Alkermes Plc (ALKS) 2025 Q2 法說會逐字稿

Greetings, and welcome to the Alkermes second quarter 2025 financial results conference call. My name is Rob, and I'll be your operator for today's call. (Operator Instructions). Please note that this conference is being recorded.

I'll now turn the call over to Sandra Coombs, Senior Vice President of Investor Relations and Corporate Affairs. Sandy, you may now begin.

Good morning. Welcome to the Alkermes plc conference call to discuss our financial results and business update for the quarter ended June 30, 2025. With me today are Richard Pops, our CEO; and Blair Jackson, our Chief Operating Officer; Todd Nichols, our Chief Commercial Officer; Dr. Craig Hopkinson, our Chief Medical Officer; and [Dr. Markus Jans, Vice President of Clinical Development].

A slide presentation along with our press release, related financial tables and reconciliations of the GAAP to non-GAAP financial measures that we'll discuss today are available on the Investors section of alkermes.com. We believe the non-GAAP financial results in conjunction with the GAAP results are useful in understanding the ongoing economics of our business. Our discussions during this conference call will include forward-looking statements. Actual results could differ materially from these forward-looking statements.

Please see Slide 2, of the accompanying presentation, our press release issued this morning and our most recent annual and quarterly reports filed with the SEC for important risk factors that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements.

We undertake no obligation to update or revise the information provided on this call or in the accompanying presentation as a result of new information or future results or developments. After our prepared remarks, we'll open the call for Q&A.

And now I'll turn the call over to Richard for some opening remarks.

Thank you, Sandy, and good morning, everyone. We had a very successful second quarter. Our commercial and financial performance were strong. And last week, we took another major step forward in our pursuit of a medicine that has the potential to transform the treatment of narcolepsy.

Now midway through 2025, we're on track to deliver on our key objectives across the business. In commercial, we had planned for strong sequential growth, and we exceeded our expectations in the second quarter. This result was driven by excellent operational execution by a seasoned commercial team.

With sustained profitability now, no debt and more than $1 billion of cash. We're in a strong financial position with significant optionality. It's clear to us now that the future growth of the business can be accelerated by the development candidates now in our pipeline. Last week, we reported positive top line results from Vibrance-1. This was our first Phase-2 study of alixorexton, which you've formerly known as ALK 2680 in narcolepsy type-1.

Vibrance-1 was successful in a critical study in the development of our orexin portfolio. Obviously for the efficacy and safety data yields, but also for the operational foundation it provides for the Phase-3 program.

Now if you think back a year ago, we had data from our Phase-1b study for alixorexton, that suggested robust efficacy and a generally well-tolerated profile based on single day exposures across a range of doses in small cohorts of patients with narcolepsy type-1 narcolepsy type-2 and idiopathic hypersomnia. These data were critical in defining the initial clinical profile and dosing range for alixorexton. This was step 1.

Step 2 is to confirm and extend these observations in multiweek, multi-dose Phase-2 outpatient studies. Vibrance-1 in patients with narcolepsy type-1 is the first of these studies. Now we have randomized placebo-controlled 6-weeks multi-dose data in hand from more than 90 patients with NT1. We've now answered key questions in Phase-2 with rigorous assays across larger cohorts of NT1 patients over a longer period of time. These data and insights will be fundamental in preparation for Phase-3.

So here are the key findings from the study at the top line. First, the results demonstrated a significant effect on wakefulness and a generally well-tolerated profile. This was our pretest hypothesis, and the data were in line with our expectations. Second, the study provided entirely new and exciting findings relating to fatigue and cognition. These are among the most disruptive symptoms patients with narcolepsy experience, and they're distinct from excessive daytime sleepiness.

In this study, alixorexton showed robust and clear improvements on validated patient-reported measures. Our view is that demonstrating effects in these domains establishes a new standard in the development of orexin two receptor agonist in narcolepsy.

These emerging data also further support our hypothesis that the orexin system can be harnessed to address other neuropsychiatric and neurological conditions. We have two additional orexin candidates that we plan to develop for conditions beyond central order disorders of hypersomnias.

In Q2, we initiated first-in-human studies for one of these candidates, ALKS 4510, we plan to advance the second candidate, ALK 7290 into the clinic later this year. So for today, Craig and Marcus will take you through the top line results of Vibrance-1 with significantly more detailed data to be presented at the upcoming World Sleep Meeting in September. But first, Blair and Todd will review the financial and commercial performance of the business for the second quarter.

And with that, I'll hand the call over to Blair.

Thank you, Rich. Our second quarter financial results were strong and reflected solid commercial and operational execution. We had planned for accelerated growth from the first quarter, and we exceeded our expectations. Financially, the year is progressing nicely, and we remain well positioned to achieve our financial guidance for the full year, which we reiterated this morning.

For the second quarter, we generated total revenues of $390.7 million. For our portfolio of proprietary products, we generated net sales of $307.2 million, reflecting 14% year-over-year growth. These results were driven by strong underlying demand, which Todd will address in his remarks, and gross to net favorability primarily related to Medicaid utilization rates and certain other credits during the quarter. These factors drove a onetime gross to net benefit of approximately $9 million for VIVITROL and approximately $11 million for ARISTADA. Taken together, these gross to net dynamics resulted in a proprietary product revenue tailwind of approximately $20 million in Q2.

As we move into the third quarter, we expect Q3 net sales from this portfolio in the range of $280 million to $300 million. Manufacturing and royalty revenues were $83.4 million for the second quarter, including revenues of $39.4 million from VUMERITY and $30.3 million from the long-acting INVEGA products.

Turning to expenses. Cost of goods sold were $49.5 million, which compared favorably to $61.5 million for Q2 last year. Primarily reflecting efficiencies following the sale of our [athlone-based] manufacturing business last year. R&D expenses were $77.4 million, compared to $59.6 million for Q2 last year, reflecting investments in the vibrant Phase-2 studies of alixorexton across narcolepsy and idiopathic hypersomnia. We expect R&D expense to step up slightly in the second half of the year as we complete our Phase-2 studies in narcolepsy and continue to build momentum in our Phase-2 study in idiopathic hypersomnia.

SG&A expenses were $170.8 million compared to $168.1 million for Q2 last year. For trending purposes, we expect SG&A expense to be fairly consistent in Q3 and a modest decrease in the fourth quarter of the year. This performance generated strong profitability of GAAP net income of $87.1 million, EBITDA of $101.6 million and adjusted EBITDA of $126.5 million in the second quarter.

Turning to our balance sheet. We ended the quarter in a strong financial position with $1.05 billion in cash and total investments. We continue to have $200 million of remaining share repurchase authorization. And going forward, we may opportunistically repurchase shares depending on market conditions and the capital needs of the business.

As we look ahead, based on our performance during the first half of the year and the expected contribution from our expanded sales efforts, we are on track to deliver record revenues from our portfolio of proprietary products in 2025. As a result of this strong performance, we now anticipate finishing the year towards the higher end of our previously issued financial expectations in terms of both revenue and profitability.

With that, I'll turn the call to Todd for a review of the proprietary portfolio.

Thank you, Blair, and good morning, everyone. In the second quarter, we recorded net sales from our proprietary product portfolio of $307.2 million, reflecting 14% year-over-year growth. We drove strong end-market demand across VIVITROL, ARISTADA and LYBALVI by executing targeted growth initiatives and delivered strong sequential growth from Q1 to Q2.

Due to this demand growth and the gross to net favorability during the quarter that Blair outlined, our second quarter proprietary net sales of $307.2 million exceeded the expectations that we provided in May of net sales in the range of $260 million to $280 million.

Starting with VIVITROL. Net sales in the second quarter were $121.7 million. VIVITROL performance continues to be driven by growth in the alcohol dependence indication market and our ability to capitalize on highly localized market dynamics in certain states and payer systems. Looking ahead, we continue to expect VIVITROL net sales for the full year 2025 in the range of $440 million to $460 million.

Turning to our psychiatry franchise. The expansion of our psychiatry sales force completed earlier this year was an important element of our strategy to maintain a competitive share of voice for LYBALVI and reaccelerate growth for ARISTADA.

The early returns from that expansion are encouraging, and we are pleased with our progress to date. For the ARISTADA product family, in the second quarter, net sales were $101.3 million. Leading indicators related to underlying demand were encouraging with increased prescriber breadth and strong new-to-brand prescriptions during the quarter.

For the full year 2025, we continue to expect ARISTADA net sales in the range of $335 million to $355 million. Turning to LYBALVI. Net sales grew 18% year-over-year to $84.3 million. Underlying [TRx] growth was 22% year-over-year, driven by new patient starts and prescriber breadth. Gross to net adjustments were approximately 29% in the second quarter.

We now expect gross to net adjustments for the full year will be approximately 30%. For the full year, we continue to expect LYBALVI net sales in the range of $320 million to $340 million. Across the portfolio, we are pleased with our second quarter performance and are focused on maintaining this momentum and driving demand in the second half of the year.

With that, I will pass the call to Craig.

Thank you, Todd. Last week, we announced positive top line results from the Vibrance-1 Phase-2 study of alixorexton in patients with narcolepsy type-1. The data further characterize the clinical profile of alixorexton and demonstrated that once-daily alixorexton normalized wakefulness and excessive daytime sleepiness scores in highly symptomatic patients with narcolepsy type-1 and with a generally well-tolerated profile across all doses tested.

These top line results represent the first of a series of data sets that will emerge from the alixorexton Phase-2 program. The data are extensive and break new ground. We are looking forward to presenting the primary and key secondary end points related to wakefulness and cataplexy and the safety and tolerability profile observed in the 6-week double-blind period of the study in an oral presentation at the upcoming World Sleep meeting at the beginning of September.

In addition to the top line results, we'll also share data relating to the exploratory patient-reported outcomes collected in Vibrance-1, including the fatigue and cognition data outlined in our top line press release last week.

These data are truly exciting, not only in terms of the clinical profile for alixorexton, but also as we plan for additional clinical studies across our portfolio of investigational orexin two receptor agonists in disorders where impaired coater functioning and fatigue are key clinical features.

Following World Sleep, we expect top line results from Vibrance-2, our Phase-2 study in nocolepsy Type-2 in the fall. Enrollment in Vibrance-2 is going well, and we expect to complete that soon. Top line data from Vibrance-3, our Phase-2 study in idiopathic hyposomnia are expected to follow in mid-2026. Each of these studies provides a significant amount of data to analyze and will deepen our understanding of alixorexton's potential utility across central disorders of hyposomnia and its differentiating features in the competitive landscape.

In parallel, we are preparing for key regulatory interactions and for the global Phase-3 program in narcolepsy that we plan to initiate as rapidly as possible following the top line data from the narcolepsy Type-2 study. Alkermes is at the forefront of development in this exciting potential therapeutic category and the positive Vibrabce-1 data represents an important stride forward for alixorexton development program and our broader portfolio of orexin-2 receptor agonist.

With that, I'd like to introduce Dr. Marcus Jans to review the top line data from the Vibrance-1 study. Marcus is Vice President of Clinical Development and the clinical program lead for alixorexton here at Alkermes. Marcus?

Thank you, Craig. Vibrance-1 is a 6-week, double-blind, placebo-controlled, parallel design study evaluating three different doses of alixorexton in patients with narcolepsy type-1 or NT1. The study enrolled a total of 92 patients with most having moderate to severe disease at baseline. Patients were randomized to 1 of 3 once-daily dose levels of alixorexton, 4-, 6- or 8-milligrams or placebo.

The primary endpoint of Vibrance-1 was the change from baseline compared to placebo and the maintenance of wakefulness test or MWT. MWT is a standardized quantitative measure of how long patients can stay awake during a 40-minute test period when they're in an environment that is conducive to sleep.

These tests are conducted at 2-, 4-, 6- and 8-hours post dose. The mean score is calculated by averaging the results of these four tests. While the MWT is less frequently used in real-world clinical settings, it is an important objective endpoint commonly used for regulatory purposes. In Vibrance-1, alixorexton showed dose-dependent statistically significant and clinically meaningful increases in mean sleep latency at all doses tested at week-6.

Importantly, all dose groups achieved normative wakefulness, applying the standard convention of a mean sleep latency on the MWT of 20 minutes or more. The study also evaluated key secondary end points including change from baseline on the Epworth Sleepiness Scale and weekly cataplexy rates compared to placebo.

First, the Epworth Sleepiness Scale, or ESS, Unlike the MWT, this scale is widely used in the clinic as a diagnostic tool to assess for excessive daytime sleepiness. The ESS is a patient-reported symptom questionnaire asking about the patient's likelihood of falling asleep across eight different scenarios such as watching TV, riding in a car or reading a book over the last week.

Higher scores indicate a greater likelihood of falling asleep with a score of 10 and below considered normal. The effort scale is useful and that the 7-day look-back period provides a holistic view of patient sleepiness beyond the 8-hour MWT test period. Here, across all doses tested, alixorexton demonstrated statistically significant and clinically meaningful improvement at week-6 with each dose group achieving normative levels.

In addition to excessive daytime sleepiness, NT1 patients can experience a sudden involuntary loss of muscle tone called cataplexy. Vibrance-1 evaluated mean weekly cataplexy rates. To measure this endpoint, patients are asked to keep diaries of cataplexy events that they experience. The average number of weekly events across weeks-5 and weeks-6 in the alixorexton-treated subjects were then compared to those experienced by the placebo group.

Across all doses tested, alixorexton showed numerical and clinically meaningful improvements in cataplexy compared with placebo. And on the prespecified analysis met the threshold for statistical significance at the 6-milligram dose. We are confident in the effects of alixorexton cataplexy and believe there are learnings here related to our implementation of this assay that we will apply in Phase-3 to reduce variability and the impact of outliers. We look forward to sharing additional analyses of these data at World Sleep.

So while excessive daytime sleepiness is the hallmark symptom of narcolepsy, many patients also experienced other symptoms, such as fatigue and cognitive dysfunction. This can result in significant morbidity as well as impaired quality of life. Our hypothesis has been, given the nature of the neurocircuitry affected that alixorexton could have an impact on many of the aspects of this disease that affect patients day-to-day functioning.

The British Columbia cognitive complaints inventory or BCCI and the promised fatigue scales capture two of these common and often debilitating effects of narcolepsy. The BCCI evaluates concentration, memory, expressing thoughts, word finding, slow thinking and difficulty solving problems. The promised fatigue measures patients frequency as well as intensity of fatigue along with its impact on physical, mental and social activities.

It's important to note here that fatigue is a symptom that patients experience, which is distinct from sleepiness. While sleepiness is a general feeling of being tired and wanting to sleep, fatigue is a broader feeling of exhaustion that can be long lasting and may not be resolved by sleep. We also looked at the narcolepsy severity scale.

The NSS captures a holistic assessment of disease by evaluating five key narcolepsy symptoms, excessive daytime sleepiness, cataplexy, hallucinations, sleep paralysis and disturbed nighttime sleep. And on each of these exploratory patient-reported outcome scales, the BCCCI, the Promise fatigue and the NSS, alixorexton demonstrated clinically meaningful improvements from baseline compared to placebo that were statistically significant.

Of course, the p-values here are nominal due to the exploratory nature of these endpoints. So from a clinical perspective, these results are compelling due to the robustness and particularly the consistency across all doses of alixorexton as well as across various complementary assays.

This is the first time that we've seen data from the orexin class on these fatigue and cognition scales. And we believe this differentiates alixorexton from other development programs and builds upon the evidence base that orexin two receptor agonists with appropriate pharmaceutical properties could have broad potential utility across a range of neurological or neuropsychiatric disorders.

And now I'll turn to safety and tolerability. Overall, alixorexton was generally well tolerated in this study. The majority of the treatment-emergent adverse events were mild to moderate in severity, and no treatment-emergent serious adverse events were seen.

The TEAEs that did occur were generally consistent with the events that we observed across the Phase-1 studies in healthy volunteers and in subjects with NT1, NT2 and IH. And among the many clinical safety assessments we conducted in the study, two of particular interest are hepatic labs and ophthalmic exams. And importantly, there were no treatment-emergent safety signals seen in these assessments.

So overall, we are very pleased with the safety and efficacy profile thus far and we look forward to presenting these data sets at World Sleep.

I'll hand it back to you, Rich.

Well done. Thank you, Marcus. So that's a summary of the top line findings. There's a lot more to come, and you'll begin to see it in a few weeks at World Sleeve. These data in NT1 represent a meaningful step forward for alixorexton development program, and they provide a substantial new data set that significantly expands our understanding of orexin biology.

Not just relevant in narcolepsy, but its potential across a broad range of neuropsychiatric and neurological disorders. We're now moving forward with confidence in a sense of urgency as we prepare for the initiation of our registrational program in narcolepsy. And with clear findings now relating to cognition and fatigue, adding to what we've seen for excessive daytime sleepiness, we now have further data supporting development of additional orexin candidates in other disease states beyond sleep disorders.

As you've heard throughout this call, the business is in a strong position. Our commercial team is on track to deliver proprietary product net sales in excess of $1 billion and robust profitability in 2025. Our balance sheet is strong and provides strategic optionality with more than $1 billion in cash. Our pipeline products are advancing. Alixorexton is the first major potential commercial opportunity to emerge from our Orexin portfolio.

but we also believe that sleep disorders are just the beginning for this exciting new therapeutic category. So thank you for your patience. With that, I'll turn the call back to Sandy to run the Q&A.

Great. Thanks, Rich. Rob will now open the call for Q&A, please.

Thank you, Sandy. We'll now be stepping a question-and-answer session. (Operator Instructions)

Paul Matteis, Stifel.

Hey, good morning. Thanks so much for taking my question and congratulations on all the progress. I don't want to front run the world fleet presentation and ask a specific data question, but taking a step back, there's been a lot of focus right or wrong from Wall Street on visual adverse events with the orexin program. And I guess I wanted to ask the Alkermes team. One, do you think the focus on visual -- as is warranted. Like are we on the right track and kind of thinking about whether this is clinically significant.

And then two, where would you draw the line on a visual AE signal that is benign and might not have much regulatory commercial consequence versus something that might be more significant and might require certain things like driving studies or could result in certain restrictions on a drug label.

Thanks so much.

Good morning, Paul. Let me start and then I'll hand it over to the experts, but I can just tell you, in my experience dealing both with clinicians and investigators and patient groups and dealing with Wall Street. The focus is almost entirely on the Wall Street side on the visual AEs.

And it's an important contributor that we made in this particular study because, as I've said before, there was a reasonable scientific medical question beginning of this program about whether orexin two receptor agonist can have a direct effect on the eye.

And so with this rigorous baseline of sound like an exam at baseline that 6-weeks later, having 90-plus patients worth of data to establish now that we saw no changes was an important step forward in that. But I think from a clinical perspective, I'll let these guys comment on that and what their experience has been. But we won't provide any more specific AE data on this call other than what's in the press release, but I think they can give you some qualitative sense.

Yeah, exactly. We, as Rich pointed out, we're not providing additional AE data. But I think in general, we do feel that based on some of our discussions that MA's thought to be mild and not interfering with patients daily activity is not going to be something that's going to be overly concerning both for physicians or for their patients.

Yeah. And maybe just to add to that. We had a Data Safety Monitoring Board in place overseeing all safety from the Vibrance program, and they've met a number of times and given us the green light to proceed.

In addition to that, as Richard has pointed out, the ophthalmologic exams were normal. We established baseline. So that gives us some confidence there as well. And then sort of directionally, as we said -- as we've sort of said in our disclosure, the adverse event profile is in line with what we saw across the Phase-1 healthy volunteer and patient cohorts from that Phase-1 program.

Paul, let me just add because it might anticipate some other questions that we're going to get. Just as a matter of fact, the safety database is actually not even closed until probably mid-August because recall, we have a 7-week extension that follows the 6-week double blind. So actually, we couldn't populate data tables with specific numbers until that database is locked.

So part of the reason for the level of disclosure at the top line was simply to characterize accurately what we found in the 6-week double-blind period. we'll actually have very specific data for you by the time we come into World Sleep in September.

Akash Tewari, Jefferies.

Thanks so much for the question. This is [Anna Sajan] for Akash. So in Phase-2, it looked like TAK-861 may have left some efficacy on the table in MWT versus 994. How confident are you that 2680 may be able to fully explore that exposure response range between 4 and 8 mg and NT1 and differentiate on efficacy versus Takeda?

Yeah. We've always thought that a range of doses would be a competitive advantage. And I'm not going to comment on the competitive programs. I think that one of the features of this program has always been the ability to dose across a wide range in NT1 leading it to NT2 and IH as well. So we'll wait to see the data from the NT2 IHH cohorts, but we're very pleased with the dose range that we selected for this NT1 study.

Andrea Newkirk, Goldman Sachs.

Good morning. Thanks for taking the question. [Rich], I was just wondering if you might be willing to speak a little bit about how you're thinking about the regulatory path from here, recognizing you do still need to meet with the FDA, but is there the possibility that these Vibrance studies could serve as registrational trials. And if not, would you expect one registration-enabling child per indication would be sufficient to support approval or would you need to for each?

Good morning, Andrew, thank you for the question. Yeah, I think -- okay, the first stipulation will be that FDA is a fairly fluid place right now, but I'm going to answer the question based on what we know coming into things. And that is that -- our expectation was to complete the NT2 study. And because we'll be seeking a label that encompasses narcolepsy writ large, which would encompass T1 and T2 we would wait for those data from NT2 before scheduling our formal end of Phase-2 meeting with FDA where we'll agree on the Phase-3 design.

The reason we're doing that is because we're currently the only player in NT2 at this late stage. And so that's a very differentiating part of the product and potentially the label. And as we understand the NT2 doses relative to NT1 doses, then we'll have a ability to sit down with the FDA and map out the Phase-3 program. Our assumption right now is that our Phase-3 program will look very similar to the competitors, i.e., a 3-month study in NT1 and probably a similar study in NT2 on each but we would confirm that in our end of Phase-2 meeting.

Okay, thank you.

Umer Raffat, Evercore ISI.

Hi guys, thanks for taking my question. Just two quick ones. One, could you confirm the dose response is, in fact, linear on MWT. And I ask because there's been some questions around the cataplexy observation. And my question is, I realize there's a numerical trend but it's not stat sig at 8 milligrams.

Is it reasonable to assume based on how the data and the variability looked that you guys trip the threshold on Pusan and ended up using negative binomial distribution to drive the p-value. And did that explain partially why P value was broader for 8 milligrams.

We haven't talked anything specifically about the linearity or lack there of the dose response. You actually see all the by dose information in just a few weeks time at World Sleep your statistical question on cataplexy is impossible for me to answer, so I'll pass it to the pros.

Sure. Yes, I can answer that. So we did use the negative binomial analysis, and that was actually prespecified for us in conjunction with discussions with the FDA. So we did use that analysis. And prespecify it. And based on our data, that was the appropriate analysis to use.

So can I just clarify then, Pason was not your base case. It went straight into negative binomial.

That's correct. Yes.

Wouldn't that create a discrepancy when we look at p-values for Takeda data set versus Alkermes data set? That wouldn't be apples-to-apples on p-value basis?

No, it's a good question. I mean we're not comparing apples-to-apples directly with their data set regardless. Obviously, they were different patient populations. So we wouldn't compare across trials directly. But this is the analysis that we used in a pre-specified manner.

And I would say that's one statistic that you use as a lens to look at the data. When you go to world sleep, you'll see other perspectives on that data that I think very clearly show alixorexton effect on cataplexy at these doses. So for us, if we think of it as more of a methological learning for Phase-3, which statistic and which method are we going to apply in Phase-3, recognizing we see a very clear cataplexy signal.

Got it. And Richard, I'm sorry, since this is so important, I just want to be clear. numerical trend-wise, do you think the data is as competitive as Takeda on cataplexy?

Well, again, it's apples and oranges. So what's -- you can make the decision yourself when you see the data itself, but I think we feel quite comfortable that we have a clear cataplexy signal that you'll see. There's some -- [Abiri], there's some outlier data that really confuses this the statistic. So you can try to correct for that using various statistical methods or you can just look at the data and you'll see the data in more complete revelation at World Sleep. And I think we can talk about that afterwards.

But I think you'd be satisfied that we have a very clear signal on cataplexy. Just as I decided, without math associated with it, remember, the narcolepsy severity scale picks up cataplexy as one of its key domains. And we've normalized patients on the NSS. So all the data tend to work complementary.

Thank you. You're welcome.

Jessica Fye, JPMorgan.

Hello. This is Adam on for Jess. I just wanted to ask the alixorexton, could you please remind us of the potency selectivity towards the OX2R over the OX1R?

I thought you're going to ask how to pronounce alixorexton because it's not the easiest word to pronounce.

5,000 fold.

So it's 5,000 fold more selective.

Joseph Thome, TD Cowen.

Good morning. Congrats on the progress, and thank you for taking my question. Maybe when we do look at the full safety profile of alixorexton, maybe how much of that can be extrapolated to some of your follow-on compound, 4510 and 7290. It looks like there's obviously some class -- orexin side effects that we're seeing.

But is there anything different about the targeting or the dosing of 4510, 7290 that you think could result in a different AE profile? Or I guess, how much will the alixorexton initial data derisk follow on? Obviously, we need to see the data, but how are you thinking about trends liability there?

Yeah. We think, yes, they're working on the same receptor. So we do think there will be some similarities. That being said, the molecules were purposely developed to have different pharmacokinetic profiles and different structures that could lead them to not all look exactly the same on a AE profile. So of course, the human data will answer that question for us completely, and we hope to have that for you in the near future on both 4510 and 7290.

And Joe, if you don't mind, let me build on your question because we anticipate questions we've been getting from investors and that is, how do the NT1 data anticipate what we receive NT2. And I think I just want to make clear our original hypothesis, which has been confirmed by our own data, which is we believe that there's actually a frame shift in terms of the tolerability and sensitivity to orexin agonist as you move from NT1 to NT2.

Meaning you'll need higher doses to drive efficacy and you'll need higher doses to drive the on-target side effects as well. So we imagine just the dose response curve shifting to the right in that. And that's what is consistent with the data we saw in our Phase-1b study. We'll know more definitively, obviously, when we get those data, but that's the pretest hypothesis.

Uy Ear, Mizuho Securities.

Hey guys, yeah, thanks for taking your question. Given that the NT2 study, I guess, the primary endpoint is complete -- expected to complete in August. Just wondering, is there a good chance that you will also present the NT2 data at works.

Thanks.

So just to be clear, so we should complete enrollment in the next couple of weeks, which then with a 2-month primary analysis puts us into the fall. So there won't be any NT2 data at World Sleep there'll be plenty of NT1 to review. So you won't be hungry.

David Amsellem, Piper Sandler.

Hey, thanks. So number one, are you planning to build in dosing flexibility or any sort of titration in the Phase-3 as a means of minimizing treatment-emergent adverse events? And then secondly, this is a commercial question. It's not, of course, unheard of to have a wakefulness promoting agent that does not have cataplexy in the label. I guess my question here is just given the wakefulness promoting properties of alixorexton. How important is it to have cataplexy in the label in terms of commercial adoption perspective?

Thank you.

So hey good morning, David, I'll give you my view, and then I'll hand it over to the guys. We haven't made the call yet on the Phase-3 dosing because we haven't finished all the analysis, and we also want to see the NT2 dosing data before we decide on the range of doses. So stay tuned there. We have -- what's so exciting about running Phase-2 of this quality is now we have 92 patients worth of data to model. And our view is that level of exposure time is essential for actually making those (inaudible) decisions for the registrational program.

So stay tuned on that. Wait for the study. My own view, and Todd can answer the question is that we believe alixorexton going to have a cataplexy claim in the label because the signal is quite clear. So it's more a matter of tuning the assay to make sure that we can see that in the data. But Todd, you can comment on whether you think cataplexy is an important part of the presentation.

David Hoang, Deutsche Bank.

Hi, congrats on the quarter and taking my question. So I just wanted to ask about the upper dose in the NT2 and IA studies. I believe it's 18 milligrams. Could you just remind us how you landed on 18, specifically given 25 was used in the earlier Phase-1b? And what would be, I guess, the ideal number to take forward into Phase-3?

Craig, do you want to talk?

So we employed some sophisticated modeling basically taking into account all the data that we had collected from our healthy volunteer studies as well as our Phase-1b program and ultimately modeled out the doses for Phase-2. And that's how we came to the dose selection.

Amit Fadia, Needham & Company.

Good morning, thanks for taking my question. Going back to the focus on visual AEs. Can you give us sort of your high-level view on how important is it to avoid a dose that might have such an AE even if it were to be transient?

And would you choose to take a dose into Phase-3 that might have seen a transient visual adverse event? And just separately speaking, do you think that, that is an on-target effect of this clause? And as you think about sort of your next-gen assets, do you think that it's just a broadly an on-target effect or is it more specific to the structure of a given drug.

Let me start my I'm just going to try to pull you back up from the visual AE obsession to the question on AEs in general. I mean what we're looking at in this data set is doses where we know they are on target A, namely insomnia (inaudible) that we and others have observed as on target effects that could be -- that would limit your dose.

So I think the virtue of this program is we've run three different doses for 6-week periods of time, the outpatient setting will get a complete time course as well as severity map of those AEs. And we have so much more data to look at together because, let's say, for example, if you have a numerical AE did happen every day over the 42 doses or did happen once in the first week and then went away.

There's a lot of nuance to this. So I don't think it's easy to answer the question about what doses we would take forward because I think that there's a range of different AEs that we're going to be focusing on. And we think our competitive advantage is going to be this range of doses.

Because not all patients are the same, and people have react to different doses. And I think that, that will be true for efficacy as well as for AEs. Marcus, do you want to have your view on it?

Yeah, I would agree. We're as we speak, doing complicated modeling on exposure response, exposure safety analysis, and that's going to encompass everything we've seen. We're looking at this data and every way we can to help us determine what the best range of doses is going to be to move forward into Phase-3. And so that's going to encompass efficacy. It's going to encompass safety and even ease of dosing. And so we're thinking about all possible criteria when we think about dosing moving forward.

Ash Varma, UBS.

Hi, thanks for doing my question. Just on these like Phase-2 study, like what time of the day are patients dosed with 2680? I understand it's down in the outpatient setting, except for the MWT days, but just what's your direction to the patients?

And then secondly, on the visual disturbance that you mentioned to you, so the PR says that you're not seeing any signal -- but is that statement based on a that you may have seen in and outside of the schedule axes?

Sure. I can answer the first part. So we tell them generally to take it in the morning. So roughly around 8 AM. There's, of course, a window around that just to accommodate for various lifestyles, but roughly 8 AM. In the morning is when we ask them to dose.

And we didn't make any specific AE table elements until the Phase-1 -- I'm sorry, tell the Phase-2 safety database is closed in mid-August. So you'll see those data at World Sleep in September.

Leonid Timashev, RBC Capital Markets.

Thanks guys. I just want to ask on the endpoints. Just given what you've seen out of Vibrance-1, are you still thinking that MWT is the best way to go forward compared to ESS and then both for as you think about, I guess, the dual design for vibrance to and then the ESS focus for Vibrance-3?

And then related to that, given all the secondaries that you hit on and including some of the exploratories, how are you thinking about elevating some of those exploratory end points to secondaries or key secondaries for a Phase-3 program like cognition or fatigue. And would you try to aim to get those on the label?

So from our perspective, we believe both MWT and Epworth are really important measures. MWT, obviously, the more objective measure at worth really sort of expressing the patients that the subjective assessment.

The reason that we elevated worth to dual primary in the NT2 study is because of our sort of thought process around planning for regulatory interactions, really taking a look at the late-stage clinical trial landscape and planning for our Phase-3 programs. So Yes, we believe both are important. And I think the data from the NT2 study will help us plan them for our Phase-3 program with the dual primary end points.

And on the key secondaries, Marcus, you might want to comment on, but from my perspective, these were really exploratory. Some of these scales that I don't think have been used in narcolepsy studies at all. And so we are curious to see whether we would see movement.

And boy, did we. I mean, we really saw clear signals, and you'll see more of those data at World Sleep, given the magnitude of the response and how clear it was, I think we have to do a lot of thinking now about how we might elevate those in the hierarchy. Please comment on that.

Exactly right, Rich. The teams here working diligently to look at exactly that, all of these various exploratory outcomes, the ones where we succeeded that, again, we're hypotheses that we've now shown significant data on. And so the team is really working on how do we pull these in through the Phase-3 and elevate them into the key secondary realm in a way that allows us to really test the aspects of this drug more thoroughly.

Jason Gerberry, Bank of America.

Hey guys, good morning. Thanks for taking my question. Maybe just wanted to probe a little bit just your understanding of the relationship of PK and the weekly cataplexy endpoint and whether or not you feel comfortable enough to rule out QD versus BID approaches confirming any advantage in terms of the WCR measurement?

And then also just -- I know you're not commenting on Phase-3 dosing plans yet, wanting to see the NT2 results first. But I'm wondering if we can take from your comments that at least in the context of NT1, that there's at least enough confidence in the tox profile of the high 8 meg dose that you could potentially push dose in future NT1 pivotal?

You guys want to talk about PKWCR relationship.

Sure. I mean at this point, those analyses are ongoing. So we've reported, as you know, sort of the top line results, and we're really digging deeper into the PK, again, as I mentioned, sort of exposure, exposure response, exposure safety. So that's going to be coming soon and potentially something you'll see in the future.

But is it fair to say, Mark, I don't think there's a QD versus BID difference that we think is meaningful.

We don't. No, that's right.

And with respect to the Phase-3 dosing plan.

Yeah, I mean, at this point for Phase-3 dosing, again, we're still making those determinations. So it's hard to speak to them. have confidence fully in our tax profile at 8 milligrams. So there's no concern there. And we're obviously taking that into account as well as everything else we've talked about to determine our Phase-3 doses.

Luke Herrmann, Baird.

Luke, do we have you?

Sorry, I was on mute. Sorry, just a quick one for me. It looks like some nice step-ups in revenues across the board. Can you just talk about the relative contribution from inventory or seasonal dynamics as compared to underlying demand for the commercial portfolio?

Thank you.

Yeah. This is Blair. I'll start with -- on the number basis, and I'll turn it over to Todd to get into some detail. I think number one, as you look at our proprietary programs, we saw demand increase across all three programs over the time period. We actually didn't have any inventory dynamics that contributed to this quarter. And so this is in line with normal seasonal dynamics and a contribution of our strong commercial performance.

Todd, anything you want to add?

Yeah. I would just agree with what Blair said. We saw strong demand for all three products. air side of VIVITROL and LYBALVI, and we were really pleased with Q2 was really the step up in new patient starts, as we said earlier, exceed our expectations to Blair's point, nothing to look at with inventory. Inventories is growing with demand right now.

So we're pleased with that.

Marc Goodman, Leerink Partners.

Yeah, just back on this cataplexy endpoint discussion, like when you talked about the learnings for the Phase-3, are these learnings basically just the statistical methods that you were talking about? Or are you talking about using different assays? I'm a little confused. Maybe you can shine a little more light there. I mean we're all still a little confused what happened with the cataplexy data.

And we're wondering like are we even going to learn like once we see the data in Singapore, we're going to feel much better about it. I mean because you were talking about thesis significance and what needs to get on the label, like doesn't it need to be static to get on the label? I mean, it's a pretty important part of the story, right? So maybe you could just give us a flavor for that. And then just since on the last question, I'll ask as well.

The working assumption is that insomnia is only seen at the very beginning. So should we still have that assumption that any type of income still seen in week-1.

Thanks.

Go ahead, Marcus, on cataplexy, so let's clear that up because it's important, and I think we have a really clear picture of this, Mark.

Sure, we do. We do think the cataplexy results had a lot of what we saw -- likely had to do with outliers that we saw in the vibrance-1 study. And we think some of that could have to do with the operational implementation of the assay.

So particularly things like standardization of how patients are recording cataplexy at sites and even across sites in what is a global study. So these are the types of things that for Phase-3 are going to apply in attempts to reduce this variability and minimize any outlayers that we might see.

And to your point, of course, you'll need to see statistically significant results for an inclusion in the label, and that's -- that would be our objective. And when you see the data at World Sleep, I think you can draw your own conclusions about the strength of the signal on cataplexy.

We shouldn't be surprising giving all these other endpoints are moving so strongly toward normal. You wouldn't expect to see a whole lot of discording data in the cataplexy. But the statistic itself, as you saw in the top line release, significant at one dose and not at the other two doses.

I think you'll get a little bit more understanding about why that might have happened when you see the variability. And we're not going to comment on the time course of the various AEs. You'll see more of that at growth seek as well.

At this time, we've reached the end of the question-and-answer session. I'll hand the floor back to Manager for closing remarks.

Great. Thanks, everyone, for joining us on the call today. Please don't hesitate to reach out to the company if you have any follow-up questions. Thank you.

This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful day.