Alkermes plc

Greetings, and welcome to the Alkermes First Quarter 2023 Financial Results Conference Call. My name is Rob, and I'll be your operator for today's call. All participant lines will be placed on mute to prevent 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.

Thank you. Good morning. Welcome to the Alchemist PLC conference call to discuss our financial results and business update for the quarter ended March 31, 2023. 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 Alchemist.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 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 now I'll turn the call over to Rich.

Thank you, Sandy. Good morning, everyone. We have a number of important and positive updates to go through today, so I'm going to get right into it. I'm going to start with a brief update on the announcement we made yesterday related to our arbitration with Janssen. I'm then going to hand it to Ian for a review of the financial results for the quarter, and then to Todd for an overview of our commercial products. I'll come back then and close with an update on the progress we're making on the separation of the oncology business and our ALX2680 orexin program. So regarding the arbitration with Janssen, recall that this pertains to royalties in the U.S. sales of three long-acting Invega franchise products, Invega Sustena, Invega Trinza, and Invega Half-Era. which are antipsychotic medications, as well as Cabinuva, which is an HIV product. In January, we announced that the tribunal, which is a panel of three experienced arbitrators, issued an interim award in which it agreed unanimously with Alkermes on the central issue of the arbitration, which is that while Janssen had the right to terminate the license agreements, it may not continue to sell the products developed under those agreements without paying royalties to Alkermes. Last week, we received the second favorable interim award from the panel, which addressed the outstanding economic issues. First, for 2022, we are due back royalties of approximately $194 million. Second, related to 2023 and beyond, the award provides that a separate royalty term applies for each of Envega Sustena, Envega Trinza, and Envega Jafira. For Envega Sustena, we would be owed royalties through August 20th, 24, which is consistent with our previous expectations. However, for both In Vega Trinza and In Vega Hapiera, the panel agreed with our position that the royalty term extends beyond 2024, through the second quarter of 2030. This would represent an additional six years of royalty revenues for these two medicines. In addition, the award provides that royalties for CABANUVA in the US are owed through the end of 2036. So to summarize, Once final, this would result in payment for back royalties due, reinstatement of royalties going forward, and royalty terms for Invega Trinza, Invega Half-Era, and Cabanuva into the 2030s. This represents significant potential economic upside and provides strategic capital to the balance sheet and additional long-term contributors to our P&L. In terms of the next steps, the panel directed the parties to confer and advise within 21 days as to whether either party believes that any issues remain for resolution by the panel prior to issuance of a final award. We are gratified by this latest interim award in support of our position, and we'll look forward to the final award and resolution of this matter. So with that, I'm going to pass it to Ian for an overview of the quarter, and then to Todd. Go ahead, Ian.