Alkermes PLC ALKS
Q4 2013 Earnings Call Transcript
Transcript Call Date 05/23/2013

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Alkermes PLC Conference Call to discuss the Company's Financial Results for the quarter and year ended March 31, 2013. At this time, all participants are in a listen-only mode. There will be a question-and-answer session to follow the call. Please be advised that this call is being recorded at Alkermes request.

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

Rebecca J. Peterson - IR: Thanks so much Jonathan. Welcome to Alkermes plc conference call to discuss our financial results for the quarter and the year ended March 31, 2013. With me today are Richard Pops, our CEO; Shane Cooke, our President; and Jim Frates, our CFO.

Before we begin today, let me remind you that during the call today we will make forward-looking statements relating to among other things our expectations concerning commercialization of our products, our future financial expectations and business performance and our expectations concerning the therapeutic value and the clinical development of our products.

Listeners are cautioned that these forward-looking statements are neither promises nor guarantees, and are subject to a high degree of risk and uncertainty. Our press release issued today, our annual report on Form 10-K filed with the SEC, and our other filings with the SEC, identify risk factors that could cause our actual performance and 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 the call today as a result of new information or future results or developments. As a complement to our press release and conference call, we have made available slides and a financial workbook on the IR section of the company's website. This morning, Jim Frates will discuss the financial results and Richard Pops will provide a brief update on the Company. After our remarks, we'll open up the call for Q&A.

Now, I'd like to turn over the call to Jim.

James M. Frates - SVP and CFO: Thanks, Rebecca. Good morning everyone. We're pleased this morning to report our financial results for the fiscal year which ended March 31, 2013. Financially, this year was characterized by robust revenue growth, focused investment and significant cash generation. Alkermes met or exceeded all the financial targets we had set forth and we are very happy with the results.

Underlying the strong financial performance, our R&D investment has resulted in a distinctive pipeline with significant potential; Rich will update you on this progress later in the call.

First, let me start with a few highlights from the fourth quarter. Total revenues increased 25% year-over-year to $163.4 million, driven by the growth of our five key commercial products, which grew 26% year-over-year, and intellectual property license revenue of $30 million. Excluding this IP license revenue, our five key products accounted for 67% of total revenues, compared to 55% for the fourth quarter in the prior fiscal year.

With our robust top line results and focused spend cross the business, we achieved non-GAAP net income of $56.3 million for the quarter, more than triple the non-GAAP net income of $16.5 million for the same period last year. Turning to the full fiscal year, we recorded total revenues of $575.5 million, representing an increase of 48% over the last fiscal year.

Now let me highlight the performance of the key products driving our growth. Our long-acting atypical franchise, RISPERDAL CONSTA and INVEGA SUSTENNA continue to be the most significant contributor to our results. Year-over-year end market sales for this franchise grew 15% to more than $2.3 billion for the fiscal year. This growth was driven by robust end market sales of INVEGA SUSTENNA which nearly doubled year-over-year. For fiscal 2013, Alkermes recorded manufacturing and royalty revenues of $197 million for this franchise.

For AMPYRA and FAMPYRA, manufacturing and royalty revenues were $65 million for the fiscal year. Worldwide end market sales grew approximately 36% year-over-year. Turning to VIVITROL for fiscal 2013, net sales grew 41% to $58.1 million, compared to $41.2 million in the prior fiscal year.

For fiscal 2013, Alkermes recognized BYDUREON royalty revenues of $16.4 million based on estimated worldwide end market sales of approximately $200 million. In addition to our key commercial portfolio, in fiscal 201, Alkermes earned revenues from legacy products. The most significant of which were $40.3 million from the combined RITALIN LA/FOCALIN XR franchise and $37.5 million from TRICOR 145.

As we have previously outlined, we expect revenues from the legacy portfolio to decline with further growth from our key commercial product more than offsetting these decline. Alkermes has demonstrated its commitment to managing the business to create value and generate significant cash flows while investing in our promising pipeline. Our strategy has delivered.

This year the value of the pipeline has become more evident while our businesses generated non-GAAP net income of $179.5 million compared to non-GAAP net income of $40 million for the prior fiscal year. Free cash flow for fiscal 2013 was $157.3 million compared to free cash flow of $23 million for the prior fiscal year.

I'd like to take a moment now to outline our change in fiscal year and our financial expectations. As we announced in the press release this morning, Alkermes has changed the fiscal year-end from March 31 to December 31, effective immediately. As a result, for the remainder of 2013, we will report a nine month period ending December 31, 2013. To assist with the transition to calendar year reporting, we have made available a workbook on our website with historical pro forma results by calendar year and for the nine month period ending December 31, 2012.

I'll now provide some of the highlights of our financial expectations for the nine month period ending December 31, 2013.

We expect total revenues to range from $395 million to $425 million with revenues from the five key commercial products expected to grow 25% compared to the same nine-month period in the prior year. We expect revenues from the legacy products to decrease due to generic competition, and our guidance assumes that there will be a generic entrant for FOCALIN XR during the summer.

We expect that any declines will be offset by the growth of our key commercial products. Our revenue expectations do not include the impact of any business development activities.

Turning to expenses for R&D expense our investment in the pipeline correlates with our success in the clinic. For the nine months ending December 31, 2013. We expect R&D expense to be in the range of $125 million to $135 million.

Likewise for SG&A we've begun the process of preparing for the commercialization of aripiprazole lauroxil. For the nine months ending December 31, 2013. We expect SG&A to be in the range of $95 million to $105 million.

We expect non-GAAP net income for the nine months ending December 31, 2013 to be in the range of $85 million to $105 million and non-GAAP diluted EPS to be in the range of $0.61 to $0.75.

Finally we expect free cash flow for the nine months ending December 31, 2013 to be in the range of $65 million to $85 million. As you can see, the business is performing well. We have a robust and diverse top line. We're making focused investments in our promising pipeline and we are generating significant cash flow. We're in a great position and I look forward to continuing this positive momentum.

With that, I'll turn the call over to Richard.

Richard F. Pops - Chairman and CEO: That's great. Thank you, Jim. Good morning everybody. So we have a strategy and a plan to build a big biotechnology company, as measured in financial terms and in terms of the number of medicines we create and the impact they have on people's lives. Given the developments in the early months of 2013, this year is shaping up to be a defining year in our evolution. We are at an inflection point. We've entered the next major phase of our Company's life as the value of the pipeline becomes obvious and it's added to the value of the profitable commercial business that we've created.

Our ambition has been to create a growing profitable Company with multiple late-stage pipeline assets with a potential to be blockbuster drugs. This has become a reality. Over the past year, the performance of our commercial products has financially transformed our business. There's more growth to be realized from our commercial portfolio, and in a couple of minutes, I'll describe some of the factors we see contributing to this ongoing growth.

But first, I want to spend a little bit of time on our late-stage pipeline. What has evolved so clearly in the last few months is that our pipeline is now characterized by late-stage candidates with robust validating clinical data and clear economic potential. This economic potential derives from their medical value and their relevance to the current value focused environment. This theme of medical, economic and societal value is one that you will see recurring in our pipeline and it's an intentional part for our strategy.

Today, I'm going to give you some updates on aripiprazole lauroxil, ALKS 5461 and ALKS 3831. In addition, I'm happy to announce it will be hosting an R&D in Boston in July where we plan to introduce new product candidates that are emerging from our productive R&D engine.

So first, the major news for ALKS 5461 in treatment-resistant patients with major depressive disorder. As you know by now, just a few weeks ago, we announced positive results from 142-patient Phase 2 study of this highly differentiated oral compound. The data were clear and we look forward to presentation of the (Technical Difficulty).

Our goal is to initiate the first of these studies in the beginning of 2014, subject to the refinement of our study design and our interactions with FDA.

ALKS 3831 is our oral agent for the treatment of schizophrenia, designed to compete with the best-in-class oral antipsychotic agents. ALKS 3831 is designed to provide a broader spectrum of benefits for patients by combining the efficacy of olanzapine or ZYPREXA with the opioid modulating properties of our proprietary NCE ALKS 33. We believe that the addition of ALKS 33, a potent, centrally acting opioid antagonist may have two important beneficial effects for patients. First, we believe that 3831 has the potential to attenuate the clinically significant weight gain commonly seen with ZYPREXA. Diminishing this side effect could open the proven therapeutic benefits of olanzapine to a wider range of patient.

Second, we plan to explore the particular applicability of ALKS 3831 for the large number of patients with dual diagnosis of schizophrenia and substance abuse, a group representing as many as 50% of patients with schizophrenia. We're on track to initiate a Phase 2 clinical study in patients with schizophrenia in mid-calendar year 2013. Our most advanced candidate aripiprazole lauroxil formerly referred ALKS 9070, is our long-acting injectable prodrug of aripiprazole currently enrolling patients in a large Phase 3 study.

Our FDA filing timeline is driven by two major operational elements. The careful execution of the single Phase 3 clinical trial and the preparation of the NDA.

We previously said that we expected topline data from the Phase 3 at the end of calendar 2013, based on where things currently stand; we now expect topline data to be available in the first half of calendar 2014.

In parallel we're accelerating the preparation of the NDA and we can finish much of the NDA content before the study completes to minimize the effect on the overall timeline.

We plan to file the NDA in 2014 as quickly as possible following the completion of the Phase 3 study. Recall that we cannot enter the market prior to the expiration of the ABILIFY patent in April 2015.

The Phase 3 study is well underway in multiple countries around the world, including the U.S. and in Eastern Europe and in Asia. In the U.S., enrollment has progressed as modeled originally and is essentially complete. Outside the U.S. we continue to bring on sites and enroll patients we're making steady progress, but at a rate slower than we modeled.

With that said we're encouraged by the quality of the study and we'll keep going until we are done.

As we gain more precision over the next few months we'll continue to update you on the timing as appropriate.

We're being really careful with the execution of this program because aripiprazole lauroxil represents such a major opportunity for us. Aripiprazole lauroxil is an important potential new treatment option for patients an opportunity for Alkermes to build on and expand our franchise in long-acting antipsychotics. We were pleased to see the approval ABILIFY maintain last quarter with a label consistent with our expectations and pricing at a premium to RISPERDAL CONSTA and INVEGA SUSTENNA. We believe our product has the potential to be a generational advance in its dosing flexibility and product presentation. So, that's the late-stage pipeline. We believe that we're building one of the most significant CNS pipelines in the industry and you'll see more evidence of this in July.

What makes all of this possible is the strong and growing revenue base that funds our focused R&D investment. Our commercial portfolio is one-of-a-kind, and unto itself is a compelling business. It's a remarkable portfolio of products. Each is unique and addresses an unmet medical need in a growing market. They have long patent lives with little risk of generic entry for many years. For the partnered products, they represent critical growth drivers for each of the Company selling the brand. Further, most are still early in their commercial lives with expected accelerating trajectories.

For BYDUREON, BMS and AstraZeneca just took control in territories outside of the U.S. on April 1. Since the acquisition of Amylin, BMS and AZ doubled the size of the sales force to penetrate the primary care market. They are focused on building the competitive profile of BYDUREON for the long-term. Filing for FDA approval of BYDUREON pen is expected mid-year and the weekly suspension is in Phase 3 clinical studies. We believe that we are still in the early days of the growth of BYDUREON and of the entire GLP-1 class.

For INVEGA SUSTENNA, the launch is underway in 18 of the 27 EU countries. The product line continues to expand. J&J has a three-month formulation in Phase 3 with data expected in 2014.

For AMPYRA, our partners at Acorda recently announced positive Phase 2 data in the post-stroke deficits syndication, which will lead to additional clinical studies. This represents a new opportunity for this product. Ex-U.S., Biogen has negotiated pricing in Germany for FAMPYRA and is launching FAMPYRA in other European countries.

VIVITROL continues to make progress. It's now nearly a $60 million product gaining traction and visibility in the treatment community. In addition to our growing commercial business, there are exciting programs underway in a number of state criminal justice settings. We expect the results of these programs to lead to broader adoption of VIVITROL over time. So, across the board, we remain confident in the future growth of this commercial portfolio.

So, let's finish there. We had a great year and now we're looking ahead. We're managing Alkermes to be a growing profitable company with a strong commercial portfolio and excitingly staged pipeline. The pipeline is moving into focus now, and we're aggressively moving the most promising candidates forward with the goal of getting them to patients as quickly as possible.

In 2013, we expect the value of this portfolio to become even more evident. We look forward to updating you on our progress each quarter and in our R&D day in July.

And with that, I'll turn the call back to Rebecca.

Rebecca J. Peterson - IR: Excellent. Thank you. We'll now open up the call for Q&A. operator?

Transcript Call Date 05/23/2013

Operator: Jonathan Eckard, Citi.

Jonathan Eckard - Citi: First, I was just going to ask. I now it's pretty early but have you seen the signs of the ABILIFY MAINTENA launch, for example, have they – have these patients – were they previously on long-acting antipsychotic or were they – are they new patients to the class and were previously on oral drugs? And then just – what you should look for out of that launch?

Richard F. Pops - Chairman and CEO: It's too early to say, we're tracking the launch right now, as you are just starting to get the first data points on the launch curve, but recall from our side that we presented, we really see that there is two major domains that the long acting ABILIFY will and should go after and that is the patients currently on oral ABILIFY with schizophrenia, many of whom are non-compliant and then what's exciting is to hear what J&J is saying about the long acting atypical class in general and what Otsuka and Lundbeck and we will echo which is the gross underutilization of a long-acting injectables in schizophrenia patients in general, the market share being around 2% of long-acting of the use of atypicals. So I think you'll see more patients coming into long-acting therapy in general.

Jonathan Eckard - Citi: Then the other question is if you could just give us a general ideal strategy regarding, potential partnering, when do you see the ideal time to potential partner some of your assets because, ex-U.S. I think that your goal is to focus on U.S. when would be the optimal time for that to help maybe mitigate some of the development costs going forward?

Richard F. Pops - Chairman and CEO: Well, we're kind of running the experimental real time and the most important thing if we are partnering these assets O-U.S. is to find the right partner with the right business strategy and the right approach to launching the products. We have the financial wherewithal generally to run the program we tend to think about the development programs in an integrated global way. We don’t know it was executed necessarily that way, but we have a good sense of how to do this so we're not really rate limited by the need for a partner to develop the products. So with 5461 maturing so nicely, 3831 maturing nicely. Some other things in the pipeline that you'll see in July coming along and with lauroxil we have a portfolio and we're having kind of series of discussions with folks on different elements of that portfolio, but they'll be right, when they are right.

Operator: Anant Padmanabhan, Cowen & Company.

Anant Padmanabhan - Cowen & Co.: So, Rich, I had a quick clarification. You mentioned 9070, the clinical trials. So, you had said the trial would report out in H1. So I just wanted to get a clarification on why there is a little bit of a delay? I guess it doesn't make a difference of the patent. You can only launch after the ABILIFY patent, but just trying to get a sense of what's happening with enrollment and the general trial itself?

Richard F. Pops - Chairman and CEO: Yeah, as I said in the earlier remarks, there's two halves to the study, the U.S. half and the O-U.S. half and the U.S. half has gone pretty much as plan, because we have a reasonable amount of experience around these types of studies or similar studies in the U.S. O-U.S. is a bit of a different world, because we're in different countries. We're in places like Ukraine and Russia, Bulgaria, Serbian places like that, no Serbia actually. So really the remodeling is based on our actual real road experience in getting regulatory approvals, import licenses, sites initiated and patients enrolled. So as we get more experienced with that we just have a better ability to project. And recall that the primary objective here is not rate; it's quality, because a single study should suffice for FDA approval. So we're erring on the side of care, being careful with site selection and patient selection rather than rate. Now, we don't want us to go for ever into 2014. We want to be done, believe me, but we're also making sure we're doing this correctly.

Anant Padmanabhan - Cowen & Co.: Then a quick clarification for Jim as well. On the R&D guidance, for the nine months, you have a $125 million to $135 million. Does that include a Phase 3 for 5461 or the beginnings of a Phase 3?

James M. Frates - SVP and CFO: You are absolutely right. It does include additional spend with the positive data that we saw in that study. We're trying to initiate as quickly as we can the broader pivotal studies for 5461. Now we still have to go down and talk to the FDA, but over the next nine months, we will be accelerating spend on that program in particular.

Anant Padmanabhan - Cowen & Co.: If I could just sneak another one, so the guidance assumes FOCALIN XR through the summer. Is that correct?

Richard F. Pops - Chairman and CEO: Yes. And obviously, the timing of when the generic entry might come, it's hard to know. It's impossible to know really. So, we just want to make sure people knew that was our assumption.

Operator: David Risinger, Morgan Stanley Research.

David Risinger - Morgan Stanley Research: I just had a couple of questions. First, I was hoping you could talk about the cost of goods in terms of the nine-month guidance basically, it implies slightly lower gross margin than we had been assuming, so any comments on the gross margin outlook would be helpful? And then with respect to partnering, could you talk about your, talk a little bit more about specifically your vision for development of 5461 and whether you are looking for partner or not? And then anything else with respect to pipeline products and substantial partnering or decisions not to partner would be helpful?

James M. Frates - SVP and CFO: Let me address the gross margin question quickly. If you remember we had a restructuring that we are working on and we announced in March around our Athlone facility is where we are consolidating some of the buildings and that means that we are actually accelerating some of the depreciation as you close buildings that were depreciated over say 20 year life. You now have to take that depreciation over a much shorter period of time. So the change in COGS guidance is really related it is about $8 million of accelerated depreciation, its non-cash and it's really related to that work going on in Athlone. So we actually think our gross margins are going to be relatively flat from year-to-year. In the longer term we expect them to improve as our higher margin products continue to grow like SUSTENNA and BYDUREON.

Richard F. Pops - Chairman and CEO: You know this but I just want to, I want to make the point on this, it's so remarkable where the pipeline has gotten in the last couple of years. We have this exciting array of products now, and as you know the scarcity value of late-stage products is extremely high and the import of these particular products is very high. So we see them as global products and we will partner in order access global markets in certain cases. We don’t feel rush to do so, and we are kind of enjoying the position we find ourselves in right now. So we will partner at some point not for money and not necessarily for development expertise per se although that’s always welcome. It's to access all the countries that we think these medicines can benefit patients in.

Operator: Cory Kasimov, JPMorgan.

Cory Kasimov - JPMorgan: So I had couple questions for you on 5461. Can you help us frame expectations for next week's presentation at NCDEU without front running the data, of course. Is there a particular hurdle on the key endpoint scores that your experts consider clinically meaningful or maybe frame it relative to what's out there today? And then also following up on the partnering question as it relates to 5461 specifically, is this – I know 9070 is something you can do alone in the U.S., but is 5461 in this indication something that you can go after as well in the U.S. and partner rest of the world? Thanks.

Richard F. Pops - Chairman and CEO: Corey, it's Rich. So next week I think we'll be able to provide a presentations to you all afterwards and if you can go you should go. The data will presented by Maurizio Fava from the MGH. So it will be nice because you can hear from a clinician's point of view rather than our point of view on it. And I think the speed from which time we got the top line data towards being presented in a medical meeting is consistent with the community's interest in this particular outcome. To us, I think you'll be impressed with the clarity of the results and the innovativeness of the design that was – which as you know was designed to kind of show in a couple of different phases of the study, the efficacy of the drug versus placebo. So, take a look at it. If you have questions about it we'll be here to answer. But that presentation I think occurs next Friday in the morning. Can we do this alone in the U.S.? Well, it's interesting. If we focused on the three new resistant patients, with adjunctive therapy with baseline SSRI or SNRI, we think, yes. We think we can. We think that's a concentrated, a more concentrated patient population. That said, does the medicine, if this new pathway for the treatment-resistant depression proved to be robust and meaningful, should it and could it possibly used earlier in the treatment-resistant depression, yes, in which case you would require a probably a bigger commercial footprint. But we see from a regulatory point of view and from a commercial point of view, this logical progression from a very focused sales force on VIVITROL expanding into long-acting injectable antipsychotic aripiprazole lauroxil broadening our footprint provides a stepwise progression then to the idea of the refractory depressing community as well. And then from there, we'll see where we go. That's why we're going to be very careful in our partnering decisions we think not to give up our ability to control some of the U.S. commercial work.

Operator: Ami Fadia, UBS.

Ami Fadia - UBS: Just to follow-up on 5461, it sounds from your comments that at this point especially if the drug is going to be focused on this concentrated patient population. You might prefer to go at alone and you might actually wait for data from larger clinical studies, maybe a Phase 3 to understand if you really need to broaden that target population in which case you will actually partner it? Am I understanding that correctly?

Richard F. Pops - Chairman and CEO: I wouldn't characterize it that way, Ami. What we hope, now that we've run two successful studies on 5461 in the injunctive setting in refractory patients. We actually hope that Phase 3 isn't particularly regulatory, doesn't reveal much in Phase 3, because we hope that we're just showing that the medicine work as we are increasingly believing that it does. So, we are actually talking to pharmaceutical companies right now about 5461, and because we're not rate limited we have the luxury of kind of talking to multiple pharmaceutical companies and crafting what we think would be the right approach to the market on a global basis, but we don’t feel compelled to doing, typically when you are seeing with a little bit more time, a little bit more gestation period the deals get more clear and stronger and better. Because the counter parties need to learn about the drug as well. That’s why presenting the data in medical meetings so that the community can begin to understand the drug as well is really helpful to that process.

Ami Fadia - UBS: Just on 9070 and I'm thinking about the trial and trying to understand what is the risk of this trial obviously you've presented very interesting data in the earlier studies. How have you taken care of any potential availability in the control arm, while designing the study. If you could give us a sense of your thought process there, that would be helpful? And then I have a quick follow-up here.

Richard F. Pops - Chairman and CEO: You see the same theme in the 5461 study we just completed in 142 patients. Because in the case of 5461 and in the case of 9070 we actually believed the mechanism is sound, the way the study fails through design, excessive placebo response, or excessive dropout which muddles the statistics. So in the 9070 study there is nested layers of ascertainment of the rating scale and a patient selection criteria not just at the site level but by independent rater as well. And this is part of the reason why the rates can be slow, because we reject patients and we reject sites and we look for concordance to begin diagnosis between the site and external raters and other things like that, that I won't bore you with now. But this is the way you need to run CNS trials this days and it isn’t easy and you have to be very careful. If you do it correctly I think the signal comes through the noise and you are very happy extra work to do it that way.

Ami Fadia - UBS: Just a last question, that's on VIVITROL, just on a sequential basis the quarter came in little light versus last quarter and I was just wondering if there was something unusual going on there? And also, in terms of sort of your projected growth rate, sort of the implied growth rate for the next 12 months, are you expecting the product growth to decelerate going forward? I mean, that's kind of what you are implying from your guidance, but I would have thought that we should expect some acceleration.

James M. Frates - SVP and CFO: Ami, it's Jim. I think that – you do notice we did not increased net sales sequentially, that's right. Really what was going on there, was some changes in the inventory levels. Now that we have inventory out at the specialty pharmacy and will recognize sales on an out model, we're going to be subject to those kinds of fluctuations. If you look through the net sales though, and you look at actual end-user sales and prescriptions, we see the product still growing. And year-over-year it was about 33% up. So, just quarter-to-quarter and then for the full year we are up 41%. So, we still see growth in VIVITROL and what we've done this year with our projections is we've tried to basically straight-line it and put some bands around that so we don't get in the business of predicting when the growth acceleration for VIVITROL will occur. We don't have any less excitement about the potential of VIVITROL. It's just very hard as we're changing the market as you know to predict when an inflection point in the growth curve will come. So, VIVITROL is really steady as she goes and we still have a lot of confidence that that inflection point will come. We just don't know when and so we won't predict it.

Operator: Mario Corso, Mizuho Securities.

Mario Corso - Mizuho Securities: A couple of things. On the financial side, on the COGS effect you are referring to the $8 million, was that a last quarter number or was that a next nine months number you were talking about? And then also on the financial side it looked like AMPYRA, if I'm backing into it correctly came in well above the kind of 18% royalty rate for the quarter. So, I was wondering, if anything in particular was going on there? And then also, how should we be thinking about taxes for the year both on a GAAP and non-GAAP basis?

James M. Frates - SVP and CFO: So, with the COGS, the $8 million additional depreciation that I mentioned is really a going forward number. So, that's for the next nine months into the future. We had slightly higher COGS last quarter, mainly driven by really just product mix, which products were going out the door and – but we hit our gross margin targets for the year. And as we talk about, there will be fluctuations from quarter-to-quarter with manufacturing shipments. And that's really the answer with the AMPYRA question. As you know, much like RISPERDAL CONSTA, we get a significant amount of our revenue when the product ships out the door. We talked about at a couple of quarters ago when we had a light AMPYRA quarter. You know we had a slightly more robust AMPYRA revenue quarter, this quarter. But again, if you look out over the full year, it's very close to the 18% that you would expect – that we earn on sales around the world. So, it's really just the timing of manufacturing shipments for both of those first two questions that you had. In terms of the taxes, you know as we talked about again, I think we – it really depends on in which jurisdiction either the United States or in Ireland where we earn our revenues, it will impact our tax rate over time. We think once we run through our NOLs which we're still probably a year or two away from depending on the long term growth of the products in that trajectory, will be in that tax rate of around 20%, but that’s really an estimate about sales we get out of our Irish products and sales we get out of our U.S. products. So again it will be lumpy from time-to-time as we have recognized various revenues and run through various NOLs and tax credits, but longer term we think we are in a very good spot.

Operator: William Tanner, Lazard Capital Markets.

William Tanner - Lazard Capital Markets: I have a couple of them, first for you Rich, just on 5461 and 3831 kind of reasonably leveraged the ALKS 33 could you just remind us where we are on the understanding the safety profile how comfortable you are with that compound? And then I have a follow-up.

Richard F. Pops - Chairman and CEO: You are right, both 5461 and 3831 have as a component NCS ALKS 33. ALKS 33 is quite well characterized. You might recall that we have run two year toxicology in rats and we've also run a 400 patient single agent study in alcohol dependence, with very positive results by the way. So we have a very good clear understanding of this from a clinical basis also structurally because it drives kind of intellectually from naltrexone we have a good sense of the pharma for as well. So we feel pretty good about that.

William Tanner - Lazard Capital Markets: The second question it's either for you maybe or Jim in his prepared remarks talked about revenue guidance not contemplating anything done on the (BD) front obviously you've got a lot of nice stuff going on in the pipeline. I mean is that kind of bolder plate commentary or is this something that you could see something by the end of the year, actually bump that higher than the guidance? Just trying to get some – I understand it's difficult to expect whether these things will happen or not, but…?

Richard F. Pops - Chairman and CEO: That's right. It's really more a philosophical set point for us. When we give guidance, we'll guide the stuff to – that we can reasonably guide to and so we just have no – because we're not running the business development process with a goal of hitting something in the fiscal year. Often you do in a company where you need the capital to proceed, that is in the case here, so we'll just let these go when they go and that's why we won't built them into the guidance. They obviously will have the profound effect, could have a profound effect on the outcome, but as we guide at the beginning in the fiscal year we won't include it.

Operator: Terence Flynn, Goldman Sachs.

Uya Chuluunbaatar - Goldman Sachs: This is (Uya Chuluunbaatar) in for Terence. Just going back to the revenue guidance, could you just walk us through and give us a little bit of incremental color on what are the other contributors? I mean, you talked about VIVITROL, but if you can just give us a little bit color on the other franchises that will be great. And on second, I know you said you haven't had the conversation with FDA, but just for a potential Phase 3 design for 5461, will you have to compare it to each of the components or would it be just the combination that's going to go into Phase 3? Thank you.

Richard F. Pops - Chairman and CEO: Perhaps I'll take that comment. Jim can give a little more color. Revenue guidance is driven by the two major buckets of revenue that we have. One is the legacy products that are ultimately going away. They contribute a certain amount. And then what we call the big five, which is our long acting injectable franchise INVEGA SUSTENNA and RISPERDAL CONSTA, BYDUREON, VIVITROL and AMPYRA. And that's the engine for the future and that's what's growing and that's the group that has patent protection in '20's generally. On 5461, that's exactly the type of question we're going to settle on with FDA in our meetings. There are some scenarios where we will use certain of the components as comparators including placebo. There are other scenarios and other stage where we might now, but we are going to work out the whole spectrum of that registration program. We're proposing that now when Senate and FDA will meet and will make a decision on that. But the basic structure of the Phase 3 is going to be similar to what we've done in the two previous studies which is 5461 versus placebo against the backdrop of concomitant use of SSRI or SNRI in treatment-resistant patients.

Rebecca J. Peterson - IR: I'll just add that, and I've had discussions with Terrence. Your question might be, do you think you need a (bup alone) arm and we don't believe that would be ethical to run on (bup alone) arm for the treatment of depression.

Richard F. Pops - Chairman and CEO: That's a fair point. We don't think – we also think there is arguments that you may not need a 33 alone arm or the 33 alone arm can function as a placebo arm, so these are the things we're working on right now, but we don't see – we don't see (indiscernible) as a competitive product or a reasonable necessarily control arm.

Operator: Steve Byrne, Bank of America Merrill Lynch.

Steve Byrne - Bank of America-Merrill Lynch: Jim, can you just elaborate a little bit more on your plans for building out the commercial infrastructure. It seems like in the March quarter, you did have a pick-up in SG&A. Is some of that infrastructure expansion already under way?

James M. Frates - SVP and CFO: The main part of the increase in the SG&A expense in the fourth quarter, the March quarter that we just reported was some of that infrastructure build-out for 9070. We're starting to expand the team. The broader brands in the operation, it will be focused on how to launch the product. And so, we are actually predicting SG&A not increasing a ton over the fourth quarter run rate through the course of the year. And obviously the major spend will come after we have the positive data and we're in the process of filing with the FDA, but you did noticed that in the fourth quarter and that will run through the rest of the year.

Steve Byrne - Bank of America-Merrill Lynch: But given your two years from commercialization on that product is that expansion of infrastructure have utility for other products that you are focused on?

James M. Frates - SVP and CFO: Well, yeah, absolutely. I mean, I think it's going to free-up people's time. We have a group of people that were doing really two things. They were focusing on VIVITROL and they were planning for the future potential marketing, understanding the market, talking to key physicians, helping to position the product and we're going to have a dedicated team that's working and preparing for 9070 and we'll have a dedicated team for VIVITROL. And as those VIVITROL sales continue to grow, that's going to offset obviously some of the spent. But this is what – two years in front of launch is actually exactly the time that you need to be preparing the market for it and – so I think we're right where we should be in that sense.

Steve Byrne - Bank of America-Merrill Lynch: And with respect to 5461, it is – the potential for going after it first line, does that really depend on whether you bring in a partner to help fund what would be a much larger Phase 3 program?

Richard F. Pops - Chairman and CEO: I think, Steve, from my point of view, it's not. I think it's more driven by our recognition of the current payer and regulatory environment. We think there's a real advantage to going to refractory patient first. From an approval point of view, FDA's risk-benefit equation is different and payer's willingness to reimburse new branded medicine in that space is different than if you are trying to go up front against a panoply of effective generic drugs. I think you can play there longer term, but I think it will be based on a body of clinical evidence in the real world that shows the differentiating features of opioid modulation for the treatment of depression, which will come with time. Mean time that more nested patient population, remember the numbers it's 4 million people in the U.S. it's not like we are going after an orphan indication here. There are 10 million people getting these drugs upfront 4 million are requiring a third medication and 3 million are requiring fourth medication. So I think that’s the place to focus, to get the drug approved initially launched.

Rebecca J. Peterson - IR: Well, thanks everyone for dialing in today and if you have any additional questions please don’t hesitate to call us here at the company. Have a great day.

Operator: Thank you ladies and gentlemen this concludes today's call. Thank you for participating you may now disconnect at this time.