ACADIA Pharmaceuticals Inc (ACAD) 2006 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the ACADIA Pharmaceuticals' second quarter 2006 financial results conference call.

[OPERATOR INSTRUCTIONS]

I would now like to turn the presentation over to Mr. Tom Aasen, Chief Financial Officer at ACADIA Pharmaceuticals, who will review the Company's forward-looking statements. Please proceed.

Good afternoon and welcome to ACADIA's second-quarter 2006 financial results conference call. This call is being recorded and an archived copy will be available on our website at www.acadia-pharm.com through August 22nd.

Before we proceed, 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 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 10K for the year ended December 31, 2005 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 turn the call over to Dr. Hacksell, our Chief Executive Officer.

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

ACADIA is delivering important business and clinical milestones during the first half of 2006, and I look forward to continuing this momentum through the remainder of the year and into 2007. So far this year we have announced key clinical results in three of our four proprietary Phase II stage programs.

First, we reported positive Phase II trial results for ACP-103 for treatment induced dysfunctions in patients with Parkinson's disease. With all of these positive results from a proof-of-concept clinical study for ACP-103 for treatment of sleep maintenance insomnia and more recently, we announced encouraging results from three initial clinical trials for ACP-104 in patients with schizophrenia.

I am also pleased to report today, that we have made solid progress with our ACP-103 schizophrenia program, our fourth proprietary Phase II program and we remain on track to report interim results from our ongoing Phase II trial in this program by the end of this year. In addition to important progress in our clinical programs, we have significantly strengthened our financial position with the completion of our follow-on public offering and the second equity investment from Sepracor.

Our achievements thus far in 2006 provide a solid foundation for us to advance our clinical pipeline to the next level. During the call today I will review each of our four proprietary Phase II stage programs and other key areas of our business.

Before I do this, I will ask Tim Aasen to discuss our recent financial results as reported in our press release issued earlier today. Tom?

Thank you, Uli.

I am pleased to report that our financial results for the second quarter of 2006 were once again in line with our expectations. The results reflect a planned strategic investment in our proprietary Phase II stage programs, at the same time we have continued to manage our operating expenses and have considerably strengthened our cash position.

We reported a net loss of 11.9 million for the second quarter of 2006 compared to a net loss of 6.0 million for the second quarter of 2005. Our cash, investment securities and restricted cash total 106.7 million at June 30, 2006 compared to 55.5 million at December 31, 2005.

This increase in cash reflects net proceeds from our follow-on public offering completed in May, as well as Sepracor's second equity investment earlier this year.

Let's briefly look at some of the components of our second-quarter results. Our revenues totaled 1.9 million for the second quarter, and were comprised of revenues from our collaborations with Sepracor, SMRI, and Allergan. We continued to anticipate revenues from these agreements for the remaining quarters of 2006, and we expect that the level of revenues from these existing agreements will be relatively comparable to those earned during the second quarter of 2006.

Research and development expenses totaled 12.3 million for the second quarter of 2006 including 326,000 in stock-based compensation. The increase in R&D expense compared to the comparable quarter of 2005 was primarily attributable to increased clinical costs associated with our proprietary Phase II stage programs as well as costs related to expansion of our R&D organization.

General and administrative expenses totaled 2.3 million for the second quarter of 2006, including 360,000 in stock-based compensation. We recorded a total of 686,000 in non-cash stock-based compensation expense during the second quarter pursuant to Statement of Financial Accounting Standards #123 R. This compared to 395,000 in stock-based compensation in the comparable quarter of 2005, recorded pursuant to the old accounting standards.

Our net loss per common share on a GAAP basis including non-cash stock-based compensation totaled $0.43 per share for the second quarter of 2006 compared to a net loss per common share of $0.26 for the second quarter of 2005. We closed the second quarter with a total of 29.7 million common shares outstanding.

Finally, regarding our cash outlook. With our strengthened financial position we believe that we are well positioned to pursue more advanced clinical trials in several of our proprietary Phase II stage programs.

Consistent with our previous guidance, we anticipate that our aggregate cash balances will be at least $80 million, at December 31, 2006, and that our existing cash resources including expected payments from our collaborators will be sufficient to fund our operations through at least mid-2008.

I will now turn the call back over to Dr. Hacksell.

Thank you, Tom.

Let me now discuss our clinical programs and touch on some of our more recent corporate highlights. ACADIA's pipeline includes five Phase II stage clinical programs, four of which are proprietary programs. We are developing ACP-103, our proprietary selected (inaudible-heavy accent) in three clinical programs, each targeting different indications.

First, acid therapy for treatment in (inaudible-heavy accent)Parkinson's disease. Second, as an adjunctive therapy for schizophrenia. And third, as a treatment for sleep maintenance, insomnia. In our fourth proprietary program, we are developing ACP-104 as a stand-alone therapy for schizophrenia.

In addition to these four internal clinical programs we have a neuropathic pain program in Phase II clinical trials in collaboration with Allergan. Let me first address our program with ACP-104 for the treatment of schizophrenia, but we recently announced results from three initial clinical trials.

As you are aware, current therapies to treat schizophrenia have substantial limitations including the inability to effectively treat the negative symptoms and the cognitive impairment associated with the disease. ACP-104 combines an atypical and psychotic profile with the added potential benefit of enhanced cognition. Thereby addressing one of the major challenges in treating schizophrenia today.

Last month we announced important results from initial clinical trials with ACP-104 in patients with schizophrenia. The three status enrolled an aggregate of 74 patients with schizophrenia, and were conducted in collaboration with Professor [Carol Tamia] from the University of Texas Southwestern Medical School in Dallas, Texas.

Before I summarize the results of each trial, let me take a step back and provide you with the objectives of these initial studies. First, we wanted to establish the safety and tolerability of profile of ACP-104 and determine the maximum tolerated dose.

Second, and although the treatment duration was short we were hoping to see preliminary signals from a psychotic effect with ACP-104 and third we wanted to demonstrate that plasma levels of ACP-104 correlate with brain receptor occupancy to indicate a good brain penetration. As indicated by the results of these studies we were successful in initiating all these key objectives.

Let me now briefly review with you the results of each of the three trials. The first clinical trial was a randomized double-blind placebo control singular sounding dose study primarily designed to evaluate the safety, tolerability, and Pharmacokinetics of ACP-104 in patients with schizophrenia.

The total of 24 patients participated in the study, and were assigned to one of five treatment cohorts. Doses of ACP-104 were tested in the range from 25 milligrams to 250 milligrams. The results from this first trial showed that ACP-104 is safe and well tolerated at all of the doses tested. No dose limiting toxicities or serious adversives were observed in the study.

The second trial was a 14 day data state double blind and placebo controlled multiple sounding dose study in patients with schizophrenia. Designed to evaluate the safety tolerability and Pharmacokinetics of ACP-104 as well as to explore preliminary signals of antipsychotic effects.

A total of 40 patients with schizophrenia were enrolled in the study in six of those cohorts. Patients were treated with escalating daily doses of ACP-104 ranging from 100 mg to 800 mg for two weeks. Results from the second trial demonstrated that ACP-104 is safe and well tolerated after repeated dosing, up to 600 mg per day, a dose considered to be the maximum tolerated dose in the study.

Adverse events were generally mild to moderate in severity. Two of the adverse events were classified as serious adverse events, none of which was deemed to be due to the study drug. The first SAE was a seizure deemed by the investigator at unrelated to the study drug. In this particular case, an epileptic patient had not taken his medication.

In the other instance, there was a patient that developed short lasting fever of unknown origin. The fever developed on day 13 of the 14-day trial, and the study drug was then discontinued.

Three days after discontinuation, the patients blood cell counts decreased slightly to a mild leukopenia level. The white blood cell counts rapidly returned to normal at the next measurement period taken three days later.

The fever was deemed by the investigator to be most likely due to a viral infection however, a possible relationship to the study drug couldn't be ruled out. Because the fever extended the hospital stay, the event was labeled as a serious adverse event.

I wish to mention that mild and transient leukopenia is common in a drug--in a non-drug treated population. For example, leukopenia has been seen at the rate of 1% to 2% in placebo groups in connection with historical schizophrenia trials.

Importantly, we were excited to see initial signal events psychotic effects within the tolerated dose range of ACP-104 despite the fact that this was a small study with only a 14-day treatment duration. Typically, psychotic efficacy trials has a 42-day treatment period.

We observed signals of antipsychotic effects in ACP-104 at the two highest tolerated doses, as indicated by the reduction in positive and negative syndrome scale scores, and scores. These signals were also supported by patients and physicians positive evaluations of their experience with ACP-104 at these dose levels.

The third ACP-104 study that was recently reported was an open label single dose positron emission topography study. The total of ten patients with schizophrenia enrolled in the study, and received single oral doses of ACP-104 ranging from 25 milligrams to 150 milligrams.

The results from this study showed that there was a relationship between plasma levels of ACP-104 and the degree of (inaudible-heavy accent) receptor occupancy at all doses indicating good penetration of ACP-104 into the brain. Together, these three studies provides us with a strong foundation to move forward with ACP-104 schizophrenia program and important information is also provided that enables us to finalize our plans for a subsequent Phase II B trial.

Our next steps in this program are to complete the analysis of all of the data from the initial three studies, and to finalize the designer preparations for the planned Phase II B trial including selection of the doses to be used in this study. We currently anticipate that this study will be a multi-on trial with two doses of ACP-104 and a placebo. We expect that the study will include about 80 to 90 patients per run and will involve a six-week treatment schedule.

Industry standard rating scales will be used to access clinical end points for positive and negative symptoms in schizophrenia as well as tolerability measures. We anticipate that this Phase II B study will be underway during the first half of 2007.

Now, let's turn to our second schizophrenia program, ACP-103 as an adjunctive therapy to schizophrenia. Compliance is a serious problem for patients who suffer from schizophrenia.

In a large-scale NRH sponsored case in study conducted last fall, 74% of patients with schizophrenia discontinued their medications because of lack of efficacy or intolerable side-effects. We believe that the use of ACP-103 adjunctively may result in an improved antipsychotic therapy with better efficacy and fewer side-effects relative to existing therapies.

We are currently conducting a large Phase II trial designed to evaluate the ability of ACP-103 when used to adjunctively with other antipsychotic drugs to provide an improved therapy for patients with schizophrenia. The study's designed to evaluate the antipsychotic and potential dose bearing affects of ACP-103 when given adjunctively with each of low dose Risperdal, a commonly prescribed atypical antipsychotic drug and low-dose Haloperidol, a typical antipsychotic drug.

We plan to enroll up to 400 patients with schizophrenia in the study, which involves a 42-day treatment schedule. We are using industry standard rating scales to assess clinical end points for positive and negative symptoms in schizophrenia as well as tolerability measures.

During our conference call last quarter, we indicated that we expected to complete enrollment of the first 200 patients by about mid-2006. I am pleased to report that we achieved this milestone and have enrolled the first 200 patients in this time frame. We remain on-track to announce results from the interim analysis of these 200 patients by the end of 2006.

Let me now turn to ACP-103 for treatment induced dysfunctions in patients with Parkinson's disease. The standard of care for Parkinson's disease consists of LDO (inaudible-heavy accent) replacement therapies.

These therapies result in treatments induced psychiatric and ultra dysfunction 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.

Earlier in the year, we announced positive Phase II trial results on ACP-103 for treatment induced dysfunctions in Parkinson's disease, the data showed that ACP-103 demonstrated antipsychotic effects, were safe and well tolerated, and didn't worsen disease related (inaudible-heavy accent) functions in patients with Parkinson's disease that suffer from treatment induced psychosis.

Many of the eligible patients from this trial have enrolled in an open-label extension study including some patients who have been treated with ACP-103 for over one year. We continue to move forward in finalizing the data analysis and designing the next trial in this program. Subject to discussions with the FDA, we are designing this trial so that it may serve as one of the pivotal trials for this development program.

We remain on track to have this trial underway during the first half of 2007. In addition to preparations for the next trial, we are also currently conducting a clinical pharmacology study in collaboration with the NIH, to evaluate the ability of ACP-103 to treat drug induced dyskinesia motoric dysfunction, in patients with Parkinson's disease.

Let's now turn to our fourth proprietary clinical program in which we are developing ACP-103 for the treatment of sleep maintenance insomnia. Sleep maintenance insomnia is defined as the inability to stay asleep or to resume sleep after waking, and it's a major unmet medical need.

Many patients with insomnia, especially older patients or those who have neurological medical or psychiatric conditions suffer from sleep maintenance insomnia. Most available sleep patients are sedatives that are ineffective in treating the symptoms of sleep maintenance insomnia.

We are developing ACP-103 as next generation treatment for sleep maintenance insomnia. We believe ACP-103 has a potent and selective (inaudible-heavy accent) inverse agonist provides the opportunity to effectively treat the symptoms of sleep maintenance insomnia without causing sedation.

In April, we announced exciting results from a proof-of-concept clinical study that involved 45 healthy volunteers ranging in age from 40 to 64. The results showed that ACP-103 induced a robust and statistically significant increase in slow wave sleep that was dose related.

In addition, ACP-103 had a positive impact on measures for sleep maintenance, including decreases in the number of awakenings, after sleep onsets and also decreases in the time awake after sleep onset. In contrast to most currently marketed insomnia drugs, ACP-103 did not induce sleep or impair daytime functioning.

We continue to move forward in our analysis of the results from our sleep study and in the planning of the next trial in this program. We plan to have a clinical trial underway during the first half of 2007 to evaluate the (inaudible-heavy accent) of ACP-103 in patients with sleep maintenance insomnia. We are currently designing this study so that it may serve as one of the pivotal trials for this development program.

Turning now to a brief update on our collaborations. Starting with Sepracor, we continue to make progress in our R&D collaboration which is focused on potential clinical trials from our preclinical (inaudible-heavy accent) program for dosing and treating neuropsychiatric and other disorders.

Sepracor advised us today that they decided to continue focusing efforts on identifying product candidates in the [mascerinic] program, and that they will not exercise their option to select a single preclinical compound from our (inaudible-heavy accent) program for used in combination with [Lonesto]. They remain fully committed to our collaboration, and this decision does not impact the level of R&D activity or research finding under the agreement.

Our ongoing collaborations with Allergan also continue to progress including our Phase II program in the area of neuropathic pain. This Phase II program is based on the discovery of a previously unappreciated (inaudible-heavy accent) to treat neuropathic pain that will be made in collaboration with Allergan.

Effective neuropathic pain therapy represents one of the largest unmathematical needs and we believe that our small molecule drug candidates provide the potential to effectively treat a range of neuropathic pain conditions. Multiple drug candidates are currently being evaluated in Phase II clinical trials in this program and we remain excited at the potential for these compounds to provide a new class of highly effective and safe therapeutics for neuropathic pain. Allergan is responsible for conducting and founding the clinical development of this program, and we are entitled to receive milestones and royalties on products successfully developed.

Now, key to the success of ACADIA is our dynamic and dedicated staff. As our pipeline matures and we prepare for latest stage development or clinical programs, we continue to strengthen our capabilities with the hiring of talented and seasoned professionals in the areas of clinical development and regulatory affairs.

In June we announced the appointment of Roger Mills, as Executive Vice-President of Development. Roger has the responsibility for ACADIA's global drug development activities.

His extensive experience and proven track record of leading successful drug development efforts in multiple therapeutic areas will be a major asset as we continue to advance our programs in development. We are delighted to have him onboard.

With the announcement of positive data in three of our proprietary programs and the strengthening of our balance sheet, we have generated a lot of momentum as we move into the second half of this year. We continue to remain keenly focused on achieving key milestones, which are as follows, we remain on-track to announce interim results from the ACP-103 adjunctive therapy trial in schizophrenia by the end of this year.

We intend to have clinical trials designed to be pivotal for ACP-103 and treatment induced dysfunctions from Parkinson's disease. And for ACP-103 in sleep maintenance insomnia underway during the first half of next year.

And finally, we also expect to have our Phase II B trial of ACP-104 for the treatment of schizophrenia underway during this time frame as well. 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 the line of Charles Duncan of JMP Securities.

Hi, gentlemen. Good afternoon. Good quarter progress.

Thank you, Charles.

I had a quick question on 104. With regard to the--to adverse events that you talked about, both leukopenia and epileptic seizures. In which dose patient did you see them?

So the--let me start with the fever, which was deemed to be a serious adverse event. So that occurred at one of the lower doses, one of the lowest doses that were given in fact in the multiple assembly dose studies.

The seizure that was deemed not related to the drug occurred in the--one of the higher dose groups but very early in the dosings. In fact, the patient had not received much of ACP-104 at all.

And when do you anticipate being able to publish those data?

We are talking with the principal investigator and trying to coordinate publication of all of these three studies and we will come out with an announcement about when we will present this data and exactly in what form as soon as we have decided on that.

Okay. And then moving on to the ACP-103 programs, both in Parkinson's, psychosis and insomnia, can you give me some insight on kind of what are the key steps to getting those to--this is pretty exciting potentially pivotal studies going on? I mean it seems like a little bit of a long time, but if they could be pivotal, that could be good.

Yeah. I think first of all we think it's very important to take the necessary time to ensure that what we are doing is optimal here. We think that we understand very much what we want to do.

We want to make sure that the FDA is onboard on what we want to do and that--you know, with the--our focus in designing pivotal trials that the FDA also will deem these trials for pivotal. So we need to make sure that we have an agreement with the FDA. For example, on primary end points. And the general outline of--of the development program for eventual approval.

So that takes time. It also takes time with all the preparation for these trials which are quite large and significant for us.

When you characterize them as large, could you give us some sense as to kind of the patient numbers, round--round numbers?

Yes. Say when we start out with repeated psychosis, the next repeated psychosis trial, we expect it to include two different doses of ACP-103 and one placebo group, probably around 80 to 90 patients. It's around 240, 250 patients in the clinical trial.

When it comes to the sleep maintenance insomnia, that trial, we expect to have two to three doses of ACP-103 and the placebo group. We expect to have up to 100 patients per (inaudible-heavy accent), so that could be up to 300 to 400 patients in that clinical trial.

The repeated psychosis trial will be a 42-day treatment trial. The sleep maintenance may be up to a four-week trial. So these are pretty large clinical trials.

Okay. And then final question, Uli, with regard to 103, the adjunct in schizophrenia. With the interim analysis, what is the question that you're really seeking to answer? What would define success for you with that interim analysis? And then, secondarily, how--is the (inaudible-technical difficulty) Parkinson's disease data was predicted at all, could you provide us a little color on that?

So let me talk to the first thing. What we really want to show here--to see in the interim analysis is that we have a dose bearing affect of ACP-103 and that is one of the most important things. So we want to see that when we give ACP-103 on the top of a relatively low dose of Risperdal and Haliperidol, doses which not provided full efficacy, that we tend to get to full efficacy, but that we don't get the side effects that we would get of a high dose of Risperdal.

So that's the--what we really want to see in the interim analysis and eventually also in the full analysis of the study. When it comes to the--the implications of the very positive results from the repeated psychosis study for the schizophrenia application of ACP-103, I think it's a very interesting question that you push.

Clearly what we showed in the--in the repeated psychosis study was that we could reduce psychosis significantly--the psychosis that is essentially dopamine related by (inaudible-heavy accent) to an inverse agonist. So that's a very interesting sort of a downstream interaction between the D2 -- primarily D2 and the (inaudible-heavy accent) receptor systems.

It's very interesting, I think demonstration of this complicated pharmacological interaction. And it certainly is something that is very encouraging for all kinds of antipsychotic actions of ACP-103.

Thanks, Uli, for the call.

Thanks.

Your next question comes from the line of Gene Tambloy of Lehman Brothers.

Hi, Uli, thanks for taking the question. I was calling--I guess to follow-up on the Phase II data for ACP-104 from the multiple ascending dose study, in terms of the antipsychotic effects seen there, I was hoping you could comment on-- on the magnitude of the reduction in the Pansar scores, obviously without going too much into what would be revealed in a publication.

But in terms of what information that gave you in terms of designing the Phase II and--and the confidence that gives you going forward there at the 400 mg and 600 mg.

Right. So let me first comment on the--the size of the response. It was a--we cannot talk about statistical significance in interpreting results from this study because we have too few patients really enrolled to do meaningful statistical analysis.

But if we look at the--the size of the response on the Pansar scale, the average response, it was a response that one can see yes a clinically meaningful response. And I think that's very important.

When we then add to that the way the drug was perceived by the patients and by the physicians I think we get a very convincing argument. Also we had a dose-related effect of ACP-104 on the Pansar scale. I think that's the third argument which was very convincing.

So at the lowest doses we didn't see any effects. On the Pan scores only up to the highest tolerated doses. So that's very strong evidence for a dose-related meaningful and psychotic effect.

Now, you asked how we can use these data for the design of the Phase II B study. I think that the kind of information that we got from all these three studies that we conducted with ACP-104 provides a very strong foundation for the future. Because we did observe those antipsychotic effects at doses that were well tolerated. So we expect to be able to design additional studies and in terms of doses, to pick doses within the well-tolerated range that we defined in this study.

I think another piece of evidence that makes us very confident here is the post transmission tomography data that demonstrates that we have a good rate of penetration with ACP-104 and that we expect to get good occupancy of relevant receptors within the dose range that is tolerated.

Great. And then I guess for the ACP-103 Phase II, where we expect data later this year, from 200 patients in schizophrenia, as adjunctive therapy.

Can you tell us--I guess you went a little bit into what you're looking for, but in terms of, what we're actually going to be able to see with significance, can you go into that a little bit?

Yeah. Just let me give you just a brief overview of that.

What we intend to do is to look for effects on the PAN scale, which really defines both effects on positive and negative symptoms. So we will compare the effects on the PAN scale up to 42-day old treatments with essentially baseline. And look for a significant antipsychotic effects that way.

So that's the primary end point of this study and it will also be treated as the primary end point in the interim analysis. And effects on the Pan scale is exactly what we want to see here.

So I guess versus baseline, how about between--between arms, or I guess between groups?

We don't expect to get full anti psychotic effect with the low doses of Haloperidol and Risperdal placebo.

I also should mention that in the interim analysis, in order to get the sufficient power we intend to collapse the--the arms that have ACP-103 plus low doses of Risperdal and Haloperidol and we intend to collapse the two arms that contain low doses of Risperdal and Haloperidol as placebo.

So that way we think that we have sufficient power to do a meaningful analysis and really address the phenomenon of a dose pairing effect of ACP-103.

Okay. Then if you could just remind us in terms of the design, is it--it's 42-day treatment, is that right?

It's 42-day treatment, that's right. So it's a standard antipsychotic trial.

Is there any follow-up after that, or is the --

You have the follow-up as well, but essentially, the design is that we give 20 milligrams of ACP-103 or placebo plus low doses of subtherapeutic of doses of Haldon or Risperdal and then we also have the fifth arm which is a high-dose Risperdal control arm.

Okay. So I guess--so in terms of following the 42-days, is that when the interim is performed and how long would it take you to perform that analysis do you think.

Well, we haven't provided any specific time frame here. But we have said that we will provide interim analysis before the end of this year and that we again, completed the enrollment of the first 200 patients by mid--this year.

Okay. Great. Thank you.

So you can draw your own conclusions from that, I guess.

Great. Thanks for taking the questions.

Sure.

Your next question comes from the line of Jason Napodano of Zack's Investment Research.

Hi, guys. Thanks for taking the question and exciting progress being made.

I have a question on--I was wondering if you could spend some time and talk about the atypical market and some of the late-stage drugs under development at major pharmas. J & J spent a significant amount of time on their Q2 call discussing Paliperidone and its improved efficacy and tolerability over existing drugs.

I know if you talk to Wyeth and Pfizer they're both pretty bullish on their respective Phase III atypicals as well. And so it seems like a drug like 103 if it was approved right now would be in pretty high demand but maybe you could talk about the atypical market in let's say 2009 or 2010 when there could be several of these new drugs on the market.

That's a very good question. I will try to keep within time frames here that are reasonable.

So let's first start by me stating that the current drugs on the market are not particularly good. They are not good for the following reasons. First of all, they are not effectively dealing with the negative symptoms of schizophrenia.

So they are relatively good in reducing positive symptoms, the hallucinations and the delusions of schizophrenia but they are not good in dealing with the cognitive deficit and they are not good in dealing with the social withdrawal that are extremely negative aspects of schizophrenia symptoms.

They are also ineffective in treating a very large portion of the patients, about 30% of the schizophrenia patients remain therapeutic and the current antipsychotic drugs are not particularly good or effective in dealing with this segment. The best drug in that respect is in fact Closapine which has a relatively small market share of today.

And the third reason why the current psychotic drugs are not particularly good is that they have nasty side-effects. I'm sure that you're aware of the weight-gain problem, the akethesia, many other problems that remain with the current antipsychotic drugs.

Now, of course they are--these drugs are--or many of them are blockbuster multi-billion dollar drugs and an additional problem here is for the companies that have these drugs is that they go off patent relatively soon. So everybody is working very hard to try to find better drugs.

J&J has worked hard on it as you mentioned, I think the follow-up to Risperdal is a marginal improvement as best. I think that is true also for what you see in the pipeline coming from the other big pharma companies. Marginal improvements essentially more of the same. And I think it's important also in this context to remember that the atypical drugs that you see on the market today are not really that much better than the old typical drugs. That was demonstrated very clearly in the KC study for example, that came out last year.

So there is still a tremendous need for better drugs and this is where ACP-103 and ACP-104 has their proper place in these discussions because they really have the opportunity to provide major advantages as compared to what you see on the market today and what is being developed by the big pharma companies today.

With ACP-103, given adjunctively to what is available on the market today, we expect to have a drug that has a expanded efficacy, not only to being effective on antipsychotic--on the positive symptoms of schizophrenia but also having an expanded efficacy profile into the negative symptom domain.

In addition to that, we expect that ACP-103 will enable therapy that has fewer side-effects and ACP 104, our other schizophrenia drug, there we believe that we will not address the side-effects but we will address really the efficacy profile. ACP-104 has the potential to become the first stand-alone antipsychotic therapy, but in addition to having good effects on the positive symptoms, schizophrenia, also have the effects on the negative symptoms and have the ability to improve cognition.

Appreciate the color. Thank you.

Thanks.

There are no further questions at this time. Dr. Hacksell, please proceed to closing remarks.

Okay. 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 in the future on our ongoing progress. Bye.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation and you may now disconnect. Have a good day.