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

Good day, ladies and gentlemen, and welcome to ACADIA Pharmaceuticals conference call. My name is Jonathan, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's call. I would now like to turn the presentation over to Mark Johnson, Vice President of Investor Relations at ACADIA. Please proceed.

Thank you. Good afternoon, and thank you for joining us on today's call to discuss ACADIA's ACP-101 program for the treatment of Prader-Willi syndrome. Joining me on the call today from ACADIA are Steve Davis, our President and Chief Executive Officer, who will provide some opening remarks on our ACP-101 program in Prader-Willi syndrome and our Levo Therapeutics acquisition before turning it over to Kathie Bishop, our Chief Scientific Officer and Head of Rare Disease, will provide a more complete overview on the syndrome, ACP-101 and our Phase III program. Steve will finish our prepared remarks with some closing thoughts before opening the call up for your questions. In addition, Doug Williamson, our Head of R&D; Mark Schneyer, our Chief Financial Officer; and Brendan Teehan, our Chief Operating Officer, Head of Commercial, will be on the call and available for your questions. I would also like to point out that we are using supplemental slides, which are available on the Events and Presentations section of our website. Before we proceed, I would first like to remind you that during our call today, we'll be making a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, including 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.

Great. Thank you, Mark. Good afternoon, everyone, and thank you for joining us today. Please turn to Slide 5. Today, we are announcing a new Phase III development candidate, ACP-101 for the treatment of hyperphagia in Prader-Willi syndrome or PWS. This program came from our acquisition in June of 2022 of Levo Therapeutics, a private biotech company focused on Prader-Willi syndrome. Prader-Willi syndrome is a rare genetic neurobehavioral syndrome that affects approximately 8,000 to 10,000 patients in the United States and represents a significant unmet need. PWS is characterized by hyperphagia as well as metabolic issues, intellectual deficits, compulsivity and other behavioral problems. The cardinal symptom of PWS is the severe and life-threatening hyperphagia and unrelenting drive to eat due to the inability to fill satiated. No therapies are currently approved to treat hyperphagia in patients with PWS. ACP-101 is an intranasal formulation of carbetocin in analog of the naturally occurring hormone, oxytocin. Oxytocin deficiency has been linked to Prader-Willi syndrome in both nonclinical studies and Prader-Willi syndrome patients. Based on prior clinical development work and the mechanism of action of carbetocin, we believe ACP-101 could be a very important new therapy for patients and families struggling with PWS. Since acquiring Levo Therapeutics, we've engaged KOLs in the area and have designed a Phase III study. We recently met with the FDA regarding the design of that study and aligned with them that if this study is successful, it could serve as the basis of an NDA submission. We plan to initiate the study in the fourth quarter of this year. ACP-101 exemplifies our ongoing business development strategy to increase our footprint generally, including in rare disease. When I think about this program, there are many similarities to our successful deal for trofinetide which is now approved and marketed as DAYBUE for the treatment of Rett syndrome. Let's touch on a few of these similarities further on Slide 6. At the time of our acquisition, both DAYBUE and ACP-101 had established solid signals of efficacy in the clinic by their sponsors. Both reached a point where it was ideal for ACADIA to step in with our proven development, regulatory and commercial expertise. Both programs address a highly debilitating and severe rare disease with no FDA-approved treatments. With both products, we designed a pivotal Phase III study and met with the FDA to form alignment on the best path to an NDA submission. The prevalence of Rett and PWS are similar. Based on estimated incident rates, there are approximately 8,000 to 10,000 PWS patients in the United States. With ACP-101, we have global rights and incidence rates are similar in countries across the globe. Therefore, the prevalence in Europe is somewhat larger than the U.S. and Japan is somewhat small. Also similar to Rett, PWS patients are seen in centers of excellence in academic and pediatric hospital settings as well as in community clinics with specialists tailored to their clinical needs. PWS patients are treated primarily by pediatric endocrinologists with additional specialists on the care team. In both Rett syndrome and Prader-Willi syndrome, there are well organized and passionate patient advocacy groups. And finally, we paid similar amounts upfront to acquire each program, approximately $10 million with additional payments tied to success. Beyond the similarities, there are also important potential commercial synergies if we're successful, including, there will be an overlap at key health care professional call points, including centers of excellence and other high-volume institutions. There's also the opportunity to leverage our existing field force for DAYBUE and our patient support services. We plan to leverage much of that -- of our successful earnings from developing DAYBUE for the development and potential commercialization of ACP-101. We know that patients and their families are waiting for an effective treatment. And now I'll turn it over to Kathie to provide more color on Prader-Willi syndrome, our approach with ACP-101 and the regulatory pathway to approval.

Thank you, Steve. Let's get started on Slide 8. Prader-Willi Syndrome, or PWS, is a rare genetic neurobehavioral disorder that affects both males and females and has onset very early in life. PWS is caused by a loss of paternally expressed genes on chromosome 15, although the exact genetic deficiency is currently unknown. PWS is characterized by severe and life-threatening hyperphagia, intellectual deficits, compulsivity and other behavioral problems. Of the features of PWS, the severe hyperphagia and the unique anxiety and distress associated with it are the most challenging. Hyperphagia tends to present between the ages of 3 and 8 years of age when patients with PWS become fixated on food. Individuals experience hyperphagia are prone to constantly thinking about food, waking from sleep early thinking about food, continuing to eat a portion size that is not limited, rarely feeling full, stealing food or money to pay for food, eating from garbage and other inedible sources and exhibiting temper tensions and meltdowns frequently related to food. Parents and caregivers resort to rigidly structuring their families' lives around controlling access to food, to manage the potentially life-threatening hyperphagia and associated challenging behaviors of the patients with PWS. And unfortunately, today, there are no approved treatments for these aspects of Prader-Willi syndrome. Let's discuss the potential for ACP-101 to help these patients and families on Slide 9. ACP-101 is an intranasal formulation of carbetocin, which is an analog of the naturally occurring hormone oxytocin. Oxytocin is believed to play a particularly important role in PWS. In addition to the known role of oxytocin in modulating appetite and behavioral symptoms such as anxiousness and multiple other disorders, postmortem studies in individuals with PWS revealed significantly decreased numbers of oxytocin-secreting neurons in the hypothalamus in the brain in these patients. This suggests the deficits in the normal function of oxytocin may contribute to the severe hyperphagia and other behavioral symptoms characteristic of PWS. Carbetocin has improved drug qualities relative to oxytocin, including an extended duration of action and greater specificity for the oxytocin receptors compared to the vasopressin receptors, which could provide meaningful efficacy with an attractive safety profile. Intravenous carbetocin has been approved outside the United States for prevention of uterine bleeding following Cesarean delivery with over 11 million patients treated without known significant safety concerns. However, intravenous delivery is not feasible for the treatment of Prader-Willi syndrome, which requires chronic treatment and delivery to the brain, which is why Ferring developed an intranasal formulation for this disorder. This intranasal formulation of carbetocin provides direct delivery of the drug to the brain in the central nervous system disorder, and greatly reduces systemic exposure and the potential for side effects. In PWS clinical studies conducted to date, carbetocin has been delivered by nasal spray and has exhibited no safety or tolerability concerns. ACP-101 has also demonstrated efficacy potential in 2 clinical studies in Prader-Willi syndrome patients, an initial positive Phase II study by Ferring and an informative and very encouraging Phase III study by Levo Therapeutics. Let's review the results of Levo's Phase III study on Slide 10. Levo conducted a Phase III multicenter, randomized, double-blind, 8-week placebo-controlled study in 119 Prader-Willi patients. The study evaluated 2 doses of intranasal carbetocin, or ACP-101 compared to placebo with an even 1:1:1 randomization. The doses were, 9.6 milligrams 3 times a day, 3.2 milligrams 3 times a day and placebo 3 times a day. The primary endpoint for the study was the 9.6 milligram dose, which showed trends for improvement but did not reach statistical significance as shown in the table on the right of the slide. The first secondary endpoint was the 3.2 milligram dose group, which showed greater benefit compared to placebo and a nominal p-value of 0.016 for the validated hyperphagia questionnaire for clinical trials or HQ-CT scale. In addition, the 3.2 milligram dose achieved significance across many other secondary endpoints. Prior to this Phase III study, Ferring ran a Phase II study with a different endpoint in dosing duration with the 9.6 milligram dose. This Phase II study showed a benefit of intranasal carbetocin on hyperphagia compared to placebo. So when we look at the totality of the data, there's a clear signal with the strongest signal being at the 3.2 milligram dose. In regards to safety and tolerability, 3.2 milligram ACP-101 had a very clean profile in the Phase III study with no serious adverse events, no discontinuations and no adverse events of concern. The most common adverse events in the Levo Phase III study at the 3.2 milligram dose were headache, which occurred in 16% of subjects compared to 7% in placebo and flushing, which occurred in 14% of subjects compared to none in placebo. In addition, Levo conducted an open-label extension study, which further confirmed the safety and tolerability profile for long-term exposure of 3.2 milligrams ACP-101. In this long-term extension study, patients were followed for as long as 2 years, and no new safety concerns were identified. In addition, detailed nasal exams performed during these studies also did not identify any safety or tolerability concerns with the intranasal delivery. Based on these results, rationale and the high unmet need for Prader-Willi syndrome, Levo submitted a new drug application for the approval of the 3.2 milligram dose of ACP-101, which was accepted by the FDA for priority review. It is important to remember that this Phase III study had a 9.6 milligram dose group as its primary efficacy endpoint, and the 3.2 milligram dose group was a secondary endpoint. Let's review the FDA interactions for both Levo and ACADIA since then on Slide 11. While there was strong rationale for an NDA submission seeking approval of the 3.2 milligram dose, ultimately, the FDA issues Levo a complete response letter and did not approve the product at that dose. Their main rationale was that the 3.2 milligram dose was not the primary endpoint of the Phase III study. However, the guidance from the FDA was clear. The FDA concluded that while ACP-101 appears to be safe and well tolerated to get an approval, an additional Phase III study would be required with the primary endpoint of the 3.2 milligram dose. And this is the type of study design that we have now aligned with the FDA at our recent meeting. And if this 1 additional Phase III study is positive, the results could serve as the basis for an NDA submission. Let's discuss at a high level what this Phase III study looks like on Slide 12. This will be a Phase III global multicenter randomized double-blind 12-week placebo-controlled study evaluating the efficacy and safety of ACP-101 in approximately 170 Prader-Willi patients. The study will evaluate ACP-101 at a dose of 3.2 milligrams compared to placebo. The primary efficacy endpoint is improvement of hyperphagia as measured by the hyperphagia questionnaire for clinical trials or HQ-CT scale. This was the primary endpoint that the 3.2 milligram dose group achieved significant zone in the previous Phase III study conducted by Levo Therapeutics with a p-value of 0.016. Those patients who complete the Phase III study will be eligible to enroll in an open-label long-term extension study. We look forward to updating you further on the program once we initiate the Phase III study in the fourth quarter of this year. And now I'd like to turn it back to Steve for closing remarks.

Thanks much, Kathie. Please turn to Slide 14. So to recap, we are excited about this program for the following reasons: one, ACP-101 addresses a significant unmet need and further bolsters our rare disease portfolio and our commitment to CNS. Two, there's a clear scientific rationale for developing ACP-101 to treat hyperphagia in PWS, where a clear efficacy signal was observed in the previous clinical development work. And three, we've recently aligned with the FDA that 1 additional Phase III study could serve as the basis for an NDA submission. As a result, if successful, we could have the first drug approved for hyperphagia in PWS. Let's review the business aspects of the program briefly on Slide 15. ACP-101 has been granted Orphan Drug designation, Fast Track designation and Rare Pediatric Disease designation for the treatment of hyperphagia in Prader-Willi syndrome. This, of course, means if approved, we may be eligible to receive a priority review voucher. Regarding intellectual property, ACP-101 has patent protection into 2039, assuming patent term extension. Let's review the deal terms for acquiring the worldwide rights to ACP-101. First, we spent approximately $10 million in upfront payments and assumed liabilities to acquire Levo Therapeutics in June of last year. We have certain development and sales milestone payments to Levo shareholders, Ferring and Inserm, which, in the aggregate, consists of up to $35 million for various development milestones and up to $85 million for certain annual net sales thresholds. In addition, altogether, cumulatively, we would alter escalating single-digit to low double-digit percentage royalties. And we would do 25% of the value of a pediatric review voucher back to Ferring if we receive one. Lastly, the ACP-101 Phase III program expenses were already included in our budget for 2023. So our R&D expense guidance remains unchanged from our most recent May 8, 2023 Earnings Call. Let's close on Slide 16. I'd like to end today's prepared remarks focused on our execution across our clinical and commercial pipeline. First, we continue to deliver value to patients and families who suffer from hallucinations and delusions associated with Parkinson's disease psychosis with our NUPLAZID franchise. We launched NUPLAZID in 2016, and the business has been increasingly profitable since 2019. Second, we recently launched DAYBUE as the first and only FDA-approved treatment for Rett syndrome. So far, our launch is going very, very well and as expected. Third, we plan to complete enrollment in our Phase III ADVANCE II study for the negative symptoms of schizophrenia midyear with top line results expected in the first quarter of 2024. Fourth, with today's announcement, we will be adding the initiation of a Phase III study evaluating ACP-101 in PWS in the fourth quarter of 2023 to our upcoming catalysts. And finally, we plan to meet with the FDA in the very near future to discuss the clinical development plan for ACP-204 as a potential treatment for Alzheimer's disease psychosis. As always, I would like to thank our employees for their accomplishments and their ongoing commitment and passion as we continue our mission to elevate life. Operator, I'll turn it back over to you.

[Operator Instructions] Our first question comes from the line of Ritu Baral from TD Cowen.

I'm going to try and limit myself to one here. But the most important one, I guess, is any thoughts as to the scientific mechanism or biochemical mechanism driving the lack of dose response between the 2 doses in the disease process, et cetera, and how that drives your confidence in the next Phase III.

Yes. Sure. Thanks much for the question, Ritu. Kathie, you want to take that?

Sure. So if we take a look back at the data, what we have to date is a very small short Phase II study that studied just a single dose level of 9.6 milligrams which demonstrated a response on hyperphagia endpoints compared to placebo. Then there was the Phase III study conducted by Levo which evaluated 2 different doses, the 9.6 milligrams and the 3.2 milligrams, where 9.6 milligrams was the primary endpoint. In this study, there was a numerical benefit observed at the 9.6 milligram dose and a greater benefit and statistical significance at the 3.2 milligram dose. So when we looked at the totality of the data for this program, we felt that there was a clear signal of efficacy, and that signal was strongest at the 3.2 milligram dose. We actually have filed some IP around this dose finding and there are -- therefore, are a bit limited in what we can say regarding the scientific and biological rationale for these. But we do feel that based on these results and especially the larger Phase III study, there is compelling rationale to run 1 additional Phase III study focused on the 3.2 milligram dose, and that's what we're moving ahead with.

Got it. And just as far as that trial design that you unveiled, it does look like there are a lot of somatotropins used off-label to treat the condition, to treat Prader-Willi, will that be allowed as background? Or will there be a required washout period?

So we're not talking about the full results there, but we will be allowing those back out with a pretty long period in which they need to have been on a stable dose.

And our next question comes from the line of Neena Bitritto-Garg from Citi.

If I recall correctly, there was an AdCom that was actually held on the Phase III study that was run originally with this program. And I don't recall if there was any discussion there around why Levo decided to actually test the 3.2 mg dose after seeing an initial signal with the 9.6 mg dose. Can you maybe talk a little bit about that. And then I'm just curious any additional thoughts you have on why the 9.6 mg dose in the Phase III didn't replicate the signal seen in the Phase II study, I think 114.

Yes. Kathie, go ahead.

So your question was AdCom where we will, I think, pretty thoroughly easy as the results of the study. I just want to sort of make the point about the Ferring Phase II study. This was a very small study. I think it was only around 35 or 40 patients, randomized, half to placebo and half to 9.6 milligrams. It was also a very short study. It was only 2 weeks in duration and used a different endpoint than the HQ-CT. So I just want to provide that context for those results. Based on that, Ferring and Levo and then Levo took over, decided to run a more robust Phase III trial, which is what's required and study 2 different doses because the dose response was unknown at that time with only having that small study with that single dose. So I think very appropriate to run more than 1 dose in a Phase III trial, especially when the dose response is unknown. What was the second part of the question?

I think Neena was also asking about 9.6 milligram.

Right. Yes, so I just want to make a point there, 9.6 milligrams both in the Ferring study and the Levo study did perform better than placebo. We did not reach statistical significance in the Phase III study, which is why the primary endpoint was not met. The Phase III study is -- was a bigger study, a longer study of 8 weeks, I think, a more robust study. And so that's why we feel it's the best evidence that the 3.2 milligram dose is the dose to take forward in our Phase III study.

Okay. So you don't feel like you need to do any...

One moment for our next question.

I'm sorry, Neena. You got cut off at the last part of your question. Is Neena still on?

One moment, I'll bring her back.

Operator, maybe Neena could come up again in the queue. If you want to go to...

She's back. Neena's back.

Yes, I was just asking, so just to clarify, so you're pretty confident that you don't have to do any additional dose ranging work at this point?

Yes. And we have discussed the study design and the selection of the 3.2 milligram dose for the Phase III with the FDA and gotten their buy-in on that study design.

And our next question comes from the line of Gregory Renza from RBC Capital Markets.

Great. Thanks, Steve and team and congrats on the update today. Steve, and maybe a question for the team as well. As you're speaking of the unmet need in Prader-Willi hyperphagia, I'm just curious if you can touch on just the natural history of hyperphagia and how we would kind of baseline and think about the change in the HQ scores when it comes to clinical meaningfulness.

Yes. Thanks, Greg. Kathie, do you want to take that?

Yes. Thanks, Greg, for the question. So most -- I'll kind of speak in generalities here, although not all Prader-Willi patients are exactly the same but most patients are actually born underweight. And for that reason, the disease is recognized pretty early on and it's, of course, been diagnosed. But then what happens somewhere between generally the ages 3 and 8, they can sort of flip in their endocrine and hypothalamus function and become hyperphagic. At that point, these extreme food-seeking behaviors set in and that downstream leads to them becoming overweight. It also has associated behavioral issues such as anxiousness and distress, fixation on food that have a large impact on the families, their quality of life and the quality of life of the patients. As I mentioned, this is generally right now, there's no treatment. It's managed through behavioral controls which I think really limits the activities for these children and as they move into adulthood and their families and the quality of life for the entire family. Hyperphagia then is lifelong as a symptom and there's varying degrees in different patients. Regarding clinical meaningfulness of the HQ-CT score, I think that's still something that is yet to be definitely determined in our Phase III clinical trial, part of the discussion with the FDA as we will have other endpoints, secondary endpoints that look at quality of life. They look at Prader-Willi disease in general from the clinician and caregiver perspective, and then look at that anxiousness and distress associated with Prader-Willi and hyperphagia. And through that, we'll use some of that data to help flesh out what our change in HQ-CT may mean for these patients and their families.

And our next question comes from the line of Charles Duncan from Cantor.

Steve and team, looks like an interesting way to continue to evolve the business model and leverage the successes of DAYBUE. I did have a question about the Phase III that you're planning to run. And that is I'm wondering if you could provide us a perspective on the prior Phase III was an 8-week study, how you think a 12-week study may impact effect size and if you could provide a little more color on, I think, it's a sample size of 170 patients. So what are you anticipating in terms of effect size with regard to change in HQ-CT over that time. And finally, in terms of phenotype age, may matter here. And so I'm wondering if you're going to emphasize certain age or stratify for different ages.

So one thing I want to say about Levo's Phase III study, it was actually planned to be 170 patients. But remember, this was conducted during COVID, and they actually had to terminate enrollment early because of the impact of COVID on these patients, their families and they continued to drop. So that's why it ended up being a smaller Phase III trial. Our study is similarly planned for 170 patients. And we plan to sample size around the results of the Levo Phase III study at that 3.2 milligram dose. So basically to try and replicate the same effect size that they got in their study. Regarding age, yes, so we will have inclusion and exclusion criteria both around age to make sure that we're capturing patients once they reach that age where the hyperphagia sets in, it becomes an issue. And then in addition, we will have criteria around making sure that they have appropriate hyperphagia in order to measure that as an endpoint in the study. And then I think the third part was around the duration of the trial. When we looked -- carefully looked at all of the data after we conducted the acquisition, we spent quite a bit of time looking through all the data. And when we look at the longer-term data, there's certainly a greater improvement, the longer you treat with ACP-101. So we chose to make the study 12 weeks rather than 8 weeks because we do think there could be continued benefit at that longer time period.

And our next question comes from the line of Tessa Romero from JPMorgan.

So on mechanism one from us. Can you walk us through the pros and cons of the mechanism of selective modulation of the oxytocin pathway as with ACP-101 versus others that you may be aware of that has been in or currently are in clinical development. And also curious on your thoughts on the pros and cons of directly targeting the brain versus the gut. And how selective is the delivery to the brain?

Great. Kathie?

Thanks, Tess. Good questions. So this program is designed around findings, mostly from Prader-Willi patients where upon autopsy there was discovered that there was a deficit in oxytocin neurons in the hypothalamus of the brain, which is the part of the brain that controls feeding, the desire to eat and it's pretty significant deficit. They have about 40% fewer in that portion of the brain. And additional in preclinical studies, oxytocin has shown to be involved in a number of different behaviors, including feeding behavior and anxiousness and some other behaviors that are very relevant for Prader-Willi syndrome. In addition, intranasal carbetocin has been tested in a mouse model of Prader-Willi syndrome and seeing positive benefits as well. So we think they can get together, there is good, both preclinical and clinical scientific support for this mechanism playing a role in these key features and symptoms of Prader-Willi syndrome that really matter to patients and their family. Generally not commenting on other programs that may be out there, but I think this is the only program that really can get at these core symptoms. There have been other treatments and clinical trials are currently in clinical trials that are more weight loss treatments, which is downstream of the hyperphagia, they would not treat these core symptoms of Prader-Willi.

And how selective brain versus [ circulatory ]....

Yes. Thank you. So and getting to that last point, actually, what we're treating here, Prader-Willi is really -- although -- it's really a neuroendocrine disorder and has these behavioral issues. So it also goes over into treatment by neurologists and psychiatrists. Actually, the division that reviews it is the psychiatry division, I think, evidence of that. So the deficit that we're treating is that core deficit in the brain. So we think treatment to the brain is critical for that. Intranasal formulations actually have been studied for a long time for treatment of CNS disorders in clinical trials. And there are several approved products for intranasal delivery to treat CNS disorders. And the advantage there is the majority of the drug goes directly to the brain or [indiscernible] and where it's needed. And some, but not very much in the brain path, the drug circulates systemically. Thus, you have the advantage of directly treating or you need to treat and avoiding side effects where you don't need the drug.

And our next question comes from the line of Jason Butler from JMP Securities.

Just wondering if you could give us some more details on the IP protection is, for example, focused on both formulation and methods or just any more details you can give us there.

Yes, sure. Thanks so much, Jason. So the IP is method of use, which as we indicated is the primary, and we do have additional IP on the dose as well as Kathie alluded to.

Our next question comes from the line of Paul Matteis from Stifel.

This is James on for Paul. Maybe just a quick one again on dosing. Just wondering have you guys done any additional work internally to help characterize the drug and the dose to help give you confidence moving forward? Or is it really just all based on the prior clinical data? And then you've touched on a couple of trial design differences, but is there any other key differences that we should keep an eye out for.

Kathie?

So since we acquired Levo last year, we've not done any additional clinical work, obviously, but we have spent a great deal of time with the data, analyzing the data in different ways, looking at the endpoints, looking at patient characteristics. And that's really, altogether, what led us to, I think, our strong belief that there's [ significant ] efficacy here that should be pursued and did help inform us for what we're sort of calling small tweaks we made to the Phase III trial design. Given that Levo Phase III trial was positive and nominally statistically significant at the 3.2 milligram dose, even though it's smaller than planned, we want to replicate many aspects of that trial. Key differences I think that we've mentioned so far is 12 weeks in duration and maybe some small tweaks to the inclusion/exclusion criteria around that data analysis that we did, but nothing meaningful because we think that they did have a strong study and result is the 3.2 milligram dose and we aim to replicate that.

And our next question comes from the line of Marc Goodman from SVB Securities.

This is [ Rudy ] on the line for Marc. So regarding the Phase III study, are you still enrolling patients of 7 to 19 years of age? And how long it takes to roll your target of 170 patients? Maybe provide some color on your plan to find the right patients there?

I'll let Kathie add some additional color. I'll just start by saying that we haven't described yet the projected time to enrollment. We typically like to get studies up and running. Then as we have a better feel for just how the enrollment is going, we will clarify as we go forward. Kathie?

Yes, and we will be coming out with full study criteria and study design once we start study in the fourth quarter. But we are going to -- I will say that we are going to go a little bit broader in the age, but being really careful but we're still enrolling patients with significant hyperphagia. We do also thinking carefully about how to enroll the 170 patients in a timely manner, but also maintain high quality of the study using high-quality study centers and high-quality patients. So sort of a balance between the two.

And our next question comes from the line of Yatin Suneja from Guggenheim.

This is Eddie on for Yatin. So just a quick one from us. Based on the previously conducted studies, what is your estimate for how long it will take to enroll and complete the study and are there other major global PWS studies ongoing and then just as a quick follow-up, like what learnings are you going to take from those previous studies? Are you going to narrow the inclusion criteria at all?

Eddie, I think you have a 3-part question. I think we lost you on second half of the third question. I'll just start with the first one. We aren't describing at this point the projected time to enrollment. Of course, we have our own [ can ] chart where we laid that out. But we like to get studies up and running. And then once we have a feel for exactly how things are going, then we will update that as we go forward. Kathie, do you want to speak on other PWS studies?

Yes. Right now, there are no other global PWS studies enrolling. There are some studies that are a little bit smaller that are ongoing but we don't think that there is any major impediment right now to enroll in that study.

And Eddie, we did not hear the third question. The third part of your question.

Yes, it was just sort of is your enrollment criteria any different from what the previous sort of studies in the -- not the ACP studies, but the other Prader-Willi studies.

Yes. So we carefully, as I mentioned, we'll come up with still a full inclusion/exclusion criteria when we start the study in the fall. But it's something we really carefully thought about as I mentioned, by looking through the Levo data, but we also talked to a lot of KOLs who've conducted not only Levo previous studies, but other Prader-Willi studies and we also talked to the patient advocacy groups. And in addition, we held a caregiver advisory board for the design of the study to really put a lot of thought into study design and especially the inclusion/exclusion criteria to try and balance, as I mentioned, enrolling the study in a reasonable quickly amount of time, but also having a high-quality study that we thought was properly designed to best detect the benefit of ACP-101.

And our next question comes from the line of Ami Fadia from Needham & Company.

Can you talk about [ not ] the other end points that were studied in the Phase III and perhaps the data that was collected through the open-label extension. And maybe talk about the absolute change that you saw in perhaps the CGI scale and if there were any changes in the weight of patients that give us some additional data points around how the drug is impacting these patients. And my second question is just regarding the dose response, you were looking through some of the discussion at the AdCom and there was some discussion by the company around a U-shaped response curve. Can you talk to that? And whether you've got a chance to look at some of the earlier dose ranging work that the company might have done to give you some more confidence around the 3.2 milligram dose.

Yes. Thanks much for both questions. Kathie?

I will mention that previous Levo Phase III study is published, so you can access that, Mark or Jeff can probably send it around, and it has the full data if you're interested in all the end points from that study. It was published earlier this year in a peer review journal. In addition to positive benefit on the HQ-CT in the Phase III study, there was also positive and nominally statistically significant results on a number of the other end points. This included clinical global impression of change, which is a clinician assessment of Prader-Willi syndrome and it included different measures looking at hyperphagia. And in addition, the -- what's called the PADQ, which is an assessment of the anxiousness and distress in these patients. So we think taken together, there was a really clear and consistent pattern of positive results for ACP-101 compared to placebo in the 3.2 milligram dose group. And that's really taken together that along with what are of the positive results, but once it did not reach statistical significance in this 9.6 milligrams dose group driving our belief that there is real clear evidence of benefit here with intranasal carbetocin. The Phase III study is the -- I think, the biggest and best study that has looked at a dose response. It was a fairly robust study. And so that's also what is driving our move forward with the 3.2 milligram dose in our own Phase III study now.

[Operator Instructions] Our next question comes from the line of Uy Ear from Mizuho. Your question please.

Just curious about the adverse events, and there seems to be a high rate of headaches, flushing, diarrhea. Wondering if you can sort of talk about the severity and maybe the time course of these adverse events, how long did it last? And when the patients [ -- did it ] go away with these patients.

Sure. Kathie, do you want to take that?

Sure. So as we discussed on the call, and if you looked at the published paper for the 3.2 milligram dose, the only 2 adverse events that occurred in more than 10% of patients were headache, which occurred in 16% of patients and flushing of 14%. These rates are fairly moderate, especially in clinical trials. Headache is often reported as the adverse events in many neurologic clinical trials. These events were also not severe and especially the flushing went away fairly soon after initiating dosing. So we don't think that these adverse events are a significant concern. Diarrhea occurred in the 3.2 milligram dose in 9% of patients compared to 2% in placebo. Diarrhea, remember, these are children. They enrolled young children and teenagers. Again, it was not severe and was a temporary condition.

Okay. Can I sneak in a little question. I was just curious, like why are the -- other than I think I was looking at the press release from Levo. I think like other than flushing, the adverse events, I think, are different -- or at least greater than 10% adverse events are different between the 2 doses. Is there a reason like it just seems a little bit puzzling.

Yes, if you look -- I know what you're talking about. So the adverse event rates in the Levo Phase II study, I'm going to say with the exception of maybe a flushing, we're very low. So these -- the ones you're looking at are all around 2%, 4%, 7% and so these are, I think, just random things that happened to these patients during the trial, not related to the intranasal carbetocin. And so that's why you may see randomly, a little bit higher rate in 1 dose group compared to the other dose group, that indicates that is probably not drug-related. Remember, adverse events as we collect them in clinical trials, they don't have to be related to drug. If anything that happens to that patient during the trial, whether it's drug-related or not. So I think the kind that you're seeing is just randomness and nondrug-related.

And our next question comes from the line of Sumant Kulkarni from Canaccord Genuity.

2-part question as well. Are you making any modifications to the questions or waiting in the HQ-CT questionnaire for your trial as primary endpoint? And did you have to make any formulation changes with the intranasal product that you will be using in your product trial versus that used in prior trials?

Yes, sure. Kathie, you're right up.

So with regards to the HQ-CT, because this is a validated scale that has been used not only by Levo but other people conducting clinical trials in Prader-Willi syndrome and is well accepted by the FDA as a primary endpoint, we are not making any changes to that scale. It's also been, I'd say, psychometrically validated, so we want to keep it intact the way it is.

No need for a formulation change on it?

Yes. And we have not made any changes to the formulation, we're using the same formulation that Levo used in their Phase III trial.

And our next question comes from the line of Salveen Richter from Goldman Sachs.

This is Matt on for Salveen. Could you share what percent of these patients are obese. And will you measure that or will you measure weight loss as a secondary endpoint? And then on the expense side, is this going to have any impact to your 2023 guidance? And how should we think about expenses in '24?

Yes. Kathie, do you want to take the first question?

I don't have an exact number for you on what percent of Prader-Willi patients are obese. We can follow up with that. We will be measuring weight in the clinical trial, though and looking at weight and BMI as an endpoint.

On the expense side, no change to our R&D expense guidance as we already factored in the potential Phase III start in our original guidance. And as per usual, we don't guide multiple years. So we'll talk about 2024 early next year.

And our next question comes from the line of Jay Olson from Oppenheimer.

Can you talk about the potential for use of ACP-101... [Technical Difficulty]

You're cutting out. I think the question was potential for use of ACP-101 in other indications. Is that correct? Yes. I'm sorry, we're having technical difficulty as you cut out. Can you repeat the question?

[Technical Difficulty] [ Beyond ] Prader-Willi syndrome and especially used in a broad obese population.

Obesity. You have me go ahead?

Yes.

So, I'll just back up and make a point. ACP-101 is designed to treat the core neuroendocrine aspects of Prader-Willi which is hyperphagia and downstream things from that. It's not an anti-obesity mechanism. Really, these patients suffer from this desire to always seek food, which impacts them and their families. And then associated with that, are behavioral issues, anxiety, distress around that food-seeking behavior. That downstream then leads to obesity, but that's a downstream effect. ACP-101 is designed to treat that core kind of upstream aspects of hyperphagia and associated behaviors, it's not an anti-obesity medication.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Steve Davis for any further remarks.

Great. Thank you, operator. And thanks again, everyone, for joining us today. We look forward to updating you on our progress.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.