Alkermes plc (ALKS) Q1 2024 Earnings Report, Transcript and Summary

Greetings, and welcome to the Alkermes First Quarter 2024 Financial Results Conference Call. My name is Maria, and I'll be the operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I'll now turn the call over to Sandra Coombs, Senior Vice President of Investor Relations and Corporate Affairs. Sandy, you may begin.

Good morning. Welcome to the Alkermes plc conference call to discuss our financial results and business update for the quarter ended March 31, 2024. With me today are Richard Pops, our CEO; Blair Jackson, our Chief Operating Officer; and Todd Nichols, our Chief Commercial Officer. During today's call, we will be referencing slides. These slides, along with our press release, related financial tables and reconciliations of the GAAP to non-GAAP financial measures that we'll discuss today are available on the Investors section of alkermes.com. We believe the non-GAAP financial results, in conjunction with the GAAP results, are useful in understanding the ongoing economics of our business. 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, our press release issued this morning and our most recent annual and quarterly reports filed with the SEC for important risk factors that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements. We undertake no obligation to update or revise the information provided on this call or in the accompanying presentation as a result of new information or future results or developments. After our prepared remarks, we'll open the call for Q&A. And now I'll turn the call over to Blair for a review of our quarterly financial results.

Thank you, Sandy. Over the past 2 years, we've been executing a plan to streamline our business and drive the growth of our proprietary products, our pipeline and our profitability. We entered 2024 as a pure-play neuroscience company with a top line driven by VIVITROL, ARISTADA and LYBALVI. Our 2024 financial expectations provided in February assumed Q1 seasonality, followed by growth in the second quarter and beyond. This continues to be our expectation. And today, we are reiterating our 2024 financial guidance. Our first quarter performance reflects continued year-over-year growth of our proprietary product portfolio net sales, investment in LYBALVI and advancement of the ALKS 2680 development program, as well as our ongoing focus on efficient management of our cost structure to drive profitability. We're in a strong financial position and confident in the growth opportunities ahead of us. For the first quarter, we generated total revenues of $350.4 million, driven by our proprietary product portfolio, which grew 9% year-over-year. This top line result also reflected the impact of a combined $10.2 million drawdown of inventory in the channel for our three proprietary products. Starting with VIVITROL. Net sales in the quarter were $97.7 million, driven primarily by the alcohol dependence indication, compared to $96.7 million in the same period last year. For the ARISTADA product family, net sales were $78.9 million for the first quarter compared to $80.1 million for the same period last year. For LYBALVI, consistent with the expectations we outlined in February, net sales during the quarter were fairly flat sequentially at $57 million, which represented 50% year-over-year growth. Gross to net adjustments were stable sequentially. Moving on to our manufacturing and royalty business. In the first quarter, we recorded manufacturing and royalty revenues of $116.8 million compared to $72.9 million for Q1 last year. Revenues from the long-acting INVEGA products were $62.7 million compared to $13.6 million for Q1 last year, reflecting the reinstatement of royalties related to these products in the second quarter of 2023. Revenues from VUMERITY were $31.3 million compared to $28.9 million for Q1 last year. Turning to expenses. Following the separation of our oncology business last year, expenses associated with the oncology business are considered discontinued operations. Today, I'll focus on results from continuing operations, as those results are more relevant to the financial profile of the company going forward. Our first quarter results reflect slightly elevated operating expenses, driven by the phasing of certain investments in clinical development, commercial support activities, labor-related costs and recognition of certain share-based compensation expenses. We expect the total operating expenses will decrease sequentially throughout the remaining quarters of the year. Cost of goods sold of $58.6 million were flat compared to $58.2 million for Q1 last year. R&D expenses were $67.6 million compared to $63.8 million for Q1 last year. This reflects focused investments in our neuroscience development programs, primarily related to the ALKS 2680 clinical program and support activities for our proprietary commercial products. We expect R&D expense to decrease by approximately $10 million in Q2, and then remain relatively steady at that level through the end of the year. SG&A expenses were $179.7 million, compared to $167.8 million for Q1 last year, primarily reflecting continued investment in the launch of LYBALVI . Looking ahead, we expect phased investments in selling and marketing initiatives to remain fairly consistent in the second quarter, followed by decreases in the second half of the year, reflecting the timing and mix of promotional activities. Within our noncash expenses across R&D and SG&A, we recorded $3.2 million and $6.2 million, respectively, of nonrecurring share-based compensation expenses during the first quarter related to the achievement of certain performance award criteria. We continue to focus on driving profitability, and during the first quarter, we delivered GAAP net income from continuing operations of $38.9 million. Non-GAAP net income from continuing operations of $76.2 million and EBITDA from continuing operations of $51.5 million, reflecting significantly enhanced profitability year-over-year, primarily driven by the growth of our proprietary commercial product portfolio, the separation of the oncology business completed during the fourth quarter of 2023 and our continued focus on operational efficiencies and disciplined expense management. Turning to our balance sheet. We ended the first quarter in a strong financial position with $807.8 million in cash and total investments and total debt outstanding of $290.1 million. Additionally, we expect to close the sale of our Athlone, Ireland manufacturing facility to Novo Nordisk within the next day or 2. In connection with the closing, Alkermes will receive a onetime cash payment of approximately $91 million. This transaction represents a significant element of our multiyear program to drive operational efficiency and further align our infrastructure and cost framework with the anticipated needs of our business. Taking a step back, our first quarter results were largely consistent with our expectations, and we believe provide a solid foundation for growth through the rest of the year. We expect top line growth to accelerate into the second quarter and are pleased with our trajectory thus far. We remain focused on disciplined management of our expenses and expect enhanced profitability as we move through the remaining quarters of the year. With that, I'll now hand the call to Todd.

Great, and thank you, Blair. Good morning, everyone. In the first quarter, net sales from our proprietary product portfolio grew 9% year-over-year, even with meaningful reductions in inventory in the channel for all three products. As we enter the second quarter, we are reiterating our 2024 financial expectations for each of our three proprietary products, LYBALVI, ARISTADA and VIVITROL. Starting with LYBALVI. During the first quarter, we generated net sales of $57 million, which was relatively flat sequentially compared to the fourth quarter, consistent with our expectations. Total prescriptions of approximately 49,600 during the quarter reflect underlying prescription growth of 6% sequentially and 50% year-over-year as well as continued expansion of prescriber breadth. This growth in demand was partially offset by a decrease in inventory in the channel equal to approximately $2.3 million. During the first quarter, LYBALVI continued to be the fastest-growing oil brand in the market on a prescription basis. Optimizing LYBALVI's access profile is an important element of our long-term growth strategy for the brand. Payer coverage across Medicare and Medicaid is established, with most patients having a pathway to access. For the commercial payer channel, our disciplined contracting strategy is playing out as we seek to maximize net sales of LYBALVI while expanding patient access. We recently enhanced the access profile for LYBALVI through selective contracting with a large pharmacy benefit manager to improve formulary positioning. This contracting is not expected to significantly impact our anticipated gross to net adjustments this year. We have additional opportunities to further enhance commercial payer access for patients and believe we are well positioned to continue to execute our strategy. For the full year, we continue to expect LYBALVI net sales in the range of $275 million to $295 million. Turning to the ARISTADA product family. Net sales in the first quarter were $78.9 million, reflecting pronounced seasonality in prescriptions and a substantial decrease of inventory in the channel, equal to approximately $3.6 million. We expect inventory levels to approach more normal levels in the second quarter. We continue to focus on highlighting ARISTADA's differentiated features in supporting clinical data. For the full year, we continue to expect ARISTADA net sales in the range of $340 million to $360 million. Moving to VIVITROL. Net sales in the first quarter were $97.7 million, reflecting normal seasonal trends in patient flow and a decrease of inventory in the channel equal to approximately $4.3 million. VIVITROL performance continues to be largely driven by the opportunity in the alcohol dependence indication, which currently accounts for approximately 75% of VIVITROL volume. Alcohol dependence is an important growth opportunity, and our team is energized about driving awareness and uptake in that underserved disease area. Looking ahead to the full year, we continue to expect VIVITROL net sales in the range of $410 million to $430 million. With the first quarter now behind us, we have a solid foundation for growth into the second quarter and the second half of the year. For all three of our products, inventory levels have started to rebound in recent weeks and prescription growth has been in line with our Q2 expectations. Our commercial team is focused on execution across our portfolio, and we look forward to sharing our progress. With that, I will pass the call to Richard.

Good. Thank you, Todd. Good morning, everybody. Alkermes is now a profitable pure-play neuroscience company with an advancing pipeline. This profile drives our objectives for 2024, commercial execution, advancing ALKS 2680 in the clinic and expanding our development pipeline. Blair and Todd covered the financial and commercial elements. I'm going to spend a few minutes on recent developments within our R&D pipeline, particularly ALKS 2680, our novel once-daily oral orexin 2 receptor agonist in development for narcolepsy. Starting with our progress in Narcolepsy Type 1 or NT1. Based on the biology, the core of the ALKS 2680 development program is in NT1, which is associated with an absence of significant deficiency in orexin levels. We are moving quickly in this indication. Last year, we had generated important proof-of-concept data in patients with NT1. Based on the compelling initial data from our first four patients, we made the decision to accelerate the Phase II planning. Toward year-end, the data from the full NT1 cohort of 10 patients reinforced our conviction in that decision. So we entered 2024 with work well underway to finalize the Phase II protocol, manufacture clinical supplies of the Phase II dose strength, interact with FDA and clinical study sites and investigators. These activities culminated in the recent initiation of Vibrance-1, a Phase II randomized placebo-controlled multinational study, which we announced last week. Vibrance-1 is planned to enroll approximately 80 subjects, randomized to single daily doses of either 4, 6 or 8 milligrams of ALKS 2680 or placebo over a 6-week double-blind treatment period. Data from this study will further characterize the safety and efficacy profile of ALKS 2680, utilizing well-established efficacy endpoints, including the maintenance of wakefulness test, or MWT, Epworth Sleepiness Scale and weekly cataplexy rates. We expect the study will take approximately 1 year to fully enroll. As we gain more experience with clinical site initiations and patient enrollment trends, we'll look to put a finer point on the time lines. As we launched this Phase II study, we're also looking forward to sharing additional data from the full NT1 cohort from the Phase Ib study with the clinical community at the Sleep 2024 meeting in June. These data will include safety, tolerability and MWT improvements for the full cohort of 10 patients, as well as our first presentation of improvements in subjective levels of sleepiness as measured by the Karolinska Sleepiness Scale, or KSS. Narcolepsy Type 2 or NT2 represents another significant potential opportunity for ALKS 2680. Last month, we announced positive top line data from the Phase Ib cohorts in NT2 and idiopathic hypersomnia. In these cohorts, participants were randomized in a 4-way crossover design in which each participant received single oral doses of 5, 12 and 25 milligrams of ALKS 2680 and placebo with washout periods between each treatment. ALKS 2680 was generally well tolerated and resulted in clinically meaningful and statistically significant improvements in wakefullness as measured by MWT sleep latency scores at all doses tested. We'll refer you to the press release we issued on April 9 for more details related to the safety, tolerability and efficacy observed in these cohorts in the Ib study. Importantly, the data showed dose-dependent effects in a pharmacodynamic profile that supports advancement into a planned Phase II study in NT2 patients, which will be known as Vibrance-2. We recently finalized our dose selection for that Phase II study and plan to move forward with 10, 14 and 18-milligram doses of ALKS 2680. ALKS 2680 is currently the only orexin-2 receptor agonist moving into later-stage clinical evaluation in Narcolepsy Type 2. We are working to initiate Vibrance-2 as quickly as possible, which we expect to be in the second half of 2024. The data from the Ib cohort validate our hypothesis and orexin agonist with appropriate pharmaceutical properties, has the potential to provide clinical benefits for both NT1 and NT2 patient populations. Importantly, the data also demonstrate that orexin-2 receptor agonist such as ALKS 2680 may have utility in treating other disorders in patients without known orexin deficiency. This represents a significant opportunity to evaluate expansion into broader disorders where excessive daytime sleepiness is a feature. To explore these opportunities, we continue to advance our portfolio of preclinical orexin 2 receptor agonist and recently nominated our next candidate, which is now in IND-enabling studies. We look forward to sharing additional details about our plans in this space later this year. So 4 months into the year, we're continuing to execute against our strategic priorities. Across the commercial business, the team is focused on delivering growth and strong financial performance. The 2680 development program is well on track and represents a potentially transformative opportunity for our business. And consistent with the capital allocation framework we unveiled earlier this year, we continue to evaluate opportunities for our external business development and to return capital to shareholders. We look forward to sharing our progress with you. And now with that, I'll turn it back to Sandy to run the Q&A.

Thanks, Rich. Maria, could you please poll the audience for questions?

[Operator Instructions] Our first question call comes from Charles Duncan with Cantor Fitzgerald.

Rich and team, congrats on a good quarter of progress. I had a couple of pipeline questions, and that is primarily around 2680. I think it was mentioned that R&D is coming down by $10 million. And despite all of the progress that you're making in the clinic, I'm trying to reconcile that. In addition, I had a question on Vibrance too, but I'll hold that for the first answer.

Charles, this is Blair. Thanks for the question. With regards to R&D, there's a couple of dynamics associated with this spend this year. One is that we have a number of nonrecurring expenses in the first quarter that apply to the R&D group that imply payroll taxes and things like share-based comp. Those won't recur. And so you would expect declines from that through the course of the year. And then also, there's a phasing of the payments associated with the programs. As you know, with ALKS 2680, we had a lot of activity in closing out our Phase Ib program in NT1 and NT2 and IH, and we had expenses associated with that. And then as we kick off the Phase II program, there's a lot of contractual dictated spend, and that leads to some phasing over the course of the year.

Charles, the only thing I'll add is, from a capital allocation perspective, 2680 gets what it needs. We're not throttling that back at all on the contrary. We're leaning into that one as aggressively as we can.

Sounds like that's the case. Regarding NT2, I'm not sure if I misheard it, but you're moving in -- or yes, Vibrance too, you're moving into NT2 specifically. Wondering if you have further thoughts on IH? Or is that perhaps an indication that is better suited for a second candidate? And can you provide any color on target product profile for that second candidate in terms of differentiating from 2680?

Yes, it's a great question. We're really pleased with those IH data and taking it in whole with the NT1, NT2, IH. You just see this very consistent profile for ALKS 2680 and driving wakefulness almost irrespective of the orexin tone in the underlying disease. But clearly, the most aggressive path to first approval is in narcolepsy, that indication. That's why we're prioritizing NT1, NT2, Vibrance-1, Vibrance-2 go as fast as we can. We are very interested in the IH population as a disease indication itself. But also as it reads on to other indications that might be characterized by excessive daytime sleepiness with orexin tone in the brain. It may be something we would do subsequent with 2680 or may be indeed something with an additional compound. I'm not going to give you specifics necessarily on the backup or the next-generation compounds because there are some competitive aspects to the profiles that we're working on. But I expect you'll hear more about that later this year.

Our next question comes from David Amsellem with Piper Sandler.

So one question on the orexin and one on LYBALVI. First on the orexin. There's a number of these agents that are kicking around, I think, recently, Harmony in-license, the preclinical stage, orexin 2 receptor agonist and there are certainly others. So Richard, maybe help us understand how you're thinking about the extent to which multiple orexins can coexist, maybe not just in narcolepsy, but as you're thinking about IH and other disorders where hypersomnia is a hallmark symptoms. So I just wanted to get your high-level thoughts there. And then secondly, on LYBALVI, also a high-level question as it relates to the availability of KarXT and the noise in the marketplace if you perceive any noise, and how you think that could impact new starts on LYBALVI as we move through 2025?

David, yes, I'll start on the orexin and give you a thought on LYBALVI too and then I'll ask Todd to give you his perspective from the front lines on it. But the one thing we've learned about this orexin space, if we've learned anything, is that each of these molecules is quite different when they get into the clinic. And we anticipated that. If you recall the slide that we've presented multiple times, which shows the various optimation parameters that one needs to consider when developing an oral small molecule GPCR agonist that gets into the brain. And what we saw from competitive programs is that the programs that the molecules, when they get into humans separate pretty distinctively. So to your question, it presupposes that there's multiple co-existing commercial orexin agonists that are similar in the profile. I just don't believe that's going to be the case. Now that will yield the data, of course. But I think that in our case, we're focused on developing a once daily, very well-tolerated orexin agonist that is approved for narcolepsy NT1, NT2. And so far, we're right on track for that. With respect to LYBALVI, I think the first approval for KarXT we expect will be in schizophrenia. And remember that LYBALVI is competing in a broader market, which is both schizophrenia and bipolar. And most of the big oral brands in this space need multiple indications to really drive sales across multiple patient populations. With that said, in the focus in schizophrenia, I think that our differentiating feature in schizophrenia is the efficacy of LYBALVI. And if physicians and patients are talking about efficacy, that's a good setup for LYBALVI. Todd, what's your thoughts?

Yes, I would agree with that. I think it's important to remember, we look at the category overall, is a very large category for LYBALVI in general, I'm speaking about, Bipolar 1 and schizophrenia. The dynamics of the market are switch. So this is a switch market. So you have to be able to compete within the switch market. KarXT coming out in the market, the first indication, as Rich said, is going to be schizophrenia. This is obviously a market that we know very well. But the core attribute has to be efficacy. And LYBALVI is very well positioned. Through all of our research, HCP continue to tell us that the core value proposition for LYBALVI is efficacy, but you have to have a good balance of tolerability and safety as well. So we believe LYBALVI is extremely well positioned now and in the future, even with new products coming into the marketplace.

Our next question comes from Joel Beatty with Baird.

First one is on 2680. With the recent NT2 IH data, do you think original disturbance is on or off target? And if it's on target, why hasn't it been seen with other agents such as with Takeda's?

Well, as I said earlier, I think that each of these agents is quite different. And this is, the 2680 is a very potent, very selective molecule in the clinic. Just to be clear, when we talk about visual disturbances, what we've observed in patients so far is very mild and very transient and very infrequent. We saw no visual disturbances in patients with NT1 at the doses tested. And we saw one event in patients with NT1 and one in patients with IH, both were mild, transient, self-limiting single occurrences. And just to understand what the parlance is with respect to adverse event characterization, when something is characterized as mild, it means that it's noticeable by the patient, but it's easily tolerated and doesn't impact their activities. So to the extent that it may be on target, we'll need more data across a wide dose range to know that for sure. But the profile is currently configured, we're very comfortable with.

Great. And then for LYBALVI, what's the outlook for the DTC campaign? Does it seem to be having the impact you were hoping for?

Yes, I'll take that one. I would say right now, we're really pleased with our DTC program. We've been executing the program over the last couple of quarters as planned. The lead indicators, the trends are positive, as we've discussed in the past, such as website visits, branded searches. In fact, they're significantly up year-over-year. And our early indicators, our early analysis shows that the overall program, which is TV and digital, is contributing to TRx growth. So our data actually shows that there is a meaningful contribution. So our plan is to continue to execute that program throughout the year.

Our next question comes from Akash Tewari with Jefferies.

This is Kathy on for Akash. I just have a couple of questions. So when tech presents full data at sleep in June, what data points are you looking for that will give you confidence that oxy won't need to be combined with sodium oxybate? And then also, what measurements do you think are the most important regarding sleep architecture? And then finally, for your NT2 study, will you require any driving restrictions?

Yes. I mean we look forward to seeing Takeda's presentation of data at Sleep in Houston in June because there, we should see the results of the randomized Phase II study in multiple doses dosed twice a day for that drug, both safety as well as efficacy. So we'll look forward to seeing what they're presenting. And obviously, we don't know at this point what they will present. With respect to the effect of the orexin agonist on sleep architecture, I think that's yet to be fully characterized. Perhaps we'll see some data in June that begin to describe that. But I think that the theory is that with a full day of wakefulness, that sleep should be consolidated and resume more normal architecture. But that needs to be proven in the lab. We'll be doing that in our Phase II study looking at polysomnography in our Phase II study for both Vibrance-1 and Vibrance-2. And no, there's no need for any driving restrictions in our study.

Our next question comes from Paul Matteis with Stifel.

This is James on for Paul. I just had one question around kind of like margins going forward and specifically on EBITDA. I guess as you look ahead and as some of these royalties kind of start to peel off, I guess, do you think the kind of -- the current kind of EBITDA margin profile is sustainable kind of in the midterm repeatable? I guess just kind of what do you see as kind of your goal kind of looking forward? And then I guess, in that context, how are you thinking about investing in R&D or looking at BD opportunities?

Maybe I'll start with the margins. This is Blair and then I'll ask Rich to give some context on our future strategy on BD and things. I think with regards to margins, as you said, we have a healthy margin going forward. We expect to generate significant cash for the business. We plan to continue to operate the business at a profitable level in this sort of range moving forward. And -- but still that allows for significant investment, both in the portfolio and in our commercial business, and that's our overall plan for the business. Rich, did you want to comment on all?

Just if you look at our long-range plan, what you see is you see, as Blair indicated, you see growing profitability with a growing top line. And so that accommodates both expansion in R&D spending as well as potential return to capital to shareholders, while maintaining significant profitability. So we think we can do all this at the same time, and it's all driven by that advancing top line.

Our next question comes from Umer Raffat, Evercore ISI.

Maybe a boring question and then a less boring question. So the boring question is Part D reform, how much of an impact do you expect on your top line and EPS into next year? And I realize this could be relevant. So I'd be curious. On the second one, on orexin, I just wanted to look into the potency a little more. I know you've shown some very good data previously. I think it was a world sleep where it was in [indiscernible]. And I'm assuming it was the IP1 assay where 2680 was about 10x more potent than the native orexin. But other data seems to also suggest native orexin underperforms in IP1 assays. So my question is, how does your potency look versus native orexin in a flipper assay?

Umer, those are both boring questions, I must say. So the Part D is interesting because we are one of the companies that qualifies for the phase-in. so that phase in, just to orient folks, as companies take on more liability in the catastrophic phase in Part D, that, for certain companies, for them to qualify that begins very gradual phase-in. So the exposure in 2025 is 1%. So it's a small, but it's a ramp toward a full participation in the program at the end of the decade or so. So it won't have much of an impact on 2025. I smiled about the potency because I mean, the potency that matters is actually the human potency. And I think that we're way ahead of everybody else in demonstrating the high potency of ALKS 2680 in the form of doses in 4, 6, 8, 10, 14 and 18 in NT1 and NT2 where we're driving meaningful efficacy. So we can talk all day about various in-vitro systems about both selectivity and potency, but I would say they're necessary, but absolutely insufficient to determine the actual potency as it relates as a medicine. So the answer could -- I don't actually know what our flipper values are because we're so far beyond that now in our development program, that it's essentially irrelevant at this point.

And sorry, Richard, just to clarify, on the Part D point that you made, you said there's a phase-in obviously. Whatever the max impact is by 2030, how much of the max is in by 2025? Is it 1/4 of that or 1/10 of that?

No, no. 2025 is 1%. Literally. It's the absolute value is a 1% participation in that catastrophe phase. But that's from 0. We have 0 right now. So we add 1% and then it scales over the next several years until it ultimately hits the full level. But it's a specific carve out for companies that are smaller companies with dependence on that Part D population as a significant source of income. And it was specifically oriented by the policymakers to make sure that companies like ours weren't devastated by going from 0 exposure in catastrophe to a 10% or 20% exposure in catastrophe.

Correct. So it's 1% of the max 20%, correct? It's not...

It's not 1% of 20%, it's 1% absolute.

1% absolute. Okay. Got it.

If you have to call us, Umer, because we can take you through that whole phase in if you want. I know you just did a briefing yesterday on it, which is smart. So make -- give us a ring and we can take you through the phase-in in particular, if you have any specific questions.

Our next question comes from Jason Gerberry with Bank of America.

I have got a couple of boring questions as well. Just...

I'll be the judge of that, Jason.

Yes. On your comments about the LYBALVI-PBM contract not impacting 2024. I'm just sort of curious about 2025-plus. Like directionally, how we think about these high 20% gross to nets? And does -- as you move towards a more commercial contracted basis, directionally how that looks? And then just a follow-up on the CAR T impact. Is your bipolar schizophrenia mix still 50-50? Or has that shifted more to bipolar? I know with the DTC, the thought was that you might activate more bipolar patients and that mix shift might actually even grow more towards bipolar.

Yes. Jason, this is Todd. I'll take that. For gross to net, we were really pleased that we were actually able to continue to execute on our strategy, our commercial contracting strategy. So as I said in the prepared remarks, we did enter into a new agreement with a really large PBM that we're really pleased with, to improve the formulary positioning to get more patient access to LYBALVI. Even with that, for 2024, we had a range of scenarios for gross to net plus net sales. So that fits perfectly in the range that we've outlined. For the full year, we still expect gross to net to be in that high 20s. Going into '25 and beyond, we're not guiding to '25 and beyond. But that may widen a little bit as we continue to execute our strategy and get more access for patients on formulary for commercial. In terms of the mix overall for schizophrenia and bipolar, the mix for TRx is still approximately 50% for schizophrenia and bipolar. We continue to see new patients start skew more towards Bipolar 1, which, again, was part of our strategy. So it's approaching a little north of 55% for new patient starts, and the volume growth overall, most of the volume growth we're seeing within the brand right now is coming from Bipolar 1. So we think that's a combination of, obviously, of growing breadth of prescribing and also the activation we have with patients right now.

Our next question comes Uy Ear with Mizuho Securities.

Just high level. Just curious, given the recent in-licensing by Harmony of an orexin 2 agonist, the deal was kind of strained. It just went from one company to the next. And curious to see what the landscape is like. Is an orexin molecule this rare? Or is it easily, I guess, can be generated? Maybe just provide a little color on the ability to have access to one of these molecules.

I think it's actually relatively rare. I think that's why people have had such difficulty coming up with chemical diversity in this space. These are -- as you've heard me say ad nauseam, these are complicated molecules to make because they have to be orally bioavailable yet cross the blood brain barrier. And once they've done that, they need to bind to a G-protein-coupled receptor as an agonist and so drive signaling in the brain and the target neurons of choice. And do all that with a pharmacokinetic profile, a concentration profile over time that's consistent with the normal sleep wake cycle. So people can wake up in the morning go sleep at night. So it's really quite difficult to do. And that's why I think even with this much of a commercial and medical promise, you see a very small number of products in the clinic right now. I contrast it to other systemically available kinase inhibitors or other types of drugs where there's a lot of chemical diversity that can be brought to bear. Even small molecules from -- ranging from small molecules to large molecules. But here, it's a really, really constricted area. So I think that one can find molecules to license. The question is, are they good molecules.

Just a follow-up on that. Could you maybe also speak a bit about the number of molecules that you perhaps have in-house, if you can share that? And what is it about your platform that gives you an advantage, I guess?

I think our platform derives from a sensibility from the outset when we began the medical chemistry about what the features that needed to be integrated rather than -- so you'll hear a lot of people talking about potency. Potency is absolutely important, but it's absolutely insufficient. So we began our screening and [ missile ] chemistry efforts based on optimizing across all of these different domains. And it yielded chemical structures that we think separate from others. But even in our patent suite, there's a limited number of structures that can confer all these attributes. So our patents are critical to the foundation of this. Within that patent suite, we can generate a multitude of compounds. And so our job preclinically is to try to stratify those into ones that map best on to the particular indications that we're thinking about pursuing. The core of the bull's eye is narcolepsy. This is the most simple embodiment of the idea of replacing a deficient neurotransmitter in disease NT1 with a small molecule analog. And that's why it's such a great place to start with this whole chemistry and this whole biology. But if we're indeed interrogating the circuitry in the brain that drives wakefulness, that has implications beyond narcolepsy.

Our next question comes from Jessica Fye with JPMorgan.

Curious, did you see any impact of volumes from the Change Health cyberattack in the first quarter? And separately on the orexin, I think for the recent NT2 and IH update, the description on AEs was just listing those that happened in more than one participant. And I think you'll have certain investors wondering about the rates that you saw, for example, if that just meant some of these occurred in only two patients versus more than that. So curious if there's any color you can provide there?

Todd, do you want to?

Yes, absolutely. Jessica. Yes, in terms of Change Healthcare, there were a lot of reports in the marketplace about operational issues for HCP offices, pharmacies and hospitals about processing claims. The biggest impact overall for the market overall was really with processing of co-pay cards, co-pay claims. We -- our three co-pay, our three brands with our co-pay cards had no impact. So we didn't see any impact at all from the Change Healthcare cyberattack.

And Jess, I don't have the AE table in front of me, but remember, we were very pleased with the AE profile in the NT2 IH cohort. And remember that across all the doses, it was observed to be generally well tolerated. The treatment-emergent adverse events assessed as related to study drug were mild transient resolved without treatment, no severe or serious AEs were reported and there are no AEs that led to study drug discontinuations. So we'll provide the full data tables when we present the data later this year, but the overall profile is just as I described.

Our next question comes from Marc Goodman with SVB Securities.

This is Rudy on the line for Marc. So you mentioned increased breadth for LYBALVI prescribers. So what percentage of these 20,000 prescribers have you reached? And what is your strategy to increase the breadth and depth in prescribers moving forward?

Yes, absolutely. I'll take that. So we -- with our sales force overall, we target about 22,000 prescribers. There's a really meaningful -- We've had a really meaningful impact there in terms of breadth and depth of prescribing. Overall, for the quarter, we see approximately 6,600 prescribers in Q1. That's a growth year-over-year of about 34%, which we're really encouraged with. And our -- a lot of this is just timing. We continue to bring on new prescribers every single week and every single month. And a lot of that is being driven by just the utility of the brand. We hear this consistently with HCPs that efficacy is the differentiator, and it provides broad utility across schizophrenia and Bipolar 1. Additionally, in some of our most recent market research, about 90% of HCPs report that they plan to continue to prescribe and increase prescribing over the next calendar year. So we think that's a very encouraging trend to continue to drive breadth but also depth of prescribing.

Our next question comes from Douglas Tsao with HC Wainwright.

Just first, on LYBALVI, I'm just curious, as a follow-up to that last question. I mean, do you see the bigger opportunity in improving the depth of prescribing with individual prescribers? Or is it just expanding the universe of writers?

Yes. Actually, it's both. But overall, we're still in the early stages, I would say, of our launch. And so prescriber breadth has obviously been primary job #1. Prescriber depth, every single quarter actually is improving. So we continue to see that. We've done a lot of research with that. And really, the key insight is once an HCP has a positive experience with LYBALVI, whether it's schizophrenia or bipolar they tend to expand utilization pretty rapidly. So we're really pleased with that. So the overall profile of the product for a broad population with schizophrenia bipolar will ultimately, over time, drive a lot of depth. But primarily job #1 right now is continuing to drive prescriber breadth. And we think we're still really early with that.

And just as a quick follow-up on that, just how long does that take in terms of sort of accruing that experience to accrue -- to feel confident in terms of -- for individual docs to start writing more?

Yes. Well, I think you got to think about that in the context of the market that we compete. Again, as I said earlier, this is for schizophrenia and bipolar patients, this is a switch market. So it's a dynamic switch market. Patients in this category will switch therapies about 5 to 8x. So it's rather dynamic. It's more dynamic and bipolar than schizophrenia. So it really depends upon the origination of the patient, the experience that they're having, but it would typically take a couple of months. So what we've seen is early on, once an HCP has a good experience with LYBALVI, whether it's schizophrenia or bipolar and they have a positive outcome from patients, they're very quickly to think about expanding utilization. So at large, I would say it's usually a couple of months really based upon the issue with the patient based upon the tolerability, their efficacy they're receiving on the current medication.

Maria, I think we have time for one more question.

Okay. Our last question then is from Chris Shibutani with Goldman Sachs.

This is Karishma on for Chris. So with the schizophrenia and bipolar markets, in particular with regard to long-acting injectables and the progress there, are your assets here, namely LYBALVI and ARISTADA, continuing to increase in terms of penetration in the U.S.? Or is this kind of plateauing at this point in time? And then I have a follow-up as well.

Yes, absolutely. So we continue to see encouraging trends overall with both products, and they're not plateauing at all. LYBALVI is still in the initial phase, obviously, our view on launching. And I think the to support that is LYBALVI for Q1 in year-over-year continues to be the fastest-growing branded product in the category, not only for TRx's but also for new patient starts. And that's a really important leading indicator right now. So it gives us a lot of confidence in the growth opportunity long term. And in terms of ARISTADA, ARISTADA has quite a bit of seasonality in the LAI category in Q1, but we've already seen encouraging trends going into Q2. And in fact, we see in Q2 already, we're seeing encouraging new patient starts. So the lifeblood of the brand is new patient starts and we don't see that slowing down for ARISTADA as well.

Okay. Great. And then one follow-up, if I could. What potential implications do you see to the legacy products when potential new mechanisms such as muscarinic agonists are introduced? Should they be successfully developed?

Yes, absolutely. So we watch the competitive landscape category really clearly. I think the key for us right now is the addressable market that we're focused on. We have a very clearly differentiated market that we're focused on for LYBALVI and also for ARISTADA. The value proposition for both brands resonates very well. For LYBALVI, it's about efficacy. LYBALVI is considered one of the most efficacious branded products in the category. And so that's a really, really strong position to be in at this point in launch. In terms of ARISTADA, you don't typically see a lot of market growth with LAIs coming into the category. They typically trade within the molecule themselves. HCP's continue to report to us that ARISTADA has a differentiated profile. It's the only LAI that you were able to initiate on day 1 for up to 2 months, and HCPs tell us that, that differentiates the brand. So we feel really confident regardless of new market entrants on how these products can compete now and into the future.

We have reached the end of our Q&A session. I would now like to turn the floor back over to Sandy Coombs for closing comments.

Thanks, Maria, and thank you, everyone, for joining us on the call this morning. Please don't hesitate to reach out to the company if you have any follow-up questions. Have a good day.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.