Alkermes plc (ALKS) Earnings

Management highlights

### CEO Transition - Longtime CEO Richard Pops will step down next week, with incoming CEO Blair Jackson (current COO) taking over; Pops will remain as chairman of the board. The transition reflects confidence in Alkermes' leadership team and its positioning for future growth. ### Pipeline & Clinical Development (Orexin Platform) - **Elixirexin (orexin-2 receptor agonist for narcolepsy)**: It is the only orexin-2 agonist with demonstrated efficacy and tolerability in both narcolepsy type 1 (NT1) and narcolepsy type 2 (NT2) in large Phase 2 studies. Interim 9-month data from the long-term extension study showed sustained, clinically meaningful improvements in wakefulness, cognition, and fatigue, with further improvements relative to Phase 2 randomized trial results. The Phase 3 program is enrolling patients and remains on track for completion in 2027. - **Elixirexin for idiopathic hypersomnia (IH)**: The Vibrance 3 Phase 2 study is ongoing, with enrollment completed for once-daily cohorts and split-dose cohorts actively enrolling; study completion is expected in Q4 2026. The split-dose regimen is designed to extend pharmacodynamic effects later into the day to better meet individual patient needs. - **ALK7290 for ADHD**: Phase 1b study is enrolling 50 adult patients, with top-line results expected by the end of Q3 2026. A larger Phase 2 study is expected to begin enrollment in Q3 2026. - **ALKS 4510 for fatigue**: A Phase 2a study in fatigue associated with multiple sclerosis or Parkinson's disease is planned to enter enrollment in late 2026, with 175 total patients planned; initial data is expected in 2027. ### Commercial Updates - **Levalvi**: Successfully expanded formulary access to three of the largest U.S. Part D plans, bringing total covered insured lives to over 80%, creating a platform for long-term prescription growth. - **Vivitrol**: The company terminated its authorized generic agreement with Amnial, so no authorized generic will launch in 2027. Only one generic ANDA is currently approved, and market entry timing remains uncertain; management expects Vivitrol to continue as a strong contributor for the foreseeable future. - **Lumerize (acquired from Avidel)**: Integration has proceeded exceptionally well, and management enthusiasm for its long-term potential has increased following Q2 performance. Positive Phase 3 results in IH have positioned the company to submit an SNDA by the end of 2026, with a potential launch in the IH indication in March 2028. Year-over-year patient growth hit 25% as of Q2, with prescriber breadth growing 24% year-over-year. ### Strategic Positioning - Alkermes has become the clear leader in orexin biology development, with the most advanced, comprehensive portfolio of orexin-2 receptor agonists across multiple indications addressing large unmet medical need. The company has built a leading position in hypersomnolence disorders combining both approved oxibate and pipeline orexin assets.

Guidance

- **Full year 2026 net sales guidance**: Reaffirmed all previous product-level guidance: - Vivitrol: $460 - $480 million - Aristotle product family: $365 - $385 million - Levalvi: $380 - $400 million - Lumerize: $350 - $370 million total, with Alkermes recording $315 - $335 million (reflecting the mid-February acquisition close) - **Q3 2026 guidance**: Total revenues expected between $450 - $470 million; cost of goods sold expected between $85 - $95 million; R&D expenses expected between $120 - $130 million; SG&A expenses expected between $215 - $225 million; adjusted EBITDA expected between $80 - $100 million. Excluding one-time items, proprietary product net sales are expected to be similar to Q2 levels, in the $390 - $410 million range. - **Full year 2026 updated overall guidance**: GAAP net loss is expected between $95 - $115 million, and positive EBITDA is expected between $75 - $95 million (revised to reflect the change in fair value of Avidel acquisition contingent consideration). All other full-year financial guidance was reaffirmed. - Levalvi full-year 2026 gross-to-net adjustments are now expected in the high 30% range, up from prior expectations.

Segment performance

Alkermes reported total Q2 2026 revenues of $496 million, with $411.7 million in net sales from its proprietary product portfolio, a 34% year-over-year increase. Breakdown by segment/product: 1. **Addiction (Vivitrol)**: Net sales of $124.5 million, contributing ~30.2% of total proprietary net sales. Results included $4 million in gross-to-net favorability from favorable patient mix, with solid underlying demand growth in the alcohol dependence market. 2. **Psychiatry**: - Aristotle product family: Net sales of $96.7 million, contributing ~23.5% of total proprietary net sales, with $4 million in gross-to-net favorability from favorable patient mix and solid underlying demand. - Levalvi (Lubavi): Net sales grew 12% year-over-year to $94 million, contributing ~22.8% of total proprietary net sales. Underlying prescription growth was 18% year-over-year, driven by new patient starts and expanded prescriber breadth. Levalvi now has coverage for over 80% of insured lives following recent Part D formulary expansions. 3. **Sleep (Lumerize)**: Net sales of $96.6 million (first full quarter post-Avidel acquisition), contributing ~23.5% of total proprietary net sales. Results included a $7 million benefit from timing of wholesaler inventory shipments, and the quarter ended with ~3,900 total patients on therapy. Additional manufacturing and royalty revenues totaled $84.3 million for the quarter, including $30.6 million from Boomerity, $27.5 million from long-acting Invega products, and $20.9 million in manufacturing revenue for Risperdal Consta (most of 2026's expected Consta revenue, with no meaningful additional Consta revenue expected for the rest of the year).

Risks & headwinds

- Forward-looking statements related to clinical trial results, regulatory approvals, and product commercialization are subject to material risks that could cause actual results to differ materially from expectations, including clinical trial failure, unexpected safety or efficacy outcomes, regulatory delays or rejections, and payer/pricing uncertainty. - The proposed Globe and Guard CMMI demonstration projects (which implement foreign reference pricing for Medicare/Medicaid) pose a material risk to mid-cap biotech companies that rely on one or two key products, as the policy may be inconsistent with existing U.S. statute and could negatively impact revenue. - Vivitrol generic entry, while not expected in 2027, remains a future risk, as one approved ANDA exists and entry timing is uncertain. - Pricing for the orexin agonist class will be initially set by Takeda, which could impact Alkermes' future pricing strategy for Elixirexin and its market access prospects. - Clinical development of new indications for orexin agonists (ADHD, fatigue) is at an early stage, and there is no guarantee that positive results in narcolepsy will translate to efficacy in other indications, or that the safety profile will be acceptable in new patient populations.

Analyst Q&A

• Q: How does Alkermes approach translatability of ALK7290 ADHD data from adults to pediatrics, what is the rationale for the 2-week Phase 1b endpoint, and will the AISRS clinical scale be included in the study? /

  A: The company always initiates new drug development in adults first, then moves to adolescents and children after establishing adult dosing via dose-ranging studies. Pediatric development will proceed via bridging pharmacokinetic studies after adult data is collected. The 2-week endpoint is appropriate for this early translational safety and target engagement study, not a late-stage dose-ranging trial. The AISRS scale will be included alongside EEG and neuropsychological performance markers to get a comprehensive early read on target engagement and potential effect size. (331 words)

• Q: How was the dose range selected for the ALK7290 ADHD Phase 1b study, and what is the regulatory path for ALKS 4510 in MS/PD fatigue? /

  A: Doses were selected using the same approach that worked for Elixirexin, leveraging EEG data to confirm target engagement, resulting in what management believes is a reasonable dose range, with flexibility to adjust higher or lower after reading Phase 1b data. For ALKS 4510, the ongoing Phase 2a study uses multiple well-established fatigue scales relevant to MS and PD patients to identify the most clinically meaningful endpoint, which will then be used to align with the FDA on a formal regulatory pathway for future development. (279 words)

• Q: What is Alkermes' thinking on Elixirexin pricing for hypersomnia, and how will competitive dynamics impact pricing strategy? /

  A: Pricing will be determined after Takeda launches the first-in-class orexin agonist, which will establish an initial price corridor for the new class. Alkermes will then set Elixirexin pricing based on the intrinsic clinical value of the drug, which offers competitive advantages including flexible dose options and split-dosing that can be tailored to individual patient needs, across all three major hypersomnia indications (NT1, NT2, IH) if clinical data supports approval. (210 words)

• Q: Is any generic competition expected for Vivitrol in 2027, and what are the company's plans for additional orexin indications beyond the current three programs? /

  A: After terminating the Amnial authorized generic agreement, no authorized generic will enter in 2027. Vivitrol requires highly specialized manufacturing that creates high barriers to entry, and management does not anticipate any generic entry in 2027 for planning purposes. Alkermes already has additional orexin compounds and indications in early development, following the GLP-1 analogy of expanding the platform as the pharmacology is better understood; more updates will be provided as candidates move toward clinical testing. (222 words)