Alkermes plc (NASDAQ:ALKS) Q3 2023 Earnings Call Transcript

Alkermes plc (NASDAQ:ALKS) Q3 2023 Earnings Call Transcript October 25, 2023

Alkermes plc beats earnings expectations. Reported EPS is $0.64, expectations were $0.44.

Operator: Greetings. And welcome to the Alkermes Third Quarter 2023 Financial Results Conference Call. My name is Donna and I’ll be your operator for today’s call. All participant lines will be placed on mute to prevent background noise. [Operator Instructions] Please note that this conference is being recorded. I’ll now turn the call over to Sandy Coombs, Senior Vice President of Investor Relations and Corporate Affairs. Thank you, Sandy. You may now begin.

Sandra Coombs: Good morning. Welcome to the Alkermes plc conference call to discuss our financial results and business update for the quarter ended September 30, 2023, as well as initial clinical data related to ALKS 2680 presented during this week’s World Sleep meeting. With me today are Richard Pops, our CEO; Iain Brown, our CFO; Todd Nichols, our Chief Commercial Officer; and Dr. Craig Hopkinson, our Chief Medical Officer. During today’s call, we will be referencing slides which are available on the Investor Events section of our website. Additionally, I encourage everyone to go to the Investor section of the alkermes.com to find our press release, related financial tables and reconciliations of the GAAP to non-GAAP financial measures that we’ll discuss today.

We believe the non-GAAP financial results in conjunction with the GAAP results are useful in understanding the ongoing economics of our business. Our discussions during this conference call will include forward-looking statements. Actual results could differ materially from these forward-looking statements. Please see slide 2 of the accompanying presentation, our press release issued this morning and our most recent annual and quarterly reports filed with the SEC for important risk factors that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements. We undertake no obligation to update or revise the information provided on this call or in the accompanying presentation as a result of new information or future results or developments.

Our prepared remarks today will include initial patient data from our Phase 1 clinical trial for ALKS 2680. These data may not be indicative of future data from this trial or future results of clinical trials. After our prepared remarks, we will open the call for Q&A. And now I’ll turn the call over to Iain.

Iain Brown: Thank you, Sandy. And hello, everyone. I’m pleased to report solid results for the third quarter that demonstrate the financial strength of the business. The quarter was highlighted by year-on-year growth across our proprietary commercial products, solid contributions from manufacturing and royalty revenue streams, disciplined expense management and strong GAAP and non-GAAP profitability. With the favorable outcome of the Janssen arbitration earlier this year, the successful settlement of the VIVITROL patent litigation, and the expected completion of the separation of the oncology business in the coming weeks, the potential of the business to deliver enhanced profitability has come more clearly into focus. This has been our plan, and it’s gratifying to see it taking shape.

For the third quarter, we generated total revenues of $380.9 million compared to $252.4 million in the same period in the prior year. This reflects the reinstatement of royalties on US sales of the long-acting INVEGA products and solid performance across our proprietary product portfolio, which grew 16% year-over-year. Starting with VIVITROL. Net sales in the quarter were $99.3 million, reflecting 3% growth year-over-year, driven by the alcohol dependence indication. Inventory in the channel was stable and gross to net deductions were consistent and within normal ranges for the quarter. Moving on to ARISTADA product family. For the quarter, ARISTADA net sales increased 8% year-over-year to $81.8 million, primarily driven by underlying demand.

Inventory in the channel was stable and gross to net adjustments were unchanged sequentially. LYBALVI net sales for the quarter were $50.7 million, up 8% sequentially. Underlying prescription growth was 10% on a months of therapy basis. During the quarter, inventory in the channel decreased by approximately $1.3 million and gross to net adjustments of 25.1% reflected the continuation of our contracting strategy in the commercial space and a one-time favorable Medicaid adjustment. Moving on to our manufacturing and royalty business. In the third quarter, we recorded manufacturing and royalty revenues of $149.1 million compared to $52.9 million in the same period in the prior year. Revenues from the long acting INVEGA products was $76.1 million compared to $26.7 million in the same period in the prior year, reflecting the favorable resolution of the arbitration related to these products earlier this year.

Revenues from VUMERITY were $34.6 million compared to $26.3 million in the same period in the prior year. Turning to expenses. Total operating expenses were $337.1 million for the third quarter compared to $313 million in the same period in the prior year. R&D expenses for the third quarter decreased to $97.1 million compared to $100.4 million for the same period in the prior year. This reflects lower spending across the nemvaleukin and LYBALVI clinical programs, partially offset by increased investment in the ALKS 2680 clinical program. SG&A expenses increased to $169.4 million from $152.8 million for the same period in the prior year, reflecting continued investment in the launch of LYBALVI, particularly the DTC campaign, and certain non-recurring expenses related to the separation of the oncology business.

I’m pleased to report that our top line results, combined with our continued focus on disciplined operating expense management, delivered GAAP net income of $47.8 million and non-GAAP net income of $109.5 million for the quarter. Today, we are reiterating our financial expectations for 2023 that we provided on our press release on June 6, 2023. As a reminder, our financial expectations reflect the combined neuroscience and oncology business for the full year. Turning to our balance sheet, we’re in a strong financial position as we ended the third quarter with approximately $996 million in cash and total investments and total debt outstanding of approximately $291 million. We currently expect that, upon separation, Alkermes will provide $275 million of cash to Mural Oncology, which we believe will enable Mural to fund its operations through top line data readouts for ARTISTRY-6 and ARTISTRY-7 and into the fourth quarter of 2025.

In the coming weeks, we’ll provide additional information regarding the separation and distribution of Mural shares to our shareholders. Post separation, Alkermes will emerge as a pure play neuroscience business with enhanced profitability and a strong balance sheet. Our focus will remain on the execution of our strategic priorities and disciplined management of our cost structure as we invest in those opportunities that we believe will drive future growth, including the ALKS 2680 development program, and the continued launch of LYBALVI. And with that, I’ll hand the call over to Todd for a review of the proprietary commercial products.

Todd Nichols: Thank you, Iain. And good morning, everyone. I’m pleased to share that we delivered solid year-over-year growth of 16% across our proprietary commercial portfolio in the third quarter. Our performance during the quarter reflects continued execution of our commercial strategy against the backdrop of some 3summer seasonality in the psychiatry and addiction treatment markets. We expect growth to accelerate in the fourth quarter and reiterated our expectations for our 2023 proprietary product revenues today. Starting with LYBALVI. Net sales increased 8% sequentially to $50.7 million. Prescriptions grew to approximately 42,000 TRxs for the third quarter, reflecting 10% sequential growth, which was ahead of other entrants in the branded oral anti-psychotic market.

We expect that growth will accelerate as we head into the fourth quarter, driven by a strong focus on execution, our direct to consumer campaign and underlying seasonal trends, and we are encouraged by prescription trends over the past several weeks. During the quarter, prescriber breadth continued to expand. In our recent market research, health care providers cited LYBALVI’s efficacy, weight gain profile and patient outcomes as key drivers for their increased prescribing, which is encouraging feedback as we think about brand awareness and potential future prescribing patterns. In terms of market access and Medicare and Medicaid, there is a pathway to access for all patients. In the commercial channel, there were no changes to our commercial access profile during the quarter and we expect the access profile to remain unchanged for the remainder of 2023.

We have ongoing discussions with the commercial payers and have designed our commercial access strategy to best support the long term growth of the brand, balancing volume growth and the profitability of each unit. As we advance our efforts to drive awareness, our direct to consumer campaign is ongoing with increased ad placement in the fall months, in line with TV viewership trends. While it will take time to see the full impact, leading indicators on the effectiveness of the DTC campaign are encouraging. Specifically, we’re monitoring the impact of our DTC campaign on internet search metrics, website visits, provider and patient awareness levels and patient requests. We are excited by the opportunity for LYBALVI and are laying the foundation for long term growth.

Turning to the ARISTADA product family. Net sales in the third quarter grew 8% year-over-year to $81.8 million, driven primarily by demand growth of approximately 8% on months of therapy basis. We expect this market will continue to be dynamic and our team will continue to focus on highlighting ARISTADA’s differentiated value proposition, including its once every two month dosing option and the ARISTADA INITIO initiation regimen, both of which are supported by clinical data from our ALPINE study. Turning to VIVITROL. Net sales in the third quarter increased approximately 3% year-over-year to $99.3 million. The alcohol dependence indication was VIVITROL’s primary growth driver and accounted for approximately two-thirds of the VIVITROL volume.

Importantly, against the backdrop of growth in the alcohol dependence treatment market, prescriber breadth for VIVITROL has continued to expand in that indication, which has driven new patient starts over recent quarters. As we think about the long term opportunity for the brand, during the quarter, we were pleased to come to a settlement agreement with Teva to resolve our patent litigations related to VIVITROL. Under the terms of the agreement, Teva will be able to market a generic version in the US beginning in January of 2027 or earlier under certain customers circumstances. With this agreement, we’re able to appropriately plan for the continued commercialization of VIVITROL and believe that the product will continue to be an important element of our growth and profitability for the next several years.

Taking a step back, we’re focused on executing our brand strategies for all three products and on delivering our net sales expectations for 2023 across the portfolio. Serious mental illness and addiction are complex conditions with unique and often challenging treatment paradigms that require well-resourced and dynamic commercial efforts to support patient access and drive growth. Our commercial infrastructure is a strategic asset, one that can be leveraged in additional opportunities in deep disease spaces, as well as in other therapeutic categories, including those that may emerge from our development pipeline, or future business development opportunities. With that, I’ll pass the call to Craig to discuss our ALKS 2680 development program.

Craig Hopkinson: Thank you, Todd. I’m pleased to be joining you this morning from the World Sleep meeting where, earlier this week, we presented our first clinical data for ALKS 2680, a novel investigational orexin 2 receptor agonist for the treatment of narcolepsy. The orexin pathway has been established to be closely linked to the pathology of narcolepsy. Orexin-1 neuropeptides that serve as important regulators of the sleep/wake cycle by promoting wakefulness and suppressing REM sleep. In particular, narcolepsy type 1, or NT1, is associated with the absence or significant deficiency in orexin concentration and the presence of cataplexy. People living with narcolepsy who did not experience cataplexy have what is called narcolepsy type 2, or NT2.

ALKS 2680 was designed to be an hourly bioavailable orexin-2 receptor agonist with potency 10 times greater than the natural orexin A peptide, a greater than 5,000 fold selectivity relative to the orexin-1 receptor. The molecule is designed to address the underlying pathology of narcolepsy and to deliver durable and quality of daytime wakefulness and cataplexy control, an acceptable safety and tolerability profile and a wide therapeutic range that can accommodate different doses potentially need for NT1 and NT2. The molecule is also designed to exhibited pharmacokinetic and dynamic profile that merge the natural sleep/wake cycle with a low therapeutic dose and once-daily oral dosing. The clinical investigation of ALKS 2680 follows encouraging preclinical data.

These preclinical data were also shared at an oral presentation this morning at the World Sleep meeting. Today, I want to focus on the review of the Phase 1 safety and tolerability data of ALKS 2680 in healthy volunteers and share initial safety and efficacy findings from patients with narcolepsy type 1. It is gratifying that, in our clinical experience to date, ALKS 2680 has behaved as we would have expected based on our extensive preclinical work. We are pleased with the clinical profile that is emerging both in terms of safety and tolerability, as well as therapeutic activity of dosing patients. The study design is outlined on slide 16. The Phase 1 study began with single and multiple ascending dose evaluations in 80 healthy volunteers to assess safety and tolerability as well as the pharmacokinetics and dynamic profile of ALKS 2680.

This study was double blind and placebo-controlled. The single ascending dose, or SAD, tested single doses of ALKS 2680 up to 50 milligrams. In the multiple ascending dose of MAD, subjects received 10 days of once-daily doses up to 25 milligrams. Moving on to slide 16. From a safety and tolerability perspective, I’m pleased with the profile that we observe for ALKS 2680 in healthy volunteers. ALKS 2680 was generally well tolerated across all doses tested and there were no serious or severe adverse events. Most adverse events were mild, occurred early, were transient and resolved without medical intervention or treatment interruption. In the SAD, the most common AE vis-à-vis drug related was dizziness, pollakiuria which means increased frequency and urge to urinate, nausea and visual disturbances and most were observed at or above the 50 milligram dose.

In the MAD, the most common AEs were insomnia, dizziness, pollakiuria and visual disturbances. And most of those were at or above the 8 milligram dose. The visual disturbances are described as blurred vision and increased light sensitivity. As I mentioned, these AEs were transient, resolved with continued dosing of ALKS 2680in the multiple ascending dose study and did not prevent continued dose escalation. There were no safety signals identified in vital signs, laboratory parameters or ECG. No hepatotoxicity signals were observed at any dose levels. We will continue to accumulate safety data over the course of the development program. This will include continuing dose escalation in the SAD and the MAD in order to fully characterize the safety and tolerability profile of ALKS 2680 as the maximum tolerated dose has not yet been identified.

In terms of pharmacokinetic profile on slide 17, we achieved the key design objective supporting once-daily dosing of ALKS 2680 and a profile that mimics the natural sleep/wake cycle with a half life of 8 to 10 hours. In the top panel, you can see that systemic exposures you can see that systemic exposures increased proportionately with dose, however with a blunted CMAX profile as depicted in the lower graph. Both of these features were explicit design intentions. The metabolic profile was also consistent with our design objective. In the study, two metabolites were observed. These metabolites were consistent with those observed in preclinical studies. Neither contributed to pharmacologic activity nor were they reactive.

Sandra Coombs: Craig, one moment. I think our audio is not coming in great. I’m going to switch the line to see if we can get a better connection.

Craig Hopkinson: Collectively, data from the SAD and MAD evaluations supported the dose levels selected to move forward into the Phase 1b evaluation in patients. This part of the study is enrolling patients with narcolepsy type 1, narcolepsy type 2 or idiopathic hypersomnia with up to eight patients per group. Earlier this week, we shared data from the first cohort of four narcolepsy type 1 patients, which was specified and powered to detect any significant effects and dose responses at the interim analysis. Starting with the study design on slide 18, following a two-week washout period of existing medications, patients were randomized to a crossover design where each received placebo, 1, 3 and 8 milligrams of ALKS 2680 with a one-day washout period in between each dosing day.

The primary endpoints were safety and tolerability. However, the Phase 1b offers the first opportunity to assess proof of concept efficacy of single doses of ALKS 2680 compared to placebo and baseline within the same subject via the maintenance of wakefulness test. In terms of baseline characteristics outlined on slide 19, the patients studied demonstrated severe narcolepsy symptoms. Next on slide 20. ALKS 2680 was generally well tolerated across all doses tested in the NT1 patients. All AEs were mild, only occurred at the 8 milligram dose, and were largely on target. Note that the most common AE was insomnia, which is directly related to the drug’s activity. This is what we were looking for. The occurrence of insomnia at the 8 milligram dose was helpful in helping us narrow the planned dose range for future clinical development of NT1.

Pollakiuria and salivary hypersecretion occurred in two of the subjects and these AEs are expected, on-target effects of the orexin pathway. There were no serious adverse events nor any adverse events leading to discontinuation. Additionally, there were no clinically meaningful treatment emergent changes in laboratory parameters or ECGs. Turning to slide 21 and the first assessment of ALKS 2680 in the Maintenance of Wakefulness Test, the 40 minute Maintenance of Wakefulness Test, or MWT, is administered every two hours post-dosing. The mean score is calculated by averaging the results of the tests conducted at hours 2, 4, 6 and 8 post dose. Prior to dosing, patients demonstrated a mean MWT baseline score of 3 minutes, meaning that they fell asleep within three minutes.

At all doses tested and in all patients, ALKS 2680 significantly improved mean sleep latency or the time that these patients were able to remain awake compared to baseline. There was a clear dose response with mean MWT improvements compared to baseline of 18, 30 and 37 minutes at 1, 3 and 8 milligrams respectively. Treatment with placebo was associated with a 1 minute reduction in mean MWT scores compared to baseline. Due to the magnitude and consistency of effect at each dose level of ALKS 2680, the improvement compared to placebo was highly statistically significant, despite the relatively small number of patients. Slide 22 shows the time course. ALKS 2680 showed clinically meaningful improvements in MWT from baseline at all doses tested and in all patients.

At the 8 milligram dose, patients maintained wakefulness for the full 40 minutes MWT duration up to 10 hours post dose. MWT scores at 3 milligrams were comparable to 8 milligrams for the first six hours. And both 1 and 3 milligrams of ALKS 2680 showed the improved wakefulness up to 8 hours post dose. The tolerability and efficacy profile of ALKS 2680 shown today in NT1 is encouraging and informs our approach around dose selection and our expectations as to the tolerability and efficacy in NT2. We received some questions from investors regarding therapeutic index and potential dosing in NT2. Based on the pathology of NT2 in previous clinical data, we expect these patients to be less sensitive to orexin, requiring higher doses for efficacy and tolerating higher doses before observing limiting side effects.

Based on our observed activity to date in NT1 and our modeling, we now believe that NT2 patients may only require a two to three fold increase in the ALKS 2680 NT1 dose. With a clear dose response and indication of therapeutic benefit at doses from 1 to 8 milligrams of NT1 and not having reached the maximum tolerated dose in patients or healthy volunteers, we are confident in the dosing flexibility that we are currently enrolling NT2 patients in the study. Concluding on slide 23, I’m pleased with the initial data generated from this innovative and efficiently designed Phase 1 study, which support the key design objectives of the molecule. In less than a year, we’ve been able to establish a preliminary safety and tolerability profile of ALKS 2680 in healthy volunteers, demonstrate target engagement through EEG evaluations, establish a PK profile that supports once-daily administration, with a target dose well below 10 milligrams of NT1 patients, and demonstrate significant wakefulness throughout the day.

We will continue to enroll the Phase 1b study in narcolepsy and IH patients and look forward to sharing those data. We are also in the process of finalizing the design of a Phase 2 study which is planned to begin in the first half of 2024. And now I will hand the call over to Rich.

Richard Pops: That’s great. Thank you, Craig. So, Craig and his teams have accomplished a great deal in the last year to efficiently advance the 2680 development programs and generate the data presented this weekend at World Sleep. ALKS 2680 is an Alkermes designed and developed molecule. It’s the product of expertise that Alkermes has accumulated in molecular design, medicinal chemistry, pharmacokinetic modeling, and neuroscience drug development. As the pharmacology of ALKS 2680 continues to be validated in clinic, we believe it has the opportunity to be an important new mechanism in the treatment paradigm for patients with narcolepsy. And beyond that, it may provide the foundation to expand the biology of orexin agonism into additional potential disease areas, some characterized by excessive daytime sleepiness, as well as others.

The data Craig summarized advance the 2680 development program past two important stage gates. First, establishment of an initial safety and tolerability profile that supports further clinical development. Second, demonstration of proof of concept through initial evaluations of efficacy using validated measures. An important characteristic relating to both points is potency, expressed in the form of expected dose. Our modeling suggests, and the initial human data supported, a dose range for NT1 patients between 1 and 8 milligrams. We believe that potency at these dose levels reduces the potential for off target adverse events and, together with the tolerability profile observed to date, provides a wide potential therapeutic index to accommodate dosing in NT1 and NT2.

With this initial data set, we believe we have adequate information to complete the design of our Phase 2 program. As we move into later stages of development, we’ll further establish the safety, tolerability and efficacy profile of 2680 through established regulatory inputs, as well as patient reported outcomes, as we further explore the effects of modulating the orexin system. So that’s the ALKS 2680 program. Shifting gears, we expect another transformational event to occur in the coming weeks, with the planned separation of our oncology business into an independent, publicly traded company called Mural Oncology. We’re now in the final stages of implementing the separation, which has been a significant undertaking from an operational, logistical, legal and accounting perspective.

As we prepare for the launch of Mural, it’s important to us that Mural begins its journey as an independent company in a position of strength in terms of its leadership, the ongoing clinical studies and financial resources. Dr. Caroline Loew, the CEO designate of Mural, has recruited a talented management team and Board of Directors, and I’m confident that their leadership will be a strategic asset. The potential registration enabling studies for nemvaleukin in platinum-resistant ovarian cancer and mucosal melanoma are well underway. And we’ve continued to focus on study enrollment and execution as we prepare for the separation. We believe that the separation provides an opportunity to unlock value for both companies, create more optionality for shareholders and position both companies for success.

Post separation, Alkermes will emerge as a more profitable, pure play neuroscience company with a clear strategy and well defined opportunities for value creation. Taking a look back, 2023 has been a very productive year, highlighted by the ongoing launch of LYBALVI, including initiation of the DTC campaign, strong enrollment and execution of our ongoing clinical studies in oncology and in neuroscience, completion of the many workstreams to support the separation of the oncology business, and the successful outcomes in the Janssen arbitration and the VIVITROL settlement. Each of these represents an important accomplishment in its own right. But collectively, they transform the financial and growth profile of the company. We believe we’re in a position to drive significant value for shareholders and look forward to share our progress with.

So with that, I’ll turn it back to Sandy to manage the Q&A.

Sandra Coombs: All right. Thanks, Rich. Apologies for the audio quality during some of Craig’s remarks. I hope that this line is working better for you. Donna, we’ll open the call now for Q&A. And in the meantime, we’ll also work on posting the prepared remarks to our website, so that any pieces that were missed can be reviewed on the website.

Operator: [Operator Instructions]. Today’s first question is coming from Akash Tewari of Jeffries.

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Q&A Session

Amy Li: This is Amy on for Akash. So a couple from us on the orexin program. We’ve seen that with TAK-925 and NT1 that the 11 milligram dose also maxed out on MWT initially, but MWT dropped from 35 plus to 20s on day 7. On the other hand, we’re seeing pretty durable effects on the 44 milligram dose at day 7. How do you plan to factor in this long term durability aspect when selecting the going forward dose from the 3 to 8 milligram dose range going forward? And then, what dose do you expect in NT2 patient? Is it fair to say that your dose could be more in the range of 10 to 12 milligrams rather than 4 to 5x NT1? And then finally, do you expect some of these on-target AES to attenuate over time?

Craig Hopkinson: Let me address each components on its own. So in terms of our dose range for the NT1 population, obviously, we have very clear dose response, exactly what we expected to see. And I think this puts us in a position to be able to model out appropriate doses for our Phase 2 study. We are also looking at the technical excellence that was observed with the TAK program. And obviously, this is something that we are going to be modeling into our doses for Phase 2, as well. Let me take the safety question [indiscernible]. Discussions with investigators at the meeting this week, they really are impressed with the safety profile generated for the IH where we haven’t shown side effects at the lower doses. And the side effects that we’re seeing at the 8 milligram dose are largely on-target side effects.

These are mild, they resolved spontaneously. We saw no serious or severe adverse events. And essentially, obviously, no discontinuations. And I think, importantly, the insomnia is almost due to the [indiscernible] potential investigators for Phase 2. Their belief is that, with this mechanism, that will attenuate over time as you had asked. And it will, probably over the first couple of days, normalize. So we’re impressed with the safety – encouraged by the safety profiles to days, and once again believe that that really sets us up to choose the appropriate doses for Phase 2. In terms of the NT2 question, we’ve seen data from the TAK program where the NT2 population is less sensitive to orexin, indicating that higher doses will be needed. At this point in time, given our dose response that we’ve seen at below 10 milligrams for NT1, we think that this sets us up to sort of narrow the range for NT2 to about two to three fold where previously we thought we may need up to up to five fold the dose.

We’re obviously collecting a separate cohort of patients for NT2 at a different dose range. And those data will obviously also be incredibly important to inform the dose range for the NT2 dose for Phase 2.

Operator: The next question is coming from David Amsellem of Piper Sandler.

David Amsellem: Just a couple. So first, on idiopathic hypersomnia, can you talk to dosing there? And what is your plan for IH regarding further development? Is that going to be a backup molecule? So, help us talk through your IH thinking? And then secondly, on a different topic, you talked about the commercial organization being a leverageable asset. Makes sense. But does that mean that you’re open to or prioritizing the addition of commercial stage or market ready assets to the portfolio? Thank you.

Sandra Coombs: Craig, do you want to take the first one and then Rich can take the second question?

Craig Hopkinson: Yeah. So, we are collecting data on IH patients. We’ve got a separate cohort in our Phase 1b program. That cohort of patients is currently enrolling. And then, based on those data that once again will inform appropriate doses for IH in our Phase 2 program. We haven’t disclosed the dose for our NT2 dose range in the current 1b study and nor have we disclosed the dose range that we are exploring for IH at this point in time.

Richard Pops: And with respect to the question about commercial, yes, I think that the point Todd has made [indiscernible] LYBALVI, ARISTADA and VIVITROL requires far more than just a field force. It requires a lot of infrastructure. And now that we’ve built that and demonstrated efficacy through the launch of LYBALVI, we do think that that’s an asset that we can leverage with additional products from the outside.

Operator: The next question is coming from Umer Raffat of Evercore ISI.

Umer Raffat: …and not showing full safety table for the multi ascending dose at the conference. So that’s one. And then also, as we think about the narcolepsy type 1 and the declaration of dose being somewhere between 3 and 8 milligrams, are we fully confident that we can make that determination based on single dose data because there’s been data from other orexin suggesting a fading in efficacy beyond the first dose effect, I’d be curious how you think about that. And finally, if you could just elaborate on LYBALVI trends into next year, especially as it relates to where some of the consensus estimates stand versus how you’re thinking about it in light of DTC.

Sandra Coombs: We missed the beginning part of your first question on the SAD table.

Umer Raffat: I was just asking thought process and you know how you have the safety table for single dose narcolepsy type 1 patients, but not for the multi ascending dose.

Craig Hopkinson: As we were designing our presentation for the World Sleep conference, it was really just economy of trying to pack a lot of in promotion into a short presentation. In terms of the single ascending dose table, obviously, we explored six separate doses there – four separate doses in terms of the MAD. And so it just didn’t make sense to really sort of try and compress that into the presentation, but rather just focus on the most common adverse events greater than 5%. As you saw, these were largely sort of mild to moderate adverse events. They were largely sort of self-resolving. And we only had the one treatment that’s continuation. So the summary is really reflective of our experience across the set.

Sandra Coombs: [indiscernible].

Craig Hopkinson: Yes. So this is one of those indications where translatability is extremely high. One of the [indiscernible] confidence in the potency of this compound where we have greater than sort of tenfold potency to orexin A. We also are cognizant, as I said previously, of the [indiscernible] that Takeda has seen. As such, we believe given the clear dose response, as well as the durability of response that we’ve seen with single dosing in a 1b study, this really sets us up well to embark upon our Phase 2 program, which obviously will explore doses in Phase 2 for each of these indications.

Sandra Coombs: Todd, did you want to comment on the LYBALVI trends for next year and expectations around that?

Todd Nichols: In Q3, the broader category, the branded oral anti-psychotic category did experience some seasonality. We saw that. We believe this is going to rebound in Q4. And as I said earlier, we’re actually already seeing that. We started seeing an uptick in TRx prescriptions and NBRx new patient starts at the end of Q3 and that’s continuing into Q4, which is encouraging. Going into next year, we are extremely confident about the growth prospects and outlook for LYBALVI for several reasons. Breadth of prescribing continues to expand. Our market research, when we talk to HCPs, they tell us their intent to prescribe continues to expand. We are investing, as you know, in a very broad direct to consumer campaign. It’s still early, but the trends and the metrics are encouraging there.

And also, we always come back to, LYBALVI has a very broad, differentiated label, and is considered one of the most effective agents in the category. So we have a lot of confidence that we’re going to see growth into Q4 and into next year.

Operator: Next question is coming from Paul Matteis of Stifel.