Q2 2019 Earnings Call
Good thing the next available conference specialist will be with you momentarily.
Okay.
Corporate Center May I have your name please.
Brian Healy.
And the name of your company please Brian .
Arrow.
E.R.A.
If I could then connecting into alkermes.
Yes.
Okay I was on your rate and one moment for the treatment of schizophrenia. So also encompass the treatment of bipolar one disorder.
This follows a constructive pre India interaction with the FDA to align on this regulatory submission and the proposed pathway to support the bipolar indication for L. Three at three one.
The India will include data from the completed outstrip three one in Latin clinical program in patients with schizophrenia, as well as pharmacokinetic bridging data comparing out straight through wonderlands appealing and data from completed drug drug interaction studies that the FDA requested to support the bipolar filing strategy.
Our team is diligently preparing the expanded file with plans to submit the India in the fourth quarter.
These data are intended to support an indication for the treatment of adults with schizophrenia and indications for the treatment of adults with manic or mixed episodes associated with bipolar one disorder as a monotherapy or as an adjunct to lithium or valproate and for the maintenance treatment of bipolar one disorder as a monotherapy.
Importantly, the proposed fix dosage strengths for elsewhere through one include 10 milligrams of Samidorphan Coformulated with 510, 15, or 20 milligrams of Elanzapine, which reflect the spectrum of Elanzapine dose was commonly used to treat bipolar one disorder schizophrenia.
Both bipolar one disorder schizophrenia are serious degenerative mental illnesses and each is estimated to affect more than 1% of the U.S. our population.
Aro atypical antipsychotics are a mainstay of the treatment of bipolar disorder.
Hi, the patients often does continue at a fairly high rates due to inadequate efficacy or intolerable side effects.
This creates a dynamic similar to schizophrenia, where patients may cycle through multiple medications and risk degenerative relapses.
In practice Olanzapine has been relegated to second line treatments in bipolar disorder, largely due to weight gain and safety concerns despite established efficacy.
We believe that our three everyone has the potential to be a useful treatment option for adults suffering from schizophrenia and bipolar one disorder.
Turning to Alps, 42 study our novel immuno oncology candidates the clinical development program for our 42 study is progressing on multiple fronts, but let me take a step back to provide some background on the interleukin two biology, the molecule and the design hypothesis for Ox 40 230.
At high doses in interleukin, two which I'll now refer to as aisle to bonds to the intermediate affinity IL two receptors expressed on tumor, killing CD eight positive T cells and natural killer cells.
Recombinant human aisle to notice proleukin.
Is approved for patients with metastatic melanoma and renal cell carcinoma and is associated with complete and durable responses in a subset of patients.
However, aisle to more potently activates the high affinity IL two receptor, resulting in preferential activation and expansion of immunosuppressive regulatory T cells and poor tolerability with Lee capillary leak syndrome, a significant concern.
This toxicity profile significantly limits the use of ill too at the spot it's established anti tumor efficacy.
And what did you study is a stable single polypeptide comprised of modified ill too and the aisle to alpha receptor chain.
The the novel design allows for it you study to selectively binds to intermediate affinity IL two receptors.
This binding initiate the cascade of interest Relisting signaling that leads to proliferation of CDN positive and natural killer cells.
Importantly, the stable fusion design of outages 30, or systemically hidden as its ability to bind to high affinity IL, two receptors, which minimizes the activation of regulatory T cells.
The Pharmacodynamic data, we have observed to date support our design and mechanism of action hypotheses.
Now I'll provide a brief overview of the status of our artistry clinical product development program and then I'll provide some insights into the early efficacy signals that we are observing.
The ongoing artistry one trial is evaluating 40 230 administered intravenously daily for five consecutive days in both monotherapy and combination settings.
The study is comprised of three distinct parts.
Monotherapy dose escalation.
Monotherapy expansion and a combination stage with the checkpoint inhibitor pembrolizumab.
The monotherapy dose escalation stage of artistry, one was designed to assess the public at an markers in all comer patients with refractory advanced solid tumors.
Data from the five completed dose escalation cohorts spanning a dose range of <unk> 0.126 micrograms per kick per day have demonstrated a dose dependent pharmacodynamic effects of circulating natural killer cells, and cdthree positive T cells, and minimal and non dose dependent effect on immunosuppressive regulatory T cells.
These data are consistent with our pre test our processes with effect to T cell expansion in line with what you would expect to see with high dose vial too.
The side effect profile across the completed cohorts was consistent with what one would expect to see with cytokine therapy, such as fever, chills and low grade hypertension.
Importantly, no capacity leak syndrome has been observed today.
Based on these data in June we announced the initiation of the phase two expansion portion of artistry, one to evaluate the efficacy safety and Tolerability of Oxford to 30 as monotherapy in patients with renal cell carcinoma or melanoma refractory to prior PD one therapies.
The decision to advance into monotherapy expansion, followed the identification of a recommended phase two dose of six micrograms per kilo per day.
Data from this does really demonstrated the tolerability profile, we set out to achieve for 40 230, along with the desired lymphocyte cell expansion without corresponding T. Reg activation in dose escalation.
In this monotherapy expansion cohorts in melanoma and renal cell carcinoma, we will assess objective efficacy measures of our 40 230 in up to 105 patients.
Following disease progression on PD, one therapy. These patients have often very limited treatment options.
These cohorts are currently enrolling in both inpatient and outpatient settings.
Given the solid expansions, we have observed clinically our hypothesis remains intact that there is the potential for Alps, four digit study to have monotherapy efficacy in these initial tumor types.
In parallel to the online monotherapy dose escalation and expansion cohorts Weve also been steadily enrolling patients in the combination stage of artistry, one evaluating outages study in combination with pembrolizumab in a variety of tumor types in both inpatient and outpatient settings.
Carlos we are are evaluating to PD, one approved tumor types in both refractory and treatment naive patients.
As well as tumor types that were PD and approved at the time of enrollment, including colorectal triple negative breast ovarian carcinoma soft tissue sarcoma and subjects with metastatic non small cell lung cancer, whose tumors express low or undetectable PDL one levels.
Based on investigator feedback, we recently expanded the combination therapy portion of artistry, one to add three cohorts evaluating patients with first line melanoma second line non small cell lung cancer, and second line head and neck squamous cell carcinoma.
Since initiation in the fourth quarter of last year, we have enrolled approximately 20 patients in the combination therapy cohort of PD, one unapproved tumors and are nearing completion of enrollments in this cohort.
Data from these patients review to date have indicated no new toxicities.
Given the enrollment trends at initial signals being observed we may expand this cohort to enroll additional subjects.
In addition to our street one earlier this year, we initiated our history to our phase one two study to explore the safety Tolerability and efficacy of our 40 230 administered subcutaneously once weekly and once every three weeks.
Artistry twos off to a solid start us with fully enrolled the initial cohort at once weekly dose of 0.3 milligrams.
Of outages study, which is intended to roughly correspond to the three micrograms per kilo per day pumps five of the Ivy regimen.
All seven patients from this initial cohort currently remain on therapy and initial pharmacodynamic data from these patients have demonstrated NK and CD h. positives cell expansion similar to what we have previously observed at the corresponding three micrograms per cake per day are the dose of 42 study with minimal activation of T regs.
I'll provide some insights into the efficacy activity, we're seeing today, but I'll note that while enrollment is picking up momentum. The sample size is still relatively small and we do not yet have final data or sufficient months of therapy to have a clear view into the ultimate potential of Alps 40 230.
With this context in mind, we have seen initial signals of efficacy across the artistry program.
When used as monotherapy treatment in the dose escalation stage of artistry, one we absorbs observed disease stabilization starting at the three micrograms, a cake per day dose level.
While we didnt expect to see much in terms of efficacy activity in this refractory all comer population as of the cut off date of June 14th.
At the three and six microgram per kilo today doses eight of the 14 patients who completed on study first scans demonstrated stable disease on monotherapy treatment.
Clinical benefit appeared to be maintained as the majority of these eight patients continue to have stable disease. Upon the second scan.
In the combination partners a portion of artistry. One we've also observed initials signs of anti tumor activity.
Also as of the 14th of June five of the non patients who completed on study for scans demonstrated stable disease or better on the initial scans.
All five patients had PD, one unapproved tumor types.
We will continue to allow these data to mature and plan to disclose additional details later this year.
In the artistry to subcutaneous study patients receive an initial six weeks of monotherapy 40 230 prior to moving its combination.
While the initial six week monotherapy lead in period is short we have observed disease stabilization on the initial scan during the 40 230 monotherapy period and look forward to following these patients as they advance into the combination stage of the study.
Across the program the feedback from the medical community. Thus far has been positive with encouraging for engagement at ASCO and accelerating enrollment trends across the program.
We are moving into a period, we expect to learn more about the profile of ox 40 to 30 and look forward to providing more detailed data at a medical meeting this fall pending converts acceptance.
Before I turn the call back to rich I'll provide a brief update on directional fume rates our novel oral fee rates being developed in collaboration with Biogen for relapsing forms of multiple sclerosis.
We submitted the India for directional fume rates on the set in December of 2018, and expect regulatory action on our India submission in the fourth quarter of this year.
We continue to expect the results of the evolve and as to study, which is evaluating the gastrointestinal tolerability profile of the proximal humeral head to head against texture. There soon.
Data from evolve Emmis, two or not part of our regulatory package or intended for labeling purposes.
The study was designed to build upon the existing body of evidence demonstrating the differentiated Gi tolerability profile of the RF.
In the meantime, we look forward to working with the agency as they complete their review of the NDA submission.
Now I will turn the call over to Richard.
That's great. Thank you Craig and good morning, everyone. So as we enter the second half of 2019, we have a clear vision and we know what we need to accomplish operationally to drive growth and value in both the near and the long term.
The first priority is commercial execution for Vivitrol and Aristada.
For Aerostar, we have recent data from the Alpine study and the full complement of product offerings that we've been developing over the last few years, putting aerostar initio in the two month dose.
Our team is focused on educating physicians, expanding our prescriber base and increasing the adoption of aerostat initio into two month dose, where we believe we have the most differentiated offerings.
The alpine data provide a new point of engagement with physicians and they will be an important element of our growth strategy in the second half of the year.
For Vivitrol the policy changes that are beginning to be implemented in the treatment system could be transformative for the treatment of addiction.
We're working with policymakers as they activate to address the opioid crisis.
And we're working to provide support to physicians to expand the use of vivitrol in their treatment practices.
Changing the treatment paradigm for how addiction in serious mental illness or addressed in this country is challenging.
It requires altering in green behaviors in engaging with a broader array of stakeholders that participate in the current system, but if we're successful in this endeavor.
These changes have the potential to provide a platform for increased adoption vivitrol and aristada.
I believe we have significant runway ahead for both of these important products and we're committed to the patients and families and the communities dealing with the challenges of addiction and schizophrenia.
The second priority.
He is regulatory approval and preparation for launch for Alex 30 31.
As you heard Craig mentioned, we had our pre NDA meeting with the FDA and we plan to submit in India for both schizophrenia and bipolar one later this year.
In the meantime, we're taking advantage of the time, we have prior to potential approval and launch to educate thought leaders on the recently presented in lighting to data and prepare to engage with payers.
Having both indications at launch expands the opportunity for 30 31 ended a laser significant cost and risk that would be associated with dedicated efficacy studies to support the bipolar indication.
Generating new data will still be a priority as we move into the commercial stage 30 31 in today's competitive landscape, it's no longer sufficient to sufficiently to successfully developed and secure regulatory approval for new medicine.
The healthcare community patients and caregivers rely on drug developers to provide new research and information that can improve the patient journey.
Patient driven drug development has always been at the core of our guiding principle and our focus on these initiatives for 30 31 is reflective of our belief. This medicine may offer a meaningful new treatment option for patients and physicians, who are dealing with this serious mental illness.
The third priority arises because of the emerging data for Alps, 40 230.
The momentum around this program is clearly building.
We believe that Alex 40, 230 is biologically active differentiated cytokine consistent with our original design objectives.
And we look forward to learning much more about as potential anti tumor active efficacy in the near term.
As the data emerge 40, 230, it opens new opportunities for us in terms of partnerships and business development.
So looking beyond these near term priorities and opportunities we're focused on the next wave of pipeline assets as well this is occurring on two fronts.
The first is investment in our own internal research and discovery efforts.
We've been cultivating early stage assets in our labs, focusing on areas within CNS and also opportunities that fit within our biologics capabilities.
Guiding our internal investment is a strategy to develop multiple independent noncore various lines of research that share a common scientific pedigree.
These efforts are active and productive and we look forward to sharing our progress with you as these programs mature.
To complement internal discovery, we also have active business development efforts to identify interesting assets that map onto our current capabilities or established new therapeutic adjacent fees.
This applies not only to our development pipeline.
But also per bit present, a potential to further leverage our commercial infrastructure and psychiatry addiction and in the hospital setting.
While we continuously evaluate the landscape for these opportunities will continue to be selective on how we deploy capital for that purpose.
So I'll finish by taking a step back.
In this field innovation and evolution are key to survival and long term success.
Several years ago, we set out a strategy to evolve from our heritage as a drug formulation and manufacturing partner to a bona fide a drug developer and proprietary commercial enterprise.
Our experiences underscored the value and importance of maintaining a diverse set of pipeline programs and commercial assets.
As we look toward building the business for the future will be guiding but both by the opportunity and what we believe is our responsibility to help address the unmet needs of patients and we take this responsibility very seriously.
With a solid foundation for growth.
Science, driven by compassion and by innovation Im proud of our mission and I'm optimistic about the opportunities that are ahead of us so with that I will turn the call back to sandy to run the QNX.
Rob will now open the conference here any update.
Thank you well now be conducting the question and answer session.
If you'd like to ask a question today. Please press star one from your telephone keypad and a confirmation tone indicate your line is in the question queue.
You May press Star two if you would like to move your questions from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.
One moment please poll for questions.
Thank you.
The first question today comes from the line of Jason Gerberry with Bank of America. Please proceed with your question.
Hey, good morning, Thanks for taking my question.
Two for me just first just on ARISTOTLE can you just confirm that the revised outlook.
It is not impacted by net pricing outlook due to mix for the product in and if you can comment at all in terms of the changes in the growth trends that Youre seeing is this just come down the marketing is it something about the product profile that maybe isn't resonating with physicians as well as we may have thought or maybe just formulary.
Challenges and then my second question.
You've got the Vivitrol IP are hearing next week I believe Monday.
What are you focused on there.
Do you think we can get any clarity in terms of how the fee caps thinking about this this key kind of issue around the photo shop analysis that was submitted by amnio. Thank you.
Good morning, Jason I'll take the Aristada, one and no. It's is there's really no changes in our estimations on gross to net we havent seen any.
Changes I think I mentioned, specifically in the call that our 48% gross to net was exactly what we're expecting for the year I think what we're seeing is.
It is just projecting forward the trends we've seen in the first six months and fine tuning that number a little bit.
As you know we've been focused on three things this year rolling out the alpine data.
Targeting the VA opportunity with the with the improved formulary access we've had since April and the addition of our new salespeople. So it's really the.
Estimating the productivity of those new salespeople as they start in new territories, and it's just been slightly slower than we anticipated in February .
But with overall year over year growth.
In the 40% to 45%, that's exactly where we anticipated with ARISTOTLE, maybe slightly behind and we think our efforts in the second quarter are going to drive that growth. So.
A slight tune.
Tuning of the guidance, but no real change in our underlying expectations for aerostar.
Jason I'll take the question on the average IP, our patent court hearing and we believe we have a strong case to put forward at the oral hearing next week and that said, we have had a back and forth.
Of documents that have been related to the case that are all publicly available that you can read our condition then and on that.
Coming week will be the first time that we'll hear how the patent board is thinking about again.
At this particular case.
Okay. Thank you.
The next question comes from the line of Cory Kasimov with Jpmorgan. Please proceed with your question.
Hi.
So.
Well about generating from Devon bipolar.
So could you just elaborate a little bit on what types of data.
Generate and when that might be available.
Or just one.
How physicians will kind of guide there.
Given that there was no study.
We conducted temptation when I have a second question just on Aristada.
And what parts of the market are you seeing greater uptake where.
Thanks, John .
So thats really on the bipolar.
Question.
I can I can answer that one so.
Our agreement with the FDA is really that would use a bridging strategy for bipolar and as part of that bridging strategy. They asked us to conduct two drug drug interaction studies, which we have completed and we plan to to include those in the filing later this year.
Having said that.
Our loans will then obviously be based on.
Thank you.
Our next question comes from the line of Chris Shibutani with Cowen. Please proceed with your question.
Great. Thank you very much for 40 230, it would be helpful to get a sense for what we can expect in terms of the efficacy profile on the Subcu formulation, what the plans and the timelines are and then just help us understand the context, you've been developing the Ivy formulation with artistry. One earlier and then the Subcu with artistry to program, but my understanding has been that it's really the subcu formulation that you would anticipate dean what you're aiming to essentially ultimately hopefully bring to market. So can you talk about what we should expect from an efficacy profile on the subcu timelines for that data and how we should think about the program overall since unless I'm wrong Subcu is really the one that is going to market.
Yes, So let me let me start off then with expectations in terms of when we.
Plan to present data so the first efficacy data from the overall program, we hope to present later this year.
We will be submitting abstracts to see and.
Pending acceptance.
Of those abstracts will be presenting the first efficacy data at at Citi.
What you can expect in terms of the efficacy that we will present at so see that will largely be based on the the mother for therapy dose escalation cohorts of the April 14 patients that we outlined this morning.
As well as in the combination stage of of the artistry. One program recall that we started enrollment in the combination stage of that program in the last quarter of last year.
About 20 patients have been enrolled in their combination cohort and we expect to present data on the filing of the non patients that had stable disease.
As such as well and the data will largely be based on.
The.
Three microgram per keurig.
Data that ants and six microgram per keurig data.
That we've.
The artistry to program is enrolling rapidly as we said we've we've also enrolled the first seven patients.
In August three two.
But but but obviously.
Yeah, we will present data as those data emerge and.
We plan on.
Submitting a trials in progress.
Abstract to see for that program as well and then lastly, maybe just to speak to the monotherapy cohorts.
We opened up our monotherapy cohorts in renal cell carcinoma melanoma.
We expect that it will probably take us about six to nine months of enrollment before data starts to mature from that particular cohort. So it's unlikely that we'll have an updated let's see on the monotherapy cohorts. Later. This later this year.
In terms of your question around the RB formulation.
Yes, our expectation is obviously that we want to progress both with the Ivy and.
That allows us to assess the additional efficacy signals and to get a monotherapy.
Efficacy signal with 40 230. The plan is that if all goes well with the Subcu program that we'll be able to.
Yes, then obviously potentially look at amending the protocols to substitute that subcu formulation in once we reach a recommended dose either at Q weekly or Q2 1 days.
The the first cohorts at Q weekly has been completed.
We'll be getting a having a safety assessment in the coming weeks.
And that will allow US then to to open up the Q2 1 day part as well.
Great and then could you just to switch over to Vivitrol and the IP are from Jasons question could you put in context for US what you see is the implications for instance of a negative outcome would be.
Your sense for what the realistic.
Commercial opportunity might be if there were to be a generic entrant in what is obviously kind of a unique and complex market.
Sure Chris Thanks, maybe I'll take that it's Jim.
I think.
Clearly, we feel like we have a very strong argument from a patent perspective, and I think as Sandy mentioned, our detailed arguments are laid out in the documentation and we'll see how that goes I think it's interesting to look at.
A generic.
Type entry because.
This is a very unique market as you mentioned first of all it's not a market that can be given the manufacturing in specific issues around making.
Microsphere products that need to be made steadily throughout the process given their makeup of PL GA.
This is not a manufacturing process that can be easily replicated or by other generics.
Monthly.
Doses of products is a complex one and there's many points that need to be compared so the question is will the product even be substitutable. That's a question that's going to have to be determined in the future and then finally, if there is one potential entry if if.
The competitive it makes it through the regulatory process makes it through the manufacturing process and then comes to market with Vivitrol.
Or a product like Vivitrol. The question is how is that market uptake in to be habit happen how are they going to sell the product in a complicated market in the United States with all the infrastructure and relationships that we've built over time, and then finally, where do they price it as we've seen in many pharmaceutical markets actually the entry of another competitor actually grows the market rather than.
Taking away from the market leader, so a lot of complexity still to play out over time, but I'd say again, we feel very confident in our patent position to begin with but we think that.
Longer term the market for long acting.
Antagonist therapy is one that is going to be growing markedly over time as the.
Problem with opioid dependence isn't going away in this country and relapse prevention medication in a monthly injection form is something that really hasn't reached anywhere near its peak of potential use by the market.
Great. Thanks very helpful. Additional details.
Our next question is from the line of whom are refined with Evercore. Please proceed with your question.
Hi, Thanks, so much for taking my question.
I also want to touch up on.
On.
Alchemy is 8700 and my question was we know there is another MMS that's been approved the five I'd be too, but it's not a pro drug. So the question is is it fair to assume that five I'd be too. The other one that's approved does not infringe Alex 8700, and finally, Richard if you could give us some broad framework on.
The type of product, we should be expecting Friday soon.
Is it realistic is it reasonable to expect some sort of small molecule for an orphan disorder. Thank you very much.
So perhaps I'll take the 42 study question first so.
You know, where we stand at the moment.
Obviously, as we said we have seen some monotherapy.
So combination therapy responses with 42 study.
Details in terms of those specifics we plan to hold for.
The city meeting so we're not going to get into any specifics around resist criteria or specific tumor tops today, but rather well to to sort of keep those those data for subsea also bear in mind as patients continue to mature on therapy will be doing subsequent data cuts closer to the CNC program, which will be more reflective of where we all with the program at that point in time.
Andrew merger, which the.
The banner product, we don't think infringes our.
The marriage of patents, but we really don't know a whole lot about its in MF pro drug.
Our IP on the Merit is very specific and very strong and.
We've had no indication at this point it infringes.
And I, probably won't make any any disclosure about the next I. Indeed that we'll be filing other than to say that that small molecules have been our historic strength.
But this decided kind of biology that we've been pursuing here is also extremely active in Atlanta, so depending on on the sequencing of the of the development.
I'd expect to see overtime.
Candidates in both.
Thank you very much.
The next question comes from the line of Paul Metis with Stifel. Please proceed with your questions.
Hi, Thanks for taking the question. This is Nate on for Paul.
Maybe two from me for 331 can you just talk about how you're thinking about preparing for the launch in terms of the commercial infrastructure and then the timing of that of that build out.
And then on Vivitrol outside of the moderation in Threeq you how are you thinking about.
The core growth rate for the franchise at this point thanks.
Hey, good morning Nate.
I'll take the Vivitrol one first.
The core growth rate I think remain solid year over year from a sales perspective, we saw a 16% growth from a unit perspective, 12% growth.
And I think it's right in line with where we are which is why we didn't tune our expectations for Vivitrol. This morning.
But I think the franchise is solid.
And we're continuing to see as I mentioned, those that broader growth and additional states. So with 25 states growing at north of 25% remember back in 16 and 17, when we saw much higher growth level levels for Vivitrol that was really driven by one or two stage. So broadening out that top five is something we're very focused on and.
Committed to working on we haven't seen it yet, but the groundwork is being laid and we're very optimistic about the patrols future.
Just in terms of the three Athree, one launch and commercial infrastructure investment.
I think as we mentioned a lot of that infrastructure now is is in place with our ARISTOTLE.
The growth that we've seen in the last six to six months really around our hospital Salesforce are.
Our commercial systems group that is targeting large systems health systems in this area.
As well as our field reimbursement management team.
And slightly broader Salesforce you into the range of about 250 is really the the bulwark of the investment that's going to be there for three athree one as we get closer to launch we'll increase our sales size, we're still doing the sales force sizing exercise now, but you'll probably see that investment certainly a quarter to six months ahead of launch so really in the second half of last next year will you will see the change of investment around Threeeight drawn if all things continue to go positive at the it with the FDA review. So we'll update you more on that as we get closer to the PDUFA date.
Great. Thanks.
You're welcome.
Our next question is from the line of Terence Flynn with Goldman Sachs. Please proceed with your question.
Hi, Thanks for taking the question. This is Nick on for Terence I was just wondering if you could share any perspective on the Senate trend pricing, though there's at least earlier this week and any potential impact do you think that will have on your business.
Hi, This is rich I'll answer that theres been a lot of attention on this this markup that that will be probably done today in the Senate Finance Committee.
But it's the it's the beginning of a long legislative process.
But now it appears to be regular order I heard today that there is.
Over 100 amendments that have been proposed to do to the to the market. So I think we've got a long way to go between Santa finance markup and and and law.
That affects 100 senators in 50 states and a lot of interest groups and I think that the jeopardy for us and for our patients and for the industry is is people moving fast on major reconstructive elements of part D. But if it happens deliberately and carefully I'm confident will come out in a positive position. It's good for everyone.
Our next question is from the line of Brandon Folkes with Cantor Fitzgerald. Please proceed with your question.
Implies that you still is going to be meaningful growth in the second half the year.
What I expected that the sales force and veterans affairs to have be a tailwind in this quarter. So any color you can provide in terms of among those great growth initiatives away, we will see the most uptake.
Sure Good morning, Brendan and I think you're right I mean, I think it's right now it's predicting the timing of when the focus on the D.A. and with the productivity of our additional sales folks come into play and.
I think we've expected to see that in sort of the three to six month time period, and we're right on the.
On a customer that right now.
And it was 21% last year in Q2, so that's really the main differentiating focus for US is our initio plus two months opportunity that's been reinforced with the the alpine data that we've seen and.
Building out the breadth and depth in prescribers that we're focused on with our sales force obviously, the V.A. helps there, but we've also learned the V.A. formulary win is a national win and it needs to be done implemented in each of the roughly 150.
VA centers across the country and that just takes some time with the government. So I think we're on track.
Maybe a month or two off of where we anticipated being more than a month more like a month.
Rather than.
More than that and I think we'll be very focused on that in the second half of the year to see that productivity come into play.
I think we're getting now also two very good response from the initial education opportunities, we've had with alpine that data coming out really in a.
What was it April now being ready to be rolled out into educational programs now here in the second half of the year with our sales force trained in executing on that as we move forward.
Great. Thanks, very much and just one more if I may on the virtual growth.
Can you update us in terms of the vitriol opportunity within the criminal Justice system and with any of the policy changes that you highlighted may increase the speed of adoption in that sector. Thank you.
Sure I'd say again, the criminal Justice system is an important aspect for us as people are more and more focused obviously on on drug offenses, and you know as opposed to violent offenses, how people can get treatment behind the walls. The prison system in the United States is not set up to deliver treatment.
And so accessing drugs and reimbursement et cetera has been.
A slow process of change a lot of this money is coming through.
State and local authorities and what we're seeing we won't go into specifics of specific states, but we're seeing both legislative allocation of funds as well as additional prison programs going across the country, we're seeing growth in the programs.
In criminal Justice in a number of those key states that are growing at those.
Greater than 25% rate rates as I mentioned and as more funds come into play we ought to see that adoption continue to grow and as Richard said in the past really the start of use of Vivitrol is really a one way Val as people a line those systems to use vivitrol.
Once we get that infrastructure in place then.
The appropriate patients can be.
Chosen in selected and we can move forward with treatment so that growth tends to build on itself over time once the treatment programs are up and running.
Good morning.
First of all maybe you can help quantify the bipolar one.
Additional indication.
Relative to your original expectations for how big the product can be.
Second.
Some doctors on Aerostar to tell US you know they don't really have much of a choice of which product they use it usually.
The place that they work at the system that they work and I was just curious will help us understand.
Where the product is sold and how much influence the doctors actually do have because you are spending a lot of money to kind of make noise and you have good data you have new products.
Offering so I was just curious how much.
You think that that will really matter and then.
Third I I didn't hear whether you said that 30 31 payer discussions have they started or have they not started yet I was just curious if they have you know what kind of feedback you're getting.
From the payers on that product. Thanks.
With the bipolar one indication Mario Thank you, obviously for bringing that up that's an important.
It's also a part where.
It's mostly dominated by commercial pay as opposed to.
Federal or state involvement and I think in our modeling.
The bipolar indication can increase the market anywhere from a third to more than half.
In terms of overall size. So this.
It's a it's a place where zyprexa has been used.
Very deeply in the past there is a lot of experience with it there and matching the Zyprexa label for 321 is going to be something that's that's very very important.
In terms of the systems and the and the choice with ARISTOTLE I mean, I think you know everywhere from hospitals to community health centers to individual physician practice the importance of being on the formulary is very real.
And I think we're making progress there and then it's a matter of changing physician behavior and what they are used to so I would say, it's really a dual effort on our part making sure that we're on formulary and the product is available and sourcing will buy those areas and we are making progress there.
And I think the obviously the differentiation of our two months and initio opportunity educating around that we are seeing those 40% plus growth rates that we need to see to hit our numbers.
And I think we'll hopefully with the additional focus of resources will be able to accelerate that with our new alpine data and other initiatives.
And the third question on payers with three to one I think we're in the midst of of reaching out we're gathering more data and those questions. You know those interactions with payers will take more specific have more specific outcomes as we as again as we get closer to launch.
We want to make sure that the data is.
Fully understood were focused on educating now and we'll have conversations about how payers will look at adopting and treating 331 in a much more closer to launch as opposed to.
As opposed to right now so we'll update you there.
Once the NDS filed in that.
T minus 12 months is more in focus.
Thanks.
The next question comes from the line of Douglas So with H.C. Wainwright. Please proceed with your question.
You can provide some perspective on how problematic weight gain isn't that indication, we know with a launch.
It's for any of the weight gain is very problematic in terms of the treatment paradigm.
You could have any thoughts in terms of how I'm getting the bipolar indication.
So.
I'll take that one so.
In terms of weight guide with Bob Paula, It's very similar to what one would see in schizophrenia. I think the difference is really the patient population is far more sensitive.
To side effects and white weight gain in particular and so.
You know patients often cycle awful therapies relatively quickly in Apollo one disorder.
And cycle through numerous therapies, and so white Guy and we know is of particular concern and.
Yeah. So we think we had three one.
We'll provide.
It will be an important.
New medication in that space.
Great and then second question for Richard just a question on business development, which you mentioned in your prepared remarks, just obviously, what we've seen with the pipeline maturation just curious in terms of.
You know sort of a fruitful and productive recently.
Thank you.
Well I think that the.
There is an immediate gratification about seeing.
A deal done.
On the business development side, because it is mixed concrete and new potential.
Opportunity for the company, so we understand that.
Fully.
But what's less obvious is the more organic growth is happening our own laboratories of multiple product candidates. So it's happening on both fronts and there is a certain theres a certain.
Gestation period, that's necessary and we're very active and on the business development side and because it does two things for US one is it gives us insight into potential opportunities for us to pursue but also allows us to triangulate the quality of our own internal efforts versus what we see happening outside in the real world and how valuations are being assigned to those so.
I think that this is this is an ongoing process theres not a biopharmaceutical company.
That become a large company that has not augmented their own pot pipeline through external collaborations, but you also have to be world class internally and I think we're going to do both.
Thank you.
Our next question is from the line of Daniel Pro with Piper Jaffray. Please proceed with your question.
Hi, guys. Good morning, thanks for the questions.
I guess just.
Two quick ones from me for the did 98.
Study, that's expected mid year head to head first texture there.
Should we expect that to be press released or is this something that will be presented at a conference and then.
And for 30 830 ones are there any plans for additional label expansion.
So when the teams given in combination in the depression indications like you have to run additional studies.
Hi, Danielle it's rich.
The Big 98 data I expect we will decide this with with Biogen, but our initial instinct will press release the top line for you all and then will subsequently present the data.
At a meeting.
And I'll, let Craig comment on lifecycle for for Atlanta.
Yes, so for a 331 the enlighten early program, which is earlier than all this program is the first of our last cycle.
Management studies and that study is is currently enrolling and we believe that's going to be a really important population of patients because the younger patients are particularly prone to weight gain.
You building upon that the team is currently.
Working on the last cycle management strategy and.
Once that is in place we will be able to update in terms of the indications that we may be interested in.
We had three one.
Our initial focus obviously is on the filing and making sure that.
All those well and smoothly as we supplement.
The fall to the to the agency in the fourth quarter of this year.
All right we have time for one more question. Please.
That question is coming from the line of our cash to write with Wolfe Research. Please go ahead.
Hi, This is Andrew on for Josh and I have two quick questions.
First by our math of EBITDA on Aerostat are currently operating at a loss could you give us an idea of what kind of like long term operating margin. We could expect from these products. Once the once they are fully ramped up and when we could expect this to breakeven and then secondly, if you do lose the vitro IP earlier than expected would you pursue any cost optimization efforts. Thanks.
Sure Andrew Thank you for the questions.
You know I think that.
The commercial investments that we're making now is really driven.
We've expanded our commercial team recently focused on Aristada as you know and that's really driven with the growth in aerostat in mind and the the follow on launch of three to run coming not too far in the future. So that investment. We're looking today right now and that investment has yet to really bear fruit in terms of the productivity of the sales force. So I think over the longer term, we expect the margins the net margins for aerostar and vivitrol to be in that sort of target, 20% to 30% net range where.
Most large pharmaceutical products are we've got to drive that growth think investing in a base of that growth over time, we will give us a lot of leverage as we move forward commercially.
We're looking at it investment you're right now and then in terms of the Vivitrol IP are I mean, I think obviously as I mentioned this is a complex area, it's not like a square away the generic.
There's a there's a there's a very real question about the substitute ability of any product that might follow on for Vivitrol. Theres also a very established relationships in the field as people understand vivitrol and a product offering and how to use it in the support programs that we have in place so.
One needs to not just get products approved but also make sure that one can.
Educate on how the products are used in the exact.
Outcomes that people see on that with with real data.
So we'll see how the impact of any potential future products.
Have on the Vivitrol growth trajectory and of course, we'll make choices about our investment in our commercial program I think hopefully that goes without saying as we look at what the growth trajectory is our going forward, but right now that investment that you see is based on our expectation. The topline is growing very rapidly for both of these products, which it is and we seek to reap the rewards of that from a profitability perspective.
Over the next several years.
Perfect. Thanks.
You're welcome.
Thank you I will now turn the call back to Sandy Coombs for closing remarks.
Hi, Thanks, everyone for joining us on the call today. If you have any follow up questions. Please don't hesitate to reach out to the company. Thank you.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.