, 2022 with me today are Richard Pops, our CEO , Ian Brown, our CFO and Todd Nichols, our Chief commercial officer.

Before we begin I encourage everyone to go to the investors section of Alkermes Dot com to find our press release related financial tables, and reconciliations of the GAAP to non-GAAP financial measures that we'll discuss today.

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 these forward-looking statements.

We believe the non-GAAP financial results in conjunction with the GAAP results are useful in understanding the ongoing economics of our business.

Our discussions during this conference call will include forward looking statements actual results could differ materially from these forward looking statements. Please see slide two of the accompanying presentation. Our press release issued this morning, and our most recent annual and quarterly reports filed with the SEC for important risk factors that could cause our actual results to differ materially from those expressed or <unk>.

Sandra Coombs: Please see slide two of the accompanying presentation, our press release issued this morning, and our most recent annual and quarterly reports filed with the FTC for important risk factors that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements. We undertake no obligation to update or revise the information provided on this call or in the accompanying presentation as a result of new information or future results or development. After our prepared remarks, we'll open the call for Q&A, and I'll turn the call over to Iain. Great. Thank you, Sandy.

Fight in the forward looking statements, we undertake no obligation to update or revise the information provided on this call or in the accompanying presentation as a result of new information or future results or development.

After our prepared remarks, we'll open the call for Q&A and I'll turn the call over to Ian.

Great. Thank you Sandy and Hello, everyone.

Iain Brown: And hello, everyone. I'm pleased to report our first quarter 2022 results that demonstrate ongoing momentum across the company. The strength of our proprietary commercial product portfolio, our continued focus on operating efficiency, and the commercial leverage we have built into the business, which is becoming more evident with the launch of Libolvi. We are in a strong financial position to execute our strategic priorities and achieve our long-term profitability target. Based on these first quarter results, today we are reiterating our financial guidance for full year 2022, which was detailed in our press release in 8K filed earlier this year on February 16th. For the first quarter of 2022, we generated total revenues of $278.5 million.

I'm pleased to report our first quarter 2022 results that demonstrate ongoing momentum across the company.

The strength of our proprietary commercial product portfolio. Our continued focus on operating efficiency and the commercial leverage we have built into the business, that's becoming more evident with the launch of <unk>.

We are in a strong financial position to execute our strategic priorities and achieve our long term profitability targets.

Based on these first quarter results today, we are reiterating our financial guidance for full year 2022, which was detailed in our press release and 8-K filed earlier this year on February the 16th.

For the first quarter of 2022, we generated total revenues of $278 $5 million.

Iain Brown: Driven by strong year over year growth of Vivitrol and Aristarda, the launch of Libolvi and growing revenues from Boomerati. Taken together, net sales from our proprietary commercial product portfolio and revenues from Boomerity increased 41% year over year. So, starting with Vivitrol. Net sales in the first quarter were $84.9 million, reflecting 14% growth year-over-year, driven primarily by an increase in units sold of approximately 7%. Growth to net adjustments in the first quarter were slightly lower at 49.4%, reflecting favorable adjustments of approximately $4 million related to lower Medicaid utilization. In Q1, inventory in the channel decreased by approximately $4 million, consistent with typical seasonal patterns.

Driven by strong year over year growth of Vitol and <unk>.

The launch of lip aldi and growing revenues from <unk>.

Taken together net sales from our proprietary commercial product portfolio and revenues from Gramercy increased 41% year over year.

Iain Brown: And for the full year, we continue to expect Vivitrol net sales in the range of $355 to $385 million. The Aristotle product family generated net sales of $72.5 million, a 31% increase year over year, driven primarily by 27% volume growth. Gross net adjustments were 53.4% in the first quarter, consistent with what we saw in 2021 in Q1. Inventory levels were flat sequentially, as expected.

So starting with <unk>.

Net sales in the first quarter were $84 $9 million, reflecting 14% growth year over year, driven primarily by an increase in units sold of approximately 7%.

Gross to net adjustments in the first quarter was slightly lower at 49, 4%, reflecting favorable adjustments of approximately $4 million.

Related to lower Medicaid utilization.

In Q1 inventory in the channel decreased by approximately $4 million consistent with typical seasonal patterns.

And for the full year, we continue to expect vitriol net sales in the range of $355 million to $385 million.

We have a startup product family generated net sales of $72 $5 million at 31% increase year over year, driven primarily by 27% volume growth.

Gross to net adjustments were 53, 4% in the first quarter consistent with what we saw in 2021.

In Q1 inventory levels were flat sequentially as expected and.

And for the full year, we continue to expect <unk> net sales in the range of $290 million to $320 million.

Iain Brown: And for the full year, we continue to expect tarry star and net sales in the range of $290 to $320 million. Now, for Le Bolvi, in the first full quarter of launch, we recorded net sales of $13.9 million. These results exceeded our initial expectations of $8 million to $10 million, driven primarily by higher volumes and favorable growth to net adjustment. Volume growth in the quarter was driven primarily by a significant increase in underlying demand. The remainder of the initial launch stocking was consumed in the quarter, and the absolute loot inventory level increased in line with demand. During the quarter, growth and ad adjustments were 27 percent.

Now for <unk> in the first full quarter of launch we recorded net sales of $13 9 million.

These results exceeded our initial expectations of $8 million to $10 million.

Driven primarily by higher volumes and favorable gross to net adjustments.

Volume growth in the quarter was driven primarily by a significant increase in underlying demand.

The remainder of the initial launch stocking was consumed in the quarter and the absolute loot inventory level increased in line with demand.

During the quarter gross to net adjustments were 27%.

Iain Brown: [inaudible] reflecting less restrictive initial commercial payer coverage which reduced the cost associated with our patient co-pay assistance program. As we look ahead, we expect the growth to net adjustments will continue to be dynamic during the first year of launch and heavily dependent on the payer mix across Medicaid, Medicare Part D, and commercial. With those factors in mind, we currently expect to achieve Levolvi net sales in the range of $18-$20 million in the second quarter, which would put us on track to achieve the higher end of our expectations of $55-$75 million for the year.

<unk> less restrictive initial commercial payer coverage, which reduced the costs associated with our patient co pay assistance program.

As we look ahead, we expect the gross to net adjustments will continue to be dynamic during the first year of launch and heavily dependent on the payer mix across Medicaid Medicare part D and commercial.

With those factors in mind, we currently expect to achieve lebow. The net sales in the range of $18 million to $20 million in the second quarter, which would put us on track to achieve the higher end of our expectations of $55 million to $75 million for the year.

Iain Brown: We're encouraged by what we've seen from the launch to date and look forward to updating you on our progress as we move into the second half of the year. Moving on to our manufacturing and royalty business In the first quarter, our manufacturing and royalty revenues were $105.2 million, compared to $119.8 million in the prior year. The decrease was driven primarily by J&J's partial termination of the license agreement related to royalties from long-acting Invega products in the U.S., which took effect starting in February of this year. We continue to disagree with J&J's actions and last week initiated binding arbitration proceedings related to this matter.

We're encouraged by what we've seen from the launch to date and look forward to updating you on our progress as we move into the second half of the year.

Moving on to our manufacturing and royalty business.

In the first quarter, our manufacturing and royalty revenues were $105 2 million.

<unk> to $119 8 million in the prior year.

The decrease was driven primarily by J&J is partial termination of the license agreement related to royalties from long acting and Vega products in the U S, which took effect starting in February of this year.

We continue to disagree with J&J as actions last week initiated binding arbitration proceedings related to this matter.

Iain Brown: In the first quarter, we recognized $37.1 million of total worldwide royalty revenue from these products, down from $61.6 million in the first quarter of last year. Meanwhile, revenues from Boomerity in the quarter increased 128% year-over-year to $30.6 million. Turning now to expenses, total operating expenses were $305.1 million for the first quarter compared to $267.9 million in the same period in the prior year. This increase was primarily driven by higher sales and marketing expenses in support of the launch of Libolvi and higher cost of goods sold related to growing sales of our proprietary products and Boomerity. For the first quarter, cost of goods sold increased approximately $14 million year-over-year to $55.2 million, driven by higher volumes of these key products.

In the first quarter, we recognized $37 $1 million of total worldwide royalty revenue from these products down from $61 6 million in the first quarter of last year.

Meanwhile, revenues from <unk> in the quarter increased 128% year over year to $30 6 million.

Turning now to expenses total operating expenses were $305 1 million for the first quarter compared to $267 9 million in the same period in the prior year.

This increase was primarily driven by higher sales and marketing expenses in support of the launch of <unk> and higher cost of goods sold related to growing sales of our proprietary products and humira team.

For the first quarter cost of goods sold increased approximately $14 million year over year to $55 2 million.

Driven by higher volumes of these key products.

Iain Brown: Blended gross margins of our proprietary products were over 85% in the quarter, and we would expect this to improve over time as the products continue to grow. Our R&D expenses for the first quarter were $96 million compared to $92.3 million for the prior year, reflecting focused investment in Nemba Leukin and our earlier stage neuroscience and oncology development programs. S-GNA expenses were $145.1 million, compared to $125.2 million for the prior year.

Blended gross margins of our proprietary products, where over 85% in the quarter and we would expect this to improve over time as the products continue to grow.

R&D expenses for the first quarter were $96 million compared to $92 3 million for the prior year, reflecting focused investment in <unk> and our earliest stage neuroscience and oncology development programs.

SG&A expenses were $145 $1 million compared to $125 2 million for the prior year.

Iain Brown: We are investing in the launch of the Volvo, but we are doing so while heavily leveraging our existing commercial infrastructure in order to drive efficient growth from the launch. Our non-operating expenses in the quarter included a non-cash reduction in the Fair Value of Contingent Consideration of $19.1 million related to the increased risk of non-payment of milestone payments by Baudax Bio. However, this did not impact our non-GAAP results for the quarter. All told, during the quarter, we generated a gap net loss of $35.9 million and a non-gap net income of $19.6 million.

We are investing in the launches of Bobby but doing so while heavily leveraging our existing commercial infrastructure in order to drive efficient growth from the launch.

Non operating expenses in the quarter included a noncash reduction in the fair value of contingent consideration of $19 $1 million relate.

Related to increased risk of nonpayment of milestone payments Bye bye bye biotechs bio. However, this did not impact our non-GAAP results for the quarter.

All told during the quarter, we generated a GAAP net loss of $35 9 million and a non-GAAP net income of $19 6 million.

Iain Brown: Turning to our balance sheet, we ended the first quarter with approximately $759 million in cash and total investments, and total debt outstanding of approximately $295 million resulting in a net cash position of close to $464 million. We are in a strong financial position to execute our strategic priorities. At a time when many companies in the biotech space rely on the public markets for capital, Alkermes is well capitalized with a diversified portfolio of revenue-generating products that serve as our financial engine.

Turning to our balance sheet, we ended the first quarter with approximately $759 million in cash and total investments and.

And total debt outstanding of approximately $295 million.

Resulting in a net cash position of close to $464 million.

We are in a strong financial position to execute our strategic priorities.

At a time when many companies in the biotech space rely on the public markets for capital Alkermes is well capitalized with a diversified portfolio of revenue generating products that serve as our financial engine.

Iain Brown: We remain committed to the efficient management of our cost structure and achievement of our long-term profitability targets, as we leverage our commercial infrastructure to launch Levolvi and efficiently advance our oncology and neuroscience pipeline candidates. And with that, I'll hand the call over to Todd to provide more detail on the commercial performance. Great. Thanks, Iain. And good morning, everyone.

We remain committed to the efficient management of our cost structure and achievement of our long term profitability targets as we leverage our commercial infrastructure to launch law, Bobby and efficiently advance our oncology and neuroscience pipeline candidates.

With that I'll hand, the call over to Todd to provide more detail on the commercial performance.

Thanks, Ian and good morning, everyone.

Todd Nichols: I'm excited to share that we achieved strong growth across our commercial portfolio this quarter. Highlighted by Libalbi's Uptake in the Oral Antipsychotic Market. Our launch execution is a testament to our team's knowledge of the neuropsychiatry space, and our well-established commercial capability. With the launch of Lee Baldy, we are harnessing the full abilities and infrastructure of our commercial organization and driving leverage across our commercial P&L. Our sharp focus on execution has also driven year-over-year growth of Aristot and Vivitrol in the quarter, which remain key growth drivers for the business and represent important medicines for the treatment of schizophrenia and opioid dependence and alcohol dependence, respectively, each characterized by large patient populations and high-end MET needs. Based on our Q1 results, current trends in the treatment landscape, and our differentiated portfolio, we believe we are well positioned to continue building momentum throughout the remainder of the year. So let's start first with LaVaulve.

I'm excited to share that we achieved strong growth across our commercial portfolio this quarter.

Highlighting <unk> uptake in the oral antipsychotic market.

Our launch execution is a testament to our team's knowledge of the neuropsychiatry space and our well established commercial capabilities.

With the launch of Lee Barbie, we are harnessing the full abilities and infrastructure.

Our commercial organization and driving leverage across our commercial P&L.

Our sharp focus on execution has also driven year over year growth of <unk> in the quarter, which remain key growth drivers for the business and represent important medicines for the treatment of schizophrenia, and opioid dependence and alcohol dependence respectively.

Each characterized by large patient populations in high unmet need.

Based on our Q1 results current trends in the treatment landscape and our differentiated portfolio. We believe we are well positioned to continue building momentum throughout the remainder of the year.

So let's start first with the body.

Todd Nichols: Net sales during the quarter were $13.9 million, driven by LaBalvie's differentiated product profile and strong execution. We exited the first quarter with significant momentum, with our two primary performance indicators, total prescriptions and prescriber breath, growing nicely. Total prescriptions during the quarter were approximately 10,400.

Net sales during the quarter were $13 9 million driven by <unk> differentiated product profile and strong execution.

We exited the first quarter with significant momentum with our two primary performance indicators total prescriptions and prescriber breadth growing nicely.

Total prescriptions during the quarter were approximately 10400 <unk>. This is driven by broad prescriber adoption.

Todd Nichols: This is driven by broad prescriber adoption. As of the end of the quarter, approximately 2,600 prescribers have written a prescription for Lubavvi since launch. We are now six months into the launch, and we are encouraged by the initial feedback we have received from the schizophrenia and Bipolar I disordered treatment communities about Lobalvi, its product characteristics, and the value proposition of this important medicine. Our utilization and source of business data have continued to show that lobalvy is being prescribed to schizophrenia and bipolar 1 patients in equal measure, and patients have been switching to Lebovy from Olanzapine as well as other branded and generic agents.

As of the ended the quarter approximately 2600 prescribers have written a prescription for laboratory since launch.

We're now six months into the launch and encouraged by the initial feedback we have received from the schizophrenia and bipolar one disorder treatment communities about labonte its product characteristics and the value proposition of this important medicine.

Our utilization and source of business data have continued to show that <unk> is being prescribed as schizophrenia and bipolar one patient in equal measure.

And patients have been switching to laboratory from Olanzapine as well as other branded and generic agents.

Todd Nichols: These data suggest that early prescribers viewed Leibovitz having utility in patients switching from a variety of therapies. This is encouraging due to the high unmet need that exists in a large number of people living with Schizophrenia and Bipolar I Disorder. So let's spend a moment on the Bipolar I Disorder Indication. LeVolvi's label covers acute treatment of manic episodes and mixed episodes, as well as maintenance treatment. This is a broad label that can capture treatment initiations, which often occur during manic or mixed episodes. Alanzabine has been a frequently used treatment option for Bipolar I patients, with 12% market share in the indication, or an estimated 1.5 million prescriptions despite a lambs of beans associated weight and metabolic side effects.

These data suggest that early prescribers viewed limbaugh he is having utility in patients switching from a variety of therapies.

This is encouraging due to the high unmet need that exists in large number of people living with schizophrenia and bipolar one disorder.

So let's spend a moment on the bipolar one disorder indication.

<unk> label covers the acute treatment of manic episodes and mixed episodes as well as maintenance treatment. This is a broad label, taking capture treatment initiations, which often occurred during manic or mixed episodes.

Olanzapine has been a frequently used treatment option for bipolar one patients with 12% market share in the indication or an estimated $1 5 million prescription despite olanzapine associated weight and metabolic side effects.

Todd Nichols: We expect that LaValvie will play an important role in the treatment paradigm for bipolar 1 disorder as new prescribers gain experience with LaValvie's profile. The payer reimbursement profile for LaValvie is progressing, and we continue to expect access to be established gradually over the next year. Importantly, there is currently a pathway to access regardless of whether patients are on Medicaid, Medicare Part D, or commercial plans.

We expect that law ball, we will play an important role in the treatment paradigm for bipolar one disorder as new prescribers gain experience with the <unk> profile.

The payer reimbursement profile for laboratory is progressing and we continue to expect access to be established gradually over the next year.

Importantly, there is currently a pathway to access regardless of whether patients are on Medicaid Medicare part D or commercial plans.

Todd Nichols: Payers have made initial access decisions, and thus far, those access decisions are in line with other branded oral agents. Launch year is our dynamic, and we will continue to update you on the trends that we see. Overall, momentum is building, and prescribers have begun to see the differentiated attributes of Labalvi within the context of their own practices and patients. Labalvi's uptake and traction in the treatment community are encouraging, and we will continue to be laser focused on execution of our launch strategy in order to maximize the opportunity to make a meaningful difference for patients and drive growth for the company.

Payers have made initial access decisions and thus far those access decisions are in line with other branded oral agents.

<unk> are dynamic and we will continue to update you on the trends that we see.

Overall momentum is building and prescribers have begun to see the differentiated attributes of labonte within the context of their own practices and patients.

<unk> uptake and traction in the treatment community is encouraging and we will continue to be laser focused on execution of our launch strategy in order to maximize the opportunity to make a meaningful difference for patients and drive growth for the company.

Todd Nichols: We have established the foundation for a significant product opportunity, and the operating leverage in our psychiatry portfolio is an important element driving the efficiency of the Livalvi launch. LeBobby's launch is rooted in our established capabilities and years of experience in the U.S. psychiatric market with Aristotle. For the Aristotic product family, net sales in the first quarter increased approximately 31% year-over-year to $72.5 million, driven primarily by TRX growth of 13% year-over-year on a month-to-therapy basis, outpacing the LAI market, which grew 7% year-over-year. This performance is driven by Aristata's differentiated value proposition, including once every two months dosing option and the Aristat Vivitrol net sales in the first quarter increased approximately 14% year-over-year to $84.9 million.

We have established the foundation for a significant product opportunity and the operating leverage in our psychiatry portfolio is an important element driving the efficiency of the laboratory launch.

Yes.

The <unk> launch is rooted in our established capabilities and years of experience in the U S psychiatry market with Aerostar.

For the Air started product family net sales in the first quarter increased approximately 31% year over year to $72 $5 million.

Driven primarily by <unk> growth of 13% year over year on a months of therapy basis, outpacing the la market, which grew 7% year over year.

This performance is driven by Aerostar is differentiated value proposition, including once every two month dosing option and the aerostat initio treatment initiation regimen.

Todd Nichols: This growth was driven primarily by the alcohol dependence indication, which accounted for approximately 60% of the Vivitrol business and is an important element of our commercial strategy. We expect this growth to continue due to increasing patient need, Rising prescriber awareness of Medication-Assisted Therapies for the Treatment of Alcohol Dependence, and our investment in driving growth in this indication.

<unk> net sales in the fourth quarter increased approximately 14% year over year to $84 $9 million. This growth was driven primarily by the alcohol dependence indication, which accounted for approximately 60% of the vivid trial business and is an important element of our commercial strategy.

We expect this growth to continue due to increasing patient need.

Rising prescriber awareness of medication assisted therapy for the treatment of alcohol attendants.

And our investment in driving growth in this indication.

Todd Nichols: Taken a step back, our Q1 results are a notable demonstration of our focus on executional excellence. We have three distinctive products driving our commercial performance and operating leverage. Our commercial team is energized and acutely focused on launching Libavi, increasing Aristata prescriber breath and expanding awareness and use of Vivitrol as a treatment option, particularly for alcohol dependence. We are committed to executing our commercial strategy across these three brands and building on our current momentum. And now, I'll turn the call over to Rich.

Taking a step back our Q1 results are notable demonstration of our focus on execution excellence.

We have three distinctive products driving our commercial performance and operating leverage.

Our commercial team is energized and acutely focused on launching labonte, increasing ARISTOTLE prescriber breadth and expanding awareness and use of <unk> as a treatment option, particularly for alcohol dependence. We are committed to executing our commercial strategy across these three brands and building on our current momentum.

Now I'll turn the call over to rich that's great. Thank you Todd good morning, everyone. So we're proud of another strong quarter, which was driven by a sharp focus on our strategic priorities I'm going to start with <unk> because it represents a number of things is an example of our R&D innovation and our focus on specific needs of people suffering from chronic disease.

Richard Pops: That's great. Thank you, Todd. Good morning, everyone.

Richard Pops: So, we're proud of another strong quarter, which was driven by a sharp focus on our strategic priorities. I'm going to start with Libolvi because it represents a number of things. It's an example of our R&D innovation and our focus on specific needs of people suffering from chronic diseases. And its launch demonstrates the power of the commercial infrastructure that we've been developing for the past several years. A set of diverse capabilities necessary to operate in complex markets.

Its launch demonstrates the power of the commercial infrastructure that we've been developing for the past several years, a set of diverse capabilities necessary to operate in complex markets.

Richard Pops: And it's revealing the financial leverage we've been anticipating as we add additional proprietary product revenue into or onto our commercial foundation. The strong early uptake of Libolvi is encouraging. The interest in Libolvi makes sense, given the extensive use of olanzapine in both schizophrenia and bipolar 1 disorder.

And it's revealing the financial leverage we have been anticipating as we add additional proprietary product revenue into our onto our commercial foundation.

The strong early uptake of <unk> is encouraging the interest in Laval makes sense given the extensive use of olanzapine in both schizophrenia and bipolar one disorder.

Richard Pops: But what's most encouraging is the feedback from healthcare providers about their real-world experience with the differentiated features of Livalvi and the impact that Livalvi has had on their patients. Even at this early stage of the launch, it's becoming clear that Libolvi has the potential to be a transformative product for Alkermes. So we have what we need, a differentiated product, a significant market opportunity, and an experienced team with sophisticated commercial capabilities.

What's most encouraging is the feedback from health care providers about their real world experience with the differentiated features of the <unk> and the impact that <unk> had on their patients even at this early stage of the launch is becoming clear that <unk> has the potential to be a transformative product for alkermes.

So we have what we need a differentiated product a significant market opportunity.

An experienced team with sophisticated commercial capabilities for this reason, we say 2022 is focused on execution as we build on this momentum and seek to maximize our impact for patients and our opportunity for shareholders.

Richard Pops: For this reason, we say 2022 is focused on execution as we build on this momentum and seek to maximize our impact for patients and our opportunity for shareholders. Nibaldi is an important element of our strategy; it joins Vivitrol, Aristata, and Vumeri as the key drivers of our financial performance, profitability, and shareholder value creation.

<unk> is an important element of our strategy. It joins vivid troll eras, Donna and be Mary as the key drivers of our financial performance profitability and shareholder value creation. This commercial portfolio is in a strong position.

Richard Pops: This commercial portfolio is in a strong position. With the growth of this portfolio, we've diversified the business away from our legacy royalty product. With that said, we are serious about enforcing our contractual rights and addressing unauthorized use of our intellectual property. To that end, last week we commenced binding arbitration proceedings with Janssen, a subsidiary of J&J, related to its partial termination of two license agreements and its obligations under those agreements to pay royalties on U.S. net sales of products enabled by our nanocrystal technology, including Invega Sistena, Invega Trinza, Invega Halfyra, and Cabanoo.

With the growth of this portfolio, we've diversified the business away from our legacy royalty products with that said, we are serious about enforcing our contractual rights and addressing unauthorized use of our intellectual property.

To that end last week, we commenced binding arbitration proceedings with Janssen a subsidiary of J&J related to its partial termination of two license agreements and its obligations under those agreements to pay royalties on U S. Net sales of products enabled by our nano Crystal technology, including in Vegas, the Stena Invega <unk> invega half here.

And Kevin Hoover, we've partnered with J&J for more than 25 years, and J&J paid royalties related to U S. Net sales of long acting and Vega products for more than 12 years.

Richard Pops: We've partnered with J&J for more than 25 years, and J&J paid royalties related to U.S. net sales of the Long Acting and Vega products for more than 12 years. Following the receipt of the notices of partial termination, we triggered the dispute resolution provisions in the agreements in an attempt to reach a resolution, but that has not been achieved to date. In parallel, we built our legal case for the arbitration.

Following the receipt of the notice is a partial termination we triggered the dispute resolution provisions in the agreements in an attempt to reach a resolution.

That has not been achieved to date in parallel we built our legal case for the arbitration as we advance through the arbitration process. We remain open to a mutually agreeable settlement should that provide a more expeditious resolution and be in the best interest of our shareholders.

Richard Pops: As we advance through the arbitration process, we remain open to a mutually agreeable settlement should that provide a more expeditious resolution and be in the best interest of our shareholders. For the purposes of guidance and management of our business, we'll continue with what we started at the beginning of the year, removing J&J royalties related to these products in order to provide a conservative financial planning scenario, a clear picture of the strength of the underlying business, and the operating leverage that we anticipate. That said, the removal does not, in any way, reflect our conviction in the strength of our legal position on the matter.

For the purposes of guidance and management of our business. We will continue with what we started at the beginning of the year, removing J&J royalties related to these products in order to provide a conservative financial planning.

Planning scenario.

A clear picture of the strength of the underlying business and the operating leverage that we anticipate.

That said the removal does not in any way reflect our conviction in the strength of our legal position on the matter.

Richard Pops: So, shifting gears from that, I'm going to spend the last couple of minutes on a few pipeline updates, starting with Nemba Lucan, our novel IL-2 cytokine. The recent failure of BEMPEG Aldis loop has driven a fresh look at the unique properties and clinical development strategy for Nemba. These two molecules are very different, and they are testing different pharmacological hypotheses. The scientific foundation for Nemvalucan is high-dose IL-2. The IL-2 pathway remains an important target in oncology for a simple reason.

So shifting gears from that I'm going to spend the last couple of minutes on a few pipeline updates starting with <unk> our novel IL two cytokine.

So the recent failure of been pegged Aldis Luca has driven a fresh look at the unique properties in clinical development strategy for nimble Lucan.

These two molecules are very different and they are testing different pharmacological hypotheses. The scientific foundation for nimble Luke is high dose IL two.

The IL two pathway remains an important target in oncology for simple reason high dose IL two has proven monotherapy efficacy.

Richard Pops: High-Dose IL-2 has proven monotherapy efficacy and is characterized by the durability of patient response. And this mechanism has potential for broader use if its serious toxicity profile can be attenuated. Nemvalucan was designed to capture the therapeutic potential of high-dose IL-2, by preserving its beneficial functional attributes while attenuating its hallmark limiting toxicity. So nimbolucan stands alone among IL-2 variants being studied. It's differentiated by its unique molecular design and the resulting pharmacology, observed monotherapy anti-tumor activity and the clinical development strategy that we're pursuing. Nembolucan is a single polypeptide designed for selectivity for the intermediate affinity IL-2 receptor.

And is characterized by the durability of patient responses.

And this mechanism has the potential for broader use if it's serious toxicity toxicity profile can be attenuated.

Nimble Lukin was designed to capture the therapeutic potential of hydro sale to buy.

By preserving its beneficial functional attributes while attenuating, it's hallmark limiting toxicities.

So nimble Lucan stands alone among IL two variance being studied it's differentiated by its unique molecular design and the resulting pharmacology.

Observed monotherapy antitumor activity and the clinical development strategy that we're pursuing.

Number Lucan is a single polypeptide designed for selectivity for the intermediate affinity IL two receptor. It is inherently active does not require any metabolic or prayer lytic conversion and does not degrade into native IL two.

Richard Pops: It is inherently active, does not require any metabolic or proteolytic conversion, and does not degrade into native IL-2. The validity of the design has been borne out in its pharmacodynamic profile. Nemvalucan activates anti-tumor CD8 positive T-cells and natural killer cells with minimal expansion of immunosuppressive regulatory T-cells.

The validity of the design has been borne out in its pharmacodynamic profile nimble Luca activates anti tumor CDA positive T cells, and natural killer cells with minimal expansion of immunosuppressive regulatory T cells.

Richard Pops: With that profile, Nemvalucan has demonstrated monotherapy anti-tumor activity in renal cell carcinoma and melanoma, including in patients previously treated with checkpoint inhibitors. This single-agent activity is an important differentiating feature in the IL-2 space and gives us confidence that nemvalucan may contribute clinical benefit when it is used in combination regimens with other cancer treatments. Beyond monotherapy, Nemvalucan has demonstrated durable and deepening responses in a range of tumor types in combination with Pembrolozumab, including in Pembro unapproved tumor types, Patients Who Progressed Following Treatment of Checkpoint Inhibitors, and in Checkpoint Naive Patients.

With that profile nimble Luca has demonstrated monotherapy antitumor activity in renal cell carcinoma, and melanoma, including in patients previously treated with checkpoint inhibitors.

This single agent activity is an important differentiating feature in the Iot space and gives us confidence that NIM to Luca may contribute to clinical benefit when it's used in combination regimens with other cancer treatments.

Beyond monotherapy nimble Luca has demonstrated durable and deepening responses in a range of tumor types in combination with timber elysium yet <unk>.

Including in <unk> unapproved tumor types and.

In patients who progressed following treatment with checkpoint inhibitors and in checkpoint naive patients importantly, as intended the observed safety and Tolerability profile is differentiated from hydro's IL two.

Richard Pops: Importantly, as intended, the observed safety and tolerability profile is differentiated from high-dose items. Our clinical development strategy is tailored to address key unmet needs as we focus on difficult-to-treat tumors where checkpoint inhibitors are not approved or where patients progress following CPI treatment. We've initiated potentially registration-enabling studies in mucosal melanoma as monotherapy and in platinum-resistant ovarian cancer in combination with PEMBRO, and we're focused on enrolling those studies. We believe in the IL-2 pathway and the potential utility of Nemba-Lugan.

Our clinical development strategy is tailored to address key unmet needs as we focus on difficult to treat tumors, where checkpoint inhibitors are not approved or where patients progressed following CPI treatment.

We've initiated potentially registration, enabling studies in mucosal melanoma as monotherapy in platinum resistant ovarian cancer in combination with <unk> and we're focused on enrolling those studies.

We believe in the IL two pathway and the potential utility of nimble Lucas we now have the opportunity to advance a first in class IL two variant and remain committed to executing our focused clinical development program.

Richard Pops: We now have the opportunity to advance a first-in-class IL-2 variant and remain committed to executing our focused clinical development program. So quickly, on the earlier stage development pipeline, we continue to make progress with IND-enabling activities for ALKS-2680, our orexin-2 receptor agonist. We're on track to enter the clinic toward the end of this year or early next year. For our ALX1140 HDAC inhibitor program, we're continuing our work to establish the necessary exposure safety margins pre-clinically in order to proceed to higher doses in our single ascending dose phase one study. In our preclinical oncology portfolio, we continue to advance and make progress with our portfolio of engineered cytokines.

So quickly on the earlier stage development pipeline, we continue to make progress with IND, enabling activities for <unk> 2680.

Our orexin two receptor agonist and we're on track to enter the clinic towards the end of this year or early next year.

For Alex 11, 40, <unk> inhibitor program, we're continuing our work to establish the necessary exposure safety margins pre clinically in order to proceed to higher doses in our single ascending dose phase one study.

In our preclinical oncology portfolio, we continue to advance and make progress with our portfolio of engineered cytokines I will end there we're executing on our strategic priorities. We are building significant momentum across the business and maintaining our focus on driving growth and long term shareholder value creation, we will look forward to sharing our progress with you as it.

Richard Pops: I will end there. We're executing on our strategic priorities. We're building significant momentum across the business and maintaining our focus on driving growth and long-term shareholder value creation. We'll look forward to sharing our progress with you as we work to build on this strong Q1 performance. So with that, I'll turn the call back to Sandy to manage the Q&A.

Work to build on this strong Q1 performance so with that I'll turn the call back to sandy to manage the Q&A great. Thank you and we'll now open the call for Q&A. Please.

Sandra Coombs: Thank you. Rob, we'll now open the call for Q&A. We'll now be conducting a question and answer session. If you'd like to ask a question today, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue.

Thank you Sandy.

Now be conducting a question and answer session.

If you'd like to ask a question today. Please press star one on your telephone keypad.

A confirmation tone will indicate your line is in the question queue.

Maybe first start to feel like to move to your questions from the queue.

Rob: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Chris Shibutani with Goldman Sachs. Thank you very much. Good morning, everybody, and congratulations on a strong, full quarter for Libelby. I want to center my question on that.

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

One moment, please while we poll for questions.

Yes.

Yes.

Thank you. Our first question comes from the line of Chris Chip Bottone with Goldman Sachs. Please proceed with your questions.

Thank you very much good morning, everybody and congratulations on a strong full quarter for the Bobby I wanted to center my question there.

Chris Shibutani: I am fascinated by the dynamics that are playing out in terms of patients switching, and in particular, the commentary that you included in slide 10 that talks about less payer pushback. Can you talk about how that is playing out in the real world, and what we should expect that to evolve? We're still in the early days, and clearly, we'd be interested in understanding what the switching dynamic is like. Good morning.

Canadian by the dynamics that are playing out in terms of patient switching and in particular the commentary that you included in slide 10 that talks about <unk>.

Less payer pushback can you talk about how that is playing out in the real world. How we should expect that to evolve we're still early days.

Clearly would be interested in understanding.

What the switching dynamic is like.

Todd Nichols: I'll take that question as well. And yeah, we're really encouraged by the early feedback that we're hearing, not only from the treatment community but from HTPs. What's encouraging is that since launch, approximately 2,600 physicians have written a prescription for Libavi, and what we're hearing is broad utility. When you think about the market, the addressable market for Lavalvie, we think about it this way. The addressable market is really the dynamic portion of the market.

Good morning, Yes, Chris This is Todd I'll take that question as well.

We're really encouraged by the early feedback that we're hearing from the treatment community, but from Hcp's.

Whats encouraging is we have since launch approximately 2600 physicians that have written a prescription for la <unk> and what we're hearing is broad utility.

When you think about the market the addressable market for <unk>, we think about it this way the addressable market is really the dynamic portion of the market.

Todd Nichols: They're looking for tolerability options as well. That represents about 11,000 patients on a monthly basis, which is broken up between schizophrenia and Bipolar I patients as well. So the addressable market, really, for Libalvi is that switch market as well. The early data for us right now is showing that about 50% of the switches are coming from lansipine, but then the remainder of the switches are coming from other agents.

Those are patients that are seeking treatment options. They are looking for efficacious treatment options. They are looking for tolerability options as well.

That represents about 11000 patients on a monthly basis, which broke which is broken out between schizophrenia and bipolar one patients as well too so the addressable market really for la <unk> as that switch market as well the early data for US right now is showing that about 50% of the switches are coming from Olanzapine.

Then the remainder of the switches are coming from other agents were actually getting switches from branded agents at the other generic agents as well too and that also we are seeing about an equal distribution between bipolar one disorder and schizophrenia, which is meaningful as you know these are two very very large markets feeds.

Todd Nichols: We're actually getting switches from branded agents and other generic agents as well, and we're also seeing about an equal distribution between Bipolar I disorder and schizophrenia, which is meaningful. As you know, these are two very, very large markets. Feedback from payers thus far has been consistent with our launch assumptions, and that is that Libalvi will compete in the branded space, and payers are starting to make these initial coverage decisions.

Feedback from payers, thus far has been consistent with our launch assumptions and that is that laboratory will compete in the branded space and payers are starting to make these initial coverage decisions over the next 12 months and our expectation is that more final decisions will be made but even with initial access decisions.

Todd Nichols: Over the next 12 months, our expectation is that more final decisions will be made, but even with initial access decisions, there is a pathway to access across the three different channels, and we're seeing that claims are being adjudicated across Medicare Part D, Medicaid, and commercial, so it's a positive dynamic for us at this point. Great, very encouraging. Thank you. Our next question comes from the line of Vimal Devan with Mizuho. Please issue the statement, Great, thanks for taking my questions. So maybe one, if I could, just following up on the Lybali commentary, and then one other one, if I could.

There is a pathway to access across the three different channels and we're seeing that claims are being adjudicated across Medicare part D Medicaid and commercial so it.

It's a positive dynamic for us at this point.

Great very encouraging thank you.

Thanks, Chris.

Our next question comes from the line of <unk>.

One with Mizuho. Please proceed with your question.

Great. Thanks for taking my question. So maybe one if I could ask just following up on that right now.

Vimal Devan: So just in terms of you mentioned, you have it at $13 million this quarter, you mentioned $18 million and $20 million, is your application for next quarter. I'm just trying to get a sense of how you're thinking maybe about the rest of the year. I know you said you'll kind of be at the higher end, but if it sort of stays even just, Unknown Attendee, Chris Shibutani, Umer Raffat, Ashwani Verma, Sandra Coombs, Akash Tewari, Jason Gerberry, Alkermes Plc, Chris Shibutani, Umer Raffat, Ashwani Verma, Sandra Coombs, Akash Tewari, Jason Gerberry, Alkermes Plc, Chris Shibutani, Umer Raffat, Ashwani Verma, And then my second question is, I guess, a little broader than just LiBALVI, but for all three products, like this one along with Vivitone Aristata, your gross to net in the first quarter was actually lower, I think, than what you're expecting for the full year, which just seems a little unusual. I think we always think of the first quarter having a little bit more in terms of gross to net. So maybe if you can just sort of comment on that.

Commentary.

Then one other one that I could say just in terms of you mentioned.

I mean, this quarter, you mentioned $18 million to $20 million.

Expectation for next quarter I'm, just trying to get a sense of how youre thinking maybe about the rest of the year. I know you said you wanted to get that.

Hi, Steve.

Steve even just.

Flat from the second quarter Youre already right near the very top of your range. So I'm just curious kind of years, maybe just some conservatism early in the launch is there anything on the payer side are you expecting or otherwise.

Otherwise in the second half that may sort of.

Let's keep the keep the number of flatter down even to.

To not sort of gets you over the top end of your range that you have right now and then my second question is I guess, a little broader than just like they will be left for all three products.

Yes.

Antonio startup.

Gross to net in the first quarter.

It's actually lower I think than what you're expecting for the <unk>.

Full year, which just seems a little unusual I think we always think of the first quarter would be a little bit more in terms of gross to net so maybe you can just sort of comment on the how does it seem like it's a little bit more volatile early in the launch but for the other twos with dynamics, maybe are impacting the first quarter to keep that lower.

Vimal Devan: Obviously, LiBALVI is a little bit more volatile early in the launch, but for the other two, what dynamics maybe are impacting the first quarter to keep that lower than what you're expecting for the full year on gross to net. Thank you. Okay, Vamal. Good morning, and thank you for the questions.

What you're expecting for the full year on gross to net.

Iain Brown: So I'll take a stab with regard to the LaBalvi net sales. You know, we're clearly encouraged by the net sales growth in the first quarter. I mean, this does still represent the first full quarter post launch.

Okay. Good morning, and thank you for the questions. So I'll take a stab with go to the laboratory net sales.

We are clearly encouraged by the net sales growth in the first quarter. I mean this does still represented the first full quarter post launch.

We have a big Q2 ahead of us and it's really going to set the trajectory for the remainder of the year.

We did talk today about trending towards the higher end of the current guidance range for the year that 55% to 75 that we have out there, but let's see how Q2 goes on I think we'll be in a better position to update guidance as necessary on the July earnings call.

Iain Brown: We have a big Q2 ahead of us, and it's really going to set the trajectory for the remainder of the year. We did talk today about trending towards the higher end of the current guidance range for the year, that 55 to 75 that we had out there. But you know, let's see how Q2 goes. And I think we'll be in a better position to update guidance as necessary on the July earnings call. And then, with regard to gross to net, I think every every product's different. We saw favorability across the portfolio. Vivitrol would really be a Medicaid story.

Iain Brown: So we saw favorability on Medicaid utilization, and that was really driven by the COVID pandemic. During the course of 2020 and 2021, we'd anticipated an increase in Medicaid utilization. We have seen that, but not to the extent that we'd originally been booking it for.

And then with regard to gross to nets I think every every product is different.

We saw favorability across the portfolio.

<unk> would be really a Medicaid story.

So we saw favorability on Medicaid utilization and that was really driven by the Covid pandemic.

During the course of 2020 in 2021, we anticipated an increase in Medicaid utilization.

And we have seen that.

But not to the extent that we had originally been booking too so as the states provide the invoices to us we're able to sort of lock in those earlier quarters and were able to release some of the favorability and we said that was about a $4 million impact in the first quarter.

Iain Brown: So as the states provide the invoices to us, we're able to sort of lock in those earlier quarters, and we're able to release some of the favorability. And we said that was about a $4 million impact in the first quarter. Aristotle was pretty much in line with expectations at this point in the year; it was very consistent with what we saw over the course of 2021.

ARISTOTLE was pretty much in line with expectations at this point in the year. It was very consistent with what we saw over the course of <unk>.

2021, so I don't think theres much to talk about there.

Iain Brown: So I don't think there's much to talk about there. And then, from a Lobolvi perspective, we did come in at 27% in the quarter. We saw less restrictive payer access across the commercial business as compared to what we've modelled. And while these are initial payer decisions, it is encouraging. The primary impact of this from a gross to net perspective was lower costs associated with our co-payee assistance program in the quarter.

And then from a laboratory perspective, we did come in at 27% in the quarter.

We saw less restrictive payer access across the commercial business as compared to what we'd modeled.

And while these are initial payer decisions it is encouraging.

Primary of impact of this from a gross to net perspective was lower cost associated with our co pay assistance program in the quarter.

Iain Brown: And I think as Todd mentioned going forward, that gross to net picture is going to be somewhat dynamic for the next 12 months and very much dependent on the payer mix. So again, as things evolve, if we feel like we need to update guidance, you know, we would look to potentially do that on the Q2 earnings call. Okay, thank you.

And I think as Todd mentioned going forward that gross to net picture is going to be somewhat dynamic for the next 12 months and very much dependent on the payer mix.

So again as things evolve.

If we feel like we need to update guidance.

We would look to potentially do that so on the Q2 earnings call.

Okay. Thank you.

Brandon Fowlkes: Our next question comes from the line of Brandon Fowlkes with Cantor Fitzgerald. Hi, thanks for taking my questions and congratulations on the quarter. Not to sort of go over something again, but I just want to ask a bit more pointedly on the live all these close to net, hearing what you said and understanding could be lumpy, given that you reiterated that guidance for 40% for the year on GhostNet. Maybe, how do we think about gross net exiting the year? I mean, could this be above 40%? Is it 40% guidance? Is that just still conservative and kind of echoing what you've just said there that, you know, you may revisit it?

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

Hi, Thanks for taking my questions and congratulations on the quarter.

Thank you Steve Davis on can you gain but I just want to also put more points.

On the liability gross to net.

Im hearing what you said and I understand it could be lumpy add given that you reiterated that guidance for 40%.

For the year on gross nits.

Maybe how do we think about growth exiting the year I mean could this be above 40% does it put it.

And guidance is that just still conservative and kind of echoing what you've just said David you may revisit that.

Iain Brown: Just, you know, how do we think about the scenario of exiting the year? Where do you think you could be on gross net, maybe around 4Q and sort of longer term? Thank you. I think for the full year, we talked about a gross net profit of around 40% when we provided guidance back in the February timeframe. We haven't moved off that today.

Just how do we think about the.

This scenario of exiting the year.

Do you think you could be on <unk> and sort of longer term. Thank you.

I think for the full year, we talked about.

Net gross to net of around 40% when we provided guidance back in the February timeframe, and we haven't moved off that.

Today, but again, it's going to be a dynamic evolution. During the course of the year as we mentioned, it's going to really depend on that payer mix and some of the coverage decisions that come out of the payers.

Iain Brown: But again, it's going to be a dynamic evolution during the course of the year. As we mentioned, it's going to really depend on that payer mix, and some of the coverage decisions that come out of the payers. So we were very happy to see that favorability in Q1. Let's get Q2 under our belt, and then I think we'll have a better sense as to where the full year is going to end up.

So we were very happy to see that favorability in Q1.

Let's get Q2 under our belt and then I think we'll have a better sense as to where the full year is going to end up.

Iain Brown: Fair enough, and one more if I may, just any update on the timing of data presentations on nimbolucan-alpha for the less frequent IV dosing and sub-2 dosing, any updates there? Thank you. Hi Brandon, this is Sandy.

Fair enough and one more if I may add.

Any update on the timing of data presentations on nimbly can hope for the less frequent IV dosing in sub Q dosing any update there. Thank you.

Sandra Coombs: We're still in the process of enrolling those studies and accumulating data. We're looking more toward year end, early 23, for data from that program to be presented, but we'll obviously be getting that data internally in the meantime. Great, thank you very much and congrats on a good quarter.

Hi, Brandon this is sandy.

In the process of enrolling those studies and accumulating data.

Looking more toward year end early 2003, four for data from from that program to be presented and but we'll obviously be getting that data internally.

Okay.

Great. Thank you very much and congrats on the Dakota.

Thank you. Thank you.

Rob: Thank you. Our next question is from the line of Akash Tewari with Jeffreys. Please proceed. Hi, this is Amy on behalf of Akash.

Our next question is from the line of our cash to worry with Jefferies. Please proceed with your questions.

Amy: Thanks so much for taking your question. We just had two. The first one on the Libelby launch early script trajectory looks comparable versus Keplita's even after Keplita's approval for bipolar. Do you think we could continue to see this type of Keplita-like script trajectory going forward? And what could this mean for Libelby peak sales, which the consensus currently has at around 600 million? And then another one on Ox2 if we could. Why do you think Takeda's Ox2 didn't show liver safety signals in healthy volunteers but did in narcolepsy patients? How could you de-risk safety in your trials? And what can we learn from a safety and efficacy perspective from healthy volunteer studies? Thanks so much. Yeah, hi, this is Todd.

Hi, This is Amy Entre kosh. Thanks, so much for taking our question, we just had Q.

The first one on the light bulb launch early script trajectory looks comparable versus <unk>, even after <unk> approval for bipolar do you think we could continue to see this type of kept bladder like script trajectory going forward and what could this mean for <unk> peak sales, which consensus currently has that around $600 million and then.

Another one on oxygen <unk> why do you think Takeda oxygen didn't show liver safety signals in healthy volunteers, but Gabe and narcolepsy patients how could you de risk safety in your trials and what could be learned from the safety and efficacy perspective from healthy volunteer study. Thanks, so much.

Todd Nichols: I'll take the first part of that with the prescription trends. In the first quarter, we achieved approximately 10,600, which was, you know, a meaningful increase from the fourth quarter of last year. Our expectation is that LaBalvie is going to continue to grow. And for that, you know, we have two primary performance indicators, TRXs and then breadth of prescribing. The TRX trends we're seeing are really based upon this broad adoption that we're seeing right now. It's approximately 2600 prescribers for Q1, which is a meaningful number. This is a very big market, as you know.

Yeah.

Yes, Hi, this is Todd I'll take the first part of that with.

With the prescription trends in the first quarter we.

We achieved approximately 10600, which was.

A meaningful increase from the fourth quarter of last year, our expectation is that will evolve as we get to continue to grow.

And this we have two primary performance indicators tier access and then breadth of prescribing.

The Trc trends, we're seeing is really based upon this broad adoption that we're seeing right now it's approximately 2600 prescribers for Q1, which is <unk>, which is a meaningful number this is a very big market.

Todd Nichols: And so the opportunity is very large, and we're encouraged by the initial feedback. What we hear from the community, from HCPs, and from patients is that really the key insight is that there's really a vast comfort level with Olanzapine. And Olanzapine is considered one of the most effective oral agents, and that is driving the value proposition for LaBalvie right now. And, you know, as Rich said, it's a pretty simple story. The efficacy of Olanzapine with weight mitigation properties in schizophrenia patients as well.

As you know until the opportunity is very large and we're encouraged by the initial feedback what we're hearing from the community from Hcp's from patients is that really the key insight is that there is a really a vast comfort level with olanzapine and Olanzapine is considered one of the most effective oral agents and that is driving the <unk>.

Value proposition for laboratory right now and as Rich said, it's a pretty simple story.

Yes.

The efficacy of Olanzapine with weight mitigation properties in schizophrenia patients as well. So our expectation is that prescriber adoption is going to continue to grow and thus the terex trends will follow that.

Unknown Executive: So our expectation is that prescriber adoptions will continue to grow, and thus, TRX trends will follow that. And with respect to 2680, I'll just say that, without commenting too much on another company's product, there is a highly prescribed method of developing new small molecule drugs, and we begin with single escalating doses in healthy volunteers in order to identify any occult toxicities that might present themselves that didn't appear in the animal studies.

And with respect to 2680.

Just say that without commenting too much on other companies' product there is a highly prescribed.

<unk> of developing new small molecule drugs and we begin with single escalating doses in healthy volunteers in order to.

Identifying any occult toxicities that might present themselves that didn't appear in the animal studies, we send those doses until we get to doses that we think are relevant therapeutic concentrations and then moved to multiple ascending dose studies to establish steady state concentrations again looking for toxicity, all along the way and target engagement and then when we've established that profile, we expand the pro.

Unknown Executive: We send those doses until we get to doses that we think are relevant therapeutic concentrations, and then move to multiple ascending dose studies to establish steady state concentrations, again, looking for toxicity along the way and target engagement.

Unknown Executive: And then when we've established that profile, we expand the program into more signal-seeking studies in patients. So it's a routine that all companies follow when you're responsibly developing new drugs, and that's what we'll do with 26A. Great, thank you so much.

Graham into into more signal seeking studies in patients. So it's a routine.

All companies follow when you responsibly developing new drugs and that's what we'll do with 2016.

Great. Thank you so much.

Thank you our.

Umer Raffat: Our next question is from the line of Umer Raffat with Evercore. Please proceed with your question. Hi guys, thanks for taking my questions. I have a few, if I may.

Our next question is from the line of whom are fat with Evercore. Please proceed with your questions.

Umer Raffat: Maybe the first one just briefly on the IL-2. I know the Artistry 6 trial in melanoma has been recruiting for about a year now. And we also know that your Phase 1 trial was...step down from like 350 patients to 240 patients last fall, so that should help the recruiting further. And I guess my question really is, this Opium Label Artistry 6, is it at least halfway enrolled, and do you see a path for monotherapy filing or not? I just thought it would be very interesting.

Hi, guys. Thanks for taking my questions I have.

A few if I may maybe first one just briefly on the IL two.

I know the artistry six trial in melanoma has been recruiting for about a year now and we also know that your phase one trial was.

<unk> stepped down from like 350 patients to 240 to 240 patients last fall so that should help the recruiting further and I guess my question really is this open label artistry six.

Is it at least halfway enrolled and do you see a path for monotherapy filing or not I just thought it would be very interesting to know.

Richard Pops: And on Libelby, maybe a couple of clarifying questions. One, is it fair to assume that the inventory is about $4 million like last quarter? Two, if a large part of the beat today was really just gross-to-net tracking at 27% and not 40%, then, I guess, am I hearing it right that it's tracking ahead and you would have raised the guidance, but since it's tracking ahead primarily in part because of the gross-to-net activity and you kind of want to see the dynamic play out, that's why you're holding off on that because the current momentum plus It's Rich.

And on libel, but maybe a couple of clarifying questions. One is it fair to assume the inventory was about $4 million like last quarter too if.

A large part of the beat today is really just gross to net tracking at 27 and at 40% and then and then I guess am I hearing it right that it's tracking ahead and you would have raised the guidance, but since it's tracking ahead, primarily.

In part because of the gross to net activity and you kind of want to see the dynamic play out that's why you're holding off on that because the current momentum plus the current gross and that implies north of $90 million for liability for the full year.

Yeah.

Iain Brown: I'll start with IL-2, and I'll let Todd and Iain comment on the trajectory of Ebola. Yeah, the Artistry 6 study is a monotherapy efficacy study in mucosal melanoma, which is potentially registration-enabling based on the results. We haven't commented on the enrollment rate, but it is enrolling, and we do believe absolutely that it's the basis for a monotherapy filing. In fact, the reason we're doing Artistry 6 is not that mucosal melanoma in and of itself is an enormous opportunity commercially.

Good morning, Rich rich I'll start with the IL, two and let Todd and any any comment on the trajectory of the ball.

Yes.

Artistry six study as a monotherapy.

Because the study in mucosal melanoma, which is potentially registration, enabling based on them based on the results. We haven't commented on the enrollment rate, but as it is enrolling.

It is enrolling and.

We do believe absolutely that is the basis for a monotherapy filing in fact, the reason we're doing the artistry six is not the mucosal melanoma in and of itself is enormous opportunity commercially. It's a really important unmet medical need but it's also an explicit demonstration of the monotherapy activity of nimble Luca.

Iain Brown: It's a really important unmet medical need, but it's also an explicit demonstration of the monotherapy activity of nematodeleukomyelitis. That study, despite the fact that it's open label, is indeed blinded to us. We will not be looking at data along the way in order to preserve its regulatory status.

That steady despite the fact, it's open label is indeed blinded to us. So we will not be looking at data along the way in order to preserve its regulatory status.

Iain Brown: And then, Umer, I'll take a crack at the Lybali questions. So from an inventory perspective, I mean, the Q1 results really were not driven by inventory. Any initial launch stocking that we had in the channel at the end of the year was burned off and replaced.

And then.

I'll take a crack at the liability question. So from an inventory perspective, I mean, the Q1 results really were not driven by inventory.

Any initial launch stocking that we had in the channel at the end of the year was burnt off and replaced and now inventory really is tracking in line with demand and we would expect that to continue as we go through the year. So Q1 was really a demand story not an inventory story.

Iain Brown: And now inventory really is tracking in line with demand, and we would expect that to continue as we go through the year. So Q1 is really a demand story, not an inventory story. On the gross to net, as you mentioned, 27% in Q1. If we'd had a gross to net of 40%, you know, based on gross sales of around $19 million, that would have been a 2.6% favorable impact on the quarter.

On the gross to nets as you mentioned.

27% in Q1.

If we'd had a gross to net of 40% based on gross sales of around $19 million that would be a two 6% favorable impact on the quarter. So some of the favorability in the quarter was driven by gross to net but the other portion of the favorability is really driven by a higher demand.

Iain Brown: So some of the favorability in the quarter is driven by gross to net, but the other portion of the favorability is really driven by higher demand. And then, just from a full year perspective, you know, we're obviously pleased with the way Q1's going. It is the first quarter of the post-season.

And then just from a full year perspective, we're obviously pleased with the way Q1's going it is the first quarter of.

Iain Brown: Launch, so it's still early. There's going to be a lot of dynamics around the growth tonight as we go through the remainder of the year, so we just felt it was very early. We're encouraged by what we're seeing, but we feel like with another quarter under our belt, the Q2 earnings call, we may be able to make any changes to guidance that we deem appropriate at that time. Our next questions come from the line of Corey Kazimoff with J.P. Morgan. Hey, good morning, guys. I have two questions from me. First on Lebalvi.

Post.

Launch so it's still early there is going to be a lot of dynamic.

Dynamics around the gross to net as we go through the remainder of the year. So we just felt it was very early we are encouraged by what we're seeing.

But we feel like with another quarter under our belt, the Q2 earnings call.

May be able to make any changes to guidance that we deem appropriate at that time.

Thank you.

Our next question comes from the line of Cory <unk> with Jpmorgan. Please proceed with your questions.

Corey Kazimoff: So based on feedback from the field, how do docs think about Lebalvi-associated weight gain versus other non-olanzapine agents? Is this, you know, an impediment at all or even a key point of discussion with prescribers? Because it doesn't seem to be having much of an impact, you know, in terms of uptake. And then, on the Nemba-Lukin side, understanding the differences between Nemba and BEMPEG.

Hey, good morning, guys two questions for me.

First on the ballsy so based on feedback from the field, how do you docs think about the ball these bobby associated weight gain versus other non olanzapine agent to this.

An impediment at all or even a key point of discussion with prescribers, who doesn't seem to be having much of an impact.

In terms of uptake and then second question on the number look inside understanding the differences between <unk> peg.

Richard Pops: I'm just curious if you still see any sort of impact on the value proposition of Nemba based on what happened and, maybe more importantly, has this situation impacted the level of outside interest in the asset in any way, or is it too soon to say on that front? Thanks, guys. Yeah, I'll take the Labavi question as well.

I'm just curious if you still see any sort of impact to that so the value proposition of number based on what happened and maybe more importantly.

This situation impacted the level of outside interest in the asset in any way or is that too soon to say on that front. Thanks guys.

Yes, I'll take the <unk> question as well, what we're here and we're staying really close.

Todd Nichols: What we're hearing, we're staying really close to the market, to our research, and also to our sales organization, too, and what's happening with ATPs, early adopters, key opinion leaders, and so forth. And what we're learning is that awareness levels are building, which is helping to drive adoption, but really what's driving adoption is that there is a positive perception for Libavi at this point. In general, the feedback that we're hearing is that Libavi is delivering on expectations in terms of efficacy and weight mitigation as well, so we think that's really encouraging. Yeah, Corey. It's Rich.

To the market level to our research and also.

Our sales organization to of whats happening with Hep's early adopters key opinion leaders and so forth.

What we're learning is that awareness levels are building.

Which is helping to drive adoption, but we are really what's driving adoption is there is a positive perception for laboratory at this point in general the feedback that we're hearing is that <unk> is delivering against the expectations in terms of efficacy and weight mitigation as well. So we think thats really encouraging.

Richard Pops: Good morning. I'm just feeling what Todd was saying. I've been personally really interested in hearing that qualitative feedback from the marketplace. What's the weight impression?

Yes, Corey it's Richard.

Just building on what Todd was saying, Okay I've been personally really interested in hearing that qualitative feedback from the marketplace.

Richard Pops: And what's so gratifying is that physicians are seeing in the real world the weight impact of Libolvi, or the differential weight impact of Libolvi versus what they've experienced with Olanzapine. And that experience in the market is vast, and people are using Olanzapine routinely. Particularly the doctors who are prescribing Libolvi have great familiarity with the profile of Olanzapine, so to us, that was the really important qualitative feedback we wanted to hear early on in launch. Do you see a difference?

The wheat impression and whats. So gratifying is that physicians are seeing in the real world the weight impact of or the differential weight impact of LIBOR versus with their experience with olanzapine and experienced in the market is vast and people are using olanzapine routinely.

In particular, the doctors from prescribing evolving have great familiarity with the profile of Olanzapine.

To us that was the real important qualitative feedback we wanted to really launch do you see a difference in that answer has been coming through very clearly to the point, where one of the conversation that was more about efficacy the efficacy they are able to bring back to their patients know that they can use olanzapine in this more maintenance phase.

Richard Pops: And that answer has been coming through very clearly to the point where a lot of the conversation now is more about efficacy. The efficacy they're able to bring back to their patients now that they can use Olanzapine in this maintenance phase. Nemvalucan, the reason I spent a bit of time on the prepared remarks on that was to really reinforce the point that we've been making for years now, which is that the correlation between Bempeg and Nemvalucan has always been highly limited. They're both, quote unquote, IL-2 variants, but they are very, very different molecules. Bempeg being a pegylated form of IL-2, whereas Nemvalucan is a new polypeptide that's focused really on that intermediate affinity receptor interaction.

Nevertheless, the reason I spent a bit of time on the prepared remarks on that was to really reinforce the point that we've been making for years now which is the correlation between Ben Peg a number Luca has always been highly limited theyre, both quote unquote IL two variance, but they were very very different molecules.

<unk> being a pegylated form of IL, two whereas nimble Luca as a new polypeptide that's focused really on the intermediate affinity receptor interaction and you see that translate into the way the drugs behave in patients in our clinical data has always been differentiated from theirs and as I said in my prepared remarks, the intellectual foundation, the scientific foundation for nimble Luca.

Richard Pops: And you see that translate into the way the drugs behave in patients, and our clinical data has always been differentiated. And as I said in my prepared remarks, the intellectual foundation, the scientific foundation for Nemvalucan, is high-dose IL-2, which was not the hypothesis that BEMPEG was testing. So the value proposition for our molecule is unchanged. It's actually nice to have the air cleared a little bit, so people are forced to look at differences between the programs.

It's high dose IL, two which was not the hypo hypothesis had been pegged with testing.

So the value proposition for our molecule is unchanged, it's actually nice to have the air clears a little bit. So people are forced to look at the differences between the programs and I don't think its impacted the outside potential interest in the product.

Richard Pops: And I don't think it's impacted the outside potential interest in the process. Okay, it's helpful. Thank you guys. Our next question comes from the line of Paul Matteis with Stiefel. Please proceed with your question. Great, thanks so much.

Okay. It's helpful. Thank you guys.

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

Paul Matteis: I wanted to ask one more follow-up question on Baldy and uptake and physician perspective, perspective, perspective, excuse me, and expectations. One of the things that I think is interesting is that half of the use is coming from Zyprexa switches. Do you know how long these patients have been on Zyprexa? Are these patients who've already gained a lot of weight? And I guess for physicians in that subset, how do you manage expectations with this drug that, you know, the patient still might gain weight, and they definitely won't lose weight?

Great. Thanks, so much I wanted to ask one more follow up on the ball and uptake and physician perspective perspective perspective, excuse me and expectations. One of the things that I think is interesting is that half of the use is coming from Zyprexa switches do you know how long. These patients had been on Zyprexa. These patients who've already gained a lot of weight and I guess to.

And that subset how do you manage expectations with this drug that you know the patients still might gain weight. They definitely won't lose weight I'm I'm really wondering if you think that that durably is going to be a big pocket of the market Zyprexa switches, where the ball is prescribed and then just one question on <unk> I'm wondering if you can give any color on kind of what youre seeing now that.

Paul Matteis: I'm really wondering if that Durably is going to be a big pocket of the market, these Zyprexa switches where the Baldy is prescribed. And then just one question on Vivitrol. I'm wondering if you could give me some color on kind of what you're seeing now that the impact of COVID may have sort of blamed mostly on the business as it relates to uptake in the opioid segment versus the alcohol segment. Any color there would be great.

The impact of Covid may have sort of wane, mostly on the business as it relates to uptake in the opioid segment versus the alcohol segment.

Any color there would be great. Thank you.

Todd Nichols: Thank you. Yeah, absolutely. Let me start first with LeBalvy, you know, the perceptions from ACPs that are adopting are encouraging right now. We did expect that the significant opportunity at the beginning of the launch would be with olanzapine switches as well. And that's a key part of how we've been thinking about the market. Just for context, I think it's important to remember there are actually 8 million prescriptions written for olanzapine in the market overall on a 12-month basis.

Yes, absolutely let me I'll start first with <unk>.

<unk>.

The perceptions from Hcp's that are adopting is is encouraging right now.

We did expect that.

The significant opportunity at the beginning of the launch would be with Olanzapine switches as well and.

That's a that's a key part of how we've been thinking about the market.

Just for context, I think it's important to remember Theres Theres actually 8 million prescriptions written for Olanzapine.

And the market overall in a 12 month basis. So it's a significant contributor overall in the oral category and thats across.

Todd Nichols: So it's a significant contributor overall in the oral category, and that's across schizophrenia and Bipolar 1 Disorder as well, and what we're hearing, what we believe is driving this, is that physicians are hearing positive responses back from their patients. They're hearing things such as reductions in hostility or impulse behavior. They're hearing improved sleep, and one of the key indicators that we're watching closely is that they're actually getting fewer callbacks.

Schizophrenia, and bipolar one disorder as well too and what we're hearing what we believe that is driving this as physicians are hearing positive responses back from their patients.

They are hearing things such as reductions in hostility or our impulse behavior, they're hearing improved sleep and then one of the key indicators that we're watching closely that theyre actually getting fewer callbacks. So that supports the hypothesis that there is a positive driver here as well.

Todd Nichols: So that supports the hypothesis that there's a positive driver here as well. One of the areas, obviously, that we're watching very closely is the experience with weight mitigation. And thus far, as Iain said, it's only the first full quarter post-launch.

One of the areas, obviously to what we're watching very closely is the experience with weight mitigation and thus far as Ian said, it's only the first full quarter post launch thus far we're hearing encouraging results with that so we.

Todd Nichols: Thus far, we're hearing encouraging results with that. So we believe that over time, as more experience is gained through physicians, as more patients get access to the medicine, as well, that positive perception will actually continue to grow. In terms of Vivitrol, we are encouraged by the results that we achieved in Q1. As you know, Vivitrol was impacted, and the entire substance use disorder market was impacted by the pandemic. We saw this more so for the opioid indication than for the alcohol indication as well.

We believe that over time that that as more experience.

<unk> gained through physicians as more patients get access to the medicine as well too we believe that that positive perception will actually continue to grow.

In terms of <unk>.

We are encouraged by the results that we achieved in Q1.

<unk> was impacted in the entire substance use disorder market was impacted by the pandemic we saw it more so for the opioid.

Indication.

Then the alcohol indication as well and in general the way to think about this is within the opioid market. It's relatively flat right now over the year over year over the quarter for alcohol dependence. We continue to see growth in fact, Vivek trial is outpacing the growth of the alcohol dependence market. So we're encouraged by that.

Todd Nichols: In general, the way to think about this is within the opioid market, it's relatively flat right now year over year and quarter over quarter. For alcohol dependence, we continue to see growth. In fact, Vivitrol is outpacing the growth of the alcohol dependence market, so we're encouraged by that. It's contributing about 60% of their overall business, and we're seeing recovery. The reason why is that we're seeing actual recovery more so in the outpatient clinic side, which represents a significant part of the AD opportunity for Vivitrol. The OD opportunity has been more specifically in the control settings of care.

It's contributing about 60% of the overall business that we are seeing recovery. The reason why we're seeing actually a recovery more so in the outpatient clinic side, which represents a significant part of the of the <unk> opportunity for visit troll. The Ot opportunity has it has been more specifically in the clinic and the controlled settings of care.

Todd Nichols: We started to see things improve towards the end of Q1, but we're going to be watching that very closely. But we believe that Vivitrol has a significant growth opportunity within alcohol dependence for the remainder of this year. Thank you. Our next question is coming from the line of Mark Goodman with SCB Larynx. Yes, good morning.

<unk> to see things improve towards the end of Q1.

But we're going to be watching that very closely but we believe that <unk> has a significant growth opportunity with an alcohol dependence.

For the remainder of this year.

Thank you.

Our next question is from the coming from the line of Marc Goodman with SBB Leerink. Please proceed with your questions.

Mark Goodman: A couple of questions. First of all, what's the normal timeline for arbitration? So we have a sense of when we can expect something there.

Yes. Good morning couple of questions first of all what's the normal timeline for arbitration.

Mark Goodman: Second, Rich, I was just curious, with NeckTar's problem, has this increased the talks kind of behind the scenes, does it increase the interest level in your product or not, just with respect to, you know, the discussions that you've been having over the past year or so with respect to partnership stuff. And then third, just on the backup work that you're doing on NEMBA, you know, the sub queue, the dosing changes, and things like that. Just curious about what, you know, where that is in the progress.

So we have a sense of when we can expect something there.

Second rich I was just curious.

Nektar is problem has this increase the talks kind of behind the scenes as it increased the interest level in your product.

We're not just with respect to the discussions that you've been having over the past year or so with.

With partnerships and stuff and then third just on the backup work that youre doing on them, but the sub Q.

The dosing changes and things just curious where that is in the progress. Thanks.

Mark Goodman: Thanks. Morning Mark, I laughed when you said a normal timeline for arbitration; there's a contractually provided window for arbitration, but we've seen in previous examples where it can be effectively irrelevant. We don't think that anything is going to materialize before six months, but it really is up to the arbitration panel for how long it takes. So I wish I had more specificity on that for you. The Nectar failure has actually...

And Mark it's rich.

I laughed when he said a normal timeline for arbitration that theres, a contractually provided window for arbitration.

But we've seen in previous examples.

It can be effectively irrelevant, we don't think that anything is going to materialize before six months, but it really is up to the arbitration panel for how long.

A long it takes.

So.

I wish I had more specificity on that for you.

Yes.

The Nektar failure has actually.

Richard Pops: Thank you for giving us an opportunity. It's not like we've not been talking about Mamba Lucan with potential strategic solvency. That's almost an ongoing dialogue as people watch the data emerge. What it's allowed us to do is have the kind of conversation we're having today, which is to focus teams back on the differentiating features, which you would think that people had already highly identified, but no. It's amazing how many companies, as well as investors, had lumped all the IL2s into one basket and said, well, if one works, then they're all going to be good, and if one's bad, they're all going to be poor.

Given us an opportunity.

Like we've we've not been talking about nimble lucan with potential strategic so long, we that's almost an ongoing dialogue as people watched the data emerge what has allowed us to do is have the kind of conversations we're having today, which is to focus teams back on the differentiating features which you would think that people who had already.

Highly identified but no it's amazing how many companies as well as investors had lumped all the IL two's into one into one basket and said well if one works and they're all going to be good and one's bad they're all going to be poor now, it's forcing a real distinction and looking at the different who remains what products remain where are they in development.

Richard Pops: Now it's forcing a real distinction in looking at the different who remains, what products remain, where they are in development, and what are their particular features. And one of the real virtues of Mamba Lucan is not just its molecular design and its pharmacology, but the fact that we've been in the clinic long enough to have durability data. You can actually see one of the hallmark features of IL2, which is durability for those who respond, and that those responses can be long-lived.

And what are their particular features and one of the real virtues of nimble Luke and does not just only as molecular design. This pharmacology is effectively been in the clinic long enough, where we have durability data you can actually see one of the hallmark features of IL, two which is durability for those who respond that those responses can be long lived and that's exactly what we're seeing through our program. That's why we can.

Richard Pops: And that's exactly what we're seeing through our program. That's why we continue to present data even from Artistry 1. What you call the backups, I really don't think of them as backup.

<unk> can present data even from artistry one.

The what you call the backups I really don't think of it as backup I think that alternative dosing regimens will end up being fundamental foundational for the broader clinical use of the drug as you mentioned, we're testing both sub Q once weekly.

Richard Pops: I think that the alternative dosing regimens will end up being fundamental, foundational for the broader clinical use of the drug. As you mentioned, we're testing both sub-Q once weekly, and we're generating responses sub-Q once weekly. The question on the sub-Q once weekly is, do we mimic the same durability that we see with the IV? And on the IV, we have a less frequent IV regimen that we're testing now in a Bayesian design because we're quite confident that daily IV times five, the original proleucin regimen, is not necessary in order to drive the right pharmacodynamic response.

And we're generating responses sub Q once weekly the question on the sub Q. Once weekly is do we mimic the same durability that we see with the IV.

And on the IV, we have a less frequent IV regimen that we're testing now in Bayesian design, because we are quite confident that daily IV times five the original Proleukin regimen is not necessary in order to drive the right. Pharmacodynamic response. So we're testing a range of less frequent dosing soon our hunches that is that one or more.

Richard Pops: So we're testing a range of less frequent doses, and our hunch is that one or more of those is going to prove to be the ultimate, most commonly used commercial dose. And we're enrolling in those studies, and we'll, as Sandra said, expect maturation of some of that data toward the end of this year or early next year. Thanks. Thank you. Our next question is from the line of Jason Gerberry with Bank of America. Hey guys, thanks for taking my questions.

Those are going to prove to be the ultimate.

Most commonly used commercial dose and we're enrolling in those studies and we'll as Sandy said, we'll expect maturation of some of that data towards the end of this year early next year.

Yes.

Okay.

Thank you. Our next question is from the line of Jason <unk> with Bank of America. Please proceed with your questions.

Jason Gerberry: So just two follow-ups on one of Mark's questions. So appreciate the commentary on arbitration and that everything is sort of case specific, but curious if you have a sense when you might get through some sort of fact discovery, because that would seem like an important juncture to reach some sort of resolution. So not sure if the J&J GenMab arbitration provides you with some sort of analog to sort of map this out. And then, as a follow-up to Paul's question, just thinking about olanzapine adherence. Typically, when do patients drop off due to weight gain?

Hey, guys. Thanks for taking my questions.

So just two follow ups first on one of Mark's questions. So appreciate the commentary on arbitration and that everything sort of case specific but.

Curious if you have a sense when you might get through some sort of fact discovery because that would seem like an important juncture to reach some sort of resolution. So not sure if like the J&J Genmab arbitration provides you with some sort of analog to sort of map. This out and then as a follow up to Paul's question, just thinking about olanzapine.

Jason Gerberry: That would seem like an important juncture to get a sense whether Lobalvi has a differentiated profile in terms of adherence and that weight attenuation is sort of responding to or I guess translating to better drug adherence. Thanks. To answer Jason's question, on the arbitration, it'll remain fairly confidential, probably entirely confidential from this point forward. Although, as I mentioned earlier, since the time of receipt of those notifications in November, we have been compiling a massive amount of legal evidence on the technology transfer between the two companies.

<unk> typically when do patients drop off due to the weight gain.

That would seem like an important juncture to get a sense, whether <unk> has a differentiated profile in terms of adherence and that weight attenuation sort of resonating or I guess translating to better drug adherence. Thanks.

More adjacent switch on the arbitration.

It'll it remained fairly confidential im probably entirely confidential from this point forward.

Although.

As I mentioned earlier.

At the time of receipt of those certifications in November we have been compiling a massive amount of legal evidence on the <unk>.

Technology transfer between the two companies.

Jason Gerberry: So we will brief that and the arbitration will, you know, you'll submit written briefs and I'm sure J&J will submit some type of written brief as well and then it's in the arbitrator's hands and we'll go through that process and that will remain confidential until such time as not.

We will brief that arbitration will youll submit written briefs and I'm sure J&J will submit some type of written brief as well and then it's in the arbitrators hands and we will go through that process and that will remain confidential until such time as it is not.

Richard Pops: Then... [inaudible] Let me just say one thing that's responsive both to Paul's question and your question, and I'll turn it over to Todd. It's important to just, the construct you should have in your mind is not that there's a stable market here of people on Olanzapine or any other drug and they're switching to Libolvi because we're now launching it and presenting it to their doctors. The form of Livaldi, with the weight profile that we have, allows physicians to try this drug and see in their own hands how it compares to their experience with Lan And that's why we're getting such positive feedback. So, Todd, I'll let you.

The.

Let me just say one thing this responsive both to Paul's question to your question, then I'll turn it over to Todd.

It's important to just the contracts you should have in your mind is not that there is there is a stable market here as people on olanzapine or any other drug and they're switching to leave all the because we're now launching it in presenting to their doctors that to the extent that happens at the smaller part of the market what's happening as Todd mentioned this is a churning market. There are switches occurring every every month because.

Theres so much unsatisfied need in the marketplace. It's in that churn that the profile of your drug becomes becomes so important.

So capturing the efficacy of Olanzapine.

In the form of evolving with with the weight profile that we have allows physicians to try this drug and see it in their own hands, how it compares to their experience with the landscape and Thats where were getting such positive feedback so titled It's yeah, absolutely I'll just build on that so the way to think about this too is.

Richard Pops: Yeah, absolutely. I'll just build on that. So the way to think about this too is that schizophrenia patients and bipolar patients make treatment changes on average of about five to seven times over a period of time. So the churn is relatively large. So it's a very dynamic market. And that's really where Livalvi is going to live.

Schizophrenia patients in bipolar patients.

Make treatment changes on average of about 5% to seven times.

Over a period of time. So the churn is is relatively large so it's a very dynamic market and that's really where the ball is going to live we stay really close to the olanzapine dynamic and the discontinuation of our research has been consistent over time about a third of patients across schizophrenia and bipolar on Olanzapine disc.

Todd Nichols: We stay really close to the olanzapine dynamic and the discontinuations. Our research has been consistent over time. About a third of patients across schizophrenia and bipolar on olanzapine discontinue due to weight gain.

Todd Nichols: And that typically happens within the first four to eight weeks. So we see that pretty consistent through all of our research, so that's something we're watching very closely, and it's supportive of how we're thinking about the dynamic part of the market and where LaBalvie will play. Great, thank you guys. Thank you. We have reached the end of time a lot for today's question and answer session. I'll now turn the call over to Sandy Coombs for closing remarks.

Continue due to weight gain and that typically happens within the first four to eight weeks. So we see that pretty consistent through all of our research. So that's something we're watching very closely and it's it's supportive of how we're thinking about the dynamic part of the market and where the ball they will play.

Got it great. Thank you guys.

Thank you we have reached the end of time allotted for todays question and answer session. I will now turn the call over to Sandy Coombs for closing remarks.

Todd Nichols: Great, thanks Rob. Thank you everyone for joining us on the call this morning. Please don't hesitate to reach out to us at the company if you have any follow-up questions. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Great. Thanks, Rob Thanks, everyone for joining us on the call. This morning, please don't hesitate to reach out just at the company. If you have any follow up questions. Thank you.

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