Alkermes plc

Greetings and welcome to the Alkermes fourth quarter 2021 earnings call. My name is Rob and I'll be your operator for today's call. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded. I'll now turn the conference call over to Sandra Coombs, Senior Vice President of Investor Relations and Corporate Affairs. Sandy, you may now begin.

Thanks, Rob. Good morning. Welcome to the Alkermes PLC conference call to discuss our financial results and business update for the quarter and year ended December 31st, 2021. With me today are Richard Pops, our CEO, Ian Brown, our CFO, and Todd Nichols, our Chief Commercial Officer. Before we begin, I encourage everyone to go to the investor section of Alkermes.com to find our press release, related financial tables, and reconciliations of the gap to non-gap financial measures that we'll discuss today. 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 and quarterly reports 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 statement. 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 will open the call for Q&A, and now I'll turn the call over to Richard.

That's great. Thank you, Cindy. Good morning, everyone. 2021 was a critical year in the development and evolution of Alkermes. We had three explicit overarching goals, growing our commercial business, expanding and advancing our development pipeline, and driving profitability. And we were successful in all three of those domains. Start first with the commercial business. The year was highlighted by the FDA approval and launch of Lebalvi, our first oral medicine for the treatment of adults with schizophrenia and for the treatment of adults with bipolar I disorder. The launch is off to a strong start, and there are reasons why. First is the nature of the medicine itself. Libalvi is addressing an unmet need in the market. The second is that the launch benefits from the commercial infrastructure we've built in psychiatry and our presence and success with Aristata. With these two medicines, we have an important and growing commercial franchise in psychiatry. For Vivitrol, we redefined and began executing our new growth strategy, focused on the alcohol dependence indication. So these products, Libalvi, Aristata, and Vivitrol, together with Vumerity, represent our four key growth drivers. With respect to the pipeline, we're guided by a focused research and development strategy that prioritizes programs with the highest potential return on investment. During the year, we initiated Nemvalucan clinical studies to support potential registration in two tumor types, where patients have limited treatment options and significant unmet need remains. We also initiated a first-in-human study for our HDAC inhibitor, ALX1140, We nominated and began IND-enabling activities for ALX2680, our orexin receptor 2 agonist, and achieved preclinical proof of concept for our tumor-targeted IL-12 program. From a financial perspective, we executed the plan with respect to our 2021 objectives, and we are on track to achieving our long-term profitability targets. As Ian will outline shortly, we managed the business to achieve the high end of our overall 2021 financial expectations. We continued our focus on driving operational efficiencies and optimizing our cost structure, focusing on our highest potential programs as we positioned the company for long-term growth. As I'm sure you're aware, in November, we received notice of partial termination from Janssen, an affiliate of J&J, that impacts our royalties related to the sales of long-acting and vaguer products in the U.S., J&J has made the surprising assertion that these products do not utilize Alchemy's nanocrystal technology, despite having paid us know-how royalties for 12 years. We strongly disagree with J&J's position. Since the receipt of this notice, we've engaged with J&J and will continue to explore whether a mutually agreeable resolution can be reached without the need for arbitration and litigation. But that said, we're prepared to pursue all the options at our disposal to enforce our contractual rights and address any unauthorized use of our intellectual property. For the purposes of the 2022 guidance and the updated long-term profitability targets that we're going to provide today, we've removed from our models U.S. royalties from the long-acting and VEGA products beginning this month and all royalties from outside the U.S. beginning in May of this year. We have not received a notice of termination related to the ex-U.S. territories. However, we believe excluding these ex-U.S. revenues provides a conservative financial planning scenario. I want to underscore that removing these cash flows from our guidance and profitability targets is for planning purposes and does not in any way reflect our belief in the strength of our legal position on the matter. This approach also has the beneficial effect of providing a clearer picture of the strength of the underlying business driven by our proprietary products in Vumerity, and the operating leverage that we've engineered into the business. Regardless of the outcome of the situation with J&J, we have been positioning the business over several years to shift away from royalties from the long-acting Invega products, and the long-term growth profile of the company remains unchanged. Separate from the modeling, from an operational perspective, following receipt of the notice from J&J, we went back and made cuts to our original 2022 budget, recognizing that even if we are successful in our interactions with J&J, that outcome could take some time. Making adjustments now changes the cost structure and facilitates the bridge to our profitability targets. The value enhancement plan that we established in 2020 continues to serve as a guide as we look to the future and we remain committed to the achievement of explicit profitability targets. This formal commitment is beneficial for our shareholders and it's beneficial for the company in managing the business as we drive the competitive allocation of capital. Today, we're announcing revised long-term profitability targets that reflect our current financial planning, as well as feedback from our board and interactions with many of our institutional shareholders over the past few months. With respect to the board, we continued our ongoing board refreshment efforts in 2021 with the addition of two highly qualified new independent directors, one of whom was named to the board just last quarter as part of an agreement with Sarissa Capital. This followed the retirement of two of our longer serving board members earlier in the year. This evolution of our board has resulted in the appointment of six new independent directors since 2019. These new directors bring important financial, strategic, governance, operational, oncology, medical and public health expertise that aligns with our business strategy of advancing and commercializing important medicines in neuroscience and oncology. We will continue to consider additional board refreshment that adds expertise and experience that may help us advance that strategy. So with that as an introduction, I'm going to turn the call over to Ian to take us through the 2021 results and the outlook ahead, and then to Todd to provide an update on the launch of Libalvi and the performance of Aristata and Vivitrol. Ian.