Q3 2024 Alkermes PLC Earnings Call

October 24, 2024

Based on mute to prevent background noise. If you should require operator assistance during the call. Please press star zero from your telephone keypad. Please note. This conference is being recorded I will now turn the call over to Sandra Coombs Senior Vice President of Investor Relations and corporate Affairs Sandy you may now begin.

Greetings and welcome to the Alkermes third quarter 'twenty 'twenty four financial results Conference call. My name is Maria and I'll be your operator for today's call. All participant lines will be placed on mute to prevent background noise. If you should require operator assistance during the call. Please press star zero from your telephone keypad.

Sandra Coombs: Good morning, welcome to the Alkermes plc conference call to discuss our financial results and business update for the quarter ended September 32024 with me today are Richard Pops, Our CEO, Todd Nichols, our Chief commercial Officer, and Blair Jackson, our Chief operating officer.

Please note. This conference is being recorded I will now turn the call over to Sandra Coombs Senior Vice President of Investor Relations and corporate Affairs Sandy you may now begin.

During today's call, we will be referencing slides these slides along with our press release related financial tables, and reconciliations of the GAAP to non-GAAP financial measures that we'll discuss today are available on the investors section of Alkermes Dot Com, we believe the non-GAAP financial measures in conjunction with the GAAP results are useful in understanding the ongoing economic.

Sandra Coombs: Mix of our business our.

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 report filed with the SEC for important risk factors that could cause our actual results to differ materially from those expressed.

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 on the investors section of Alkermes Dot Com, we believe the non-GAAP financial measures in conjunction with the GAAP results are useful in understanding the ongoing economic.

Sandra Coombs: First are implied in the forward looking statements, we undertake no obligation to update or revise the information provided on this call or in the accompanying presentation. As a result of new information or future results or developments. After our prepared remarks, we'll open the call for Q&A and now like to turn the call over to Todd for a review of the commercial portfolio.

Sandra Coombs: Mix of our business our.

Todd Nichols: Thank you Sandy.

Speaker Change: And good morning, everyone.

Sandra Coombs: Or implied in the forward looking statements, we undertake no obligation to update or revise the information provided on this call or in the accompanying presentation. As a result of new information or future results or developments. After our prepared remarks, we'll open the call for Q&A and now like to turn the call over to Todd for a review of the commercial portfolio.

Todd Nichols: We generated strong growth of our proprietary product portfolio in the third quarter during the quarter our team drove aggregate net sales.

Todd Nichols: Of $273 million, reflecting 18% year over year growth.

Todd Nichols: With three quarters now complete we are on track to achieve our previously announced financial expectations, a proprietary net sales in excess of $1 billion in 2024.

Speaker Change: Thank you Sandy.

Speaker Change: And good morning, everyone.

Todd Nichols: We generated strong growth of our proprietary product portfolio in the third quarter during the quarter our team drove aggregate net sales.

Todd Nichols: Starting with neutral net sales in the third quarter were 101 hundred $13 $7 million, representing strong year over year growth of 14% driven by underlying demand and growth in the alcohol dependence indication for the full year, we expect victrola net sales towards the high end of our <unk>.

Todd Nichols: Of $273 million, reflecting 18% year over year growth.

Todd Nichols: With three quarters now complete we are on track to achieve our previously announced financial expectations, a proprietary net sales in excess of $1 billion in 2024.

Todd Nichols: Obviously announced range of $410 million to $430 million.

Todd Nichols: Starting with the troll net sales in the third quarter were 131, $113 $7 million, representing strong year over year growth of 14% driven by underlying demand and growth in the alcohol dependence indication for the full year, we expect the vitriol net sales towards the high end of our <unk>.

Todd Nichols: Turning to the air start a product family that sales in the third quarter were $84 $7 million.

Todd Nichols: During the quarter, we continue to see some softness in the overall schizophrenia long acting antipsychotic market, which we expect will persist through the end of the year with that in mind, we expect aerostar and net sales to be towards the lower end of our previously announced range of $340 million to $360 million for the full year.

Todd Nichols: We announced a range of $410 million to $430 million.

Todd Nichols: Turning to the air style at a product family that sales in the third quarter were $84 $7 million.

Todd Nichols: Year.

Speaker Change: Poorly bobbi during the quarter, we generated net sales of $74 $7 million.

Todd Nichols: During the quarter, we continued to see some softness in the overall schizophrenia long acting antipsychotic market, which we expect will persist through the end of the year with that in mind, we expect aerostar to net sales to be towards the lower end of our previously announced range of $340 million to $360 million for the full year.

Speaker Change: Total prescriptions of LIBOR, IV grew 5% sequentially and 37% year over year to approximately 57500 during the quarter.

Speaker Change: Reflecting strong underlying demand and continued expansion of prescriber breadth and depth.

Speaker Change: For the full year, we continue to expect Lee ball B net sales in the range of $275 million to $295 million.

Todd Nichols: Yeah.

Speaker Change: Poorly bobbi during the quarter, we generated net sales of $74 $7 million.

Total prescriptions ugly, Bobby grew 5% sequentially and 37% year over year to approximately 57500 during the quarter.

Speaker Change: The ball is an important treatment option in the schizophrenia and bipolar one disorder space differentiated by its efficacy and safety profile and long term data.

Speaker Change: Reflecting strong underlying demand and continued expansion of prescriber breadth and depth.

Speaker Change: To support the long term growth of the Bobby we are focused on executing our strategy to optimize its access profile and maximize net sales and profitability. We are pleased with our progress this year.

Speaker Change: For the full year, we continue to expect Lee ball B net sales in the range of $275 million to $295 million.

Speaker Change: The ball is an important treatment option in the schizophrenia and bipolar one disorder space differentiated by its efficacy and safety profile and long term data.

Speaker Change: This past quarter, another important commercial payer enhanced access to effective October one and discussions with other key payers are ongoing as.

As we have previously discussed as we expand commercial access we expect both higher unit volume and fulfillment rates as well as higher gross to nets.

Speaker Change: To support the long term growth of the ball, but we are focused on executing our strategy to optimize its access profile and maximize net sales and profitability. We are pleased with our progress this year.

Speaker Change: Over the course of next year, we expect gross to net adjustments will move into the mid Thirty's.

Speaker Change: This past quarter, another important commercial payer enhanced access to effective October one and discussions with other key payers are ongoing as.

Speaker Change: As we enter 2025, we will be focused on competitive dynamics in the antipsychotic space as we work to maximize the opportunities for both laboratory and Aerostar, our most effective investment as personal promotion via of our field force and we plan to increase our investment there to preserve a competitive share of voice we are made.

Speaker Change: As we have previously discussed as we expand commercial access we expect both higher unit volume and fulfillment rates as well as higher gross to nets.

Speaker Change: Over the course of next year, we expect gross to net adjustments will move into the mid Thirty's.

Speaker Change: Turning a sharp focus on executing our commercial strategy and believe we are well positioned to drive growth across our portfolio. We look forward to sharing our progress with you with that I will pass the call to Blair. Thank you Todd the third quarter marks an important inflection point for the company as we have worked over the last several years to transit transitioning the business to a finance.

Blair Jackson: <unk> profile driven by the performance of our proprietary commercial products and an efficient operating structure that has been realigned to support the needs of the business and drive profitability.

Speaker Change: And a sharp focus on executing our commercial strategy and believe we are well positioned to drive growth across our portfolio. We look forward to sharing our progress with you with that I will pass the call to Blair. Thank you Todd the third quarter marks an important inflection point for the company as we've worked over the last several years to transit transition the business to a finance.

Blair Jackson: Q3 was another productive quarter for alkermes highlighted by the strong performance of <unk> and <unk> and our continued focus on operating efficiency.

Blair Jackson: With three quarters of solid results behind us we are reiterating our financial expectations for 2024.

Blair Jackson: Profile driven by the performance of our proprietary commercial products and an efficient operating structure that has been realigned to support the needs of the business and drive profitability.

Blair Jackson: For the third quarter, we generated total revenues of $378 $1 million driven by our proprietary product portfolio, which grew 18% year over year.

Blair Jackson: Q3 was another productive quarter for alkermes highlighted by the strong performance of vivid troll and <unk> and our continued focus on operating efficiency.

Blair Jackson: Starting with vitriol net sales in the quarter were $113 $7 million.

Blair Jackson: With three quarters of solid results behind us we are reiterating our financial expectations for 2024.

Blair Jackson: Compared to $99 3 million in the same period last year.

Blair Jackson: For the <unk> product family net sales were $84 7 million compared.

Blair Jackson: For the third quarter, we generated total revenues of $378 $1 million driven by our proprietary product portfolio, which grew 18% year over year.

Blair Jackson: Compared to $81 $8 million in Q3 last year and for <unk> net sales were $774 7 million compared to $50 7 million for the same period last year.

Blair Jackson: Starting with vitriol net sales in the quarter were $113 7 million compared to $99 $3 million in the same period last year.

Blair Jackson: Across our proprietary commercial products inventory remains stable on a month on hand basis.

Blair Jackson: For the <unk> product family net sales were $84 7 million compared to $81 $8 million in Q3 last year and for the ball V. Net sales were $774 $7 million compared to $50 $7 million for the same period last year.

Blair Jackson: Moving on to our manufacturing and royalty business in the third quarter, we recorded manufacturing and royalty revenues $105 $1 million.

Blair Jackson: Revenues from the long acting and Vega products were $58 $4 million.

Blair Jackson: Compared to $76 1 million for Q3 last year.

Blair Jackson: Across our proprietary commercial products inventory remains stable on a month on hand basis.

Blair Jackson: As previously disclosed and reflected in our financial expectations are royalties on net sales of Invega cisterna in the U S ended in mid August of this year, we will continue to receive royalties on net sales of Invega <unk> and invega half here in the U S and on the long acting and Vega products outside of the U S.

Blair Jackson: Moving on to our manufacturing and royalty business in the third quarter, we recorded manufacturing and royalty revenues $105 1 million revenues.

Blair Jackson: Revenues from the long acting and Vega products were $58 $4 million compared to $76 1 million for Q3 last year.

Blair Jackson: Revenues from <unk> were $32 6 million compared to $34 6 million for Q3 last year.

Blair Jackson: As previously disclosed and reflected in our financial expectations are royalties on net sales of Invega <unk> in the U S ended in mid August of this year, we will continue to receive royalties on net sales of Invega <unk> and invega half here in the U S and on the long acting and Vega products outside of the U S.

Blair Jackson: Due to the timing of manufacturing activities, we did not record any manufacturing revenues related to <unk> during the quarter, but we expect them pure revenues of approximately $25 million. In Q4. This will represent the conclusion of our manufacturing obligations and associated revenues related to <unk>.

Blair Jackson: Revenues from <unk> were $32 $6 million compared to $34 6 million for Q3 last year.

Blair Jackson: Now I will turn to our operating expenses in our financial results from continuing operations. Following the separation of our oncology business late last year.

Due to the timing of manufacturing activities, we did not record any manufacturing revenues related to <unk> during the quarter, but we expect them pure revenues of approximately $25 million. In Q4. This will represent the conclusion of our manufacturing obligations and associated revenues related to <unk>.

Blair Jackson: Cost of goods sold were $63 1 million compared to $61 5 million for Q3 last year.

Blair Jackson: R&D expenses were $59 9 million compared.

Blair Jackson: Compared to $64 9 million for Q3 last year. This consisted of focused investments in our neuroscience development programs, primarily related to the <unk> 2680 clinical program and support activities for our proprietary commercial products. We expect R&D expense to remain in this range through the end of the year.

Blair Jackson: Now I will turn to our operating expenses in our financial results from continuing operations. Following the separation of our oncology business late last year.

Blair Jackson: Cost of goods sold were $63 1 million compared to $61 5 million for Q3 last year.

Blair Jackson: R&D expenses were $59 9 million compared.

Blair Jackson: SG&A expenses were $154 million compared.

Blair Jackson: Compared to $156 4 million for Q3 last year looks.

Blair Jackson: Looking ahead, we expect SG&A expenses to decrease in the fourth quarter, primarily reflecting the timing and mix of commercial promotional activities.

Blair Jackson: We continue to focus on driving profitability and during the third quarter. We delivered GAAP net income from continuing operations of $92 8 million non-GAAP net income from continuing operations of $121 4 million.

Blair Jackson: SG&A expenses were $154 million compared.

Blair Jackson: Compared to $156 4 million for Q3 last year looks.

Blair Jackson: Looking ahead, we expect SG&A expenses to decrease in the fourth quarter, primarily reflecting the timing and mix of commercial promotional activities.

Blair Jackson: And EBITDA from continuing operations of $112 3 million.

Blair Jackson: Turning to our balance sheet, we ended the third quarter in a strong financial position with $927 $8 million in cash and total investments during.

Blair Jackson: We continue to focus on driving profitability and during the third quarter. We delivered GAAP net income from continuing operations of $92 $8 million non-GAAP net income from continuing operations of $121 4 million and EBITDA from continuing operations of $112 $3 million.

Blair Jackson: During the quarter, we deployed approximately $116 million to repurchase four 4 million shares as part of the $400 million share repurchase program authorized earlier this year.

Blair Jackson: With $200 million of remaining authorization going forward, we may opportunistically repurchase shares dependent on market conditions and the capital needs of the business.

Blair Jackson: Turning to our balance sheet, we ended the third quarter in a strong financial position with $927 $8 million in cash and total investments.

Blair Jackson: During the quarter, we deployed approximately $116 million to repurchase four 4 million shares as part of the $400 million share repurchase program authorized earlier this year.

Blair Jackson: We are in a strong financial position and have made solid progress across the business as we execute against our strategic operational and financial priorities for 2024.

Blair Jackson: Switching gears I'm going to spend a minute on our plans for next year.

Blair Jackson: With $200 million of remaining authorization going forward, we may opportunistically repurchase shares dependent on market conditions and the capital needs of the business.

Blair Jackson: In 2025, we plan to manage the business to deliver significant profitability and cash flow, while increasing our investment in the growth opportunities that we believe will be the key drivers of shareholder value.

Blair Jackson: We are in a strong financial position and have made solid progress across the business as we execute against our strategic operational and financial priorities for 2020 for switch.

Blair Jackson: We will provide detailed expectations in February but today I will highlight a few considerations to keep in mind in 2025, we expect our top line will be driven primarily by the growth of our proprietary commercial portfolio, reflecting the expected dynamics within our royalty and manufacturing revenue streams, namely.

Blair Jackson: Switching gears I'm going to spend a minute on our plans for next year.

Blair Jackson: The previously announced conclusion of royalties on U S. Net sales of Invega <unk> Pham Purion manufacturing revenues in 2024 and.

Blair Jackson: And the planned transition of <unk> manufacturing to Biogen in 2025.

Blair Jackson: Collectively we expect these factors will impact royalty and manufacturing revenues by approximately $200 million in 2025.

Blair Jackson: The previously announced conclusion of royalties on U S. Net sales of Mega sustain and fan pier in manufacturing revenues in 2024 and.

Blair Jackson: Primarily driven by our early success in the clinic with <unk> 2680, we expect our overall operating costs will increase modestly as we advance the ongoing <unk> 2680 phase two studies and expand into idiopathic hypersomnia and as we increase our investment in psychiatry commercial footprint to.

Blair Jackson: And the planned transition of Humira manufacturing to Biogen in 2025.

Collectively we expect these factors will impact royalty and manufacturing revenues by approximately $200 million in 2025.

Blair Jackson: To support the growth of <unk> and Aerostar taken together, we're committed to maintaining a robust cash generating business and expect to deliver profitability of more than $200 million in EBITDA next year.

Blair Jackson: Primarily driven by our early success in the clinic without 26 80, we expect our overall operating costs will increase modestly as we advance the ongoing Alpha 26, 80 phase two studies and expand into idiopathic hypersomnia.

Blair Jackson: Our 2025 financial profile will demonstrate the significant transformation of the company over the last several years and serve as a strong foundation for our future growth and financial performance with that I'll now hand, the call to rich.

Blair Jackson: And as we increase our investment in psychiatry commercial footprint to support the growth of <unk> and Ers data taken together, we're committed to maintaining a robust cash generating business and expect to deliver profitability of more than $200 million in EBITDA next year.

Rich: That's great. Thank you Blair.

Rich: 24 has been a key transition year for the company, we entered the year as a pure play neuroscience company with a strong top line and a streamlined cost structure and planning for our final year of cash flow from royalties related to and biggest systemic.

Our focus in 2024 has been to manage the business to generate a substantial amount of cash and demonstrate the profitability inherent in the business. While we advanced the Alex 2680 clinical program to get a sense of its potential.

Rich: That's great. Thank you Blair.

Rich: 2024 has been a key transition year for the company, we entered the year as a pure play neuroscience company with a strong top line and a streamlined cost structure and planning for our final year of cash flow from royalties related to Invega cisterna.

Rich: We now have positive phase <unk> data in hand for 2680 in patients with narcolepsy type one narcolepsy type two and idiopathic hypersomnia.

Rich: Our focus in 2024 has been to manage the business to generate a substantial amount of cash and demonstrate the profitability inherent in the business. While we advance the Alex 2680 clinical program to get a sense of its potential.

Rich: These data underscore the differentiated profile of 2680 in the Orexin two receptor agonist therapeutic category and based on the successful outcome of the phase one b, we've advanced quickly into a phase III program.

Rich: We now have positive phase <unk> data in hand for 2680 in patients with narcolepsy type one narcolepsy type two and idiopathic hypersomnia. These.

Rich: As we prepare to enter 2025 as you heard from Blair, we plan to manage the business to generate significant cash and profitability, that's an important priority for us.

Rich: These data underscore the differentiated profile of 2006, Eddie in the Orexin two receptor agonists therapeutic category and based on the successful outcome of the phase one b, we've advanced quickly into a phase III program.

Rich: We believe that the way to create significant shareholder value is through deploying capital toward development candidates with significant potential and a favorite favorable benefit risk profile new medicines.

As we prepare to enter 2025 as you heard from Blair, we plan to manage the business to generate significant cash and profitability, that's an important priority for us.

Rich: We have clinical proof of concept data supporting the potential of <unk> 2680 in narcolepsy NIH.

Rich: In preclinical data, suggesting the potential applicability of <unk> receptor agonists in other disease categories.

Rich: We believe that the way to create significant shareholder value is through deploying capital towards development candidates with significant potential and a favorite favorable benefit risk profile new medicines.

Rich: So our focus is on aggressively moving forward R&D initiatives that can drive meaningful shareholder value.

Rich: Two weeks ago, we provided a comprehensive update on the 2680 program and other orexin candidates advancing in our development portfolio the.

Rich: We have clinical proof of concept data supporting the potential about 2680 and narcolepsy NIH.

Rich: And preclinical data, suggesting the potential applicability of <unk> two receptor agonist in other disease categories.

Rich: The replay of materials from that portfolio strategy review are still available on our website I recommend you take a look at them and if you haven't so I'll be brief today, our 2680 phase II studies in <unk> and <unk> are underway with sites actively screening and enrolling patients.

Rich: So our focus is on aggressively moving forward R&D initiatives that can drive meaningful shareholder value.

Rich: Two weeks ago, we provided a comprehensive update on the 26 80 program and other orexin candidates advancing in our development portfolio.

Rich: As we announced earlier this month, we expect data from both studies in the second half of 2025.

Rich: Play of materials from that portfolio strategy review are still available on our website I recommend you take a look at them and if you haven't so I'll be brief today are 26, 80 phase II studies in <unk> and <unk> are underway with sites actively screening and enrolling patients.

Rich: We're continuing to activate additional clinical trial sites to further support enrollment and to provide a strong operational foundation for potential phase III studies, we are preparing for success with the goal of moving as swiftly as possible from phase two into Registrational studies.

Rich: As we announced earlier this month, we expect data from both studies in the second half of 2025.

Rich: The scientific foundation supporting this class of investigational medicines is growing orexin based therapies have the potential to transform how narcolepsy NIH are treated.

Rich: With many molecular design parameters, requiring optimization, we believe that different molecules ours and others, we will demonstrate different pharmaceutical properties in the clinic to date, where just one or two companies that have presented data in patients with hypersound disorders, we like our positioning in this competitive landscape.

Rich: The scientific foundation supporting this class of investigational medicines is growing.

Rich: Orexin based therapies have the potential to transform how narcolepsy NIH are treated.

<unk> thousand 680 is the only entered advancing to phase II and empty one Institute NIH based on data in patients.

Rich: With many molecular design parameters, requiring optimization, we believe that different molecules ours, and others, who will demonstrate different pharmaceutical properties in the clinic today.

The phase II data, we expect next year has the potential to be transformative catalyst in this development space and for the company.

Rich: We're just one of two companies that have presented data in patients with Hypersound mounts disorders, we like our positioning in this competitive landscape.

Rich: The implications of this biology and pathway may extend beyond hyper somnolence disorders. The Orexin system is associated with the activation of multiple downstream neurotransmitters in neurosurgery.

26, 80 is the only entered advancing to phase II and empty one Institute NIH based on data in patients.

Rich: Our preclinical data suggest that Orexin based pharmacology has the potential to extend to multiple CNS disease settings, where sleepiness fatigue cognition and mood are prominent clinical features.

Rich: The phase two data we expect next year has the potential to be transformative catalyst in this development space and for the company.

Rich: We are leveraging this understanding pursuing a multifaceted research program designed to identify the most promising liens for development.

Rich: We recently shared a selection of our preclinical data that demonstrated benefit with Orexin two receptor agonist in highly translatable models and symptomatic domains related to mood attention and impulsivity.

Rich: Our preclinical data suggest that Orexin based pharmacology has the potential to extend to multiple CNS disease settings, where sleepiness fatigue cognition and move our prominent clinical features.

Rich: We're continuing these efforts to map and prioritize the disorders, where we see the greatest opportunity to drive benefit for patients and for the company in.

Rich: We are leveraging this understanding pursuing a multifaceted research program designed to identify the most promising lanes for development.

Rich: In parallel we're planning to advance two additional orexin two receptor agonist candidates into first in human studies next year.

Rich: We recently shared a selection of our preclinical data demonstrated benefit with Orexin two receptor agonist in highly translatable models and symptomatic domains related to mood attention and impulsivity.

Rich: These candidates share certain features of <unk> 2060, <unk> in terms of required potency and selectivity, but we believe they have distinct pharmaceutical properties will characterize these properties and our early clinical experience and this will inform our development strategy for the portfolio.

Rich: We're continuing these efforts to map and prioritize the disorders, where we see the greatest opportunity to drive benefit for patients and for the company.

Rich: In parallel we're planning to advance two additional orexin two receptor agonist candidates into first in human studies next year.

Rich: We will exit 2024, with a clear strategy to create value for shareholders and we're carrying great sense of momentum as we go into 2025, so with that I'll turn the call back to sandy to.

Rich: These candidates share certain features of our 2680 in terms of required potency and selectivity, but we believe they havent distinct pharmaceutical properties will characterize these properties and our early clinical experience and this will inform our development strategy for the portfolio.

Speaker Change: During the Q&A.

Sandra Coombs: Great. Thank you rich.

Sandra Coombs: We'll now open the call for Q&A. Please.

Sandra Coombs: At this time.

Rich: We will exit 2024, with a clear strategy to create value for shareholders and we're carrying great sense of momentum as we go into 2025, so with that I'll turn the call back to Sandy to run the Q&A.

Speaker Change: We'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Information tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue. We ask that you limit your questions to one and a follow up so that others may have an opportunity to ask questions.

Sandra Coombs: Great. Thank you rich.

Sandra Coombs: We will now open the call for Q&A. Please.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star.

At this time.

Speaker Change: We'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue. We ask that you limit your questions to one and a follow up so that others may have an opportunity to ask questions.

Speaker Change: One moment, please while we poll for questions.

Speaker Change: Our first question is from Joseph.

Speaker Change: With TD Cowen. Please proceed with your question.

Joseph: Hi, there good morning. Thank you for taking my question and congrats on all the progress.

Speaker Change: Maybe just talk a little bit difficult actually there has been a little bit more uptick in sort of the questioning around the impact of <unk>, one drugs on sort of impulse control and.

Sandra Coombs: All participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: One moment, please while we poll for questions.

Speaker Change: Our first question is from Joseph <unk>.

Speaker Change: Refraining from alcohol, obviously, it seems like these companies aren't going after.

Speaker Change: TB Cowen. Please proceed with your question.

Speaker Change: We can make alcohol indications, but do you foresee any competitive threat from GOP ones on the Datacom business or do you see these as sort of distinct patient populations.

Joseph: Hi, there good morning. Thank you for taking my question and congrats on all the progress.

Speaker Change: Maybe just talk a little bit under the call actually there has been a little bit more uptick in sort of the questioning around the impact of <unk>, one drugs on for impulse control and.

Speaker Change: Right now not only into each other thank you.

Speaker Change: Yes, I'll take that we've been watching the market pretty closely with that there have been some publications that we're monitoring and watching we don't see that really as a as an impact into the trial at this point.

Speaker Change: Remember, bringing from alcohol, obviously it seems like these companies arent going after specific alcohol indications, but do you foresee any competitive threat from GOP ones on the Datacom business or do you see these as sort of distinct patient populations that.

Speaker Change: In the quarter, we saw strong demand approximately 7%, which is really being driven by the alcohol dependence indication and so our expectation is that we'll continue to grow we'll be monitoring the uptake of <unk> in general.

Speaker Change: Right now not only into each other thank you.

Speaker Change: Yeah, Yeah, I'll take that.

Speaker Change: Been watching the market pretty closely with that are there have been some publications that we're monitoring and watching we don't see that really as a as an impact of a trial at this point.

Speaker Change: But at this point right now, we don't see that impacting vishal and alcohol dependence.

Speaker Change: Alright, so maybe just a follow up on the pipeline for directions. I guess do you anticipate that this class will need.

Speaker Change: In the quarter, we saw strong demand are approximately 7%, which is really being driven by the alcohol dependence indication.

Speaker Change: Sort of abuse potential studies or pre clinically or clinically before formal FDA approval and are you anticipating that as part of the clinical development program.

Speaker Change: And so our expectation is that we'll continue to grow we'll be monitoring the uptake of <unk> in general.

Speaker Change: Yes. This is rich I think that just as a matter of course for a CNS active compounds will be.

Speaker Change: But at this point right now, we don't see that impacting vishal and alcohol dependence.

Speaker Change: At the preclinical and clinical abuse potential studies.

Speaker Change: Perfect and maybe just a follow up on the pipeline for <unk> I guess do you anticipate that this class will need.

Speaker Change: Perfect. Thank you very much youre welcome.

Speaker Change: Sort of abuse potential studies or pre clinically or clinically before formal FDA approval and are you anticipating that as part of our clinical development program.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Robert <unk> with Evercore. Please proceed with your question.

Hi, guys. Thanks for taking my questions I have two here if I may 1st Rich I know you mentioned distinct pharmaceutical properties for your Nextgen Orexin and will stay patient and look forward to that when that's ready.

Speaker Change: Yeah. This is rich I think that that's a matter of course for a CNS active compounds will be speaking at the preclinical and clinical abuse potential studies.

The only thing I do want to clarify is are you are you guys aiming for lower C. Max with one year development candidates, the new ones coming up I'm thinking about possible applications for from a tolerability profile and secondly, Blair you mentioned, something which confuses me a bit.

Speaker Change: Perfect. Thank you very much youre welcome.

Speaker Change: Our next question comes from Nomura with Evercore. Please proceed with your question.

Speaker Change: Hi, guys. Thanks for taking my questions I have two here if I may 1st Rich I know you mentioned distinct pharmaceutical properties for your Nextgen Orexin and will stay patient and look forward to that when that's ready.

Speaker Change: I think you guys are tracking at about.

Speaker Change: $400 million EBITDA. This year did you say 200 million EBITDA for next year, so cut into half on EBITDA for next year.

Speaker Change: But the only thing I do want to clarify is are you are you guys aiming for lower C. Max with one year of development candidates, the new ones coming up I'm thinking about possible implications for from a tolerability profile.

Speaker Change: Yes, so I'll start morning Newmar.

Speaker Change: Yes, we actually we think that the PK profile for <unk> is quite good right now so no explicit design objective is not to lower C. Max but it is to focus on the PK properties as we done in the past.

Speaker Change: Secondly, Blair, you mentioned, something which confuses me a bit.

Speaker Change: I think you guys are tracking at about.

Speaker Change: 400 million in EBITDA. This year did you say 200 million EBITDA for next year, so cut into half on EBITDA for next year.

Speaker Change: And then this is Blair. Thanks for the question Yeah look as we move into next year I mean, one of the reasons. We wanted to provide some guidance into 'twenty five for next year is that it is such a transformational year for the company as we move forward and we want to make sure everybody has their models in order as we move into such a busy year.

Speaker Change: Yeah, So I'll start newmar.

Yeah, we actually we think that the PK profile for <unk> is quite good right now so no explicit design objective is not to lower C. Max but it is to focus on on the PK properties as we've done in the past.

Speaker Change: We have a couple of dynamics going on overall with the business as we put into the.

Blair Jackson: And then this is Blair. Thanks for the question Yeah look as we move into next year I mean, one of the reasons. We wanted to provide some guidance into 'twenty five for next year is that it is such a transformational year for the company as we move forward and we want to make sure everybody has their models in order as we move into such a busy year.

Speaker Change: The prepared remarks, the first and foremost is on the revenue side associated with our manufacturing and royalty revenue, where we see a transition now away from the.

Speaker Change: In Vegas, the center revenue as well as we transition some of our manufacturing and revenue out of the Athlone facility. So this relates to <unk>.

Blair Jackson: We have a couple of dynamics going on overall with the business as we put into the.

Blair Jackson: The prepared remarks, the first and foremost is on the revenue side associated with our manufacturing and royalty revenue, where we see a transition now away from the.

Speaker Change: Moving to Biogen and then that would be moved into the margin side of the business. Overall, so we see a net impact of that of about $200 million next year on the revenue side.

Blair Jackson: In Vegas, the center revenue as well as we transition some of our manufacturing and revenue.

Speaker Change: Separately as we move into 2025, one of the things that we need to do is invest in the growth of our business as we have some really exciting things happening on our research programs and on the commercial side on the research side is really about <unk> 2680, and the rapid growth of that.

Blair Jackson: Out of the Ashland facility. So this relates to meritor.

Blair Jackson: Moving to Biogen, and then that being moved into the margin side of the business. Overall, so we see a net impact of that of about $200 million next year on the revenue side separately as we move into 2025, one of the things that we need to do is invest in.

Speaker Change: Graeme we're going to be continuing to support the <unk> 2600, <unk> and NTT enrollment and we've also now added idiopathic hypersomnia to the program. So that'll add our typical program for that size of about $40 million or so so that'll increase the R&D revenue or cost there.

Blair Jackson: The growth of our business as we have some really exciting things happening on our research programs and on the commercial side on the research side is really about out to 2680 and the rapid growth of that program, we're going to be continuing to support the Alex 2680 N T. One and N T. Two enrollment and we've also now.

Speaker Change: On the commercial side as Todd mentioned, we will be expanding our sales force.

Speaker Change: To meet some of the competitive dynamics of the space.

Speaker Change: But that's really where we're focusing our investment next year, we're going to.

Blair Jackson: Add in idiopathic hypersomnia to the program. So that'll add you know our typical program for that size of about $40 million or so so that will increase the R&D revenue or cost there.

Speaker Change: Strong cost discipline across the rest of the spend items and that will then lead to about to something north of $200 million in EBIT next year, we'll put a finer point on it as we get to February and we guide.

Speaker Change: On the commercial side as Todd mentioned, we will be expanding our sales force.

Speaker Change: As we have more line of sight to the year.

Speaker Change: To meet some of the conduct competitive dynamics of the space.

Speaker Change: Thank you.

But that's really where we're focusing our investment next year, we're going to have.

Speaker Change: Strong cost discipline across the rest of the spend items and that will then lead to about to something north of $200 million in.

Speaker Change: Our next question comes from Paul Matteis Stifel. Please proceed with your question.

Paul Matteis: Hey, good morning. Thanks, so much for taking my questions I really appreciate it R&D EBITDA guidance I wanted to just follow up there and maybe if you could give us a little bit more color. What do you think as you look at street models for 2025 is the biggest mismatch Blair I know you mentioned that manufacturing and royalty revenues, but.

Speaker Change: In EBITDA next year, we'll put a finer point on it as we get to February and we guide.

Speaker Change: As we have more line of sight to the year.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Paul Mckesson Stifel. Please proceed with your question.

Paul Matteis: It doesn't feel like that could really.

Paul Matteis: The Delta here versus consensus is there something also on the product side. When we think about the run rate of laboratory or Eric data, where you think maybe some folks had been overly optimistic as competition increases in that market and then I'll have empty to NIH for 2688, if you just take a step back I mean, what does the hour.

Paul Mckesson: Hey, good morning. Thanks, so much for taking my questions I really appreciate it on the EBITDA guidance I wanted to just follow up there and maybe if you could give us a little bit more color. What do you think as you look at street models for 2025 is the biggest mismatch, where I know you mentioned that manufacturing and royalty revenues, but it.

Paul Mckesson: It doesn't feel like that could really explain the delta here versus consensus is there something also on the product side. When we think about the run rate of the ball V or Aerostar, where you think maybe some folks have been overly optimistic as competition increases in that market.

Paul Matteis: Thank you.

Paul Matteis: Biggest risk from the translate ability would be early data to.

Paul Matteis: Succeeding in those phase III studies, and I guess, what gets you comfortable with that risk. Thank you.

Speaker Change: But go ahead in the long tail of things I'm sure Hey, Paul Thanks for the question.

Speaker Change: No actually I think I think actually if you look at the biggest mismatch is really on the manufacturing and royalty revenue I think the.

Speaker Change: And then on NTT <unk> and IH for 26 88, if you just take a step back I mean, what does the out earnings view as the biggest risk from the translate ability of your early data.

Speaker Change: The dynamic that we're looking at through next year, just a lot of folks just didn't understand the a how the invega revenue was going to transition and then b, how we're handling the transition of the manufacturing activity in.

Speaker Change: Succeeding in those phase III studies, and I guess, what gets you comfortable with that risk. Thank you.

Speaker Change: But go ahead in the long tail of things sure Hey, Paul Thanks for the question.

Speaker Change: No actually I think I think actually if you look at the biggest mismatch is really on the manufacturing and royalty revenue I think the the dynamic that we're looking at through next year, just a lot of folks just didn't understand the a how the invega revenue was gonna transition and then b.

Speaker Change: In.

Speaker Change: <unk> loan I think I think as we as we look at the business moving forward.

Speaker Change: We've been planning for this for a really long time, and how we were going to do this transition and I.

Speaker Change: I think we've been trying to explain it and we would just wanted to lay it out a little more clearly today. The other piece I think that some folks are missing in their models for next year is that we are increasing our R&D spend associated with 2680 as it progresses is deeper into the.

Speaker Change: How we're handling the transition of the manufacturing activity in.

Speaker Change: In.

Speaker Change: <unk> flown I think I think as we as we look at the business moving forward.

Speaker Change: The development program and so those were really the two areas of mismatch in street models.

Speaker Change: We've been planning for this for a really long time, and how we were going to do this transition and I think we've been trying to explain it and we were just wanted to lay it out a little more clearly today. The other piece I think that some folks are missing in their models for next year is that we are increasing our R&D spend associated with 2680 <unk> as it.

Speaker Change: Mitch.

Mitch: So Paul I'll take I'll take that.

Mitch: I think from our perspective.

Mitch: As you contrast empty one into two NIH, you're sort of moving outward in concentric circles of.

Speaker Change: <unk> deeper into the the.

Speaker Change: The development program.

Mitch: Biological certainty I N T. One of course being a deficiency of <unk> replacement makes a lot of sense <unk> variable orexin tone in patients.

Speaker Change: And so those were really the two areas of mismatch in street models.

Speaker Change: Mitch.

Mitch: And IH, even further out and so the variability in those patient populations increases as you move from one to the other so I think the biggest risk in India two is.

Speaker Change: So Paul I'll take I'll take that.

Speaker Change: I think from our perspective.

Speaker Change: As you contrast, empty one NTT NIH, you're sort of moving outward in concentric circles of biological certainty I N T. One of course being a deficiency for Rexam. So replacement makes a lot of sense empty too variable orexin tone in patients and NIH, even further out and so the variability.

Mitch: Just the variability of the patient population, but the primary endpoint in those studies is going to be the maintenance of wakefulness test and we've already shown against the backdrop of a lot of variability that we can meaningfully changed in a dose dependent way of the M. WT Interestingly NIH, though the primary endpoint is not what we tested in phase one be the maintenance away from this test.

Speaker Change: And those patient populations increases as you move from one to the other so I think the biggest risk in India too is.

Mitch: The approvable endpoint NIH is probably it's more one of the idiopathic hypersomnia scores and we don't have experience with that yet so as we design the phase III program for IH, and we're actually introducing new endpoints to capture that disease more accurately. So I think the simple answer to the question that probably the biggest risk is the variability of that patient.

Speaker Change: Just the variability of the patient population, but the primary endpoint in those studies is going to be the maintenance of wakefulness test and we've already shown against the backdrop of a lot of variability that we can meaningfully changed in a dose dependent way the MW T Interestingly and IH, though the primary endpoint is not what we tested in phase one be the maintenance away from this test.

Mitch: Populations.

Speaker Change: The approvable endpoint NIH is probably it's more one of the idiopathic hypersomnia scores and we don't have experience with that yet so as we design the phase III program for IH, and we're actually introducing new endpoints that capture that disease more accurately. So I think the simple answer the question that probably the biggest risk is the variability of the patient.

Speaker Change: Got it thanks very much.

Speaker Change: Okay.

Speaker Change: Our next question comes from Charles Duncan with Cantor Fitzgerald. Please proceed with your question.

Charles Duncan: Hey, good morning, Thanks for taking my question congratulations on the progress in the quarter I had a question on commercial and then one on the pipeline with regard to commercial perhaps a follow up to the last one when do you think about live ball the and the market dynamics, there could you give us a little more.

Speaker Change: Relations.

Speaker Change: Got it thanks very much.

Speaker Change: Our next question comes from Charles Duncan with Cantor Fitzgerald. Please proceed with your question.

Charles Duncan: Color on where you are picking up scripts and how you think that dynamic may or may not be impacted.

Charles Duncan: Hey, good morning, Thanks for taking the question congratulations on the progress in the quarter I had a question on commercial and then one on the pipeline with regard to commercial perhaps a follow up to the last one when do you think about live ball V and the market dynamics, there could you give us a little.

Charles Duncan: Increased competition due to Muscarine X and then secondarily with regard to the pipeline very quickly in terms of the nexgen compounds I know youre still mapping this but could you give us a sense as to the type of indications you're looking to pursue would it be.

Charles Duncan: More color on where you're picking up scripts and how you think that dynamic may or may not be impacted by increased competition due to muscarine X and then secondarily with regard to the pipeline very quickly in terms of the nexgen compounds I know youre still.

A rare orphan neuro or would it be highly more more a highly prevalent diseases. Thank you.

Todd Nichols: Yes. Good morning, I'll take this is Todd I'll take the first one on the evolving market dynamics.

Todd Nichols: So the addressable market for <unk> bipolar, one disorder, and schizophrenia, which is two large markets.

Charles Duncan: <unk> this but could you give us a sense as to the type of indications.

Charles Duncan: You're looking to pursue what would it be rare orphan neuro or would it be highly more more highly prevalent diseases. Thank you.

Todd Nichols: And we're seeing really healthy growth across both but the strongest new patient start growth is really coming through bipolar one disorder.

Charles Duncan: Yes. Good morning, I'll take this is Todd I'll take the first one on the evolving market dynamics.

Todd Nichols: Approximately 55% to 57% of our new patient starts now are coming through bipolar, which is a really encouraging sign and that's been part of our strategy. Since day, one is to maximize the full indication. So we don't we don't really see that dynamic changing with the muscarinic coming to the market, especially the one that was recently.

Charles Duncan: So the addressable market for the ball he is bipolar one disorder and schizophrenia, which is two large markets.

Charles Duncan: And we're seeing really healthy growth across both but the strongest new patient start growth is really coming through a bipolar one disorder.

Todd Nichols: [noise] approved as you as you probably know the one that was just recently approved is going to play in the schizophrenia space. That's a market that we know very well, it's a it's a switch dynamic market and from all of our research Hcp's continue to tell us that they will not switch stable patients. So the ball is really well <unk>.

Charles Duncan: Approximately 55% to 57% of our new patient starts now.

Charles Duncan: Coming through bipolar, which is a really encouraging sign and that's been part of our strategy. Since day, one is to maximize the full indication. So we don't we don't really see that dynamic changing with the muscarinic coming to the market, especially the one that was.

Todd Nichols: <unk> there the <unk>.

Todd Nichols: Aspect that we look at with any type of competition come into the marketplace is really our product profile and the attributes of the product profile for <unk> and attributes continue to pay off we hear that consistently in the market Hep's tell us that they use the product based upon the well established efficacy.

Charles Duncan: Recently approved as you as you probably know the one that was just recently approved is going to play in the schizophrenia space. That's a market that we know very well, it's a it's a switch dynamic market.

Charles Duncan: And from all of our research Hcp's continue to tell us that they will not switch stable patients. So the ball is really well established there. The second aspect that we look at with any type of competition come into the marketplace is really our product profile and the attributes of the product profile for <unk> and <unk>.

Todd Nichols: <unk> ability and over the last three years, we've been able to generate some very meaningful real world evidence and so we think real world evidence in the marketplace is going to be a key determinant for laboratory in the future and also for the competition when new competitive entrants come into the market.

Charles Duncan: <unk> continued to pay off we hear that consistently in the market Hep's tell us that they use the product based upon the well established efficacy tolerability and over the last three years, we've been able to generate some very meaningful real world evidence and so we think real world evidence in the marketplaces could it be a key determinant for.

Charles Duncan: Hi, Charles this is rich good to hear your voice.

Charles Duncan: Color on what Todd said as well, which is that they've already has a really strong position in the market based on its efficacy and the track record of both Olanzapine and evolving now in the marketplace.

Charles Duncan: And I think for a lot of folks don't realize what Todd said, it's a switch market patients are switching constantly unfortunately, the average length of therapy on an oral antipsychotic is six months or so.

Charles Duncan: The ball in the future and also for the competition when new competitive entrants come into the market.

Charles Duncan: Hey, Charles it's rich good to hear your voice just a little color on what Todd said as well, which is that they've already has a really strong position in the market based on its efficacy and the track record of both Olanzapine and evolving now in the marketplace and I think what a lot of folks don't realize what it says it's a switch market patients are switching constantly unfortunately the average.

Charles Duncan: And that will probably be true for any any entrants in the category. So the churn of the patients is what drives the market and that's why a number of these brands can become large large products on the pipeline. It's interesting we were deliberately a bit coy about about where we're going because we feel like we have some competitive insights on mapping.

Charles Duncan: A therapy on an oral antipsychotic is six months or so.

Charles Duncan: The pharmacology onto the certain disease conditions, but general categories would say it extends from from psychiatry, where we have a lot of experience both commercially and in development wise through neurology and even into the rare and ultra rare.

Charles Duncan: And that'll probably be true for any any entrants in the category. So the churn of the patients is what drives the market and Thats why the number of these brands can become large large products on the pipeline. It's interesting. We were we were deliberately a bit coy about about where we're going because we feel like we have some competitive insights or on on mapping.

As well and so probably different price points with different molecules with different features.

Charles Duncan: And step one as I mentioned in the earlier remarks is take these these next generation agents into the clinic in the single ascending and multiple ascending dose studies to characterize the rexam piece of it and then be a little bit more clear about where we're going to map those onto particular diseases.

Charles Duncan: Pharmacology onto the certain disease conditions, but general categories would say it extends from from psychiatry, where we have a lot of experience both commercially and in development wise through neurology and even into the rare and ultra rare.

Charles Duncan: Looking forward. Thanks.

Charles Duncan: As well and so probably different price points with different molecules with different features and step one as I mentioned in the earlier remarks is take these these next generation agents into the clinic in the single ascending and multiple ascending dose studies to characterize the orexin piece of it and then be a little bit more clear about where we're going to map those onto particular disease.

Charles Duncan: Okay.

Speaker Change: Our next question comes from David <unk> with Piper Sandler. Please proceed with your question.

Speaker Change: Yes.

Speaker Change: So can you remind us.

Speaker Change: And of your liability business comes from schizophrenia.

Charles Duncan: It is.

Speaker Change: And looking at the competitive landscape do you think that the availability of an <unk> form of Olanzapine could impact your ability to drive switches from legacy oral olanzapine to MRV, how do you think.

Charles Duncan: Looking forward. Thanks.

Speaker Change: Our next question comes from David <unk> with Piper Sandler. Please proceed with your question.

Speaker Change: So can you remind us.

Speaker Change: And <unk> with new products that would impact your business if at all and then I'll just sneak in a quick question on business development. How are you thinking about in licensing.

Speaker Change: What portion of your life all the business comes from schizophrenia.

Speaker Change: And looking at the competitive landscape.

Speaker Change: And acquisitions, and specifically ways to bolster the pipeline beyond <unk>.

Speaker Change: Do you think that as email ability of an L. A form of Olanzapine could impact your ability to drive switches from legacy oral olanzapine to lung Avi how do you think.

Speaker Change: Yes, absolutely.

Todd: Louis This is Todd in terms of the mix the Trs mix still approximately is about 50 50 between schizophrenia and bipolar.

Speaker Change: And <unk> island between products that would impact your business if at all and then I'll just sneak in a quick question on business development. How are you thinking about in licensing.

Todd: Yes, several quarters, though again when we look at new patient starts were starting to see a really encouraging trend with growth within the bipolar one disorder space, which as you know is a is a much larger market and their propensity to switch as much stronger for bipolar patients. So.

Speaker Change: And acquisitions, and specifically ways to bolster the pipeline beyond <unk>.

Speaker Change: Yeah, absolutely. This is Todd in terms of the mix the Trs mix still approximately it's about 50 50 between schizophrenia and bipolar.

Todd: We're encouraged with that trend in terms of Ah in Atlanta.

Todd: That's still a few years out.

Speaker Change: Several quarters, though again when we look at new patient starts were starting to see a really encouraging trend.

Todd: That we do watch closely the rate the rate limiting step for any type of Olanzapine based therapy, regardless of delivery is really the weight gain.

Speaker Change: This growth was in the bipolar one disorder space, which as you know is a is a much larger market and the propensity to switch as much stronger for bipolar patients. So we're.

Todd: The metabolic disturbance, we hear that consistently from Hcp's. So our belief continues to be regardless of the delivery you have to solve that issue <unk> is becoming the standard of care within Atlanta based therapy. So we don't see that any type of lag coming into the market that would impact <unk>.

Speaker Change: We're encouraged with that trend in terms of and Atlanta P and L. A.

Speaker Change: That's still a few years out.

Speaker Change: It's something that we do watch closely the rate the rate limiting step for any type of Olanzapine based therapy, regardless of delivery is really the weight gain.

Todd: And I think David on the business development and licensing.

Speaker Change: The metabolic disturbance, we hear that consistently from HCP. So our belief continues to be regardless of the delivery and you have to solve that issue Lowball V is becoming the standard of care within Atlanta based therapy. So we don't see that any type of L. A I coming into the market that would impact la Bobby.

Todd: Here the same response, you've heard pretty consistently over the last year or so which is <unk>.

Todd: As a pure play Standalone neuroscience company with this robust Orexin pipeline, we would love to add something non covariant to that pipeline, where we love to play is in places where the biology is fairly well credentialed and the molecular design is complicated and so our BD efforts are often looking in.

Speaker Change: And I think on the David on the business development and licensing.

Speaker Change: You'll hear the same response, you've heard pretty consistently over the last year or so which is <unk>.

Todd: These types of places so I think.

Todd: It's a space that we expect to stay in for quite a while and I'd be surprised if we don't add something to the portfolio.

Todd: Not in the immediate future, but over time.

Speaker Change: Okay helpful. Thanks.

Speaker Change: Yeah.

Speaker Change: Our next question comes from <unk> <unk> with Jefferies. Please proceed with your question.

Speaker Change: Hi, This is Kathy on for our costs. So for our Orexin two tuck eight six months efficacy waned between <unk> and <unk> showing a nine minute placebo adjusted MW T response at week, four then jumping to one minute at week eight so what do you think led to the weighting efficacy at the southern mill.

Speaker Change: Dose and are you concerned about six to eight <unk> efficacy and NTT or IH patients with longer follow up time. Thank you.

Okay.

Rich: Kathy is rich.

Speaker Change: So I don't want to Overinvest in describing their program because I think the simple answer to the longer question is that they don't have the right dose for <unk> two.

Speaker Change: And until you have the right dose youre not able to really interrogate the efficacy effect and so I don't really pay a lot of attention to the shape of their efficacy curve because they're not on the dose response curve, where they need to be we contrast that with 2680, where we've shown we can we can be effective across a range of doses and in tier one and tier two NIH all within a well tolerated bandwidth.

Speaker Change: You answered it the longer question is that they don't have the right dose for <unk> two.

So I think that flexibility of dosing the ability to pursue up and down the dose response curve is going to be a major competitive advantage for us.

Speaker Change: And until you have the right dose youre not able to really interrogate the efficacy effect and so I don't really pay a lot of attention to the shape of their efficacy curve because they're not on the dose response curve, where they need to be we contrast that with 26 80, where we've shown we can we can be effective across a range of doses and then T. One and T. Two NIH all within a well tolerated bandwidth.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Joel Beatty with Baird. Please proceed with your question.

Joel Beatty: Hi, Thanks for taking the questions for Labelle the contracting.

Speaker Change: So I think that flexibility of dosing and the ability to pursue up and down the dose response curve is going to be a major competitive advantage for us.

Joel Beatty: You've added some of our recent quarters how much further is there to go there.

Joel Beatty: Yes. This is Todd I'll take take that as well, we're really pleased with the progress. This year, we think the access profiles in a really really good position right now.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Joel Beatty with Baird. Please proceed with your question.

Joel Beatty: We're continuing to talk to commercial payers and we're going to continue those discussions and negotiations it all depends upon the volume growth opportunity and comparing that to net sales of our primary focus is really profitability in net sales.

Joel Beatty: Hi, Thanks for taking the questions for Labelle the contracting.

Joel Beatty: You've added some of our recent quarters on how much further is there to go there.

Todd: Yeah. John This is Todd I'll take take that as well, we're really pleased with the progress. This year, we think the access profiles in a really really good position right now where we're.

Joel Beatty: So we will make some some additional decisions going into next year, but to expand access we would really be clear that that has to impact volume and it has to be profitable back to the brand.

We're continuing to to talk to commercial payers and we're going to continue those discussions and negotiations it all depends upon the the volume growth opportunity and comparing that to net sales of our primary focus is really profitability in net sales. So we will make some some additional decisions going into next year, but I'm too.

Thanks, Tom as a follow up also on La <unk>.

Speaker Change: Tell us more about the DTC program. It seems like spending for that is ramping down.

Speaker Change: This quarter in Q4 of its more frontloaded this year.

Todd: Expand access we would really be clear that that has to impact volume and it has to be profitable back to the brand.

Speaker Change: Do you anticipate ramping that up again next year, yes.

Speaker Change: Yeah, absolutely. So DTC is a really important part of the marketing mix and we've seen it as a very productive investment this year.

Todd: Yeah.

Speaker Change: Thanks, John as a follow up also on the body.

Speaker Change: You will see a little fluctuations quarter to quarter based upon our strategy. So going into Q4, we continued to optimize the program and we're seeing really healthy returns.

Speaker Change: Also more about the D. T C program. It seems like spending for that is ramping down.

Speaker Change: This quarter in Q4 of its more front loaded this year.

Speaker Change: Do you anticipate ramping that up again next year.

Speaker Change: Going into next year, we're going to continue to invest we will provide more color obviously, when we get to February but youll see it a little bit more streamline will be more consistent quarter to quarter.

Speaker Change: Yeah, absolutely. So DTC is a really important part of the marketing mix and we've seen it as a very productive investment. This year, you will see a little fluctuations quarter to quarter based upon our strategy. So going into Q4, we continued to optimize the program and we're seeing really healthy returns.

Speaker Change: Got a really good handle and good view on the channels that are the most productive and so that's what we're going to be making those investments.

Speaker Change: Thank you.

Speaker Change: Our next.

Speaker Change: Question comes from Ali <unk> with Mizuho Securities. Please proceed with your question.

Speaker Change: Hey, guys. Thanks for taking our questions.

Speaker Change: So on the EBIT.

Speaker Change: Guidance for 2025, just wanted to.

Speaker Change: To make sure that we understand it correctly.

Speaker Change: I hated that you were expecting operating expenses to go up modestly.

Speaker Change: So you're kind of saying that primarily the cut is due to the manufacturing.

Speaker Change: The consensus missile Mis modeling essentially the in Vegas sustainer growing royalty going away is that the case and the second question is.

Speaker Change: Could you also maybe just sort of help us understand the.

Speaker Change: The trend for EBITDA going forward beyond 2025 from before the Orexin product comes.

Speaker Change: Potentially.

Speaker Change: It.

Speaker Change: Is commercialized do you expect it to.

Speaker Change: Banned from the $200 million level.

Speaker Change: Yes. Thanks for the question you're exactly right I think as you look at the EBITDA for 2025.

Speaker Change: We really are focused on transitioning the business towards the proprietary revenue and I think that's what a lot of folks have missed moving forwards is primarily driven by the transition of the manufacturing and royalty revenue, we expect to see continuous growth on our our proprietary products moving forward I think the.

Speaker Change: One of the pieces the key pieces that folks have missed on the manufacturing and royalty revenue side is the Humira do you shift of revenue.

Speaker Change: One of the things just to put it in context, we manufacture for Biogen on a cost plus basis.

Speaker Change: And we've done that for a number of years as we transition the product out of Athlone and out and into the Biogen and that manufacturing and royalty revenue line actually gets converted into a 1% increase in royalty. So you'll see a decrease in revenue and but it'll be margin neutral.

Speaker Change: I think the one of the pieces the key pieces that folks have missed on.

Speaker Change: On the manufacturing and royalty revenue side is the humira the shift of revenue.

Speaker Change: One of the things just to put it in context, we manufacture for Biogen on a cost plus basis.

Speaker Change: As we transition the activities through the end of <unk> through the end of next year.

Speaker Change: And we've done that for a number of years as we transition the product out of Athlone and out and into the biogen's hands that manufacturing and royalty revenue line actually gets converted into a 1% increase in royalty. So you'll see a decrease in revenue and but it'll be margin neutral.

Speaker Change: And you're exactly right on the expense side, we have modest increases in expenses, mostly related to investment on.

Speaker Change: On La <unk> and <unk> in the psyche franchise and growth of the sales force as well as the R&D increase associated with our 2016.

Speaker Change: As we transition the activities through the end of <unk> through the end of next year.

Speaker Change: With regards to trends for EBITDA. Your second question. Our plan is to continue to run the business at a profitable rate moving forward and how we how we do that will depend on the research investments and commercial investments that we need to make but we see this as a profitable business for the foreseeable.

Speaker Change: And you're exactly right on the expense side, we have modest increases in expenses, mostly related to investment on an Laval V and aerostar, the psyche franchise and growth of the sales force as well as the R&D increase associated with our 2016.

Speaker Change: <unk>.

Speaker Change: Okay. Thank you.

Speaker Change: With regards to trends for EBITDA. Your second question. Our plan is to continue to run the business at a profitable rate moving forward.

Speaker Change: Our next question comes from Jessica Fye Jpmorgan. Please proceed with your question.

Speaker Change: And how we how we do that will depend on the research investments and commercial investments that we need to make but we see this as a profitable business for the foreseeable future.

Speaker Change: Hey, guys. Thanks for taking the question.

Just a couple on the products can you elaborate on what is the improved commercial access you negotiated starting October 1st for Labelle views like how specifically was that enhance and when you talk about gross to nets heading towards the mid <unk> over the next year should we think of that as linear or does it have any kind of step up say starting January one.

Speaker Change: Okay. Thank you.

Speaker Change: Our next question comes from Jessica Fye J P. Morgan. Please proceed with your question.

Jessica Fye: Hey, guys. Thanks for taking my question I had just a couple on the products can you elaborate on what any improved commercial access you negotiated starting October 1st for Labelle. He is like how specifically was that enhance and when you talked about Christian it's heading towards the mid thirties over the next year.

Speaker Change: And then just on the Arizona Guide.

Speaker Change: It seems like the low end of the range implies.

Speaker Change: A 7% sequential growth if my arithmetic is right.

Speaker Change: But you said you expect the softness in that category to continue.

Speaker Change: Just trying to reconcile that and then lastly.

Jessica Fye: Should we think of that as linear or does it have any kind of step up say starting January one.

Speaker Change: To the extent there is a negative stock reaction on the back of 25 EBITDA commentary, how do you think about that.

Jessica Fye: And then just on the Arris daughter died.

Jessica Fye: It seems like the low end of the range implies.

Speaker Change: The share repo in that context. Thank you.

Speaker Change: Yeah, absolutely I'll start with the questions on market access for the ball. So yeah as I said in my prepared remarks, there was another major commercial payor that in Q4 enhanced access that impacted approximately 11 million lives and so that we've had.

Speaker Change: For significant changes this year three in the commercial space and one in the Medicare part D space, which is very encouraging which is part of our disciplined contracting strategy.

Speaker Change: That will lead next year Youll see that Youll see the reaction of that will be full year gross to net impact and.

Speaker Change: So our expectation is that the gross to net will move into the mid thirty's and that will be over time throughout the year. So we're not expecting big step ups from quarter to quarter, but for the full year it should be in the mid thirty's.

Speaker Change: In terms of air Astana.

Speaker Change: A key factor to really watch and look at with Aerostar is really market growth.

Speaker Change: Right now, we're seeing very marginal market growth in the schizophrenia market.

Speaker Change: We believe part of that is related to seasonality as we came through Q3, but we're also seeing lower schizophrenia patient visits. So we think there is an impact with that.

Speaker Change: In terms of the brand for Q4, we continue to see growth in prescriber breadth. So that's an encouraging sign and we believe that will persist.

Speaker Change: And we also see encouraging growth within our non retail part of the business, which represents about 25% of the business. So our belief is that that non retail will continue to play through and also brought the prescribing which allows us to to meet the guidance that we've set forth.

Speaker Change: And then I just because it was blair with regards to share repurchase as you know we have about $400 million of share repurchase authorized.

Speaker Change: That was earlier this year, we've executed about half of that now so we've done about $200 million of that share repurchase we're going to be opportunistic on how we deploy that moving forward to be clear. We think our stock is undervalued at this level, which is evidenced by the share repurchases that we've done to date that being said, we also need to assess the needs of the cash for the business.

Speaker Change: As you know, we have about $400 million of share repurchase authorized.

Speaker Change: And also for our business development opportunities that may be may come our way.

Speaker Change: That was earlier this year, we've executed about half of that now so we've done about $200 million of that share repurchase we're gonna be opportunistic on how we deploy that moving forward to be clear. We think our stock is undervalued at this level, which is evidenced by the share repurchase that we've done to date that being said, we also need to assess the needs of the cash for the business.

Speaker Change: Our next question comes from Jason <unk> with Bank of America. Please proceed with your question.

Speaker Change: Hey, guys. Thanks for taking my questions most of.

Speaker Change: Them have been asked already but just wanted to get your general sense of the.

Speaker Change: The overall health of the market when we see kind of the volume trends and you hear the cautionary language, we see companies like and DVR, just pool and <unk> off the market cautioning around part D redesign tailwind next year.

And also for business development opportunities that may be may come our way.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Jason Goldberg with Bank of America. Please proceed with your question.

Speaker Change: I guess.

Speaker Change: It seems like it's a challenging space overall, so your general outlook that volumes can ever grow again on this business just wanted to get a general sense.

Jason Goldberg: Hey, guys. Thanks for taking my questions. Most of them have been asked already but just wanted to get your general sense of the the overall health of the market you know when we see kind of the volume trends and you hear the cautionary language E companies I can give you or just pool and L. A I watch.

Speaker Change: On that front.

Speaker Change: This year thanks.

Yes, absolutely this is Todd I'll take that Jason.

Speaker Change: So overall, we're not seeing a change in kind of the treatment algorithm with L. A is there typically a reserve for later line use third and fourth line, so that hasnt hasnt been changing.

Jason Goldberg: The market cautioning around part D redesign tailwind next year.

Jason Goldberg: I guess.

Speaker Change: And that's something we obviously watch very closely of how hcp's patients react to the brands. The biggest change in the dynamic that we're really seeing is just lower growth overall in the schizophrenia space as I as I said earlier again, we think part of that is seasonality. There are a couple of new brands that have launched in the last year that.

Jason Goldberg: You know it seems like it's a challenging space overall, so your your general outlook that you know volumes can ever grow again on this business just wanted to get a general sense on that front I'm you know beyond this year. Thanks.

Jason Goldberg: Absolutely. This is Todd I'll take that Jason.

Jason Goldberg: So overall, we're not seeing a change in and kind of the treatment algorithm with L. A is there typically a reserve for later line use third and fourth line, so that hasn't hasn't been changing and that's something we obviously watch very closely is how H C P and patients react to the brands, but the biggest change in the dynamic that we're really seeing is just lower.

Speaker Change: We're showing some growth and we did expect that that's typical when you launch a brand and you're early in your launch phase you will see some growth the key dynamic we're watching there is neither of those brands are growing the market Youre just seeing a transition from the base molecule to longer durations. So we really don't see that impacting the market overall and obviously.

Jason Goldberg: Growth overall in the schizophrenia space as I as I said earlier again, we think part of that is seasonality. There are a couple of new brands that have launched in the last year that are showing some growth and we did expect that that's typical when you launch a brand and you're early in your launch phase you will see some growth the key dynamic we're watching there.

Speaker Change: We're in constant contact with payers overall, and we don't see that as a big risk for for Aerostar moving into next year that'll be part of our guidance our gross to net.

Speaker Change: We're in constant contact with payers and there is some pressure, especially with the part D redesign and Thats something that we are in discussions with them about as well.

Speaker Change: Got it okay. Thanks, guys.

Speaker Change: Our next question comes from Marc Goodman with Leerink Partners. Please proceed with your question.

Marc Goodman: Can you help us how to think about <unk>.

Speaker Change: Once we have.

Marc Goodman: Hello.

Some competition coming in the settlements.

How should we model that.

Marc Goodman: I can't imagine this is going to be a normal postal OE market.

Marc Goodman: Hey, Mark it's Richard and it's a really good question.

Speaker Change: And we have a number of different models.

Speaker Change: I think the punch line is that we will adapt but the most important thing to realize is even the parlance of low.

Speaker Change: What we foresee as a single additional entrants coming into the market in the form of Teva.

Speaker Change: And their capacity to enter the market and the extent to which they are enter it is unknown at this point vitriol is growing as you saw it was unusual for a drug so late in its life to be growing at the rates that it is particularly in this alcohol indication, which is really an untapped.

Speaker Change: So with our promotional activity in the field, we see that market continuing to grow and so if there is a single additional entrants in the marketplace now.

Speaker Change: I don't really see the compelling logic for why you would see a typical low erosion theres no real reason for it but we.

Speaker Change: We don't know yet so we have a range of different models.

Speaker Change: But all of them indicate a shoulder passed the 2027 date.

Speaker Change: Yes, so the spending will be generally the same because you're not expecting much of a change I mean Teva comes in they lower the price a little bit maybe like a typical situation where the only other player and you are going to continue to support the brand. That's our base case for sure and if anything other than that it has.

Speaker Change: We could flex our spend in order to drive profitability because thats, obviously, the key benchmark for this brand will be maintaining robust profitability, but I think the case you just articulated would be what I would consider to be the base case.

Speaker Change: Yeah.

Speaker Change: And the commentary around.

Speaker Change: I guess it was in the questioning of the numbers coming down a little bit for next year and I think there was a comment about what we will remain profitable, but I guess the <unk>.

Speaker Change: <unk> was really like Okay, we have one set.

Speaker Change: A reset next year, what happens to the year. After the year. After I think the question was should we expect growth again in EBITDA or <unk>.

Speaker Change: How should we think about that just given the level of spend that youre going to need to.

Speaker Change: To support all of the indications that youre working on for the Rexam.

Jason Goldberg: And.

Speaker Change: I guess, we'll make the call on an annual basis, but we have substantial topline and we can drive profitability. The cost structure. We've worked on the last several years to drive profitability. So we're gonna be inherently able to manage the business to profitability, but as we see pipeline things evolve as we see the competitive dynamic in the market as we just talked about change 2000.

Speaker Change: Reset next year, what happens to the year after the year. After I think the question was like should we expect growth again in EBITDA or how should we think about that just given the level of spend that youre going to need to see.

Speaker Change: <unk> will be different in 27, 28 will be different 2000.

Speaker Change: 27.

Speaker Change: <unk> thousand 680 starts coming to market so.

Speaker Change: Support all the indications that youre working on for the Orexin.

Speaker Change: It's not to avoid the question is just to tell you from the board level on down.

Speaker Change: Yes, we will make the call on an annual basis, but we have substantial topline and we can drive the profitability of the cost structure. We've worked on the last several years to drive profitability. So we're going to be inherently able to manage the business to profitability, but as we see pipeline things evolve as we see the competitive dynamic in the market as we just talked about change 26.

Speaker Change: Been managing the business and building it to be able to run a highly profitable business, while investing in the pipeline and returning capital when we see excess excess capital in the in the plan. So that's the way we'll continue to approach it on a year by year basis.

Speaker Change: And as the share buyback basically telling US you cant find anything in business development do you want to spend on.

Speaker Change: Will be different in 27, 28 will be different in 2000.

Speaker Change: <unk> 2007.

Speaker Change: 2680 starts coming to market. So it's not to avoid the question is just to tell you from the board level on down.

I know you're smiling when you asked that question because.

Speaker Change: It's all part of an overall plan, we have a $1 billion of cash. So we have plenty of firepower to do the BD deals that they were looking for we just we were burdened with a lot of experience in this space and the diligence often results in issues on the licensing side that you you need to walk away from whether the regulatory or their IP or reimbursement.

Speaker Change: We've been managing the business and building it to be able to run a highly profitable business, while investing in the pipeline and returning capital when we see excess excess capital in the in the plan. So that's the way we'll continue to approach it on a year by year basis.

And as the share buyback basically telling US you cant find anything in business development do you want to spend on.

Speaker Change: Or whatever but we have a pretty fine mesh here and it's a sophisticated team, but we're out there looking at all times.

Speaker Change: I know you're smiling when you asked that question because it.

Speaker Change: Thanks, Ron.

Speaker Change: It's all part of an overall plan, we have a $1 billion of cash. So we have plenty of firepower to do the BD deals that we're looking for we just we were burdened with a lot of experience in this space and the diligence often results in issues on the licensing side that you you need to walk away from whether the regulatory or their IP or reimbursement.

Speaker Change: Our next question comes from Chris ship ton Goldman Sachs. Please proceed with your question.

Speaker Change: Hi, Good morning. This is Chris on for Chris. Thank you for taking our question.

Speaker Change: Regarding the implementation of IRB, which were previously not a factor in pursuing I E.

Or whatever but we have a pretty fine mesh here and it's a sophisticated team, but we're out there looking at all times.

Speaker Change: Since decided to move forward.

Speaker Change: Let's say about what you assume for how <unk> will be implemented going forward and can you talk to the push pull factor and how compelling an opportunity needs to be commercially in order to support this assertion.

Speaker Change: Thanks, Ron.

Speaker Change: Hi, Christian it's Richard.

Speaker Change: Excellent question.

Speaker Change: You are right I think at the outset, one would've said with a single orphan exclusivity or exclusion from the negotiation in nine Years' time, you can say well why would you add additional morphin indication to that and open up the potential for negotiation and as we thought more about in round numbers a couple of things became clear.

First of all what's the probability of IRA looking exactly the same nine years from now it's probably extremely low and I also think this particular provision which is hurting patients with rare diseases.

Speaker Change: Of the various things you'd love to changing in IRA I think this particular provision is one that could be changed by the Congress going forward because it hurts patients with that said putting that aside.

Speaker Change: If there are 100000 diagnosed and treated patients with narcolepsy in the U S. There are at least 40000 with IH.

Speaker Change: And so because the distinction between NTT and IHS, so blurry as we talked to patients and clinicians and show them. The data from the <unk>, which was so compelling to them. It became clear to us that we needed to develop this drug in phase III in IH as well because the adjacency is so clear the price point will be the same in the market.

Speaker Change: Spans significantly for nine years. So that's all that all went into our decision to say, we're going to go full bore into IH.

Speaker Change: Thank you that was very helpful.

Speaker Change: Our next question comes from Ash Paramount with UBS. Please proceed with your question.

Great. Thanks, Thanks for taking my question I wanted to just go back you were asking about.

Speaker Change: You mean about the inventory movement that youre not seeing any kind of.

Speaker Change: Impact on that but are you carrying some inventory quarter over quarter I'm seeing that the study reporting.

Speaker Change: In line with what we are seeing on the on this level job site. So if you can comment on either the bottom you'll just start out with Michael is that any inventory that you're carrying.

Todd Nichols: Yes, absolutely ash this is tod inventory dynamics for the quarter.

Speaker Change: Or are consistent with our expectations, we continue to see some growth with inventory for la <unk>, but that's consistent with demand. So our expectations is that it will continue to grow modestly to support the Trs demand, we're seeing which is consistent and at this point for Aerostar and live all of the inventory is stable.

Speaker Change: Okay.

Speaker Change: Our next question.

Speaker Change: Our next question is from Douglas Tsao with H C. Wainwright. Please proceed with your question.

Speaker Change: Hi, good morning, Thanks for taking the questions.

Speaker Change: Just first.

Rich in terms of 26 or the Orexin program.

Speaker Change: And the second generation of molecules I know you talked about several different potential uses.

Speaker Change: Inventory is stable.

Speaker Change: Yeah.

Speaker Change: Uh huh.

Speaker Change: At the analyst meeting.

Speaker Change: I'm just curious.

Speaker Change: How much what indications you initially go into things on the phase one data or the phase one studies that youll be running next year or.

Speaker Change: We'll take our next question.

Speaker Change: Our next question is from Douglas Tsao with H C. Wainwright. Please proceed with your question.

Speaker Change: Hi, good morning, Thanks for taking my questions.

Speaker Change: Do you have a pretty good idea of what you want where you want to go yet obviously, we just need to get the healthy human volunteer data. Thank you.

Speaker Change: Just first rich in terms of 26 or the Orexin program.

Speaker Change: And the second generation of molecules I know you talked about several different potential uses at the analyst meeting I'm just curious.

Speaker Change: Hey, Doug it's more of the latter I think we have a pretty good sense, although we're still running a number of preclinical assays.

Speaker Change: And we don't just have to pick one obviously.

Speaker Change: How much.

Speaker Change: But I think that we don't have to formally commit to that until we've completed the necessary prerequisites in the sad and the Mad.

Speaker Change: What indications you initially go into things on the phase one data or the phase one studies that you'll be running next year or you know do you have a pretty good idea of what you want to go where you want to go yeah. Obviously, we just need to get the healthy human volunteer data. Thank you.

Speaker Change: Okay, Great. That's helpful and then just.

Speaker Change: Somebody asked about the potential introduction of Olanzapine.

Speaker Change: Olanzapine.

Speaker Change: Long acting injectable and I think you indicated that you did not see an impact is that because you don't see sort.

Speaker Change: Hey, Doug it's more of the latter I think we have a pretty good sense, although we're still running a number of preclinical assays.

Speaker Change: And we don't just have to pick one obviously.

Speaker Change: Sort of the two sort of in a long acting injectable being in the same market as a.

Speaker Change: But I think that the we don't have to formally commit to that until we've completed the necessary prerequisites in the sad and the Mad.

Speaker Change: <unk>, which is in the oil market or.

Speaker Change: Or is it that you think that lowball. These sort of weight gain profile, just should make yet sort of immune to any competitive pressure. Thank you.

Speaker Change: Okay, Great. That's helpful and then just.

Speaker Change: Somebody asked about the potential introduction of any olanzapine.

Speaker Change: Long acting injectable in and I think you indicated that you did not see an impact is that because you don't see you know sort of the two sort of the long acting injectable being in the same market as a as lowball V, which is in the oil market.

Yes, that's absolutely right. So when you think about just the entire.

Speaker Change: The L. A market these molecules typically stay within the base class. So youll see a patient transition from oral to a long acting version. Our research continues to tell us that patients prefer oral <unk>. So the first step is an oral <unk> when you think about olanzapine.

Speaker Change: Or or is it that you think that lowball. These sort of weight gain profile, just should make yet sort of immune to any competitive pressure. Thank you.

Speaker Change: <unk> consistently tell us that the rate limiting step is weight gain and.

Speaker Change: Yeah, that's absolutely right so.

Speaker Change: 80% of patients will gain more than 7% of the body weight within the first four to six weeks. That's the whole reason why we developed <unk> and so <unk> has now become the standard of care for an Atlanta team based therapy. So we solve that issue.

Speaker Change: At this point right now we don't see an olanzapine based LTI solving that issue. So the core issue again is it going to be weight mitigation.

Speaker Change: Okay, Great that's really helpful.

Speaker Change: Okay.

Speaker Change: Our last question today comes from Nomura with Evercore. Please proceed with your question.

Speaker Change: Hi, guys. Thanks for letting me do a follow up I just I just wanted to make sure I had a full handle on a couple of these numbers. So the move from sort of 400 million EBITDA down to 200 is it fair to say, 75% of that is on Opex and 25% of that is on the royalty line.

Speaker Change: Sort of what I'm seeing but I just want to make sure I'm not mistaken.

Speaker Change: Yes, I think it's more on the.

Speaker Change: The royalty line and then on the Opex side. So I think we'll give more guidance obviously in February but the major impact that we see is associated with manufacturing and royalty revenue. We do have some impact from the expanded expense associated with investments in our business, but it's not as much as the.

Speaker Change: The royalty impact.

Speaker Change: Got it so just to be clear $800 million SG&A plus R&D. This year, that's not going to $1 billion. It's more like 800 go to 900 is that a reasonable yes.

Speaker Change: I'm not going to put any numbers out there yet until February so we're definitely going to see us.

Speaker Change: Small increase on SG&A associated with the sales force expansion.

Speaker Change: Not blowing up that line, we're going to be very disciplined on our expense line.

Thank you very much.

Speaker Change: Okay.

Speaker Change: We have reached the end of our question and answer session and I would now like to turn the floor back over to the company for closing comments alright.

Speaker Change: Alright. Thank you everyone for joining us on the call. This morning, we will be available for any follow up questions.

Speaker Change: Please don't hesitate to reach out thank you.

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

Speaker Change: Yeah.

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