Alkermes plc ($ALKS)

Good morning, everyone. Thanks for joining us here on the third day of the Goldman Sachs Global Healthcare Conference. And thanks everyone who joined us here as well as online. And we're thrilled to be joined today by Richard Pops, Chairman and Chief Executive Officer; and Blair Jackson, Executive Vice President and Chief Operating Officer for Alkermes. Maybe first, just over the last 12 months, you've seen a significant period of change for Alkermes, including validation of Rx and agonist class an acquisition of Avadel, the announced CEO transition. So thanks for joining us. But before we jump into Q&A, I'd love to just turn it to you for some opening remarks on all that progress.

Well, thanks for having us. First of all, and standing room only in this giant room.

You don't know any dealer online.

The -- this has been just a fantastically interesting past 12 months for the company. in part, from our perspective, we're smiling because we're doing everything we said we're going to do. And things have evolved in a way that we would have hoped to predict but it all of a sudden it seems surprising to everybody. And that is we've been working in these rexinagonist now for a number of years. We've been, along with others in the field, slowly elaborating the biology and the chemistry and I think it's becoming abundantly clear that this is a really exciting opportunity. And then with Lilly coming to the space and in many ways, validating what what we've been saying. Now we find ourselves with a drug that we think is really the best-in-class molecule in diseases of hypersaline, now enrolling in Phase III after a very, very strong Phase II program. that answered most of the questions that we all had because these weren't underpowered Phase II were very well-powered Phase IIs asking questions about safety and efficacy and tolerability over extended periods of time and a range of doses. So the company is evolving really well. I announced that I'm going to move to Chairman. Blair has been shoulder to shoulder with me for the last many years building this company. And we've got ourselves in a position now where I think that if we execute, we can see the valuation of the company really expanding. And it's not notional. It's just at this point, it's about -- it's in our hands to execute. Blair?

Yes. I think if you look over the last year, we've really been looking to widen our portfolio and our pipeline in our agonism. And really laying down a number of different bets over the next little while and programs that are going to report out over the next 12 months. So we're in a really exciting moment for the company and a moment of really execution and change. And so I think everybody in the company is really excited and I know it's going to be a really interesting data set, both in the sleep space as well as in the neuropsych space as we look at our ADHD and our fatigue programs as well.

What's interesting, we have a $1.7 billion top line commercial business that drives tremendous profitability and a lot of cash flow, and most people don't care at all about it. But we care a lot about it because it's the flywheel that powers all this innovation that we've been able to do in a nondilutive way for our shareholders. We bought Avadel, which brought us into the hypersonics business from a commercial perspective with a really good asset with cash. we didn't need to use any stock to do that. So we have amazing strategic flexibility that we've been exploiting slowly, carefully, almost quietly. And I think people are beginning to realize that now.

Great. Let's start with our Rexon program. And as that competitive landscape continues to evolve, potential approval of the first NT1 asset expected relatively soon, other pharma stepping into the space. What is your current thinking about how Elixorextan is most differentiated? And how does that profile then translate to in T2?

Go ahead, Blair.

Yes. I think when you look at the -- we look at the space as a whole, this is a disease area that has a number of therapies that are in it right now but has left a really gap in what patients are really looking for. And I think with this new class of rexinagonist is bringing with it a whole new level of efficacy and opportunity for these patients. And we're going to be coming into the marketplace with a drug that has treat has multiple doses to treat different heterogeneity in disease who have a drug with once day dosing with split dosing to provide flexibility for patients and their needs as well as a drug that hopefully works across all 3 hypersomnolence indications. If you compare that to Takeda's drug, which is coming in right before us, it is a wonderful drug. It addresses a lot of the efficacy in a subset of patients it's limited in where it can go. There's not multiple doses, can't go into other indications. So we're highly differentiated from the first molecule in the space, and we're really looking to deliver on that data set with our Phase III program. And our goal with RTPP is to create a label that's going to be hard for anyone else coming behind us to differentiate from, whether that's Eli Lilly or whether that's anyone else.

Great. And maybe given what we've seen from the data on elexoxeten's benefits on wakefulness and EDS and the T2 population, I think 8 to 10 minutes from baseline on the MWT and ESS cores at the upper limit of the normative range. How do your results reinforce confidence in the benefit of orexin in indications such as NT2 and idiopathic hypersomnia where those orexin levels are not necessarily compromised.

Well, we're going to show a more complete analysis of the 2 data next week at the Sleep Conference in Baltimore. And the feedback we get from opinion leaders in the space is that it's remarkable to see -- and it is the first agent to show against the backdrop of this very highly variable patient population, not just changes in MWT that are clinically meaningful, but changes in the upper sleepiness scale, which is the patient self-reported assessment of their daytime sleepiness, taking people from highly symptomatic to normal and we'll show it at sleep, we'll show some of the longer-term extension data from the open-label phase, showing this is a durable effect that lasts for multiple weeks, coupled with new data on fatigue and cognition, which are part of this holistic benefit that these orexin agonist seem to be bringing patients, which is not just the number of minutes your eyes are open in the MWT test or how you report it's what are the components that lead to that feeling of normalcy with respect to cognition and fatigue as well. So -- what people have to understand about the MT-2 data is that unlike NT1, it's a very, very diverse patient population. And in a Phase II study where you keep people in a particular dosing lane for the duration of the period of time, you get a certain response. And in the real world, the patient won't stay in a dosing lean. They need a higher dose. They'll go to a higher dose. They need a lower dose, they go to a lower dose, which is why -- to your earlier question about differentiation, this program from the outset has been built on differentiation. And the differentiation we see central is range of doses, range of regimens and a range of indications. So the physician and the patient have the ability to flex into whatever duration they want and whatever dose they is most suitable to their disease and their lifestyle.

Maybe you could contextualize for us how clinically meaningful the results you've shown on NWTNSSR relative to other options currently available in the indications?

Well, no 1 has ever shown any data in NT2 alone to my knowledge, -- when you see the data from the oxybate, for example, it's a pooled NT1 and 22 population. I think that -- I think it's 1 of a kind at this level with respect to the various parameters we've measured in the NT2 population. In the NT1 population, of course, if you compare the orexin agonist to previous therapies. I don't think there's any comparison between the MWT changes that you're seeing in the NT1 patient population compared to the previous drugs.

Yes. And what I'd say is when you look at any of these various indications, there's multiple prisms that we look at with regards to efficacy. One of them is MWT, which we use in NT1 and in T2. I think there's a risk of over-interpreting that result when you look at an average across a number of patients.

provide treatment for their patients and to keep them on therapy while you're getting ready to commercialize. So Takeda has done the same thing. They have a number of people in their extension programs who are likely going to be some of their early customers as they move forward. So if you actually look at the true overlap of where we are in enrolling our studies versus their launch, I think we're in a really good place. 1 of the things to keep in mind, too, we're in a number of different countries around the world. There's U.S. There's a number of countries ex U.S. In fact, some of our best sites come ex U.S. And so I don't see their launch really impacting our enrollment in this program.

The contrary, we're probably the biggest fans of a strong launch educating patients, the new mechanism recruiting doctors to understand the mechanisms so they feel comfortable with prescribing it to their patients.

Okay. What can you share regarding the powering assumptions across the 3 studies and the magnitude of improvement that would be both statistically but also clinically or commercially meaningful?

It's actually a really interesting question because I think this disease area is different than what a lot of people are familiar with. I think a lot of times, if you're talking about a depression study or schizophrenia study, that power calculation is so critical, and it's so important I think what we're finding here, given the effect size of these molecules in efficacy is that the power is not your real key question. Your key question is really about your clinical effect size. -- and how that compares competitively to the others in the group. I'll point to the fact when we started our NT1 study, and we did our multidose, we have 4 patients that drove statistical significance. So when you have a 90-patient study 150-patient study, it's not the p-value, you kind of leap over that. And in fact, 1 of the things we showed in our T2 program despite all this patient heterogeneity despite some patients responding, some not variability in how the tests were run, the efficacy of the drug just shines through. So for us, it's about -- it's about standardization. It's about making sure that we're enrolling the right patients. You don't want an NT2 patient in our NTI study, that will mess up your signal. You want to make sure your cataplexy is standardized. You're counting them the same at any treatment site so that you can actually have as much fidelity in the data as possible and get rid of some of that noise. And I think 1 of our key learnings as well in our Phase II program was that the MWT, which I think a lot of people felt was a very standardized objective test, has a lot of art to it, how people do it, how -- whether people determine what persons of sleep or not, how all that happens, requires a lot of attention. And I think doing that and applying that care into the Phase II is going to enhance our signal that much more so that we have a really strong label as we go into the market.

You mentioned measuring cataplexy in the NT1 studies. I think you recently revised the assay that you'll use to measure and report those events in Phase III. And remind us how that new methodology differs from prior ones in terms of standardization.

Sorry, there's cataplexy?

In Cataplex?

Yes. Yes. So I think 1 of the things that was a big -- was a surprise a little bit is that even within treatment specialists, how they recognize cataplexy and how they count it somewhat different and especially as you win across different locations and things like that. And so cataplexy is really a spectrum. And it can be anything from a patient losing full muscle tone to almost a tweak in the cheek or an eye. And it sometimes becomes hard to recognize for both the patient and the physician. So one of the things that we did is we put very clear criteria on what is considered cataplexy, making sure they were trained to understand it, making sure that was consistent across our study. And consistency is key. And then the other is counting them. You could have a patient could be watching a comedy and then all of a sudden have a cataplectic event, maybe it's their leg, twitching. And their leg in the course of a short time, which is 10x. One doctor might call that one cataplectic event, another might call it 10 -- you can't have that. That really messes up your score different. So it's all those little things and making sure they're trained, making sure that we're certain they were training, making sure the patients understand how to do it as well. That's what's going to drive the effect as we move into Phase III.

Great. You kind of alluded to this already, but how confident are you that the effect size is seen in Phase II will translate and hold up into Phase III and would there be any reason to expect kind of compression in a larger patient population or a longer duration trial? Or is it the reverse?

Yes. I think, again, this area is a little different when you have an asset that actually has an effect size like this. It it really mutes a lot of those effects. A lot of times when you see compression of effect, it has less to do with the active drug and more to do with placebo. And there's not a lot of placebo here. So what you find is if you look at MWT, you look at ESS placebo is flat on the bottom. It doesn't tend to move. And so we feel pretty good as you go to bigger sizes, it's not so different. The other thing to keep in mind is that your Phase II trials are similar in size to your Phase III trials here, your rare disease, we were 19 patients in our Phase II trial, and we were like 150 in our Phase III trial. So you're not that much bigger. So this idea of dilution doesn't really come into play.

Okay. what about the decision to evaluate the cognition endpoints BCCCI and PBT in the Phase III programs? And could you speak to which if either is more kind of clinically meaningful?

So I think what's interesting is, so we've used BCCCI consistently through the program. And I think as a tool, it's really good for measuring cognition holistically. So cognition is -- how is that patient interpreting things? Are they -- do they have memory? Are they able to engage in tasks, things like that. I think it's a true sense of how the patient feels. PBT is a little different. That's a vigilance test essentially, and it's actually more of a behavioral test. It's akin almost to do you have attention? Do you have -- are you able to respond in a task situation? And so I think they measure very, very different things. I think we -- we're really expanding in the cognition side with regards to these assets as well. And I think as we go to the vigilance side, you'll be -- we'll be doing more of that with the ADHD program as we think of some of the attention and things like that, that we're doing there. We decided to measure PVT as part of our program in Phase III. We do know others are doing it. We want to make sure we have a rounded data set to show the benefit of our drug. So we'll have both BCCI and PVT to round it out. But I think most of the data that we share with you and you've seen before, is really around that cognition piece because we know it's a key driver of patient satisfaction.

When you talk to patients with narcolepsy they don't talk about MWTs or ESS. They talk about brain fog and they talk about fatigue. And so what we tried to do from the outset was build these instruments into the clinical trial using instruments that are recognized as having validity despite the fact they haven't been used historically in narcolepsy because we know that patients care about those things, and it's also beginning to increase the dimensionality of what an orexin agonist does. First principles when you think about what this circuitry does in the brain, it drives wakefulness and wakefulness is more than just the amount of time your eyes. -- wake from us is about mood elevation. -- not focus. It's about vigilance. It's about cognition. All these things that turn on in the beginning of the day that allow you to sustain through the day and then wind down at night sleep. So it's not surprising that orexin agonist would have an effect on these various domains. And what we're trying to do is bring light to that through data. Whether or not it ends up the label, at the outset, I think ultimately it will. But at the outset, it's important to differentiate these from mechanisms that preceded them.

Can you speak to any new learnings on the safety front in the open-label extension study? Or is kind of gather feedback from physicians on what they're willing to tolerate? And maybe related to that, can you provide an update on whether you'll be conducting ophthalmic exams to suss visual changes in the Phase III?

Yes. I think as you look at the open label I think what we're going to show, and you'll see it at sleep is a lot of consistency on tolerability of the drug. A lot of the key sort of AEs that you tend to see with this are things like transient [indiscernible], you'll see Poly Korea and what's interesting is, as you move into your OLE period, longer-term treatment, it doesn't come up that much. Even if patients move to higher doses, you don't tend to see any -- or not many additional AEs. So a highly tolerable program to what Rich said earlier in the study. With regards to ophthalmic exams that was only done as part of the Phase II. As you know, we had a couple of AEs related division. We wanted a abundance of caution to understand that to make sure there wasn't anything going on. That was confirmed as part of our Phase II program. And so there will be nothing in our Phase III.

Great. Beyond elexorextin in hypersomnia, there's also a growing investor interest in your project Saturn programs. Maybe starting with 729, you have a Phase Ib study in an ADHD patients coming in 4Q how translatable do you think the preclinical mouse data are in this setting?

So that -- we use the 5 Troy cereal reaction model as our preclinical model. It's quite a robust model that's been used -- it allows you to kind of compare assets on a rank basis, but also on an effect -- we went through rigorous testing of these therapeutic class within these models. So we feel really good that we're engaging that circuitry. We also know that we did a number of other things too. We did we did micron dialysis. We're looking at neurotransmitter expression in the brain. So we think that if you look at all of the indications you could take a recon agonism. -- anywhere alertness goes, all these different things, ADHD is probably the most proximal next to sleep. So you do your hypersomnia. ADHD has the highest probability of success and then you kind of move out from there as you look at other indications. So the real question for us, and this is why we're doing our -- part of why we're doing our 1b is that -- no one has really taken orexin agonism in ADHD patients before, and they may provide additional benefit beyond what the existing therapies do for ADHD patients. It's not just about your ACR score, it's what about cognition, -- what about fatigue in those patients? What about other elements that they may feel on this drug, and that's part of what we want to explore in that file study.

Great. I think you're starting a Phase II study later this summer. I guess, can you talk about your conviction to move into that ahead of seeing Phase Ib data and how you might be able to incorporate any learnings out of the Phase Ib into Phase II design?

Well, so again, the Phase Ib is about rounding out, making sure we're hitting the targets, making sure we're rounding out some of our signals, understanding the benefits of the mechanism. The Phase II is a traditional dose-ranging Phase II study where we set a range of doses that we're going to look at. And we're really trying to put ourselves in a good spot to design our Phase III program for efficacy. -- the much longer study is going to use the ACR test as a statistical test it's 300 patients. We'll have that things that overlap, there was an opportunity to adjust on the edges, but we feel pretty good about where we are in our dose range and our target engagement that we don't need to wait to do one and move into 2.

Great. Maybe briefly, we can touch on the Avadel acquisition in Loomis, which you talked about as being complementary. Now that transaction has closed, what are kind of like the key next steps in terms of integration?

So it's interesting. This transaction really addressed a number of different issues for us, not issues, but actually benefits for us. It brings with it just an incredible asset with the Lumeris and the oxybate class. It actually bolsters our commercial business as a whole, revenue-wise profitability-wise. And it prepares us for the launch of elixorexan. -- really gives us that step into the sleep space with a commercial group that is highly experienced, knows the patients, knows the payers and the physicians. And what's interesting about it too is, in many ways, it was a bolt-on. We brought over more than 90% of the commercial business. which was actually most of Avondale, frankly. And so we brought those -- that group in. They're part of our team. We're having a lot of discussions with them. Interestingly, this transaction has opened up a lot of discussions with the treatment community on how can you use orexins in the morning and perhaps oxybate at night. There's a lot of discussion now about how can we generate data to show the benefits of doing those things. So from an integration perspective, to your core question, they're pretty much integrated. We hit the ground running. We've had -- we're having just a great response, having them as part of the team. And they're going to benefit from our scale and some of the things that we have, patient engagement and all these other things and we're going to benefit from some of the things where they do really, really well, like some of their market access and pull-through and some of the stuff we're doing on luxorextin. So it's been great for us.

You're sort of alluding to it, but could you expand a little bit on the way that like your work with Lumeris, could lay the groundwork for potential launches of alert Alexorexetin?

Yes. It's interesting when you go to launch one of the drugs in a new space, it's sometimes tough. You have to go into a doctor's office, you're a new company. They don't know who you are. You don't know who they are. You don't know if suppose to talk to the doctor, the nurse, who are their payers, what systems they're using all these things. And that takes time and it takes time to burn that in. And with this transaction, we bypass all of that. We're right now talking to most of the doctors that we're going to want to talk to for alixorexton. We're out there. We know the nurses. We know how to wire that office. And so as we come in with eluxorextan, it's going to be a phase Ano,we're going to have a reputation. As Rich said earlier, we're going to be at sleep in a pretty profound way this year. Avadel was was going to be there in in-force as where we together. We're going to -- we have many posters. We're going to talk to all the KOLs, all the physicians were known to those offices, and that's going to -- that can only help your launch as you move into a new space.

And our final minutes here, I wanted to just touch on the CEO transition. Rich, I think you're moving away in August after more than 3 decades at the company. What are you most proud of throughout your tenure at Alkermes. And what's the legacy you kind of hope to leave behind.

Thing I'm probably most proud of is the fact that over 200,000 patients will get Alkermes medicines this year. you've been sort of quiet about it. We've chosen to work often in places where big pharma has not spent as much time, serious mental illness addiction. And in doing that, we've created a culture at this company that is really -- it's a really lovely company because it's animated by this idea of helping people. And this most recent progress in narcolepsy, you can see that being brought over like when Bert talks about the Avadel team coming in and what we get with them often is just that connection to the patients and the physicians. And that's really exciting for a company like ours that sees the translation, what we do in the laboratory into patients' lives, and it isn't theoretical. We've been doing it. And that's a really good feeling. So if you can spend your professional energy is doing things like that at the end of the day, if you're successful, and it's hard, translates into people's lives getting better. That's a pretty satisfying experience. And I'm really proud of handing the baton to Blair, who's obviously been integral in building it to where we are today. And so I think we're going to make that transition without a hitch.

I think that's a great place to end more officially at time. So thank you, -- thank you guys appreciate it, and thanks everyone who joined us here and online.

Thank you.