ACADIA Pharmaceuticals Inc (ACAD) 2009 Q4 法說會逐字稿

Good day, ladies and gentlemen. Welcome to the ACADIA Pharmaceuticals Fourth Quarter 2009 Financial Results Conference Call. I will be your coordinator for today. (Operator Instructions) I would now like to turn the presentation over to Mr. Tom Aasen, Chief Financial Officer at ACADIA. Please proceed.

Thank you. Good afternoon and welcome to ACADIA Pharmaceuticals' fourth quarter 2009 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 23, 2010. Also joining me from ACADIA today is Dr. Uli Hacksell, our Chief Executive Officer and. Dr. Roger Mills, our Executive Vice President of Development. Uli will begin our call today by highlighting some recent events and updating you on the progress we've made in executing our strategy. I will then briefly review our financial results for the fourth quarter. Following these remarks, Roger and Uli will provide you with an update on our development programs and we'll then open the floor to your questions.

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 and our partner's research and development programs and plans including the timing of clinical trials, potential payments pursuant to our collaboration agreements and our future expenses, cash position and financial performance. 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, 2009, and other 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'll now turn the call over to Uli, our chief executive officer.

Thank you, Tom. I'm going to take this opportunity to thank all of you for joining us on today's conference call. Following a comprehensive analysis of our first Phase III trial with Pimavanserin in Parkinson's disease psychosis we which refer to as the 012 study, we've worked together with our partner Biovail to execute a broad and aggressive development strategy with Pimavanserin. This strategy is designed to leverage the clinical potential of Pimavanserin in three separate indications with large unmet medical needs. And to position the party to maximize the commercial potential of this product in North America.

First, we are continuing to prepare for a new Phase III trial in Parkinson's Disease psychosis or PDP which we expect to start around midyear. This new study will build on the signals of our psychotic efficacy observed in the 012 study with the 40 mg. Pimavanserin R and we incorporate studies, sign changes intended to mitigate the placebo response. Second, Biovail has initiated a Phase III development program with Pimavanserin as an injunctive therapy for schizophrenia. They have announced that they're planning to start a large Phase III adjunctive therapy trial with Pimavanserin in mid 2010 after discussing development plans for this program with the FDA.

Third, we are planning for a Phase II feasibility study with Pimavanserin as a treatment for Alzheimer's disease psychosis or ADP which we expect to start in the third quarter this year. Importantly, both ACADIA and Biovail remain enthusiastic about Pimavanserin's prospects and are strongly committed to advancing Pimavanserin to market as quickly as possible and maximizing its commercial potential over a range of neurological and psychiatric indications. As we choose to focus on our most advanced programs including Pimavanserin, we took decisive action during the fourth quarter last year to further streamline our operations and to reduce our operating costs.

With these actions, we have reduced our income and operating expenses significantly. And we anticipate that we have extended our cash on way through the end of 2011. Our strategy and priorities remain clear. We are focused on developing a portfolio of our four most advanced product candidates, all of which are supported by a collaborative partner. In addition to Pimavanserin, we have two clinical programs in the areas of chronic pain and glaucoma in collaboration with Allergan and we're in IND track development with AMA31, approved cognitive and psychotic dry candidate to our collaboration with Meiji Seika. We believe that our focus on this portfolio of four product candidates, led by a broad-based development program with Pimavanserin firmly positions ACADIA with multiple product and commercial opportunities and significant growth potential. Let me now turn the call over to Tom to discuss our recent financial results.

Thank you, Uli. Let me start by commenting briefly on our fourth quarter results. Which were reported in our press release and form 10-K issued earlier today. We reported a net loss of $8.7 million or $0.23 per common share for the fourth quarter of 2009, compared to a net loss of $14.0 million or $0.38 per common share for the fourth quarter of 2008. The net loss for the fourth quarter of 2009 included $1.3 million in aggregate charges in connection with our restructuring and related work force reductions announced in October.

Let's look at some of the components of our fourth quarter results. Our revenues increased to $1.8 million for the fourth quarter from $325,000 in the comparable quarter of 2008. The increase was primarily driven by $1.3 million in revenues recognized under a collaboration with Biovail which was established in 2009. Our research and development expenses decreased to $7.8 million for the fourth quarter of 2009 from $12.1 million for the fourth quarter of 2008. This decrease was driven largely by $4.5 million in lower external service costs and cost savings resulted from our October 2009 restructuring offset in part by a charge of $905,000 in connection with the restructuring. External research and development costs totaled $4.3 million for the fourth quarter of 2009 and were comprised nearly entirely of expenses related to Pimavanserin.

Our general and administrative expenses increased to $2.6 million for the fourth quarter from $2.4 million in the comparable quarter of 2008. This increase was primarily due to a charge of $382,000 in connection with our October restructuring offset in part by cost savings. Before I review our cash position and guidance, let me take a moment to cover the future funding responsibilities for the various Pimavanserin development programs being pursued under our collaboration with Biovail. Under the agreement, Biovail is responsible for future costs associated with the development, manufacturing and commercialization of Pimavanserin for all indications with the exception of specified PDP study cost and the planned ADP feasibility study which will be funded by ACADIA.

Beginning with the PDP indication, ACADIA's responsibilities include the second Phase III trial referred to as the 014 study which is being concluded early and the on-going open label safety extension studies. Biovail is responsible for funding the new Phase III PDP trial which is expected to start around midyear. However, since we are managing this trial, we will incur the related expenses on our books and be reimbursed for these clinical costs by Biovail. We currently estimate that this trial will cost in the range of 10 to $12 million. It should be noted that while there's not expected to be any overall impact on our cash as a result of the reimbursement of these clinical costs by Biovail, our financial results may be impacted in three ways.

First, fluctuations may occur period to period due to the timing of expenses incurred and reimbursements received. Second, because we record development expenses as incurred, but we recognize revenues from the reimbursement of development costs, using a contingency adjusted performance model, over the expected period of performance of our collaboration, revenues will not match the related expenses in a given period. And finally, under the terms of our agreement, if the new PDP study does not meet its primary end point, we would reimburse Biovail one half of the study cost. When it comes to the schizophrenia indication, Biovail is fully responsible for funding this Phase III clinical program with Pimavanserin.

Finally, with regard to the ADP indication, ACADIA's responsible for funding the initial feasibility study in this program, however, if this study is successful, Biovail will reimburse us 100% of the cost of this study. Biovail will then be responsible for any remaining development costs for ADP that may arise following the initial trial. Let me close by reviewing our cash position and updated guidance. We ended the year with $47.1 million in cash and investment securities. This compares favorably with our previous guidance of year end cash in the range of 43 to $45 million.

Following the streamlining of our organization, our resources are focused on our most advanced product candidates and we have significantly reduced the cost associated with our internal R&D and support organization. We anticipate that our existing cash resources and anticipated payments from our collaborations will be sufficient to fund our operations through the end of 2011. I'll now turn the call back over to Uli.

Thank you, Tom. As Tom mentioned, we remain focused on our four most advanced product candidates which are Pimavanserin in collaboration with Biovail, (inaudible) product candidates that are fully funded by Allergan and a program in IND track development in collaboration with Meiji Seika. Our remarks today will focus on our three development programs with Pimavanserin. Let me start by asking Roger to provide you with an update on our Phase III program with Pimavanserin with PDP.

Thank you. Uli, good afternoon. As Uli mentioned earlier, we're preparing for a new Phase III trial with Pimavanserin and PDP which we expect to initiate around midyear. This new trial will build on the signals of antipsychotic efficacy observed in the 012 study and will incorporate study design changes based on the findings from that study along with any additional learnings from second Phase III PDP study, the 014 study which we're concluding early.

You will recall that while the 012 study was impacted by a larger than expected placebo response, and did not meet its primary end point, the 40 milligram Pimavanserin arm consistently demonstrated signals of efficacy across a number of measures including the scale assessments of positive symptoms or SAPS, CGI scale, the scope of nighttime sleep measure and the (inaudible). These antipsychotic signals most prominent in the US portion of the study which comprised nearly one half of the patients in the study and for which a group of independent centralized raters were used to conduct the SAPS measurements. We observed several findings from the 012 study that we and Biovail can be applied to enhanced design by new Phase III trial in order to help mitigate the placebo response and to increase the chances of success.

Dr. Jersey Freedman, a professor at Brown University and a leading Parkinson's disease expert, is scheduled to present data from the 012 study at the 2010 meeting of the American Academy of Neurology in Toronto in April.

Turning now to the 014 study which had a similar design to the 012 study but was testing 10 and 20 milligram doses of Pimavanserin. Because of the similar design and the fact that the doses being tested are lower than the 40 milligram dose, where we observe signals of antipsychotic efficacy in the 012 study in which the dose we plan to use and the new PDP trial, we and Biovail believe we have a better chance of success focusing our efforts on our new enhanced Phase III study rather than on the 014 study. Therefore, we decided to conclude enrollment at the 014 study early at a level of about 120 patients. We'll review the data when available, in order to apply any additional learnings to further refine our study design for the new PDP trial. This new Phase III study which we refer to as the 020 study, is planned to start around midyear.

Together with Biovail, we're currently finalizing the study design which will incorporate the learnings from our earlier studies. The 020 is expected to enroll about 200 patients and test a 40 milligram dose of Pimavanserin versus placebo in a one-to-one randomization. We plan to conduct the study in North America using independent centralized raters to assess the primary end point based on SAPS. Finally, the study design will also incorporate other changes related to the frequency and application of ratings and other study design enhancements. We plan to provide more information on the design of this trial once we have started the study. Meanwhile, we're continuing to conduct an open label safety extension study consisting of a large number of patients who have completed the 012 and 014 studies.

This open label study, coupled with a similar study in connection with our earlier Phase II PDP trial has generated a considerable amount of long-term safety data on Pimavanserin. Over 1,000 subjects have now been exposed to Pimavanserin of which about 650 were Parkinson's disease psychosis or Parkinson's patients. Our overall patient exposure is now equivalent to over 200 patient years. The longest single patient exposure from the Phase III open label extension study exceeds two years and is greater than five years in our Phase II extension study.

Pimavanserin has been safe, well tolerated in its fragile elderly patient population with an underlying chronic neurodegenerative disease.. We believe this profile supports the potential of Pimavanserin to offer significant advantages relative to current antipsychotics used off label for the treatment of partner psychosis in Parkinson's disease and in Alzheimer's disease. Let me now turn the call back over to Uli.

Thanks, Roger. Let me now take a moment to highlight the two (inaudible) indications that we're pursuing with Pimavanserin in our collaboration with Biovail. I will start with the injunctive therapy for schizophrenia, whereby (inaudible) Phase III development program.

Biovail has announced that they have requested in the meeting with the FDA to discuss the clinical program required for the use of Pimavanserin as an injunctive therapy in patients with schizophrenia. Their expectation is that this meeting will be held in the second quarter this year. This Phase III program is designed to build on the positive results from our launch Phase II injunctive therapy (inaudible) that we reported on in 2007. As you may recall, this Phase II trial demonstrated several advantages of adjunctive therapy with Pimavanserin and a low dose of Risperidone, a commonly prescribed atypical psychotic drug in patients with schizophrenia.

First, 20 milligrams of Pimavanserin given injunctively with a low two milligram dose of Risperidone produced enhanced efficacy compared to that of a higher six milligram standard dose of Risperidone. Second, the onset of (inaudible) action was accelerated by adjunctive therapy with Pimavanserin as compared to either standard or a low dose of Risperidone alone. Third, injunctive therapy with Pimavanserin together with a low dose of Risperidone demonstrated an improved side effect profile including significantly less weight gain compared to the standard dose of Risperidone.

Biovail has announced that their (inaudible) six week, 600 patient, four-armed Phase III trial in mid 2010. The trial would compare the safety and the efficacy among the four arms of the study, each with 150 patients. One arm will evaluate the two milligram dose of Risperidone. The second arm would look at the six milligram dose. The third arm would look at the 20 milligram dose of Pimavanserin as monitor while the fourth arm will evaluate two mgs of Risperidone with 20 mgs of Pimavanserin (inaudible)

This study also would include the long-term safety extension components. Biovail expect that the entire study including the long-term safety component would take about 24 months to complete. Biovail will manage and fully fund the study. Both Biovail and ACADIA believe the opportunity for Pimavanserin as injunctive therapy in schizophrenia is an attractive one. Risperidone, a powerful anti-psychotic has continued to generate a significant level of prescriptions and revenues despite having been (inaudible) and despite well-known side effects.

The injunctive therapy with Pimavanserin may provide an improved therapy with patients with schizophrenia and potentially related disorders as well. Let me now turn briefly to the third indication that we and Biovail pursuing with Pimavanserin which is Alzheimer's disease psychosis or ADP. Similar, to Parkinson's disease, Alzheimer's disease is a progressive neurodegenerative disorder.

Around 5.3 million people have Alzheimer's disease in the US alone and it is estimated that 25% to 50% of these patients may have psychosis consistent with hallucinations and delusions. There is no proven safe and effective therapy for ADP. As is the case with PDP, psychotic symptoms in ADP progress, decisions may resort to off label use of psychotic medications for these patients. However, (inaudible) psychotics may exacerbate the cognitive disturbances associated with Alzheimer's disease and they're associated with numerous side effects. (inaudible) psychotic medications also have a black box warning for use in elderly patients with the MPR related psychosis due to increased mortality and morbidity.

Because of its (inaudible) action and the favorable safety profile observed today, (inaudible) they have conducted in patients with Parkinson's disease, and other neurodegenerative disease, we believe that Pimavanserin may be ideally suited to address the need for new treatment for ADP that is safe, effective and well tolerated. We are currently planning to initiate the Phase II feasibility study in the third quarter of this year to evaluate the potential of Pimavanserin as a treatment for ADP. ACADIA will manage this initial study after which Biovail would be responsible for any further studies pursued by the parties for this indication. Overall, ACADIA and Biovail are both strongly committed to Pimavanserin and we're excited with the broad development strategy that we're pursuing. It provides the opportunity to explore the potential-- the clinical potential of this product candidate over three different indications. And to maximize the commercial value of Pimavanserin in North America.

While this collaborative effort clearly represents the core of our Pimavanserin program, I want to remind you that we have retained all rights to Pimavanserin in the rest of the world. This provides ACADIA with the opportunity to drive additional value for our shareholders. While Pimavanserin is our most advanced product candidate, ACADIA also has other important programs in its pipeline. Through our collaborations with Allergan, we have two clinical stage candidates that provide the potential for new treatment options in the areas of chronic pain and glaucoma.

First, in the chronic pain program, Allergan has conducted several Phase II trials and has reported encouraging preliminary results from this program. Allergan has announced they're currently seeking a partner for further development of this program and for commercialization in areas predominantly served by general practitioners. Second, in our (inaudible) glaucoma program, Allergan is conducting Phase I development with our product candidates. Beyond these two collaborations with Allergan, that have lead to clinical stage product candidates, we have an on-going third collaboration that is focused on joint discovery efforts in the area of ophthalmology. Through our collaboration with Meiji Seika, we're progressing with IND development with AM-831, a compound that we discovered and that offers new approach to treating schizophrenia that may address cognition and untreated third symptom dementia of this disease.

While ACADIA also had earlier stage efforts behind these product candidates, in order to reduce our operating expenses and extend our cash on way, we currently have limited our earlier R&D activities to only selected programs that are directly funded. Our earlier stage efforts include our estrogen receptor program for Parkinson's disease, that we continue to explore through a grant from the Michael J. Fox Foundation. Importantly, while we took decisive actions last year to streamline our operations, we remain positioned with a strong core organization that we are convinced will enable us to deliver our key objectives. In closing, we believe that our focus on a portfolio of four product candidates coupled with steps we are taking to extend our cash on way, firmly positions ACADIA with multiple product and commercial opportunities and significant growth potential. We will now be happy to answer questions that you may have.

(Operator Instructions) Your first question comes from the line of Alan Carr with Needham Company. Please proceed.

Hi, good afternoon, everyone.

Hi, Alan.

It sounds like there is a lot of similarities between the Phase III trial that Biovail is -- trial design that Biovail is proposing with the Phase II B trial that you all conducted a few years ago. Are there any -- can you disclose if there is any meaningful differences between the two?

Perhaps I can start and you can fill in later on, Roger. I think one major difference is the size of the study and also the fact that they use four arms rather than three. They also have added an arm with Pimavanserin alone.

Yes, and obviously this study doesn't have Haldol as another agent.

But dosing looks like it is similar and then the duration, of course, is the same, too.

Yes.

Ok. So, I guess midyear when this trial gets started, we'll get the rest of the details on this one?

Yes, we will provide more details over time of the study.

Ok. And then in regarding expense guidance for this year, can you break out the cost of the Alzheimer's trial that you all will be conducting?

Yes Alan, a couple of things I could point to. We haven't given specifics as to the cost of that. As you know, I did indicate that our Phase III trial and PDP would be in the range of $10 to $12 million. I think you can understand the Phase II feasibility in ADP would be substantially lower than that.

We would expect to provide more information as we get set to move forward with that study. And then in general sense, expensewise, I would think the best thing is to refer you to the overall guidance from a cash position and that is that we do expect the existing position will be a runway that's a two-year runway through 2011. So, hopefully it gives you a good feeling as to the kind of -- what it will look like over the course of the next 2010 and '11 period.

So, the reimbursement from Biovail around that PDP program, should we look at that as being like a shifted a quarter out?

Yes, I think there is a couple of things to put in perspective. The first is as I mentioned, that there can be some variances in shifting and I think you had something that's pretty sensible that there would be a kind of a quarter lag perhaps in the reimbursement side. That will obviously normalize once you're moving forward with kind of a standard program.

The other important element I pointed out though is that there can also be a difference from a P&L perspective. Not a cash perspective, but from a P&L position as the expenses are incurred, we certainly will report those as expenses on our books. The revenue though, we use that contingency adjusted performance model so really what that means is though the revenues from the associated reimbursement are recognized over an entire period of the contract performance so that -- they're recognized more slowly over a period of time. So, there will be a P&L difference but again, the cash won't be.

The PDP was a two-year program, right?

We haven't given the specific timing but certainly, you can look to say that that was the kind of time frame from our previous study.

Ok. Great. Well, thanks very much. Congratulations on your progress.

Thanks.

Your next question comes from the line of Jason Napodano. Please proceed.

Good afternoon, gentlemen.

Hello.

Last we spoke, you mentioned some interesting results pertaining to the sleep characteristics of the patients in the 012 trial. I'm wondering if you plan to study this again or if there will be any end points, secondary end points relating to sleep in the 020 trial or if that is a potential fourth indication for Pimavanserin.

Thanks, Jason. I think we saw some very clear benefits in nighttime sleep and the patients who were in 012 and the 40 milligram dose. As I think we've indicated before that one of the -- real problem for patients both with PDP and in fact with ADP, in terms of issues relating to nighttime sleep. And a lot of the agents that are used consequently also have worsening of daytime sleep for the patient so the patients are overly sleepy during the day. Importantly, in the 012 study, we saw there was a clear improvement at 40 milligrams on nighttime sleep.

But importantly, there wasn't a detrimental effect on daytime sleep. So, they benefit from nighttime sleep did not impact negatively in terms of daytime sleep for patients. That's something that was great finding in the study. We're not currently pursuing sleep as a separate indication. However, I think as you pointed out quite rightly, it is something that we would look to reproduce in the upcoming study. Together, in fact, with indicators of sleep in the Alzheimer's city in a similar way .

(indiscernible) just a major additional benefit by Pimavanserin in these particular patients, indication that's where we really want to leverage this.

Understood. As far as the Phase II feasibility study in Alzheimer's and Phase III program that Biovail plans, in adjunct schizophrenia, will those be all North American studies?

So, the schizophrenia study is currently intended for North America. The Alzheimer's study may include some western European sites. The important thing is that in the Alzheimer's study, that we choose sites that are well experiencing in conducting these sorts of studies.

Ok. And as far as the ultimate plans for adjunct schizophrenia, is it your plan or your desire to co-formulate that into one pill, Pimavanserin and Risperidone or will it still be essentially two separate pills? Or once it gets on the market?

(inaudible) is clearly to move ahead with two separate pills over time in the life cycle kind of on the management but could think about other combinations.

As far as Biovail's interest in adjunct schizophrenia, are they specifically interested in Risperidone or do you think you'll test other atypicals as well?

(Inaudible) the initial effort is clearly focused on injunctive therapy, in Pimavanserin plus Risperidone. We believe that it is clearly an opportunity to expand beyond that into adjunctive therapy with other anti-psychotics as well. We hope that we will be able to work over that in due time but the initial effort is on Pimavanserin plus Risperidone.

Ok. Thank you very much.

Thank you.

Thank you.

Dr. Hacksell, please proceed to closing remarks.

Well, thank you, again, to everyone for joining us on today's call. For your continued support. We look forward to updating you in the future on our on-going progress. Thank you.

Thank you for your participation in today's conference call. This concludes the presentation. You may now disconnect.