Good morning, and welcome to the Alkermes Plc Second Quarter 2017 Financial Results Call. My name is Brandon, and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session [Operator Instructions]. Please note this conference is being recorded. And I will now turn it over to Sandra Coombs, Senior Director of Investor Relations. Sandra, you may begin.

Thank you, Brandon. Welcome to the Alkermes Plc conference call to discuss our financial results for the quarter ended, June 30, 2017. With me today, are Richard Pops, our CEO; and Jim Frates, our CFO. Before we begin, I encourage everyone to go to the Investors section of alkermes.com to find our press release and related financial tables, including a reconciliation of the GAAP to non-GAAP financial measures that we'll discuss today. We believe the non-GAAP financial results in conjunction with the GAAP results better represent the ongoing economics of our business. Our discussions during this conference call will include forward-looking statements. Actual results could differ materially from these forward-looking statements. Please see our press release issued today, our most recent 10-Q and also our 10-K for the year ended December 31, 2016 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 as a result of new information or future results or developments. Today, Jim Frates will discuss our financial results and Richard Pops will provide a brief update on the company. After our remarks, we'll open the call for Q&A. Now, I'll turn the call over to Jim.

Thanks, Sandy. Good morning, everyone. We're happy to report strong second quarter results driven by the performance of our proprietary commercial products, VIVITROL and ARISTADA. During the second quarter, total revenues grew 12% to $218.8 million compared to the second quarter of 2016 driven by a 54% year-over-year increase in revenues from our proprietary commercial product portfolio. This growth demonstrates the shift in our revenue mix from reliance on our manufacturing and royalty business to a top line that is increasingly driven by VIVITROL and ARISTADA. Revenues from our proprietary commercial products accounted for 41% of our total revenues during the quarter compared to 29% in the second quarter of last year. These strong revenue results coupled with important investments in our advancing development pipeline and growth initiatives for VIVITROL and ARISTADA drove a GAAP net loss of $43 million and a non-GAAP net income of $1.2 million for the second quarter. Starting with VIVITROL, in the quarter net sales grew to $66.1 million compared to $47.2 million for the same period last year demonstrating growth of approximately 40%. Sequentially VIVITROL units grew 24% compared to the first quarter of 2017. This unit growth is somewhat steered in our sequential net sales growth of 13% as our second quarter was impacted by an unexpected $3 million one-time charge related to additional Ohio Medicaid units dating back to 2014 that the state recently submitted to us for payment. Based on the underlying growth trends through the second quarter and our expectations for growth for the remainder of the year, today we're reiterating our expectations for VIVITROL net sales in the range of $280 million to $300 million in 2017. Turning to ARISTADA, our second quarter net sales of $22.7 million came in ahead of expectations. During the quarter, we continued to…

That's great, thank you Jim. Good morning everyone. So we got lot of good things to talk about this morning, since our last earnings call we've made great progress in our development portfolio and I'd like to start there. In summary in just the past quarter, we've received FDA approval and launched the two month dose of ARISTADA, we announced the positive top line results of a pivotal antipsychotic efficacy study of ALKS 3831 and we had an important pre-NDA meeting with FDA on ALKS 5461. First, ALKS 5461 our fast track designated medicine for depression. Earlier this week, we passed a major milestone with the outcome of our pre-NDA meeting with FDA which resulted in an agreement on our NDA submission content and timing. Based on that meeting, we planned to begin the rolling submission of the NDA for ALKS 5461 in August. Encompassing data from more than 30 clinical studies and 140 non-clinical studies, the submission of the NDA for ALKS 5461 is a massive undertaking and we're on track to complete the submission by year end FDA will still need to review it and no regulatory review is without risk. With that said, we're pleased with the outcome of this week's interaction and we're looking forward to entering the review phase as we work to bring these important new medicines to patients. ALKS 5461 with its unique pharmacology targeting endogenous opioid system may provide distinct clinical benefits for patients. During the second quarter at the Society of Biological Psychiatry Medical Meeting, we presented data from the positive five pivotal study as well as a holistic overview of the consistent efficacy and safety profile of ALKS 5461 demonstrated throughout the entirety of the development program, if you've not had a chance to listen to this presentation, I encourage…

Thanks, Richard. Brandon, we'll now open the call for questions please.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And from JPMorgan, we have Cory Kasimov. Please go ahead.

Great, good morning guys, thanks for taking my questions. So first one to ask you about FDA feedback on 5461 from your pre-NDA meeting, I guess did they provide any thoughts or insights during the session on MADRS-6 for averaging and in terms of the rolling filing itself, is there anyone saying that it's going to be the big gauging factor here or is it just the overall size of the application, maybe I want to follow up.

Good morning, Cory, it's Rich. Yes we got helpful feedback in the interaction, so on those three things that folks have been asking us about MADRS-6 averaging SPCD all these things, we've got some clarity. So we now know that FDA intends to focus on MADRS-10 as the primary efficacy measure which was the efficacy measure that was collected across all our efficacy studies. For studies that evaluated MADRS-6, they will indicated they review the MADRS-6 data but their primary analysis will be on MADRS-10, those we collected MADRS-10 in all the studies as well, so that's fine. Regarding averaging as you know we believe that averaging is a more accurate way of capturing drug effect over time and it's central to our efficacy analysis, although we'll make all the data available for FDA to review in the NDA, so they can analyze the data however they choose to it, we didn't talked about averaging this meeting which we have discussed in the past and we expect to do review issue which is appropriate, SPCD studies are becoming the best practice in the development of new medicines which treat the major depressive disorder seen that broadly. That said, the 5461 NDA will be the first NDA based on SPCD efficacy analysis, so I think the FDA is old version of SPCD and potentially utility and psychiatric trials and we discussed with them for a number of years now. So I feel like we have got what we wanted out of that interaction, the rolling this submission is really it's just guided by the magnitude of submission for Part D in excess of 3 million page submission with hundreds of studies in it. So we'll because it's the fast track designated medicine that's what qualifies it for the rolling submission FDA will can choose to begin the review right away or wait it's really just gives them the ability to more flexibly schedule their work across the NDA as it presents itself.

Okay, great. And then I just want to quickly ask on your current commercial products, can you talk about where you are in terms of the manufacturing expansion plans for the pathology you mentioned in the past and still on those lines, how much manufacturing capacity did you launch ARISTADA with?

Hi Cory, it's Jim. I'll take that, good morning. So the manufacturing expansion for VIVITROL is going well, we'll exit the year with roughly $500 million of capacity and in the 2019 range with some stepwise expansions along the way we were preparing to be ready to produce north of $1 billion worth of VIVITROL in that timeframe. So we're on track with that and everything's going well and with ARISTADA, given that it's the LinkeRx technology, it's different from the microsphere technology, we're actually were able to launch with a capacity that's close to a $1 billion in net revenues. So we're comfortable with where we are with ARISTADA.

All right, terrific. I will stop there, thanks for taking the questions and greatly appreciate once again you guys keeping the comments tight on straight, so thanks.

Thanks Cory.

From Cowen, we have Chris Shibutani, please go ahead.

Yes, thanks very much. For VIVITROL, we drive our model based upon a couple of background, Netflix this year provided in the past, can you talk about pricing what gross to net has done for VIVITROL specifically, I know you gave it for the branded products, can you also talk about whether or not the CARA legislation seems to be having any impact in terms of number of prescribers and what the mix is kind of the Medicaid versus the private side? Thanks.

Hey Chris, good morning I'll take those. So VIVITROL gross to net for the quarter were 49% that was up from 44% the previous year, excuse me previous quarter. That was mainly driven by that $3 million charge I mentioned from the State of Ohio that went all the way back to 2014. So that was we look at that as a one-time thing, we don't expect that again. So VIVITROL gross to net remaining in 45% to 50% is pretty consistent with where we've been modeling, the number of prescribers is again growing nicely, we won't talk about specific targets but that's growing as we look at the 40% growth that we're seeing year-over-year with VIVITROL that's mainly driven by prescribers, prescriber growth. And we're seeing growth across all the different regions of the country which is also consistent and an ongoing theme you know interestingly the care funding or the 21 century cures funding that you're talking about really is being released just now in the beginning. In July with the federal government's fiscal year that money has been made available to the states starting in July so we're not necessarily banking on a pick up there, based on the growth that we've seen historically there is certainly is an opportunity though and we expect more programs to expand as the crisis sadly continues to get worse. But in a positive note more money is being able to has been provided to the states to be able to address the crisis so that, that investment ought to be coming in the second half of the year.

And mix of patients on the Medicaid versus the private insurance side.

Sorry. So we're about 50% Medicaid patients and you know we're seeing solid growth in both the Medicare side and the commercial side but you know growth continuing on the Medicaid side because that's where frankly most of the patients are as you know.

Great and then very quickly ALKS 3831 can you remind us where you are for timeline for telling us about metabolic study and Young Adult study. Thank you.

Hey, Chris. This is Richard. We'll get the metabolic data probably next quarter in the fall and we'll analyze that is as it comes in as you know this is large complicated study in patient study 28 days, healthy volunteers causing all kinds of metabolic profile data so we're excited to get that and will share that with you as we have analyzed.

Thanks.

From Credit Suisse we have Vamil Divan. Please go ahead.

Great, thanks for taking my question so, just one thing just on the FDA back on 5461 just a clarify meeting just happened I assume you haven't received a formal meeting minutes yet it's just giving confirm that's the case and any sort of things that maybe or a little more contentious that we should keep an eye out for besides just sort of moving forward with the submission. And then second just on health care reform I think you guys just keep in your product mix you know little more exposed to some of the debates around potential or you know if you want to place a lot of care would it right with Medicaid I'm just curious you know you simply putting on the DC fund. The latest you're hearing there and also maybe more generous how do you planning or are you kind of where you contingency plans of some of the changes to Medicaid do take place in terms of your strategy around, around VIVITROL.

Good morning, Vamil. The meeting just having this week so that we actually submit a very large briefing document in advance of the meeting. Six weeks or so in advance over a hundred page document that lays out the questions that we expect to cover during the meeting. We receive written FDA feedback in advance of the meeting and that actually becomes the foundation of the meeting minutes that will get formally at the end so, we have a good sense of the complete nature of the response so, we don't expect any more, any more drama around it we had a very, very good interaction and really wasn't anything that was contentious. So we're really in a strong position to begin the submission now with, with a lot of clarity and a lot of excitement going forward. On health care reform as you know today's an important day with the [indiscernible] probably starting later at the completion of the 20 hours of debate. Throughout all the major point of contention with the moderate Republicans in the Senate has been around Medicaid expansion and particularly providing funding for serious mental illness and opioid dependence. Senator Portman being in the front of that and the latest compromise drafts have $45 billion of specific money earmarked for opioid treatment and serious mental illness in the, in the draft so none of it, no one can predict where this is going to up at the end but you should just know that for governors and for people on the ground in the state deal with the opioid crisis. This is something that can continue have specially allocated funds. This is something that's become a political as well as a health care issue and you can see that Governor Christie's report which is, he is spearheading the president commission on opioids of the first interim report from that commission probably next week with a final report due in the fall. This is supposed to be a series of actions that the administration could take with administrative authority without legislation to begin to address this crisis more again directly and a foundational piece of that is going to be more aggressive treatment of opioid dependence we believe so, I think that sadly because of the extent of the epidemic we're going to continue to have a fairly advantage position for growing and improving access to our medicines.

Okay and again I just read an one follow up on VIVITROL systems then you in the past given sort of breakdown of sales from some of the core States that have driven that product uptake or first last two years. I mean this some of your comments that you stated today could you give a little more sense of how you're doing some of the newer states are seeing a little bit more interest more you know more funding just a little sense of the uptick beyond on those core states.

Yes, sure Vamil. We didn't mention the, the specific top five states because actually the theme is right on where we've seen in the past I would say that's where we are with VIVITROL. Things are progressing as we expected and going well so, the top five states still account for they are the same states although some of the ones you know five through 15 are beginning to grow as I mentioned to quarter, we're seeing that growth in all areas of the country which is heartening. And as part of our plans but those five key states which we've talked about before are you know are still the aligned share of our product and still growing you know close to a 100% and many of them so VIVITROL story this quarter is very much the same as we've seen the last few and you know we expected to continue to stay on that trajectory as we move into the second half of the year with the potential of the additional funding from 21 century cures and attention to the epidemic you know continuing to grow.

Okay, all right. Thanks so much.

You're welcome.

From Jefferies we have Biren Amin. Please go ahead.

Yep, thanks for taking my questions just maybe if I could start on 5461 in the FDA meeting. Was the ongoing Phase three the trial at all discussed during that meeting and if so are there any modifications you would make based on those discussions with the FDA. And then just on the rolling submission what parts of the application would be submitted the last towards the end of the year.

Good morning, Biren. The [indiscernible] was not discussed at all so, that was the topic and will, will in that study as you know were capturing multiple end points were interested in further elaborating the clinical profile using the instruments of 5461 in major depressive disorder so, all systems go on that for now. The rolling submission I actually can tell you right now went on again charted the rate limiting for the for the final bit of that but it's such a large, such a large submission I think we'll probably start with the CMC itself and probably end with the final safety cut that will do but that may have been flow over the next few months but we're hard at it and all the modules are in process now.

And then maybe just a follow up on 5461 does the company anticipate building out the marketing team now that the filing is on its way and how should we think about that relative the full year SG&A guidance.

Yes, Biren we're luckily you know we plan for this and when we guided to the beginning part of the year part of our increase in SG&A is actually that leadership team and I mentioned that my prepared remarks so, you'll see SG&A move up steadily through the year it's moved up a little bit in the first half of the year. And again those investments really are around I would say on the one hand ARISTADA and VIVITROL you know continued growth but also preparing for the launch for 5461 so with the NDA going in completely by the end of the year we are going to start preparing. But that's already in our guidance for the year.

Great thank you.

You're welcome.

From Leerink we have Paul Matteis online. Please go ahead.

Great, thank you so much for taking a few questions. I appreciate it. My first one is on 5461 now that the FDA it's going to be primarily looking at the MADRS-10 I'm wondering if you can talk about how you think the FDA could be conceptualizing the data you've shown in terms of statistics. So, specifically I think that MADRS-10 was a secondary endpoint in FORWARD-5 is historical significance but just the way that they do the change because it was a secondary endpoint but it's their primary focus on the data.

Hey Paul, it's not the recall in 207 or FORWARD-5 we had a higher goal primary analysis so, it began with, with MADRS-6 averaging then it moved to MADRS-10 averaging hierarchically and then it moved to the final end of study point. So that's why we're really quite indifferent to which they choose, we believe MADRS-6 is interesting from the point of use that it address core symptoms of mood which in the adjunctive settings with patients who are receiving SSRIs this is often unresolved part of the depression because the other medicines maybe addressing sleep and appetite and things like that. So we and clinicians will continue to believe that MADRS-6 is important but perfectly fine with analysis that focuses on MADRS-10.

Okay, okay thanks and if you don't mind one exhibit trial one on 8700 on VIVITROL I know there is recent times article that highlighted an ongoing study head-to-head study between VIVITROL and Suboxone, I guess I know this is not a company sponsored study, what is Alkermes's view of this study and what do you think the implications are in terms of how this the data could be interpreted by both primary users of the product or not really yet primary users of the product?

Well interesting, I think it states rely completely on their own experience. This is a very different part of medicine than its oncology or other places where people reacted to publish data. So with that as the most important observation I think that this study got is a bit of an unusual study because it actually excludes the patients that we primarily focus VIVITROL on that is people who want to be on VIVITROL, this is a study that is comparing the use of VIVITROL to buprenorphine in patients that are randomized being essentially in different between seen in the two different drugs. So it should be interesting, I'm not sure there is particularly key target patients who wants to undergo detoxification in these drugs treated with antagonist medication on a monthly basis, while that study is evidently complete and we will expect data by the end of the year.

Okay, thank you. And then one more thing Rich, you said in your prepared remarks that you're expecting preliminary head-to-head data between 8700 in TECFIDERA early next year. I guess two things is that earlier than you expected, I thought the data were coming later and would you say preliminary data what kind of cut is this in terms of sample size and duration of use? Thank you so much.

I think we're right on track for that early Q1, that first cut is about I think 100 some patients Sandy, I'm looking to you yes that is a decent sample size and in that we will be looking at these two instruments that we've been looking at for monitoring GI tolerability and we'll see the sensitivity and the power that we see the difference between the two and that will inform subsequent clinical trials that we can run to ultimately we have two differentiation to effect labeling.

Sorry was on mute, okay thank you very much.

You're welcome.

From Barclays, we have Douglas Tsao, please go ahead.

Hi good morning, thanks for taking the questions. Just turning to ARISTATA quickly, I was just curious in the second quarter, how much of the stocking benefit that you referenced was due to the two month and then just sort of anecdotally I know it's still early in terms of that the launch of the two month product but how alternatively or I guess based on the old experience, how much of the overall volume for ARISTATA do you expect to ultimately come from the two month or do you expect it to be sort of spread across all the different dose it ranges?

Yes good morning Doug, good question. I would say the stocking is probably roughly split equally between the new two month dose as well as just the regular extension you would see as sales grow. And it's not as if inventory is particularly high, it's just over three weeks in the channel. So we sort of expected to land between three and four weeks, it was just a little bit higher than where we sat at the end of the first quarter. So that's all pretty much in line and as expected. I think it's going to be hard to tell and you're right, we launched at the end of June, we're not fully a month in yet, so we haven't really seen all the regular reorders that one would expect with the two month product obviously because we're only halfway through the duration of the product. But we've seen nice uptick in hospitals in the different programs and actually a lot of nice uptick of the insurance plans adding two months to the formulary. So that is all going according to plan and I think the launch was very, very executed very well on our part. So we'll obviously give you more updates as we come through the year but finally, I think we said in the past the benefit of the two months is really for particular places that maybe who want to start and make that transaction easier to community care from hospital, but its really part of the whole rest of options that people with their start, you know, generally we still think that the largest number of patients they are going to start one month choices, but we are making ourselves more look more like the market leader which is in where you sustain with the number of choices and number of different doses and the number of different durations and that's what patients and physicians wants to see. So, this is very additive and we are looking for into updating you more as we go through the rest of the year.

And then, again this is a quick follow-up on our side and then you know, in terms of 2040 and 27 how much do you expect, is that going to be all in market demand or do you have an expectation there will some stocking benefit in the quarter as well?

No, we kind of make our estimates based on demand sales really, and then we will see a little fluctuation based on how inventory turns out. I mean, you know, this is also interesting quarter, you know, because, you know, 4 July we can happen right in the beginning part of July. So, you know, right at the end of the quarter in the beginning part of this following week. So, we anticipate that growth really being driven by demand not, you know, channel stock one way or the other.

And then, just, you know, in terms of VIVITROL I mean you referred, you know, you are still seeing incredibly robust growth from your sort of top five stakes. Just curious if that is, you know, coming from, you know, a range of different community programs or, you know, do you see sort of an expansion, you know, sort of within the states themselves?

I would say that, you know, again this quarter for VIVITROL is very consistent so we are seeing growth in state programs, you know, as Rich mentioned, you know, the number of pilot programs just continuing to increase over 500. And, yeah, we are also seeing the breadth and depth of prescribed is right in and this is, you know, VIVITROL as we talked about the breadth of our prescriber network making sure that we have appropriate reimbursement and making sure that from a policy perspective, you know, up and down the stadium for structure, they understand accommodate these VIVITROL. So, the growth is really happening in, you know, across all those three of those fronts, and its just growing faster and the states that have adopted it the most. And that's a good sign for us, because we think ultimately the other states are going to catch up because as Rich said, through the experience that people are seeing in the field is very positive.

I mean, I guess, was there any -- that those stakes are sort of broadening our programs or they just, you know, each of those programs are just processing more patients now?

Well, I mean, it's actually both because as we look at and this is where some of the care of funding comes in because that's allow the state to expand there are number of counties as they can support with the VIVITROL program or the number of drug of course they can support. So, you know, can't report on that yet, because that's in -- that's ahead of us not yet in the rearview mirror.

Right. Brendon, we have time for one more question.

It's from Evercore ISI, we have Umer Raffat. Please go ahead.

Hi, this is [indiscernible] for Umer; just a couple of questions. Number one, can you just over again exactly why it was rolling submission versus a normal submission basically what data will we get any new data in the back half of 2017 that will incorporate in your filings. Number two, in terms of combining forward three, forward four and forward five in the pre-NDA meeting did you get any feedback from the FDA on how they will be looking at the data. And finally, on your metabolic study reading our in August, do you guess, in terms of expectations see any changes that are like…big changes on blood glucose or instant concentration in healthy patients like what we should will be expecting for that trial? Thanks.

Good morning. The rolling submission is really more of a way to -- for work management in FDA, and so what you do with the fact that it need medicines because they have, they have a lot of things going in reviewing division, you simply provide modules of FDA on rolling basis. So, they can choose to review it at in your pacing. So, for us, you know, its more just putting together all the information, we need to put together completing the safety updates and getting all the integrated summary of safety and integrated summary of efficacy all of the studies pulled together to organize in what is a large, large submission. So, I think its more indicative of fact that we are ready to go now and we are start and we are moving to review [indiscernible] for the drug. The pooling analysis itself was something that just statistic, its just math. So, FDA will have they acknowledged that we have done the pooling analysis, they will look at it, and we will provide all the data to them to run the analysis however they want to chose to run the analysis and then that's the current team in the submission is how robust the data is across multiple and whatever methodologies. So, we want them to do that and we expect them to do that and no single studies is as positive with this program and that's what so interesting is that each of the different studies it provides a different length to view the safety and efficacy of the medicine through and then you can look at them in aggregate or on an individual basis and we think is all internally consistently in support of the approval of the medicine. But, the FDA had to make the determination, we have made determination but its, and now FDA will get the get data set and will be able to make their own determination. The metabolic study, you have heard me describe in the past is it's truly a translation on metal that is metal translation on medicine study, because we are seeing very clear evidence in animal species of changes in metabolic parameters. They required different types of instrumentation and methodologies and you do in the context of the depression study in patient, and that's why this is done in volunteers almost like lab and animals in-patient 28 days being potent product and measured essentially every day in certain faster condition. So, we actually don't know what we are doing to find, we are hopeful what we don't know is 28 days enough, do we have enough time, do we have asset sensitivity, how much variability. So, it's a lot of stuff that the real wet work of doing real experimentation. So, we are excited to find the data and we'll see what we see and we will share with you guys when we get it.

All right, great. I am sorry. Just a sneak in one more question, is there any preliminary comments on the DOJ Subpoena related to VIVITROL we are just seeing that your queue right now? Thank you.

No, we won't comment on that, and we are…we will cooperate with information request that's all we know.

All right. Great, thank you so much. Appreciate it.

Okay. Thanks for joining us on the call this morning. Please don't hesitate to reach out to us if you have any follow-up questions.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for joining. You may now disconnect.