Rebecca Peterson - SVP of Corporate Communications Richard Pops - Chairman, President and CEO Shane Cooke - President Jim Frates - SVP, CFO and Treasurer.

Michael Schmidt - Leerink Partners Ken Cacciatore - Cowen & Company Cory Kasimov - JPMorgan Mario Corso - Mizuho USA Ari Jahja - Credit Suisse Steve Byrne - Bank of America David Reisinger - Morgan Stanley.

Ladies and gentlemen, thank you standing by. And welcome to the Alkermes Conference Call to discuss the company's Fourth Quarter and Year End 2014 Financial Results. At this time, all participants are in a listen-only mode. There will be question-and-answer session to follow. Please be advised that this call is being recorded at Alkermes request.

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

Thanks, Brendan. Welcome to the Alkermes PLC Conference Call to discuss our financial results for the quarter and year ended December 31, 2014. With me today are; Richard Pops, our CEO; Shane Cooke, our President, and Jim Frates, our CFO.

Before we begin, I encourage everyone to go to the Investor section of the 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 that the non-GAAP financial results better represent and reflect the ongoing economics of our business. Our discussions during the call today will include forward-looking statements. Actual results could differ materially from those contemplated by these forward-looking statements.

Please see our press release issued today and our annual report on Form 10-K for important risk factors that could cause our actual results to differ materially from those projected or suggested in the forward-looking statements.

We undertake no obligation to update or revise the information provided on this call today as a result of new information or future results or development. Today, Jim will discuss our financial results and Rich will provide a brief update on the company. After our remarks, we'll open it up for Q&A. And now, I'd like turn over the call to Jim..

Thanks, Rebecca. Hello, everyone. We're please to report our results for the fourth quarter and year ended December 31, 2014 and our financial expectations for 2015. Alkermes ended the year strongly and our 2014 results were ahead of expectations.

These results were characterized by strong revenues from our portfolio of commercial products and focused investments in our pipeline. We believe this pipeline has matured into the most exciting pipeline in CNS. It is late stage we are validating data and we control the assets 100%.

With this pipeline in our commercial business, both performing well, we continue to build a major biopharmaceutical company with significant growth and earnings ahead.

In 2014, our commercial portfolio generated $618.8 million of total revenues and we earned $54.6 million of non-GAAP net income, demonstrating our strong financial and operational performance. We ended the 2014 with over $800 million in total cash and investments and are well capitalized to execute on our pipeline and commercial portfolios.

Turning to fourth quarter, our total revenues were $175.2, driven by robust revenues from INVEGA SUSTENNA, VIVITROL and AMPYRA and we recorded non-GAAP net income of $16.8 million. I'll now review some the key drivers of our financial performance during the quarter.

Within our commercial portfolio, worldwide end market net sales of our long-acting atypical antipsychotic franchise, RISPERDAL CONSTA and INVEGA SUSTENNA were approximately $712 million in the fourth quarter compared to $671 million for the same period last year.

For the quarter, Alkermes reported manufacturing and royalty revenues of $70.3 million for this product franchise. INVEGA SUSTENNA continues to show impressive growth, as the leading product in the class with end market sales of $418 million in the quarter, reflecting nearly 24% operational growth year-over-year.

Our partners at Janssen continue to invest in the long-acting atypical antipsychotic space. The NDA for INVEGA SUSTENNA, AMPYRA recently received priority review from the FDA with the approval expected mid-year. Additionally, INVEGA SUSTENNA received approval for new schizoaffective disorder indication in November 2014.

We are pleased to see the continued growth of the overall market for LAIs with sale growth of approximately 20% in the United States over the fourth quarter last year. This market is expanding and we're excited to be preparing for the launch of Aripiprazole Lauroxil later this year.

For AMPYRA and FAMPYRA, our manufacturing and royalty revenues were $24.3 million for the quarter, reflecting strong end market sales and the timing of shipments to Acorda.

For VIVITROL, the fourth quarter was our strongest quarter yet, with net sales of $29.7 million compared to $20.6 million for the same period last year, demonstrating growth of 44% versus last year and 15% sequentially.

In terms of expenses, our total operating expenses for the fourth quarter were $190.8 million compared to $148.6 million for the same period last year.

This increase in operating expenses was driven primarily by the success we are seeing in our late stage clinical pipeline, along with increase promotional activities for VIVITROL commensurate with its growth and early preparations for our anticipated launch of Aripiprazole Lauroxil.

Looking forward to 2015, we're well position to execute on our plans to drive the next stage of Alkermes growth. We are developing a robust, late stage CNS pipeline of differentiated drug candidates with long patent lives and disease areas with major unmet medical need and we have the resources to bring them to market.

2015 will be a year of investment as we continue pivotal studies for ALKS 5461 in major depressive disorder and initiate pivotal studies for ALKS 3831 in schizophrenia and ALKS 8700 in multiple sclerosis. At the most mature end of our pipeline, we have Aripiprazole Lauroxil, which represents another key area of focus for 2015.

We're investing in our commercial organization and preparing for the launch of this product into a schizophrenia market that is shifting in favor of increased used of long-acting injectables. With this context, I'll now review the highlights of our financial expectations for 2015.

We expect total revenues to be in the range of $640 million to $670 million, with VIVITROL revenues to be in the range of $125 million to $135 million, reflecting growth of approximately 33% to 43% compared to calendar 2014.

Additionally, assuming a September launch and using the Abilify Maintena launch as a proxy, we currently expect Aripiprazole Lauroxil revenue of $5 to $10 million. We expect R&D expenses to be in the range of $345 million to $365 million.

This expectation reflects investment in the ongoing forward pivotal program for ALKS 5461 and the initiation of pivotal programs for ALKS 3831 and 8700. We expect R&D expense to ramp throughout 2015 as these additional pivotal programs get underway. Additionally, we will advance our biologic into the clinic and unveil a new CNS candidate this year.

We expect SG&A to be the range of $310 million to $330 million. This increase is primarily driven by the expansion of our commercial organization to support the anticipate launch of Aripiprazole Lauroxil.

We expect that the majority of the sale force will be hired in the second and third quarters and we'd expect to see a ramp up in investment to occur during those periods.

Reflecting these investments, we expect non-GAAP net loss for the year ending December 31, 2015 to be in the range of $40 to $60 million and non-GAAP net loss per share to be in the range of $0.27 to $0.40.

Even with this increase investment in the business, we remain well positioned and financial strong as we expect to end 2015 with over $700 million of cash and total investments.

The investments we make in 2015 will be the foundation of Alkermes future growth, through active management of the business, we have the resources in place to aggressively advance our innovative late stage pipeline, launch Aripiprazole Lauroxil and drive future growth for our shareholders. With that, I will turn the call over to Richard..

That's great. Thank you, Jim. Good morning everyone. 2014 was a year characterized by excellent execution of our plans and validation of important drug candidates as we continue on its path to build a high value biopharmaceutical company.

We have proven and productive R&D engine, generating innovative products design to address to the needs of range of participants in the healthcare systems, not just patients who are central to our focus, but also they are care givers, families, healthcare providers and payers.

Moving into 2015, we've identified our next leg of growth, as the potential has become clear for this exciting portfolio of late stage drug candidates following a series of positive clinical trial results.

We now have three portfolios that drive our business, our commercial portfolio of marketed products, the emerging blockbusters that are next in line to become potentially significant commercial products and our pipeline of earlier stage candidates that continues to be replenished by our R&D engine.

As we look ahead, we see one of the strongest pipelines in the pharmaceutical industry with four late stage drug candidates each with major potential. The first is ALKS 5461, for patients with major depressive disorder and an inadequate response to standard therapies.

5461 is based on a new mechanism of action and is differentiated from the classic SSRI or SNRI approach. Based on the compelling data from the Phase 2 program, last year we initiated the comprehensive forward pivotal program.

The objective of this program is not to run entirely new clinical experience, but to replicate our successful Phase 2 results in Phase 3. Last month, we announced data from the first study in the pivotal program called Forward 1. These data were very positive and clearly replicated results from our previous Phase 2 study.

Seeing these consistent effects, study-to-study gives us a sense of confidence and robustness of the effective ALKS 5461 in this patient population and its ability to potentially to improve the standard of care. We're continuing to enroll the three core efficacy study with the Forward program in 2015. We're on track to report data in 2016.

Next, 3831 is our novel, oral, broad spectrum antipsychotic drug candidate.

With ALKS 3831 we built on the proven pharmacologic activity of olanzapine and added our own proprietary NCE, samidorphan, to create a novel agent, design to deliver efficacy of olanzapine without the weight gain associated with it and have particular applicability in patients with co-occurring substance abuse.

The Phase 2 study in weight attenuation, for which we announced data last month, was designed as an acid test study. To determine early in the program where the 3831 had not only some degree of effect on olanzapine-mediated weight gain, and whether the effect was large, consistent and clinically meaningful to patients and it was.

The data were clear and compelling, 3831 demonstrate the equivalent antipsychotic activity to olanzapine with statistically significant lower percent weight gain across a range of analysis of study results. In all of our analysis we saw a clear beneficial effect of ALKS 3831 on weight gain versus the active olanzapine control in the study.

With these data in hand, we're confident that ALKS 3831 has a meaningfully different weight gain profile compared olanzapine and we think that’s going to have a profound impact on the use of these medicine in a wide range of patients with schizophrenia.

We've only had a look at the first three month double blind phase of the 3831 data in weight attenuation. The second three month period is ongoing and we'll have that data early in Q2. We plan to meet with FDA and initiate the pivotal programs 3831 later this year.

We also have an important ongoing Phase 2 study in patients with alcohol use and schizophrenia, which comprises about a third of the patients with schizophrenia and that study is continuing to enroll. So ALKS 3831 is firing on all cylinders and it’s really gaining momentum.

Next, our newest emerging blockbuster potential product is ALKS 8700 in multiple sclerosis. We design this molecule to provide the efficacy of the active moiety of Tecfidera MMF and offer favorable tolerability by applying our chemistry and oral formulation capabilities.

Earlier this month we announced the part of the results from a large Phase 1 study. We achieved the results we were hoping for, the highly informative study show that ALKS 8700 provided MMF exposures equivalent to Tecfidera with favorable gastrointestinal tolerability.

Based on these data, we plan to initiate the pivotal development for this program following an end of Phase 2 meeting with FDA and we're incredibly excited to be moving forward with this opportunity.

Now for ALKS 7106, we announced this morning that the Phase 1 study did not meet our pre-specified criteria that would support advancing and into further development. We're stopping work on ALKS 7106 because of certain limitations specific to that molecule to this early study revealed.

Our R&D efforts will keep going because of our leadership in this field and our confident in the opportunity to create opioid modulators with fundamentally different risk profile in traditional opioids. ALKS 7106 is another example of the way we approach to our development here at Alkermes.

We set clear, pre-specified criteria, if we hit them we go forward aggressively and if now we're disciplined about holding investment and moving on, in this case to the next series of compounds. Let me switch gears now to our most proximal commercial opportunity which is Aripiprazole Lauroxil.

Aripiprazole Lauroxil embodies all the key attributes that we've learned are important to patients, nurses and physicians, efficacy range of doses, ease of use and we believe this is a fantastic time if we come into market with our own product.

With a PDUFA date of August 22, we're moving quickly to put all the key elements in place to successful launch this emerging blockbuster later this year. We know the LAI market and we understand the change in market dynamics.

We have a team of experienced commercial leaders and established commercial infrastructure for especially injectable products in place. In the second and third quarter we'll build the field sales force. We know which accounts to target at launch and we have an attractive product profile and we're moving full team ahead.

With a newly allowed patent extends Aripiprazole Lauroxil patent protection to 2032. This product is going to be an important contributor to our business for a long time.

At higher level, what's remarkable is that over the last few years, we've been able to position the company to independently develop and advance each of these blockbuster opportunities and this is not by chance.

Our commercial business is operating just as we intended and generating significant revenues, coupled with active management of our balance sheet we have the financial foundation and flexibility to invest in the success of this rapidly growing business. So as you can see, we've identified the products that are going to drive Alkermes future growth.

2015 will be a year of major news flow and catalyst. To start, next week we'll host an Analyst and Investor event in Boston. We will provide an update on the pipeline and also provide some perspective of the market potential for each of these late stage product candidates and we look forward to see many of you there.

We're incredibly excited about the prospects for Alkermes in 2015 and beyond as we bring this pipeline of valuable medicines to patients and build value in our business. And with that, I'll turn the call back over Rebecca for any questions..

Thanks, Rich. We'll now open up the call for Q&A..

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And from Leerink Partners we have Michael Schmidt on the line. Please go ahead..

Hey, good morning. And thanks for taking my question. So you will have three new agents in Phase 3 testing by year-end.

How is your thinking evolving with regards to addressing these opportunities on a global basis, either from the regulatory point of view for these trials, these potential new trials with those allowed for your approval as well? And secondly on the commercial front, how do you foresee addressing ex-US markets with these opportunities? And my second question is, on SG&A with the build [ph] out of the commercial infrastructure, do you foresee any commercial synergies for VIVITROL as well? Thank you..

Hey, Michael. It’s Rich. I'll take some of those. First of all thanks for the question. It’s a really high quality series of decision we have to make now, because the pipeline is so populated, as you say with late stage products. So taking the pivotal programs in turn, 5461, 3831, 8700.

5461 we see as a global product and we're – the Forward program is addressing many of the global registration needs. For European registration we expect we have to run an additional study in addition to the Forward program that we disclosed. And we're talking with European regulators and developing that strategy now.

3831, the data are pretty new, but we absolutely see that as a global product as well. And so as we design this Phase 3 program, we will also meet with European regulators to talk about its applicability to the OUS [ph] market.

And the same holds for 8700, we'll – you clearly see Tecfidera being sold on the global basis and we have to be mindful of exclusivities in various territories and meet with the regulators to come up with the plan. But we see all the three of those in particular on a global basis.

The commercial technique that we'll use to bring these products to market OUS are in development right now and it catalyzes in fact by the point now that we have multiple assets in this CNS category in psychiatry.

So, if we only had one, we would think about licensing probably OUS, but given the fact that we have multiple products, we like the idea that we have perfected ownership of all these products on a global basis right now. So evaluating what our global commercial strategy will be for the portfolio. SG&A question, Jim you want to take….

Yes. I'll take that one. So the overlap between and potential synergies between VIVITROL and Aripiprazole Lauroxil, another good question.

First of all, we are adding reimbursements specialist and policy people that will be able to work across the country on both products and the sales forces are going to be sharing our management team and our management structure.

So there will be some synergies there, but there is not really a particular overlap between the folks that prescribe medicines for addiction for opiate dependence and alcohol dependence and schizophrenia. I think and we hope and expect that as maybe as treatment of all that becomes more together, but right now they are very separate systems.

So we'll have separate sales forces, but there will be some synergies on the management and some of the more reimbursement areas..

And Michael, let me just make one more point for you all, one more subtle point about synergies.

When you think about attracting the finest commercial people in the business that come to a company, when you have a product like VIVITROL in the market Aripiprazole Lauroxil on the threshold of coming to the market and now 8700, 3831 and 5461 all within the planning scenario of somebody who is looking to make a career change.

We're seeing just a remarkably talented group of people attracted to come Alkermes now..

Okay, great. Thanks so much..

Thanks, Michael. The next question….

From Cowen & Company we have Ken Cacciatore on the line. Please go ahead..

Good morning, guys. My question is as you look at the stock your currency is up very nicely. Your balance sheet is still very healthy. You are in overall good position.

So I'm wondering why not as you're building the infrastructure ahead of aripiprazole lauroxil launch and it bulks up, why wouldn't you be looking to expand the unmarketed portfolio given the position that you're in.

Are you actively looking at assets, even maybe late stage assets, or do you just want to continue to push forward with the current portfolio alone? Thank you..

Hey, Ken. It’s Rich. The answer is yes to both. We build this company over time through a series of clever acquisitions that were timely and consistent with our business at the time. We have a just incredibly rich portfolio of development products.

So, we would add to that by exception where we see things that are complimentary and at the same level of quality. On the commercial side, it’s interesting, you're right, there maybe opportunities for us to accelerate our presence in some of these markets with commercial products.

It’s a target core environment is how we say, but we are always out there evaluating those deals..

Thank you..

From JPMorgan we have Cory Kasimov on the line. Please go ahead..

Hey. Good morning, guys. Thanks for taking the questions. I have two of them for you. The first one I guess is for Jim, just looking for some additional granularity on the SG&A guidance.

Can you remind us of how many sales reps you have now? I guess they would be primarily dedicated to VIVITROL, and how many do you expect to have by the time you launch aripiprazole lauroxil?.

Sure, Cory. Currently we have 65 reps selling VIVITROL and that’s been a pretty consistent number over the last year or two.

And as we said before, we're targeting a number of 175 sales people for aripiprazole lauroxil and we'll be making those hiring those people, will becoming on board in the next quarter and early third quarter as we prepare for a launch in September..

Okay. Great. And then the second question is following up on the positive data that you talked about that you had earlier this year for both 3831 and 8700 and the company stated intention to advance both into pivotal trials.

I realized that end of phase 2 meetings are still pending for both, but do you have any updated thoughts, maybe, to what you had to say earlier this year on what phase 3 studies might look like for these? I guess I'm asking, how straightforward do you consider these programs are going to be?.

I think they both can be relatively straight forward. It’s just a matter than of sitting down with the regulator and figuring out what the most optimized strategy is going to be. 3831 in particular if you think about it Cory we've actually run a large randomized study testing its effects on weight.

We'll have the most – the complete data set from that in a few weeks time. But it really answers the question in very rigorous way about the differential effects of weight. The primary end point of the clinical trial, we just ran as you know with efficacy.

So we think the probability of repeating in Phase 3, demonstration of the efficacy of 3831 is extremely high and going to that with very well elaborated in terms of its weight differences.

We think the overall program is quite straight forward and what's interesting is to feather in additional data that might arise from the second Phase 2 programs that’s on way in the concomitant alcohol use patient populations well. So we actually have very big ambitions for 3831.

And the ambitions are really driven the quality of the data set that we just reported. 8700, I know there is a lot of questions speculation about what the most accelerated form of clinical trial could be for MMF pro-drug.

So what's – and so speculating we have our own thoughts and we'll sit down with the regulators as soon as possible and let you guys know as soon as we come to some type of agreement on that..

Okay. Thanks for the taking the questions. See you next week..

Thank you, Cory..

From Mizuho USA we have Mario Corso on the line. Please go ahead..

Good morning. Thanks for taking my questions and congratulations on all the progress. In terms of SG&A, drilling down there a little bit, if we annualize the 4Q number, we get about $220 million. So then that would mean another $100 million or so incrementally in 2015.

So, is that's really all aripiprazole lauroxil commercial? Obviously 175 reps would get you maybe $40 or $50 million in terms of direct costs. Is that the right way to think about that? And then in terms of the pipeline, NCDEU, is that still the target meeting for both the 5461 and the 3831 data? Thanks very much..

Thank you, Mario. Jim, go ahead take Mario's SG&A one..

Sure. So you're right, Mario, you know, you're doing the math correctly, that’s about a $100 million increase in spend. One thing to point out a lot of that actually is an increase in non-cash compensation, given that our stock price is almost doubled year-over-year, our non-cash comp is going up quite significantly.

And that’s just based on the number of shares issued in terms of stock price. We're also – there is in increase in spend on VIVITROL as well and that spend is really commensurate with the growth in sales from a $80 million range up to the $125 – excuse me, the $90 million range of $225 to $235 they were projecting in the next year.

But the bulk of the spend is going to be around Aripiprazole Lauroxil, the sales force and the preparation for the launch spend..

Rebecca, why don’t you answer the….

So, Mario, obviously we submit a plethora of abstracts for scientific data but there a number of conferences this spring that you should expect to see data at on our pipeline..

So more than NCDEU, we are growing beyond that..

The most proximal is the yeah, international conference on schizophrenia which is coming up at the end of March..

Okay. From Credit Suisse we have Ari Jahja on the line. Please go ahead..

Good morning. And thanks for taking my questions. First for Rich, beyond your disclosures at the investor meeting, can you remind us about the clinical use flow in the first half of this year? I know Rebecca has mentioned about the international congress in schizophrenia, and I also have a follow-up question for Jim. Thank you..

Yes, Ari. The most dynamic part of it is 3831 which we're submitting abstracts immediately after receiving those data and we have different ways of data.

One you'll see the data from three month double-blind cohort that we gave top line results on, but we're also fascinated to see to see the second three month phase and we'll get that either out in subsequent meetings and publications as well.

So 3831 we'll have a whole of data, we'll give you lot of transparency and as the data supporting that program.

5461, we're also beginning to present data in various scientific forums both pre-clinically and clinically about this novel mechanism of opioid modulation, particularly introducing the idea that opioid modulation can be done to reflect mood without – we're not having addictive properties, as well and throughout the course of the year by the end of the year we'll have the human abuse liability studies done which will provide human clinical data support that observation as well.

On 8700, we're going to – we're already have lined up I think we will be presenting the first data from [indiscernible] I am looking at Rebecca to confirm that….

It’s been submitted..

It’s been submitted, so I don’t know if we have it approved yet or no for sure. And then of course as we move into the summer time, we'll be looking at approval of Aripiprazole Lauroxil in August as the plan is launched in September and we're also going to put immuno modulator oncology product into the clinic at the end of the summer as well.

Our first biologic in that program. And we also have another new candidate that will be announcing that will give you some time line on as well that will provide additional news for.

So the – its interesting because you look at all three of the portfolios of the company, the commercial portfolio, there is lot of actions with VIVITROL and INVEGA SUSTENNA in particular, along with AMPYRA doing quite well.

The emerging blockbuster portfolio you'll hear a lot about next Monday, but all those elements the Aripiprazole, 8700, 3831, 3461 all moving quickly generating news. And the new portfolio of products will continue to generate news flow as well. The immuno modulator, the new product candidate and other things in the pipeline that are growing..

That’s great. Thanks you.

And then for Jim, can you talk about the pushes and pulls that led to the increase in R&D spend guidance this year? And also, on aripiprazole lauroxil, can you share more insights pertaining to the revenue benchmarking analysis relative to Abilify Maintena?.

Sure. I'll start with Abilify Maintena question, first, I think that’s a launch in a market that we know quite well Ari, as we've been it for a long time with RISPERDAL CONSTA, INVEGA SUSTENNA and now watching Abilify Maintena.

Again, we think we have a product that is potentially best in class in the area and I think taking the most recent launch in the space, given it’s a highly Medicaid space, taking the most recent launch as a proxy and something we said before and that’s all we be doing going forward.

So, given that we're launching in September we'll only have one quarter during the year and $5 to $10 million launch would be ahead of were maintain it was. And so, that’s our goal is to continue to be Abilify Maintena as we move forward.

In terms of the R&D spend, its really been data driven, as you know the last year we've had a in the last few months, we've had a lot of data come out and with ability to move directly into Phase 3 with 3831 and 8700 that’s where the precision to continue to accelerate this programs has come in.

There were also going to be a full year of spend on 5461 studies, as well as Rich mentioned, advancing both the immuno modulator and oncology as well as the new candidate forward, so there is a little bit of increase there, but mainly driven by the Phase 3 start up and the phase 3 program for 5461 in terms of R&D spend. Hopefully that’s helpful..

Got it. And then lastly, can you share your thoughts on the cash balance? I know it is getting stronger, $800 million, especially in the context of the anticipated burn this year? Thank you..

Yes, sure. And that’s a good question, thank you for highlighting that.

We were able with the sale on our stake of Acceleron and Civitas, and through the year I think wisely managing our balance sheet, we've ended the year with $802 million in cash and as we look forward that gives us plenty of resources to continue to execute on these studies, without the necessity of doing a financing and that’s I think another thing that’s make Alkermes very unique because you get these late stage portfolio.

And that’s the benefit of the commercial business, right. And we've been managing that business well over the last few years.

It’s performing very well and its providing our ability to invest and on a non-GAAP net income level, be in that $40 million to $60 million which while we're investing we think its going to yield many, many times in the future..

Yes. I think Alkermes is in a very enviable position just vis-à-vis our cash balance and ability to prosecute this portfolio..

Appreciate the color. Thank you..

From Goldman Sachs we have Terence Flynn on the line. Please go ahead..

Hi, this is Lian [ph] for Terence. Thanks for taking our questions. I just have a few on the pipeline.

First one, 8700, do you think you can improve the extend release formulation, and why not wait to start pivotal until you have this optimization in place? Secondly, on 5461, can you just provide a little more color on that enrollment and how that's going? And whether four to one data that you just reported, was that a gain factor in any way as it seems to have confirmed the titration schedule they have chosen for the phase 2 program.

Thanks..

Hi, this is Rich, I'll take that. On 8700 I think its important to plan out that Tecfidera is going to be mega blockbuster driving it twice or day or [indiscernible] So we're thrilled to have a twice a day product and looks like it has the GI tolerability that we have demonstrated in the first clinical trial. So absolutely not, we wouldn’t wait.

We're going to go as fast as we possible can to get this medicine to patients. That said, we learned enormous amount in that first study about the approaches one could take to extend dosing interval and we're going to apply those in keep working on that because it’s an important goal and one that we'll continue to pursue.

On 5461, the enrolment is going well, we'll update you soon on [indiscernible] how we're doing on that but its something we're pleased with, it just gives me a chance to reiterate the point we've always said about 5461 enrolment because we see it as an exercise replication the critical element in the enrollment is the quality of the sites, quality of the radars, quality of the patients and so we will trade quality for time every time but so far our original modeling is bearing out so we're pleased with that.

And the Forward 1 titration schedule was not gaining [ph] we went a little bit at risk on that you'd say by choosing the one week titration schedule in advance because we had a good feeling that that was going a well tolerated dosing regimen [ph] indeed it is, the question we were asking is, is there even better tolerated regimen and its gratifying to see that our original hypothesis were correct.

So we didn’t loose anytime and it gave us a chance get that confirmatory data that you referring to..

Great. Thanks for taking my question..

From Bank of America we have Steve Byrne on the line. Please go ahead..

Hi.

Do you expect your initial uptake for aripiprazole lauroxil to be primarily inpatient or outpatient driven, and do you anticipate any challenges getting formulary access?.

We're probably not going to give a whole lot of disclosure but what we think how enrolled the product, but we expect that we'll gain access on formularies as the normal period that others have this is a largely Medicare and Medicaid product, so there is a certain rhythm to getting on all the various formularies and all the various states and we had the benefit of watching folks J&J and other companies do this.

So we're well prepared to get into the market..

Okay. A question on 3831.

Do you have any data on any of the other metabolic impacts of olanzapine other than the weight gain?.

None that we disclosed..

Will have any at some of these upcoming conferences?.

To be determine, I think we'll probably – because the way this study was designed. Steve this one had one week olanzapine for all patients which isn’t quite the most pure way of looking at the separate metabolic parameters.

But we use weight as the primary end point or secondary end point in these clinical trials which is probably focus of the presentation. But as the data matures, we'll present data as we get it..

Okay. And then just one for you, Jim.

What is the focus of the capital expenditure investment for the year?.

Yes, thanks, Steve, good question. So we've gone up from the around $30 million to capital spend to a range of 50 to 55 and that’s really going to allow us to fully build out the manufacturing capacity for 5461, 3821 and 8700 actually and then we should soon get back to areas back in the $30 million range which is more maintenance CapEx.

So another interesting point about this new products in our pipeline, not only to they have large market potential they ought to have very nice cost of good sold perspectives and we have the facilities really almost complete for all that commercialization. So, that’s why the increase spend..

Okay. Thank you..

You're welcome..

Thanks so much. Operator, I think we have time for one more question..

Yes. From Morgan Stanley we have David Reisinger on line. Please go ahead..

Thanks very much. Just two quick questions. First on lauroxil, I'm assuming you're not expecting an FDA panel, but just wanted to confirm that. And second, with respect to the guidance for revenue, you've got it to $5 million to $10 million for revenue later this year, and that's below what investors were expecting.

My guess is that that just relates to the time to get the product adopted by formularies and by the providers.

But could you just, I guess my question on the adoption of the drug in the marketplace is, do you expect that the customers, the providers and clinics that administer both Maintena and will be administering lauroxil, do you expect them to also stock your product or to displace the Otsuka product? Maybe you can just talk through how you expect to knock Maintena aside with your better profile.

Thank you..

Hi, Dave. We don’t expect Maintena [ph] Aripiprazole Lauroxil and with respect the adoption, as Jim said in his remarks, we because we have PDUFA date on August 22 and there could be some timing Q4 will launch the drug, we're assuming a September launch but weeks would matter in the forecasting.

We simply took Abilify Maintena launch as a reasonable proxy because it’s so close in time and it’s a very good product, so very, very good company. So, we've had very reasonable proxy.

In part just for a questions like this and get people on the streets focused on the idea of these long-acting antipsychotics in the schizophrenia indication reimbursed by Medicare and Medicaid are not square with late wave launches, either these are launches that build and build and build in a market we think that is increasingly using long-acting injectables.

We expect the features of Aripiprazole Lauroxil in many ways to distinguish themselves in almost in the self evident way, I mean, will help, but the fact is our product is very different than the competitive products because we expect to come to market with a range of doses.

We're also in the clinical range of intervals and we just really elegant easy to use formulation. So we would expect providers to provide access to all these important medicines for patients with schizophrenia.

This is one of the six protected classes under the Affordable Care Act, and so we just hope that we have equal access and level playing field which is what we model and that our features will speak for themselves in a market that is growing significantly we expect to get our fair share of it..

Okay..

Thank you..

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