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ALKS Presentation at CSFB Health Care Conference Nov 13, 2013Alkermes' CEO at Credit Suisse 2013 Healthcare Conference Nov 13 2013 Executives Richard Pops - Chief Executive Officer Jim Frates - Chief Financial Officer Rebecca Peterson - Senior Vice President, Corporate Communications Thank you. Good morning, everybody. So, I’m going to take you through the corporate presentation, with a focus today on the pipeline, because I think that’s where a lot of the investors attention has been appropriately focused and it’s a place that we’re extremely excited about right now. The title of this presentation is this idea of driving growth through two different portfolios. This pipeline of drugs that is emerging as one of the most important we think in the whole biopharmaceutical industry, particularly in the CNS space and how this is built on this foundation of this very strong commercial portfolio and by that we mean products that are approved by the FDA and other regulatory authorities and launched around the world with long patent lives that are going to drive cash flows for many, many years to support this ambitious research program. So I will make forward-looking statements and we ask you to please look at the disclosures that we make and articulation of the risks in our Q’s and K’s. We spend time trying to articulate the risks of the business and there are many as you know. So if you look at a simple picture of what comprises Alkermes today. It’s these two strong portfolios. The top is the commercial portfolio. And we focus people’s attention on these five, the big five products, RISPERDAL CONSTA, INVEGA SUSTENNA, which are drugs that we developed for Johnson & Johnson that were the first entrants into long-acting injectable anti-psychotic class and really represent the most important offering in this space around the world. It’s a $2.5 billion franchise now growing remarkably strongly still after all these years and in many ways and we’ll talk about this in a bit, this market is just beginning to grow. VIVITROL is our drug for alcohol and opioid dependence. We sell it ourselves. It’s actually our fastest growing product right now. It’s always been a very important medicine. It’s a once-a-month injection that prevents relapse to opioid dependence in patients with opioid dependence and reduces heavy drinking and promotes abstinence in patients with alcohol dependence. It is an important medicine in a nascent market and a market that’s coming together for the first time because historically in the U.S. alcohol dependence was treated with counseling not with medicine and opioid dependence has been treated with substitution therapies like methadone or Suboxone. VIVITROL is an antagonist. It blocks receptors in the brain. It has no addictive potential on its own. It has no street value. It doesn’t get you high and the magic of VIVITROL it’s embodied in a once-a-month injection, which allows patients the opportunity for time to go to counseling, to learn how to live their lives differently and rebuild their lives. AMPYRA is a drug that we developed that is sold by Acorda in the U.S. and Biogen outside the U.S. It’s a one of a kind drug in its class and it’s for the improving walking in patients with multiple sclerosis. It’s about a $300 million drug right now and it’s a drug that has potential utility in new indications, including in the treatment of post-stroke syndrome, where there are no medicines. And BYDUREON is the only once-a-week product for type 2 diabetes. This is one of the GLP-1 class, it competes with Victoza and Byetta and it’s the only once-a-week injection that affords tremendous glycemic control, low risk of hypoglycemia and opportunity for weight loss as well. And this is part of the disease of our epic like type 2 diabetes is this epidemic and these agents, GLP-1s, which BYDUREON is one of the class are the most powerful glucose-lowering agents and we see increasing utility for this class of medications going forward. That has been the story of the commercial pipeline. We’ve spent a lot of time over the last couple years educating urologist to the ultimate elements and I won’t spend a whole lot of time on it today, focusing your attention on some of the new stuff which is the pipeline. And the pipeline now is filled with six medicines that we’ve disclosed. There’s actually more working in the laboratories but six medicines that we disclosed at the clinical trial stage. Aripiprazole lauroxil, 5461, 3831, these are drugs you’ve heard about over the last year. In the summertime we introduced new candidates, our MMF prodrugs, 7106 for pain and RDB 1419 and we’ll do a deeper dive into some of those today. What’s cool though is that what enables that portfolio, as I said, is this commercial portfolio and what’s interesting, if you look at those five key commercial products. Since the time we announced the EDT transaction in 2011 till today, you can see how the elements of the commercial portfolio are continuing to grow. And that should continue because if you look at the patent lives that sustain these products, it’s a remarkable portfolio. The numbers here are surprising in a business that’s characterized often by patent cliffs and loss of exclusivity, 2029, 2025, 2027, 2019, 2021, 2023. This is very powerful because this provides a very stable platform for continuing investment in our pipeline while we’re also generating cash. It’s a very singular company in that way that has the here and now of a strong cash generation -- cash generating topline growing business, as well as this pipeline is coming into the flow. So let’s spend some time on the pipeline. The pipeline, as I mentioned, is comprised by these elements. This is where they stand in development. Aripiprazole lauroxil is finishing Phase 3. As we speak ALKS 5461 is just entering its pivotal program, 3831 in a broad Phase 2 program and the next three readying for human clinical trials in -- the two of them beginning in 2014. So let’s take them in turn. For each of these products, we’ve put together a slide now that has a single statement of what is the nature of the opportunity and there’s two elements to the opportunity these days in developing drugs we see. One is the market and the payer environment the drug will exist in and the second is the attribute of the drug itself and so in this case, Aripiprazole lauroxil. This is clearly a blockbuster opportunity in a place where we have a tremendous amount of experience, which is the long-acting injectable anti-psychotic space. So what drives the opportunity? The schizophrenia market dynamics are shifting in favor of long-acting injectables, which is amazing to say after, it’s been 10 years since the introduction of the first one, but just now, the dynamics are shifting in favor and I’ll explain why. The second reason though it relates to our product itself. Aripiprazole lauroxil is designed specifically for leadership in this market and that’s because we understand how this market builds upon itself and how genera tional advances drive growth and we’ll explain that a little bit more as well. So on the market dynamic, what’s amazing about the schizophrenia market is that it’s a $24 billion worldwide category, that’s been dominated by these major oral brands. And in the light blue here, you’re seeing against the X axis, which is time, you see the length of exclusivity for the major brands. So you can see RISPERDAL is now off-patent. ZYPREXA is now off-patent. Geodon is off-patent. ABILIFY will be off-patent next year, Seroquel the year after. So, you can see all the orals are coming off and what’s coming on for the first time is that the long-acting injectables are going to be the dominant share of voice. So doctors and patients and payers and systems are going to be learning more and more about long-acting injectables for the first time. So by the time we launch Aripiprazole Lauroxil, there will be sales force messages that are echoing from J&J, from Otsuka, from Lundbeck and ourselves, all extolling the virtues, which are based on data of long-acting injectable anti-psychotics for patients with schizophrenia, because compliance drives outcomes. And this is a patient population with historically poor compliance. You can also begin to just see it quantitatively beginning to happen already. In this slide, we’re looking at the detailing activity in the U.S. for long-acting injectables since 2009. The light blue is RISPERDAL CONSTA promotion and the dark blue is INVEGA SYSTENNA. And you can see, J&J has been the only voice in the market with a fairly steady amount of detailing around these products. With the introduction of ABILIFY MAINTENA in March, immediately the share of voice doubles. The noise in the marketplace has doubled. And when we come to market and Lundbeck (inaudible) it’s going to triple and quadruple against the backdrop of the oral message declining. This is the fundamental change in the market that we think is so powerful and it’s the right time now. Because it’s not just a promotional message of a glossy brochure and a new product, it’s promotion based on data in the real world from payment systems and long use of long-acting injectables now to support the economic as well as medical benefits from them. As I said, it’s a big market and Aripiprazole is the biggest wedge of the pie right now, known as ABILIFY around the world. It’s a $7.2 billion drug. It’s used extensively in schizophrenia and in bipolar disease. So it stands to reason that a long-acting form of the biggest drug has an important commercial opportunity. What’s interesting about this market compared to other markets for big drugs, if I showed you a slide like this and this is a slide that’s kind of a pie chart that shows the binding activity of various drugs for the treatment of schizophrenia. You’ll notice just by the colors, without focusing particularly on the neurotransmitter systems, they’re all very different. If I showed you a slide of depression drugs, they all look very similar. If I showed you a slide of drugs for cholesterol lowering, they all look the same. But this brain disease is so different that these drugs are quite different and it stands to reason that the long-acting form of only Risperidone, which is what CONSTA and SYSTENNA have been for the last 10 years, is insufficient. And so, Aripiprazole, which is right below Risperidone, it’s a completely different animal and a long-acting form makes sense. In fact, there’s probably a logic for a long-acting form of every one of these major atypical anti-psychotics. And ours, Aripiprazole Lauroxil, is designed to be this generational advance. The picture tells a simple story. This is a prefilled syringe, room temperature, ready to use, twist on a needle and go. And in the busy community mental health center, this is a really important attribute. We learned this with INVEGA SYSTENNA compared to RISPERDAL CONSTA. RISPERDAL CONSTA requires reconstitution, SYSTENNA doesn’t. The preference is for SYSTENNA. The other thing about our drug is that it’s available -- we’re testing three doses, a range of doses. And we think that range of doses and the product presentation, just simple, real-world attributes that will drive utilization of the drug. So enrollment is completed in our Phase 3 study, it’s a multinational program. We plan to file the NDA for this drug next year and launch it in 2015. 5461 is a drug for depression. This has gotten a lot of attention over the last six months or so based on the very powerful Phase 2 results that we presented in the spring. What drives this opportunity is very clear, is that a new mechanism of action is needed in depression. Not based on serotonin or norepinephrine, to complement the treatment options that millions of people are being exposed to. 5461 is a new mechanism and has demonstrated clear and powerful efficacy. And just recently, our clinical trial program for Phase 3 was endorsed by FDA and we were granted fast-track status. That anointment is important because it talks about the medical need in this particular patient population. So 5461 works in the opioid system. It’s an opioid receptor modulator. It combines an opioid, buprenorphine, that has a spectrum of activities, with a very particular new chemical entity that we developed that knocks out the addictive potential or the high-inducing potential of the opioid. And what remains is the mood effect that opioids have been shown to have. That’s what 5461 is, it’s a little tablet on the lower right. It’s a sublingual, elegant presentation of this combination of our proprietary molecule and a well-known opioid, Buprenorphine. What’s interesting about this is that, if you look at the drugs that are used to treat this disease, major depressive disorder, in the left-hand lane you see, these are household names, Lexapro, Zoloft, Cymbalta, Prozac, Paxil. This is -- and what’s amazing, though, if you look at the middle column, they all do the same thing. They’re selective serotonin reuptake inhibitors or serotonin-norepinephrine reuptake inhibitors. It’s what they all do. In fact, the new drugs getting approved, they all do the same thing. And the clinical regimen now is to try one and if it fails, try another one and if it fails, try another one. And each one of those cycles can take months. So we know from key opinion leaders, we know that an alternative mechanism that can be complementary to this neurotransmitter system is what the field is desperately seeking. And that’s what 5461 represents. So the numbers are astonishing. In the U.S., we see about 11 million people treated for major depressive disorder but what’s interesting is the cascade, 6.8 million people fail on their first-line therapy and go to a second line and almost five million people fail the second line and need to go to a third line. And here’s there the clinical situation becomes dire, because these patients are often then elevated to anti-psychotic medication, electroconvulsive therapy, or hospitalization. So this dark blue square is, we think, the enriched patient population, where both patients, their families, payers and clinicians recognize the need for new medicines and that’s where we’re developing 5461. So we’re really moving fast on this. I’m not going to take you in this presentation through the data. Many people have seen that. It’s very powerful. We have a line with FDA on plans for the pivotal program that incorporates the key design elements from our Phase 2 program. It’s a very strong program. It’ll start in early 2014. And with the fast-track designation, it does two important things for us, I think. One is it allows us to have more frequent interaction with the regulators as we go through the development program. And number two, this will qualify for priority review when we submit the NDA at the end of the program. So we’re really rolling on this one now. 3831 is for schizophrenia. It’s an oral compound. It builds off of the known efficacy of a drug called olanzapine, which is the most efficacious anti-psychotic drug, but the one that comes with the highest liability of weight gain and metabolic changes. So what drives this opportunity is the idea that despite the fact that I’ve shown you $24 billion market in schizophrenia, there is still major unmet needs. So we’re starting with the most efficacious drug, olanzapine. And we’re adding complementary pharmacology to solve problems and open up opportunities for new patients. This has potential utility in two distinct subsets. One are the people who would go on olanzapine, they have a propensity to gain an enormous amount of weight, measured in 50, 60, 70 pounds of weight. The other sub-population is those who have schizophrenia exacerbated by substance abuse disorders, which turns out to be a major portion of these patients. 50% of schizophrenic patients have some co-morbid substance abuse problem, as well, alcohol being the primary bad actor. So 3831, think about it this way. It’s a way of broadening the spectrum of olanzapine. Olanzapine has this very clear pharmacology that yields a very strong effect in the treatment of schizophrenia. What we’re doing with our drug is we’re adding spectrum to it by including opioid system modulation essentially. And this is what that additional opioid modulation has the potential to attenuate the weight gain and focus this drug for use in patients with also co-occurring substance abuse. Why is that important? As I mentioned, in olanzapine -- with olanzapine, which is a drug that was called ZYPREXA sold by Eli Lilly. In the prescribing information in the label, the highlighted part says, the percentage of the patients who gained at least 7%, 15% or 25% of their baseline body weight, were 64%, 32% and 12. So, if you look at the table, the table has gradations of weight gain 22 to 33 pounds, 33 to 44 pounds, 44 to 55 pounds, 55 to 66 pounds. This is not a trivial amount of weight gain. This can lead to metabolic syndrome and type 2 diabetes. But it’s the price clinicians are willing to pay, because it’s such an effective agent for patients with really serious schizophrenia. It’s a really important unmet need for patients. And as I said, the second patient population, what’s so tragic about this disease is that patients are often self-medicating with substances and alcohol, as I mentioned, probably the most commonly abused. And an alcoholic schizophrenic is different than an alcoholic who doesn’t have schizophrenia because the toll is measured in terms of the progression of their schizophrenia, more frequent relapse, more severe symptomatology, higher treatment dropouts and so on. So, payers and the FDA care about this group of patients and interestingly, a patient population that historically has been excluded from clinical trial because it’s such a difficult patient population. And we’re going right toward it with an agent that we think is just appropriate for the time and the unmet medical need that patients and payers are facing. So, we have a big phase 2 program underway right now looking at the weight question. This is a 400-patient study comparing our drug to olanzapine alone, looking at weight gain in patients with schizophrenia over a six-month period of time. And we’ll start a similar phase 2 program for the dual diagnosis patient for the co-occurring substance abuse patient in 2014. Okay. We’ll move quickly through the last couple in the last few minutes. Not to diminish them at all, because I’m actually really excited about all three of them -- actually the next two. I think we only put in two for time reasons. So, the first are these MMF prodrugs. And what drives the opportunity? Biogen’s drug, TECFIDERA, is becoming a blockbuster in multiple sclerosis and it’s going to establish a new multi billion dollar category. It’s also an unoptimized drug. It’s an -- we see it as a first-generation product. And so what we’re doing is trying to design MMF prodrugs to address the simple but explicit flaws that relate to the dosing regimen and tolerability of TECFIDERA. As a formulator, you look at TECFIDERA and you say, boy, we should be able to improve on that, particularly the nausea and the dosing regimen of twice a day. So, what many people I think understand now, is that TECFIDERA is dimethyl fumarate. Dimethyl fumarate is fumaric acid with a methyl group on each end. You can see that in the lower left. That’s from the label there, the kinetics. It talks about it’s very rapidly hydrolyzed into monomethyl fumarate. So, one of the methyls comes off and MMF is the active moiety that drives efficacy of TECFIDERA. So, we’re making prodrugs of MMF. And here’s the goal. When you give TECFIDERA today to patients, it’s given us a twice-a-day pill. It’s a short half life drug and you get these two peaks. These aren’t -- this is cartoon. This isn’t actual data. You get two peaks with TECFIDERA. So, we’re doing a number of things that marry our prodrug technology and our oral drug delivery technology. One is that we’re making twice-a-day formulations with attenuated peaks, with the hypothesis being that that can reduce the side effects associated with peak concentration. We’re also making once-a-day formulations. And we’ll put these in demand next year and we very early have a sense of the kinetics and the dynamics and the tolerability of these agents. 7106 builds on our opioid experience and now goes directly at the target that most opioids go after, which is pain. But the idea here is a next-generation pain product. 7106 is entirely responsive to the public health issue that payers and FDA and everybody is recognizing is a major issue, which is the prescription opioid abuse as a public health issue. Front page of the Wall Street Journal yesterday was a story about a veteran who came back with PTSD and ended up addicted to opioids. It’s a tragic story that’s being played out again and again. 7106 establishes a new class of opioid modulators that have an intrinsically lower ability to cause overdose toxicity because of what they do to receptor. And it’s going after what the media and what FDA has highlighted. On the far right there, what FDA says about abuse deterrent technology is that they say it’s important. We want to build it into products. But the second paragraph says, these technologies have not yet proven successful at deterring the most common form of abuse, which is swallowing a number of intact pills or tablets to achieve a feeling of euphoria. Most people just take more pills to get high. And what happens when you take too many pills of these potent opioids is that you die and you die from respiratory suppression. And 7106 is designed to avoid that, because it’s more potent than morphine in animal studies than opioid. It binds the opioid receptor. It’s an opioid analgesic. But what’s interesting about it, in this figure you can see compared to buprenorphine, which is an opioid and morphine, another opioid, over a thousand fold range of doses you don’t get more release of neurotransmitters in the brain as you take more. So there’s no bang for your buck. There’s no incentive to take additional amounts of this. And it provides a safety margin too, because within this huge range of doses, you can’t elicit the biologic effect that will lead to respiratory suppression. So, 7106 are going to clinic next year and what we like about this program is that, structurally, we know it’s an opioid. We know exactly how to develop it in pain models. And also, the early clinical trial will tell us what we need to know. Is it potent analgesic and does it exhibit safety over a wide range of doses in which case, you could think of it as a next-generation type product for addressing this major unmet need of analgesia. So, I’ll finish right there with one second to go. I’ll show you the milestones for the year. And thank you for your attention. |
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