Alkermes Plc (ALKS) 2009 Q3 法說會逐字稿

Ladies and gentlemen thank you, for standing by. Welcome to the Alkermes conference call to discuss the Company's third quarter financial results for fiscal 2009. At this time, all participants are in a listen only mode. There will be a question-and-answer session to follow. Please be advised that this call is being taped at Alkermes request. Now I would like to introduce your host for today's call, Ms. Rebecca Peterson, Vice President of Corporate Communications at Alkermes. Please go ahead.

Good afternoon, and welcome to the Alkermes conference call to discuss our financial results for the third quarter of fiscal 2009 which ended on December 31st, 2008. With me this afternoon are our CEO, David Broecker, our CFO, Jim Frates and our Chairman, Richard Pops.

Before we begin let me remind that you during the call today we will make forward-looking statements relating to among other things our expectations concerning commercialization of RISPERDAL CONSTA and VIVITROL, our future financial and business performance including our financial expectations for fiscal 2009. And our expectations concerning the therapeutic value and the continued development of our product candidates.

Listeners are cautioned that these statements are neither promises nor guarantees, but are subject to risks and uncertainties that could cause our actual results to differ materially from the results contemplated by these forward-looking statements. You can find a list and detailed description of these risks and other risks in our annual report on form 10-K filed May 30th, 2008 and other periodic reports filed with the SEC under the Securities and Exchange Act of 1934 as amended. We undertake no obligation to update or revise the information provided on this call.

This afternoon, Jim Frates will discuss our third quarter financial results, and our revised financial expectations for fiscal 2009. David Broecker will then provide an update on our business. After our remarks we will open it up for Q & A.

Now I will turn over the call to Jim to review the financial results.

Thanks Rebecca. Good afternoon everyone. We reported a profitable quarter on a GAAP basis and entered calendar 2009 in a very strong financial position.

Before discussing the details behind our financial results, I want to take a moment to highlight RISPERDAL CONSTA a key element of our strong financial foundation. This product is on track for another year of growth with world wide sales in excess of $1 billion for fiscal 2009. End market sales of RISPERDAL CONSTA by Johnson and Johnson for our third quarter were approximately $319 million. While this quarter was negatively impacted by foreign currency exchange rates RISPERDAL CONSTA continued to grow on a unit basis. AS J&J stated on their recent earnings call, quote RISPERDAL CONSTA achieved fourth quarter sales growth of 16.3% on an operational basis. US sales growth was 8.3% while sales outside the United States were up 20.9% operationally. With continued positive momentum in share. End quote.

RISPERDAL CONSTA has grown to become one of Johnson & Johnson's key billion dollar brand and we believe that its profile will continue to drive growth and market share for the foreseeable future. Beyond RISPERDAL CONSTA we are marketing VIVITROL in the United States with our own sales team and a disciplined commercial plan that we believe can grow sales. We also have a Blockbuster opportunity with exenatide once weekly, and we are continuing to advance our pipe line of proprietary product candidates.

I will now turn to the most important elements of our financial results for the third quarter of fiscal 2009. On a GAAP basis we achieved net income of $112.3 million. Or a basic earnings per share of $1.18 and diluted earnings per share of $1.17. The GAAP net income includes a one time recognition of $120.7 million in milestone and deferred revenue related to the Company's previous agreements with Cephalon for VIVITROL.

On a pro forma basis we reported a net loss of $5 million or $0.05 per basic and diluted share. As you know we view cash flow from operations as a key metric for our business performance. We generated $4 million of cash flow from operations during the third quarter. And $43.2 million for the first nine months of fiscal 2009. As we have stated all year, we expect to be cash flow positive on an operating basis each quarter this fiscal year. For a full reconciliation of our pro forma net income to GAAP as well as additional details on our third quarter results, please see our press release issued earlier today.

Total revenues for the third quarter of fiscal 2009 were $155.7 million compared to $50.8 million for the same period last year. The increase in revenues was driven mainly by higher net collaborative profit as well as higher manufacturing and royalty reviews for RISPERDAL CONSTA. Manufacturing revenues for RISPERDAL CONSTA during the third quarter were $21.3 million compared to $12.9 million last year. Manufacturing revenues for RISPERDAL CONSTA for the third quarter were within the $20 million to $24 million range that we provided on our last earnings call.

Royalty revenues for RISPERDAL CONSTA were $8 million for the third quarter of fiscal 2009. Compared to $7.4 million for the same period last year. Royalty revenues last quarter were $8.4 million. Again on a unit basis RISPERDAL CONSTA grew quarter-to-quarter, but dollar sales were negatively impacted by currency exchange rates. We were planning for a modestly negative impact of currency exchange rates going forward. Our exposure is buffered by our collaboration with Johnson & Johnson as we receive the annual average currency exchange rate rather than the rate of any one particular quarter.

Turning to VIVITROL Alkermes regained commercial rights to the product on December 1st, 2008. However we did not record net product sales or associated costs of goods in the month of December. As we transition to selling VIVITROL independently and introduce a return policy we're moving to a sales-out revenue recognition policy as opposed to a sales-in policy. This means that instead of recognizing sales when we ship product into the distribution channel we're going to recognize sales when product ships out of the distribution channel.

On the P&L in December we deferred revenue of $1.4 million and associated cogs of $628,000. We plan to recognize net product sales for VIVITROL effective January 1st, 2009. Assuming the level of VIVITROL inventory in the distribution channel remains consistent we do not expect this policy transition to have any further material impact on our P&L. For your reference gross sales for the entire third quarter would have been $4.7 million under the previous sales-in policy compared to $5 million for the same period last year, and $4.7 million for the second quarter of fiscal 2009.

Product losses related to VIVITROL for the quarter were $6.2 million which compares to $7 million for the same period last year. Of these net losses, the collaboration incurred $3.9 million during the month of October and November. And Alkermes incurred $2.3 million in the month of December. Also in the month of December we recognized $1.2 million of the $11 million of deferred revenue that we received from Cephalon when the collaboration ended. We will recognize the remainder of this deferred revenue over time within the net collaborative profit line in an amount of 50% of the product losses each month.

In terms of our expenses for the third quarter of fiscal 2009, total operating expenses of $42.8 million compares to $53.1 million last year. And were in line with our expectations. We ended the quarter with over $423 million in cash and investments. Even as we continued our share repurchase program. During the quarter, we repurchased 487,000 shares for $4.9 million.

I will now conclude with some comments on our financial expectations for fiscal 2009. With only a few months remaining, we're refining these expectations. I will highlight for you now the line items that we're updating, you can look to our press release for a complete review of our expectations for the year. We expect royalty revenues from RISPERDAL CONSTA to range from $33 million to $35 million, revised from an earlier expectation of $34 million to $36 million, to reflect the impact of currency fluctuations. We expect R&D revenues to range from $41 million to $45 million revised from an expectation of $45 million to $50 million, primarily to reflect the early completion of work performed for the exenatide once weekly program.

We expect net sales from VIVITROL to range from $4 million to $6 million, revised from an expectation of $5 million to $8 million, due to the deferral of revenue in December that I discussed earlier. Going forward we will be shifting from reporting gross sales to reporting net sales. However for fiscal 2009 based on the previous collaboration revenue recognition policy, we expect gross sales of VIVITROL to remain in the range of $19 million to $24 million. As a result of these adjustments we expect total revenues to range from $314 million to $338 million, revised from an expectation of $320 million to $346 million. Note that we expect manufacturing revenues to remain in the range of $111 million to $122 million.

For the fourth quarter we expect manufacturing revenues for RISPERDAL CONSTA to range from $21 million to $30 million. We're adjusting other income expense to a net expense of $3 million to $5 million, revised from an expectation of zero, based on certain noncash charges and lower interest income than we were anticipating. With these adjustments we now expect GAAP net income to range from $125 million to $132 million, or basic earnings per share of $1.32 to $1.39. Revised from an expectation of $134 million to $145 million, or basic earnings per share of $1.41 to $1.53.

To conclude, our business model is working. And continues to generate cash from operations. We're well positioned to invest in our pipeline while focusing on longterm profitability and growth. We have a number of important milestones to achieve in the coming months and I look forward to updating you on the progress throughout the year.

With that I will turn the called over to David, to provide an update on our products and programs.

Good afternoon everyone. Thank you, Jim for the financial update.

Let me take a moment to provide my perspective on the year ahead for Alkermes. We expect calendar year 2009 to be a big and newsworthy year for the Company with progress across all stages of our portfolio. Alkermes is unique in that we have two commercial products and a blockbuster opportunity with a late stage product candidate. We believe this base business can drive earnings per share of $2 to $3 in 2013. We are planning for growth in the years beyond by advancing [our pipeline of proprietary product candidates]. Importantly we have the financial strength and discipline to execute on this business plan.

Now I would like to begin my update with the foundation of our base business RISPERDAL CONSTA. This product is one of the biggest growth drivers within J&J's pharmaceutical business and J&J continues to invest in the brand. In calendar year 2009, we anticipate an FDA response to J&J's SNDA submissions for RISPERDAL CONSTA. One for use in frequently relapsing bipolar disorder and a second for the maintenance of bipolar one disorder.

Bipolar disorders have doubled in prevalence over the past decade with an estimated 27 million people world wide suffering from some form of this disease. If approved, RISPERDAL CONSTA would be the first and only long acting treatment indicated for bipolar disorder. Another noteworthy milestone will be the results from the phase one clinical study of our four week formulation of RISPERDAL CONSTA, that J&J initiated in January. The study will assess the PK, safety and tolerability of this four-week formulation. We expect the study results to be available in the second half of calendar year 2009.

If we take a step back, RISPERDAL CONSTA continues to be the only FDA approved long-acting atypical anti-psychotic. We believe this is because it is exceedingly difficult to formulate, develop, and manufacture long-acting injectable medications. And we're pleased to have achieved this successfully with multiple commercial products. The scientific challenges we navigated have posed developmental hurdles to potential entrance in this market. We believe that from a safety and efficacy standpoint, RISPERDAL CONSTA remains unrivaled. Recent data presented at the ACNP meeting last December underscore our belief. With several years of patient, physician, and payor experience as well as patent protection into 2020 and potential expansion into new indications, we feel very confident about the future of this product.

Moving to VIVITROL. We're pleased to have regained full commercialization rights to this product in the US. Calendar year 2009 is the pivotal year for VIVITROL. We consider a -- we consider growing product sales to be the key metric for our success this year. We have a focused commercial plan to drive sales growth for the product and, as Jim mentioned, we're taking a disciplined financial approach to the program.

A fundamental aspect of this plan is to change the distribution network by contracting directly with specialty pharmacies in addition to national wholesalers to improve access for patients and physicians. Beyond working to grow sales in the US , we have another commercial opportunity for VIVITROL in Russia. We have been guiding toward a product launch by J&J in the first quarter of calendar year 2009. We have just heard that due to the decline in the Russian economy, the launch will be delayed by a few months. J&J now plans to launch VIVITROL in RUSSIA mid-year of calendar year 2009.

In addition the registration study for VIVITROL in opioid dependence continues to progress. These trial results will help to assess the clinical potential of VIVITROL in this new indication. Opioid dependence represents a significant growth opportunity because the market for medicine is already established. In calendar year 2008, US medication sales for opioid dependence exceeded $700 million. We look forward to reporting topline results from the registration study, in the second half of calendar year 2009.

Turning to exenatide once weekly. A very important year lies ahead for this program. I am pleased to announce that at the end of January, we completed the technology transfer to Amylin. This is a major milestone for the program and marks a transition in our role. We are proud to have applied our expertise in developing long-acting medications, the development of exenatide once weekly and exciting to see this product move closer towards NDA submission.

On their recent earnings call, Amylin reaffirmed that feedback from the FDA indicates that data from the extension of the duration one study is appropriate as the basis for demonstrating comparability. Amylin expects results from this extension by the end of the first quarter of calendar year 2009 and is on track to file the NDA by the end of the first half of calendar year 2009. This year will also be significant for exenatide once weekly in terms of further defining the product profile. As you know, marketing studies are underway designed to show superiority compared to other approved products.

In the second quarter of calendar year 2009, Amylin expects to report data from duration two, a study comparing exenatide once weekly to [Actose and Jenuvia] in more than 400 patients. In the third quarter of this calendar year, Amylin expects study results from duration three a study comparing exenatide once weekly to [Lantis] in more than 400 patients. These data will help provide the required foundation to market a blockbuster product competitively.

Beyond our base business, we are advancing a pipeline of proprietary product candidates. We put a great deal of thought into both our R&D approach and the candidates we elect to bring forward. Our R&D teams have been working steadily to bring forward high value opportunities while minimizing risk, based on our experience with successful product development. We view our development portfolio as an important growth driver, and plan to make advancements this calendar year.

We have stated that we would provide more visibility into our pipeline and it is time to do that. We are pleased to announce that we will host an R&D meeting for analysts and investors on Tuesday, April 7th, this year, during which we will outline the scientific rationale behind our portfolio. We are looking forward to sharing additional details about our development opportunities during that meeting.

To conclude, 2009 is certain to be an important year for Alkermes with potential catalysts for each of our programs. Let me provide a brief review of the program milestones we expect in the next few months. Updates on the SNDA filings for RISPERDAL CONSTA, initiation of a phase 2A study for ALKS 27 for the treatment of chronic obstructive pulmonary disease. Data from the duration program for exenatide once weekly, top line results from the phase one study of ALKS 33 an oral opioid modulator with application in addiction and other CNS disorders. And finally top line results from the PK study of ALKS 29 a potential treatment for alcohol dependence.

With that I will now turn the call back to

Thank you. We will now open up the lines for your questions. Operator?

Thank you. (Operator Instructions). Our first question comes from Cory Kasimov of JPMorgan.

Hi, good afternoon guys. Thank you for taking the questions. First on CONSTA, the once monthly program that has now been started. You said the data from that will be available in the second half of this year. Do you know at this point if you are going to be permitted to publicly release this or if J&J is going to keep a lid on it?

Hi, Cory, thanks for the question. So we're hopeful to be able to work with J&J to be able to give you guys some topline data.

Okay. And then sticking with CONSTA for one question here, are there any patterns or trends in J&J's product ordering that you could comment on, or maybe even comment on the status of the third manufacturing suite that you have for CONSTA?

Sure, Cory, hi it is Jim. One of the things we do see typically is that the third quarter, the December quarter is always a little lower than other quarters. Mostly because of the holidays. Since we're shipping this -- a lot of CONSTA overseas because of customs they tend not to ship product in -- in the last few weeks of December. So, we have always seen that and our fourth quarter has tended to be up, which we -- guided a little bit to today.

In terms of -- what was the second part -- oh, the next manufacturing line we will give more guidance on that when we update you for the year. We have done a very good job of becoming more efficient in the line and you can see that in our gross margins over the last few years. So, we used to say that we could make about $750 million to $800 million worth of CONSTA on each line. And so next year will be interesting as we move forward in the next 12 months. But we will give you an update on that when we project CONSTA for the next 12 months in May.

Okay, that's helpful. And then one last question regarding LAR. Just sort of a housekeeping question here. Obviously there is some controversy right now with Amylin and [Carl Icahn] making some noise over there. In the event that there is ever actually a change in control, sometime down the road, is there anything -- is there any impact on the contract that you have with Amylin and Lilly for supplying the Medisorb technology for LAR.

Cory, the simple answer is no.

Okay, great. Thank you.

Thanks Cory. Operator, we will take the next question.

Thank you,. Our next question comes from Dave Windley of Jefferies & Company.

Hi. Thanks for taking the questions. Jim I wanted to walk through this -- VIVITROL revenue recognition just so I make sure I understand it. You said 4.7 would have been basically gross revenue?

Yes.

And -- 3.1 was the -- October/November amount?

Yes.

So did that then get recognized?

Yes. That got recognized, Dave through the VIVITROL business unit. As if nothing had changed with the partnership, so that is -- our half of that exposure came through net collaborative profit.

Okay. And then, the 0.8 that you essentially unwound, does that then -- because you have got some amount in deferred, correct?

Yes. But that's separate from what was in deferred. That 0.8 that we unwound is essentially from manufacturing revenue that we already shipped to Cephalon. So we had to -- we obviously we recognized revenue on that but now that Cephalon -- we took over the inventory from Cephalon we can't recognize revenue on something twice. So, we've reversed it. It now sits in inventory on Alkermes and we will recognize that when it gets sold.

Okay. So it is an inventory. It is not shipped to the channel again, yet?

Correct. It is in inventory.

Okay. And then, the amount that is in deferred, is it the 1.6?

Yes.

And where is that?

That sits at the wholesalers essentially, it is in the chain.

Sorry let me rephrase the question. Where that is on the balance sheet?

Ah. In deferred revenue.

Okay. And that's treated as long term?

No, it is short term. Long term deferred revenue we have is actually from milestone payments that we got from J&J in Russia that we're going to recognize over the life of that deal. So that -- that inventory essentially is sitting -- that deferred revenue is sitting in short term deferred revenue.

Okay. And -- not to beat this up but -- but so on your -- on your abbreviated balance sheet and the press release, is that grouped in "other? "

Let me just check. Yes. Yes.

Okay.

Under current liabilities.

Okay, thanks.

You're welcome.

This -- one more question, on R&D expense so that is trending down somewhat. Is R&D expense at this point, pretty directly identifiable to the -- the major projects that you're talking about or is there -- is there still an amount of -- what I will call for lack of a better phrase exploratory projects that you're not talking about publicly that some R&D expense is directed toward?

I would say there is both. I mean, I would say the majority of it is actually identified with the programs we're talking about. We still have a few other programs that haven't progressed far enough that we're going to talk about them. And then of course the -- the different facilities that we have, and operations that we have in R&D go in R&D as well.

Okay. So -- a rough percentage of how much is going to stuff you haven't talked about?

I would say less than 15%.

Okay great, thanks.

You're welcome.

Our next question comes from Gene Mack of Lazard Capital.

Thanks for taking the question. I am just wondering if there is any update to your current thinking on leveraging the balance sheet for any sort of end licensing opportunities to bring some later stage assets into the pipeline? Thanks.

Gene, good question. We -- as we have outlined we're focused on the EPS target of $2 to $3 in 2013. And we feel that that base business of CONSTA and exenatide once weekly as well as growing contributions from VIVITROL will get us there. And right now our focus is really on advancing our internal pipeline of proprietary products. So at the current moment we don't have any plans in terms of trying to leverage the balance sheet except through some of the share repurchase and retirement of our debt.

Great, thanks.

Our next question comes from Ian Sanderson of Cowen and Company.

That would be Jethro Tull.

Hi Ian.

Thanks for taking the question. On the SG&A number there, is that a -- and I -- it does appear to be given your guidance, but now that you have the VIVITROL sales force internally, is the number that we saw in Q3, kind of a representative quarterly number?

Good question, Ian. I think that what is reflected is actually only one month of SG&A on Alkermes P&L. And I wouldn't say that that is entirely representative because, a lot of things happen in the third month of a quarter that don't happen straight through. So, if you look at our P&L going forward, and our guidance for the full year and -- what we have done in the three quarters and you back it out. Q4, if you do the math, you would estimate it to be between $15 million and $20 million going forwards.

Okay.

That's probably a good number for you to look at going forward. Net, net, incrementally the addition of the Cephalon force would add about $20 million of SG&A to the Alkermes SG&A line. On an annualized basis. Right. Annual basis

And the -- for VIVITROL, for the opioid addiction indication, do you need two trials or just one trial for that?

Right now the conversations we have had with the FDA is one.

Okay.

So that -- that's -- that's our operating assumption right now.

And I -- I noticed you -- you indicated that you're going to be recognizing a -- some sort of compensation from Cephalon to offset the losses. What is the break-even plan or do you have a revised break-even timing plan for the VIVITROL program?

Yes from a -- it is a good question. So, we -- in our deal with Cephalon, they essentially had an obligation for the next 12 months of marketing so we received $11 million from them as their 50% share of the losses. And as I mentioned we will be recognizing that as 50% of the losses that we incur going forward. Each quarter. And we continue to spend roughly $10 million at the current run rate. Of course we can adjust that as we go forward. We're going to be disciplined in that as we go forward. And we're really working hard to get the sales on the top line to grow. Obviously appropriately with some of the new programs that David mentioned and put into place.

Okay and then just one last balance sheet question. I notice there is a shift of RISPERDAL CONSTA a portion of the notes to the current portion. Are those notes that are retiring or is that a portion that is able to be put you?

No, good question. Thank you for bringing that up. They are now starting a payback schedule essentially. I don't think it is correct to say that we're amortizing but essentially each quarter we have to pay down $8 million in principal for the next three years.

Okay.

That is why you see it moving to the current portion.

Thank you, very much.

You're welcome.

(Operator Instructions). Our next question comes from Bert Hazlett of BMO Capital Markets.

I was waiting for Ian to break out his flute. I'm sorry. Hi how are you. Just a -- just a drive at the $2 to $3 in 2013. Just a quick question, does that exclude compensation expense and then maybe more importantly, what are your assumptions regarding exenatide LAR to get to that $2 to $3. Thanks.

Sure, Bert. It includes compensation expense actually even though that is a noncash item. It even includes taxes if we're going to get down to the jot and tiddle of it. So we think that the earnings are going to be driven by RISPERDAL CONSTA and continued growth in that franchise. By the launch of LAR and also by a positive contribution to VIVITROL.

It is also fully burdened as we model out, R&D on some of the development programs that we're moving forward. So we're trying to look at this as a fulsome business fully taxed. From the respective to the assumptions on LAR I mean I think you can look at the street models. I think what is important to note -- I'd say two things one the analysts who cover Lilly and Amylin have higher expectations for LAR than the analysts that cover Alkermes just on average.

And also the second thing is it is very important to note that really is something that is going to drop completely to the bottom line as we get our roughly 7% royalty, we have no expenses associated with that going forward. But those are the things that underlie the model.

Okay thank you, very much.

You're welcome.

(Operator Instructions). Our next question is a follow-up from David Windley of Jefferies & Company.

Hi, just wondered, thanks for taking the follow-up, by the way. Just wondered how much do -- do your thoughts on pursuing the -- the opioid and the alcohol dependence products in the pipeline, depend on how VIVITROL progresses under your control in the commercial market?

Good question, Dave. Whatever we do with VIVITROL is going to tell us what the market potential and opportunities are, in this particular space. But we also know that there -- there is a profile for VIVITROL and there is a profile for the other drugs we're working on and we see them as being complimentary in nature to one another. So, this is a huge untapped market. High unmet medical need. We've talked a little bit about the alcohol market and some of the challenges that we face to -- to -- to penetrate that market. But the opiate market is driven by methadone and [bupinorphin] use and we believe that VIVITROL and some of these other products that we're working on have the potential to really complement what we're doing in this space.

And I would also add that we're going to have a lot more information as we go through the year. We are going to have our data from the opiate study; we are going to have data from the field as we implement the new programs that David mentioned on VIVITROL in alcohol dependence and we're going to have the launch of VIVITROL in Russia. As well as having Cephalon paying half the bills. So I think we have set up this product quite well going into 2009.

Okay, great, thank you,.

You're welcome.

Operator, are there any further questions. ?

Thank you. We actually have one more question that popped up in the queue.

Okay we're happy to take it.

Thank you, Patti Bank of Pacific Growth.

Thanks for taking it. Just a -- on the VIVITROL topic again, just can you talk about now that you have full control, if there is a change in the marketing message there? Or is it more just going after the doctors that are already writing it and get them to write more? And then also Jim's question for you on the R&D revenue under collaborative arrangements, can you remind me what goes into that at this point, and it was -- I think just under $4 million in the quarter. Is that a good run rate to use?

Patti I will take the first question, just about the overall sort of breadth of the commercial campaign. It starts with fixing the distribution channel. The way we look at it is, is there is like a kink in the hose. And previously product was distributed really only through national wholesalers. And when you look at a specialty injectable like VIVITROL, what is really required is contracting directly with specialty pharmacies, specialty distributors. Entering into contracts which provide fee for service types of programs that -- these people are experts in getting a product like VIVITROL to the doctors. So we're in the midst of trying to sign all those contracts. It will take us about a quarter to do that.

In addition to that we're -- we're tweaking the message. Around VIVITROL slightly. But there is no -- there is no major overhaul of that. And then we're trying to do some of the other programs and just basic blocking and tackling types of thing, to get this product growing. It is not going to take much. We -- we outlined that we're going to sell somewhere between $19 million and $24 million. We're spending $10 million a quarter. As Jim outlined. So, we believe that with the plan we have got, and what we have learned, working with Cephalon over the last two years that we know what we need to do to get it going.

Is the sales force the right size at this point from what you have learned?

We actually in December when we brought and converted the sales force to the Alkermes sales force, we focused on the most productive territories. So, we actually took out about 5% of the reps. So we have about 45 or 50 people in the field now. So we have already done some optimization there. But these people are really focused on the most productive account, and growing sales within that group of physicians that are currently delivering the business.

Okay.

Yes, Patti in terms of the R&D revenue that is driven by four-week CONSTA, by LAR, although LAR is ramping down and four-week CONSTA is ramping up and work also on VIVITROL Russia. So that will ramp down slowly a little bit. Depending on what happens with the four-week program. With CONSTA, and potentially other partnerships that we may sign. As you know we're looking for partnership for ALKS 27. So at this stage we will update you for this year as we typically do in May.

Great, thanks.

You're welcome.

I am not showing any further questions. Would you like to continue with any closing remarks?

I would just thank you, to everyone for dialing in and Jim and I will be available after the call should you have any additional questions. Thanks so much. Have a good evening.

Ladies and gentleman, thank you for your participation in today's conference. This concludes the program, you may all disconnect. Everyone have a great day.