Alkermes Plc (ALKS) 2017 Q2 法說會逐字稿

Good morning, and welcome to the Alkermes plc Second Quarter 2017 financial results call. My name is Brandon, and I will be your operator for today. (Operator Instructions) Please note, this conference is being recorded. And I will now turn it over to Sandra Coombs, Senior Director of Investor Relations.

Thank you, Brandon. Welcome to the Alkermes plc conference call to discuss our financial results for the quarter ended June 30, 2017. With me today are Richard Pops, our CEO; and Jim Frates, our CFO.

Before we begin, I encourage everyone to go to the Investors section of alkermes.com to find our press release and related financial tables, including a reconciliation of the GAAP to non-GAAP financial measures that we'll discuss today. We believe the non-GAAP financial results, in conjunction with the GAAP results, better represent 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 our press release issued today, our most recent 10-Q and also our 10-K for the year ended December 31, 2016, 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 as a result of new information or future results or developments.

Today, Jim Frates will discuss our financial results, and Richard Pops will provide a brief update on the company. After our remarks, we'll open the call for Q&A. Now I'll turn the call over to Jim.

Thanks, Sandy. Good morning, everyone.

We're happy to report strong second quarter results, driven by the performance of our proprietary commercial products: VIVITROL and ARISTADA. During the second quarter, total revenues grew 12% to $218.8 million compared to the second quarter of 2016, driven by a 54% year-over-year increase in revenues from our proprietary commercial product portfolio. This growth demonstrates the shift in our revenue mix, from reliance on our manufacturing and royalty business to a top line that is increasingly driven by VIVITROL and ARISTADA.

Revenues from our proprietary commercial products accounted for 41% of our total revenues during the quarter, compared to 29% in the second quarter of last year. These strong revenue results, coupled with important investments in our advancing development pipeline and growth initiatives for VIVITROL and ARISTADA, drove a GAAP net loss of $43 million and a non-GAAP net income of $1.2 million for the second quarter.

Starting with VIVITROL. In the quarter, net sales grew to $66.1 million compared to $47.2 million for the same period last year, demonstrating growth of approximately 40%. Sequentially, VIVITROL units grew 24% compared to the first quarter of 2017. This unit growth is somewhat obscured in our sequential net sales growth of 13%, as our second quarter was impacted by an unexpected $3 million onetime charge related to additional Ohio Medicaid units dating back to 2014 that the state recently submitted to us for payment.

Based on the underlying growth trends through the second quarter and our expectations for growth for the remainder of the year, today, we are reiterating our expectations for VIVITROL net sales in the range of $280 million to $300 million in 2017.

Turning to ARISTADA, our second quarter net sales of $22.7 million came in ahead of expectations. During the quarter, we continue to gain traction in the growing market for long-acting, atypical antipsychotics, with ARISTADA prescription growth of approximately 17% compared to the first quarter. Our Q2 ARISTADA net sales reflect an increase in gross-to-net deductions to approximately 41%. As I mentioned last quarter, 2 new Medicare Part D contracts took effect in March. And as a result, we expected gross-to-net deductions to increase for the second quarter, accompanied by increased volumes in these payer channels.

During the second quarter, ARISTADA inventory levels in the channel also increased to support higher weekly volume, as well as the launch of the ARISTADA 2-month dose, following FDA approval in June. We are making steady progress in our launch and we're optimistic about ARISTADA, as our market share for new prescriptions in the long-acting aripiprazole market grew to approximately 21% in June, compared to 14% in June of last year.

Looking ahead, net sales should track prescription and unit growth more closely in the second half of the year, as gross-to-net adjustments due to payer mix stabilize and we expect that third quarter ARISTADA net sales will be in the range of $24 million to $27 million. We are also reiterating our expectations for ARISTADA net sales to double to approximately $95 million for 2017.

Moving on to our key partner products. We saw overall revenues of $119.1 million in the second quarter compared to $122.7 million in the second quarter of last year. Of note, this included manufacturing and royalty revenues of $82.2 million related to RISPERDAL CONSTA, INVEGA SUSTENNA and INVEGA TRINZA, which increased from $69.6 million for the same period last year, while revenues from AMPYRA and FAMPYRA declined to $25.3 million from $40.8 million for the same period last year, due to the timing of shipments.

In terms of expenses, our total operating expenses for the second quarter of 2017 were $263.4 million compared to $242.3 million for the same period last year. This year-over-year increase was driven primarily by investment in the growth of ARISTADA and VIVITROL, as well as increased manufacturing activity.

R&D expense during the second quarter was somewhat lighter than expected, primarily due to the timing of certain expenses. As a result, we anticipate that approximately $10 million of R&D expenses originally expected in the second quarter will shift into the third quarter. We also expect that SG&A expense will increase slightly through the remainder of the year, driven by investments in the infrastructure and leadership team for ALKS 5461, as we prepare for its potential launch. Overall today, we are reiterating our financial expectations for 2017.

In addition, as we look to model the next 2 quarters, we expect a modest non-GAAP net loss in Q3, followed by a return to non-GAAP net income for the fourth quarter.

Turning to our balance sheet. We're in a strong position and ended the second quarter of 2017 with approximately $561 million in cash and total investments. Changes in cash during the quarter were primarily related to changes in working capital and capital expenditures.

In summary, the business is performing on plan, powered by the robust growth of our proprietary products, which now represent approximately 41% of our top line. With this strong foundation, we are well-positioned to invest in the continued growth of VIVITROL and ARISTADA, prepare for the anticipated launch of ALKS 5461 and execute on our strategy to advance our pipeline of late-stage CNS candidates.

With that, I'll turn the call over to Richard.

That's great. Thank you, Jim. Good morning, everyone.

So we got a lot of good things to talk about this morning.

Since our last earnings call, we've made great progress in our development portfolio and I'd like to start there. In summary, in just the past quarter, we received FDA approval and launched the 2-month dose of ARISTADA, we announced the positive top line results of the pivotal antipsychotic efficacy study of ALKS 3831 and we had an important pre-NDA meeting with FDA on ALKS 5461.

First, ALKS 5461, our Fast Track-designated medicine for depression. Earlier this week, we passed a major milestone with the outcome of our pre-NDA meeting with FDA, which resulted in an agreement on our NDA submission content and timing. Based on that meeting, we plan to begin the rolling submission of the NDA for ALKS 5461 in August. Encompassing data from more than 30 clinical studies and 140 nonclinical studies, the submission of the NDA for ALKS 5461 is a massive undertaking and we're on track to complete the submission by year-end. FDA will still need to review it and no regulatory review is without risk. With that said, we're pleased with the outcome of this week's interaction and we're looking forward to entering the review phase, as we work to bring this important new medicine to patients.

ALKS 5461, with its unique pharmacology targeting the endogenous opioid system, may provide distinct clinical benefit for patients. During the second quarter, at the Society of Biological Psychiatry medical meeting, we presented data from the positive FORWARD-5 pivotal study as well as a holistic overview of the consistent efficacy and safety profile of ALKS 5461 demonstrated throughout the entirety of the development program. If you've not have a chance to listen to this presentation, I encourage you to visit the website and access that webcast. You now have seen data from all of the key efficacy studies in the program. It's this complete data set that supports our belief in the safety and efficacy of 5461 and provides the foundation of the NDA submission. So a significant development in the 5461 program and we're incredibly excited about what lies ahead for this important medicine.

We also achieved a significant milestone for 3831, our novel oral broad-spectrum antipsychotic drug candidate for the treatment of schizophrenia. At the end of June, we announced positive preliminary top line results of ENLIGHTEN-1, evaluating the antipsychotic properties of 3831 versus placebo. While this result was the objective, studies in schizophrenia are never without risk due to high placebo response. This study had a clear positive readout and its successful completion represents a critical item on the path toward registration.

The study achieved its primary endpoint, with ALKS 3831 demonstrating clinically important and statistically significant reductions from baseline in PANSS total scores compared to placebo at week 4, with a P value of less than 0.001. Olanzapine achieved similar improvements from baseline PANSS scores with a P value of 0.004. Patients need this strong efficacy in a well-tolerated medicine. We believe that ALKS 3831 has the favorable weight and metabolic profile that we designed from the outset and that it will continue to reveal itself with data readouts from ongoing studies.

Next fall, we expect results from ENLIGHTEN-2, the pivotal 6-month study evaluating weight in patients with stable schizophrenia, are receiving olanzapine or ALKS 3831, which is designed to replicate and confirm the findings from our large randomized Phase II study.

So another major milestone in the ALKS 3831 program achieved and we're looking forward to completing this registration program.

In the interest of time, I'll give brief updates on 8700 and 4230. Both are moving well, on track for data this year. ALKS 8700 is really building momentum. Our 2-year safety study now has more than 585 patients and we're on track to achieve our exposure requirements of 100 patients at 1 year by the end of this year. GI adverse events remain low and the head-to-head study versus TECFIDERA is enrolling, with initial data expected early in 2018. We're excited about the progress we're making in the data as it matures, and we remain on track to file the NDA in 2018.

There were positive developments on the commercial side, too, as we recently completed market research confirming robust interest from healthcare providers and the market potential of 8700 as an additional treatment option for patients with MS.

ALKS 4230, our immuno-oncology compound, is proceeding through its escalation cohorts and we hope to provide our first update on interim results later this year.

As to VIVITROL and ARISTADA, we are incredibly proud of these medicines and the role they're playing in key public health issues affecting the country. At a moment in time when healthcare accessibility and affordability are in the spotlight of our national dialogue, Alkermes is providing patient-centered treatment options to those afflicted by addiction and serious mental illness. We have been committed to these patients for many years and we're proud to be working with healthcare providers, public health officials and policymakers to address these devastating diseases, that wreak havoc on patients, their families and in our communities. Against the backdrop of a raging national epidemic, VIVITROL is beginning to have an impact on the treatment paradigm. With that said, we still have far to go. Only 2% of patients receiving medication for opioid dependence are being treated with VIVITROL. There are only 3 medicines approved by FDA, each very different and each with a role to play. As an injectable, long-acting opioid antagonist and the only medication approved for the prevention of relapse to opioid dependence, VIVITROL is uniquely positioned. We're encouraged by the level of engagement by senior policymakers and public health officials to evaluate the treatment status quo and consider new treatment options. Their commitment and interest is evident in the expansion of the number of state programs that incorporate VIVITROL, with now with over 500 programs in 39 states.

Turning now to ARISTADA. Serious mental illness is another major public health priority that impacts not only the healthcare system, but also our criminal justice systems and the ambience of our communities at large. Many of the lessons we've learned through our work with VIVITROL over the past 10 years are directly transferable to advocating for treatment options for patients with schizophrenia, backed by science and outcomes data.

We're building the ARISTADA product family to be a preferred option for healthcare providers and patients when considering long-acting injectable treatment. With newly approved 2-month dose, ARISTADA is the first and only long-acting atypical antipsychotic approved in 3 dosing durations. With the ability to initiate treatment at any dose or duration, ARISTADA provides a range of options to help clinicians tailor treatment to individual needs of their patients. We believe that the availability of the ARISTADA 2-month dose may be particularly appealing to healthcare providers as they address the challenges of transitioning patients with schizophrenia from hospital inpatient care to outpatient settings. The approval and launch of the 2-month dose in June is just the latest demonstration of our commitment to meet the real-world needs of patients suffering from schizophrenia, and we look forward to bringing additional innovations to these patients and healthcare professionals providing their care.

So we have an incredible amount of activity ahead of us as we enter the second half of the year. Our team is prepared and committed to advancing these important medications as we focus on bringing patient-centered treatment options to these underserved disease areas.

And with that, I'll turn it back over to Sandy.

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

(Operator Instructions) And from JPMorgan, we have Cory Kasimov.

So first, I wanted to ask you about FDA feedback on 5461 from your pre-NDA meeting. I guess, did they provide any thoughts or insight during the session on MADRS-6 or averaging? And in terms of the rolling filing itself, is there any one thing that is going to be the big gating factor here or is it just the overall size of the application? And I have one other follow-up.

Cory, it's Richard. Yes, we got helpful feedback in the interaction. So on the 3 things that folks have been asking us about, MADRS-6, averaging, SPCD, all these things, we got some clarity. So we now know that FDA intends to focus on MADRS-10 as the primary efficacy measure, which was the efficacy measure that was collected across all of our efficacy studies. For studies that evaluated MADRS-6, they will -- indicated they will review the MADRS-6 data, but their primary analysis will be on MADRS-10. But as you know, we collected MADRS-10 in all the studies as well, so that's fine. Regarding averaging, as you know, we believe that averaging is a more accurate way of capturing drug effect over time and it's central to our efficacy analysis, although we'll make all the data available for FDA to review in the NDA. So they can analyze the data however they choose to it. We didn't talk about averaging in this meeting, as we discussed it in the past, and we expected it to be a review issue, which is appropriate. SPCD studies are becoming the best practice in the development of new medicines for the treatment of major depressive disorder. I think you're seeing that broadly. That said, the 5461 NDA will be the first NDA based on SPCD efficacy analysis. So I think that the FDA is well-versed in SPCD and its potential utility in psychiatric trials and we discussed it with them for a number of years now. So I felt that we got what we wanted out of that interaction. The rolling submission is really -- it's just gated by the magnitude of the submission. I think you've heard me say this, but it'd probably be in excess of a 3 million-page submission, with hundred of studies in there. So because it's a Fast Track-designated medicine, that's what qualifies it for the rolling submission. FDA can choose to begin the review right away or wait, it's really just gives them the ability to more flexible schedule their work across the NDA as it presents itself.

Okay, great. And then I just wanted to quickly ask on your current commercial products, can you talk about where you are in terms of the manufacturing expansion plans for VIVITROL that you mentioned in the past? And just along those lines, how much manufacturing capacity did you launch ARISTADA with?

Cory, it's Jim, I'll take that. So the manufacturing expansion for VIVITROL is going well. We'll exit the year with roughly $500 million in capacity and in the 2019 range, with some step-wise expansions along the way, we are preparing to be ready to produce north of $1 billion worth of VIVITROL in that time frame. So we're on track with that and everything is going well. And with ARISTADA, given that it's the LinkeRx technology, it's different from the microsphere technology. We're actually, we were able to launch with a capacity that's close to $1 billion in net revenues. So we're comfortable with where we are with ARISTADA.

From Cowen, we have Chris Shibutani.

For VIVITROL, we drive our model based upon a couple of background metrics that you have provided in the past. Can you talk about pricing, what gross-to-net has done for VIVITROL, specifically? I know you gave it for the branded products. Can you also talk about whether or not the CARA legislation seems to be having any impact in terms of number of prescribers and what the mix is, kind of from the Medicaid versus the private side?

Chris, I'll take those. So VIVITROL gross-to-net for the quarter were 49%. That was up from 44% the previous year -- excuse me, the previous quarter. That was mainly driven by that $3 million charge I mentioned from the state of Ohio that went all the way back to 2014. So that was -- we look at that as a onetime thing. We don't expect that again. So VIVITROL gross-to-net remaining in 45% to 50% is pretty consistent with where we've been modeling. The number of prescribers is, again, growing nicely. We won't talk about specific targets, but that's growing as we look at the 40% growth that we're seeing year-over-year with VIVITROL, that's mainly driven by prescriber growth. And we're seeing growth across all the different regions of the country, which is also consistent and an ongoing theme. Interestingly, the CARA funding or the 21st Century Cures funding that you're talking about, really is being released just now in the beginning of July with the federal government's fiscal year. That money has been made available to the states starting in July, so we're not necessarily banking on a pickup there, based on the growth that we've seen historically. There certainly is an opportunity, though, and we expect more programs to expand as the crisis sadly continues to get worse. But on a positive note, more money is being able to -- is being provided to the states to be able to address the crisis. So that investment ought to be coming in the second half of the year.

And mix of patients on the Medicaid versus the private insurance side?

Sorry, so we're about 50% Medicaid patients and we're seeing solid growth in both the Medicare side and the commercial side. But growth continuing on the Medicaid side, because that's where, frankly, most of the patients are, as you know.

Great. And then very quickly on ALKS 3831, can you remind us where you are for time line for telling us about the metabolic study and young adult study?

Chris, it's Richard. We'll get the metabolic data probably next quarter in the fall and we'll analyze that as it comes in. As you know, this is a large, complicated study, an in-patient study at 28 days, healthy volunteers, causing all kinds of metabolic profile data. So we're excited to get that and we'll share that with you as soon as we have it analyzed.

From Crédit Suisse, we have Vamil Divan.

So just -- one thing just on the FDA feedback on 5461, just to clarify, so the meeting just happened, I assume you haven't received the formal meeting minutes yet, just if you can confirm that's the case. And any sort of things that maybe were a little bit more contentious that we should keep an eye out for besides just sort of moving forward with the submission? And then second, just around healthcare reform, I think you guys, just given your product mix, you're a little more exposed to some of the debates around potential repeal and replace of Obamacare or whatever might happen with Medicaid. I'm just curious, you guys seem pretty plugged in on the D.C. front, the latest you're hearing there? And also maybe more general, sort of how are you planning or how you kind of -- what are your contingency plans if some of these changes to Medicaid do take place in terms of your strategy around VIVITROL?

Vamil, the meeting just happened this week. So we actually submit a very large briefing document in advance of the meeting, 6 weeks or so in advance, over a 100-page document that lays out the questions that we expect to cover during the meeting. We receive written FDA feedback in advance of the meeting and that actually becomes the foundation of the meeting minutes that we'll get formerly at the end. So we have a good sense of the complete nature of the response. So we don't expect any more drama around it. We had a very good interaction and there really wasn't anything that was contentious. So we're really in a strong position to begin the submission now, with a lot of clarity and a lot of excitement going forward. On healthcare reform, as you know, today's an important day, with the vote-o-rama probably starting later at the completion of 20 hours of debate. Through it all, the major point of contention with the moderate Republicans in the Senate has been around Medicaid expansion and particularly, providing funding for serious mental illness and opioid dependence, Senator Portman being at the front of that, and the latest compromise drafts have $45 billion of specific money earmarked for opioid treatment and serious mental illness in the draft. So it's hard -- no one can predict where this is going to end up in the end, but you should just know that for governors and for people on the ground in the states dealing with the opioid crisis, this is something that's going to continue to have specially allocated funds. This is something that's become a political as well as a healthcare issue, and you can see that Governor Christie's report, which is, he is spearheading the President's commission on opioids. We'll see the first interim report from that commission probably next week, with a final report due in the fall. This is supposed to be a series of actions that the administration could take, with administrative authority, without legislation, to begin to address this crisis more directly. And a foundational piece of that is going to be more aggressive treatment of opioid dependence, we believe. So I think that sadly, because of the extent of the epidemic, we're going to continue to have a fairly advantaged position for growing and improving access to our medicines.

Okay. If I could just squeeze in one follow-up on VIVITROL. So sometimes you've in the past sort of given sort of a breakdown of sales from some of the core states that have driven that product's uptake for the last few years. I may have missed some of your comments if you said it today, but can you give a little more sense of how you are doing in some of the newer states, where we've seen a little bit more interest, more funding, just to give a little sense of the uptake beyond those core states?

Yes, sure, Vamil, it's Jim. We didn't mention the specific top 5 states, because actually, the theme is right on where we've seen in the past. I would say that's where we are with VIVITROL. Things are progressing as we expected and going well. So the top 5 states still account for -- they are the same states, although some of the ones, 5 through 15, are beginning to grow. As I mentioned to Cory, we're seeing that growth in all areas of the country, which is heartening and is part of our plans, but those 5 key states which we've talked about before are still the lion's share of our product and still growing close to 100% in many of them. So VIVITROL's story this quarter is very much the same as we've seen in the last few. And we expect it to continue to stay on that trajectory as we move into the second half of the year, with a potential of the additional funding from 21st Century Cures and attention to the epidemic continuing to grow.

From Jefferies, we have Biren Amin.

Just maybe if I could start on 5461 and the FDA meeting. Was the ongoing Phase IIIb trial at all discussed during that meeting? And if so, are there any modifications you would make based on those discussions with FDA? And then just on the rolling submission, what parts in the application would be submitted last towards the end of the year?

Biren, the IIIb study was not discussed at all. So that wasn't a topic and we'll -- in that study, as you know, we're capturing multiple endpoints. We're interested in further elaborating the clinical profile using new instruments of 5461 in major depressive disorder. So all systems go on that for now. The rolling submission, I actually couldn't tell you right now what on the Gantt chart is rate-limiting for the final bit of it. But it's such a large submission, I think we'll probably start with the CMC stuff and probably end with the final safety cut that we'll do. But that may ebb and flow over the next few months. But we're hard at it and all of the modules are in process now.

And then maybe just a follow-up on 5461. Does the company anticipate building out the marketing team now that the filing's on its way? And how should we think about that relative to the full year SG&A guidance?

Yes, Biren, well, luckily, we planned for this and when we guided in the beginning part of the year, part of our increase in SG&A is actually that leadership team. And I mentioned that in my prepared remarks. So you'll see SG&A move up steadily through the year, it's moved up a little bit in the first of the year. And again, those investments really are around, I would say on the one hand, ARISTADA and VIVITROL continued growth, but also preparing for the launch for 5461. So with the NDA going in completely by the end of the year, we are going to start preparing for that, but that's already in our guidance for the year.

From Leerink Partners, we have Paul Matteis.

My first one is on 5461. Now that the FDA is going to be primarily looking at the MADRS-10, I'm wondering if you could talk about how you think the FDA could be conceptualizing the data you've shown in terms of statistics? So specifically, I think the MADRS-10 was a secondary endpoint in FORWARD-5. It hit statistical significance, but does the way that they do the stats change because it was a secondary endpoint, but it's their primary focus in the data?

Paul, it's Rich. No, recall in 207, or FORWARD-5, we had a hierarchical primary analysis, so it began with MADRS-6 averaging, then it moved to MADRS-10 averaging hierarchically, and then it moved to the final end of study point. So no, that's why we're really quite indifferent to which they choose. We believe MADRS-6 is interesting from the point of view that it addresses core symptoms of mood, which in the adjunctive setting, when patients are receiving SSRIs, this is often the unresolved part of their depression, because the other medicines may be addressing sleep and appetite and things like that. So we and clinicians will continue to believe that MADRS-6 is important, but we're perfectly fine with analysis that focuses on MADRS-10.

Okay. And if you don't mind, I have one on VIVITROL and one on 8700. On VIVITROL, I know there was this recent Times article that highlighted an ongoing study, a head-to-head study between VIVITROL and SUBOXONE. I guess, I know this is not a company-sponsored study. What's Alkermes' view of this study and what do you think the implications are in terms of how the data could be interpreted by states who are both primary users of the product, or not really yet primary users of the product?

Well, interestingly, I think it's states rely completely on their own experience. This is a very different part of medicine than oncology or other places where people react to published data. So with that as the most important observation, I think that this study, which is called X:BOT, is a bit of an unusual study because it actually excludes the patients that we primarily focus VIVITROL on, that is, people who want to be on VIVITROL. This is a study that is comparing the use of VIVITROL to buprenorphine in patients that are randomized, being essentially indifferent between receiving the 2 different drugs. So it should be interesting. I'm not sure that it's particularly on point for the key target patient who wants to undergo detoxification and be drug -- treated with antagonist medication on a monthly basis. But that study is evidently complete and will expect data by the end of the year.

And then one more thing, Rich, you said in your prepared remarks that you're expecting preliminary head-to-head data between 8700 and TECFIDERA early next year. I guess, 2 things. Is that earlier than you expected? I thought the data were coming later. And when you say preliminary data, what kind of cut is this in terms of sample size and duration of use?

No, I think we're right on track for that early Q1. That first cut is about, I think, 100-some-odd patients -- Sandy, I'm looking to you.

I can confirm that.

But it's, yes, it's a decent sample size. And in that, we'll be looking at these 2 instruments that we've been looking at for monitoring GI tolerability. And we'll see the sensitivity and the power that we see, if there is a difference between the 2. And that will inform subsequent clinical trials that we can run to ultimately, if we have a true differentiation, to affect labeling.

From Barclays, we have Douglas Tsao.

Just turning to ARISTADA quickly, I was just curious in the second quarter, how much of the stocking benefit that you reference was due to the 2-month? And then just sort of anecdotally, I know it's still early in terms of the launch of the 2-month product, but how ultimately, or I guess, maybe based on the early experience, how much of the overall volume for ARISTADA do you expect to ultimately come from the 2-month? Or do you expect it to be sort of spread across all the different dosage ranges?

Doug, good question. I would say the stocking is probably roughly split equally between the new 2-month dose as well as just the regular expansion you'd see as sales grow. And it's not as if inventory is particularly high, it's just over 3 weeks in the channel. So we sort of expect it to land between 3 and 4 weeks. It was just a little higher than where we sat at the end of the first quarter. So that's all pretty much in line and as expected. I think it's going to be hard to tell. And you're right, we launched at the end of June, we're not fully a month in yet. So we haven't really seen all the regular reorders that one would expect with the 2-month product, obviously, because we're only halfway through the duration of the product. But we've seen nice uptake in hospitals and the different programs. And actually, a lot of nice uptake of the insurance plans adding 2-months to the formulary. So that's all going according to plan and I think the launch was very, very -- executed very well on our part. So we'll obviously give you more updates as we come through the year. But finally, I think we've said in the past, the benefit of the 2-month is really for particular places that maybe want to start and make that transition easier to community care from hospitals, but it's really part of the whole breadth of options that people have with ARISTADA. Generally, we still think the largest number of patients are going to start on 1-month choices, but we're making ourselves look more like the market leader, which is INVEGA SUSTENNA, with a number of choices, a number of different doses, a number of different durations and that's what patients and physicians want to see. So this is very additive and we're looking forward to updating you more as we go through the rest of the year.

And then Jim, just as a quick follow-up on ARISTADA, in terms of that $24 million to $27 million, how much -- do you expect is that going to be all end market demand? Or do you have an expectation there'll be some stocking benefit in the quarter as well?

No, we kind of make our estimates based on demand sales, really. And then we see a little fluctuation based on how inventory turns out. I mean, this is also an interesting quarter, because the 4th of July weekend happened right in the beginning part of July. So right at the end of the quarter, in the beginning part of the following week. So we anticipate that growth really being driven by demand, not channel stocking one way or the other.

And then just in terms of VIVITROL, you referenced you are still seeing incredibly robust growth from your sort of top 5 states. Just curious, if that is coming from a range of different community programs? Or do you see sort of an expansion sort of within the states themselves?

I would say that again, this quarter for VIVITROL is very consistent. So are seeing growth in state programs. As Rich mentioned, the number of pilot programs is continuing to increase to over 500. And yet we are also seeing the breadth and depth of prescribers, right. And this is, VIVITROL, as we've talked about, the breadth of our prescriber network, making sure that we have appropriate reimbursement and making sure that from a policy perspective, up and down the state infrastructure, they understand and accommodate the use of VIVITROL. So the growth is really happening across all 3 of those fronts. And it's just growing faster in the states that have adopted it the most. And that's a good sign for us because we think ultimately, the other states are going to catch up. Because as Rich said, too, the experience that people are seeing in the field is very positive.

I mean, I guess, is it that those states are sort of broadening their programs? Or are they just -- each of those programs are just processing more patients now?

Well, I think it's actually both. Because as we look at -- and this is where some of the CARA funding comes in, because that's going to allow the states to expand, say, the number of counties that they can support with a VIVITROL program or the number of drug courts they can support. So just can't report on that yet, because that's ahead of us, not yet in the rearview mirror.

Brandon, we have time for one more question.

From Evercore ISI, we have Umer Raffat.

This is Akash on for Umer. Just a couple of questions. Number one, can you just go over again exactly why it was a rolling submission versus a normal submission. Basically, what data -- will we get any new data in the back half of '17 that you will incorporate in your filing? Number two, in terms of combining FORWARD-3, FORWARD-4 and FORWARD-5, did, in the pre-NDA meeting, did you get any feedback from the FDA on how they will be looking at the data? And then finally, on your metabolic study reading out in August, do you, just in terms of expectations, see any changes, like statistic changes on blood glucose or insulin concentration in healthy patients? Like what should we be expecting for that trial?

Akash, the rolling submission is really more of a way for workload management at FDA. So what you do with a Fast Track-designated medicine, because they have a lot of things going on in these reviewing divisions, is you simply provide modules of the FDA on a rolling basis so they can choose to review it at -- in their pacing. So for us, no, it's more about just putting together all the information we need to put together, completing the safety updates and getting all the integrated summary of safety and abridged summary of efficacy, all the studies pulled together, organized, in what is a large, large submission. So it's -- I think it's more indicative of the fact that we're ready to go now and we're going to start -- we're moving to the review phase for the drug. The pooling analysis itself was something that that's just statistics. It's just math. So FDA will have -- they acknowledge that we've done the pooling analysis. They will look at it and we'll provide all the data to them to run the analyses however they want to choose to run the analysis. And that's the recurring theme in the submission, is how robust the data is across multiple analytical methodologies. So we want them to do that and we expect them to do that. And no single study is dispositive with this program. That's what's so interesting, is that each of the different studies provides a different lens to view the safety and efficacy of the medicine through and then you can look at them in aggregate, or on an individual basis. And we think it's all internally consistent and supportive of the approval of the medicine. But the FDA has to make the determination. We've made the determination, but now FDA will get the data sets and be able to make their own determination. The metabolic study, you've heard me describe in the past, is a truly translational medicine study, because we're seeing very clear evidence in animal species of changes in metabolic parameters. They require different types of instrumentation and methodologies than you would do in the context of a depression study in patients. And that's why this is done in volunteers, almost like lab animals, in-patient, 28 days, being poked and prodded and measured, essentially every day in fed and fasted conditions. So we actually don't know what we're going to find, we're hopeful. And what we don't know is 28 days is enough? Do we have enough time? Do we have assay sensitivity? How much variability? So it's a lot of stuff that's just the real wet work of doing real experimentation. So we're excited to find the data and we'll see what we see and we'll share it with you guys when we get it.

All right, great. Just to sneak in one more question. Is there any preliminary comments on the DOJ subpoena related to VIVITROL? I think we're just seeing that on your Q right now.

No, we won't comment on that. And we will cooperate with the information requests, but that's all we know.

Thanks for joining us on the call this morning. Please don't hesitate to reach out to us if you have any follow-up questions.

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