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

Good afternoon, everyone. Thanks for joining us on this home stretch of the Cowen 2022 Healthcare Conference for the ACADIA fireside chat. I'm covering analyst, Ritu Baral, and I'd like to welcome the ACADIA team for the time. Thank you so much. We have Steve Davis, CEO; Serge Stankovic, President; and -- gosh, Serge wears -- you wear so many hats, I can't even remember all of your titles now. I do remember your newly appointed President, Mark Schneyer, CFO; and Chief Commercial Officer, Brendan Teehan. Welcome, everyone. Steve, you had some news this morning. So I'm going to turn it over to you for just a couple of minutes to make some introductory remarks before we go into Q&A.

That sounds great. Ritu. Thanks much for having us, and thanks to each of you for joining today. I'll try to do this quickly, but I would like to level set a little bit. To deliver on our mission, we're focused on 3 strategic pillars. First is to drive the growth of NUPLAZID franchise in PDP. In 2021, NUPLAZID continued to outperform the top neurology, Parkinson's and long-term care drugs. Achieving $448 million in net sales, this represents a 10% increase year-over-year. We achieved this despite operating in a disproportionately affected Parkinson's disease market where in-person Parkinson's patient visits remain down approximately 20%, and occupancy rates in long-term care facilities remain down about 15%, in both cases compared to pre-pandemic levels. Our strong relative performance during this time underscores our ability to grow the brand. And as the pandemic conditions normalize, and we -- and the overall PD market dynamics improve, we're poised to dramatically accelerate growth of NUPLAZID with continued superior execution. As we look ahead in 2022, we expect to see improvement in the infection rates of COVID-19, but more importantly, as it relates to the Parkinson's market, we'll be looking for a normalization of staffing turnover and reduction in staffing shortages in both the office-based and long-term care setting. We'll also be focused on the rates at which Parkinson's patients are seeing their additions in person. For 2022, we expect net sales in PDP to be between $510 million and $560 million. And what we achieve within this range will be a function of 2 things. One is read-through from the pandemic conditions, as I just described them; and secondly, our ability to continue to execute and outperform the top neurology Parkinson's and long-term care drugs. Second pillar is advancing our 3 late-stage opportunities in ADP, Rett syndrome and the negative symptoms of schizophrenia. For ADP, we resubmitted our sNDA to the FDA. And as we announced this morning, the FDA is reviewing the resubmission and has assigned a target action date of August 4. The FDA also advised us that they are planning to hold an advisory committee. As a reminder, we view this resubmission as our opportunity to make our case with the FDA that pimavanserin should be approved for ADP. It also gives the FDA an opportunity to fully review our new additional analyses. And we look forward to working with the FDA on the review and as well as preparing for the panel. In addition, we're planning an NDA submission for trofinetide for the treatment of Rett syndrome around the middle of this year. Our submission will be based on the pivotal Phase III LAVENDER study where we've recently announced positive top line results evaluating trofinetide in Rett. We expect a priority review with a PDUFA action date most likely in the first quarter of 2023. Furthermore, we have a very exciting Phase III program evaluating pimavanserin for the negative symptoms of schizophrenia where there are no FDA-approved treatments. As part of our advanced program, we have one positive pivotal study already in the bank, where we did a little bit of dose ranging but observed the most robust results on the primary end point in patients receiving the 34-milligram dose of pimavanserin. Recall this is the dose recommended for PDP. It's also the dose that we're pursuing in ADP. We're now evaluating only the 34-milligram dose of pimavanserin in our second pivotal study, ADVANCE-2, with enrollment on track to complete this year and top line results expected in 2023. Our third pillar is to develop the next wave of breakthrough in CNS through the advancement of our early-stage pipeline and business development. Our early-stage pipeline is led by our ongoing Phase II pain program evaluating ACP-044 in 2 studies, one in acute and one in chronic model of pain, with the acute pain data coming shortly. We have additional early-stage programs highlighted by collaborations with Vanderbilt University and Stoke Therapeutics as well as early-stage internal programs designed to leverage the learnings of pimavanserin to further our franchise and take advantage of indications we might never get to with pimavanserin. And finally, business development continues to be a key priority of our strategy to expand our pipeline, it fuels our long-term growth and our mission to bring new therapies to patients with high unmet needs. And with that, I'll turn it back to Ritu for questions.

Great. Thanks, Steve. So I guess maybe we'll start with ADP. Those have been all my questions today, certainly since the news. Most investors know that FDA didn't accept the HARMONY study for approval in DRP. Their understanding of DRP has changed. Can you speak to that change? And does that impact how they see the unmet need in ADP?

Sure. So I'll try to do it quickly because there's a fair amount of history here, but the short version is we ran a Phase II study in ADP, Alzheimer's disease psychosis patients, positive results from that study, went to FDA, had an end-of-Phase-II meeting and proposed that for Phase III, we study dementia-related psychosis. So psychosis that happens in dementia patients across not only Alzheimer's patients, but also patients with Lewy body dementia, vascular dementia, et cetera. And the FDA and we aligned on that. In fact, at the time we were having a discussion, the FDA response was, we view it the same way and recognize the medical literature is kind of moving in that direction. So we ran the Phase III program in dementia-related psychosis had very, very positive results there submitted on that basis. And the result of that review was the FDA issued, as we all know now, a CRL. And at the time we received the CRL, they said, look, now after having reviewed your data, we believe the best way to study this population is not looking at DRP broadly, but look -- but you evaluating pimavanserin in individual subtypes on a subtype by subtype basis. We wind up having 3 meetings with the FDA post the CRL, they were very productive meetings. The psychiatry division as well as the office of neuroscience were present at all meetings and both were very engaged. And through that process...

[indiscernible] senior members of the office, correct?

That's correct. Yes. Yes. And through that process, it was very clear that the path forward for us is going to be to look at dementia patients on a sub by subgroup basis. Alzheimer's disease psychosis following that path is -- was clearly the most the most relevant subgroup to pursue because it represents about 70% of dementia patients in our study in a similar manner. It was about 2/3 of the patients in our study. And we had an additional very sizable Phase II study in that patient population was positive. So it made sense for us to focus on ADP. So that's a little bit about the history of how we got to where we are. And in terms of what the unmet need is, and the...

And FDA's understanding of the unmet need, is there physician papers or public statements they've made at any point?

I don't have any doubt that they appreciate the unmet need. I mean, this is their business, right? And I think they highly appreciate the fact that for Alzheimer's patients today, there is no drug approved to treat the psychosis. So there are drugs approved that provide symptomatic relief for the memory loss that these patients suffer, for the cognitive deficits that they have. But the hallucinations and delusions, so them seeing or hearing things that are not there or just believing things that are not true, which is a very common occurrence in these patients and very distressing both to the patients as well as their caregivers, there's nothing approved to treat them. And so the FDA has a very well refined view of the unmet need here, in my opinion. We all know that today, these patients with no approved drug many times are treated off-label with drugs that, again, are not approved to treat them. And there are a lot of complications with those drugs and a lot of -- there have been a lot of hurdles in getting a drug approved for to treat this population because one of the things that you need to navigate around is just the fact that there -- it's a frail and elderly population, so you need a drug that has a very good safety profile and tolerability profile. And in addition, one of the challenges in developing drugs in this arena is finding a drug that treats the psychosis but doesn't impair cognition in these patients. And that's -- or doesn't impair motor function in these patients. And with our -- with pimavanserin, we've demonstrated that we have -- statistically significantly that we don't have those deficits. So that's been a real challenge in this space in terms of getting a drug to market that would be appropriate to treat these patients.

Got it. And all of the focus so far in your conversations has been on efficacy, right? There has been no communication to you on a safety issue with pimavanserin in this population?

The FDA has not raised any concerns regarding safety through the review process and DRP through the CRL that we've had, nor in the 3 meetings that we've had with them. And at this point, having been on the market for 6 plus years, we have a very well-established safety and tolerability record with pimavanserin. As is really...

This is not a risk-benefit analysis, this is what is the integrity of the benefit analysis?

Well, I wouldn't say -- it's always a risk benefit analysis, as it should be with the approval of any drug because every drug has some side effects or risk to it or just unknowns about it and certain benefits. So as it rightfully should be, it's always ultimately a benefit risk. I think the point you're trying to make, which I would strongly agree with is, I think on the safety and tolerability side, we have a whole lot of data now having been on the market for a number of years that, that has a very strong read-through into Alzheimer's dementia population -- or excuse me, Alzheimer's disease psychosis population. And on the efficacy side, as we've previously stated, we had very strong results in dementia-related psychosis, looking at that. we did not power that study or design it to show an effect in any subgroup, including Alzheimer's disease psychosis patients. And so when we now focus on that subgroup in that study, I'm putting aside our other Alzheimer's disease psychosis study for a second, when we look at it in the HARMONY study, our Phase III program, we see what are clinically meaningful effect -- benefit of pimavanserin, but the results are not statistically significant. And again, it wasn't powered to show that. And so that raises the question, is this a chance finding or is it a drug effect? And so to probe that very appropriate question, we've done a lot of new analysis since the time of receiving the CRL, focused on all subgroups, but focusing most intently of course, on Alzheimer's disease psychosis population to see how consistent is this effect. Not only on the primary endpoint, but we also measure patients on the SAPS H&D scale, a validated scale for measuring symptoms of psychosis. We did it at baseline. We did it through the 12-week open-label portion of the study through the randomized portion of the study where patients were treated over an extended period of time. So we have a lot of data on that. And what we see is this very consistent response on the SAPS H&D scale, so a measure of psychosis. So when we step back and look at the totality of all of our data, what we see with pimavanserin is a drug that on the safety and tolerability side of the equation, has a very favorable profile precisely the kind of profile that you would want for this frail and elderly population. And on the efficacy side, we believe our data strongly supports the utility and the efficacy of pimavanserin in Alzheimer's disease psychosis. And as we've said many times, we're eager now through this review process and now including an advisory committee panel to make our case.

Got it. So you -- so you've gotten your letter. I think it's the day 60 letter, right, for resubmission? And it has advisory committee. Were there any review issues in that letter that were not brought up in those 3 meetings? Anything new?

No. They didn't have any comment on anything related to the submission or previous discussions we've had with them, and we wouldn't expect that at this juncture. We submitted it 30 days ago. Their policy is that after 30 days, they'll make a determination whether they're going to review and assign an action date or not. They've clearly done that. And we didn't know if we'd have an advisory committee or not and didn't know when we might hear about that, but they -- we were very glad to hear now because it just gives us more time to prepare for it that they do plan to have an advisory committee.

Were there any potential advisory committee meeting discussion topics communicated in the letter?

No. And we wouldn't expect that again at this juncture.

Got it. When do you think the outcome will likely occur? You've got the August PDUFA date. It might be in like a couple of months, right?

Well, I've been talking a bit. I'll ask Serge to answer that question.

Well, based on the target action date of August 4, the most reasonable is to expect that the advisory committee to be sometime in a June time frame. Of course, we don't know that for sure, but FDA indicated that they will follow-up with us in terms of the detail of the advisory committee and we'll know for sure. But it will be necessary a little bit of a time between advisory committee and the action date. So we are anticipating then slightly to June.

June. Okay. And then in a resubmission, is there -- does the FDA even have an option for a 3-month delay? I know it's part of the -- it's an option in the regular PDUFA [indiscernible], if there's a major amendment. If you -- if they decide, can they do that here and push the PDUFA back further?

I mean, it's always an option that they have. They -- we have seen -- it's not the typical case, but we have some instances where they have pushed an action date out to accommodate an advisory committee meeting. And of course, if a sponsor submits material that they view as a material amendment after they submitted then built into their process as the potential for them to extend the review period for 90 days. Look, in this case, we got the -- an action date assigned at the same time that they indicated that they plan to have an AdCom, and they didn't give us any indication that they plan to extend that pipeline -- I mean, that time line. Now having said that, of course, they've only had to file for 30 days. They're in the process of reviewing it and getting through it. And if they determine that they need more time, they'll let us know, but we've not received any indication or nothing to indicate at this juncture that, that would be -- that, that's likely to happen.

Are you planning -- or are you due to generate any additional analysis from an ongoing extension study or any sort of Phase IV commitment between now and August 4 that they might ask for?

Sure. Serge, do you want to take that?

Yes. We do not plan neither we planned previously to add any new study data to our resubmission. So there will be no study data included in the resubmission, additional data.

Got it. But they do have the option to ask for something more if they so decide?

Absolutely, they have a wide latitude of asking whatever they need, but it's -- we did -- there will be -- like in any other submission, there will be an update for them. And we will be updating them on the ongoing studies and all that. But there is no any additional new data that we will be submitting.

And do you get a mid-cycle review?

They will have their internal meetings. There is no pretty prescribed sort of the milestone of actions that they need to follow just as like in a review of the regular NDA or the supplemental NDA. So from that perspective, they may or may not communicate that we do anticipate there will be a regular communications on the information requests, questions, clarification and so on. They will have their internal meetings, and we'll see if they communicate to us and what do they communicate.

So whether senior staff of -- in the office of neuroscience, whether they remain engaged in the review will be somewhat opaque to you. Is that correct?

Yes, I think -- we don't have a direct line to know or understand that. I mean, we -- there may be based on either questions or some point of indication, there may be some signs or indications of that, but we don't have any direct line either. As Steve said, this is a prerogative of the division. So we don't -- there is no mechanism for them to be involved and that we know about through communication.

I mean -- I'm sorry, just to annotate it, that's always the case, right? I mean, we know how the FDA is structured, the psychiatry division reports into the office of neuroscience. They report it to the office of new drugs. And so -- but you never know exactly who is engaged and at what levels in any review they have. Now -- and as Serge mentioned, I just want to underscore, this -- we're working with the psychiatry division. That is the division that's doing the review. That's the division that will coordinate the AdCom. And the level of engagement we've had with the psychiatry division through these 3 meetings and in our preparation for submission has been very good. So we're eager again to work through the review process with them and -- as well as any other constituents from FDA that might be involved.

Great. All right. Now we're going to move to NUPLAZID and rope Brendan in here. Steve, you mentioned something interesting that I think many investors haven't taken into account. We've talked about -- Cowen clients and I, we've talked about potential changes in the total addressable market in long-term care with elderly patients after COVID mortality, et cetera, et cetera. What it sounded like you were saying is that the main sort of valve or headwind right now to increase long-term care uptake is not the number of patients but actually staffing and the number of staff. Is that based on market research that you've done or other metrics that are in the public domain?

So obviously, we're on the ground living this day to day. So it's a very consistent issue that we see and hear about from practicing physicians and office space setting as well as in long-term care facilities. And you were, I think, specifically asking about long-term care.

Yes.

And staffing turnover in long-term care facilities has long been a challenge in that business. it's become exacerbated dramatically during the pandemic. And so we encounter on a fairly regular basis facilities that can't take new patients because they just don't have to staff. So it's a little more...

There's a wait list to get in. There's a wait list to get into [indiscernible].

Right. Correct. In addition, of course, you have some patients or their families that are reticent to go into a facility until things normalize further. But the real crux of the issue right now revolve more on just staffing. Most staffing turnover as well as just frank staffing shortages in the long-term care facilities. It's a very similar situation in office-based facilities. But there, it's more -- skews more towards just staffing turnover as opposed to shortages.

And that's -- those are the retail prescriptions that you're talking about? Those...

No. When I say the office-based setting, I'm talking about patients that are not in a long-term care facility that are just going to see their doctor, they live at home, but they're going to see their doctor. Those...

And the prescription goes to retail pharmacy, essentially?

Yes. The prescription...

[indiscernible]. Sorry, go ahead.

Yes, typically, they go through our hub. There's 2 different distribution channels. So in the office-based channel, correct. They go through specialty pharmacies. The majority then go through our hub in connection to getting to a specialty pharmacy.

Got it. So now that other companies have started -- maneuvering is the long word, but preparing for a COVID -- a real sort of COVID-off phase in society, are there any new commercial initiatives that you'll undertake in the second half of the year? Anything outpatient related, anything specific to if and when long-term care occupancy goes up?

Sure. I'll let Brendan answer that.

Sure. Thanks, Steve and Ritu. So the answer is yes. And as we look at the range of options in the -- as you're saying COVID-off period, a lot of that depends on, as Steve has pointed out, not just infection rates, but the return of PD patients to their physicians face-to-face that's critical for our new patient identification. Similarly, in long-term care, census driven by staff being able to support additional new residents coming in, create opportunities for us? So there are surely different levers for us to pull as the market reopens up. Among those are some of the obvious live face-to-face interactions that we can have whether those are peer-to-peer programs or a speaker program. You also know we have a multichannel direct-to-consumer approach to our business. We know that getting patients and/or residents and their families to have discussions with their physicians around NUPLAZID is critical. But we need to see a rise in those patients beginning to return to the office, and an increase in new resident starts for us to want to pull that [indiscernible].

And you haven't seen that quite yet?

Through the fourth quarter, we have seen continued suppressed LTC census, and...

You're not talking on what you've seen in Q1 right now?

There's nothing as yet to indicate [indiscernible].

Okay. Got it. Great. And so all of these things together suggest that we really should be watching for something real in the second half. Is that -- are we crazy to think that, that's where all of these metrics should be improving?

Well, I'll take a little bit of running, sorry. I think as we look at our PDP business, we've -- that sector has been disproportionately impacted. We've got the headwinds we referred to. We have significantly outperformed other drugs in the sector, whether we're looking at Parkinson's disease drug, specifically branded drugs I'm referring to, or we're looking at the top basket of neurology products or top basket of long-term care products. We very significantly outperformed those products. So if we continue to execute in that manner, and the question is not if but more when the -- we'll make further adjustments to the new normal of the pandemic, then I think that provides an environment for very attractive revenue growth going forward. It really, I think, is more a matter of precise timing of these pandemic conditions. And we're poised to continue to execute as we have and take advantage of them when as these term.

All right. We've got 3 minutes left. So lightning round, trofinetide questions. I think we're all pretty familiar with the data on the investor side have had a number of conversations. What are the gating items now to that filing? And then as you think about commercial prep, what are you starting even ahead of any regulatory action?

Okay. We'll try to do it in lightning fashion. I'll ask Serge to answer the first question and Brendan the second.

Yes. As we reported, we recently met with the FDA to review our overall content and format of the clinical data to be included in our NDA submission, and have a good alignment on the NDA submission in that respect. We have a dedicated CMC meeting, which is often the case when you let the clinical and CMC meeting to review similarly to review the CMC filings within the part of NDA that will occur in March. And we don't expect neither there are any controversial issues for that. So we anticipate to submit our NDA around midyear.

Just quickly adding to that. So -- we've been working with the Rett foundations and a very tightly knit community on the Rett side for both patient identification and identifying those patients or those physicians with the most Rett patients for us to address. At the time of launch, we're also working, of course, on disease state education because Rett needs to be identified early to be treated by our experts and we're exploring avenues for genetic testing as well in partnerships there to make sure that there can be a confirmatory diagnosis and people can get to care as quickly as possible, not to mention the payer work, Ritu.

Great. Thanks, Brendan. And last question, the [indiscernible] data is coming very, very soon. What are expecting -- what will you top line with the data? And what should investor expectations be?

Well, we expect to give preliminary top line results. So obviously, results on the primary endpoint of the acute pain study that you're referring to. We have another study coming up later in the year. And this is an early stage program. And of course, the first thing we're going to look for is do we have pharmacology. Do we see an effect of the drug, and if so what is that benefit.

[indiscernible].

We'll also be looking at safety tolerability. So in an early stage, we need to have a fairly wide lens in terms of the things we're looking for. If what we see is a profile that looks positive and is worthy of investing additional capital and we're eager to do that. And if we don't, then we try to be very disciplined about these things. But we're eager to -- we're totally blinded now. We're eager to get to the end result to open the envelope and make that assessment.

Great. Thank you for the concise answer. I think we got through everything that's going on in the near term. And thank you to the whole team. Thanks for the time. Thanks for the insight.

Thank you.

Thank you, Ritu.

Thank you. Bye-bye.

Bye.