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

Okay. Good day, everybody. Welcome to UBS Healthcare Conference. With us, we have ACADIA Pharmaceuticals and Mark Schneyer, who is the Chief Financial Officer; and Ponni Subbiah, who is the Chief Medical Officer. Thank you so much for joining us. My name is Ash Verma, I cover SMid-cap biotech and spec pharma. So I just want to go over the story and learn some of the exciting things that have happened. Just for the audience in the room, if there is a question that you want us to ask, feel free to send this to me by the QR code, and we can cover that. But maybe with that, I'll get started.

Yes, maybe, Mark, if you can give us a sense on like where you are in the story, just recently the third quarter earnings and take it from there.

Well, Ash, great to see you. Thanks for having us. We appreciate it. So at ACADIA Pharmaceuticals, we're a neurological and rare disease company. Both commercial and development stage. So we have two commercial products: NUPLAZID and DAYBUE that each treat, respectively, Parkinson's disease psychosis. NUPLAZID and DAYBUE treats an indication called Rett syndrome. Together, the commercial franchises will cross $1 billion in revenue for the first time as a company this year, and we have a pipeline behind that. So with our latest-stage asset, ACP-204, we're investigating in two indications: Alzheimer's disease psychosis, which will have a Phase II readout in the middle of next year and Lewy body dementia psychosis. We have an early-stage pipeline behind that, that we can talk about as well. And we're in a strong financial situation. The company's cash flow positive, have almost $800 million -- or over $800 million in cash on the balance sheet as of our last quarter and no debt.

Right. Perfect. So maybe, I know the NUPLAZID and DAYBUE, both sort of like different dynamics going on. Maybe we start with NUPLAZID actually. So this is interesting. Like we have seen the IP extension, which was a big positive news for you guys, like earlier this year, and I see that you have started to more talk about that you want to fuel the growth behind that. Just talk towards like where you are in that growth narrative. And as you're thinking of like expanding the commercial footprint, where can this go ultimately?

That's a great question. So NUPLAZID has been on the market 8, 9 years now. So it's kind of mid-life cycle. And I think like we do for all of our assets, we invest for returns, and we'll dial up and down that investment based upon the performance of the assets and the environment that we're facing. And what happened with NUPLAZID during the pandemic, even though that's kind of in the rare view mirror, but it kind of helps to bring back a little bit to address kind of a more fulsome answer to your question with an elderly and frail patient population. Fortunately, there was mortality in this patient population, as well as patients just wouldn't go to their physicians for the same level of visits. So the traditional metrics that you test to say, all right, our commercialization and marketing dollars reaching returns didn't meet those thresholds in that time period. So we pulled back. But then coming out of the pandemic, what we saw is that there was low awareness. We had some new information that Ponni can talk to you about some real-world evidence studies that we started to share with the market and gained traction kind of 5, 6 years into launch of renewed growth trajectory. Over the last 12 months, knowing that we had low awareness in the kind of patient and caregiver community for this disease, but still a strong prescriber base and willingness to prescribe amongst our physician customers, we renewed our direct-to-consumer campaign, both unbranded and branded. The unbranded, we partnered with Ryan Reynolds to get the information out about Parkinson's disease psychosis. And that is -- all of that together has led for renewed growth. In the last quarter, we had not only double-digit year-over-year growth in revenue, we had 9% volume growth year-over-year in the third quarter and to -- and then from the results of the direct-to-consumer campaign seeing where our new patients are coming from and those new scripts are coming from. We see an opportunity to expand our field force, which we also discussed this fall. And so come January of next year, we're going to increase our footprint by about 30% to drive further growth. Together with kind of near term because commercialization, you think a 2- to 3-year investment horizon. But from what you mentioned earlier, Ash, for the kind of intro to this question, we did have an IP win earlier this year that gets us runway through February 2038. So there's a lot of life left in the franchise to properly commercialize it to maximize the value, at least from a financial perspective for the company and for investors.

Great. Great. Yes. I mean this type of sizable sales force expansion. Have you done this before with NUPLAZID in the past? And I'm just curious to see like when does it start to like generate the results in terms of like...

So we -- so I think from my -- I mean, I've been in the company 5 years. So we haven't done this direction with NUPLAZID, but we have a very experienced commercial team, personal leadership, our CCO, Tom Garner, and Catherine Owen Adams, our CEO have plenty of experience with optimally commercializing assets. So they've done it many times. And so -- and we're doing it also, as you know, and you may get there on your questions on DAYBUE, we did it earlier this year. So typically, you'll see a couple of quarter 2 to 3 quarter impact from when you start to make the investment until it's up and running fully and optimally and you see results at the top line.

Both from DTC and sales force expansion standpoint, like kind of the -- that type of time frame?

Yes. So I think both. It's a couple of quarter lag. I mean, the DTC usually happens a little quicker because as you're drawing -- you're targeting kind of the patient caregiver universe. And as they go and talk to their physicians, oftentimes, those physicians are familiar with NUPLAZID. And so there's some -- depending upon where they go, there's some lag. But if you're talking to a new physician, whether it's NUPLAZID or DAYBUE it's kind of similar across, you need a number of conversations with that physician to make that relationship fruitful from a financial perspective. So it's about the same time frame. Usually, you see it a little quicker in DTC a little longer from a field force expansion.

Got it. Got it. And I see that just like roughly where consensus is at for 2026, like $730-ish million. Is that sort of looks reasonable given like the push...

We'll guide next year. I think there's two things we promised to do next year. One is typical, we'll guide for the year. And two, for both DAYBUE and NUPLAZID individually, we'll give some perspective on where we think the peak sales opportunity or the full opportunity of the [ ads ]. So let us get there. But it's an asset that we continue to see meaningful growth from in kind of the near, medium and long term and let us get into next year to be more specific on numbers.

Great. Great. And then just on the IP win, sort of as a follow-up to that, yes, I know there's like appeals process like when that can play out typically. Anything that you're seeing on that front?

There's one -- so the litigation -- the trial court that we -- or the trial that we won in the spring that moved the stock price was winning the formulation patent that covers our 34-milligram capsule of NUPLAZID. That litigation is subject to appeal. The appeal -- kind of briefing process is ongoing now, and we would expect to have oral arguments at the appeal sometime next year. We had very strong arguments that supported our win at the district court level, and we remain confident in our position in that case.

Yes. Great. Awesome. So maybe just like switching over to DAYBUE then. So here, just I think -- yes, I have to say this has seen quite a bit of a turnaround, right? I think back in 2024 or '23, you started to see a little bit of a stagnation, but with more of a focus on like the pushes that you're making. You're starting to see like more growth coming back. So I think like on this same kind of a situation that like you're expanding the field sales force, right? And then you're starting to look at more commercial opportunity. Like have you quantified like where is the sales footprint right now for DAYBUE specifically specifically and like where the expansion...

Like the number of reps, yes. So we have 38 territories, so 38 reps supporting the DAYBUE franchise today, and that's kind of full from after completion of our field force expansion earlier this year. I think the thinking behind that, as we had new leadership come into the company, both at the commercial level, the CEO level, we just felt that we were undersized in our DAYBUE customer-facing effort. And -- and as about, I would say about 2/3 of Rett patients are treated outside center of excellence is we just didn't have enough people to have kind of the reach and frequency. So similar to what we're talking about, there's no mystery to it. If you're going to build a relationship with a physician, to try to educate them about a medicine for them to treat their patients. You just need a certain level of reach and frequency or frequency with that individual position to get them comfortable prescribing a medicine. And so even though Rett syndrome is a rare disease and you have pediatric neurologists that are specialists in the area and pointing things about this better than I can, any physician can prescribe it. And it's not -- and so -- but we wanted to make sure is that, you have pediatric neurologists or even just normal pediatrician who's treating a number of Rett patients that they can feel comfortable prescribing the medicine to their patients. And we just didn't have enough people to accomplish that at this stage of the launch or at this stage of the life cycle of the asset. And that's why we expanded the field force earlier this spring or this year. And as we reported on our third quarter call, we're just starting -- we're now starting to see -- kind of the fruits of that expansion with -- in the third quarter. We had an increase in referrals, and it was our highest referral count since third quarter of 2024.

Great. Maybe I can just add to Mark's point. So Rett syndrome can affect patients right from young age greater than 18 months, and they can be -- continue to live with the disease. And now because of better care for these patients, they're living into their 50s, right? And so it's really important we started, of course, in the centers of excellence, the pediatric neurologists. But as you go into the community, they're not -- as they get older, especially, they are being taken care of by more adult internists, family practitioners, as well as advanced practice providers like nurse practitioners. So it's really important now that in order to help them understand, many of them maybe see one or two patients. So we're really spending a lot of time educating them, not just on our product, but also about Rett syndrome itself. And so that has been very important now with more people on the ground to be able to reach more of them.

Great. Great. Yes, I know you focused on like these three different kind of buckets in terms of like the COEs and high-volume institutions and then private new. So where is the most value that you can extract us for the next phase of the growth in terms of focusing in the channel?

Well, I think right now, we've now really established our relations with COEs. And so we've taken a lot of their learnings both from an efficacy, as well as the tolerability management perspective. We've published two papers on that with their opinions. So we're continuing to really share the experiences and rolling them out. And so the high-value institutions, that's a low-hanging fruit because these are often academic centers, tertiary care centers, where patients do come. But to really reach those others, we're really trying to make the connection. And really educate them and at the same time, really educating the caregivers because many times, especially the older patients, they not really -- they're not aware that there's a product that's available. So that is also a very important channel that we're making sure that the awareness has increased.

Great. And then, yes, I mean, there is a fair bit of discussion on this around the persistency of the drug, right? And some of the data that you've shown, which has been kind of improving, I would say, like over time, like as you're saying, the -- more than 50% of persistency over 12 months and I think like 45% at 18 months. So do you think that you're -- like is there a room to go higher than that? And like patients that you have been tracking for, let's say, 2 years, like where is that shaking out to be in terms of the persistency?

Yes. So I guess the way the math works on it, right, those numbers have stabilized and more patients that we have that reach those time points just supports and maybe even uplift those numbers a little bit, right? So it's greater than 50% after 12 months and greater than 45% at 18 months of time. And those are -- for any chronic medicine are strong persistency rate. So could they improve? It would -- you need like new patients that start today or like are on the patient to have greater persistency at that time point. So like the whole curve over time, as more patients go through it, can shift up and down. But I think as we've seen it over time, and we've taken -- we've waited to report those numbers just because you don't want five patients to reach there, right, because that will just be like this. So it's really -- those numbers are just robust and are supported as more and more patients hit those time points.

But it seems to -- a lot of the churn in the patient is happening like early on. And if it's like 50%, 45%, like at 12% and 18%, that means that longer to follow.

If you could see us in the room, and I guess I maybe not people on WebEx, there's -- it kind of plateaus out, right? So the greatest time point when people would stop taking therapy because they either didn't see efficacy or they had tolerability issues are in the first few months of therapy. So that's when we lose most of the patients that have started. But now more than 70% of our patient base have been on therapy 12 months or longer. So that's a very stable patient base. They're on the outer ends of that persistency curve that you mentioned. And then as we add new patients that start, that's how we're growing our patient base. today and in the future.

Great. Yes. And then just talking about like Europe for DAYBUE. So, I mean, I know you've discussed this kind of like starting in Germany and stuff like that. But, yes, how is the concept of the market different in Europe at all versus U.S. standard of care, the physician, how they prescribe for Rett. Maybe like if there are any differences between U.S. and Europe?

So it really varies by country. So let's take Germany, for example, our biggest market. There is really those centers of excellence like in the U.S. rather, there's a network of about 120 centers that provide care for children with neurodevelopmental disorder. And so it's important that we're able to work with that kind of framework. But if you look at France, it's very similar to U.S. There's about four or five centers of excellence where many of the care is being provided and the management plans are coordinated with their local doctors. Now if you look at Italy and Spain, also very similar to kind of the French model. So we are very much learning. We have our MSL team already on the ground. We're really interacting with a lot of these experts. And so really trying to understand the nuances within each country.

Yes. So -- and then just in terms of the pricing like where you might ultimately like realized price versus U.S. like what is the likely base case that you're running?

So I think it's a little early to talk about that. As we go through the approval process next year, then in Germany, there's a period of kind of unconstrained or free pricing as they call it. So we're probably about a year, if not little bit more than a year out of setting price and let us get closer to that before we share it with Wall Street.

Got it. Okay. Perfect. So yes, let's switch over to the R&D. So I mean, I think it's been a lot of kind of ups and downs, right? This year, I mean, particularly, a lot of excitement around the R&D Day when you outlined big -- sort of sales potential, but then, unfortunately, the PW did not work out. So I guess the question that I have just on that is, does that, in any way, change your kind of level of confidence in the rest of the pipeline? Or do you think that you still kind of firm believer that the overall revenue opportunity that you outlined for the rest of the pipeline is pretty intact?

I think from a revenue standpoint, not every science experiment works, right? So that's just the nature of the business that we're in. So we did share at R&D Day that we had a potential $12 billion of opportunity from everything that was identified in our pipeline and with 101 not being successful that number is around $11 billion. So it's still substantial, and we still have confidence across the pipeline that there are good investments to make. But I'll let Ponni talk maybe a little more specifically about the pipeline in general and what she sees in it.

Yes. So we're very excited about our pipeline. We do think it will be an important engine for growth of the company. The first is more on the clinical those stages that are in clinical is, first of all, ACP-204. We're very excited about that. First of all, it was developed internally within the company based on all the learnings we've had with pimavanserin. We're probably one of the experts in the 5-H2A receptor science. And so based on that and really trying to improve the profile. And right now, based on the data from our nonclinical studies as well as Phase I, we do think we have a very interesting profile that's going to be very important in the populations right now we're studying. So right now, we have a Phase II study that's in Alzheimer's disease psychosis as well as the Phase II study that just started in Lewy body dementia. So 2 very important and huge market opportunities, right? 7 million patients with Alzheimer's disease of 30% can develop psychosis versus an LVDP over 1 million Americans affected, of which 50% to 75% can be affected with psychosis. And psychosis can be extremely burdensome to the family. So we do think based on our learnings from PDP that we have a lot to offer here. Now in addition to that, also very -- we are very excited in the neuropsychiatry space is ACP-211. This is our deuterated n-ketamine, which we will be studying in major depressive disorder with the Phase II study -- Phase II starting fourth quarter of this year.

Yes. I want to ask a few questions about each one of those. So maybe just like starting off with Alzheimer's disease psychosis. So this can be a very big opportunity, like you said. And like so far, the data that we've seen from preclinical or Phase I, I mean, you kind of showed that this next-gen pimavanserin effectively like no -- doesn't have the QT prolongation issue that pimavanserin does. So as you're getting to like the higher concentration of this molecule, are there any other side effects that might be triggered that NUPLAZID did not have with 204?

So let me step back first about the molecule. And as we said, based on the early nonclinical and the Phase I study. First of all, there's a few things that we are excited about that differentiates it and really part of our target product profile. One is that lacks so far, the data suggests it lacks QT prolongation potential. Now that really limited us on the NUPLAZID side to go above the 34-milligram dose, right? So that's a huge point. Now why is that important? Because if we don't have that potential, we will be able to test higher doses. Now that's important because based on our work in pimavanserin, we know that if there's a strong exposure response relationship. So if we're able to get a higher platinum exposure, we think that will translate to better efficacy, right? And the third thing is that compared to NUPLAZID, ACP-204, its terminal half-life is about half of NUPLAZID. It's about 21 hours versus 55 hours for NUPLAZID. So we think that also have a shorter onset of action. So that will help translate to the population. Also, it continues to have a convenient, we think, once a daily dosing with or without food intake. Now with regards to your point, now with the higher doses, there could be potentially dose responsiveness with regards to other events. But so far, we have tested single doses up to 180 milligrams, as well as multiple doses at 120 milligrams, and they've been generally well tolerated. Now even in our ongoing study, we are testing both 30 and 60 milligrams. And so far, review of the blinded data is reassuring. And then we also have a Data Safety Monitoring Board, which has supported the continuation of the study. So for those reasons, we're feeling that the to profile will be very consistent with what we've seen at pimavanserin. And that has been a huge advantage for pimavanserin is the convenience. Also, it's the safety in the elderly population.

Got it. Great. Yes. I mean in this space, like there is a fair bit of just focus right now on Cobenfy, right, the Phase III trial reading out. I'm just curious like if you have any views on like their study kind of as a competitor. It seems that they -- I mean, like even on the schizo side has a pretty high discontinuation rate. And like for this study, they're using it twice a day, which in this population can cause even more discontinuation. So just in terms of like what do you think the profile of Cobenfy might be from a competitive standpoint when we get the data in the next few weeks, I guess?

Yes. So first, we don't really comment on other companies' compounds. But what I can tell you is, first of all, it's really good there's more investments in the space. Again, huge population huge unmet need. So -- but with ACP-204, as I mentioned, we have a pretty robust target product profile. And so far, what the profile looks like, that we think that this will be a very important option if we're able to consistently get it through the pipeline. And one of the things, since you alluded to dosing, what I mentioned earlier, is that the convenient once-a-day dosing orally is going to be very important for this kind of fragile population.

Right. I was looking at like the -- I think the endpoints are also a little bit different versus what you guys are choosing versus them. So you have the SAPS-H+D versus I think they have NPIC-H+D. So yes, what is essentially like an FDA-validated endpoint, like registrational endpoint or is it kind of that situation that because it's totally new disease state that there's no consensus around it?

Yes. So the FDA hasn't really communicated a preference with regards to an endpoint. So we have a lot of experience with SAPS-H+D, right? So we have experience from the pimavanserin trials, both in the registration trial, as well as the HARMONY was a component of the relapse criteria. So we know that, that's sensitive to change. We were able to get registration in PDP. And so with that, we have included the SAPS-H+D, the change from baseline at week. Now the NPIC is the neuropsychiatric inventory rated by the clinician. Now we have included that as an exploratory endpoint. But we, right now, our plans are to continue with this primary endpoint in Phase II into our Phase III studies as well based on the experience we've had on our program. And remember, we also have experience with pimavanserin in Alzheimer's disease psychosis in a nursing home setting in the U.K. Now there, we did use a neuropsychiatric inventory, but we've decided to go with SAPS-H+D again because of its sensitivity change.

With this scale, like is there -- like what's the right like clinically meaningful effect size versus placebo for the duration of the -- like the time that you're running this study?

Yes. So we have powered the study for a moderate effect size of 0.4 and we also are looking at not just a key secondary endpoint is looking at the clinician's global improvement. And so we feel based on this, this will be clinically meaningful for these patients.

Great. Awesome. And then I had a couple of other quick questions on the rest of the pipeline. Before we go there, Subbiah, just on Lewy body, like what's the time line on that? You said like initiation by the end of this quarter.

We've actually started enrollment in the trial. And so we'll be -- we're hoping to be able to read out potentially mid part of next year.

Got it. Okay. Perfect. And then, yes, there are a few different early pipeline programs that I was looking at. So 2591 in Rett plus Fragile. So just kind of how you're thinking about that from a positioning standpoint versus DAYBUE for Rett?

No. So this is a compound that we licensed from Neuren, and this is a IGF-1 analog. And just early work suggests it may have better brain penetrant. And so we're continuing to work on this. Right now, we're very committed to bringing new solutions to the Rett community and in addition to, of course, ensuring that DAYBUE gets to more patients around the globe. So right now, it's in the early stages.

Right. And for this program, you have the rights for two indications, but Neuren has the right for, I believe, for the rest of them, one of them kind of including Prader-Willi, just given like you have shown excitement around Prader-Willi as an opportunity, is that something that makes like a logical step for you to try to secure that piece of the risk?

So as of now, Neuren is investigating 2591 in a number of indications. And as kind of the owner of the asset that they've chosen strategically, they want to keep those and invest them on their own. So we have Rett and Fragile X. And so we'll stick with those. And it's just the nature of the business relationship that we have with Neuren.

Yes. Is this one of those like sort of more broad approach -- applicability, excuse me, for different indications with this 2591 that it can work on a bunch of these different indications?

Maybe I can comment a little bit on that. So many of these disorders they're working on are neurodevelopmental disorders, right? At least the mechanism of action of trofinetide, for example, which is this is a next generation, is that at least based on animal studies, it appears to impact neuronal plasticity and dendritic growth, thereby improving neuronal communication. And so I think in these neurodevelopmental disorders where there's not neurodegeneration, but immaturity of the neurons. This could play a role. And I think that's why, especially trofinetide was the first drug ever approved for neurodevelopmental disorder. So this has given a lot of hope into the other areas and enthusiasm investing in some of these other neurodevelopmental disorders.

Got it. Got it. Okay. And then, yes, I mean, I think you mentioned the Ketamine. Deuterated ketamine. Yes, can you talk about that a little bit? I think -- yes, what's the angle there? Like are you going for which subtype of depression or like how fast can you see onset of action that an approach?

Well, so we've been working to have a robust target product profile for this. So what our thesis is because 211 is a less potent on the NMDA antagonist, it will have less likely to have impact on and cause anesthesia. And also, it may be -- because of this, it could potentially be dosed at a higher level, which can enhance AMPA activity, which can lead this -- has impact on depression. At the same time, with oral dosing and also one of the theses our target product profile is the ability because it's not as potent, potentially to be less sedating, and also have less association. Now why is that important? Because in the clinic, then they don't have to be there longer being monitored. So it will be convenient but at the same time, of course, the focus on efficacy.

Great. And then just on 271. So this is, yes, going after Rusteo, Ingrezza and a very, very underpenetrated market. So yes, I mean, I'm just curious like what's the angle there in terms of target product profile that you're looking at? Is it after those therapies? Or can it be for naive patients?

Yes. It's in the very, very early stages right now. So -- but it does have a very interesting scientific hypothesis, right? It's work on the GPR8, and it's an agonist there. And so we do think that it may have some potential in Huntington's chorea, Huntington's disease, both on the chorea movement disorder, but also potentially in the psychiatric manifestations as well. And then, of course, we're also thinking about it for tardive dyskinesia.

Would HD chorea would be the main indication and tarda is like secondary. Is that...

It's very early. We're hoping both. But yes, it's very early in stages right now.

All right. Great. With that, we can wrap it up here. So thank you so much.

Thank you.

Yes. This was great.

We enjoyed as well.