ACADIA Pharmaceuticals Inc (ACAD) 2005 Q3 法說會逐字稿

[Note - accented speakers; transcript is best product.]

Ladies and gentlemen, we thank you for your patience and welcome to the ACADIA Pharmaceuticals Q3 2005 Results Conference Call. [Operator Instructions]

I would now like to turn the presentation over to your host for today’s conference, Mr. Tom Aasen, VP and CFO, ACADIA Pharmaceuticals. Please proceed, sir.

Thank you. Good afternoon and welcome to ACADIA Pharmaceuticals’ Q3 2005 conference call. This call is being recorded and an archived copy will be available on our website at www.acadia-pharm.com through November 24th.

Today’s call will cover two topics. First, I will provide a brief overview of our unaudited financial results for the third quarter ended September 30, 2005. Following this overview, Uli Hacksell, ACADIA’s CEO will provide you with an update on our clinical pipeline and recent highlights. Following this update, we will entertain questions in a Q&A 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 R&D 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 our actual results to differ materially from those contained in the forward-looking statements. These factors and other risks associated with our business can be found in our filings made with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2004 and subsequent filings. You are cautioned not to place undue reliance on these forward-looking statements, which are made only as of today’s date. ACADIA disclaims any obligation to update these forward-looking statements.

I will now proceed with a brief overview of our financial results for the third quarter of 2005, as reported in our press release issued earlier today.

We reported a net loss of $12.3 million for the third quarter of 2005, including a non-cash provision of $5.9 million for loss from litigation related to a previously announced civil action. The loss for the current quarter compared to a net loss of $6.2 million for the third quarter of 2004.

Let me first reiterate once again that we strongly disagree with and have appealed the jury verdict rendered in the civil action. Nonetheless, we have recorded a provision for loss from litigation during the third quarter covering the full amount of damages previously disclosed from the jury verdict, along with applicable fees, net of $2.5 million and remaining proceeds, which we may receive under our Employment Practices Liability insurance policy.

Thus, we have set aside what we believe is a conservative accrual on our books covering the full amount of damages. Most importantly, let me also assure that we are firmly focused on driving our business and executing on our key milestones while we let the standard appeal process run its course.

As we turn to the other components of our financial results, our results for the third quarter continue to reflect our plan to increase our investment in our proprietary clinical programs, while controlling our burn rate through an expanded base of revenue and control of operating costs.

Our revenues increased to $3.7 million for the third quarter of 2005, compared to $1.6 million for the third quarter of 2004. This increase was primarily due to revenues recognized from our collaboration with Sepracor, which we began in January, increased revenues from our collaborations with Allergan, as well as revenues earned from our agreement with the Stanley Medical Research Institute.

Our collaborations with Allergan contributed $2.1 million to our third quarter revenues and included a milestone earned from the advancement of our neuropathic pain clinical program.

R&D expenses increased to $8.1 million for the third quarter, up from $5.9 million in the third quarter of 2004. This increase largely reflected an increased investment in our proprietary Phase II clinical programs and personnel and other costs associated with expansion of our R&D organization.

As previously mentioned, we anticipate that our R&D expenses will continue to increase during the remainder of 2005 and into 2006, primarily reflecting increased costs associated with the clinical development of our lead drug candidates.

G&A expenses increased to $2.1 million for the third quarter, up from $1.3 million in the comparable quarter of 2004, reflecting increased professional fees, including increased costs associated with operating as a publicly-traded company and costs related to litigation, as well as increased personnel costs as we expand our G&A infrastructure.

Our net loss per common share totaled $0.53 for the third quarter of 2005, compared to a net loss per common share of $0.37 for the third quarter of 2004. We closed the quarter with a total of 23.5 million shares of our common stock outstanding. We also have outstanding warrants to purchase and aggregate of 1.4 million shares of our common stock and outstanding stock options to purchase approximately 2.2 million shares of our common stock.

Finally, to update you on our cash position and outlook, ACADIA’s cash and investment securities totaled $62.7 million at September 30, 2005 compared to $35.9 million at December 31, 2004. The increase in cash primarily reflected net proceeds from sales of equity securities, including $34 million raised in our private placement and the initial $10 million equity investment made by Sepracor in January.

Sepracor has also committed to purchase a second $10 million equity traunch on the one-year anniversary of the collaboration agreement, which will be in January 2006, at a 25% premium to the then 30-day trailing average process, subject to customary closing conditions.

Based on our increase in revenues and related funding and our control of operating costs, we now anticipate that we may use less cash to fund our activities during 2005 than had previously been expected. We now anticipate that our cash and investment securities will total in the range of $52 to $55 million at December 31, 2005. This does not include the additional $10 million equity expected in January.

This cash amount, compares to an estimated cash range at year-end of approximately $50 to $54 million based on our earlier guidance. We anticipate that our current cash resources included expect payments from existing agreements with our collaborators will be sufficient to fund our operations through at least mid-2007.

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

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

The third quarter was another very productive period for ACADIA and was highlighted by important advances in all our four clinical programs, all of which are now at the Phase II stage. I’m also pleased to report today that we remain on track to close 75 and begin 76 with additional results in our clinical programs.

During our call this afternoon I will provide you with a brief update on our clinical programs and pass on some our recent corporate highlights.

ACADIA’s pipeline now include four Phase II staged clinical programs, three of which are proprietary. First, ACP-103 for treatment-induced dysfunction in Parkinson’s Disease (PD). Second, ACP-103 as an adjunctive therapy for schizophrenia and third, ACP-104 as a stand-alone treatment for schizophrenia.

In addition to these three internal clinical programs, we have a neuropathic pain program in collaboration with Allergan, which successfully advanced into [indiscernible - heavily accented language] exploratory Phase II studies during the third quarter.

Let me start with our Phase II programs with ACP-103, ACADIA’s proprietary small molecule, which acts selectively as an inverse agonist on 5-HT2A receptors.

In our first clinical program, we are developing ACP-103 as a therapy for treatment-induced dysfunction in PD. The standard of care for PD 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 PD, by its actively[treating those dysfunctions. In this program we are conducting a multicenter, double-blind, placebo-controlled, 28-day dose escalation study designed to evaluate the efficacy and tolerability of ACP-103 in a total of 60 PD patients suffering from treatment-induced psychosis.

You may recall that we announced encouraging results from an interim trend analysis of this trial in June of this year, based on data from the first 30 patients to complete the study. This interim trend analysis showed a greater reduction in psychotic symptoms in the ACP-103 treatment group, relative to the placebo group, on two standard rating scales used in the trial. In addition, there were no serious adverse events reported from this study.

Following the encouraging interim results, we have continued to advance this trial and I am pleased rule out report that we have now completed enrollment in this study. As a result, we remain on track to report the complete results from this trial during the first quarter of 2006, in line with our previous guidance.

We are also conducting and open label study in this program involving the standard use of ACP-103. This study is designed to determine the safety of ACP-103 during long-term administration and involves patients who have completed the aforementioned Phase II clinical trial and who may, in the opinion of the treating physician, benefit from continued treatment with ACP-103.

Finally, in this program, we also have an ongoing clinical pharmacology study in collaboration with the NIH, which [indiscernible] ACP-103 to accrete levodopa-induced dyskinesia in patients with PD.

In our second clinical program we are developing ACP-103 as an adjunctive therapy for schizophrenia. We believe that ACP-103 has the potential to improve the efficacy profile and reduce the side effects of current antipsychotic drugs and thereby offering a major advance in schizophrenia therapy.

Our Phase II program with ACP-103 as an adjunctive therapy for schizophrenia consists of multiple ongoing clinical trials. The first trial in this program is a double-blind, placebo-controlled Phase II study designed to evaluate the ability of ACP-103 to treat side effect associated with treatment with haloperidol, a typical antipsychotic drug in patients with schizophrenia.

Specifically, we are examining two troubling side effects in antipsychotic drugs - akathisia, which is an uncontrollable and extremely disturbing feeling of motoric restlessness, and hyperprolactinemia, a condition of elevated prolactin secretions, which is associated with sexual and other side effects.

This Phase II trial involves once-daily oral administrative of either ACP-103 or placebo for a five-day period and will encompass about 35 patients with schizophrenia. Efficacy is addressed by the use of a standard rating scale for akathisia and the measurement of prolactin levels. We are happy to report today that we remain on track to report results from this trial during the fourth quarter of 2005.

The second ongoing trial in this program is a larger, multicenter, double-blind, and placebo-controlled Phase II trial designed to evaluate the ability of ACP-103 when used adjunctively with other antipsychotic drugs to provide an improved therapy for schizophrenia patients.

This Phase II clinical trial will explore the potential dose-bearing [indiscernible] enhancing affects of ACP-103 given adjunctively with each of risperidone, a commonly prescribed atypical antipsychotic drug, and haloperidol.

The trial is designed 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, each combined with placebo, one on doses of haloperidol and one each on low and high doses of risperidone.

The study involved a 42-day treatment schedule. We’re using industry standard rating scales to assess clinical endpoints for positive and negative symptoms in schizophrenia, as well as tolerability measures. This must attempt to replace two clinical studies being conducted at trial sites, both in the United States and in Brazil, where we expect to recruit significant numbers of patients in a hospital type setting.

Recruitment is ongoing in this trial and as previously announced, this trial is designed to include a formal interim analysis after 200 patients have completed the trial. We expect to report results from the interim analysis during 2006 and we anticipate that we will be able to provide more information regarding timing for this trial at a later date.

We are very excited about this clinical trial and we believe that this study design provides an excellent opportunity to demonstrate the advantages of adjunctive therapy with Q3.

Let me now move to our third Phase II clinical program where we are developing ACP-104 as a treatment for schizophrenia with the added potential benefits of enhancing cognition. Cognition is one of the major challenges in schizophrenia therapy today and we believe that ACP-103 may represent a promising new, broad-spectrum therapy that address its unmet medical needs.

During the third quarter, we publish research in which we showed that ACP-104, the major metabolizer of clozapine, is a partial agonist of dopamine D2 and D3 receptors. Where clozapine itself and most other antipsychotic drugs in fact block these receptors, we believe that these partial agonist properties of ACP-104 may lead to less motoric side effects than seen with most other antipsychotic drugs.

And by combining M1 muscarinic agonists 5-HT2A inverse agonist and D2 and D3 dopamine partial agonists in a single molecule, we believe that ACP-104 uniquely address the three most promising target mechanists for treating positive and negative symptoms in schizophrenia.

ACP-104 is currently being elevated in three separate clinical trials, all of which are being conducted in patients with schizophrenia and in collaboration with Professor Carol Tamminga, one of the world’s leading clinicians in the area of schizophrenia.

This first clinical trial is a randomized, double-blind, placebo-controlled, single ascending-dose study designed primarily to evaluate the safety, tolerability and pharmacokinetics of ACP-104 in patients with schizophrenia. The initial results from this study are based on a total of 10 patients. Each patient received placebo and two distinct doses of ACP-104 ranging from 25 mg to 100 mg.

Based on these initial doses administered in the study, peak plasma levels ranging from 22 nanograms/ml to 219 nanograms/ml of ACP-104 were observed. And these levels were in the range of ACP-104 exposure previously observed after the administration of clozapine. ACP-104 was safe and well tolerated at all of the doses tested to date and no dose limiting or serious adverse events were observed.

We are very encouraged with the tolerability and patient responses for ACP-104 in this first study and because we have not yet reached dose-limiting side effects with doses up to 100 mg, we are expanding the single-dose trial to a higher doses than originally expected.

Our second ongoing trial with ACP-104 is a 14-day, double-blind, placebo-controlled multiple ascending-dose study in schizophrenia patients. This study is designed to evaluate the safety, tolerability and pharmacokinetics of ACP-104, as well as to provide preliminary indications of antipsychotic efficacy.

In addition to these two initial clinical trials, we are also conducting a single-dose positron emission tomography (PET) study, designed to provide us with further data regarding the brain receptor occupancy and plasma levels of ACP-104 in schizophrenia patients.

Overall, we are excited with the progress and initial results in our Phase II clinical program with ACP-104. We expect to report complete results from all three of these ongoing clinical studies during the first half of 2006.

Following the completion of these initial trials, we plan to begin an additional trial to further evaluate the ability of ACP-103 to treat positive and negative symptoms of schizophrenia and also to assess its ability to treat cognitive impairment in schizophrenia patients.

I will now turn to a brief update on our collaborative programs, starting with Allergan. I’m pleased to report that our ongoing collaborations continue to progress favorably, most notably, our collaborative clinical program in the area of neuropathic pain. This program is based on the discovery of the previously unappreciated [indiscernible] mechanist to treat neuropathic pain that we made in with Allergan. Neuropathic pain represents one of the largest unmet medical needs and we believe that our small molecule drug candidate provides the potential to treat a range of neuropathic pain conditions.

During the third quarter, we reached an important milestone in this program with the start of an initial single-dose exploratory Phase II clinical study. Multiple [indiscernible] from this program are being evaluated in ongoing clinical trials and Allergan is responsible for conducting and founding the clinical development in this program. And we are entitled to receive milestone and royalties on products successfully developed.

We are excited with the progress in this clinical program and we are pleased to see we are successful with a relationship with Allergan lead to new therapeutic approaches that may effectively address this unmet medical need.

In addition to our Allergan collaborations, we continue to progress our collaboration with Sepracor. This alliance encompasses two exciting areas. First, the exploration of potential clinical candidates resulting from our preclinical muscarinic program, targeted toward MS and other diseases and second, an option to select a preclinical compound from our [indiscernible] program for use in combination with Lunesta for sleep-related indications.

Finally, behind our clinical pipeline we have established a deep portfolio of assets in the discovery of preclinical stages. We continue to progress these assets and we believe that this unique asset base provides a strong foundation for expansion of our clinical pipeline in the future.

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

[Operator Instructions] Joe Pantginis; Adams Harkness

Hi guys, thanks for taking the question. I just wanted to ask a question about ACP-104. In the 14-day multidose study that -- I’m sorry, single-dose study -- no, sorry, the multidose study - you have three going on - can you remind us of the doses being tested? And looking forward, could new information coming out of today’s single-dose escalation study affect those dose and the length or outcome of that study? Thanks.

Well, let me first say, then, that we were very encouraged by the initial results from the single-dose study, which really showed that it could give quite high, unexpectedly high doses of ACP-104 to patients, without seeing any serious side effects whatsoever.

This is important, because previously many patients have been exposed to ACP-104 when they have taken clozapine. But clozapine, in fact, might have limited some of the side effects of ACP-104. Now we have demonstrated that ACP-104 has been given without clozapine. In fact, it’s well tolerated at these doses.

What this means for the single and for the multiple-dose studies is that we will need to go to higher doses than previously anticipated in order to establish what the maximum tolerated doses may be. So this means that we need to expand on the single-dose study and the multiple-dose study and that we will report results from these studies during the first half of next year.

Great. Thank you very much.

Joe Aguilera of Bio Revolution Capital.

Hi Uli, hi Tom. How are you?

Hi.

Good morning.

Good. Just have a question on -- congratulations on ACP-104. Can you talk about a potential partnership? Do we intend to partner that going forward? Can you expand on that?

Yes. So let me take a shot at that. It’s our strategy with both of our schizophrenia programs to initially try to get very strong safety and efficacy data established on the basis of our Phase II clinical trials.

We believe that when we have established that these drugs are indeed efficacious and safe, that we are in a great position to start to explore potential partnerships with a partner that can help us to really complete the Phase III program and optimize the value of these drugs on the market. We think that that’s the optimal kind of value for us, when it comes to partnerships.

We also believe that we partnered these schizophrenia programs at that state, that we can get commercial rights as part of such an agreement and that such rights will help us to forward integrate, which is a very important aspect for ACADIA.

Okay. Thank you, Tom, thank you Uli.

Thanks.

Thanks.

[Operator Instructions] And at this time we have no further questions.

Okay. Since there are no further questions, I want to again thank everyone for joining us on today’s call and for your continued support. We certainly look forward to the opportunity to update you in the future on our ongoing progress. Thank you.

Thank you very much, sir, and thank you, ladies and gentlemen for your participation in today’s conference call. This concludes the presentation and you may now disconnect.

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