Welcome to the Alkermes second quarter fiscal year 2011 conference call. (Operator Instructions) I will now turn the call over to Rebecca Peterson, Vice President, Corporate Communications.

Good afternoon and welcome to the Alkermes conference call to discuss our financial results for the second quarter of fiscal 2011 which ended on September 30, 2010. With me this afternoon are Richard Pops, our CEO; and Jim Frates, our CFO. Before we begin, let me remind you that during the call today we will make forward-looking statements relating to among other things our expectations concerning the commercialization of RISPERDAL CONSTA and VIVITROL, the approval and commercialization of BYDUREON; our future financial expectations and business performance, our expectations concerning the future of business development transactions and our expectations concerning the therapeutic value and development of our products. Listeners are cautioned that these statements are neither promises nor guarantees, but are subject to risks and uncertainties that could cause our actual results to different materially from the results contemplated by these forward-looking statements. Including but not limited to the risk that we rely on our partners to inform us on a timely manner about developments concerning the regulatory status of BYDUREON, and the marketing strategies for RISPERDAL CONSTA. You can find a list and detailed description of these and other risks in our annual report on Form 10-K, and quarterly report on Form 10-Q, as well as in other periodic reports filed with the SEC under the Securities and Exchange Act of 1934 as amended. We undertake no obligation to update or revise the information provided on this call. This afternoon, Richard Pops will provide an update on the Company, and Jim Frates, will discuss our second quarter financial results. After our remarks we'll open up the call for Q&A. Now, I'll turn over the call to Richard.

Great, thank you Rebecca. Hello everybody. So we've reported another strong quarter today. The solid top line results, driven by continuing growth for RISPERDAL CONSTA, allow us aggressively drive multiple new product development program with minimal cash burn, while also maintaining a significant cash balance with no debt. So these financial results reflect the business strategy, which has always been characterized by a diverse portfolio. I think that it came even more clear this quarter with our three key products CONSTA, VIVITROL and BYDUREON. Plus this emerging pipeline, we have built-in diversification. We continue to build this company without depending on any single program, this lead to a certain resiliency in the business. So we're switching it up this quarter. I'm going to start with an overview of where we stand as we exit, what turned out to be a very eventful October, as we head into the end of the calendar year. Then Jim will provide a little bit more granularity on the financial. And then we'll take the questions. October obviously, was a big month for us, with two FDA action days. The first was for VIVITROL. On October 12, we announced that the FDA had granted marketing approval for VIVITROL for the prevention of relapse opioid dependency, following opioid detoxification. As we said then, we're tremendously pleased by the approval and by the strength of this label, because opioid dependence is characterized by high rates of relapse. Prevention of relapse is a powerful new concept and represents a paradigm shift for the treatment of the disease. Opioid dependence is an established medical market. The leading products in the market are Suboxone and methadone, and their sales exceed $1 billion a year. VIVITROL represents a new treatment option as the first and only, not addictive, non-narcotic, once monthly…

Thanks, Richard and good afternoon everyone. From a financial point of view Alkermes is strong. I'm very happy to report another quarter right in line with our guidance. Total revenues for the quarter were $49.2 million, driven primarily by RISPERDAL CONSTA, which generated $42 million of manufacturing and royalty revenues in the quarter. Nearly 20% increase over the first quarter with particularly strong growth outside the United States. Our second best quarter ever from a RISPERDAL CONSTA revenue perspective in fact. And this was not just a quarterly phenomenon. Our RISPERDAL CONSTA revenues for the trailing 12 months were $146 million, comparing favorable to the $139 million recorded for the trailing 12 months ended on September 30 2009. Royalty revenues for RISPERDAL CONSTA were based on approximately $378 million in end market sales. As J&J stated on its recent quarterly earnings call, during the quarter RISPERDAL CONSTA achieved sales growth of 11% year-over-year on an operational basis, with particularly strong growth in Japan. The strong growth of this product outside the United States underscores that this blockbuster product will continue to be an important revenue stream for Alkermes, for the foreseeable future. RISPERDAL CONSTA has patent protection through 2020 in the United States and 2021 in the EU. Also during the quarter VIVITROL in the alcohol dependence indication, achieved $6.5 million of net sales, our highest quarter to date and our fifth consecutive quarter of growth. We're on track to breakeven in the alcohol dependence indication, as we invest judiciously in the launch of our new opioid indication. Turning to expenses, total operating expenses for the first quarter were $56.3 million, which included $4.9 million charge for non-cash compensation expense. This is in line with our expectations and flat compared to the same period last year. On a GAAP basis…

We'll now open it up for Q&A.

(Operator Instructions) The first question comes from Cory Kasimov from JPMorgan.

I have a couple on VIVITROL, then one quick one on CONSTA. So with regards to VIVITROL, Richard, you'd said your reps are out in the field now with this. Is there any sort of early anecdotal feedback you can share with the reception you've gotten so far?

It isn't worth much because it's all going to be positive. The reps are calling on the current prescribing VIVITROL base, many of who've been waiting for these products for use in opioid dependence, so the early returns are quite positive but they're just that.

With regard to Vivitrol's cost as a treatment for opioid dependence, how big of a factor was cost and reimbursement with the lackluster commercial performance for alcoholism, and how confident are you that you have the right price for opioid dependence?

I don't think it's a major factor. I don't think cost is the impediment. The impediment on the alcohol side was changing the paradigm of using medication for the treatment of the disease. And I think on the opioid side, it's going to prove to be a pharmaco-economically advantageous. We already have data that we didn't generate prospectively ourselves, but people like Aetna and UnitedHealth have looked in their own databases that provide quantitative justification for the cost of the VIVITROL at these prices. So I think this is much more about introducing a brand new treatment paradigm into a new market and building from there.

And then lastly, on CONSTA, clearly this was a very strong quarter for the product, are you seeing anything in J&J's ordering patterns that suggest this trend can continue?

Yes, I think I would say probably the best way to answer that is our guidance last quarter for manufacturing revenues. This quarter it was $25 million to $30 million. And we just reported $32.6 million. So those patters seem to strengthening and that's good although it's hard to predict the future in the next year at this point. We will wait to do that before we guide next year.

The next question comes from Ami Fadia from UBS.

Firstly on VIVITROL, could you give sense of where the pricing is today? Price of script? And did you take a price increase recently?

The last price for VIVITROL is $1,100 a month and that went into effect on October 1.

Could you give us a sense of the rebates on it?

We don't probably talk about our rebates as it relates to VIVITROL.

But you can look in the Q and see gross and nets that are in the 20% range.

On BYDUREON, could you give us any color at all on the status of the application in Europe? Have you or has Amylin received any kind of communication with the regulatory authorities around how the application is progressing? I believe there are some standard timeframes within which they are supposed to hear back from the authorities and if you could give us any color on that?

Here's what I can tell you that maybe helpful. But first of all, as it relates to Europe, we're almost twice removed in this case. Our collaboration with Amylin and, as you know, Lilly controlled the OUS regulatory submissions. So the best fidelity, the highest fidelity response is for you to talk to Amylin and Lilly on this. That said we presume things we know from the calendar as you implied because of the timing of the filing earlier this year. That's why we said earlier we expect there's going to be action in the first half of 2011 and Europe operates a little bit differently than in the U.S. in the way clock stops and starts. So we're not completely expert in communicating when does the clock stops and starts. So you should ask those guys on that. But we do expect some type of action in the first half.

And then my third question was around the pipeline and how do you think about sort of monetizing the pipeline going forward into next year? You seem to have several sort of data announcements coming up in the next 12 months, what else can we expect, lets say, if the data is positive, how do you think about monetizing that?

Well there's two ways you can think about monetizing, and one is through building the valuation of the company by maintaining the rights to these products with more clear value, and the other is through collaboration, through partnerships. So there's an explicit valuation that's put on it by a third party. We're actually interested in both. And the necessary prelude or precursor to either those decisions is the point data. And when I tell you that we're actually interested in both, I mean that literally, we have the financial resources which is fantastic to pursue these as far as we want to on our own. But we also have the interest in the track record of collaborating aggressively on certain development programs as well. So the way we're running it here internally is that we've committed the capital if you will to take these through to these major inflection points, these value adding milestones as I mentioned before. We'll review those data and then we'll make a determination on a portfolio basis, how many of those to keep, how many to farm out; if they all work, if they all fail; it all changes based on the actual dynamic. And that's what so interesting that Alkermes is going to 2011, because as you heard earlier, there's not just one product our candidate that has data in the first half of 2011, there's a whole sequence of them. So I think when we get to look at that in total, we'll be able to make a better and a more clear answer to the question.

The next question comes from Steve Byrne from Bank of America.

Just wanted to drill into that ex-US CONSTA revenue number. Is Japan representing a meaningful contributor to overall ex-US sales or is it being singled out as just being a region where there was a sharp increase in revenue?

I think Japan is beginning to get there. It's been over a year now since it's been on the market and it is still growing fast and it happens to be the third largest single market for schizophrenia in the world. So J&J has characterized it previously as a much slim market in their business for neuroscience in general and so they seem to be doing quite well there in Japan. I would say though that around the world on a unit basis, and again I like to use because any one quarter I think is hard to look at, we've been trying to get some distance here, so again over the last 12 months ex-US has grown 17.2% in terms of unit leaving currency aside et cetera, that's a really nice strong double digit growth and that's really what's driving us now. Again it's over $1.5 billion product in sales in the last 12 months as well.

And was there anything in that quarter revenue number that was a whole over from the prior quarter, anything that you would call out as being exceptional because there were a couple of quarters where the ex-US CONSTA revenues were declining and then boom, you had this big number in the September quarter, was there anything unusual about it?

That is best directed to J&J. I think if you go back and look historically over time, and all these numbers are public, you tend to see a quarter where it doesn't grow, it doesn't grow and then bang, you get big large growth, so that's why I always try and look at 12 month's increments because I just think that takes out the quarterly ebb and flow a little bit more. But we've seen that kind of thing before. But as you track these trends, CONSTA is still clearly growing. And I think that publications like we saw this quarter in Neuropsychopharmacology where they published that 2 year data against SEROQUEL is the reason why.

And then can you talk a little bit about your ex-US strategy for VIVITROL in opioid dependence? You have some regions like Russia where they don't even use Suboxone and presumably there could be a big market. So how are you approaching the commercialization outside the US?

There are certain countries in the world where (inaudible) medication is not either available or indicated. So what we are doing is, right now we're mapping up the regulatory strategy because when you look at in the prioritization of these various countries, we look to those where most likely you get a file off the U.S. NDA translated into the local language. Meantime, we're having discussions with U.S. pharmaceutical companies both on a regional and a global basis about partnering the OUS piece of it. So I think it's a two part answer. We're going to pick out the regulatory strategy and dovetail that with the business strategy. But you're right, we do think that we have an opportunity OUS, and I'll just remind you that we do have a deal with J&J for one country, and that's for Russia. And that was a deal we signed a couple of years ago. So we believe that they'll be filing for approval based on the U.S. data in Russia in 2011.

And then in the US, do you have a sense for what portion of the docs that are prescribing Suboxone are already at the 100 patient a month limit?

I don't have that answer in hand.

I'll follow up with you on that. I think there are certainly a concentration of docs who are capped at that 100 patient limit.

I don't think it's not the preponderance of the docs, but there are some. But we'll follow-up with you. We know that answer somewhere here.

The next question comes from Mario Corso from Caris & Company.

Two questions, please. Regarding BYDUREON, with the delay, I'm curious how you look at your overall business, and I guess specifically the pipeline? If BYDUREON weren't delayed by two years or so versus BYDUREON being delayed two years or so, does that change the way you look at the outlicense versus development aspect of some of the different programs? I mean, clearly, if BYDUREON were on the market, you'd be garnering some significant funds over the next couple of years with which to finance the pipeline. The second question on VIVITROL, with the early anecdotal experience, are you getting any better view of what off-label use of VIVITROL may have been like?

On the first question, interestingly, it really doesn't change much at all because we can finance the development of these programs. And as I answered the earlier question, we have so much that we're learned about this pipeline in the next six months, let's say. So that gives us a real sense of whether we've got assets that are going to drive future valuation for the company. So if BYDUREON had been approved, if BYDUREON gets delayed, we're still going to hammer through what we're hammering through right now to get to these answers as fast as possible. By the time we get those data, let's say, fast-forward it to mid-calendar 2011, not only are we going to know those data, we'll also have a much clear sense of what's going with the QT study. We both had regulatory interactions in Europe and in the U.S. We'll have a much higher resolution about the future. But, boy, we really think that the pipeline has the opportunity to really drive valuation for us. And it's not distant pipeline. This is the stuff that's in manned, in clinical trials, new chemical entities with strong patent positions that are entirely congruent with the kind of business areas and medical areas we'd like to be in. so we're thrilled with it. On the second question, no, there's not a really good sense. We really don't believe that there was a whole lot of off-label use of VIVITROL in the opioid dependence indication. Undoubtedly with some, but clearly we were never promoting there and there wasn't reimbursement there. And so we can tell you only anecdotally that some of the top prescribing VIVITROL docs have said to us that now they can start writing for opioid dependence which indicates that they weren't writing for it before.

Today's final question comes from Ian Sanderson from Cowen and Company.

Actually, Rich, on VIVITROL, at your analyst meeting earlier this year, you talked a little bit about kind of exploring a different group of prescribers for VIVITROL for opioid dependence, and have you done any of that and have you begin expanding the sales forces, call points in any way and a follow-on to that would be, what does that mean for this sales force infrastructure around VIVITROL?

Well, we were settled on the sales force. We expanded the sales force by about 10 folks organically over the last few months in preparation for approval in this indication. Suboxone and methadone, the existing therapies in the treatment of disease, give us a lit lamp post to look under in the sense that there are prescribers who prescribe over $1 billion of pharmaceutical in this particular indication. And that's something we never had in alcohol. So we've mentioned before there are 2,000 doctors who prescribe the vast majority of the Suboxone prescription. So that's the kind of an enriched group that our sales force will be looking at to get through. And obviously that's quantitatively a fairly small number of docs to go through. The other place, it's a very logical place for the sales force to go, is for the inpatient treatment centers. And that may not be quite as obvious as it sounds, because VIVITROL requires detoxification. So you need to be detoxed from your opioid in order to get your VIVITROL injection. And where do detoxification happens, it happens in the inpatient centers in many cases. Many of these centers have typically the detoxing patients and releasing them just back into their lives without any pharmacologic support, and the recidivism rate is extremely high. Suboxone, by contrast, is more of an outpatient, doctor's office type of practice. So between inpatients looking at detox centers that are experienced in detoxification superimposing VIVITROL makes sense. And then in the outpatient setting, where doctors are using medication and seeing the benefits of using easy (inaudible) medication, we think many of those doctors will understand the logic of adding to that treatment arm and treating with an antagonist. So those will be the two major points of expansion. The overlap between the alcohol doc and the opioid docs was probably less than we would have imagined going in. So this will be some new call points for us.

And just related to that, Jim, you mentioned that you're now on track or breakeven for VIVITROL on the alcohol dependence indication. Does that send any signal in terms of how you're allocating the sales force? Have you basically pulled everybody over to the opioid dependence indication?

No, really, Ian, they're selling both. And I think it really relates to the overall expenses. We're going to be spending about $10 million to $15 million to launch the product in opioids, we've talked about that before. And if you look at our overall expenses, prior to that work in opioids, we were in the $30 million range. So once we get close to $30 million, we'll be breakeven and then we'll decide after this initial period of six to nine months of launch, how much we decide to continue invest in opioids. And I think that a lot will depend on the growth and where we're seeing growth, what type of physician, inpatient, Suboxone writers, the alcohol treatment physicians that we've seen previously. So we'll be pretty nimble on how we spend, once we learn more in the real world.

Well thanks everyone for dialing in tonight. And if you have any subsequent questions, please don't hesitate to call us. Have a wonderful evening.

Thank you for participating in the Alkermes second quarter fiscal year 2011 conference call. This concludes the conference for today. You may all disconnect at this time.