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

Good day, ladies and gentlemen, and welcome to the ACADIA Pharmaceuticals conference call. My name is Mel, and I will be your coordinator for today. [Operator Instructions] I would now like to turn the presentation over to Mark Johnson, Vice President of Investor Relations of ACADIA. Please proceed.

Thank you. Joining me on today's call from ACADIA are Steve Davis, our Chief Executive Officer; and Serge Stankovic, our President, who will provide some prepared remarks before opening up the call for your questions. Also joining us today is Elena Ridloff, our Chief Financial Officer. I would also like to point out that we are using supplement slides, which are available on the Events and Presentations section of our website. Please turn to Slide 2. Before we proceed, I would first like to remind you that during our call today, we will be making a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, including goals, expectations, plans, prospects, growth potential, timing of events or future results are based on current information, assumptions and expectations that are inherently subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially. These factors and other risks associated with our business can be found in our filings made with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which are made only as of today's statement. I'll now turn the call over to Steve.

Thank you, Mark, and good afternoon, everyone. Please turn to Slide 3. Earlier today, we issued a press release providing a regulatory update on the supplemental new drug application for pimavanserin for the treatment of hallucinations and delusions associated with dementia-related psychosis. On Wednesday, March 3, we received a notification from the FDA stating that as part of its ongoing review of the sNDA, they've identified deficiencies that preclude discussions of labeling at this time. The FDA stated that the notification does not reflect a final decision on the information under review. We were extremely surprised and disappointed to receive such a communication from the FDA and to receive it so late in the review cycle. Up until this notification, we've received confirmation from the FDA that they had not identified any review issues. On -- the March 3 notification did not provide any information on the deficiencies identified by the FDA. And despite our outreach, the FDA has provided no additional information at this time. We fully intend to work with the FDA to learn the nature of the deficiencies and seek to resolve whatever issues remain in the application so that we can bring this meaningful new therapeutic option to patients and their caregivers as quickly as possible. Before moving to Q&A, I'd like to hand it over to Serge, so he can briefly summarize our interactions with the FDA during the sNDA review.

Thank you, Steve, and good afternoon, everybody. Please turn to Slide 4. I would like to briefly highlight our interactions with the FDA since the submission of our supplemental NDA. On June 3, 2020, we submitted our sNDA. The FDA accepted our sNDA for filing in July 2020. At that time, they clearly stated that no potential review issues have been identified and that they were not planning to hold an advisory committee. The FDA stated to us in December 2020, following their mid-cycle review meeting in November, that they have not identified any review issues and confirmed that they were not planning to hold an advisory committee. In February 2021, ACADIA inquired if we were still on track for communication of labeling on March 3, and the FDA responded, stating that they were on track for communication around March 3. In the normal course of review, we responded to 2 data requests and 1 statistical question. In January of this year, the FDA conducted an inspection at ACADIA, focusing on HARMONY study, the pivotal trial in the sNDA, and the Phase II Alzheimer's disease psychosis study, one of the supportive studies for the DRP sNDA. We did not receive any observations related to the pivotal Phase III HARMONY study. We did receive observations related to the Phase II supportive study that we believe are not impactful on the efficacy and benefit risk conclusions from this study. Based on not having been advised by the FDA or any issues throughout the sNDA review until now, the March 3 notification came as a complete surprise this late in the review. This situation is particularly disappointing given the fact that pimavanserin has a breakthrough therapy designation for the treatment of DRP, and this designation should come with more transparency from the FDA. While at this time, we still do not have any information on what the deficiencies identified by the FDA are, we remain highly confident as we have since day 1, of our submission that we have a complete and robust data package to support the approval of pimavanserin for the treatment of DRP. In addition, our views are shared by numerous medical experts and former FDA personnel with whom we share the data. The unmet need is dramatic. Pimavanserin has demonstrated a positive benefit risk profile, and we are determined to bring it to the patients, caregivers and physicians who are waiting for this important new therapy. We'll now open the call up for questions. Operator?

[Operator Instructions] Your first question comes from the line of Ritu Baral from Cowen.

Can you guys go into a little more detail about the -- you said the 2 data analyses and the statistical analyses submitted, what were the nature of those? And have you had any feedback on the acceptability of those analyses to FDA, like proactive feedback, either on their part or inquiries on your part?

Sure, Ritu. Serge, do you want to take that?

Yes. Thanks, Ritu. The -- actually, the requests were not related to any new data. They were more a clarification related to particular patient profiles that FDA asked us to provide them so that they have a better review of the particular patients in the trial. And the statistical questions was more related to the SaaS program and formula for calculation of certain p-values that we calculated in the trial. That's all. They were clarification questions really.

And feedback?

There wasn't a feedback because this was -- they received the information they requested that there was not any follow-up to that.

Okay, on either side.

Next question comes from the line of Cory Kasimov from JPMorgan.

I'm kind of confused here. I mean, you got this letter last week on March 3, and you're just announcing it now almost a week later. Is it you were trying to -- you've been trying to get in touch with the FDA and they won't respond to your incoming e-mails, phone calls, whatever it is? Is there anything else behind that? Like when do you expect to engage in conversations with the agency to understand the path forward?

Yes. Thanks for the question, Cory. You're exactly right. We immediately and repeatedly have been pushing the FDA. We've escalated the issue. We just don't have any feedback from them yet. They've told us twice that they don't have any additional questions for us, and that's where things stand at the moment.

Okay. I mean -- so you just sit here in limbo until they decide to respond. I mean, maybe just ask this another way. Is there -- can you talk about the precedent for this type of communication? I am aware of some other companies that have gotten notifications like this. Is there any way to avoid a CRO at this point?

It's -- without having more information ourselves and knowing the nature of the deficiencies, it's hard for us to speculate. We are aware of some precedent situations where other companies have received letters that sound similar to this letter. And based upon those precedents, it would appear, likely, that we may have a CRO, but we just don't know at this juncture. We're still in the middle of a pandemic. I think the normal rules of engagement are perhaps a little bit different. And I'm not sure that precedents already are necessarily the best guide now. So I wish that we had more information to share. We just have not been provided any information from the FDA.

Your next question comes from the line of Neena Garg from Citi.

So just to kind of follow up on Cory's question. Was there any indication from the FDA potentially around extending the PDUFA date? And I guess, is that -- do you think that is still an option at this point?

At this juncture, they have not given us any reason to think or any indication to think that the April 3 PDUFA date would not be met.

Next question comes from the line from Salveen Richter of Goldman Sachs.

Yes. I was just wondering if you have any thoughts as to what these deficiencies could entail?

Serge, do you want to...

Yes, I'll -- yes. Thanks, Neena. At this time, we still don't know and don't have any information about the nature of deficiencies. Until we are able to learn what it is, what this deficiency may be, it may be premature for us to comment on the meaning of our potential contingencies in terms of what the next action by the FDA may be. We, as Steve said, reached out immediately to FDA and repeatedly, but at this time we really don't have -- they did not provide us with any additional information.

And is there like a set date by which they would have to respond to you?

No, there is no set date, really, that they would have to respond. I mean, we -- as Steve mentioned, just to reiterate, we escalated our queries and are doing everything that it is in our power to get that information in time to be able to react to it prior to PDUFA date, but we cannot say what FDA will ultimately do.

Next question comes from the line of Charles Duncan from Cantor Fitzgerald.

Unfortunate situation, difficult to figure out, I know. But I guess I'm kind of wondering if you feel like the label or REMS discussion was the next step. It seems like the press release was pretty clear that, that was kind of precluded. And do you feel like they are fully beyond the clinical data and safety review. And does this reflect a new level of FDA conservativism? I'm wondering if your consultants have said anything about that. It does seem to be, to some extent, a little bit of a trend when you look across some of the news flow recently in biotech.

Serge, do you want to take that?

Right. Absolutely. Charles, thanks for the question. Again, without having the knowledge what specific deficiencies FDA has identified, it is really difficult to speculate. Obviously, we were hoping and expecting that on March 3, we will receive first draft of the label and thus initiate labeling discussions but instead received this communication. Now I do want to use opportunity to say we are very confident with our efficacy and safety package that we submitted to FDA. We remain confident in the data, in the quality of the data and in the extent of the data. And therefore, this is really a big surprise for us because it's really, at this point, difficult for us to think that any potential questions or concern would merit this sort of postponement of the labeling discussions. But I would stop here and really refrain from further speculation because it's very difficult in a situation of not knowing the exact nature of deficiencies.

Charles, just to be clear, in response to your question, March 30 is the date that the FDA gave us as the date that they plan to commence labeling discussions. In the middle of February, we reached out to them to confirm that they were still on track, and they responded that they were on track. So that's all we know. It's very difficult for us to speculate what could have happened in that time frame. But obviously, as soon as we learn more, we'll be eager to share it.

Next question comes from the line of Tazeen Ahmad from Bank of America.

Steve, just on the point of labeling discussions to have started on March 3. How does that compare? It would have been only about a month before the PDUFA. How does that compare to when your labeling discussions for PDP has begun? And then secondly, can you just clarify for us in terms of either your Phase II data set or your Phase III data set, did you have a disproportionate number of responders from certain sites in those studies?

I'll take the first part of the question, and Serge will take the second part. So 30 days out is about the normal time that you might start labeling discussions. Many times, it can be less. It's rarely a lot more than that. Sometimes, it's 3 weeks out, 2 weeks out. I've seen as little as a week out. As it relates to our PDP experience, we started labeling discussions -- I can't recall exactly, but I think it was between 2 and 3 weeks out from the PDUFA date. Serge, do you want to take the second question?

Yes. In the Phase II study, we had -- it was a single center [ STAR ] trial, so that -- in the Phase III, our pivotal trial, there were no particular outliers with the numbers of responders. Obviously, there are sites that recruit more or less. But in terms of the responders and particular patterns of response, there were no outliers that were observed or reported.

Our next question comes from the line of Paul Matteis from Stifel.

I wanted to clarify one thing, and then I had one other quick question. And the clarification is really, you mentioned that there were FDA questions related to particular patient profiles. Did that have anything to do with the different subindications within the DRP trial, and whether or not the effect side kind of held up across groups? And then second, where are you on your PDP post-marketing work, specifically in any post-marketing safety studies that you were asked to do? And what's kind of the ultimate schedule there on the side in terms of when you're supposed to give FDA more data?

Yes. Let me start with the first clarification in terms of the data request. These were not related to any specific subtype of dementia. They were more related to the response and relapse. And so the FDA wanted to look at the entirety of the patient profile and just ask us to make it easier for you to review the individual patients -- not all, but some of the patients and ask us for those patient profiles. So statistics, just biometrics produce those reports, and we send them back to them. So there were not any specific targeted questions about that, but it must please help us so that we can review this easier. On the second part of your question, can you repeat it, please? It just escaped my mind for a moment.

Post marketing commitment.

On the post marketing commitment, yes. Well, you know that we had a 4 post-marketing commitment. The one remaining commitment that -- all are fulfilled, except the one that was a controlled safety study. That as we reported throughout our submission and the review, we -- majority of that study is completed. You know that, that commitment asked for 5 -- minimum 500 patients to be exposed to pimavanserin for minimum 8 weeks as a part of our submission, both in the original submission and then in the 120-day safety update. We have fulfilled 80% of that commitment. So we had completed 400 out of 500 patients in that post marketing commitment. That commitment is -- not to do with the report until next year. So we have -- we are -- at the time of our submission, we were ahead of the schedule in terms of the data. But obviously, the COVID situation slowed down some recruitment.

But just to be clear, we submitted in our 120-day update a data cut from that study, which was exactly what we had promised FDA we would deliver. That data cut did not have any additional information on safety. The safety profile continue to look exactly as it had in all of our previous work.

Next question comes from the line of Gregory Renza from RBC Capital Markets.

Just as we look where you go from here, just if you could perhaps speak to how you're going to organize around this issue. What are those next steps? How you plan to update and provide disclosures to us and the street around getting some of the detail on the FDA. And then just related to that, certainly on the organization to run, the commercial leadership change and certainly patients and folks lying and waiting in the wings here, how you think about those impacts when you talk about allocating resources certainly going forward for the rest of the -- for the remainder of the year.

Yes. I'll -- there are a few questions in there. I'll start, and then I think Elena may want to chime in on a couple of them. But I think just in terms of our communication with you, communication with the investment community, we're kind of handicapped right now because we just don't have any information from the FDA. We're eager to learn what deficiencies are that they have identified and work to try to resolve them as fast as humanly possible. Until we get that information, it's kind of hard for me to make any commitment to you about exactly when we'll be able to get back. But what I can tell you is we'll get back to you just as quickly as we possibly can. In terms of the impact it has on our business, obviously, we've got a PDUFA date still of April 3. We expect to hear something by the end, if not sooner. And so between now and then, we've got a business to run and we'll keep running it. Once we have more information, to the extent we need to do anything -- whatever we need to do to respond to information, of course, we will. And you can count on us to continue to executing the business in the same way that we have, subject to whatever we need to do in DRP. And by that, I mean we've got trofinetide data coming up in the fourth quarter of this year. We're continuing to execute on our negative symptoms of schizophrenia study. We'll be starting Phase II studies in pain. We've got an early stage portfolio that's, going forward, business development will continue to be a very important part of our business. So as it relates to DRP, we need more information before we can really speak clearly about next steps there. And of course, as it relates to PDP, we continue to have a very healthy growing revenue stream there. Elena, anything else you want to add?

Yes. The only thing I'd add is we're in a very strong cash position with DRP and pending any updates -- depending on what we learn on the timing of DRP. We ended the year with $632 million in cash. And as Steve mentioned, it's premature at this point to comment on our resource allocations. As we learn more, we'll be able to give you additional color there.

Next question comes from the line of Vamil Divan -- from Jeff Hung from Morgan Stanley.

I know based on the comments that you made so far, it's hard to speculate without more information. But I guess, do you think that you would hear back from the FDA before the PDUFA date?

Yes. Thanks for the question. I can certainly understand why you'd ask it. I just -- I'm afraid to make any commitment. We just don't know. What I can tell you is we have -- we immediately reached out. We have continued to reach out. We've escalated. We don't have any additional feedback yet. And so it's hard for me to know what we'll learn between now and the PDUFA date.

Next question comes from the line of Vamil Divan from Mizuho Securities.

I know you're limited to what you can say. But maybe just one kind of, again, thinking about the big picture and kind of the outlook for the product. Can you just talk about, sort of, your base case assumptions right now on the IP situation on NUPLAZID and even trying to again the patent extension, sort of what when might we hear more on that? Just as we think about if there is some sort of delay, less time to commercialize DRP, what the impact might be longer-term in terms of when the product faces to your competition?

Yes, sure. So thanks for the question. So just as a reminder, our compositions of matter patent with Hatch-Waxman extension provides coverage of pimavanserin to April of 2030. So that's the 14-year maximum you can get under Hatch-Waxman. In addition in the orange book there are 4 additional patents listing that cover the only 2 formulation of NUPLAZID that are on the market. One is the method of use patent, which expires in 2037 for our 10-milligram tablet. And the other 3 patents cover the 34-milligram capsule formulation that expires in 2038. And as we said before, I'm highly confident in our intellectual property, and we would assert these patents against any potentially infringing in the filers.

Our next question comes from the line of Joseph Stringer from Needham & Company.

I just wanted to clarify on comments that Serge had made on no observations related to the pivotal study. But you mentioned the Phase II supportive trial, could you maybe just sort of -- I guess, repeat what you had said in terms of observations from that and expand on that, if you could?

Yes, absolutely, I'd be happy to do that, and maybe provide a little bit of the color. Just to repeat, in January, we had an inspection that was focused on these 2 studies: Our pivotal trial, HARMONY study; and Alzheimer's disease psychosis study, which is one of the supportive trials in this supplemental NDA. No observations related to HARMONY study, observations related to supportive Phase II study, and we believe that this observation really were -- are not impactful on the -- any conclusions from this study, but either in efficacy or benefit/risk profile. The observations were related to investigator and sponsor oversight. This sort of things in any inspections often happen that some observations are noted. And as I said, the impact of this observation in our belief is not really affecting the overall conclusion from this study.

Next question comes from the line of David Hoang from SMBC.

So I just had a question on the Phase III HARMONY study, just kind of going back to the design of that study. I understand it's a randomized withdrawal design. Could you just remind us why that design was selected versus sort of a more standard placebo-controlled design? And then are there any precedents within the CNS space for FDA approving a drug based on one pivotal study that uses a randomized withdrawal design?

Right. Let me start. There is a few questions here that I would like to address. First, I want to emphasize that the design of the single pivotal trial, an agreement that one single -- robustly positive pivotal trial of the design, as we proposed, would be sufficient for approval of this indication was agreed with the FDA both at the end of Phase II meeting as well as the pre-sNDA meeting. So this was -- FDA was well informed about the design, and we have the discussions of that and agreement even before we started the study. The choice of the design was not in the absence of already available efficacy data for pimavanserin in both Parkinson's disease patients with psychosis and dementia and in the outcome disease psychosis patients, where in both of this, in the 6-weeks efficacy evaluation, the drug showed superiority over placebo. So the question that this design was intended to address is maintenance of efficacy, durability of effect, which we demonstrated with randomized withdrawal design, along again with repeating the short-term acute efficacy from the open-label phase and then the duration durability of effect in the randomized withdrawal phase. So as a package, this was completing the overall evidence of efficacy of pimavanserin in both acute and maintenance of treatment paradigm. In regard to whether this design is sufficient and whether there are precedents in terms of approval, I can think of the case of lamotrigine that is approved for prevention of bipolar depression on a basis of randomized withdrawal design or the maintenance of efficacy design. And of course, almost every antipsychotic is in the supplemental NDA received approval for maintenance of treatment in schizophrenia on a basis of randomized withdrawal design.

We have a follow-up question, comes from the line of Jason Butler from JMP Securities.

Just a couple of quick ones. Are you guys aware of any manufacturing, outstanding deficiency that your third-party supplier either directly related to NUPLAZID or indirectly related to the facility? And then secondly, Serge, can you just talk about the HARMONY study and the sensitivity analysis you ran, any analysis there changed the primary statistical conclusions of the study?

Yes, I'll take this...

Yes. Okay. Please go ahead, Steve.

Yes. I'm sorry, Serge. Let me just answer the first one really quickly. The answer is no. We're not aware of any issues with any of our contract manufacturers. The drug has been on the market for almost 5 years. The contract manufacturers we use do get inspected periodically, and we're not aware of any deficiencies or outstanding issues if any of them at this juncture. Serge, you want to take the second question.

Yes. What I will say is, naturally, we ran a number of different sensitivity analysis in addition to our primary analysis in the HARMONY study, and they all essentially were confirmatory in a sense of validated the primary outcome of the study at -- in a vast majority of the sensitivity analyses, almost all of this at a very high statistical significance level that we observed in the primary analysis.

We have the next question, comes from the line of Sumant Kulkarni from Canaccord.

We know that patients in the HARMONY trial had no worsening in cognition or motor function. There were no specific questions from the FDA on HARMONY so far, and you said you're confident about quality and extent of data. But do you think the time frame of the HARMONY trial, that's the 12 plus 26 weeks, provides enough info on the risk/benefit profile of pimavanserin specifically to gauge an impact on cognition in this older patient set?

Well, I will first say that the safety data package that we provided for pimavanserin in this patient population and the duration of trial and the exposure that we have, it's actually the -- among the largest data sets and longest trials that exist in this patient population in for this indication. So it is very hard to argue that this would be insufficient duration of exposure because essentially, the other trials done in this patient population for these same indications were shorter and data sets were relatively smaller or also considerably smaller.

[Operator Instructions] A question from the line of Ritu Baral from Cowen.

Can you give us the topics of the mid-cycle review meeting? And based on this time line on Slide 4, is it fair to say that you did not have a late-cycle review meeting? Was that on the books, or was that just part of labeling discussion?

Yes, Ritu. Happy to do that. I do want to make a little bit of clarification. Typically, the mid-cycle review meetings and end of cycle review meetings, would be held internally by FDA. And for the NDA -- for a full NDA for the program application, the company is notified of the outcome of the meetings, and there is a mid-cycle review meeting. However, in the case of supplemental NDA, it is -- FDA is not required to notify the company of the outcome of the meeting or to hold a mid-cycle review meeting. So this is really at their discretion whether they would do that or not. We did not -- they did have mid-cycle review meeting, internal meeting, but we did not have mid-cycle review meeting with the FDA. We did receive for them the -- as I reported, we did receive from them a notice -- notification, that there were no review issues identified at that meeting, and that they continue not to plan holding the advisory committee meeting. This was the message that we received from the project manager, and that was it. In terms of the end of cycle review meeting, that one usually happens around the time of commencement of the labeling discussion. And that is why in February, we reached out to the FDA to ensure that we were on track for that labeling communication on March 3. And as I reported, they confirm that we are on track for communication around March 3.

Thank you so much for the question. Mr. Davis, please proceed to closing remarks.

Thank you, operator, and thanks for each of you for joining us today. We look forward to getting back to you as soon as we have additional information.

Thank you for your participation in today's conference call. This concludes the presentation. You may now disconnect. Good day.