ALKS

Greetings. Welcome to Alkermes' second quarter 2026 financial results conference call. My name is Sherry, I will be your operator for today's call. All participants will be placed on mute to prevent any background noise. If you should require operator assistance during the call, please press star zero from your telephone keypad. Please note this conference is being recorded. I will now turn the call over to Sandy Coombs, Senior Vice President of Investor Relations and Corporate Affairs. Sandy, you may now begin.

Good morning. Welcome to the Alkermes plc conference call to discuss our financial results and business update for the quarter ended June 30th, 2026. With me today are Richard Pops, our Chief Executive Officer, Joshua Reed, our Chief Financial Officer, Todd Nichols, our Chief Commercial Officer, and Blair Jackson, our Chief Operating Officer and incoming CEO. A slide presentation, 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 investor section of alkermes.com. We believe the non-GAAP financial results, in conjunction with the GAAP results, are useful in understanding the ongoing economics of our business.

Our discussions during this conference call will include forward-looking statements. Actual results could differ materially from these forward-looking statements. Please see slide two of the accompanying presentation, our press release issued this morning, and our most recent annual report filed with the SEC for important risk factors that could cause our actual results to differ materially from those expressed 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. Now I'll turn the call over to Richard for some opening remarks.

That's great, thank you. Good morning, everyone. A few months ago, we announced that I would be handing the CEO reins to Blair while continuing to serve as Chairman. That transition becomes official next week, making this my final earnings call as CEO. When we made that announcement in February, it reflected my confidence in the strength of Alkermes' leadership team and how effective we'd been in positioning the company for its next major phase of growth. At the time, we had a strong sense of what the coming months could bring, and I'm pleased to say that many of our most optimistic expectations have become reality. What does that mean in practical terms? I think most notably, Alkermes' leadership position in orexin development is now quite clear.

While our initial focus is on disorders of hypersomnolence, such as narcolepsy and idiopathic hypersomnia, we increasingly see orexin as a platform with the potential to address a broad range of serious conditions where this neurocircuitry plays an important role, such as ADHD, fatigue, and other potential psychiatric, neurodevelopmental, and neurodegenerative diseases. Alixorexton is at the leading edge of that opportunity. It remains the only orexin 2 receptor agonist to have demonstrated efficacy and tolerability across both narcolepsy type 1 and narcolepsy type 2 in large phase II studies. Importantly, its clinical profile has shown benefit beyond improvements in excessive daytime sleepiness, with evidence of meaningful effects on cognition and fatigue as well.

We've continued to share these findings, presenting the first phase II data set in narcolepsy type 2 at the SLEEP meeting in June. Most recently, the top-line results of an interim analysis of our alixorexton long-term extension study in NT1 and NT2, which demonstrated sustained improvement in wakefulness and other measures for up to nine months of treatment. Today, we're actively enrolling patients in our phase III narcolepsy program, which remains on track for expected completion next year. At the same time, we're advancing alixorexton in idiopathic hypersomnia in our Vibrance-3 phase II study. Vibrance-3 adds a new element to the program with a split dose arm. The split dose regimen is designed to extend the pharmacodynamic effects of alixorexton later into the day and expand our competitive profile as we seek to meet the spectrum of needs of individual patients.

We've now introduced two additional orexin compounds into clinical development, each exploring a new avenue of potentially significant commercial and medical opportunity. ALKS 7290 is currently enrolling adults with ADHD, with initial phase I-B clinical data expected by the end of the third quarter. ADHD represents one of the largest and most compelling potential applications of orexin biology. We look forward to gaining our first insights into its activity in this population. In addition, ALKS 4510 is planned to enter phase II in fatigue later this year, initially focused on patients with multiple sclerosis or Parkinson's disease. Fatigue remains one of the most debilitating and poorly treated symptoms across a number of neurological disorders. We expect initial data from this program next year. Our advantageous competitive position has become increasingly evident.

Today, Alkermes is setting the pace in orexin biology with a robust and expanding foundation of clinical evidence in narcolepsy and now generating new data sets across a number of development candidates and disease states. The result is an R&D pipeline with both depth and momentum. We enter the second half of the year with a series of meaningful clinical readouts ahead of us. There's more to Alkermes than the pipeline. We've built a significant commercial business that serves hundreds of thousands of patients, generates substantial cash flow, and provides a foundation that allows us to invest for the future. Here, too, a number of important developments have unfolded largely as we anticipated they could. The first relates to LYBALVI, our oral antipsychotic medicine.

For several years, we've been pursuing a deliberate strategy of steadily expanding access while carefully balancing the economics of our gross-to-net profile. This past quarter marked an important milestone in that effort. Through new contracting arrangements that we believe will help drive increased uptake of LYBALVI, we expanded access strategically with three of the largest Part D plans, where LYBALVI is now on formulary. With this expansion, LYBALVI is now covered for more than 80% of insured lives. That level of access means that patients who may benefit from LYBALVI have a better chance of getting it, and importantly, provides a strong platform for continued prescription growth in the years ahead. The second relates to VIVITROL, our longstanding medicine for the treatment of alcohol and opioid dependence.

Given its unique clinical profile and the distinct treatment settings in which it's used, we have always believed that VIVITROL would have a long commercial life. Today, more than two decades after its launch, VIVITROL continues to grow. Earlier this month, we announced the termination of our agreement with Amneal for an authorized generic of VIVITROL. So we can say now conclusively that there will be no AG for VIVITROL in 2027. As we've discussed many times before, VIVITROL's manufacturing requires specialized sterile facilities and formulation expertise. This has created meaningful barriers to entry, as evidenced by the fact that today there remains only one approved ANDA. As we look ahead to 2027, the actual timing of that generic's market entry remains uncertain. So we see VIVITROL continuing to be a strong contributor to our commercial business in the years ahead.

The third major development has been the acquisition and integration of Avadel and the LUMRYZ brand. As reflected in today's results, the integration of the Avadel team and the LUMRYZ business has proceeded exceptionally well. In fact, as we've gained experience with the medicine and the impact it can have on patients, our enthusiasm for its long-term potential has only increased. Importantly, last quarter we reported positive phase III results for LUMRYZ in idiopathic hypersomnia, positioning us to pursue an sNDA submission and, if approved, a launch in that indication in March 2028. Taken together, these developments underscore how substantially Alkermes has evolved. From a standing start in sleep only a few years ago, we've become one of the leading companies in hypersomnolence disorders, with both a growing commercial presence in narcolepsy and a differentiated research and development platform.

More broadly, we believe the biology underlying sleep and wakefulness represents one of the most compelling frontiers in neuroscience, with opportunities that may extend well beyond today's approved therapies and well beyond narcolepsy. We expect this to remain a fertile area for innovation and drug development for many years to come. As I reflect on where the company stands today, I would say that much of what we had hoped to accomplish has begun to take shape. Our commercial business is strong, our pipeline is advancing, our scientific leadership has never been more apparent. It's exciting. I'll end my prepared remarks from my last earnings call on a note of great optimism and appreciation for the remarkable opportunity this company has provided me. With that, I'll turn the call over to Todd for a review of the commercial results.

Thank you, Rich, and good morning, everyone. I am pleased to report another quarter of strong commercial execution. During the second quarter, our teams remained focused on supporting patient access, driving demand for our commercial products, and delivering strong performance across addiction, psychiatry, and sleep medicine. In the second quarter, net sales from our proprietary product portfolio increased 34% year-over-year to $411.7 million, reflecting solid demand across our psychiatry and addiction portfolios and our first full quarter of commercial contribution from LUMRYZ. Starting with VIVITROL. Net sales in the second quarter were $124.5 million, reflecting solid year-over-year performance. Results were driven by growth in underlying demand in the alcohol dependence market, as well as approximately $4 million of gross-to-net favorability, primarily related to favorable patient mix. For the full-year, we continue to expect VIVITROL net sales for 2026 in the range of $460 million-$480 million.

We remain confident in the strength and the durability of our VIVITROL business and look forward to expanding our impact with this important medicine. For our psychiatry franchise, in the second quarter, net sales for the ARISTADA product family were $96.7 million. Results reflected solid underlying demand, as well as approximately $4 million of gross-to-net favorability, primarily related to favorable patient mix. We are encouraged by recent growth trends in the long-acting injectable antipsychotic space and ARISTADA's performance in that market. For the full-year 2026, we continue to expect ARISTADA net sales in the range of $365 million-$385 million. LYBALVI net sales grew 12% year-over-year to $94 million. Underlying TRx growth was 18% year-over-year, driven by sustained momentum in new patient starts and continued expansion in prescriber breadth.

Gross-to-net adjustments were approximately 36% during the second quarter. This quarter marked a meaningful step forward in the evolution of our long-term access strategy for LYBALVI. We significantly expanded LYBALVI's access position during the quarter, with coverage now exceeding 80% of all insured lives, with notable access enhancements, particularly in the Part D channel. These access gains improve our competitive position and represent a strategic investment in the brand's long-term growth potential. We expect gross-to-nets to expand in the second half of the year. For the full-year, we now expect GTN adjustments in the high 30%. Underlying demand has remained strong, and we are maintaining our full-year guidance of LYBALVI net sales in the range of $380 million-$400 million. Turning to our sleep franchise, Q2 marked the first full quarter following our acquisition of Avadel and the LUMRYZ brand.

During the quarter, the team delivered strong performance and generated LUMRYZ net sales of $96.6 million. We exited the quarter with approximately 3,900 patients on therapy. Our strategic focus is on providing a strong access profile and driving adoption among prescribers while providing extensive patient support services. In addition to strong underlying demand, our Q2 results included approximately $7 million of benefit related to timing of wholesaler inventory shipments at quarter end. I will discuss how we expect that to impact Q3 in a moment. For the full-year, we continue to expect LUMRYZ to generate total net sales in the range of $350 million-$370 million. Of this, we expect Alkermes to record $315 million-$335 million, reflecting the mid-February close of the transaction. In sleep medicine, we have the unique opportunity to both grow the LUMRYZ brand while preparing for the potential future launch of alixorexton.

We believe the combination of our commercial capabilities, deep expertise in central disorders of hypersomnolence, and a differentiated portfolio encompassing both oxybate and orexin mechanisms uniquely positions Alkermes as a leader in sleep medicine. Looking ahead to the third quarter, excluding the GTN benefits for ARISTADA and VIVITROL and the $7 million inventory fluctuation for LUMRYZ mentioned earlier, we expect net sales from the four proprietary products to be generally similar to Q2 levels in the range of $390 million-$410 million.

As we enter the second half of the year, we remain focused on disciplined execution, supporting patient access to our medicines, and delivering sustained commercial performance across the portfolio. With a seasoned commercial organization, a growing presence in sleep medicine, and significant opportunities ahead, we believe we are well positioned to drive growth and to create long-term value. With that, I will pass the call to Joshua to review the financial results for the quarter.

Thank you, Todd. In the second quarter, we delivered strong financial results driven by continued growth across our proprietary product portfolio, a full quarter of contribution from LUMRYZ, and disciplined execution across the business. Our diversified commercial portfolio and strong operating performance continue to generate meaningful cash flow and to provide flexibility to invest in our expanding development pipeline. Turning to our financial results. During the quarter, we generated total revenues of $496 million. These results reflect solid performance for our portfolio of commercial products and the first full quarter of financial contribution from LUMRYZ following the acquisition of Avadel. As Todd outlined, our portfolio of proprietary products generated net sales of $411.7 million. Manufacturing and royalty revenues were $84.3 million for the quarter, including $30.6 million from VUMERITY, $27.5 million from the long-acting INVEGA product, and manufacturing revenue of $20.9 million related to RISPERDAL CONSTA.

This represents the majority of our expected manufacturing revenues for CONSTA for 2026, and as such, we do not expect meaningful revenues from CONSTA for the remainder of the year. As we move into the third quarter, we expect Q3 total revenues in the range of $450 million-$470 million. Turning to expenses. Cost of goods sold in the second quarter were $98.1 million, which includes the purchase price fair value accounting of LUMRYZ inventory that we described last quarter. This compared to $49.5 million in Q2 of the prior year, prior to the acquisition of Avadel. In the third quarter, we expect costs to be in the range of $85 million-$95 million. R&D expenses in the quarter were $112.9 million, compared to $77.4 million in Q2 of the prior year, reflecting continued advancement of our orexin portfolio.

That program has expanded to include a number of ongoing studies, including the phase III alixorexton Brilliance studies in narcolepsy, the Vibrance-3 phase II study in idiopathic hypersomnia, and the ALKS 7290 phase I-B study in ADHD and preparations for the phase II study in ADHD, as well as clinical development activities supporting ALKS 4510 as we prepare to enter into phase II in fatigue later this year. In the third quarter, we expect R&D expenses to be in the range of $120 million-$130 million. SG&A expenses were $217.6 million for the quarter, compared to $170.8 million in Q2 of the prior year. The year-over-year increase primarily reflects the addition of the Avadel commercial infrastructure. As we look ahead to the third quarter, we expect SG&A expense to be fairly flat in the range of $215 million-$225 million.

During the quarter, we also recorded amortization of intangibles of $22.6 million and net interest expense of $20.6 million. In addition, we recorded the change in the fair value of contingent consideration of $26.4 million related to the CVR milestone associated with our acquisition of Avadel, which we deemed more likely to be achieved following the recently announced positive phase III results for LUMRYZ in IH. In Q2, we recorded GAAP net income of $0.5 million and EBITDA of $49 million. Adjusted EBITDA was $139.2 million, which we believe is more representative of cash generated by the business during the quarter. Looking ahead to the third quarter, we expect adjusted EBITDA to be in the range of $80 million-$100 million.

For the year, we are reiterating our financial expectations across all line items with the exception of GAAP net loss and EBITDA, which are impacted by the change in fair value of the contingent consideration that I mentioned earlier. We now expect GAAP net loss in the range of $95 million-$115 million and positive EBITDA in the range of $75 million-$95 million. Turning to our balance sheet, we ended the second quarter in a strong position with approximately $690 million in cash and total investments.

Overall, we are pleased with our performance in the first half of the year. Our diversified commercial portfolio, strong balance sheet, and ability to generate meaningful cash flow provide flexibility to invest in our growing development pipeline while maintaining disciplined financial management. We remain focused on executing against our strategic priorities and believe we are well positioned to deliver on our objectives for the remainder of 2026. With that, I'll now hand the call to Blair.

Thank you, Joshua. As you've heard, we entered the second half of 2026 with strong commercial and financial momentum and continued execution across our development portfolio. During the first half of the year, we delivered important clinical and operational milestones that further strengthen our long-term growth profile. Starting with LUMRYZ, as Richard mentioned, in May, we announced positive top-line results from the phase III REVITALYZ study in idiopathic hypersomnia. Based on these results, we plan to submit an sNDA for LUMRYZ in IH by year-end. If approved, this would expand LUMRYZ's growth opportunity into an additional area of significant unmet need, with a potential launch as early as March 2028.

Turning to alixorexton, in June, we presented detailed results from the Vibrance-2 study at the annual SLEEP meeting. This marked the first positive phase II data set for an orexin 2 receptor agonist in narcolepsy type 2, and one of the few studies conducted exclusively in this patient population. Importantly, it also provided the first look at the impact of orexin signaling on fatigue and cognition in patients with normal physiological levels of orexin. We were encouraged not only by the treatment effects observed across wakefulness, fatigue, cognition, and other patient-reported outcomes, but also by the response from the sleep medicine community to these findings. Collectively, the data broadened our understanding of the potential role of orexin biology in patients with normal orexin tone. Building on these data, earlier this month, we reported interim results from the ongoing alixorexton long-term extension study, or LTE.

This is the first long-term study of an orexin 2 receptor agonist to demonstrate sustained, clinically meaningful improvements from baseline in wakefulness and excessive daytime sleepiness across both NT1 and NT2. We view these data as highly clinically relevant, and there are a number of important elements to this data set. First, we observed durable improvements in wakefulness, cognition, and fatigue for up to nine months of treatment, with sustained effects over time. Given that narcolepsy is a lifelong disease, durability is a critical attribute for any potential long-term therapy.

Second, the magnitude of benefit remained impressive with up to nine months of treatment. Overall, across measures of wakefulness, cognition, and fatigue, most participants were severely symptomatic at baseline. At week 24 of the LTE, most patients across all doses had cognitive functioning scores within the normal or mild range, and mean fatigue scores were within the normal range. Across all dose groups in both NT1 and NT2, alixorexton sustained clinically meaningful improvements from baseline in mean wakefulness. We believe this is one of the most compelling aspects of the alixorexton profile.

Finally, data from week 24 of the LTE generally demonstrated further improvement in mean wakefulness on the Maintenance of Wakefulness Test and Epworth Sleepiness Scale relative to the results observed during the randomized phase II studies. During the first four weeks of the LTE, dose adjustment was permitted, providing flexibility to meet individual needs across narcolepsy patients. This has important potential implications for clinical practice. Narcolepsy is a heterogeneous disorder with a spectrum of disease severity and sensitivity to orexin 2 receptor agonists. In a real-world setting, we believe providing a range of dose options would give physicians flexibility to tailor treatment to individual patients and would be an important element of alixorexton's competitive profile.

Taken together with the general safe and well-tolerated profile demonstrated in this interim analysis of the extension study, these data strengthen our confidence in alixorexton's potential to become a cornerstone treatment for narcolepsy. As the body of evidence continues to grow, we believe alixorexton is well-positioned to help transform the treatment of narcolepsy and address significant unmet needs for patients living with NT1 and NT2. Operationally, we've continued our strong focus on clinical execution. The Brilliance phase III studies in NT1 and NT2 are active and enrolling, and we are pleased with the progress across the program. In idiopathic hypersomnia, enrollment in the once-daily dosing cohorts of Vibrance-3 has been completed, and the split dose cohort is actively enrolling. We continue to expect completion of that study in the fourth quarter.

Turning to ALKS 7290 in adult ADHD, we have made substantial progress in our phase I-B study, and we now expect top-line results by the end of the third quarter. This randomized, placebo-controlled study is designed to enroll approximately 50 adult patients to establish initial clinical proof of concept for ALKS 7290 in ADHD. Participants will receive two weeks of treatment with ALKS 7290 or placebo. This study will assess the safety and tolerability of ALKS 7290, along with the effects of treatment on translational measures, including quantitative EEG and certain neuropsychological performance measures. These assessments are designed to evaluate sustained attention, vigilance, and impulse control in a short-duration study. While this study is not powered for statistical significance, we will also assess changes from baseline on established clinical ADHD scales, including the Adult ADHD Investigator Symptom Rating Scale, or AISRS.

Importantly, we expect these data will represent the first clinical evaluation of an orexin 2 receptor agonist in patients with ADHD. In parallel, we continue preparations for a larger phase II study and expect to begin enrollment in that study this quarter. Finally, turning to ALKS 4510, fatigue represents another potentially significant opportunity for orexin biology. Our initial strategy is to evaluate fatigue in well-defined patient populations where symptom burden is substantial and meaningful unmet needs remain. Our first phase II-A study will enroll participants with fatigue associated with multiple sclerosis or Parkinson's disease, providing an important opportunity to evaluate the impact of orexin signaling in these disease states. In this placebo-controlled, randomized, double-blind study, we plan to enroll approximately 175 participants with multiple sclerosis or Parkinson's for four weeks of treatment.

As we look for signal and prepare for later-stage clinical studies, the phase II-A represents an important opportunity to evaluate a number of established fatigue scales, including the Modified Fatigue Impact Scale, or MFIS, which is commonly used in patients with MS; the Parkinson's Disease Fatigue Scale, or PFS-16; the Fatigue Severity Scale; as well as the PROMIS-Fatigue scale that we implemented in the alixorexton narcolepsy development program.

As we advance into this area of development, we also plan to engage with the FDA regarding study design and the development pathway. More broadly, we believe fatigue represents a large and underserved category where meaningful innovation is needed, and we are excited to begin exploring the potential of this mechanism in that setting. We've built the industry's most comprehensive portfolio of orexin 2 receptor agonists and are now advancing that science across multiple indications where meaningful unmet need remains.

The progress we've made over the past year has increased our confidence not only in alixorexton but in the broader opportunity to leverage orexin biology beyond narcolepsy. As I prepare to take on the responsibilities of the CEO role next week, my objective is simple: deliver on the tremendous opportunities ahead of us, focusing on what matters most, operating with discipline, and executing with excellence. Under Richard's leadership, Alkermes has grown into a company that has profoundly impacted the lives of countless patients, a company of which we are all immensely proud. As the continuing Chairman of our board of directors and a trusted advisor, I'm grateful for Richard's ongoing contributions to the company and know he will continue to play an important role in supporting our future success. With that, I'll turn the call back to Sandy for the Q&A.

Thank you. We'll now turn the call over for Q&A.

Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit to one question and one follow-up question. One moment while we poll for questions. Our first question is from Umer Raffat with Evercore ISI. Please proceed.

Hi, guys. Thanks for taking my question. I just wanted to focus on ADHD for today's question. Specifically, here's the couple things I want to touch up on. One, I think you've mentioned it's 50 adult patients in an ongoing study that's going to be reporting later this year. How are you thinking about the translatability from adults over to pediatrics? My understanding is pediatrics is a must for any ADHD drug development. That's one. Secondly, I think you also mentioned it'll be like a two-week endpoint, and I know tachyphylaxis was something that you were definitely able to overcome in the narcolepsy setting.

I'm just trying to think about the ADHD endpoints and whether two weeks and translatability six weeks, given the orexin mechanism of action, how you're thinking about that and whether there'll be a follow-up. Finally, is it safe to assume that among the neuropsych performance measures you're evaluating, we will have AISRS for adults in there as well? Thank you.

Morning, Umer. This is Blair. Thanks for the questions. Yeah, look, I think as you look at the market as a whole, pediatrics is obviously very important. What we do though is start with adults, and we'll do the first part of the program in the adult population. That's highly translatable into adolescents and children. The way you typically handle that is by doing some bridging PK, then you move into your later stage programs, including those patient populations. We have that well in hand, and we'll move forward once we have the dose ranging figured out for the adult populations. Remember, we'll get the dose ranging predominantly from our larger phase II study that will come out for next year.

The study that we get this year will be our translational study, our phase I-B study, that we'll have by the end of the third quarter. With regards to the endpoints, you're exactly right. The two-week endpoint that we have in the phase I-B study is shorter than you'd typically have in a dose ranging study. That just really reflects the fact that this is predominantly a safety and a translation study. What we'll be doing is looking at a lot of different markers, both from EEG, behavioral markers, as well as some of the typical tools that you see.

We will include AISRS as part of that. We'll be able to really get a comprehensive sense of whether or not we're engaging the target, sort of some of the effect size, but we're also looking for dimensionality of the response. Are we seeing things other than what you see with the typical assets that have been tested in this space using this new mechanism? We're really excited to see what learnings we can bring from this study.

Thank you, Blair.

Our next question is from Paul Matteis with Stifel. Please proceed.

Hey, thanks for taking my questions, Richard, congrats on the transition, Blair, congrats to you as well. Another one on ADHD. Can you maybe just talk a little bit about how you selected the doses for this study? Obviously, you can't look at receptor occupancy, so how confident are you that you're in the right sort of range here in the 50-patient POC study? Then as you think about other non-sleep indications, like something like MS fatigue, where are we with establishing the regulatory path there? And what are some of the kind of different endpoints you're kicking around that you think the FDA could be receptive to? Thank you.

Sure. Hey, Paul. I think on the selection of doses, so as you mentioned, ALKS 7290 is a new asset. It's a molecule that stands on its own. It's been through a full SAD/MAD program. We took a similar path to selecting doses that we did with the original work with alixorexton, whereby we used EEG and target engagement as a way of assessing what range we wanted to be in. That gives us a pretty good sense of where we're engaging the system. I think what's unknown still is a little bit of the response and the pharmacology related to attention versus what we see with, say, wakefulness in an alixorexton system.

Part of our strategy here is if we see that we're slightly high or slightly low in the range out of the phase I-B study, we'll have an opportunity to tuck in additional doses on the higher or lower end. We think we've got it in a good range, but we have that flexibility if need be. With regards to our other areas, specifically MS fatigue and ALKS 4510, as I said in the prepared remarks, I put in some of the endpoints or some of the tools that we're using as part of that study. That's really getting at what you were asking about, which is establishing a regulatory pathway with the agency.

What we're trying to do here is make sure that we can find a scale that best represents how fatigue is described by patients across multiple areas, such as multiple sclerosis or Parkinson's disease, and align with the FDA on that tool moving forward for the regulatory path. This ALKS 4510 study is going to be important in establishing that.

Our next question is from Leonid Timashev with RBC Capital Markets. Please proceed.

Hey, guys. Thanks for taking my question. I just wanted to ask sort of how you're viewing the orexin commercial landscape and specifically maybe what your latest thinking is on pricing and how much of that strategy might be driven by how the competition evolves versus sort of what you're seeing as the intrinsic value of the molecule as sort of you continue to develop it in NT1, NT2, and IH. Thanks.

I think as the market evolves, pricing is one of the things that we're going to learn over the next little while. With Takeda coming into the marketplace first, I think they'll be definitely establishing a price corridor for the class. As you know, this is a mechanism where we've seen really outsized effects relative to the current standard of care. It's really meaningful impacts to patients and their lives potentially. We'll see where Takeda ends up pricing, then based on that, we'll look to establish our own price strategy as we complete our program. As we've said before, I think we're going to bring a lot of potential options to the table with the program that we're developing with alixorexton.

Multiple doses, a range of doses that patients can use according to their own individual needs, also the split dose option, which will allow for flexibility in dosing commercially as well. Assuming the data comes through, that will be across all different hypersomnia indications, NT1, NT2, and idiopathic hypersomnia. I think all of that will go into our determination of price moving forward. We think from a patient perspective, we're in a really good place of delivering a lot of value over the next few years.

Our next question is from Akash Tewari with Jefferies. Please proceed.

Thanks so much, and congrats, Richard. It was really great working with you. Any lessons from the Tris CRL for their once-weekly low sodium oxybate? Do you feel like you'd be able to file on PK data? Where do you currently stand with your program? Maybe stepping back, Richard, can you talk a bit about what's going on with GLOBE and GUARD and the impact it could have on mid-cap biotech? Is the perception that there's limited dialogue with these companies in the administration true, and do you think these programs will ultimately get implemented? Thank you.

Why don't I start with the Vox question. Then I'll turn it to Rich on the second question. I think as we look at our low to no salt option that we're developing, which we call our Vox program, we're taking an approach where we're taking multiple formulations into the clinic and looking at them this year. The goal here is to establish a bioequivalence pathway, if possible. That'll be our fastest path to market, potentially. If we're able to do that, then that would allow us to do a PK bridging study and move forward with a broad label. I don't think that the Tris CRL really impacts that in any way. I think Tris has its own idiosyncratic safety and efficacy questions that it needs to answer. I think for us, it's a pretty straightforward path if we're able to achieve bioequivalence.

We have a robust package with the LUMRYZ data set that we can leverage, and I think the molecule that we're using on the Vox program looks really good. We'll see how that data comes out, and we'll give you guys some information on that once that's available.

Akash, it's Rich. Briefly on GLOBE and GUARD, these are the CMMI demonstration projects that are currently in front of the OMB with an expectation of perhaps a final rule fairly soon. Both of them are ways of essentially building in reference pricing to foreign markets into the Medicare and Medicaid programs. They're probably directly in violation of the existing statute. I think there's a lot of energy in the Congress and also just direct lobbying with HHS and the administration about modifying these or not proceeding to the final rule. To the extent there's a final rule issued, I think there's still a fair amount of litigation that would go forward.

For midsize companies, it's actually quite important because many of the big companies have a large portfolio that they can sort of craft deals around, whereas many of the midsize companies depend on one or two products only. To the extent they have a foreign reference price, it can be really important for their business. I think policymakers have been very receptive to that message. Just to be clear, for Alkermes, we don't have foreign reference pricing. We don't sell our drugs at a lower price outside the U.S., so it's not an issue for us. For the industry writ large, it's actually something people are paying a lot of attention to.

Our next question is from Joseph Thome with TD Cowen. Please proceed.

Hi there. Good morning, and Thank you for taking my questions and adding my best wishes to Rich and Blair on the upcoming transition. Maybe switching to IH for alixorexton, I guess, what should we think about as the goal for later this year? Is it getting patients to below 10 on ESS? How can we extrapolate the results that you saw in the NT2 population over to IH, given that there is some similarities in this population, but also you have the incorporation of the BID dosing? Maybe your competitor, Takeda, has indicated some expectations on scheduling for their compound. I guess, how are you thinking about the scheduling of alixorexton, and maybe what studies have you done to support that? Thank you.

Hey, Joe, it's Rich. I'll start, then Blair and Todd can jump in. I think our expectations for the IH are informed by the success we had with NT2, given the fact that two populations overlapped to some extent. They're both characterized by a lot of variability. What we want to see in the Vibrance-3 study is a couple of things. We want to see evidence of the activity of alixorexton in this diverse patient population as measured primarily by ESS and IHSS. We're using MWT simply as another marker because we've used it in other studies, recognizing that it's not used as an approval endpoint in IH. It also gives us a tool to look at the benefits of the split dose.

We're testing the split dose in the IH population to see whether we can see just numerical changes in the IH MWT by splitting the dose, one in the morning and one later in the day. What we're hoping to see and our expectation is to see evidence of activity, a sense of dose, so we can design and size the phase III program. With respect to Takeda, they've been talking publicly about potential scheduling at Schedule IV, which is within our planning scenario, and that won't be a commercial impediment at all. Blair, Todd?

Yeah. As Rich said, I think IH is a really interesting market overall. I think to the extent that we can have an effect within that patient population, I think that's going to be really important to that group. There's really only one approved product there right now on a branded basis and

I think bringing orexin into that class is going to be very attractive. As Rich said, our whole focus here is about identifying the signal to design our phase III to get the most robust label possible, and that's what we'll be looking for.

Great, thank you.

As Rich said, all of our research points to HCPs don't see this as a barrier to entry for a product.

Great. Thanks.

Our next question is from David Amsellem with Piper Sandler. Please proceed.

Thanks. A bigger picture question on orexins. When Lilly bought Centessa, they talked very clearly about multi-indication potential. Obviously, you have a lot of irons in the fire, but can you talk about how you're thinking about even more indications for your orexins and when we can get more updates on potential additional clinical programs? That's number one. Number two, on VIVITROL, do you think that any generic competition whatsoever will materialize next year? I've noticed on the FDA website that Teva's generic is listed as "discontinued." Just wondering, I know, Richard, you alluded to it being a fluid situation, but, are you expecting any generic competition, any entrants on VIVITROL, whatsoever next year, given that? Thanks.

Hey, David, it's Rich. It's so interesting, I referred to it in my opening comments, is that things are playing out largely the way that we would've hoped that they would've played out in both the orexin space and in the VIVITROL space. I think it's really gratifying to see Lilly and others talking about the potential breadth of applications of the orexins. Remember when we started this a couple of years ago, that was a gleam in people's eyes. We're still trying to figure out the pharmacology, the tolerability, the overall efficacy levels. Now I think it's almost taken as a matter of proven science that these drugs are quite effective in driving wakefulness in patients with and without orexin tone in their brain.

We are, as you know, active in ADHD and fatigue in multiple domains, we're not going to describe at this moment some of the other areas that we're going. We do have a number of other ideas as well as other compounds in development. With respect to VIVITROL has always been a bear of a product to manufacture. It requires unit operations that most generic companies just don't have, in terms of sterile processing of microspheres and sterile filling of dry powders and so on. We terminated the Amneal deal earlier this year, there won't be an authorized generic next year. At this moment, we don't plan on a generic entering in 2027. We don't have perfect visibility in everything, in terms of the way we're going to plan our business for 2027, we're not anticipating a generic.

Our next question is from David Huang with Deutsche Bank. Please proceed.

Hi there. Congrats on the upcoming transition, thanks for taking my questions. I just wanted to ask first on, I guess, latest thoughts maybe around the relative market size and opportunity for NT1, NT2, and IH. I think, the thinking is maybe the IH market is perhaps bigger than some of the epidemiology historically has suggested. Would you agree with that? Then in terms of LUMRYZ, if you could just talk about some of the underlying maybe patient demand trends that you're seeing there. Thanks so much.

Yeah, David. Hi. I'll take that one. We would agree with your statement. Significant unmet need, NT1 and NT2, also all of our research really points to significant unmet need with an IH. As we've said in the past, there's about 40,000 patients right now. We think that's actually likely undersized, and there's only one approved product on the marketplace. When we do our research with HCPs and patients, we see a really significant unmet need there, which provides a great opportunity eventually for LUMRYZ and also for alixorexton. Something that we're excited about. LUMRYZ had a great quarter. Q2 was really strong. As you saw in the results, overall 3,900 patients on therapy, which is a really nice growth trend quarter-over-quarter and year-over-year.

In fact, year-over-year, that's a 25% growth in patients. That's really being driven by HCP TRX breadth. We continue to see expanding breadth. In fact, HCP breadth year-over-year grew by 24%. It's really driven by strong patient mix. It's a really diverse profile. It's new to oxybate patients. It's switch patients coming back into the mix overall. We're really encouraged with the underlying demand and the metrics that are supporting that.

Our next question is from Uy Ear with Mizuho Securities. Please proceed.

Hey, guys. Thanks for taking our questions. Rich, congrats on making the transition. Maybe just help us sort of understand potentially the implication from the data readout that we expect this year. Would you be able to Our understanding is that it's BID dosing. If the readout for NT2 is positive or IH is positive, how should we perhaps interpret what that means with respect to your split dosing program and the IH readout later this year? Thanks.

Uy, it's Rich. I don't know if I completely understand the question, but I'll give you my interpretation of what you're asking. Takeda is going to get approved for only NT1 for drug 861 that is dosed at the 2.2 dose as their anchor dose. That's the extent of the commercial launch that'll happen this year. They have other drugs in development. We've not seen any data on those, and they're way behind what we're doing. We're in phase III for NT1 and NT2 and with a range of doses from once daily to split doses to provide the flexibility that we know patients will want as they get introduced to this new pharmacology. I think one of the things that's happened over the last year is that our leadership position in the disease of hypersomnolence has become more clear.

I think at this time last year, there was still speculation about other players. Are they going to be faster or slower than us? What their data were going to look like. Now it's clear Takeda's going to come first, and we're going to come next with a broader offering. Anything that comes behind us is going to have to figure out how to compete with our profile. Our profile, we think, is the best in class right now, and it's the most advanced.

Our next question is from Jessica Fye with JPMorgan. Please proceed.

Thanks for taking our question, this is Jose on for Jess. I have two on ADHD. I'm curious about how you're applying learnings from narcolepsy and your other programs to design an ADHD titration strategy, particularly given that standard ADHD therapies are used across a wide range of doses and dosing schedules. Second, how do you think class effects such as polyuria will play out in this patient population? Thank you.

Yep. This is Blair, thanks for the question. Look, I think as you go into ADHD, it has many of the similar characteristics that we see within diseases of hypersomnolence with regards to a need for long-acting dose options, dose options that'll last throughout the day, as well as opportunities for some flexibility for patients. I think there's a lot of learnings that we take from the work that we've done in NT2 and NT1 that will inform on that. I think from the wide safety profile that we've seen and the wide therapeutic window, we don't anticipate that a titration is going to be required with regards to, for any sort of safety reason.

Remember, we saw in our NT2 study that the drug and this mechanism was tolerated really well with patients who had an intact orexin tone, which is what we see as kind of the platform that we'll be launching into in all of these other indications outside of diseases of hypersomnolence. It then comes down to just sort of normal drug development in sort of looking at what other AEs you bring to the table. I think, as you said, polyuria is something that we've seen in our hypersomnolence program, and that comes with a certain engagement of the orexin system. We're not sure if that'll come into play at the levels of dosing that we're going to need for ADHD. We'll assess that as we go forward.

What we've seen, though, at least in all of our clinical programs, is that polyuria that we see is really an increased frequency of urination that's noticed by the patient. It's usually mild. It can be moderate, but it doesn't tend to lead to discontinuation or dissatisfaction. I think all in all, if we see a similar profile to what we've seen in our existing programs in ADHD, we'll be quite happy. The data will speak for itself when we get it.

Thank you.

Our next question is from Rudy Li with Wolfe Research. Please proceed.

Thanks for taking my question. Just a quick follow-up for the LUMRYZ growth trajectory. Can you provide additional color on the key growth drivers across different patient segments? Regarding potential impact of orexin entry, talk about recent market research and payer discussions for potential combo use of orexin plus oxybate. Thanks.

Yeah, sure. Absolutely. Overall Q2 was really driven by addition of new patients. Total patients on therapy, 3,900. That's a net add of about 300 quarter-over-quarter, which is a strong indicator going into Q2. It's really based on contribution from returning patients, new to oxybate patients, and switched patients. Actually, the strongest growth segment right now is new to oxybate, which we view as very encouraging because that's the highest portion of the dynamic impact of the market overall. We feel really good about that. We're going to be watching closely just the impact of the launch of Takeda's program, potentially sometime this year going into next year. I think you know we are really big believers in orexin biology. We believe that there's significant unmet need and that alixorexton has the potential to fill a very big gap in the marketplace.

All of our research, all of our HCP research continues to support durability of the oxybate class. There's a lot of interest in oxybates plus orexins. We believe we have the chance to be really the leaders in sleep right now. In terms of payer research, that's ongoing. We're watching that very closely, the pricing that will happen with Takeda's program. We believe we have a competitive advantage based upon the profile of alixorexton and also the breadth of the indications.

This is Blair, just to talk on the combination element for a second. We do get a lot of interest from patients and physicians about the ability to use both the orexins and the oxybates together. A lot of that actually is generated by some of those that use oxybates now. They're getting a tremendous benefit, and what they'd like to do is augment that with the orexin molecules. I think as a company that has both, it's on us to start to generate some data that we can provide both to the treatment community as well as to the payer community. That's something we'll be looking at doing over the next few years.

Very helpful. Thank you.

Our next question is from Ben Burnett with Wells Fargo. Please proceed.

Good morning, team. This is [inaudible] on for Ben. Thank you for sharing some color on LYBALVI and the Part D expansion. Would you expect to see the impact from this expansion this year, or will that be more visible in 2027? Perhaps more broadly, how do you expect LYBALVI's growth dynamics to unfold over the coming quarters? Thank you.

Yeah, absolutely. In terms of LYBALVI, as Rich and I both said in our prepared remarks, it was a really strong quarter overall for LYBALVI performance with demand, but we're really pleased with the strategic move in expanding access. LYBALVI access for across all channels is now approximately 80%. We view that as a long-term strategic investment in the durability of the brand. We think that all of the underlying metrics support that right now, which is TRx growth, HCP breadth of prescribing continues to expand in persistency. We believe that improving access will enable stronger volume. That's the reason why we've enhanced the access profile and gone into new agreements. The short-term impact is going to be expanded Gross-to-Net, which I said earlier, that will happen later this year, but we believe that's going to support long-term growth over the next several years.

Perfect. Thank you very much.

Our next question is from Ami Fadia with Needham. Please proceed.

Good morning. Thanks for taking my question. I wanted to get your latest thoughts on how you're looking to potentially generate any data in patients that are using both an oxybate and an orexin, and if there is a way to differentiate in this market with, say, some sort of combination data. Thank you.

Ami, why don't I start, then I'll turn over to the others. I think one of the biggest takeaways I had coming from the sleep conference in Baltimore was the interest in this combination therapy, given the fact that narcolepsy is a 24-hour disease, and we're going to address the wakefulness side of it incredibly aggressively with the orexins. In talking to patients, patient advocacy groups, and clinicians, the consolidation of nighttime sleep, particularly as it relates to consolidation of slow-wave nighttime sleep, is a benefit that's not entirely captured in the current labels for oxybate. I think we came away from that as we've gotten more experience with LUMRYZ, the idea that this oxybate biology is under-scienced at this point. With alixorexton moving so aggressively in phase III, we're not going to disrupt that program. We're going to finish the Brilliance program.

We're going to file with a safety data set that's consistent with the Brilliance program. Around that time, though, we'll start feathering in the idea of creating some studies to look at both sides of the equation. We'll do that probably not for registrational purposes, but more for support for clinicians and for payers. It's an area that's got a lot of energy right now. Blair?

No, nothing to add. That's great.

Okay.

Our next question is from Ash Verma with UBS. Please proceed.

Hi, this is [inaudible] on for Ash. Thanks for taking our questions. I guess our first question is, as we get closer to the potential launch of Takeda's oveporexton in NT1, what is your base case assumption on where the annualized list and net pricing per patient might shake out? The second is, what is your assumption around how ORX-750 asset may change in the hands of Lilly? We saw the phase II has expanded materially from 96 patients to 248 patients and now includes more frequent and/or regular follow-ups on the endpoints. How could that change the data generation in your view? Thank you.

I think as you look at Takeda's launch, as we said earlier, they'll be determining the overall price. As you know, this class generates a tremendous amount of value for these patients, and they're going to be limited to the NT1 population. I'd expect them to price kind of in the range of a typical orphan drug, and obviously, they're in the process of working through that now as they prepare for their PDUFA, which we expect to see in kind of the August to December timeframe. We'll learn more then as to where they end up. As for Lilly, I think, and the orexin-750 program or ORX-750 program, I think you're exactly right. Lilly's widened their phase II program, and they've done that because they needed to sort of backfill some of the work that was done by Centessa earlier.

I think that wasn't a very thorough dose ranging. I think they were being very exploratory in their program, to try to show people what they could potentially do. Lilly is taking a traditional and responsible drug development approach. They're doing a proper dose ranging, so they can understand what they really have and how it's going to play. I think Rich characterized it really well earlier, which is, we're well ahead of our competitors as we think of NT2 and IH. I think across all indications, we think we have a really robust profile that's going to be difficult to differentiate from. I think Lilly's going to be looking to see how could they differentiate as they come into the market after us.

I see. Thank you so much.

Our next question is from Douglas Tsao with H.C. Wainwright. Please proceed.

Hi. Good morning, and thanks for taking the questions. Just one follow-up. I think you made the comment at the beginning of the call that you had become sort of more optimistic or sort of enthusiastic about the Avadel transaction and LUMRYZ, and I'm just curious what in particular is sort of driving or sort of drove that enthusiasm because obviously you felt good enough about the asset to do the deal originally. Thank you.

Todd, why don't you start and then we'll chime in?

Yeah, absolutely. The transaction's going exceptionally well with the integration. Approximately, we're coming up on six months right now. We feel really good about that. Gaining the commercial infrastructure that Avadel had is a really big strategic advantage for us and something that we have in our long-term plan. We believe that it's going to allow us to obviously get into the market much sooner in the sleep community. That evidence is playing out right now. We believe that LUMRYZ is the best-in-class oxybate.

We're seeing that really strong growth trends across patient segments. It's being supported by HCP Research and just the capabilities that the team brings to the market, such as patient services. Our established capabilities and market access is also supporting that right now. We weren't surprised by the Q2 results, and we believe that there's a really long-term, durable opportunity for LUMRYZ and then addition when alixorexton comes to the market.

Let me just add that on the human side, culture in these companies is so critical, and we ask a lot of our teams, and the team at Avadel is just a superb team. They've just integrated into Alkermes culture so seamlessly. They've taught us a lot about this oxybate class. It's interesting to observe it from the outside, but once you're actually dealing with patients and providers and the whole reimbursement system and understanding the value that these medicines confer to individual patients, it's hard not to get more excited about it. You couple with the idea of combining the pharmacology, and we just see a lot of white space here to improve the overall quality of life for patients with diseases of hypersomnolence.

Our last question is from Marc Goodman with Leerink Partners. Please proceed.

Good morning, guys, and Rich. It's been a fun journey working with you all these years. My question's kind of just on orexin, big picture strategy. You've got three products now. One is obviously focused on fatigue. You've talked about different areas. Is the strategy to take that product and that's the fatigue product, and you'll just continue to work through that? One of them will be ADHD, then do you have other plans, other orexin molecules behind that to go into other indications? Or do you feel like three is enough to kind of take it into all the different areas? I'm just curious, Joshua, as we think about the R&D spend for these programs, specifically obviously orexin, which is where most of the spend is. Should we be thinking that the R&D numbers go up dramatically here?

Is this going to kind of level out in the $500, $600 spending per year range over the next couple of years as narcolepsy kind of comes down and all these other indications kind of come up in spend? Thanks.

This is Blair, Marc. Why don't I start. Then Joshua can tell you how we're going to pay for it all. I think as you look at the expanding pipeline in orexin, as you said, fatigue is a really interesting drug in that we're starting in multiple sclerosis fatigue, in PD-associated fatigue. The goal is to expand it outwards from there into broader areas. As you know, fatigue sort of impacts a number of different diseases around neuroscience, and we think this can be a really interesting opportunity. That being said, we have a number of indications that we're looking at within neuroscience that are both extensions of some of the programs that we already have and the molecules that we already have. We also have additional molecules in development, which would allow us to go after different things and perhaps with different characteristics as well.

We have a pretty comprehensive strategy. We'll start to reveal more of that as we move forward and we get closer to the clinic on a couple things. Our goal is to press our advantage here. We've been talking about these diseases in orexin biology for a number of years now, and it's great to see it now finally getting to the point where we're starting to generate data around that.

Marc, a few things from my perspective. First off, we'll always exercise disciplined financial management. As Blair pointed out, we've got a tremendous opportunity here in orexin, and we'll appropriately invest to capitalize on that opportunity. With all that said, you're thinking about this appropriately, right? We're in phase III on alixorexton. As those programs wind down, we'll start to reinvest in our pipeline, and you can imagine that we'll leverage that investment in the orexin space.

Marc, it's Rich. Just one last thought on this. Look to the analogy, hopefully this plays out to the GLP-1 space, where there's plenty of molecules. You need plenty of molecules because the pharmacology also begins to expand. You start with GLP-1, you add GIP, you add glucagon, you start getting triples. Adding this pharmacology into other established pharmacologic pathways in CNS indications is really exciting. I think we're just at the beginning of this all.

That will conclude our question-and-answer session. I would like to turn the call back over to Sandy for closing remarks.

All right. Thanks everyone for joining us on the call this morning. Please don't hesitate to reach out to us at the company if there are any follow-up questions we can be helpful with. Thank you.

Thank you. This will conclude today's conference. You may disconnect at this time. Thank you for your participation.