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

Hi, everyone. Thanks for joining us at the Cowen Healthcare Conference. A fireside chat with ACADIA Pharmaceuticals. I'm covering analyst, Ritu Baral. And with us from ACADIA, we have CEO, Steve Davis; CFO, Elena Ridloff; and President, Serge Stankovic. Thanks, everyone, Steve. Thank you. I will let you, Steve, kick it off with just a couple of minutes of level setting where you guys are right now before we dive into questions.

That sounds great. Thanks much, Ritu. I'd like to start just with a few highlights, again, as you say, to level set. First, we're driving NUPLAZID growth in PDP. In 2020, we achieved net sales of $441.8 million, representing 30% year-over-year growth. We continue to add new prescribers and new patients and see high adherence among our continuing PDP patients. Based on our 2020 performance and current outlook, we expect 2021 net sales in PDP, again, I just want to be really clear, this is PDP only, to be between $510 million and $550 million, representing 20% year-over-year growth at the midpoint of the range. As this is a potential launch here for DRP, we're not including revenue expectations for DRP in our guidance at this point. Beyond 2021, the long-term opportunity for NUPLAZID in PDP is significant and growing. Second pillar of our business is delivering on the DRP opportunity. Our sNDA submission for DRP remains on track with a PDUFA date of April 3, and we'll be ready to launch on day 1. There are no approved treatments for DRP today. There are, however, as we've discussed before, very serious consequences associated with symptoms of psychosis, including repeated hospital admissions, nursing home placements, increased risk of morbidity and mortality. We're looking forward to our potential launch in DRP. Our third pillar is to develop the next wave of breakthrough therapies in CNS. This year, we're advancing our pipeline with clinical trials across 5 separate indications. We have 2 ongoing Phase III programs. We initiated ADVANCE-2, our Phase III study for pimavanserin for the negative symptoms of schizophrenia in the third quarter of last year. And we progressed LAVENDER, our Phase III study for trofinetide for Rett syndrome and expect results in the fourth quarter of this year. In 2020, we further expanded our pipeline with strategic business development. We acquired CerSci Therapeutics, bringing us to first-in-class non-opioid pain program. And through our collaboration with Vanderbilt University, we brought in a novel muscarinic receptor program. Business development, as we said before, remains a critical pillar of our strategy. And we'll continue to execute high science deals to expand our pipeline. With that, Ritu, I'll turn it back over to you.

So I'll start you guys off easy. With the PDP continuing growth. I mean, given everything we've heard about -- look, knowing what we know about what a big proportion of your business, long-term care has been and knowing what happened in long-term care over the last year. The maintenance of sales levels and your continued growth trajectory has been really remarkable. And there's been a number of conversations about what's actually going on behind the scenes with patients and how that could impact any potential disruption as we head into the second half and we enter a potential COVID off-period. So can you talk about what you saw in the long-term care facility? Did you have patients leave long-term care, go to a retail setting, are now in the retail setting that may return to long-term care? Like why did retail return to growth as strong as it did, while long-term care was steady?

Yes, great question. So let me take it in 2 parts. I'll talk a little bit about what's happening outside of long-term care in the more community office practice channel and then talk about what's going on in the long-term care. So as we've indicated before, we did very well in 2020 despite the pandemic. The growth was driven by growing our prescriber base through double-digit year-over-year growth leading to double-digit growth in volume. And in addition, we increased our market share and meaningfully expanded the size of the overall PDP market by approximately 4% to 5%. That's about double the growth that you would expect based upon demographics. So as we think about these 2 channels, in the SP channel, we often refer to it or the more office-based channel, we saw an immediate impact when the pandemic first hit, that was centered on new patient starts. Not surprisingly, everything just froze, patients didn't go to their doctor's offices. And so we lost new patients that we otherwise would have expected to gain in the early 2 or 3 months of the pandemic. That pretty quickly began trending back toward normal growth rates and for the last several months of the year, we were back at pre pandemic levels there. I think that's just a...

Sorry, you said last several months of 2020, even as cases were going up?

That's right. That's right. Yes. Again, on the office-based side of the business, we performed really well despite the pandemic. So back at pre-pandemic growth levels in that channel. And I think that's -- I think there are 2 things -- 2 threads to pull on there. One is, I think we did pivot very rapidly in response to the pandemic. We instantly got all of our promotional materials on vivo vault, so that we could -- so our reps could be looking at the same documents that health care providers are looking at as they're detailing them virtually. We instantly moved our speakers bureau to a virtual speakers bureau. We set up -- facilitated the ability for physicians to write scripts virtually so that as their practicing telemedicine, they could do everything online. So that was one thing supporting that return to growth. And the other is just simply the recognition that this is a disease that needs to be treated. These symptoms are significant. And so as physicians adapted, patients, caregivers adapted to kind of a new reality during the pandemic, people pretty quickly go back to the point where they realize these patients need to be treated and then acted accordingly. On the long-term care side of the business, we saw an initially slower impact, but it's been a more sustained impact. And the impact Is really directly related to census numbers coming down in long-term care. So they're just fewer patients in long-term care. Fewer patients, exactly. It wasn't so much that we saw a lot of -- that was fed more by just patient -- new patients not coming into long-term care rather than patients that were already in a long-term care facility moving out. It's all some of that, too, but it was primarily just new patients not coming in. And so that is a temporal situation as vaccines are more and more distributed, more and more -- the elder population is vaccinated, we'll see that turnaround. I can't give you the precise month or quarter exactly how that will get back to kind of prepandemics census numbers and therefore, pre-pandemic growth levels in that channel, but that is certainly coming. So what we see today is the long-term care channel has stabilized. They stabilized at a level lower than it was pre pandemic. And again, I think we're on the cusp, now beginning to see the census numbers come back, and that will then be in advance of more normal growth patterns in long-term care.

So you will see like RRXs from retail turn into NRXs in the long-term care facility of patients, now are newly admitted to long-term care?

Yes, there's an important point there that I probably should have mentioned, we can access the patient wherever they are. So if a patient is not going into a long-term care facility because they were concerned about the pandemic, we have always shipped drug through specialty pharmacy channels directly to households. So patients get their prescription at their home. They don't need to go to a retail pharmacy to pick it up. So we can reach them wherever they are. I can't quantify for you the number of scripts that would have been a long-term care script that instead, resulted in an office space script, but certainly, some of that was happening. And so again, we can reach them wherever they are. And as we go forward, that mix of scripts between long-term care and SP will shift as the long-term care portion of the business returns to more normal growth patterns.

Got it. Okay. So that's PDP's snapshot in time. Of course, everybody wants to know now how the DRP sNDA is going. And the most frequent question I get is are we beyond an AdCom. Any change whatsoever from FDA in messaging such that there is a real possibility they could come back sometime in the next couple of weeks and say, "Wait AdCom, problem with the PDUFA date, if not anything else. What has that sort of tenor of the communication continued to be?"

Yes. I think we're beyond an AdCom.

Is that your...

Well, when we submitted, we said that we wouldn't be commenting on the kind of normal interactions that you would be having during a review -- during the entirety of the review cycle. So I'm not going to comment on that. But in terms of an AdCom, I think we're past the time now to have an AdCom. The FDA, when they accepted the submission for filing, indicated to us that they do not plan to have an AdCom, they've never changed from that verbiage. So I think we're beyond the time now where you would expect to have an AdCom.

Got it. How -- again, conversations with investors about the black box, what should expectations be? Modest changes? Could it be removed? Or the warning language just be moved to a different part of the label? And honestly, doesn't matter as you think about it?

Yes. Well, our expectations on this front haven't changed. So I'm just going to repeat what we've said historically. And that is, every antipsychotic has the same boxed warning. It's a class warning that all of them have. And it has 2 sentences. The first sentence simply says, "There's an association of higher mortality in elderly demented patients that take antipsychotics." And the second sentence says, "This drug is not approved for use in that patient population." Our label is the only label that has a carve-out in that second sentence. And our second sentence says, "This drug is not approved for use in that population unless their psychosis is associated with Parkinson's disease." So again, 2 sentences. Upon an approval in dementia-related psychosis, we would expect that, that second sentence would be removed. Because obviously it would've been more approved in DRP. The first sentence could stay just the way it is. And if that were the case, where it simply said, "There's an association of higher mortality in elderly demented patients that take antipsychotics," we would be in a situation that's very much akin to what you see with antidepressants today. Every antidepressant has a class boxed warning that says, "When these drugs are used in younger patients, there's a higher risk of suicidality." And so however, things might turnout with that first sentence or with the box warning in general. We're in a situation today where I just -- I don't see that having significant -- being a significant impediment. It's a medical warning that physicians are very well-positioned to assess. They do that in depression today. Physicians see the box warning. They make -- they know there's a risk associated with that class of drugs, and they make prescribing decisions based upon the needs of the patient. We're seeing that in PDP today, where we do have the box warning and physicians make that same type of risk-benefit assessment, and they're very well-positioned to do that. In DRP today, where there is no drug approved despite the fact that every one of these antipsychotics has that box warning and they're not approved for use in that population, there are 800,000 patients being treated with those very antipsychotics that have DRP. So I just don't view it as -- I think it is -- that kind of information is important medical information, but I think physicians are very well-positioned to assess it.

Got it. We have one e-mail question in from a client. "Could you please address how you view the patent expiration of well, patent expiration of NUPLAZID?" Maybe you could talk about the polymorph patent. What that real-world means and its expiration?

Yes, sure. So let me -- I'll start broadly and I'll go into as much details as you like. But broadly speaking, we have composition of matter patents that will take us into 2030. Now that includes our Hatch-Waxman extension, which is in the -- we're in the process of getting. So we filed for it. We will get it. And you'll see that in the orange book in due course. You don't see it today, but it will be there. And this is the normal process and the normal timing that you go through on a small molecule Hatch-Waxman extension. So that composition of matter patent will take us into 2030. Now when you apply Hatch-Waxman, you can only apply it to one patent. And we haven't specified which patent it will be applied to, but people don't normally apply them to a polymorph patent. Our polymorph patent does go 1 year beyond the underlying specificity patent that we have. And -- but people don't normally apply them to a polymorph patent unless they felt there's something very, very unique about that polymorph. So more likely, we would apply it to the underlying specification patent that would again take us into the second quarter of 2030. Now in addition to our composition of matter patents, we have a series of patents around the formulation of the 38-milligram dosage form, which is the standard dose given to patients. And we have a method of use patent around a 10-milligram tablet. Now that 10-milligram tablet is only used for patients that are taking potent 3, 4 inhibitors. That's a very small portion of the population. So we have additional patent coverages -- patents covering the only 2 forms of the drug that are available today. But admittedly, we all understand the small molecule patents. The most rock-solid patent that you have is a composition of matter. The other patents are just as solid, but they -- you can potentially work around a formulation patent. So we will enforce those patents very vigorously. But that's basically the status of affairs today.

Got it. Helpful. So let's go back to DRP for a second. So you mentioned you would be ready to launch on day 1, which probably means a -- 4th, correct, launch readiness on April 4, right?

Well, April 4 is a Saturday, but yes, we will be ready.

So clearly, in your line of sight, everything straightforward. How -- where are you on the current -- since we're a month away, planned sales force expansion and have you had to pull back from your long-term care touch points through COVID? And are you now sort of redoubling on those? Or do you have to sort of push those out until second half until society as a whole enters COVID off?

Well, I'll answer the second question. I'm going to ask Elena to answer the first.

So with regards to the sales team expansion, we're expanding from about 200 FTEs that are field facing to about 450. And as Steve mentioned, we'll be ready to go on day 1. And Steve, do you want to address the long-term care question?

Yes. So in long-term care, again, the 2 channels, long-term care, office-based physicians. The long-term care haul point is a little bit more complex. And so in an office-based setting, of course, we're calling on the physician, we're calling on perhaps nurses and staff at that physician office. So they're all there together. In long-term care, the call point is a -- includes various constituents, including the nursing staff or Medical Director at a facility, a prescribing physician many times, which is a geriatrician or a geriatric psychiatrist, that does not reside at the facility, they visit patients at the facility many times. And then the long-term care consulting pharmacy, and so again, typically not at the facility.

Can the geriatrician be detailed at the facility? Or do you need to go to the geriatrician's office?

Many times, these physicians that focus on long-term care, they really rotate around facilities seeing patients. So we can see that we -- there's no bar against seeing them at a long-term care facility. But I guess my point is we don't need to meet them at the long-term care facility, when we call them in-person.

Got it.

So having established relationships with that -- with those facets of the call points, those people that are involved, we're able to access them wherever they are. So we're not in long-term care facilities that -- but we don't need to be in order to detail to the people that we need to speak with. Now as we progress, we will reach a point where we will be back in long-term care facilities in more in-person settings. And so that will be coming. But I think as we've seen, where our business in long-term care has been impacted by census numbers, but on a relative basis, we performed very well. So we performed better than a basket of 15 drugs, branded drugs in long-term here, 13 of which had sales declines in 2020. We were 1 of 2 that actually had sales increases in 2020. So we're -- I think we're very well-positioned in long-term care to continue our business, they are at a very high rate. The key determinant there really is just getting back to the pre-pandemic census numbers or the number of people in those long-term care facilities.

Another e-mail question and just going back to DRP. Can you speak to your current confidence level in the efficacy and safety profile of pimavanserin in DRP as of right now?

Yes. We love to talk about that. So I'll let Serge answer that question.

Yes. Thanks. Well, I will start by saying that our confidence in both efficacy and safety data, has not changed from the beginning. We are very confident in the efficacy. I mean the robust results of the HARMONY study, combined with the evidence of efficacy in the -- up to acute clinical paradigms. And HARMONY study demonstrated clearly robust efficacy in both acute and maintenance study is exceptional. So we are very confident in those results as well as safety. I will remind you that the extent of the safety database that we have submitted as a part of this supplemental NDA is the largest that I'm aware in this patient population. We in addition to that, have a very extensive experience in the post-marketing safety surveillance in frail and elderly population of Parkinson's disease psychosis. And that's also a part of our file. So just to underscore again, we are very confident in the data and that level of confidence did not change throughout review.

Got it. How should we think about pricing now? You're going after a market that's 10x the PDP market. Yes. Just how are you thinking about WAC pricing? How are you thinking about discounting?

So as we said before, so we already have a drug on the market in PDP, right? So we already have a price. We're already on formulary. So as we've said before, I wouldn't expect -- I wouldn't assume that the price will be different in DRP. So obviously, if it were to change, we have the potential to discount. We don't do any discounting today in PDP other than what's statutorily required to government payers and then, of course, some very small customary discounts you do to channel participants. But to payers, we don't do any discounting other than to the government. And so I wouldn't assume that, that will be any different in DRP. And the reason I say that is the dynamics are very similar between PDP and DRP. And based upon the payer work we've done, they get it. There's nothing approved in DRP as there was nothing approved when we launched in PDP. The use of the dopaminergic, previous generation, atypical antipsychotics is very problematic in both populations. In the case of PDP, it can impair motor function in a Parkinson's patient that already has motor impairment. In the case of dementia-related psychosis, very large study, it's well-established that those drugs, those dopaminergic antipsychotics used off-label impair cognition in dementia patients that already have impaired cognition. And it's not insignificant. It's equivalent to about 1 year of disease progression. In addition, they impair motor function in those patients that already frail and elderly and higher risk of falling and breaking a hip, et cetera. They're also heavily sedating. So payers get it that those drugs are very problematic when used in those patients -- in that patient population for which they are not approved. So the dynamics, I think, are very similar. Now anytime you launch in a new area, you don't have the final payer discussions until you actually get an approval, and we have a label to discuss with payers. So that time will come. If we ever do need to do any discounting, we think it pencils out. In dementia-related psychosis, we've got a lot of dry powder since we're not doing any today.

Okay. I want to spend our last few minutes on the pipeline, especially with the trofinetide data approaching before end of the year. Maybe, Serge, can you remind us and walk us through the primary endpoint on the LAVENDER study, that Rett scale? And what does good data look like on that scale? Is statistical significance enough just given the unmet need? Or are you really looking for a certain delta to show clinical meaningfulness on top of statistical significance?

Yes. Thank you. First of all, let me just update you on the progress in LAVENDER study. We -- the study is progressing well in spite of the headwinds with the COVID pandemic and stops and starts with the study related to the availability and possibility to adequately assess the patients as we move forward through the pandemic. So the study is progressing well, and we are on track for the top line results before the end of this year, 2021. The study, again, as a reminder, is a 3-month placebo-controlled study and primary outcome measure is actually co-primary measures. We are using 2 outcome measure. One is our Rett Syndrome Behavioral Questioner, a validated caregiver assessment for the symptoms of Rett. And the second is clinical global impression of improvement, which is a clinician assessment. By nature, we need to win on both as those are primary. The study is adequately powered for both outcome measures. And by the nature of having that clinical clinician validation of the Rett questionnaire, I mean statistically significance from placebo would also indicate meaningfulness, clinical meaningfulness of the results. So we do anticipate that separation from placebo in this trial will present a clinically meaningful advancement for the treatment of Rett syndrome. And one other thing that I would like to say here is that a distinguishing feature of trofinetide is that we are targeting core symptoms of Rett syndrome. Some of the other development programs are more geared toward a specific area. Just as a reminder, the Rett syndrome is really a very polymorph in terms of a variety of different body systems involved. Not only in terms of motor symptoms and ambulation, but seizures, respiratory symptoms, GI symptoms, developmental cycles -- developmental symptoms and so on. So from that perspective, we are addressing multiplicity of these symptoms within the Rett syndrome. And the benefits will be -- that we observed in the Phase II study and anticipating our pivotal program will actually spread across these different symptoms.

Okay. That's very helpful. That was going to be my follow-up question. That gives us just 1 minute to talk about the non-opioid pain program. You have or planned to start 2 Phase II studies and 2 pain models. Serge, can you briefly walk us through those trial designs and when we might expect data?

Yes. In the first quarter of this year, we will be initiating Phase II study in the acute post-operative pain for patients undergoing bunionectomy surgery. And in the second quarter, we will be initiating Phase II study for patients suffering from chronic osteoarthritis pain. So we are targeting both acute clinical model and the chronic pain clinical model. Obviously, for the first study that we are starting and in acute pain, it's also a shorter study. We anticipate that we will be able to share the top line results before the end of this year, while the next study, osteoarthritis, starts a little later and it will be a little longer. So we anticipate in top line results in 2022. At this point, until we actually start the study and enrollment and get a little bit experience with that, we are not guiding precisely when in 2022, but we will have the top line results next year.

Great. I think we're at time. Serge, Steve, Elena, thank you so much for joining us today, and taking all the questions.

Thanks you, Ritu.

Thanks, Ritu.

Thank you, Ritu.