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

So good morning, everyone, and thanks for attending Day 3 of Citi's 16th Annual Biopharma Conference. I am Neena Bitritto-Garg, one of the biotech analysts here at Citi. And I am really pleased to be joined for our next fireside chat by the management team from ACADIA Pharmaceuticals, including CEO, Steve Davis; President Serge Stankovic; and the Interim CFO, Mark Schneyer. And before we get into the discussion, I do want to note that if you have any questions, feel free to either e-mail me directly or submit questions through the online portal, and I will answer them or I will address them as time permits. So now I just wanted to turn it over to Steve to make some opening remarks.

Great. Thanks so much, Neena. I'd like to start just by doing a little bit of level setting. I'll try to make it brief, so that we can get on to the Q&A. And then I'll ask Mark to introduce himself. So in regards to our commercial business in PDP, in the second quarter of 2021, NUPLAZID achieved net sales of $115.2 million. This was driven by year-over-year and sequential volume growth. We continue to add new prescribers and new patients and see high adherence among our PDP patients. And although we continue to be impacted by COVID-related headwinds, our ability to grow despite these headwinds is further reinforced by our strong relative performance compared to other branded products in the long-term care channel as an example. As the pandemic conditions for Parkinson's community improve, we expect these headwinds to become tailwinds that will further accelerate our growth. Beyond 2021, the long-term opportunity for NUPLAZID in PDP is significant in growing as I've always said, I think it's going to be a very large drug just in PDP. Next, regarding our regulatory interactions for dementia-related psychosis or DRP. In April, we announced that the FDA issued a complete response letter, or CRL, regarding our supplemental new drug application for dementia-related psychosis. And on our earnings call last month, we provided an update from our Type A end-of-review meeting with the FDA. And at that meeting, the FDA reiterated their stated position in the CRL that pimavanserin should be studied by individual subgroups of dementia and advised that they, in their opinion, the best path forward is to conduct an additional clinical study in each of the subgroups for which we seek approval. It's important to note, however, that the FDA also indicated that they are open to having another meeting to discuss additional analyses from the HARMONY and the -019 studies in support of a potential resubmission without an additional clinical study. So in other words, we presented this data. We didn't get to complete the discussion and the FDA invited us to have another meeting, so we're planning to do that. We plan to conduct that meeting and report on the outcome around the end of this year. And finally, just a few highlights from our development pipeline. 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 LAVENDER, our pivotal Phase III study for trofinetide for Rett syndrome, is on track to deliver top line results by the end of this year. Earlier this year, we initiated a Phase II study evaluating ACP-044 for postoperative pain associated with bunionectomy surgery and we expect top line results by the end of this year. Furthermore, in the second quarter, we initiated a Phase II study evaluating 044 for pain associated with osteoarthritis. This and development continues to be a key priority for our strategy to expand our pipeline to fuel long-term growth and bring new therapies to patients with high unmet needs. And with that, I'll ask Mark to give a brief introduction profile.

Great. Thanks, Steve. Neena, it's a pleasure to meet you and participate in your conference. I joined -- my name is Mark Schneyer, I joined ACADIA about 1.5 years ago as Head of Business Development and Business Officer. I've spent my 25-year career focused on strategic and corporate finance transactions through my roles at ACADIA, Pfizer and Lazard. In this expanded role, I look forward to continuing to partner with Steve, Serge and our executive team and to lead our strong finance organization. And finally, I look forward to now engaging with all of you in the investment community. Neena, I'll hand it back to you.

Perfect. I appreciate the introduction. And I guess just kind of to close the loop on the CFO transition announcement last week, I guess, maybe kind of going back to Steve, if you can tell us a little bit about just kind of Elena's decision to step down, the process that you're kind of undergoing now to find a permanent replacement? And what you're looking for, specifically, to kind of round out the finance leadership?

Yes, sure. So first, let me say, Elena has been a great thought partner of mine, and I really hate to see her go. These things are always a little bit bittersweet because we very much enjoyed working with Elena. She's been a great leader in the company. But I'm also excited about her journey and things she'll be doing in her career. When you hire great people, other people like to hire them, too. And in this case, Elena had an opportunity to do something she's never done before and kind of expand her range of experience. She's not -- hasn't -- not in a position to disclose the company she's going to. It's been one that's operating in stealth mode. It's a private company. But she will, in due course, and we're going to obviously wish her the best. In terms of what we look for in a CFO, we tend to think of things both with the CFO role in terms of external capabilities and internal capabilities. And so it's important to have someone that has the external ability to navigate managing investor expectations. It's not an easy thing to do. It requires a certain skill set and maybe a certain DNA. And on the internal side, there are a lot of people that can do the accounting piece, they can do the finance piece. But the really, really great CFOs are able to operate at a highly strategic level. and contribute a strong leadership role in the company. So that's what we're looking for. I'm very excited about Mark's candidacy as a candidate to be a permanent CFO. I think he's got all those right capabilities, and we're looking forward to conducting a relatively efficient search and be off and running. Anything else on that topic?

Not for me. That looks good. That sounds good. Okay. So now I want to jump into, obviously, the focus for investors over the last 6 months or so has been the DRP kind of regulatory review, which I know you touched on in your intro, Steve. But I guess the key question that I get from people is around -- is there something specific in your view that may have driven the FDA to kind of change their mind regarding their willingness to consider DRP as a single indication. And I mean, I know -- I've done some regulatory work and some of the experts I've talked to have said that there may be some discomfort with kind of 1 or 2 subgroups kind of driving significant amount of the kind of efficacy in the HARMONY study. Do you think that's kind of the case? Or do you think that this is like a broader shift within the FDA to not really accept DRP as a single indication?

Yes, I really appreciate the question because there are a few, maybe subtle, but very important points to tease out here. First, let me just say there's not a lot of data in the literature regarding studying dementia-related psychosis. So we're in kind of a new-ish area. And although we had a very firm agreement with the FDA about how we would study in Phase III, they didn't have the benefit of our data and neither did we. And so I would say where we stand today is -- their view today is that instead of looking at DRP as a single entity to be studied as a single group. They've been very clear that they think we should study individual subtypes or subgroups. I think that it's possible that part of that -- the undercurrent for that is there have been some changes in personnel at FDA, so there's always new thinking that comes to the table. So that's a part of it. But I think that one of the principal drivers for that is a situation that we're, quite frankly, reasonable minds can differ over this. So in our study, when we -- so first of all, the study was not powered to show significance on individual subtypes. As I think we've mentioned many times, the sub-typing is a little bit of a -- it's not nearly as precise as the groups that you assign people to. There's a lot of mixed etiology and it's very difficult to diagnose these patients. So -- but putting that aside for a second, the -- when we didn't look at the individual subtypes, again, where we're not powered to show statistical significance, we see for those that go into the randomized withdrawal portion of the study, on drug, behave in a very similar fashion across all subtypes. Where we do see a difference is in those that switched to placebo. In doses switched to placebo, we do see a faster rate of relapse in the Parkinson's dementia patients. Now I want to be really clear, these Parkinson's dementia patients are a little bit different than the Parkinson's patients that were in our Parkinson's disease psychosis study, where we had someone that had some mild impairment, but these patients have Parkinson's and they have frank dementia. And so what we see in those patients is a faster rate of relapse. So what you do see is a higher statistical signal in that one group. We also in the patients with dementia with Lewy bodies, we didn't have any relapses on drug there. So -- but the numbers are so small, you can't really calculate statistics on them. But in those 2 groups, we -- you do see a faster rate of cycling. That is probably due to the fact that they're taking dopaminergic motor therapies, which can increase that rate of cycling. It doesn't change the nature of the psychosis. The hallucinations and delusions are very similar, frankly, across all subgroups and within those subgroups. So at the -- when we look at the analysis, we see a very common response for those patients to stay on drug. We do see some differences for those that switched to placebo. And importantly, when we did look at, well what effect did we have in these -- if we were looking at things on a subgroup basis, what effect could we have? And of course, in the Parkinson's disease dementia patients that have Parkinson's and they have dementia, we saw a very large effect size. When we look at those in Alzheimer's disease psychosis, we see a very good effect size there. It's comparable to what you would typically see with antipsychotics or antidepressants or other neuropsychiatric drugs. I've already mentioned in the dementia with Lewy body subgroup, you can't even calculate the effect size because no one on drug relapsed. And so -- and those 3 subtypes comprise about -- a little over 80% of the dementia-related psychosis population. So in our view, we saw exactly what we hoped to see in this study. We saw a very consistent response and a very strong response, but we do recognize that [ recent lines ] could differ about of how to interpret the placebo group. And so that's really been a part of the -- what I've just described has been a significant part of the discussion we've continue to have with FDA. And in addition to the analysis I've just described, we've also presented new analysis after we got the CRL and got the response to our briefing document for the Type A meeting, we had a better sense for the particular areas they wanted to see more of. And so we did new analysis, including a cluster analysis, looking at the individual elements of the SAPS-H+D scale for patients at baseline and then how they responded during the open-label period and how they responded during the relapse prevention period. And there too, across subgroups, we see a very consistent response. So we don't see anything that would indicate that this disease is different in a Parkinson's patient than it is in an Alzheimer's patient or a Lewy body patient or a patient with frontotemporal dementia or vascular dementia. And so we look forward to continuing the dialogue. We'll -- there's even more analysis that we've done that we'll be presenting at the next meeting that we'll have with FDA. And obviously, we're eager to get to a conclusion here and look forward to having that meeting and be able to report back on it around the end of the year.

Definitely. Okay. So I guess on those kind of additional analyses that you're working on right now, can you just talk a little bit more about the types of analysis that you're doing. And I guess, what specifically in your view in that -- in the Type A meeting that you did have, do you think was kind of the most compelling piece of data that you presented to FDA, just based on their body language in that meeting? Was it this kind of looking at the relapse rates in the placebo patients that switched on to placebo? Was it a different analysis? I guess how should we think about kind of what could be convincing to the FDA at your next meeting?

Yes, sure. I'm going to ask Serge to take that question.

Yes. Thanks, Neena, for the question. As I mentioned in the last latest analyst call, we presented several buckets of analysis that I will describe some of those that actually were the subject maybe of the most discussion. And as you mentioned, maybe most interesting there. First bucket, it really relates to what Steve was mentioning, and that is that we did a cluster and severity score distribution analysis of the entire DRP patient population in the HARMONY study with the intention to see if there is any distinguishing features, both in terms of the clinical feature presentations of different subtypes as well as the response to treatment when you see following successful treatment. And what we presented and what we are finding is that in terms of the cluster symptom analysis, based on the SAPS-H+D items, analysis. We don't really see any distinguishing features between different dementia subtypes in terms of the clinical presentation of psychosis, whether we look at prior to treatment, after open-label treatment and successful reduction of symptoms or following randomization. One exception Steve was talking about is distribution of scores that we see in the placebo group following withdrawal of treatment. But other than that, there was no really distinguishing characteristics. So that is one type. The similar situation is seen when you look at the severity score and distribution of severity scores across this spectrum of the course of treatment and prior to treatment. The second example of the analysis was to demonstrate the type of response that we see across different subtypes. And I will not repeat much what Steve was already talking about. And that is that when we look into the pimavanserin treatment response, whether that is during the open-label part and more importantly, during the double-blind portion, the pattern of response that we see across subtypes is very similar. Difference that is seen is actually just one outlier, and that is the Parkinson disease patients and in frequency on intensity of the relapses that you see, they relapse faster, in other words, than the other subtypes. We obviously discussed some of the potential implications of that and the distinguishing feature and whether that actually may present some compounding on the concomitant treatments on other things. But nevertheless, the pattern of response to active treatment to pimavanserin is very similar across the subtypes and across the spectrum of treatment. And lastly, the set of analysis that we also presented is a consistency of the meaningful response that we see across different subtypes, particularly actually in the largest subgroup, and that is the Alzheimer's disease psychosis. And this not only refers to the relapse rates that we are seeing and the hazard ratio that is about 40% reduction that we observed in the risk of relapse in that group, which is on par with everything that we know about all the randomized withdrawal trials. But also if you look into the severity scores, following randomization, just the total scores and the course of those scores in the responder rates that we are seeing. So there is a consistency in the meaningful benefit that we are seeing not only on one outcome but on the multiple outcomes throughout in different subtypes and particularly in Alzheimer's disease psychosis. So that's kind of a little bit of color on that analysis that we are doing, yes.

Yes. Okay. No, that's really helpful. And then I guess -- so I've also gotten some questions around there was the Phase II Alzheimer's psychosis study that you had also run. And I know that, that was kind of part of the discussion or part of -- obviously, that was part of the submission for DRP as well. I guess can you talk a little about what the FDA's kind of feedback was on that study specifically? And whether you're doing any additional analysis on the depth from that study as well to submit for this upcoming meeting?

Serge, do you want to take that?

Yes, absolutely. As we reported in the CRL -- in the complete response letter, the division identified 2 things, which they stated led them to believe that this study may not be adequate and well-controlled study. One is that the study was conducted at a single site in the U.K. and that there was no type I error control for the secondary outcome measure. By the way, I will say that either of these are not really requirements from the regulatory perspective for the adequate and well-controlled study. So obviously, we will present the case for that as we move forward. The second was related to certain protocol deviations in the study on which FDA was concerned that may have impacted the results. However, our set of sensitivity analysis that we are performed of these deviations clearly shows that they do not alter the positive results of the study's primary endpoint and nor the conclusions of the study. As a matter of fact, they are even more strongly supporting those conclusions. So those are sets of analysis that we -- will be presented as a part of our next meeting and as well as a potential resubmission as we move forward, essentially making the case that in spite of these deviations that the conclusions hold and hold firmly.

Got it. Okay. That's super helpful. So I guess now just thinking about kind of next steps post that next meeting and kind of the potential outcome. I guess, how are you thinking about that? What do you think are kind of the potential outcomes? I know one is potentially resubmitting, one is running -- choosing to move forward with running another study. Question I've gotten from investors is, is there a formal kind of dispute resolution process that you might consider going through? I guess, what would need to happen? And what would need to be the outcome from that meeting for you to want to pursue those alternatives or those different options?

Yes, I very much appreciate the question. I'll give as much color as I can. Obviously, we need to get to the next meeting and learn what we can at that meeting to map out the next precise step. But what I will say at this juncture is we do a lot of contingency planning, and we're prepared for whatever the outcome of that meeting is. Obviously, one potential outcome is that we get alignment to submit without doing an additional clinical study. Another is that the -- we leave that meeting and the FDA's view is that you really need to run another study. You shouldn't resubmit without running another study. And I'll just simply say that we're prepared for both of those outcomes. The FDA also has an additional -- has a built-in appeal process. So the -- because this was an SNDA, it was a decision of the psychiatric division. If it had been an NDA, it would have been an office level action. It was one level up. In the meeting that we've had, we've had engagement with both the psychiatry division and the Office of Neuroscience led Dr. Billy Dunn. The office of neuroscience is led by Tiffany Farchione. And so we've been very pleased to have interactions at both the psychiatry division office level through the discussion -- or through the dialogue that we're continuing. The appeal process technically would be if we can't reach an agreement about how to proceed coming out of this next meeting, we technically have the right to appeal because it was a division decision up to Billy Dunn's office. Now if we've already engaged with Dr. Dunn's office, and they've been very involved, we'd have to think about the benefit of doing that. And then there is yet one more step of appeal built into their system. I think goes up to the Office of New Drugs. And so our strong desire is to try to get an alignment with FDA. They do have the built-in appeal process that is available to sponsors if they feel like it's appropriate.

Got it. Okay. That makes sense. And then I guess just one last question here on DRP, just around timing. I guess just any updates on when that meeting could actually take place and when we could kind of have an update on next steps? I know you've said kind of by year-end, but anything more granular that you can kind of provide at this point?

No, there's nothing more. I would just simply say that the most important thing is to have a productive meeting. There's a certain time line that's built into the FDA process that we're cognizant of. But having a productive meeting and getting all the right people there and sometimes that does require a little bit jockeying with the FDA to do that is our #1 goal, of course. And so we do expect to have the meeting and be able to announce results by year-end. But if it requires more, I don't have any reason to think it would at this point. But if it requires more time to get the right people at a meeting, then that's the kind of thing that, obviously, we would want to be flexible on. And -- but at this juncture, we still anticipate being able to announce results at the meeting around the end of the year.

Got it. Okay. That's super helpful. So now I want to just shift over to talking a little bit about commercial, kind of the commercial uptake for NUPLAZID and PDPs. So I guess first question is just around anything you can say at this point on kind of commercial dynamics so far in the third quarter? I know we were starting to see kind of some recovery in the second quarter, but just given kind of the emergence of the Delta variant, anything you can say about kind of how trends have gone in the third quarter so far?

Yes. As you know, we don't provide updates on commercial progress mid-quarter, but I can -- I'll give as much color as I can. And I guess I'd start by saying that the macro factors related to NUPLAZID sales are: one, in-person patient visits with their physicians; two, new admission rates at long-term care facilities; and then three, in-person detailing with our sales force. So our sales force in person meeting with health care providers. And so far, all of these factors remain meaningfully below pre-pandemic levels. And as we reported in August, despite the fact that these are significantly below pre-pandemic levels in the Parkinson's community, we've still grown the franchise quarter-over-quarter. We've had sequential growth. And also, of course, on a year-over-year basis. So essentially, we've continued to do more with less. And that's why I say as these -- this is a temporal situation, the benefits not going to last forever. But as the pandemic conditions improve, I think we'll go from growth rates that have been lower during the pandemic than they were pre-pandemic back to growth rates that will be reflective of the pre-pandemic growth and as these headwinds turn into tailwinds. So we're very much looking forward to that. But we're not waiting for just the pandemic to end. There are other things we're doing to -- we always do, but particularly in light of the pandemic conditions to try to continue getting this drug to the patients who can benefit from it, and those efforts are going very well.

Got it. That's super helpful. So I guess just thinking about kind of the bigger picture for this year, you did lower the guidance range for NUPLAZID and PDP on the earnings call in August due to a combination of both the COVID impact and then lower net pricing. I guess can you talk a little about how you expect those dynamics to kind of play out through the end of the year. And I guess some of the assumptions that kind of go into the top and the bottom end of the new guidance range.

Yes, sure. So we lowered our guidance and at the time we indicated that about half of the impact that we're seeing was due to pandemic conditions. And almost half of it was due to a higher gross to net. So we're now guiding to gross net in the 20% range. That's up from our original expectations in the high teens. The gross to net is primarily driven by the volume of 340B business. So this is not unique to us or our drug. It's happening across the industry. And so we're seeing more 340B volume, which historically has higher discounted price compared to other segments. In terms of the pandemic conditions, we're all seeing the same press. So we all know what's going on in terms of the pandemic at a very much at a macro level. And I would say at the more micro level as it relates to Parkinson's patients and it relates to our ability to start new patients on therapy, the conditions continue to be, as we described on the earnings call, that is admission rates into long-term care continue to be meaningfully below pre-pandemic levels in the mid-teen range below pre-pandemic levels. Just overall occupancy rates in long-term care facilities are about 15% below where they were pre-pandemic. And patient in-person visits with physicians are down about 20% from a pre-pandemic level. So those conditions continue to be, as we described on the -- on our second quarter earnings call. But again, as we progress through the pandemic conditions and get more and more people vaccinated, more and more workers vaccinated, staff at nursing home facilities and in physicians' offices, we do expect to see these trends to improve.

Got it. That's super helpful. Okay. Great. So I do want to save a little bit of time here in the last 15 minutes or so to talk about some of the rest of the pipeline. So I guess starting with trofinetide as that's become kind of an area of focus for investors. You're on track to report out data from the LAVENDER study later this year. The study, as many I'm sure are aware, is using co-primary end points. I guess, can you talk a little bit about the metrics specifically that are being assessed? What is kind of most important, in your view, for patients? Like what specific kind of sub-scores within those -- the metrics that are being tested are most important? And sort of what benefit do you hope to show in the study? And are there any specific kind of symptoms, in particular, that you think it's important to show a benefit on.

Yes, it's a great question. Serge, do you want to take that?

Yes, absolutely. As you mentioned, by the nature of 2 co-primary measures, we will be getting a perspective from the caregiver via Rett syndrome behavioral questionnaire, which by the way, includes all core symptoms of the Rett syndrome. So it does measure mood, nighttime behavior, anxiety, hand movements, which is pathognomonic for it, face expressions and movements, body movements, walk. And by nature of this, as you can say, from that perspective of a caregiver gives you a fairly good functional assessment of the potential benefit or incremental or larger benefit that we will be achieved. At the same time, we have the co-primary measure, which is a physician assessment of the global assessment, which serves in some aspect as a validating element of that caregiver perspective on the functional improvement. So what we're expecting really in the characteristic of trofinetide's mechanism of action is that it should be addressing multiple core symptoms within the syndrome of Rett syndrome. So we are anticipating in incremental. Of course, this is a devastating disease. There is no available treatment. It requires a tremendous engagement and rehabilitation efforts in -- for the patients. So even a small incremental improvements and the distinction from the no treatment from placebo on these 2 measures will be a meaningful movement forward for these patients, and I think would be appreciated. We -- I will just add, we also, as an exploratory measures, we are assessing a number of other functional outcomes as well as exploratory outcome. So we'll get -- I'm sorry, quality of life outcomes. So we will have a fairly good picture on the benefits that we potentially will see in the study.

Got it. That's super helpful. So I guess thinking about kind of next steps after the data from a regulatory perspective, I mean, I guess, how are you thinking about how regulators may react if, let's say, one of the co-primaries is positive, but the other isn't but there is support from multiple secondary end points just because there isn't a really clear kind of regulatory precedent here in Rett syndromes. I guess how should we think about that?

Right. First of all, you know we hesitate to answer the hypothetical situations and questions, and each development is really always specific and situations come out when we least expect them. But I will just repeat what I said. This is, as you mentioned, are devastating developmental disorder without really a treatment or a measure of success. And any incremental treatment would be important. I would venture to say that, as always, totality of data will determine how to look at consistency of findings across this. Obviously, if it's just a single finding somewhere there is a higher probability that this is only by chance. But on the other side, if there is a consistency of finding across deferred measure, even though they may not reach complete statistical significance, there is a meaningfulness in that, that will be determined. And I guess we ourselves will be engaging experts to understand better the totality of data. And I'm sure the FDA will do the same thing in order to determine how to really interpret the totality of data.

Got it. Okay. That's super helpful. So...

I just want to add, we're still blinded, so we don't have any -- this is 100% a hypothetical situation. So we're here to get an open envelope and get the results and go from there.

Absolutely. Absolutely. So then I guess turning to pimavanserin in another indication. So in schizophrenia, negative symptoms of schizophrenia. Can you give us just an update on kind of how that study is enrolling? Any potential thoughts on time line? And then any -- just any commentary to, one, on just kind of the high level of design types of patients that you're enrolling, retention rate, things like that related to COVID specifically, given that this is a study being run in Europe?

Sure. Serge, go ahead.

Yes. A couple of points here. Just as a reminder, we started advanced to third quarter of last year. These studies take about, to recruit, 2, 2.5 years. It is a 6-months trial because it's a negative symptom trial. So you can, for yourself determine where approximately we would anticipate. Obviously, we are still in the first 1/3 of the running the study. And in the COVID situation, I would say we are very pleased with overall in spite of the headwinds, and it's really depending on country by country. Some countries pull back as the pandemic intensified some countries now. But we have been recruiting fairly well. We are pleased with the progress of the study and believe that we are generally on track as we are in according with the general time lines I just described. I would say we are very excited about this study and this indication. It's -- I think as you know, the negative symptoms treatment development has been littered with failures. And our prior success in the ADVANCE-1 study is very exciting to us, and we have high expectations. We described in terms of the patient population. Yes, we are doing trial in Europe. We are doing a fixed dose at a fixed dose of 34 milligrams. Those were learnings that we had from the ADVANCE-1 and applied here. But in general, patient population and design of the trial is very similar to what we had in ADVANCE-1.

Perfect. That's super helpful. So I guess thinking then about ACP-044 in the acute pay model. So as Steve mentioned in his opening, we will have data from that later this year as well. I guess, how should we think about -- I guess, timing of the data source, just based on how the study is enrolling. Because one question I've gotten is bunionectomy is an elective procedure. Is there any risk to kind of shifting -- a shifting time line there given kind of COVID resurgence? Then I guess, if you could also talk a little bit about what, in your view, would tend to be a successful outcome from that study and then potential next steps as well.

Right. Pandemic situation and ups and downs with it, we thought we were out of it, but it looks like not -- it's a little premature to conclude that. It's always a concern for us. So far, so good in terms of the recruitment and our progress on the study. So we are still on track that by the year end, around the year-end that we would be able to report top line results. Again, always the caveat, we don't know what next month situation will be and what it may happen, but we are on track at this point. This is -- we are approaching -- this is -- these are proof-of-concept studies, both in the acute pain and the study we just started with osteoarthritis chronic pain. So we are approaching this primarily from the perspective of learning about this novel mechanism, not only in terms of the efficacy, but also in terms of the profile of the drug, which will be very important. So what we will be looking in the results of this study is obviously a pain benefit. I mean reduction in pain, as we said. And -- but also we will be looking in the other elements of rescue medications, tolerability profile and all other in order to determine how we pursue following this proof of concept studies.

Got it. Okay. That makes sense. And one last question on the pipeline. Particularly, I think, relevant topic nowadays in the CNS space is kind of the role of M1 versus M4, muscarinic receptor activators in cognition and psychosis. So I guess, what are your thoughts just on the ongoing kind of debate? And then I guess, what are next steps in terms of getting a 319 molecule to kind of a proof-of-concept study in schizophrenia and/or potentially Alzheimer's disease?

Right. I would say there is a lore out there that M4 is primarily responsible for benefits in acute schizophrenic symptoms and M1 more predominantly benefits cognition. We -- our approach to development of 319 compound, which is PAM M1, positive allosteric modulator, is that we will try to listen to the data rather than to preconceived notion of things. And even in our early development, we will be doing some target engagements and some assessments to try to better understand where are the benefits that we may potentially see from the compound. We fully intend to evaluate both schizophrenia as well as cognition in Alzheimer. But as far as schizophrenia, you can approach schizophrenia from the negative symptoms and cognition perspective. You can approach it from acute symptoms. So we will -- we believe that M1 and M4 mechanism -- muscarinic mechanism, definitely has a significant role in the treatment of schizophrenia and cognitive disorders. We -- I think the question about M1, M4 is selectivity and unwanted side effects and how you really control that. So we don't have doubt that ultimately, we'll learn about 319 and where is the best benefit that we can derive in the development while we are fairly optimistic about its tolerability profile based on the high level of selectivity of the compound.

Got it. That's super helpful. So I just want to actually ask an e-mail question that came through. Just going back to the discussion we were having before about DRP, before we wrap it up here. The question is, essentially, I guess, how are you thinking about in a situation where the FDA does want you to run another study before refiling or filing a new application. I guess, how would you think about kind of the cost benefit of actually running another study? Is there a scenario where you may not choose to do that and why?

Well, again, it's a little bit of a hypothetical situation, but I'll answer it as best as I can. We've got a lot of patent life left with pimavanserin. Our composition of matter patents go through into 2030. We do have formulation patents, multiple formulation patents on the 34-milligram capsule version of the drug that go to 2038. And we have a method of use patent on the 10-milligram tablet version that go through 2037. So we've got a lot of patent life left. We've got a strong balance sheet. We certainly have the capital to do additional clinical work here. Look, if it turned out that the clinical path that the FDA requires is significantly longer, larger, et cetera, than we would expect, that could change our thinking. But otherwise, we feel like we -- it definitely pencils out to continue to move forward. So again, we're eager to have the -- to continue and conclude the dialogue with the FDA and have clarity and look forward to reporting on that.

Awesome. No, I really appreciate you taking that question. I apologize for running a couple of minutes over here, but I just want to thank all 3 of you for taking the time today to join me. It's been great. And yes, enjoy the rest of your day and the rest of the conference.

Thank you, Neena.

Thank you.

Of course. Thanks, guys.