Alkermes Plc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Joseph Thome - TD Cowen - Analyst : Hi, there, good morning. Thank you for taking my question and congrats on all the progress. Maybe just to talk a little bit on VIVITROL, actually, there's been a little bit more uptick in sort of questioning around the impact of GLP-1 drugs on sort of impulse control and refraining from alcohol. Obviously, it seems like these companies aren't going after specific alcohol indications. But do you foresee any competitive threat from GLP-1s on the VIVITROL business or do you see these as sort of distinct patient populations that might not not bleed into each other? Thank you.

Question: Joseph Thome - TD Cowen - Analyst : Perfect and maybe just a follow up on the pipeline for the orexins, I guess, do you anticipate that this class will need sort of abuse potential studies or either pre clinically or clinically before formal FDA approval? And are you anticipating that as part of the clinical development program?

Question: Joseph Thome - TD Cowen - Analyst : Perfect. Thank you very much.

Question: Umer Raffat - Evercore ISI - Analyst : Hi guys. Thanks for taking my question. I have two here, if I may. First Rich, I know you mentioned distinct pharmaceutical properties for your next gen orexin, and we'll stay patient and look forward to that when that's ready. But the only thing I do want to clarify is are you guys aiming for lower C-max with one of your development candidates, the new ones coming up? I'm thinking about possible implications for, from a tolerability profile. And secondly, Blair, you mentioned something which confused me a bit. I think you guys are tracking at about $400 million in EBITDA this year. Did you say $200 million EBITDA for next year, so cut into half on EBITDA for next year?

Question: Umer Raffat - Evercore ISI - Analyst : Thank you.

Question: Paul Matteis - Stifel - Analyst : Hey, good morning. Thanks so much for taking my questions. I really appreciate it. On the EBITDA guidance, I wanted to just follow-up there and maybe if you could give us a little bit more color. What do you think as you look at street models for 2025 is the biggest mismatch? Blair, I know you mentioned the manufacturing and royalty revenues, but it doesn't feel like that could really explain the delta here versus consensus. Is there something also on the product side, when we think about the run rate of LYBALVI or ARISTADA, where you think maybe some folks have been overly optimistic as competition increases in that market? And then on NT2 and IH for 2680, if you just take a step back, I mean, what does Alkermes view as the biggest risk from the translatability of the early data to succeeding in those Phase 2 studies? And I guess what gets you comfortable with that risk? Thank you.

Question: Paul Matteis - Stifel - Analyst : Got it. Thanks. Thanks very much.

Question: Charles Duncan - Cantor Fitzgerald - Analyst : Hey, good morning. Thanks for taking the question. Congratulations on the progress in the quarter. I had a question on commercial and then one on the pipeline. With regard to commercial, perhaps a follow up to the last one, when you think about LYBALVI and the market dynamics there, could you give us a little more color on where you're picking up scripts and how you think that dynamic may or may not be impacted by increased competition due to muscarinics? And then secondarily with regard to the pipeline very quickly in terms of the next gen compounds, I know you're still mapping this. But could you give us a sense as to the type of indications you're looking to pursue would be rare or orphan neuro or would it be highly more highly prevalent disease? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 12:00PM, ALKS.OQ - Q3 2024 Alkermes Plc Earnings Call

Question: Charles Duncan - Cantor Fitzgerald - Analyst : Looking forward. Thanks.

Question: David Amsellem - Piper Sandler - Analyst : Hey, thanks. So can you remind us what portion of your LYBALVI the business comes from schizophrenia these days? And looking at the competitive landscape, do you think that the availability of an LAI form of olanzapine could impact your ability to drive switches from legacy oral olanzapine to LYBALVI? How do you think an LAI landing product could impact your business, if at all? And then I'm just sneaking a quick question on business development. How are you thinking about in licensing and acquisitions and specifically ways to bolster the pipeline beyond orexins? Thanks.

Question: Katie - Jefferies & Co., Inc. - Analyst : Hi, this is [Katie] on for Akash. So for orexin 2 TAC 861's efficacy waned between week four and eight and NT 2, showing a nine-minute placebo-adjusted MWT response at week four, then dropping to one minute at week eight. So what do you think led to this waning efficacy at the 7 milligram dose? And are you concerned about 2680's efficacy in NT2 or IH patients with a longer follow-up time? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 12:00PM, ALKS.OQ - Q3 2024 Alkermes Plc Earnings Call

Question: Katie - Jefferies & Co., Inc. - Analyst : Thank you.

Question: Joel Beatty - Baird - Analyst : Hi, thanks for taking the questions. For LYBALVI the contracting, I know you've added some of our recent quarters. How much further is it to be margin-neutral?

Question: Joel Beatty - Baird - Analyst : Thanks. And as a follow-up also on LYBALVI. Tell us more about the DTC program. It seems like spending for that is ramping down on this quarter in Q4, it was more front loaded this year. Do you anticipate ramping that up again next year?

Question: Joel Beatty - Baird - Analyst : Thank you.

Question: Uy Ear - Mizuho Securities - Analyst : Hey guys, thanks for taking our questions. So on the eve of guidance for 2025, just wanted to make sure that we understand it correctly. I think you initiated that you were expecting offering expenses to go up modestly. So are you kind of saying that primarily the cut is due to the manufacturing? And the consensus miss modelling, essentially the in INVEGA SUSTENNA going, royalty going away, is that the case? And the second question is, could you also maybe just sort of help us understand the trend for EBITDA going forward beyond 2025 before the orexin product comes potentially is commercialized. Do you expect it to expand from the $200 million level? Thanks.

Question: Uy Ear - Mizuho Securities - Analyst : Okay. Thank you.

Question: Jessica Fye - JP Morgan - Analyst : Hey guys, thanks for taking the question. I had a couple on the products. Can you elaborate on what the improved commercial access you negotiated starting October 1, for LYBALVI is like, how specifically was that enhanced? And when you talk about gross to nets heading towards the mid-30s over the next year, should we think of that as linear? Does it have any kind of step up, say starting January 1? And then just on the ARISTADA guide, it seems like the low end of the range implies a 7% sequential growth if my arithmetic is right. But you said you expect the softness in that category to continue. Just trying to reconcile that. And then lastly, to the extent there's a negative stock reaction on the back of the '25 EBITDA commentary. How do you think about the share repo in that context? Thank you.

Question: Jason Gerberry - Bank of America - Analyst : Hey guys, thanks for taking my questions. Most of them have been asked already, but just wanted to get your general sense of the overall health of the LAI market. When we see kind of the volume trends and hear the cautionary language, we see companies like Indivior, just pull an LAI launch off the market, cautioning around part D redesign tail wins next year. I guess, it seems like it's a challenging space overall. So your general outlook that, volumes can ever grow again on this business, just wanted to get a general sense on that front beyond this year. Thanks.

Question: Jason Gerberry - Bank of America - Analyst : Got it. Okay. Thanks guys.

Question: Marc Goodman - Leering partners - Analyst : Can you help us how to think about VIVITROL once we have LOE, the competition coming in the settlements and just how should we model that? Because I can't imagine this is going to be a normal post LOE market.

Question: Marc Goodman - Leering partners - Analyst : Yeah. So the spending will be generally the same because you're not expecting much of a change. I mean, Teva comes in, they lower the price a little bit, maybe like a typical situation where the only other player and you're going to continue to support the brand.

Question: Marc Goodman - Leering partners - Analyst : Yeah. And the commentary around, I guess it was in the questioning of the numbers coming down a little bit for next year. And I think there was a comment about, well, we will remain profitable. But I guess the question was really like, okay, we have one set, a reset next year. What happens the year after the year after? I think the question was like, should we expect growth again in EBITDA or how should we think about that? Just given the level of spend that you're going to need to support all the indications that you're working on for the orexin?

Question: Marc Goodman - Leering partners - Analyst : And it's the share buyback basically telling us you can't find anything in business development you want to spend on?

Question: Karishma - Goldman Sachs - Analyst : Hi, good morning. This is [Karishma] on for Chris. Thank you for taking our question. Regarding the implementation of IRA, which was previously not a factor in pursuing IH, you've since decided to move forward. What does this say about what you assume for how IRA will be implemented going forward? And can you talk to the push pull factors and how compelling an opportunity IH needs to be commercially in order to support this decision?

Question: Karishma - Goldman Sachs - Analyst : Thank you. That was very helpful.

Question: Ash Fermot - UBS - Analyst : Great. Thanks. Thanks for taking my question. I wanted to just go back to you were asking about you were mentioning about the inventory movement that you're not seeing any kind of impact on that. But are you carrying some inventory quarter over quarter? I'm seeing that the sales that you're reporting not really align with what we are seeing on the script level growth side. So if you can comment on either for LYBALVI, ARISTADA, or VIVITROL, is there any inventory that you are carrying?

Question: Douglas Tsao - H.C. Wainwright - Analyst : Hi, good morning. Thanks for taking the questions. Just first, Rich in terms of '26 or the orexin program, and the second generation of molecules. I know you talked about several different potential uses at the analyst meeting. I'm just curious, how much, what indications you initially go into change on the Phase 1 data or the Phase 1 studies that you'll be running next year or do you have a pretty good idea of what you want to go where you want to go yet? Obviously, we just need to get the healthy human volunteer data. Thank you.

Question: Douglas Tsao - H.C. Wainwright - Analyst : Okay, great. That's helpful. And then just somebody asked about the potential introduction of a olanzapine long acting injectable. And I think you indicated that you did not see an impact. Is that because you don't see the two sorts of long acting injectable being in the same market as LYBALVI, which is in the oil market or or is it that you think that LYBALVI's sort of weight gain profile just should make it sort of immune to any competitive pressure? Thank you.

Question: Douglas Tsao - H.C. Wainwright - Analyst : Okay, great. That's really helpful.

Question: Umer Raffat - Evercore ISI - Analyst : Hi guys. Thanks for letting me do a follow up. I just wanted to make sure I had a full handle on a couple of these numbers. So the move from sort of $400 million EBITDA down to $200 million, is it fair to say 75% of that is on OpEx and 25% of that is on the royalty line? That's what I'm seeing, but I just want to make sure I'm not mistaken.

Question: Umer Raffat - Evercore ISI - Analyst : Got it. So Blair just to be clear, $800 million SG&A plus R&D this year, that's not going to a billion. It's more like $800 million going to $900 million. Is that reasonable?

Question: Umer Raffat - Evercore ISI - Analyst : Thank you very much.