Alkermes Plc (ALKS) 2012 Q4 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 year-end 2012 financial results. 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 recorded at Alkermes' request.

At this time I would like to introduce your host for today's call, Ms. Rebecca Peterson, Vice President of Corporate Communications at Alkermes. Please go ahead.

Thanks. Welcome to the Alkermes plc conference call to discuss our financial results for the fourth quarter and fiscal year 2012, which ended on March 31, 2012. With me today are Richard Pops, our CEO; Shane Cooke, our President; and Jim Frates, our CFO.

Before we begin let me remind you that during the call today we will make forward-looking statements relating to, among other things, our expectations concerning the commercialization of RISPERDAL CONSTA, INVEGA SUSTENNA, AMPYRA/FAMPYRA, BYDUREON, and VIVITROL; our future financial expectations and business performance; and our expectations concerning the therapeutic value and clinical development of our product candidates. Listeners are cautioned that these forward-looking statements are neither promises nor guarantees and are subject to risk and uncertainty.

Our press release issued today, our registration statement on Form S-1 effective on March 2, 2012, filed with the SEC, and our other filings filed with the SEC identify risk factors that could cause our actual performance and results to differ materially from those projected or suggested in the forward-looking statements. We undertake no obligation to update or revise the information provided on this call as a result of new information or future results or developments.

This morning, Richard will provide a brief update on the Company and Jim will discuss our fiscal 2012 financial results. After our prepared remarks, we will open up the call for Q&A. Now I will turn it over to Richard.

Thank you, Rebecca. Good morning, everybody, and actually good afternoon from Dublin. We just finished a meeting of our Board of Directors, and being here physically reminds us of just how transformative a year fiscal 2012 was for this Company.

With the EDT merger complete, Alkermes is a dramatically enhanced and financially strong company. We have doubled our revenue base, with a diversified commercial portfolio of more than 20 products. We are now generating significant positive cash flow, while at the same time advancing our late-stage pipeline.

With the financial engine in place and with the pipeline maturing so nicely, we are very well positioned to create value in both the near term and in the long term. We now have five key commercial products, RISPERDAL CONSTA, INVEGA SUSTENNA, AMPYRA, VIVITROL, and BYDUREON.

The fourth quarter was particularly exciting for BYDUREON. It was approved by the FDA in January and launched by our partners at Amylin in the US in February. We are now 13 weeks into the launch of BYDUREON in the US, and it has captured more than 6% of the growing GLP-1 market.

Our long-acting antipsychotic franchise, RISPERDAL CONSTA and INVEGA SUSTENNA, had another quarter of double-digit growth. With the ongoing launch of INVEGA SUSTENNA in the EU and strong growth in the US, we are confident that these products will continue to be major contributors to our pipeline.

For AMPYRA and FAMPYRA, this year growth is essentially hardwired into our business, at a minimum because of the increase in the number of markets that we are supplying. During fiscal 2012, our royalties were based on net sales of approximately $250 million, driven primarily by the US sales. Fiscal 2013 will be a year of significant growth as we will benefit from the ex-US launch of FAMPYRA by Biogen, which will layer on to US sales driven by Acorda. Biogen has launched the product in seven markets thus far, with 30 additional regulatory filings expected during 2012 and planned launches in the remaining EU markets.

VIVITROL continues to make steady progress with its 11th consecutive quarter of growth, achieving sales of just over $40 million for the year. We continue to increase awareness of VIVITROL for the treatment of both opioid and alcohol dependence. And just last week we presented new data on VIVITROL at the APA annual meeting.

In March, Mark Stejbach joined us in the role of Chief Commercial Officer. In addition to leading our commercial team in support of VIVITROL, Mark will play an important strategic role in preparing and enhancing the capabilities of our commercial team as our late-stage clinical candidates advance toward commercialization.

So that is the foundation, and it's an incredibly strong one, comprised of five products with long patent lives, many at the beginning of their commercial lives. But it's only the foundation. Looking forward, the pipeline becomes more important as it becomes more valuable.

In fiscal 2013, we will build upon the progress we made in 2012, during which we advanced three of our pipeline candidates into later-stage development based on pre-specified go/no-go criteria.

The Phase 3 study of ALKS 9070, our long-acting prodrug of aripiprazole, is on track for our enrollment goal of nearly 700 patients and we continue to expect top-line data in mid-calendar 2013. We see a very clear medical and business opportunity here, bringing a new long-acting medicine to an emerging class which is growing because of long-term efficacy and pharmaco-economic benefits. The development of an ALKS 9070 builds on our expertise and our experience with the long-acting atypical class, and it's a natural next step for our long-acting franchise.

For ALKS 37, our opioid antagonist for the treatment of opioid-induced constipation, the ongoing Phase 2b program is nearing completion. We expect results in mid-calendar 2012 from two separate Phase 2b studies in over 200 patients.

If the data confirm a favorable competitive profile, determined by a rigorous evaluation of safety and tolerability as well as efficacy, we will move forward into Phase 3. We think this is a real unmet medical need and potentially a major commercial opportunity.

For ALKS 5461, an opioid receptor modulator for treatment-resistant depression, a Phase 2 study is underway, enrolling 130 patients. We expect to have data in hand in the first half of calendar 2013.

If these data confirm what we saw in our first proof-of-concept study we will have a drug candidate with some incredibly attractive features. Namely, a well-tolerated, oral treatment for a large refractory condition based on a new mechanism with strong patent protection. Data from the Phase 1b study will be presented at the upcoming NCDEU conference which is sponsored by the American Society of Clinical Psychopharmacology later this month.

Meanwhile, our partners continue to advance other programs. In May, Zogenix submitted an NDA for ZOHYDRO, which is an extended-release formulation of hydrocodone without acetaminophen. If approved, we will receive manufacturing fees and royalties of approximately 20% of the net sales of ZOHYDRO.

Amylin is developing three new formulations of BYDUREON to take advantage of the expanding GLP-1 market opportunity, a dual-chamber pen device and two suspension formulations that eliminate the need for reconstitution, one administered weekly and one monthly. They are expecting to launch the pen in late calendar 2012 or early 2013, and expect to start the weekly suspension Phase 3 program this year and the monthly program next year.

Finally, Acorda is evaluating the use of AMPYRA in two proof-of-concept studies, one in cerebral palsy, which started enrolling at the end of calendar 2011, and one in chronic stroke which they expect to begin enrolling in the second quarter.

So that is enough for the portfolio. The numbers tell the other part of our story, so I will turn the call over to Jim to walk you through our financial performance and expectations. As you will see, we have transformed the Company financially and we are positioned to grow it from here. Jim?

Thanks, Rich. Good morning, everyone. Today we are reporting our fourth-quarter and fiscal 2012 results for Alkermes plc, which reflect the completion of the merger of Alkermes, Inc., and EDT in September.

The results demonstrate the power of the financial engine we have created. We have fundamentally transformed our business, going from an adjusted EBITDA loss of $15.4 million in fiscal 2011 to a positive adjusted EBITDA of over $70 million in fiscal 2012. This is a Company that is characterized by the scale and diversity of our revenues, our ability to generate positive and growing cash flows, while at the same time investing in an increasingly valuable late-stage pipeline.

Now we have all the elements in place to continue to grow our business in fiscal 2013. Let me start by providing some highlights of our fourth-quarter results.

We recorded total revenues of $130.5 million, which is more than a 155% increase over the fourth quarter of last year, reflecting the Company's expanded commercial portfolio. Revenues were driven by the growth of our key commercial products and the strong performance of some of the legacy products.

Revenues related to our long-acting atypical franchise, RISPERDAL CONSTA and INVEGA SUSTENNA, were the most significant contributors to our top line during the fourth quarter, achieving double-digit operational growth due to an increase in combined market share. End-market sales for RISPERDAL CONSTA and INVEGA SUSTENNA exceeded $2 billion in fiscal 2012, growing more than 16% over fiscal 2011. For the quarter, Alkermes recorded manufacturing and royalty revenues of $45.3 million.

Manufacturing and royalty revenues for AMPYRA and FAMPYRA were $13.8 million during the fourth quarter. Acorda reported US net sales of AMPYRA during the quarter of $57.4 million. Outside the United States, Biogen continues to launch FAMPYRA on a country-by-country basis and reported net sales of approximately $15 million during the quarter.

Net sales of VIVITROL for the fourth quarter of fiscal 2012 were $11 million, representing the 11th consecutive quarter of growth. This reflects 4% growth sequentially and 29% growth over the same quarter last year on an operational basis.

Turning to BYDUREON, during the fourth quarter Alkermes recorded revenues of $8.2 million, which included a $7 million milestone payment recorded as R&D revenue, triggered by the launch of BYDUREON in the United States.

In addition to our five key commercial products, during the fourth quarter of fiscal 2012 Alkermes earned revenues from our legacy products including $10.3 million from TRICOR 145; $10 million from the combined RITLAN LA/FOCALIN XR franchise; and $6.1 million from VERELAN.

Switching to expenses, we are managing our business rigorously. During the fourth quarter, operating expenses were in line with our expectations, excluding a non-cash $45.8 million write-off of intangible pipeline assets valued in the merger with EDT. We took the write-off in the fourth quarter as we finalized our prioritization for R&D spend for fiscal 2013.

Our adjusted EBITDA for the quarter was a positive $24.4 million, compared to an adjusted EBITDA loss of $6.6 million for the same period last year. Finally, during the fourth quarter our cash and total investment balance increased by approximately $12 million to $246.1 million.

I will now outline some of the highlights for the combined Company for the entire fiscal 2012, which included the contributions from the EDT business from the September 16 close of the merger through March 31, 2012. Total revenues were $390 million, which reflected an increase of 109% over fiscal 2011 and was within our increased expectation of $370 million to $400 million provided on our February earnings call.

Total operating expenses were $478.3 million for fiscal-year 2012 as compared to $232.3 million for fiscal 2011. Operating expenses were in line with our financial expectations, excluding the write-off of $45.8 million of in-process R&D that I mentioned previously.

As a reminder, fiscal-year 2012 operating expenses included $29.1 million of merger-related expenses that will not be recurring in fiscal 2013 and $122.5 million of non-cash expenses, including the in-process R&D charge.

Net interest expense for fiscal 2012 was $26.6 million, which included $28.1 million of interest expense incurred on the $450 million of term loans secured to fund the merger with EDT.

Adjusted EBITDA for the fiscal year was $70.2 million, within our expected range of $65 million to $75 million. This will be the last time we use adjusted EBITDA in our guidance. Going forward, we will guide to a non-GAAP earnings metric that reflects our ongoing cash expenses.

Essentially this is taking adjusted EBITDA and deducting net cash interest expense and cash taxes. For a detailed definition of Alkermes' non-GAAP earnings and a reconciliation to both adjusted EBITDA and to GAAP, please see our press release issued earlier today.

I will now provide some of the highlights of our financial expectations for fiscal 2013, which will be the first full fiscal year following the merger with EDT. We expect total revenues to range from $490 million to $530 million. Here in the revenue line we see the benefits that a diverse product portfolio offers.

We've assembled a portfolio of commercial products driving total revenues this fiscal year of approximately $0.5 billion. There are a number of different scenarios that will yield this result.

For CONSTA, SUSTENNA, AMPYRA/FAMPYRA, and BYDUREON, we model a series of ranges based on our partners' guidance and, where applicable, our manufacturing forecasts. For VIVITROL, we assume net product sales in the range of $45 million to $55 million. Our expectations also include milestone and license revenues unrelated to our key clinical development candidates in the range of $20 million to $30 million.

Our revenue expectations do not include any impact of the business development activities related to key clinical development candidates. We expect to revenues from our legacy products to decrease during fiscal 2013 due to generic competition, offset by revenue growth of our key commercial products.

Turning to expenses, for fiscal 2013 we expect total operating expenses to range from $485 million to $520 million. Of note, this includes expected non-cash expenses in the range of $110 million to $125 million.

We expect net interest expense to range from $35 million to $40 million. Our GAAP net loss for fiscal 2013 is expected to be in the range of $20 million to $40 million, or approximately $0.15 to $0.30 per basic and diluted share. And finally, we expect positive non-GAAP net income to be in the range of $85 million to $105 million, and non-GAAP diluted EPS to be in the range of $0.62 to $0.77. Our complete financial expectations for fiscal 2013 are outlined in the press release we issued earlier today.

With the successful completion of the EDT merger we have all the elements in place to take Alkermes to the next stage of growth. We now have a broad commercial portfolio with key products in their growth phases that will contribute not only to top-line growth but also to margin expansion, driven by our pure royalty products like INVEGA SUSTENNA and BYDUREON.

This financial engine we have created is generating growing cash flows while also enabling the advancement of the most promising product candidates into later-stage clinical development. In fiscal 2013 and beyond, we will be focused on increasing our earnings and cash flows, paying down our debt, and increasing value for our shareholders.

With that, I will now turn the call back to Rebecca.

Thanks, Jim. We will now open up the call for Q&A. Operator?

(Operator Instructions) Cory Kasimov, JPMorgan.

Hi, it's just Matt Lowe in for Cory today. Just wondering if you could expand on the thinking behind the move from the adjusted EBITDA guidance to the non-GAAP guidance. And then just as a follow-up, if the OpEx guidance assumes you move ALKS 37 into Phase 3 on your own. Thank you.

Sure. Hi, Matt. It's Jim here. Yes, I think we started off with adjusted EBITDA because it was very much related to debt financings, and people who are in the debt markets like to look at adjusted EBITDA numbers. I think as we looked around the industry we have found that trying to find an EPS number that people could get their hands around was something that was important; and we wanted to reflect the true cash expenses and cash earnings of the business.

So, the move from adjusted EBITDA -- again, people can calculate it one way or another. But it is simply adding back, if you will, or subtracting from adjusted EBITDA your cash interest expense that will be a recurring expense for us quarter-to-quarter as well as our cash tax expense. So hopefully again that will make it clear for people and possibly make it easier for people to compare one company to another across the industry.

Then in terms of ALKS 37, at this stage, yes, we have included the beginnings of Phase 3, assuming positive data obviously through the year, in our fiscal '13 guidance. And as we look beyond that, obviously that is a long way away; and we will continue to give guidance as we move into next fiscal year.

Okay, that's great. Thank you.

Steve Byrne, Bank of America.

Rich, you mentioned the recent APA conference, and there were a couple things there that I wanted to get your view on. One of them, Otsuka had several posters on their monthly ABILIFY. Just wanted to see what your all view was on their efficacy and safety data relative to 9070.

Then the other group of posters were from you guys on VIVITROL. You had some data on overall healthcare cost benefits. Can you use that to help drive penetration?

Yes, hi, Steve. So first, my overarching view of the Otsuka presentations was positive in the sense that I am very pleased to see that they are moving forward with their long-acting ABILIFY program. And the data appear to be pretty clean. They have a PDUFA date this summer, and we expect that drug to get approved.

An important part of that, much in the same argument we made about Victoza in the GLP-1 space, is that the long-acting atypical antipsychotic space has been hampered by the fact that only J&J has been promoting the product. So more promotional intensity means more physician education and payer education, which means broader use of long-acting atypicals, particularly in this indication where payers have been reluctant and the total market share is still below 5%.

Now, specific comparisons with the Otsuka product, let's wait until we see all of their data and we see all of our data. I will just say that, as you know, we have designed 9070 specifically to have advantages over the Otsuka product.

Now on the VIVITROL data, VIVITROL cost-effectiveness data and real-world data is very important in the payer environment. I think there is very little doubt about the efficacy and utility of opiate receptor blockade in the treatment of opioid dependence and in alcohol dependence. Really what we are doing is adding more data, more straws on the camel's back in terms of the pharmaco-economic benefits and the long-term benefits of treating this way.

Thank you.

Bill Tanner, Lazard Capital Markets.

Thanks for taking the questions. Rich, just one for you. If your BYDUREON partner changes hands, I am just wondering if you could help us frame what kind of opportunities or, I guess, challenges that could create for Alkermes. And I have a follow-up.

Hey, Bill. What is best for our shareholders is the partner who is going to sell the most BYDUREON. So an increase in scale if that were to happen would be beneficial for us, as we believe that the manufacturing capacity [use it] to supply a large market, and this is a very important product that should be commercialized on a global basis. So I will probably just leave it at that.

I mean, so do you then have a viewpoint that something like that would be a net positive? That potentially you get the asset in maybe, I guess, stronger marketing hands? Is that kind of -- understanding there is a lot of water that has got to flow under the bridge; but is that a fair operating assumption, I guess?

Well, I think our economics, just to be clear, Rebecca points out and just so people realize -- our economics are the same. Nothing changes if things change with Amylin. That is the first principles.

But I would say that the launch phase of BYDUREON right now is going well, and there is a tremendous amount of intensity and focus at Amylin to do it well. And I think that the success of their company depends upon it, which I think focuses the mind.

So at peak I think this product has the potential to be a very large product if its safety and efficacy get borne out over time. And the application of scale can only help us.

Okay, fair enough. Then as relates, Rich, you did mention that you've got a maturing pipeline, but it seems like it might be a few years hence before you would launch a new product. So in the interim, are you comfortable with revenue growth from the existing products? Would you be on the lookout for anything that might be complementary? Maybe just help us understand a little bit the (multiple speakers) .

I would say both. We don't feel any compelling need to augment right now, because we are just entering really the ramp phase for SUSTENNA, BYDUREON, AMPYRA, and so even VIVITROL continues to grow into this, in that nearer-term time frame.

That said, we have a commercial infrastructure. We have recurring cash flows. We have a decent market cap, which we think is going to be growing. So we will always be looking for opportunities, but without feeling the compelling need to do anything.

Then maybe if I could just ask one last one as it relates to expense management. I know that is kind of a sensitive topic I think with investors about your Company. Maybe for Jim, just any general comment on the philosophy there in terms of you've got obviously a growing revenue base. And the thoughts on how you are investing in R&D; it looks like R&D may be a little bit less than what we were thinking for fiscal 2013.

Yes, Bill, I think what we are really trying to do is exhibit disciplined expense management. We have talked about that for some time since the merger. I think if we can deliver on that, we have enough and varied streams of revenue where lots of permutations get us to growth.

I think we've got a very good stable of products that we expect to grow. We will continue that disciplined management, and investing in our key products, and making sure that -- the clinical data obviously has to match the outcomes if we are going to be continuing to invest in them. So.

Okay.

Thanks. Operator, we will take the next question.

Ami Fadia, UBS.

Hi, good morning. Just a question on the EBITDA margin. Could you give us a sense of what EBITDA margin you are assuming for your fiscal 2013? My rough calculations show that it is below 30%. And if you could update your guidance for when you think you could reach that 30% to 35% range, thanks.

Sure, Ami. Yes, if you do -- and let's be clear, the shift to the adjusted EBITDA margins can be figured out quite clearly by adding back our cash interest expense. So you get 23% to 28% margin if you calculate our adjusted EBITDA based on our guidance for fiscal '13.

You know, you're right; it hasn't yet hit our target of 30% to 35%. Again, I think we are going to be focused on disciplined expense management, which is what we can control.

And I would say let's see how the products launch. We have got BYDUREON, SUSTENNA, and AMPYRA still in their launch phase, as Rich talked about.

So that 30% to 35% range is still a very, very real goal for us. Our guidance this year doesn't quite get there at this stage, but it is obviously a long year and we will be continuing to work to deliver on that.

Just as a follow-up, could you give us a sense of what changed versus what you had previously assumed when you gave us the 30% to 35% guidance? If there is anything specific you could point out, that would be great.

Ami, it's Rich. Maybe I will take that one.

Nothing has really changed. That was when we first put the merger together last fall and we were mapping out. We reckoned that we would be somewhere around the $0.5 billion revenue range. We simply -- but the fine points to the pencils as we made a decision to guide for the year and live with the guidance. So we are happy with that. As Jim pointed out in his remarks, we went from a significant amount of loss position to a significant cash flowing positive position, and we think we are on a really nice trajectory.

Got it. Thanks.

Graig Suvannavejh, Jefferies.

Yes, hey, good afternoon, guys, and congratulations on the quarter. Two questions if I could.

First, thanks for giving the 2013 guidance. But can you give us any color on how we should be thinking about the quarterly progression? If there is not specific numbers, just an overall trend on the major P&L line items.

Then second, just wanted to go back to the debt balance and where you stand, and how you feel you are making progress on paying down debt, and when you think you might be able to pay that off. Thanks.

Sure. I think, Graig, we are not going to give specific quarterly guidance at this stage. I do think that we shouldn't have a direct line, though, because again a lot of our manufacturing revenues from CONSTA and AMPYRA come in not necessarily directly, again, in a straight line related to sales growth as it were. So those can be lumpy.

Obviously we also have products in the launch phase like BYDUREON that ought to be growing more linearly. That is a pure royalty in SUSTENNA. I will also remind you that the SUSTENNA royalty is based on a cumulative basis, but it will step down; and it did step down in the first quarter to the lower 5% range; and it will be stepping up as we hit certain milestone. So we will have a higher SUSTENNA royalty at the end.

So there's a lot of moving parts. I think it is good to walk through and put your own guidance around that; but we don't have any specific guidance for the quarters.

The second part of the question I think was the debt management. I think we are looking at generating significant cash flow through the year. We have the obligation to repay half of our free cash flow at the end of each fiscal year, which we will certainly do.

And then I think we are keeping our eye on potentially doing more; but that will depend on the interest rate environment, the refinancing potential that we have, and other corporate activities. But with a CapEx budget of around $20 million to $25 million, as we outlined as well in the press release, I think we are looking forward to generating significant cash as we go forward this year. And debt repayment will be one of the things that we will be focused on.

Okay, is your debt repayment at the end of the fiscal year, or is it on a periodic basis? And are there any numbers you can share around that?

Yes. The requirement is at the end of our fiscal year. That said, we can repay it early if we so choose.

Then its, as I said, defined requirement is 50% of our free cash flow, which would subtract CapEx from our non-GAAP EPS number -- or non-GAAP number that we have given you. So that is a good definition of free cash flow, as it were.

Okay. Thanks and congrats on the quarter again.

Yes, you're welcome.

Thanks very much.

Mario Corso, Caris & Company.

Hi, thanks. Good morning. A couple of things I wanted to ask about.

Cost of goods sold looked like it bumped up quarter over quarter, and it looks a little bit higher for fiscal '13 than I was modeling. I am wondering what, if anything, was going on there.

Then can you say anything about your expectations on the CONSTA SUSTENNA side for the year? Whether it is a range of growth you might see or how you see shipments differing from end revenues, even qualitatively if not quantitatively.

Then thirdly, what is the biggest swing factor in the revenue range for the year? Is it the antipsychotic franchise, or is it generics to the TRICOR, FOCALIN, and RITALIN? Thanks a lot.

Sure, Mario. Let's see. On the margins, I think some quarters we have higher efficiencies in our plants than others; that has something to do with it. The other thing that is driving the margins really for the full year will be how big our pure royalty products are. Right? Because that fits into the -- so your BYDUREON and your SUSTENNA lines.

So I think that depending on our assumptions there, with the drivers, we have tried to give conservative margin guidance. And I think they're pretty much in line; I am just looking at last year. It is very much in line with where we were last year.

I think on the second question with the CONSTA, SUSTENNA side, I think the focus there for us is -- qualitatively we grew 16% if you look at the franchise as a whole compared to last year. So again, people will say -- oh, I understand this transaction perhaps at its simplest; now you have stabilized CONSTA or you have protected CONSTA. But I would say the benefits of the franchise together, with SUSTENNA and CONSTA together, is that we have really been growing nicely. The last few quarters have been well into the double-digit growth range, 20%, 20%, and 16% for the whole year.

So I think that as SUSTENNA launches in Europe and we have seen CONSTA stabilize in the United States, and if that pattern repeats itself SUSTENNA further penetrates around the world, obviously actually that has some upside for us.

Then I think the swing factor in the revenues, you hit the two main ones right on the head. How quickly does that long-acting franchise continue to grow? And how long?

We have I think put in conservative assumptions for the generic entries, and there are definitely could be some upside there. Then of course you have the upside with the launches of AMPYRA around the world as well as BYDUREON.

So, that is the benefit of the portfolio. As I said in my prepared remarks, there's a lot of different scenarios that play into it. I think we beat our revenue guidance for the last two quarters, and I hope that we can continue to do that if the products perform.

All right, operator, I think we have time for two more questions.

Anant Padmanabhan, Cowen.

Thank you. I just wanted to follow up on the CONSTA commentary earlier. In the past you have provided guidance for CONSTA manufacturing fees of about $120 to $125 million. I understand you would want to couple that with SUSTENNA.

But I was wondering if -- presumably you are already able to see some orders from J&J for the year. So I was wondering if you just talk about CONSTA itself, if you get a sense of what J&J is trying to do with the switch from CONSTA to SUSTENNA. So that is one.

Then my second question is on VIVITROL. We are seeing some strong prescription trends. In the past you have said that IMS is not necessarily a good indicator. So could you discuss some metrics for us behind the opioid dependence indication? Thank you.

Sure, I will start with CONSTA. Anant, we have made the decision not to break out specifically the CONSTA versus the SUSTENNA going forward. I think it is important. We look at it as a franchise; J&J sells it as a franchise.

And I think the overall growth is something that is very, very clear. Ultimately the more SUSTENNA sells, the peak royalties are actually higher than our margins on CONSTA. So also, though, I would point out that -- let's just look historically.

We earned in fiscal '12 $10 million to $15 million from CONSTA more than we earned in fiscal year '11. So the franchise is doing quite well, and I think that is the power of it and that is why in the fiscal year they both combined for over $2 billion in sales, because CONSTA is continuing to do well.

I think the other thing is we just -- it is hard to predict exactly how the launch in the various European countries are going to roll out. But again, together I think the two of them are growing quite nicely and should have a beneficial effect certainly on our financial statements.

On VIVITROL, I think in the opiate -- again 11 consecutive quarters of growth. This year as we have in years past, we have really tried to take a linear extrapolation of the current growth rates. The IMS trends do look good, and yet they haven't really hit a breakout phase.

I think we will see that when we -- you will see that when we report it in our quarterly sales, obviously as soon as we see it. So I think we feel like VIVITROL is still a very good product. It has got a long patent life, and we are looking at it as a very lucrative product for us over time as Rich has mentioned, as we build that information and people recognize how good the outcomes are with regard to what we have seen so far with VIVITROL. So plenty of room for that to grow in the years ahead.

All right, operator, we have time for one more question.

Terence Flynn, Goldman Sachs.

Hi, good morning. Thanks for squeezing me in at the end. Just a couple questions.

The first was in terms of ALKS 37, I was wondering if you can tell us when those trials completed enrollment so we might be able to get a better sense of timing of the data.

Then number two, can you just remind us of the patents on both CONSTA and SUSTENNA in terms of your assumptions there. Thanks a lot.

Hey, Terence, it's Rich. You were almost late to the party. I thought you weren't going to get in here.

The ALKS 37 enrollment, I am not quite sure; Rebecca is checking right now. But the fact is they are done and there are two different studies; we will get the first study earlier in the summer and the second study probably in the middle of the summer. So we are expecting most of the data to be out by mid to late summer. On the --

Patents.

On the patents on CONSTA and SUSTENNA, there's two important points on this. We have patents that run out into the '20s for CONSTA, and data exclusivity and patents on SUSTENNA that run into the late teens.

CONSTA is 2023 and INVEGA SUSTENNA is 2019 in the US.

Okay, so those are the patents. But there is also the whole issue about substitutability and the potential for generic entry. We continue to believe that we won't see AB-substitutable generic entries for these products certainly in this decade.

Excellent. Well, everyone, thank you very much for dialing in today and if you have any additional questions we are certainly available for follow-up. Have a great day.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.