Q4 2023 Alkermes PLC Earnings Call
Yes.
Rob: Greetings. Welcome to the Alkermes fourth quarter 2023 financial results conference call. My name is Rob, and I'll be your operator for today's call. All participant lines will be placed on mute to prevent background noise.
Speaker Change: Greetings and welcome to the Alkermes fourth quarter 2023 financial results Conference call.
Robin: My name is Robin I'll be your operator for today's call.
Speaker Change: All participant lines will be placed on mute to prevent background noise.
Speaker Change: If you should require operator assistance during the call. Please press star zero on your telephone keypad.
Rob: If you should require operator assistance during the call, please press star zero on your telephone keypad. Please note, this conference is being recorded. I'll now turn the conference over to Sandra Coombs, Senior Vice President of Investor Relations and Corporate Affairs. Sandy, you may begin.
Speaker Change: Please note this conference is being recorded.
Speaker Change: I'll now turn the conference over to Sandra Coombs, Senior Vice President of Investor Relations and corporate Affairs.
Sandra Coombs: Sandy you may begin.
Sandra Coombs: Thank you, Rob. Good morning. This is the Alkermes Plc conference call to discuss our financial results and business update for the quarter and year ended December 31, 2023. With me today are Richard Pops, our CEO; Todd Nichols, our Chief Commercial Officer; and Blair Jackson, our Chief Operating Officer. We'll be reviewing our financial results and expectations while our Chief Financial Officer Ian Brown is on medical leave.
Sandra Coombs: Thank you Rob Good morning, welcome to the Alkermes plc conference call to discuss our financial results and business update for the quarter and year ended December 31, 2023 with me today are Richard Pops, Our CEO, Todd Nichols, our Chief commercial Officer, and Blair Jackson, Our Chief operating officer, who will be reviewing our financial results and expectations.
Sandra Coombs: Our Chief Financial Officer, Ian Brown is on medical leave during today's call. We will be referencing slides. These slides along with our press release related financial tables, and reconciliation of the GAAP to non-GAAP financial measures that we'll discuss today are available on the investors section of Alkermes Dot Com, we believe the non-GAAP financial results in conjunction.
Sandra Coombs: During today's call, we will be referencing slides. These slides, along with our press release, related financial tables, and reconciliations of the GAAP to non-GAAP financial measures that we'll discuss today, are available in the investor section of Alkermes.com. We believe the non-GAAP financial results, in conjunction with the GAAP results, are useful in understanding the ongoing economics of our business. Our discussions during this conference call will include forward-looking statements. However, actual results could differ materially from these forward-looking statements.
The GAAP results are useful in understanding the ongoing economics of our business.
Sandra Coombs: 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 implied.
Sandra Coombs: Please see slides two and three of the accompanying presentation, our press release issued this morning, and our most recent annual and quarterly reports filed with the SEC for important risk factors that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements. We undertake no obligation to update or revise the information provided in this call or in the accompanying presentation as a result of new information or future results or developments. After our prepared remarks, we'll open the call for Q&A, and now I'll turn the call over to Richard for some opening remarks. That's great! Thank you, Sandy, and good morning, everyone.
Sandra Coombs: The forward looking statements, we undertake no obligation to update or revise the information provided on this call or in the accompanying presentation. As a result of new information or future results or developments. After our prepared remarks, we'll open the call for Q&A and now I'll turn the call over to Richard for some opening remarks.
Richard F. Pops: Great. Thank you Sandy and good morning, everyone.
Richard F. Pops: So 2023 was an eventful and productive year at Alkermes, one in which we repositioned the company and established a strong foundation for growth. We had an ambitious agenda last year, and we successfully achieved the major goals we set for ourselves. We entered 2023 into arbitration with J&J and prevailed in that matter decisively, which reinstated significant cash flows to us, strengthened our balance sheet, and enabled us to raise our financial expectations. We had another pending matter relating to Vivitrol's patent protection, which we also resolved on favorable terms.
Richard F. Pops: So 2023 was an eventful and productive year at alkermes, one in which we repositioned the company and established a strong foundation for growth.
Richard F. Pops: We had an ambitious agenda last year and we successfully achieved the major goals. We set for ourselves. We entered 2023 in arbitration with J&J and prevailed in that matter decisively, which reinstated significant cash flows to us strengthened our balance sheet enabled us to raise our financial expectations, we had another pending matter.
Richard F. Pops: <unk> related to Vitaros patent protection, which we also resolved on favorable terms.
Richard F. Pops: We entered the year with a goal of generating critical decision-making data for our orexin-2 receptor agonist, ALK2680, in a multifaceted Phase I program. We were successful in doing that, generating narcolepsy Type I data to support advancing it to Phase II in NT1. We completed the separation of our oncology business, which is a major milestone for the company, freeing resources and focusing our R&D efforts in neuroscience. We delivered on a significant element of our multi-year initiative to drive operational efficiency by announcing the sale of our Aslan, Ireland, GMP manufacturing facility, and that transaction is expected to close mid-year. We also met our goal of continuing to drive our top-line revenue from proprietary products, including Through these accomplishments, we emerge as a pure play neuroscientist. Today, Alkermes can be characterized by three distinctive attributes.
Richard F. Pops: We entered the year with a goal of generating critical decision, making data for our Orexin two receptor agonist OCA 26, 80 in a multifaceted phase one program. We were successful in doing that generating narcolepsy type one data to support advancing into phase two and in Q1 this year.
Richard F. Pops: We completed the separation of our oncology business to a major milestone for the company freeing resources and focusing our R&D efforts in neuroscience.
Richard F. Pops: We delivered on a significant element of our multi year initiative to drive operational efficiency by announcing the sale of our Athlone, Ireland GMP manufacturing facility and that transaction is expected to close mid year.
Richard F. Pops: And we also met our goal of continuing to drive our topline revenue from proprietary products, including the continued strong launch of the body.
Through these accomplishments, we emerge as a pure play neuroscience company.
Richard F. Pops: Today Alkermes can be characterized by three distinctive attributes first our commercial business with revenues over $1 billion.
Richard F. Pops: First, a commercial business with revenues exceeding a billion dollars, driven by four core products all developed by Alkermes. Second, proven development capabilities with an advancing neuroscience pipeline. And third, an efficient operating structure that positions the business for sustained profitability and significant cash generation. So with that as an introduction, I'll turn the call over to Todd to review the commercial performance. Great. Thank you, Rich. And good morning, everyone.
Richard F. Pops: Driven by four core products all developed by Alkermes.
Richard F. Pops: Second proven development capabilities within advancing neuroscience pipeline and third an efficient operating structure that positions the business for sustained profitability and significant cash generation, so with that as an intro I'll turn the call over to Tom to review the commercial performance.
Tom: Great. Thank you rich and good morning, everyone.
Todd Nichols: I'm pleased to share that we achieved strong year-over-year growth of 18% across our proprietary commercial portfolio in 2023, as we executed our commercial strategy for each of our three proprietary products and continue to demonstrate the operating leverage we are able to capture with our commercial infrastructure. Starting with Livalvi, Livalvi was the fastest growing oral atypical antipsychotic in the fourth quarter and for the full year. We launched Libavi two years ago with a broad, differentiated label that includes both schizophrenia and bipolar 1 disorder. In its second full year of launch, Leibovit generated net sales of $191.9 million. For the fourth quarter, net sales increased 11% sequentially to $56.2 million, driven primarily by demand. Prescriptions grew to approximately 46,700 t-rexes for the fourth quarter, reflecting 11% sequential growth. During the quarter, inventory in the channel increased slightly, reflecting a normalization from lower levels at the end of Q3 and typical seasonal purchasing patterns.
Tom: I'm pleased to share that we achieved strong year over year growth of 18% across our proprietary commercial portfolio in 2023.
Tom: We executed our commercial strategy for each of our three proprietary products and continued to demonstrate the operating leverage we are able to capture with our commercial infrastructure.
Tom: Starting with Lee Bobby Bobby was the fastest growing oral atypical anti psychotic and the fourth quarter and for the full year.
Tom: We launched <unk> two years ago with a broad differentiated label that includes both schizophrenia and bipolar one disorder.
Tom: In its second full year of launch Lee ball will be generated net sales of 191 $9 million for the fourth quarter net sales increased 11% sequentially to $56 $2 million driven primarily by demand prescriptions grew to approximately 46700 <unk>.
Tom: <unk> for the fourth quarter, reflecting an 11% sequential growth.
Tom: During the quarter inventory in the channel increased slightly reflecting a normalization from lower levels at the end of Q3 and typical seasonal purchasing patterns.
Todd Nichols: Gross to net adjustments widen to approximately 29% due to higher Medicaid utilization and certain one-time adjustments related to prior periods. In disease areas as complex and competitive as Schizophrenia and Bipolar I Disorder, new medicines need to establish their place in the treatment paradigm through healthcare provider experience. We recently shared data from a long-term, Phase III, open-label extension study in which patients with schizophrenia or Bipolar I disorder treated it with Lobalvi for up to four years to demonstrate stability in their symptoms, minimal changes in their body weight, lipid, and glycemic parameters, and a safety profile that was consistent with what we had seen in previous studies.
Most to net adjustments widened to approximately 29% due to higher Medicaid utilization and certain one time adjustments related to prior periods.
Tom: And disease areas is a complex and competitive as schizophrenia and bipolar one disorder, new medicines need to establish their place in the treatment paradigm through health care provider experience.
Tom: We recently shared data from a long term phase III open label extension study in which patients with schizophrenia or bipolar one disorder treated with laboratory for up to four years demonstrated stability in their symptoms mid.
Tom: Minimal changes in their body weight lipid and glycemic parameters and a safety profile that was consistent with what we had seen in previous studies. The data highlight the potential utility of LIBOR is a foundational maintenance treatment option for people living with schizophrenia or bipolar one disorder, and we look forward to sharing more data from.
Todd Nichols: The data highlight the potential utility of Libav as a foundational maintenance treatment option for people living with Schizophrenia or Bipolar I Disorder, and we look forward to sharing more data from the study at upcoming medical meetings. Looking ahead, in 2024, we expect Leibovit net sales in the range of $275 to $295 million. For the first quarter of 2024, we expect net sales growth to be fairly flat in Q4 due to typical seasonal patterns, with more robust growth resuming in Q2. Turning to the Aristotle product family, in 2023, Aristotle net sales grew 8% year-over-year to $327.7 million. Aristotle net sales in the fourth quarter grew 5% year-over-year to $83.4 million, driven primarily by demand growth of approximately 5% of the months of therapy.
Tom: The study at upcoming medical meetings.
Tom: Looking ahead in 2024, we expect <unk> net sales in the range of $275 million to $295 million for the first quarter of 2024, we expect net sales growth to be fairly flat to Q4 due to typical seasonal patterns with more robust growth resuming in Q2.
Tom: Turning to the air starter product family in 2023, <unk> and net sales grew 8% year over year to $327 $7 million Aerostar to net sales in the fourth quarter grew 5% year over year to $83 $4 million driven primarily by demand growth.
Of approximately 5% of the months of therapy basis for.
Todd Nichols: For 2024, we expect Aristotle net sales in the range of $340 to $360 million as we continue to emphasize Aristotle's differentiated value proposition, including its once-every-two-month dosing option and Aristide Initio initiation regimen, both of which are supported by clinical data from our Alpine study. Moving to Vivitrol. In 2023, Vivitrol net sales grew 6% year every year to $400.4 million, driven primarily by unit growth. However, Vivitrol net sales in the fourth quarter were flat year-over-year at $102.4 million.
Tom: For 2024, we expect air start of net sales in the range of $340 million to $360 million as we continue to emphasize aerostat as differentiated value proposition.
Tom: Including its once every two month dosing option into aerostat initio initiation regimen.
Tom: Both of which are supported by clinical data from our Alpine study.
Moving to Vivek trough in 2023 virtual net sales grew 6% year over year to $404 million driven primarily by unit growth vitriol net sales in the fourth quarter were flat year over year at $102 4 million during the year Vivek <unk> growth was driven primarily by the alcohol.
Todd Nichols: During the year, Vivitrol growth was driven primarily by the alcohol dependence indication, which accounts for approximately 75% of the volume. However, growth in the alcohol dependence indication was partially offset by erosion in the opioid dependence indication. As we look ahead, we expect these market dynamics to persist and expect Vivitrol net sales in the range of $410 to $430 million in 2024. Alcohol dependence is an important growth opportunity, and our team remains energized about driving awareness and uptake in that underserved disease area. In 2024, we expect to achieve an important milestone for the company by generating more than $1 billion in proprietary net sales. Each of our proprietary products provides important contributions to the growth of the company, and we are focused on executing across the portfolio and are optimistic about the opportunities ahead. With that, I will pass the call to Blair.
Tom: Dependents indication, which accounts for approximately 75% of the volume.
Tom: Growth in alcohol dependence indication was partially offset by erosion that opioid dependants indication as we look ahead. We expect these market dynamics to persist and expect vivid trial in net sales in the range of $410 million to $430 million for 2020 for Alka.
Tom: Alcohol dependence is an important growth opportunity and our team remains energized about driving awareness and uptake in that underserved disease area and.
Tom: In 2024, we expect to achieve an important milestone for the company by generating more than $1 billion in proprietary net sales.
Tom: Each of our proprietary products provides important contributions to the growth of the company and we are focused on executing across the portfolio and are optimistic about the opportunities ahead with that I'll pass the call to Blair.
Blair Jackson: Thank you, Todd. In 2023, we successfully executed our strategy to position the business for sustained profitability and growth. Our financial results for 2023 reflect a number of one-time factors, such as back payments and reinstatement of the long-acting and vega royalties, as well as one-time legal expenses associated with the Janssen arbitration and the settlement of the Vivitrol patent matter and, most notably, the separation of oncology, which had operational, financial, and tax consequences. As a result of the completion of the separation in November, oncology-related expenses incurred during the year qualify as discontinued operations.
Blair Jackson: Thank you Todd in 2023, we successfully executed our strategy to position the business for sustained profitability and growth our financial results for 2023 reflect a number of one time factors such as back payments and reinstatement of the long acting and Vega royalties, one time legal expenses associated with the Yens and arbitration.
Blair Jackson: <unk> and the settlement of the <unk> patent matter and most notably the separation of the oncology business, which had operational financial and tax consequences.
Blair Jackson: As a result of the completion of the separation on November oncology related expenses incurred during the year qualify as discontinued operations.
Blair Jackson: Expenses and our bottom-line results inclusive of these discontinued operations are fully outlined in our press release issued this morning. That said, today I'll focus on continuing operations as those results are more relevant to the financial profile of the company going forward. Across the business, in 2023, we will work to streamline and position the company for future growth. With the moving pieces I mentioned now behind us, we have clarified and strengthened the financial profile of the business, and we believe we are well positioned to execute on our strategy as a pure play neuroscience company. Over the next few minutes, I'll take you through the details of our 2023 results, then turn to our 2024 financial expectations. Our 2023 financial results reflect strong performance in our core neuroscience business.
Expenses and our bottom line results inclusive of these discontinued operations are fully outlined in our press release issued this morning.
Speaker Change: That said today I'll focus on continuing operations as those results are more relevant to the financial profile of the company going forward.
Speaker Change: Across the business in 2023, we worked to streamline and position the company for future growth.
Speaker Change: With the moving pieces I mentioned now behind US, we've clarified and strengthen the financial profile of the business and we believe we are well positioned to execute on our strategy as a pure play neuroscience company.
Speaker Change: Over the next few minutes I'll take you through the details of our 2023 results then turn to our 2024 financial expectations.
Speaker Change: Our 2023 financial results reflects strong performance of our core neuroscience business. We generated total revenues of nearly $1 7 billion driven primarily by our proprietary product portfolio, which grew 18% year over year.
Blair Jackson: We generated total revenues of nearly $1.7 billion, driven primarily by our proprietary product portfolio, which grew 18% year over year. From a bottom line perspective, we recorded gap net income of $355.8 million compared to a gap net loss of $158.3 million in the prior year, and a non-GapNet income of $243.7 million compared to $57.9 million in 2022. Turning to our proprietary
Speaker Change: From a bottom line perspective, we recorded GAAP net income of $355 8 million compared to a GAAP net loss of $158 $3 million in the prior year.
Speaker Change: On a non-GAAP net income of $243 $7 million.
Speaker Change: Compared to $57 $9 million in 2022.
Speaker Change: Turning to our proprietary products for the year, we recorded <unk> net sales of $404 million, reflecting 6% growth year over year net sales of the <unk> product family increased 8% to $327 $7 million in 2023, driven by unit growth.
Blair Jackson: For the year, we recorded Vivitrol net sales of $400.4 million, reflecting 6% growth year-over-year. Net sales of the Aristotle product family increased 8% to $327.7 million in 2023, driven by unit growth, and LeBolving sales increased 100% year over year to $191.9 million. Moving on to our Manufacturing and Royalty. For the year, we recorded manufacturing and royalty revenues of $743.4 million, compared to $332.0 million in the prior year. Revenues from the long-acting and Vega products were $486.1 million compared to $115.7 million in the prior year, reflecting the reinstatement and back payment of royalties related to these products in 2020. Revenues from Vumerity were $129.3 million compared to $115.5 million in the prior year. Turning to expenses for full year 2023, cost of goods sold related to continuing operations was $253.0 million, reflecting a year-over-year increase of approximately $35 million, driven by an increase in net sales of proprietary products.
Speaker Change: And <unk> net sales increased 100% year over year to $191 9 million.
Speaker Change: Moving on to our manufacturing and royalty business.
Speaker Change: For the year, we recorded manufacturing and royalty revenues of $743 4 million.
Speaker Change: Compared to $332.0 million in the prior year.
Revenues from the long acting and Vega products were $486 1 million.
Speaker Change: Compared to $115 $7 million in the prior year, reflecting the reinstatement and back payment of royalties related to these products in 2023.
Speaker Change: Revenues from <unk> were $129 3 million.
Speaker Change: Compared to $115 5 million in the prior year.
Speaker Change: Turning to expenses for full year 2023.
Speaker Change: Cost of goods sold related to continuing operations were 253.0 million.
Speaker Change: Reflecting a year over year increase of approximately $35 million driven by the increase in net sales of proprietary products.
Blair Jackson: R&D expenses related to continuing operations were $270.8 million and FLOT year-over-year, reflecting focused investments in our neuroscience development programs, including the ELKS 2680 Clinical Program and support activities for our proprietary products. SG&A expenses related to continuing operations were $689.8 million in 2023. The increase of $99 million, as compared to the prior year, was primarily related to investment in the launch of Lebalvi and non-recurring legal expenses. During the year, we recorded a net tax benefit of $97.6 million, driven primarily by the partial release of a valuation allowance related to our Irish net operating loss carry-forwards in the fourth quarter.
R&D expenses related to continuing operations were $270 8 million and flat year over year, reflecting reflecting focused investments in our neuroscience development programs, including the <unk> 2680 clinical program and support activities for our proprietary products.
Speaker Change: SG&A expenses related to continuing operations were $689 $8 million in 2023, the increase of $99 million as compared to the prior year was primarily rated related to investment in the launch of <unk> and nonrecurring legal expenses.
During the year, we recorded a net tax benefit of $97 $6 million driven primarily.
Speaker Change: <unk> by the partial release of a valuation allowance related to our Irish net operating loss carryforwards in the fourth quarter. This is a onetime adjustment due to the separation of the oncology business and our expectation of sustained profitability going forward.
Blair Jackson: This is a one-time adjustment due to the separation of the oncology business and our expectation of sustained profitability going forward. More detail can be found in our press release issued this week. During the year, we undertook significant work to streamline our operations and enhance the growth and profitability of the business going forward. While this work was underway, we continued our focus on operational efficiency and generated strong profitability in cash flow, with GAAP net income from continuing operations of $519.2 million, and non-GAAP net income from continuing operations of $518.2 million. Turning to our balance sheet, we ended the year in a strong financial position, with $813.4 million in cash and total investments, and with total debt outstanding of approximately $290 million.
Speaker Change: More details can be found in our press release issued this morning.
Speaker Change: During the year, we undertook significant work to streamline our operations and enhance the growth and profitability of the business going forward. While this work was underway. We continued our focus on operational efficiency and generated strong profitability and cash flows with GAAP net income from continuing operations of $519.
Speaker Change: $2 million non-GAAP net income from continuing operations of $396 5 million in EBITDA from continuing operations of $486 3 million.
Speaker Change: Turning to our balance sheet, we ended the year in a strong financial position with $813 $4 million in cash and total investments and with total debt outstanding of approximately $219 million.
Blair Jackson: Looking ahead, we expect the business to continue to generate significant cash flow. In addition, upon the closing of the sale of our Athlone Ireland manufacturing facility to Novo Nordisk, expected later this year, Alkermes will be entitled to a one-time cash payment of $92.5 million for the facility and related assets, subject to customary adjustments in accordance with the purchase. I'll shift now to our financial expectations for 2025. These expectations were outlined in the press release and 8K issued this morning. Starting with the top line, we expect total revenues for 2024 to be in the range of $1.5 to $1.6 billion and expect net sales from our proprietary products to exceed $1 billion, reflecting continued growth of our proprietary products, led by LaValle.
Speaker Change: Looking ahead, we expect the business to continue to generate significant cash flow. In addition, upon the closing of the sale of our Athlone, Ireland manufacturing facility to Novo Nordisk expected later this year alkermes will be entitled to a onetime cash payment of $92 5 million for the facility and related assets.
Speaker Change: Subject to customary adjustments in accordance with the purchase agreement.
Speaker Change: I'll shift now to our financial expectations for 2024. These expectations were outlined in the press release and 8-K issued this morning.
Speaker Change: Starting with the topline we expect total revenues for 2024 to be in the range of one five to $1 6 billion.
And expect net sales from our proprietary products to exceed $1 billion, reflecting continued growth of our proprietary products led by <unk>.
Blair Jackson: Our total revenue expectations for the year also reflect the previously disclosed expiration of the royalty related to the U.S. sales of one month in Vegas, Estena, in August of 2024. In terms of expenses, our expectations for 2024 reflect reduced spend across all line items due to the separation of oncology, other 2023 non-recurring expenses, and our continued focus on efficiency and profitability. The cost of goods sold is expected to be in the range of $230 to $250 million.
Speaker Change: Our total revenue expectations for the year also reflect the previously disclosed expiration of the royalty related to the U S sales of one months and Vega Sistema in August of 2024.
Speaker Change: In terms of expenses, our expectations for 2024 reflect reduced spend across all line items due to the separation of the oncology business other 2023 nonrecurring expenses.
Speaker Change: And our continued focus on efficiency and profitability.
Speaker Change: Cost of goods sold are expected to be in the range of $230 million to $250 million.
Blair Jackson: R&D expenses are expected to be in the range of $225 to $255 million, reflecting a decrease of approximately $150 million compared to 2023 as a result of the separation of the oncology business. This level of R&D spend accommodates initiation of the ELKS 2680 Phase II program in NARCLA, as well as preclinical work to advance additional orexin compounds in other disease areas, and support activities for our portfolio of proprietary products SG&A expenses are expected to be in the range of $625 million to $655 million, reflecting investments in the launch of Lebal-V and appropriate levels of support for Vivitrol and Aristotle.
R&D expenses are expected to be in the range of $225 million to $255 million, reflecting a decrease of approximately $150 million compared to 2023 as a result of the separation of the oncology business.
Speaker Change: This level of R&D spend accommodates initiation of the <unk> 2680 phase II program in narcolepsy as well as preclinical work to advance additional orexin compounds and other disease areas and support activities for our portfolio of proprietary products.
Speaker Change: SG&A expenses are expected to be in the range of $625 million to $655 million, reflecting investments in the launch of <unk> and appropriate levels of support for <unk>.
Blair Jackson: With our enhanced profitability profile, we expect an effective tax rate of approximately 17% in 2024. We expect GapNet income to be in the range of $350 to $390 million, EBITDA in the range of $445 million to $485 million, and non-GAAP net income in the range of $465 million to $505 million.
With our enhanced profitability profile, we expect an effective tax rate of approximately 17% in 2024.
We expect GAAP net income to be in the range of $350 million to $319 million.
Speaker Change: EBITDA in the range of $445 million to $485 million and non-GAAP net income in the range of $465 million to $505 million.
Blair Jackson: With a proprietary product top line that's expected to exceed $1 billion this year, a sharpened strategic focus, and an operating structure that we've carefully calibrated to support the needs of the business going forward, we believe we have positioned the company for significant growth and profitability. I'll now hand the call to Rich for a broader discussion of our capital allocation strategy.
Speaker Change: With a proprietary product top line is expected to exceed $1 billion. This year sharpen strategic focus and an operating structure that we've carefully calibrated to support the needs of the business going forward. We believe we are positioning the company for significant growth and profitability.
Speaker Change: I'll now hand, the call to rich for a broader discussion of our capital allocation strategy.
Richard F. Pops: Thank you, Blair. Alkermes now joins a small group of biopharmaceutical companies that have successfully developed and secured regulatory approval for novel medicines, effectively commercialized them, and generated significant profitability in cash flow. With that distinction, our capital allocation strategy takes on new importance. Our capital allocation decisions are guided by a framework designed to drive near and long-term growth, and it starts with focus.
Great. Thank you.
Rich: So alkermes now joins a small group of biopharmaceutical companies that have successfully developed and secured regulatory approval for novel medicines.
Rich: Effectively commercialize them and generated significant profitability and cash flow with that distinction our capital allocation strategy takes on new importance.
Rich: Our capital allocation decisions are guided by a framework designed to drive near and long term growth and it starts to focus alkermes is now a pure play neuroscience company with demonstrable and Leverages, both commercial and scientific expertise. Our first priority is to maximize the potential of our current commercial products with the most intense.
Richard F. Pops: Alkermes is now a pure-play neuroscience company with demonstrable and leverageable commercial and scientific expertise. Our first priority is to maximize the potential of our current commercial products with the most intense investment currently deployed to support the growth of Libalvi. These investments are designed to drive growth over the near and medium term.
Rich: <unk> currently deployed to support the growth of the Baldy. These.
Rich: These investments are designed to drive growth over the near and medium term.
Richard F. Pops: Second, we will invest in our pipeline to develop and advance new neuroscience candidates that can drive significant value, including ALK2680 and additional earlier stage programs. Investments in R&D are made with discipline and rigor, and with predefined stage gates and success criteria for each program, with an emphasis on early translational clinical data. Third, beyond our internal efforts, we will explore external opportunities to expand the portfolio with assets that are a strong strategic fit.
Second we will invest in our pipeline to develop an advanced new neuroscience candidates that can drive significant value, including our 26 80 and additional earlier stage programs.
Rich: Investments in R&D are made with discipline and rigor and with predefined stage gates and success criteria for each program with an emphasis on early translational clinical data.
Rich: Third beyond our internal efforts, we will explore external opportunities to expand the portfolio with assets that are a strong strategic fit in.
Richard F. Pops: In these efforts, we plan to prioritize commercial assets that leverage our infrastructure and capabilities, as well as development candidates that align with our expertise and fit within our core neuroscience focus. And the fourth element of our capital allocation strategy is to prudently return excess capital beyond our organic and inorganic growth needs to our shareholders. As Blair mentioned, looking ahead, we expect the business to continue to generate significant cash flow. This week, our Board of Directors approved a share repurchase program for up to $400 million, which we plan to deploy opportunistically over the next several years.
Rich: In these efforts, we plan to prioritize commercial assets to leverage our infrastructure and capabilities as well as development candidates that align with our expertise and fit within our core neuroscience focus.
Rich: In the fourth element of our capital allocation strategy is to prudently return excess capital beyond our organic and inorganic growth needs to our shareholders.
Rich: Blair mentioned looking ahead, we expect the business to continue to generate significant cash flow.
Rich: This week, our board of directors approved a share repurchase program for up to $400 million.
Rich: Which we plan to deploy opportunistically over the next several years.
Richard F. Pops: With the significant work and accomplishments of 2023 behind us, we now set our sights on building the company for the future. Augmenting the pipeline will be a key strategic priority for the business this year. We gravitate toward development programs that align with our expertise and where there is a strong biological rationale, challenging molecular design, a clear clinical pathway with early proof of concept, and importantly, in this intense payer environment, the potential to significantly advance the standard of care for patients. ALCS 2680 represents one such opportunity.
Rich: With the significant work and accomplishments of 2023 behind US we now set our sights on building the company for the future augmenting the pipeline will be a key strategic priority for the business this year.
Rich: <unk> gravitate towards development programs that align with our expertise.
And where there is a strong biological rationale challenging molecular design, a clear clinical pathway with early proof of concept and importantly in this intense payer environment the potential to significantly advance the standard of care for patients.
Our 2680 represents one such opportunity.
Richard F. Pops: The data in patients with narcolepsy type 1 from our Phase 1B study were compelling and supported the acceleration of the program into Phase 2. Study startup activities are underway now, and we're on track to initiate the next quarter. For narcolepsy type 2 and idiopathic hypersomnia, we're in the process of completing enrollment in the phase 1B study cohort. Data from these cohorts will inform dose selection for a potential Phase 2 study. The Phase II program for ALCA 2680 will be conducted at multiple sites around the world, and we're working to initiate it as quickly as possible. 2024 is set to be an exciting and important year for the company, enabled by the significant work over the past several years to reposition the company, and we'll look forward to updating you on our progress. We appreciate the continued support of our shareholders. And with that, I'll turn the call back to Sandy to run the Q&A. Great. Thanks, everyone.
Rich: The data in patients with narcolepsy type one from our phase <unk> study were compelling and supported the acceleration of the program into phase III studies.
Rich: Study startup activities are underway now and we're on track to initiate next quarter.
Rich: For narcolepsy type two in idiopathic hypersomnia, where in the process of completing enrollment of the phase <unk> study cohorts data from these cohorts will inform dose selection for a potential phase III study the phase II program for <unk> 2680 will be conducted at multiple sites around the world and we're working to initiate them as quickly as possible.
Rich: 2024 is set to be an exciting and important year for the company enabled by the significant work over the past several years to reposition the company.
Rich: And we'll look forward to updating you on our progress and we appreciate the continued support of our shareholders and with that I'll turn the call back to Sandy to run the Q&A.
Sandy: Great. Thanks, everyone.
Sandy: Rob we'll now open the call for Q&A. Please.
Rob: Thank you.
Rob: At this time, we'll be conducting a question and answer session.
Rob: If you'd like to ask a question today. Please press star one from your telephone keypad, a confirmation tone will indicate your line in the question queue.
Sandra Coombs: Rob, we will now open the call for Q&A. Thank you. If you'd like to ask a question today, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.
You May press star two if you'd like to move your questions from the queue.
Rob: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one more please pull for questions. Once again Thats star one thank you.
Rob: For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Once again, that's star 1. Thank you. Thank you. Thank you.
Rob: Thank you and our first question today will be coming from the line of David and tell them with Piper Sandler. Please proceed with your question.
David: Hey, good morning, just a couple so first.
David: Richard what do you make.
David A. Amsellem: Thank you, and our first question today will be coming from the line of David Amsellem with Piper Sandler. Pleasure to see you with your questions. Hey, good morning. Just a couple.
David: I'm sorry to have enough Takeda.
David: Not moving forward with.
David: <unk> hundred 61 and <unk> two.
David A. Amsellem: First, Richard, what do you make of... Takeda not moving forward with the TAK861 in NT2? My understanding is that they capped the dose due to some concerns about liver toxicity. I guess the question here is, just picking your brain, what do you make of that and what does that mean for 2680? And then, secondly, dosing in NT2 and IH. Can you just remind us what that looks like for 2680 relative to NT1, any changes there in your thinking? Thank you. Hi David, thank you for the question. A narcolepsy drug like 2680, an EREXIN-2 receptor agonist, in NT2 is that the dosing would have to be significantly higher than in NT1. On the order, we reckon between 2 to 3 to 4x, but what you would see is our assumption is 2 to 3x with 2680.
Richard F. Pops: My understanding is that the cap the dose due to some concerns about liver tox.
Richard F. Pops: I guess the question here is just picking your brain what do you make of that or what does that mean for 2680.
Richard F. Pops: And then secondly regarding dosing and MP to NIH can you just remind us what that looks like for 2000 and 680 relative.
Richard F. Pops: And T. One any changes there and youre thinking thank you.
Hi, David Thank you for the question.
Speaker Change: So the.
Speaker Change: The premise going into study of of narcolepsy drug like 26, 80, Orexin two receptor agonist in NT too is that the dosing will have to be significantly higher than in Q1.
T: On the order we record in between two to three years to Forex, but what you would see our assumption is two to three X with 2680.
Richard F. Pops: So it wasn't surprising to us that Takeda, with the update they gave in early January, said they might not have enough dosing flexibility to move beyond NT1 into that higher dose range necessary for NT2. But it wasn't particularly surprising, and we were actually encouraged to see that they had strong results in the NT1 cohort, sort of reaffirming the pharmacology that we're all seeking to exploit in this therapeutic class that With 2680, we are testing in NT2 and IH, and we remain blinded in those as we complete enrollment. We're testing just that at 2 to 3x from the doses that you saw us in NT1. And because of the work we did in the healthy volunteers, we feel comfortable going up to those doses and higher if necessary. But we'll wait to see the data to see exactly how that translates into patients with NT2 NIH. And then your view regarding your competitor? with respect to them in NT2 or in NT1? Yeah, in NT2.
T: So it's not surprising to us that Takeda with the update that gave in early January.
T: They might not have enough dosing flexibility to move beyond <unk> into that higher dose range necessary for NTT. So it wasn't particularly a surprising and we're actually encouraged to see that they had strong results in the N T. One cohort sort of reaffirming the pharmacology that we're all seeking to exploit in this therapeutic class it's emerging with.
T: With 26 80, we are testing in NTT and IH and we remained blinded in those as we complete the enrollment.
T: We are testing just that at two to three X from the doses that you saw us in tier one and when because of the work we did in the healthy volunteers, we feel comfortable going up to those doses and higher if necessary, but we will wait to see the data to see exactly how that translates into patients with empty to NIH.
T: And then your view regarding your competitor.
T: With respect to them in antitumor T. One.
Speaker Change: Yes, and then in NT too I mean, I guess the question is are you.
David A. Amsellem: I mean, I guess the question is, you know, is this a class where you're just seeing these drugs behaving markedly differently from one another, and in that vein, it's hard to sort of make comparisons from one molecule to another? Is that the way we should think about it? I think that's exactly the way we look at it. Fundamentally, we believe that these molecules are going to demonstrate significantly different clinical properties, and we've seen that already bear out with the Takeda program, with the JAS program, with our program. And so at this point, our underlying assumptions with respect to the potential efficacy of NT2 are unchanged by the Takeda result.
Speaker Change: Is this a class where youre just seeing these drugs behaving markedly differently from one another and in that vein.
Speaker Change: It's hard to sort of make comparisons from one molecule to another is that the way you should think about it I think.
Speaker Change: I think that's exactly the way we look at it I think that fundamentally we believe that these molecules are because it demonstrates significantly different clinical properties and we've seen that already bearing out with the Takeda program with the jazz program with our program.
Speaker Change: And so at this point, our underlying assumptions with respect to the potential efficacy and NTT are unchanged by the by the Takeda results and in fact as I said earlier, given the limitation of their dosing.
Richard F. Pops: And in fact, as I said earlier, given the limitation of their dosing... or fear of liver toxicity, and we weren't surprised to see that. What we have to show now is that we have efficacy and tolerability in that NT2 and the IH cohort in the same way we do with the NT1. So the first data we showed of world sleep were confirmed by the full cohort. Now we'll get similar early data from the IH and NT2 cohorts when we unblind in a few weeks. Thank you.
Speaker Change: The fear of the liver toxicity, and we weren't surprised to see that outcome.
Speaker Change: No. Thank you remains.
Speaker Change: What we have to show now is that we have the efficacy and tolerability in that entity to an NIH cohort in the same way we did with the <unk>. So the first data we showed a world sleep were confirmed by the full cohort now we will get the similar first data from the IH and NTT co.
Speaker Change: Cohorts when we unwind in a few weeks.
Speaker Change: Thank you Alright, I think we're ready for next question.
Rob: I think we're ready for the next question. Our next question will be coming from the line of Akash Tiwari with Jeffreys. Please receive your question. Hey, thanks so much.
Speaker Change: Our next question will be coming from the line of our cash to Ari with Jefferies. Please proceed with your question.
Ari: Hey, thanks, so much.
Akash Tiwari: So, Rich, how concerned is your team that 2680's efficacious doses in NT2 patients will induce insomnia, given these NT2 patients have hypercretin levels that aren't as impaired as NT1, and the half-life of 2680 is about 8 to 10 hours? And any sense on when patients will be taking the medication in your Phase 2 trials, right? Are there any protocol adjustments you can make to maybe help with that concern? And then, on Libalbi, what is the cost of the Libalbi DTC program in your 2024 guidance, and what's your internal ROI hurdle to justify its continued investment? Thanks so much.
Ari: So rich how concerned as your teams at 26, eight bureaus applications doses. The 92 patients will induce insomnia given these <unk> patients have hyper clean levels that R&R imperative and he won and the half life of 26 eight there was about eight to 10 hours and any sense on when patients who will be taking the medication in your phase two trial.
Right are there any protocol adjustments you can make.
Ari: Maybe help with that concern and then on the ball B what is the cost of the lowball. The DTC program in your 2020 for guidance and what's your internal ROI hurdle to justify its continued investment. Thanks so much.
So akash I'll take the first one.
Richard F. Pops: So, Akash, I'll take the first one. One of the things we like about 2680 is the dose proportionality that we've seen along with half. So as you saw in the NT1 cohort, where you escalated from one to three to eight, you actually saw increased wakefulness and increased duration thereof. So, as I said, our original hypothesis with respect to the PK and the dosimetry in NT2 is unchanged. It only changes in the face of data, which we're on the threshold of obtaining. So insomnia, though, just to be clear, as an AE, it's actually an indicator of efficacy. And so obviously, if you had persistent insomnia at a certain dose, the solution would be to lower the dose. And I think in so doing, you mitigate whatever concerns you would have about that. But we'll see that in the patient because you're entirely right. They have a much different background for superimposition of an orexin agonist than an NT1 patient, where there is none. Whereas, in NTU2IH patients, there are detectable levels of orexin.
Akash: One of the things we like about 26 80 as the dose proportionality that we've seen along with the half life. So as you and you saw that in the N T. One and T. One cohort, whereas escalated from one to three to eight you actually saw increased wakefulness increased duration thereof.
Akash: We are as I said in my our original hypothesis with respect to the PK and the dosimetry and NTT is unchanged the only change in the face of data.
Akash: Which we're on the threshold of <unk>.
Obtaining.
Akash: So in sum you there just to be clear as an AE, it's actually an indicator of efficacy and so obviously if you had if you had persistent insomnia at a dose the solution would be to lower the dose and I think in so doing you mitigate whatever whatever concerns you would have about that but we will see that in the patient because you're entirely right.
Akash: They have a much different background for superimposition of in Orexin agonist and in tier one patient where there is none whereas in the <unk> two IH patients. There are detectable levels of of of Orexin interests at the signaling thereof is not is not normal.
Todd Nichols: It's just that the signaling thereof is not normal. Yeah, and in terms of Lavalvy for our DTC program, thanks for the question. As you might remember, we launched our pushback campaign, which is our DTC campaign, our full campaign last year, our digital assets launch at the beginning of 23, and then we actually went on linear TV, on TV at midpoint in Q2. And we're really pleased so far with just the overall response to the program from HCPs but also from patients. It's a really important part, building awareness. It's an important part of our marketing mix, just as driving demand with physicians and also within market access. I think the best way to look at the overall effectiveness right now is just looking at new patients starting. So MBRXs continue to grow.
Speaker Change: Yeah and in terms of laboratory for our DTC program. Thanks for the question.
Speaker Change: As you might remember, we launched our pushback campaign, which is our DTC campaign, a full campaign last year, our digital assets.
<unk> launched at the beginning of 'twenty three and then we actually went on linear TV on television.
Speaker Change: Mid point in Q2, and we're really pleased so far with just the overall response to the program from Hcp's, but also from patients that's a really important part.
Speaker Change: Building awareness.
Speaker Change: It's an important part of our marketing mix just is driving demand with physicians and also within market access.
Speaker Change: The best way to look at the overall effectiveness right now is just looking at new patient starts.
Speaker Change: <unk> continue to grow we saw nice growth in Q4 with <unk> and then we're starting to see a shift in the mix of new patients.
Todd Nichols: We saw nice growth in Q4 with MBRXs, and we're starting to see a shift in the mix of new patients that are going more towards bipolar than schizophrenia. So in the fourth quarter, MBRXs for bipolar patients represented about 56%.
Speaker Change: That are going more towards bipolar and schizophrenia. So in the fourth quarter <unk> for bipolar patients represented about 56%. So that's a it's a nice gradual shifts that we're seeing and we think that our DTC campaign is driving a lot of that shift to all of the leading indicators, which is a key point that we keep watching which.
Todd Nichols: So that's a nice gradual shift that we're seeing, and we think that our DTC campaign is driving a lot of that shift. All of the leading indicators, it's a key point that we keep watching, which is awareness levels with ACPs and patients, utilization of our digital assets, website visits, those are all heading in the right direction. Grant rates when patients walk into the office for requesting the product, ACPs are giving the product.
Speaker Change: As awareness levels with HCP and patient.
Speaker Change: Utilization of our digital assets website visitors are all heading in the right direction grant rates when patients walk into the office for requesting the product hep's are granting the products. So everything in our view right now is heading in the right direction. So our plan is to continue that.
Todd Nichols: So everything, in our view, right now, is heading in the right direction. And our plan is to continue that in 2024. Now, for competitive reasons, I'm not gonna get into all of the details of that, but I will let you know that we watch this every single quarter. We make adjustments every single quarter, and our plan is to fully maximize and activate patients within 24. Our next question comes from the line of Paul Matisse with Stiefel.
Speaker Change: In 2024 now for competitive reasons, I'm not going to get into all of the details of that but I will let you know that we watch. This every single quarter, we make adjustments every single quarter and our plan is to fully maximize and activate patients and 24.
Speaker Change: Our next question comes from the line of Paul Matisse with Stifel. Please proceed with your question.
Paul Matisse: Please send your question. Hey, thanks so much for the questions and congrats on the guidance and the expense discipline. That was kind of what I wanted to ask about in light of your comments, Rich, on BD.
Paul Matisse: Hey, thanks, so much for the questions.
Paul Matisse: Congrats on the on the guidance on the expense discipline.
Paul Matisse: That was kind of what I wanted to ask about in light of your comments rich on BD.
Paul Matisse: When you look at the margins, it looks like you're meeting or potentially exceeding your goals here. Where do you see margins going over time? Like, what kind of goal is that?
Paul Matisse: When you look at the margins it looks like Youre meeting.
Paul Matisse: Actually exceeding your goals here, where do you see margins going over time like what's kind of your goal or there are pure company targets that youre thinking of.
Richard F. Pops: Are there peer company targets that you're thinking of? And, you know, how could doing business development, spending more money on the R&D side, issuing any debt, if that could be in the cards, sort of play into the whole context of where you think the P&L structure is going here over the next two to three years? Thank you. Hey Paul, thanks for the question. I'll start, and if the floor has any color, please, please provide it.
Paul Matisse: During business development spending more money on the R&D side issuing any debt if that could be in the cards sort of play into the whole context of where you think the P&L structure is going here over the next two to three years. Thank you.
Speaker Change: Hey, Paul Thanks for the question I'll start and then maybe if whereas any color. Please. Please provided our view now is that we've transformed the company and has taken a few years to do it but now we enter 2024 and I think the guidance reflects reflects it now in two ways. One 2023 of the complexity of the 23 cleanup and by 2024, how clean it is.
Richard F. Pops: Our view now is that we've transformed the company, and it's taken a few years to do it, but now we enter 2024. And I think the guidance reflects that now in two ways. One, 2023, the complexity of the 23 cleanup, but 2024, how clean it is. Our view at the board level, and at management level, is that we're going to be a sustained, profitable company from here on out. So we'll guide on an annual basis with respect to how we expect to manage the business, but we think we can drive profitability, pipeline expansion, and prosecuting 2680 and its derivatives aggressively in the clinic. Obviously, we'll monitor the top line each year as that grows. We adjust the expense line in light of how the revenue line is growing, but we see sustained profitability, cash flow generation, and pipeline expansion all going forward. Blair, anything you want to add?
Speaker Change: Our view at the board level management levels, we're going to be a sustained profitable company from here on out.
Speaker Change: So we will guide on an annual basis with respect to how we expect to manage the business, but we think we can drive profitability pipeline expansion and prosecuting 2680 and its derivatives aggressively in the clinic, obviously, we'll monitor the topline each year as that grows we accommodate that.
Speaker Change: The expense line in light of how that revenue line is growing but we see sustained profitability cash flow generation and pipeline expansion, all going forward or anything like that and the only thing I would add Paul is that we also as you mentioned, we have a very clean balance sheet and that provides us optionality as we move forward and we can be opportunistic as need be.
Speaker Change: Thanks.
Speaker Change: Thank you. Our next question is from the line of Jessica Fye with Jpmorgan. Please proceed with your questions.
Blair Jackson: The only thing I'd add, Paul, is that we also, as you mentioned, have a very clean balance sheet, and that provides us with optionality as we move forward, and we can be opportunistic as needed. Thank you. Our next question is from the line of Jessica Fye with J.P. Morgan. Please proceed with your question. Hey, guys, this. This is not on for Just Five.
Jessica Fye: Hey, guys.
Jessica Fye: Yes.
Jessica Fye: This is not on for Jess Fye.
Jessica Fye: Two questions from us.
Jessica Fye: 24 guidance reflects really nice cost control on operating expenses.
Jessica Fye: Is this just sort of run rate we should.
Jessica Fye: I expect the company to roughly maintain over the next few years.
Or if not how should we think about that.
Jessica Fye: Two questions from us. The 2024 guidance reflects really nice cost control on operating expenses. Is this the sort of run rate we should expect the company to roughly maintain over the next few years? Or, if not, how should we think about that?
Jessica Fye: And then secondly.
Jessica Fye: On to 680 can you confirm whether any visual disturbances have been observed in any of the anti too or IH patient dose. So far thank you.
Blair Jackson: And then secondly, on 2680, can you confirm whether any visual disturbances have been observed in any of the NT2 or IH patients so far? Thank you. Great. Well, this is Blair.
Jessica Fye: Great well this is Laura I'll take the first question with regard to the operational expenses.
Laura: So you are right. We have spent a long time over the last couple of years really looking carefully at our cost structure and managing that across the organization.
Blair Jackson: I'll take the first question with regard to operational expenses. So you're right. We've spent a long time over the last couple of years really looking carefully at our cost structure and managing that across the organization, and we plan on being very disciplined as we move forward. That being said, as the business continues to grow, we will be growing those lines in line with that business, investing in research and development, and investing in our key products. But I think you can imagine, as Rich said, that we're going to maintain a healthy profit margin moving forward in the foreseeable future. And with respect to 2680, we've not released any data on the NT2 IHs. We remain blind. Thank you.
Laura: And we plan on being very disciplined as we move forward that being said as the business continues to grow we will be growing those lines.
Laura: In line with that business investing in research and development investing in our in our key products.
Laura: But I think you can you can envision as rich said that we're going to maintain a healthy profitability margin moving forward in the foreseeable future.
Laura: And with respect to 2680, we've not released any data on the NTT or IHS, we remain blinded.
Speaker Change: Thank you.
Speaker Change: The next question is from the line of Chris <unk> with Goldman Sachs. Please proceed with your question.
Speaker Change: Hi, Good morning, everyone. This is Charlie on for Chris. Thank you for taking our questions maybe shifting back over to Bobby I had a question just regarding whaler. Bob you ended up for fiscal year 'twenty three I seem to recall earlier in the year last year hearing commentary that Bobby was trending towards the upper end of fiscal year 'twenty three guidance.
Chris Shibutani: The next question is from the line of Chris Shibutani with Goldman Sachs. Please take your question. Hi, good morning, everyone. This is Charlie Yonter, Chris.
Chris Shibutani: Thank you for taking our questions. Maybe shifting back over to Libalvi, I had a question just regarding where Libalvi ended up for fiscal year 23. I seem to recall earlier in the year, last year, hearing commentary that Libalvi was trending towards the upper end of fiscal year 23 guidance, and now we're seeing that we came in more towards the middle of that range. Just wondering what may have changed over the course of the year and whether there are implications that we need to keep in mind when we look at fiscal year 24 guidance. And then, just as a quick follow-up, I was wondering if we could hear some commentary around how the team sees the schizophrenia market potentially changing with the potential approval of CAR XT from Karuna later this year. Thank you very much.
Charlie: And now we're seeing that we came in more towards the middle of that range I'm. Just wondering what may have changed over the course of the year and whether there are implications that we need to keep in mind. When we look at the fiscal year 2000 and for guidance and then just as a quick follow up I was wondering if we could hear some commentary around how the team sees the schizophrenia market potentially changing with the potential approval of <unk>.
Charlie: Car T from Corona later this year, thank you very much.
Speaker Change: Yeah, absolutely so I'll take those questions as well so for.
Speaker Change: The full year 2023 laboratory net sales were $191 9 million overall, you might you might remember in Q3, we saw a little bit of softness overall due to some inventory draw down and also also some seasonality with with patient visits we just see a.
Todd Nichols: Yeah, absolutely. So, I'll take those questions as well. So, for the full year 2023, Levalvi's net sales were $191.9 million overall.
Todd Nichols: You might remember in Q3, we saw a little bit of softness overall due to some inventory drawdown and also some seasonality with patient visits. We did see a nice recovery of that into Q4, which led to 11% TRX growth. Overall, the full year of 2023 was really a demand-related story. So, demand grew over 100% year-over-year, which we're really encouraged by.
Speaker Change: A nice recovery of that into into Q4, which led to a 11% T. Rx growth overall, the full year of 2023. It was really a demand related stories of demand grew over 100% year over year, which we're really encouraged with them.
Speaker Change: And that's very supportive of all of our market research when we would talk to Hcp's theyre seeing a lot of utility for laboratory right now not only within bipolar one disorder, but also within schizophrenia in terms of.
Todd Nichols: And that's very supportive of all of our market research. When we talk to HCPs, they see a lot of utility for lobotomy right now, not only within bipolar 1 disorder but also within schizophrenia. In terms of new competitive entrants into the marketplace, you know, this is something that we watch very closely overall. There is the potential that CAR-XP could be approved sometime later this year.
Speaker Change: New competitive entrants into the marketplace.
This is something that that we watch very closely overall there.
Speaker Change: There is the potential that <unk> could be approved sometime later this year at the way. We think about that is that that's a product that would be approved in one of our indications which is in schizophrenia. I think it's important to remember that lowball. The basically has an equal contribution from chip from <unk> from bipolar disorder and schizophrenia.
Todd Nichols: The way we think about that is that it's a product that would be approved in one of our indications, which is schizophrenia. I think it's important to remember that Lobalvi basically has an equal contribution from TRXs for bipolar disorder and schizophrenia. So there's broad utility overall within the product.
Speaker Change: Furniture, there's broad utility overall within <unk>.
Speaker Change: Within the product.
Speaker Change: We also really believe in talking to HCP is as well.
Todd Nichols: We also really believe in talking to HCPs as well that one of the most important attributes in the marketplace is efficacy. So any product, and that would be CAR-XP, if they were to come into the marketplace and really want to discuss and strengthen the overall perception in schizophrenia of efficacy, we think that's a good thing. And we actually think that's a good thing for Lobalvi.
Speaker Change: The one of the most important attribute as efficacy in the marketplace. So any product that would be <unk>. If they were to come into the marketplace and really want to discuss and strengthen the overall perception in schizophrenia efficacy. We think that's a good thing and we actually think that's a good thing for for la Bobby but but overall.
Todd Nichols: But overall, you know, in the last couple years, we've built a really sophisticated commercial infrastructure. And regardless of any new entrants coming into the marketplace, we're ready, and we're ready to compete. Thank you very much.
Speaker Change: Last couple of years, we've built a really sophisticated commercial infrastructure.
Speaker Change: And regardless of any new entrants coming into the marketplace, we're ready and we're ready to compete.
Speaker Change: Okay. Thank you very much.
Speaker Change: Our next question comes from the line of Jason <unk> with Bank of America. Please proceed with your questions.
Jason Gerber: Our next question comes from the line of Jason Gerber with Bank of America. Please proceed with your question. Hey guys, thanks for taking my question. Coming back to 2680, Rich, I'm wondering if you can comment at all just how to think about the NT2 data update versus when we got the NT1 update, just given the patient level variability. It just seems like probably the data update on the MWT might inherently be a little noisier than the NT1 update, but just wondering if you can provide any perspective on that. And then, I guess, is there a dose level with NT2 that you just don't want to go beyond? Is it 5X? Is it 6X?
Jason: Hey, guys. Thanks for taking my question.
Jason: Coming back to 26 80 rich.
Rich I'm wondering if you can comment at all just how to think about the NTT data update versus when we get the end Q1 update just given the patient level variability.
Jason: Seems like probably the data update on the M WT might inherently a little noisier than the NP one update but just wondering if you can provide any perspective on that and then.
I guess is there a dose level with <unk> that you just don't want to go beyond is it five X because it <unk> just wanted to get your sense. It seems like at least from Takeda as prior commentary, there's sort of a hypothesis around exposure and not wanting to trigger liver toxicity on the dosage based hypothesis. So I'm just curious sort of if there's a threshold that you don't want to.
Jason Gerber: I just wanted to get your sense. It seems like, you know, at least from Takeda's prior commentary, there's sort of a hypothesis around exposure and not wanting to trigger liver toxicity on a dosage-based hypothesis. So I'm just curious, sort of, if there's a threshold that you don't want to exceed in the NT2 setting. Yeah, Jason, I think that that's a thoughtful question.
Jason: Exceed any antitumor setting thanks.
Speaker Change: Yes, Jason I think that the.
Speaker Change: <unk> question I think that in Q2.
Speaker Change: The pretest hypothesis.
Speaker Change: We remain blinded as exactly as you describe these people in contrast empty ones, where there is fleet latencies first dataset that we presented were all under five minutes, what we will expect to see with NTT NIH or sleep latencies that range from the low end somewhere around that up to up to 20 minutes.
Richard F. Pops: I think that in NT2, the pre-test hypothesis, you know, we remain blinded, is exactly as I described. These people, in contrast to NT1s, where the sleep latencies in the first data set that we presented were all under five minutes, what we'll expect to see with NT2 and NIH are sleep latencies that range from the low end somewhere around that up to up to 20 minutes or so in a 40 That's the inherent variability.
Speaker Change: So in a 40 minute test that's inherent variability so what we're looking for is actually the ability to change that latency in a dose dependent fashion with an acceptable tolerability profile. So we don't expect each patient to be quite as uniform in their responses. We saw in Q1, but we do expect to be able to affect wakefulness and do so in a wave at doses.
Richard F. Pops: So what we're looking for is actually the ability to change that latency in a dose-dependent fashion with an acceptable tolerability profile. So we don't expect each patient to be quite as uniform in their response as we saw in NT1, but we do expect to be able to affect wakefulness and do so at doses that are clinically acceptable and well-tolerated. So that's what we'll see when we unblind the data. We're only testing in a fixed regimen that we establish a priori. The same thing we did with NT1.
Speaker Change: Is that are that are clinically.
Speaker Change: Acceptable and well tolerated. So that's what we will see when we hit when we unblinded the data we're only testing.
Speaker Change: In our fixed regimen that we established a priori.
Speaker Change: Same thing, we did with with empty want remembered NT when we chose in advance one 3% and eight milligrams to test in each patient received all three of those doses or placebo in a randomized sequential fashion, we picked a range of doses three or two or three fold higher for the NTT than IHS, we're doing the same thing.
Richard F. Pops: Remember, in NT1, we chose in advance one, three, and eight milligrams to test, and each patient received all three of those doses or placebo in a randomized sequential fashion. We picked a range of doses three or two or three times higher for the NT2s and NIHs. We're doing the same thing.
Speaker Change: So we happen to find that dose range pretty much dead on for the empty ones, we could be dead on for the <unk>, we could be too low we could be too high we could have unacceptable tolerability, we have beautiful tolerability, we just need to see the data, but the only answer to your question, we're not worried about going higher than the doses we selected.
Richard F. Pops: So we happen to find that dose range pretty much dead on for the NT1s. We could be dead on for the NT2s, or we could be too low.
Richard F. Pops: We could be too high. We could have unacceptable tolerability. Or we could have beautiful tolerability.
Speaker Change: A priori, we will just need to see the data and decide whether we need to make that adjustment, but remember in healthy volunteers, we escalated to 50 milligrams.
Richard F. Pops: We just need to see the data. But the only answer, so to your question, we're not worried about going higher than the doses we selected a priori. We'll just need to see the data and decide whether we need to make that adjustment. But remember, in healthy volunteers, we escalated to 50 milligrams without declaring a maximum tolerated dose and without seeing cardiovascular or any other signals. My final point is that the liver toxicity that you see, we don't believe that's a dose-dependent phenomenon for the class. We believe that that is a phenomenon that's dose-dependent for that particular molecule and won't be generalizable to a rexin receptor agonist in general.
Without declaring a maximum tolerated dose and without seeing cardiovascular.
Speaker Change: Or any other signals. The final point is that the liver toxicity that you see is not we don't believe that's a dose dependent phenomenon for the class. We believe that that is a phenomenon thats dose dependent for that particular molecule and won't be generalizable to orexin receptor agonist in general.
Speaker Change: Got it and rich if I can squeeze a follow up and is there a driving requirement in your phase two that you're planning.
Rich: One question, we've gotten from investors regarding the visual disturbance and if there'd be a driving requirement in that study protocol.
Speaker Change: You will not be required to drive.
Jason Gerber: Got it. And, Rich, if I could squeeze a follow-up in, is there a driving requirement in your Phase 2 that you're planning? I know it's one question we've gotten from investors just regarding the visual disturbance and if there'd be a driving requirement in that study protocol. You will not be required to drive.
Speaker Change: That's a joke.
What we will be doing.
Speaker Change: We will we will be doing.
Speaker Change: Visual assessments.
Speaker Change: Just as a matter of caution to make sure. We understand if there are on target visual effects at any dose.
Speaker Change: Something we want to investigate in phase two.
Richard F. Pops: That's a joke. No, we will, what we will be doing is we will do visual assessments just as a matter of precaution to make sure we understand if there are on target visual effects at any dose. That's something we want to investigate in phase two. Got it, okay.
Speaker Change: Got it okay.
Speaker Change: Our next question is from the line of Charles Duncan with Cantor Fitzgerald. Please proceed with your questions.
Speaker Change: Yes.
Charles Duncan: Thanks for taking our questions and congrats on a strong execution transformative 'twenty three I had a quick question on the pipeline and then one on the ball on the pipeline regarding 2006, Adi I gave some wondering if you can provide any more granularity on the timing or.
Charles Duncan: Our next question is from the line of Charles Duncan with Canterbury Cheryl. I'm pleased to see you with your question. Yes, good morning.
Charles Duncan: Thanks for taking our questions and congrats on a strong execution transformative 23. I had a quick question on the pipeline and then one on the ball be on the pipeline regarding 2680. I guess I'm wondering if you can provide any more granularity on the timing or and or design of phase two in NT1 and just a perspective on your view of NT2 versus NT1 in terms of being important for transforming the treatment of narcolepsy. Yeah, thank you for the question. This is Rich.
Charles Duncan: And door design of the phase two E N T. One and just some perspective on your your view of N T two versus and T. One in terms of being important for transforming the treatment of narcolepsy.
Rich: Yes. Thank you for the question. This is rich so the.
Phase two design in N T. One is a very actually straightforward parallel design four arm study. So we will randomize patients after a two week washout of their existing medications to one of four arms.
Richard F. Pops: The phase II design in NT1 is a very straightforward, parallel design, forearm study. So we'll randomize patients after a two-week washout of their existing medications to one of four arms, a dose of 2680 at 4, 6, or 8 mg, or placebo, and we'll evaluate them over a six-week period. That's where the primary efficacy assessment, maintenance of wakefulness tests, will be assessed. And then there will be a subsequent safety extension that all patients will move on to. So the primary endpoint will be the maintenance of wakefulness test along with the Epworth sleepiness scale, and we'll also be capturing cataplexy rates in the NT1 patient population. As an aside, if we're successful in NT2, we expect the NT2 study to look very similar. There's not cataplexy in NT2 patients, but the basic architecture, the parallel design, six-week study, looking at three doses in placebo, makes sense to us for NT2. But as I said, when we get the data, we'll look at it. I think that, you know, starting at the core of the bullseye, NT1.., is a deficiency of orexin.
A dose of 2680 at four six or eight milligrams.
Or placebo and we will evaluate them over a six week period.
Rich: That'll be that's where the primary efficacy assessment maintenance of wasteful tests will be will be will be assessed and then there'll be a.
Rich: Subsequent safety extension.
Rich: All patients will move on to.
Rich: So the primary endpoint will be the maintenance of wakefulness test along with the Epworth sleepiness scale and we will be also capturing cataplexy rates in the <unk> patient population.
Rich: Aside if we're successful in NT too with respect to empty to study to look very similar.
Rich: Theres, not cataplexy, and indeed to patients, but the basic architecture of the parallel design six week study looking at three doses and placebo makes sense to us for NTT as I said, when we when we get the data.
Rich: We will look at the data I think that.
Rich: Starting with the core of the Bullseye N T. One.
Rich: Is a deficiency of orexin, so reintroducing in orexin agonist into that into that blank profile, we and others have shown now that we can drive meaningful wakefulness and clinically and tolerable dosage form I think NTT was more empirical and as as I H in the differential diagnosis between the two is fairly fluid.
Richard F. Pops: So reintroducing an orexin agonist into that blank profile, we and others have shown now that we can drive meaningful wakefulness in clinically intolerable doses. I think NT2 is more empirical, as is IH, and the differential diagnosis between the two is fairly fluid. But as I mentioned before, the expectations are that it will require higher doses, and also that the dose-response curve is shifting, that the tolerability curve has shifted as well, meaning patients can tolerate higher doses because they're not as sensitive to the Rx antagonists as the NT1. But we'll see that with human data. If these drugs meet the profile that we hope they have, I think they could transform the treatment of NT1. That, by itself, is a major medical and commercial innovation.
Rich: But as I mentioned before the expectations that we will require higher doses and also that the dose response curve and shifting to the tolerability curve has shifted as well meaning.
Rich: Meaning they can patients can tolerate higher doses, because they're not as sensitive to theater accident agonists as E&P ones, but we will see that with with human data commercially.
Yeah.
Rich: If these drugs meet the profile that we hope to have I think they could transform the treatment of <unk>.
Rich: That by itself is a major medical and commercial innovation.
Richard F. Pops: If it extends to NT2 and IH, there are two implications of that. First, it's a much bigger market set, obviously. But number two, it indicates that patients even with an existing orexin background can affect their wakefulness, which opens up potential opportunities for other orexin agonist products in other therapeutic indications outside of narcolepsy. So we're quite interested in seeing the data for those reasons.
Rich: If it extends to NTT NIH theres two implications of that.
Rich: First is that it's a much bigger market et cetera.
Rich: Obviously, but number two it indicates that patients even within an existing eurex and background, we can affect their wakefulness, which opens up potential opportunities for other orexin agonist products in other therapeutic indications outside of narcolepsy. So we're quite interested in seeing those data for those reasons.
Speaker Change: I appreciate the color quick question on the ball.
Todd Nichols: Quick question on Libolvi, you're a year into this or a little bit more in terms of growth. Is growth being driven by new to the brand or persistence that perhaps exceeds your expectations? How do you view the refills and persistence on the drug? Yeah, absolutely. It's a really, really important question.
Speaker Change: You're a year into this or a little bit more in terms of growth is its growth being driven by new to brand or persistence that perhaps exceeds your expectation how do you how do you view that.
Speaker Change: Refills and persistence on the truck.
Speaker Change: Yeah, absolutely, it's really really important question.
Speaker Change: I would say overall the dynamics across all those three are really healthy right now.
Todd Nichols: I would say overall, the dynamics across all those three are really healthy right now. First, if we just look at Q4, we just finished this quarter, overall TRX demand was 11%, which was really encouraging. If you look at it for the full year, it was over 100%, and again, both of those metrics led the branded category at year two, which is great.
Speaker Change: First if you if we just look at Q4, we just finished this quarter.
Speaker Change: Overall T Rx demand was 11%, which was really encouraging.
Speaker Change: If you look at it for the full year over 100% and again both of those metrics led to branded category at year, two which is great and so.
Todd Nichols: And so, and this is very consistent with what we hear in our market research, HCPs tell us that they're finding a lot of utility for the brand, that patients that they have on the product are having a good experience, and that they are planning to expand their utilization. So, qualitatively, that's a good sign.
Speaker Change: And it's very consistent with what we hear in our market research.
Speaker Change: <unk> tell us that they're finding a lot of utility for the brand at patients that they have on the product or having good experience and that they are planning to expand their utilization. So qualitatively thats a good sign we also look at persistency rates in terms of refills. We look at this in terms of claims level data and it's been very.
Todd Nichols: We also look at persistency rates in terms of refills. We look at this in terms of claims-level data, and it's been very encouraging as well there.
Speaker Change: Encouraging as well there right now we are seeing.
Todd Nichols: Right now, we're seeing, you know, persistency levels that are consistent with the branded category and better than Lanspain. And then, I'll just kind of reinforce, you heard my prepared remarks, the A308 data that was just released that we're going to be discussing at some medical meetings this year. That's some really important information.
Speaker Change: Persistency levels that are consistent with the branded category and better than Atlanta pain, and then I'll just kind of reinforce again you heard in my prepared remarks that the <unk>.
Speaker Change: <unk> hundred 88 data that was just released that we're going to be discussing at some medical meetings. This year.
Speaker Change: That's some really important information that those are patients that have been on the product long term for approximately four years.
Todd Nichols: Those are patients that have been on the product long term for approximately four years. They're showing durability of efficacy, they're showing durability of the low weight gain and also the metabolic profile as well, so that's gonna reinforce the persistency levels that we're expecting long term.
Theyre showing durability of <unk>.
Speaker Change: You can see the showing durability of.
Speaker Change: The low weight gain and also the metabolic profile as well too so that's going to reinforce.
Speaker Change: The persistency levels that were expecting long term.
Charles Duncan: Also, I appreciate the clear guidance. Thanks for taking the questions. Charles, our next question is from the line of Umer Raffat with Evercore.
Speaker Change: Also appreciate the clear guidance thanks for taking the question.
Speaker Change: Okay. Thanks Charles.
Speaker Change: Our next question is from the line of Omar Robot with Evercore. Please proceed with your questions.
Umer Raffat: Please proceed with your question. Hi guys, thanks for taking my question. So we know Takeda obviously decided not to move forward with narcolepsy type 2, and it seems like that might have been because they didn't want to go above doses of 10 milligrams with 861. I realize the upcoming data for you is single dose, and I wonder how you think about doses of 15 to 20 milligrams for narcolepsy type 2 in IH, knowing some of the visual disturbance observations at Thank you. Good morning, Umer.
Omar Robot: Hi, guys. Thanks for taking my question.
Omar Robot: So we know Takeda, obviously decided not to move forward in narcolepsy type two.
Omar Robot: It seems like that might have been because they don't want to go above doses of 10 milligrams with 861.
I realize the upcoming data for you is as single dose and I Wonder how are you thinking about dosing.
Omar Robot: 15 to 20 milligrams for narcolepsy type two NIH, knowing some of the visual disturbance observations.
Speaker Change: Add those dose levels previously thank you.
Speaker Change: Good morning, or I don't know if you heard my earlier responses to questions on this but.
Richard F. Pops: I don't know if you heard my earlier responses to questions on this, but I'll give you our current view of it. Our hypothesis with respect to NT2 versus NT1 is driven by our own experience as well as the experience of predecessor compounds in the clinic. So we expect... to shift the dose-response curve both in terms of tolerability as well as efficacy, meaning we expect to dose and we're testing doses that are 2 to 3x higher. We also expect the tolerability profile to shift along with that. So we'll learn as we get the data unblinded how that plays out, but as I mentioned before, our expectation is that there will be a lot more variability in the NT2 patients in terms of their baseline sleep latency in the NWT.
I'll give you our current view of it.
Speaker Change: Our hypothesis with respect to <unk>.
Speaker Change: Two versus N T. One is driven by our own experience as well as the experience of predecessor compounds in the clinic. So we expect.
Speaker Change: To shift the dose response curve, both in terms of Tolerability as well as efficacy, meaning we expect to dose and we're testing doses that are two to three X higher we expect also the tolerability profile of this shift along with that.
Speaker Change: So we'll we'll learn as we as we get the data unblinded, how that how that plays out but as I mentioned before our expectation is that there'll be a lot more variability in the <unk> patients in terms of their baseline sleep.
Speaker Change: Sleep latency and the <unk> test.
Richard F. Pops: And so what we're looking for is can we shift that in a dose-dependent manner at doses that are well tolerated. So that's what the test is designed for right now. In a single exposure across multiple doses, it allows us to see both dose response as well as durability of that response across the MWT, which we run every two hours over a 10-hour period during that study. So it's a data-rich format that you saw in the NT1 being replicated in the NT2.
Speaker Change: And so what we're looking for is it can we shift that in a dose dependent manner at doses that are well tolerated.
Speaker Change: So that's what the test is designed right now in a single exposure across multiple doses. It allows us to see both dose response as well as Darryl ability of that response across the M. WT, which we run every two hours over a 10 hour period during that in that in that study. So it's a data rich format that you saw in the <unk> reps.
Speaker Change: The cases in the <unk>.
Richard F. Pops: So we feel like the tolerability profile that was established in the sad and mad and healthy, where we didn't declare a maximum tolerated dose at 50 milligrams, gives us a lot of flexibility to dose. So we've picked these doses a priori to study in NT2 and IH. When we unblind those, we'll see whether we have those correct, whether they're too low, too high, or whether they're not tolerable at any dose to drive meaningful wakefulness. But our pretest hypothesis is that we should be able to drive wakefulness at a dose that's acceptably tolerable. But that theory will be replaced by data very soon. Got it. And Rich, is it reasonable to assume, and I know there's been some discrepancy in how streets looked at visual disturbances versus the Alkermes view, is it your opinion that those visual disturbances are not a gating factor in your opinion at doses like 20 milligrams?
Speaker Change: So we feel like the Tolerability profile that we established in the sad and Mad in healthy is where we didn't declare a maximum tolerated dose of 50 milligrams.
Speaker Change: Gives us a lot of flexibility to dose. So we've picked these doses a priori studying into NIH when we unblinded those we'll see whether we have those correct, whether they're too low too high or whether they're not tolerable at any dose to drive meaningful wakefulness, but our pretest hypothesis is that we should be able to drive wakefulness added.
Speaker Change: That's that's acceptably tolerable, but that theory will be replaced by data very soon.
Speaker Change: Got it and is it reasonable to assume and I know theres been some discrepancy in how street looked at visual disturbances versus the alchemy view is it your opinion that those visual disturbances or not a gating factor in your opinion at going to doses like 20 milligram.
Richard F. Pops: So let's establish the first principles. First, we saw some evidence of visual disturbances in healthy volunteers at doses above 15 milligrams. They were all mild or moderate. They were self-resolving. They were so self-limiting. And what we meant specifically by visual disturbances was blurriness of vision, or photosensitivity, or photophobia, which are categorized differently. Other people have reported hallucinations and things like that.
Speaker Change: So let's establish the first principles first principles are that we saw some evidence of visual disturbances in healthy volunteers at doses above 15 milligrams. They were all mild or moderate they were self resolving they were so self limiting so a patient might.
Speaker Change: What we meant specifically by visual disturbances was blurriness of vision or photo sensitivity or photophobia.
Speaker Change: Which categorized differently, others People's having have reported hallucinations and things like that we've not reported that we reported these visual disturbances in the healthy volunteers. We also reported we did not see them in the full <unk> one cohort that we tested at one three and eight milligrams.
Richard F. Pops: We've not reported that yet. Instead, we reported these visual disturbances in healthy volunteers. We also reported that we did not see them in the full NT1 cohort that we tested at 1, 3, and 8 milligrams. So our view is, to the extent that one saw visual disturbances that we saw in the healthies, i.e. Mild, transient, self-limiting, that would not be limiting for the drug. And if they're dose-dependent, it would be interesting to correlate them to the extent they present, which we haven't seen them present yet, to the extent they present, are they dose-dependent, i.e., is there a wakefulness threshold that is much earlier than anywhere where you might see a small transient visual disturbance? So I think there's just a lot more science that needs to be done here to figure out whether this is on target.
Speaker Change: Our view is to the extent that one saw visual disturbances that we saw in the healthier I E mild transient and self limiting that would not be limiting for the drug.
Speaker Change: Then if their dose dependent be interesting correlate them to the extent, they presented which we havent seen them present, yet to the extent. They presented are they dose dependent I E is there a wakefulness threshold that is much earlier than anywhere where you might see a small transient visual disturbance. So I think theres just a lot more science that needs to be done here to figure out could it be on target absolutely.
Richard F. Pops: Absolutely. But we'll know more. And I think phase two will be really instructive in this, because here, in that study, we'll be dosing consecutively, you know, daily for six weeks, and we'll be picking up all these AEs. And the final point I'll make is that what we've heard from the thought leaders is that you should be careful about determining your AE profile based on single doses because patients tolerate these drugs over time and they report them. AEs will change with the passage of time, and so we'll see a full data set when we complete the phase. Thank you. You're welcome.
Speaker Change: But we'll know more and that's I think the phase II will be really instructive in this because here in that study we will be dosing consecutively daily for six weeks and we will be picked picking up all of these these aes and the final point I'll make is it what we've heard from the thought leaders as it.
Speaker Change: Be careful about determining your AE profile based on single doses because patients accommodate these drugs overtime and Theyre reported.
Speaker Change: <unk> will change with the passage of time, and so we will see a full dataset when we complete the phase III.
Speaker Change: Thank you.
Speaker Change: Youre welcome.
Speaker Change: Our next questions come from the line of Marc Goodman with Leerink Partners. Please proceed with your questions.
Umer Raffat: Our next questions come from the line of Marc Goodman with Learing Partners. Please send your questions. Two questions.
Marc Harold Goodman: First, can you talk about Labalvi and gross to net? Just review how you're thinking about it for this year and whether we should be expecting that to continue changing over the next couple of years. Just the strategy there. And then also, secondly, on Vivitrol, just a little more color on what is happening with opioid dependence versus alcohol dependence, maybe just from the quarter and your expectations this year. I mean, is opioid dependence declining completely, or are they both growing, one's going a little faster? Just help us with that.
Marc Harold Goodman: So two questions first can you talk about <unk> and the gross to net.
Marc Harold Goodman: Just review, how you're thinking about it for this year and whether we should be expecting that to continue changing over the next couple of years just the strategy. There and then also secondly on vivid trial, just a little more color on what is happening with the opioid.
Marc Harold Goodman: Pendants versus the alcohol dependence, maybe just from the quarter and your expectations. This year.
Marc Harold Goodman: Opioid declining completely or is just are they both growing ones growing a little faster just help us with that thanks.
Todd Nichols: Thanks. Yeah, absolutely. So I'll, I'll take both of those.
Speaker Change: Yeah, absolutely so.
Todd Nichols: First, Growth Connect with LaBalvie. So, for Q4, growth net was approximately 29%. The increase was driven by higher Medicaid utilization and some one-time events.
Speaker Change: Take both of those first gross to net with laboratory so.
Speaker Change: For Q4 gross to net was approximately.
Speaker Change: 29% the increase was driven by higher Medicaid utilization and some some one time events.
Todd Nichols: Our expectation going into the year is that it should be relatively stable at this point. So that's what we're expecting for the full year. I will say as well that, you know, we're in constant discussions with payers, and to the extent that we do sign some additional agreements, that gross to net would widen. But the expectation for 2024 is that it will be in the upper 20s. In terms of Vivitrol right now, we're seeing really strong growth with our alcohol dependence strategy. And that, as you know, is the largest part of the market, more than 24 million Americans. We did see some headwinds in Q4 for opioid dependence, but that's really a subnational phenomenon. So it's state dependent; it's setting of care dependent.
Speaker Change: Our expectation going into the year is that it should be relatively stable at this point. So that's what we're expecting for the full year.
Speaker Change: I will say as well.
Speaker Change: We're in constant discussions with with payers and.
Speaker Change: To the extent that that we do sign some additional agreements that gross to net would widen but the expectation for 2024 is that what it would be in the upper twenty's.
Speaker Change: In terms of vivid trial right now, we're seeing really really strong growth with our alcohol dependence.
Speaker Change: Strategy and that's as you know is the largest part of the market and more than 24 million Americans.
Speaker Change: We did see some some headwinds in Q4 for opioid dependants, but that's really a sub national phenomenon. So its state dependent it's setting of care dependent so.
Todd Nichols: So there was a little bit more of a decline overall for that indication, but alcohol dependence is actually offsetting that. So our strategy is, again, 75% of all the volume that units are coming through alcohol dependence. And we've been transforming Vivitrol over the last several years, and our strategy is to continue to really go after that very large addressable market and really drive the brand through alcohol. Thanks. Thank you. The next question is from the line of Ash Farma with UBS.
Speaker Change: There was a little bit more of a decline overall for that indication, but the alcohol dependence of its actually offsetting that so our strategy is again is 75% of all the volume and the units are coming through from alcohol dependence and we've been transforming to the trial over the last several years our strategy is to continue to.
Speaker Change: Really go after that very large addressable market and really drive the brand through alcohol dependence.
Speaker Change: Thanks.
Speaker Change: Thank you. The next question is from the line of Ash firm up with UBS. Please proceed with your questions.
Ash Farma: Please proceed with your question. Hi, great, thanks for taking our questions. I have two on Libalvi.
Ash: Hi, great. Thanks for taking our questions. So I have two one tebaldi plus one.
Ash Farma: First one, can you update us where you are on Libalvi commercial contracting? I think previously, like during the second half last year, you said that you were looking at expanding your presence in more commercial plants. Can you tell us where we are in this process? And then second, so for Libalvi, there's still a little bit of a weight gain issue, but still much better than Olanzapine. So my question is, are these obesity products going to become a little bit more affordable and commonplace? Would patients on these weight loss drugs be more willing to consider Libalvi versus not? Yeah, absolutely, Ash.
Ash: Can you update us where you are on the evolving commercial contracting I think previously during the second half last year. You said that you were looking at expanding presence in more commercial plants.
Ash: We are in this process and then second.
Ash: It's important to boldly and does it still a little bit of an issue, but still much better than olanzapine. So my question is as these obesity products become Olympic more affordable uncommon place with patients on these weight loss drugs be more willing to consider any bodily what does not.
Speaker Change: Yes, absolutely Kash I'll take that so in terms of market access you know the way that we really think about market access as you know there is three channels Medicaid Medicare and commercial.
Todd Nichols: I'll take that. So in terms of market access, you know, the way that we really think about market access, as you know, there are three channels: Medicaid, Medicare, and commercial.
Todd Nichols: And access is really dependent upon the formulary or design of each of those payers. Libavi has very strong access, and there is a pathway to access for patients. So we think about this in terms of, you know, providing a healthy balance of contracting plus services to help patients get on therapy. The reason why we do that is we know that once you start increasing gross to net, it's very difficult to pull that back.
Speaker Change: And access is really dependent upon to formulary design of each of those Payors Laval. He has a very strong access and there is a pathway to access for patients. So we think about this in terms of.
Speaker Change: Providing a healthy balance of contracting plus services to help patients get on therapy. The reason why we do that is we know that.
Speaker Change: Once once you start increasing gross to net it's very difficult to pull that back. So our primary focus really is net sales profitability for each unit or.
Todd Nichols: So our primary focus really is net sales profitability for each unit. Our expectation for the year is that gross to net will be relatively stable to where we ended 2024, but it's a constant discussion that we have with commercial payers. And we're constantly, we look at each discussion, each opportunity on an individual basis by individual payers, and we have to balance, and we look at, you know, what is the gross to net expectation versus the volume expectation.
Speaker Change: Our expectation for the year is that gross to net would be relatively stable to where we ended 2024.
Speaker Change: But it's a constant discussion that we have with with commercial payers.
Speaker Change: And we're constantly we look at each discussion each opportunity on an individual basis by individual payers and we have to balance and we look at what is the gross to net expectation versus the volume expectation and our focus is really net sales.
Todd Nichols: Our focus is really net sales. At this point right now, we think that, you know, Libavi continues to be available to the majority of patients. We hear that from HCPs. Their perception is that access is similar to other branded agents.
Speaker Change: At this point right now we think that.
Speaker Change: <unk> continues to be available to the majority of patients we hear that from Hcp's. Their perception is that the access is similar to the other branded agents. So we're not seeing that as a rate limiting step.
Todd Nichols: So we're not seeing that as a rate-limiting step at this point right now. In terms of weight gain, you know, there was a, you know, that was the big hypothesis behind developing Libavi. That's always a weight issue, a rate-limiting step with Olanzappine is the metabolic profile and also weight gain, and we address that with Libavi. And so, you know, our expectation right now is that, based upon the efficacy of Olanzappine, we're going to continue to see broad utilization. The benefit to weight gain actually just supports it to be a foundational therapy for maintenance treatment.
Speaker Change: At this point right now in terms of weight gain you know there was a.
Speaker Change: And that was the big hypothesis behind developing laboratory, that's always a weight a rate limiting step with olanzapine is the metabolic profile and also weight gain and we addressed that with la Bobby.
Speaker Change: And so our expectation right now is that based upon the efficacy of Olanzapine, where we're going to continue to see broad utilization.
Speaker Change: The benefit to weight gain actually just supports it to be a foundational therapy for maintenance treatment. So.
Todd Nichols: So, you know, it'll be yet to be determined what's going to happen with some of the weight loss products that come into the marketplace right now, but, you know, our expectation is that we will continue to see strong demand for Levovian 25. Thanks. Our final question is from the line of Oyeere with Missoula Health Securities. Please proceed with your question. Hey guys, thanks for taking our questions. Could you, I guess, speak a little bit about what your expectations are for the gross net for LIBAL, not LIBAL-B, Vivitrol, and Aristata for 2024? And also, can you sort of speak about what came out of SG&A in 2023 versus 2024? If you're able to quantify that a little, that'd be great. Just wondering how much you're planning to spend on DTC going into 2024. And a quick... Third question, what's the timing for the data readout for MT2 NIH? This is Blair.
Speaker Change: It will be yet to be determine what's going to happen with some of the weight loss products that come into the marketplace right now, but our expectation is that we will continue to see strong demand for laboratory in 'twenty four.
Speaker Change: Thank you.
Ear: Our final question is from the line of ear with Mizuho Securities. Please proceed with your question.
Ear: Hey, guys. Thanks for taking our questions.
Ear: Could you I guess speak a little bit about what your expectations are for the gross to net full eyeball to eyeball the <unk> startup.
Mizuho Securities: For 2024.
Speaker Change: And also.
Mizuho Securities: Can you sort of speak about what came out of the SG&A in 2023 versus 2024.
Speaker Change: If you're able to quantify that a little of that be great.
Speaker Change: Great just wondering how much you're planning to spend on DTC going into 2024 and <unk>.
Speaker Change: Quick.
Speaker Change: Third question.
Speaker Change: It's the timing for the data readout for NTT NIH. Thanks.
Blair Jackson: Why don't I start with just the SG&A? So I think it's important to recognize as you compare 23 to 24 that it becomes difficult because 23 was such a complicated year for us, a year where we had a number of activities that were ongoing. We have an efficiency program that we're running through the organization to ensure that we're driving efficiency on every line item. We also had a number of one-time expenses in SG&A, particularly in the G&A element of that, associated with the separation of the mural oncology business. So those things really drive the predominant difference between 23 and 24.
Speaker Change: This is Blair why don't I start with just the SG&A.
Speaker Change: So I think I think it's important to recognize as you compare 23 to 24 that it becomes difficult because twenty-three was such a complicated year for us a year, where we had a number of activities that were ongoing.
Speaker Change: Have an efficiency program that we're running through the organization to ensure that were.
Speaker Change: Driving efficiency on every line item. We also had a number of one time expenses.
Long SG&A, particularly in the G&A element of that associated with the separation of the neuro oncology business.
Speaker Change: So those things really drive the predominant difference between 'twenty, three and 'twenty four and I'll turn it over to Todd to answer specific questions on DTC, yeah, absolutely in terms of DTC again.
Blair Jackson: And I'll turn it over to Todd to answer specific questions on DTC. Yeah, absolutely. In terms of DTC, again, we feel really good about the overall program that we have. It tested very well in market research, and we're starting to see the benefits of, you know, getting new patients started. It's a broad campaign that includes TV plus digital assets.
Todd Nichols: We feel really good about.
Todd Nichols: The overall program that we have it tested very well in market research and we're starting to see the benefits of.
Now to new patient starts.
Todd Nichols: It's a broad it's a broad campaign that includes TV plus digital assets. Our plan is to continue that in 2024.
Todd Nichols: Our plan is to continue that in 2024. Obviously, for competitive reasons, you know, I'm not going to get into the specifics on. We expect both of those products to be fairly consistent with the recent trend. So, approximately 54% for Vivitrol and approximately 56% for Aristotle for 2025.
Todd Nichols: Obviously for competitive reasons.
Todd Nichols: I'm not going to get into the specifics on the spend level, but we watch it very closely throughout the year, we watch it on a on a quarterly basis and we're going to continue to invest in DTC.
Todd Nichols: In terms of gross to net for for ventral and for Aerostar, We expect both of those products to be fairly consistent with the recent trend so approximately 54% for Venezuela on approximately 56% for <unk> for 2024.
Todd Nichols: And when do you expect the readout for the NT2 and IH Phase 1 study? We're completing that enrollment as we speak, so when we clean up those data, I'm looking to Sandy, but I think what we'll probably do is top line those data because there's not an immediate medical meeting until early summer or the fall. So we'll probably give a sense of the top line of the results and then wait for a medical meeting for the full development.
And when do you expect the readout.
Todd Nichols: It read out for <unk>.
Todd Nichols: BNP to NIH.
Todd Nichols: Phase one study.
Rich: Barry its rich, we're completing that enrollment as we speak so when we clean up those data.
Speaker Change: I'm looking to sandy, but I think what we'll probably do is topline those data because there's not an immediate medical meeting until early summer or the fall. So we'll probably give a sense on the topline.
Richard F. Pops: All right, thank you. Thanks. At this time, we've reached the end of the question and answer session. I'll now turn the call over to Sandy Coombs for closing remarks. All right. Thanks, Rob. Thanks, everyone, for joining us on the call today. Please don't hesitate to reach out to us at the company if you have any follow-up questions. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: <unk> and then wait for a medical meeting for the full disclosure.
Speaker Change: Alright, thank you.
Speaker Change: Youre welcome.
Speaker Change: Thank you.
Speaker Change: At this time, we've reached the end of the question and answer session now I'll turn the call over to Sandy Coombs for closing remarks.
Sandy Coombs: Alright, Thanks, Rob Thanks, everyone for joining us on the call today and please don't hesitate to reach out to us at the company. It's a follow up question. Thank you.
Speaker Change: This concludes today's conference you may disconnect your lines at this time and thank you for your participation.