Alkermes plc

Greetings and welcome to the Alchemy second quarter 2024 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 from your telephone keypad. Please note 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 now begin.

Thank you. Welcome to the Alchemist PLC conference call to discuss our financial results and business update for the quarter ended June 30th, 2024. With me today are Richard Pops, our CEO, Todd Nichols, our Chief Commercial Officer, and Blair Jackson, our Chief Operating Officer. During today's call, we will be referencing slides. These slides, 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 Alchemist.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 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 will open the call for Q&A, and now I'll turn the call over to Blair for a review of the quarterly financial results.

Thank you, Sandy. Our second quarter results reflect robust profitability and solid execution across our business, delivering double digit year over year growth for our proprietary commercial product portfolio. The year is proceeding as planned, and we enter the second half in a strong position with clear priorities to deliver on our 2024 financial expectations, which we are reiterating today. For the second quarter, we generated total revenues of $399.1 million, driven by our proprietary product portfolio, which grew 16% year-over-year. Starting with Vivitrol, net sales in the quarter were $111.9 million compared to $102.1 million in the same period last year. For the Aristotle product family, net sales were $86 million compared to $82.4 million for the same period last year. For LaVolvi, Net sales were $71.4 million compared to $47 million for the same period in the prior year, which represented 52% year-over-year growth driven by robust underlying demand. Across our proprietary commercial products, inventory in the channel returned to normal levels on a months-on-hand basis during the second quarter, following the drawdown we experienced in the first quarter of this year. Moving on to our manufacturing and royalty business, In the second quarter of 2024, we recorded manufacturing and royalty revenues of $129.9 million. Revenues from the Long Acting and Vega products were $78.7 million compared to $321.2 million for Q2 last year, which included $245.5 million of back royalties and related interest following the successful resolution of our arbitration with Janssen. As previously disclosed and reflected in our financial expectations for the year, our royalties on net sales of Envega Sustene in the U.S. will end in mid-August of this year. We expect the impact on our third quarter results will be approximately $20 million. We will continue to receive royalties on net sales of Envega Trinza and Envega Jafiera in the U.S. and on the long-acting Envega products outside the U.S. Revenues from Vumerity, were $35.2 million compared to $32.3 million for Q2 last year. Now I'll turn to our operating expenses and our financial results from continuing operations following the separation of our oncology business late last year. Cost of goods sold were $61.5 million compared to $63.2 million for Q2 last year. R&D expenses were $59.6 million compared to $68.2 million for Q2 last year. This reflects focused investments in our neuroscience development programs, primarily related to the ELKS 2680 clinical program and support activities for our proprietary commercial products. We expect R&D expense to remain relatively steady at this level through the end of the year. SG&A expenses were $168.1 million compared to $195.8 million for Q2 last year. The decrease was primarily driven by operational efficiencies and a number of non-recurring expenses that were recorded in the second quarter of 2023. Looking ahead, we continue to expect SG&A expenses to decrease in the second half of 2024, primarily reflecting the timing and mix of commercial promotional activities. We continue to focus on driving profitability, and during the second quarter, we delivered gap net income from continuing operations of $94.7 million dollars. non-GAAP net income from continuing operations of $123.4 million, and EBITDA from continuing operations of $118.6 million. Turning to our balance sheet, we ended the second quarter in a strong financial position with $962.5 million in cash and total investments. In May, we completed the sale of our Athlon Ireland manufacturing facility to Novo Nordisk, and received a cash payment of approximately $91 million for the facility and related assets. This transaction represents a key element of our multi-year strategy to drive operational efficiency and further align our infrastructure and cost framework with the anticipated needs of the business. Additionally, as part of the $400 million share repurchase program authorized earlier this year, the company repurchased approximately $3.5 million of our outstanding shares during the quarter for an aggregate purchase price of $84.7 million. And we have since continued to be actively repurchasing shares opportunistically in the market. Taking a step back, we are pleased with the progress we have made as we've continued to deliver on our multi-year plan to streamline the business and strengthen our financial operating profile while advancing ELKS 2680 rapidly in the clinic. As we look at the second half of the year, we're in a strong financial position as we work to execute on our strategic priorities, drive momentum across our business, and deliver robust profitability. With that, I'll now hand the call to Todd.