Q1 2025 Alkermes PLC Earnings Call
Greetings and welcome to Alkermes first quarter 2025 financial results Conference call. My name is Maria and I'll be the 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. Please note that this.
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.
Sandy Coombs: Good morning, welcome to the Alkermes plc conference call to discuss our financial results and business update for the quarter ended March 31, 2025 with me today are Richard Pops, Our CEO, Todd Nichols, our Chief Commercial Officer Blair Jackson, Our Chief operating Officer and Dr. Craig Hopkinson, our Chief Medical Officer, a slide presentation.
Sandy Coombs: <unk>, 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 results in conjunction with the GAAP results are useful in understanding the ongoing economics of our business our.
Sandy Coombs: Our discussions during this conference call will include forward looking statements actual results could differ materially from these forward looking statements. Please see slide two of the accompanying presentation. Our press release issued this morning, and our most recent annual and quarterly reports filed with the SEC for important risk factors that could cause our actual results to differ materially.
Sandy Coombs: From those expressed or implied in the forward looking statements. We undertake no obligation to update or revise the information provided on this call or in the accompanying presentation. As a result of new information or future results or developments. After our prepared remarks, we'll open the call for Q&A and now I'll turn the call over to Richard for some opening remarks.
Richard Pops: Thank you Ken and good morning, everyone.
Richard Pops: I'm going to start by recognizing the passing of our colleague and friend Ian Brown.
Richard Pops: Boeing are courageous battle with cancer.
Speaker Change: One to many of you Ian represented the best of our company in many ways through his intellect and his professionalism his kindness and humanity.
Richard Pops: And his sense of humor.
Richard Pops: Thank all of you who send along your condolences and remembers it meant a lot to all of us here.
Richard Pops: As you know Blair Jackson has been serving in the role of interim principal financial officer, Cynthia and when it went on medical leave.
Richard Pops: In early 2024, Barry's done an excellent job of among his other responsibilities and we will continue to serve in that role as we look now to identify a successor.
Speaker Change: So with that said, let me say that we have a few things to cover this morning, I'm going to dive right in on today's call Todd is going to start with an overview of the performance of our commercial products Blair, who will review the financial results for the quarter and provide some insights regarding our positioning within the current macro economic conditions.
Speaker Change: And given the exciting progress, we're making across the erection portfolio, Craig Hopkinson, our head of R&D and CMO will provide an update you'll be hearing from him more going forward as you move into a data rich phase the August 2680 program.
Speaker Change: So here's my perspective on where we stand in May 2025.
Speaker Change: The summary is that we're well positioned and we're right on plan our first quarter.
Speaker Change: Commercial performance was solid and slightly ahead of expectations that we provided on our last earnings call.
Speaker Change: Each of our medicines has a differentiated value proposition and we're focused on maximizing the potential of <unk> <unk> and <unk> in their respective markets.
Speaker Change: Financially our first quarter results were on plan and this morning, we reiterated our financial expectations for the year.
Speaker Change: Across the commercial and financial elements of the business, we continue to focus on driving growth and driving profitability.
Speaker Change: The exciting new developments are happening in R&D. This will be a pivotal year across the orexin two development landscape and alkermes is at the forefront of developments in this exciting potential therapeutic category.
Speaker Change: Our <unk> 2680 phase III program is designed to generate a substantial dataset that characterizes the efficacy safety and tolerability of a wide range of doses across north lets say type one narcolepsy type two and idiopathic hypersomnia.
Speaker Change: As we had hoped and anticipated as we activated sites around the world and investigators gained experience with our studies the phase III program began to accelerate and it's advancing now with real momentum momentum. The N. T. One study Vibrance one is now fully enrolled.
Speaker Change: We now expect top line results early in the third quarter.
Speaker Change: The <unk> two study Vibrance two is enrolling very well, we expect to complete enrollment mid year with data to follow in the fall the results of Vibrance, one and Vibrance too will represent two of the most substantial datasets to be generated in this therapeutic category to date and will provide important information as advanced the program toward planned phase III studies.
Speaker Change: We are on the cusp now of potentially transformative data and we're planning for an exciting second half of the year.
Speaker Change: Finally, with respect to the macro environment, where we will give you some details and I'll be happy to answer questions you might have but in summary, we are paying attention to two main topics Medicaid changes under reconciliation and FDA.
Speaker Change: With respect to potential tariffs and foreign reference pricing, we are in an advantageous position because we manufacture all of our proprietary products in the U S. In the state of Ohio, and we do not commercialize them in markets outside the U S.
Speaker Change: So as those introductory comments I'll turn it over to Todd to take us through the commercial results for the first quarter.
Speaker Change: Thank you rich and good morning, everyone in the first quarter, we recorded net sales from our proprietary product portfolio of $244 5 million slightly above the expectations that we outlined in February reflecting 5% year over year growth, primarily driven by <unk>.
Speaker Change: Starting with <unk> net sales in the first quarter were $101 million.
Speaker Change: <unk> performance continues to be largely driven by the alcohol dependence indication.
Which is the primary focus of our promotional efforts and currently accounts for approximately 75% of the trial volumes.
Speaker Change: Looking ahead, we continue to expect <unk> net sales for 2025, and the range of $440 million to $460 million.
Speaker Change: For the air started product family in the first quarter net sales were $73 5 million in 2025, we continue to expect aerostat and net sales in the range of $335 to $355 million.
Speaker Change: Turning to leave all the net sales grew 23% year over year to $70 million, primarily driven by underlying <unk> growth of 22%.
Speaker Change: With growth coming from both the schizophrenia and bipolar one disorder indications.
Speaker Change: As we indicated on our last earnings call gross to net adjustments were approximately 31% in the first quarter and we expect will remain consistent in the low to mid 30% range for the remainder of 2025 for the full year. We continue to expect leap all of the net sales in the range of $320 million to $340 million.
Speaker Change: We continue to make strategic investments designed to drive awareness and uptake of our psychiatry franchise products in the first quarter. We completed the expansion of our psychiatry sales force, which is now fully deployed in the field with a focus on maintaining a competitive share of voice for Lee, Bobby and Reaccelerate growth for Aerostar.
Speaker Change: We expect to see tangible contributions from the new sales positions within a few quarters.
Speaker Change: Across our proprietary products inventory at the wholesale level was drawn down as expected during the first quarter and is now in a normal range for all three products.
Speaker Change: Each of our products offers a unique value proposition in their respective category supported by established efficacy long term clinical data and real world patient experience.
Speaker Change: We're off to a solid start in 2025 and believe we are well positioned to achieve our financial expectations for the year. We look forward to sharing our progress with you with that I will pass the call to Blair. Thank you Todd our first quarter performance was slightly ahead of our expectations and we remain on track to achieve our financial guidance for the year.
Blair Jackson: Macroeconomic conditions are dynamic and rapidly evolving.
Blair Jackson: We are well positioned with more than $900 million of cash and investments on the balance sheet, a business generating substantial cash flow significant growth opportunities ahead, and the ability to adapt quickly to the environment. We remain focused on executing against our strategic objectives for the year and are preparing for the key data readouts.
Blair Jackson: From the August 2680 Phase two narcolepsy studies later this year.
Blair Jackson: Before I detail, our financial results I'll provide a brief overview of our position with respect to the macroeconomic policy landscape.
Blair Jackson: Starting with our manufacturing footprint.
Blair Jackson: All of our proprietary products are manufactured at our Ohio facility and are sold exclusively in the United States. The vast majority of our manufacturing supply chain is also sourced domestically, we import a small amount of active pharmaceutical ingredients from certain suppliers abroad, but this represents less than 5% of our call.
Blair Jackson: Of goods sold.
Blair Jackson: Additionally, we maintained significant safety stock of API, which if necessary could provide flexibility to adapt our supply chain sourcing without significant disruption.
Blair Jackson: We will continue to carefully monitor the evolving policy environment for any potential impacts to our business, but believe we are in a strong position with our U S based manufacturing and supply chain.
Blair Jackson: Turning to our financial results for the quarter, we generated total revenues of $306 5 million sleep.
Blair Jackson: Slightly ahead of the expectations, we outlined on our fourth quarter call. These results were driven by our proprietary product portfolio, which grew 5% year over year.
Blair Jackson: For our portfolio of proprietary products, we generated net sales of $244 $5 million as we move into the second quarter. We expect Q2 net sales from this portfolio in the range of $260 million to $280 million.
Blair Jackson: Manufacturing and royalty revenues were $62 million for the first quarter, including revenues of $27 $8 million from <unk> $17 $7 million from the long acting and Vega products and approximately $9 million from Risperdal constant.
Blair Jackson: Turning to expenses.
Blair Jackson: Cost of goods sold were $49 2 million compared to $58 6 million for Q1 last year, primarily reflecting efficiencies following the sale of our Athlone based manufacturing business last year.
R&D expenses were $71 8 million compared to $67 6 million for Q1 last year. This consisted of focused investments in our neuroscience development programs, primarily related to our ongoing phase III studies of <unk> thousand 680 in narcolepsy type, one and narcolepsy type two as well as the <unk>.
Blair Jackson: Initiation of our phase two study in idiopathic hypersomnia we.
Blair Jackson: We expect R&D expense to increase modestly in the second quarter and remained fairly consistent for the remainder of the year.
Blair Jackson: SG&A expenses were $171 7 million compared to $179 7 million.
Blair Jackson: For Q1 last year, reflecting the mix of promotional activities supporting our commercial products as we continue to focus on driving efficiency.
Blair Jackson: For trending purposes, we expect SG&A expense in the second quarter to remain fairly consistent with Q1 levels with a modest step down in the second half of the year.
Blair Jackson: We continue to focus on driving profitability in Q1, we generated GAAP net income of $22 $5 million EBITDA of $22 $8 million and adjusted EBITDA of $45 $6 million.
Blair Jackson: Turning to our balance sheet. We ended the first quarter in a strong financial position with $916 $2 million in cash and total investments. We continue to have $200 million of remaining share repurchase authorization and going forward, we may opportunistically repurchase shares depending on market conditions and the capital needs of the business.
Craig Hopkinson: The financial performance, we delivered in the first quarter was slightly ahead of our expectation and provides a strong foundation to achieve our financial guidance for the year I will now hand, the call to Craig for an update on our research and development pipeline.
Craig Hopkinson: Good morning.
Craig Hopkinson: I'm pleased to join you with an update on the development programs for our Rx and tourists receptor agonist portfolio.
Craig Hopkinson: Also 26 80 program focusing on central disorders of Hopper Somnolence is advancing with strong momentum.
Craig Hopkinson: Investigators across the phase II program are gaining experience in the studies and what the clinical trial network largely established screening and enrollment accelerated significantly in the narcolepsy studies in the first quarter.
Craig Hopkinson: We look forward to further harnessing that interest and enthusiasm.
Craig Hopkinson: Yet the company suddenly a phase II study and for potential phase III studies.
Craig Hopkinson: At the same time, we are moving forward aggressively to expand our research into new disease areas for Orexin two receptor agonists.
Craig Hopkinson: A couple of years ago, we initiated project certain with the goal of advancing new molecules from a broad range of disorders.
Craig Hopkinson: This year, we plan to start the clinical work underpinning this strategy.
Craig Hopkinson: The Orexin two receptor agonist pathway has broad potential applicability and we are a leader in evaluating the utility of this novel pharmacology.
Craig Hopkinson: With that as an introduction, let's start with our 2680.
Craig Hopkinson: In the Phase <unk> study, we completed last year of $26 80 demonstrated a highly potent clinical profile in the intended patient populations.
Craig Hopkinson: In that study, we established initial safety efficacy tolerability and dose response profiles across narcolepsy type one narcolepsy talk to an idiopathic hypersomnia.
Craig Hopkinson: The key objective of the phase II program is to more fully elaborate the dose response curve at larger patient populations defined the lower and upper limits in terms of both efficacy and tolerability and inform dose selection for the planned phase III program.
Craig Hopkinson: Yes.
Craig Hopkinson: The phase II program is well underway bobbins, one is a six week double blind placebo controlled parallel design study in narcolepsy top one or in Q1.
Craig Hopkinson: <unk> is defined by an absence of orexin producing neurons in the hopper elements.
Craig Hopkinson: People living with NC one experience.
Craig Hopkinson: Excessive daytime sleepiness, and cataplexy, which is a sudden loss of muscle tone.
Craig Hopkinson: The primary endpoint of vibrant as well as the change from baseline in the maintenance of wakefulness test or AWT.
Craig Hopkinson: <unk> is a quantitative measure of how long patients can stay awake.
Craig Hopkinson: The study will also evaluate secondary endpoints, including change from baseline in weekly cataplexy rates as well as change from baseline on Epworth Sleepiness scale, which is a patient reported measure of patient subjects situational likelihood of falling asleep.
Craig Hopkinson: Yeah.
Craig Hopkinson: As clinical trial starts were initiated and gained experienced the study's investigator interest intensified and enrollments in Vibrance. One is now complete.
Craig Hopkinson: We expect to report topline data from <unk>, one early in the third quarter.
Craig Hopkinson: Narcolepsy top two IMTT is a more heterogeneous disease compared to <unk> one.
Craig Hopkinson: People living with anti <unk> may have more functional a normal ericsson systems. However, they still experience excessive daytime sleepiness.
Craig Hopkinson: <unk> two is an eight week double blind placebo controlled parallel design phase two study in <unk>.
Craig Hopkinson: In this study we plan to evaluate changes from baseline in both <unk> and at worse as dual primary endpoints.
Sovereigns II will generate the largest data set today for in Orexin, two receptor agonist and the NTT population.
Craig Hopkinson: We have strong momentum in screening and enrollment and expect to complete enrollment midyear and have top line data in the fall.
Craig Hopkinson: The most recent developments in the house $26 80 program is the initiation of <unk> III.
Craig Hopkinson: Phase II study in idiopathic hypersomnia.
Craig Hopkinson: Bob <unk> is similar to the <unk> two in terms of the three doses being studied 10 14 and.
Craig Hopkinson: In 2018 milligrams as well as the eight week duration of the randomized double blind placebo controlled parallel design.
Craig Hopkinson: The primary endpoints in this study is the change from baseline in airports scale.
Craig Hopkinson: The study will also evaluate the changes in idiopathic hypersomnia severity scale as a secondary endpoint and we expect data from this study in mid 2026.
Craig Hopkinson: We're focused on capitalizing on our momentum in preparations for phase III studies. So that we can move as quickly as possible. Once we have phase II data in hand.
Craig Hopkinson: We've established a robust clinical trial network with more than 45 sites initiated to support the phase III program and expect to be able to leverage this network in a clinical relationships to streamline operational study startup timelines for phase III.
Craig Hopkinson: Preparations for other phase III work streams, including manufacturing of clinical supply.
Craig Hopkinson: Our study design planning and key regulatory interactions are also underway.
Craig Hopkinson: We expect to exit phase II with strong momentum and are focused on carrying that momentum forward into phase III.
Craig Hopkinson: I'll finish with a quick update on our project certain initiatives.
Craig Hopkinson: Orexin two receptor agonists have been shown pre clinically to activate neuropsychiatry associated with mood attention vigilance and cognition.
Craig Hopkinson: <unk> is focused on harnessing these effects in the treatment of other diseases outside of hypothermia disorders.
Craig Hopkinson: We are on track to advance additional orexin two receptor agonist into first in human studies this year.
Craig Hopkinson: 45, 10 will be the first with single ascending dose study is expected to commence in the coming weeks.
Craig Hopkinson: Our 70 to 90 is anticipated to follow later this year.
Craig Hopkinson: These two compounds system similarities without 26, 80, but we will have their own unique pharmacokinetic and pharmaceutical properties.
Craig Hopkinson: Once the initial pharmaceutical profiles are established in healthy volunteers, we plan to move quickly into disease relevant studies.
Craig Hopkinson: And.
Craig Hopkinson: Establish proof of concept.
Craig Hopkinson: Indications of interest.
Craig Hopkinson: Spectrum of disorders under consideration ranges from Red neuro, degenerative and neurodevelopmental diseases to broader neuropsychiatric disorders each.
Craig Hopkinson: Each seeking to harness the orexin system to drive wakefulness attention cognition, and activates downstream neurosurgery treat related to mood in other domains.
Craig Hopkinson: Our preclinical work is ongoing and continues to support the potential of the Orexin pathway.
Speaker Change: Alkermes is well positioned as a leader in developments in this exciting new therapeutic category in sleep disorders and beyond and.
Rich: And with that I'll hand, the call back to rich.
Richard Pops: Great. Thank you Craig I'll finish up so across the business, we're executing across our strategic objectives, focusing on the initiatives that we believe represent our greatest growth opportunities. Let me close with just a couple of thoughts first with respect to the macro landscape.
Richard Pops: We are well prepared to operate in this kind of environment. The patient populations that our commercial medicines are indicated for have always demand at a high level of engagement with policymakers and regulators our presence and capabilities in these areas become even more important against the backdrop of rapid insignificant change.
Richard Pops: Our focus is on advocating for policies that maintain access to care for our patient populations.
Richard Pops: <unk> with regulators to support continuity of critical regulatory work streams and identifying opportunities for efficiency in a thoughtful manner. We've been doing this for a long time and we will continue that work.
Richard Pops: Next irrespective of the political environment, what will continue to drive valuations in our industry is the discovery and development of important new medicines with therapeutic value for patients and long potential patent lives.
Richard Pops: This is why the erection development program is so central to our planning new molecules based on new biology, our program begins with narcolepsy and out to 2680 and has shown potential to extend beyond that into other exciting neuroscience indications.
Richard Pops: We've been building this type of valuation potential into the business thoughtfully over the last several years and we're excited to be on the brink of important new data sets this year.
Sandy Coombs: So with that I'll turn it to sandy to run the Q&A.
Sandy Coombs: Thank you very much.
Speaker Change: Marianne would you please open the call for Q&A.
Marianne: Of course, thank you.
Marianne: At this time, 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.
Marianne: Confirmation tone will indicate that your line is in the question queue.
You May press star two if he would like to remove your question from the queue. We have some analysts limit themselves to one question and a follow ups that others may have an opportunity to ask questions.
Marianne: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Marianne: One moment, please while we poll for questions.
Speaker Change: Our first question comes from Joseph Thome with PD Cowen. Please proceed with your question.
Joseph Thome: Hi, there good morning, Congrats on the progress and thank you for taking my question.
Joseph Thome: The first one I think in the prepared remarks. It was mentioned that the NTT said he has co primary.
Joseph Thome: E Commerce tests in NSS and <unk>.
Joseph Thome: Curious if that was an update from the initial Esa as being secondary and kind of what led to that and then maybe as a follow up I know you and the Kols indicated flexible dosing would be.
Joseph Thome: Very attractive for this patient population can you remind us if patients are able to escalate.
Joseph Thome: Between active arms.
Joseph Thome: Buddy progresses, if they do see at AE that can kind of see on active drug with maybe drop down can you comment on that thank you.
Speaker Change: Yes, sure I'll start off with the question on <unk> efforts has always been an important assessment has been one of our endpoints for <unk>, two and considering other late stage studies in the competitive landscape and our expectations for global regulatory interactions as we as.
Speaker Change: We plan to prepare for a potential phase III studies, we decided to elevate its two dual primary endpoints. So it's not a co primary endpoint with a dual primary endpoints in the <unk> study.
Speaker Change: With regard to the flexible dosing during the actual double blind portions of the study patients are assigned to a dose and then in the open label extension portion of the study all patients will initiate on the mid dose and Kent trade for a period of time to the higher.
Speaker Change: The lower dose from that mid <unk>.
Speaker Change: So we will gain quite a bit of experience hearing patient motivations and physician motivations.
Speaker Change: In terms of that titration from the phase II data and that will be really informative as we start planning for phase III.
Speaker Change: Perfect. Thank you very much.
Speaker Change: Okay.
Speaker Change: Our next question comes from Charles Duncan with Cantor Fitzgerald. Please proceed with your question.
Charles Duncan: Good morning, Rich and team congrats on a great start to the year and a quick commercial question and then a pipeline question with regard to the commercial question in terms of Blue Bar B I think you mentioned that youre, gaining scripts from both schizophrenia and bipolar I'm wondering if you could breakout the realm.
Charles Duncan: Two percentage and then with regard to the <unk>.
Charles Duncan: R&D or the pipeline question.
Charles Duncan: You mentioned <unk>.
Charles Duncan: 26, 80, being highly potent and I know we've talked about this before but is potent C D and all and be all are there are other aspects in 2680 that encourage your investment.
Charles Duncan: Yes, Hi, Charles Good morning. This is Todd I'll start with the commercial question sort of evolving for <unk>, It's roughly about a 50 50 split for schizophrenia and bipolar for new patient starts we see it more of a trend towards bipolar. So it's approximately 55% for bipolar group within the body.
Charles Duncan: Sure.
Charles Duncan: Yes.
Charles Duncan: Potency perspective potency is just one aspect of.
Charles Duncan: What we built into the profile of our 2680, obviously.
Charles Duncan: It's a true once daily.
Charles Duncan: We believe that that's important we've got dose flexibility with a wide therapeutic.
Charles Duncan: Index I think those those different aspects collectively are really important and I think.
Charles Duncan: So that helps them in the results of our phase <unk> study, where we're the only agent that has positive data across all three patient populations in tier 182 NIH.
Charles Duncan: Got it thanks.
Speaker Change: Our next question comes from Paul Mckenzie with Stifel. Please proceed with your question.
James: Hey, this is James on for Paul Thanks for taking our question and then just a quick one on <unk>.
Speaker Change: Given the study has now been going on for some time is there anything you can say about safety at least on a blinded basis.
Speaker Change: Specifically, one point of focusing in the prior data has been a couple of instances of visual disturbances. So any color on sort of your expectations. There for the phase twos would be helpful. Thanks, So much.
Speaker Change: Obviously, it's not appropriate for us to comment too much on blinded data from a study and for that purpose. We have an independent data safety monitoring board.
Speaker Change: That we've assigned the DSM B is charged with the oversight of safety across the entire study.
Speaker Change: As part of that obviously, you are looking at things like visual adverse events.
Speaker Change: In other aspects of the safety as well, including lab parameters at this point in time the met on a regular basis and have given us green lots with no modifications to the study.
Speaker Change: Makes sense thanks for the color.
Speaker Change: Our next question comes from Nomura <unk> with Evercore ISI. Please proceed with your question.
Speaker Change: Good morning, guys. Thanks for taking my question.
Speaker Change: First I'm, just curious how youre defining efficacy in some of the Readouts coming up.
Speaker Change: For example, does the M. W T need to be above 30, and I'm asking because it looks like the 10 milligram dose, especially new NTT trial might be able to thread the needle on safety on every possible metric, but I'm just curious how.
Speaker Change: Efficacy success could be defined.
Speaker Change: Secondly.
Speaker Change: On Rem sleep intrusions during wakefulness in weather that drove some of the visual hallucinations and blurred vision I'm just curious how should we balance some of the underlying rem related intrusions and possible visual disturbances versus.
The observation of visual disturbances only happening at higher doses and not across doses or is it more <unk> or not just curious how you think about that overall thank you.
Speaker Change: Okay.
Speaker Change: So maybe starting with your last question first I think the amount of information we have on visual disturbances.
Speaker Change: It's really not sufficient for us to draw any meaningful conclusions at this point in time.
Speaker Change: This is obviously something that we studying more fully in the phase III program and to the extent that we can do exposure relationships will be able to do that.
Speaker Change: <unk> once we have phase two.
Speaker Change: Phase III data in hand, and the first question Sandy.
Speaker Change: Define efficacy threshold does it have to be up 30, yes. So the efficacy thresholds that occupancy in broad terms I mean, I think that the way we've looked at the efficacy is really through two lenses as the lens of what's currently approved and on the market and obviously those are sub 10 minutes improvements in AWP and then there is.
Speaker Change: The lens.
Speaker Change: Through which the Orexin agonist has the potential of getting to more normal.
Speaker Change: Wakefulness.
Speaker Change: During the daytime house for us.
Speaker Change: Not only for the thresholds we achieve.
Speaker Change: But the pattern of those thresholds in other words are really striving to have a normal for sort of wakefulness during the daytime LLS dropping below that threshold in the evening hours to promote more normal lot Tom sleep I think is.
Speaker Change: It's a really important component and to that end a low orexin code in the evening hours with a once daily agents may actually have benefits.
Speaker Change: It is something we're studying more complete in our phase III studies.
Speaker Change: Humor rich I just wanted to jump in a little bit on the on the second part of your question about the Rems sleep intrusion.
Speaker Change: Those who don't follow the field as much.
Speaker Change: Orexin two receptor agonist.
Speaker Change: Press Rem sleep and so one of the characteristics of an <unk>. For example are these sleep onset.
Speaker Change: The periods. So you could theoretically have.
Speaker Change: Some type of visual disturbance I E a.
Speaker Change: Hallucination as a marker of lack of efficacy and I think other programs may have even seen that what we described in our in our into two an NIH study one patient in each was very different initiatives transient blurred vision in one case and transient light sensitivity and another so we didnt enter.
Speaker Change: With that as an intrusion of Rems sleepwear failure of efficacy.
Speaker Change: Thank you so much.
Speaker Change: Our next question comes from David <unk> with Piper Sandler. Please proceed with your question.
Speaker Change: Thanks, So just taking a step back.
Speaker Change: With the advancement of 2680 and other Orexin two receptor.
Speaker Change: Hygienist and potentially other indications.
Speaker Change: What are your latest thoughts on Biz, Dev and M&A and how aggressively are you going to be pursuing other.
Speaker Change: Assets.
Speaker Change: To bolster the neuroscience pipeline.
Speaker Change: With that in mind can you talk about how.
Speaker Change: How large of a transaction you would contemplate.
Blair Jackson: Hi, David This is Blair I'll answer that question I think as we look at our pipeline moving forward. As you said, we're really excited about the 2680 program and the expansion of the Orexin franchise further and we think that's going to be.
Blair Jackson: Quite beneficial to the company over the coming years that being said, we would like to bring in additional assets to bolster the pipeline if that makes sense if that fits with the strategy of the business and if we can find an asset that we can add value to through our development program. So we're looking across the range of the development cycle.
Blair Jackson: Phase one through mid stage et cetera, I don't think I'll comment on the size of the opportunity that will really depend on what we're looking at and what phase it's in but I think.
Blair Jackson: We plan to maintain the business in a profitable stance for the foreseeable future and so bringing in additional assets and clinical catalysts is something that we're looking for.
Speaker Change: Okay helpful. Thank you.
Blair Jackson: Our.
Speaker Change: Question comes from Jessica Fye with Jpmorgan. Please proceed with your question.
Speaker Change: Hi, This is a dual on for Jess just two quick questions for your key commercial products can you touch on how you think about the contribution of volume versus price to sales. This year and then we've heard some investors are worried about the possible cuts to Medicaid, but can you remind us what portion of it which all the <unk> are covered by Medicaid. Thank you.
Speaker Change: Yeah I'll start.
Speaker Change: But the first part of that as well.
Speaker Change: Theres always going to be a contribution of pricing. We do expect the typical seasonality with gross to net deductions. So we expect that will widen a little bit in Q2 for the products and then normalized for Q3 and Q4, but the majority of our expectations based on volume growth, So our expectation and what we're seeing in the marketplace is.
Speaker Change: Healthy growth.
Speaker Change: <unk> data.
Speaker Change: And of the trial second.
Speaker Change: Second question in terms of Medicaid contribution overall.
Speaker Change: It's relatively similar for all three products. It's in about the 45 to about 50% range for all three products.
Speaker Change: Thank you.
Speaker Change: Our next question comes from <unk> <unk> with Jefferies. Please proceed with your question.
Speaker Change: Hey, this is Amy on bare Carlos Thanks, So much for taking our question. Just one question on your Orexin program. If you look at CAD six one in Q1 data were seeing worst aes with the five milligram dose compared to the seven milligram daily dose, even though the same amount of drug is being delivered just carry.
Speaker Change: What is your bar on safety and how confident are you that you can show better safety than Patti. Thanks Juan.
Speaker Change: <unk> population that cant go forward dose.
Speaker Change: Yes at this point in time, it's important to note that we're obviously in very different portions of our clinical development program.
Speaker Change: <unk>.
Speaker Change: Yeah.
Speaker Change: Essentially with what <unk>.
Speaker Change: Takeda has been seeing with sort of B E.
Speaker Change: Dosing.
Speaker Change: Relating to the fact that they are seeing to see mix peaks.
Speaker Change: The profile of <unk> thousand 680 is is truly once daily promoting sort of wait for live stream the daytime hours dropping below <unk>.
Speaker Change: The cases concentrations and allowing for more normal dotcom sleep and so we're looking forward to a phase II data and we'll be able to have a formal cultural problem for more color on that once we have the data.
Speaker Change: Okay. Thank you.
Speaker Change: Okay.
Speaker Change: Our next question comes from Marc Goodman with Leerink Partners. Please proceed with your question.
Speaker Change: You have been reading a lot about these government cuts in some of the Vin to abuse programs. I was just curious if any of this was impacting <unk> at all.
Speaker Change: Or do you expect any changes at all.
Speaker Change: And in those funding and then second of all just total evolving any changes.
Speaker Change: Patterns that <unk> seen just with the with the Bristol launch of a drug that's been out there for a long time now.
Speaker Change: Yes, yes, absolutely Mark this is Todd I'll take that.
Speaker Change: Not seeing any changes right now in <unk>.
Speaker Change: And funding federal funding for the control.
Speaker Change: I think it's I think it's important to remember we over the last several years, we have totally re-engineered devote trial business.
Speaker Change: With our focus on the <unk> indication. So we are really less reliant on government funding sources.
Speaker Change: So ideally, though the contribution of funding is really at the state level and at the state level of less than 5% of the <unk> demand is based on funding. So we are very well positioned overall in terms of of evolving we continue to see healthy growth as I said in my prepared remarks Q.
Speaker Change: Q1 year over year, we showed a 22% growth in <unk>, we're not seeing any impact from any of the competitors in the marketplace right now.
Speaker Change: I think again, it's important to remember that the ball, we had a healthy mix of schizophrenia contribution plus bipolar contribution.
Speaker Change: In terms of <unk> feed Hcp's continue to tell us that they're not making trade off decisions between laboratory <unk> and <unk>.
Speaker Change: If you look at the prescription data you also look at market research Youll see very clearly that the majority of <unk> used as an adjunctive therapy.
Speaker Change: The mix of our business across the treatment paradigm as is.
Speaker Change: Is is getting contributions from new patient starts switch business plus add on business as well. So we feel really good about the long term prospects of <unk>.
Speaker Change: Okay.
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 I have.
Speaker Change: Appreciate all the updates on the on the tariff stuff. So it sounds like the punch line here is everything from API to fill finish it's going to be sourced in the U S and never go through customs and so if there's theoretical concerns around tariffs of transfer pricing all of it sounds like you guys use like a royalty payment backed here Irish sub in any sort.
Speaker Change: Transfer pricing tariffs stuff like I don't know for that to have any impact. It seems like it's more of the realm of tax legislation. So I just wanted to make sure.
Speaker Change: Folks understood that appropriately and then.
Speaker Change: Just separately with the vibrant one I'm wondering what we can learn about the visual disturbance AE at all because we haven't seen these aes in.
Speaker Change: Narcolepsy type one population I think you guys had indicated you will do some.
Speaker Change: Added ophthalmic testing of some sort in these patients. So I'm wondering if that will be part of the early <unk> update as well. Thanks.
Blair Jackson: Hi, Jason This is Blair I'll take the first one so.
Blair Jackson: Just to clarify with regards to the products, yes, youre exactly right, we manufacture all of our products in the United States in Wilmington, Ohio, We do bring in some API from outside of the United States, but it is a very very small amount of our total cost so tariffs.
Blair Jackson: We are really not a material impact to the business I think as you look at transfer pricing and transfer of racing reform.
Blair Jackson: We believe that as as you said that in order for them to do that the administration that would require some sort of tax reform and involvement of legislation in Congress and I think that takes time and it's very complicated. So what we're seeing the agency or the administration's focus on right now are areas, where they can do.
Blair Jackson: Executive orders and Thats, the movement of goods across and through customs and so we're monitoring everything very carefully, but we set our business up in a way that is quite flexible and we can adapt to whatever comes downstream.
Regardless of where they go.
Blair Jackson: And then with regard to the question on <unk>, one and.
Blair Jackson: Visual exams.
Blair Jackson: Patients.
Blair Jackson: Phase II programs are receiving visual exams at baseline. We will also be doing follow up exams and to the extent patients have adverse events will be.
Blair Jackson: And testing retesting those patients as well.
Blair Jackson: As I said, we've got a data safety monitoring board, which has oversight over the.
Blair Jackson: <unk> of the safety of the study and as part of that penalty, but ophthalmologist built into that as well and thus far we've been given.
Blair Jackson: Green lots on proceeding without any modifications across all of our study.
Speaker Change: Got it thanks guys.
Speaker Change: Our next question comes from branded to Michelle with RBC capital markets. Please proceed with your question.
Speaker Change: Hey, guys. Thanks for taking my question I had one on the Orexin program you mentioned in the prepared remarks that Youre also thinking about orexin is for cognition attention.
Speaker Change: I'm curious if you can gather any data on those endpoints in the ongoing phase twos or in the open label extension portions if theres any formal endpoints you can evaluate there and then I'm curious if any of those aspects can also potentially pulse to go into stimulating.
Speaker Change: Activity of Erections, and if there's any potential for liability and if you can test for that as well in the phase twos.
Speaker Change: Yes, it's an interesting question, obviously, a number of the different aspects of recapturing in terms of the CRO is in sleep quality and what have you we'll be we'll have a read through into a potential utility in.
Speaker Change: Other indications.
Speaker Change: In parallel we've generated a wealth of preclinical data we've got confidence that we have.
Speaker Change: Also the refining which indications we are going to be prioritizing first order of business for US is obviously to get the sad and Mad studies completed for.
Speaker Change: For the two Orexin agonist that we will be moving.
Speaker Change: Moving forward in these indications and then to get those initial proof of concept studies up and running.
Speaker Change: That will be informed by some of this work, but we will have coming out of some of the <unk>.
Speaker Change: And what have you from Ericsson.
Speaker Change: Ericsson program as well.
Speaker Change: Narcolepsy studies just to be clear there is a whole suite of crows.
We're investigating in the phase II study that wont be part of the first data readout.
Speaker Change: What's your focus on <unk> Wtf worth in cataplexy, but we're testing a number of different <unk> touch on some of those don't mean domains that you that you referred to and we will look for signals there and that'll inform both our phase III program as well as other indications.
Speaker Change: And then in terms of the.
Speaker Change: Human abuse potential studies, we're doing standards human abuse potential study starting with a.
Our preclinical assessments and then that will obviously then inform any additional work that needs to be done. So that that's something that's going to be built into our standard into any neuroscience program.
Speaker Change: Okay.
Speaker Change: Our next question comes from you at at year with Mizuho Securities. Please proceed with your question.
Speaker Change: Hey, guys. Thanks for taking our questions.
Speaker Change: Given the upcoming data readout, maybe just help us set expectations for the <unk> one.
Speaker Change: I'm wondering what are in terms of efficacy are you expecting and safety and pure.
Speaker Change: <unk>.
Speaker Change: If not back and maybe just remind us what was the effect size that was assumed in person for the phase II study and the powering thanks.
Speaker Change: Yes.
Speaker Change: Maybe it's rich I'll just jump in on this thing because it's pretty simple.
Speaker Change: The Vibrance one.
Speaker Change: Six week double blind phase is what we will topline.
Speaker Change: Early in Q3 based on the timeline that that'll be your primary efficacy analyses, which will be MW T F worth in cataplexy.
Speaker Change: And we will give because I think there is so much belief in the efficacy signal in Q1.
Speaker Change: A lot of focus will be on the Tolerability and so we will try to summarize the tolerability profile as extensively as we can for that dataset.
Craig Hopkinson: That those data then will be followed in time by the seven week open label extension data, where Craig had mentioned and we will see the variability of the dosing patients can then choose the dose that they want to go to as well as these other.
Craig Hopkinson: Patient reported outcomes that we're testing in phase II, along with the Polycom nagra fee that will pick up looking at sweet sleep quality across a range of doses during the six week double blind period as well those will be subsequent datasets.
Craig Hopkinson: The powering the powering of this is not powered the sample size is not powered based on efficacy calculations powered based on.
Craig Hopkinson: Interactions with FDA on safety exposures, so we should be highly powered for the efficacy endpoints.
Craig Hopkinson: <unk>.
Craig Hopkinson: We will have a big enough sample size.
With long enough duration of exposure to really characterize tolerability.
Craig Hopkinson: Okay. Thanks.
Craig Hopkinson: Our next question comes from Joel Beatty with Baird. Please proceed with your question.
Joel Beatty: Thanks for taking the question.
Joel Beatty: <unk> pivotal with sales from that product being particularly strong over recent quarters could you discuss the potential to maintain revenue from that product in 2027 and beyond upon the potential.
Joel Beatty: The entry of generic competitive competition.
Speaker Change: Yes, absolutely we feel the same vishal had a really solid quarter really primarily driven by alcohol dependence in fact alcohol to finished growth in Q1 was 10% faster than the overall alcohol dependence market. Our expectation is that will continue through <unk>.
Joel Beatty: This year.
Joel Beatty: As we as we prepare for a competitive entrant in the outer years, our belief continues to be that.
Joel Beatty: This is not only a complex product to make that a very complex market to product to commercialize. So we don't believe that it will take a typical generic erosion curve.
Joel Beatty: And we're going to be prepared to drive demand and growth.
Joel Beatty: If not we're always flexible we can we can modulate insulet and flex our commercial infrastructure to make sure that we're driving profitability for the brand long term.
Joel Beatty: Thank you.
Joel Beatty: Okay.
Speaker Change: Our next question comes from David Ho with Deutsche Bank. Please proceed with your question.
David Ho: Hi, there. Thanks, so much for taking the questions.
David Ho: So I just wanted to ask given the cadence of phase II data that youll get here anti one NTT NIH, how you think about having.
David Ho: Timing of regulatory interactions with FDA around things such as end of phase two meetings and such and then in terms of heading into phase III do you have kind of an idea of.
David Ho: How many doses would be preferable to take into phase III and then eventually commercialization. Thanks so much.
David Ho: Yeah. So the cadence that we plan to move forward with us to bring both <unk> hundred 92 forward into an end of phase II meeting with the agency and that's obviously something that the team can already start planning once we have in Q1.
David Ho: Data in hand.
David Ho: In terms of.
David Ho: The second one is how many doses how many doses so.
David Ho: One of the strengths of our program is really the fact that we.
David Ho: Have a broad range of doses and what therapeutic index and so our intention is to bring multiple doses into the phase III program. This is obviously going to be informed by the strength of our phase II data in our interactions with regulators as we plan our phase III program.
David Ho: Maria will take one more question please.
Speaker Change: Okay. Our last question will be from Douglas Tsao with H C. Wainwright. Please proceed with your question.
Douglas Tsao: Hi, good morning, and thanks for squeezing me in maybe just wanted to follow up on project Saturn and obviously you presented some really interesting preclinical data.
Speaker Change: Data at your erection.
Speaker Change: Moving on last year I'm just curious.
Speaker Change: To get your sort of thoughts on sort of the decision points that will be made.
Speaker Change: As you think about bringing molecules into development across these different indications outside of the sweet space and is it a situation where you might ultimately bring multiple assets for four sort of different SaaS.
Speaker Change: <unk> uses.
Speaker Change: At this point in time, we've made a lot of progress on our preclinical data since the R&D day in parallel we have is our second work stream is really to get these two agents into the clinic and to generate sad mad data and at that point in time, we will be well positioned to disclose more in.
Speaker Change: In terms of which indications we have decided to move forward with.
Speaker Change: It's rich, but also for sure we see multiple multiple drugs.
Speaker Change: Advancing in different therapeutic areas.
Speaker Change: Thanks.
Speaker Change: Just as a follow up.
Speaker Change: I'm curious is it gives the ultimate indication selection depends a little bit on the sad Mad data, meaning just given the sort of profiles that you see in terms of exposure maybe some other pharmacological.
Speaker Change: Sort of end points that Youre looking at help you decide this molecule might be better suited for one indication versus the other.
Speaker Change: Yes, absolutely I mean, I think well.
Speaker Change: Awesome similarities between the two risks and receptor agonist, we moving forward they have distinct pharmacokinetic and Pharmacodynamic dynamic properties will learn a whole lot more from the sad and Mad studies and in parallel we generating a lot more preclinical data in those two work streams together will help inform which agents are best matched to which indications.
Speaker Change: Yes.
Speaker Change: We have reached the end of our question and answer session I would now like to turn the floor back over to Sandy Coombs for closing comments.
Sandy Coombs: Great. Thanks, everyone for joining us on the call. This morning, please don't hesitate to reach out to us at the company. If you have any follow up questions.
Speaker Change: Thank you.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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