Alkermes plc

Greetings and welcome to the Alchemy's third quarter 2022 financial results conference call. My name is Melissa and I will be your operator for today's call. All participant lines will be placed on mute to prevent any background noise. If you should require operator assistance during the call, please press star zero on your telephone keypad. Please note that this conference is being recorded. I'll now turn the call over to Sandra Coombs, Senior Vice President of Investor Relations and Corporate Affairs. Sandy, you may begin.

Good morning. Welcome to the Alkermes PLC conference call to discuss our financial results and business update for the quarter-ended September 30, 2022, and the proposed separation of Alkermes neuroscience and oncology businesses. With me today are Richard Popps, our CEO, Ian Brown, our CFO, and Todd Nichols, our Chief Commercial Officer. Before we begin, I encourage everyone to go to the Investors section of Alkermes.com to find our press release, related financial tables, and reconciliations of the GAAP to non-GAAP 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 is issued this morning, and our most recent annual and quarterly reports filed with the FCC 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, and I'll turn the call over to Richard.

Thank you, Sandy. Good morning, everyone. So we had a strong third quarter financially and operationally. On the neuroscience side, Our commercial portfolio performed well, highlighted by Levolvi, and we took an important step forward for our next pipeline candidate with our orexin-2 receptor agonist now entering the clinic. After a year in the market, we're confident that Levolvi has attributes of an important new psychiatric medicine. On the oncology side, Nemvalucan has advanced in potential registration-enabling studies, and our other engineered cytokines, IL-12 and IL-18, are progressing behind it. During the quarter, the Inflation Reduction Act became law, fundamentally shifting the relative economic value of biologic medicines and cancer. So together, these developments catalyzed new opportunities for the company. This morning, we announced that with the unanimous support of the board, we've decided to explore separating our oncology and neuroscience businesses, including a potential spinoff of the oncology business into an independent publicly traded company. The proposed separation is timely. And it's consistent with feedback we've collected throughout our extensive shareholder and investor engagement efforts. And we believe it's in the best interest of both businesses. I'll discuss that separation in more detail in a moment. But first, I'd like to provide a little context. For decades, Alkermes' focus and foundation have been in neuroscience. And we've successfully developed a number of important treatments for neurological and psychiatric disorders, including Vivitrol, Aristata, Lebolvi, and Vimeridine. and we've enabled many other products with our technologies. Lebalvi has opened a significant new door for us as our first oral product in a major psychiatric market. Its real-world profile is being established, and it deserves the commensurate focus and investment to achieve its maximum medical and commercial potential. Altogether, these medicines have been used to treat millions of people living with serious and complex diseases, and they're expected to drive top-line revenues in excess of a billion dollars for Alkermes again this year. Along the way, though, we developed new technical capabilities and identified opportunities for capturing additional value from our R&D efforts. Over the past 10 years, our expertise in molecular design and protein engineering led us to the development of Nembolucan and into the oncology therapeutic space. We've proceeded with discipline, adhering to a series of predefined development stage gates along the way for Nembolucan to confirm the design hypothesis and increase the evidence supporting its further development. Our protein engineering capabilities have also yielded additional engineered cytokines that are based on established biology and designed to address key challenges. As we look toward the future, with the early traction of the Evolvi launch and progress in the Nemvalucan development program, the respective value propositions for each of the neuroscience and oncology businesses have come more clearly into focus. The neuroscience business represents an established commercial enterprise with multiple growing products and a distinctive place in a complex market, and an early stage pipeline that we expect will serve as the next phase of growth. The oncology business includes a differentiated late stage clinical candidate and a pipeline of preclinical biologics. Each has its own compelling investment thesis. So for these reasons, we believe the separation could unlock value for shareholders and yield a number of benefits for both businesses. First, it would drive a sharp strategic focus for each, led by separate and distinct management teams with therapeutic expertise relevant to each business's unique strategic priorities and opportunities. Second, it would simplify capital allocation decision-making at a time when both the launch of Libalsi and the late-stage development of Nemalucan are worthy investments that we believe will drive a high return on investment. Through this lens, we believe operating separately will increase each business's flexibility to pursue growth and investment strategies that more directly align with their respective goals. And third, it would allow the capital markets to better assess the value, performance, and potential of each business and attract an appropriately suited shareholder base. Following the plan's separation, we expect Alkermes to become a profitable, pure-play neuroscience company. Alkermes will continue to build on our heritage of innovation and excellence in this therapeutic space, focusing on significant unmet needs within neuroscience and driving growth of our proprietary commercial products, Vivaldi, Aristata, and Vivitrol. This portfolio of commercial products drives our growth and profitability. As we execute on the launch of Libalvi, the operating leverage we've engineered into the business is becoming evident and offers the potential to be transformative for the company. We'll also continue to advance ALX2680, our orexin-2 receptor agonist for the treatment of narcolepsy, which is poised to enter first in human studies imminently. In the clinic, our goal is to answer critical questions early to enable data-driven decisions. and we plan to move quickly to conduct a proof-of-concept study in patients with narcolepsy next year. This candidate is grounded in a strong biological rationale and represents an exciting opportunity in neuroscience that builds on Alkermes' expertise in molecular design and pharmacokinetic optimization. So with a strong top line driven by the growth of proprietary products, a specialized commercial infrastructure in neuropsychiatry and addiction, and proven drug development capabilities, this standalone neuroscience business would represent a significant opportunity to capture operating leverage, drive growth and profitability, and advance new potential medicines for neurological disorders. The oncology side of the business also has a compelling standalone investment thesis, anchored by the potential medical and economic value of Nemvalucan, our novel investigational engineered IL-2 variant that's a potential first-in-class cancer immunotherapy. The data from our Artistry I clinical study established Nemvalucan's profile and our belief in its clinical potential, both as monotherapy and in combination with pembrolizumab in heavily pretreated patients across multiple tumor types. Our current development efforts are focused on two difficult-to-treat tumor types. Artistry 6 is evaluating nebulucan monotherapy in mucosal melanoma, and Artistry 7 is evaluating nebulucan in combination with pembrolizumab in platinum-resistant ovarian cancer. However, We believe the full promise of an effective, well-tolerated IL-2 variant derives from the potential to be used in a wider range of combinations and tumor types. By selectively targeting the IL-2 pathway, Nemvalucan has broad potential clinical utility and offers an opportunity for significant value creation as the development program advances and expands. Along with Nemvalucan, the oncology business is comprised of sophisticated protein engineering platform capabilities and our portfolio of novel preclinical and recidivist including our tumor targeted split IL-12 program and our IL-18 program, each of which has continued to achieve its predefined development stage gates to date. The oncology team we've assembled over the last few years is comprised of highly experienced individuals with the scientific pedigree and clinical trials expertise to efficiently and strategically advance these oncology assets. The progress we've made to date is thanks to their knowledge, hard work, and dedication. As I mentioned at the outset, The impact of the recently passed Inflation Reduction Act further reinforced our decision to separate the oncology business at this time. In the past, drug developers were essentially indifferent as to whether to interrogate a target with a biologic or a small molecule. The Inflation Reduction Act made biologic medicines more valuable. But in order to realize that value, drug developers must adapt their development programs to accommodate the finite window of exclusivity imposed by the legislation. and invest in populations of interest earlier in the development lifecycle in order to yield greater economic returns. To that end, we believe separating the oncology business at this time will best support and position Nevalucan for success. In terms of next steps, we expect to complete the separation in the second half of 23. We plan to provide additional details regarding the contemplated standalone oncology business, as well as additional financial details for the two contemplated companies at a later date. Completion of a separation would be subject to customary closing conditions, including final approval from our board of directors. So, we'll look forward to updating you on our progress. So, with that, I'm going to turn it over to Ian for his perspectives and a review of our third quarter results. Ian?