Sandra Coombs - Investor Relations James M. Frates - Chief Financial Officer Richard F. Pops - Chairman and Chief Executive Officer.

Vamil Divan - Credit Suisse Paul Matteis - Leerink Cory Kasimov - JPMorgan Securities, Inc. Chris Shibutani - Cowen & Co. Biren Amin - Jefferies & Co., Inc. Liav Abraham - Citi.

Good morning, and welcome to the Alkermes Plc First Quarter 2017 Financial Results Call. My name is Brandon, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note this conference is being recorded.

And I will now turn it over to Sandra Coombs, Director of Investor Relations. Sandra, you may begin..

Thank you. Welcome to the Alkermes Plc conference call to discuss our first quarter 2017 financial results. With me today, are Richard Pops, our CEO; and Jim Frates, our CFO.

Before we begin, I encourage, everyone, to go to the Investors section of alkermes.com to find our press release and related financial tables, including a reconciliation of the GAAP to non-GAAP financial measures that we'll discuss today. We believe the non-GAAP financial results better represent the ongoing economics of our business.

Our discussions during this conference call will include forward-looking statements. Actual results could differ materially from these forward-looking statements.

Please see our press release and 10-Q issued today and also our 10-K for the year ended December 31, 2016 for important risk factors that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements.

We undertake no obligation to update or revise the information provided on this call as a result of new information or future results or developments. Today, Jim Frates will discuss our financial results and Richard Pops will provide an update on the company. After our remarks, we'll open the call for Q&A. Now, I'll turn the call over to Jim..

Thanks, Sandy. Good morning, everyone. During the first quarter we continued to execute on our business strategy and our results reflect strong year-over-year growth driven by our proprietary products. We remain confident in our financial expectations for the year which we are reiterating today.

During Q1 our sequential quarter-over-quarter unique growth for VIVITROL and ARISTADA were somewhat mashed by our net sales results and I'll explain that more in a moment. Let me start with an overview of our key financial highlights. During the first quarter we generated total revenues of $191.8 million and recorded a $27.9 million non-GAAP net loss.

In the quarter VIVITROL had net sales of $58.5 million compared to $43.8 million for the same period last year demonstrating growth of approximately 33% driven by underlying unit growth of 43% and robust expansion across the country.

Typically, first quarter net sales are impacted by deductable resets in commercial plans that happen at the beginning of the year and inventory build at our wholesalers during the preceding fourth quarter. The inventory build of $3 million from the fourth quarter of 2016 was largely worked down during the first quarter.

Adjusting for these inventory fluctuations on a sequential basis VIVITROL units grew approximately 4%.

With channel inventory at current levels and the commercial insurance plan deductible reset behind us we expected growth rates to accelerate throughout the year and we are reiterating our expectations for VIVITROL net sales in the range of $280 to $300 million in 2017. The underlying fundamentals of VIVITROL's growth and potential are strong.

Since our year end results call in February we've seen a number of state expand from approximately 400 programs in 36 days to nearly 450 programs in 39 states.

The robust growth of these programs which range from public health initiatives to criminal justice programs in drug courts, prisons and jails represents a leading indicator of the sustained growth of VIVITROL.

Further, last year the comprehensive addiction recovery act and the 21st Century Cures Act was signed into law and we'll begin to see the initial impact of these major pieces of legislation later this year as state access funding and implement new treatment programs to address the opioid epidemic.

Turning to ARISTADA the launch continues to gain traction in the growing long acting atypical market with $18 million of net sales during the first quarter. As with VIVITROL the underlying growth of ARISTADA was somewhat obscured in our net sales results.

During the first quarter ARISTADA prescriptions grew approximately 16% compared to the fourth quarter. In March contracting for two major payer plans SilverScript, and WellCare took effect. Together, these two plans open up a significant pool of patients representing 35% of the Medicare Part D market.

As these payer contracts took effect, gross to net deductions increased during the quarter. Additionally inventory in the channel stayed flat from the end of 2016 after sequentially increasing each quarter since launch. Looking ahead to the second quarter we expect the net sales will be in the range of $19 million to $21 million.

Our Q2 expectations reflect a lower average selling price as the contracting that took effect in March is in place for a full quarter and ARISTADA sales volumes increased in these channels. Net sales should track prescription and unit growth more closely in the second half of the year as gross to net adjustments to the payer mix stabilize.

Also in the second quarter we expect the approval for the 1064 mg two-month dose in June and are preparing for that launch shortly thereafter. We're making steady progress and we're optimistic about ARISTADA as our growth in new prescribers and the depth of prescriptions among our highest users continues to increase.

In March our market share for new prescriptions in the long-acting aripiprazole market grew to approximately 20% compared to 10% in March of last year. When healthcare providers use ARISTADA they appreciate its unique attributes and we remain on track with our expectations for net sales to increase by at least 100% this year.

Moving on to our key partner products, we saw overall revenues of $101.5 million in the first quarter compared to $93.4 million in the first quarter of last year. This included manufacturing and royalty revenues of $60 million related to RISPERDAL CONSTA, INVEGA SUSTENNA and INVEGA TRINZA compared to $54.7 million for the same period last year.

For AMPYRA and FAMPYRA we recorded manufacturing and royalty revenues of $29.2 million during the first quarter compared to $28.2 million for the same period last year. Generic competition to AMPYRA is expected in July of 2018 and at this time our total revenue guidance for 2017 is not affected.

In terms of expenses, our total operating expenses for the first quarter of 2017 were $262.6 million compared to $233.7 million for the same period last year reflecting targeted investments in our late-stage pipeline and in our commercial infrastructure to support the growth of our proprietary products as well as increased manufacturing activity.

Turning to our balance sheet, we're in a strong position and entered the first quarter of 2017 with approximately $590 million in cash and total investments. The financial underpinnings of our business are solid.

We look forward to accelerating the growth of our proprietary products and executing on our development pipeline to deliver our important medicines to patients. And with that, I'll turn the call over to Richard..

Thank you, Jim. Good morning everyone. Our commercial portfolio and our late-stage pipeline are in a state of rapid evolution. VIVITROL and ARISTADA are growing and they'll continue to do so because they are important differentiated products addressing profound societal needs which are only becoming more prominent.

From an operational perspective the commercial and development teams are full throttle and excited to be fielding data and capabilities around medicines with incredible long-term potential.

In the fields we operate in serious mental illness and addiction things take time, but you can see from our experience with VIVITROL and in the long-acting injectable antipsychotic market that good medicines priced fairly were built steadily over time.

As you heard in Jim's remarks, the trends underlying VIVITROL's potential and growth are strong and supported by the activation of policymakers at the local, state and federal levels.

Just yesterday Health and Human Services Secretary, Tom Price visited our Wilmington, Ohio facility to learn more about VIVITROL and Alkermes commitment to the treatment of addiction. The opioid epidemic is affecting every state and district across the country.

Advancing treatment and prevention strategies have become national, political, health and criminal justice issues with bipartisan support. VIVITROL is in the central part of that discussion and it was inspiring for the whole company to hear the Secretary recognize our dedication to this field and our growing impact on it.

Turning to ARISTADA, our long-acting injectable atypical antipsychotic for the treatment of schizophrenia, like addiction, approving the treatment of serious mental illness is a national priority and long-acting injectable treatments are growing in importance for both medical and economic reasons.

We designed ARISTADA for market leadership and we continue to build the ARISTADA product family to provide more options and flexibility for patients, physicians, and payers. This continues with the expected approval of the 1064 mg two-month dose in June which would add to our current offerings of once monthly and once every six-week dosing options.

This will be the only two-month antipsychotic on the market and our launch preparations are well underway. Now on to the late-stage pipeline, we have three late-stage candidates approaching registration or completion of the pivotal programs. This pipeline is moving quickly and we expect a number of important milestones in the next few months.

I'll start with ALKS 5461. We're developing 5461 as an adjunctive therapy in the treatment of major depressive disorder in patients not achieving adequate clinical response to their first-line therapy. It's important to understand the clinical context.

These patients are several weeks or months into their major depressive episode and can experience debilitating and potentially fatal symptoms of their disease. Treatment options are limited and introduce new and significant risks. ALKS 5461 is doing different things for patients than other depression medications.

It is a well-established that the guidance [ph] opioid system is intimately involved in motivation, social connection and resiliency and that its function is dis-regulated in the context of major depression and other psychiatric disorders.

5461 is specifically designed for therapeutic benefit via the endogenous opioid system while avoiding the risk of abuse, dependence and addiction associated with opiate agonists. We did this specifically and intentionally by including a prudent opioid antagonist component. This is a fast-track designated medicine.

With the pivotal program completed, we've requested the pre-NDA meeting and we expect it to occur in the late June or early July timeframe. We're preparing the new drug application and are on track to submit the NDA later this year. Our belief in the safety and efficacy of 5461 is based on data.

Last year we presented data from FORWARD-3 and FORWARD-4 at ASCP. In May we will present the balance of the data from the FORWARD pivotal program at the Society of Biological Psychiatry Medical Meeting and will host a webcast conference call for analysts and investors.

These data will include FORWARD-5, the prespecified pooled analysis of FORWARD-4 and FORWARD-5 as well as a holistic overview of the consistent efficacy and safety profile of 5461 demonstrated throughout the development program.

As we continue to build the evidence supporting the safety and efficacy of ALKS 5461 and share it with key opinion leaders in the field, we recognize that we're just getting started reviewing the clinical importance of this new pharmacology.

The approval of 5461 is an adjunctive agent in patients failing to get adequate clinical relief from first-line treatments as measured by MADRAS should just be the beginning. We're going to continue to expand the data set supporting ALKS 5461 to think its clinical profile through a new clinical trial.

This begins later this quarter as we initiate Study 217. This study will continue our focus on patients suffering from treatment of refractory depression.

In addition to the MADRAS this study will utilize scales and endpoints to assess additional domains such as social interaction, anhedonia and resilience which are regulated by the opioid system and where ALKS 5461 may have particular benefit. So finishing up on 5461 we will present the FORWARD-4 and the FORWARD-5 pooled data at SOBP in May.

We have submitted our request for the pre-NDA meeting and expect that to be scheduled soon. We will start the next study by the end of the quarter and we're on track with our preparations for submitting the NDA by year-end. Turning to ALKS 3831, we're entering a data rich period as the pivotal program matures.

3831 is our novel oral antipsychotic designed to harness the efficacy of olanzapine with a more favorable weight and metabolic profile. The first piece of new data comes from our recently completed exploratory Phase 2 study in patients with schizophrenia and co-occurring alcohol use disorder.

Despite representing more than a third of patients with schizophrenia, these patients are generally excluded from clinical trials and represented undertreated and underserved patient population.

Our study was designed to assess ALKS 3831's efficacy, safety and tolerability compared to olanzapine in this population and breaks new ground in testing antipsychotic medications in patients many physicians are unsure how to treat.

The hypothesis was that because 3831 seems samidorphan it might have a greater effect on drinking behavior than olanzapine alone and thereby avoid some of the deleterious outcomes associated with alcohol use.

We pre-specified the primary endpoints as a novel composite measure of disease exacerbation as measured by a series of potential events ranging from hospitalization to arrest. The study did not show a difference on this endpoint as the ALKS 3831 in olanzapine treatment groups performed similarly well.

The study did however, provide a wealth of data supportive of the safety and real world efficacy of 3831 compared to olanzapine in this complicated and underserved patient population. Perhaps the most striking finding was in terms of long-term antipsychotic efficacy.

While both groups experienced an improvement in PANSS scores which is the positive and negative syndrome scale, subjects on ALKS 3831 had greater long-term improvement. This is remarkable as olanzapine is regarded as among the most effective of all the antipsychotic agents.

This underscores our fundamental positioning of ALKS 3831 as a new antipsychotic agent.

As its favorable weight and metabolic profile is established through the development program, the focus shift to its potential is to have a profound impact on the treatment of schizophrenia based on its efficacy, this study provides additional support for that positioning.

We will complete the analysis of the study and look forward to presenting the data at a future medical meeting. The next study to read out will be the pivotal Phase 3 study of evaluating the antipsychotic efficacy of ALKS 3831 compared to placebo and olanzapine in approximately 390 patients.

We have moved in the time lines for this study and now expect to complete enrollment in the next couple of weeks with top-line data expected around mid-year compared to our previous expectation at year-end.

The pivotal study of evaluating the effect of ALKS 3831 on olanzapine associated weight gain will continue its enrollment throughout this year with data expected in mid 2018. Next is ALKS 8700 for the treatment of multiple sclerosis which is also enrolling in this pivotal program.

8700 is a novel oral molecule formulated in an advanced controlled release dosage form that’s designed to compete against Biogen's TECFIDERA which represents a $3 billion class in the U.S.

In March, there were a number of positive developments in the intellectual property around dimethyl fumarate which resulted in TECFIDERA patent protection being upheld through 2028. While our branded fumarate market is positive for the long-term potential of ALKS 8700 we expect the IP surrounding dimethyl fumarate will continue to be challenged.

To more completely elaborate the potential competitive advantages of ALKS 8700 we are conducting an elective head-to-head study of evaluating the GI tolerability of 8700 compared to TECFIDERA. This 420-patient study began in March and will provide updates on expected timing of data as we get more experience with enrollment trends.

The pivotal program for 8700 consists of two elements. Completed pharmacokinetic bridging studies enabling a 505(b)(2) regulatory pathway referencing TECFIDERA, and a two-year open label safety study. This study has enrolled now over 550 patients and the data continue to support a differentiated GI profile of 8700.

We expect to complete the safety exposure requirements for registration later this year and remain on track to submit the NDA in 2018. I will finish with ALKS 4230, our novel immune therapy, designed for selective activation of the IL-2 receptor in order to increase the number of tumor killing immune cells.

We have recently presented three posters at AACR showing some of the pre-clinical data which served the foundation of the program, including data that demonstrated the selective expansion of CDA T-cell and natural killer cells with minimal expansion of the immunosuppressive regulatory T-cells.

We are currently engaged in the dose escalation phase of our first clinical trial and we expect to see initial data later this year. So I’ll finish there. We have a lot of important milestones on the new horizon and we look forward to updating you over the course of the coming weeks. And with that, I'll turn the call back to Sandy for questions..

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

Thank you. We will now begin the question-and-answer session. [Operator Instructions] From Credit Suisse, we have Vamil Divan online, please go ahead..

Hi, great good morning, thanks for taking my question.

So, just two questions, you mentioned on 3831 the timeline that’s coming a little bit for the top line data there, can you just explain what change was just enrollment came in faster than you thought or were there any other changes there that have taken place with the study? And then the second one on VIVITROL, I appreciate the comments you made on the volume, can you give a little more color just in terms of pricing, as that has been the area of focus there in terms of the net price you are getting any changes or anything unusual on what happened this quarter? Thanks..

Okay Vamil, I'll take the first one and let Jim answer the second. The 3831 study is this efficacy study which is analogous of the study we ran for the approval of ARISTADA. All along in all of our psychiatric studies we say that we will trade time for quality or quality for time.

In this case we just had really excellent enrollment in the back half of the study which allowed us to hit our patient enrollment numbers sooner than we would have conservatively modeled; other than that, all systems are good..

Yes, and on VIVITROL, I think the change sequentially from quarter-to-quarter was really due to the seasonality that we have seen in the first quarter typically. Our pricing was very stable and our gross to net were 43.6% last quarter and 44% this quarter, so pricing wasn’t an issue.

There really was just as those commercial plans reset and we head into the year-end. You know we’ve seen that VIVITROL fluctuations from quarter-to-quarter in the past, so we are confident about where we are headed for the rest of the year..

Okay, thanks so much..

You’re welcome..

From Leerink we have Paul Matteis online. Please go ahead..

Great, thanks so much.

A couple of questions on 5461 and 3831, first one on 5461, was this study that you are initiating always planned or was it in reaction to any feedback from FDA, and do you have plans to initiate additional study in the future this year?.

Good morning, Paul. No, this was not based on any feedback from FDA. This is based on our recognition that we're just at the beginning of elaborating the clinical potential of this new pharmacology. We had, as you may know, we had about a dozen or more of the top KOLs for depression at Logan Airport a few weeks ago.

And it was interesting because we reviewed all the data from the FORWARD program and since there was a strong consensus the drug is doing as intended and will be approvable in that indication, so the conversation then shifts to what do we do next.

Because in a way we’ve developed 5461 pursuant to the old rules up until this point, testing it as adjunctive agent in patients with major depressive disorder failing to get adequate clinical relief using MADRAS as the endpoint.

But it’s doing different things in patients brains and monoamine reuptake inhibitors, particularly on these domains really the social resiliency, anhedonia, social connectivity and things like that. So, this next study will begin to explore that.

We also have some imaging ideas that we want to do just looking directly in the brain at different domains, then of course other clinical indications other than adjunctive use in major depressive disorders. So, we will be in the clinic with the drug for the next decade..

Okay, got it. So, we should potentially expect more studies in the future. And then separately on….

Absolutely..

Great, thanks, Rich for clarifying that, I appreciate it.

And then on 8700, you conveyed that from the safety study you are continuing to see a differentiated [indiscernible], are you seeing lower rates of diarrhea and flushing, how much of a window into the data do you have from your [indiscernible]?.

Our team has lot of data, and what I can tell you based on what I know, I’ve been mostly looking at the major AEs so SAEs and also GI discons [ph] and they are extremely low.

So, the weakness of that observation is despite the large number of patients that we have now which is significant, this is in trivial end now we're over 500 patients, but now we go head-to-head. It just underscores our interest and belief in the larger the brain head-to-head study..

Okay, thanks.

May be just one more on 3831 if you don’t mind, this study, so is the timing as timing pulls into midyear, do you think that this study is long enough and I guess you tweaked the run into, I mean based on the design, do you think that its realistic to see a benefit or differentiation on metabolic or so?.

You are breaking up a little bit, Paul, but I think I understand the question, I just want to make sure we are not confusing two different studies. We’ve got the study that we’re going to have data on midyear now is part of the two study pivotal program as agreed with FDA.

This is the formal definition description of efficacy with the primary compared to being placebo in acute schizophrenia, it’s a four or five weeks study. We also have olanzapine arm, so we are not powered for [indiscernible]. The primary statistical comparison is to placebo. And of course that duration, that’s how we ran the ARISTADA Phase 3.

This is a standard efficacy study for antipsychotic agent.

Separately, we're running a much more exploratory human metabolic study in volunteers that's an inpatient study for almost a month where we're trying to see whether we can picture in the humans what we’re seeing in the rodents which is the peripheral metabolic effects of olanzapine and the corresponding effects when samidorphan in the form of 3831 is also deployed.

So, in the animals we've learnt a tremendous amount about why olanzapine is causing weight gain, separate from our central hypothesis about the reward systems. And if that's borne out in human, we want to begin to explore that to underscore the pharmacology of 3831.

Those data will also be available midyear, but they are not part of the pivotal program..

Okay, thanks Rich. I guess my question was on this study that’s going to read out in the year, you see differentiation on weight gain really closer to, are you anticipating that you may see differentiation from the olanzapine arm on metabolic side effects for 3831, actually that was my question..

I see, I'm sorry, I gave you a long answer to a question you didn’t ask. But in a four-week study we don’t expect to see major changes in a way, plus all patients who are hospitalized are getting care, it’s a different experiment..

Okay, okay, super helpful. Thanks, very much..

Take care..

From JPMorgan, we have Cory Kasimov. Please go ahead..

Hey, good morning guys, thanks for taking the question, actually two of them for you as well.

So, I guess, first when thinking about VIVITROL traction over the course of the year, how much insight do you guys typically have ahead of time as to when utilization of the product could or is kind of poised to pick up in certain states or systems? And I have one follow up for Jim..

Yes, Cory, that’s one of the things that makes it difficult to predict VIVITROL because we are changing care and the use of a long-acting relapse prevention medicine which is an antagonist, so different. The state programs are - when state programs start they can accelerate quite quickly.

The question is when exactly do they start? Right? When are the systems in place, when does the funding come through? How quickly do physicians get up and running? So I think the thing that makes us optimistic over time is that in all of our territories across the country as I tried to refer to in my remarks we are seeing that steady growth still occurring.

And we are also seeing many states accelerate that growth. And our concentration in growth remains very high in those five key states still providing more than 50% of our sales.

So it is very difficult quarter-to-quarter to know exactly which state is going to pop next, but given our market share and the movement we see across the country we are very confident that it will happen.

You know you add to that the additional funding that’s going to come in the second half of the year through 21st Century Cures and the CARA legislation that was passed last year. And what we are hearing on the ground from our sales team is we remain very optimistic about the growth..

Okay, great.

And then the follow up is, it looks like there was a step-up in your cost of goods this quarter, anything in at least as a percent of your total sales, or anything in particular behind that is it more driven by the 1Q commercial dynamics you discussed?.

Yes, you know, we do fluctuate from quarter-to-quarter on cost of goods and it has a lot of things to do with product mix and the amount of manufacturing that we are doing. Obviously, we did more in the first quarter this year than we did last year.

And we also brought on some additional capacity too, so that works through the system and volumes increase and we get more efficient on that. We are very confident that cost of goods will get back into that kind of 82% range versus the 79% we saw this quarter, so really just quarter-to-quarter fluctuation..

Okay, great. Thanks taking the questions..

You bet..

From Cowen, we have Chris Shibutani. Please go ahead..

Yes, thanks for taking the question. On VIVITROL can you comment a little bit about some of the trends you're seeing and underlying drivers such as the number of kind of the higher volume prescribers? You did comment on the programs which are improving.

As new programs come on I know that they tend to be a little bit slower, but a lot of the traction has historically seemed to come from the higher volume prescribers.

Duration of use, if you could comment there? And then secondly, this has been a drug that has kind of needed a constellation of events to come through, payer backdrop recognition of demand et cetera.

I think we've discussed in the past sort of what are the pushes and pulls, where are you able to push and invest? I know that you tried to do so with that naltrexone kit, do you speak to efforts that you feel you can proactively invest in and employ to somehow encourage growth in the market rather than sort of needing everything to move in sort of coincident fashion as it has, but how can you sort of accelerate or push growth? Thank you..

Chris I'll let, I let Jim answer some and then I'll give you some color myself..

Yes, so I think it's a good question, Chris and this again relates to the complexities of the VIVITROL system. We will point you back to Analyst Day with that the expansion of our provider network.

The policy overlay in a state and the access in reimbursement and when we get all three of those things working that's when we can drive and maybe add another sales person to the territory. We can do some micro marketing, that sort of more traditional marketing in a sense.

And so, what we're trying to do is continue to move those states up to highly developed states as we've talked about. We don't do that count every quarter, but we absolutely are moving in the right direction with states moving to highly developed states.

And it really is a coordinated effort between our reimbursement folks, our sales folks and our policy folks in the states to move that along. We are making progress. I think the key thing that we look at is year-over-year growth for VIVITROL because again the first quarter with those commercial resets is very different from other quarters.

We've typically seen the highest growth rates in the second and third quarters and we have no, we have little doubt that that will change as we go into the year.

Some of the more specifics that you asked about in terms of the number of high prescribers, our key accounts and maybe the depths of prescriptions and the duration, we are seeing improvements. The other thing is prescription fulfilment rates, that sort of thing we are seeing improvements in those underlying trends.

Those are slow, percentage point, percentage point a month-to-month at a time and we're definitely continuing to see that growth occurring in the background. So as I say we've reiterated guidance for the year and hopefully we'll see and expect to see VIVITROL accelerating through the course of the year..

Chris the only thing I'll add to that is, as we highlighted yesterday with Secretary Price is to the moment to cite, the basic hydraulics in the market are that more VIVITROL is going to be used. That's why it's a little bit sarcastic in a way and that's why we've used the 450 state programs compared to 400 even in February as a leading indicator.

It's very difficult to predict any one of those 450, but again the aggregate there's just more and more people using more and more VIVITROL and it's got about 2% market share right now with a lot of states, municipalities, counties just beginning to get exposure to the product.

So it's at the kind of highest level at the systematic level, the basic instinct is due to - for more use of long acting antagonist medication. You will see from us even in this quarter. I got e-mails from a number of you all, and you saw the buses in Manhattan that had the VIVITROL ad on them.

We’re beginning to expand these micro marketing approaches and I think you'll be seeing more of VIVITROL..

Great and then just one quick additional seasonal question we're heading into the cancer time of year, 4230 you see that when will see some color in terms of data or thinking about, what you're going to do with that asset? Thank you..

I don't think you'll see anything at ASCO, but I think for the fall, that will be the timing where we'll be into those dosing cohorts where therapeutic concentrations we expect to start to seeing activity..

Thank you..

You‘re welcome..

From Jefferies we have Biren Amin. Please go ahead..

Yes, hi guys. Thanks for taking my questions.

Just on the new 5461 study can you just share how many patients you plan to enroll in that trial and what the primary endpoint would be? And I guess when should be expect data from this study? And I guess the other question is will you be discussing the design of the trial with FDA in your pre-NDA meeting in second quarter? Thanks..

Good morning Biren. No, we won’t talk about it with FDA in the pre-NDA meeting. It's not really part of the submission package and we'll probably give you more specific details when we do the webcast around the SOBP presentation because we're finishing off the details on that.

MADRAS will continue to be one of the primary endpoints that we're going to augment that with some new scales. One of the tensions in running these depression studies is that you don't want to invoke a number of scale. The more interventions with the patient tends to drive a higher placebo response.

So we're being very, very reductive and selective about trying to explore particular domains that we think map on to this endogenous opioid system pharmacology and those the team is settling on those and we'll tell you more about those as we get closer to launching it..

So Rich, maybe a follow up on the MADRAS endpoint are you going to be evaluating an average across several weeks time such as what you did with 4 or 5?.

Yes, we think that's the more precise and accurate determination of separation of these curves in these studies. We know those are demonstrated. There is just inherently week-to-week variability and you can win and you can lose simply based on variability. So a more accurate approach is to capture more data in the analysis.

And we will probably employ an SPCD or SPCD-like study design as well with the first days to filter out high placebo responders..

And when do you hope to finish the trial like?.

Well, we have to start it first, so it depends on the end. So, I'm not sure, obviously it will be next year at a minimum, but we'll give you more details as we finish designs..

Great, thank you..

You're welcome..

From Evercore ISI, we have Umer Raffat. Please go ahead..

Hi, it's Dara [ph] standing in for Umer.

I just had two questions, so first on 8700, in a scenario where 8700 differentiates in Phase IIb versus Taxotere [ph] do you intend on going it alone in this market or are you willing to partner?.

I think the answer is yes. So the most important thing is to really understand the clinical and economic value of 8700 relative to Taxotere [ph]. There are a number of people paying attention to this development program as you might imagine.

Unlike 3831 or 5461 in our core psychiatry franchises where we know that we want to be launching those drugs ourselves and that would be a new foray for us. We could do it ourselves, it's certainly tractable, so we also could be collaborating around this as well..

Great and on ARISTADA what was the gross to net in the first quarter and what's really changed from Q4 and is this a trend, is there any trends we should expect to continue?.

Yes, thank you. Yes the gross to net did increase from quarter-to-quarter, so we were up about 3 points from 33% to 36% and our estimates for the full year is more in the mid 40s which is where you would see the other competitive products, given they are very heavy Medicare and Medicaid, that's 90% of the market here.

So that's one of the things I talked about in the dynamics.

We're going to continue to see unit growth in the second quarter, but as those Medicare Part D plans came on in March for the second quarter we expect gross to nets probably to move up into the mid to low 40s from the mid 30s where they were in the first quarter and stabilizing that mid 40% going forward for the foreseeable future..

That's great and if and if I may just one quick question on the GI tolerability and of 8700 again.

If that reads out in towards the end of the year is there any chance it would be included in the NDA package at the FDA?.

Our expectations it would not be in the initial label based on the 505b (2) approach and also having run a single study. With that said, we would expect at launch to have that the data published and if the data are clear and compelling we could consider running a second study for potential label inclusion..

That's great. Thank you very much..

You’re welcome..

From Citi we have Liav Abraham. Please go ahead..

Good morning, thanks for taking the question. A lot of mine have already been answered. Just a quick question on 54 61 and on your pre-N.D.A.

meeting with FDA that's scheduled for later in the quarter, what feedback exactly do you plan on getting from FDA in this meeting or is it purely to tick the box and will you be communicating anything to the investment community after this meeting and if so how and when and in what formats? Thank you..

Good morning, Liav. The pre-NDA meeting is a kind of statutory well known type B FDA interaction. All of our interactions with FDA are meaningful and have an opportunity to teach and to learn.

This particular meeting is more typically focused on the structure of the NDA itself, the table of contents, the various analyses, the various figures, tables and listings that we'll be providing the NDA across the various elements, the various modules in the NDA itself, typically 90-minute meeting or working type meeting.

So we will absolutely give feedback coming out of it because that will give us more clarity on the timing of the submission and we've said year end and we'll tune that up as we come out of the meeting. And any other things we learn we will share with you..

Great, thank you..

Okay, Brandon we have time for one more question. Sure. From Barclays we have David Sell [ph]. Please go ahead..

Hi, good morning, thanks for taking the questions.

Just in terms of CARA and 21st Century Cures Act and I think you referenced sort of some new money or state taxes and new money later in the year, is it your expectation or do you have a sense or is it too early whether that money is going to go into existing programs or do you think it this will be a catalyst for new program formation and therefore sort of translation and then how should we think about that for potentially sort of helping that they call it option?.

This is Rich. I’ll answer, that 21st Century Cures money really brings funding to the CARA legislation that was passed in the summer as well. So you can think about it as federal money that will be granted down to states largely for the initiation of new programs. So, we've been real strong advocates of this.

And the new programs come in two domains, one is in the public health, traditional substance abuse treatment also in the criminal justice side where the whole logic that's beginning to build the idea of let's not incarcerate patients with addiction.

Let's start intervening in their treatment sooner prior to diverting them into the criminal justice system. So I think you could see it in the form of new programs.

Some of those programs relate directly to funding that could support purchasing VIVITROL, but actually more importantly it could put in the systems in the community to be able to treat patients with medications and to treatment generally.

Often in states there's access to VIVITROL through Medicaid expansion and what is lacking has been the human infrastructure to deploy the use of monthly injectable treatments along with lack of social counselling and monitoring. So that’s a long answer to a question but there's – it's quite a complicated system..

Okay and then one more question if I might on ARISTADA, you referenced the two planned additions for March just curious in terms of ARISTADA coverage right now, how do you feel, your positioned and especially relative to the competition and is there more work to be done or do you think that at this point it's a level playing field and then just maybe some context around how you think the two month dose and how significant in terms of volume trends that might be?.

We're effectively at parity now with the completion of those two big contracts in March where we want to be. We could always improve, but largely we're at parity.

The two-month is important for a couple of reasons, not that it creates a step function in the sales in the quarter, not far from it because I think the model [ph] use of long-acting injectable will continue to be around that one month, but it's another reason for physicians to choose our product versus other competitive products, because it opens the opportunity to produce a patients number of injections going six per year if they're compliant and doing well on the medicines.

The second piece of it that's important over the long term that we're quite energized about is the hospital start. We expect labelling for the two months version to allow initiation on the two-month dose. This is different than INVEGA TRINZA which requires stabilization on monthly sustain before initiating TRINZA the three-month version.

If you could initiate a patient as they leave the hospital on a two-month formulation that maps it really well into a public health system now that is looking to reduce the number of hospital readmits for the same diagnosis and gives patients a chance to stable therapeutic levels of the drug for a couple months coming out of their acute episode.

We think that from a personal and public health point of view that could be very powerful..

And then Richard I mean how many do you know how big the sort of hospital market or sort of initiating in the hospital market population is?.

We will follow up with you on this, but my God I'm looking at Jim, it is about a third or about 30% start to come out of the hospital..

Yes, as you know the - unfortunately these patients cycled through a lot of times, the average duration of therapy is very short, four to six months. And so when therapy changes they often sadly end up back in the hospital and so therefore there are real opportunity for new starts on early [ph] on..

Okay, great thank you very much..

Thank welcome..

You’re welcome..

Thank you. We will now turn it back to Sandy Coombs for closing remarks..

Thanks everyone for joining us on this busy morning and please don’t hesitate to to reach out to us here at the company of you have any follow up questions. Thank you..

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