ACADIA Pharmaceuticals Inc (ACAD) 2005 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the ACADIA Pharmaceuticals' First Quarter 2005 Financial Results Conference Call. My name is Mia, and I will be your coordinator for today.

[Operator Instructions]

I would now like to turn the presentation over to your host for today's call, Mr. Tom Aasen, Vice President and Chief Financial Officer of ACADIA Pharmaceuticals. Please proceed.

Thank you. Good afternoon and welcome to ACADIA Pharmaceuticals' first-quarter 2005 conference call. This call is being recorded, and an archived copy will be available on our website, at "www.acadia-pharm.com," through May 25th.

Today's call will cover two topics. First, I will provide a brief overview of our un-audited financial results for the first quarter ended March 31st 2005. Following this overview, Uli Hacksell, ACADIA's Chief Executive Officer, will provide you with an update on our clinical pipeline, collaborations, and recent highlights. After this update, we will entertain questions in a question-and-answer session.

I would first like to remind you that during our call today, we will be making a number of forward-looking statements, including statements regarding our financial results and our research and development programs.

These forward-looking statements are based on current information and expectations that are inherently subject to change and involve a number of risks and uncertainties that may cause ACADIA's actual results to differ materially from those contained in the forward-looking statements.

These factors and other risks associated with ACADIA's business can be found in our filings made with the SEC, including our "Annual Report" on Form 10-K for the year ended December 31st 2004 and subsequent filings, including the re-sale S-1 registration statement that we filed on May 10th.

You are cautioned not to place undue reliance on these forward-looking statements.

I will now proceed with a brief overview of our financial results as reported in our press release, issued earlier today. I'm pleased to report that our financial results for the first quarter year ended March 31st 2005 were in line with our expectations.

We reported a net loss of 5.6 million for the first quarter of 2005 compared to a loss of 6.5 million for the first quarter of 2004.

Our revenues increased to 2.3 million for the first quarter compared to 924,000 for the first quarter of 2004. This increase was primarily due to new revenues recognized under our recent collaboration with Sepracor as well as revenues earned from our development agreement with the Stanley Medical Research Institute. Revenues from our collaboration with Allergan totaled approximately $1 million for the first quarter, slightly above the level for the comparable quarter of 2004.

Research and development expenses increased to 6.1 million for the first quarter, up from 5.7 million in the first quarter of 2004. This increase largely reflects expansion of our research and development organization, as we continued the development of our clinical and pre-clinical pipeline. This increase was offset, in part, by a decrease in external service cost, which can fluctuate from period to period.

General and administrative expenses increased to 1.6 million for the first quarter, up from 912,000 in the comparable quarter of 2004, reflecting increased personnel costs and costs associated with operating as a publicly-traded company.

Our net loss for the first quarter also included 371,000 of non-cash, stock-based compensation expense compared to 695,000 for the first quarter of 2004.

ACADIA's cash and investment securities totaled 41.6 million at March 31st compared to 35.9 million at December 31st 2004. The increase in cash largely reflected initial payments associated with our collaboration with Sepracor, which began in January, partially offset by cash used in our operations.

Sepracor purchased shares of our common stock for $10 million in January at a 40% premium to the 30-day trailing average closing price. Sepracor has also committed to purchase a second $10-million tranche on the one-year anniversary of the agreement at a per-share price reflecting a 25% premium to the then 30-day trailing average price subject to customer and closing conditions.

Subsequent to quarter-end, we closed a private placement on April 20th, in which we raised net proceeds of approximately 34 million from the sale of shares of common stock and warrants to purchase shares of common stock.

Consistent with the terms of this private placement, we have filed a re-sale registration statement with the SEC earlier this week to register the shares of common stock that were purchased in the private placement and the shares of common stock that are issueable upon the exercise of the warrants. This registration statement has not been declared effective by the SEC, and those securities may be sold there under, until it is declared effective.

Through our collaboration with Sepracor and our recent private placement, we have significantly strengthened our balance sheet. We anticipate that we will use between 26 and 30 million of our cash resources to fund operations during 2005.

Looking ahead, we believe that our current cash resources, including expected payments under our existing collaborative agreements, are sufficient to fund our operations through at least mid-2007.

Finally, to update you on our share information, we closed the quarter with a total of 18.1 million shares of common stock outstanding. Following the closing of our private placement in late April, we had an aggregate of approximately 23.3 million share of common stock outstanding.

I'll now turn the call over to Dr. Hacksell, our Chief Executive Officer, who will provide you with an update on our development programs and other recent highlights.

Thank you, Tom. And let me take this opportunity to thank all of you for joining us on today's conference call.

We are off to a very exciting start to 2005, and I'm pleased to report today that we remain on track to reach our previously announced clinical milestones for the remainder of this year. We continue to believe that 2005 will be an exciting year for ACADIA and its top cultures.

During our call this afternoon, I will provide you with a brief update on our clinical programs and ongoing collaborations and also touch on some of our recent corporate highlights.

ACADIA's pipeline includes four clinical programs, three of which are proprietary Phase-II programs. First, ACP-103 for treatment-induced dysfunctions in Parkinson's disease. Second, ACP-103 as an adjunctive therapy for schizophrenia, and third, ACP-104 as a standalone treatment for schizophrenia.

In addition to these three internal clinical programs, we have a neuropathic pain program in Phase-I clinical trials in collaboration with Allergan. We expect to have important milestones in 2005 for each of these programs.

Let me start with our Phase-II programs for ACP-103, ACADIA's proprietary small molecule, which acts selectively as an inverse antagonist on 5-HT2A receptors. In our first clinical program, we are developing ACP-103 as a therapy for treatment-induced dysfunctions in Parkinson's disease.

The standard of care for Parkinson's disease currently, and for the foreseeable future consists of L-Dopa and other Dopamine Replacement Therapies. These therapies result in treatment-induced psychiatric and motor dysfunctions, and there is currently no approved therapy in the United States for these dysfunctions.

We believe that ACP-103 has the potential to make an important difference in the standard of care for patients with Parkinson's disease by effectively treating these dysfunctions. We are currently conducting a multi-centered Phase-II clinical trial with ACP-103 in Parkinson's disease patients with treatment-induced psychosis.

This trial is double-blind, placebo-controlled, 28-day, dose-escalation study, designed to evaluate the efficacy and tolerability of ACP-103 in a total of 60 patients with Parkinson's disease that suffer from treatment-induced psychosis. The efficacy and tolerability endpoints are assessed by a battery of standard rating scales, including the sub-scale, the Physician's Global Impression of Change scale, and the UPDRS scale.

As previously communicated, we plan to report results from this trial at two points during the study. First, by mid-2005, we expect to report on trends in patient responses to ACP-103, based on the first 30 patients to complete the study. This examination will be limited to an evaluation of potential trends relative to the trial's endpoint for antipsychotic efficacy.

We are continuing to enroll patients. And when all 60 patients have been completed, we will perform a complete statistical analysis of all clinical endpoints. We expect to report results from the complete analysis in late 2005 or early 2006.

We're also conducting a study involving the extended use of ACP-103 in Parkinson's patients with treatment-induced psychosis, who have completed the aforementioned Phase-II trial and who may, in the opinion of the treating physician, benefit from continued treatment with ACP-103. This study is designed to determine the safety of ACP-103 during long-term administration.

Finally, we have also an ongoing clinical pharmacology study in collaboration with NIH to assess the ability of ACP-103 to treat levodopa-induced dyskinesia in patients with Parkinson's disease.

In our second clinical program, we are developing ACP-103 as an adjunctive therapy in schizophrenia, designed to improve the clinical profile of existing and psychotic drugs.

We believe that ACP-103 has to potential to improve the efficacy profile and reduce the side effects of current and psychotic drugs, thereby, offering a major advance in schizophrenia therapy.

Our Phase II program with ACP-103 as an adjunctive therapy for schizophrenia consists of multiple clinical trials. We reported results from the first proof-of-concept clinical study last fall, which showed that ACP-103 reduced side effects associated with haloperidol treatment in normal healthy volunteers.

We have two additional clinical trials in this Phase II schizophrenia program. We are currently conducting a double-blind, placebo-controlled Phase II trial, designed to evaluate the ability of ACP-103 to treat side effects associated with chronic treatment with haloperidol, a typical antipsychotic drug in patients with schizophrenia.

Specifically, we are examining two troubling side effects of that psychotic drug. First, akathisia, which is an uncontrollable and extremely disturbing feeling of motoric restlessness, and second, hyperprolactinemia, a condition of elevated prolactin secretion, which can adversely effect sexual function.

This trial involves once daily oral administration of either ACP-103 or placebo for a five-day period. Efficacy is assessed by the use of standard ratings scales. We expect to report results from this trial during the second half of 2005, as previously communicated.

The other trial is a larger, multi-centered double-blind placebo controlled Phase II trial, which is designed to evaluate the ability of ACP-103 when used adjunctively with other antipsychotic drugs to provide an improved therapy for schizophrenia patients. We have continued to finalize preparations for this trial and we expect to begin the clinical phase later on this quarter, as previously communicated.

This Phase II trial will primarily explore the potential dose baring and efficacy enhancing effects of ACP-103 given adjunctively with each risperidone, a commonly prescribed atypical antipsychotic drug and haloperidol.

We are planning to enroll up to 400 patients with schizophrenia, who will be randomly assigned to five treatment arms. Two arms using ACP-103 adjunctively with low doses of risperidone or haloperidol and three additional arms, low-dose haloperidol, and low and high-dose risperidone.

This clinical trial will include a 42-day treatment schedule. We will use standard rating scales to access clinical endpoints for both positive and negative symptoms in schizophrenia as well as tolerability measures. We are planning to perform a formal interim analysis of the 200 patients who have completed the trial.

Now, in our third phase of clinical program, we are developing ACP-104, as a treatment for schizophrenia, with the added potential benefit of improving cognition. Cognition is one of the major challenges in schizophrenia therapy today and we believe that ACP-104 may represent a promising new therapy that addresses this unmet medical need.

We are currently conducting the initial studies in our Phase II program for ACP-104. These initial studies are focused on establishing safety and tolerability of ACP-104, but may also provide initial indications of efficacy.

We expect to report results from the initial studies during the second half of 2005, as previously communicated. Following these studies, we plan to begin additional studies to further evaluate the ability of ACP-104 to treat schizophrenia and cognitive impairment.

I will now turn to a brief update on our collaborations. Today ACADIA has three ongoing collaborations with Allergan as well as our new collaboration with Sepracor, which we initiated in the first quarter of this year.

Starting with Allergan, I am pleased to report that our collaborations continued to progress favorably, including our collaborative program in the area of neuropathic pain. This program is based on the discovery of the previously unappreciated alpha-adrenergic machinist to treat neuropathic pain that we made in collaboration with Allergan.

Neuropathic pain represents one of the largest unmet medical needs and we believe that our drug candidates provide the potential for a breakthrough in pain therapy. You may recall that this program moved into Phase I clinical trials during the fourth quarter of 2004, and Allergan has previously announced that it intends to launch this program into Phase II clinical trials this year in 2005.

Finally, we are off to, what we believe, is very start productive start to our collaboration with Sepracor. This alliance encompasses two exciting areas.

First, the exploration of potential clinical candidates resulting from our pre-clinical muscarinic program, which is targeted towards CNS and other disease.

And second, an option to select a pre-clinical compound from our research in 5-HT2a program for using combination with LUNESTA for sleep-related indications. Both companies are very enthusiastic and we look forward to further advancements in this collaboration.

I want to conclude my update today by remarking on a very important recent highlight for ACADIA, the completion of our private placement in April. This financing provides ACADIA with a comfortable cash runway to complete our planned Phase II trials and position our lead candidates for late-stage development, while continuing to build our drug pipeline. We are very grateful for the strong support exemplified by a high quality group of new and existing institutional investors through this financing.

That completes our update and we will now be happy to entertain any questions that you may have.

[Operator Instructions]

Your first question comes from Ted Tenthoff of Piper Jaffray. Please proceed.

Nice start to the year, certainly. Looking for a lot into the back half. One quick question, with respect to the revenue upside in 1Q, do you think that the incremental revenues from Stanley and Sepracor are sustainable? And could you remind me what the duration was of the Stanley agreement?

Sure. I would be happy to Ted. First of all, in terms of the revenue amounts, what I can tell you is, we have provided overall guidance on the level of cash usage for 2005. We have not provided specific guidance on topline.

But, however, you can know obviously from the first quarter that revenues did increase and the reason for the increase was the new revenues from Sepracor and SMR and we can clearly say, presumed to the terms of these agreements, we expect continued revenues from all of these sources during the -- throughout 2005.

And may be one quick follow-on there just to clarify. Was there any up-fronts or loading or anything like that that was recognized in the first quarter, as that kind of an amortized amount?

We recognize revenues pursuant to the standard GAAP principle. So, any thing that's received in advance must be amortized in over the term of the agreement. So, we, in fact, as I mentioned, this contributed about 820,000 during the period. While I can't give you specifics, we clearly expect the continuation of the revenues from Sepracor from each of these different sources throughout '05.

You mentioned, Stanley -- let me get to your second piece of question, Ted. That in fact provided -- it was an overall three-year agreement. If you recall, it encompassed first $1 million investment and that was actually done via a promissory note that converted into our stock at our IPO and then 5 million in funding over a 2.5 year period.

And just to clarify, you said that 820,000 in the first quarter that was specifically Sepracor?

That's correct.

Okay. Great. Thanks. I'll hop back in.

Your next question comes from Charles Duncan of JMP Securities. Please proceed.

Hey good afternoon, guys. Congrats on a good start to the year as well and good financing -- gives you some decent runway. Quick question on kind of a 30,000-foot question before we get to some of the details.

If you take a look at the progress that you are making within about 6 to 9 months, you folks are going to have, at least, you may have three late-stage programs ongoing. Do you have the firepower to do that, or do you need to hire some additional folks? And where do you think your R&D expense is going to go to over the course of that time?

Very good question. And Charles, I think, we are currently, in fact, hiring additional people to our development organization to really enable us to push forward aggressively with all these programs. We have already this year hired the VP of Clinical Development, Dr. van Kammen. He certainly provides us with wealth of experience from schizophrenia clinical trials. He is also responsible for running schizophrenia development programs first at J&J, later on at Aventis. And that was exactly the kind of expertise that we wanted to add to our development program.

We will continue to hire some additional people to really see to it that we are fully staffed in the development area.

As you move forward in these development programs, are you confident of your CROs that you are using? Are you confident about some of the efficacy measures that are being used, or do you think there is some potential for there being interpretable results that you're concerned about?

I think that we have really done our homework here. As you're aware, we have access to the very best clinical advisors in this area that have helped us to design the programs optimally and to include the standard parameters to assess activities mostly in schizophrenia on positive and negative symptoms. And now also to include that bit of cognition, which is certainly very interesting to study both in the area of the ACP-104 and in the area of ACP-103, where we, in fact, expect that we will see an expounded efficacy being built into the negative symptom domain and we had ACP-103 on the top, for example, risperidone.

So, this is something that we have taken into account in the design of these Phase II studies.

Uli, let's talk a little about some of those studies and specifically some of the details of the design of ACP-103 Parkinson's disease treatment-induced psychosis. You're talking about an interim analysis coming up here very shortly.

Right.

Would there be a certain clinical meeting, or do you think that's going to be a topline data release?

We intend to give that as a top line press release and eventually, we will describe the results from the complete trial. That will be done, when we have done to full analysis of all the 60 patients by the end of this year or early next year. Then, we are ready to do a more complete description of everything. And that will -- we haven't decided exactly where we will do that. We will certainly pick a suitable clinical meeting for that, eventually also publish the study.

And that's the final results you mean?

Yes.

By the mid-year there would be a top line data release. So we can look forward to that in the next couple of months, you would say?

Yes. As previously we reported mid of this year. So, that is still what we are aiming for.

Okay. And then with regard to the NIH trial, I know you're not managing that, but can you give us some color on the progress of that trial?

The only thing I can really say there is that we are progressing. We are having additional patients in the study, and that we cannot fully control the ends of that study. But we can say that it's progressing.

Can you give us some insights on the dosing duration and the goal in terms of the number of patients?

Well, we set up the study to include a fair amount of patients, so that we could get significant data on the effects of ACP-103 on these L-Dopa-induced dyskinesias. We do not provide specific guidance on the number of patients induced, but we can say that there are a number of patients that have been through this study already.

Okay. With regard to the antipsychotic improvement studies, did you talk about the number of patients that you're including in on that? If so, I missed it.

With ACP-103...

Yes.

... in schizophrenia, the adjunctive therapy trial there, we said that we aim to include a total of 400 patients, and that we will interim analysis up to 200 patients.

When do you expect to achieve that?

We haven't provided any guidance of that. But you know, to help you to try to estimate that, we can say that this is a 42-day treatment schedule of 200 patients. It will take a while. We expect it will be about the industry's standard timing for that.

If you would just remind me of when you formally commenced patient enrollment and dosing on that?

Well, we have said that this study will be started this second quarter this year, in 2005.

Okay. And you're still on track for that one?

Yes.

Good. Then, finally, with regard to 104 in terms of the efficacy study, you're going to have the safety study here. It sounds like pretty shortly...

Yes, in the second half of this year.

And with regards to that molecule, safety is actually important. Correct?

Absolutely. It's accretive. It's critical for us to carry out these first two studies. We think that clearly, by addressing safety, we are, as you realize, quite convinced that we will have a good efficacy from this drug because it has a profile that accounts to dopamine (inaudible) and locking ability, which is very similar to that of clozapine itself.

So -- and in addition to that, we have the ability of ACP-104 to stimulate muscarinic m1 receptors. So, we believe that efficacy is something that we are -- we'll get at least to the same extent as with clozapine. So, safety is something that is important for us to address.

But unlike a lot of drugs, safety is actually a key issue there because of the agranular cytosis. Correct?

Well, that is certainly something that is very important to address, although we were not able to say much about that following the initial safety studies. This will more be related to other kind of aspects of it to ensure that we can give relatively high doses of ACP-104 to schizophrenic patients, and that the doses are tolerated. That's really what we want to demonstrate in these first studies.

And, we also hope to get some initial indications of efficacy so that these two -- first two studies will help us to design a standard dosage we are going to be use in the subsequent efficacies and more formal efficacy studies in Phase II.

What's the duration of dosing for that study?

In the Phase II studies its -- acute (inaudible) patients up to two weeks of administration.

Yes, really this stuff will make you crazy, won't it? Keeping it all straight. That's a joke.

I know. I heard what you said, we feel very excited about it to be honest.

Okay. Thanks. I'll hop back in.

Thanks.

[Operator Instructions] Your next question comes from Joe Agiler (ph) of Bio Revolution. Please proceed.

Hi, Uli. Hi, Tom.

Hi.

Good afternoon.

Just a question on the ACP-103. Who would say the main competitors are, being that Cephalon a month back just announced the discontinuation of their Phase II, Phase III clinical trial in Parkinson's. I don't know if you guys saw that.

Yes. So let me say a few words about that. I think that we don't have a true competitor when it comes to ACP-103 in this area, because what we are talking about is adjunctive therapy here, basically. We are adding ACP-103 on the top of L-dopa or dopamine agonists. We ensure that you can give the optimal dose of L-dopa, for example, without eliciting those treatment-induced psychotic episodes or dyskinesias, which are typical for L-dopa therapy otherwise.

So, we are helping the patient and the physician to find the optimal dopamine replacement therapy dosing without coping any of the treatment into the side effects. So that's our - we're especially trying the theme with ACP-103 and we don't think that anyone else is working on this particular concept.

Okay. Thank you.

Thanks.

You have no further questions at this time. You do have a question from Ted Tenthoff of Piper Jaffray. Please proceed.

Sorry about that. I thought I had gotten the question with question prior, as Charles hit on a lot of the clinical questions. One other quick thing on the financial side. When, and if, Allergan does advance one of the neuropathic pain drugs into Phase II, do you guys stand to recognize the milestone at that point?

Yes, Ted, we certainly do. We have not given all the specifics of the financial terms to those, but I can tell you just in general, this is part of the alliance that where ACADIA can realize up to 20 million in total.

We have realized 9 million in total payments today and there is 11 million additional payment on the table, those are eligible in terms of milestone that are known to be industry standard milestone as this advances. So that gives you a flavor of 11 million in complete, every milestone possibilities as this program continues in that area, plus royalties.

Great. Thanks so much.

You are welcome.

You have no further questions at this time.

Okay. So, thanks again to everyone for joining us on today's call and for your continued support. We look forward to the opportunity to update you on our ongoing process throughout 2005. Thank you.

This concludes your conference. You may now disconnect. Have a great day.