Good morning and welcome to the Alkermes Plc Second Quarter 2018 Financial Results Conference. My name is Brandon and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note this conference is being recorded. And I will now turn it over to Sandra Coombs, Co-Head of Investor Relations. Sandra, you may begin.

Thank you. Welcome to the Alkermes Plc conference call to discuss our financial results and business update for the quarter ended June 30, 2018. With me today are Richard Pops, our CEO; Jim Robinson, our President and COO; and Jim Frates, our CFO. Before we begin, I encourage everyone to go to the Investors section at 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 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 and our most recent annual and quarterly report 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. Today Jim Frates will discuss our financial results, Jim Robinson will share his perspectives on our commercial portfolio, and Richard will provide an update on the company. After our remarks, we'll open the call for Q&A. Now I'll turn the call over to Jim Frates for a review of our financial results.

Thank you, Sandy, and good morning, everyone. Our strong second quarter results were driven by the solid year-over-year growth of our proprietary products, the continued strength of our base royalty and manufacturing business, and license revenues received during the quarter from Biogen. Let me start with an overview of our key financial highlights. During the second quarter we generated total revenues of $304.6 million and recorded non-GAAP net income of $45.6 million. In the quarter VIVITROL had net sales of $76.2 million compared to $66.1 million for the same period last year, demonstrating growth of approximately 15%. These results reflect year-over-year unit growth of approximately 16%. Gross to net adjustments during the second quarter of 49% were consistent with the second quarter of last year. While there may be some variability from quarter-to-quarter, we continue to expect gross to net adjustments to be approximately 50% for 2018. Sequentially, VIVITROL net sales increased approximately 22% compared to the first quarter with underlying unit growth of 19%. These results reflect a modest increase in inventory in the channel at the end of the second quarter as some customers placed orders ahead of the 4th of July holiday week. As we exit the first half of 2018 we expect that sequential growth in Q3 will be tempered as this inventory is worked down. However, we expect continued growth throughout the second half of the year and are reiterating our expectations for VIVITROL net sales to be in the range of $300 million to $330 million for 2018. Turning to ARISTADA. We saw net sales of $33.6 million in the second quarter, an increase of 48% compared to the same period in the prior year and 15% growth sequentially. Gross to net adjustments for ARISTADA were 43% for the quarter, and we expect this…

Thank you, Jim, and good morning, everyone. The solid performance of our proprietary commercial portfolio continues to be a key growth driver for Alkermes. There's a high level of activity across the organization as we evolve and expand our efforts to effectively deploy our resources against the opportunities ahead. So let's start with VIVITROL. As Jim stated, net sales of VIVITROL during the second quarter were $76.2 million driven by unit growth of 16% year-over-year and 19% sequentially. Through the first half of 2018 we've seen year-over-year unit growth of 18%, in line with our expectations. VIVITROL has significant potential, and in order to maximize this opportunity we continue to adapt and augment our commercial efforts. We are focused on executing on the opportunities to expand the use of VIVITROL in both the inpatient and the outpatient settings of care as well as improve accessibility and continuity of care for patients. As previously discussed, the national response to the opioid epidemic is building with more federal funding being distributed to states, policy initiatives being developed and implemented, and important improvements in accessibility to treatment underway in a number of states. Federal funding continues to be distributed to the states in the form of block grants. Of note, the 21st Century Cures Act passed at the end of 2016 provided approximately $1 billion of funding with an initial tranche of $500 million being distributed to states in mid-2017. However, it's estimated only 30% of this funding has made its way into the treatment system. Initial disbursements of federal grants are likely being used toward supporting existing treatment programs as well as important investments to establish new treatment infrastructure. The second tranche of $500 million from the 21st Century Cures Act was also recently distributed to states. Another $1 billion of federal…

Thank you, both, and good morning, everyone. Our business is based on three discrete elements of value. The first, which you've just heard about, is our base business of growing proprietary commercial products and our partnered royalty and manufacturing business which is expected to generate approximately $1 billion in revenue this year. The second is our late-stage development pipeline on the cusp of important catalysts. And the third is a significant infrastructure of expertise and capabilities that we built to support a rapidly growing biopharmaceutical company. We are on the threshold now of important value inflections across the development portfolio and we expect the second half of 2018 to be replete with news flow. With that, let me share a few important updates on the pipeline. I'll start with a brief update on ALKS 5461, our novel opioid system modulator for major depressive disorder. With a PDUFA date in January, the regulatory review is proceeding on schedule and we were recently informed that our FDA advisory committee meeting is tentatively scheduled for November 1. That is the timing we expected and we're well underway in our preparations for it. The strength of the ALKS 5461 program rests on the totality of the data. Important new data on the long-term safety, tolerability, and durability of antidepressant effect of ALKS 5461 were recently presented at APA and ASCP. Data from our long-term open label extension study demonstrated durable antidepressant effect with clinical improvement that progressed over a prolonged period of time and was then sustained. In the study ALKS 5461 was generally well-tolerated and demonstrated an AE profile consistent with that seen in the placebo-controlled studies. You will continue to see additional publications throughout the course of the year, including manuscripts on the pivotal efficacy studies and the data we've collected that…

Thanks, Richard. Brandon, we'll now open the call for question, please.

Thank you. We'll now begin the question-and-answer session. From Bank of America we have Jason Gerberry. Please go ahead.

Hi. This is Cameron Bradshaw on for Jason. Thank you for taking our question. Maybe just two quick ones. First on ARISTADA. I believe in the past you've noticed that about a third of LAI patients start therapy in hospital setting. I was wondering if you could elaborate a little more on the dynamics within that channel and then how we should be thinking about the pace of uptake given your label expansion. And maybe the second question just on the pipeline. Outside of IL-2, it seems like your portfolio is pretty back end-loaded. How are you guys thinking about timelines or gating factors for potentially bringing in some new assets? And do you see more potential within kind of the existing areas or would you be interested in some other areas of CNS as well? Thanks.

Go ahead, Jim.

I'll take the ARISTADA question first. So agree, as we mentioned in the past, 30% of starts we believe start in a hospital setting of care. As you know and Jim mentioned we did establish a hospital sales force earlier this year. We believe that provide us an opportunity to meet with the key institutions and really start to lay the foundation for ARISTADA and ARISTADA INITIO in those hospitals that haven't yet adopted it. We do believe that with ARISTADA INITIO, it provides a significant opportunity to dose patients as we mentioned day one. So with the initiation dose, one oral tablet of aripiprazole, 30-milligram tablet, and in some cases two months of therapy with ALKS 1064 provides a significant advantage to the patient as well as healthcare professionals to make sure that they're getting coverage from that patient before they're discharged and then they have an opportunity to come back for ongoing care.

And I'll take the second one. You're right. It's interesting because we do have such a strong late-stage portfolio that we spend most of our time trying to educate investors and analysts on the value of that late-stage pipeline with ALKS 5461 at the NDA stage, ALKS 3831 at pivotal trial stage, ALKS 4230 in development as we just heard, and ALKS 8700 also at the NDA stage. So the company is incredibly busy processing all these late-stage programs. With that said, we have a very rich and productive R&D engine at this company. And we haven't spent a lot of time sharing with you work that's been progressing in that domain and you can expect to see more insights into that as we go through the news flow in the second half of the year on the late-stage pipeline. You can start to anticipate that you'll start hearing more about the early-stage pipeline as well.

Great. Thanks, guys.

From Cowen we have Chris Shibutani. Please go ahead. Chris Shibutani - Cowen & Co. LLC: Thank you very much. Good morning. Two questions, one on VIVITROL and the second on ALKS 4230. I appreciate the update there. With VIVITROL, I heard some commentary for the first time about detox efforts being somehow an aspect of driving that business. Can you comment a little bit further there and to the extent that you can give us any updates on some of the traditional metrics that in the past you've talked about, whether it's the number of treaters, duration of care, what those trends are? Then I have a follow-up question on ALKS 4230 but first on the VIVITROL.

Hi. Morning, Chris. This is Jim Frates. Thanks for the questions. Yeah, I think I would basically just say our continued trends with growth of new prescribers and expansion of the VIVITROL franchise is really you could directly kind of relate that to unit growth, so I think it's steady as she goes there. It's one of the reasons why we're reiterating guidance. And as you know, detox is an important aspect of starting VIVITROL. I think as we saw the data last year that's come out on some of the work we did around our ALKS 6428 program and new and now broadly studied and reported on ways to transition people from opioids to being opioid-free and then being able to use VIVITROL, that's been published a lot last year as well so it's been a lot of time educating doctors on that new data. Chris Shibutani - Cowen & Co. LLC: Great. And then on ALKS 4230?

Yeah, ALKS 4230. Chris Shibutani - Cowen & Co. LLC: Yeah. On ALKS 4230, I appreciate some of the additional details about your plans there. Can you comment specifically about your strategy? I assume that there's no formal relationship with Merck but you're using pembrolizumab; that would be the first one. And then secondly, what are your expectations for the monotherapy data that you're hopefully going to discuss at the end of the year? Should we be able to see some data that demonstrates some efficacy in the tumor types that you described? Thanks.

Hey. Morning, Chris. It's Rich. Yeah, so the ALKS 4230 program has got a whole lot of momentum right now in a number of different domains. To begin with so we can get moving fast, we're just going to be purchasing the pembro but we're in discussions with a number of different folks around PD-1 type collaborations, and so you can expect that to evolve as we begin in the clinic and if we're lucky enough to start generating real data on efficacy. There's a lot of interest in ALKS 4230 as you can imagine. But to get going, we're just going to start as fast as we can. The whole series of different tranches of data that we'll hopefully be able to present over time, the first being just the monotherapy dose escalation data that I referred to. We've requested a presentation for a meeting later this year and hopefully we'll be accepted for that, so that'll be the first where you'll be able to see the immunological response of ascending doses, the dose proportionality, and the absolute levels that you're seeing of our effect on the circulating cells that we're interested in. As we move, the combo and monotherapy expansion stages, that'll be data in 2019 where we start seeing our first evidence of efficacy hopefully. Chris Shibutani - Cowen & Co. LLC: Great. I'll get back into the queue. Thanks for the questions.

From Evercore ISI we have Umer Raffat. Please go ahead.

Hi, (00:29:19) on for Umer. First question is just if you would mind commenting on the dynamic between SUBLOCADE and VIVITROL and whether SUBLOCADE has helped or hurt the franchise. And then secondly, just asking for some color on the new IV dosing regimen for the IL-2 for ALKS 4230. And just a quick follow-up on that IL-2, if that's all right?

Sure, sure. I'll just cover – the SUBLOCADE, for those of you who don't know, that's the recently approved once monthly formulation to buprenorphine. And our view has always been that more medication-assisted treatment, MAT, administered by physicians in the form of injectable medicine is exactly what this field needs as we continue to medicalize and expand treatment for opioid dependence. SUBLOCADE as a commercial phenomenon is still very early in its life. It's not really having an impact on us. And as we've said all along, the patient that's going to go on to a long-acting partial agonist therapy like a SUBLOCADE is a very different patient that wants to undergo detox and have monthly VIVITROL to prevent relapsed opioid dependence. So we're a big believer in the medicalization of this market and expanding the medical treatments available to patients to deal with this national epidemic. On ALKS 4230, recall that the IV dosing regimen that we're using now is intentionally chosen to mimic the dosing regimen that's used with Proleukin to give us an apples-to-apples comparison of the tolerability and the cell expansion that we would see with ALKS 4230, and that's daily IV for five days. But now as we're establishing the pharmacologic profile, we have the ability to modify that and see whether we can replicate cell expansion with less frequent dosing. So we have two major approaches, one is the sub-Q formulation that will go into the clinic in relatively short order as well as now beginning to change the periodicity of that IV dosing. And so we'll be looking at both of those.

Great, thank you. And Rich, just quickly just as you mentioned the sub-Q thing, when is the earliest we might expect to see a sub-Q combo arm study (00:31:26)?

Well first let's get underway and make sure that we're getting the correct exposures and the right cell expansions, but we would tether that into the development program in 2019, I'm hopeful. But you can see how fast things could begin to change with ALKS 4230. We moved from the call it proof-of-design or proof-of-concept in terms of the design of this molecule in order to preferentially expand natural killer cells in CD8-positive cells in the circulatory system without a corresponding increase in regulatory T-cell expansion. We're seeing that in a very logical dose-dependent manner. So now the presumption is if we can mimic what we've seen with higher dose IL-2 with ALKS 4230, we still believe that there's a very strong argument for pursuing monotherapy particularly in those tumor types that have shown that they can respond to IL-2 therapy, namely melanoma and renal cell carcinoma. So the monotherapy path continues now. Now that we feel like we're in those active doses, we would expect to see immunological as well as disease response in those tumor types. But I think what's changed over the last several months is with recent data in combination with a checkpoint, we're accelerating that piece of it. And as we start seeing data on that in 2019, hopefully the whole program begins to take on a different profile. Then dosing regimens and various combinations and various business combinations all start coming into focus. So stay tuned for a lot of development in this program over time.

Great. Thank you very much.

You're welcome.

And from Barclays we have Douglas Tsao. Please go ahead.

Hi, this is (00:33:15) on for Doug Tsao. Hi, I just have a quick question on VIVITROL. It just looks like script counts have slowed in recent quarters. Can you give us a sense of the magnitude of the growth drivers of the increased federal funding and if you could point to any other catalyst? Can you also give us some details around the gross to net of VIVITROL and if this has increased or decreased since 1Q? Thanks very much.

Sure. Good morning, it's Jim. On the gross to net front, I covered that in my remarks but we're at a pretty consistent 49%. That was exactly where we were a year ago, last – a year ago, and last quarter we were at 50%. So the gross to nets are pretty steady. And as you know, as we've said before the main driver in changes there remains the mix of business between the Medicaid business and the commercial business. So that's been remaining steady. On the script count side, I have to say I disagree with your assessment that they've slowed down. We've seen 19% growth in units I believe year-over-year, so that's pretty healthy and where we projected. What you may have seen is a slowing growth in how IMS reports those trends, and I think that's really driven by the sample size that IMS or the sample areas that IMS uses. They're generally retail pharmacies, right? So injectable products like VIVITROL is going to be more heavily weighted to specialty pharmacies. And also, our Federal business is growing nicely with the VA. And I think as we look forward, the growth in VIVITROL is really driven by state-by-state infrastructures. And as we expand states, Jim mentioned in his remarks we're seeing nice growth in California, Florida, Pennsylvania, Kentucky. And that's going to be our job, is to expand the growth in VIVITROL into more states.

I'll just add one point in terms of the Federal funding question. There is absolutely Federal funding available. The opportunity, or in some cases the challenge, is ensuring that states are aware that that funding is available, understanding how to apply for that funding and also how to secure it, and then to be able to apply it into a treatment system that actually can help patients. So that's our opportunity and that's where we focus as Jim was mentioning in terms of expanding at a state-by-state basis. That's what we're doing today and that'll continue to be our activity. It's not as fast I think as we would all like especially from a standpoint of the funding reaching down into a local area. But we're continuing to work to make sure that the states are aware of it and are able to apply where it can do the most good.

Great. Thanks very much for the color.

From JPMorgan we have Cory Kasimov. Please go ahead.

Hi, guys. Thanks for taking my question and this is Matthew (00:36:07) on for Cory. Just on ALKS 3831, I'm curious what the feedback has been from docs on the potential for metabolic differentiation beyond weight gain. And on this, are there any metabolic endpoints that you're investigating in your late-stage clinical studies that you believe will be key for demonstrating this?

Good morning. Yeah, as you can imagine, it's an interesting program because in many ways we're reverse-engineering the mechanism of action for ALKS 3831 with the passage of time because the first observations were empirical, that we simply were attenuating weight gain in animals by co-administration of samidorphan with ALKS 3831. We had a hypothesis as to why that might be the case, it was essentially driven by the reward system in the brain. But it's fascinating to reveal now both what's happening in the periphery and in the brain by co-administering samidorphan and olanzapine, and those were the data that we saw in that webinar that I encourage people to take a look at. In terms of approvability, it's really supplemental to the pivotal efficacy studies that are underway of which there are two, the one with the antipsychotic efficacy which we completed last year and the weight study which has a primary endpoint really focused on weight. So within that study that we call ENLIGHTEN-2 that will read out in the fourth quarter, we really haven't added metabolic parameters per se as primary evidence of efficacy. The efficacy is quite straightforward as defined in that study which is changes in weight at that six-month timeframe head-to-head versus olanzapine. We really ran the metabolic program in parallel not really on the registration pathway in order to build this intellectual understanding and scientific foundation for the program. Moving ahead, we're considering whether we might want to run targeted metabolic type studies in patients with schizophrenia to more further elaborate some of these phenomena. But you should think of the registration pathway as being quite straightforward. With the completion of ENLIGHTEN-2, with a positive outcome on the weight, we'll be filing. And I think the clinicians that we've spoken to are fascinated and it reinforces their belief in why the weight might be different if you were to start to understand mechanistically how that's happening.

Great, thanks. And then just quickly on ALKS 4230. Curious of the protocol amendment for your monotherapy. Has that (00:38:34) initiation of the pembro combo trial?

Well the pembro combo arm will start as fast as we can get it up and running because the protocol amendment is going allow us to continue to advance dosing in the monotherapy. And the doses that will start in the combo study will ratchet down a couple dose tiers as we begin the combination studies and begin a separate brief escalation in that arm. So that's not rate limited by what we're doing on the monotherapy side. That makes sense?

Awesome, great. Thanks. Yeah, thanks for taking my questions.

Okay. You're welcome.

Thank you. We will now turn it back to Sandy Coombs for closing remarks.

Great. Thank you, everybody, for joining us on the call this morning. Please don't hesitate to reach out to us with additional questions today. Thank you.

And ladies and gentlemen, this concludes today's conference. Thank you for joining. You may now disconnect.