Alkermes plc (ALKS) Earnings Call Transcript & Summary

All right. Good morning from the 40th Annual JPMorgan Healthcare Conference. My name is Cory Kasimov. I'm the senior large-cap biotech analyst, and it's my pleasure to introduce Alkermes and Chairman and CEO, Richard Pops. Please note that following the presentation, we will move right into Q&A, where you can send in your questions via the conference portal, and I'll do my best to work them into the conversation. So with that, Rich, thanks as always for joining us today, and let me turn things over to you for the latest on Alkermes.

Great. Thanks, Cory. It's great to see you and not see everybody else at this moment. But I understand the slides are going to work is that you'll drive them from the audience. So I'm going to give you a sense of where we are in the presentation as we go. This presentation was designed to give you a sense of how significantly and deliberately, we've evolved Alkermes over the past couple of years. Driving changes that we think position us for new growth in our revenues and our profits over time and in the impact of our medicines. This is a strong company with a distinctive mission and incredible employees who demonstrated amazing resiliency and creativity over the past couple of years. If you haven't been paying attention to what we've been doing, 2022 is a good time to look again. So I will be making forward-looking statements in the presentation and our actual results could differ materially from these statements due to various risks. So I encourage you to read Slide 2 of the presentation and our SEC filings where we seek to articulate these risks. And with that important statement being made, let's move ahead on to Slide 3. So we've been managing the business based on 3 clear strategic priorities, all rooted in this strong foundation of dedication to patients and operating in an ethical and a responsible manner. The first priority is to continue to grow our substantial commercial business. Alkermes has a prominent and rapidly growing psychiatry franchise. It includes ARISTADA, our long-acting injectable antipsychotic, and has just been augmented with the launch of LYBALVI, our new oral medicine. The commercial portfolio also includes VIVITROL, our medicine for alcohol dependence and opioid dependence, and VUMERITY for multiple sclerosis sold by Biogen. This portfolio has generated more than $670 million of revenue for us over the last 4 quarters, and we expect these revenues will continue to grow. The second priority is to expand and advance our development pipeline in our focus areas of neuroscience and in oncology. This has been the mission of the R&D group for the past several years, and the results are becoming evident. Our R&D strategy is highly targeted, and it's based on combining our proven capabilities in new molecular design with an emphasis on pursuing validated biologic pathways. The third priority is to drive profitability. Efficient management of what has become a significant and complex company with an explicit focus on our cost structure and disciplined capital allocation across R&D, commercial and G&A. Foundational to everything is the patient-focused ethos of the company, which is seeking to develop medicines that address real-world concerns of patients suffering from serious diseases and a dedicated culture of corporate responsibility and governance. So moving to Slide 4. We made excellent progress in 2021 and built on each of these aspects of the business. Within our commercial business, the year was highlighted by the FDA's approval and our commercial launch of LYBALVI. Our next psychiatry product for the treatment of schizophrenia and bipolar I disorder and our first oral medicine in the category. LYBALVI is off to a strong start. I'll show you some data in a moment, and we anticipate it becoming a significant growth component of our revenue base. For ARISTADA, we continue to drive prescription growth that outpaced the broader long-acting injectable market and maintained our position as the fastest-growing LAI. For VIVITROL, we redefined and began executing our new growth strategy focused on the alcohol dependence indication. For both products, COVID had an impact. In response, our teams adapted to respond to the challenges and found new ways to make sure that access to our medicines could be maintained and that we were positioned to resume growth. We met important pipeline milestones during the year. Nemvaleukin is now on potential registration-enabling studies and is emerging as a differentiated IL-2 variant with accumulating clinical evidence of antitumor activity, both alone as monotherapy and in combination with the checkpoint inhibitor. We advanced our first HDAC inhibitor, ALKS 1140 into first-in-human studies, and we nominated ALKS 2680, our orexin receptor 2 agonist and moved it into IND-enabling studies. From a financial perspective, we executed the plan with respect to both our 2021 objectives and our longer-term profitability targets. In November, J&J informed us that they intend to stop paying us certain royalties despite doing so for 12 years. We're exploring all options to enforce our contractual rights and address any unauthorized use of our intellectual property. We'll continue to work favorably also to favorably resolve the matter. With that said, it's important to understand that in the recent years, we have been deliberately and successfully engineering our business away from royalties based on our technologies. Our long-range profitability will be driven by revenues from our proprietary products in VUMERITY and efficient capital allocation. We'll provide an update on our long-term profitability targets in conjunction with our 2022 financial expectations on our February earnings call. With that guidance, with the anticipated revenue growth profile of the business will come more clearly into focus and demonstrate that the financial structure of the company is evolving as we intended. In 2021, we also continued to focus on excellence in the form of corporate responsibility and governance with important initiatives in each of these domains. In addition to our long-standing engagement with policymakers at the federal and state level, addressing systemic impediments to treatment, we supported new research and patient advocacy programs focused on people affected by serious mental illness, addiction or cancer. We introduced new diversity, inclusion and belonging employee resource groups, and we continued our ongoing Board refreshment efforts with the retirement of 2 of our longer-serving directors, the addition of 2 highly qualified new independent directors, and the declassification of our Board. So Slide 5 offers a snapshot of Alkermes today. Commercial enterprise with significant diverse revenues and new growth opportunities for LYBALVI, ARISTADA, VIVITROL and VUMERITY, coupled with a pipeline of novel development candidates, designed to target significant unmet medical needs of patients, focused in oncology and neuroscience. So let's switch gears and focus on these 4 growth drivers: LYBALVI, ARISTADA, VIVITROL and VUMERITY. On Slide 7, you can see that LYBALVI and ARISTADA comprise our psychiatry franchise, and we'll start there on Slide 8. LYBALVI is our once-daily oral atypical antipsychotic composed of olanzapine, a proven and widely used antipsychotic agent, and samidorphan, a new chemical entity developed by Alkermes scientists. As you can see on the left, LYBALVI comes in a variety of strengths, corresponding to the most commonly prescribed olanzapine doses. In each case, co-formulated with 10 milligrams of samidorphan in a single bilayer tablet. We launched LYBALVI in the U.S. last quarter in its labeled indications of schizophrenia and bipolar I disorder. On Slide 9, LYBALVI was designed from the outset to address a compelling real-world need of people suffering from these conditions. LYBALVI offers the proven efficacy of olanzapine and was associated with less weight gain versus olanzapine in patients with schizophrenia in the pivotal clinical trial. This is an important and differentiated offering in the branded antipsychotic market, 1 where patients frequently switch medications in pursuit of efficacy but do so mindful of the tolerability profile that can also affect the well-being. Moving to Slide 10. LYBALVI launches off of a sophisticated commercial presence in psychiatry, a presence that we've been building for several years that's designed to drive both operating and financial leverage. It began with our long-acting injectable antipsychotic ARISTADA. ARISTADA's launch led us to build the range of capabilities necessary to commercialize medicines for patients with serious mental illness. Patients largely covered by government payors, namely 50 state Medicaid programs and Medicare. To work effectively in these markets, you need scale, a strong commercial support infrastructure, including marketing, managed markets and commercial operations teams, patient support services, and federal and state policy efforts to support access for often marginalized patients. You also need a rightsized and experienced commercial field organization with representatives able to navigate complex settings of care that are much different than a typical community or hospital-based physicians' offices. And now as we evolve in reaction to COVID-driven access impediments, a hybrid promotional approach, combining digital and virtual interactions to supplement and leverage critical in-person relationships. As we prepare for the launch of LYBALVI in this commercial environment, we restructured our field-based organization and added only a modest increment of field-based personnel to broaden our coverage universe and build our share of voice in our target audience. Because of the highly synergistic target prescriber universe and our daily presence in the market with ARISTADA, we have real-time understanding of market dynamics and we're able to hit that ground running. The strong start we've seen in the LYBALVI launch is directly attributable to this raise of capabilities and experience. So focusing on Slide 11. This experience is also being brought to bear in our approach to targeting prescribers for the launch. The oral antipsychotic market is large with more than 500,000 prescribers, far too large to address without a specific targeting strategy. We sift this large group of potential prescribers through 3 filters. First, those who initiate therapy rather than simply refill prescriptions. Second, those who know and use olanzapine already in their practice. And third, those who utilize branded oral antipsychotic medications. Importantly, this means that their offices are familiar with the administrative steps required to access branded products. We've deployed our field sales representatives with highly targeted call lists, focused on high potential prescribers that represent a large majority of the prescriptions written for branded oral atypical antipsychotics. Using our digital capabilities and nonpersonal promotion in addition to the in-person interactions, we expect to further broaden our reach. On Slide 12, you can see that the launch is off to a strong start. This figure shows 2 lines. The dark blue is the number of prescriptions on a weekly basis since launch. The light blue is the cumulative number of prescribers that have written LYBALVI since launch, which is a key performance indicator for our team. As you can see, both have been growing nicely. On the right, you can see some of the market statistics that help scale and inform the opportunity, 63 million prescriptions per year for oral atypical antipsychotics, 8 million for olanzapine, showing just how widely used it is, with 22% market share in schizophrenia and 12% share in bipolar I. This, an unpromoted product, the treatment guidelines do not typically recommend for first line use in these indications due to its tolerability. There are many generic treatment options in the market, but with that said, more than 5.5 million branded prescriptions were written last year as patients sought treatment options to meet their needs. So to help put this in context and give you an idea of the difference in scale between the long-acting injectable market and the oral atypical market, our LAI product, ARISTADA, which generated nearly $270 million of sales in the last 4 quarters, generated about 750 prescriptions in its first 10 weeks of launch. With LYBALVI, we've seen more than 4x that, even as we launch through the holiday period. An oral medication with LYBALVI's profile, coupled with our established market presence and insights, represents a new and synergistic opportunity for us. So we're on our way. LYBALVI is beginning its commercial life. So we'll go to the next slide. The second complementary element of our psychiatry portfolio is, of course, ARISTADA. Turning to Slide 14. ARISTADA is our long-acting injectable atypical antipsychotic indicated for schizophrenia. It's a novel molecular entity, a prodrug of aripiprazole, designed by Alkermes' scientists specifically for long action in the body. The ARISTADA product family includes various doses and durations, but its key differentiating feature is the ability to fully dose a patient on day 1 for up to 2 months with the ARISTADA INITIO regimen in our 2-month 1064-milligram dose. This attribute has resonated with healthcare providers and is a core element of our competitive positioning in this space. On the left of Slide 15 is ARISTADA's performance since 2016. Steady, consistent growth, currently annualizing at nearly $270 million. On the right, 2 observations. First is that ARISTADA continued to grow faster than the market and was the fastest growing medicine in the long-acting injectable space in the third quarter. The second is that the market itself has been significantly impacted by COVID. Shifting from consistent double-digit growth in previous years to single-digit growth in the most recently reported quarter. With impediments to patients' access to care and physicians' reluctance to change medicines and initiate new injectable therapies. We believe that our competitive position for ARISTADA is strong, driven by our once every 2-month dosing in INITIO and the market will resume growth as the pandemic wanes. And as it does, we expect ARISTADA will continue to be very well positioned. Moving on to Slide 16. VIVITROL is the next major commercial contributor. On Slide 17, you can see VIVITROL is our extended-release opioid antagonist, providing therapeutic levels of naltrexone for a month. It has 2 FDA-approved indications. Treatment of alcohol dependence and for the prevention of relapse to opioid dependence following opioid detoxification. It is a singular product. We are very proud of the pioneering work we've done to bring this important medicine to patients, to families and the communities. On the left of Slide 18, you can see VIVITROL's performance since 2016, currently annualizing in excess of $300 million. Treatment systems were severely impacted in 2020 by COVID. We were able to adapt and reestablish growth in 2021. Interestingly, it's largely driven by the alcohol dependence indication. The growth we've seen in the alcohol indication is shown in the figure on the right. What was once less than 1/3 of VIVITROL sales, has now become the dominant share. We've adapted our strategy to focus on this growth and the significant patient need in alcohol dependence, while at the same time, recognizing that opioid dependence remains a major public health crisis in America. VIVITROL has important public health potential in both areas, and we plan to continue our work with public health systems and policymakers to help drive access to treatments for those in need. The fourth element of the commercial portfolio is VUMERITY. Let's turn to Slide 20. VUMERITY is a novel oral fumarate for the treatment of relapsing forms of multiple sclerosis. It's a new molecular entity, designed and developed by Alkermes. In contrast to LYBALVI, ARISTADA and VIVITROL, products for which we believe we could drive the most value by bringing them to market ourselves. In this case, we developed a medicine and licensed it to Biogen, a world leader in the MS market, who is responsible for worldwide commercialization. With Biogen's extensive commercial presence in MS, the collaboration was designed to maximize patient access to VUMERITY and in turn, make VUMERITY more profitable medicine for Alkermes and our shareholders. As you can see on Slide 21, the progress is encouraging. This figure shows the launch performance of VUMERITY over the past 2 years. COVID drove a slow start in 2020, but you can see how VUMERITY gained traction as the MS market reopened and its attributes began to be demonstrated. We receive a 15% royalty with no associated costs on Biogen's worldwide net sales. With growing sales in the U.S. and multiple recent regulatory approvals in Europe, we expect continued growth for VUMERITY. Slide 22 summarizes these current growth drivers from a financial perspective. You can see how VIVITROL, ARISTADA and VUMERITY have grown to nearly $700 million business through the third quarter of 2021. And this does not yet include any contributions from LYBALVI. 2022 will include contributions from all 4 with 2 of these, LYBALVI and VUMERITY still early in their commercial life. So let's shift to the pipeline and the R&D engine that's driving it, and move to Slide 24. Starting at the conceptual level, it's important to understand how carefully we've designed our approach to pharmaceutical R&D. There are 3 key features to our approach. First, we employ an integrated approach to target selection, development and life cycle management, and continuously evaluate both the medical and economic value of each program. Second, we leverage our strengths in advanced medicinal chemistry and protein engineering to develop novel molecular entities with strong intellectual property protection. And third, we seek to derisk programs early by accelerating time to data, decision milestones and adhering to clear go/no-go criteria. This rubric drives competitive allocation of capital only to those programs we believe have the most potential. Next slide. Our pipeline is focused on neuroscience and oncology, and we'll talk today about 3 of the programs. Nemvaleukin in oncology, and ALKS 1140 and ALKS 2680 in neuroscience, and we'll start with nemvaleukin. So turn to Slide 26. The thing to know about nemvaleukin is that we established at the outset key criteria that it would have to meet in order for us to believe that it has significant medical and commercial value. The accumulating data supported these criteria. This is the list. We wanted to see that our molecular design was sound, yielding us active, stable, new IL-2 fusion protein with a desire and receptor selectivity. That molecule then had to demonstrate a dose-dependent effect on expanding immune cell populations of interest. It then had to demonstrate clear antitumor activity, importantly, both as monotherapy and in combination with the checkpoint inhibitor. More than that, we wanted to see activity in areas of unmet need, namely in checkpoint inhibitor unapproved tumor types and after progression on checkpoint inhibitors. We started the program with an IV regimen based on the original high-dose IL-2 regimen. We're also now exploring less frequent IV dosing as well as subcutaneous administration. And finally, if all the proceedings were in place, we wanted to focus the program on difficult-to-treat cancers with clear unmet needs. So let's move to the next slide. The data are accumulating and maturing. As of the data cut from ASCO last year, we've seen deepening and durable responses in a number of difficult-to-treat tumor types, both as monotherapy and in combination with pembrolizumab. The design intention is bearing out with respect to tolerability as well as efficacy. Treatment-related adverse events have been consistent with expectations based on nemvaleukin's mechanism of action and we're mostly transient and manageable. The figure on the right summarizes the tumor types in which we've seen responses as of the data cut. It includes monotherapy responses in melanoma and renal cell carcinoma, and combination responses in a range of tumor types. We've advanced nemvaleukin into potential registration-enabling studies in 2 indications, as monotherapy in mucosal melanoma and in combination with pembro in platinum-resistant ovarian cancer. Next slide. Based on the antitumor activity and the tolerability signals that have emerged from the initial IV program, we're evaluating multiple dosing options to support flexibility and the potential for broader clinical utility. These included on Slide 28, on the upper right, less frequent IV dosing schedule including once or twice within every 3-week interval; and on the lower right, subcutaneous once-weekly dosing. Now on Slide 29, the progress we've made to date informs our clinical program in 2022. It's focused on 2 main objectives: enrolling the studies that could support potential registration and more fully exploring a range of dosing alternatives. ARTISTRY-6 is the monotherapy study in mucosal melanoma. ARTISTRY-7 is the study in platinum-resistant ovarian cancer in combination with pembro. We've been granted fast track designation by FDA in both indications. We will continue to enroll ARTISTRY-2 and 3 to evaluate the various dosing regimens. This will include a new dose escalation cohort of patients in ARTISTRY-3 to evaluate the less frequent IV dosing. Both studies will evaluate patients with a range of tumor types. This is a very focused program in our hands. But understand, we believe the promise of an effective, well tolerated IL-2 variant is its potential use in a range of tumor types, lines of therapy and combinations. We hope to expand the program in the future via collaboration with other oncology companies with complementary agents and capabilities. Moving on to Slide 30 and our neuroscience candidates, ALKS 1140 is our novel CoREST-seletive HDAC inhibitor. This is an exciting area of neurobiology. HDAC inhibitors increase the accessibility of DNA for transcription of genes associated with synaptogenesis, which is the formation and strengthening of neuronal connections. Many neurological disorders are characterized by synaptic pathology. So targeting the synapse may slow progression and preserve cognitive and functional abilities in a range of diseases. HDAC is histone deacetylase, it's an enzyme, shown as the blue mass in the image on the right. ALKS 1140 selectively targets HDAC 1/2 bound in the CoREST complex shown as red and green. In animal models, 1140 increased dendritic spines and synapses and improved function in areas associated with memory and combination. Next slide. ALKS 1140 just entered the clinic last quarter and the first in-human study is underway. Consistent with the R&D approach I outlined earlier, we've designed the development program to seek early validation of biology. In parallel with the human dosing of 1140, we've designed Phase 0 biomarker studies. The objective here is to evaluate certain biomarkers to establish the utility in serving as early indicators of the effect of 1140 in subsequent studies. As we progress from single doses to multiple doses of our HDAC inhibitor, we have a number of assays to evaluate target engagement and help identify relevant biological activity. And consistent with our R&D strategy, these tools are designed to provide an initial validation of biology early in the development program and should also help inform the most promising indications to pursue. Slide 32 shows the final program we'll cover, our Orexin program in narcolepsy. Orexin is a brain peptide with well understood biological functions. Orexin neurons promote wakefulness and modulate reward pathways. Low orexin levels play a central role in narcolepsy and other sleep disorders. Narcolepsy affects approximately 200,000 people in the U.S. and 3 million around the world. The challenge here is actually not in understanding the biology, it's in designing the right molecule. Next slide. ALKS 2680 is our orexin 2 receptor agonist. In designing 2680, our objective was to optimize the PK/PD relationship, meaning, to make a molecule that could achieve the appropriate potency in pharmacokinetics, which are the desired concentrations over time in tissues of interest, to affect the desired pharmacodynamics, which are the intended therapeutic effects without unintended side effects. If we achieve this, we should have a drug that mimics the efficacy of the natural orexin peptide, increasing wakefulness, with a convenient dosing schedule and a well-tolerated profile. The chemistry here is sophisticated, and we were pleased to nominate 2680 last quarter. IND-enabling activities are underway, and we're hoping to enter the clinic later this year or in early '23. So I'll finish on Slide 34 with a summary of our 2022 strategic priorities. These echo the strategic focus areas I outlined at the outset: commercial, pipeline, financial. For commercial, the launch of LYBALVI is a key focus area, along with growing ARISTADA and VIVITROL. A successful LYBALVI launch would establish Alkermes as a leader in the neuropsychiatry space. The pipeline has clear objectives covered here today, nemvaleukin, 1140, 2640. Each has specific deliverables and expected milestones for the year. And next month, we'll provide full year 2021 results, 2022 guidance and discuss our long-term profitability goals. It should be an important year for Alkermes and I'll thank you for your attention and your interest in the company. I'll turn it back over to Cory.

Great. Thank you, Rich. Just a reminder, everybody, you're able to submit questions for the Q&A in the portal, and I can read them out here about 10 minutes or so for Q&A. And of course, I want to start, no surprise, I think, with LYBALVI. It sounds like things are going well. I mean, what kind of, I guess, direct feedback are you hearing from physicians on what they're seeing and the impact that they're seeing? Or is it a little bit too soon for that?

Well, just I'll describe it in 2 phases. The first phase was at launch, which, obviously, clinicians have had clinical experience with it, but they are anticipating the arrival of the medicine. On the aided awareness and aided awareness of LYBALVI was extremely high at launch. That's in part because we got approval in June. So -- and we had time with our medical affairs team. And because we're in the market every day with ARISTADA, we could build awareness for the drug. What's fascinating is that leverages a deep institutional understanding in the community of olanzapine. Everybody uses olanzapine. As you saw in the figures, 22% market share in schizophrenia and 11% in bipolar. So the basic positioning at the outside was quite simple. Olanzapine is well used. FDA has just approved a new olanzapine with improved weight profile. So that has led to a tremendous amount of interest in the drug at launch. Now the second phase is after patients have enough time on therapy for physicians to really discern the difference in weight profile in their hands. And we're just now moving into that phase as in the launch where people are beginning to see the clinical experience come back through our medical affairs and anecdotal feedback. And that I think that's going to really fuel the next real wave of understanding of the drug, and we're quite excited about that.

Okay. And then I'd probably have to ask on COVID and Omicron. And how much of an impediment is the pandemic in terms of physician outreach and face-to-face meetings? I mean, certainly, you can leverage what you have with ARISTADA on that front, but not the easiest time to be launching a drug. Have you seen an impact from that?

Well, it's funny. Last year, we said we would have lost absolutely nothing, not launching in June and waiting for the Q4 launch that we did. Because we went from a nadir during COVID of physician in call percentage being 30% or less to back up to over 75% in Q3. So launching when we did was exactly right. And because we -- as you said, we're in the market all the time, we could leverage these in-person relationships. We did not expect -- I don't think anybody would expect the world to shut down as much as it did over the holidays and right now. But again, I think this will be a transient phenomenon as Omicron blasts through the population. The natural instinct is for people to get back to work here. Psychiatry, interestingly, a lot of psychiatrists really moved to remote telemedicine during COVID. And often, the most important people at the prescribing interface were the nurse practitioners and the physician assistants, who really kept the practice is going. But we're anticipating a little bit of restricted access this month. But then over the course of '22, basically, things getting back to normal.

Okay. And then look, obviously, people are going to look at sales when you provide that for LYBALVI over the course of the year. But aside from that, what do you think are the key metrics that we should be watching over the first year or so to really better understand this launch and how performance is tracking?

Well, I think NRx and TRx, obviously are the easy ones to track internally and the reason I put that up in that slide. The foundation for a big brand in this space is the number of physicians. So we're really tracking the number of physicians. And to put it in some type of context, orders of magnitude and actually more precise than that, ARISTADA might have 5,000 prescription prescribers writing these long-acting injectables. You've heard me say, I think, 120,000 physicians prescribe olanzapine. It's -- and so we have 1,000 prescribers already in our first 10 weeks in the launch. And if we compare that to, as I said in the talk to the ARISTADA launch, we're fourfold ahead of where we would have been with ARISTADA. So I think the number of prescribers, the geographic distribution and whether they're driving prescriptions coming from bipolar I or schizophrenia, also channels of business, are they coming from commercial, Medicare and Medicaid. And so far, across all those different domains, we're seeing prescriptions originating, which is really encouraging sign for us.

Okay. And then as long as we're on this indication, what do you see is the key for ARISTADA and its outlook heading into '22?

Resumption of the growth of the LAI market. You saw that in the figure. ARISTADA is actually really well positioned as the fastest growing of the LAIs, just the overall market as people were reluctant to move to injectable therapy in the context of COVID. Historically, as you know, the LAI market has been growing really well because of the clear efficacy and patient benefits that they confer. So we're hopeful that, that market resumes growth. And as it resumes growth, our position within that market should drive good performance.

Okay. And speaking of metrics, I have a question here in the portal, bigger picture. Which long-term measures best highlight Alkermes long-term growth and profitability potential?

I think the measures that we'll go back to that we established in a year or so ago, revenue and non-GAAP net income or EBITDA.

Okay. And then on the pipeline front, I mean, Nemvaleukin clearly had an increasing amount of focus for investors. What are the key updates we should be expecting in 2022 there?

Well, the data from ARTISTRY-1, which is the basket program where we're generating signal, those data continue to mature. And it's an important point with an IL-2 variant, because one of the hallmark features in IL-2 is the durability of responses. There's obviously a certain nominal amount of response rate, but historically, with high-dose IL-2, patients who respond often have these very durable responses. And we're seeing that recapitulated in the data with nemvaleukin. So in 2022, it's the continued maturation of the data sets from ARTISTRY-1. The enrollment in these 2 registration-enabling studies, in mucosal melanoma and in platinum-resistant ovarian cancer, and the maturing data from our subcu and our less frequent IV dosing, which are the commercial dosing regimens that we think are going to be the most important. I just want to make one point about that monotherapy study in mucosal melanoma. Mucosal melanoma is a relatively small indication, but it's serving a very important purpose in the program, because it's an explicit demonstration of the monotherapy activity of nemvaleukin. And that's something that differentiates it from some of the other IL-2 variants for the data they developed so far in the clinic. Because it's almost an essential prerequisite to think about then as an effective pair in a doublet knowing that the individual contributor actually has its own efficacy as well. And I think that's a really important part of the program to be noted.

Okay. And then what are your latest thoughts on partnership for nemvaleukin? And what does an ideal partner look like?

Well, the promise of an IL-2 variant is, of course, if you've got the desired tolerability, the monotherapy efficacy and the combination efficacy in tumor types where checkpoints are no longer working or never worked, is potential for broad collaboration across multiple indications, tumor types as well as other agents. So almost by necessity, to realize the full value of this program, we wouldn't want to collaborate, in our own hands with our focused spending on the R&D side, we're going to concentrate our spend only in the 2 areas that I mentioned. But our hope is in '22, we can begin to broaden the clinical profile of the drug. Capitalizing on the early signals that we've seen in ARTISTRY-1 and other tumor types where it's quite an exciting indication and do that via collaboration. So I think the #1 attribute of a collaboration would be is that it expands the medical and commercial opportunity for the drug. And then, of course, people with complementary capabilities, complementary agents and financial resources, and I think that's all part of the profile.

Okay. An investor question I have here going back to LYBALVI. Do you intend to guide to LYBALVI product sales for '22?

We're working on that right now. We're going to try. Historically, we've guided on VIVITROL and ARISTADA. So the remainder will be other things, including LYBALVI. We'll probably have to put a fairly wide range around it, given COVID, given early in the launch. But we're going to try to give investors at least some way to triangulate where our expectations are, recognizing that it's still early days.

Right. Okay. I have to ask for latest on the J&J termination notice. You mentioned it upfront. Has there been any incremental progress to date towards potentially coming to some sort of compromise or agreement? Or is it pretty much status quo?

It's pretty much status quo. We're preparing to move into the formal dispute resolution process, with a frustrating lack of transparency from J&J, but I'll leave it there.

Okay. And has that kind of changed or impacted how you're thinking about the operational efficiencies and costs you've talked about in terms of your longer-term expectations for the company?

It's interesting, because had that not happened. You would have seen in the 2022 guidance, what we've done on the expense management over the last couple of years, coupled with the new revenue growth, we are just on this beautiful trajectory to meet or exceed those profitability targets that we had set out. And I want to acknowledge the amount of work that's been going into the cost structure in order to facilitate that. So what we want to do, likely what we'll do in our February guidance is it will say, let's guide for the business without J&J revenues and rolling off in 2022. All of it, right? Just so we can look at the core drivers. And that's why in this presentation, I focused on what's driving the top line, VIVITROL, ARISTADA, LYBALVI and VUMERITY, let's guide to our profitability for the business assuming the J&J business is gone. Now that's not so hard, because we've been engineering the business in that way for the last several years. We expected U.S. royalties to be gone mid-2024 and European royalties be gone in 2026. So it's not anything fundamentally different in our long-range plan. It'll just be the way we guide and show you the metrics.

Okay. And then one more here just came in the portal. In terms of ongoing governance efforts, what can you say about the recent Sarissa filing and how they plan to nominate more directors at the annual meeting?

Well, we've had a constructive interaction with Sarissa. Sarissa is a major shareholder. They own over 80% of the stock. I've known Alex for many years. They were really constructive in our most recent Board refreshment with the appointment of Kate Lorenson to our Board, who is a highly distinguished scientist and engineer clinician. And so I expect them to continue to be part of that ongoing Board refreshment process, which you know, we really turbocharged a few years ago to really have this robust ongoing addition and refreshment of the Board. So I expect them to continue to be part of that.

Okay. Well, we're out of time there, Rich. So thank you very much. Appreciate you participated again this year and best of luck in '22.

To you as well, Cory. Thanks very much.

Thank you.