Q3 2026 Alkermes plc Earnings Conference Call - ALKERMES PLC

Explicit Guidance:

• FY2026 Net Sales (Proprietary Portfolio):
  • Vivitrol: $460–$480 million.
  • Aristata: $365–$385 million.
  • Levolvi: $380–$400 million (with gross-to-net adjustments expected at ~42% for FY2026).
  • Lumerise: $350–$370 million total (Alkermes share: $315–$335 million), reflecting the mid-February 2026 Avidel transaction close.
  • Q4 2026 Net Sales: Expected range of $400–$420 million.
  • FY2026 Full Year Total Net Sales: Nearly $1.6 billion for the proprietary product portfolio.
• FY2027 Financial Expectations:
  • Cost of Goods Sold (COGS): Expected to be lower than 2026 due to the removal of the non-cash Lumerize inventory fair value step-up; returns to normalized patterns.
  • SG&A: Expected to be broadly similar to 2026, excluding transaction-related costs incurred in early 2026.
  • R&D: Investment expected to increase to reflect a growing number of portfolio programs and broader clinical activity.
  • Cash Flow/EBITDA: Expectation to deliver strong adjusted EBITDA and cash generation in 2027 while maintaining capital discipline.
  • Specific Guidance Timing: Full 2027 guidance to be provided on the February 2027 earnings call.
• Levolvi Gross-to-Net Adjustments:
  • FY2026: ~42%.
  • FY2027: Expected to increase to ~45%.
  • Volume Growth: Levolvi volume expected to grow nearly 20% year-over-year in 2027, with net sales growth acceleration anticipated to follow; volume and net sales growth expected to track more closely again beyond 2027.

Business-Segment Outlook:

• Addiction (Vivitrol): Continued strong demand driven by market penetration; business viewed as having strength and durability.
• Psychiatry (Aristata): Continued demand growth driven by HCP adoption and expansion; strong performance in the category.
• Psychiatry (Levolvi):
  • Market Access: Expanded to ~80% of covered lives, driving positive volume trends.
  • Growth Trajectory: 2027 expected to see prescription volume growth of ~20%, with net sales acceleration following.
• Sleep Medicine (Lumerise):
  • IH Launch: Potential FDA submission for Idiopathic Hypersomnia (IH) based on Phase 3 data; potential launch date of March 2028 if approved.
  • Patient Base: Reached ~4,100 patients on therapy at Q3 2026 end.
  • Elixirexin (Orexin Portfolio):
    • Narcolepsy: Phase 3 Brilliant studies underway; top-line results expected beginning mid-2027.
    • Idiopathic Hypersomnia (IH): Vibrance 3 Phase 2 study completed (130 participants); top-line results expected year-end 2026 or early 2027. Split-dosing data to inform registration program.
    • ADHD: ALKS7290 Phase 2 study ongoing; data expected in the second half of 2027.
    • MDD: ALKS7290 Phase 2 adjunctive therapy study initiated; evaluating effects on depressive symptoms.
    • Fatigue: ALKS4510 Phase 2 study in fatigue associated with Parkinson's disease or Multiple Sclerosis planned for initiation; proof-of-concept data expected toward end of 2027.
  • Competitive Dynamics: HCPs view orexins and oxibates as complementary. Belief that the oxibate category will remain durable despite Takeda's Orexin 2 agonist entry, though some switch of early-line therapy is anticipated.
• Strategic Focus: Advancing pipeline with urgency, focusing on orexin-2 receptor agonists as a differentiated class for sleep, neuropsychiatry, and neurodegenerative disorders.

Market and Competitive Outlook:

• Orexin Market: First oral Orexin 2 agonist (Takeda's Oxybave) expected to launch commercially for Narcolepsy Type 1 imminently (within next few weeks), setting the pricing range for the market.
• Pricing Dynamics: Alkermes expects flexibility to adjust Elixirexin pricing relative to competitors based on Takeda's entry price.
• Market Access: Levolvi's expanded access profile (80% covered lives) positioned for long-term growth; no significant pricing pressures anticipated for Lumerise in the short term.
• Category Growth: IH is a fast-growing segment for the Oxybate market; expectation that the overall oxibate footprint will expand alongside orexin therapies.
• Competitive Advantage: Elixirexin's wide therapeutic range and dosing options (once-daily and split-dosing) positioned to offer differentiated utility across Narcolepsy Types 1 & 2 and IH.

Macro / Industry Outlook:

• Regulatory: FDA submission for Lumerise in IH anticipated; reliance on agency meetings to guide Phase 3 design post-Vibrance 3 data.
• Market Structure: Anticipated expansion of the treatment landscape for hypersomnolence and neuropsychiatric disorders, with orexins addressing unmet needs in fatigue, cognition, and mood.
• Payer Dynamics: Strong access profiles (>80% covered lives) for current portfolio; expectation of broad access for future Elixirexin launch, contingent on demonstrating value to payers regarding combination therapy with oxibates.

Strategic Initiatives:

• Avidel Transaction: Closed mid-February 2026; Avidel commercial infrastructure integrated into SG&A; Lumerize inventory fair value step-up recognized in 2026 will not recur in 2027.
• Pipeline Expansion:
  • Elixirexin: Advancing from hypersomnolence to broader neuropsychiatry (ADHD, MDD) and neurodegenerative (fatigue in MS/Parkinson's).
  • ALKS7290: Expanded from ADHD to MDD (adjunctive therapy study initiated).
  • ALKS4510: Initiating Phase 2 for fatigue in MS/Parkinson's.
  • Preclinical: Advancing additional orexin compounds beyond the immediate clinical portfolio.
• Clinical Development Strategy:
  • Split Dosing: Evaluating split-dosing to provide flexibility for patients requiring additional efficacy in the afternoon; expected to be a key differentiator in future registration trials.
  • Combination Therapy: Planning to generate data on orexin agonist + oxibate combination (specifically with Lumerise) post-registration to support patient safety and payer adoption.
• Capital Allocation: Disciplined investment in R&D (2027 R&D spend to increase) while maintaining strong cash generation and EBITDA performance.

Risks and Headwinds to Outlook:

• Clinical Trial Outcomes: Success of Phase 2 and 3 studies is critical for advancing Elixirexin, ALKS7290, and ALKS4510 programs; failure to demonstrate efficacy (e.g., in ADHD or MDD) could halt development.
• Regulatory Uncertainty: FDA meetings post-Vibrance 3 data are a rate-limiting step for moving into IH Phase 3; final approval and launch timing (March 2028) depend on regulatory response.
• Competitive Pricing: Takeda's pricing for Orexin 2 agonists will set the market range; pricing pressure could impact Alkermes' revenue trajectory for Elixirexin.
• Patient Heterogeneity: Variability in patient response (particularly in IH populations, including "long sleepers") could impact trial data interpretation and dosing strategy.
• Transaction Costs: One-time transaction-related costs incurred in 2026 will not recur, but integration of Avidel infrastructure is a driver for elevated 2026 SG&A.
• Market Adoption: Potential for initial marginal impact on oxibate sales (Lumerise) due to Takeda's entry, though long-term durability is expected.

Management Tone on the Future:

• Confidence: High confidence in the commercial foundation (Vivitrol, Aristata, Levolvi, Lumerise) supporting R&D investment.
• Strategic Clarity: Management expresses strong conviction in the orexin class as a "leading franchise" with vast opportunity across sleep, neuropsychiatry, and neurodegenerative disorders.
• Execution Focus: Emphasis on "urgency and discipline" in advancing the pipeline; anticipation of a "data-rich" next year with six critical study readouts.
• Differentiation: Strong belief in the differentiated profile of Elixirexin (dosage options, broad utility) and the complementary nature of orexins vs. oxibates.
• Financial Discipline: Reiteration of 2026 guidance despite integration costs; commitment to balancing investment with strong cash flow in 2027.

Miscellaneous:

• Financial Metrics: Q3 2026 Total Revenues: $480.1 million; Adjusted EBITDA: $120.1 million; Cash and Investments: $787.6 million (start of Q3).
• Transaction Context: Avidel transaction closed mid-February 2026, impacting Lumerise revenue attribution and 2026 financials (COGS/SG&A).
• Study Designs:
  • ADHD Phase 2: Placebo-controlled, evaluating once-daily and split-dose regimens.
  • MDD Phase 2: Adjunctive therapy for partial responders, including a pre-specified subgroup with excessive daytime sleepiness.
  • Fatigue Phase 2: Randomized, double-blind, placebo-controlled.
• Key Milestones:
  • Mid-2027: Top-line results for Elixirexin Narcolepsy Phase 3.
  • Early 2027: Top-line results for Elixirexin IH Phase 2.
  • H2 2027: ALKS7290 ADHD Phase 2 data.
  • End 2027: ALKS4510 Fatigue Phase 2 data.