ACADIA Pharmaceuticals Inc. (ACAD) Earnings Call Transcript & Summary

Great. Well, thank you, everybody, again for joining us today for the JMP Securities CNS Forum. Really excited to have ACADIA with us next, both Steve Davis, the company's CEO; and Michael Yang, Chief Commercial Officer. Another great first half of the year for NUPLAZID and the on-label indication of Parkinson's disease dementia -- sorry, psychosis. And obviously, a lot of progress with the dementia-related psychosis indication, which you've now submitted the sNDA for. So maybe -- again, let's just turn it over to you, Steve, for any additional introductory comments, but then would love to just jump in and review how you think the first half of the year went and how you're positioned commercially for the second half of the year with NUPLAZID.

Great. Perfect. Thanks so much, Jason. So maybe just to level set, I'll offer a few very brief remarks, and then we'll get right into the Q&A. So just as a quick reminder, the business of pharmaceutical development and commercialization has certain inherent risks. So please see a copy of our most recent SEC filings for a description of how those risks relate to our business. I'd like to briefly highlight some of our key accomplishments so far this year as we execute on our 3 strategic pillars. First, we will drive NUPLAZID growth in PDP. Our second quarter 2020 net sales were $110.1 million, representing 32% year-over-year growth. We continue to add new patients and see high adherence among continuing patients. As a result, we expect our 2020 net sales to be between $430 million and $450 million. This would represent a 30% year-over-year growth at the midpoint of the range. And then beyond 2020, the long-term opportunity for NUPLAZID in PDP is very significant and continues to grow. Our second pillar is delivering on the DRP opportunity. There is no approved treatment for DRP today. The opportunity is about 10x the size of PDP, as we've discussed before. And as you guys have heard us say, there are very serious consequences associated with DRP. Just a few examples: repeated hospital admissions are very frequent, increased likelihood of nursing home placement, progression of dementia, and increased risk of morbidity and mortality. So it's a very serious disorder. We're pleased that the FDA has accepted our filing of our sNDA for DRP with a PDUFA date of April 3, 2021, and we're highly confident in both the efficacy and safety data supporting our submission. Look forward to continuing to work with the FDA to facilitate their review. Finally, our third pillar is to develop innovative treatments for unmet needs in addition to PDP and DRP. We recently initiated our second pivotal study evaluating pimavanserin for the negative symptoms of schizophrenia. As you guys know, we already have one pivotal -- positive pivotal study that we would file for approval if ADVANCE-2 is also positive, the study that we just started. In addition, we initiated a Phase III program late last year evaluating trofinetide as a treatment for Rett syndrome, and we expect results from this Phase III program in the second half of next year. On the business development front, earlier this year, we announced a licensing and collaboration agreement with Vanderbilt University, adding a muscarinic receptor program to our pipeline. This M1 PAM program is a portfolio of early-stage candidates with lead compound in early Phase I and several preclinical compounds. And the key thing here to underscore is on these early-stage small molecule programs, you want to have a battery of compounds, and that's what we've acquired through this relationship with Vanderbilt. So we're very excited about that. We'll continue to invest in our future through additional business development opportunities. You've heard me say before, we will do more deals, and we'll do deals to complement, of course, our long-term growth strategy. And with that, I'll turn it back over to you, Jason.

Great. That was a really great overview, Steve. So maybe just let me start off by asking, Michael. The question you've been asked probably the most in the last few months, and that you guys have navigated through the COVID-19 pandemic headwinds. And just -- I guess 2 components. One, would be with the immediate changes that you needed to navigate through the worst of the pandemic. And then how do you think the long-term impact and then how that changes your commercial strategies, especially when you think about the risks of the elderly patients and those in long-term care? So the more systemic changes that might be necessary in the long term.

Jason, those are 2 great questions. And let me take the second one first because I think it bears mentioning that for both Parkinson's disease psychosis and, I expect, for dementia-related psychosis, these are not trivial diseases. These are diseases that cause massive disruption, a substantial caregiver burden and physicians have to react. So from that standpoint, whether we're in a COVID environment or not, in a telemedicine environment or not, the need to treat is high. And I think what that ties into is our organizational response and adaptation to the COVID environment. I think that I'm really proud of the organization. As you know, we have 2 major channels. One is more the office-based channel. I would say that earlier in the pandemic, of course, all the offices shut down. We were in a kind of a national state of shutdown. Our team quickly pivoted to being ready for digital engagement, virtual programming, a number of different examples. So when those offices came back up and started seeing patients in telemedicine, we really were catching a lot of wind in our sales from those technologies. We were able to digitally reach patients and create awareness. And importantly, we were able to help the doctors on a remote environment for a bundle of population. They could diagnose, they could sample, they could check reimbursement and deliver drug to the patient all virtually without the patient ever having to leave the home. So this is really a nice kind of side benefit of our specialty distribution model. In long-term care, as I reported on the earnings call in the second quarter, that's where we start to see a pretty big impact on the operational elements of long-term care there. Because of their focus on infection control, COVID parameters and procedures, staffing shortages and whatnot, there was a fairly large disruption to the operational rhythm. Patients -- in some cases, there was a reduction in census in new patient admissions. So that impacted that channel. But I think we're starting to see signals of stabilization there not returned to growth quite yet, but we're seeing signals of stabilization. We did not see any drop-offs in our fulfillment rates for patients in either channel. And so I think where we are now is both the doctor offices and the long-term care channels adjust with the new normal. I think we, NUPLAZID and ACADIA, are well positioned to capture that patient no matter where they go, whether it's virtual, face-to-face, home, office or a long-term care facility.

So I guess if you just tie that back into the fact that you have revenue guidance out there for the year, Steve, so is it fair to say that you feel good about the -- what you know about operating in this current environment and how predictable you think your growth trajectory is for the second half of the year?

Yes, we do. I mean obviously, we're -- our entire industry and society is operating in a very unusual environment right now, but we feel very good about that. Yes. I think as Michael mentioned, the thing that -- I think the first half of the year underscores is I think we've been very successful continuing to add patients, continuing to add physicians, continuing to grow the brand in spite of being in the middle of a pandemic. And that just really reflects the fact that Parkinson's disease psychosis is very severe. It's very disruptive. It's very burdensome, and it needs to be treated.

Sure. So then if we switch over to the dementia-related psychosis indication. As you said, it's a large market, much larger, 10x larger than PDP. Can you help us maybe understand the breakdown of that patient population and how that goes into market size? Obviously, PDP is a progressive disease. It's a decision of when you start treating the psychosis symptoms. You've obviously changed that dynamic with NUPLAZID. So how does that compare and contrast to DRP and how you think about who's eligible or who's appropriate for treatment, and when?

Right. Well, yes, a lot there. So I'm going to ask Michael to chime in. But I'll just start very briefly by saying the dynamics between in PDP [Audio Gap] very similar. In both cases, you have a situation where there was -- in PDP, there was no drug approval for NUPLAZID; in DRP, there is no drug approved to treat it. And the off-label use of the previous generation dopaminergic antipsychotics complicate the disease in both cases. In the case of PDP, it can interfere with motor therapy or motor function in those patients. And in the case of dementia-related psychosis, it can interfere with the cognitive abilities of those patients, and it's not insignificant. It's equivalent to about 1 year of disease progression. So it impairs cognition in those patients. So those dynamics are very similar. And I'll ask Michael to give a little bit more color on some of the other detailed questions you asked.

Yes. Thanks, Steve. I think you hit it well. I think Jason, this is a really great Venn diagram for us overlapping. There are a lot of similar dynamics, and as we mentioned, the population is a lot larger. Let's start with the physicians that treat it are the similar to the ones that we call on. So that would be neurologists, psychiatrists, geriatric psychiatrists. They operate in the long-term care facility and probably will pick up a larger component of what we're calling dementia care specialists. These are primary care physicians, essentially, but they have an older practice and they're actually acting as pseudo-specialists. But from a call footprint, we're just going to be adding depth to our existing call footprint, but we already have some experience with all those specialties and channels. Importantly, though, I think that with Parkinson's disease psychosis, obviously, the patients that are seeing a neurologists, those physicians are focused primarily on the motor. That's their major, major reason to exist. And therefore, non-motor symptoms are something that are bothersome and they have to treat them, but it's -- the main thing is motor. Whereas in DRP, cognition is the main thing. And when you're dealing with cognition, obviously, you're in the brain, and that's where there's this -- I wouldn't say muddled, but there's comorbidity with cognition and psychosis. And so therefore, our treatment reason in psychosis is much more closer to what the physicians are examining on a day in day out basis. So I think that -- and just the other thing I would mention is these are all Medicare patients older. So our existing commercial footprint with regards to insurance and payers and patient services and all of those things are just going to be leveraged and expanded upon nothing really de novo from our existing operational milieu.

Okay. Yes. And your comments are -- led right into my next question about the physician population. Obviously, there have been some overlap. But like you said, there's a clear difference in how they view the disease and the comorbidity, the psychosis symptoms. Can you maybe talk about the market research you've done and how that lends to who those physicians will treat and maybe what -- relative to PDP, when they might look to start treating psychosis symptoms? And specifically, do you think it could be at an earlier stage than -- or at an earlier stage of progression of severity of the psychosis symptoms?

Right. So let me unpack that a little bit because one of the things we have to be very careful around is progression of dementia and the progression of -- or severity of psychosis. They're independent. So we don't really talk progression of psychosis because progression of cognition is what physicians look at. But I will say that the patients that we're treating -- or the market research that we've done, it's a little unusual, I guess, in the sense that they're really looking at the caregiver burden here. A lot of times, they're treating the patient, but they're really getting the signals of the -- of how to treat, when to treat, what to treat with from the caregiver. And so a lot of physician strategy, we look at it as a triad, it's the doctor, patient and caregiver family triad. And from that standpoint, I think we'll be able to -- the market research shows, I think, have a very strong value proposition primarily because the doctor is in a very tough situation having to compromise. They know that the patient needs to be treated. They know that the caregiver wants something, and they know there's nothing indicated. And what they are going to be using has the specter of cognitive decline acceleration, off-target side effects, balance issues and a lot of safety. So one of the things that really comes through is our efficacy and safety profile is really, really compelling to physicians in this kind of situation that I'm describing with the doctor, patient and caregiver.

Okay. And then you also mentioned that from a commercial footprint perspective, there's clear overlap. Are there -- you mentioned deepening the certain parts of the organization. But are there any changes in strategy that you need to implement as you think about bringing the DRP label on board?

Well, I think I'll just address that. I think we are going to be expanding to about 450 to 500 people. But we're mostly leveraging existing infrastructure whether it be our commercial operations teams, market research, all of those things. Our patient services group, which we have a good group, we're going to have to expand that. We deliver the drug through, as I mentioned, specialty distribution. We call them long-term care. So all of those areas that we have today will be deeper and broader with this 10x kind of opportunity in terms of patient pool. I think the area that is potentially something we are going to have to really be mindful of is that because there's so many more physicians and some physicians will have familiarity with NUPLAZID, and some physicians will not. So we have to really be thoughtful about how we enter into these 2 different kind of segments because, obviously, with the people who are using NUPLAZID, this is a N1. You're using it, you've tasted it, let me tell you about it. And obviously, for the people who have not used NUPLAZID, this is a "Let me introduce you" thing. But we have to kind of almost communicate the history of NUPLAZID to them, which is, in research, comforting. It's nice to know that when I give you a new indication and you never use the drug that you have 4 years of experience, a lot of safety, a lot of patients treated, it's not a new thing. That really gets people over that initial hump sometimes when you launch a drug. So it's an interesting kind of dichotomy for us. It's a line extension on one side, and it's a de novo launch of a new drug on another side. So that's cool, actually.

Right. And that, let me segue that into the next question about the adoption curve then. When you have the precedent now of PDP and those different dynamics of those that are familiar, longer safety experience, how do you think about the -- and the larger population overall, does that all support that we'll see acceleration of growth as you add this label into the commercial strategy?

Well, I think there, we're leveraging our PDP experience. I think that the neurodegenerative category is going to be like we saw with PDP, a steady, progressive kind of linear-esque kind of growth trajectory as we acquire new patients, got new -- get new physicians on board. I think when you start to see these very steep adoption curves, they're typically with oncology-type products where you're actually kind of transitioning an entire line of therapy or a total category here. We're going to be kind of progressing into the disease-affected population, I think, quite well, and it will be a nice, very similar, I think, but obviously, larger adoption curve to PDP.

Okay. Okay. Great. Just one more question on the market dynamics here. So DRP does involve a number of different patient populations, obviously, the largest of which being Alzheimer's patients. Just from the work you've done with physicians, do they view those different patient populations and underlying dementia differently in terms of how they would treat the psychosis symptoms? Or again, who they would view as appropriate and when for initiating therapy?

Jason, the way I would answer that is it doesn't seem to be different in terms of the dementia minus the focus on motor versus cognition thing that I alluded to earlier. But what I do see in research is that, obviously, the Alzheimer's specialist, they know the Mini-Mental State Exam, right? So they know cognitive measures. So when we say and show no impact on cognition, they get that. We may have to build a few more stepping stones for that for some of the other specialties because cognition, it scales and curves and some of these other nuances are not maybe as much known to them. So I think that it really just speaks to the kind of market-prep education we need to do. Those are not foundational to the NUPLAZID story, but they're critical building blocks for us to say why this is a new and novel and worthwhile treatment to add to your regimen. So I think it's more of the ancillary explanations we have to do by specialty as opposed to the difference in a way they would treat psychosis.

Okay...

I'll just -- just to echo Michael's thoughts, one of the things we hear very consistently among KOLs, just physicians generally is the -- and as we've said before, the "subtypes" of dementia are very difficult to diagnose. They overlap many times. And so it's a little bit of an artificial distinction to say someone has Alzheimer, dementia with Lewy bodies or vascular dementia, et cetera. And so -- and one of the advantages, of course, pursuing dementia-related psychosis broadly, which is just, as a reminder, we got a clear agreement from -- with the FDA at our end of Phase II meeting, and we executed the plan that we agreed to with them. One of the advantage is it picks up what's referred to as dementia not otherwise specified, that's quoted as not otherwise specified. And that's a big chunk of patients. And that -- the fact that so many patients are not specified other than beyond just saying dementia, is again, a reflection of the fact that these categories are very difficult to diagnose. So as Michael mentioned, the good news is physicians understand that. They operate in that world. And with the indication that we are seeking, it won't matter. They won't have to try to make a determination, whether it's Alzheimer's or vasco dementia or something else.

And that's a really good point. And so let me just ask one more question about the FDA there. You obviously have this very broad patient population under the DRP umbrella. How do you think about more broadly the label indication statement based on the Phase III trial design, specifically the relapse prevention relative to PDP, where you had an initiation kind of trial design?

Yes. Well, let me take it in from 2 perspectives. Let me take it from a regulatory perspective and then from a medical perspective. From a regulatory perspective, I just want to remind everyone that the sNDA that we've submitted includes the HARMONY study, the relapse prevention study but also includes -- or the kind of study that we did in Parkinson's disease psychosis. It includes acute -- we'll call it acute data as well over a much shorter time frame and it showed positive results, both in an Alzheimer's population as well as our -- of course, our Parkinson's disease psychosis population. So we have both in the submission. More importantly, we agreed with the FDA on that approach at our end of Phase II meeting and agreed on the plan for Phase III, and then we've executed that plan. From a medical perspective, it's also important because physicians -- and they think -- again, when they think about dementia-related psychosis, they'd oftentimes just think about it more broadly speaking. As they think about a relapse prevention study, what we hear over and over is it really resonates with them. Many times in neuropsychiatry, when you get approval on a drug, it's based upon -- we ran one arm with drug, one arm with placebo. We measured them on -- we measured progress on the scale. We compared those 2 and have indication of efficacy. But physicians don't do that in practice. They don't use those scales, and they're really just looking at the clinical manifestation of the disease and the patient that they're seeing in the examining room on. And they're thinking about things like will this impact their symptoms, and if so, will it have a durability of effect. So the relapse prevention study really resonates with the medical community because it aligns with a clinical outcome and the kinds of things that they think about.

Great. Just a couple of minutes left here, and I know we don't have Serge with us. So I'll ask a higher-level R&D question. Just you've clearly, over the last 3, 4 years, run through a series of studies that have -- with the intention of building upon the label that you've established in PDP with obviously DRP now coming to fruition. You're running the negative symptom study in schizophrenic patients. Just help us think about how you think about the next steps here with NUPLAZID. Where else can you go? Are there other strategies that you have to build this franchise longer term?

Yes. So just a couple of quick points. When we got approval in Parkinson's disease psychosis and we kicked off simultaneously 4 very large studies, I said at the time, I said, "Look, if it works in just one of these, it will be well worth investment in all of them." And what we've seen is this very robust data in dementia-related psychosis. We've talked about the similarities with Parkinson's disease psychosis. We've talked about the fact that DRP is 10x the size of Parkinson's disease psychosis, et cetera. So we're thrilled with the data set. We also are pursuing negative symptoms of schizophrenia where we've seen a positive -- we have one positive pivotal study in the bag, and we're seeking to replicate that in the next study. The only difference between the study we've run already in the study that we just initiated is the dose. In the previous study, we did a little bit of dose ranging, saw a much greater effect at the high dose. That is now the dose, the only dose that we're testing in the study we're doing now. So I think what we see with pimavanserin is this potential of a very large drug just in PDP with significant, very significant growth potential beyond that. That's not the full story. We also have -- we haven't talked about it a lot, but we also have a preclinical program to leverage the learnings that we have with pimavanserin. And what I mean by that is to bring other molecules forward that have similar biochemical profile in order to be able to more fully leverage the very long list of opportunities for this kind of a drug. What we have in pimavanserin is a drug that is dramatically different than any other antipsychotic. It's certainly the most significant advancement we've seen in at least several decades in treating psychosis. And there are a lot of other indications we could go after. We're just not going to be able to get to all of them with pimavanserin. So we're bringing these other molecules forward in order to get to a lot of the indications that we'll never get to with pim.

Great. Well, look, I really appreciate that, Steve, and thank you for the time. Obviously, we didn't get a chance to -- about trofinetide, but that's going to be exciting program with data next year as well. Thank you. Really appreciate both you and Michael being here and looking forward to the progress in the second half of the year.

Always a pleasure, Jason. Thank you much.

Thanks, Jason.

Thanks, Michael.