Ladies and gentlemen, thank you standing by. And welcome to the Alkermes Conference Call to discuss the company's Fourth Quarter and Year End 2014 Financial Results. At this time, all participants are in a listen-only mode. There will be question-and-answer session to follow. Please be advised that this call is being recorded at Alkermes request. At this time, I would like introduce your host for today's call Ms. Rebecca Peterson, Senior Vice President of Corporate Communication at Alkermes. Please go ahead.

Thanks, Brendan. Welcome to the Alkermes PLC Conference Call to discuss our financial results for the quarter and year ended December 31, 2014. With me today are; Richard Pops, our CEO; Shane Cooke, our President, and Jim Frates, our CFO. Before we begin, I encourage everyone to go to the Investor section of the alkermes.com to find our press release and related financial tables, including a reconciliation of the GAAP to non-GAAP financial measures that we'll discuss today. We believe that the non-GAAP financial results better represent and reflect the ongoing economics of our business. Our discussions during the call today will include forward-looking statements. Actual results could differ materially from those contemplated by these forward-looking statements. Please see our press release issued today and our annual report on Form 10-K for important risk factors that could cause our actual results to differ materially from those projected or suggested in the forward-looking statements. We undertake no obligation to update or revise the information provided on this call today as a result of new information or future results or development. Today, Jim will discuss our financial results and Rich will provide a brief update on the company. After our remarks, we'll open it up for Q&A. And now, I'd like turn over the call to Jim.

Thanks, Rebecca. Hello, everyone. We're please to report our results for the fourth quarter and year ended December 31, 2014 and our financial expectations for 2015. Alkermes ended the year strongly and our 2014 results were ahead of expectations. These results were characterized by strong revenues from our portfolio of commercial products and focused investments in our pipeline. We believe this pipeline has matured into the most exciting pipeline in CNS. It is late stage we are validating data and we control the assets 100%. With this pipeline in our commercial business, both performing well, we continue to build a major biopharmaceutical company with significant growth and earnings ahead. In 2014, our commercial portfolio generated $618.8 million of total revenues and we earned $54.6 million of non-GAAP net income, demonstrating our strong financial and operational performance. We ended the 2014 with over $800 million in total cash and investments and are well capitalized to execute on our pipeline and commercial portfolios. Turning to fourth quarter, our total revenues were $175.2, driven by robust revenues from INVEGA SUSTENNA, VIVITROL and AMPYRA and we recorded non-GAAP net income of $16.8 million. I'll now review some the key drivers of our financial performance during the quarter. Within our commercial portfolio, worldwide end market net sales of our long-acting atypical antipsychotic franchise, RISPERDAL CONSTA and INVEGA SUSTENNA were approximately $712 million in the fourth quarter compared to $671 million for the same period last year. For the quarter, Alkermes reported manufacturing and royalty revenues of $70.3 million for this product franchise. INVEGA SUSTENNA continues to show impressive growth, as the leading product in the class with end market sales of $418 million in the quarter, reflecting nearly 24% operational growth year-over-year. Our partners at Janssen continue to invest in the long-acting atypical antipsychotic space.…

That's great. Thank you, Jim. Good morning everyone. 2014 was a year characterized by excellent execution of our plans and validation of important drug candidates as we continue on its path to build a high value biopharmaceutical company. We have proven and productive R&D engine, generating innovative products design to address to the needs of range of participants in the healthcare systems, not just patients who are central to our focus, but also they are care givers, families, healthcare providers and payers. Moving into 2015, we've identified our next leg of growth, as the potential has become clear for this exciting portfolio of late stage drug candidates following a series of positive clinical trial results. We now have three portfolios that drive our business, our commercial portfolio of marketed products, the emerging blockbusters that are next in line to become potentially significant commercial products and our pipeline of earlier stage candidates that continues to be replenished by our R&D engine. As we look ahead, we see one of the strongest pipelines in the pharmaceutical industry with four late stage drug candidates each with major potential. The first is ALKS 5461, for patients with major depressive disorder and an inadequate response to standard therapies. 5461 is based on a new mechanism of action and is differentiated from the classic SSRI or SNRI approach. Based on the compelling data from the Phase 2 program, last year we initiated the comprehensive forward pivotal program. The objective of this program is not to run entirely new clinical experience, but to replicate our successful Phase 2 results in Phase 3. Last month, we announced data from the first study in the pivotal program called Forward 1. These data were very positive and clearly replicated results from our previous Phase 2 study. Seeing these consistent effects,…

Thanks, Rich. We'll now open up the call for Q&A.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And from Leerink Partners we have Michael Schmidt on the line. Please go ahead.

Hey, good morning. And thanks for taking my question. So you will have three new agents in Phase 3 testing by year-end. How is your thinking evolving with regards to addressing these opportunities on a global basis, either from the regulatory point of view for these trials, these potential new trials with those allowed for your approval as well? And secondly on the commercial front, how do you foresee addressing ex-US markets with these opportunities? And my second question is, on SG&A with the build [ph] out of the commercial infrastructure, do you foresee any commercial synergies for VIVITROL as well? Thank you.

Hey, Michael. It’s Rich. I'll take some of those. First of all thanks for the question. It’s a really high quality series of decision we have to make now, because the pipeline is so populated, as you say with late stage products. So taking the pivotal programs in turn, 5461, 3831, 8700. 5461 we see as a global product and we're – the Forward program is addressing many of the global registration needs. For European registration we expect we have to run an additional study in addition to the Forward program that we disclosed. And we're talking with European regulators and developing that strategy now. 3831, the data are pretty new, but we absolutely see that as a global product as well. And so as we design this Phase 3 program, we will also meet with European regulators to talk about its applicability to the OUS [ph] market. And the same holds for 8700, we'll – you clearly see Tecfidera being sold on the global basis and we have to be mindful of exclusivities in various territories and meet with the regulators to come up with the plan. But we see all the three of those in particular on a global basis. The commercial technique that we'll use to bring these products to market OUS are in development right now and it catalyzes in fact by the point now that we have multiple assets in this CNS category in psychiatry. So, if we only had one, we would think about licensing probably OUS, but given the fact that we have multiple products, we like the idea that we have perfected ownership of all these products on a global basis right now. So evaluating what our global commercial strategy will be for the portfolio. SG&A question, Jim you want to take…

Yes. I'll take that one. So the overlap between and potential synergies between VIVITROL and Aripiprazole Lauroxil, another good question. First of all, we are adding reimbursements specialist and policy people that will be able to work across the country on both products and the sales forces are going to be sharing our management team and our management structure. So there will be some synergies there, but there is not really a particular overlap between the folks that prescribe medicines for addiction for opiate dependence and alcohol dependence and schizophrenia. I think and we hope and expect that as maybe as treatment of all that becomes more together, but right now they are very separate systems. So we'll have separate sales forces, but there will be some synergies on the management and some of the more reimbursement areas.

And Michael, let me just make one more point for you all, one more subtle point about synergies. When you think about attracting the finest commercial people in the business that come to a company, when you have a product like VIVITROL in the market Aripiprazole Lauroxil on the threshold of coming to the market and now 8700, 3831 and 5461 all within the planning scenario of somebody who is looking to make a career change. We're seeing just a remarkably talented group of people attracted to come Alkermes now.

Okay, great. Thanks so much.

Thanks, Michael. The next question…

From Cowen & Company we have Ken Cacciatore on the line. Please go ahead.

Good morning, guys. My question is as you look at the stock your currency is up very nicely. Your balance sheet is still very healthy. You are in overall good position. So I'm wondering why not as you're building the infrastructure ahead of aripiprazole lauroxil launch and it bulks up, why wouldn't you be looking to expand the unmarketed portfolio given the position that you're in. Are you actively looking at assets, even maybe late stage assets, or do you just want to continue to push forward with the current portfolio alone? Thank you.

Hey, Ken. It’s Rich. The answer is yes to both. We build this company over time through a series of clever acquisitions that were timely and consistent with our business at the time. We have a just incredibly rich portfolio of development products. So, we would add to that by exception where we see things that are complimentary and at the same level of quality. On the commercial side, it’s interesting, you're right, there maybe opportunities for us to accelerate our presence in some of these markets with commercial products. It’s a target core environment is how we say, but we are always out there evaluating those deals.

Thank you.

From JPMorgan we have Cory Kasimov on the line. Please go ahead.

Hey. Good morning, guys. Thanks for taking the questions. I have two of them for you. The first one I guess is for Jim, just looking for some additional granularity on the SG&A guidance. Can you remind us of how many sales reps you have now? I guess they would be primarily dedicated to VIVITROL, and how many do you expect to have by the time you launch aripiprazole lauroxil?

Sure, Cory. Currently we have 65 reps selling VIVITROL and that’s been a pretty consistent number over the last year or two. And as we said before, we're targeting a number of 175 sales people for aripiprazole lauroxil and we'll be making those hiring those people, will becoming on board in the next quarter and early third quarter as we prepare for a launch in September.

Okay. Great. And then the second question is following up on the positive data that you talked about that you had earlier this year for both 3831 and 8700 and the company stated intention to advance both into pivotal trials. I realized that end of phase 2 meetings are still pending for both, but do you have any updated thoughts, maybe, to what you had to say earlier this year on what phase 3 studies might look like for these? I guess I'm asking, how straightforward do you consider these programs are going to be?

I think they both can be relatively straight forward. It’s just a matter than of sitting down with the regulator and figuring out what the most optimized strategy is going to be. 3831 in particular if you think about it Cory we've actually run a large randomized study testing its effects on weight. We'll have the most – the complete data set from that in a few weeks time. But it really answers the question in very rigorous way about the differential effects of weight. The primary end point of the clinical trial, we just ran as you know with efficacy. So we think the probability of repeating in Phase 3, demonstration of the efficacy of 3831 is extremely high and going to that with very well elaborated in terms of its weight differences. We think the overall program is quite straight forward and what's interesting is to feather in additional data that might arise from the second Phase 2 programs that’s on way in the concomitant alcohol use patient populations well. So we actually have very big ambitions for 3831. And the ambitions are really driven the quality of the data set that we just reported. 8700, I know there is a lot of questions speculation about what the most accelerated form of clinical trial could be for MMF pro-drug. So what's – and so speculating we have our own thoughts and we'll sit down with the regulators as soon as possible and let you guys know as soon as we come to some type of agreement on that.

Okay. Thanks for the taking the questions. See you next week.

Thank you, Cory.

From Mizuho USA we have Mario Corso on the line. Please go ahead.

Good morning. Thanks for taking my questions and congratulations on all the progress. In terms of SG&A, drilling down there a little bit, if we annualize the 4Q number, we get about $220 million. So then that would mean another $100 million or so incrementally in 2015. So, is that's really all aripiprazole lauroxil commercial? Obviously 175 reps would get you maybe $40 or $50 million in terms of direct costs. Is that the right way to think about that? And then in terms of the pipeline, NCDEU, is that still the target meeting for both the 5461 and the 3831 data? Thanks very much.

Thank you, Mario. Jim, go ahead take Mario's SG&A one.

Sure. So you're right, Mario, you know, you're doing the math correctly, that’s about a $100 million increase in spend. One thing to point out a lot of that actually is an increase in non-cash compensation, given that our stock price is almost doubled year-over-year, our non-cash comp is going up quite significantly. And that’s just based on the number of shares issued in terms of stock price. We're also – there is in increase in spend on VIVITROL as well and that spend is really commensurate with the growth in sales from a $80 million range up to the $125 – excuse me, the $90 million range of $225 to $235 they were projecting in the next year. But the bulk of the spend is going to be around Aripiprazole Lauroxil, the sales force and the preparation for the launch spend.

Rebecca, why don’t you answer the…

So, Mario, obviously we submit a plethora of abstracts for scientific data but there a number of conferences this spring that you should expect to see data at on our pipeline.

So more than NCDEU, we are growing beyond that.

The most proximal is the yeah, international conference on schizophrenia which is coming up at the end of March.

Okay. From Credit Suisse we have Ari Jahja on the line. Please go ahead.

Good morning. And thanks for taking my questions. First for Rich, beyond your disclosures at the investor meeting, can you remind us about the clinical use flow in the first half of this year? I know Rebecca has mentioned about the international congress in schizophrenia, and I also have a follow-up question for Jim. Thank you.

Yes, Ari. The most dynamic part of it is 3831 which we're submitting abstracts immediately after receiving those data and we have different ways of data. One you'll see the data from three month double-blind cohort that we gave top line results on, but we're also fascinated to see to see the second three month phase and we'll get that either out in subsequent meetings and publications as well. So 3831 we'll have a whole of data, we'll give you lot of transparency and as the data supporting that program. 5461, we're also beginning to present data in various scientific forums both pre-clinically and clinically about this novel mechanism of opioid modulation, particularly introducing the idea that opioid modulation can be done to reflect mood without – we're not having addictive properties, as well and throughout the course of the year by the end of the year we'll have the human abuse liability studies done which will provide human clinical data support that observation as well. On 8700, we're going to – we're already have lined up I think we will be presenting the first data from [indiscernible] I am looking at Rebecca to confirm that…

It’s been submitted.

It’s been submitted, so I don’t know if we have it approved yet or no for sure. And then of course as we move into the summer time, we'll be looking at approval of Aripiprazole Lauroxil in August as the plan is launched in September and we're also going to put immuno modulator oncology product into the clinic at the end of the summer as well. Our first biologic in that program. And we also have another new candidate that will be announcing that will give you some time line on as well that will provide additional news for. So the – its interesting because you look at all three of the portfolios of the company, the commercial portfolio, there is lot of actions with VIVITROL and INVEGA SUSTENNA in particular, along with AMPYRA doing quite well. The emerging blockbuster portfolio you'll hear a lot about next Monday, but all those elements the Aripiprazole, 8700, 3831, 3461 all moving quickly generating news. And the new portfolio of products will continue to generate news flow as well. The immuno modulator, the new product candidate and other things in the pipeline that are growing.

That’s great. Thanks you. And then for Jim, can you talk about the pushes and pulls that led to the increase in R&D spend guidance this year? And also, on aripiprazole lauroxil, can you share more insights pertaining to the revenue benchmarking analysis relative to Abilify Maintena?

Sure. I'll start with Abilify Maintena question, first, I think that’s a launch in a market that we know quite well Ari, as we've been it for a long time with RISPERDAL CONSTA, INVEGA SUSTENNA and now watching Abilify Maintena. Again, we think we have a product that is potentially best in class in the area and I think taking the most recent launch in the space, given it’s a highly Medicaid space, taking the most recent launch as a proxy and something we said before and that’s all we be doing going forward. So, given that we're launching in September we'll only have one quarter during the year and $5 to $10 million launch would be ahead of were maintain it was. And so, that’s our goal is to continue to be Abilify Maintena as we move forward. In terms of the R&D spend, its really been data driven, as you know the last year we've had a in the last few months, we've had a lot of data come out and with ability to move directly into Phase 3 with 3831 and 8700 that’s where the precision to continue to accelerate this programs has come in. There were also going to be a full year of spend on 5461 studies, as well as Rich mentioned, advancing both the immuno modulator and oncology as well as the new candidate forward, so there is a little bit of increase there, but mainly driven by the Phase 3 start up and the phase 3 program for 5461 in terms of R&D spend. Hopefully that’s helpful.

Got it. And then lastly, can you share your thoughts on the cash balance? I know it is getting stronger, $800 million, especially in the context of the anticipated burn this year? Thank you.

Yes, sure. And that’s a good question, thank you for highlighting that. We were able with the sale on our stake of Acceleron and Civitas, and through the year I think wisely managing our balance sheet, we've ended the year with $802 million in cash and as we look forward that gives us plenty of resources to continue to execute on these studies, without the necessity of doing a financing and that’s I think another thing that’s make Alkermes very unique because you get these late stage portfolio. And that’s the benefit of the commercial business, right. And we've been managing that business well over the last few years. It’s performing very well and its providing our ability to invest and on a non-GAAP net income level, be in that $40 million to $60 million which while we're investing we think its going to yield many, many times in the future.

Yes. I think Alkermes is in a very enviable position just vis-à-vis our cash balance and ability to prosecute this portfolio.

Appreciate the color. Thank you.

From Goldman Sachs we have Terence Flynn on the line. Please go ahead.

Hi, this is Lian [ph] for Terence. Thanks for taking our questions. I just have a few on the pipeline. First one, 8700, do you think you can improve the extend release formulation, and why not wait to start pivotal until you have this optimization in place? Secondly, on 5461, can you just provide a little more color on that enrollment and how that's going? And whether four to one data that you just reported, was that a gain factor in any way as it seems to have confirmed the titration schedule they have chosen for the phase 2 program. Thanks.

Hi, this is Rich, I'll take that. On 8700 I think its important to plan out that Tecfidera is going to be mega blockbuster driving it twice or day or [indiscernible] So we're thrilled to have a twice a day product and looks like it has the GI tolerability that we have demonstrated in the first clinical trial. So absolutely not, we wouldn’t wait. We're going to go as fast as we possible can to get this medicine to patients. That said, we learned enormous amount in that first study about the approaches one could take to extend dosing interval and we're going to apply those in keep working on that because it’s an important goal and one that we'll continue to pursue. On 5461, the enrolment is going well, we'll update you soon on [indiscernible] how we're doing on that but its something we're pleased with, it just gives me a chance to reiterate the point we've always said about 5461 enrolment because we see it as an exercise replication the critical element in the enrollment is the quality of the sites, quality of the radars, quality of the patients and so we will trade quality for time every time but so far our original modeling is bearing out so we're pleased with that. And the Forward 1 titration schedule was not gaining [ph] we went a little bit at risk on that you'd say by choosing the one week titration schedule in advance because we had a good feeling that that was going a well tolerated dosing regimen [ph] indeed it is, the question we were asking is, is there even better tolerated regimen and its gratifying to see that our original hypothesis were correct. So we didn’t loose anytime and it gave us a chance get that confirmatory data that you referring to.

Great. Thanks for taking my question.

From Bank of America we have Steve Byrne on the line. Please go ahead.

Hi. Do you expect your initial uptake for aripiprazole lauroxil to be primarily inpatient or outpatient driven, and do you anticipate any challenges getting formulary access?

We're probably not going to give a whole lot of disclosure but what we think how enrolled the product, but we expect that we'll gain access on formularies as the normal period that others have this is a largely Medicare and Medicaid product, so there is a certain rhythm to getting on all the various formularies and all the various states and we had the benefit of watching folks J&J and other companies do this. So we're well prepared to get into the market.

Okay. A question on 3831. Do you have any data on any of the other metabolic impacts of olanzapine other than the weight gain?

None that we disclosed.

Will have any at some of these upcoming conferences?

To be determine, I think we'll probably – because the way this study was designed. Steve this one had one week olanzapine for all patients which isn’t quite the most pure way of looking at the separate metabolic parameters. But we use weight as the primary end point or secondary end point in these clinical trials which is probably focus of the presentation. But as the data matures, we'll present data as we get it.

Okay. And then just one for you, Jim. What is the focus of the capital expenditure investment for the year?

Yes, thanks, Steve, good question. So we've gone up from the around $30 million to capital spend to a range of 50 to 55 and that’s really going to allow us to fully build out the manufacturing capacity for 5461, 3821 and 8700 actually and then we should soon get back to areas back in the $30 million range which is more maintenance CapEx. So another interesting point about this new products in our pipeline, not only to they have large market potential they ought to have very nice cost of good sold perspectives and we have the facilities really almost complete for all that commercialization. So, that’s why the increase spend.

Okay. Thank you.

You're welcome.

Thanks so much. Operator, I think we have time for one more question.

Yes. From Morgan Stanley we have David Reisinger on line. Please go ahead.

Thanks very much. Just two quick questions. First on lauroxil, I'm assuming you're not expecting an FDA panel, but just wanted to confirm that. And second, with respect to the guidance for revenue, you've got it to $5 million to $10 million for revenue later this year, and that's below what investors were expecting. My guess is that that just relates to the time to get the product adopted by formularies and by the providers. But could you just, I guess my question on the adoption of the drug in the marketplace is, do you expect that the customers, the providers and clinics that administer both Maintena and will be administering lauroxil, do you expect them to also stock your product or to displace the Otsuka product? Maybe you can just talk through how you expect to knock Maintena aside with your better profile. Thank you.

Hi, Dave. We don’t expect Maintena [ph] Aripiprazole Lauroxil and with respect the adoption, as Jim said in his remarks, we because we have PDUFA date on August 22 and there could be some timing Q4 will launch the drug, we're assuming a September launch but weeks would matter in the forecasting. We simply took Abilify Maintena launch as a reasonable proxy because it’s so close in time and it’s a very good product, so very, very good company. So, we've had very reasonable proxy. In part just for a questions like this and get people on the streets focused on the idea of these long-acting antipsychotics in the schizophrenia indication reimbursed by Medicare and Medicaid are not square with late wave launches, either these are launches that build and build and build in a market we think that is increasingly using long-acting injectables. We expect the features of Aripiprazole Lauroxil in many ways to distinguish themselves in almost in the self evident way, I mean, will help, but the fact is our product is very different than the competitive products because we expect to come to market with a range of doses. We're also in the clinical range of intervals and we just really elegant easy to use formulation. So we would expect providers to provide access to all these important medicines for patients with schizophrenia. This is one of the six protected classes under the Affordable Care Act, and so we just hope that we have equal access and level playing field which is what we model and that our features will speak for themselves in a market that is growing significantly we expect to get our fair share of it.

Okay.

Thank you.

You're welcome.

Thanks, everyone for dialing in today. Should you have any follow up questions, please don't hesitate to give us call here at the company.