ACADIA Pharmaceuticals Inc (ACAD) 2006 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the ACADIA PHARMACEUTICALS fourth quarter and full year 2006 financial results conference call. My name is James, and I will be your coordinator for today. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of today's call. [OPERATOR INSTRUCTIONS]. I would now like to turn the presentation over to Ms. Lisa Barthelemy, Director of Investor Relations at ACADIA PHARMACEUTICALS, who will review the company's forward-looking statements. Please proceed.

Thank you. Good afternoon and welcome to ACADIA PHARMACEUTICALS's fourth quarter 2006 financial results conference call. This call is being recorded and an archived copy will be available on our Web site at www.ACADIA-PHARM.com through March 20th.

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 plan. 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 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, 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.

Additionally, certain of the information discussed today reflects preliminary financial results as ACADIA's 2006 audit and evaluation of internal control over financial reporting will be completed nearer the date that ACADIA files its annual report on form 10-K for the year ended December 31, 2006, with the SEC. It is now my pleasure to turn the call over to Dr. Hacksell, our Chief Executive Officer.

Thank you, Lisa. And let me take this opportunity to thank all of you for joining us on today's conference call. Also joining me today from ACADIA is Dr. Roger Mills, our Executive Vice President of Development, and Tom Aesen, our Chief Financial Officer. I will begin today by covering some of our key highlights from this past year, and then I will ask Tom Aesen to review our recent financial results. Following these remarks we will provide an update on our clinical programs and other business items. We will then open the floor to your questions.

2006 was a year of outstanding progress for ACADIA. Most importantly we made major advances in all four of our proprietary clinical programs. ACADIA has now transitioned to a later-stage development company as we prepare to initiate the first pivotal trial in our Phase III program with ACP-103 for Parkinson's disease cycles. Last year, we completed a Phase II trial in this program demonstrating that ACP-103 clearly has the potential to differentiate itself from current offlabel use of antipsychotics by treating the psychosis in patients with Parkinson's disease, without impairing their motor function. Based on the results of this trial and our subsequent end of Phase II meeting, which we held with the FDA last fall, we are finalizing our preparations to initiate the first pivotal trial in our Phase III program from PDP during the first half of 2007.

We also announced topline results last year from the initial clinical trials in two of our proprietary Phase II stage programs, our program with ACP-103, a treatment for sleep-maintenance insomnia, and our program with ACP-104, as a stand-alone therapy for schizophrenia. The results of these initial clinical trials have provides us with a strong foundation to advance each of these programs to later Phase II studies, which we expect to initiate during the first half of this year. We have also made impressive progress in our third proprietary Phase II program, where we are developing ACP-103 as a co-therapy for patients with schizophrenia. The completed enrollment in a large Phase II co-therapy trial during the fourth quarter of 2006, ahead of schedule. The treatment phase of this trial has been completed and I am pleased to report today that we remain on track to report topline results from this trial this month.

Consistent with the maturation of our clinical pipeline, we also continued to build our clinical and regulatory organizations during 2006 to support the advancement of our programs. Finally, we also strengthened our balance sheet through a follow-on public offering and a second equity investment by separate quarter. We are proud of these achievements we made over the past year, and look forward to an equally productive 2007. Before we read you our clinical programs and upcoming milestones in more detail, I will ask Tom Aesen to discuss our recent financial results. Tom?

Thank you, Uli, and good afternoon. I'll provide you with a brief overview of our fourth quarter 2006 financial results, which were reported in our press release issued earlier today. I'm pleased to report that our financial results for the quarter were in line with our expectations and continued to reflect our plan to invest in our proprietary clinical pipeline.

We reported a net loss of $12.5 million, or $0.42 per common share for the fourth quarter 2006, compared to a net loss of $10.2 million, or $0.44 per common share for the fourth quarter of 2005. The net loss for the fourth quarter of 2006 included $820,000 of non-cash stock-based compensation compared to $80,000 in non-cash stock-based compensation in the fourth quarter of 2005. Our cash and investment securities totalled $83.3 million at December 31, 2006, compared to our earlier guidance of $80 million, and to cash of $55.5 million at December 31, 2005. The increase in cash as compared to the prior year was largely attributable to net proceeds from our follow-on public offering, completed during the second quarter, as well as Sepracor's second equity investment during the first quarter.

Let's briefly look at some of the components of our fourth quarter results. Our revenues totaled $1.8 million for the fourth quarter, and were once again, primarily comprised of revenues from our collaborations with Sepracor, Allergan, and the Stanley Medical Research Institute, or SMRI. As expected, revenues were comparable to our third quarter 2006 revenues and reflected lower revenues from our Allergan collaboration as compared to the fourth quarter of 2005. Revenues from our Sepracor and SMRI agreements were comparable quarter over quarter.

Research and development expenses totalled $12.8 million for the fourth quarter of 2006, including $449,000 in stock-based compensation. R&D expenses increased compared to the fourth quarter of 2005, primarily due to increased clinical development activity associated with our proprietary clinical programs, including our ACP-103 Phase II co-therapy trial for schizophrenia. General and administrative expenses totalled $2.5 million for the third quarter of 2006, including $371,000 in stock-based compensation. G&A expenses for the fourth quarter were lower than the comparable quarter of 2005, primarily due to lower professional fees, partially offset by an increase in stock-based compensation.

Finally, regarding our cash position and outlook, as previously mentioned, we closed 2006 with a total of $83.3 million in cash and investment securities. We used an aggregate of $41.4 million of cash during the year ended December 31,2006, to fund our operating activities. Consistent with our previous guidance, we anticipate that our existing cash resources, including expected payments from our collaborators, will be sufficient to fund our operations through at least mid-2008.

I'll now turn the call back over to Uli.

Thank you, Tom. Let me now review our clinical programs in more detail. ACADIA's pipeline includes five clinical programs. In our most advanced program, we are entering Phase III development with ACP-103 for the treatment of Parkinson's Disease Psychosis. We also have three Phase II stage clinical programs, including ACP-103 therapy as a co-therapy for schizophrenia, ACP-103 for the treatment of sleep maintenance insomnia, and ACP-104 as a stand-alone treatment for schizophrenia. We have retained worldwide commercialization rights for all four of these proprietary programs. In addition we have a neuropathic pain program in Phase II clinical trials in collaboration with Allergan.

Let me start by discussing our program, where we are developing ACP-103 as a co-therapy to be used together with other antipsychotic drugs to treat schizophrenia. We believe that co-therapy with ACP-103 may provide an important new treatment pattern for patients with schizophrenia. Current drugs used to treat this debilitating mental illness have substantial limitations, including severe side effects and lack of affect on the negative symptoms of schizophrenia. We believe that cotherapy with ACP-103 may result in enhanced efficacy, together with fewer side effects relative to existing treatments, thereby providing the potential to significantly improve therapy for patients suffering from schizophrenia.

We continue to be very pleased with the progress in the Phase II co-therapy trial that we are conducting in this program. As previously announced, we completed enrollment of this trial during the fourth quarter last year, ahead of schedule. We have also completed the treatment and related patient follow-up dates of the study, and we remain on track to report topline results from this study this month. Let me take a moment to review the design and key objectives of this trial. This Phase II trial is a double blind placebo-controlled six-week study, exploring the ability of ACP-103 when used together with low doses of each Risperidone, a commonly prescribed atypical antipsychotic drug, and Haloperidol, a typical antipsychotic drug, to provide an improved therapy for patients with schizophrenia.

We enrolled a total of 423 patients in the trial who were randomized to five different study arms. One, ACP-103 plus a low dose of Risperidone; two, ACP-103 plus a low dose of Haloperidol; three, a low dose of Risperidone plus placebo; four, a low dose of Haloperidol plus placebo; and five, a high-dose Risperidone plus placebo which was used as a control arm. Patients underwent a 42-day treatment schedule. The primarily end point of the study is antipsychotic efficacy that's measured after day 42 of treatment versus baseline in each of the ACP-103 treated arms, using the positive and negative syndrome scale, otherwise known as PANSS. This study is powered to show significant, up to 15% reduction in the PANSS score.

PANSS is an industry standard rating scale that is commonly used in schizophrenia trials. The scale includes 30 items which measured the severity of positive and negative symptoms and general psychopathology in patients with schizophrenia. Each item is rated on a scale of one to seven, with a score of one equivalent to absent and a score of seven equivalent to extreme.

In addition to evaluating the primary end point of the study, we will also be conducting secondary analyses which will include comparisons between the study arms. Our objectives of this trial are straight forward. First, we would like to demonstrate that ACP-103, when used in combination with low doses of either Risperidone or Haloperidol demonstrates antipsychotic efficacy and provides enhanced efficacy when compared to the low doses of Risperidone and Haloperidol alone. Second, we would like to demonstrate that the treatment arm with ACP-103 plus low dose Risperidone show a favorable side effect profile relative to the high dose Risperidone control arm. Third, we hope to see an expansion of antipsychotic efficacy into the negative symptom domain with the ACP-103 treatment groups.

We believe that this Phase II trial design provides the opportunity to demonstrate the key advantages of cotherapy with ACP-103. The limitations of currently available antipsychotics result in extremely poor patient compliance. This was clearly demonstrated in the KT study which was reported last year and which showed that 74% of patients taking atypical or typical antipsychotics discontinued their treatment within 18 months because of intolerable side effects or lack of efficacy. We believe that co-therapy with ACP-103 may address these large, unmet medical needs, and that it has the potential to significantly improve the standard of care for patients with schizophrenia. We look forward to reporting topline results from our Phase II cotherapy trial this month.

Let me now turn to our most advanced clinical program. That is our Phase III stage program with ACP-103 for treatment of Parkinson's Disease Psychosis or PDP. PDP is a debilitating psychiatric disorder that occurs in up to 40% of patients with Parkinson's Disease, and is the most common factor leading to nursing home placements of these patients. There currently is no drug approved in the U.S. for the treatment of PDP. We are currently completing preparations to initiate the first of two pivotal trials in our Phase III development program for PDP. We finalized the design of this trial following our end of Phase II meeting that we held with the FDA during the fall.

We have conducted extensive trial preparations, including protocol finalization, site selections, and related side preparations, and we remain on target to initiate this study during the first half of this year. In terms of this arm, this multi-center double blind placebo-controlled Phase III trial is expected to enroll about 240 patients. The patients will be randomized to three different study arms which will include two different doses of ACP-103, and one placebo arm. Patients will receive oral doses of ACP-103 or placebo once daily for 6 weeks, in addition to stable doses of their existing dopamine replacement therapy. The primary end point of the trial is antipsychotic efficacy as measured using the Scale for the Assessment of Positive Symptoms, or SAPS. [Metoric] tolerability will be an important secondary end point in the trial and will be measured using the Unified Parkinson's Disease Rating Scale or UPDRS.

Regarding the second required pivotal efficacy trial, we plan to first dedicate our resources to getting the first trial up and running before initiated the second pivotal trial. We believe that this approach will allow us to enhance our execution by also seeking to compress the overall development time frame. With regards to safety requirements, we anticipate that the standard safety package will be required for this development program. We plan to conduct open label extension status in connection with our planned efficacy trials in order to meet our safety requirements and to offer continued options to these patients. We are very excited about our PDP program and the potential for ACP-103 to treat this debilitating and largely untreated disease. We believe that ACP-103 will clearly differentiate itself from offlabel use of antipsychotics, as it is designed to effectively treat psychosis in patients with Parkinson's Disease without impairing motor function.

Let me now turn to our third proprietary clinical program, which is ACP-104, as a stand-alone treatment for schizophrenia. We believe that ACP-104 has the potential to be a major step forward in the treatment of schizophrenia. Current treatments are generally not effective in addressing negative symptoms and also are not -- or may in fact exacerbate cognitive disturbances associated with schizophrenia. ACP-104's unique pharmacological profile, combining M1 muscarinic agonism, 5-HT2A inverse agonist, and D2 and D3 partial agonists i may provide an atypical antipsychotic efficacy profile with the added advantage of improving cognitive function in patients with schizophrenia.

We have made considerable progress in this program. Last year we reported topline results from three initial clinical studies, which demonstrated that initial signals of antipsychotic affects as indicated by clinical meaningful reductions in PANSS scores were observed within the tolerated dose range of ACP-104. These initial studies provided us with a strong foundation to prepare for more advanced Phase II clinical trials.

We have made significant progress in our preparations for a multicenter double blind placebo-controlled six-week Phase II-b study with ACP-104 in patients with schizophrenia. Patients in this trial will be randomized to three different study arms, which will include two different doses of ACP-104 and one placebo arm. The primary end point will be psychotic efficacy as measured using the PANSS. We remain on track to initiate this Phase II-b study in the first half of 2007.

Let me next turn to our fourth proprietary clinical program, in which we are developing ACP-103 as a next generation treatment for sleep maintenance insomnia, or SMI. Most of the current therapies for insomnia are sedatives that are designed primarily to address sleep onset and have limitations in treating the symptoms of SMI. In contrast to these drugs, ACP-103 provides the opportunity to treat the symptoms of sleep maintenance insomnia without inducing sleep or impairing daytime functioning. Last year, we announced positive results from the proof of concept clinical study showing that ACP-103 induced a statistically significant and dose-related increase in deep, or slow wave, sleep in healthy volunteers. We are planning to follow this study with a Phase II clinical trial with ACP-103 in patients with sleep maintenance insomnia, and we plan to initiate the study during the first half of this year.

In addition to the progress in our clinical programs, our discovery engine continues to deliver new compounds that address [synest] disorders and other areas of unmet medical needs. Today, we announced the nomination of a new clinical candidate, ACP-106. A novel, potent and selective 5-HT2A inverse agonist. We have initiated R&D-track development for this program in an attempt to complete development studies necessary to advance further clinical trials. We believe that ACP-106 and other compounds from our serotonin platform provide with us great opportunity to expand our base of assets for potential partnering and to do more broadly -- to more broadly pursue the wide range of potential therapeutic indications.

Finally. In addition to our proprietary programs, we have continued to make important progress in our collaborations, including our Phase II neuropathic pain collaborative program with Allergan, and our collaboration with Sepracor which is focused on developing drug candidates resulting from our muscarinic program. We continue to be pleased with the progress of these programs and are grateful for the opportunity to work closely in collaboration with these high-quality R&D organizations.

In closing, I believe that our achievements into 2006 clearly lay the foundation for continued success in 2007. We are entering 2007 with a lot of excitement and momentum. We look forward to reporting topline results from the ACP-103 schizophrenia cotherapy trial this month and initiating the first pivotal trial in our Phase III Parkinson's Disease program during the first half of 2007. We're also excited about initiating more advanced Phase II trials in our program with ACP-104 for schizophrenia and our program with ACP-103 for sleep maintenance insomnia during the first half of 2007. 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. Please proceed.

Good afternoon, folks, and congratulations on a good year of progress.

Thank you.

Uli. I wanted to talk to you a little bit about the Parkinson's Disease Psychosis trial. You did a nice job of laying out the design, but could you help us understand the kind of powering assumptions that you used in designing the trial with that number of patients. Why you didn't seek a SPA or maybe you did seek a SPA, and when you anticipate being able to outline the second trial protocol and what its sizing is likely to be?

Thank you, Charles. Good question. In fact, since Roger is here with us, I'll ask Roger to present a little bit more about the ACP-103 Phase III program.

Okay.

Thank you, Uli. Charles, I think the -- just looking back at where we are with this program, we really planned the program, discussed it with FDA and had a very good meeting with the agency. Out of that, we had a very clear path to move forward in the Phase III program to take this through to obviously hopefully a successful filing.

Within that, the program we have is a pretty straightforward and standard one. We've got agreements on the end points that we were aiming to achieve in the study and therefore, when we look to -- whether it was necessary to do a SPA or not, we decided that on balance it wasn't required. As I said, we had good concordance on our proposals. As many of you are probably aware, that the SPA process is still somewhat the jury's out as to how applicable it is, and certain therapeutic areas, it is required to go through, but not in this right now. One has to be careful through that process that you don't end up with encumbrances on the program that one otherwise wouldn't have.

In terms of the powering, the previous study that was performed was not primarily powered to show efficacy, but was designed around demonstrating that the addition of ACP-103 to these patients in fact didn't worsen the motoric control of the underlying Parkinson's Disease, which has been the major limitation to treating the psycho says in these patients. These studies are powered to demonstrate efficacy.

There's one other question, that was the outline of the second study. It's a pretty standard development program, so we have two pivotal studies. I think as Uli indicated, that these studies will be running parallel, but they'll be staggered so that we can ensure that we achieve a successful start to the first one, and then we can take the learnings from that and ensure a successful start to the second study. The studies will be very similar in design.

Charles, we will provide more information about the complete Phase III program of ACP-103 for PDP in connection with the initiation of the first study.

Is it safe to say that roughly similar size is certainly not a magnitude of order increase in number of patients in that second trial?

Pretty similar studies.

If I could follow-up with ACP-103 question in the schizophrenia co-therapy trial, I'm kind of wondering, since we're in March, why you didn't present the data today. Obviously you don't have it. But kind of what is necessary to present the data? And then secondly, how do you interpret the comment on the enrollment time lines having beat expectations last year of what is the signal value of that, if any? And finally wanted to ask, relative to the motor function impact, with the second objective of the study looking at relative to low dose Risperidone, what would you expect to see?

Maybe, Roger, you can shed some light on Charles' question here?

There are a number of subpoints in that. Please prompt me if I miss one of the subpoints.

That was just one real long question, right?

It sounded like a number of subpoints to me. Let me just run through. You hit the nail on the head when you said it's difficult to present data when you don't have it. We stated that we would have data by the end of the first quarter and lo and behold we're in March and this is the month that is last in this quarter, and we're on target to deliver those data before the end of the month. We are on target, we are running through the standard processes that were run through pulling in, especially a large study, and we're on track to deliver when we said we would deliver. The other point in -- forgive me, the other points now, were?

Two, one not very substantiative, the enrollment time line, to beat expectations last year, is there any signal value in terms of the design of the trial or the interest of the drug? And second, probably of greater substance, with regard to the second objective, the motor function impact relative to low dose Risperidone, what would you hope to see?

In terms of the enrollment, we're very pleased that the enrollment was accelerated and a credit to the team here for achieving that. I think there are a number of things in there. Obviously, it's been a reasonably attractive protocol for investigators to offer this to patients and patients to come into the study. Also, I think we hit an opportunity in the field where there weren't many studies around. We've provided -- which meant we had a reasonable free run at bringing patients on. So it came really from a lot of things, a lot of good work here, but also opportunities externally. With respect to what we would see between arms, we've not been specific on the -- between arms. This study is primarily powered to demonstrate that there's an antipsychotic affect providing 103 to the low dose of the typical and atypical drugs. Clearly there will be -- we will be looking at the other arms, but that isn't the primary powering.

Perhaps I can add to Roger to say that the 2 milligram dose of Risperidone is probably about -- first of all, it's designed not to have optimal efficacy, optimal psychotic efficacy. I think normally, when you're combining those in Risperidone, you don't see much of the efficacy, not as much that you would expect to see at the 6 milligram dose. While we expect to see efficacy from 6 milligrams, it's more of a question mark whether we will see significant amounts of efficacy at the low dose. I think it's more likely that we will see an enhancement of efficacy in the ACP-103 plus low dose risk Risperidone as compared to the low-dose Risperidone plus Haldol rather than seeing a lot of side effect advantages.

But surely with your design, it sounds like you'll be able to tease out if there's an impact of the low-dose Risperidone versus an impact -- a positive impact of the 5-HT25 antagonism.

Yes, yes.

Last question is for Tom. Any R&D guidance for '07?

Charles, we haven't provided specific guidance on the expenses for the '07 year. We certainly have overall given you the flavor of the cash and that isn't changed at all in terms of our guidance. All I could comment on with respect to the expenses, as we had anticipated, the expenditures did go down in the fourth quarter, R&D, versus the third quarter, and that was principally due to the acceleration of the enrollment that happened last quarter, so it was, as we indicated, a very heavy quarter for external costs. You're going to see the expenses will fluctuate from period to period, and we overall will be starting new studies. That's an important point. But at the same token, we have completed a number of those studies too, incoming this major two cotherapy. All in all, we clearly do expect R&D expenses to increase over what we have run in the 2006 year, and I would just guide you to the overall usage of cash that I indicated.

And that specifically included the full Phase III program in PDP?

That's correct.

Okay. Thanks.

Your next question comes from the line of Joe Pantginis of Canaccord Adams. Please proceed.

Hi, guys. Thanks for taking the question. Two questions, please. The first one is with ACP-103. If you can just share with us again your partnering plans and/or progress around this program? And then I just follow-up with one other one.

Thank you, Joe. ACP-103 we have the following strategy. In schizophrenia, SMI, two indications where you need to have five large-sized organizations in order to be successful on the market. In these areas, we have the intentional completing the Phase II programs and when that is done, then we have analyzed the Phase II data, start to explore potential strategic alliances.

Okay, super.

The indication we intend to try to move the program all the way to the market, because that's a different kind of indication. It's an indication where you can be successful on the marketplace with a small dedicated sales force.

Okay, super. My follow-up question has to do with the announcement of ACP-106. I was just wondering if you could provide any flavor with regard to how this molecule might be different biochemically or what information you can provide about how it might be advantageous or how it might even potentially compete in the future with ACP-103.

Let me take you a step back here first. We have been working for quite some time with molecules around ACP-103. We have numerous compounds which are different structurally, which have slightly different pharmacology and slightly different pharmacokinetic properties. ACP-106 is from a different structural class than ACP-103. It is a potent, selective, and what appears to be quite safe compound with a similar mechanism of action as ACP-103. We believe that with this mechanism of action, 5-HT2A inverse agonists, there is lots of therapeutic opportunities. We intend to fully explore those with different compounds coming out from our serotonin portfolio.

Clearly ACP-103 is the lead here. With ACP-103, we have focused in very much on three indications. With ACP-106, we can look at these indications, but also other indications that are potential openings and opportunities for ACADIA. We think that the serotonin assets that we have generated during the years is extremely valuable for ACADIA and provides us with the two different opportunities. Opportunities for partnering, but also opportunities for broadly pursuing a wide range of potential therapeutic indications.

Okay, great. Thanks a lot, guys. Look forward to seeing the Phase II data.

Your next question comes from the line of Patrick Moriarty of Fortis. Please proceed.

Hi. Thank you for taking my question. I have a question related to the low-dose Haldol arm in the ACP-103 schizophrenia trial. What receptors would you expect Haldol to be active at at these low doses?

Perhaps I can take this question. Haldol is, as you know, one of the oldest antipsychotic drugs. At higher doses, Haloperidol interacts with D2 receptors, D3 receptors and also alpha one receptors among other things. At this low dose, 2 milligrams a day, we don't expect that Haloperidol would have anything but an interaction with the D2 receptors. It's really a very interesting conceptual arm, if you wish, but we combined a pure D2 with a pure 5HT2A inverse agonist. So I think it's quite the interesting study in that sense.

So in that sense, you could almost consider this plus low dose -- I mean, this plus ACP-103 as more of a pure, atypical without the off-target affects. What do you think that would -- how would that play to EPS in general? Do you think you would need a 5-H21 or 5-HT3 affect in order to affect EPS, or is this the lead arm in the co-therapy trial?

Haloperidol is known to cause some extraparameter side effects. We also know from our previous efficacy studies with ACP-103 that we in fact can counteract psychotic-induced efficacy by giving ACP-103. We'll see how the data came out here. I think it's likely that ACP-103 versus the low dose Haloperidol will have a very nice profile for therapy. And it's likely to be similar to the low dose for ACP-103.

I had one follow-up question on ACP-106. There was some indications that really low-dose rise Risperidone, like the 1 mg dose has been effective in treatment-resistant depression. Is that something you would look at with ACP 106?

We haven't decided to look at any specific indications of the efficacy of that drug. Depression is certainly an area that would be interesting to explore with drugs of this type. Whether it would be specifically for treatment-induced depression or for other aspects of depression is something we haven't decided on yet.

Okay, great. Thank you.

The key thing is that we see lots of opportunities here.

Yes, absolutely. All right, thank you.

Thanks.

[OPERATOR INSTRUCTIONS] Your next question comes from the line of [Ted Lattis] of Alia [Capital Management]. Please proceed.

Hi, it's actually Martin and my questions were answered.

Okay, thanks.

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

Hey, guys. Thanks for taking my follow-up. You mentioned, Uli, that you were pleased with the progress with the diabetic -- or excuse me, the neuropathic pain program with Allergan. Can you give us some sense as to when there'll be an increased visibility to the rest of the world from those programs? As well maybe lump Sepracor in that as well? Why are you pleased with the progress?

Well, I cannot provide anymore guidance than Allergan has provided on the neuropathic pain collaboration, but the information that is available is in fact, very encouraging to us. Last year at the R&D day that Allergan had, they spoke about the encouraging Phase 1 data within this program, and they talked about the intention of moving into Phase II. We know that they are in Phase II clinical trials with the program and we heard from spies at the JPMorgan conference that Allergan sees the neuropathic pain program emanating from this collaboration as one of the exciting things for the future market pipelines. So we think that it's an interesting progress in that collaboration, when it accounts for the Sepracor collaboration, that's an ongoing collaboration that's been moving on for two years now and the intent in that collaboration is to try to develop selective muscarinic agonists for various cognitive psychiatric disturbances and for pain conditions. I know that we have made significant progress in that collaboration and I'm very excited about that as well.

Good. And can you give us some sense of progress in the two development candidates you've mentioned? One was a preclinical one, ACP-105 and CB1 from '06?

ACP-105 is a compound that was nominated last year for development. It's in IND track development. It's a selective androgen receptor modulator that we think is particularly exciting because of its ability to selectively act on androgen receptors, thereby being differentiated from a compound like testosterone. When it comes to the CB1 program, it's still in the late stage discovery phase. We are working very hard on optimizing our lead compounds, but we still haven't nominated formally a development candidate in that program.

Any thoughts on seeing 105 move closer to the clinic this year?

The only thing we have said that we nominated it last year for R&D track development and that we are in R&D track development with the molecule.

Okay, thanks.

Thanks.

Your next question comes from the line of [Jason Napadonnel] of [Sachs Investment Research]. Please proceed.

Hi, guys. Thanks for taking the question. Just to build off the previous question. Are there any milestone payments that we can expect in 2007, either from Allergan or Sepracor or Stanley?

Do you want to answer that?

Sure. Thanks, Jason. What I can tell you is that we don't provide a lot of specificity or guidance in terms of the timing, but if you look at, I can just guide you to the disclosure in the filings we have made with the SEC and there we provide a little bit of color on the amount of milestones that are available in each of those different collaborations. As you're aware, we have three different collaborations with Allergan and one with Sepracor. That will give you a sense of the magnitude. They're typically traditional milestone-based. What I mean by that, as you reach the different sages of development, you typically trigger milestones through all the way up including a filing and approval. We don't provide the specific guidance on the times of those, but you would anticipate that as major events occur in the collaborations and we would announce them, they could in fact be associated with the milestones that are articulated in our disclosures.

Okay. Thanks a lot.

Your next question comes from the line of Eun Yang of Jefferies and Company. Please proceed.

Thanks very much. A couple of questions on ACP-103 in schizophrenia agent therapy. I'm just wondering in terms of your plan for Phase III going forward, is that contingent upon -- does it depend on forming a partnership, or you are also thinking about moving forward on your own, depending on what you find in partnership discussions?

Thank you, Eun. Our strategy has been and still remains to when we have looked at the data in detail from the co-therapy trial to start out to evolve discounts and potential strategic alliances with strategic partners. The reason for this is that it's very difficult to really make a major impact in schizophrenia if you don't have behind you the major marketing organizations. They're competing with some of the largest organizations out there with the marketing organization, AstraZeneca, etc. If you want to really optimize the value of a drug like ACP-103 in schizophrenia, I think it's smartest and best to get a strategic alliance with someone that has that kind of potential to really compete successfully with these guys.

The question is then, are you -- I don't know if you can answer this, but are you currently in discussions? Normally, partner discussions kind of take a long time. Assuming the data is quite positive by the end of this month and you're going into partnership discussion, then when do we expect ACADIA and potential partners to actually initiate Phase III studies?

We don't provide specific guidance on timing for dates, but what I can say is we have already tried to keep potential partners informed about the co-therapy trial, what the concept behind the trial is and how it's designed. We have also talked, of course, about preclinical ACP-103 data. So I think that potential partners are relatively well-educated about the Phase III co-therapy program. All it takes time to get, deals, that's fine, but we certainly think that it's worth taking some time to get the kind of deal that we think is justified here.

Okay. And the second question is, because ACP-103 is also being tested for insomnia, in your discussions, are you actually looking into a partnership who can actually -- who can take both indications at the same time? Or is it kind of a totally separate?

That's certainly a possibility, not an unlikely possibility, in fact.

Okay.

Yes. So I guess that answers your question.

Okay, thanks.

Sure. Thanks.

Your next question comes from the line of [Mark McIrney] of [Vivian Asset Management]. Please proceed.

Hey, guys. How you doing? Just wanted to just kind of go quickly through your post Phase II partnership plans for 104. In addition, what your thoughts are about the cost and size of a Phase III study there considering some of the safety concerns?

Yes. So with ACP-104 in schizophrenia, we have essentially the same strategy with we have ACP-103 as a co-therapy schizophrenia. Then we have the Phase II-b data in hand, when we have completed the Phase II program with ACP-104, so established strong evidence of efficacy and also have initial safety data on the drug, we think that's the timing for exploring strategic alliances. Now if the second part of your question relates to safety concerns around ACP-104, specifically the related to the fact that [inaudible - heavy accent] and therefore we will need to demonstrate through clinical trials with ACP-104 that we don't cause acidosis.

We believe we will need to conduct the complete regulatory program with ACP-104 to demonstrate lack of agrams with this particular molecule. We also believe that already following the Phase II studies, we will have information if ACP-104 causes less leukopenia than you see. And that in itself will be a very interesting signal. It will not say anything definitive about the ability of ACP-104 to cause cyrtosis, but it will be an encouraging signal that we think is quite valuable.

Right. But do you think you'll need to conduct a longer study than what would be customary for a Phase III antipsychotic, given the safety?

We think it's a relatively standard program for new psychotic drug will be required here.

Okay, thanks.

Thanks.

We have no additional questions in the queue. Dr. Hacksell, please proceed to closing remarks.

With that, thanks again to everyone for joining us on today's call and for your continued support. We look forward to the opportunity to talk to you in the future on our ongoing progress. Thank you.

Thank you for your participation in today's conference. This concludes the presentation and you may now disconnect. Good day.