Please join us. Richard, normally I would do this much more systematically. We would start high level, we'd go down sort of the longer term plan, et cetera. And I realize there's some more news lately as well, so we want to get through both. But let me first turn it over to you, kick things off, and we'll jump right into the latest debates and onwards. Well, first of all, thanks for having us, and it's great to see you. I mean, I haven't seen you live in quite a while. You're generating a lot of news down here in Miami, so. Not me, but others are. Well, it occupied my entire day yesterday, so - Okay. Well, can you confirm you guys are not discontinuing, right? I can, I can confirm that officially. Okay. I think that the demise of the orexin 2 receptor agonist class is probably overstated at this point, but we'll talk a lot about that. We're ending a tumultuous year in this industry, and for Alkermes, a really critical year, because this was the year where we had to clear the decks to prepare for what 2024 and beyond is going to be. If you think about where we were coming into this year, we had an outstanding litigation with J&J, that was worth lots of money to the company. We had outstanding litigation with Teva on VIVITROL, which is a major product for us. We'd never put our orexin agonist into the clinic yet. We had just launched LYBALVI- Potential for another litigation, too. We had just launched LYBALVI, and had done about $97 million the first year, and the question, which beat expectations, and could we continue the growth of, of LYBALVI? And we also had decided that we wanted to spin the oncology company, which was going to be a year-long project to, you know, disaggregate something from a financial, from a tax, from an accounting point of view. And so now, at the, at the end of the year, we won that litigation with J&J. We, we had a, a really strong settlement with Teva, which perfects our, our knowledge of... in being able to model VIVITROL for 2023, 2024, 2025, 2026. And, and we've made enormous progress in the orexin program, which we'll talk about. And we completed the, the Mural Oncology spin, last week or so, and we've had another really strong year of growth on LYBALVI. So as we go into 2024, we're going to have a pure CNS company with a billion-dollar top line growing, with LYBALVI anchoring, I think, some of the growth for the long term. Resolution on VIVITROL. ARISTADA continues to grow, and a really exciting pipeline that's coming through, first with 2680, but then things that derive from understanding that circuitry in the brain. So that would be my preamble. Excellent. Okay, well, there's a lot of components to go through. And like I said, normally I would start more linearly, talk about some of the financial targets and, the direction things are going. But let me get, some of the questions from yesterday out of the way- Yeah ... first on orexin. Are all orexins made the same? Well, we've been remarkably consistent on this, and you would have heard me say this for the last couple of years. I've always contended that these drugs were going to all look very different in the clinic, and the reason for that is because there are so many different optimization parameters in designing these molecules. The likelihood of them all looking the same was approaching zero. I'm just going to tick through them briefly, so can people be aware of this. People talk a lot about potency. Potency is one of many facets that are essential. You have to have a highly potent molecule that agonizes a GPCR in the brain, selectively not hitting other receptors, with a potency that is nanomolar or better. It has to be orally bioavailable. That already eliminates a lot of structures. Not only does it have to be orally bioavailable, it has to cross the blood-brain barrier. It has to cross the blood-brain barrier and get to the target tissues in concentrations that are relevant. It can't be a substrate for pumping out of the brain. And then, once you do all that, it has to do so on a waveform that's consistent with the sleep-wake cycle. So if it's too short a half-life, you'll have to take it multiple times a day. If it's too long a half-life, you won't be able to go to bed at night. And so all that then has to be engineered to a molecule that shows normal pharmaceutical properties, dose proportionality, oral bioavailability, you know, just all the, the classic, prosaic things. And so it's hard enough to make a small molecule GPCR agonist that's potent, but to put all that together and assume that all these drugs are going to be the same, there's no way, and you're already seeing it. Takeda's drug looks different than our drug. Jazz- Yes ... Jazz's drug is done, you know. And so it stands to reason. But the biology, which motivated all of us in the beginning, I think is getting stronger and stronger. We know now, these when you put these agonists into human beings' brains, you're going to drive wakefulness. Right. So maybe let's start to get more specific then, Richard. There were obviously, some observations of visual disturbances in your trial, but not at the doses that you had in Narcolepsy Type 1. Can you speak to your expectation on, is this dose-related? Are there certain doses where you would start to see them? But I also acknowledge that Narcolepsy Type 1 data for you is single dose, so I don't know if we can judge that fully just yet. Yeah, I think the visual disturbances story will be more fully elaborated with more data. What's already clear is that different compounds are going to have different propensities for it. Now, we haven't seen Jazz's data. That'll be, you know, important to actually see the data, because my hunch is that cardiovascular issues are probably more rate-limiting than visual disturbances. In our program, though, going back to the data, we saw some evidence of visual disturbances in the healthy volunteers at doses of 15 milligrams and above on a sporadic basis. Out of 80 patients, we had a few observations. They were mild, they were scored mild, and they were self-limiting, meaning that people in the MAD might have reported it, but then it went away over time. So it wasn't a signal that we had detected in the healthy volunteers. Is it a first-dose issue? No, it's not necessarily a first-dose issue, and often. And I don't want to minimize it at all. I'm just, the point was, for our safety team and at the sites, for centrally acting compounds in healthy volunteer studies where you're interrogating for side effects. These are patients with intact orexin systems. We're putting super therapeutic doses of orexin on board, and we're interrogating, you know, how- Right. What are they getting? As we move then to the patients, now, albeit only four NT1 patients who have a deficiency of orexin, we haven't seen it. Right. We may if it's on, there's an ongoing debate within our company, whether it's on target or off target. We'll figure that as we go. But going back to the data, though, in the healthy volunteers, mild, transient, self-limiting, and not observed yet in the patients. When observed in the healthies, at doses higher than what we demonstrated. Right ... rosetting efficacy. Richard, you said it's not a first dose issue, but if I recall correctly, there were two cases in SAD and two in MAD. Now, I realize SAD is also like the same patient washing out, then taking it again. Wouldn't that be considered a first dose? In a SAD, by definition, yes. Okay, um- I forget the exact numbers. They were- Okay. I know that in the MAD, where we saw the observations, there were some. Sandy can correct me if I look at her, what, where, what it—the observations- It's not exclusively, I guess is what you're saying. Yeah. Correct. Okay, 'cause in MAD, it happened later as well. Okay, got it. My initial hunch was on target versus not. My initial hunch when I started looking at it after your abstract first came out, was that maybe it's just, these are wake promoting and potentially stimulant-like effects, and that's what's the blurry vision. But I couldn't validate that, especially, and the counter evidence for that was, and I sat down with, Takeda at length on this, and they said, patient-level data, they don't see it. And I, it left me confused on why there would be such a discrepancy, unless the way this is being tracked is not consistent across trials. Yeah, I think it's—I think there's a consistency issue, but also, our original hypothesis when we saw it, which was actually accentuated by your focus on it, was it could be driven just by pupil dilation, pupil changes. That in centrally acting compounds, it's not unusual to see that type of visual disturbance reported. The taxonomy of this is actually important because other people have reported hallucinations, and that's very different. In the binning and the taxonomy of the AE scoring, visual disturbances in our case meant, photosensitivity and blurred vision. So those are, you know, very... Both scored mild. Now, there can be other visual disturbances that are much more clinically significant. They get scored differently. A hallucination is not viewed, binned, and categorized as a visual disturbance. Got it. But just to be clear, you've only seen that at 15 milligrams and above? I believe so. Yeah, that's a yes. Okay, excellent. So what's the next data update? It's Narcolepsy Type 2 and IH data update. We're in- Those are single doses only. We're in that same rubric, that same four-way crossover that you saw at World Sleep for the NT1s, is being applied in the NT2s and the IHs. Got it. Each patient will get four doses, one being placebo. We've just shifted that dose range up to, based on modeling what we think will be appropriate for NT2, which is two to three x higher, and we'll see just empirically whether- Got it ... that's right. So phase 1 data suggests, even at 3 mg, patients getting basically almost all the efficacy they would want. Now, the concern would be that, on a 7-day dosing, on repeat dosing, it fades a little bit, so maybe you need a little higher dose. But conversely, do we really need to be at all the way at 40 minutes? 'Cause presumably, you're getting almost all the efficacy. I almost wonder if you guys are overdosing, is what I'm really trying to ask. We learned a lot at World Sleep. The virtue of World Sleep is that it's literally everybody in the world meets every two years, and the clinicians one meets with are generally testing Takeda's drug in randomized studies. And so you get a lot of insights without betraying any confidentiality, and just think about it. So we showed the 8-milligram data to those folks. Right. They said, "Absolutely test that in phase two. They are saying that. For a couple of reasons. One is that the patient-reported side effects tend to diminish over time as people acclimate to being on the drug. Right. So what somebody might report as polyuria or might report as insomnia tends to dissipate over time. Number two, recall that in an early IV study with Takeda, there was some evidence of tachyphylaxis at lower doses. So if you have a very potent compound like we do, that's driving so much wakefulness, you could endure. If there is some inherent tachyphylaxis or accommodation to the drug, you might as well start it at a dose that will then yield a steady state. Can I... Richard, can I maybe challenge that a bit by saying, what if there was a scenario in phase two or an arm in phase two, where you have a 3 milligram for narcolepsy Type 1 and a 6 milligram for narcolepsy Type 2? You get 80%-90% of the efficacy, but probably a much, much lower, if not any, on the visual disturbance. Is there any other potential concerns? Well- Is that- ... it just depends. You're postulating that visual disturbance has become rate limiting in this, and I'm not ready to go there yet. I think we've not seen any. We saw them at 15 and above in healthies. We haven't seen any yet in patients. If we see it in patients, that's a fair point, because the other thing is, in the real world, so in phase two, just structurally, you're gonna test fixed doses for a certain period of time because you're trying to get a bracket on the dosimetry and the variability that you see across the patient population. In the real world, patients, I believe, they'll titrate this drug to efficacy. Some people might want 12 hours of wakefulness, some people might want 6 hours of wakefulness. Right. And it's just. That's what's so interesting about the data that we showed. The dose proportionality is so striking, 1, 3, 8, with error bars that led to p values with Ns of 4, because the phenotype of NT1 is so tightly defined. It's really remarkably consistent so far. You know, of course, stipulation, and things can always change with more data- Right ... but what we've seen so far is consistent with that. So with this update coming in, presumably 1Q or, whenever that is in first half on Narcolepsy Type 2 and IH, do you go right to a pivotal?... or you go to a phase II? You go to phase II. In phase II. So we're lighting off the NT1 phase II right now, based on the data that you saw at World Sleep. That was enough for us to hit our stage gates to say, "Okay, we're gonna floor it in NT1s." We know the dose. We were lucky or smart, we bracketed that dose perfectly. Imagine a situation where we had an efficacious compound, but we had picked a dose range too low, and only the upper dose was showing some effect on the MWT. We would've had to go back, shift that, and interrogate that. Or if we were too high, conversely, we would've had to come back. We happened to pick that 1, 3, 8 was exactly what we wanted. Minimally effective, maximally effective, bracketed between 1 and 8, we can light off phase II. Got it. We'll see how the NT2s... If the NT2s are more variable, we may need a little more time to narrow in that dose before we light off the phase 2. IH, IH is interesting because we're probably not gonna register an IH, but we like IH in terms to build the safety database as well. So it just gives you access to more patients to get more in the denominator. Got it. One last one. From preclinical data sets, is something like is a visual disturbance the type of thing you could actually get a good read on from preclinical data sets? I've asked our folks. I don't think so. I don't think there's any indication preclinical that— Got it. Okay. There's not any indication from preclinical, or is it hard to get that read? I think it's a tough thing to assay in preclinical. Right. Exactly. Okay, that's consistent. So I know we have limited time, but I do wanna step out of this, because ultimately one of the ways of looking at Alkermes is just going on orexin and orexin only, or there's an alternative way of looking at it, which is there's a real top line. There's a commitment to certain profitability targets, so this is not a small cap clinical stage company only. Could you remind us where the operating profit trajectory is tracking for next year based on some of the previously communicated targets, and how that could evolve now in light of the J&J, which could potentially be additive to that? Yeah, it's a real, it's a real business, and that's, that's what's neat about Alkermes now, and it, it's, it's been a complicated story to deconvolute for the past few years because there's been vestigial royalty stuff, there's CNS stuff, there's oncology spend, and, and, and proprietary products, partner products, and, and all that's coming into, into resolution now. So the profitability of the business is driven by the top-line growth of VIVITROL, ARISTADA, and LYBALVI. And these are, these are products with, with defined, and for most of them, long lives ahead of them. The cost structure, we spent a lot of time over the last two or three years really trying to optimize that within SG&A, within, within R&D as well. And so that's driving a set of explicit profitability targets that we put out there simply to make the point, "Look, we can manage this business to grow the top line and the bottom line at the same time," which is rare in the biopharmaceutical space. Right. And it's just a demonstration from the board level on down that we can see that the way to drive the maximum value of the business is by showing growth in both of those areas. That profitability profile accommodates expansion in the R&D line to some extent. Not... You know, we're not gonna go buy a giant M&A deal that blows up the R&D line, because we're gonna operate within the constraints of these profitability targets that we've set. With that said, as the top line grows, it accommodates more spend. Right. The orexin program is actually, in the context of CNS drug development, economical. They're not big studies. 20% EBITDA for next year, is that? Yeah Still a commitment? That's ex J&J. Ex J&J. Right. Ex J&J. So, ex J&J, if the top line is over $1 billion, let's call it $1 billion to what have you, 20% on that. So just EBITDA tracking sort of mid-200s, $250 million- That's the math. - Bottom line. That's the math. Got it. And so that is... We actually established those targets before we even knew the trajectory of the top line, 'cause we said, "Look, you should be able to manage the business on the expense side- Right in that way. So my question on that, Richard, would be: in tracking companies which have gone through splits, et cetera, in the past, one of the things I find very commonly is there's always an element of underestimating what the synergies would be from doing the split and the dis-synergies, and the true cost savings end up being less. I guess, said differently, the path in going from... I think this year's gonna be, what, $50 million EBITDA or so for Alkermes, if I'm not mistaken. So the path from here to next year is primarily around the savings from doing the oncology spin. Are you convinced now that the spin's in effect, that those savings are all falling through exactly per plan? Yeah, the one-time stuff in 2023 is actually a part of it, too, because it's not inexpensive to do all the work to lead to a spin. In an oncology spin like Mural, a lot of those expenses were literally outside clinical costs. Oh, I see. So you can measure those, and you know they're gonna transfer over. Those are not your trials anymore. They're not our trials anymore. Right. And so then that's a heavy lift on the spend. And so, you know, Blair's here, and I think we feel real good about the way we translate this. So my understanding is, of the $200 million year-over-year EBITDA increase, $150 comes from R&D, $50 SG&A. Is that, is that consistent with … Okay. Okay, got it. So it sounds like you guys feel reasonably comfortable, and then you'll revisit it, obviously, with the J&J inclusion as well. J&J, I mean, J&J, we've just said, "Look, we can manage the business without paying attention to J&J." If it comes in, which we deserved, and we fought hard, and we won, it's worth, you know, $1 billion to us, so we're not going to fool around with it. But just put that on top. That's- Right. Because those revenues are going away over time. The U.S. revenues on Sustenna go away beginning in the mid-2024. The European ones taper off toward the end of the year. Investors should be focused on the hydraulics of the business, the long-lived part of the business. Right. I guess, said differently, Richard, if you're doing $250 million next year, and there's also a further increased model, and $250 million is ex J&J, so this could even possibly approach $300 million in operating profit, and it increases further into the following year based on previously communicated targets. There starts to be a very direct conversation then on what's the EPS power here? Because if you put orexin stuff and the pipeline stuff to aside, just talk about the intrinsic ability of the company. Have you thought about potentially coming out and communicating what the EPS power of the company is? And this is not a future thing, this is, like, two years out from now kind of thing. Yeah, I think that we're going to think a lot about that. And also, what do you do if you become a reliable cash generator? What do you do with that cash? Right. I think there's things you can do strategically. There's things you do on the balance sheet as well, so all those things. Well, what can you do strategically? I think you know the answer to that. You know, the standalone company will have, as a pure neuroscience company, it's got a really interesting nucleus of a pipeline with 2680, and- Right ... something we haven't talked about is the other things that derive from interrogating that circuitry in the brain, that we have immediate adjacencies to, with additional compounds and others. But then there's an opportunity to grow the pipeline and build out that pipeline. If this is going to be a $30 billion company, it's not just going to have one or two pipeline assets. It's going to have a range of pipeline assets. That capital gives you the ability to license and build out the pipeline. Is it a consideration, Richard, from your perspective, given how much focus there is on orexin and visual disturbance and all these issues, the Jazz issues happening, et cetera, on maybe coming back and communicating to the street that, "Look, forget orexin and all that for a second. We think we're on a path to do at least $4 in earnings in the next conceivable future." Is that something that you and the board have talked about? I think that's inherent in the way we'll guide in February. So we have a base business that we're going to guide to, and people, people need to be able to model it, and the street models are still all over the place because they haven't really- Do we get an EPS guidance next year? EPS guidance? I don't know. I don't know. I mean, I think that we tend to guide more on EBITDA. Right. But my point is, it's a small share count, and if your EBITDA is approaching 250+. Right ... like, the EPS is very straightforward. It's a simple division. Yeah. That's right. So would that be a consideration? I only say that because there's a lot of folks, especially in the midcap growth manager land, who are very focused on sort of profitable... companies going from not profitable to being profitable, and I think this could be a metric that could be very relevant if it's a direction you intend to go down. I think we'll take that into consideration because the share count, we don't see the share account changing. Right. We don't plan a large dilutive M&A transaction or anything like that. Got it. As I said, that's a simple- Okay ... count. And I guess the corollary to this, and I realize we're at time as well, is, so let's say there's a scenario where you guys are sort of approaching, I don't know, $1.50+ in EPS next year. It's amplifying from there, but then there's also the VIVITROL settlement for 2028, but conversely, that's also a product that's not falling off a cliff, nor is it the biggest product anymore from that perspective either. Do you think whatever earnings power there is at Alkermes, you can sustain that beyond VIVITROL expiry as well? 'Cause that would be very relevant for assigning a multiple on, on that. That's where the pipeline comes into play. And LYBALVI has a long life ahead of it, but we want to augment that. And so the other piece we haven't touched on, Umar, is that in an environment where cost of capital is extremely high and small cap companies can't raise money, the infrastructural cost of our commercial enterprise is massive. 'Cause we're dealing with mass-market products at lower price points, high gross to nets, payer restrictions, you know, all that tough world that we've learned to thrive in. We think that that's an asset that we can leverage through additional commercial products as well. When you say a commercial, commercial stage products as well? Correct. So it sounds like where your head's at is there's a lot of OpEx in place, let's, Leverage ... commercial stage products, and then we could improve the margin- Because also for that, we've been in that position as... So we, we licensed, for example, our drug VUMERITY to Biogen. Why? We had a commercial enterprise. The math was better because it, by licensing it to Biogen, we didn't have to build a new sales force. We got $150 million on approval. We got a pure 15% royalty, and they launched it because of their commercial capability. They launched it faster in more markets than we could. So when, when we modeled it, doing it alone, going through the trough for two or three years, then breaking through, versus immediate profitability and faster growth, the economics were better to take a 15% ride. Right. There'll be CNS companies, I believe, with psychiatry products, for example, where they're going to be dealing in these complex commercial environments, where that's a better trade for them to do than trying to build the whole infrastructure. What's your ability from a balance sheet perspective on a transaction like that? Well, I don't think about it in terms of massive M&A. I think in terms of licensing milestone-type deals, and so those don't- On something approaching clinical stage- Yeah ... a commercial stage, but not quite there yet. Yeah. I mean, I think purely validated 100% FDA approval, those are expensive, and we're not gonna, we're not gonna do that deal right now. Okay, something like phase II-ish, and then you- Where you feel like you have a competitive advantage because you understand the space and, and the data, and the regulatory environment as well, then you're more likely to win than not. Alkermes has never been historically a big new biology bet. We tend to, to go where the pharmacology is well understood, where often the molecular design is the limiting part of it. VUMERITY, perfect example. Everyone wanted to make a new MMF prodrug, we were able to do it. ARISTADA, brand new, never designed before, prodrug of aripiprazole. What we've done with, with orexin, we knew that the biology was quite credentialed. Could you design the right molecule? That's our sweet spot. Excellent.