Alkermes plc (ALKS) Earnings Call Transcript & Summary

Hi. Good morning, everybody. Thanks for joining us. I'm Terence Flynn, the U.S. biopharma analyst here at Goldman Sachs, and we're very pleased to be hosting Alkermes today at our virtual conference. Today from the company, we have Richard Pops, who is Chairman and CEO of Alkermes. Rich, thanks so much for taking the time out of your day to join us today. I'll turn it over to you for some opening remarks, and then we'll launch into some Q&A.

Perfect. Great. Thanks. It's good to see you, Terence. And sorry, we're not all in person. But as we said before, this may be the last time we have to do it this way. So let's hope that's the case.

Fingers crossed.

I won't take long because I'd rather have the conversation, but I just -- I'll ask you all to take a look at what's been happening in Alkermes over the last several months. It's been a really productive period of time even in the midst of a complicated national international environment, we were incredibly productive during the pandemic, and it's nice to see that aspect of it hopefully drawing to a close, but it's worth noting all the accomplishments of the company during that period of time. And I think the net result of it is, as we move into the second half of the year, we're feeling like the company is regaining significant momentum that admittedly we had lost for a certain period of time. But I'm really pleased with the 3 major areas of the business that we've been focused on. Those being, number one, our commercial business, which was impacted by COVID, but we, I think, demonstrate a remarkable resiliency in our VIVITROL and ARISTADA business. And indeed we're seeing those businesses regain their growth coming out of the shutdown and the more cloistered environment of the pandemic. And that commercial business is going to be augmented now with the approval of LYBALVI, which we'll talk about, which we're really excited about, about the label, about the positioning in the marketplace and how it synergizes with what else we have in the commercial portfolio. So if priority number one was protecting and building and growing our commercial business, I think we're doing a good job there. Second priority was the pipeline, the R&D productivity. LYBALVI being an example of that, but also the work we're doing with nemvaleukin on the immuno-oncology side, I think, is becoming clear. And we had an important presentation last week at ASCO that's available on the web. If you didn't see that last Friday afternoon late. But I think it provided a comprehensive view of where that program is now as the data accumulated in multiple tumor types and in combination and in as monotherapy. And then the third area of the business, we put an intense amount of work into over the last couple of years has been the business efficiency itself. R&D efficiency, commercial efficiency, structural efficiency, governance, Board, all that stuff that prepares us for this next wave of profitable growth. And so I think as we move into the second half of the year, for me, the highlights seem to be approval of LYBALVI preparing for that launch. The commercial business, reestablishing its footing and growth. And surprisingly, perhaps, VUMERITY, which is our collaboration with Biogen, which during COVID in its launch, it was hard to gauge whether it was going to get traction. We always believe deeply in this medicine as an MS medicine. But I think the data we're bearing out now in the real-world that it is a differentiated product. And you've seen simply through the script trends that it's taking off now. And I think it's a really important contributor to the profitability and the growth of the company going forward. So fingers crossed, and we're always -- we've been through a lot of things. So we're never immune to the risks that characterize this business, but we're feeling very good about where the company is. And if Sandy were on she would ask me to give a forward-looking statement here, where I say we're -- in our conversation, we will make forward-looking statements, I'm sure, Terence. And we always ask folks to take a look at the risk factors that we described in our filings. So I'll turn it over to you to lead the discussion.

Okay. Well, thanks so much, Rich. Really appreciate the comments and congrats on all the progress. I guess just on the heels of ASCO here, obviously, you touched on this a little bit, but the nemvaleukin data, we saw some updates here on the ARTISTRY program. Maybe just remind us about how you think about the profile of nemvaleukin relative to some of the other IL-2 drugs. Including some of the earlier stage assets. And what really struck you when you saw that -- the updated data for the first time?

Yes. I think this is worthy of some research by folks who have only a superficial understanding of this program. A number of people a year or so ago would have said, well, Alkermes is known as a CNS company, what are they doing in the immuno-oncology space. But remember that what got us into the space was our capabilities to engineer proteins. And the hypothesis on this IL-2 variant has always been very straightforward. And in fact, we feel like it may be the most economical, the most parsimonious construct to target that intermediate affinity IL-2 receptor. That was all theory, and that theory is being replaced by data now. And that, to me, that's the primary takeaway from the ASCO data set, and that was the focus of the call on Friday, which is I don't think there is another IL-2 variant that has accumulated this level of data as monotherapy, showing monotherapy efficacy in the canonical IL-2 responsive tumor types in combination with pembrolizumab in other tumor types. But importantly, not just in combos where pembro is approved, but in combos where pembro has failed, patients have progressed or in combos where pembro is not approved. In contrast to PROLEUKIN, IL-2 originally developed 20-plus years ago, whenever it was, it's a different world now. So you look at the future of nemvaleukin, I believe, most completely will be elaborated in combination with other agents. That's the promise of these IL-2 variance is that if you -- the biology is well validated. If you talk to thought leaders, people get the fact that IL-2 is an efficacious agent. It's been very difficult to harness because of the toxicities. So it's clear that we have -- in the clinic now, we've demonstrated a tolerability profile that is quite acceptable. And we've recapitulated the efficacy as monotherapy and in combination. I think there's a long way for this drug to go. And I think that the most -- that's why it's worth looking at these data increments as we provide them. At our Investor Day in March, we focused mostly on the monotherapy responses in melanoma and in platinum-resistant ovarian cancer. The ASCO data set actually provided updated data there, but also gave a sense of the breadth of tumor types and settings where we're seeing responses and efficacy. So I continue to believe that the ultimate medical and commercial value of the drug will be most realized in collaboration, one or more, with people to exploit all these different indications and combinations and lines of therapy. But from our perspective, the program is advancing as we would have hoped it to.

Okay. I guess, maybe just give us a little bit of a more detailed reminder on the pivotal program. You guys talked about mucosal melanoma, platinum-resistant ovarian cancer is kind of your 2 lead indications there. What are kind of the gating steps to getting those underway? And then how are you thinking about the pace of enrollment in these studies, given what you're hearing from investigators here, post-ASCO?

So first, the strategy and the tactics behind it because what I just said, obviously, implies that you could be testing this in multiple combinations, in multiple lines of therapy, in multiple tumor types. That, of course, is a path to unlimited spending. So on our own pre collaboration, we focus. So we -- if you think at the beginning of the program was -- the first step was dose identification, recapitulating the pharmacodynamics of IL-2 the second stage of the program was signal seeking across multiple tumor types. Third stage we're in right now is coning down our own for approval. What our team calls land and expand. How do we land, where we're going to land is on monotherapy and mucosal, high unmet medical needs, small patient population, but a pretty accelerated path to approval. And then platinum resistant ovarian, a bigger indication, in combination with pembro, another serious unmet need where we're seeing real signals of activity. So those 2 them are not chosen to represent. This is the extent of the opportunity set, they are the leading edge of the wedge. Mucosal melanoma, what we call ARTISTRY-6, that study is up and running now. We don't have a sense of the enrollment rates. We're going to -- it's going to be a global study. We'll update more, Terence, as we get some traction as we go. What we're going to call ARTISTRY-7 most likely, which is the PROC study. That's being done in collaboration with Merck. And we'll probably launch that in the next couple of months. And once again, as we finish the dimensions of that, run that through FDA, we'll give you a better indication of the timing of that. It will be a bigger study than the melanoma study by necessity, but both of these could serve as the basis for registrational activities.

Okay. Great. And what -- and just remind us, the control arms in these studies, what you guys are using or how you're thinking about that?

We haven't settled and disclose yet what we're going to go on the PROC side on the mucosal melanoma. There really is no standard for cure there.

Okay. And so then do you have an agreement from the FDA? I'm assuming, yes, on the mucosal melanoma in terms of kind of like your -- the bar for success in terms of efficacy or DOR, do you feel confident all about that?

Yes, we do. I would, if I knew it off hand, I don't want to be wrong. So we can follow-up on that. Yes.

Okay. No problem. All right. Great. And then, again, you talked about this a little bit, but then where are you in terms of these partnership collaboration discussions? You mentioned you could go in a lot of different directions here with this asset. You have the collaboration with Merck for PROC. But again, I'm assuming you would like ideally something broader to help parallel process some of these other tumor types. So where do those discussions stand? And what are kind of the next milestones or gating items?

The way we view it is that we have the operational and financial capacity to advance this program along these lines with the focus that I just described. So it's important that people understand, we're not looking for a partnership to help us develop the drug to its approval. We can do that on our own. But it gives us the flexibility to look at these business collaborations strictly as that. We're not interested in going to part trying to convince that the nemvaleukin is an active agent. We'll do that on our own with our own data. And then we can focus the discussions on what should we do together, what's the logic. So we know all the players that I think would be relevant in these discussions. We're beginning those discussions now, but we'll -- these will it's very difficult to predict the timeline. I'd say only semi facetiously that it reminds me a bit of the deal we did with Biogen on VUMERITY, where we knew for a long time that Biogen would be a very logical partner for VUMERITY. We knew that long before Biogen knew that because they weren't convinced yet that as the data accumulated that it was going to differentiate from TECFIDERA. We had a strong sense that it would. And ultimately, the data became clear enough where it led to the transaction on the terms that we wanted to do. And that's proven to be a good -- that patience and that prove to be valuable.

Yes. Can you help us maybe think about the level of external excitement? Obviously, you guys are really excited about this program internally. But are you seeing the same level of excitement and engagement from external partners? And then what would the ideal structure look like if you could have everything you want, recognize it's always a negotiation. But again, if you could have an ideal structure, what would that look like?

It's interesting because this IL-2 space was, I think people were a little bit jaundiced because there are other players in it who had all kinds of promise and that there's expectations were diminished. And it's been very -- so I think as we came into it, I think that the level of excitement was actually -- I characterize it more as level skepticism but what's so interesting to us is that each of these various IL-2 variants, and there are a few -- very few of them actually have much clinical data, but the ones that are accumulating clinical data. They're segregating into their own lanes. They're very different, and they make sense structurally. If you look at just the biology they makes sense. Some of them are deliberately introducing new functionality into them. Others are forms of IL-2 that degrade into IL-2 or require metabolic conversion dot, dot, dot. Whereas -- so anyway, the drugs are very different. And the clinical data are bearing that out. And that's why it's so important for us when you -- when we ask people to look at our data, monotherapy efficacy, check, desired cellular expansion of IL-2 in a dose-dependent fashion in the periphery, check, combination efficacy in unapproved tumor types with pembro, check, and it's all coming together. So long-winded answer to a simple question, the structure we would look for is, a, to defease or help support R&D spending, so we can actually spend more into tumor types and combinations that make sense scientifically. And b, expand the geographic footprint because unlike some of our CNS portfolio, which is really U.S. focused, these oncology drugs, these are global drugs. In fact, some of the indications are more regionally specific as well. and then C would be probably regulatory and commercial experience that can augment hours. We actually have quite a bit of oncology development experience in the company. We have 0 oncology commercial experience now. And it's not clear, we need to build it or whether we should, but those are the types of discussions that we'll have with potential partners.

Okay. And would you be willing, like let's assume the -- if the conversations just take a more extended period of time, would you be willing to market for these 2 indications, solo, so PROC and melanoma, do you think you could handle that as a commercial organization?

I do. I think we'll probably -- I would be surprised if we're not in some type of commercial configuration prior to that. Because we've got some time before that's going to happen.

Right. Okay. Okay. Great. Maybe we'll move on to LYBALVI. Congratulations on the approval. I know it's a big, big milestone for you guys. Another product here in the bag on your CNS side. Maybe just, again, help us think about where the label came in versus your expectations? And then what are the next items that you guys are focused on as a management team here into the launch? As I know it's a launch, later this year, but what are the kind of gating items?

Well, we're thrilled with the approval for a number of reasons. One is just the actual approval itself. It's not easy to get drugs approved in this environment when FDA has limited ability to conduct pre-approval inspections. So I think our strategy of responding to the records request really intensely in a collaborative, interactive way led to the outcome on June 1 that we had hoped for. So that was really great work by our teams. And it's where our deep manufacturing experience had actually came in handy because that's not a contract site. That's our site in Ohio, it's been inspected by the FDA many times for our injectable products. And so we can leverage FDA's understanding of our quality systems and the way we operate to lead the approval. The product itself, the label was what we had expected and hoped for. And I know there was some skepticism on the Street following, even the advisory committee meeting, would we get what we hope for as a platform for promotion into the label? And there are 3 major variables. Number one, when we get comparative weight data to olanzapine in the label. We filed under 505(b)(2). So strictly, you would typically expect to see basically olanzapine's label. But if you run a red line of our label versus olanzapine's label, you'll see that we have data from ENLIGHTEN-1, our efficacy study, comparative to placebo and olanzapine. And we have data from ENLIGHTEN-2 which is the direct head-to-head comparison longitudinally of our weight gain versus olanzapine. And then the third question was the better rounds. And we never expect rounds and we don't have. So we have we have everything in the promotional platform that we need to be able to convey to physicians and patients for the benefit of the medicine, which is the reason we developed in the first place, obviously, is to unleash or reestablish the ability to use olanzapine in the maintenance setting in a market where its efficacy is already well established. 20% of patients with schizophrenia are getting prescriptions for olanzapine, notwithstanding its metabolic liabilities. So now there's an offering, FDA-approved, that has addressed the weight mitigation issues that are so central to unlocking the use of olanzapine. So it's a really important drug for us. And then -- and I guess the other piece of it is that it really is the first demonstration of the leverage in the commercial model that we've been seeking to build over time because the core of the launch activity is driven by the presence we already have in the field. So in many ways, the launch has already begun. The data that we have FDA approve, we have a label. We can begin interacting with key thought leaders. Our medical science liaisons, our medical affairs people are in the field every day. We're dealing with payers. We're dealing with thought leaders. We're dealing with building awareness of the product and with the indications. So when a commercial product becomes available in the channel in the fourth quarter, we're going to be really ready to go.

Okay. Okay. Great. And maybe just on the -- that payer landscape discussion. I mean maybe any flavor you can give us of how those conversations have gone now that you have a label out there? I know it's still early days. But how is that conversation going? And again, I think you're still waiting to disclose pricing. But maybe just walk us through some of the kind of inputs that you're thinking of or considering as you think about making that final pricing decision?

I don't think the pricing decision is particularly dramatic. I think we'll end up pricing this drug in line with other branded agents. And that's direct -- directly from feedback from payers. There's a generic aspect of this market. There's a branded aspect of this market. And to -- we get the question all the time, well, aren't you concerned because this is a generic market. The fact is, it's always been a -- we've known that forever. And we're in the market every day. No single patient has ever gotten RISPERDAL CONSTA or ABILIFY MAINTENA or INVEGA SUSTENNA, or our drug who hasn't failed multiple generic medicines. That's a statement of the obvious. What's also a statement of the obvious, which is unfortunate is that these patients fail repeatedly on medicines. So there are 70,000 switches a month that occur with a typical antipsychotic, 70,000 a month. 15,000 of those each month are to branded agents. So there is an ongoing flux, ongoing churn that's driven by the need for better medicines for patients. So when we come into the market with a product, its primary offering is efficacy and its efficacy built off of a foundation of knowledge and clinical experience that they've known based on olanzapine. It's very firm footing for us to be able to move into. So the fact that there is generic utilization is table stakes. That's to be expected. And we expect in the first year, there'll be better impediments being put up to formulary access and all the usual tricks that people play, particularly in stigmatized patient populations like patients with schizophrenia. But those can all be overcome, and you work your way through it. And on the other side of that bridge, is a huge amount of patient need and a lot of churn in the marketplace.

Okay. Great. And I guess then maybe talk to us a little bit about how you're going to leverage your ARISTADA sales force. And then as you think about building from there, what are the inputs that you're waiting on to see before maybe making further investments on the sales force side?

Yes. Well, the ARISTADA sales force is currently calling on about 60% of the target audience for the LYBALVI launch. So that's terrific. They're -- in the wake of COVID, aspects of telemedicine, telepsychiatry, are going to persist. So we actually believe we're going to augment our field force with some virtual interactions, some under contract with contract providers to access some of those physicians that we don't call on ourselves and often are in treatment systems that don't allow reps in. So that's an interesting sleeve of capabilities that we're going to add that's really measurable as well. You can you know what you spend on it, you know what you're getting back from it. We're going to add about 50 reps, around the launch, to go from calling on that 60% of the targets to about 80% of the targets. And then as the country opens up and as demand builds, we'll see about whether we stage anymore. But I think our feeling is that at that level, it will be really well positioned. And it's interesting because if you can trans that to where we were a couple of years ago, we thought we would have added 200 people at the launch. But it's just that much has changed with telepsychiatry and also just our own precision and targeting where we're going to go with the drug.

Yes. And where does your sales force stand now in terms of size versus maybe some of your peers in the CNS space? When you think about all in ARISTADA sales force plus those additional 50 reps? I mean how you stack up versus these?

We'll stack great. We'll have as much voices as anybody. And again, every indication is different. And we're talking about in the LAIs and in the branded space for going after this. Now the x factor, I will say, Terence, is bipolar because bipolar is a big indication. And olanzapine is approved in that indication, as are we. It's not as used there because the weight -- weight issues for patients by far are more sensitive to those weight issues. It's a bigger universe of docs to call in. And I think that's when we'll really watch as we may build more capability into that as that gets traction.

Okay. And maybe just remind us, like, so what's the mix if you look at olanzapine right now in terms of scripts for schizophrenia versus bipolar approximately?

I don't know the ratio, but I know that the new -- in schizophrenia, about 22% of scripts are for olanzapine, it's about 11% in bipolar.

Okay. Okay. Great. Okay. I think that the next one, obviously, that's top of mind here for folks is just the recovery. And again, you touched on this a little bit in your prepared remarks. But I would just love to hear your perspective in terms of what you're seeing out there, maybe May versus April in terms of the trends on your business and kind of your key therapeutic areas. Again, it seems like some of the commentary we've heard from others is things tracking in line to maybe slightly ahead. But would love to kind of mark-to-market from you guys in terms of what you're seeing kind of real-time out there?

Yes. Hopefully, that's helpful to your investors just to triangulate these various perspectives. I can tell you, I met face-to-face with our VIVITROL marketing team for the first time in a year, yesterday. It's awesome to see everybody together without masks in one room. One of the leading indicators that we use is the percentage of our reps calls that are made to doctors in person. And I think at the nadir, it was approaching 0. But I think for a while there, it was in the 30% range. I think between April and May, we probably moved from the 50% to 60% range up to probably closer to 2/3, 3 quarters now. So it's definitely falling out there.

Yes. Great. And then so again, I guess that you feel pretty good about your guidance. I know you and others are comparing for you to kind of a second half more full reopen. So still pretty comfortable with that dynamic here, given what you're seeing?

I mean we are. I mean I worry all the time about another leg of this pandemic. I know we all do. But I think the forces that are driving reopening are almost inevitable. You guys are going back to work next week, right? We're opening up -- I'm in the office today. I think that's a general condition around the country. And so hopefully, we'll avoid a tough fall in keeping the ignition going.

Yes, fingers crossed. What -- and again, maybe just another one on the pandemic here. And again, you touched on this a little bit, but maybe it's kind of two-pronged, as first, there's the learnings from the pandemic in terms of this virtual environment and maybe leveraging some of that on the forward on the sales side, which, again, it sounds like you feel pretty good about some of those potential improvements you can make there. So maybe you could elaborate a little bit on that. But then maybe on the virtual R&D side, were there any learnings coming out of this that you can leverage there to maybe improve efficiencies on kind of the clinical side of things and either maybe its timelines or cost or remote monitoring.

I mean the commercial side is clearly a place where we had to adapt immediately. And some of those adaptations are going to be sticky because they just make sense. They're just so much more efficient to run meetings in certain ways to interact with certain health care providers in certain ways. Those are pretty obvious. But they translate into more profitability as we model the business, sooner profitability, which is encouraging. R&D side is, I think, is less clear. I'm incredibly proud of -- we run 2 GMP manufacturing sites, one in Ireland, one in Ohio. We have a major lab here in Waltham, and we are to be able to keep all those things going, doing essential experiments and providing essential medicines through COVID. And that was some brave people who kept coming to work every single day, pre-vaccines, wearing masks, distancing, doing all that stuff. We enrolled over 200 patients in the nemvaleukin clinical program during COVID. It's the biggest year of enrollment we've ever had. So that was operational efficiency as well as the drug itself, people were coming to the drug because it's helping their patients. I think the long term, the tail from COVID in R&D side, relates a lot to what FDA ends up doing. If they can -- if we can institutionalize remote clinical trial monitoring, if we can institutionalize certain of these more efficient ways of capturing information in the periodicity that we use to capture it. And also the use of remote meetings and remote interactions with the FDA themselves. There's a number of good things that could derive from that. But I don't see a step change coming out of COVID on the R&D.

Okay. Maybe just moving on to the commercial products. I mean, VIVITROL, I think part of the story here has been the ramp in the alcohol indication now. And again, you guys have talked about kind of the faster rate of growth there you're seeing. So maybe help frame us -- frame that for us and how you're thinking about that momentum continuing here on the forward on the alcohol side specifically?

Well, starting at the top of the epidemiological funnel, there's just too much story, one of the papers today about alcohol use in the wake of COVID. The amount of drinking that's been going on at home, and there is one publication that said that 40% of the people on Zoom calls during the day were drinking during the day. And that's going to lead to a pretty tough outcome for folks. So alcohol as a public health issue is actually much bigger than opioids. It's just -- it's more pervasive and has always been a part of the culture, but it's devastating in terms of people's lives, the economics employment, underemployment and things like that. What's interesting, when we launched VIVITROL years and years ago, it was first launched for alcohol, but it really was quite a failure there because nobody was really tuned into the idea of treating alcohol dependents with medicine. But I think one of the implications or the side effects of more and more VIVITROL being used in opioids over the years and more clinicians having familiarity with opioid and opioid receptor antagonism is that there's much more acceptability of the idea of medication-assisted treatment in alcohol than there was before. And VIVITROL is really one of the only major products there, certainly only injectable product with its features. So I think that we'll see that these are not traditional pharmaceutical markets, either alcohol or opioids. They're driven a lot by public policy by disbursement of federal funds into state systems and state disbursements. And so it's complete with parochial interest in small profit-making enterprises that are based on data. It's really interesting to try to navigate this with an FDA-approved product that's based on evidence, developed in rigorous clinical trials, because that's not necessarily the coin of the realm in all these places. But we have a big initiative in alcohol this year, and we'll see how we do with it, but we're hopeful that it will really gain some traction.

Okay. Great. Maybe on to ARISTADA. Obviously, another important commercial product for you guys here. Just remind us the steps you're taking to grow that LAI share? Because I think that's one thing when you look at U.S. versus Europe, maybe a country like Spain, you see a lot higher uptake of LAI. So how has the progress been here in the U.S.? And any other levers that you guys are working to pull to try to boost that even further?

Well, the long-acting injectable market has been a reliable grower for the last many years. It slowed during COVID, obviously, primarily because of lack of access to docs and unwillingness or reluctance to switch medicines. But interesting, during COVID, it also revealed some of the huge value of LAIs, particularly ours with -- where you can initiate and discharge a patient on 2 months' worth of therapeutic dosing. So 6 caregiver interactions a year on the medicine side allows you to free up other time to work on the psychosocial aspects of the treatment, behavioral components of the treatment. So I think there's a real virtue to long-acting injectables that has become self-evident during COVID, and coupled with telemedicine, the idea of telepsychiatry with LAIs is a very, very logical pair. Because then in the interaction you're having -- in a remote, where you don't have to worry about medication adherence. You know that's sorted out. You can focus more on the interaction with the patient. So the fact that there are more entrants in the field that for a while, it was just J&J with the medicines that we had worked with them on, that was CONSTA and INVEGA SUSTENNA. Now there are other players in the market, there's more noise around it. There's more evidence so we're hopeful that with that share will continue to grow. But that's why we thought that LYBALVI was so important because being in the market every day, we also realize that 80% of the market is oral and always will be. And so to be able to have efficacious medicines on both sides of the ledger, I think really gives us that commercial presence with the physicians that we've been seeking for a long time.

Okay. Great. Maybe just the other area to dig in here is just the -- in the last few minutes is just beyond nemvaleukin, anything else that you're really excited about on the pipeline side here that's kind of coming up through the R&D organization that you want to highlight? And then the kind of correlated question is as you think about potential business development as a way to augment that pipeline, how are you thinking about the opportunity set right now on the CNS side from kind of where you sit?

At our Investor Day, Terence, and you saw it, we revealed some things that we think are kind of the highest potential things in the portfolio right now. And some of these have really explosive potential. We've been working for quite a while in this field of synaptogenesis and we acquired a business in that field, 1.5 years or so ago, and our first clinical candidate is moving into the clinic at the end of this year that is based on that biology. HDAC inhibition with specific targeting of these HDAC-CoREST complex, which is more neuronal. And the data are really exciting about driving synaptic strength and formation in the brain and potential implications in a range of psychiatric, neurodegenerative, neuro developmental disorders. The other one is our Orexin 2 receptor agonist program, which is moving quite quickly now with a big scientific foundation underneath. And the third would be sons of nemvaleukin or cousins of nemvaleukin, which are engineered cytokines. And we disclosed that we're working both on IL-12 and IL-18 variance that we think have real competitive -- potential competitive advantages. They still yet have to prove themselves, but we're moving quickly on that. So for that reason, we don't feel a compelling need to do anything on the business development side now. And I've been doing this for a long time. The biotech cycles are reliably cyclical. And when the markets get tough for companies, that's often when assets become available at good prices. And there tends to be a migration back towards true commercial, stable businesses like ours, which is a real economic enterprise. We're really focused on these profitability targets that we set up for because it wasn't a new thing. It was always consistent with our long-range plan, but we never been explicit about it. We heard from shareholders directly, we want to hear more explicitly about your commitment to not just doing science but also returning profits. And we think that now that's becoming very clear that we can do that, particularly with the approval of LYBALVI and the growth of VUMERITY, the focus of the R&D pipeline, the maturation of some of these things that we're feeling -- we feel like we can do all those things. So we will always look for undervalued assets that dovetail fit into what we're doing. But it's not like we're -- with the sirens going and saying, we got to go find something right now because we've got a hole because I don't feel that way.

Yes. Great. And maybe just the last one in the last couple of minutes is just you touched on this a little bit about the value enhancement plan. So maybe just help us think about the path to those margin targets you set out as you think about kind of top line and then obviously, some of the expense control measures. What's the kind of mix shift as you think about where you sit right now?

Well, the important thing about the value enhancement plan when we announced it in December, well that was pre-LYBALVI, pre-VUMERITY even -- we basically said, notwithstanding what happens on the top line. We will manage the business to achieve these profitability targets. It certainly becomes more visible, more obvious when you've got new products coming in and growth in the revenue line. So -- but that doesn't take away from our focus on efficiency because it's really nice. It's a really synergistic approach. If you can work on both the expense side and the revenue side, it gives you a lot of levers to be able to solve for this. So we still have the ways to go. We've got to launch LYBALVI, we'll see the trajectory of -- we've got to make sure -- this time last year, we had no idea where this commercial business was going to go in the throws of COVID. So it's all coming back into focus now, but we're feeling quite confident on our ability to hit those targets.

Yes. Great. Well, really appreciate the time today, Rich. Thanks so much, and best of luck for the remainder of the year and stay safe.

Thank you. Terence, to you as well.

Thank you very much. Thanks, everybody. Take care.