ACADIA Pharmaceuticals Inc (ACAD) 2010 Q4 法說會逐字稿

Good day ladies and gentlemen and welcome to Acadia Pharmaceuticals fourth quarter 2010 financial results conference call. By name is Michael and I will be your coordinator for today. (Operator Instructions)I would now like to turn the presentation over to Tom Aasen, Executive Vice President and Chief Financial Officer at Acadia. Please proceed.

Thank you. Good afternoon and welcome to Acadia Pharmaceuticals' fourth 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 March 24, 2011.

Joining me on the call today from Acadia are Dr. Uli Hacksell, our Chief Executive Officer, and Dr. Roger Mills, our Executive Vice President of Development. Uli will begin the call today with some introductory remarks. I will then briefly comment on our financial results for the fourth quarter, and 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 partners' research and development programs and plans including the timing, design and results of clinical trials and partnering activity, the benefits to be derived from our product candidates, in each case including Pimavanserin, benefits to be derived from changes to clinical trial designs, plans regarding the development of Pimavanserin, and our future revenues, expenses, cash position, and financial performance. These forward looking statements are based on current information, assumptions 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, 2010 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 and good afternoon. Let me first take this opportunity to thank all of you for joining us on today's conference call. [Because] 2010 and we have begun the new year with a strong foundation in place that we believe will allow us to advance and build substantial value in our pipeline of our project candidates, which is led by Pimavanserin.

Our primary focus remains on advancing our Phase III program with Pimavanserin in Parkinson's Disease Psychosis or PDP. As you will hear from Roger later on the call, we have continued to make solid progress in the execution of this program, including our ongoing pivotal Phase III trial referred to as the -020 study, which we initiated last summer. During the fourth quarter, we concluded our Pimavanserin collaboration with Biovail; this unique opportunity positions Acadia to realize all of the potential upside from Pimavanserin, and at the same time provided us with an $8.75 million cash infusion.

More recently we completed some important equity financing in general, which further strengthen our financial position and provided us with increased flexibility in advancing the Pimavanserin program. We are grateful for the strong support from this group of highly, high quality institutions along with our existing stockholders. These additional financial resources we believe Acadia is now well positioned as we focus on executing the -020 study and building value for our stockholders.

Pimavanserin has the potential to be the first in class treatment for PDP that may significantly improve the quality of life for patients with Parkinson's disease. PDP is a large unmet medical need that represents what we believe is an ideal lead indication for Pimavanserin. We also continue to be excited with Pimavanserin's potential to be extended to a range of additional neurological and psychiatric indications, that are poorly served by existing antipsychotic drugs.

Why Pimavanserin is our most advanced product candidate and our primary focus, I want to remind you that it's one of four product candidates in our pipeline. We also have two clinical programs in the areas of chronic pain and glaucoma in collaboration with Allergan, and we are in IND-track product development with a product candidate for schizophrenia through our collaboration with Meiji Seika Kaisha. This portfolio of four product candidates led by our Phase III PDP 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 comment on our fourth quarter financial results.

Thank you Uli. Our financial results for the fourth quarter and year ended December 31, 2010, were impacted significantly by the agreement we executed with Biovail in October, in which we regained the US and Canadian rights to Pimavanserin, concluded our collaboration and received an $8.75 million cash payment. Our results for the period also continue to demonstrate our financial discipline and expense control. Largely as a result of the revenue recognition associated with concluding our Biovail collaboration, we reported net income of $29.1 million or $0.74 per common share for the fourth quarter of 2010, compared to a net loss of $8.7 million or $0.23 per common share for the fourth quarter of 2009.

For the year ended December 31, 2010, we reported net income of $15.1 million or $0.39 per common share compared to a net loss of $45.1 million or $1.20 per common share for 2009. Our revenues increased to $35.4 million for the fourth quarter of 2010 from $1.8 million in the comparable quarter of 2009. During the fourth quarter, we recorded a total of $34.7 million in revenues related to concluding our Biovail collaboration, including the $8.75 million cash payment we received and recognition of all remaining deferred revenue from this collaboration. There will be no additional revenue from this collaboration.

Revenues from our agreements with other parties totaled $749,000 for the fourth quarter of 2010. This included our collaborations with Allergan and Meiji Seika as well as grant funding by the Michael J Fox Foundation, and the federal government's Qualifying Therapeutics Discovery Project Program. Our research and development expenses decreased to $4.8 million for the fourth quarter of 2010 from $7.8 million in the comparable quarter of 2009, reflecting lower external costs associated with our Phase III PDP trials, as well as cost savings in our internal organization.

Our general and administrative expenses decreased to $1.5 million for the fourth quarter, from $2.6 million in the comparable quarter of 2009 reflecting cost savings in both internal and external expenses. Following the conclusion of our Biovail collaboration, we expect our revenues to decline significantly beginning in the first quarter of 2011, and we expect to continue to incur net losses for the foreseeable future as we invest in the development of our product candidates.

Finally, let me turn to our cash position and updated guidance. We closed the year with $37.1 million in cash and investment securities. Following the end of the year we raised net proceeds of approximately $13.8 million in our previously announced private equity placement. This financing provides us with additional financial resources to advance our pipeline and has extended our cash runway significantly. We now expect that our existing cash resources and anticipated payments from our ongoing collaborations, will be sufficient to fund our operations at least into the first half of 2013. I'll now turn the call back over to Uli.

Thank you Tom. We remain focused on our four most advanced product candidates, which are Pimavanserin in Phase III development, as well as two partnered clinical stage project candidates that are fully founded by Allergan, and a program in IND-track development in collaboration with Meiji Seika. Our remarks today will focus mainly on our Phase III PDP program with Pimavanserin. Let me start by asking Roger to provide you with an update on this program.

Thank you and good afternoon. As Uli mentioned earlier, our efforts are focused on the ongoing Phase III -020 study. This study builds on the wealth of clinical experience we've generated in our PDP program, and incorporates several important design enhancements that we believe will significantly improve the likelihood of achieving a successful outcome in this study.

The -020 study is a randomized multi-center double-blind placebo-controlled study designed to evaluate at the efficacy, tolerability and safety of Pimavanserin in patients with PDP. The study is expected to enroll about 200 patients at approximately 50 clinical sites located in the United States. Patients are randomized to two study arms and receive oral doses of either 40 mg of Pimavanserin or matching placebo once daily for six weeks. Patients also continue to receive stable doses of their existing dopamine replacement therapy used to manage the motor symptoms of Parkinson's disease. The primary end point of the -020 study is antipsychotic efficacy as measured using nine items from the hallucinations and delusions domains, and the Scale to the Assessment of Positive Symptoms, or SAPS.

We employ independent centralized ratings to assess the primary end point in the study. The -020 study is powered at a standard level for a pivotal study of 90% to provide statistically significant antipsychotic efficacy as measured using the nine items SAPS. Motoric tolerability is a key secondary end point in the trial and is measured using parts two and three of the Unified Parkinson's Disease Rating Scale, or UPDRS.

Let me now review the key design enhancements and why we are confident that they will be able to mitigate placebo response, reduce variability, and enhance sensitivity in measuring antipsychotic efficacy in the -020 study. First, we are testing only a 40 mg dose of Pimavanserin versus placebo in a 1-to-1 randomization. We expect that the use of two, rather than three study arms, will in itself help to mitigate placebo response, because patients now have an equal 50/50 chance of receiving active drug or placebo.

Second, we are conducting the study exclusively in North America, where we are employing centralized ratings using an independent group of highly trained raters to assess the primary end point. Our previous experience has indicated that a focused and centralized approach helps to mitigate placebo response and leads to less variability in the data.

Third, based on our observation of the larger placebo response in patients with less severe psychosis in previous studies, we've increased the MPI minimum score requirement at screening and the SAPS score required at baseline. Importantly, the baseline SAPS score is assessed independently from the MPI, which provides a further check and balance.

Fourth, we are employing a structured, social therapy lead-in during the screening phase. This involves a series of focused interactions between each patient and their caregiver directed by a qualified member of the clinical staff, and is intended to help diffuse initial anxiety and expectations that may be associated with participating in a clinical trial setting, and to provide additional support to patients and caregivers during the screening and run-in to the study. This structured therapy designed to help mitigate the traditional being-in-a-study-effect, and pull initial placebo responses ahead of the baseline assessment in the study.

Finally, we've refined the primary end point of our antipsychotic efficacy to a group of nine items of the SAPS, which best reflect the expression of psychosis in patients with Parkinson's disease. These nine items are identified using a factor analysis of baseline data from our earlier PDP studies and from an external clozapine study. In total this analysis involved over 500 patients and comprised by far the largest data set using SAPS to assess PDP. By using this nine item scale derived from the hallucinations and delusions domains of the SAPS, we expect to reduce data variability and enhance sensitivity in measuring the treatment response.

Importantly, the FDA was supportive of the -020 study design and accepted the use of the nine item SAPS scale as the primary end point of the study, agreeing that this group of nine items would appear to have improved clinical relevance and face validity in PDP. We continue to be pleased with the progress in -020 and have now brought on-line and initiated nearly all the base of 50 planned clinical sites, and we are continuing to enroll patients in the study. We believe the prior experience that many of the investigators and clinical sites have with Pimavanserin has helped contribute to increased awareness and activity at the sites.

As it relates to timing, if the -020 study is conducted in a timeframe similar to what we experienced in our previous studies, would suggest top-line data by about mid '12. We expect to provide specific timing for completion of the study at a later date.

In addition, we are continuing to conduct a large Phase III Open-Label Safety Extension Study, referred to as the -015 Study. This study involves patients who completed previous Phase III PDP trials together with patients who completed the -020 study and, who, in the opinion of the treating physician, they benefit from continued treatment with Pimavanserin. The -015 Study, together with a similar extension study from our earlier Phase II PDP trial, continues to generate a large amount of important, long-term safety data regarding the use of Pimavanserin in patients with PDP.

Overall, in our Phase III and Phase II extension studies, about 200 patients have now been treated for over a year. Over 50 patients for over two years, and our longest, single patient exposure is greater than six years. We continue to be encouraged to see that many patients remained on Pimavanserin for long periods of time. Importantly, our experience to date suggests that long-term administration of Pimavanserin has continued to be safe and well tolerated in this fragile, elderly patient population. Let me now turn the call back over to Uli.

Thank you Roger. Our priorities are clear, and our resources are focused on advancing our Phase III PDP program. We believe that this program, including the ongoing -020 study, will allow Acadia to significantly increase the value of Pimavanserin and drive additional value for our stockholders. PDP is a large unmet medical need and represents what we believe is an ideal, lead indication and specialty market opportunity for Pimavanserin.

PDP is a progressive and persistent condition that occurs in an estimated 40% of Parkinson's patients and deeply affects their quality of life. PDP is associated with increased mortality and caregiver burden, and it is the major cause of the institutionalization among Parkinson's patients. The FDA has not approved any drug to treat PDP and urologists currently face overwhelming challenges in managing patients with this debilitating disorder.

Physicians may resort to using current antipsychotics off-label in an attempt to treat PDP. However, these agents are generally not tolerated as effective doses by patients with PDP and they are associated with a number of side effects. Our market research has reinforced the pressing need among patients, caregivers, and physicians for a new treatment that is safe, effective and well tolerated. In particular, we noted that physicians are concerned with the use of existing antipsychotics due to safety, and the potential for loss of motor symptom control in PDP patients. As a result, this condition is under-treated.

Pimavanserin provides an innovative non-dopaminergic approach to treating PDP by selectively blocking a key serotonin receptor, the 5-HT2A receptor which plays an important role in psychosis. We believe Pimavanserin has the opportunity to be a first in class therapy that will effectively treat psychosis in Parkinson's patients without compromising motor control. We believe that the favorable safety profile observed to date provides additional support for the potential of Pimavanserin to offer significant advantages relative to current antipsychotics used off-label for the treatment of PDP.

While our strategy currently focuses on advancing our Phase III PDP program toward registration, we also attempt to use this program as a foundation to develop and commercialize Pimavanserin for additional neurological and psychiatric disorders that are under-served by currently available antipsychotics. We believe there is a significant commercial potential for Pimavanserin beyond PDP in a range of indications, including Alzheimer's Disease Psychosis, or PDP, and as a [cool] therapy for schizophrenia.

In both of these indications, we have established well-defined paths forward. In ADP, we have established a protocol for a Phase II feasibility study to evaluate the potential of Pimavanserin as a treatment for ADP. While we don't have current plans to begin this study, we intend to pursue this feasibility study in the future independently or in collaboration with a partner.

ADP is another indication, like PDP, with no FDA approved therapy. And it represents a large, unmet medical need. As is the case with PDP, physicians may prescribe off-label use of antipsychotic medications for their patients with ADP. However, current antipsychotic may exacerbate the cognitive disturbances associated with Alzheimer's disease. They have numerous side effects, and carry black-box warning for use in elderly patients with dementia related psychosis.

Because of its selective mechanism of action and the favorable safety profile observed to date in elderly patients with Parkinson's disease, we believe that Pimavanserin may also be ideally suited to address the need for a new treatment for ADP, that is safe, effective and well tolerated.

Turning to schizophrenia, previous interactions with the FDA have established a straightforward development path for a combination product consisting of Pimavanserin and risperidone. This would build on our earlier successful Phase II cotherapy study, which demonstrated a clinically attractive profile of a cotherapy combining Pimavanserin and a low dose of risperidone. In this large, six week Phase II study, the cotherapy was equally effective as a standard dose of risperidone while exhibiting a much improved side effect profile, including significantly less weight gain and a faster on-set of action.

Currently we are focused on and continue to advance our Phase III PDP program. With Acadia now holding worldwide rights to Pimavanserin, we will consider potential opportunities that may allow us to further accelerate and broaden the development program of Pimavanserin and drive increased value for our stockholders. Given the commercial potential for Pimavanserin in PDP and a broader range for neurological and psychiatric indications, we have focused on establishing a strong path and portfolio around Pimavanserin. During 2010, we continued to expand our portfolio of issued patents [backed] numerically and specifically [cover] Pimavanserin. Importantly, patents that claim compositional matter will not provide us with patent protection to June 2028 in the US and to September 2025 in numerous countries outside of the US.

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 in this program, and has announced that they are seeking a partner for the further development of this program and for commercialization in areas predominantly served by general practitioners.

Second, in our muscarinics glaucoma program, Allergan is conducting Phase I studies in glaucoma patients with our product candidate. To our collaboration with Meiji Seika, we are in IND-track development with AM-831. This compound was established by Acadia and may offer a new approach to treating schizophrenia that importantly improves cognition, an untreated third symptom domain of the disease. We are pleased with the progress in our collaboration where together with Meiji Seika, we are currently conducting the required development studies in preparation for potential future clinical trials with AM-831.

Behind our four most advanced product candidates we have additional earlier stage programs. This includes our ongoing discovery collaboration with Allergan, which is focused on ophthalmology and additional discovery efforts which are founded by other sources. In particular, we made exciting progress during 2010 in two pre-clinical programs that may pave the way for new breakthroughs in the treatment of Parkinson's disease. During the fourth quarter, we were awarded a new grant from the Michael J Fox Foundation to support one of these programs. Our Nurr1 program.

In this pre-clinical program we discovered compounds that selectively activate Nurr1-RXR complexes and promote viability of dopamine containing neurons. We are conducting experiments to further examine the effects of these compounds on neuroprotection and neuro-regeneration in pre-clinical models of Parkinson's disease. In our ER-beta program, we discovered compounds that may posses neuro-protective and anti-inflammatory properties and we have the ability to slow down the progression of Parkinson's disease and related conditions. Our initial studies in this pre-clinical program have also been supported by two grants from the Michael J Fox Foundation.

In closing, we believe that our portfolio of product candidates led by Pimavanserin, our Phase III product candidate for which we hold worldwide rights, positions Acadia with multiple product and commercial opportunities. With the well designed Phase III program for Pimavanserin and an extended cash run rate, we believe we have a strong foundation in place to advance this late stage product candidate and drive value for our stockholders. We would now be happy to answer questions that you may have.

(Operator Instructions) And your first question comes from the line of Charles Duncan, JMP Securities. You may proceed.

Hi, this is Jason for Charles. Thanks for taking the questions. First on the 020 study, could you give us an update? You said there were 50 sites that you are planning to include in this study. Can you give us an update on what proportion of those sites are currently enrolling patients?

We have almost all 50 sites, the planned sites are actually now active and initiated. We are actually really pleased with the activity that we are seeing at the sites and I think that is reflective level enthusiasm that the investigators both obviously with a large base of previous experience investigators, but also some new ones that have been added as well; we see great activity there. We're not actually giving guidance on the individual aspects of the study or on enrollment right now, but I am very comfortable in saying that we are very, very happy with the level of activity and enthusiasm that the sites have.

Great. Thanks. And then, just looking at the cost a second. Would you say that you are at a point now where you are at a stable level of cost for the 020 study?

Tom you want to take that?

Yes, I think as it relates to the 020 study I think that's true; it's quite stable. I think, with respect to the overall expenses, those can clearly fluctuate in any given period of time in the quarter, just with the nature of the timing of different aspects of the studies throughout our organization. So, I would refer you in general to our overall cash guidance and again, that indicates that we have a 2 year plus runway, and that's probably the best way to look at it in terms of the over all the runway for the Company.

Okay. Great. And one last question on Pimavanserin, what is the right time to start really actively looking for a new strategic partner? Is it when you have more data for the studies you are running out, or is there a point at which you become sensible to ramp up those activities before that point?

Let me say that first of all we don't comment specifically on plans for partnering, but what I can say is that we have continued to keep potential partners updated on the program, and as we are progressing with the program. Let me also say that we believe that the PDP program really can increase significantly the value of Pimavanserin. Now when we have worldwide rights to the drug, and that means that we can really consider partnering either on a regional or on a global basis.

We are certainly open to opportunities that may allow us to accelerate and or broaden the program, opportunities that can really drive increased value for our shareholders. The very important thing for us is that with the recent financing, we can always now consider opportunities from our positional strength. And I think that's key for us.

Great. Thanks. And then finally just switching to the pipeline, you mentioned that you guys are making progress both with the Allergan partnership programs as well as other pre-clinical programs. Is there any updates or data that we should be looking for in 2011 or in 2012 for those programs?

We haven't provided any specifics on that, but we do, however, continue to move these programs forward. And we would expect to be able to communicate interesting developments in these programs over time.

Okay. Great. Thank you very much.

Thanks.

(Operator Instructions). And there are no further questions at this time. Dr. Hacksell, please proceed to closing remarks.

Well thanks again to everyone for joining us on today's call. And for your continued support. We certainly look forward to updating you in the future on our ongoing progress. Thank you.

Thank you for your participation in today's conference call; this concludes the presentation. You may now disconnect. Good day.