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

Great. Thanks, everyone, for joining. Happy to be hosting this panel with Steve Davis, CEO of ACADIA Pharmaceuticals; and Elena Ridloff, Chief Financial Officer. We're going to keep it mostly conversational, but Steve, I think you wanted to make some prepared remarks and give a more high level update, and then we can get into Q&A. So thank you, again, and please take it away.

Great. Thanks much, Paul. Yes, just to level set a little bit before we get started with the Q&A. And by the way, very much appreciate being able to present at your conference today. I do need to start with just a brief reminder that 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 these risks relate to our business. I'd like to briefly highlight our key accomplishments in 2020 as we execute on our 3 strategic pillars. First, we are driving NUPLAZID growth in PDP. We recently announced our third quarter 2020 net sales, which were $120.6 million. This represents 27% year-over-year growth. We continue to add new patients and see high adherence amongst our continuing patients and, as a result, expect our 2020 net sales to be between $430 million and $450 million. This represents 30% year-over-year growth at the midpoint of the range. Beyond 2020, the long-term opportunity for NUPLAZID in PDP is very significant and growing. Our second pillar is delivering on the DRP opportunity. There is no approved treatment for DRP today, and there are serious consequences associated with the symptoms of psychosis. These include repeated hospital admissions, nursing home placement and increased risk of morbidity and mortality. We're highly confident on both the efficacy and safety data supporting our sNDA submission for DRP, which remains on track for our PDUFA date of April 3, 2021. And our third pillar is to develop innovative treatments for unmet needs. Earlier this year, we initiated our second pivotal study, ADVANCE-2, evaluating pimavanserin for the negative symptoms of schizophrenia. In addition, our ongoing Phase III study, LAVENDER, evaluating trofinetide as a treatment for Rett syndrome remains on track for top line results in the second half of 2021. Finally, we remain very active on the BD front and had completed 2 transactions this year, including the acquisition of CerSci Therapeutics and a license and collaboration deal with Vanderbilt University. As part of our long-term growth strategy, we continue to invest in additional BD opportunities. And with that, I'll turn it back over to you, Paul.

Awesome. All right. Understanding that you have a pretty steady PDP business, we'll definitely get to it. But I want to ask some DRP questions first, if that's cool.

Yes, you bet.

I guess as you've had continued engagement with the FDA, is there any interpretation you have on the lack of priority review? Investors and analysts love to read these tea leaves. And I've been misled by priority review and no panel, resulting in a CRL. So I won't overdo it, but what did you think internally then? And how do you guys feel about the intent?

Yes. Thanks much for the question. So let me just start by saying we remain highly confident in both the efficacy and safety data supporting our submission. And of course, at this point, we're focused on facilitating the FDA's review, which, as I mentioned, remains on track. And just as a brief reminder, our sNDA submission included an efficacy package, which was agreed upon with the FDA at the end of Phase II meetings before we conducted the pivotal HARMONY study. And based upon the robust and meaningful results from HARMONY and the additional supporting data from other efficacy studies in Alzheimer's and Parkinson's patients, and then just the overall safety profile of pimavanserin, we remain very confident in the potential approval for DRP. So again, just as I put it -- with that backdrop, at our end of Phase II meeting, we went to the FDA. We said we think we have demonstrated sufficient efficacy in the acute setting. We'd like you to agree to 3 things: one, that we studied DRP generally. They agreed to that. That was actually a very short discussion. Two, that we run a relapse-prevention study now to demonstrate the -- not only that we can stabilize patient symptoms, but that we get a durable effect over time. And then three, that we -- that a single relapse prevention study serve as the basis of approval, together with the other supporting acute studies we've done. And they've agreed to all 3 of those. That's documented in our minutes. So fast forward to today, we then executed the exact plan that we laid out for them. And again, that underlines the confidence we have in the potential for approval in DRP.

Got it. Okay. Great, Steve. What were your discussions with the FDA and what you need to show for safety? I mean, there's this whole -- we had Alzheimer's panel here at this conference yesterday and one of the panelists walked through the whole back history, going back to the 2000s with atypicals in the elderly and the original black box and changes in policy and things like that. What did FDA -- did they ever articulate to you what they wanted to see, right? It's obviously very hard to disprove a negative. And I guess, were they going to rely more on just your DRP clinical data? Or how much of the PDP post-marketing data goes into this?

Yes. They're both important. One thing that I didn't mention is that in the Phase II meeting we had setting up our Phase III program that we then executed, is in addition to those 3 points, we also just asked FDA very specifically. We said we just want to make certain that you are on board with approving a drug to treat dementia-related psychosis. Because today, there's a class warning for all antipsychotics, basically contraindicating that patient population. We want to make certain that you are on board with the concept of doing this if we followed the plan that we've agreed to. And they said, absolutely, we wouldn't agree to your Phase III plan if we weren't in that -- if we weren't of that mind. So again, fast forward to today, we've been on the market for 4 years. We've continued to run placebo controlled studies. If you look at the totality of the data that we have today on -- just on safety, if anything, the safety profile and tolerability profile of the drug looks even better than it did when we got our PDP approval. Most recently, or as a component of that PDP approval, we agreed to a post-marketing commitment to run a substantial number of patients in placebo-controlled study for elderly patients, evaluating them over -- against placebo over a period of at least 8 weeks. And we -- that commitment is due to be completed in the next year or 2. But any time you follow an sNDA, you need to collect all the safety data that you've generated since your prior NDA approval. We've done that, including the most recent cut from that safety study. And like I said before, every cut of data that we've had continues to support, if not look even better than the original basis for approval in PDP. So we've submitted that data and that all looks very consistent with what we know about the drug.

Got it. That's great. All right. Last here of the regulatory question, I promise, because I don't want to belabor it. Between what you do, Steve, are there any 3 like inflection points during the review from your seat that can be articulated and continue to convey comfort to investors?

We're following the same path that we did in the PDP review and that most companies do when they're in registration, that is, we're not going to comment on the specific back and forth that we're having with FDA. I just don't think that will be productive. But what I will say is, we remain on track. We remain just as confident as we've ever been in the potential for approval and just e-ready it to the PDUFA date.

Got it. Okay. Great. So assuming approval, where is your head at today on additional sales and marketing personnel? And how much infrastructure build-out will be required to launch DRP successfully?

Yes. Well, let me -- I'll take a little bit of running start. Let me start by just saying everything that we can do or should do in advance of our PDUFA date we've done. So we're ready to go. Let me just add a little bit of additional texture around that. One of the things that I think is really an advantage of this launch is this is a line extension. It's not a de novo launch. So there are a lot of things that we already have in place. We already have a hub. That hub has already been optimized. That is not an insignificant accomplishment when you launch a drug. There are elements of it that need to be expanded, and we've already done the work necessary to do that. We've had a lot of payer interactions. We won't be able to have the final, final interactions until we have a label. But based upon everything we've discussed with payers at this point in time, they get it. They understand that there's no drug approved, use -- off-label use of these dopaminergic antipsychotics is very problematic in this population. They actually impair cognition, been well established. They impair motor function. They have other safety and tolerability issues. So they get the need. From a promotional perspective, everything is ready to go. There's some final promotional materials that will need to await the final label. But otherwise, we're ready to go. We have a disease awareness campaign that we've initiated, put -- already put a lot of investment of capital and people and time into, that's going very well. So there's a certain amount of things that can't be done until we get closer to the PDUFA date, but everything else remains on track and is going extremely well at this juncture. Paul, you may be on mute.

Always. Yes, I know. Right. It's good. I'd interrupt you otherwise. So how does the treater mix compare for, I guess, maybe we'll simplify it and just say, PDP versus Alzheimer's psychosis? I remember when you were launching PDP, there was a lot of education that needed to go on with moving to certain specialists on what psychosis is and why is it a problem? Is that the same dynamic in Alzheimer's psychosis? Or is the treater base more biased towards psychiatrists and geriatricians?

So there are essentially 3 components to the prescriber base in PDP. They're neurologists, which really dominate the prescriber population. Psychiatrists, which are primarily geriatric psychiatrists. And then primary care physicians that we often describe as kind of pseudospecialists. So they are physicians that tend to focus on geriatric populations, for example. Those 3 components of the prescriber base are the same in DRP. Now the mix is a little bit different. So in DRP, the neurology base, as you might expect, is a little bit smaller. It's obviously dominant in a Parkinson's movement disorder. And the other 2 pieces of the pack grow a little bit. So we're already established in those components. There is some additional work we'll do to expand the footprint that we already have. But in many cases, for example, in long-term care, we might call on long-term care facility today that has 2 or 3 Parkinson's disease psychosis patients. That same-facility may have 20 or 30 dementia-related psychosis patients. So there are some real economies that we'll enjoy from that perspective. One other thing you touched on is what are the kind of dynamics going into PDP as related to -- excuse me, DRP as compared to the launch that we had in PDP. And I think there's one key similarity between the 2 and one key difference. And the similarity is, in both cases, there was nothing approved prior to the approval of NUPLAZID. And although physicians used the dopaminergic antipsychotic self label, they required a compromise. In the case of Parkinson's patients, those dopamine blockers can interfere with the dopamine therapy those patients receive and impair motor function, the hallmark of the disease. In the case of dementia-related psychosis, it is a very similar situation. Those same therapies are used off label. And they -- it's been well documented that they impair cognition. So they make the -- the kind of the first symptom of the disorder works. They can also impair motor function, which is a concern in these frail elderly patients. So that's the similarity. It's very similar dynamics. The key difference is, as I mentioned, Parkinson's disease psychosis is treated primarily by neurologists. And of course, they're most focused on can I -- on the movement disorders of the disease, can I get this patient so that they can go to the bathroom, so that they can feed themselves, so that they can have a more normal life. The psychosis there, they deal with it, but it's not as high on their -- it's not as close to the center of the bull's eye. In DRP, the connectivity between cognition, confusion, hallucinations and delusions is much closer. So we're just much closer to the center of the bull's eye. So I think we'll benefit from that in DRP.

Yes. No, that makes a lot of sense. That's really interesting. So maybe just one other thing comparing the treatment dynamics in PDP to DRP. So in PDP, there's this kind of nuance, right, where, theoretically, you could use any atypical off-label, but Seroquel has a big chunk of market share. Clozapine has a small bit because it doesn't block the D2 receptor and then there's pimavanserin. How does that kind of treatment dynamic compare DRP? Is there a go-to off-label generic atypical that you're kind of sort of pseudo competing with? Or is it more fragmented?

It's a little bit different in DRP than in PDP. You're absolutely right. In PDP, Seroquel is -- for decades was kind of the go-to -- low doses, I should clarify, of Seroquel were the kind of go to therapy. Now at those low doses, it's debatable whether you're really getting any true efficacy on psychosis versus just sedation. But that's what generally was used. So as a consequence, there was not a lot of switching wired into the system, because physicians just didn't have anything that they could -- they felt like they could really switch to prior to the approval of NUPLAZID. It's a different situation in DRP. Seroquel is still used more than any other agent, but there's a lot more use of Risperdal, Abilify and other atypical antipsychotics in that space. So there's more -- there's already built in more familiarity with switching antipsychotics. The other kind of related issue that I'll just touch on really quickly is Parkinson's psychosis and dementia-related psychosis, of course, occur in these diseases late in life. And so just based upon the patient demographics, you have a lot of new patients that are coming into the top of the funnel. So they're fairly dynamic -- dynamically treated medical conditions in terms of the patient population. So there's lots of opportunities to introduce a new drug.

Great. Makes sense. So it's interesting. I've watched your thinking on pricing and what price the market will bear evolved a lot. I remember when it was an upside surprise when the drug was $23,000 to $24,000 per year. I think over time you determined that maybe that was even too conservative and now you're expanding the population really significantly. So where is your head at on price and your ability to potentially hold price in DRP? And is there any engagement you can have with payers ahead of the PDUFA that can reaffirm your confidence here?

Yes. Great question. We've invested a lot of time on this very point because we want to make sure that we understand the dynamics, and we want to make sure that we're well positioned to describe the value that we're delivering. Because that really, at the end of the day, is what drives the pricing discussions and where we -- and our destination. So I would say on -- although DRP is 10x the size in terms of addressable population as PDP, I wouldn't assume that there will be a different price once we launch in DRP than the price we have in PDP today. And the reason is, as I mentioned before, the dynamics are very similar, and I think payers get that. Now having said that, the most important pricing discussions we'll have need to await a final approval and the label, and we'll see. If I had to say today, my expectation is, when we launch, we will get some pushback from payers we did in PDP. But over time, the medical community pushed back as well, had strong incentive for wanting access to the drug and patients need the drug. And so we settled to a steady state, which today reflects the very broad access that we have in PDP. So my expectation is we'll go through a similar process. I don't know if we'll land in exactly the same place. But I think based upon the discussion we've had, today, again, I wouldn't assume that there would be any different price in -- once we launch in DRP.