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

Good day, ladies and gentlemen, and welcome to ACADIA Pharmaceuticals DAYBUE FDA Approval Call. My name is Michelle, and I will be your coordinator for today. [Operator Instructions] I would now like to turn the presentation over to Mark Johnson, Vice President of Investor Relations at ACADIA. Please go ahead.

Thank you. Good morning, and thank you for joining us on today's call to discuss the FDA approval of DAYBUE, trofinetide Oral Solution. Today's agenda will commence with an introduction from Steve Davis, our Chief Executive Officer, followed by a review of the DAYBUE label and clinical data by Kathie Bishop, our Chief Scientific Officer and Head of rare disease. Then Brent and Tian will discuss our commercialization strategy for DAYBUE. Mark Schneider, our Chief Financial Officer, will provide financial details on our license agreement with Neuren Pharmaceuticals before turning it back to Steve Davis for closing remarks and opening up the call for your questions. Also on the line and available for the Q&A session is Doug Williamson, our Head of Research and Development; and from commercial, Parag Meswani, our Senior Vice, Rare Disease franchise. I would also like to point out that we're using supplemental slides, which are available on the Events and Presentations section of the website. Before we proceed, I would first like to remind you that during our call today, we will be making a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include goals, expectations, plans, prospects, growth potential, timing of events or future results are based on current information, assumptions and expectations that are inherently subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially. These factors and other risks associated with our business can be found in our filings made with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which are made only as of today's date. I'll now turn the call over to Steve.

Thank you, Mark. Good morning, everyone. This is a very exciting time for the Rett community, and we thank you for joining us. Let's get started on Slide 5. For almost 30 years, Acadia has been advancing breakthroughs in neuroscience to achieve our mission to elevate life. In 2016, ACADIA received its first approval for NUPLAZID, the first FDA-approved therapy to treat hallucinations and delusions associated with Parkinson's disease psychosis. And now, I'm pleased to announce that DAYBUE is the first and only FDA-approved medicine for Rett Syndrome. The FDA has approved DAYBUE with a broad label. It is indicated for the treatment of Rett Syndrome in adult and pediatric patients 2 years of age and older. While Rett Syndrome primarily affects females, importantly, our label includes both male and female patients. DAYBUE brings significant and new hope to the Rett Syndrome community and offers the potential to improve the lives of patients and families struggling with the day-to-day challenges of this devastating disease. Rett Syndrome is a rare neurodevelopmental disorder that affects approximately 6,000 to 9,000 patients in the United States, for which we estimate approximately 4,500 are currently diagnosed. DAYBUE demonstrated the potential to improve a broad range of signs and symptoms of Rett Syndrome that can be distressing for patients and their caregivers. DAYBUE has orphan drug status and is protected by a method of use patent for the treatment of Rett Syndrome, which provides exclusivity with expected Hatch Waxman patent extension into early 2036. Today is a big day for the Rett community and ACADIA, but also for our partner, Neuren Pharmaceuticals In 2018, we licensed the exclusive North American rights for the development and commercialization of trofinetide or as we now know DAYBUE for Rett Syndrome and other indications. This is a culmination of the years of tireless work from both the ACADIA and Neuren teams, bringing the significant first approval for Red syndrome. In addition to the approval of debut, the FDA has also issued ACADIA a priority review voucher, of which we share some of the value with Neuro. Mark will describe further at the end of this presentation. Finally, ACADIA remains committed to further development in Rett Syndrome. We plan to further study debut and learn more about its potential benefits for patients and families. In addition, our rare disease pipeline includes a collaboration with Stoke Therapeutics to discover, develop and commercialize novel RNA-based medicines for the treatment of severe and rare genetic neurodevelopmental diseases, including SynGaP-1 and Rett Syndrome. I'll now turn the presentation over to Kathy, who will walk you through the FDA-approved label.

Thank you, Steve. I would like to begin by thanking everyone who's contributed to the approval of Debut. On behalf of ACADIA, I would like to thank all the patients, families, investigators and their staff for their support in our clinical trials. I would like to thank the patient advocacy groups and the Rett community at large for all their support and encouragement. I would like to thank our partner, Neuren for their early work on trofinetide, and the FDA for their partnership in the development of trofinetide. And I would like to thank all the ACADIA employees who have worked long hours to bring us to this moment. We recently honored Rare Disease Day. It is only fitting that now a couple of weeks later, we have the privilege to bring the first ever treatment to a rare disease community that has been waiting for so long. We have been very touched and grateful for the involvement in support of the Rett Syndrome community during our process to bring debut to approval. Let's begin on Slide 7. Rett Syndrome is an extraordinarily debilitating disorder affecting not only the patients, but their caregivers and families. There is a period of normal development, followed by the loss of skills, leaving a typical child unable to use their hands, walk, eat or speak. Rett Syndrome affects a broad set of core neurodevelopmental symptoms. Despite this complex very involved disorder, many individuals with Rett live into adulthood, but do require one-to-one care for their entire lives. Until now, there were no FDA-approved treatments for the core symptoms of Rett Syndrome representing a tremendous unmet need. Let's move on to review the high level and important aspects of the approved label and prescribing information on Slide 8. DAYBUE approved the treatment of Rett Syndrome in adults and pediatric patients 2 years of age and older. This includes both male and female patients living with Rett Syndrome. We are very pleased with the broad indication, which matches our original FDA submission. The rest of the label is very informative for health care providers, patients, families and caregivers. As expected, there are no restrictions based on gender or age 2 years and above, no restrictions based on severity or baseline score on any Rett assessments, no contraindications, no box warning and no REMS. The dosing is based on patient weight bans and should be taken twice daily. Let's discuss the safety information included on the label on Slide 9. Safety information in the label is drawn from controlled and uncontrolled trials in patients with Rett Syndrome in which 260 patients aged 2 to 40 years were treated with DAYBUE. This includes 109 patients treated for more than 6 months, 69 patients treated for more than 1 year and 4 patients treated for more than 2 years. As expected, the most common adverse events were diarrhea and vomiting, as described in the label. Importantly, the label includes in both the warnings and precaution section and the patient counseling information, helpful management and advice for patients and caregivers should they experience diarrhea. This includes the very important recommendation to stop taking laxative, anti-constipation medications before starting DAYBUE. The label also provides additional advice related to management of diarrhea. Weight loss was also included in the label as a warning and precaution although it does not appear in the adverse reaction table. Rett Syndrome patients are underway for their age and often struggle to gain and maintain their weight. Thus, weight is monitored as part of Rett patient care. In the clinical trials, a small number of patients, both on trofinetide and on placebo lost weight and in the long-term data, 2% of patients discontinued the study due to weight loss. Overall, we are very pleased with the final label and strongly believe it provides the right information and support for health care providers, patients and families as they begin their DAYBUE journey. Now let's turn to Slide 10 to review the pivotal clinical study, which supported the approval of DAYBUE. We evaluated trofinetide in a robust Phase III clinical study, Lavender, evolving 187 young women and girls with Rett Syndrome. The 12-week double-blind study design is shown here. The Phase III study was overwhelmingly positive and demonstrates a compelling benefit profile for patients. The study met both of its co-primary endpoints, achieving a statistically significant improvement compared to placebo on both the Rett Syndrome Behavior Questionnaire, or RSBQ, a caregiver assessment tool; and the Clinical Global Impression of Improvement or CGI-I, a physician assessment tool. Let's first review RSBQ on Slide 11. The RSBQ is a validated caregiver completed rating scale assessing a wide range of neurobehavioral symptoms known to be impaired in Rett Syndrome. The RSBQ has been correlated with functioning and quality of life. Symptoms at the RSBQ assess include vocalizations, facial expressions, eye gaze, hand movements or stereotypies, repetitive behavior, nighttime behaviors, breathing and mood. In the Lavender study, the RSBQ co-primary endpoint was positive with a p-value of 0.01 and effect size of 0.37. We saw improvement across the broad symptoms of Rett Syndrome. Importantly, the efficacy results observed were consistent across all age groups and severity of disease. Let's review the second positive co-primary endpoint on Slide 12. The CGI-I is assessed by a physician on a 7-point Likert scale. The score of 4 indicates the physicians saw no improvement. Scores above 4 denote a worsening of disease and scores below 4 indicate an improvement. The CGI-I was positive with a p-value of 0.003 and an effect size of 0.47. As with the RSBQ, the efficacy results we observed were consistent across all age groups and severity of disease. In addition to the efficacy data that is contained within the label, we would also like to discuss our recently completed LILAC open-label extension study results on Slide 13. The LILAC open-label study design is shown here. efficacy assessments were taken only from those patients who completed the study. In the 40-week LILAC study, we observed a consistent adverse event profile compared to the Lavender study. We also followed these patients using the RSBQ and CGI-I, the same endpoints used as co-primary endpoints in the Lavender study. For the RSBQ, we observed a decrease of over 7 points in RSBQ scores from their original Lavender baseline scores. And for the CGI-I, the scores were assessed from patients' baseline as they started the open-label study. For CGI-I we observed the mean scores for 3.1 after 40 weeks at almost 1 point difference from the beginning of LILAC. Finally, for the sake of completeness, I'd like to briefly mention the post-marketing commitments that the FDA is asking us to complete as part of the approval of DAYBUE listed here on Slide 14. The FDA has asked for a renal impairment Phase I study, which has already been completed and additional drug-drug interaction and nonclinical work. Importantly, the FDA is not requiring any additional clinical studies to be completed in Rett Syndrome patients. I'll now turn it over to Brendan to outline our commercialization strategy.

Thank you, Kathy. Please turn to Slide 16. We're very excited to bring DAYBUE the first ever treatment of Rett Syndrome to this community. As you've heard Kathy and Steve described, Rett Syndrome can be an absolutely devastating disease with patients requiring lifelong continuous care and assistance with all aspects of daily living. DAYBUE is now poised to bring meaningful improvements to the lives of these patients and their families. With no approved treatments for Rett Syndrome until now and families waiting for treatment options, we know demand will be high, and we're excited and well prepared to meet that demand. We have a 3-pronged approach to our launch. Educate, identify and facilitate. First is the educate. We will continue to drive disease state awareness and education about the core symptoms of Rett and the compelling value that DAYBUE offers. Second is to identify. It is critical to identify and activate patients and families to seek out their HCPs to initiate treatment. Third is to facilitate. We will now leverage our best-in-class support services, including our ACADIA Connect Hub for patients and their families to help with access, reimbursement and the continual clinical support to not only start but to stay on therapy. We look forward to making DAYBUE available next month, and we're in great shape as we prepare for our official commercial launch shortly thereafter. Let's go a little deeper. Starting with driving awareness and education on Slide 17. Prior to launch, we've laid a critical foundation building awareness of the core symptoms of Rett and educating physicians and caregivers. And now with an approved product and label, we are looking forward to driving trial and treatment initiation and ultimately helping thousands of Rett patients and families start and stay on therapy. Our teams are ready to help ensure patients receive the full long-term benefits of treatment. Now let's discuss how we will identify and activate patients and their families with our commercial team starting on Slide 18. Today, we've identified approximately 4,500 Rett patients who have been diagnosed and are primarily cared for in 3 principal treatment settings. First, over 25% of patients are treated in centers with expertise treating Rett. These tend to have the most comprehensive Rett treatment teams and the highest patient concentration. Beyond these centers, the majority of current Rett patients are an additional 60% or so are cared for at approximately 300 large, including academic hospitals. And finally, a small percentage, less than 15% of patients are cared for out in the community setting at close to 2,700 stand-alone neurology offices. In addition, we will continue to work closely with the over 200 key opinion leaders in the Rett community and expand our relationships to include the over 2,000 HCPs who are actively involved in diagnosing and caring for Rett Syndrome patients today. Our field force is built to cover the HCP community who currently care for Rett patients. We've invested in hiring a rare disease sales organization consisting of field-based representatives who have on average approximately 20 years of pharmaceutical sales experience, with an average of 6 years' experience promoting rare disease products. Supporting our sales representatives will be our team of medical science liaisons, or MSLs, who will help deliver specific scientific information and clinical education about DAYBUE. In addition, we will be leveraging multiple elements of our already established 7-year-old commercial organization, including key resources in marketing, commercial operations, patient support services and access and reimbursement. Now let's turn to how we'll help facilitate support and access for patients on Slide 19. With our ACADIA Connect hub, we've developed comprehensive resources that will provide patients, caregivers and HCPs with the broad support they need. For health care providers and practices, ACADIA Connect will provide access and coverage support services, information on appropriate financial assistance options for eligible patients and coordination of medication delivery to patients through our specialty pharmacy. For patients and caregivers, ACADIA Connect will help families understand and verify insurance coverage, provide information on appropriate financial assistance options and coordinate with our specialty pharmacy for timely delivery of DAYBUE right to their homes. Our hub will provide ongoing education and support with a highly dedicated and experienced support team, including dedicated nurse care coordinators who will be paired specifically with patients, families and HCPs from the start, and our field-based family access managers. They will also be paired to each individual family providing access expertise, information and education about the product and resources for all of the caregivers of patients prescribed DAYBUE. All services will be offered in person or virtually, so we can meet the needs of patients and families wherever they are in their patient journey. As you've heard me mention, DAYBUE will be distributed through an exclusive specialty pharmacy, which only focuses on rare disease. Clinical pharmacists will be available 24/7 to answer specific questions from families and offer treatment support for DAYBUE, provide information about potential side effects and offer clinical recommendations when appropriate. Our commitment is to be there for our patients, families and HCPs from the very beginning to ensure each patient has the best treatment journey possible. Let's move on to the facilitation of coverage, access and affordability on Slide 20. ACADIA's patient access philosophy is simple. We believe cost should never be a barrier to treatment. As I mentioned, one of the key program offerings from our ACADIA Connect hub is providing insurance support services to help our patients obtain coverage for DAYBUE. When we review the projected payer mix for DAYBUE, we see the majority of patients, approximately 60% or so will be on Medicaid. We then estimate roughly 30% of patients will be covered through commercial plans. And finally, a small percentage will have Medicare coverage. To fulfill our mission and ensure our promise to patients, we will be working with each family and HCP practice to facilitate and or provide financial assistance to patients regardless of their insurance status. To provide more detail, we expect most Medicaid and Medicare patients to have a nominal out-of-pocket drug cost. In addition, eligible patients who have commercial insurance may pay as little as $0 per month per DAYBUE after being automatically enrolled in our ACADIA Connect co-pay program. If a patient does not have insurance or DAYBUE is not covered by their insurance plan, including government coverage. ACADIA can provide appropriate financial assistance options such as the ACADIA Connect Patient Assistance Program or direct families to external financial assistance options. These programs will help us ensure that we are there for all DAYBUE patients and their families. Now let's discuss DAYBUE's value proposition and how you can obtain DAYBUE on the next 2 slides. Let's start on Slide 21. There are many factors that contribute to determining the price of DAYBUE, including the devastating nature of the disease itself, the unmet need that product uniquely addresses, the compelling clinical benefits imparted from treatment for patients and families as well as the relative rarity of the disease. Let's review these elements further. Let's talk about the burden of disease itself. There is a substantial burden of disease associated with Rett Syndrome. It is devastating and debilitating to both patients and their families. It causes severe impairment across a broad spectrum of abilities and impacts nearly every aspect of a patient's life. Most patients living with Rett Syndrome will live into adulthood and require a round-the-clock care. Next, let's discuss the significant unmet need in Rett Syndrome. There's a very high unmet need in this disease. DAYBUE now represents the first and only therapy approved to treat the core symptoms of Rett Syndrome. Next is the DAYBUE product profile. DAYBUE has an established and very compelling benefit risk profile. In the Phase III pivotal trial, DAYBUE demonstrated a nearly 3x greater improvement in signs and symptoms of Rett Syndrome from baseline versus placebo over a 12-week period. Simply put, treatment with DAYBUE can be life-changing for patients, families and caregivers. Finally, there is the rarity of this disease. Rett Syndrome is a rare disease with a well-defined patient population. There are only an estimated 6,000 to 9,000 patients in the United States with approximately 4,500 diagnosed today. There's also a long development pathway to approval. Developing medicines to treat rare neurological diseases is particularly challenging. These diseases are poorly understood due to the limited number of cases and are complex due to the wide-ranging symptoms these patients experience. With this backdrop, investigational treatments for these diseases tend to see high clinical failure rates in development. The value of a therapy like DAYBUE takes into consideration the extensive investment and challenges involved in developing and commercializing a first-of-its-kind therapy to treat a rare neurodevelopmental disorder. We've priced DAYBUE based on the value the therapy brings. The list price of DAYBUE will be $21.10 per milliliter. We expect the annual average net realized cost of therapy to payers to be approximately $375,000. This takes into account DAYBUE's weight-based dosing assumes, the average weight of our expected patient population, compliance rates to therapy and mandatory government discounts. Let me reiterate ACADIA's commitment and patient access philosophy. We believe cost should never be a barrier to treatment. DAYBUE patients and families should expect to have very little out-of-pocket expense for a DAYBUE prescription. The ACADIA Connect team is dedicated to helping families navigate options to ensure affordable access. Now let's turn to product availability and resources on Slide 22. Our DAYBUE launch efforts are well underway, and we expect to have DAYBUE available for patients before the end of April. Please visit acadiaconnect.com or reach out to our call center to learn more about our personalized patient support program designed to help meet the needs of patients looking to start taking DAYBUE. In addition to acadiaconnect.com, we have launched our brand website, daybue.com. Please visit our website to learn more about this first ever approved medication for Rett Syndrome there. I'll now turn the call over to Mark.

Thank you, Brendan. Please turn to Slide 24. We licensed the North American rights to trofinetide from our partner, Neuren Pharmaceuticals in 2018. As part of the agreement, we will own Neuren a $40 million milestone payment upon the first commercial sale of DAYBUE. Our royalty rates and sales milestones on during are sited on Slide 24. For annual net sales below $250 million, our royalty rate is 10%. It escalates from there on a tiered basis with the highest rate being 15% for annual net sales in excess of $750 million. In regards to sales milestones. The first milestone is for $50 million and would become payable at such time that net sales of DAYBUE equals or exceeds $250 million in 1 calendar year. The additional sales milestones are listed on the slide. In addition, we received a priority review voucher from the FDA upon approval of DAYBUE. When we either sell or use the voucher, we will pay Neuren 1/3 of the value. And with that, I'll turn the call back over to Steve for closing remarks.

Thank you, Mark. Please turn to Slide 26. I'd like to end our prepared remarks by reiterating what my team has already stated. We're so very grateful to be able to bring a medicine like DAYBUE to the Rett Syndrome community. On behalf of ACADIA, I'd like to thank all of the patients and their families who participated in our clinical studies. I'd like to thank investigators and support staff for their participation as well as the support and engagement of the medical community. I'd like to thank the never-ending support from patient advocacy organizations who are a vital part of ensuring treatments are developed for their communities. And as always, I'd like to thank our employees for their accomplishments and their ongoing commitment and passion as we continue our mission to elevate life. With that, I'll now turn the call back over to the operator for Q&A.

[Operator Instructions] The first question comes from Ritu Baral with Cowen.

I apologize for my voice. Congratulations on the approval. I was wanted to ask about potential rollover of either extension patients extension trial patients or expanded access patients? And if I can just squeak a quick second follow-up in there. Steve, you mentioned that you were going to be doing additional clinical work on additional clinical work in Rett beyond the post-approval commitments, which you said were known. Can you elaborate on both points.

Yes. Thanks much for the question, Ritu. Kathy, do you want to take those?

Yes. Thanks, Rich, for the questions. With regards to ongoing open-label extension patients, it is our goal to roll those patients over onto commercial DAYBUE product as soon as possible. And we do not have any capacity use programs ongoing. Our goal is to commercialize JB at this point since we have gotten approval. With regards to additional clinical work, -- we do plan on following patients once they get on DAYBUE in a real-world study to continue to characterize over the long term, the benefits of DAYBUE. I'll just note, this is not a required study. This is something we are doing to collect additional clinical data, I think, really to flesh out the impact that DAYBUE has on these patients.

Kathy, can you say how many patients and how long it will take to roll them over?

Yes. Right now, we have approximately 80 patients that will roll over. Those are patients that are both in the LILAC-2 second open-label extension study and a small number of patients from the small Daffodil study in age 2 to 4. Our goal is to roll them over within the next couple of months.

The next question comes from Charles Duncan with Cantor.

Steve and team, congratulations on the approval. I have a 2-part question, and that is regarding the future. I think you mentioned when you started to collaborate with Neuren, you mentioned other indications beyond Rett. I'm wondering if you could provide a little bit of color on your efforts there. I know you're going to be very busy with commercializing DAYBUE, but any other uses? And then regarding the PRV, is there any time limited during which you have to use or sell the PRV?

Yes. Thanks, Carl. In terms of additional indications We previously noted that Fragile X is another indication of interest in this arena. There are others beyond that. We're not talking publicly about those at this point, but they're definitely several indications that of interest where we feel like a medication like DAYBUE could be very useful. In terms of the pediatric review voucher. There's no time limit on the expiration of that. I think as you probably understand and others do as well. That's a program that could -- that has -- the overall program has a time-based limit on it that historically has been renewed by Congress, but vouchers that are issued do not have an expiration date. So even if the program ultimately ends, the vouchers do not, again, have an expiration date.

And the terms with Neuren don't expire or change, so you could use that for your own pipeline?

We can. The deal we have with Neuren provides that if we use it, we pay them a portion of the value, and if we sell it, we pay them the same portion of the value. We have the majority of the value and they have a minority interest in the value of the voucher.

The next question comes from Tazeen Ahmad with JPMorgan.

Congratulations, Steve and team on this accomplishment. So our question is, any general guidance you give us on the epidemiology specifically the weight breakdown by age of the 4,500 patients diagnosed for Rett Syndrome? And how does the weight of Rett patients compared to age-matched female that sounds like they're generally smaller. And just as a quick follow-up, based on the market research, other than weight, what factors will physicians be considering when deciding on dose?

Yes. Thanks. A multipart question. We'll try to make sure we catch them all. Brendan, do you want to take this?

Sure, Taz. Thanks so much for the question. First and foremost, you're correct. Across the board for age-matched equivalent, we would expect and note in the natural history that Rett patients are lighter or underweight as Dr. Bishop had suggested earlier. In terms of average weight, the way to patients is going to skew on the lighter side. We estimate the average patient size will likely be around 27 kilograms, which is consistent with the patient population that we've studied in our trials. For example, in Lavender, patients were between the ages of 5 and 20 and in Daffodil, they were 2 to 4. In terms of dosing, I think some of the most important considerations are going to be benefit and patient-specific tolerability. We expect that some physicians are likely to start at the expected dose, and they'll be looking for benefit versus that patient-specific tolerability some positions may start lower and move up to what they consider to be the dose of clinical benefit in coordination with caregivers.

The next question comes from Neena Bitritto-Garg with Citi.

Congrats on the update. I'm just curious if you could talk a little bit more about some of the assumptions in the pricing, specifically how we should think about the gross to net discount and any other assumptions that you can kind of help us with in figuring out what the WAC the average black price is? And how long it may take to actually get to that $375,000 debt price that you're guiding to?

Yes. Thanks. Mark, I'm going to ask you to respond on the gross to net front. And then, Brendan, if you'll take the pricing question.

Yes, sure. Happy to. Thanks for the question. On gross to net, we're not going to guide to the kind of the details in the first few quarters, as you know, bounce around a lot in the early days. But what we can say is the key component of gross-to-net will be the 23.1% Medicaid discount that we expect will apply for approximately 2/3 of DAYBUE patients. Our full gross-to-net calculation will include not only mandatory government discounts for Medicaid but also Medicare discounts as well as items such as distribution expenses and co-pay assistance, for example. Brenda, I'll hand it to you.

Sure. Thanks, Mark. So in terms of other assumptions, we think in terms of the average net realized cost based on the average weight, which I've already shared, that is sort of a combination of what we've seen in Lavender and daffodil. and Also think about compliance rates to therapy and then the mandatory government discounts. And as a reminder, 2/3 of our patient population are likely to be subject to that mandatory government discount, which is 23.1%. And those are the principal elements that get us to the annual net realized cost of approximately $375,000.

Okay. Got it. Just a quick follow-up. Can you give us a little bit more detail on what you're assuming in terms of the long-term compliance rate and then the average dose that patients may ultimately settle on.

Yes, I'll take that. So in terms of compliance, we won't get into the precise math today, but we'll try to give you as much color as we can. So this is a variable assumption. Of course, we'll continue to watch this closely in real-world practice. And compliance -- and when I speak to compliance, just to make sure we all level said, we're talking about the dose that a patient takes relative to the approved dose or doses. In compliance, it's rarely 100% for drugs. In fact, almost never 100% when you look at the averages across the patient population. As Brendan mentioned, we expect doctors neurologists, in particular, in this case, may adjust the dose based upon individual patient needs. One data point to consider is in the clinical trials, we observed a 90% compliance rate as on average as some patients had their dose titrated in that study. In clinical trials, of course, there's a strong motivation to keep patients as close to 100% compliance as possible. And it's very important to note that in that setting, of course, physicians are following a protocol. In the real-world setting, there is no protocol and therefore, we typically expect with drugs like this compliance will be lower than it was in the clinical trial setting. And as Brendan mentioned before, physicians will adjust the dose to the individual needs of each client. Excuse me, patient.

The next question comes from Yatin Suneja with Guggenheim.

This is Eddie on for Yatin. Just a follow-up on the question on weight. How are the early patients at the centers of excellence that you've identified? How does their age and wait sort of compare to the overall Rett population? And then sort of over the next year, what kind of metrics do you plan on providing The Street as you sort of understand what the launch cadence is going to look like over the first year?

Brendan, I'll ask you to answer the first question, and Mark, the second.

Sure. Eddie, thanks for the question. Your question was about centers of excellence and sort of the patient distribution there. We don't expect that the distribution of patients is going to be remarkably different between centers of excellence and high-volume institutions that we've otherwise discussed. Obviously, some of these centers of excellence are places that were involved in our clinical studies. And so they've contributed those patients that you'll see in Lavender and potentially in Daffodil as well. So overall, we would expect that in centers of excellence, we're going to see that same distribution of patients. In fact, since they're sort of the high-volume institutions. They're probably more uniformly distributed.

And I think in the second part of this was just in terms of patient weights in terms of how we calculate and maybe just to give a little bit more color here as much as we can. So again, in terms of patient weight, what we've assumed is the 27-kilogram weight that is the average from the clinical trial experience that we have. As we move into the real-world setting, there will be as we mentioned, including in our modeling, getting to the $375,000 a year net realized cost, we factor in considerations that patients will -- the prevalent population will gain weight as they grow. These patients are pretty frail medical condition. They tend to be underweight, but there is a component of that. That will be somewhat offset by the recognition that as we move forward, the incident population will be almost entirely composed of smaller, lighter, younger patients. And so when we factor those things in over time, that's how we get to 27 kilogram average weight that we assume in the model.

Please stand by for the next question.

I'm sorry, operator, I think we had a second part of that, that Mark Schneyer was going to address.

Thanks, Steve. As far as information share, we don't plan to guide on DAYBUE for at least the first few quarters. We will be breaking out net sales for DAYBUE when we report earnings.

The next question comes from Marc Goodman with SVB.

Yes. Can you talk about the DDI requirements, what drugs are the agency worried about here?

Yes. Thanks for the question, Mark. Kathy, do you want to take that?

Yes. So Mark, first, I want to clarify, it's not that they're worried about anything. These are just standard studies following FDA guidance for studies that should be conducted for DDI. As you see in the label, we already did a large portion of that work. There's just a couple of small remaining studies that we didn't do prior to approval that we're going to do post-approval. But no specific concerns from the FDA.

Our next question comes from Jeff Hung, Morgan Stanley.

Congratulations on the prevalence. What proportion of the 4,500 diagnosed patients do you expect to be able to reach with your sales force? And then how challenging is it to grow the diagnosed population from 4,500 to 5,000 or 6,000 patients and beyond? Like would you focus more on the large institutions earlier in the launch to help grow that diagnosed patient population?

I'm going to take the second part of the question and then I'll ask Brendan to take the first part. So it's estimated rare diseases many times, hard to get a precise number in terms of the number of patients that have the disorder. There are estimates that go higher, but we think the best estimates in terms of the number of patients in the United States that have Rett Syndrome is the 6 to 9 ball that we described. The 4,500 of them based upon our work have been diagnosed. What you often find when there's no drug to treat a disorder, many times, patients just aren't diagnosed. A physician may have a belief regarding what they most likely suffer from, but there's no -- there's not as much determination to first to assign a prescribe diagnosis. Once you have a drug approved to treat the disorder, many times you see the diagnosis rates go up. So over time, I think there's a good chance that, that will happen in the case of DAYBUE and we'll have a better feel for the precise number as we progress. But the that the 4,500 that's diagnosed today, we feel very good about that. We've done a lot of work to substantiate that number. And of course, we'll continue to monitor this as we go. Brendan, do you want to take the first part of the question?

Sure, Steve. Thanks for the question. And to your point, and as Steve pointed out, approximately 4,500 diagnosed and treated patients in the United States today built our sales commitment to cover those HCPs that are treating that population. So that is our core area of focus in the early days. It is most expedient to go after the treaters that already have identified the patients that they look to treat. So you heard me say in our prepared remarks, there are essentially 3 core areas: the centers of excellence of which there are about 22, and that's 25% of that already diagnosed and treated population. The other 60% found that those large high-volume institutions, another 300 or so centers we are sized to go after that and opportunistically to go after the remaining 15% of diagnosed and treated patients found in the community. So our core efforts in the early days will be almost entirely focused on those already identified patients for treatment.

The next question comes from Tazeen Ahmad with Bank of America.

This is Avi from Tazeen's team. Congratulations on the approval. I guess like we have a follow-up question on the compliance what is the weighted average cost of the drug if you take out the compliance and take out the compliance assumptions out and the gross to net assumptions out. And then do you guys -- given that like 60% of your patient population, 70% patient population is Medicare, Medicaid, do you guys need a J code? And if yes, when do you think that will be effective? And what are the sales expectations for the approval of J code.

Great. Thanks much for the questions. I think there are 3 parts to it, Brendan, do you want to take that?

Sure, thanks. There isn't going to be a J code associated with DAYBUE. So we'll start with that. That's not the way the drug would be reimbursed. Your second question, though, is around pricing. So there are really 2, I would say, important considerations to take into account with price or cost. The first is gross pricing, which is simply the list price that we provided. And as you pointed out, patients are going to -- there's the average price, but then there are going to be patients in the highest weight band and there'll be patients in the lowest weight band. As is the case with any weight-based dose product. So for example, on the low end, if you were to look at a list price, for example, that would be $385,000 a year. But the second and I think more important cost is the net realized cost of payers, which is much more informative. and there is when we factor in the mandatory government discounts for example. And as I said, about 2/3 of the population will be expected to be covered by those mandatory government discounts, which equate to 23.1%. If you look at compliance rates to the prescribed dose and you couple that with what our average weight of the calculated patient population is -- that's how you get to that annual average net realized cost of about $375,000 for patients. Importantly, I would point out that payers are looking to understand what they can expect to pay on average, and that's used to try and understand the potential impact to their overall budget. And because Rett Syndrome is a rare and really well-defined patient population, we expect that their overall budget impact would be nominal.

Just to maybe flesh that out a little bit more and make sure that we cover all the components to your question. So again, as Brendan mentioned, there's a list price and there's a net realized price, which is the real cost of the therapy to payers. On the list side, the average list price will be in the -- again, it depends on the precise weight, but it will be in the $575,000 to $595,000 a year range. As Brendan mentioned, the net realized costs after you factor in the discounts that you described, compliance rates, weight assumptions is $375,000 a year.

The next question comes from Ami Fadia with Needham.

Coming up from the approval. Just with regards to the 80 patients that were in your trial that you hope to transfer to pain patients over the next few months. What are the gating factors with regards to transferring those patients? Can you give us some more color on how quickly they could be converted into paying patients?

Yes. Thanks much for the question. I mean, Brendan, do you want to take that?

Sure. Thanks for the question. Obviously, first and foremost, we want to maintain these patients on DAYBUE until such time that they can convert to paid therapy. That's priority one. The principal governing factor is securing access for those patients, and that is very much dependent on plan and geography. So we know from our interactions with payers that some of them have shorter time frames for making coverage decisions. Others can be a bit longer. I think as Kathy said, it will be over the next several months that we'll be looking to convert, and they will be a priority for us, obviously. Those patients that are currently in LILAC 2 or Daffodil studies, and we'll be working more than anything to make sure that it's a smooth transition from study drug to paid drug.

Our next question comes from Jason Butler with JMP Securities.

Congrats on the approval. For patients who are not in the extension study, can you just talk about your expectations for time from prescription to reimbursed -- receiving reimbursed drug.

Yes. Thanks for the question, Jason. Brendan, do you want to take that?

Sure. Thanks, Jason. I think we're -- as we described, we have sort of 2 dynamics at play. One is, as we said in our prepared remarks, we believe there will be high demand for the opportunity to get a patient on DAYBUE, and we're very much looking forward to engaging the HCP and caregivers from that in that aspect. But we also know from all of the conversations that we've had with payers really over the past 12 to 18 months that there's a process that needs to be followed. And that means that they're going to assess a DAYBUE and determine their coverage -- make their coverage determination over the same period of time that they would have otherwise looked at other therapies. In some cases, that can be as short as 30 to 60 days. In many cases, it's 90 to 180 days. We will, of course, be working diligently from the outset with each of the plans to make sure that they fully understand, A, the gravity of the disease and the unmet medical need. And then secondly, the label that's associated with DAYBUE so that they have a very good sense for what the coverage patient population should be. So in every instance, ACADIA will be working as quickly as possible with payers to secure that access. We just understand that there is a process that will be followed.

The next question comes from Paul Matteis with Stifel.

Appreciate it and congrats. Just to clarify, did I hear it right that there aren't any plans to provide demand metrics early in the launch like patients on therapy or start forms or something that a number of your peer companies typically provide? And then I just wanted to clarify something on your compliance assumptions. Is there any assumption around the percent of patients that might reduce their dose and chronically take a lower dose to maintain adverse events? Just curious on the thought there as to whether that's a realistic AE management strategy and what you had seen previously in trials.

Yes. Thanks much, Paul. With respect to your first question, no, you did not -- the plan is not to provide no information at all. I think the point Mark was trying to make is in terms of revenue guidance, we won't do that for at least the first few quarters. And we'll assess other metrics as we go forward. In the early days of a launch, as you know, things bounce around a lot. And so we'll continue to look at those metrics as we go forward and information that we think would be helpful, we'll share. Sometimes there's information good things are bouncing around a lot, that it's just not that helpful. And so we'll try to give as much color as we can because we always try to help you guys think about our business the way we think about it. So we'll do that. And then the second part of your question, regarding compliance. Let me just level set in terms of the term compliance and what we mean by that. We mean precisely what you just described, and that is what is the actual dose that patients take, which is typically for drugs like this, never 100%. So we know that the average dose, we saw this in our clinical studies where they were following a protocol. And in that case, it was 90%. We expect in the real-world setting, it will be lower than that. I think the other component. so that compliance factor we've factored into the net realized cost of $375,000. The other component which we would refer to as persistence is not factored into the $375,000 net realized cost. And by persistence, what we mean is again, with any drug of this nature, there's a certain discontinuation rate that will happen. Not every patient will respond to therapy. Not every patient will continue on therapy. And so there's a certain discontinuation that happens, and it usually is higher in the first few months, and then it settles out to kind of your enduring population. On the persistence side of that, that is not factored into the $375 million. So that's an additional if you want to think about it this way, that's an additional reduction from a payer perspective that will factor into their ultimate total cost for the therapy and they often look at this on a kind of a permit or per month basis. And because this is such a rare disease, we don't expect to have any significant impact on that.

The next question comes from Gregory Renza with RBC.

Great. Let me add my congratulations on the approval as well. Steve, maybe just a quick 1 for me. At the top of the call, you commented on the Stoke collaboration specifically. I'm just curious how you're building trust and establishing success in the Rett community is key to your positioning of that program as well as any other R&D efforts as you prioritize not just this community with DAYBUE, but also with additional treatment options in development.

Thanks much. Greg, I'm going to answer at a very high level, and I'm going to turn it over to Kathy for some additional color. But at a very high level, we are making significant investments in the Rett Syndrome and with the Rett community. This is such a devastating disease. Today, there's no therapy approved and DAYBUE will be the first therapy approved, but we believe this will be the beginning of additional therapies coming in due course, and we want to be at the forefront of that. So Kathy, do you want to add some additional color?

Yes. Thanks. Also by at what Steve mentioned, we're very committed to the Rett community, and with the approval of DAYBUE and the launch, it's just so do we see our first step within that community. As you mentioned, we do have a collaboration with Stroke Therapeutics for an antisense approach to increase MECP2 protein, which is the core protein missing in Rett Syndrome. And that collaboration also has 2 other -- similar neurodevelopmental diseases in it. Those programs are still preclinical. So we're not talking too much about them yet, but I think it represents our commitment not only to Rett, but to treatment of neurodevelopmental disorders and our sort of foray into rare diseases at ACADIA.

The next question comes from Salveen Richard with Goldman Sachs.

This is Matt for Salveen. I think you previously mentioned that you anticipate a linear shape curve in the early quarters of launch to account for time gain on formularies and as you work through access programs. Is this still the case? And then kind of what are the main things that you guys still have left to do in terms of getting on formularies?

Yes. So kind of a 2-part question, Mark. I'm going to ask you to respond to the shape of the curve component and Brendan, the access component.

Yes. we still expect the linear-shaped curve, as we've been talking about, ultimately, our launch objective will be the established DAYBUE as the foundational treatment for Rett Syndrome and to sure access to patients in need. If you look at launches of rare disease products. You will see high demand. However, as mentioned earlier, this is mitigated by early logistics of the access process. and the time it takes for patients to visit their appropriate physician, many times patients don't live in the same city or even the same state as they're treating Rett [indiscernible]. As a result, you often observe linear-shaped curve sometimes you have expanded access programs with a large bolus of patients that suddenly convert to commercial pay patients and create a sharp uptake curve. Many companies do not do this. And that's the same for us as we've discussed earlier in this call.

Yes. Thanks, Mark. Just maybe a little bit more on that. So there hasn't been an early access program as discussed. But we have been talking with payers for quite some time, and they do understand this is a devastating disease for which there is no approved therapy. There have actually been several decades worth of work in Rett Syndrome and DAYBUE represents the first and only therapy ever approved. So they're very cognizant of that. They understand a debilitating disease that requires a round a clock support. They also understand that we've demonstrated compelling efficacy in our Phase III program, and that's across a broad range of patients, which is obviously now more firmly established with a label that we received from the FDA. They also know it's a rare and well-defined patient population, so budget impact should be nominal. So with that, we're really dealing with a level of demand that we're obviously excited about in an access process that each individual payer plan goes through. At this point, we have a final approved label. So we're looking forward to those post-approval discussions to move to as timely access as possible for all of our Rett patients and families.

The next question comes from Sumant Kulkarni with Canaccord.

It's nice to see an approved option for patients with it. What's the current fraction of Rett patients who might be dosed by [indiscernible]? And how do you expect that traction to change given the availability of DAYBUE. And then just on the priority review, how would you define value if you were to use the priority review [indiscernible] for your side?

Sure. Kathy, do you want to take the first question? And then Mark, do you want to take the second question?

Yes. Thanks for the question. In our clinical trials, about 40% of patients were dosed their tube and 60% orally. And from the work we've done, I think that nicely matches what we might expect in the general population. Mark?

And then on the value for the priority review voucher, just in the terms of our contract with Neuren will use recent comps for third-party sales on the voucher value.

I mean, sorry, a clarification, what if you use it for yourself rather than monetize it?

For ourselves of course, we'll assess if there's value for us in using it to get the benefit from the priority review for something in our pipeline above and beyond what we can achieve from a third-party sale and that will evaluate as we go forward.

I think just to clarify one point. Under our contract, if we use it ourselves, there is a formula in the contract for how we would determine the value. And that's based upon -- there's a market value for these vouchers. What we've seen most recently is these vouchers selling for somewhat north of $100 million. And so I don't know what the market would be or the value would be at a time where we would potentially use it or sell it. But there's an established market for these vouchers today.

The next question comes from Uy Ear with Mizuho.

So Steve mentioned that to get to the 375 net price, the 27 kilogram weight assumption assumes that patients would gain weight over time. So I'm just wondering what is the weight assumption at launch. And secondly, will patients get free drug? I guess, until you get reimbursement?

Yes. Brendan, I'll let Brendan take the second part of it. So the 27 kilograms we mentioned, is what we project as we work through the -- get to the end of the prevalent population. So it's a prevalent population, and we transition to a population that is enduring patients together with the incident population. At launch, we think it will skew a little bit lower than that, not a lot, but a little bit lower as we work through that prevalent population. Brendan, do you want to take the second part.

Sure, and thanks, Steve. And we said, we believe cost should never be a barrier to treatment. Our goal will be to work very diligently with each of the payer audiences to secure access for patients. And that really -- and we'll fulfill that commitment in 3 different ways. The first is for Medicaid and Medicare patients, upon coverage, they will be expected to have a nominal out-of-pocket cost. For those patients that have commercial coverage, we expect that they're going to have essentially pay as little as $0 per month for DAYBUE after being automatically enrolled in our ACADIA Connect co-pay program. And then to your final point, if after working with payers, a patient does not have insurance or it's not covered by their plan, and that does include the government insurance the government-insured patient population, we can provide appropriate financial assistance inclusive of our ACADIA Connect patient assistance program or we can also direct patients and families to external financial assistance options where they can get some further support.

Our next question comes from Danielle Brill with Raymond James.

Just a quick one. Can you remind me what proportion of the 4,500 diagnosed patients are under the age of 2? And then just a clarification from earlier. Did you say that 25% of the diagnosed population is treated at COEs and 65% at large institutions?

Thanks for the question. Kathy, do you want to take the first part. Brendan, second.

Yes. Thanks for the question. I'll cover the diagnosis stage. So Rett Syndrome is generally, as I mentioned earlier in the presentation, Rett patients are born normally, and actually develop normally until about aged 2. So aged 2 would be a very early diagnosis. Patients are generally diagnosed aged 2 and up. So our label really is very broad label, basically covering all diagnosed patients with Rett syndrome.

Yes. Thanks, Kathy. And then in terms of where we're going to find those patients, Again, in centers of excellence, about 25% of patients are principally cared for in those COEs. Roughly 60% of the remaining population is treated at what we would call high-volume institutions roughly on the order of 30 and then roughly 15% or so are going to be found in stand-alone community neurology practices.

Our last question comes from David Hoang with SMBC.

Actually, just 2 quick ones for me. Could you just refresh me on the size of the sales force that will be dedicated to detailing accounts for Rett Syndrome. And is there any overlap there with the commercial footprint for NUPLAZID? And then you mentioned the discounts, the mandatory discounts for the government payer do you plan to discount or offer rebates for the commercial book of business?

Yes. Thanks much for the question. Brendan, you want this?

Yes. Sure, David. Thanks for the question. The sales force is approximately 50 FTEs, 5-0. Your second question was around overlap. Well, there's certainly overlap in institutions for sure. We do cover for NUPLAZID institutions, and so there would be overlap there. But in terms of the treating population, there's a reasonably significant difference between those that are treating Parkinson's disease psychosis in general and then the very concentrated HCP audience that's focused on Rett Syndrome. With that said, there are, as I said in my prepared remarks, multiple aspects of our commercial team that we will be able to leverage across both of these franchises, including our marketing team, patient access, commercial operations as well as access and reimbursement. I think there was -- is there another. And in terms of discounts, our focus is on the mandatory government discount for the 2/3 of patients that are eligible for that. We're not envisioning anything beyond that at this point.

At this time, I would now like to turn the conference back to Mr. Davis for closing remarks.

Great. Thank you, operator, and thanks, everyone, for joining us today. We look forward to updating you as we advance this important new therapy.

Thank you for your participation in today's conference call. This concludes the presentation. You may now disconnect. Have a good day.