All right. Good morning, everybody. It's my pleasure to kick off the conference with Alkermes. I think I've kicked it off with you guys before. It's my pleasure to have Blair Jackson, COO. Maybe I'll have Blair just give a quick snapshot of where Alkermes is at with the base business, orexin, and then we'll get into Q&A. So thanks for joining. Appreciate it.
Thanks, Paul. Thanks for having us here. I'll start out just by making sure that everyone knows we will be making forward-looking statements. Encourage you to review our SEC filings for our risk disclosures. You know, I think if you look at Alkermes, over the last couple of years, it's been a very deliberate process to get us where we are today as a very clear thesis within neuroscience. We've really spent the last couple of years simplifying the business. We've removed our oncology platform, and we separated that into a new company. We started the exit of the CDMO business with the sale of our Athlone facility to Novo Nordisk, and now we're in a position where we have a very clear thesis moving forward.
We have a strong commercial portfolio consisting of three products: Vivitrol, Lybalvi, Aristada, all of which have meaningful impacts within their therapeutic categories, and all of which we see growing into the future. And then we have this really interesting pipeline now in the orexin space. And it really starts with our ALX2680, our orexin agonist for the treatment of narcolepsy, NT1, NT2, as well as idiopathic hypersomnia. I think we're the only company that's been able to show, in a single molecule, significant efficacy in each of these therapeutic spaces. And we're now moving forward into our mid-stage clinical program. We're enrolling in NT1, we're enrolling in NT2, and we'll be enrolling in IH by the end of the year. So it's a really interesting time for that molecule. And we expect to start to get the data from that rolling out in the second half of next year.
We've also announced that we're going to be expanding our orexin program into other therapeutic areas: neurodegen, neuropsychiatric indications, therapeutics where attention, cognition, sleep have an important impact. So this has turned out to be a really interesting portfolio. So if you take that together with our commercial business, we're a highly profitable company, which makes us a rare bird in the pharmaceutical space, as you know. With the data coming out into 2025, I think this is a really interesting setup time for Alkermes as we exit this year.
Great. So let's start with the orexin program. So the space, super interesting, but obviously somewhat crowded with a bunch of companies and players in there with Takeda and Centessa, and then some mystery players like Eisai and Merck. We don't really know exactly what they have. Maybe just give us a step back and talk about where Alkermes fits within this and your comfort that you can have a best-in-class asset in the context of increasing competition.
Yeah, look, I think as you look at the space, I'll start first just with the number of competitors in the space. I think we're going to see people constantly trying to come into this. I think there's a recognition that this is a really important new therapeutic class that could have a significant benefit across the domain of alertness, I guess, if you want to call it that. And I think that different companies have different approaches. Some are really focused on the narcolepsy indications. Others are starting to look at some of the bigger indications that I alluded to before.
I think if you look at Alkermes and our position within the space, I think that we were one of the, I'll call it, second generation of companies who were able to really start to crack the chemistry around the GPCR agonism and the ability to address the orexin system. People have known about this target for a long time, but it's actually quite hard to agonize this molecule or this receptor system with a small molecule. And so I think when you look at Alkermes, our history is in really trying to develop drugs that have a really good PK/PD relationship. It's more than just the chemistry. It's about being able to deliver something into the brain for a certain period of time with certain effects over the course of that time period.
We've approached our molecular design with that sensibility, and we've tried to incorporate that into our molecules, so I think if you look at where we're at, there's a number of us who have a patent estate within this area. I think we have a chemistry space that allows us to be flexible across dose ranges and therapeutic indications, and right now, what we're seeing in the clinic is very supportive of our target product profile, so I think we look to highly differentiate, and we'll see as further clinical outcomes present themselves.
Breaking down things by indication, I guess in NT1, it feels like the biology is validating, the clinical data is validating. As you go into that phase II study, what is the biggest risk to replicating the phase I data?
Look, I think that we've tried to take as much of the risk out of the program as possible. We went and did our phase I-B program in patients. So this allowed us to make sure that we were operating in an area that has the deficit. So if you look at NT1 patients, they actually are absent of a orexin tone or have very low orexin tone. And so we felt that if going into healthy volunteers, sleep deprived, those sort of things aren't necessarily the most translatable, patients would be the best way to de-risk the program. In our 1b, we saw very clear efficacy across dose ranges. It was dose responsive. We saw a wide therapeutic window. So really, the phase II is about looking at multiple dosing over a course of a number of weeks.
I think the one thing that we don't know yet that we're still learning as we move forward is some of the things Takeda is starting to tee on with their program. How do the patients feel? What are some of the PROs? What's the sleep architecture? That's a big unknown in the field, and some of the early data is tantalizing, but we have some of that in our phase II program, and we're excited to see it.
Okay. So how are you thinking about the right dose in NT1? And to what degree do you think there's going to be an optimal dose for most patients or more of a dose range where people titrate with it?
Yeah, I think as you look at the NT1, we've spent a long time, as I mentioned earlier, on our PK/PD work to really model where we thought the therapeutic range would be. As we moved into the phase I-B, it's a little bit of an art of how you're trying to set your dose range. We were really happy to see that we really kind of nailed it on that. We studied in our initial program one, three, and eight milligrams as our dose range. And that's allowed us to move forward in our phase II program with four, six, and eight. So you can see we're in a very good space with the NT1 program.
And I think when you look at the NT1s, it's maybe a little different if we talk about the NT2 and IHs, but these patients are hyper-responsive to the orexin. And you may find that a single dose could work within this group. I think the one wildcard that people don't necessarily think about in this space is the duration of activity. Some patients may want to be awake longer than other patients. And we're a wakefulness agent. So you can envision a patient who wants a lower dose just because they want to go to bed earlier than someone who wants a higher dose and go to bed later. So as long as you have the therapeutic window to do that, that gives you a lot of flexibility. So I don't necessarily see titration because we see AEs as being pretty benign.
You think it's more like a preference thing for timing? I mean, I guess someone who's staying up later, though, is probably going to take the drug at a different time in the morning, right? So might that resolve itself to some degree?
They may also want to be awake in the morning. Like I want to be awake right now, but I also want to be awake late tonight, and I want to do some other things. So I think I equate this a little bit to ADHD and how that market has evolved with people looking for certain abilities to stay awake over periods of time.
Okay. I feel like the safety question is different across different indications. In NT1, I mean, from a safety perspective, it looks fairly benign. But from a tolerability perspective, there's still this kind of question around the right margin with insomnia and also urinary frequency. Do you think that that is going to be something that is purely on target and purely something you can just kind of simply dose around? Or might the rate and intensity of those AEs vary across drugs or have something else to do with the drugs themselves? Does that make sense?
It does. And I do think that all AEs, whether they're on target or not, are going to vary by the drugs that are being studied because, as I said earlier, there's a lot of nuances to the drugs just by virtue of the fact that you have to get these across the blood-brain barrier, and you have a very defined PK/PD window to be within. So I do think, though, that when you look at things like insomnia, which is on target, and polyuria, what we tend to see with these is that they tend to mitigate with time. You tend to see them earlier on in the clinical trial, and patients tend to tolerize as they move forward.
But I do think that a company that has a drug that can have a wide therapeutic range can move the doses around, would allow patients to adjust accordingly if needed.
Okay. Okay. I think the other question with NT1 or something that Takeda has elucidated with some of their data is this idea that patients may be hypersensitive given that they have lower orexin tone, and then there might be this more pronounced first dose effect. Do you believe that that's the case, and have you kind of baked that into your dose selection assumptions for the phase II?
We definitely have. We've modeled very clearly how we see the dose response. That's gone into our phase II. As you know, we have a range of doses that can take us at a low dose to a much higher dose. If you look at our phase I- B study, our one mg dose had a 25-minute sleep latency. We have really good efficacy even at the lower dose.
Like how much theoretically would that regress over the course of two to six weeks?
I think that's highly theoretical. I think if you look at some of the Takeda stuff, you're not really seeing any tachyphylaxis. I think if you look at the early, early stuff, there's the one week piece. So I actually think that when you look at these molecules that are more highly potent, they tend to overcome that effect. And so again, we'll see. We have a wide range of doses that we could go through. So if we do see it, we can mitigate it pretty easily.
Okay. Okay. How would you, I mean, not that you put numbers to it, but how would you at least qualitatively describe the relative probability of success in NT1 versus NT2 at this point?
We feel really good about both programs. Obviously, NT1 has a more clear biological rationale just with replacement of the orexin tone. I think there's been a lot more studies from us and others in the space. So we feel pretty good about efficacy. I think efficacy is largely adjudicated already by all the companies in the space. It's really just about rounding out how wide is the therapeutic window and what's the AE profile. I think as you go into NT2 and IH, definitely you start to get further along the axis or removed from some of the biological rationale, maybe with disrupted receptors or something else that's more unknown. I think NT2, we have some data of ourselves and others that's really, really great results.
And then with IH, we're one of the few that have data in there that shows that this mechanism can work as well. So we feel good about all of it. And it's all consistent across those programs. But obviously, there's more work to be done.
Okay. I guess in NT2 and IH, do we have any data beyond a single day that is positive? We obviously have the failed phase II from Takeda.
There's the failed phase II from Takeda. There was some earlier data that they did in there with their other molecules where they did some NT2 work.
Is that the IV?
The IV work.
Okay. Was that one day or one week?
That was, I thought, one week. But when you looked at that data, what you saw was that there was a difference in dosing range between NT1 and NT2. That played out with our molecule, although our doses were a lot tighter than what the Takeda data would have predicted. So again, as you start to think about potency and how it interacts with these different areas.
Maybe that's PK too, given IV to oral.
It could be. It could be. There's a lot that goes into it, as you know.
Okay. Okay. Okay. So I guess then the question kind of comes down to NT2 and IH, as you alluded to, related to therapeutic index. And when we've done work in this class, the one thing we tried to spend a lot of time on was this visual disturbance AE. And I know at face value, visual disturbance could mean a whole bunch of things. It could imply something that's really problematic to something that's innocuous. What do we know and not know right now?
I think what we know is that we do see some patients. For example, in our one B, we had a single patient in the NT2 program and a single patient in the IH program who had a visual disturbance. What we know about them so far is that they were mild. They self-resolved. They only lasted in the order of like an hour or two. And the definition of mild means that the patient observes it, but it doesn't impact their functioning. And so, for example, one of the things was photophobia, which is how it's coded. But it's really just they thought the light seemed a little brighter. I mean, that gives you an idea of what we've seen so far. What we don't know is, are these on target? Are they off target?
Are they like polyuria and insomnia where after you do multiple dosing, they tend to dissipate? And we don't know right now just how many patients would be impacted by this sort of thing. So if you look at our phase II program, we are carefully looking to get baselines on patients as part of our phase II program. And we are looking to see how this progresses and get a little more detail on it. But right now, it looks pretty benign from our perspective.
I think one thing that we felt like we don't know yet is, is there a bell curve distribution around the intensity of these adverse events? And is there a tail of that curve where this could be something that's a more problematic AE that interferes with daily functioning? And maybe it's not that common, but maybe it's something that leads FDA to be more conservative on labeling or monitoring. Do you feel like that's a tangible risk at this point?
I think there's always a risk. I think it's a far-reaching risk. I think if you look at our program, we only saw these AEs at our highest dose. This was our 25 milligram dose as part of the NT2 and IH program, and they were mild. So there was nothing we have not seen anything to date that suggests that these are things that are going to impact your daily functioning. I think when you look at a number of drugs in the CNS space that upregulate just you as a person's sympathetic immune system or nervous system, whatever, you sometimes see visual impacts or effects related to pupilometry, related to your system upregulating, and we've never seen those in those scenarios turn into driving restrictions or anything like that.
So I think that obviously, if we see more profound things in the future, we would deal with that accordingly. But right now, we don't see this as a limiting, say, the commercial potential of the drug or the ability for the patients to interact with the world.
Okay. At the dose range that you're exploring in NT2 and IH, what do you expect for the high end of that range in terms of efficacy and side effect trade-off versus the low end of that range?
Right now, I mean, you definitely, with all of these, whether you're in NT1 or NT2, you tend to see a few more AEs at the higher doses than the lower doses. Though those AEs are predominantly related to insomnia, so the duration of wakefulness that we talked about earlier, as well as polyuria. And what we tend to find is that the polyuria exists, but hasn't tended for us or others to lead to discontinuation or withdrawal of the studies, so the effects that we're seeing in the NT2 and IH actually were quite profound, both in the lowest dose that we're testing. So again, we're doing 12, 14, 18 in the NT2, and we're still working through the IH piece. And when you look at those, you're practically normalizing these patients regardless of the dose range that you're getting.
You may bring in a few more AEs of the polyuria, and that's sort of going to be patient-specific. Again, just like in NT2, I think patients will have an ability to flex commercially as they look to get different doses that fit their lifestyle or their particular AE profile.
Yep. Okay. For NT1, from a market opportunity perspective, do you have a good visibility into these three buckets? Patients who are on Norexin, sorry, not Norexin, excuse me, oxybate, patients who've tried oxybate and fallen off, and then another group that might be enthusiastic to be treated. Do you have any kind of loose way to size that?
You know, it's a really interesting question. I mean, we sort of triangulate. So obviously, there's the oxybate market itself, which you know is a $2 billion market. And then you have just the diagnosed patients in kind of NT1 and NT2, which we've equated to about 100,000. And so where those patients end up, you're exactly right. You get a lot of patients who don't even want to go to oxybates to start. You have some patients that go to oxybates and fall off because they just don't like it and don't tolerate it. I think that a lot of these patients are going to be looking for new therapies in the space.
We do see when we talk to the doctors who are treating physicians, they have a stable of patients who are just looking for something different because if you're not on an oxybate, you're on a stimulant, or you're on a histamine, or you're on something like that, that may not be giving you everything you're looking for and may also not have side effects that you really like. So it's hard to get very specific on each of those buckets, but I think the boundaries of oxybate to diagnosed is sufficiently large that we see this as quite an interesting opportunity commercially.
Yep. Yep. Okay. And NT2 and IH, I think that market is a lot harder to size. The numbers on paper are big, but it seems a little bit murky in terms of the spectrum of severity, how many patients are actually seeing a specialist, enthusiasm to use an expensive drug. How would you at least size that in a relative basis to NT1?
Well, I mean, we took a careful look at that. And we actually had an analyst day a number of weeks ago where we tried to lay that out as transparently as possible. And I'd encourage people to the stuff is on our website still if you want to have a look at it. One of the things that we've seen is that as you look at diagnostic codes, it appears that there's more NT2s than people really were anticipating. I think we see about two to one, three to one, NT2 to NT1 within that space. So that says that's a pretty significant part of the market. I think where it gets really complicated is when you get to idiopathic hypersomnia because that is sort of, it's diagnostic by exclusion. It's sort of the last; it's the catch-all.
What we don't know is how many people out there have something like an idiopathic hypersomnia that aren't part of that whole treatment paradigm because they don't feel narcolepsy is there. They're not being caught by their PCP. I see this whole market, like some of the other more rare things that you saw before, take tardive dyskinesia, for example, which people knew about for years. Once you had a drug that worked in the space, you started seeing a lot more people pouring in. I think these markets can be quite large. I think NT1, NT2 is a little more definable in orphan. I think IH can get a lot bigger.
Yep. Yep. Okay. Before we move on, anything else you'd add on the orexin space?
No, I just remind everyone that our data is kind of coming out in the second half of next year. That's going to be a real important moment for this program and it'll really determine how we design the program and move it forward over the next couple of years.
Yeah. Any comment you can make on next-gen molecules and what you're trying specifically to improve upon?
I think on the next-gen molecules, the focus is actually moving it outside of narcolepsy and idiopathic hypersomnia. Obviously, we always have backup molecules to what might happen to 2680. What we found so far in our development program is we've really met our target product profile. It appears to be going towards where we want it to be. We don't really need to rely on those molecules. We can now move them towards these more broad areas like in neurodegen or neuropsych. It's not so much about improving relative to the 2680. It's about making them specific to the areas that we want to take them into and to meet the needs of that different patient group.
Makes sense. Okay. So maybe switching gears to your commercial business. As we look ahead into 2025, are there any product-level nuances that we need to be keeping in mind as we make forecasts with our models?
You know, if we go through each of the products really quickly, I think Vivitrol is always the toughest one to really get your arms around in that it's two markets that are sort of going different directions. You have the alcohol market, which is growing at double digits around the country. There's been a big uptick, especially since COVID. And then you have the opioid dependence market where we see a decline in scripts year over year, just mainly based on how states are treating using harm reduction and some of the buprenorphines as their path forward. So these two markets kind of compete and lead to our overall growth rate. Right now, alcohol is 80% of our sales for Vivitrol. And we see that continuing as we move forward. Moving on to Aristada. Aristada has had a few more headwinds.
I think that's been the long-acting injectable market is still recovering. It's been impacted by some of the resurgence of telehealth and some of the work associated with that. If they're not seeing patients, it's hard to put them onto a long-acting injectable. But we have a number of initiatives that we're kicking off with there. We think that we're a really unique product offering for patients that are interested in aripiprazole LAI therapy. And this got a long patent life. So there's a lot of work that we're doing there to continue the growth. And then Lybalvi, it just continues to move along its way. I mean, we've generated significant growth since launch. We're definitely participating within that switch market for schizophrenia patients. And what we're finding is half our business comes from olanzapine, and then half comes from other atypicals. So I think that's very healthy.
And we also are about half and half in bipolar as well as schizophrenia. So I think that's really good. The key dynamic in this space is the introduction of the new BMS drug, the muscarinic. That's a very interesting addition into the space. I know there's a lot of interest from physicians. Very, very different, obviously, than our drug. I think we operate a very unique niche within the space with efficacy and with regards to our ability to treat patients very, very acutely and for long periods of time. So our success with Lybalvi is really in our hands. And I think right now, the big dynamic is just going to be the noise that BMS makes in the space. They're coming out with a large number of reps. They're spending a lot of money. So in light of that, it's all of our share of voice.
Part of our way to compete with that is to increase the size of our sales force, make sure that we're in front of the physicians, just to remind them that Lybalvi is there. When they have an efficacy choice, that's the one they should pick.
Makes sense. Are you planning for a significant impact from KarXT? Moderate impact, mild impact, no impact?
It's hard to say what they'll do with regards to the share of voice. I think generally, if there was any impact, I'd probably say it would be mild. It's a new class. It's going to launch slow, my prediction, mainly because of its unique profile. I mean, this is a group of patients that have a hard time taking drugs. This is a twice-a-day. You're not allowed to eat on the front or back end of it. It's going to be a tough profile for patients to get used to. And so for us, again, it's about just reminding the patients or the physicians of Lybalvi, why they use it, who's right for it. So if there is any impact, I think it would be mild.
Makes sense. Okay. Do you want to talk a little bit about how you're thinking about BD in 2025?
Sure, so BD is a core strategy for the company moving forward. I think we talked about our orexin platform and just how exciting it is, and that's going to generate a lot of growth, and we have some investors who say, look, you should focus all your money on that and expand that and don't do anything else, but as you know, there's a risk associated with having one mechanism in your pipeline, so I think having something orthogonal that would also create more catalysts for the business, I think, would be very beneficial to the company, so we're in a large number of discussions looking at a number of things. Hard to predict when these things are going to happen because it just depends on how it goes through the system.
But it's definitely something that we're looking for clinically or commercially, whatever could work, but really across the spectrum of development.
When you think about in licensing other assets, spending more in development, how sensitive are you to trying to keep that EBITDA number for next year above the $200-ish million that you guided for?
Yeah. Look, we're really looking to maintain profitability in the business at a significant level moving forward. So obviously, if we do a transaction that's going to impact EBITDA, we'll announce that as part of that transaction. But what we're not looking to do is buy a bunch of things and then go into a loss position. It's really looking for things that maintain the profile of the company, that leverage our experience. We have room in our P&L to do some additional things. And I think that that's something that investors would benefit from and that, frankly, our employees would benefit from as well.
Great. We have a couple of minutes left. Anything else you'd like to highlight, Blair?
No. I'd like to say just as we move into next year, we'll be guiding our financials in the February time frame. As I said, data will be coming out for 2680 in the second half of the year. So it's going to be a pretty dynamic year moving forward for us. And we're pretty excited to see what comes out of it.
Okay. Great. Well, thank you very much for your time. Appreciate it.
Thank you, Paul.