All right, thanks so much. I hope everyone's enjoying day three of our healthcare conference here in New York. My name is Akash Tewari. I cover pharma and biotech companies at Jefferies, and I have the pleasure of hosting Richard Pops, CEO of Alkermes. As a quick background, for us, Alkermes is one of our top picks in mid-cap biotech, and to us, when it comes to the pipeline, I have been hard-pressed to see this clear of a biological signal that the orexins have shown in narcolepsy, in a market that is this well diagnosed, and there's this many, you know, really tens of thousands of refractory patients, and with something that is potentially disease modifying. So that's how we view it, but I wanted to hand it off to Richard.
SLEEP just happened, and I know your team was there. I'd love to start off with your high-level takeaways of what happened in SLEEP and what really stood out to you.
First of all, thanks for having us, Akash. It's good to see you.
Yeah.
I also always like to say that we make forward-looking statements in these types of presentations, so please take a look at our disclosures and our risk factors and all that, 'cause we spend time trying to articulate the risks in the business. SLEEP was a pivotal meeting, I think, for the entire field. We presented data, of course, but I think, I think Takeda presented some very important data as well. I think skeptical people reasonably could have had a position coming into this meeting, asking questions about the orexin 2 receptor agonist class. Now that it's pretty well established that these agents can drive meaningful wakefulness, we've shown that, Takeda's, others have shown that as well.
The questions have shifted more toward tolerability and patient experience on the drugs, and I think the data that we saw this week should give us all a lot of reassurances about the class in general. Like what, what happens when you give orexin 2 receptor agonist to patients with narcolepsy, particularly narcolepsy type one? Some of those open questions, as you know, Akash, one was, was tachyphylaxis.
Right.
Will, will you see an attenuation of this effect over time? Very clearly, we did not see that in the data presented from the phase II data. So second question was, to the extent you have on-target adverse events or tolerability phenomena such as urinary urgency, did that impede patients' experience? Did it, did it affect their experience on the drug? Did it lead to discontinuations? And I think we saw, you know, really beautiful patient-reported outcomes with respect to the patients' preference being on this drug and the effect of being on the drug. Very minimal, if very, like, Ns of 1 dropouts in-
Right
... patients. So tachyphylaxis, check. Tolerability over an eight-week period, check. Insomnia, on-target effect, perhaps we saw really interesting data over the eight-week study where the extent there was insomnia, and it was not a small number, largely attenuated after five days, which had been part of the hypothesis that you know, we'd heard from clinicians, but that was also quite manifest as well. So I think for the field, with efficacy now quite robustly established, and all the presenters would have said, you know, the efficacy they were seeing with the orexin 2 receptor agonist significantly exceeds what you see with other agents in the class. Efficacy, check. Tolerability looks like is excellent. Patient experiences are excellent. And from our perspective, you know, I think we also revealed the competitive dynamic that's emerging.
Right.
There are, you know, one of the Takeda drug looks like an efficacious drug and a good drug, but it's not a perfect drug. And I think that no drug is a perfect drug, but I think that it's opened up a real lane for us. We presented data on our drug from the full cohort of NT1 patients. We'll present the data from the NT2 and the IH patients in the September meeting.
Okay.
But we can talk more about that as... I'm sure you have some questions about that, Akash.
Perfect. So I wanted to start on something which, you know, you can look at preclinical data, and there is some preclinical, and of course, preclinical is preclinical, evidence that orexins can actually help with sleep architecture, and I think that's the big question. I cover Jazz. I think when you talk to most KOLs, the, the pitch is sodium, you know, these are in some ways, they're stimulant-like. At least that's the way the KOLs view them, and you still are gonna have to dose a patient with sodium oxybate in order to help with their nighttime sleepiness. I don't think Takeda necessarily presented a lot of data related to sleep architecture, but it does seem like they alluded to a publication or more information on sleep architecture and OX2s, in the future.
A, if and when that data does come out, what endpoints and what tests should we really be paying attention to when we think about sleep architecture and orexins? What would your expectation be on whether patients actually have to be dosed concurrently with the sodium oxybate when they're on an OX2?
I think you described it correctly. It's interesting because no data were presented on sleep architecture from that, that eight-week phase II study. And I, I assume and we know from investigators that those data were collected, but they hadn't been completely analyzed yet. I think in the scientific presentations that we attended, we didn't hear reference to it, but I did hear that there was some reference to it in an investor call that, that suggested that the sleep architecture was being affected favorably by.
Right.
We've not seen those data, and we'll all look forward to seeing those. In many ways, sleep architecture per se, you know, looking at EEG traces or, or over the course of evening, are interesting but irrelevant. The question is, what, how are patients feeling? Are they reporting insomnia? Are they-
Right
... are reporting daytime sleepiness? So the thesis is that if you really consolidate wakefulness during the day, you'll, you know, will have a, you know, a corresponding effect on consolidating sleep at night.... The science is really interesting because, of course, orexin tone doesn't drop to zero at night, and orexin 2 receptor agonists, you know, the natural neuropeptides is a, is a suppressor of REM sleep, so it's contributing to the, to the-
Right
normal homeostatic architecture in sleep. So I think, there's a potential that we'll see the orexins affecting sleep architecture. I think that's a reasonable assumption, and I think it could be different based on the different compounds, based on what doses you're able to achieve.
Mm.
I think, we have to watch that space.
What specific metrics are you looking at when we look at sleep architecture, right? 'Cause we saw very strong benefit on CGI, Epworth Sleepiness Scale, but for sleep architecture, just, you know, teach the investor community what are the right endpoints there?
It's not really an endpoint per se.
Mm.
You know, like, you're not powering for it. You're just looking at. So if you can imagine a trace of a normal sleep architecture, where you descend through the various stages, you have REM periods, you ascend, and there's a certain cyclicality or periodicity to it. Patients with narcolepsy have this really fragmented sleep, and so I think in the first instance, in phase II, when we do the PSGs during that study, just to see whether we reestablish a more natural rhythm to that without a formal statistical endpoint per se. But again, if, if... Let's say you reestablish that, but people still feel, like, really exhausted during the day, it's a distinction without a difference.
Yeah.
That's why I think the wakefulness is actually the most important piece of it, and patients reported insomnia or fragmented sleep at night.
Understood. Now, going into your program, you know, you had data in NT1 patients. Now, the question that I get a lot from investors is twofold. Number one, at that 8 mg dose, you did see it was dose-dependent, an increase in insomnia. A, how do you think that evolves over time? And kind of add the context of patients who have NT1, they've never really maybe had orexin in their system, hypocretin in their system for quite some time. So how do you expect that 60% plus nausea or, or insomnia rate in your 8 mg dose evolve in a larger study? And then number two, we've obviously, and you guys know, we've been trying to back out everyone's PK. You know, Takeda kind of qualitatively described it. We kind of simulated your own curve.
I think enough to be actually dangerous, but the question I have for you is, it seems like at night, orexin levels get to kind of 10% in healthies. They drop by 90%, but there is still residual orexin at night. When you think about the doses you're testing, let's say your 8 mg dose or some of your higher doses in NT2 patients, are you getting levels of orexin at the end of the day that are in line with that 10% threshold that we see with normal healthy volunteers, or is it perhaps higher? Any general color would be quite helpful.
I probably won't answer that second question because I think the actual tracing of our PK curve is one of the real competitive advantages that we have, and we've not disclosed-
That makes sense.
We've not disclosed that other than to say that it was an explicit design intention, the PK curve. It wasn't. Sometimes when you design a highly potent molecule for a particular target, the PK is just, it's what you get.
Mm.
Whereas in this case, we designed the PK, and you've seen us talk about dose-dependent increases in AUC or total exposure without a corresponding dose-dependent increase in Cmax. So it tells you that there's a certain shape to that curve that we sought to create through the design of the medicine. With respect to the 8 mg dose, it was interesting, and it's part of our own learning as we get into the field. When we first unblinded those data, one, three, and 8 mg , what Akash is referring to is that we saw at the 8 mg dose, we were maxing out the MWT, the Maintenance and Wakefulness Test, at 40 minutes for 10 hours and beyond, keeping people up all night. We were excited by that result because it was an on-target effect.
We're showing basically on a dose-dependent fashion, 1 mg had a certain amount of duration, 3 mg had more, 8 had even more, suggesting you can just dose, titrate the dose to, to affect duration. Interestingly, the concept of tachyphylaxis, and this may be a little more weedy-
Sure
... than you want to get, but the concepts of tachyphylaxis is actually was discussed by one of the real thought leaders in the field, who said there is tachyphylaxis, but you don't see it when you're comparing week four to week eight.
Mm.
The tachyphylaxis you see is from dose one to week two, three, because in the beginning, these patients have a really strong response. Insomnia, you know, hypervigilance, what, pick whatever it is, but then it settles down, along with the side effects associated with it as well.
Right.
I think the Takeda data are consistent with that as well. So all alone in the world, when we started, when we first saw the 8 mg data, our team said, "That might be too high to run in phase II." The KOLs came back and said, "No, no, run the eight-
Right
and you'll see that profile evolve over time.
Understood. Richard, what you just described, let me see if I can make a guess. If you're saying, you know, you're describing not necessarily an increase in Cmax, but an improvement in AUC, it seems to me like perhaps... Okay, so you get to your Cmax, the clearance of the molecule on the way down, is it theoretically quicker than the Tmax benefit you get, right? Like, so is the curve maybe shaped, going very, you know, like it, it takes a while to get up, but then it clears out more quickly on the way back down. Is that what you're really optimizing for, fast clearance as we get into the afternoon?
No, I won't spend any more. Just understand that the front part of that curve-
Mm
is just as important as the back part of that curve.
Right.
Half-life, when you talk about T½, bless you, you will measure zero to infinity, but there's a threshold level of in the brain that's gonna drive wakefulness.
Mm.
So you might have a functional half-life that's quite different than your numeric T½.
Okay.
That's an important distinction that often people don't make.
... Understood. Now, when we think about running, you know, it's funny, in Wall Street, it's like, okay, max out MWT, and that's what we're obsessed with. And I think the whole point is you're gonna get to a therapeutic window. I feel like you're gonna be able to max out MWT in NT1 and NT2 patients, but to me, it's also where do you get to a dose where you can also optimize side effects, right? I don't think—I think that's how patients are really gonna use these drugs in the real-world setting. So I wanted to talk to you about the concept of titration, especially if it's a G-protein coupled receptor AE, like maybe normalizing patients with lower levels might, you know, help attenuate some of those side effects. You're not doing that in your current phase II design.
Why not adopt a titration scheme in phase II, and is that something you'd consider in phase III?
So it's actually a great question, and it's one of the great competitive advantages I think we have emerging out of the data that's coming up from the various companies. So we're gonna be testing in NT1 doses of four, six, and 8 mg, and in NT2, 10, 14, and 18. So stick those together, and you have this beautiful continuation of four, six, eight, 10, 14, 18. In the real world, assume approval of these drugs, physicians and patients will have a whole range to titrate against based on their own sculpting how they want their wakefulness-
Right
... and side effect profile to be A, B these drugs so far from testing in ourselves appear to be quite well tolerated. So we're not worried about a titration per se, in order to attenuate dose-limiting side effects at the outset. In phase II, though, just from a drug design, drug development point of view, we're gonna keep people in their lanes of four, six, and eight through the six-week evaluation phase, 'cause we wanna see what the tolerability profile is at each of those doses. And that information will all holistically go into as we design phase III.
Right.
So we'll know the dose range, we'll know the bracketing of it. Then in phase III, we can decide whether we wanna have a flexible dosing schedule, a dose forced titration, all TBD. But at the outset, we feel like that range of doses is available to us, and the tolerability profile going in is quite favorable.
Understood. And then in your phase II, do you have the ability to down titrate if, let's say, patients are getting AEs and they want to?
No. In the six-week evaluation, in the double-blind randomized period, we'll keep them in their lane.
Got it.
That's followed by a seven-week extension phase, where they can then find their own level.
Understood.
We'll learn in that phase as well.
Okay.
The other thing we're gonna do is at some point, we'll light off a two-year open label safety study, and in that information that you learn in the real world how patients are using the drug as well.
Understood. Let's talk a bit about visual disturbances, where I think maybe there's been a little myopic concern, I think, with investors. That's, again, maybe me, editorializing. But, let's get to brass tacks. In NT1 and NT2, do you have any expectation of a requirement on driving restrictions in either of those studies?
Oh, no. I mean, let's level set, though.
Yeah.
NT1, in the cohort we presented, we've not seen any visual disturbances. In the NT2 cohort, we saw one, and in the IH, we saw one. Both were at 25 mg, the dose we're testing, and both, it's really important, were mild. And in the taxonomy, in the language of AE reporting, mild means it's noted, but it doesn't affect you. So they were mild, they were transient. They were like, the overhead lights look brighter.
Hmm.
A little blurriness in the overhead. Now, these are patients who are coming in out of MWT tests. They're in an inpatient site setting, and we're interrogating them for these effects. So they could be on target, they could be real, they could... But we just don't have enough events to draw any correlations at this point. So from a clinical perspective, we've not been concerned about them as being dose limiting or affecting driving or obviously not stopping discontinuations. And remember, in the healthies, we went up to 50 mg-
Right
... without declaring a maximum tolerated dose. So, you know, we feel like we've. But the only real answer to that will be in the wild, six-week continuous dosing, where we can really get a sense of how these present.
Okay, understood. Well, Richard, tell me this, you know, my suspicion it is, it could be on target, maybe it could be related to blood-brain barrier penetration. You do have better bioavailability than some of the other compounds. That's why your exposure, I think, you can get efficacy at lower doses. I think. Tell me about this, though. It does seem to be dose related, and it does seem to be self-resolving. What is your confidence that the visual disturbances are indeed a G-protein-coupled receptor-related AE, you know, receptor-related AEs, like we've seen with blood pressure increases, like we've seen with insomnia, where it's transient, and that with longer dosing, those visual disturbances don't actually occur?
And I think maybe to add some color on that, can you talk about the visual disturbances that occurred in your sleep-deprived healthy volunteer study? When did they occur, and did they continue? Were those visual disturbances sustained with longer treatment?
Yeah, I think it's too early to speculate on it 'cause there's just so, there's no pattern yet, and we have such a small number of incidents.
Right.
But I think that... I just wanna be clear, we've not seen those blood pressure excursions. Others have.
Hmm.
So there's something about potency and PK. It could be rate of entry, it could be absolute entry, it could be AUC. So when you talk to our scientists about this, they, they'll speculate, but the point is, we need more data. The other thing is, in a phase I setting, remember, this study, we've got patients in-patient, in a lab, dosing on a day, doing MWTs all day, washing out the next day, dosing, so we're intensely interrogating them for-
Hmm
... side effects. In the phase II, they go home, six weeks, they're, you know, taking their drugs, and they'll report spontaneously whatever AEs present themselves. It's a different setting for assessment of those AEs.
Understood.
I think it's too early to make the call on.
Okay. That makes sense. Okay, so maybe let's just look at, duration of response, and I, I think this is one of the things on the Takeda that is interesting. You know, I cover Jazz. With sodium oxybate's within six months, about 50% of patients usually discontinue treatment. It's obviously hard to, you know, take a drug at night. What have you seen from the Takeda data in terms of durability on treatment, and how do you suspect that will play out in kind of a real-world setting? Do you— 'cause—and I say this not only for sodium oxybate, I think, but if you look at pitolisant, you can see there's this kind of issue where, over time, patients just you kind of feel like a zombie, right? It, it— 'cause a lot of these are repurposed, antidepressants.
How do you think patients are going to experience being long-term on an orexin versus the current standard of care?
Well, first thing, I think you're right, that certain physicians who are not really exposed to this, the neurobiology, are looking at these a bit like stimulants, and they appear to be quite different than stimulants-
Mm.
Because they're much more specific targeting of circuitry in the brain associated with wakefulness, rather than just revving up the whole, the whole system. I think that I was quite interested to see the PRO data. And typically, you know, you can look at PROs, these patient-reported outcomes, with some skepticism, but it was interesting because Takeda and the French investigators are testing a new scale to try to capture more holistically the patient phenomenon on... And they also showed the more traditional CGI, PGI as well.
Right.
They were really positive. Absolutely, dropouts, I think there were ends of, like, one dropout in each group. Now, this is a clinical trial setting, so people are—it's not the real world. People are in clinical trial. There's a bias toward people who wanna get treated in the trial, so-
Right.
But boy, the patient responses were really favorable. And I've always thought Maintenance of Wakefulness Test, you talk about maxing out the MWT. MWT is, it's not used in the real world.
Mm.
People don't do MWTs. They're treating the symptoms that patients feel, and so if you're treating those symptoms, but patients have other side effects that discourage their ongoing use, that's actually more important than whatever the numerical MWT change is.
Understood.
So I think the tolerability and the quality of that wakefulness is a huge... I think that's gonna end up being the huge driver in favor of using these medicines.
Understood. Maybe stepping back to the broader business, you know, I think, the question I get a lot from investors is, "Akash, I know you're, you're bullish on this pipeline story, but that's more of a 2025 event." The question I get from investors is: Should I own the stock this year? And that question really codifies into: Should I own the Lybalvi launch, right? And I, I'd love to pose that question to you. If, let's say, we're not talking about the orexins, but we're just saying, "I wanna own the Alkermes story, because I think Lybalvi numbers are under-modeled, and we think this launch is gonna go better than what investors really expect." Where do you see potentially upside in the cadence of Lybalvi uptake? Because right now, it seems to be gradual, but it doesn't necessarily seem to be accelerating.
Would you agree or disagree with that characterization?
Yeah, just look at the plot. It's sort of a linear, left to right, upwards trajectory, and that's, that's the way we've always modeled it, really. So I don't know. I, it's kind of sad to see that people feel like they have to try to predict each quarter as it goes, or each week as it goes, because-
Welcome to our lives.
It's just. Well, it's a different life, you know?
Yeah.
You know, we love what Lybalvi is doing for patients and its long-term product effects.
Yeah.
It's a giant market that's characterized by churn, and patients need access to medicines, and you fight to get them access to medicines, and treatment systems that try to deny it to them.
Mm.
Payers exert an enormous amount of control. We've got a lot of experience there with Aristada and VIVITROL, and now Lybalvi. So, you know, we're gonna continue to sell more, more, Lybalvi, and I just feel sorry for people who try to predict it each week because we can't predict it each week.
So maybe to that point, Richard, I think the question becomes, last year, it's like, okay, we are doing DTC. That's about, it sounds like it's about $70 million in annualized spend for both last year and this year. We're going to start to see an acceleration of growth. We have not necessarily agreed to discounts with payers because the juice isn't worth the squeeze, basically. They're asking for too much of a price decline. And so you're kind of in this, you know, stasis, where you're getting groundswell support. You haven't necessarily agreed to the payer deals to open up supply. Do you think sometime in 2024, we will see you agree to terms with some of these big payers, and the gross to net declines, but we're going to see a corresponding increase in volume? Is that event going to occur this year?
Will that event occur at all, or would it make more sense just to kind of go with what you're doing right now, where it's a bottoms-up type marketing effort?
No, it'll happen this year.
Okay.
As the business gets bigger, the commercial channel becomes more and more important to access, and-
Right.
But correspondingly, as this branded drug becomes bigger and bigger, the commercial plans are reimbursing without any rebates.
Mm.
And so they're missing dollars every day there's not a contract. So there's a certain convergence of interest that happens here in the third year of launch. We already announced it on the last call. We did our first big commercial contract with one of the big three.
Right.
We'll do more.
Okay.
At steady state, we're gonna have contracts with all those guys you'd think, too. But my admonishment, my risk factor in this is that these payers, each year, they're looking for more and more, not just from us-
Right
... from all of us. Because particularly with the Part D redesign and
Mm
... and their exposure that they have now in the catastrophic phase of Medicare, they're trying to come to the manufacturers for more and more each year. So we'll fight this fight in perpetuity.
Understood. Strategic question. You know, it's funny, I talked to some people who are similarly bullish on orexins, and it's almost like, feel like it's like a cult sometimes. You don't see the stock move, you see clinical data that gets you excited. There's clearly a disconnect, I'm sure, in your mind, between the intrinsic value of your company and what Wall Street shareholders are actually ascribing to your pipeline right now. Do you feel like there's that similar disconnect when you think about strategic discussions about this asset? And then number two, do you think that the orexin program is best in the hands of a pharmaceutical company that can really accelerate development in other indications?
The core of the bullseye right now is narcolepsy.
Mm-hmm.
That's a multi-billion-dollar opportunity for, you know, a drug that fully elaborates the potential that it looks like orexins have.
Yeah.
Whether ours makes that or not, we'll see. But it's a huge opportunity. You don't need a big pharma company. No one's gonna go faster than we're going right now-
In narcolepsy.
I think. You know, we're gonna, we're going like the hammers of hell to move this thing as fast as we can. You know, we're up and running in our phase 2 in Vibrance-1, in NT1s. We're moving fast to start the phase 2 in Vibrance-2. The broader indications are really tantalizing.
Mm.
Now, those are new molecules with different IRA implications, different clinical trial implications, but I think at some point, application of scale will become meaningful. Hopefully, if on a standalone basis, we're generating those cash flows to be able to do that ourselves, but I think there's no question the opportunity for these orexins extends beyond narcolepsy.
Maybe just last question on that point. Do you feel like the strategic card flip, maybe that others would wanna see, is your phase II data with longer duration?
It's your department. I mean-
Fair
... it depends. I mean, sometimes-
Yeah
You get paid in advance, sometimes you get paid in arrears. But either way, we're charging ahead, and we're gonna generate more data.
Understood. I really appreciate it. Thanks so much.
Thank you, Akash.
Thanks, everyone, for joining us.