Alkermes plc

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Greetings and welcome to the Alkermes first quarter 2026 financial results conference call. My name is Carrie and I will 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 will 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 March 31, 2026. With me today are Richard Pops, our CEO, Joshua Reed, our Chief Financial Officer, Todd Nichols, our Chief Commercial Officer, and Blair Jackson, our Chief Operating Officer. A slide presentation along with our press release, related financial tables, and reconciliations of the gap to non-gap 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. During the quarter, we closed the acquisition of Avidel Pharmaceuticals, TLC. The financial results announced today reflect the mid-February closing of the transaction and the integration of Avidel into our business, including six weeks of contribution from Lumerize. Abadil's once-at-bedtime sodium oxibate for the treatment of narcolepsy. 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 report 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 I'll turn the call over to Richard for some opening remarks.

Thank you, Sandy. Good morning, everyone. So we had an excellent financial first quarter with another strong period of commercial execution and business performance. The quarter was consequential in other ways. Perhaps most significantly, we completed the acquisition of Avidel, a key element of our strategy to become a leader in the sleep medicine space. With Lumerize, we add a new, differentiated medicine to our portfolio, one that's early in its commercial life and has significant potential for growth. Lumerize addresses a clearly defined patient need and fits logically into our portfolio, consistent with our focus on medicines delivering meaningful clinical benefit to patients. From a financial standpoint, the acquisition further enhances our financial growth and provides additional resources and flexibility to advance our development portfolio. Beyond the financial consideration, the acquisition allows us to establish a commercial footprint in sleep medicine now, well in advance of the potential approval and launch of elixirexin. This early presence enables us to engage directly with sleep specialists and other key stakeholders critical to ensuring access to prescribed medications. Building these relationships now provides a strong foundation to accelerate our potential launch trajectory for elixirexin. Another consequential event occurred at the very end of the quarter with the announced entry of Eli Lilly into this therapeutic space. This is an important external validation of the breadth of the scientific and commercial potential in developing new medicines targeting the erexin pathway. I think it underscores important aspects of this emerging therapeutic class, namely the the limited number of competitive entrants, and the scarcity of available intellectual property around the chemistry, as well as the broad potential clinical and commercial opportunity. It starts with diseases of hypersomnolence and extends beyond that to a range of potential conditions in neurology, psychiatry, and other rare diseases. For Alkermes, we believe elixirextin and our other development candidates represent substantial opportunities to advance patient care and drive significant value for shareholders. We have a clear strategy and we're well positioned to advance these programs. Well, Larry and I will provide an update on our development efforts at the end of the call, but first I'll turn to Todd and Joshua to review our commercial and financial performance for the first quarter. Todd.

Thank you, Rich. Good morning, everyone. I'm pleased to report that we're off to a strong start to the year with first quarter performance ahead of our expectations and solid execution across the commercial organization. It is exciting to note the evolution of our commercial team as our portfolio of commercial products expands. We now have commercial capabilities in three distinct categories, in addiction with Vivitrol, in psychiatry with Aristata and Libavi, and now following the closing of the acquisition of Avadel in sleep medicine with Lumrise. The integration of Avadel commercial team is progressing well, and we entered the second quarter with a combined team fully in place. Looking ahead with clear strategic priorities, a seasoned commercial team, and a portfolio of important medicines in addiction, psychiatry, and sleep disorders, we are in a strong position to deliver on our performance goals for 2026. Turning to our first quarter results, net sales from our proprietary product portfolio increased 38% year-over-year to $338.1 million, reflecting solid demand across our psychiatry and addiction portfolios and certain favorable gross-to-net adjustments during the quarter and six weeks of commercial contribution from Loom Rise. Starting with Vivitrol, net sales in the quarter were $112.4 million. Vivitrol performance continued to be driven by 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 2026 in the range of $460 to $480 million. For our psychiatry franchise, in the first quarter, net sales for the Aristata product family were $93.8 million, reflecting solid underlying demand. In 2026, we continue to expect Aristata net sales in the range of $365 to $385 million. Revolving net sales grew 32% year-over-year to $92.4 million. Underlying TRX growth was 21% year-over-year, driven by sustained momentum in new patient starts and continued expansion in prescriber breadth. Gross to net adjustments were approximately 33%, which we expect will continue to widen into the mid-30s during the course of the year as we continue to build on our market access profile. For the full year, we continue to expect Levolvi net sales in the range of $380 to $400 million. The first quarter results for these products benefited from gross to net favorability of approximately $14 million, driven primarily by favorable patient mix. Approximately two-thirds of this favorability related to Vivitrol, and the remainder related to Aristata and Levolvi. Across the brand's inventory levels in the channel were relatively stable in the first quarter of 2026. As a result, we expect Q1 to Q2 growth trends to generally track in-market demand. Turning to our sleep franchise, we are now 10 weeks post-close of the acquisition of Avidel. As we build on our commercial presence in this space, we are pleased with feedback from the sleep medicine community regarding the Lumerize commercial organization, the utility and expected durability of the Oxibate class, and the differentiation of Lumerize within this category. The Lumerize team is off to a strong start since joining Alkermes. For the first six weeks following the close of the acquisition in mid-February, we recorded Lumerize net sales of $39.5 million. For the full quarter, Lumerize generated approximately $72 million of net revenue. We exited the quarter with approximately 3,600 patients on therapy and with solid momentum in new patient enrollments, which we expect to build on as we move through the year. For the full year, we expect Lumerize to generate total net sales in the range of $350 to $370 million. Of this, we expect Alkermes to record $315 to $335 million, reflecting the period since the mid-February close of the transaction. In sleep medicine, our near-term focus is on driving growth and executing against the loom rise opportunity while advancing our broader strategy into space, including preparation for the potential launch of elixirexin. Narcolepsy and idiopathic hypersomnia represent multi-billion dollar market opportunities, and our goal is to establish Alkermes as the leader in sleep medicine based on deep expertise in this disease area and differentiated and competitively positioned product portfolio. With solid performance from our established franchises and the recent addition of Lumerize, we are operating from a strong position of increasing scale and diversification. As we move forward, our focus remains on discipline execution, driving demand across our brands, and advancing our strategy in psychiatry, addiction, and sleep medicine. The first quarter was a strong start to the year, and we are well positioned as we work toward achieving our 2026 objectives. With that, I will pass the call to Joshua to review the financial results for the quarter.

Thank you, Todd. In the first quarter, we delivered financial results that reflect continued growth across our proprietary product portfolio and the initial contribution from Lumerize following the close of the Avidel acquisition. Post-acquisition, our financial profile is further enhanced and diversified. We manage the business to drive significant operating cash flow and maintain a strong balance sheet, and we do so now with increased scale and flexibility. We are in a strong position to invest in the expanding development pipeline that will shape the future of our business. Turning to our financial results. During the quarter, we generated total revenues of $392.9 million. These results provide a solid foundation for the year. Today, we are updating certain non-cash elements of our 2026 financial expectations to reflect refinements to the purchase price accounting for the acquisition of Avidel. These adjustments improve our full year expectations for GAAP net loss and EBITDA. For our portfolio of proprietary products, we generated net sales of $338.1 million ahead of the expectations we outlined on our fourth quarter call. As we move into the second quarter, We expect Q2 net sales from our proprietary portfolio, including a full quarter of revenues from Lumerize, in the range of $385 to $405 million. Manufacturing royalty revenues were $54.8 million for the quarter, including revenues of $27.3 million from Boomerity and $18 million from the Long-Acting and Vega products. Turning to expenses, cost of goods sold were $61.6 million, which includes the purchase price accounting of Lumerize inventory. Recall that at closing, Lumerize inventory held by Abadel was marked to fair market value. Net of the Lumerize inventory step-up charge, cost of goods sold, would have been $48.9 million in Q1 of this year, compared to $49.2 million in Q1 of the prior year. In the second quarter, we expect COGS to be in the range of $85 to $95 million, reflecting a full quarter of LUMRI sales and associated inventory step-up charge. R&D expenses in the quarter were $103.3 million compared to $71.8 million in Q1 of the prior year, reflecting the initiation of the Elixirexin Brilliant Phase III clinical program in narcolepsy, which began in the first quarter, the ongoing Vibrant III Phase II study of Elixirexin and idiopathic hypersomnia, and the phase one studies and development efforts for our next orexin-2 receptor agonist candidates, ALKS-7290 and ALKS-4510. In the second quarter, we expect R&D expenses to be in the range of $110 to $120 million. SG&A expenses were $264.6 million for the quarter, which included approximately $55 million of costs associated with the closing of the acquisition of Abadel, including transaction expenses and share-based compensation. Excluding these one-time expenses, SG&A would have been $209.4 million compared to $171.7 million in Q1 of last year, primarily reflecting the addition of the Abadel commercial infrastructure mid-quarter. As we look ahead to the second quarter, we expect SG&A expense to be in the range of $210 to $220 million. During the quarter, we also recorded amortization of intangibles of $11.7 million and net interest expense of $12.4 million. In Q1, we generated gap net loss of $66.5 million and EBITDA of minus $30.1 million. We also generated positive adjusted EBITDA of $80.3 million, well ahead of our prior Q1 expectation of adjusted EBITDA of $30 to $50 million due to higher than expected revenues and the timing of R&D expenses. Looking ahead to the second quarter, we expect adjusted EBITDA to be in the range of $100 to $120 million. Turning to our balance sheet, We ended the first quarter with approximately $538 million in cash and total investments. To finance the acquisition of Avidel, we used approximately $775 million of cash from our balance sheet and then entered into term loans totaling $1.525 billion due in 2031. We expect to pay down this debt quickly with cash flows from the business. During the quarter, We also deployed $28 million to repurchase approximately 1 million shares at an average price of approximately $28 per share. We continue to have $172 million of remaining share repurchase authorization. As I mentioned, in connection with the purchase price accounting related to the Avidel acquisition, we have refined our expectations for several non-cash expense items, including the inventory step-up charge, which flows through cost of goods sold and the amortization of intangible assets associated with Loomrise. These changes have a net positive impact on our 2026 expectations for GAAP net loss and EBITDA. We now expect to expense approximately $105 million of Loomrise inventory fair value step-up in 2026, compared to a prior estimate of approximately $150 million. As a result, our 2026 cost of goods sold is now expected to be $320 to $340 million, an improvement from our prior estimate of $365 to $385 million. For amortization of intangible assets, we now expect full-year amortization expense in the range of $75 to $85 million, compared to our previous estimate of $95 to $105 million. For income tax, we now expect no income tax expense or benefit for the year from a prior estimate of an income tax benefit of $20 million. Taken together, these purchase price accounting adjustments improve our expectations for GAAP net loss, which is now projected to be in the range of $70 to $90 million, as well as for EBITDA, which is now expected to be in the range of positive $105 to $135 million. All other components of our 2026 outlook, including adjusted EBITDA, remain unchanged. Taking a step back, it was a strong start to the year, and we look forward to carrying this momentum into the second quarter and beyond. With that, I'll now hand the call back to Rich. Thank you, Joshua.

So the commercial and financial elements of the business are strong. With expected revenue of more than $1.7 billion and adjusted EBITDA of more than $370 million, we have the financial resources to invest aggressively in our pipeline and generate significant cash flow. I think it's becoming increasingly clear that our erection program has brought us to the threshold of substantial value creation. Today, we've developed and shared with you comprehensive clinical data sets across the first area of focus for this therapeutic class, disorders of hypersomnolence. That data set reflects the design and execution of a broad Phase II program, randomized, controlled, multi-center, multi-week across multiple doses and indications using established clinical endpoints, as well as additional measures such as fatigue and cognition that relate specifically to the brain circuitry that we're activating. At the same time, we're broadening our development efforts beyond disorders of hypersomnolence, leveraging our portfolio of orexin-2 receptor agonist candidates. In this area, more than most, We believe that chemistry-based intellectual property represents an important strategic asset. Blair will speak in more detail about our expansion strategy and development plans. But first, I'm going to update you on where we are with Elixirexton. This year, our focus is on continuing the momentum we built in phase two to enroll the phase three brilliance studies in narcolepsy. Phase three for us is all about execution. We're on the path now to potential registration. The Brilliance Phase 3 program is now open for enrollment in narcolepsy type 1 and type 2 with site initiation and patient screening underway. Because of the strength of the Phase 2 results, investigator interest in the studies is strong. We're working to enroll these studies quickly with a sharp focus on quality and execution to support the strongest competitive positioning. From an operational perspective, the duration and scale of the Vibrance Phase 2 studies generated important and proprietary data that informed the design of our Phase 3 program. With Alexa Rexton, we're building a broad and robust clinical data package across narcolepsy and idiopathic hypersomnia. In June, we'll present data from the VIBRANCE-2 Narcolepsy Type 2 study at the annual sleep meeting in Baltimore. We've reported the positive top lines in November, so much of the data set will be familiar to you. Along with the positive outcome of the study, Vibrance 2 is important because it's one of a very small number of clinical studies ever conducted exclusively in patients with NT2. As such, it provides a depth of insight into the characteristics and variability of this population that is largely absent from the existing literature. The sleep meeting gives us an opportunity to share the data with a broader sleep community. One-on-one engagements with clinicians and investigators over the last several months have already given us a clear sense of the treatment community's high level of interest and excitement about these data. For idiopathic hypersomnia, or IH, our Vibrance Phase 3, I'm sorry, our Vibrance 3 Phase 2 study is ongoing and on track to be completed in the fourth quarter of this year. We've initiated enrollment of a split-dose cohort of approximately 30 patients across sites in both U.S. and Europe, with patients randomized to elixirexin or a matching split-dose placebo. As a reminder, in IH, the Epworth Sleepiness Scale and the Idiopathic Hypersomnia and Severity Scale are the established and preferred clinical and regulatory endpoints. In addition to those measures, Vibrance 3 also includes mean sleep latency assessed by the maintenance of wakefulness test, which will help us to characterize the durability of wakefulness over the course of the day. The clinical development program for elixirectin has been deliberately designed to support strong competitive positioning, both in the quality of the clinical data generated and the breadth of potential dosing options and regimens being evaluated to address individual patient needs. We believe this approach positions elixirexin, if approved, to become the erection of choice across both narcolepsy indications. Importantly, elixirexin has the potential to be the first in class in narcolepsy type 2, and our lead in development in NT2 continues to widen. In the meantime, while the erection development story in narcolepsy continues to mature, with LUMARISE, we now have an important new medicine being used in current clinical practice. Later this quarter, we expect to announce top-line data from the Lumerize Phase III Revitalized Study, NIH. Data from this double-blind, placebo-controlled, randomized withdrawal study, which enrolled approximately 150 patients, would serve as the basis for an SNDA submission with a potential launch in early 2028, if approved. This represents a potential growth opportunity for Lumerize in an underserved patient population and we'll look forward to data this quarter. So now I'll turn the call over to Blair to provide an update on our expanding development work in our orexin portfolio. Beyond central disorders of hypersomnolence, there are many adjacent disease areas that may benefit from modulating the orexin pathway. We identified this opportunity early on, and we're moving aggressively with new molecules. Go ahead, Blair.

Thank you, Rich. As we outlined earlier in January, this year we are expanding our orexin development programs into disease areas outside of sleep medicine. We are doing so with two new molecules from our portfolio, ALX7290 and ALX4510. Each of these orexin-2 receptor agonists has been advancing through single and multiple ascending dose cohorts and healthy volunteers, and we're pleased with the profiles we've observed to date. This year, our development plans take us into patient populations in ADHD and fatigue. Early on, based on our emerging data and feedback from clinical investigators, we identified attention deficit hyperactivity disorder as one of the most compelling initial opportunities for orexin-2 receptor agonists outside of sleep medicine. ADHD is a common neurodevelopmental disorder characterized by persistent difficulty in maintaining attention and concentration. and is frequently accompanied by hyperactive and impulsive behavior. Despite the availability of some treatment options, many patients continue to experience residual symptoms, functional impairment, tolerability issues, and adherence challenges, even when receiving current standard of care treatment. Against that backdrop, Alkermes is working to advance the evidence base supporting the potential use of orexin-2 receptor agonists in ADHD. we have established a foundation of data from validated preclinical behavioral models, assessment of neurotransmitters, and human EEG that support our conviction in this program. Based on this foundation, we are initiating our first clinical studies of ALK7290 in adults with ADHD this year. The first is a Phase 1b randomized placebo-controlled proof-of-concept study designed to enroll approximately 50 adult patients. Participants will receive two weeks of treatment with ALK7290 or placebo. In this study, we will assess the safety and tolerability of ALK7290 along with the effects of treatment on translational measures where we expect to see more rapid changes, including quantitative EEG and certain neuropsychological performance measures. These assessments are designed to evaluate sustained attention, vigilance, and impulse control in a shorter duration study. For exploratory purposes, We'll also assess changes from baseline on established clinical ADHD scales. Results from this Phase 1b study are expected in the fourth quarter of this year, and we will provide the first clinical data generated with the REXN2 receptor agonist in patients with ADHD. Enrollment in that study is already underway, with the first patients dosed in April. As enrollment in the Phase 1b study progresses, we plan to initiate a well-powered Phase 2 study in adult patients with ADHD this summer. This randomized, double-blind study is expected to enroll approximately 300 patients and will evaluate ALK7290 versus placebo over a four-week treatment period. The primary endpoint will be changed from baseline on the adult ADHD investigator rating scale. Data from this study which we expect to complete in 2027, may serve as the foundation to advance to a potential registrational program in ADHD. We are excited to be the leaders in this exciting area of clinical development, and we look forward to updating you on our progress. For ALKS 4510, we are advancing in single and multiple ascending dose studies in healthy volunteers and plan to initiate a multi-dose phase 2A study later this year in patients with fatigue associated with multiple sclerosis and Parkinson's disease. Fatigue is one of the most common and burdensome symptoms in neurodegenerative disorders and remains a significant unmet need in MS and Parkinson's. Our interest in fatigue in these populations is also informed by observations from our Phase II narcolepsy studies, where we saw improvements in patient-reported fatigue that appeared distinct from effects on sleepiness or wakefulness alone. Fatigue represents a novel area of pharmaceutical development and we'll provide more details regarding the design of the development program as the phase two study opens later this year. As we advance through the development program, our strategy will be stepwise, data-driven, and informed by interactions with regulatory authorities as we seek to make a meaningful contribution to patient care. Taking a step back, the potential utility of orexin-2 receptor agonists across a broad range of indications is a significant and striking opportunity. This will be the year that we generate a substantial new increment of data to the clinical evidence base supporting these potential opportunities. With that, I'll turn the call back to Sandy to manage the Q&A.

Thanks, Blair. We'll now open the call for Q&A.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. Please limit yourself to one question and one follow-up. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. And our first question will come from David Amsalim with Piper Sandler.

Thanks. So on the orexin programs beyond sleep-wake, in ADHD, can you talk about your thought process regarding development as monotherapy versus adjunctive therapy in ADHD and what preclinical data you can point to that gives you confidence that a monotherapy approach makes sense? And then regarding the fatigue program, it might be a little early to talk to this, but can you talk about endpoints that you're exploring? And I realize this is going to be informed by your discussions with regulators, but what are you going to be looking at in terms of early outcome measures on fatigue? Thanks.

Sure. Hey, David, it's Blair. So with regards to ADHD, we have a substantive amount of data with regards to orexin agonists in this space. And in fact, it's probably the most tangential of the indications out there for the next place for us to go. We did a lot of preclinical work looking at neurotransmitter release, looking at behavioral models, EEG. We saw increased levels of acetylcholine in the prefrontal cortex, which is a high indication of activity and attentiveness. We also use what's really a highly translatable model within the preclinical testing where it's called the five-choice serial reaction test. And our initial hypothesis was exactly where you started, was what if we did an adjunctive therapy perhaps with a non-stimulant? Would that provide a really beneficial outcome? But when we did that model, what we found is across all our studies, we were performing as well as or better than stimulants themselves as a monotherapy. So we feel that both in the attention and the impulsivity aspects of those programs, that we have a really good opportunity here. And our clinical studies that we're kicking off are actually designed to look at just that. So we'll be looking at monotherapy across a broad population both intention and impulsivity. And I think the two studies that we've set up are going to be really well positioned to give us a full idea of how this could proceed moving forward. With regards to fatigue and that program, we're moving into the clinic with a drug called ALX4510. And that's a really interesting area. And we are looking very carefully at the scales to be used within those studies. So we're going to be testing this in MS fatigue patients and Parkinson's disease patients. And one scale that we're going to use is the promise fatigue scale. This is a scale that we used in our NT1 study where we showed a really strong benefit within the NT1 patients, taking them really from severe to normal on that scale. And that hasn't been shown very widely within clinical literature We also saw similar outcomes as we moved into the NT2 patient population. So that bodes well as we go to an intact orexin tone system. But the other thing to keep in mind is a lot of these disease areas, they also have their own scales that have been developed as part of that patient population. So we're going to be testing those two and trying to understand best how the different characteristics of the scales work and also how these drugs perform within different subcategories of fatigue.

Thanks, David.

Our next question will come from Uma Raffet with Evercore ISI.

Hi, guys. Thanks for taking my question. I have a two-part question. Clearly, there's been a ton of strategic interest in the orexin space. What I'm wondering is twofold. Number one, Can you lay out timelines for indications beyond narcolepsy? Because I feel like that aspect of the value has not been captured by much of the valuation numbers that have been thrown around so far. And I ask that in particular because it seems like Lilly's early interest in Sintesa was perhaps not even on the LEAD program. And number two, more importantly, is Alchemies and the board open to the idea of asset sale rather than a whole company sale, if that were to be a possibility at any point. And I'm thinking back to examples like Biohaven. Thank you very much.

You remember me, I'll start and then I'll hand it over to Blair as well. Yeah, I think Blair just referred to in the prepared comments, which is the two most immediate adjacencies to the hypersomnolence are fatigue and ADHD. We're enrolling patients right now in the first ADHD study, that translational study in adult patients. So that'll be a 50-patient study. We'll get data this year on ADHD. So give us our first sense. And we won't even wait for those data before we light off a bigger, proper Phase II program, which we'll light off this summer in ADHD, because we feel like the preclinical evidence in that space is quite compelling. And the enrollment in the fatigue studies in Parkinson's and whatever, MS, that starts this year as well. So we're right on the threshold of new data sets that expand the understanding of the pharmacology in patients without demonstrable orexin deficits. And as you know, the first hints of that come from our NT2 data and our IH data that we've already developed. So, but the second question, you know, our company, our board, you know, we're a public company. We react to whatever circumstances present themselves. But we feel like right now we're right on the threshold of major valuation changes as we mature this program. And I think Lilly coming into the market underscores the fact that there's more than just hypersonics here at play. This circuitry is directly associated with human wakefulness defined broadly. and I think that opens up a whole bunch of adjacencies. And we start with hypersonalants, and we go from there. Blair, any other thoughts?

No, I'd just reiterate what Rich said, which is we're in a process right now. We're going to be turning over a lot of cards with regards to a number of these clinical areas, and we're looking to really execute and drive value over the next couple years. So I think it's a little premature to talk about any potential sale process.

Thank you very much. And moving next to Paul Mateus with Stifel.

Hey, this is Julian on for Paul. Thanks so much for taking our questions. And I guess just to piggyback again on the orexin program and the pipeline, it would be great to hear about for this larger phase two that you're kicking off this summer, what types of patients are you hoping to enroll? And can you just talk a little bit about the translatability of what you'd expect based on past clinical data literature in terms of success on the primary endpoint and how it may that translate to a larger randomized phase three. And I guess in comparison, how large are phase three studies relative to the phase two that you plan on kicking off? Thanks.

Yeah, thanks for the question. I think with regards to the ADHD, as I said earlier in the call, we saw pretty broad activity in some of our early models with regards to this asset and this mechanism. And so as we look to enroll our patients in the Phase 2 study, we think a broad base of patients will be beneficial from this. So we're not going to look at individual subtypes. Our key primary endpoint for this is the ACERS, which is the adult tool that's been used widely in industry. And what we're really looking to do is see the relative effect size across the patient population. And, you know, just to give an idea of what people have seen in the past, there's typically kind of breaks into two main areas. You typically see the non-stimulants, and they typically have, you know, cone effect sizes that are kind of 0.3 to 0.45 or so. And then what you see is a very different result with stimulants. Stimulants typically can be one and above with regards to COVID-Z, but it comes with tradeoffs. And so what we're really looking to see is how we perform on that over a four-week period. That study, as we said in the prepared remarks, is going to be about 300 patients. And that's roughly the size that you see in some of the Phase III programs. And you go a little longer. Usually, you're looking at six-plus weeks on the primary endpoint. But we'll determine that, and we'll indicate more of that after we see the data in the phase two.

I just want to add a couple things on that. Number one, what we did in narcolepsy is what we want to do in ADHD, i.e., have a significant amount of clinical data before we launch the phase three program and run a phase two program that almost mimics a phase three program. That's a major risk mitigator in the program. Second thing is we're going to start using the tools that exist, just like we did in narcolepsy. But what's interesting about this pathway is that it's activating the brain in different ways than a stimulant activates the brain. And I think with the benefit of additional clinical data, we'll be able to dial into some of the differential efficacy potential of an erection agonist compared to just a stimulus, which is revving up the brain in a more general way.

Thanks so much. And sorry, just one quick question, if I may as well. I think you said you'd be completing the IH study in 4Q, Rich. Are we expecting data this year, or could it potentially run into next year? Thanks.

That's the translational study, the first study where we're looking at more... IH. Oh, I'm sorry. IH. IH, I'm sorry. Yeah, the IH... erection study, we'll complete that in Q4 and we'll get the data as fast as we can thereafter. It could be right at the end of the quarter or right at the beginning of the second quarter according to the current plan.

Thanks for the clarification.

Moving next to Jessica Fye with JP Morgan.

Great. Good morning. Thanks for taking my question. Just a question on Lumerize and your guidance for that product this year. Can you just talk about what's embedded as it relates to your expectation for any potential net price pressure as non-AG generic sodium oxibate gains traction in the marketplace?

Yeah, sure. I'll take that one. At this point right now, as I stated, we're guiding to 350 to 370. We had a really solid first quarter, and so we feel really good about that, heading into Q2 and for the remainder of the year. At this point, we haven't seen any impact on multi-source generics for XyREM. Again, the most important point is this is a multi-source generic for XyREM, not for loom rise. So we haven't seen any impact on demand, any impact on physician behavior, any change in payer behavior at this point. A really solid part about the Lumerize story is really the diverse patient mix. We get a sizable portion of patients from newtoxibate, from returning oxibate, and from the switch market. So it's a very durable product. So it's something that we're watching very closely. We have to see how it plays out. But with our full year guide, we do incorporate a range of gross to net scenarios.

Very clear. Thank you.

And our next question will come from Ben Burnett with Wells Fargo.

Hey, thanks very much. I wanted to ask about the Vibrance 3 data that you will provide in the fourth quarter or thereabouts. I guess what dose cohorts will be included in the update, and will this include split dosing at therapeutically relevant doses?

Yes, we'll expect to have top line results from the entire study. when we read out the data from that, which would include the split dose arm.

Okay. Fantastic. And can I ask, the split dosing that's being tested, how is that split? Are they evenly split? And are you testing sort of higher total doses in the split dosing cohorts relative to the single dose cohorts?

We haven't disclosed the specifics on the split dose strategy either for the IH study or for the other studies as well. partly because we feel like we've learned so much from our clinical program that is proprietary that we're going to keep that close to our vest until we have the data.

Understood. Okay, thank you.

You're welcome.

We'll go next to Mark Goodman with LeeRink Partners.

Yes, on Lumerize, can you talk about the net patient starts that got you to the 3,600 patients that ended the quarter? And then now that you own the asset, can you give us an update of how you plan to develop valyloxibate? Thanks.

Yeah. Hey, Mark, I'll take the first part of that. So overall, as I said in my prepared remarks, the brand in Q1 realized 3,600 patients on therapy. We actually think that total patients on therapy is the best metric. That's a 28% year-over-year growth. overall that's the really the durable part of the brand that really incorporates any type of demand perspective access and also persistency so our focus is really on on total patients we're always going to be focused moving forward on growing net patient ads and we feel really good about you know the enrollment trends we saw coming at the end of the quarter which is going to set us up very well for q2 and beyond and that's um you know that's really based upon just the overall strength of the mix between newtoxibate switch and also returning. So we feel good about the patient mix that we're seeing.

And hey, Mark, this is Blair. I'll take the veloxibate question. So that's an asset that came over as part of the Avidel acquisition, and that's an opportunity for us to potentially develop a no-salt, once-nightly product for patients. And so... Our plan for that is to take multiple formulations into the clinic and really try to assess a rapid development program. And this is really right up our wheelhouse. As you know, we're a formulation company at our roots, and especially when it comes to PK-PD relationships. So we right now have multiple formulations that are in the clinic and being assessed. And as we have more data later in the year, we'll share that.

Claire, do you think you're going to have to do a full phase three study, or will you be able to do some type of bridging study that is quicker?

Well, that will really depend on the clinical data that we generate. So our hope is that we can do some bridging, but again, we'll have to see how this asset performs in the clinic. Thanks.

And Rudy Lee with Wolf Research has our next question.

Thanks for taking my question. Can you talk about your current understanding of the competitive landscape for erection agonist? And specifically, what key endpoints being measured in your breathing phase three trial that could provide additional label differentiation?

Thanks. I think the major differentiating feature in the erection space now is the fact that Alkermes has the only program that has a range of doses that have been credentialed in large randomized phase two studies. And in so doing, we've been able to explore other domains other than just the classic maintenance of wakefulness tests and the cataplexy scale by extending into fatigue and cognition. So while we don't expect fatigue and cognition data to be in our initial label, what we do expect is to have a clinical data set that encompasses all those features of the treatment. So when we come to market, if the drug is approved, we expect to come to market for NT1 and NT2, which differentiates us from the first market entrant, as well as a range of doses. across NT1 and NT2, both as once a day as well as in split-dose formats, which further differentiates us from the first market entrant. And I think following the acquisition of Centessa, I think our lead in NT2 as well as NT1 continues to grow. So we're really happy with the competitive positioning, and we think this is going to open up the beginning of a brand-new class of pharmaceuticals that will continue to grow from the diseases of hypersomnolone.

Got it, thank you. And we'll go next to Luke Herman with Baird.

Hi team, thanks for the question. One on 7290 and ADHD, you laid out the effect sizes we've seen across different standards of care. So, based on the preclinical data, do you think the more likely outcome as a monotherapy is sort of a more tolerable asset that sits in the middle of stimulants and non-stimulants in terms of efficacy? Or do you think efficacy could actually exceed what we've seen with stimulants?

Well, again, what we've seen in our preclinical data is we performed as well or better than stimulants in our early models as monotherapies. So, Obviously, if we're able to achieve that clinically with the tolerability profile that we see with this class of drugs, that's a great outcome for us. But I think there's a wide range of market opportunities regardless of what we see in the clinic. But our goal will be to get the strongest efficacy possible.

Great. And then just one follow-up on the Alexorexin Phase 3 studies. I believe you commented on the high level of patient interest. Has this exceeded what you anticipated, and would this maybe lead to more expeditious enrollment?

You know, the difference between Phase 3 and Phase 2 for us is that when you go into Phase 2, no one's used your drug before. And now we go into Phase 3 with a major data set that's been presented at major meetings and a buzz about this program. What mitigates against the rate of enrollment though is the control and the rigor that we learn from phase two about which sites to use and how to select patients and how to make sure that you're not just enrolling for the sake of enrollment numbers but to enroll the finest cohort you can over the period because those data become your label. So the quality of that study is sacrosanct. So we expect to enroll the study correctly at the rate that we'll determine as we activate sites, and we'll keep you guys posted as we go on that.

Great, thank you.

We'll hear next from Joseph Tom with TD Cowan.

Hello, this is Jacob on for Joe. Thanks for taking my question. I was wondering if you were planning on studying lumerize in combination with an OX2R agonist in the future, and if so, what would a trial for that look like?

Yeah, Jacob, it's something we're hearing so frequently from clinicians now that we've completed the acquisition. And we'll go to the sleep meeting in Baltimore representing both once-nightly oxibate with extended efficacy as well as the elixirexin program. And so we will be harnessing that energy into a clinical program over time. We're not going to start that right away. We need to finish some other things first, namely the registration program for elixirexin as monotherapy. but I think there's increasing interest in understanding both the nighttime and the daytime aspects of the disease. Great. Thank you.

We'll go next to Ami Fadia with Needham & Company.

Good morning. Thanks for taking my question. I've got two. Just with regards to Vibrance 2 that's going to be presented at the sleep meeting in Baltimore, what additional data on top of what you'd announced at the initial data readout that we can expect at the meeting. And with regards to the Lumerize IEP study that's expected to read out in the second quarter, maybe talk about your expectations for what that profile is likely to look like, the market opportunity, and what you're doing in terms of preparing for a potential launch of that indication. Thank you.

Amit, it's Rich. I'll start. As I mentioned, we presented most all of the data on the Survivors 2 study in November, and that's available on the website if people want to look at that again. But we will give a bit more sleep in two principal domains. One, we'll try to give a little bit more dimensionality to the efficacy effect that we saw. And the other is we do have data from the extension phase now that we can tack on to the double-blind phase, and that's always instructive to see what happens as patients stay on therapy for a longer period of time. And, of course, at the sleep meetings, those data are presented by investigators, and you have the ability to talk to people who actually have hands-on in the use of the drug. Your second question was about Lumerize in IH and the market opportunity for that. I'll start, and then I'll ask Todd to comment on that. What's interesting is that a competitive product is IWAVE. The principal growth of that drug now is driven by the IH indications. And part of the reason we went into IH for elixirextin was as talking to patients and patient advocacy groups, there's a huge unmet need for new medicines in IH. And we just had a thought leader here at the company yesterday saying that he thought oxibates at this moment were probably the best treatment for idiopathic hypersomnia, which is interesting. I think that's underappreciated. So we will be able to enter this market with Lumerize in 2028. So we have some time to prepare for that type of launch if it's approvable. But we're quite excited about that as a lifecycle growth tool for Lumerize. Todd?

Yeah, I would just add a couple of things. We continue just to validate all the research that we've done, listening to the community, listening to HCPs. We believe it's a really underdeveloped category right now. There's 40,000 patients that are diagnosed. We think that's underrepresented. And there's only one FDA-approved product on the market. We think that Lumerize has an opportunity to be the second product. And we know how well Lumerize is received in the community now for narcolepsy. So our expectations are very high on what the opportunity is for Lumerize and IH. As Rich said, as the data is presented, as we go through the approval process, We'll be continuing to build what our launch plan looks like, but it's something that we are very excited about.

And we'll go next to Jason Gerberry with Bank of America.

Hey, good morning. This is Chiang for Jason. Thanks for taking our question. I guess on ADHD, can you talk about what's unique about the molecule, PK, or dosing profile? that could help you mitigate insomnia or urinary frequency, the class adverse events you have observed in narcolepsy patients? And would you expect the ADHD patients to be more or less sensitive to these class AEs so far? And just a quick follow-up on Vibrance 2, would you provide any sort of kinetics on weekly MWT data to better contextualize data comparison? relative to a key competitor of yours, which had two-week data, and you've talked about observation of tachyphylaxis in the past with Vibrance 2. Thanks.

All right, Chi, it's Blair. I'll start with the ADHD, and then I'll get Rich to answer you on the Vibrance 2 stuff. So with regards to ADHD, I think a couple things I want to make sure we're clear on. One is the adverse events that we typically see with this class of arrested agonists. It's a very wide therapeutic window. As you saw from our programs in NT1 and NT2, we have a really nice AE profile overall. The main effects associated with this class are really polychorea and some transient insomnia that we see at the beginning of the study. As we talk about the ADHD program and the PK dosing profile, I think with regards to any of the new programs that we move outside of narcolepsy, we're developing them with new drugs. So ALK7290 is its own unique molecule. It's been designed by itself specifically. It's optimized for the patient populations that we're going after. And so it'll have its own unique PK and dosing profile that will match that patient population. As you know, what we saw in our NT2 program is that patients who have an intact orexin system, so who have natural orexin tone, we tend to see a very mitigated overall AE profile due to that fact. And so, again, I think we're well positioned to test a wide range of doses within that patient class. Rich, do you want to do this?

Yeah, the Vibrance 2 data at sleep, you will see time course data on a multi-week basis for the ESS score. And I just want to make the point that there is no competitive data that's been presented so far. There's only one company that's shown multi-week successful data in NT2, and that's Alkermes.

And we'll hear next from Akash Tiwari with Jefferies.

Hi, this is Anastasia on for Akash. Thanks for taking the question. So when you've previously talked about NT2, you've kind of segmented the pop into a couple of buckets of patients. You have the ones who would benefit from BID dosing and then the ones with kind of a more modest effect size. So how are you thinking about that dynamic as you consider orexins working in other indications where patients have more normal hypocretin levels at baseline, like ADHD or fatigue?

We just think overall dosing flexibility will be a really important thing because people have different physiologic set points for their base orexin tone and they have different lifestyle expectations, whether they want to stay up until 10 o'clock at night or they want to go to bed at 7 p.m. So our feeling is that we've established in data so far in T2 patients as well as IH in an early stage that patients with normal orexin tones can benefit from an orexin agonist. So then that degree of that benefit will be determined by each individual's set point, as I just described. So the prerequisite for addressing that commercially is just a range of doses with data supporting that range of doses in the label, which is exactly why we've designed the pivotal study, the brilliant study, to include once-daily dosing, split dosing across that range of doses that we elaborated in Phase II.

Moving next to Ash Verma with UBS.

Hi, this is Hoyeon Ahn for Ash. Thanks for taking our questions. Our first question is for the pending lomerized IH study. How do you think about the placebo arm here, given the patients may have some bias knowing that sodium, sodium oxyben works in IH? And our second question is, so it's good to see the decent beat on Vivitrol. Can you help us understand your latest thoughts on how the Vivitro revenue trajectory could be in 2027 and beyond as Tevas generic enters? Thank you.

I'll take the first, and Blair and Todd talk about the second. Just understand the Lumerize IH Phase 3 study is a randomized withdrawal study. so patients would have all been on the OxyVade. So they'll know there's no binding issue, and then it's withdrawn on a blinded basis. So this is the same design that Jazz used with their Zywave study.

Yeah, and I think with regards to Vivitrol, as we move into 2027, there's a number of interesting scenarios in front of us. Obviously, we have the potential entrant of Teva into the space in the beginning of 2027. And we're looking at a lot of scenarios related to that, including some scenarios where Teva actually isn't able to make it into market. What we don't expect, though, is to have a really dramatic impact on Vivitrol as the new entrant comes into the place. Vivitrol is a unique asset. It requires a lot of of manufacturing capability. It requires a lot of commercial infrastructure and hand-holding with patients and physicians. And Todd can give you a little more on that.

Yeah, absolutely. Just to kind of reiterate, we have really two key priorities right now, and that's delivering for 2026 for Vivitrol. We're right on track to be in the range of our full-year guidance, really driven by the alcohol dependence indication and to reinforce what Blair said. We've been working on this for a number of years. We have a range of scenarios that we're playing through, and our research continues to reinforce that we don't see this as a typical erosion. If Teva were to make it into the market, it's a durable product, and so we'll be prepared regardless of what those scenarios are to flex our resources if we need to and also be prepared to compete.

I see. Thank you. Our next question will come from Uyir with Mizuho Securities.

Hey, guys. Yeah, thanks for taking your questions. So maybe apologies for missing this. I dialed in a little bit late. Could you maybe just help us understand if there's a reason or not on why the patient mix may change going through the year, given the nice patient mix that led to better than expected growth in that. And the second question is, on ADHD, is there anything else in terms of potential differentiation other than efficacy? Thanks.

Yeah, I'll take the first one regarding patient mix. We did see some favorability, some Medicaid favorability in the first quarter of the year. We don't expect, we don't actually forecast on favorable patient mix. We do expect that for the full year that we would see the access profile for Lebalvi expand, so we do have a better line of sight to what that profile would look like. We're always in active negotiations with payers and our full year range actually assumes that that could play through. But, you know, that's the real logistics of the business right now. We're just not forecasting any additional favorability for the remainder of the year.

And then with regards to ADHD, look, we're looking for differentiation both on efficacy and tolerability. I think if you look at the ADHD market and how it's evolved, it really was started around the stimulants and the amphetamine use within adults and children. And that comes with significant tradeoffs. It comes with side effects. It comes with potential abuse. And I think people have been really looking for more tolerable agents that are maybe non-stimulant for a long time. Up until now, really, the efficacy of those agents really just hasn't matched what you've seen on the stimulant class. So I think the really holy grail for this indication in this area is to create an asset that has the efficacy of a Vyvanse or something like that, but also is really well tolerable. And the orexin agonist class has the potential for that. It's a new mechanism of action. It It operates on the alertness centers in the brain. We've seen attention and impulsivity benefits in preclinical models. We've seen the right neurotransmitter release and profile as we look at these assets. So we think there's a real opportunity here to really thread that needle and provide a new benefit to this patient population. Thanks.

Our final question will come from David Hong with Deutsche Bank.

Hi there. Thanks for fitting me in and taking my questions. So I've said two. Maybe first with the Vibrance 3 IH study, when we do get that data for the split dosing arm, I guess ideally what would you like to see for that split dose versus a single dose to help, you know, validate your hypothesis. And I guess, do you just have any sense of, in the real-world setting, if a split dose or a single dose would be preferred? And then on the LumRise opportunity in IH, if LumRise is approved for IH, how do you think about where your patients may come from? Do you think that would be mostly oxybate-naive in IH, or would you think that there would be a good proportion of switches from ZyWave as well? Thanks a lot. Hey, David. It's Rich.

I'll take the first. The hypothesis for the split dose in IH is driven by the observations that we saw in the NT2 study. And so the simple readout would be to look at the MWT and see whether we're extending the later time points and elevating the latencies of the later time points, recognizing that it's It's almost a laboratory measure that we're using in the IH population because the MW2 is not a preferred endpoint for IH, but it's simply a way for us to demonstrate the pharmacodynamic effect of the split dose and to confirm our dosing assumptions. In the real world, we've talked to a lot of different folks in the course of market research. I think that the once daily will continue to be probably the modal approach that patients use. But over time, as the category continues to mature, I think we analogize it to the ADHD space where there's a whole range of dosing alternatives and people can tailor their dose to their lifestyle. And that's why we think there will be a real virtue to having a suite of once-daily doses as well as accompanying split doses that people can then dial in to the level of wakefulness that matches their lifestyle and their disease.

Yeah, and in terms of the IH opportunity for loom rise, you know, we clearly see a high unmet need here. We think there's a significant opportunity for expansion potential because we think that the market right now is very modest. Even with one product approved, there's only very modest penetration. So we see market expansion opportunity, which will be a new patient start opportunity. that Lumerize will have the ability to tap into. That's what we've seen with narcolepsy. But at the same time, it's also going to create another market, which is a switch market. And that's what we've seen with narcolepsy. So we think that it will mimic kind of the patient patterns that we've seen in narcolepsy, which is new to OxyVe patients, switch patients, and returning patients.

Thank you.

And this now concludes our question and answer session. I would like to turn the floor back over to Sandra Coombs for closing comments.

Great. Thank you, everyone, for joining us on the call today. Please don't hesitate to reach out to us at the company if we can be further helpful. Thank you.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.

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