Greetings and welcome to the Alkermes First Quarter 2023 Financial Results Conference Call. My name is Rob and I'll be your operator for today's call. [Operator Instructions] I'll now turn the call over to Sandra Coombs, Senior Vice President of Investor Relations and Corporate Affairs. Sandy, you may begin.

Thank you. Good morning. Welcome to the Alkermes plc conference call to discuss our financial results and business update for the quarter ended March 31, 2023. With me today are Richard Pops, our CEO; Iain Brown, our CFO; and Todd Nichols, our Chief Commercial Officer. Before we begin, I encourage everyone to go to the Investors section of 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. After our prepared remarks, we'll open the call for Q&A. And now, I'll turn the call over to Rich.

Thank you, Sandy. Good morning, everyone. We have a number of important and positive updates to go through today, so I'm going to get right into it. I'm going to start with a brief update on the announcement we made yesterday related to our arbitration with Janssen. I'm then going to hand it to Iain for a review of the financial results for the quarter and then to Todd for an overview of our commercial products. I'll come back then and close with an update on the progress we're making on the separation of the oncology business and our ALKS 2680 Orexin program. So, regarding the arbitration with Janssen, recall that this pertains to royalties in the U.S. sales of 3 long-acting INVEGA franchise products, INVEGA SUSTENNA, INVEGA TRINZA and INVEGA HAFYERA which are antipsychotic medications as well as CABENUVA which is an HIV product. In January, we announced the Tribunal which is a panel of 3 experienced arbitrators issued an interim award in which it agreed unanimous with Alkermes on the central issue of the arbitration which is that while Janssen had the right to terminate the license agreements, it may not continue to sell the products developed under those agreements without paying royalties to Alkermes. Last week, we received the second favorable interim award from the panel which addressed the outstanding economic issues. First, for 2022, we are due back royalties of approximately $194 million. Second, related to 2023 and beyond, the award provides that a separate royalty term applies for each of INVEGA SUSTENNA, INVEGA TRINZA and INVEGA HAFYERA. For INVEGA SUSTENNA, we would be owed royalties through August 24 which is consistent with our previous expectations. However, for both INVEGA TRINZA and INVEGA HAFYERA, the panel agreed with our position that the royalty term extends beyond 2024 through the second quarter of 2030. This would represent an additional 6 years of royalty revenues for these 2 medicines. In addition, the award provides the royalties for CABENUVA in the U.S. are owed through the end of 2036. So to summarize, once final, this would result in payment for back royalties due, reinstatement of royalties going forward and royalty terms for INVEGA TRINZA, INVEGA HAFYERA and CABENUVA into the 2030s. This represents significant potential economic upside and provide strategic capital to the balance sheet and additional long-term contributors to our P&L. In terms of the next steps, the panel directed the parties to confer and advise within 21 days as to whether either party believes that any issues remain for resolution by the panel prior to issuance of a final award. We are gratified by this latest interim reward in support of our position and we look forward to the final award and resolution of this matter. So with that, I'm going to pass it to Iain for an overview of the quarter and then to Todd. Go ahead, Iain.

Great. Thank you, Rich and hello, everyone. I'm happy to report solid financial results for the first quarter, driven by the strength of our proprietary commercial product portfolio, our continued focus on operating efficiency and the commercial leverage we have built into our business. We are confident that we can continue to build on this momentum as we look ahead through the remainder of 2023. As Rich mentioned, the anticipated outcome of the Janssen arbitration once final, represents significant potential upside to our current financial expectations for 2023 and our long-term profitability targets for 2024 and 2025. However, we will wait until we have further resolution of the dispute before revising any current or future financial expectations. In the meantime, today, based on the performance of our core business and as we've continued to execute across our strategic priorities, we are reiterating our financial expectations for 2023 which were detailed in our press release and 8-K filed on February 16. Now for the first quarter, we generated total revenues of $287.6 million, driven primarily by our proprietary product portfolio which grew 25% year-over-year. Starting with VIVITROL. Net sales in the quarter were $96.7 million, reflecting 14% growth year-over-year, driven primarily by the alcohol dependence indication. Inventory in the channel was fairly stable and gross to net deductions were within normal ranges for the quarter. For the full year, we continue to expect VIVITROL net sales in the range of $380 million to $410 million. Moving on to the ARISTADA product family. For the quarter, ARISTADA net sales increased 10% year-over-year to $80.1 million, primarily driven by underlying prescription growth of 10% on a month of therapy basis. Inventory in the channel and gross net adjustments were relatively stable for the quarter. And for the full year, we continue to expect…

Great. Thank you, Iain and good morning, everyone. I'm pleased to share that we delivered strong growth across our proprietary commercial portfolio in the first quarter, building off the momentum we generated in 2022. Net sales from the portfolio increased 25% year-over-year and were driven by double-digit growth for each of our 3 brands: VIVITROL, ARISTADA and LYBALVI. We are particularly pleased with the strong continued uptake of LYBALVI in the oral antipsychotic market. So, let's start there. During the quarter, LYBALVI net sales were $38 million. Total prescriptions grew 16% sequentially to approximately 33,000 TRxs for the first quarter. As of the end of the first quarter, nearly 24,000 patients have been treated with LYBALVI since launch. At this stage of the launch, our focus continues to be on expanding prescriber breadth which grew by 1,700 prescribers to approximately 9,300 health care providers who have written a prescription since launch. As we outlined earlier this year, our strategy for LYBALVI in 2023 is focused on 3 key initiatives: growing prescriber breadth, further leveraging our access profile and building awareness for LYBALVI. Our direct-to-consumer campaign will be a key factor in accomplishing these goals. DTC campaigns have been shown to be highly effective in driving brand growth in many therapeutic areas, particularly in psychiatry, where market research and prescribing patterns suggest that when patients request a specific brand from their health care provider, there is a high likelihood they will be prescribed the brand requested. Our DTC strategy is grounded in deep patient and health care provider insights, including immediate consumption habits as well as the significant opportunity of unmet need in schizophrenia and bipolar 1 disorder. Our goal is to drive awareness and uptake for LYBALVI through execution of a broad, differentiated campaign across multiple media channels, including digital…

That's great. Thank you, Todd. So at the beginning of the year, we outlined 3 strategic priorities: driving the ongoing launch of LYBALVI, advancing our Orexin program in narcolepsy and other hypersaline conditions and executing on the planned separation of our oncology business. 4 months in, we're advancing on all 3 and believe that we can drive significant value for shareholders. As you just heard from Todd, we're executing our strategy for LYBALVI and we've established a strong platform for growth. LYBALVI clearly demonstrates the power of Alkermes science and the opportunity to leverage our commercial capabilities. I'm going to focus now on where we stand with the separation of the oncology business and the ALKS 2680 Orexin program. We believe the separation of the oncology business will reveal the value of our Neuroscience business which has come more clearly into focus with the launch of LYBALVI and at the same time, provide shareholders and investors with an independent and more direct opportunity to realize value from the oncology investments that we've made. The separation is expected to yield a number of benefits for each business, including driving a sharp strategic focus, simplifying capital allocation decision-making and increasing each business' flexibility to pursue growth and investment strategies more directly aligned with their respective goals. We've made significant progress in the quarter toward launching what would become a new independent public company named Neuro Oncology Plc. Last week, we announced that we submitted a confidential draft Form 10 registration statement with the SEC. In addition, we recently submitted a request for a private letter ruling to the IRS to support the separation as a tax-free distribution to Alkermes shareholders for U.S. federal income tax purposes. Submission of the Form 10 and the PLR request represent 2 labor-intensive and long lead time…

Thank you. We'll open the call for Q&A now, please.

Thank you, Sandy. At this time, we'll now be conducting a question-and-answer session. [Operator Instructions] And our first question is from the line of Akash Tewari with Jefferies.

So on the Orexin, your MAT study started in Feb. Can you go over how many dosing cohorts you've tested at this point from an exposure perspective. And if you've crossed levels that you think are therapeutically efficacious in narcolepsy and IH and have you seen any evidence of metabolite accumulation at this point? And just on LYBALVI, you grew 16% quarter-over-quarter on TRx but sales grew 9% heading into Q2, consensus is baking in 19% sales growth. Does that seem doable given gross nets are likelihood to worsen as we get deeper into 2023?

Akash, it's Rich. I'll start and then I'll hand it -- the Orexin program, as you can tell from my earlier remarks, is really rolling now. I'm not going to give this specific information on the various dose levels other than to say that I think the program now encompasses over 60 subjects and between the SAD and the MAD and we are above doses that we think are therapeutically relevant for narcolepsy. And that's encouraging. And that's why we're really pleased to see the PK dose proportionality, tolerability, all those things. With respect to metabolite profile, it's as we would have anticipated, we've been able to characterize the principal metabolites and we feel comfortable with where we are with that.

Yes. And I'll just pick up on LYBALVI as well. The first thing is we're not going to guide on the quarter for Q2. But what I would say is that we are really pleased with the uptake of LYBALVI. New patient starts, new prescriptions, TRxs. As we said on the call, TRxs grew 16% and quarter-over-quarter, we really believe that's a result of strong demand growth based on our expanding prescriber universe which is growing quarter-over-quarter and it's very supportive of the market research that we hear from HCPs as well. So we expect that to continue.

Our next question is from the line of Brandon Folkes with Cantor Fitzgerald.

Maybe firstly for me, just on LYBALVI and the launch of the broader DTC TV campaign. How should we think about the interplay of the broad DTC TV campaign ahead of contracting? And how should we think about the initial effectiveness of it and the interplay between perhaps a broad TV DTC campaign and contracting as the year unfolds?

Yes, absolutely. So as I said, we're really excited about the launch of our -- the TV portion of the consumer campaign which will actually kick off next week. It's a broad campaign, the TV portion. It's meant to be supportive of the earlier launch we did with our digital component. We've been planning for this for a number of years. We've got deep patient insights, HCP insights. We really understand what patients are looking for and we've tested this with an enormous amount of actual patients and they responded very well to them. Market Access is in a good position at this point. Medicare and Medicaid, there is a pathway to access. There is a pathway to access for the majority of patients in the commercial space. We're seeing encouraging trends across all 3 segments. So we have utilization across all 3 segments. And market access and today's U.S. health care environment is broader than just contracting. It's providing a pathway to access. It's providing support services. It's pushing through access. It's also pulling through access and we're seeing good utilization. As you know, as we've talked, we have a lot of support services available. We're seeing a very high utilization of our prior -- of our PA program. We're seeing a high utilization of our co-pay program. And physicians and HCPs in this space are used to navigating the complexities of market access. They know how to get these products and all of the products are somewhat treated very similarly. So we think we're in a good spot with where market access is. Patients can get access to the product. Our strategy, as we've been planning for, for a number of years, as I said earlier, is to drive demand but also to build awareness. And we've seen through our research that if a patient sees our campaign, they like the campaign, they will ask HCPs about the campaign and there's a very high likelihood that the request will be granted. So we're excited about that.

Great. And just on a follow-up, just given the news on the spin, can you just update us on the latest on the alternative dosing for nemvaleukin and Alfa? Do you expect to make that data public ahead of the spin?

Brandon, it's Rich. That's happening primarily in a study called ARTISTRY-3 which is looking at less frequent IV dosing regimens, including once every 3-week cycle and twice in a 3-week cycle. And we're accumulating data in those cohorts right now. We will present those data as they mature. And I don't have a specific sense right now of what that looks like over the course of the year but we can get back to you on that.

And the subQ dosing, Rich?

subQ is still underway. I think the team's belief right now is that the less frequent IV will probably be a preferred route versus the subQ but we can't say that definitively. I think for some of these cytokines, we -- and you've seen from the previous data, we've seen original response data with subQ presentation. We see pharmacodynamics through subQ presentation. The question with subQ presentation would be durability of that response because one of the hallmarks of the IL-2 pathway has been when people respond and we get these nice durable responses. For PROLEUKIN originally in the same story, it was active subQ but it wasn't as durable. So that's what we're testing in the clinic as well.

Our next question comes from Umer Raffat with Evercore ISI.

I have 2 here, if I may. First, Richard, can you remind us what's the key clinical readout you guys will get visibility on in your ovarian study for nemvaleukin as well as for the melanoma study, the Phase III trial -- the Phase II trials and to what extent would those readouts determine whether or not you are absolutely moving forward with the spend? Point number 1. The second one is, can you speak to the e-flux ratio on your orexin molecule and how that compares versus Takeda and what that would mean for the types of doses you guys think are clinically relevant or efficacious doses.

Recognize that the -- so the punch line to your question on the clinical trial was that we're going to spin while both ARTISTRY-6 and ARTISTRY-7 are still underway and blinded. So the key variable for us prior to spin is enrollment rate as we determined where we stand in the overall enrollment, that will help us measure the amount of time we think we will need before we get to turn those cards over to inform how we capitalize the spin. But the spin should happen in the Q3 time frame. Enrollment in ARTISTRY-7 and ARTISTRY-6 will be underway. ARTISTRY-7, the ovarian study is a multi-arm study that has all the appropriate controls that you would expect in a registration-enabling study. So it's a very well-designed, appropriately controlled study that will need -- that's why we described it as a registration-enabling study. I won't comment on the numerical eFlex ratio with respect to the orexin candidates. Obviously, it raises a really important point, though, with respect to these molecules and why I think all of them -- each of them are going to be different because it's not just about potency as an erection to receptor agonists. It's about its effective half-life and its effective target engagement in the human body over time over the course of a day. So that's what happens as you take the tablet orally, how it gets into the bloodstream, how it crosses the blood brain barrier, how it gets into the brain, how it reaches the target concentrations at the target neurons and then how long it stays there or whether it's a substrate for any other types of pumps or other eFlex mechanisms. All that stuff has been taken into consideration as we design 2680. But as I always say, none of it matters until you get into the species of interest which is humans. And now with the Phase I work as well along as it is now, we're excited to actually get into NT1 patients which would be the next step. And all systems are go leading into that.

Richard, if I may clarify, I'm thinking back and maybe I'm not recollecting properly. I recall we had discussed there will be potential interim looks ahead of the spin on the oncology side. Are you saying there's a change in plan? I just want to make sure I understand the right because I thought that was a trigger to go forward with the spin.

We have an ongoing data safety monitoring board with respect to the melanoma study that looks at futility and risk benefit and we continue to pass those hurdles. I'm looking to Sandy make sure that's an accurate statement.

Yes, that's accurate.

Our next question is from the line of Chris Shibutani with Goldman Sachs.

On 2680, as I think about how we should be interpreting the data that you'll have Phase Ib proof-of-concept across the different subtypes of patients in T1 and I think the expectation is that potentially the potency or dosing level would be different for NT2 and IH. It seems perhaps that you may be emphasizing IH over NT2 and with such a modest denominator, relatively speaking, 6 or 7 or so patients in each subtype. Can you help us understand how you're thinking about your positioning of your development plan and whether ultimately next steps may be to pursue specific segments because of the potential differences in dosing required?

Yes. Chris, that's a really important question because please don't misinterpret any of our comments that they were emphasizing IH or narcolepsy. If anything is the other direction, particularly in the wake of the IRA. I think that this orphan indication as a single indication, narcolepsy is really attractive because it's an orphan indication but it's a large orphan indication, spanning in NT1 and NT2. So if anything, I think that our focus is more likely to come down into the narcolepsy indications rather than the IH and excessive data sleepiness indications which we will pursue as this biology gets more clearly elaborated with additional compounds. I mean, we're not done here by any stretch of imagination in the lab. And we see 2680 as the first embodiment focused on narcolepsy given a certain PK/PD potency profile. But if this is really central to the sleep-wake access and that circuitry is more better elaborated, there's other drugs that could be developed here. But for the purposes of 2680 the Phase Ib proof-of-concept study is going to focus first on NT1 and that's the core of the bull's eye, then we'll enroll the NT2 patients in the IH patients. You're right, we expect dosing differential based on previous clinical women done by others between NT1 and NT2. But that's why potency is such an important variable. If you think that you could go as high as several fold higher into NT2 versus NT1, you want to start with this as high potency drug in NT1 as you can get. And so far, based on the modeling and the work we've seen in the clinic so far, the data are consistent with our hypothesis going in. Does that make sense?

Great. And then -- yes. No, that makes sense. And then as a follow-up, a broader strategic question, given all the progress that you're making, the separating the company, Alkermes is domiciled in Ireland. And the revenue in the commercial footprint has always been significantly, if not entirely in the U.S. As you think about the neuroscience business portfolio and particularly with the potential to expand with 2680 which has certainly vast potential market opportunity, can you talk through the pros and cons and how you and the management team and the Board are thinking about ultimately aspiring to be more on the global commercial presence? And if so, how much you do that?

Yes. It's another good question, Chris. So Alkermes plc will remain an Irish Topco company with significant operations in the U.S. and in Ireland. But we have a really strong foundation for expansion ex U.S. Interestingly, our psychiatry portfolio, ARISTADA, VIVITROL and LYBALVI to some extent, really we didn't have great opportunities outside the U.S. given the reference pricing in those markets. 2680 is a completely different story. I mean, that's absolutely a global product and we think about it as such. And so our registration strategy and our teams now are working through the strategy for a global presence. Given the size of the market on the order of a couple of hundred thousand patients in the U.S. and about 3 million worldwide, it's very tractable for a company and with our infrastructure to go after an OUS presence with respect to 2680. So we'll give you more information on that as it evolves.

Our next question is from the line of David Amsellem with Piper Sandler.

So there's a couple. So on LYBALVI, you had talked about potentially a widening gross to net in the second half of this year to the extent that there's new commercial contracting. In the past, you sounded more certain that there will be a wider roasted or due to the impact of commercial contracting. So is there anything that's sort of changed in your discussions with commercial payers that has driven the revised commentary of somewhat revised commentary, if you will? That's number one. And then secondly, as you think about the cash that's coming in by the Janssen win, can you talk about the extent to which that could be used to seed the oncology business -- and just also, generally, you mentioned strategic purposes. How are you thinking about use of capital broadly to build out the neuroscience pipeline.

Yes, I'll start first with LYBALVI Market Access. I think the way to think about this, what we've been thinking about this is the market access profile continues to be established and it will continue to be established. The most important thing right now is to make sure that patients have a pathway to access across the 3 channels, Medicare, Medicaid and commercial. And we built a solid foundation across all 3 of those channels. I would say nothing's changed to your question. We are strategically managing growth to net to support our top line growth. And our plan is to continue to determine over time if we need to change our access position within commercial. So we're actively discussing in discussions with all of the commercial payers regarding the future of LYBALVI. And if we do make a decision that we need to change that profile, our plan is to do so over time. And we'll keep you informed as things progress. But to your question, nothing has changed.

And then on the income and cash, assuming the final award reflects the interim awards. With respect to the oncology business, it would certainly be helpful in seeding the oncology business. That's not to say we would change the amount that we believe the oncology business needs in order to reach its next data inflection point which has always being tied to the level of funding that we provide. And then with respect to items beyond that, the cash is obviously a strategic asset and we could look to potentially augment the pipeline or further leverage the commercial infrastructure with appropriate products at some point into the future. But we'll provide more information as things materialize in that direction.

Our next question is from the line of Paul Matteis with Stifel.

I wanted to ask a question on LYBALVI in your full year guidance. If you assume that the sequential script growth declines even a little over the next handful of quarters, say, 1% to 2%, even at stable gross to net, you get closer to the low end of your guidance. So I wonder if that's a realistic way to think about this or whether part of the assumption here is that the DTC is going to actually boost demand growth relative to what we just saw sequentially or whether 1Q was maybe just kind of a lighter quarter for various seasonality reasons.

Yes, I'll take that question as well. Our guidance has a range of scenarios from -- as we discussed earlier, from demand, gross to net and so forth. We are very encouraged with what we're seeing. We -- Q1, the story for Q1 was a demand story, up 16%. We've been at this launch now for approximately 18 months. We continue to see strong uptake and expansion of breadth of utilization. That's probably the best metric that we're watching at this point. We fully believe that building awareness through a direct-to-consumer campaign will also support our demand aspirations over time. Typically, what you see with broad campaigns such as this and other categories and also in psychiatry, is it usually takes about 6 to 12 months to actually see some type of inflection. We think it will be gradual overall. And so, we do believe that this is going to support the long-term growth aspirations that we have for the brand. But we're encouraged right now and we think this is about expanding prescriber breadth building awareness and seeing the demand continue to grow quarter-over-quarter. And I'll just reinforce, again, as Iain said earlier, we are reiterating our guidance today, our range and we're confident in what those ranges are.

Can you say anything about what the top end of your guidance would assume or what would have to happen?

No, at this point, I mean we provided the outlook. It's -- we've looked at a range of possibilities from market access demand also with direct-to-consumer. So we're comfortable with where that range is right now.

Our next question is from the line of Jessica Fye with JPMorgan.

Just a couple on LYBALVI. Can you remind me of the payer mix between government and commercial in the bipolar market? And can you elaborate on what you mean by a pathway to access in commercial? Where does commercial coverage stand? And specifically, I guess, how could the quality of access be improved via contracting? And then I have one follow-up on the erection.

Yes, absolutely. So overall, what you see across the category, across all the channels is typically, it's broken into 1/3. It's about 1/3 commercial, 1/3 Medicaid, 1/3 Medicaid. You see a little bit of a change within the bipolar space. There's a little bit more commercial and also a little bit more Medicaid and a little bit less Medicare. So the bipolar market is typically categorized by commercial and Medicare. We think about a pathway to access is it's broader than just gross to net and doing contracting as well. And that's really the dynamic in the U.S. health care system. And I'll keep in mind that it's a very large generic market. All of these products, all of the branded products have to step through generics. So that's not different for what LYBALVI is facing. And providers and HCPs in the U.S. are very comfortable with managing medical exceptions, prior authorizations and steps through. So our goal right now is to make sure that we're balancing and managing the access profile that would be across commercial, Medicaid and Medicare, along with the programs that HCPs and patients would need to be able to get access. And we also look very closely, we do a lot of research with patients and also with providers. And we hear really consistently that HCPs perceived that LYBALVI's formulary access is on par with branded competitors. And we see that in terms of the access that's happening within the marketplace at large. Over time, we'll continue to watch what's happening in the commercial space. We watch product, we watch our NDC block lives, we also have a number of lives that have open access. And so it's not a stagnant market. I can tell you that. It takes a lot of focus and attention and we put a lot of attention to this as well, too. And so overall, we're going to be managing our gross to net. It's a big strategy for the company, making sure that we have the right access profile to support the long-term growth aspirations. And so we're in a good place with that right now. We have a solid foundation.

Okay. And then for the Orexin, thanks for the additional color in the prepared remarks, should we expect a more detailed update on the SAD and MAD results prior to learning the Phase Ib results later this year?

Jessica, it's Rich. I think that what we're trying to do is move as quickly as we can and being mindful of some of the major scientific meetings that occur in the fall, what the late-breaking status would be. So we'll try to present as much data as we can comprehensively and scientific for rather than just via press release. But I think the primary goal right now is to finish off the SAD MAD get the Phase Ib data, particularly with respect to the NT1 cohort as fast as possible. So we get a real sense of the clinical profile of the drug and then we'll present those data as rapidly and as comprehensively as we can.

Our next question is from the line of [indiscernible].

I know you probably can't say much but could you sort of just walk us through sort of what needs to -- or at least a procedure for the arbitrations in order to sort of get the interim awards finalized? Is there anything else we should we expect additional interim awards? So that's the first question. I guess my follow-up question is, can you tell us like how much of the royalties come from TRINZA and HAFYERA?

It's Rich. The arbitration procedure has proceeded in a really deliberate and careful way. And we have a lot of respect for the way the panel is conducting itself because essentially, they're giving the parties the opportunity to breathe and make sure that the voices on both sides are heard throughout the process. So the first interim award in January, as I mentioned, ticked off the central issue which is the ability for Janssen to continue to sell the product without paying us a royalty. That was adjudicated in our favor. The next question was then, okay, let's start seeing how that applies directly to the various products and the terms of those royalties. And that's what we just learned in the second interim award. The numerical quantification of 2022 and then what 2023 looks like and the fact that each of the 3 products are being treated independently with different terms. That's check, check, that's now -- in the second interim, the panel came back and said the parties have 21 days to alert the panel, whether there's any other things they want the panel -- we want the panel to opine on. So we're nearing the end of the runway here. I think that this is going down now to the -- any remaining issues. From Alkermes perspective, we don't see any outstanding issues. We'll wait to see if J&J has any other outstanding issues but I think we're approaching the final award.

And then with regard to TRINZA and HAFYERA, this is based on IQVIA data in the U.S., we would estimate that somewhere between 20% to 25% of volume on a month of therapy basis is related to TRINZA and HAFYERA.

Our next question is from the line of Jason Gerberry with Bank of America.

Most of my questions have been asked but I'll ask a couple. Rich, in the past, just thinking about the whole VIVITROL generic threat and whatever shape it takes, you've talked about a lot of the commercial challenges to making or selling a generic of VIVITROL. Given the shift of the business to alcohol, I'm wondering, is this becoming more of a conventional channel product versus when there was more of an opioid component to revenue and starts were occurring in prisons and addiction clinics, maybe it was a harder product commercially to reach. So just wondering if there's any change that's noteworthy there? And then just as a follow-up, your comment about IRA and the orexins got me thinking, obviously, 2 indications you lose the Orphan Drug Shield. Have you thought about adjudicating 2 different NCEs in the orexin space, one for narcolepsy and one for IH?

Yes to the second question. Absolutely, yes. I mean that's what I think I was saying earlier, Jason, I think this whole pathway is so important and fundamental to awake the sleep wake cycle and I think our first embodiment is 2680 but we're already thinking about other ways of engaging that pathway. I wish VIVITROL became more conventional with the advent of the alcohol side. It remains and I'll let Todd comment. These are definitely different settings of care than your classic medical setting. So it remains incredibly idiosyncratic and credit we bespoke with still a large overlay of public policy and government intervention in the way that the patients get treated overall.

Yes. Let me just -- I'll add to that. When we think about VIVITROL right now, 65% of the contribution of the volume is coming from alcohol dependence. We're hitting all-time highs with utilization for alcohol dependence. At this stage in the life cycle, we're actually hitting all-time highs with prescriber and account breadth as well. And there's a very high receptivity to the store for VIVITROL for alcohol dependence. We -- it's not a typical retail product. And so we've done a lot of models, looked at analogs as well, too. And our expectation is that regardless if there was a generic injectable naltrexone coming into the marketplace, we don't believe that it would resemble a low-cost, small molecule erosion. And it really comes down to kind of what Rich said as well too. It's a complex market overall. And the way to think about the complexity of the market is there's various settings of care. It's just not one setting of care that you have to be able to commercialize. There's various payer dynamics. And there's also various fulfillment channels as well, too which is different than your typical retail product. So we think it's really complex, actually, the product attributes but the actual commercialization attributes. So we don't see this as a typical generic erosion.

Our next question is from the line of Marc Goodman of SVB Securities.

Which obviously, BD must be pretty important to you and I know that you're probably out there looking pretty actively for new molecules. Can you just talk about the landscape right now? I mean do you feel like some of these smaller companies are capitulating on valuations? Are you closer this year than last year on bringing in some new assets from the outside?

Mark, it's Rich Yes, I think that there's -- you would have characterized this area as being not very fertile for business development a couple of years ago and I think it's getting more so. And the cost of capital for small companies is helping. I'm going to say, we've not been rabid about expanding the pipeline and the R&D spend over the last couple of years being so focused on the launch of LYBALVI and the getting the orexin program and its derivatives and other things in the labs that we haven't discussed moving along. So we've got in a nice position where we feel like there's enough in the pipeline to prime the pump to get us going but we don't feel an urgency to do something. So we're letting things play out. We -- obviously, the business development team that we have is sophisticated and broad. I mean they're looking at things from late-stage commercial things all the way through to things at ideation. They are consistent with our scientific capabilities. But stay tuned. I mean we feel like as the neuroscience company spins, it will want to augment its pipeline but we want to do so in a really cost-efficient way.

And orexins and derivatives, is that referring to the previous question about potentially having multiple orexins for the different channels of with cataplexy, without cataplexy, the IH that kind of thing.

Yes. And there's a lot to be done as we figure out how to create these small molecule orexin receptor agonist. I think thinking that the full embody mean it would be in the first drug is probably naive. So we want to make sure we're ahead of the curve on that.

Okay. Thanks, Mark. I think we have time for one more question.

That question comes from the line of Douglas Sao with H.C. Wainwright.

Most of my questions have been asked and answered. But just in terms of the DTC campaign, I'm just curious, do you expect to have a greater impact on the demand for bipolar indication? Or do you think it would have more impact on the schizophrenia indication?

Yes. Doug, the way we think about that is it works together. The powerful thing about LYBALVI is that we have a very broad indication which is not typical for a launch product in the category. This is a -- and what we've learned over the first 18 months is this is totally an efficacy-driven market. And that's how really LYBALVI is differentiated. So we believe that we have a campaign that is differentiated. We know the media consumption patterns of patients with schizophrenia and bipolar. We know what their habits are. The initial launch of our digital program was really focused specifically on schizophrenia and bipolar. With the TV component of this, the bipolar is a very large market opportunity. There's a lot of switching within the marketplace up to patients switch therapies anywhere between 5x to 7x over their span. So we know this is a large switch opportunity. So this program overall actually works together. You have the digital component that hits both indications but then we're really going to activate the bipolar patient through TV.

All right. Well, thanks, everyone, for joining us on the call today. Please don't hesitate to reach out if you have any follow-up questions. Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.