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

Hi, everybody. Good afternoon, and thanks for continuing to join us American Healthcare conference. It's my pleasure to have with me for the next 30 minutes some of the members of the management team from ACADIA Pharmaceuticals. Steve Davis, Serge Stankovic and Elena Ridloff. Good afternoon. Thanks for joining.

Thanks, Tazeen.

So we're meeting virtually this year again. We hope to be back in Vegas, but we'll try to make the best of the time that we have together. I thought that it would be good for everybody to get on [indiscernible] going on at ACADIA. There might be some folks on this webcast that aren't as familiar with the story. So usually, I'd like to ask for a quick 2-minute pitch and see here, I'm going to ask you to pitch ACADIA for 2 minutes or less.

Perfect. I'll make it quick, but thanks very much for having us, Tazeen, and I'll just start with a little bit of level setting. So there are 3 strategic pillars to our business. First, we're driving new plans of growth in PDP. In the first quarter of 2021, we achieved net sales of $106.6 million. This represents 18% year-over-year growth. We continue to add new prescribers and new patients and see very high adherence among our continuing PDP patients. And although, we experienced the COVID-related headwinds in the beginning of the year this year, March and April have shown improvements in several key leading indicators. So we're very optimistic as we move forward. On our earnings call, we reiterated our 2021 sales guidance of $510 million to $550 million and where we land in this range will largely be a function of the timing and pace of recovery related to the conditions of the pandemic. Beyond 2021, the long-term opportunity for NUPLAZID in PDP is significant and growing. I've said many times in the past, this can be a very big drug just in PDP alone. Second pillar of our business is we remain committed to bringing pimavanserin to the DRP patient community. In April, we announced that the FDA issued a complete response layer or CRL, regarding our supplemental new drug application for dementia-related psychosis. We look forward to constructive dialogue with the FDA at our Type A meeting, where we plan to discuss the CRL into potential path to approval with pimavanserin. Just as a reminder, there are no approved treatments for DRP today at a very significant unmet. There's serious consequences associated with the symptoms of psychosis, which includes repeated hospital admissions, nursing home placement, increased risk of morbidity and mortality. And without an FDA approved treatment, the burden of DRP remains significant, and patients just continue to be treated with the dopaminergic antipsychotics that are not approved for treatment of that patient population and it's well established that those drugs impair cognition further than the patients already experienced with dementia and impaired motor function, we've demonstrated in the clinic, but we don't have those liabilities. The third pillar of our business is to develop the next wave of breakthrough therapies in CNS. This year, we're advancing our pipeline with clinical trials across multiple therapeutic areas. We have 2 ongoing Phase III programs. We initiated our ADVANCE-2 study, a Phase III study for pimavanserin for the negative symptoms of schizophrenia in the third quarter of this year, and we expect results by the end of this year from lab into our pivotal Phase III study with trofinetide for Rett syndrome. Last year, we further expanded our pipeline with strategic business development deals, including our acquisition of CerSci Therapeutics, first-in-class non-opioid pain program; and a collaboration with Vanderbilt University, where we brought in a novel muscarinic receptor program in 1 PAM target. In the first quarter, we initiated a Phase II study, evaluating our lead drug and pain ACP-004 for postoperative pain following bunionectomy. And in the second quarter of this year, we will initiate a Phase II study evaluating that same compound for chronic osteoarthritic pain. So business development remains a critical pillar to our strategy, and we'll continue to execute high science fields that expand our pipeline. So thanks for the opportunity to level set. And with that, I'll turn it back over to you, Tazeen.

Okay. Great. Steve. So there's a lot to talk about. So maybe let's start off with your currently marketed indication PDP, which has now been on the market for a few years. Wanted to get your latest thoughts on where you think you are in the trajectory of the launch? And then we can go into some details about different channels and impact from COVID.

Yes. Great. Thanks much for the question. So when we launched this drug, we said in this indication, you should expect a kind of a linear shaped growth or not a C-shaped curve that you might often see in rare disease or maybe oncology. And there are a lot of dynamics that factored into that. But the short version is that's exactly what we've seen. We've seen very attractive revenue growth quarter-over-quarter, year-over-year and we expect to continue to see that. At the moment, we stand at about 20% of market share. So we've got a lot of room to continue to grow the drug. When we look at the kind of near-term growth drivers, there are 2 key ones that really stand out, they're both related to the pandemic. We have been impacted on the long-term care side. Long-term care admissions dropped about 20% during the pandemic and then just kind of stayed there. The last couple of months of data we have, we've indicated growth for the first time about 1% in each month. And so we're beginning to see what appear to be some early signs of recovery here. So the bottom line is the [indiscernible] situation is as vaccinations get more and more prevalent as infection rates go down further and further, as more and more nursing homes allow family members to visit their loved ones in care, the census numbers will go up, and that will be supportive of returning to the kind of growth that we've seen in the past in that channel. And on the -- in the other channel, in the office space channel, we made a very quick pivot when the pandemic first hit moved all of our materials to a common database system, so that health care providers and our reps could be looking at the same promotional materials at the same time. We instantly move to virtual speaker's bureau. We facilitated online prescribing so the physicians could do everything online when they're pricing telemedicine to patients. So we really benefited that throughout the pandemic. And as physicians are now doing less telemedicine, I think it will still stabilize at a significantly higher level than it was prior to pandemic. But as they're doing less telemedicine, they're doing less virtual detailing as well. So it's important for us to get back to more and more in-person detailing with our reps, and we're beginning to see that now. So those numbers are going up. We're still less than 50%, but they're going up now, and that will also continue to support near-term growth. Longer term, the same dynamics that we've seen that have supported the kind of growth trajectory we have continue to be in place. And again, as I said before, I think it's going to be a very significant draw just in PDP.

Okay. You talk about your current market share, you talked about the 20%. Is there any way of quantifying what, if any, major impact COVID has had on that number? Would you expect it to be without COVID, for example?

Well, I think the biggest impact from COVID has not been on share per se. It's just been an absolute numbers. I talked a little bit about in long-term care, the impact that the pandemic has had in long-term care. And then in office space setting, the impact through our inability at a certain point in time, which is now changing to detail in person. And so because Parkinson's disease psychosis is very different than, I would say, depression or bipolar disorder or schizophrenia, where those patients are impacted and on therapy for decades. In the case of Parkinson's disease psychosis, the patient population seems to have a lot more turnover just due to the fact that their lifespan is shorter than those other kinds of indications. So as a consequence, the way to gain share in this population is through new patient starts primarily. We certainly do see switches. That's an important part as well. But just due to the dynamics of this patient population, new patient starts are key. So during the pandemic, when you don't have as many patients starting into long-term care, when we're not able to do as many in-person visits, it does have an impact on the ability to start new patients and therefore, can impact our share as well.

Okay. Now hopefully, as the reopening starts, you'll start to see acceleration again. I think you could provide some comments on your earnings call about some observations. But can you give us your thoughts on whether or not we should start to see a meaningful uptick as scripts as we go back to reopen?

Yes. I think on the call -- let me give a couple of dynamics and I'll escalate you may want to add some additional color here, too. But at a high level, we -- the pandemic situation is temporal. It will -- life will return to maybe a different normal or a new normal, but it will return to a normal at some point in time. And so as we progress, we expect to benefit from that. It's very hard to predict on a month-to-month basis or even a quarter-to-quarter basis exactly what those -- how those dynamics will change and particularly when you get to the distal end of them impacting revenues in that month or that quarter. So that's a little bit challenging. So I can't predict exactly the timing. But what I can say is, we have a high degree of confidence that these are temporal matters. And as I described, the impact of the pandemic that I've just described, will subside, and we will return to more normal type of growth patterns. Elena, anything else you would like to add?

Yes, I think that's right. It's a little -- it's hard to predict today what the pace of that recovery will place. But starting in March and in April, we have seen important indicators trend positively. So patient business, patient business are seeing face-to-face interactions as well as new emissions to [indiscernible].

Okay. So let me ask you this question. How difficult is it -- so doctors have switched to virtual business, let's say, with patients. Does that make a more [ difficult ] to diagnose PDP? Because we cover other companies that have said that they've had varying levels of impact from switch to telemedicine or virtual medicine, whatever you want to call it. And some have been more impacted by others. Some have said, no, you have to see the patient face-to-face to make a diagnosis. How -- where would [indiscernible]?

Yes. So I can tell you the feedback we get from physicians. So of course, Parkinson's disease psychosis is a component of the overall symptoms that Parkinson's patients have. It's a little bit more challenging to diagnose or make adjustments in treatment on the motor symptoms of Parkinson's when they're not seeing patient face-to-face. On the psychosis, it lends itself more to a telemedicine approach. Just as an example, Psychiatrists have for quite some time, probably done more telemedicines than any other specialty. So it can lend itself. But if the patient is not coming into the office to see the physician, and they're not able to address the motor symptoms, then it does have an indirect impact, I would say, on their ability to diagnose new patients with psychosis or start them on new therapy.

Okay. Okay. So maybe let's move on to the second indication that you're looking at now the pimavanserin for DRP. There's been news flow over the last couple of months as it relates to the application that you submitted for approval, which all of us thought should have been a smooth approval. So we were as surprised as you guys were to not have that happen. So just to remind everyone at ACADIA, a CRL for the application. And you have now undertaken to address that, given pretty strong reasoning about the agreement that you have with into that program of [indiscernible] needed to be shown. So if you could either see or provide us with a quick summary of where you guys are in the process of appealing that CRL?

Sure. Serge, do you want to start and then I'll add additional color.

Yes, absolutely. Our team has been really diligently preparing the briefing package, which outlines the perspective or our perspective on supplemental NDA and the overall totality of the data we presented. And that briefing package should provide a template for us for discussion and future interactions with the FDA. We -- as you mentioned, we believe we have a strong argument to discuss with the FDA and want to be very diligent in the preparation of this, including a number of both external experts, different expertise, trying to really prepare the case. First of all, the principle, our principal objective here is to understand the best we can, the rationale and concerns that the division has related to the review of our supplemental NDA. That's really our first step in order for us to be able to find a successful path forward with the division and that understanding. So we continue to believe, are very confident with the data that we presented in the supplemental NDA, and continue to believe that the prior agreements that we have in the way how to study dementia-related psychosis is indeed the best, most appropriate scientifically approach to study this condition. And we would like that data and evidence that we provided really supports strongly both the approach and support strongly the strength of benefit that pimavanserin provides in this patient population. So that's where we are. We are in the final stages of preparation of that background document. I want to remind everybody that because Type A meeting is on a 30-day schedule, the meeting request is simultaneously submitted with the briefing document. And that's why really preparation of the briefing document is a critical point for our submission, which we are at the final stages and anticipate to be able to submit that in the very near future.

And Tazeen, I think Serge summed it up really well. I'd just maybe just add one additional thought. I think the core issue here is, what's the best way to study this population. Should you study them based on the way that we studied them in our Phase III program, which aligned completely with the end of Phase II agreement we had in Phase II meeting agreement we have with FDA. And that is to study it as a single population. There are a lot of reasons we've discussed in the past call. We think that's the right way to study it. I'll just quickly summarize here. While the underlying etiology can be very -- of course, it would be very important if we were looking for a disease-modifying therapy and you wouldn't be able to study a broad population like this. The psychosis presents in a very similar fashion irrespective of the underlying etiology and it responds in a very similar way. The -- in addition, the purported subtypes that you have or subgroups is very, very difficult to correctly diagnose. It's very hard. And we see many times for patients on autopsies to discover that they actually didn't have Alzheimer's and vascular dementia they had some other [indiscernible] as an example. So for a lot of good reasons, we feel like the better -- the best way to study this population is the way we studied it, we're eager to get to the Type A meeting to better understand the FDA's perspective that appears to suggest that their view is that it should be studied based upon individual subtypes. They clearly pointed out in the CRL that they -- that we didn't have statistical significance in some subgroups, again purported subgroups, and in others, the numbers were just too small. We wouldn't have expected that based upon the design of the study. It wasn't designed nor powered to show significance on individual purported subgroups.

Okay. And all of that makes sense, like you said, this was agreed to before you started the study. So we are [indiscernible] about [indiscernible]. So maybe what do you think are the potential outcomes here? So I think people might be a little bit confused about what the next steps are. The question is, once you have this meeting, do you then immediately [ assess how the meeting went ] or do you wait for the minutes of the meeting? Or do you just go through the process of that meeting isn't productive, you appeal to the next level and then you just provide an update at the end.

Yes, sure. I'll give just as much color as I can. So we'll be completing the briefing document very soon, and then we -- we'll submit our request for the topic, the briefing document has to go in with the request. Once we've done that, the clock that the FDA has set for their internal guidelines is we should have a Type A meeting within 30 days, usually it is about 30 days. Once we had that meeting, then minutes should come with -- in another 30 days. So I think it's very doubtful that we'll have anything to update on until we've actually had the meeting and get the minutes from the meeting. So that's probably a little more than a couple of months out. And once we do that, we expect to be in a position where we'll be able to comment. So then as you correctly asked -- what happens after the meeting? Well, the whole purpose of this meeting is to align around what does it take to get an approval now? Can we agree on a plan to get an approval? It's possible in circumstances like this, that you can agree on a plan that doesn't require any additional clinical work. That's, of course, will be the best outcome for us. It's also possible that the psychiatry division, which just issued the CRL will be -- the primary people who we'll be meeting with at this Type A meeting, they may take the position, you need to do additional clinical work. And so if we can't agree on that path, if it does have a built-in appeal process, we can appeal that, then up to the office of neuroscience. Same question would be on the table, what do we need to do to get an approval? And if we don't reach an alignment there, we have the option of appealing up to the office of new drugs. And so it's premature at this point to say where we'll go with this process, the next step is we need to have the Type A meeting.

Okay. So let's say that one of the scenarios that could happen when you have this Type A meeting is that they realize the errors, their errors in their ways and they say -- sorry for them, miscommunicated or misunderstanding. We're going to honor what we agreed to in writing at the beginning of this process. If something like that were to occur, and I'm painting the clueless type scenario, obviously. If something like that were to happen, I guess, mechanistically, would you have to reapply or how would that...

Well, I just want to clarify one thing first. I wouldn't expect the FDA to respond to the way that you described it because I don't think that's really the issue. I think the issue is what is the best way to study this population. And we just need to meet with them to better understand their position. We just -- we believe our position is very well supported. And clearly, the data from the study would support an approval if you believe that's the right way to study the population. So we need to have that straightened. But to answer your question, the best case scenario is probably looking at approval sometime next year. If we don't need to run additional clinical work. And just win, that would be a function of, do we reach alignment at the Type A meeting in a way that wouldn't require additional clinical work because if we need to do additional clinical work, then we're looking well beyond next year. But if we don't need to do additional clinical work and we reach that alignment at a Type A meeting. If we can't, can we get that alignment at either step of the appeal process and obviously, the further you go, the longer it takes.

And if I may just add one additional color, your question. Regardless of what outcome the meeting is, the complete response letter is a finality. This review cycle is ended. We will have to resubmit and have a new review cycle. The question is how long that review cycle may be? Because it may be, if it's only a labeling discussion, it may be as short as 2 months, it may be 6 months, post the new submission.

Okay. And to clarify, you guys have not reached the stage of labeling discussions in this cycle, for this indication based on [indiscernible] in March?

That's correct. We did not initiate labeling. That's right.

Okay. Let's talk about [ if the agency ] deems it to be not the right approach to take a bit of an umbrella view of all the different types of psychosis that can occur. What if they become a little bit more strict on what they asked for? How do you assess internally what the risk reward is for ACADIA to pursue in a decision in DRP, if for whatever reason, at the end of the day, that DRP indication may not look as large as it does right now to you.

Well, as tempting as it is to try to answer that question, I just -- I don't want to get too far ahead of ourselves. I want to make sure that we have the opportunity to actually discuss with the FDA and understand their position. That's really the next step. And so once we've had a chance to do that, then we'll be in a better position to discuss what would maybe be next steps beyond that.

Okay. So we'll come back and revisit here [indiscernible] later in the year. Let's move on to talk about [indiscernible] going on at ACADIA. Let's talk about your programming Rett, because a lot of people spent enough time digging deep into that. So perhaps you can give us an overview or search about what your program is in the clinic right now on Rett and when we should expect to see the next round of data?

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

Yes, absolutely. Thanks for that question. Yes, our trofinetide program and Rett syndrome development is high on our priorities. Obviously, as we are approaching the conclusion of our Phase III study. We do have agreement with the FDA based on our discussions on the end of Phase II meeting, both in respect to the design of the study and definition of what the positive outcome of this program would be sufficient for approval in this indication. The Rett syndrome is -- there is a high medical need. It's a highly debilitated rare neurological disorder, just to remind the audience here. And we are doing a single pivotal trial, a Phase III trial. It's a placebo-controlled 3-month study. We have agreed, as I said, on the design of that trial and the program is progressing well. We are anticipating top line results before the end of this year. So based on those results, we will then be moving forward with a positive data. We will be moving forward for an approval toward the submission of trofinetide for this indication.

Okay. So Serge, what should we view as clinically meaningful data here when you have the readout of the top line?

The interesting feature of this program and design of the Phase III study that we are evaluating 2 measures of efficacy as a co-primary measures. One is Rett syndrome questionnaire that is completed by the parent and is evaluating progress on the core symptoms of Rett syndrome, really a battery of symptoms. It's not a single functional area, but more a comprehensive assessment. And the second co-primary measure is clinical global assessment of improvement. So it's sort of a very clinical validation of the parent perception of the changing symptoms. So we need to win on both outcome measures in order to consider this trial a positive trial. And from that perspective, it has internal validation on the meaningfulness of the observation as long as we separate from placebo. So really, any win in that respect will present a considerable advancement to what's available for Rett syndrome. And in -- at this point, there is no treatment that addresses these core symptoms.

Okay. And then really quickly, how do you view the competitive landscape here?

Well, as I mentioned, we -- obviously, there are a lot of efforts that we are aware -- I'm sorry, there is some sound problems. But a lot of efforts on the gene therapy front. But they are fair -- they are in early stages of development and really characteristic of the Rett syndrome, mosaic nature of the Rett syndrome and the unfortunate implication of the duplication syndrome that may produce same clinical manifestations as a Rett syndrome is a rather big complication that has to be surmounted in the gene therapy. And then I think there are a lot of efforts, but it's a fairly early stages. We -- there are no advanced programs that particularly address symptomatic treatment and core symptoms of Rett syndrome. There have been some attempts and some success or -- and some failure in terms of directing treatment, symptomatic treatment to a certain specific symptoms like respiratory symptoms, GI symptoms or maybe seizures. But to our knowledge, we are first to advance to this point with addressing a broader array of core symptoms of Rett syndrome.

Okay. Great. With that, we are out of time this afternoon. We should definitely continue this conversation at a different point. I'm sure there's a lot more to learn about Rett and other programs that you're pursuing. But for now, I'll say thank you to Steve, Elena, Serge to join us this afternoon and for participating in our conference.

Thanks very much, Tazeen. We very much appreciate the opportunity.

It's always a pleasure. Thank you.

Thanks a lot. Bye-bye.