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

Hey, everybody. Thank you so much for joining us. My name is Chris Howerton, part of the Research -- Biotechnology Research team here at Jefferies. And I'm very pleased to be hosting a chat here with ACADIA. And on behalf of the management team, we have Steve, Elena and Serge. So thanks so much for joining us, everybody.

Thank you, Chris.

All right. So I guess, maybe before we get into a chat, Steve, would you mind just kind of maybe giving us a high-level overview of where you're at or maybe an elevator pitch?

Yes. Yes. Thank you so much, Chris. So I'll just try to do a little bit of brief level setting before we ran to the Q&A. So I'll just start by highlighting our 3 strategic pillars for building shareholder value. First, we are driving high growth in PDP. In the first quarter of 2021, we achieved net sales of $106.6 million. This represents an 18% year-over-year growth. We continue to add new prescribers and new patients and see high adherence amongst our continuing PDP patients. And although we and others in our industry experienced COVID-related headwinds at the beginning of the year, March and April have shown improvements in several key leading indicators as we continue to see the pandemic conditions improve. On our earnings call, in the early part of May, 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 conditions of the pandemic. Beyond 2021, the long-term opportunity for NUPLAZID in PDP is significant and growing. Second pillar 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 the FDA in our Type A meeting, where we plan to discuss the CRL and the potential approval path for pimavanserin in this very significant and underserved community. So there are no treatments, approved treatments for DRP today, and there are some very serious consequences associated with symptoms of psychosis. These include repeated hospital admissions, nursing home placement and increased risk of morbidity and mortality. And without an FDA approved treatment, the [ permanent ] DRP remains very significant, and we're very eager to move forward. 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 multiple therapeutic areas. We have 2 ongoing Phase III programs, we initiated our phase -- excuse me, our ADVANCE-2 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 our LAVENDER study that's our pivotal Phase III study for trofinetide in Rett syndrome. Last year, we further expanded our pipeline to strategic business development deals. We acquired CerSci therapeutics for first-in-class, non-opioid pain program and through our collaboration with Vanderbilt University, we brought in a novel receptor -- muscarinic receptor program. In the first quarter, we initiated a Phase II study, evaluating our lead product ACP-044 in the pain program for postoperative pain following bunionectomy surgery. And in the second quarter of this year, we'll be announcing the initiation of Phase II study, evaluating the same drug, ACP-044 for osteoarthritic pain. And just lastly, I will mention that business development remains a critical pillar of our strategy, and we'll continue to execute high science deals that expand our pipeline. And with that, I'll turn it back over to you, Chris.

Awesome. Thanks, Steve. All right. So I think -- first and foremost, I would very much commensurate with you and applaud with you your commitment to seeking a label in DRP. I mean, the unmet need is unquestionable. So I think, your commitment to moving forward, I think, is obviously the right thing to do. So I guess, Serge or Steve, why don't you just kind of frame the basis of the problem here? What was the discrepancy in terms of what you expected to be needed in the package relative to what maybe the FDA might have been expecting?

Well, I'll start, and Serge may want to add some additional color. So I think you need to go back 4 years to our end of Phase II meeting and the agreement that we had with FDA coming out of that meeting. And we went in seeking 3 things. One, we said, we'd like to study this population only. And by that, we mean dementia-related psychosis as 1 group. There are various purported subtypes of dementia, and therefore, patients that ultimately have dementia then get psychosis, but those subgroups are very difficult to define. They're frequently misdiagnosed. About 40% of the patients that have dementia never get a subtype diagnosis because they're so difficult to diagnose. And the reality is there's a lot of overlapping etiology. So a lot of patients will have mixed dementia, sometimes referred to. So for all those reasons, together with, most importantly, the fact that the psychosis responds in a very similar way, presents in a similar way, responds in a similar way, we believe that the right way to study population is to study these patients as a group rather than trying to break them out into individual subtypes. [indiscernible] with the FDA on that front at our end of Phase II meeting is documented in the meeting minutes. And then we, of course, ran our Phase III program, submitted our sNDA, received CRO. And if you look at the CRO, the key basis for receiving CRO is the fact that we -- in some subtypes, we had too few patients to really try to draw any statistical conclusions from. We knew that would be the case based on the epidemiology of how these purported subtypes break out. And we didn't hit statistical significance in some other key subtypes. And again, we didn't expect to. The study wasn't designed or powered to do that. So it's a situation where the psychiatry division has a different view today of how best to study this population. And I think that is the key issue that we'll be discussing with them at our Type A meeting and any further discussions we have after that. What we say here is, quite clearly, can we get an approval without running additional clinical trials or do we need to run additional clinical trials? And I think that's going to really turn it on, what do you think the best way is to study this population? And so we're eager to have the meeting and start that dialogue and better understand why the psychiatric divisions now appear to be of the view that you need to study individual subtypes to get statistical significance on these purported subtypes.

Got it.

Serge, do you have anything else to add?

Yes, thanks. I think you summed it up very well. The critical question is really indeed how -- what is the best way to study this population and whether the construct of dementia-related psychosis is a unified diagnosis, is appropriate way to evaluate benefits and risk of treatment in this patient population, which was all the way the agreement that we have, but obviously, there is some change in the FDA's approach to this.

Yes. So I guess, is there -- has there been any -- I want to push on 2 concepts, let's say. First is that, Steve, I think you said that there's no differential response that you have observed thus far in the different kinds of subtypes. So I guess, do you think that the FDA is questioning that, that feature of any data that they've seen in yours or other datasets or that they just have uncertainty around that concept?

Well, what I said was that the psychosis -- let me take a little bit more running start. So if we were developing a drug to -- as a disease-modifying drug for cognition, kind of the hallmark symptom of dementia and been trying to study as precise as you can, the individual subtype or common etiology would be critical. But that's not what we're studying here, what we're seeking approval. We're seeking approval on psychosis and the psychosis actually presents and responds in a very similar way.

Got it.

So that's the kind of a core tenet of our perspective that the right way to study it is to not trying to break it out by subtypes. In our study, any time you start breaking things out kind of in a post hoc manner based upon individual subgroups or subtypes, generally in our business, of course, it's very hazardous doing that. And so in our case you do see a differential between the patients that have the -- again, the purported subtype of Parkinson's dementia, psychosis versus where we did see statistical significance in that one subtype, but where we didn't in others. So for instance, in Alzheimer's, we didn't see statistical -- statistically significant response there, but we did see a very meaningful response, clinically meaningful response where we reduced risk by about 40%.

I got you.

We estimate to show statistical significance in that, again, purported subtype, we wouldn't need to have about double the number of patients that we did. So I guess the point I want to make is when you start looking at things on a post hoc basis in a subtype or subgroup type of analysis, where you don't have statistical power to really answer questions there, you can always get on results. I'll just give you 1 brief example with the approval of Zoloft for, I believe, [indiscernible] depression that we're seeking approval for, I think, maybe PTSD. One of the indications, they -- if you look back, you would see that if you post hoc divide things between males and females, the drug didn't have any response at all in males. In fact, they were numerically slightly worse than placebo. But the drug wasn't approved that way. That's just the kind of thing that can happen when you start on a post hoc basis, trying to break things down in a way that weren't statistically powered to show.

Yes. Well, I am a recovering statistician. I don't know if you knew that. So I think some of the ways that we treat p-values, I think, is offensive to me as well. But that's for another time, let's say. Okay. So I guess the other feature, maybe I just wanted to dig into that was that, is there any lag as diagnosis changed of the subtypes? Or like, have we learned anything about some of the subtypes that would make the perspective of treating the individual subtypes differently justifiable?

Not in our view. No, in our view, we continue to feel very strong that the right way to study this population is looking at this as a whole. And quite frankly, when we had our end of Phase II meeting with FDA, that was a fairly short discussion because they immediately said we view it the same way, we think it's the right way to study this population. Now I don't know why they are expressing what appears to be a different view now, but we're eager to talk to them to better understand their perspective and understand why they believe that studying this on an individual subtype basis may be more appropriate from their perspective.

Okay. All right. So we'll stay tuned, I guess, on that. Have you -- so I guess just from a nuts and bolts perspective, have you actually requested the meeting yet? Or I guess, what can you say about the time lines from an external perspective?

We have. We won't give the -- not going to give the precise date because sometimes if the meeting gets delayed a day or 2 or the minutes get delayed a day or 2, we don't want people be agonized for that or...

[indiscernible]. Yes, totally. Okay.

But what I can tell you is that we've submitted a request. The meeting will happen in 30 days after the meeting, we'll get minutes and so you would expect an update from us after we get the minutes, so sometime around the time of our earnings call in early August.

Okay. All right. Well, that's -- that would be great. All right. Fantastic. So I guess moving to other opportunities, let's say, in Rett syndrome, I think, is probably the most near-term opportunity here. So I guess, Serge, what can you tell us about the status and maybe some design features of the LAVENDER study?