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

Excited to be joined for our next fireside discussion with ACADIA by ACADIA Pharmaceuticals. With us, we have Kimberly Manhard, the SVP of Global Strategic Planning and Execution; and Mark Schneyer, the CFO. So Mark, Kimberly, I really appreciate you guys being here. I'll just turn it over to give a quick intro and then we'll jump into the Q&A.

Yes, sure. Thanks for that, Jason. We're very happy to be here. At ACADIA, we have -- we're a commercial stage biotech company. We have 2 first-in-class assets in the market that are first and only approved treatments for their therapies. So NUPLAZID for Parkinson's disease psychosis and DAYBUE for Rett syndrome. And then behind that, we have a pipeline both of disclosed and undisclosed programs to support long-term and future growth. Our 2 late-stage assets are ACP-101 for Prader-Willi syndrome and ACP-204 for Alzheimer's disease psychosis. And we can get into all of this as we progress with the Q&A.

So you guys have had longstanding success with NUPLAZID. Obviously, you really managed through some headwinds through COVID and things are moving back in the right direction. I'll leave that one for a second. I think what's been really exciting over the last 12-plus months has been the DAYBUE launch. It's fair to say that it's gone really well. Can you maybe just give us a high level of what you think resonated most with health care practitioners and caregivers during the first year of the launch. And I say that in the context of running up into the launch, I think a lot of investors were trying to ascertain with there being nothing available for Rett patients, what would be clinically meaningful, what would really drive adoption. So what do you think has resonated?

Yes. So let me just kind of jump off from where you left the question. I mean I think as I mentioned, just kind of in the 1-minute overview, DAYBUE is the first and only approved treatment for Rett syndrome. Unfortunately, this is a really debilitating disease where you have children born and after kind of 18 months or 2 years of normal progression and development, start to regress, right? And they lose motor function, lose ability to speak and communicate and really just unfortunately, just become trapped in their own bodies. And so the children are there and then adults, but the caregivers really struggle to engage, communicate and take care of their children that are suffering really this debilitating disease. So the question is efficacy, any meaningful improvement from kind of the current state is something that caregivers and their health care professionals are looking for. And these are children and adults that go into care facilities that really need care 24/7. This is not -- it's not a disease where it's okay for hours and then kind of you have to step in. So really, to be able to move the needle on efficacy, and that's what's kind of resonated. That's where caregivers were interested, that knew about it. They became interested where we were able to make them aware of it and then to see the results kind of in the real world. And I guess, what -- maybe the layman's explanation is if a patient is suffering from Rett syndrome, the neurons in their brain are not communicating properly and DAYBUE helps restore that communication. So if you're able -- you can lose all ability to communicate verbal and nonverbal. DAYBUE help -- for patients that are successful in getting to efficacy, you can see improvements in that. They can see improvements in their motor function and being able to control kind of their arms and hands in a way that's uncontrollable for a Rett patient. And they're able -- they experience better mood, behavioral problems can improve in using DAYBUE. And so what does that mean, I guess, to the real world? I mean the common example that we hear is that my daughter is more alert. She's present. We've re-met her, right? She's able to engage in communication, tell me her what she wants or doesn't want, when she wasn't able to do that before. She can participate in the conversation, laugh at an appropriate moment and be there and be present with their community, whatever that is. And so those are all real-world tangible benefits that HEP values and what we hear feedback and why. Those are the stories that we want to continue to tell to get more patients who have yet to try DAYBUE to initiate therapy.

Great. That's really helpful. So obviously, now you have several quarters of the launch experience, you're continuing to generate data that informs how -- again, that it's going well, but also why you think it will keep going well. You hit on some of those drivers on your earnings call last week. So I just wanted to touch on a couple of them. We talked about the clinical data, the trial data and how relevant that was to caregivers. Can you -- you're also now saying that you're taking the real-world experience and the benefit that patients are seeing, and you're using that as part of your education messaging to providers and caregivers.

Yes. So operationally, I think -- so we talked about just in the last question, kind of the real-world benefits. I think the other thing that we need to make sure we're educating about is that there's a known tolerability issue with the drug. So in the clinical trials, about 80% of patients experienced diarrhea. That's happening in the real world, but there are management strategies to deal with that that were not implemented or implemented early in the clinical trial. So being able to communicate that and also to be able to give you a time, and they kind of all relate to each other.

Sorry, I think it's a really important point because you identified this tolerability point during the trial experience and had a strategy at launch to manage it. And I think it's really notable that not often do you see that actually succeed in clinical practice, and it really has done. You have patients now that you are successfully managing that tolerability.

We are, but I would say it's still variable, right? I think there are physicians that have really dialed in on it. And there are multiple strategies to deal with it, but they are our best pack practices. And I think from our kind of commercial and medical education efforts are to make sure those best practices are more widely known because there are some physicians who will say, listen, I'm able to -- without wanting to be graphic, but to say, all right, from a child stool to get it to peanut butter level consistency, we have practitioners that say, I'm able to do that with essentially all of my patients. And so to be able to communicate those best practices more broadly, if people can effectively manage the #1 tolerability issue, that could lead to them seeing -- getting through time to see -- and I can come back to that, to see efficacy or at least just get to efficacy, which can then just add to our enduring patient population. So ultimately, we want to make sure that patients for those that -- this is a drug that is -- it was approved based upon subjective end points like NUPLAZID, right, for these types of medicines, they work for many patients. They don't work for others. And that's fine, and that's to be expected. But we want to make sure that physicians, caregivers are using best practices on GI management strategies so they can work through the tolerability to see that there's efficacy there and if there's efficacy for the patient to remain on therapy.

Got it. Obviously, we learned early in the launch that you were able to get patients on drug. And that's not -- both from an awareness perspective, a reimbursement perspective. One of the questions that we had to wait for the answer was persistency. We now have some really interesting data there. Can you maybe just give us where -- what your thoughts on where persistency is tracking today versus your expectations? And what are the drivers? Obviously, tolerability is going to be one of them, but what are the drivers that are really -- we should focus on for persistency?

Right. So I think that -- like the driver is kind of what we just talked about. If you're having a good experience on the drug and it's effective, you're going to maintain -- stay on therapy. And if you're not, for whatever reason, there will be a reason or a good reason to stop therapy. I think when we -- so we're tracking on persistency. I would say, meeting our expectations, right? I think we talked about a little earlier, right, the rate of diarrhea was not known going into the Phase III trial. So it wasn't actively managed. Coming out of it, we knew, right? So our expectations kind of at launch would be we should be able to do better than what we saw in terms of persistency or people remaining in the clinical trials in the commercial setting. And what we've done for the investment community is as time progresses and we monitor patients on a monthly cohort by monthly cohort basis, so when did you start and how long are you on therapy, we are expecting we should be able to do better than a clinical trial experience. And the measurement we're using is while there's no 100% best comparator, we think the best comparative say is for those patients that were on placebo and LAVENDER, but then in our LILAC open-label extension, first -- at the first time went on to trofinetide. Well, they didn't know that they were or were not on active in the Phase III. They at least knew when they started the open-label extension, they were getting active at that time. And so certainly, in the commercial setting, you know you're getting a script for DAYBUE, which is the FDA-approved drug, and it's active. So if we can compare over time how patients are doing in the commercial setting versus what they did for this group of patients, the placebo rollovers and LILAC, we think we could do better. And what we've consistently done through kind of the first 12 months of launch has been able to maintain a 10 percentage point differential between the commercial setting in favor of the open-label LILAC. And so we have released data kind of as we progressed and have had enough patients that it's meaningful and so on in our last earnings call, we released the 9-month data. So for the cohorts of patients that were on or could be on for at least 9 months, 58% of those patients remain on therapy versus 47% the comparator for this group for the LILAC open-label extension. In addition to that, where we've talked about, well, what does that really mean? So obviously, we're happy with that performance. We always want to do better. But what does it mean for the enduring patient population? Because that's ultimately what's going to serve patients. And then for those in the investment community that say, well, what's the revenue base for this? That enduring patient population is going to be kind of the ballast for revenues going forward. And if we just look at any patient that started in our clinical trials, about 40% of those patients remain on therapy today. So if we're able to maintain this kind of 10 percentage point differential is our kind of belief, expectation that we'll be able to say, all right, if you -- for patients that start therapy on DAYBUE, about half of them will be enduring patients over the long term.

Got it. The other thing you gave some good data around on the earnings call was market share, market penetration and also thoughts about market growth. Can you just kind of hit the high points there of where you're at today? And obviously, you talked about the different segments of the market. So centers of excellence versus non-centers of excellence. Can you just run us through those numbers?

So there -- today, there -- and we know from claims data, there are in the U.S., right? There are about 5,000 patients that are diagnosed and treated for Rett syndrome. About 1,300 of those have initiated treatment, so tried DAYBUE at some point and a little -- and we had 862 patients on today as of our earnings call last week. So that 1,300 is roughly 25% -- a little over 25% of the known diagnosed patient population. So that gives us excitement of there are a lot more patients to serve, right? So that's where we see significant future growth from where we are today. And then as far as prevalence is concerned, I mean, there's always a difference between known and what is expected. The data suggests that there's 6,000 to 9,000 patients in the U.S. that have Rett. So that's -- so where will that number ultimately fall out? Time will tell. That will be part of our disease awareness efforts to try to close that gap. When we started before launch, the 5,000 we shared with the market was -- our estimate at the time before launch was 4,500. So it's increased a little bit. We would say some of that is probably just due to better data. But it's just kind of part of the theme. The more information that's out there, the more there is known of treatments, the bigger those numbers get because you get towards kind of maximum possible diagnosis. But is the number some 5,000 something north of that, something where between 6,000 to 9,000? Time will do.

And that's not specific to Rett, right? We've seen that in other rare disease examples where the diagnosis rate does increase with an effective therapy?

Correct.

Okay. Last couple of questions here on DAYBUE. You reiterated guidance. You also gave a little bit of color around some seasonal dynamics. Can you just walk us through what we should think about the cadence for growth for the rest of the year, both in terms of demand and revenue.

So from a revenue standpoint, we reiterated guidance, as you mentioned, we'll expect growth from here. There were specific dynamics we're happy to get into on kind of why we had a sequential decline in revenues in the fourth quarter, but we expect sequential growth quarter-over-quarter here. through the remainder of the year.

Great. And then just lastly, what are your plans for -- beyond the U.S.? And is that something that you plan on taking on yourself? Or will you consider a partnership or partnerships to help?

Yes, I can...