Alkermes plc

Greetings, and welcome to the Alkermes Second Quarter 2025 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 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 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, 2025. With me today are Richard Pops, our CEO, Blair Jackson, our Chief Operating Officer, Todd Nichols, our Chief Commercial Officer, Dr. Craig Hopkinson, our Chief Medical Officer, and Dr. Marcus Yance, Vice President of Clinical Development. 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 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 let's turn the call over to Richard for some opening remarks.

Thank you, Sandy. Good morning, everyone. We had a very successful second quarter. Our commercial and financial performance were strong. And last week, we took another major step forward in our pursuit of a medicine that has the potential to transform the treatment of narcolepsy. Now, midway through 2025, we're on track to deliver on our key objectives across the business. In commercial, we had planned for strong sequential growth, and we exceeded our expectations in the second quarter. This result was driven by excellent operational execution by a seasoned commercial team. With sustained profitability now, no debt, and more than a billion dollars of cash, we're in a strong financial position with significant optionality. It's clear to us now that the future growth of the business can be accelerated by the development candidates now in our pipeline. Last week, we reported positive top line results from Vibrance One. This was our first phase two study of Elixir Rexton, which you've formerly known as ALX2680, in narcolepsy type 1. Vibrance 1 was successful and a critical study in the development of our Rexton portfolio, obviously for the efficacy and safety data it yields, but also for the operational foundation it provides for the Phase 3 program. Now, if you think back a year ago, we had data from our Phase 1B study of elixirexin that suggested robust efficacy and a generally well-tolerated profile based on single-day exposures across a range of doses in small cohorts of patients with narcolepsy type 1, narcolepsy type 2, and idiopathic hypersomnia. These data were critical in defining the initial clinical profile and dosing range for elixirextin. This was step one. Step two is to confirm and extend these observations in multi-week, multi-dose, phase 2 outpatient studies. Vibrance 1 in patients with narcolepsy type 1 is the first of these studies. Now we have randomized, placebo-controlled, six-weeks, multi-dose data in hand from more than 90 patients with NT1. We've now answered key questions in Phase 2 with rigorous assays across larger cohorts of NT1 patients over a longer period of time. These data and insights will be fundamental in preparation for Phase 3. So here are the key findings from the study at the top line. First, the results demonstrated a significant effect on wakefulness and a generally well-tolerated profile. This was our pretest hypothesis, and the data were in line with our expectations. Second, the study provided entirely new and exciting findings relating to fatigue and cognition. These are among the most disruptive symptoms patients with narcolepsy experience, and they're distinct from excessive daytime sleepiness. In this study, elixirextin showed robust and clear improvements on validated patient-reported measures. Our view is that demonstrating effects in these domains establishes a new standard in the development of REXIN-2 receptor agonists in narcolepsy. These emerging data also further support our hypothesis that the REXIN system can be harnessed to address other neuropsychiatric and neurological conditions. We have two additional REXIN candidates that we plan to develop for conditions beyond central disorders of hypersomnolence. We initiated first in human studies for one of these candidates, ALKS 4510. We plan to advance the second candidate, ALKS 7290, into the clinic later this year. So for today, Craig and Marcus will take you through the top line results of Vibrance One, with significantly more detailed data to be presented at the upcoming World Sleep Meeting in September. But first, Blair and Todd will review the financial and commercial performance of the business for the second quarter. And with that, I'll hand the call over to Blair.

Thank you, Rich. Our second quarter financial results were strong and reflected solid commercial and operational execution. We had planned for accelerated growth from the first quarter and we exceeded our expectations. Financially, the year is progressing nicely and we remain well positioned to achieve our financial guidance for the full year, which we reiterated this morning. For the second quarter, we generated total revenues of $390.7 million. For our portfolio of proprietary products, we generated net sales of $307.2 million, reflecting 14% year-over-year growth. These results were driven by strong underlying demand, which Todd will address in his remarks, and gross-to-net favorability, primarily related to Medicaid utilization rates and certain other credits during the quarter. These factors drove a one-time gross-to-net benefit of approximately $9 million for Vivitrol and approximately $11 million for Aristata. Taken together, these gross net dynamics resulted in a proprietary product revenue tailwind of approximately $20 million in Q2. As we move into the third quarter, we expect Q3 net sales from this portfolio in the range of $280 to $300 million. Manufacturing and royalty revenues were $83.4 million for the second quarter, including revenues of $39.4 million from Vumerity, and $30.3 million from the long-acting Invega products. Turning to expenses, cost of goods sold were $49.5 million, which compared favorably to $61.5 million for Q2 last year, primarily reflecting efficiencies following the sale of our Athlone-based manufacturing business last year. R&D expenses were $77.4 million, compared to $59.6 million for Q2 last year. reflecting investments in the vibrant Phase II studies of elixirexin across narcolepsy and idiopathic hypersomnia. We expect R&D expense to step up slightly in the second half of the year as we complete our Phase II studies in narcolepsy and continue to build momentum in our Phase II study in idiopathic hypersomnia. SG&A expenses were $170.8 million compared to $168.1 million for Q2 last year. For trending purposes, we expect SG&A expense to be fairly consistent in Q3 and a modest decrease in the fourth quarter of the year. This performance generated strong profitability of GAAP net income of $87.1 million, EBITDA of $101.6 million, and adjusted EBITDA of $126.5 million in the second quarter. Turning to our balance sheet, we ended the quarter in a strong financial position $1.05 billion in cash and total investments. We continue to have $200 million of remaining share repurchase authorization, and going forward, we may opportunistically repurchase shares dependent on market conditions and the capital needs of the business. As we look ahead, based on our performance during the first half of the year and the expected contribution from our expanded sales efforts, we're on track to deliver record revenues from our portfolio of proprietary products in 2025. As a result of this strong performance, we now anticipate finishing the year towards the higher end of our previously issued financial expectations in terms of both revenue and profitability. With that, I'll turn the call to Todd for review of the proprietary portfolio.

Thank you, Blair, and good morning, everyone. In the second quarter, we recorded net sales from our proprietary product portfolio of $307.2 million, reflecting 14% year-over-year growth. We drove strong in-market demand across Vivitrol, Aristata, and Lee Balvey by executing targeted growth initiatives and delivered strong sequential growth from Q1 to Q2. Due to this demand growth and the growth to net favorability during the quarter that Blair outlined, our second quarter proprietary net sales of $307.2 million exceeded the expectations that we provided in May of net sales in the range of $260 to $280 million. Starting with Vivitrol, net sales in the second quarter were $121.7 million. Vivitrol performance continues to be driven by growth in the alcohol dependence indication market and our ability to capitalize on highly localized market dynamics in certain states and payer systems. Looking ahead, We continue to expect Vivitrol net sales for the full year 2025 in the range of $440 to $460 million. Turning to our psychiatry franchise, the expansion of our psychiatry sales force completed earlier this year was an important element of our strategy to maintain a competitive share of voice for Lee Balvey and re-accelerate growth for Aristata. The early returns from that expansion are encouraging and we are pleased with our progress to date. For the Aristada product family, in the second quarter, net sales were $101.3 million. Leading indicators related to underlying demand were encouraging with increased prescriber breadth and strong new-to-brand prescriptions during the quarter. For the full year 2025, we continue to expect Aristada net sales in the range of $335 to $355 million. Turning to Levolvi. Net sales grew 18% year-over-year to $84.3 million. Underlying TRX growth was 22% year-over-year, driven by new patient starts and prescriber breadth. Gross to net adjustments were approximately 29% in the second quarter. We now expect gross to net adjustments for the full year will be approximately 30%. For the full year, we continue to expect evolving net sales in the range of $320 to $340 million. Across the portfolio, we are pleased with our second quarter performance and are focused on maintaining this momentum and driving demand in the second half of the year. With that, I will pass the call to Craig.

Thank you, Todd. Last week, we announced positive top-line results from the Vibrance 1 Phase 2 study of elixirexin in patients with narcolepsy type 1. The data further characterized the clinical profile of elixirexin and demonstrated that once daily, Alexarexin normalized wakefulness and excessive daytime sleepiness scores in highly symptomatic patients with narcolepsy type 1 with a generally well-tolerated profile across all doses tested. These top-line results represent the first of a series of datasets that will emerge from the Alexarexin Phase 2 program. The data are extensive and break new ground. We are looking forward to presenting the primary and key secondary endpoints related to wakefulness and cataplexy and the safety and tolerability profile observed in the six-week double-blind period of the study in an oral presentation at the upcoming World Sleep Meeting at the beginning of September. In addition to the top-line results, we'll also share data relating to the exploratory patient-reported outcomes collected in Vibrance 1, including the fatigue and cognition data outlined in our top line press release last week. These data are truly exciting, not only in terms of the clinical profile for elixirexin, but also as we plan for additional clinical studies across our portfolio of investigational erexin-2 receptor agonists in disorders where impaired cognitive functioning and fatigue are key clinical features. Following world sleep, we expect top-line results from Vibrance 2, our Phase 2 study in narcolepsy type 2 in the fall. Enrollment in Vibrance 2 is going well, and we expect to complete that soon. Top-line data from Vibrance 3, our Phase 2 study in idiopathic hypersomnia, are expected to follow in mid-2026. Each of these studies provides a significant amount of data to analyze and will deepen our understanding of elixir residence potential utility across central disorders of hypersomnolence and its differentiating features in the competitive landscape. In parallel, we are preparing for key regulatory interactions and for the global Phase III program in narcolepsy that we plan to initiate as rapidly as possible, following the top-line data from the Narcolepsy Type II study. Alchemies is at the forefront of development in this exciting potential therapeutic category and the positive Vibrance-1 data represent an important stride forward for elixirexin development program and our broader portfolio of orexin-2 receptor agonists. With that, I'd like to introduce Dr. Markus Jans to review the top-line data from the Vibrance-1 study. Markus is vice president of clinical development and the clinical program lead for elixirexin keratalkymes. Markus.

Thank you, Craig. Vibrance 1 is a six-week, double-blind, placebo-controlled, parallel design study evaluating three different doses of elixirexin in patients with narcolepsy type 1, or NT1. The study enrolled a total of 92 patients, with most having moderate to severe disease at baseline. Patients were randomized to one of three once-daily dose levels of elixirexin, four, six, or eight milligrams, or placebo. The primary endpoint of Vibrance 1 was the change from baseline compared to placebo in the maintenance of wakefulness test, or MWT. MWT is a standardized quantitative measure of how long patients can stay awake during a 40-minute test period when they're in an environment that is conducive to sleep. These tests are conducted at 2, 4, 6, and 8 hours post-dose. The mean score is calculated by averaging the results of these four tests. While the MWT is less frequently used in real-world clinical settings, it is an important objective endpoint commonly used for regulatory purposes. In Vibrance 1, elixirexin showed dose-dependent, statistically significant, and clinically meaningful increases in mean sleep latency at all doses tested at week 6. Importantly, all dose groups achieved normative wakefulness applying the standard convention of a mean sleep latency on the MWT of 20 minutes or more. The study also evaluated key secondary endpoints, including change from baseline on the Epworth Sleepiness Scale and weekly cataplexy rates compared to placebo. First, the Epworth Sleepiness Scale, or ESS. Unlike the MWT, this scale is widely used in the clinic as a diagnostic tool to assess for excessive daytime sleepiness. The ESS is a patient-reported symptom questionnaire asking about the patient's likelihood of falling asleep across eight different scenarios, such as watching TV, riding in a car, or reading a book over the last week. Higher scores indicate a greater likelihood of falling asleep, with a score of 10 and below considered normal. The Epworth scale is useful in that the seven-day look-back period provides a holistic view of patient sleepiness beyond the eight-hour MWT test period. Here, across all doses tested, elixirexed and demonstrated statistically significant and clinically meaningful improvement at week six, with each dose group achieving normative levels. In addition to excessive daytime sleepiness, NT1 patients can experience a sudden involuntary loss of muscle tone called cataplexy. Vibrance 1 evaluated mean weekly cataplexy rates. To measure this endpoint, patients are asked to keep diaries of cataplexy events that they experience. The average number of weekly events across weeks 5 and 6 in the elixirexed and treated subjects were then compared to those experienced by the placebo group. Across all doses tested, elixir extin showed numerical and clinically meaningful improvements in cataplexy compared with placebo, and on the pre-specified analysis, met the threshold for statistical significance at the six milligram dose. We are confident in the effects of elixir extin on cataplexy and believe there are learnings here related to our implementation of this assay that we will apply in phase three to reduce variability and the impact of outliers. We look forward to sharing additional analyses of these data at WorldSleep. So while excessive daytime sleepiness is the hallmark symptom of narcolepsy, many patients also experience other symptoms, such as fatigue and cognitive dysfunction. These can result in significant morbidity as well as impaired quality of life. Our hypothesis has been, given the nature of the neurocircuitry affected, that elixirexedin could have an impact on many of the aspects of this disease that affect patients' day-to-day functioning. The British Columbia Cognitive Complaints Inventory, or BCCCI, and the PROMIS fatigue scales capture two of these common and often debilitating effects of narcolepsy. The BCCCI evaluates concentration, memory, expressing thoughts, word finding, slow thinking, and difficulty solving problems. The promise fatigue measures patient's frequency as well as intensity of fatigue, along with its impact on physical, mental, and social activities. It's important to note here that fatigue is a symptom that patients experience which is distinct from sleepiness. While sleepiness is a general feeling of being tired and wanting to sleep, fatigue is a broader feeling of exhaustion that can be long lasting and may not be resolved by sleep. We also looked at the narcolepsy severity scale. The NSS captures a holistic assessment of disease by evaluating five key narcolepsy symptoms, excessive daytime sleepiness, cataplexy, hallucinations, sleep paralysis, and disturbed nighttime sleep. And on each of these exploratory patient reported outcome scales, the BCCCI, the PROMIS fatigue, and the NSS, elixirexin demonstrated clinically meaningful improvements from baseline compared to placebo that were statistically significant. Of course, the p-values here are nominal due to the exploratory nature of these endpoints. So from a clinical perspective, these results are compelling due to the robustness and particularly the consistency across all doses of elixirexin, as well as across various complementary assays. This is the first time that we've seen data from the erexin class on these fatigue and cognition scales, and we believe this differentiates elixirexin from other development programs and builds upon the evidence base that erexin-2 receptor agonists with appropriate pharmaceutical properties could have broad potential utility across a range of neurological or neuropsychiatric disorders. And now we'll turn to safety and tolerability. Overall, elixir exten was generally well tolerated in this study. The majority of the treatment emergent adverse events were mild to moderate in severity, and no treatment emergent serious adverse events were seen. The TEAEs that did occur were generally consistent with the events that we observed across the phase one studies in healthy volunteers and in subjects with NT1, NT2, and IH. And among the many clinical safety assessments we conducted in the study, two of particular interest are hepatic labs and ophthalmic exams. And importantly, there were no treatment emergent safety signals seen in these assessments. So overall, we are very pleased with the safety and efficacy profile thus far, and we look forward to presenting these data sets at WorldSleep. I'll hand it back to you, Rich.

Well done. Thank you, Marcus. So that's a summary of the top-line findings. There's a lot more to come. and you'll begin to see it in a few weeks at World Sleep. These data in NT1 represent a meaningful step forward for the Elixirexin Development Program, and they provide a substantial new data set that significantly expands our understanding of orexin biology, not just relevant to narcolepsy, but is potentially across a broad range of neuropsychiatric and neurological disorders. We're now moving forward with confidence and a sense of urgency as we prepare for the initiation of our registrational program in narcolepsy, And with clear findings now relating to cognition and fatigue, adding to what we've seen for excessive daytime sleepiness, we now have further data supporting development of additional erection candidates in other disease states beyond sleep disorders. As you've heard throughout this call, the business is in a strong position. Our commercial team is on track to deliver proprietary product neck sales in excess of a billion dollars and robust profitability in 2025. Our balance sheet is strong and provides strategic optionality with more than a billion dollars in cash. Our pipeline products are advancing. Elixirexin is the first major potential commercial opportunity to emerge from our orexin portfolio. But we also believe that sleep disorders are just the beginning for this exciting new therapeutic category. So thank you for your patience. With that, I'll turn the call back to Sandy to run the Q&A.

Great. Thanks, Rich. Rob, we'll now open the call for Q&A, please.

Thank you, Sandy. We'll now be conducting a question and answer session. To allow as many analysts to ask questions as possible, we ask that you please limit yourself to one question. If you'd like to ask a question at this time, you may press star 1 on your telephone keypad and a confirmation tone to indicate your line is in the question queue. You may press star 2 if you'd like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Thank you. And our first question today comes from the line of Paul Matase with Stifel. Please proceed with your question.

Hey, good morning. Thanks so much for taking my question, and congratulations on all the progress. I don't want to front run the WorldSleep presentation and ask a specific data question, but taking a step back, there's been a lot of focus right or wrong from Wall Street on visual adverse events with the orexin program. And I guess I wanted to ask the Alkermes team, you know, one, do you think the focus on visual AEs is warranted? Like, are we on the right track and kind of thinking about whether this is clinically significant? And then two, where would you draw the line on, you know, a visual AE signal that is benign and might not have much regulatory commercial consequence versus something that might be more significant and you know, might require certain things like driving studies or could result in certain restrictions on a drug label. Thanks so much.

Good morning, Paul. Hey, let me start, then I'll hand it over to the experts. But I can just tell you, in my experience, dealing both with clinicians and investigators and patient groups and dealing with Wall Street, the focus is almost entirely on the Wall Street side, on the visual AEs. And it's an important contribution that we made in this particular study because, as I've said before, there was a reasonable scientific medical question at the beginning of this program about whether orexin-2 receptor agonists can have a direct effect on the eye. So with this rigorous baseline ophthalmic exam at baseline and then six weeks later having 90-plus patients' worth of data to establish now that we saw no changes was an important step forward in that. But I think from a clinical perspective, I'll let I'll let these guys comment on that and what their experience has been. But we won't provide any more specific AE data on this call other than what's in the press release, but I think they can give you some qualitative sense of it.

Yeah, exactly. As Rich pointed out, we're not providing additional AE data, but I think in general we do feel that, based on some of our discussions, that any AE that's thought to be mild and not interfering with patients' daily activity is not going to be something that's going to be overly concerning, both for physicians or for their patients.

Yeah, and maybe just to add to that, we had a data safety monitoring board in place overseeing all safety from the Vibrance program, and they've met a number of times and given us the green light to proceed. In addition to that, as Richard has pointed out, the ophthalmologic exams were normal. We established baseline. So that gives us some confidence there as well. And then sort of directionally, as we've said in our disclosure, the adverse event profile is in line with what we saw across the Phase 1 healthy volunteer and patient cohorts from that Phase 1 program.

Hey, Paul, let me just add, because it might anticipate some other questions that we're going to get. Just as a matter of fact, the safety database is actually not even closed until probably mid-August, because recall we have a seven-week extension that follows the six-week double bind. So actually, we couldn't populate data tables with specific numbers until that database is locked. So part of the reason for the level of disclosure at the top line was simply to characterize accurately what we found in the six-week double bind period. We'll actually have very specific data for you by the time we come into world fleet in September.

Great. Thanks for all the perspective.

You're welcome. Our next question is in the line of Akash Tiwari with Jefferies. Please proceed with your question.

Thanks so much for the question. This is Anastasia on for Akash. So in Phase 2, it looked like TOC 861 may have left some efficacy on the table in MWT versus 994. How confident are you that 2680 may be able to fully explore that exposure response range between 4 and 8 megs in NT1 and differentiate on efficacy versus Takeda?

Yeah, we've always thought that a range of doses would be a competitive advantage. And I'm not going to comment on the competitive programs. I think that one of the features of this program has always been the ability to dose across a wide range in NT1, leading it to NT2 and IH as well. So we'll wait to see the data from the NT2 and IH cohorts, but we're very pleased with the dose range that we selected for this NT1 study.

Thank you.

The next question is in the line of Andrea Newkirk with Goldman Sachs. Please proceed with your question.

Good morning. Thanks for taking the question. Rich, I was just wondering if you might be willing to speak a little bit about how you're thinking about the regulatory path from here. recognizing you do still need to meet with the FDA, but is there the possibility that these vibrant studies could serve as registrational trials? And if not, would you expect one registration enabling trial per indication would be sufficient to support approval, or would you need two for each?

Good morning, Andrea. Thank you for the question. Yeah, I think, okay, the first stipulation will be that FDA is a fairly fluid place right now, but I'm going to answer the question based on what we know coming into things, and that is that Our expectation was to complete the NT2 study. And because we'll be seeking a label that encompasses narcolepsy writ large, which would encompass NT1 and NT2, we would wait for those data from NT2 before scheduling our formal end of phase two meeting with FDA, where we'll agree on the phase three design. The reason we're doing that is because we're currently the only player in NT2 at this late stage. And so that's a very differentiating part of the product and potentially the label. And as we understand the NT2 doses relative to the NT1 doses, then we'll have the ability to sit down with the FDA and map out the Phase 3 program. Our assumption right now is that our Phase 3 program will look very similar to the competitors, i.e., a three-month study in NT1 and probably a similar study in NT2, one each. But we would confirm that in our end of Phase 2 meeting.

Okay, thank you.

The next question is from the line of Umar Rafat with Evercore ISI. Please just use your question.

Hi, guys. Thanks for taking my question. Just two quick ones. One, could you confirm the dose response is, in fact, linear on MWT? And I ask because there's been some questions around the cataplexy observation. And my question is, I realize there's a numerical trend, but it's not stat-sig at 8 milligrams. Is it reasonable to assume, based on how the data and the variability looked, that you guys... tripped the threshold on Poisson and ended up using negative binomial distribution to drive the p-value. And did that explain partially why p-value was broader for 8 milligrams? Thank you.

Morning, Richard. We haven't talked anything specifically about the linearity or lack thereof of the dose response. You'll actually see all the by-dose information in just a few weeks' time at WorldSleep. Your statistical question on cataplexy is impossible for me to answer, so I'll pass it to the pros.

Sure, yes, I can answer that. So we did use the negative binomial analysis, and that was actually pre-specified for us in conjunction with discussions with the FDA. So we did use that analysis and pre-specify it, and based on our data, that was the appropriate analysis to use.

So can I just clarify then, PASAN was not your base case? It went straight into negative binomial?

That's correct. That's correct, yes.

wouldn't that create a discrepancy when we look at p-values for Takeda dataset versus Alchemy dataset? So it wouldn't be apples to apples on p-value basis?

Yeah, no, it's a good question. I mean, we're not comparing apples to apples directly with their dataset regardless. Obviously, they were different patient populations, so we wouldn't compare across trials directly. But this is the analysis that we used in a pre-specified manner.

And I would say that's one statistic that you use as a lens to look at the data. When you go to world sleep, you'll see other perspectives on that data that I think very clearly show alexorexin's effect on cataplexy at these doses. So for us, we think of it as more of a methodological learning for phase three, which statistic and which method are we going to apply in phase three, recognizing we see a very clear cataplexy signal.

Got it. And Richard, I'm sorry. Since this is so important, I just want to be clear that Numerical trend-wise, you think the data is as competitive as Decada on cataplexy?

Well, again, it's apples and oranges. So you can make the decision yourself when you see the data itself, but I think we feel quite comfortable that we have a clear cataplexy signal that you'll see. There's some outlier data that really confuses the statistic. So you can try to correct for that using various statistical methods, or you can just look at the data. And you'll see the data in more complete revelation at World Sleep. And I think we can talk about that afterwards. But I think you'd be satisfied that we have a very clear signal on cataplexy. Just as an aside, without math associated with it, remember the narcolepsy severity scale picks up cataplexy as one of its key domains. And we've normalized patients on the NSS. All the data tended to work complementary. Thank you. You're welcome.

Our next question comes from the line of Jessica Fay with JP Morgan. Please use your question.

Hello, this is Adam on for Jess. Thank you for taking our question. I just wanted to ask, excuse me, Could you please remind us of the potency selectivity towards the OX2R over the OX1R? Thank you.

Adam, I thought you were going to ask how to pronounce elixirexin because it's not the easiest word to pronounce. It's 5,000-fold. So it's 5,000-fold more selective. Great. Thank you.

Our next question is from the line of Joseph Tome with TD Count. Please receive your question.

Hi there. Good morning. Congrats on the progress, and thank you for taking my question. Maybe when we do look at the full safety profile of alexorexin, maybe how much of that can be extrapolated to some of your follow-on compounds, 4510 and 7290? It looks like there's obviously some class arexin side effects that we're seeing, but is there anything different about the targeting or the dosing of 4510, 7290, that you think could result in a different AE profile? Or, I guess, how much will the elixirexin initial data de-risk follow on? Obviously, we need to see the data, but how are you thinking about translatability there? Go ahead, Maurice.

We think, you know, yes, they're working on the same receptor, so we do think there will be some similarities. That being said, the molecules were purposely developed to have different pharmacokinetic profiles and different structures that could lead them to not all look exactly the same on an AE profile. So, of course, the human data will answer that question for us completely, and we hope to have that for you in the near future on both 4510 and 72.

And, Joe, if you don't mind, let me build on your question to anticipate questions we've been getting from investors, and that is, how do the NT1 data anticipate what we would see in NT2? And I think I just want to make clear our original hypothesis, which has been confirmed by our own data, which is we believe that there's actually a frame shift in terms of the tolerability and sensitivity to orexin agonists as you move from NT1 to NT2, meaning you'll need higher doses to drive efficacy, and you'll need higher doses to drive the on-target side effects as well. So we imagine just the dose-response curve shifting to the right in that, and that's what is consistent with the data we saw in our Phase 1b study. We'll know more definitively, obviously, when we get those data, but that's the pretest hypothesis.

Perfect. Thank you.

The next question is from the line of Iyer with Mizuho Securities. Please, I see it's your question.

Hey, guys. Yeah, thanks for taking our question. Given that the NT2 study, I guess the primary endpoint, is complete, expects to complete in August, just wondering, is there a good chance that you also present the NT2 data at WorldSleep? Thanks.

Just to be clear, so we should complete enrollment in the next couple of weeks, which then with a two-month primary analysis puts us into the fall. So there won't be any NT2 data at WorldSleep. There'll be plenty of NT1 to review. So you... you won't be hungry.

Thanks.

The next questions are from the line of David in Salem with Piper Sandler. Please just use your question.

Hey, thanks. So number one, are you planning to build in dosing flexibility or any sort of titration in the phase three as a means of minimizing treatment emergent adverse events? And then secondly, this is a commercial question. It's not, of course, unheard of to have a wakefulness promoting agent that does not have cataplexy in the label. I guess my question here is just given the wakefulness promoting properties of Elixirextone, how important is it to have cataplexy in the label in terms of a commercial adoption perspective? Thank you.

So, morning, David. I'll give you my view and then I'll hand it over to the guys. We haven't made the call yet on the phase three dosing because we haven't finished all the analyses, and we also want to see the NT2 dosing data before we decide on the range of doses. So stay tuned there. What's so exciting about running phase twos of this quality is that now we have 92 patients' worth of data to model. And our view is that that level of exposure time is essential for actually making those dosimetry decisions for the registrational program. So stay tuned on that. Wakefulness, my own view, and Todd can answer the question, is that we believe elixirexin is going to have a cataplexy claim in the label because the signal is quite clear. So it's more a matter of tuning the assay to make sure that we can see that in the data. But Todd, you can comment on whether you think cataplexy is an important part of the presentation.

No, I agree. I think you captured it right.

Okay. All right. Thanks.

The next question is from the line of David Hong with Deutsche Bank. Please, excuse your question.

Hi. Congrats on the quarter and taking my question. So, I just wanted to ask about the upper dose in the NT2 and IH studies. I believe it's 18 milligrams. Could you just remind us... how you landed on 18, specifically given 25 was used in the earlier Phase 1B, and what would be, I guess, the ideal number to take forward into Phase 3? Thank you.

Greg, you want to chime in?

Yeah, so we employed some sophisticated modeling, basically taking into account all the data that we had collected from our Healthy Volunteer Studies as well as our Phase 1B program. and ultimately modeled out the doses for phase two. And that's how we came to the dose selection.

Thank you.

The next question is from the line of Ami Fabia with Needham & Company. Please proceed with your question.

Good morning. Thanks for taking my question. Going back to the focus on visual AEs, Can you give us sort of your high-level view on how important is it to avoid a dose that might have such an AE even if it were to be transient? And, you know, would you choose to take a dose into phase three that might have seen a transient visual access event? And just separately speaking, do you think that that is an on-target effect of this class? And, you know, As you think about sort of your next-gen assets, do you think that it's just a broadly an on-target effect, or is it more specific to the structure of a given drug? Thank you.

Let me start off. I mean, I'm just going to try to pull you back up from the visual AE obsession to the question about AEs in general. I mean, what we're looking at in this data set is doses where we know there are on-target AEs, namely, you know, insomnia and polycuria. that we and others have observed as on-target effects that could be, that would limit your dose. So I think the virtue of this program is we've run three different doses for six-week periods of time in the outpatient setting, and we'll get a complete time course as well as severity map of those AEs. And we have so much more data to look at together because let's say, for example, if you have a numerical AE, did it happen every day over the 42 doses or did happen once in the first week and then went away. You know, there's a lot of nuance to this. So I don't think it's easy to answer the question about what doses we would take forward because I think that there's a range of different AEs that we're going to be focusing on. And we think our competitive advantage is going to be this range of doses because not all patients are the same and people react to different doses. And I think that that will be true for efficacy as well as for AEs. Marcus, I'm happy your view on it.

Yes, yeah, I would agree. We're, as we speak, doing complicated modeling on exposure response, exposure safety analyses, and that's going to encompass everything we've seen. We're looking at this data in every way we can to help us determine what the best range of doses is going to be to move forward into phase three. And so that's going to encompass efficacy. It's going to you know, even ease of dosing. And so we're thinking about all possible criteria when we think about dosing moving forward.

Thank you.

The next question is in the line of Ash Farmer with UBS. Please just use your questions.

Hi, thanks for taking my question. So just on these phase two studies, what time of the day are patients dosed with 680? I understand it's down in the outpatient setting, except for the MWT days. But just what's your direction to the patients? And then secondly, on the visual disturbance that you mentioned, so the PR says that you're not seeing any signal. But is that statement based on age that you may have seen in and outside of the scheduled exams? Thanks.

Sure. I can answer the first part. So we tell them generally to take it in the morning, so roughly around 8 a.m. There's, of course, a window around that just to accommodate for various lifestyles. But roughly 8 a.m. in the morning is when we ask them to dose.

And we didn't delay any specific AE table elements until the phase one, I'm sorry, until the phase two safety database is closed in mid-August. So you'll see those data at World Sleep in September.

Thank you. The next question is from the line of Leonid Timoshev with RBC Capital Markets. Please receive your question.

Thanks, guys. I just want to ask on the endpoints. Just given what you've seen out of Vibrance 1, are you still thinking that MWT is the best way to go forward compared to ESS and both for, as you think about, I guess, the dual design for Vibrance 2 and then the ESS focus for Vibrance 3? And then related to that, given all the secondaries that you hit on, including some of the exploratories, how are you thinking about elevating some of those exploratory endpoints to secondaries or key secondaries for a phase three program like cognition or fatigue, and would you try to aim to get those on the label? Thanks.

Great, you guys.

So, you know, from our perspective, we believe both MWT and Epworth are really important measures. MWT, obviously, the more objective measure, Epworth really sort of expressing the patient's sort of subjective assessment. The reason that we elevated Epworth to a dual primary in the NT2 study is because of our sort of thought process around planning for regulatory interactions, really taking a look at the late-stage clinical trial landscape, and planning for our Phase III program. So, yes, we believe both are important, and I think the data from the NT2 study will help us plan then for our phase three program with the dual primary endpoints.

And on the key secondaries, Marcus, you might want to comment on, but from my perspective, these were really exploratory. Some of these scales I don't think have been used in our epilepsy studies at all. And so we were curious to see whether we would see movement. And boy, did we. I mean, we really saw clear signals. And you'll see more of those data at WorldSleep. Given the magnitude of the response and how clear it was, I think we have to do a lot of thinking now about how we might elevate those in the hierarchy. Please comment on that.

Exactly right, Rich. The team's here working diligently to look at exactly that, all of these various exploratory outcomes, the ones where we succeeded that, again, were hypotheses that we've now shown significant data on. The team is really working on how do we pull these in through the phase three and elevate them into the key secondary realm in a way that allows us to really test the aspects of this drug more thoroughly.

Thank you.

The next question comes from the line of Jason Gerbery with Bank of America. Let's see your question.

Hey, guys. Good morning. Thanks for taking my question. Maybe just wanted to probe a little bit just your understanding of the relationship of PK and the weekly cataplexy endpoint and whether or not you feel comfortable enough to rule out QD versus BID approaches conferring any advantage in terms of the WCR measurement. And then also just, I know you're not commenting on phase three dosing plans yet. wanting to see the NT2 results first. But I'm wondering if we can take from your comments that at least in the context of NT1, that there's at least enough confidence in the tox profile of the high 8-meg dose that you could potentially push dose in future NT1 pivotal. Thanks.

Yeah, you guys want to come back and talk about the PK-WCR relationship?

Sure. I mean, at this point, those analyses are ongoing. So we've reported, as you know, sort of the The top line results, and we're really digging deeper into the PK, again, as I mentioned, sort of exposure, exposure response, exposure safety. So that's going to be coming soon and potentially something you'll see in the future.

But is it fair to say, Mark, I don't think there's a QD versus BID difference that we think is meaningful? We don't. No, that's right. And... And with respect to the phase three dosing plans?

Yeah. I mean, at this point for phase three dosing, again, we're still making those determinations. So it's hard to speak to them. We do have confidence fully in our tox profile at eight milligrams. So there's no concern there. And we're obviously taking that into account as well as everything else we've talked about to determine our phase three doses. Got it. Thank you.

The next question is from the line of Luke Herman with Baird.

Please just use your question. Luke, do we have you?

Oh, sorry, I was on mute. Sorry, just a quick one for me. It looks like some nice step-ups in revenues across the board. Can you just talk about the relative contribution from inventory or seasonal dynamics as compared to underlying demand for the commercial portfolio? Thank you.

Yeah, this is Blair. I'll start on the number basis, and I'll turn it over to Todd to get into some detail. I think, number one, as you look at our proprietary programs, we saw demand increase across all three programs over the time period. We actually didn't have any inventory dynamics that contributed to this quarter, and so this is in line with normal seasonal dynamics and a contribution of our strong commercial performance. Todd, anything you want to add?

Yeah, I would just agree with what Blair said. We saw strong demand for all three products, Aristata, Vivitrol, and Levolvi, and we were really pleased with Q2 was really a step up in new patient starts. As we said earlier, exceed our expectations. To Blair's point, nothing to look at with inventory. Inventory is just growing with demand right now, so we're pleased with that.

Great. Thank you. Thank you. Our last question comes from the line of Mark Goodman with Learing Partners.

Please use your question.

Just back on this cataplexy endpoint discussion, when you talked about the learnings for the phase three, are these learnings basically just the statistical methods that you were talking about, or are you talking about using different assays? I'm a little confused. Maybe you can shine a little more light there. I mean, we're all still a little confused what happened with the cataplexy data, and we're wondering, like, are we even going to learn? Like, once we Once we see the data in Singapore, we're going to feel much better about it. I mean, because you were talking about the Cisco significance of what needs to get on the label. Like, doesn't it need to be stat sig to get on the label? I mean, this is a pretty important part of the story, right? So maybe you could just give us a flavor for that. And then just since I'm the last question, I'll ask as well. The working assumption is that insomnia is only seen at the very beginning. So should we still have that assumption that, you know, any type of insomnia is still only seen in week one? Thanks.

Go ahead, Marcus, on cataplexy. Let's clear that up because it's important, and I think we have a really clear picture of this, Mark.

Sure, we do. We do think the cataplexy results had a lot of what we saw likely had to do with outliers that we saw in the Vibrance 1 study, and we think some of that could have to do with the operational implementation of the assay, so particularly things like standardization of how patients are recording cataplexy at sites and even across sites in what is a global study. So, These are the types of things that for Phase 3 we're going to apply in attempts to reduce this variability and minimize any outliers that we might see.

And to your point, of course, you'll need to see statistically significant results for inclusion in the label, and that would be our objective. And when you see the data at WorldSleep, you can draw your own conclusions about the strength of the signal on cataplexy. which shouldn't be surprising given all these other endpoints are moving so strongly toward normal. You wouldn't expect to see a whole lot of discordant data in a cataplexy. But the statistic itself, as you saw in the top line release, significant at one dose and not at the other two doses, I think you'll get a little bit more understanding about why that might have happened when you see the variability. And we're not going to comment on the time course of the various AEs. You'll see more of that at growth sleep as well.

Thank you. At this time, we've reached the end of the question and answer session. I'll hand the floor back to management for closing remarks.

Great. Thanks, everyone, for joining us on the call today. Please don't hesitate to reach out to the company if you have any follow-up questions. Thank you.

This will conclude today's conference. We'll disconnect your lines at this time. Thank you for your participation, and have a wonderful day.