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

RBC Global Healthcare Conference. My name is Greg Renza, one of the senior biotechnology equity research analysts here at RBC, and we're pleased to have ACADIA Pharmaceuticals with us today. And joining us from the team is Steve Davis, Chief Executive Officer; Serge Stankovic, President; and Elena Ridloff, the VP and Chief Financial Officer. And just some housekeeping before we do get started. If you do have any questions for the team, please feel free to enter those in the web portal below, and we would be happy to ask those on your behalf. So let's get started. Steve, over to you. Thank you for joining us. And perhaps we can just start by allowing you to provide an overview of ACADIA.

Yes. Great. Thanks much, Greg. Look forward to just doing a little bit of a quick level setting here, and then we'll get right to the Q&A. So I'd like to just start by highlighting the 3 strategic pillars of our business. First, we are driving NUPLAZID 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 also continue to see very high adherence among our continuing PDP patients. We did see some COVID-related headwinds in the beginning of the year, in the beginning of the first quarter related to the post-holiday surge in COVID cases. March and April, however, have shown some improvements in several key leading indicators. On our earnings call, we reiterated our 2021 net sales guidance of $510 million to $550 million. And just 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 growth opportunity for NUPLAZID in PDP is significant and growing. We've got a lot of room to continue to grow this drug. Second pillar of our business is delivering on the DRP opportunity. We remain committed to bringing pimavanserin to the DRP patient community. In April, we announced that the FDA issued a Complete Response Letter or CRL regarding our supplemental new drug application for dementia-related psychosis. We look forward to a constructive dialogue with FDA at our Type A meeting, where we plan to discuss the CRL and a potential path for approval for pimavanserin in a very important indication. There are no approved treatments for DRP today. There are, however, very serious consequences associated with the symptoms of psychosis, including repeated hospital admissions or single placement and increased risk of morbidity and mortality. And of course, today, with no drug approved, the only options physicians and patients have is to take the existing class of dopaminergic drugs, which very well established to increase or result in increased impairment of cognition. So they make the primary symptom of the disease worse and they also impair motor function. And in our clinical studies, we've demonstrated that we don't have those liabilities in the studies we've done. Without an FDA approvement, the burden of the DRP just remains very significant, and we remain as committed as ever to serving this need. 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 ADVANCE-2, a Phase III study for pimavanserin for the negative symptoms of schizophrenia in the third quarter of last year, and we expect results by the end of this year from LAVENDER our pivotal Phase III study for trofinetide in Rett syndrome. Last year, we also further expanded our pipeline with strategic business development deals, acquiring CerSci Therapeutics for a first-in-class nonopioid pain program, led by the lead candidate, their ACP-044. And through our collaboration with Vanderbilt University, we brought in a novel muscarinic receptor program. In the first quarter, we initiated -- of this year, that is, we initiated a Phase II study evaluating ACP-044 for postoperative pain following bunionectomy surgery. And in the second quarter of this year, we will initiate a Phase II study evaluating the same molecule, ACP-044, for osteoarthritic pain. I should also note that business development remains a critical pillar of our strategy, and we'll continue to execute high science deals that expand our pipeline. So with that, Greg, I'll turn it back over to you.

Great. Thanks, Steve, and thanks for the introduction. And certainly, the area of focus being on that second pillar that you described on delivering on the DRP opportunity. But I thought before we get there, let's talk about that first pillar and the growth of NUPLAZID, alluded to some of the patterns that you saw coming in the first part of this year. When would you expect some recovery of the COVID-19 impact on the various channels for PDP? And that, of course, includes the office-based setting as well as the long-term care. And how has that recovery momentum changed since what you had observed with respect to improvement that was exiting the first quarter?

Yes. Let me -- I need to take a little bit of a running start at this. So if you go back to the beginning of the pandemic in March of last year, we saw an immediate impact on the office-based channel. And that deteriorated pretty quickly. And then -- but then after a couple of months, begin to stabilize, begin to trend back up. And so by the fall time frame in 2020, we're kind of back up to prepandemic levels of new patient starts, one of the lead indicators for us. As we progress now through the early part of this year, of course, as I mentioned, we had a resurgence in infection rates following the holiday season. That impacted that channel as well as the long-term care channel, I'll get to it in a second. And as we stand here today now, we're at a point where we're seeing those numbers begin to move upward again. So for example, in the office-based setting, in the early -- I think we were one of the -- [ we moved ] very quickly to the pandemic in terms of being able to virtually detail, have our promotional materials on a common database, have physicians be able to write the drug from their home computer, prescribe it. We moved our speakers, [ grew the -- virtual speakers grew ] very, very quickly. And I think what we've seen in the industry is, as we and others have progressed through the pandemic, the virtual detailing that we're doing has been very effective. But as physicians are now seeing more patients in person, they're spending less time doing telemedicine, and they're spending less time doing teledetailing or speaking to pharmaceutical companies. So the good news is, as we progress through the pandemic and as conditions continue to improve further and further, physicians are doing more and more in-person visits now. And we're doing more and more in-person detailing with physicians. So I think those trends will be very supportive of continued growth, both in the near term as well as the long term. Just speak briefly on the long-term care channel. Again, going back to March of 2020, we saw a more gradual decline. It wasn't as precipitous as the office-based channel, but it was deeper. So in the long-term care channel, for instance, we saw an overall reduction in patients going -- entering nursing homes across the country, drop of about 20%. That has stabilized after a while and kind of stayed at those same levels in terms of the census numbers and in terms of our business in long-term care. And then after the post-holiday spike in infection rates with COVID, we saw those numbers degrade again in January and February. March and April, we've seen those numbers come back up. And for the first time now, we've seen growth in the long-term care channel of that 20% down, we've now regained 1% in February, then we regained another 1% in March. So we're beginning to see those numbers come back up now. So as we look to the remainder of the year, as we mentioned, we reiterated our guidance of $510 million to $550 million for the year. And just where we land on that will be a result of just how quickly we see the underlying conditions of the pandemic recover. But as we're all seeing the same news and I think we're very optimistic about what we're seeing today in terms of the impact of the pandemic and the knockdown impact it has on our business.

That's very helpful. And one of the questions that does come up is since the CRL was announced, any impact to NUPLAZID in PDP? And not just off-label use based on script analyses, but just how, if there's any, perceptions or a change to how the market or how clinicians could be viewing NUPLAZID in the marketplace with respect to some of the sNDA and regulatory proceedings?

Yes. Thanks for the question. Let me answer it in 2 parts. Let me address the kind of off-label component first, and then I'll get to the kind of perceptions of the medical community. Since we launched the drug in PDP, we've seen very little off-label use. Obviously, physicians are free to write the drug provided -- and provided they can get it reimbursed from insurance companies, sometimes you do see off-label use in other indications. We can't track every bottle, particularly in long-term care. We don't -- we can't trace bottles down to the ultimate patient. But what we -- but where we can trace the bottles that is through our hub and the majority of scripts come through our hub, the number of -- we can see exactly what the indication is and the -- or the diagnosis is. And we've -- from the time we launch, we've seen very little off-label use. It's -- in other words, high 90% of scripts are on-label for Parkinson's disease psychosis. And the reason for that is very simple. It is the pretty much universal [ prerog that ] payers have is they want to see that the drug is being written for patients that, in fact, have Parkinson's disease. So the off-label use has always been very low, and that hasn't changed. The -- in terms of the perception in the medical community because the off-label use was very, very low, there's really no change in -- I think, in terms of physician's utility or use of the drug or their experience with the drug. In fact, right after we announced the results of our HARMONY study, we convened a panel of 15 KOLs at the CTAD meeting in 2019, and we went through all the data within our panel. And the -- and when we do these kinds of things, we usually like to pressure test things to make sure we're not just in love with our own data. And so we tried to expose any potential weaknesses that we saw, et cetera. And the response that we have is -- quite honestly, it was the strongest, most favorable response of any -- I've done scores of these panels over my career. I've never seen a stronger response than we got there. They were very impressed with the efficacy in -- across the board in this study. And they were also quite impressed with the fact that we didn't observe any impairment in cognition or any impairment in motor function. So -- and as we fast-forward now to today, the feedback that we have in the medical community continues to be very strong, very supportive. They're very eager to see a drug approved to meet this very significant unmet need.

That's very helpful, Steve. And yes, let's follow up on that with the latest on your regulatory interface. So based on your progress on preparing for the briefing docs here, how should we think about some of those expectations around timing, around the Type A meeting? It sounds like disclosures forthcoming with the minutes from when that meeting takes place, so that will be thereafter. What are those plans for the updates? And what's the latest there?

So let me walk through it both mechanically as well as I'll give just as much color as I can in terms of the dynamics. So after you receive a CRL, that review cycle is over. You're entitled to a Type A meeting. And at the Type A meeting, the focus of that meeting is to discuss with the agency or in our case, it will be with the psychiatry division, what do we need to do now to get an approval? And so in order to set the right template for that discussion and any additional interactions we have after that Type A meeting, it's important to get our briefing document, which needs to accompany the request for that Type A meeting, right. And so we've taken time to make certain that we have all of the right arguments positioned for that very important discussion and again, any interactions beyond that. So that the request, together with the briefing document, will go in very soon. And once we -- that goes in, the type -- because it's a Type A meeting, that needs to happen within 30 days. So meeting should be about a month after the request goes in. And then it's another 30 days to get minutes from the meeting. So we probably won't be able to give an update until we get the minutes for the meeting. That should be a little bit more than 2 months from now. Just back to -- so this kind of mechanically how it works. Just sometimes they get the question, well, what happens if we can't agree on the -- what's required for approval? Well, there's an automatic process built into the FDA process that allows us to then appeal that up to the next level office. In this case, it would the Office of Neuroscience. And then if we can't agree there, again, the same topic, what's required for an approval, then we have the right to appeal up to the Office of New Drugs. And so that's just mechanically what's in place within the FDA system. The next step is to have the Type A meeting, we're eager to have that discussion with the FDA. And the principal, the core of that discussion will be, of course, revolving around can -- what do we need to do to get an approval? And the very strong position that we'll take there is the same position we've had that we think the right way to study this population is the way we studied it, looking at dementia-related psychosis as a whole. Now if we were seeking approval for a drug that might -- that was a disease-modifying drug for dementia itself, you certainly would need to separate out or try to study patients that have the same etiology, the same underlying cause of the dementia. But we're not doing that. We're seeking approval for a drug to treat a symptom of dementia, that is psychosis. And that symptom presents in a very similar way, irrespective of purported subtype, and it responds in a very similar way. A complication we're trying to break things down to a subtype-by-subtype analysis is these patients are very difficult to diagnose. The diagnosis are frequently wrong. That's -- can't really confirm the diagnosis until autopsy. And many patients have mixed etiology. So because the symptom actually presents and responds in a very similar way, and it's very difficult to know that you've got purity when you try to look at individual subtypes, we think the way we stay the drug is the right way to do it. And we're eager to have further discussion with the FDA and better understand their position. This is clear from the CRL that their position is you need to look at individual subtypes in order to get a broad DRP indication.

That's very helpful, Steve. And certainly, numerous scenarios on which one can speculate, although we won't be doing that. But maybe just one on one of the most common scenarios that comes up for investors is just about conducting another pivotal trial. And maybe the question there is what is your level of commitment under such a scenario? Should a trial like that be needed for the registration of pimavanserin in DRP based on, obviously, the momentum, all the factors about pimavanserin and the market, but also with your planned goals and resource allocation across the company?

Look, I can certainly understand the -- why people would ask the question, and I'm very sympathetic to it. And I'm probably going to give you an answer that may not be entirely satisfactory because the answer has to be we need to have the Type A meeting. What I can tell you today is we are very committed, we're as committed as we've ever been to treating the patients that suffer from DRP. It's a very significant unmet need. There's really -- there's nothing approved, and the existing options used off-label are very -- cause very significant compromises in the treatment of those patients. So we're very committed to it. We're eager to have the discussion that I've outlined with the agency. And as soon as we've had that, we'll be able to speak about next steps.

That makes sense. And just as a tack on to that, just your latest thinking, Steve, and perhaps for Serge, about just those additional indications and maybe just walking us through the -- your mention of the schizophrenia negative symptom study, where we are there as far as that trial progressing and how we should think about the ADVANCE-2 study now with the Phase III study there?

Well, I'll start with an answer to the broad question, and then I'll turn it over to Serge and he may want to add additional color and specifically speak to negative symptoms of schizophrenia. But broadly speaking, of course, we're approved in PDP. As we've said, when we launched the drug, you should expect a more linear-shaped curve that produces attractive revenue growth over -- year-over-year, and that's exactly what we've seen. So we'll continue to executing on that front. As I mentioned, we're very -- remain determined and committed on the DRP front. Of course, we also have an ongoing Phase III program in negative schizophrenia that Serge will speak to. One element in the franchise that we don't speak a lot about, and I'll just touch on briefly here, is we do have other molecules that we're advancing to leverage the learnings we have around pimavanserin. And so those early-stage molecules may be molecules that we use to pursue indications that we'll just never get to with pimavanserin. So although we have composition matter patents that take us into April 2030, and then we have a method of use patent on the 10-milligram tablet of the drug that takes us to 2037 and a -- and numerous formulation patents on the 34-milligram capsule that take us to 2038, so we've got a lot of patent life left, we'll just never be able to get all the indications that we could with pimavanserin. So the focus right now with pimavanserin is on PDP, DRP, negative symptoms of schizophrenia. And then for indications beyond that, more likely that we would pursue those with some of the molecules that we're bringing forward that will leverage the learnings of pimavanserin. Serge, I'll turn it over to you to add any additional color and speak to negative symptoms.

Yes. Thanks, Steve. We are very excited about the negative symptom schizophrenia opportunity. And as you know, we are pursuing our second pivotal trial in this indication. And our excitement is actually based in the fact that we already have one positive trial under our belt. And -- which is for this very difficult indication to pursue a rare success to have a positive trial. So that definitely speaks for the potential of pimavanserin in this indication. And based on that trial, we learned quite a bit and apply those learning in our next trial. Of course, it's early months in this trial. We just started in the later part of last year, but recruitment is progressing well. These trials usually take about 2, 2.5 years to complete. And this is a long trial, a 6-month follow-up. So from that perspective, we are patiently moving forward with the recruitment and execution on the trial.

Thank you, Serge, for that context. And let's just continue on in the last few minutes that we have with what is in your growing pipeline. And certainly, what's circled on the calendar is the LAVENDER trial and the top line readout for trofinetide in Rett syndrome. How is that recruitment progressing? Maybe just in addition to putting potentially a finer point on the timing for enrollment completion, just how we should think about a bar for success in population and with the trofinetide MOA?

So to start in -- with enrollment, enrollment continues to progress well. And as we reported, we are expecting to announce top line results from this trial toward the end of the -- toward the end of this year. So we are in the final stages of enrollment and recruitment and are really excited about being able to turn over the card at the end of the year. In regard to the trial itself and the threshold, I will -- just a reminder, the -- our LAVENDER trial is evaluating the core symptoms of Rett syndrome, many of those actually being behavioral symptoms. And as you know, there are particular challenges in evaluating and assessing behavior of symptoms as they have quite a bit of subjective component in it rather than measuring maybe some more objective signs and symptoms such as blood pressure or ECG or other elements. So there are integral difficulties in potential for the placebo response, potential for variability and assessment. And we are aware and taking all of the measures as much as we can to minimize this impact on variability and assessment accuracy or assessment in the trial. This trial, to remind you, have a co-primary endpoint. So not only a Rett Behavioral Symptom Scale (sic) [ Rett Syndrome Behavior Scale ], which is a parent-assessed questionnaire on symptoms on the broad array, of course, symptoms of Rett syndrome, but also clinicians' global impression of improvement. So if you will, in some sense, the trial has built in clinical validation by having these 2 measures and the clinical assessment providing a clinical meaningfulness to the observations made on the scale. And from that perspective, and this is a fairly high threshold, our expectations is that our separation from placebo statistically on these measures would definitely provide advancement in the treatment of these core symptoms of Rett syndrome in these patients.

Thank you, Serge. And we certainly are out of time and lots to talk about, didn't get to cover ACP-044 or 319 and in pain and cognition schizophrenia. However, maybe we can just close, Steve, by just allowing you to talk a little bit about BD, that last pillar, really key to the ACADIA strategy, maybe as those programs typify your business development strategy and how that has and can evolve over the year.

Yes. Great. Yes. So I'll just cut right to that. As I mentioned, business development continues to be a core pillar to our business. And it is because we've got a significant franchise that we've built, both in psychiatry and neurology, and we want to continue to leverage that. Today, we -- in addition to being in psychiatry and neurology, where we have a franchise that both includes symptomatic relief for chronic care types of programs that we've talked a lot about here. And then also franchise in rare disease, as we've just talked about with our Rett syndrome program. So as we go forward, what you should expect to see is us maintaining a presence in both neurology and psychiatry, in both chronic care symptomatic relief and rare disease, but the mix, the shift -- the mix will evolve and shift so that you'll see more on the neurology and the rare disease side. And that's just simply a function of a reflection of kind of where the science is leading us. There's still some very interesting opportunities in psychiatry, very interesting opportunities in broad markets. But there's some really, really intriguing signs going on in the -- and particularly in the neuro and the rare disease space. And so as we said before, the starting point for our business development activities is high science. We'll continue to apply that standard as we go forward.

Well, that's great. I think we can leave it there. Steve, Serge, Elena, we appreciate you joining us today. We look forward to all the upcoming updates, and have a great rest of the day. This concludes the session. Thank you very much.

Thank you.

Thanks much, Greg.

Thanks.