ACADIA Pharmaceuticals Inc (ACAD) 2010 Q1 法說會逐字稿

Good day, ladies and gentlemen and welcome to the ACADIA Pharmaceuticals first quarter 2010 financial results conference call. I'll 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 this conference. (Operator Instructions). I would now like to turn this presentation over to your host for today's call, Mr. Tom Aasen, Executive Vice President and Chief Financial Officer at ACADIA. Please proceed, sir.

Good afternoon and welcome to ACADIA Pharmaceuticals' first quarter 2010 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 May 24th. Also joining the call 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 been making in executing our strategy. I will then briefly comment on our financial results for the first quarter. Following these remarks, Roger and Uli will provide you with an update on our development programs and we will 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 and results of clinical trials, potential payments pursuant to our collaboration agreements, the benefits to be derived from our product candidates, 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 31st, 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 Hacksell, our Chief Executive Officer.

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

The beginning of 2010 has been a productive period for ACADIA and its downstream partner Biovail, as we work together to execute our growth 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 position the parties to maximize the commercial potential of this product in North America.

First, we remain on track with preparations for a new Phase III trial in Parkinson's Disease Psychosis, or PDP, which we expect to start mid-year. This new study, which we refer to as the 020 study will build on the signals of anti-psychotic efficacy observed in our previous trials. Importantly, we have made several refinements to the study design that Roger will discuss later, and that expect will help mitigate the placebo response and enhance the ability to demonstrate efficacy of Pimavanserin in PDP.

Second, Biovail has made important progress with their planning for a Phase III trial with Pimavanserin together with Risperidone to treat schizophrenia. Third, we are continuing to plan for a Phase II feasibility study with Pimavanserin as a treatment for Alzheimer's Disease Psychosis, or ADP. Overall, ACADIA and Biovail remain committed to advancing Pimavanserin to market and maximizing its commercial potential over a range of neurological and psychiatric indications.

In addition to Pimavanserin, we have two clinical programs in the areas of chronic pain and glaucoma in collaboration with Allergan, and we are in R&D track development with a product candidate for schizophrenia through our collaboration with Meiji Seika. We believe that our focus on this portfolio of our four most advanced product candidates, led by multi faceted 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 first quarter financial results, which were reported in our press release and Form 10-Q issued earlier today. I'm pleased to note that we are clearly seeing the desired effects of the disciplined actions we implemented last October to streamline our organization, focus on our most advanced product candidates, and extend our cash runway. We reported a net loss of $5.5 million or $0.14 per common share for the first quarter of 2010, compared to a net loss of $15 million or $0.40 per common share for the first quarter of 2009.

Let's look at some of the components of our first quarter results. Our revenues increased to $2.1 million for the first quarter, from $374,000 in the comparable quarter of 2009. The increase was primarily driven by $1.4 million in revenues recognized from our collaboration with Biovail, which was established in May 2009 as well as increased revenues from other agreements. Our research and development expenses decreased to $5.8 million for the first quarter of 2010, from $12.6 million for the first quarter of 2009. This decrease was largely driven by lower external service costs as well as cost savings resulting from our October 2009 restructuring.

External R&D service costs totaled $3.8 million for the first quarter of 2010, a decrease of $5.3 million from the comparable quarter of 2009. This decrease reflected lower clinical expenses associated with our Phase III PDP trials. Our general and administrative expenses decreased to $1.8 million for the first quarter of 2010, from $3.0 million in the comparable quarter of 2009, primarily due to cost savings in both external and internal expenses.

Let me now turn to the funding responsibilities for the various Pimavanserin development programs being pursued under our collaboration with Biovail, and the expected impact on our future financial results. Under the agreement, Biovail is responsible for future costs associated with the development, manufacturing and commercialization of Pimavanserin in North America for all indications, with the exception of specified PDP study costs, and the planned ADP feasibility study, which will be funded by ACADIA.

Beginning with the PDP indication, ACADIA's responsibilities have included the two completed Phase III PDP trials, the 012 study, which was reported last fall, and the 014 study, which was recently concluded and the ongoing open label safety extension studies. Biovail is responsible for funding the new 020 Phase III PDP trial, which is expected to start mid-year. 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. Therefore, we anticipate that our external R&D costs will begin to increase in future quarters as we progress with this trial. We currently estimate that the 020 study will cost in the range of $10 million to $12 million.

Once again, I want to point out 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 will 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 collaboration, if the 020 study does not meet its primary end point, we would be required to reimburse Biovail one half of the study cost. As a result, we will defer revenue recognition of one half of the reimbursement received for the 020 study until the outcome is determined.

When it comes to the schizophrenia indication, Biovail is responsible for managing this Phase III clinical program with Pimavanserin, and for funding the related development costs. Finally, with regard to the ADP indication, ACADIA is responsible for funding the initial Phase II feasibility study in this program. However, if this study is successful, Biovail will reimburse us 100% of the costs 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 quarter with $40.6 million in cash and investment securities. Following the streamlining of our organization, we have significantly reduced the cost associated with our internal R&D and support organization. This, coupled with the anticipated development support from our partners, is expected to extend our cash runway as planned. We continue to expect 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. We remain focused on our four most advanced project candidates, which are Pimavanserin in collaboration with Biovail, as well as two partnered clinical stage product candidates that are fully funded by Allergan, and a programming R&D track developments in collaboration with Meiji Seika. Our remarks today will focus on our development programs with Pimavanserin. Let me start by asking Roger to provide you with an update on our Phase III program with Pimavanserin in PDP.

We are busy finalizing preparations for the 020 study, our new Pimavanserin Phase III PDP trial, which we expect to initiate mid-year. The study is designed to build on the signals of anti-psychotic efficacy opened in the 40-milligram Pimavanserin arm of the 012 study. Last month, Dr. Joseph Freedman, Professor at Brown University and a leading Parkinson's Disease expert presented data from the 012 study at the 2010 meeting of the American Academy of Neurology in Toronto. These data showed that the 40-milligram Pimavanserin arm consistently demonstrated signals of efficacy across a number of measures, including the scale for the assessment of positive symptoms, or SAPS, CGI scale, scope of nighttime sleep measure and the caregiver burden scale. In addition, Pimavanserin was shown to be safe and well tolerated in this elderly and frail patient population.

We also observed several findings from the 012 study that we believe can be applied to enhance the design and implementation of the 020 study in order to help mitigate the placebo response and to enhance sensitivity and reduce variability. These planned design enhancements include testing of only a single 40-milligram dose versus placebo in a one to one randomization, focusing the study in North America, using centralized ratings to assess the primary end point, implementing modifications to the frequency and application of ratings and other design enhancements. And refining the primary measure of efficacy to include only a focused set of items in the hallucinations and delusions, domains of SAPS that are most reflective of the expression of PDP symptomatology.

This refinement to the SAPS end point emerged from a number of analyses we had conducted as part of our PDP program. In particular, we've conducted a factor analysis of baseline data from our two Phase III PDP trials as well as our earlier Phase II PDP proof of concept study. And, a previous Parkinson's study group, PDP trial, with clozapine. In total, this analysis reflected baseline data from over 500 PDP patients. This baseline analysis demonstrates that a focused set of nine items from the hallucinations and delusions domains of SAPS best captured the expression of psychosis in PDP patients. By refining the end point, using this more specific measure, we expect to reduce variability and enhance sensitivity of the measure for demonstrating treatment response in PDP.

Following our planning of the proposed new study design and methodology for the 020 study, which was done in collaboration with several leading experts, we approached the FDA to obtain feedback on our proposed modifications and study design. We were pleased to note that the FDA was supportive of our proposed study design, they accepted our proposed refinement of the SAPS scale to use as a primary end point in the 020 study and agreed with our determination that this focused set of nine items would appear to have improved clinical relevance.

Additionally, in our PDP program, we recently conducted analysis of our second Phase III PDP trial, which we refer to as the 014 study. You will recall that the 014 study was designed similar to the 012 study. However, this study tested doses of Pimavanserin which were lower than the 40-milligram dose, where we observed say signals of efficacy in the 012 study. Because of the similar design and the fact that lower doses were used, together with Biovail, we have decided to include enrollment of the 014 study early in order to review these data, and apply any additional lessons in the design of the new refined 020 study, where we elected to focus our PDP efforts.

For this early conclusion, the 014 study enrolled an aggregate of 123 patients at clinical sites located in the US and Western Europe. With the reduced size of the study, we are using these data primarily to support our design of the 020 study. We were, however, pleased to observe several encouraging findings in the 014 study. First, the 20-milligram Pimavanserin arm showed a clear efficacy signal, though not statistically different from placebo on the SAPS, the primary efficacy measure. Mean reductions in SAPS scores were 6.5 points in the 20-milligram arm, and 4.4 points in the placebo arm. Second, on the CGI scale, secondary efficacy end points, we observed a statistically significant difference between the 20-milligram arm and placebo on day 42.

And finally, Pimavanserin was safe and well tolerated in the 014 study. The key secondary end point and tolerability was met and the safety profile was once again outstanding. The frequency of adverse events generally in line with placebo. We believe that these data from the 014 study support our proposed design refinements for the 020 study in PDP. We have learned a great deal through the conduct of our 012 and 014 studies, and we have implemented important modifications in the design of the 020 study. We are confident that these design enhancements appropriately reflect the findings from our earlier studies and believe that they will provide an increased opportunity to demonstrate efficacy with Pimavanserin.

Overall, we are excited with the progress in this program and we remain on track to initiate the 020 study mid-year. We look forward to providing additional information regarding this study as we progress. 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 extension study in connection with our earlier Phase II PDP trial, has generated a considerable amount of long-term safety data on Pimavanserin.

Our overall exposures in PDP patients are now equivalent to over 280 patient years. In our Phase III and Phase II extension studies, a total of 100 patients have now been treated for over one year, with our longest single patient exposure greater than five years. Pimavanserin has been safe and well tolerated in this fragile, elderly patient population with an underlying chronic neurodegenerative disease and we believe that this profile supports the potential of Pimavanserin to offer significant advantages relative to current anti-psychotics used off-label for the treatment of psychosis in Parkinson's Disease as well as in Alzheimer's disease.

Let me now turn the call back over to Uli.

Thank you, Roger. Let me take a moment to highlight the two other development programs that we are pursuing with Pimavanserin in our collaboration with Biovail. I will start with schizophrenia.

Biovail has announced that they had a constructive meeting with the FDA last week to discuss the clinical program required for the use of Pimavanserin with Risperidone in schizophrenia patients. The agency noted that Phase II pro proof of concept study conducted by ACADIA would not qualify as one of the two pivotal trials required for an NDA filing. The agency did clarify that it views the program as combination therapy, which Biovail believes generally provides for a simpler, more straightforward development path, relative to an adjunctive approach. Biovail indicated that two pivotal studies will be required and they are currently assessing the costs and time lines for such studies.

The Phase III program is expected to build on the positive results from our Phase II co-therapy trial that we reported in 2007. As you may recall, this Phase II trial demonstrated several advantages of co-therapy with Pimavanserin and a low dose of Risperidone, a commonly prescribed atypical antipsychotic drug in patients with schizophrenia. First, 20 mgs of Pimavanserin given together with a low of 2-milligram dose of Risperidone produced enhanced efficacy comparable to that of the higher 6-milligram standard dose of Risperidone. In addition, co-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.

We expect a Phase III trial to be a four arm study designed to evaluate 20 mgs of Pimavanserin in combination with 2 mgs of Risperidone versus placebo and each of the two individual components, using a standard six-week treatment duration, and the past as a primary end point. However, the design of the studies has not yet been finalized. Biovail has indicated that based on the need to do routine safety assessment prior to Phase III trial of Pimavanserin as combination with Risperidone, the first study may not commence until early in 2011.

Biovail would be accountable for the funding and execution of these studies under the terms of our collaboration. Both Biovail and ACADIA continue to be very excited about the schizophrenia program and believe the opportunity for Pimavanserin as combination therapy with Risperidone is an attractive arm. Risperidone, a powerful anti-psychotic, has continued to generate a significant level of prescriptions and revenues despite having been genericized in 2008, and despite well-known side effects. Pimavanserin when used together with Risperidone may provide an improved therapy for patients with schizophrenia and potentially related disorders.

Let me now turn briefly to the third indication that we are 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 with Alzheimer's Disease in the US alone, and it's estimated that 25 to 50% of these patients may have psychosis consisting of hallucinations and delusions. There is no proven safe and effective therapy for ADP.

As is the case with PDP, as psychotic symptoms in ADP progress, physicians may resort to off label use of anti-psychotic medications for this patients. However, current anti-psychotics may in fact exacerbate the cognitive disturbances associated with Alzheimer's disease and they are associated with numerous side effects. Current anti-psychotic medications also have a black box warning for use in elderly patients with dementia related psychosis due to increased mortality and morbidity.

Because of its mechanism of action and the favorable safety profile observed to date in studies conducted in elderly patients with Parkinson's Disease and other neurodegenerative disease, we believe that Pimavanserin may be ideally suit ed to address the need for a new treatment for ADP that is safe, effective and well tolerated. We are continuing to plan a Phase II feasibility study which we expect to start 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 committed to Pimavanserin and we are excited with the broad development strategy we are pursuing, which provides the opportunity to explore 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, which provides ACADIA with the opportunity to drive additional value for our shareholders. Following these remarks, Roger and Uli will provide you with an update on our development programs and we will then open the floor to your questions.

While Pimavanserin is our most advanced product candidate, ACADIA also has other important programs in its pipeline. Through our long-standing alliance with Allergan, we have two clinical stage product candidates that provide the potential for new treatment options in the areas of chronic pain and glaucoma. First, in the Alpha agonist chronic pain program, Allergan has conducted several Phase II trials, and has reported encouraging preliminary results from this program. Allergan has announced that they are currently seeking a partner for the further development of this program, and for commercialization in areas predominantly served by general practitioners. Second, in our [muscarenia] glaucoma program, Allergan is conducting Phase I development with our product candidate.

Beyond these two collaborations with Allergan that have led to clinical stage product candidates, I'm delighted to report that we have extended our third product discovery collaboration for an additional year through March 2011. This collaboration is focused on joint discovery efforts in the area of ophthalmology. Through our collaboration with Meiji Seika, we are in R&D track development with AM831, the compound we discovered that offers a new approach to treating schizophrenia that may address cognition, an untreated third dimension of this disease. While ACADIA also has earlier stage assets behind these product candidates, in order to control our operating expenses and extend our attachment rate, we are continuing to limit our earlier R&D activities to only selected programs that are externally funded.

In closing, we believe that our focus on our portfolio of four product candidates, coupled with the steps we have taken to extend our cash runway, 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?

(Operator Instructions). And your first question comes from the line of Alan Carr from Needham & Company. Please proceed.

Hi, good afternoon. Thanks for taking my questions. Start with Pimavanserin in schizophrenia. Can you elaborate a bit on the FDA thinking behind the combination route, versus an adjunct, and then also why does this entail some extra safety work that adds six months delay?

So as you know, Biovail had a recent FDA meeting with the FDA to discuss the co-therapy of Pimavanserin with Risperidone. And the FDA considered this program to be a combination therapy program and Biovail has in fact announced that they think that this is a very straightforward way for approval of a co-therapy product. Such a program is very well-defined. You need to demonstrate that a co-therapy product, combination product, is superior to any one of the components of the combination therapy and also superior to placebo. It's a well-defined way moving forward.

With respect to the safety?

Well, so what Biovail indicated was that the FDA would want to have a safety -- traditional safety program for a combo product as part of the package.

Okay. Thanks. And then with your work in Parkinson's Disease, the data from the 014 trial, it sounds like the 20 mg response is a bit more than what you saw with the 012 trial. Wonder if you could comment on that. And then also, did you see any difference in signal between the US and the European sites in that second trial?

I'll give you to Tom. Can you take that question?

Thanks, Uli. Hi, Alan. First, let me put things in context. Obviously the 012 study was fully enrolled with essentially 300 patients whereas the 014 study was completed early with 123 patients. These are two different populations, obviously two different studies, albeit the entry criteria were the same. So in terms of drawing conclusions between the two studies, one has to be careful as they're not absolutely comparable populations.

I think what we saw was encouragingly, was there was a separation with the 20-milligram arm, the shape of which, with the response over the first couple of weeks, continuing out to week six, is similar to the shape of the curve that we saw with the 40-milligram arm in the 012 study. And, therefore, is we believe very supportive of the data that we had in 012 and also with the modifications that we made to the use of the coming up. And in terms of the difference between the US and X-US, once again, just to put things in context, the X-US population was mainly a Western European based population, as opposed to that seen in 012, where it was driven by eastern European patients. I think what we saw in the study was that the outcome from patients in Western Europe was more comparable to that seen in the United States than in the previous study, 012, where there was a difference between the eastern European sites and those in the United States.

Was there a central rater in Europe as well?

No. In 014 --

In Western Europe.

We used the same centralized rating in the United States but in Western Europe we used local raters who had been trained in a fairly intensive manner.

I take it more intensively than the eastern European individual raters in 012 or -- ?

I think as I just mentioned, the training was exactly the same in the X-US raters between 012 and 014. I think there was a difference between the two in as much as the 012 was populated by eastern European patients and 014 by Western European patients.

Okay. Thanks very much.

The healthcare systems are different.

(Operator Instructions). And your next question comes from the line of Jason Napodano from Zacks Investment Research. Please proceed, sir.

Good afternoon, gentlemen. Thanks for taking the question. Wondering if you could comment a little bit on the efficacy measures that physicians are using in your Phase II open label program where you have patients that have been on the drug for five years now. What are they seeing that would keep them encouraged to keep the patients on the drug that long and are they essentially using the modified SAPS that you commented on to make that decision to keep those patients still on active drug?

Hi, Jason. So the -- we actually don't have efficacy measures in either of the long-term safety studies. The 010 which was the follow-on to our Phase II program, nor the 015, which is the follow-on to the two Phase III studies. The criteria is that in the opinion of the investigator that the patient continues to derive benefit from being on the drug. So there's no specific measure there of efficacy. It really is an investigator-led opinion as to the benefit versus any potential risk from being on the program.

But surely there --

Sorry, I was about to say encouragingly, both the two studies, we've seen a high uptake of patients into those studies and encouragingly we've seen that many of these patients are treated for fairly long periods.

And so surely they're using some I guess be it their own internal measure of efficacy to keep the patient, I mean, you say they're seeing a benefit that's worth them keeping on the drug so I guess I rephrase my question. What internal measures are they using to make that decision? There's no standardized protocol.

Sorry. I think they are using their clinical expertise and experience the same as they would in managing Parkinson's patients in the general clinic and they obviously have looked after these patients throughout the randomized portion into the long-term studies. So they've got a long association with many of these patients in terms of clinical management, and they clearly are employing that clinical expertise and experience in determining that these patients are still deriving benefit.

Okay. Thank you.

And sir, you have no questions at this time. I will turn the call over to Dr. Hacksell. Please proceed with closing remarks.

All right. So thank you again to everyone for joining us on today's call, and for your continued support. We look forward to updating you in the future on our ongoing progress. Thank you.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.