ACADIA Pharmaceuticals Inc (ACAD) 2011 Q2 法說會逐字稿

Good day, ladies and gentlemen and welcome to ACADIA Pharmaceuticals' second quarter 2011 financial results conference call. My name is Karma and I will be your coordinator for today.

At this time all participants are in a 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 your host for today, Tom Aasen, Executive Vice President and Chief Financial Officer at ACADIA. Please proceed.

Good afternoon and welcome to ACADIA Pharmaceuticals' second quarter 2011 financial results conference call. This call is being recorded and an archived copy will be available on our website at www.ACADIA-Pharm through August 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. Following some introductory remarks by Uli, I will briefly comment on our financial results for the second quarter. After this 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 derived from changes to clinical trial designs, plans regarding the development of pimavanserin, and our future expenses, potential savings in facility costs, collaboration payments, 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 will 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. During the second quarter we continued to build on the momentum we established earlier this year, and we have maintained our primary focus on our lead Phase III program with pimavanserin in Parkinson's disease psychosis, or PDP.

Most importantly I'm happy to report that we continued to make solid progress in the execution of our ongoing pivotal Phase III trial referred to as the -020 Study. Roger will provide you with an update on our PDP program later on in this call.

Behind pimavanserin we have made recent strides in other pipeline programs, including our collaborative program with Meiji Seika Pharma, where we have continued to advance [IND-enabling] preparations for our product candidate AM-831. And in our ER-beta preclinical program, we were recently awarded a new NINDS grant.

On the financial front, following our successful private equity financing earlier this year, we continue to demonstrate financial discipline and expense control. These efforts, including efforts during the recent quarter that have significantly reduced our facility-related expenses have allowed ACADIA to maintain a solid cash runway.

Overall, we believe our progress during the first half of this year provides ACADIA with a strong foundation to advance and build substantial value in our pipeline of product candidates, led by our Phase III pimavanserin program.

Let me now turn the call over to Tom to comment on our second quarter financial results.

Thank you, Uli. Once again, I'm pleased to report that our financial results for the quarter were in-line with our expectations. We reported a net loss of $6.6 million or $0.12 per common share for the second quarter of 2011. The net loss for the quarter included a $1.1 million net charge associated with the previously announced termination of our Swedish facility lease.

Importantly, on a go forward basis we anticipate that this will allow us to save at least $1.5 million in annual facilities and related costs.

The net loss for the second quarter compared to a net loss of $4.3 million or $0.11 per common share for the comparable quarter in 2010. Revenues totaled $460,000 for the second quarter and were comprised of revenues from our collaborations with Allergan and Meiji Seika Pharma, as well as from research grants. This compared to revenues of $2.3 million for the second quarter of 2010, which included $1.8 million from our collaboration with Biovail, which was concluded in October of last year.

Our research and development expenses decreased to $4.3 million for the second quarter from $5 million for the comparable quarter of 2010, reflecting savings in facilities and other expenses associated with our internal organization, as well as lower external service costs.

Our general and administrative expenses totaled $2.7 million for the second quarter, which included the $1.1 million lease termination charge mentioned earlier. Excluding this charge, our G&A costs are comparable to the second quarter of 2010.

Turning to our cash position and guidance. We closed the quarter with $40.4 million in cash and investment securities, which continues to provide us with a solid cash runway. We expect that our existing cash resources and anticipated payments from our collaborations will be sufficient to fund our operations at least into the first half of 2013.

I will now turn the call back over to Uli.

Thank you, Tom. Our development pipeline consists of four product candidates, which are pimavanserin in Phase III development, as well as two partnered clinical stage product candidates that are fully funded by Allergan, and the program in our IND-track development in collaboration with Meiji Seika Pharma.

Behind this development pipeline we have additional preclinical programs that may offer innovative disease modifying approaches for treating Parkinson's disease and other CNS disorders.

Our remarks today will focus mainly on our Phase III PDP program with pimavanserin. So let me start by asking Roger to provide you with an update on this program.

Thank you, and good afternoon. As Uli mentioned, our primary focus is on the ongoing Phase III -020 Study. The study builds on the wealth of clinical experience we generated in our PDP program and incorporates an enhanced study design.

Let me start by reviewing key elements of the study protocol. -020 is a randomized, multicenter, double-blind placebo-controlled study designed to evaluate the efficacy, tolerability and safety of pimavanserin in patients with PDP. The study is being conducted exclusively in North America and expected to enroll about 200 patients over approximately 50 clinical sites.

Patients initially participate in a screening phase, which includes a structured social therapy program. This is designed to help diffuse anxiety that may be associated with participating in a clinical trial setting, provide additional support to patients and caregivers during the run-in to the study, and to pull initial placebo responses ahead of the baseline assessment.

To participate in the study patients are required to have moderate to severe psychosis as measured by the Neuropsychiatric Inventory Scale, or NPI, at screening, and the Scale for the Assessment of Positive Symptoms, or SAPS, at the time of baseline assessment.

Patients must have both adequate severity and frequency of symptoms to be included in the study. Importantly, the baseline SAPS score is assessed independently from the NPI, which provides a further check and balance.

Patients are randomized on a one-to-one basis to two study arms and receive either 40 mg of pimavanserin or 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 endpoint of the -020 Study is antipsychotic efficacy as measured using nine items, from hallucinations and delusions domains of SAPS, which best reflects the expressions of psychosis in patients with Parkinson's disease.

By using this refined nine-item scale we expect to reduce data variability and enhance sensitivity in measuring the treatment response.

We are using an independent group of highly trained, centralized raters to assess the primary endpoints in the study. Our previous experience has shown that this independent centralized approach helps to mitigate placebo response and leads to less variability in the data.

This pivotal study is powered at a standard 90% to provide statistically significant antipsychotic efficacy as measured using the nine-item SAPS.

The tolerability is a key secondary endpoint in the trial and is measured using parts two and three of the Unified Parkinson's Disease Rating Scale, or UPDRS.

We remain very enthusiastic with the study design for the -020 Study and are confident that the design enhancements we have incorporated significantly improve the likelihood of achieving a successful outcome in this study.

After completing initiation with a base of 50 planned clinical sites this spring, we are continuing to enroll patients in the study and are pleased with the study execution. In particular, we are encouraged to see that investigators are working diligently to ensure that the appropriate patients, those exhibiting moderate to severe psychotic symptoms, are being enrolled in the study.

You'll recall that based on our observation of a larger placebo response in patients with less severe psychosis in previous studies, we increased the NPI score required at screening and the SAPS score required at baseline in the -020 Study.

In addition, we believe that the social therapy program implemented during the screening phase is helpful in providing additional support to patients during the run-in period in advance of study randomization, and facilitating participation by patients with more pronounced symptoms.

We also continue to be encouraged by the enthusiasm displayed by many of the investigators and sites, and believe that the prior experience many of them have had with pimavanserin has contributed to increased awareness of the -020 Study.

If enrollment in the -020 Study proceeds in-line with our experience in previous studies, it would suggest topline data by about mid-2012. We expect to provide specific timing for the completion of this study at a later date.

In addition to -020, 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 complete -020, as well as patients who completed previous Phase III PDP trials, and who in the opinion of the treating physician may benefit from continued treatment with pimavanserin. I'm pleased to report that the overwhelming majority of patients who complete the treatment phase in -020 have rolled over into the -015 Study.

We continue to generate a large amount of valuable long-term safety data regarding the use of pimavanserin in patients with PDP. Overall in our Phase III and Phase II extension studies, we have now accumulated over 450 patient years of exposure. More than 200 patients have been treated for over one year, and our longest single patient exposure exceeds six years.

We remain encouraged to see that many patients have continued on treatment with pimavanserin for long periods of time, and this growing base of clinical experience increases our confidence in the program.

Importantly, our experience to date suggests that the long-term administration of pimavanserin appears to be generally safe and well-tolerated in this fragile, elderly patient population. 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.

Let me now turn the call back over to the Uli.

Thank you, Roger. We believe that a successful -020 Study will allow ACADIA to significantly increase the value of pimavanserin and drive value for our stockholders. PDP represents a large unmet medical need, and what we believe is an ideal lead indication of specialty market opportunity for pimavanserin.

PDP is a progressive and persistent condition that occurs in an estimated 40% of Parkinson patients and deeply affects their quality of life. It is associated with increased mortality, caregiver burden, and is the major cause of nursing home placements 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 disease. We believe that pimavanserin with its innovative non-dopaminergic profile has the opportunity to be a first-in-class therapy that effectively treat psychosis in Parkinson patients without compromising motor control.

While our strategy currently focuses on advancing our Phase III PDP program towards registration, we also intend to use this program as a foundation to develop and commercialize pimavanserin for additional neurological and psychiatric disorders, which are underserved 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 ADP, and as a co-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 that we intend to pursue in the future independently or in collaboration with a partner.

Because of its selective mechanism of action, and the favorable safety profile observed to date in elderly patients with Parkinson's disease, we believe 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 development path for a combination product consisting of pimavanserin and risperidone. This Phase III program would build on our earlier successful Phase II co-therapy study, which demonstrated that co-therapy combining pimavanserin and a low dose of risperidone 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 onset of action.

With ACADIA holding worldwide rights to pimavanserin, as we focus on advancing our Phase III PDP program, 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.

Now while our Phase III pimavanserin program remains our top priority, I want to take a moment to briefly comment on the other programs in ACADIA's 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. We are also continuing joint discovery efforts based on ophthalmology to our recently extended research collaboration with Allergan.

Through our collaboration with Meiji Seika Pharma, we are developing AM-831, a new chemical entity that may offer innovative improved cognitive approach to treating schizophrenia. We are very pleased with the progress made on our [DNA linked] preparations for AM-831 during the first half of this year, and we look forward to advancing this product candidate to the clinic.

Finally, behind our foremost advanced product candidates we have additional preclinical programs. During the second quarter we were awarded a new grant from the National Institute of Neurological Disorders and Stroke to support the development of our novel ER-beta agonists for the treatment of neuropathic pain.

You may recall that these compounds also offer the potential for an innovative disease modifying approach to the treatment of Parkinson's disease. And our initial studies in this area have in fact been supported by the Michael J. Fox Foundation.

In addition, we continue to make solid progress in our Nurr-1 pre-clinical program, which is also supported by a Michael J. Fox Foundation grant.

In closing, our portfolio of product candidates, led by our Phase III program with pimavanserin, positions ACADIA with multiple product and commercial opportunities. With a well-designed Phase III program for pimavanserin and a solid cash runway we believe we have a strong foundation in place to advance this late stage product candidate and drive value for our stockholders.

We will now be happy to answer questions that you may have.

(Operator Instructions). Charles Duncan, JMP Securities.

Thanks for taking my question. First of all, with regard to the -020 Study in pimavanserin I am wondering -- Roger, thank you very much for the added information on the run-in period in the screening process. It sounds like that should work. But I'm wondering if you do periodic surveys of the sites and are some way of scrutinizing whether or not enrollment is going in the way that you would like it to go, or what you have done -- if you can perhaps provide more color on the checks and balances that you are employing to reduce the likelihood of being surprised at the end?

Thanks, Charles. Yes, we -- in terms of -- I think as indicated on the -- earlier, the patients entering the study are assessed on the NPI. And the NPI is assessed by the investigator. We actually have an independent check to the -- how that NPI is performed. And then patients who qualify on the NPI undergo the two-weeks screening, which includes the brief psychosocial therapy, which is designed to essentially pull forward the -- any placebo response to being in a study effect -- pull that forward.

It also has the benefit of actually helping patients with more severe symptoms to be included by the investigator, so the patients aren't just left in the air with nothing to support them during that screening period.

Importantly, at baseline patients are reassessed using a different scale, the SAPS, and this is done by the independent centralized raters. And patients have to qualify at that point to get into the study. So that is all set out in the way the study is performed, and obviously we have oversight to see that those factors are met.

Okay, and then you also mentioned the enrollment patterns. And you have referred directly to if the study had been enrolling consistent with your historical experience. Does that suggest that it hadn't been? Are you just maintaining previous guidance or are you actually trying to update it in some way?

And if not the latter, what number of patients do you need until you are able to give us maybe on a percentage basis some increased information on when the enrollment could be completed?

So, Charles, let me answer that question. So first of all we haven't changed anything. What we say is that our experience from previous studies would suggest topline data by around mid-2012.

To the second part of your question, our policy not to provide interim updates on enrollments. But what we normally have done is that we have informed when we start the study, when we have completed enrollment in the studies, and that is the way we do it. We will certainly continue to provide updates on the study, but we will not provide specific information on enrollment while the study is ongoing.

I know it is -- it is the summer, so it is hard to -- and everything is going to hell in a handbasket, if you will, if you believe the stock market. But, I mean, do you feel good about how it is going with regard to the trial and the enrollment and the ability to keep patients in that should be in this study?

I think Roger should answer that.

Yes, we are. I think we are very pleased with the execution on the study, not only that we are enrolling patients that we want to enroll in the study, but importantly, beyond that is during our continual interaction with investigators, we are continually reassured that they really understand the need to bring what we define as the right patient into the study. Patients who do have that moderate to severe symptomatology and patients who really do fit within, not just the wording of the protocol, but also very importantly the spirit of the protocol and the changes that we have made since we did the previous studies. So that has been very encouraging and continues to be on an ongoing basis in all our interactions.

Then with regard to commercialization and partnering, I realize there is another study to be done. But have you been getting incoming calls, or have you had any ongoing discussions? And is the environment changing at all with regard to the interest in this type of program? I know that in the past it had been partnered effectively, and then there were some changes in terms of M&A in the space and perhaps that has changed the dynamic. Is there demand for this type of program?

So, first, Charles, you know, we don't comment on specific partnering discussions or specific plans, but what I can say is that we have continued to keep our potential partners informed about the progress in the pimavanserin program.

We are clearly now focused on advancing the Phase III PDP program. We think that this really provides the potential to significantly increase the value of pimavanserin as a drug candidate.

Now, in particular now when we have worldwide rights to pimavanserin that -- because it means that we can keep all our options open, make sure that we enhance value optimally.

And then as we advance the program, we have the opportunity to consider partnering in the future either on a regional or a global basis. We are open to any kind of opportunity that may accelerate or broaden the program and that can really drive increased value for our stockholders.

And then my final --.

So we think -- again, just let me say that I believe that with the continued advancement of pimavanserin that we are generating a product that is very interesting for a lot of potential partners.

Thank you, Uli, for that clarification. And then my final question is with regard to the pivotal program. I know that this study is critical. I believe that you have guided in the past to a second Phase III, maybe I'm wrong there. But are there any additional incremental Phase III's or other types of studies that need to be done before you could file an NDA if these studies read out with compelling safety and efficacy data?

Yes, so we do in fact expect that we will need to conduct a second Phase III study. We think that's the most likely of them. And it will be a study that essentially would be identical to the current one.

Okay, but any other studies, such as safety studies or anything else with pimavanserin?

Obviously, we have had the opportunity to really complete a lot of the supporting program. There will need to be some smaller supporting studies such as very standard drug-drug interactions studies to be completed. But nothing really of any real significance.

Any cardiovascular studies or anything like that?

No.

Okay, thanks for the added color.

Jason Napodano, Zacks.

I was just wondering if there are any milestones essentially coming from Allergan or Meiji Seika that we can look forward to in the next maybe one to two quarters?

So we clearly have additional things outside of pimavanserin that may -- we will update on, both from the clinical studies and the earlier preclinical studies that I mentioned. But, clearly, we also expect to provide from time to time updates on the PDP program.

We will present at clinical meetings. We have the manuscripts that will appear in clinical papers -- in clinical journals. And, clearly, we are advancing the program in general. So there will be a lot of things coming out.

Is there any potential to sign another deal similar to the deal with Meiji Seika or Allergan with some of your preclinical candidates?

I think that those -- if you think about specifically the ER-beta program and the Nurr-1 program they're completely unencumbered by anyone else. We think that they're very interesting. And I think that is also very clearly established by the fact that we've been able to get grants that essentially support everything that we do with these programs.

They are really providing interesting disease-modifying principles that may be applied to various indications, including chronic pain, Parkinson's disease and Alzheimer's disease. Those are, as you are aware, huge indication areas with enormous commercial potential. So we think clearly there is the potential in these programs to partner.

Got you. And just a question for Tom. Can you give us an update on the warrants outstanding? Have any of those been exercised? I know they became active in July. This is from the January raise.

Yes, sure. No change at all in the terms of the number of warrants. Currently there is 4.7 million warrants outstanding. 4.4 million of those were issued in connection with the January placement, and all those warrants remain outstanding.

Okay, thanks for the update, guys.

Alan Carr, Needham & Company.

Thanks for taking my question. I want to come back to an earlier point. How much insight do you have to that data around this screening period? I'm wondering if you do have access to blinded data, do you see any changes in symptom scores from initial screen to baseline?

Roger.

I think it is -- just to clarify, the screening is assessed by the investigator on the NPI scale, whereas the baseline is assessed with a SAPS by the independent raters. So the two -- there are similarities between the NPI and the SAPS, but they are not equivalent in order to be able to make the sort of assessment that you're looking for.

What we do, however, as indicated earlier, we have a lot of interaction with the sites -- all the sites during the study. And we have had very good feedback about how the brief psychosocial therapy has been working with patients, and there is good, positive feedback there.

So although we don't measure differences in psychosis between the screening visit and baseline, we have not had indicators that the [PBST] has been held to be a negative in the study.

Okay thanks. Do you have access to any other blinded data that might suggest that some of these other changes to trial design may be having an impact, for example, central reader and that sort of thing?

I think as I have said on previous calls, we don't over-interpret blinded data. The study should remain as the study set up in the protocol. And there is a danger with over-interpreting data that that actually takes place. However, I think as I indicated earlier we have been very encouraged that the investigators understand the changes to the protocol and are applying them to the patient population.

Okay, and then last question. I may have missed this. With regards to the program at Allergan is there any changes to -- or actually can you give me an update on timelines for those in terms of next steps?

So what we have done -- just to take a step back, we have two clinical stage product candidates in collaboration with Allergan. We have a chronic pain program in Phase II, and we have a glaucoma program in Phase I.

What we have announced previously on that -- I have no new information there -- is that Allergan has conducted several Phase II trials in the chronic pain program. And they have also announced that they are seeking a partner that can help them with the commercialization in the areas which are predominantly served by [DPs] (inaudible) conducting the -- helping them to conduct the Phase III program. And they have indicated that this particular strategy is related to their focus on specialty pharmaceutical marketers.

What we have announced on the second program, the glaucoma program on our muscarinic agonist, is that it is in Phase I development. We have not provided any additional information on that.

But it is still an active Phase I?

Yes, very much so. And we think that the muscarinic compound that we have in development is very exciting.

Okay, thanks very much.

(Operator Instructions). Charles Duncan, JMP Securities.

Thanks for taking my follow-up question. This is perhaps housekeeping. But, Tom, I kind of missed your guidance in terms of your expense plan for R&D and SG&A. Can you run through that again, and we may have a question beyond that?

Sure. Essentially we have not changed any of the guidance. As we have said, the existing cash of $40.4 million at the end of the second quarter puts us in a very nice position and a strong runway. We have said that that is sufficient, at least into the first half of 2013.

We haven't provided the specific expenditure guidance. I think overall I would refer you to the -- to that cash guidance. You will see that we have used about 10 -- just over $10 million for the first six months. Pretty ratable in quarter one and two in terms of our cash usage to date. And as I said, a comfortable position that is at least into the first half of 2013.

Given that, call it, $10 million spend thus far, so you are saying -- I mean, my math suggests there is no change in the vectoring, so between now and then you would not anticipate initiating any additional work like Phase III?

I can say our guidance in terms of our runway has the full scope of the Phase III program for pimavanserin and all other activities baked in to our figure.

Okay, so if you have got a good result out of -020 and you had the opportunity to, and could quickly turn around and start another study, that is included in your guidance?

Yes, in terms of the timeline, yes.

Right.

Is it possible that you would start another study before you see the results of this study or are you going to wait and --?

I can say from the strategy we have had it is clearly -- we are focused on -020. What we have said though is that we clearly are planning to leverage the infrastructure in the -020 so that we can very efficiently initiate and conduct the confirmatory trial in a cost effective and a very efficient manner. So that is clearly part of our thinking.

So that infrastructure could mean exactly the same or many of the same sites, as an example maybe you would just --

[Exactly our thoughts].

As you know, if you are able to really have something on -- do a lot of the planning upfront, and as you said, not only in the site selection but other logistics, you can very efficiently cut down the time required for initiation of that trial.

Okay, that's helpful. I appreciate the added insight. And thanks to Tom for the color.

Dr. Hacksell, please proceed to closing remarks.

Okay, so thanks 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 so much.

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