Good morning and welcome to the Alkermes First Quarter 2018 Financial Results. 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. Please note this conference is being recorded. And I will now turn it over to Sandy Coombs, Co-Head of Investor Relations. Sandy, you may begin.

Good morning. Welcome to the Alkermes Plc conference call to discuss our financial results for the quarter ended March 31, 2018. With me today are Richard Pops, our CEO; Jim Robinson, our President and COO; 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 are useful in understanding the ongoing economics of our business. Our discussions during this conference call will include forward-looking statements. Actual results could differ materially from these forward-looking statements. Please see slide 2 of the accompanying presentation and our most recent annual and quarterly reports 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. Today, Richard will provide an update on the company, Jim Robinson will share his perspectives on our commercial portfolio, and Jim Frates will discuss our financial results. After our remarks, we'll open the call for Q&A. Now, I'll turn the call over to Richard.

Thank you, Sandy. Good morning, everybody. If it seems like we've been doing these calls more frequently lately, it's because we have. So, what I think I'll do before we get to the results for the quarter and a broader discussion about all the progress being made across the commercial portfolio, I'll start by providing some additional context surrounding the developments in the ALKS 5461 program over the last few weeks. As you all know, we're developing 5461 for the adjunctive treatment of major depressive disorder, and last week we announced that FDA had accepted our NDA based on our original filing date in January and the regulatory review is underway with a PDUFA date of January 31, 2019. Our belief on the outset has been that a rigorous and comprehensive review of the complete data set supporting the application, including safety, efficacy, and benefit-risk profile would support approval of 5461 and provide an important new medication for patients. The profile of the 5461 application has been raised within the agency. We believe that the review will proceed with scientific rigor and without bias in either direction. There will be questions from FDA during the review process on our study designs, our analyses and other things. This is expected and appropriate and we look forward to those interactions. Our confidence in the 5461 data package is unwavering and it's based on the foundation of data generated from the clinical development program of more than 30 clinical trials and more than 1,500 patients with MDD. Internally, our people coalesced and activated to address an unanticipated challenge. We arrived at the desired outcome and I couldn't be more proud of the team. Major depressive disorder is a serious condition and there have been no new FDA-approved pharmacologic approaches to the treatment of depression in more than 30 years. Patients and health care professionals deserve new options. So, before we get to the rest of the pipeline and the financials for the quarter, I'd like to introduce Jim Robinson, who joined Alkermes in March as our new President and Chief Operating Officer. Jim comes to us from Astellas, where he served as President of the Americas operations for North and South America. He brings extensive experience in establishing and managing global pharmaceutical operations, with particular experience leading successful commercial organizations. He's already made important contributions to our organization in his first two months on the job and his industry knowledge, proven leadership and strategic insights will be valuable assets as we continue to build our commercial portfolio. So, we're delighted to have Jim on board and I'm happy to introduce him to you and I'll turn it over to him now to share his perspectives on the commercial portfolio. Go ahead.

Thank you, Richard. Good morning, everyone. I'm very happy to be joining Alkermes at this exciting time of the company's evolution. I was drawn to this role for two very specific reasons. The first is the leadership team and the people at Alkermes, and the second is the magnitude of the opportunity in front of us, and that is to address the unmet needs of patients in our major disease areas and to realize the long-term value of these important medicines. One of my top priorities is to drive continued focus within the commercial organization on expanding opportunities for both VIVITROL and ARISTADA as well as our late-stage pipeline. With a deep pool of talent, we are building a commercial organization based on efficiency and effectiveness. Alkermes is uniquely positioned to be nimble and adapt real-time to the changing market environments. So, let's start with VIVITROL. It's a unique product that has an important role to play in addressing the nation's opioid epidemic. Net sales of VIVITROL during the first quarter were $62.7 million, driven by the underlining (sic) [underlying] (5:26) growth of over 21% year-over-year. Q1 sales did decline sequentially as we guided in February. However, they are in line with our expectations. While we're only four months into the year, we believe we're on track with our growth expectations for 2018. VIVITROL's market is just about as challenging a market that I've encountered in my career, but challenging markets provide an opportunity for innovation. Our primary focus with VIVITROL is to remove the obstacles to treatment and promote broad and seamless access for patients and we continue to engage and expand in the areas where we've been successful. And we're also expanding into additional areas as new policy, funding and clinical data provide opportunities to increase utilization of…

Thank you, Jim. Good morning, everyone. During the quarter, our first -our results reflected the solid year-over-year growth of our proprietary products and the continued strength of our base royalty and manufacturing business, as well as disciplined expense management. With the ALKS 5461 NDA now accepted, today we're updating our financial expectations to reflect the anticipated regulatory action by the PDUFA date in January 2019 rather than late 2018. Financially, this shift primarily impacts two items, the timing of the hiring of the ALKS 5461 sales force, which is a cash expense, and certain noncash share-based compensation. These two expenses will now move into 2019. Our complete financial expectations are outlined in our first quarter results press release issued this morning. Now, let me start with an overview of our key financial highlights. During the first quarter, we generated total revenues of $225.2 million and recorded a $14.2 million non-GAAP net loss. In the quarter, VIVITROL had net sales of $62.7 million compared to $58.5 million for the same period last year, demonstrating growth of approximately 7%. As Jim mentioned, underlying unit growth was stronger at approximately 21%. This unit growth was masked by the increase in our gross to net adjustments to approximately 50% during the quarter from 44% in Q1 2017, primarily driven by a higher percentage of Medicaid volume. While there may be some variability from quarter to quarter, we expect gross to net adjustments to be approximately 50% for 2018 due to the continued growth of the Medicaid business. As we've seen in the past, first quarter net sales of VIVITROL are down sequentially, impacted by deductible resets in our commercial plans that happened at the beginning of the year and inventory build during the preceding fourth quarter. The inventory build of approximately $5 million from…

That's great. Thank you, Jim. So, I'll finish by giving you a brief overview of our other pipeline candidates. I'll start with ALKS 3831, our novel, oral atypical antipsychotic for the treatment of schizophrenia. We designed 3831 to provide the antipsychotic efficacy of olanzapine, while addressing its associated weight and metabolic liabilities and we did this by extending olanzapine's spectrum of activity to include opioid receptor modulation. This morning, we announced the completion of enrollment in our second Phase III study, ENLIGHTEN-2, a six-month head-to-head study evaluating weight gain in patients receiving olanzapine or ALKS 3831. This keeps us on track to receive top line data from the study in the fourth quarter of 2018 and if positive, these data would complete the registration package, which is planned for submission in the first half of 2019. In parallel to the development program, our teams have been conducting important preclinical and clinical research to gain new insights on 3831's mechanism of action and particularly the role that samidorphan plays in mitigating the adverse metabolic effects of olanzapine, both acute and chronic. This research is revealing the unique pharmacology of ALKS 3831 and may provide distinct clinical benefits for patients with powerful antipsychotic efficacy and a differentiated weight and metabolic profile. These data are exciting and ready to be shared. We're preparing manuscripts for submission to peer-reviewed journals and in advance of that plan to share some of our findings with the financial community via an educational webcast. That presentation is being prepared and we'll announce the timing of that webcast in the next few weeks. Turning now to BIIB098, formerly known as ALKS 8700, our novel, oral monomethyl fumarate prodrug in Phase III developments in treatment of relapsing forms of multiple sclerosis, we have important progress to report regarding its efficacy,…

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

Thank you. We will now begin the question-and-answer session. And from Cowen, we have Chris Shibutani. Please go ahead. Chris Shibutani - Cowen & Co. LLC: Yes, good morning. Thanks for taking the question. Thanks for the update on the pipeline. For 4230 in particular, I wanted to ask you two things. When you say that we're further along would be the timing that you would think about doing the partnering, can you clarify when that would be, because you also talked about taking the expansion phase, not just monotherapy but in combination? So, how would that work trying to find a combination partner, i.e., PD-1 or other IO agent? And secondly for the subcu formulation, should we be thinking about that as having either any differentiated dosing schedule and/or efficacy? Thanks.

Perfect. Good morning, Chris. Yes. So, the 4230, I think the partnering sequencing will go as follows. Since we decided to accelerate the combination work into the expansion phase, there's a number of companies who would be interested in working with 4230 in combination with their particular IO agent. Even though some people believe these are generalizable phenomena, it's always better to have your own agent tested in combination with a new agent like 4230. So, we're having those discussions and an early partnership could be something where not a strategic business partnership but simply accessing somebody's IO agent and running a study together. And we have those discussions underway now. We can actually initiate the combination work without such a partnership and we probably will, but that's something we're evaluating right now. Once we generate data, because I think notwithstanding the immunological responses that we're seeing with 4230 right now, which are exciting and consistent with our hypothesis, the next phase is actually to see patient response, objective responses to tumor types of interest. I think that's when the program really builds its momentum. And we're going to be reluctant to enter into any type of strategic business partnership until we more fully review what the value of this molecule may be. With respect to the subcu, absolutely. In the animal studies, the subcu enables a much less frequent dosing regimen. And so, we'll be testing the tolerability and waveform of release of a subcu formulation, but the expectation, it would certainly be significantly more extended than once a day. Chris Shibutani - Cowen & Co. LLC: And if I could ask one other follow-up. Unquestionably, the goal here is to try and come up with a better safety profile than Proleukin. You used the word outpatient in particular when you were describing some of your next stages of development. Can you talk generally about what you're seeing from a safety standpoint with 4230? Thank you. Then I'll get in the queue.

Well, the reason I made that point, Chris, is because a number of investors, as there's been more and more interest in the 4230 program, have been obsessing on the fact that our regimen is once daily IV for five days and saying, well that's not a competitive regimen. And the point we want to make is that it's not the optimized regimen. It's where we started, so we could compare head-to-head to Proleukin, both in terms of tolerability as well as the pharmacodynamic response immunologically. But, there's a long way to go in dose optimization. So, there's also because our first clinical trial is being run as an inpatient study, I think there's a misperception that that's 4230's fate, is that it will be an inpatient medicine. And our belief is that it will ultimately end up being an outpatient medicine. Chris Shibutani - Cowen & Co. LLC: Okay. Thank you.

From JPMorgan, we have Cory Kasimov. Please go ahead.

Hi, guys. Thanks for taking my question. Hi, guys. Thanks for taking my question. This is Matthew (25:15) on for Cory. I was wondering if you can quantify the funding that has flowed from states into changing the treatment system. It's a little more for what you've seen so far in 2018. And then, regarding the additional 40 state programs that have been added since the last update, is this a good way to be thinking about the state programs coming online for the rest of 2018?

Hey, Matthew (25:38). So, this is Rich. I'll take it. So, there's an explicit amount of federal dollars that have been allocated via the 21st Century Cures and subsequent omnibus funding packages into the states and the first big bolus was that $1 billion that you heard about which came in two $500 million chunks in 2017 and 2018. Interestingly, our information tells us that of that first $500 million chunk, still quite a small fraction of it has made its way into treatment systems in states around the country. The methodology is the states apply for these grants, they get the grants, the money moves from the federal government to the state government and then it gets dispersed via the single state authority into various programs and the wheels of the bureaucracy move fairly slowly despite the fact that we have a national crisis. The second $500 million was just distributed last week, I believe. And so it's the next bolus of money moving into the system and we hope that the second bolus moves a bit faster than the first, although there's no indication that it necessarily will. So, from our point of view, it's inevitable that it will end up in the treatment system by statute, but the pacing of it is very difficult to model. And I think the rate of the growth of the programs should be looked at not just on a quarterly basis, but almost on an annual basis. We started with those programs a few years ago and they were zero and now we're approaching 700. I view them as a leading indicator of interest in the states of activating in new ways to treat the opioid crisis in their state. But they're very hard to correlate to projected VIVITROL sales, as we've learned over time.

Great. Thank you.

From Credit Suisse, we have Vamil Divan. Please go ahead. Vamil K. Divan - Credit Suisse Securities (USA) LLC: Hi, great. Thanks for taking the question. So, one on VIVITROL, sorry if I missed this in the prepared remarks, but just around the pricing dynamics in the quarter, (27:36) gross to net or any sort of shift from what you've seen over the last few quarters. And then second question I just have and I've asked this one before, Richard, because you do have a pretty good cash balance, I'm just curious if you have any updated thoughts in terms of leveraging the balance sheet a little bit more, whether it's to purchase assets or for whatever other reason, and just in general, or do feel you have pretty good capacity with everything you have going on right now. Thanks.

Okay, Jim, why don't you take the first one?

Sure. Thanks, Vamil. Good morning. Yeah, our gross to nets just for specifics, they were 50% for the quarter, last year as a whole in 2017 they were 46% on VIVITROL. So, there's been a slight increase. I think that can be explained as you look that quarterly. The first quarter is often one of our highest of the quarters, again, because of the commercial plans that reset the general percentage of Medicaid business is slightly higher typically in the first quarter. So, we were guiding and expecting a gross to net of roughly 50% for the year and that will fluctuate a little bit up and down quarter-to-quarter, but we're really right on track with VIVITROL. And again, that's not really being driven by price competition or price, but rather a mix of businesses, the Medicaid business in the various states begin to grow. Obviously, with Medicaid expansion and the opioid crisis in general, you would see a vast majority of patients who are suffering from opioid disorder are being covered by state programs and Medicaid in particular. So, that's about where we expected and pretty consistent with what we saw last year.

And with respect to the cash, I don't know if you heard in the prepared remarks, but we executed a really nice refinancing of the debt this last quarter, pushing out the maturity a couple of years and lowering the interest rate by 50 basis points. So, our cash position right now I think is very strong, but it's not excessive. So, we have really three identified uses of that cash as we sit here today. One is executing these launches that we're anticipating for 5461 and 3831. The second is our in-house pipeline, which some of that is visible to you, but some of it is not. We've been very productive and active on the research side within the company and you will see more about that as the year progresses. And then I think more targeted BDA (29:53) efforts as we look at licensing opportunities that present themselves from time to time. But I don't see a large size of strategic use of cash in a particular transaction. Vamil K. Divan - Credit Suisse Securities (USA) LLC: Okay. Thanks so much.

From Evercore ISI, we have Umer Raffat. Please go ahead.

Hi. Thanks so much for taking my question. I wanted to...

Umer, you have to speak up. We can't hear you.

Sorry. Can you hear me now?

There you go.

Okay, excellent. Sorry. I wanted to focus on 4230 and 5461, but in that order, if I may. So, on 4230, Richard, will your subcu be in Phase I in 2018 and can you basically fast track towards PD-1 combos with subcu or will it be more stepwise with that? And I also wanted to confirm I heard you right, the dose expansion phase of your IV, will that include PD-1 combos as well now? And is that something this year? I'm just trying to get a sense for how soon are you in PD-1 combos, either with subcu or with IV?

Yeah. So, you heard correctly, Umer. So, first of all on the subcu, we expect to be in the subcu IND phase this year in 2018, right towards the end of...

Towards the end of the year, yeah.

I believe we'll submit that. We're finishing the IND-enabling studies now. We'll submit the IND and just based on timing getting through that. But yes, it will be around the end of the year on the subcu. And we'll move as fast as we can move in that dosing cohort as well. But that won't be limiting for what we are doing on the expansion phase with the IV work. And yes, we now will be modifying the protocols and submitting to FDA to expand the ongoing study, the monotherapy study to include now an arm for PD-1 combos with the IV regimen.

Got it. And then if I may on 5461 as well. I noticed, initially when you guided to the early 2019 – when we spoke about this on last earnings call, there was certain SG&A expense modeled in, in preparation for the launch.

Correct.

And we obviously went through the RTF episode and the PDUFA was restored. So, I guess my question is, when you change the guidance for the year and push out the launch expenses, even though the PDUFA is the same, how should we think about that? And does it or does it not imply anything for how you're thinking about the odds of first cycle approval?

No, it's a good question. I'm glad you asked it because it actually has nothing to do with odds. It has to do simply with a decision we made in the original guidance, which was should we guide more conservatively toward the assumption of a priority review, which would have put the approval in the September/October timeframe and launch into the year, or should we guide more conservatively towards a standard review. So, in order to make the numbers as conservative as possible, we guided based on priority review, although as you'll recall at the time, it was not clear which we'd end up with, the standard or priority review. With the RTF excursion, we ended up back on the original filing date, but with the standard review, which puts it into January. So, the shift that you see in the SG&A is really just that, it's just a shift of that timing by the quarter.

Got it. Got it. Thank you.

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

Hi. Good morning. Thanks for taking the questions. Just in terms of VIVITROL, the starting point, how much of the growth are you seeing right now from the top five states versus states outside of the top five? Also for ARISTADA, you mentioned hiring a small sales force for hospitals. Just curious, when you think down the road, do you anticipate potentially using or deploying that sales force for other products, in particular maybe something like a 3831? And then just in terms of 4230, do you have a sense of the tumor types that you will be targeting in the dose expansion stage?

Thanks, Doug. It's Jim. I'll start with the VIVITROL question. We saw pretty balanced growth across the states with VIVITROL, some changes, but we typically see that region to region. Interestingly, the top five states, they remain the same. Last year, they were approximately 50% of our sales, this last quarter, so year-to-date, they were 46% of our total sales. So, we are starting to see the broader base grow, which is good and exactly what we like to see. On the hospital sales force, Jim, maybe you want to...

Thanks, Jim. Specific to the hospital sales force for ARISTADA first, we believe 35 is the right size for the sales force. We also believe that hospital sales forces can be leveraged for more than one product. So, as we prepare for 3831, we'll be looking to also see if we can further leverage the hospital sales force and in the future we will continue to look at it as an asset to be leveraged.

And on 4230, I don't think we've settled on the full range of tumor types. Obviously, there's proven efficacy and durable efficacy in various tumor types with IL-2 Proleukin, but there's also a fair amount of work going on clinically with these IL-2, IL-15 type agents. So, we're dealing with our clinical consultants and our sites, who have all kinds of interest in various approaches. So, we'll figure that out in the next several weeks.

And just as a quick follow-up, I mean, do you expect to be able to sort of share those details with us maybe with 2Q results?

I don't know. I hope so. I mean, we're trying to keep you guys as posted. As soon as we know things that are meaningful, we'd let you know. So, if it's ready to be talked about, we'll talk about it on the Q2 earnings call.

Okay, great. Thank you.

You're welcome.

From Jefferies, we have Biren Amin. Please go ahead.

Yeah. Thanks, guys, for taking my questions. Just on VIVITROL, have you guys seen any impact from the new launch from Indivior and SUBLOCADE?

Not yet, Biren. Good morning.

All right. And then I guess on 3831, ENLIGHTEN-2 data later this year, Richard, what can we expect in terms of weight change, given the Phase II was at the week 12 and this is 24-week data?

Well, I think the profile that we saw in the 300-patient randomized Phase II study is the profile we expect to replicate in the larger study. So, the defining characteristics of those curves, if you recall, Biren, was that in that first study, the patients on olanzapine were on olanzapine for the first 12 weeks of the study and then they were switched over to 3831 in the second three months of the study. In the first three months of the study for that group, you saw progressive weight gain, which then was arrested by the inclusion of the samidorphan in the second three months of the study. The other group in that study of course was just receiving 3831 and you saw weight gain in that group for the first three or four weeks, actually three weeks, and then it plateaued. Its slope did not numerically change from zero through the balance of the six-month study. So, we think that's the basic profile as we expect to replicate in this study as well.

Great. Thank you.

You're welcome. I'm sorry. Yeah, I just want to finish that thought because I want to make sure if it's not clear. In the study that we're running now as you referenced, instead of switching the patients on olanzapine after the first three months, they're just going to stay on that olanzapine for the full six-month period. So, that delta, that space between the two curves we would expect to widen with the passage of time.

Go ahead, Brandon.

From Goldman Sachs, we have Terence Flynn. Please go ahead. Terence Flynn - Goldman Sachs & Co. LLC: Hi. Thanks for taking the question. Rich, was just wondering on 4230 in terms of your prepared remarks, it was a little bit unclear to me if you guys have seen any single agent resistor responses yet. I know you talked some immunological markers. But have you seen actually any resist responses? And if so, can you give us any more color about that? Thanks.

No. We don't have any resist responses yet, Terence, and I'm not sure we would expect them because the way that this study works is that we enroll a small number of patients at each cohort and then we escalate. And for most of the time in the study, we've been sub-therapeutic doses. We're now in the action where, in the doses, where we're seeing real lymphocyte responses, but we've just not had that much duration of therapy and a whole mix of tumor types in this. And so, this is often, these are six or seventh line patients. We really want them to be immunocompetent, so we can see the lymphocyte expansion. But it's really why that expansion phase is so important. You get to the dose, we figure out the dose and then we begin to build the denominator in the tumor types of interest. Terence Flynn - Goldman Sachs & Co. LLC: Okay. And so, you're pushing up to higher doses now then in the expansion? I know you're doing the combo as well with PD-1, but you're also going to higher doses. Are you already in those higher doses or not yet?

Just to be clear, imagine we're stair-stepping up right now to try to find the best dose to then take into the expansion phase at that dose. And the news today is that, in the past, the model was we would do that as monotherapy. But now we're accelerating the inclusion of a PD-1 arm in that expansion phase as well. Does that make sense? Terence Flynn - Goldman Sachs & Co. LLC: Okay. But it's going to be a higher dose. I guess you're not at your top dose yet, I guess...

Correct. Terence Flynn - Goldman Sachs & Co. LLC: ...is what I'm trying to figure out.

Correct. Terence Flynn - Goldman Sachs & Co. LLC: Okay.

You're correct. We think we're getting there, but... Terence Flynn - Goldman Sachs & Co. LLC: Right.

...we haven't yet formally said okay, here's our dose to move into the expansion phase. And we hope to get there fairly soon. Terence Flynn - Goldman Sachs & Co. LLC: Okay. Thank you.

We have time for one more question.

And from Morgan Stanley, we have David Risinger. Please go ahead. David R. Risinger - Morgan Stanley & Co. LLC: Thanks.

David, your line is open. David R. Risinger - Morgan Stanley & Co. LLC: Yeah. Sorry about that. I was on mute. So, first of all, congrats, Jim, on your new role. I wanted to ask a couple of questions. First, Richard, could you just clarify the timing for the 50-patient metabolic study disclosure? Second, regarding 8700, when we should expect to see the top line results of your Phase III for that trial? And then third, could you provide a little bit more color, maybe you could sort of bookmark how infrequently we should expect the subcutaneous dosing of your IL-2 to shift to versus the daily infusion that was originally studied? Thanks so much.

Good morning, Dave. So, the metabolic study for 3831, we are going to have a webinar, a webcast, for you all. As I said in the earlier remarks, we're finishing those up, presentations, now, and we'll put out a notice about that webcast in the next few weeks, I would think. And meanwhile, we're preparing manuscripts for publication based on the metabolic work that we've been doing pre-clinically and ultimately clinically as well. So, that's a very rich area of science for us right now and we're quite excited to share that with you all. Just to be clear on the 8700, there is no Phase III efficacy study because of the 505(b)(2) filing strategy that we're employing. That's why the data we presented this week actually was so important because these are actually real efficacy results using MRI, looking at disease relapse rates and progression from the patients enrolled in the large open-label two-year safety study. So, it's true bona fide efficacy data, but we don't need it and there's not a Phase III study per se that we'll report out. So, from our perspective, the clinical requirements for submission of the NDA are complete and they comprised of a bridging study that looked at the PK exposures bridging back to TECFIDERA and then this two-year safety study, which we've completed the in-life phase sufficiently enough for the submission of the NDA. The subcu dosing on IL-2, the goal was for this to be over multiple days, if not weeks. So, we'll see. I don't want to guess yet, because we just need to look at the dose response in the human subjects and look at the tolerability as well. So, that's why we do the experiment, but in the animal work, it's quite encouraging. David R. Risinger - Morgan Stanley & Co. LLC: Great. Thank you very much.

You're welcome.

Well, thanks, everyone, for joining us on the call this morning. Please feel free to reach out to us at the company if you have any follow-up questions. Thank you.

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