ACADIA Pharmaceuticals Inc (ACAD) 2013 Q4 法說會逐字稿

Good day, ladies and gentlemen and welcome to ACADIA Pharmaceuticals fourth and full year 2013 financial results conference call. My name is Crystal and I will be your coordinator for today. At this time, all participants are in listen-only mode. We will be facilitating a question and answer session towards the end of today's call.

(Operator Instructions) I would now like to turn the presentation over to Lisa Barthelemy, Director of Investor Relations at ACADIA. Please proceed.

Good afternoon and welcome to ACADIA's fourth quarter 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 13, 2014.

Joining me on the call today from ACADIA are Dr. Uli Hacksell, our Chief Executive Officer; Dr. Roger Mills, our Executive Vice President of Development and Chief Medical Officer; Tom Aasen, our Executive Vice President and Chief Financial Officer, and Terry Moore, our Executive Vice President and Chief Commercial Officer.

Uli will begin our call today with some introductory remarks and then Tom will briefly comment on our fourth quarter financial results. Following this, Roger will provide you with an update on our development programs and business, 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 research and development programs and plans and our strategy, including the timing, results, or implications of clinical trials or CMC development; the benefits to be derived from, future approval of, and the commercial potential for a product candidate, in each case, including pimavanserin; the timing, content, or likelihood of regulatory meetings, filings or approvals, future development and commercialization of pimavanserin, the expansion of the pimavanserin franchise and its value, and our future expenses, cash position, and usage and growth potential.

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, 2013, and other filings.

You are cautioned not to pace 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 Hacksell, our Chief Executive Officer.

Thank you, Lisa, and good afternoon. Let me first take this opportunity to thank all of you for joining us on today's conference call.

As many of you know, 2013 was a truly transformational year for ACADIA, highlighted by several important achievements. During the first half of the year, we presented data clinical meetings from our pivotal phase 3 -020 with pimavanserin for Parkinson's disease psychosis, or PDP. We established an expedited path for registration with the FDA. And we significantly strengthened our financial position through a successful public financing.

We followed this with strong performance in the second half of 2013, highlighted by publication of our -020 study in The Lancet, important progress in our PDP program, and the initiation of our Phase II trial with pimavanserin in Alzheimer's disease psychosis, or ADP.

2013 was clearly an extraordinary year for ACADIA. We look forward to building on this momentum during what we expect will be a busy and exciting 2014. And I am pleased to report today that we are off to a productive start.

Most importantly, as Roger will share with you later, we have continued to make outstanding progress in advancing our PDP program towards registration. And we remain on track for our planned submission of a new drug application or NDA near the end of this year.

Currently, no drug is approved in United States to treat PDP, a debilitating disorder that can have devastating effects on patients as well as their caregivers and families. Pimavanserin offers an innovative, non-dopaminergic approach and has the potential to be the first safe and effective drug to treat PDP without compromising motor control, thereby significantly improving the quality of life for patients with Parkinson's disease.

To help prepare for the planned future launch of pimavanserin, we have successfully recruited a core team of professionals with extensive commercial experience. This team is busy with pre-commercial activities designed to position ACADIA for success in the planned PDP launch.

Meanwhile, in parallel with completing the remaining aspects of our PDP development program, we are pursuing a lifecycle management program to strategically broaden our pimavanserin franchise. Because of its selective mechanism of action and its efficacy and safety profile observed to date in elderly patients with PDP, we believe that pimavanserin also may be ideally suited to address other major neurological and psychiatric disorders, including ADP and schizophrenia, which are poorly served by currently available therapies.

We are excited to have initiated our Phase II ADP trial that Roger will discuss later in the call. As is the case with PDP, no drug is currently approved in the United States to treat ADP. And the off-label use of existing antipsychotics is linked to increased mortality, serious adverse events, and cognitive decline in elderly patients with dementia-related psychosis.

In addition to ADP, we are actively planning additional studies in our lifecycle program to further expand our pimavanserin franchise in other indication areas, including schizophrenia.

While pimavanserin is the most advanced asset in our product pipeline, we have several additional programs in our R&D portfolio. Our pipeline also includes clinical stage programs in areas of chronic pain and glaucoma, in collaboration with Allergan, and two programs in advanced preclinical stages directed at Parkinson's disease and other neurological disorders.

All of our programs emanate from internal discoveries and offer what we believe are innovative approaches that may address large potential commercial market opportunities. Our pipeline of product candidates, led by our Phase III PDP program with pimavanserin, positions ACADIA with multiple products and commercial opportunities of significant growth potential.

Before we review our programs in a bit more detail, let me ask Tom to comment on our recent financial results.

Thank you, Uli. The fourth quarter financial results reflect our strategy to increase our R&D investments in order to aggressively advance and build value in our pimavanserin franchise and to simultaneously conduct pre-commercial activities to position ACADIA for commercial success.

Our R&D expenses increased to $7.9 million for the fourth quarter from $4.9 million for the comparable quarter of 2012, primarily due to increased development costs incurred in our Phase III program for pimavanserin, as well as increased costs associated with our expanded R&D organization. We expect our R&D expense to increase in future quarters as we continue to conduct the remaining activities in our PDP program and pursue our lifecycle management program for pimavanserin.

G&A expenses increased to $4.3 million for the fourth quarter from $2.3 million for the comparable quarter of 2012, largely reflecting increased non-cash stock-based compensation expense and professional fees, including costs related to our initial pre-commercial activities.

Finally, let's turn to our cash position and guidance. We continue to maintain a strong cash position which provides us with important financial flexibility.

We closed the year with $185.8 million in cash and investment securities, compared to $108 million at December 31, 2012. We used $10.4 million in cash during the fourth quarter to fund our operating activities. In future periods, we expect our cash used in operations to increase as we advance our PDP program toward an NDA, conduct pre-commercial activities, and execute on our pimavanserin lifecycle management program, including conducting our Phase II trial in ADP.

We anticipate that our cash and investment securities will be greater than $120 million at December 31, 2014. Importantly, we have a strong cash runway that we believe will enable us to continue to build value in our PDP program.

Let me now turn the call over to Roger, who will provide you with an update on our pimavanserin program.

Thank you, Tom, and good afternoon. As Uli mentioned, we are off to a very nice start to what we expect will be a busy and exciting year for ACADIA. Our team has been focused on completing the remaining activities in our pimavanserin PDP development program that are needed for submission of an NDA.

This includes aspects of the CMC development including stability testing, a pimavanserin registration batches and the remaining supportive studies, including customary drug-drug interaction studies.

I am delighted to report that our PDP development activities have continued to progress well.

Now our CMC program, you may recall that our initial three registration batches of pimavanserin were successfully manufactured at the commercial launch scale, and registration instability testing on these drug product batches was initiated last October. This registration stability program is designed to comply with ICH guidelines and to meet the regulatory filing requirements for major markets worldwide.

As expected, we have now observed an initial three months of stability data on the registration lots appears to be consistent with what we had observed earlier with our clinical trial formulation. We have previously established long-term stability of pimavanserin in our clinical trial formulation, covering a three-year period. This initial stability data on our registration batches, which uses the same manufacturing suppliers and general processes as our clinical trial formulation, is very encouraging.

Meanwhile, we have also progressed with the remaining supportive studies, which include [customary] short-duration, drug-drug interaction or DDI studies. I am pleased to report that we are now in the process, finalizing our planned DDI program, and that the profile of pimavanserin appears consistent with what we have observed in our long-term PDP safety extension studies.

Patients with PDP are frequently on a number of concomitant medications. Thus we have had the opportunity to gain a significant amount of real life clinical experience in this patient population through our clinical trials; in particular, our open-label extension studies. Importantly, we have continued to observe that pimavanserin is generally safe and well-tolerated in PDP patients.

We are continuing to end conduct our Phase III PDP open-label safety extension trial, referred to as the -015 study, which is designed to continue until pimavanserin is commercially available. This study has allowed us to generate a large amount of valuable long-term safety data regarding these (technical difficulty) pimavanserin in patients with PDP.

We have already far exceeded the ICH guidelines for required one-year exposures, with well over 250 patients having been treated for one year or longer. In fact, through our -015 study and a similar extension study tied to our earlier Phase II trial, we have well over 100 patients who have been treated with pimavanserin for at least two years, and our longest single patient exposure exceeds eight years.

Our long-term safety data provides support for the potential of pimavanserin to offer significant advantages relative to current antipsychotics, frequently used off-label for the treatment of PDP. Overall, we continue to be very pleased with the progress in our PDP development program and remain on track for a planned NDA submission near the end of 2014.

Consistent with our previous guidance, we plan to conduct routine pre-NDA meetings with the FDA this spring. These interactions will enable us to outline and discuss our planned submission and how the NDA will be organized.

Whilst our focus is clearly on our planned NDA submission, we also have moved forward with efforts outlined in the past to registration in EU. We have completed an initial series of interactions with the regulatory agencies from several EU member states. We are continuing with this process designed to clarify the pathway for registration in the EU.

Let me now turn to our Alzheimer's disease psychosis, or ADP program. As Uli mentioned earlier, we are currently conducting our Phase II ADP trial, which we refer to as the -019 study. This study is a randomized, double-blind, placebo-controlled trial designed to examine the efficacy and safety of pimavanserin and in about 200 patients with ADP. We are conducting this study through a large network of research care facilities, established as part of the National Institutes for Health Research via Medical Research Center for Mental Health at Kings College, London.

-- King's College, London. The principal investigator is Dr. Clyde Ballard, professor of age-related diseases at King's College and a renowned clinician in the field of Alzheimer's disease.

In this -019 study, patients are randomized on a one-to-one basis to receive either 40 milligrams of pimavanserin or placebo, once daily for 12 weeks following an initial three-week screening period that includes brief psychosocial therapy. The study is designed to assess several key efficacy endpoints, including these of the neuropsychiatric inventory, nursing home, or NPI and H scale to measure psychosis, agitation aggression, and sleep nighttime behavior, as well as additional exploratory endpoints.

The key efficacy endpoints were based on the change at week six from baseline, which is a standard duration for psychosis studies. The full 12-week treatment period will allow us to explore additional endpoints, including the cognitive status of the patients. We will be looking to show that we do not worsen cognition relative to the placebo-treated patients.

In contrast, currently most event psychotics have been linked to cognitive decline in elderly patients with dementia-related psychosis. The 12-week treatment period will also provide the opportunity for demonstration of durability of response to pimavanserin beyond the six-week placebo-controlled period tested in our pivotal PDP efficacy trial, and the key efficacy endpoints in the -019 study.

We have been very pleased with the study startup and the overall commitment shown by King's College clinical organization. We believe that conducting the study at this high-quality medical institution, with its network of nursing care homes and its experience in this patient population, provides several advantages in study execution.

Firstly, we were able to incorporate many design features from our successful pivotal PDP trial into the -019 study design. Importantly, a geographically-focused network of care facilities enables the use of a small group of highly trained raters, which we expect will enhance study precision.

Secondly, we believe this unique clinical research infrastructure and expertise provides access to a pool of well-characterized ADP patients and facilitates data management and monitoring. We continue to believe that this study positions us with a unique opportunity to demonstrate the potential benefits of pimavanserin in this patient population and to inform us on design for future studies in this program.

Beyond ADP, we are currently planning for additional studies as part of our lifecycle management program to further characterize potential aspects of pimavanserin's clinical profile and to position it for other indications. This includes development planning and related commercial assessments at the various markets of pimavanserin.

On such indications where we believe pimavanserin may play a beneficial role is schizophrenia. Pimavanserin's selected blockade of the 5-HT2A receptor may enable it to be used in two different treatment approaches to improve the therapy for patients with schizophrenia.

Firstly, it may be used as a co-therapy together with low doses of existing atypical antipsychotic drugs such as risperidone, to enhance the clinical profile that is demonstrated in our earlier Phase II trial. Secondly, in the maintenance phase of schizophrenia therapy, we believe that a selective 5-HT2A treatment may allow for symptom control whilst avoiding interactions with dopamine and other receptors that are linked to many of the side effects caused by existing antipsychotics.

With its selective profile, we therefore believe that pimavanserin has the potential to be used as a stand-alone treatment in order to provide a well-tolerated maintenance therapy that may result in better compliance of schizophrenia patients. We look forward to sharing more details on these planned studies in our lifecycle management program later this year.

I will now turn the call back over to Uli.

Thank you, Roger. We continue to be excited with the progress in our PDP program which moves us closer to our ultimate goal of bringing innovative compounds like pimavanserin to the market to improve the lives of patients with neurological and related central nervous system disorders.

PDP represents what we believe is an ideal lead indication and specialty market opportunity for pimavanserin. Strategy is to commercialize pimavanserin for this indication in the US by establishing a small specialty sales force focused primarily on neurologists.

I am excited to report that since our Q3 call we made impressive progress with our commercial preparations. Most importantly, we have assembled a core commercial organization to help prepare for the planned launch of pimavanserin for PDP. This highly experienced professionals in marketing, reimbursements, and managed markets, marketing research, and commercial operations as well as sales force planning and management.

Over the last several months, this team has focused on several key activities to position ACADIA for success in the planned future US market launch. We are continuing to conduct extensive market research to optimize the positioning on pimavanserin in the PDP market in order to best serve the needs of prescribers, patients, and payers.

Importantly, our research has confirmed the high unmet medical need for PDP patients and has reinforced that prescribers are in need of safe and effective alternatives to the off-label use of antipsychotics that they often resort to currently. In addition, we have initiated our supply chain distribution activities, which is a lengthy process, to ensure all channels of distribution are established at the projected time of product approval.

Let me add that the more our team examines the PDP market, the more excited we have become for the potential for pimavanserin to improve the lives of people impacted by this disease.

Finally, we are also underway with preparations to position us for the larger commercial organization that we plan to have in place at the time of launch, with a focus on infrastructure developments including customer relationship management, [book] automation, [ties and] structure analysis, compliance, training, and other services for both our planned sales force and account management teams.

Interestingly, while we have not yet begun formal recruiting for the commercial positions planned for a later stage, we have experienced an increasing amount of interest from highly qualified and experienced professionals. Overall, we are very pleased with our preparations to date and are looking forward to continuing these important pre-commercial activities.

Let me now touch briefly on the other programs in our pipeline. Together with Allergan, we have generated clinical stage programs in the areas of chronic pain and glaucoma. Allergan also is pursuing preclinical development of an additional compound, which was advanced last year from our collaborative research as a potential new treatment for glaucoma.

In addition, our two advanced preclinical programs are ER-beta and Nurr1 programs and they offer novel approaches to treating Parkinson's disease and other neurological disorders. Preclinical studies in our ER-beta program as a novel pain treatment are supported by a grant from the National Institute of Neurological Disorders and Stroke. And we are also conducting preclinical studies with our ER-beta compound as an innovative approach to targeting neurodegeneration associated with multiple sclerosis.

Preclinical studies in our Nurr1 program directed at Parkinson's disease have been supported by a grant from the Michael J. Fox Foundation.

Finally, before I close, I would like to take this opportunity to acknowledge and thank our employees. ACADIA's extraordinary progress in 2013 was the direct result of the hard work, dedication, and passion of our talented team.

Looking forward, I am confident that we have the right team and the right strategy in place to capitalize on the vast opportunities ahead. Our priorities remain clear. We are focused on building additional value in our pimavanserin franchise.

We believe that our pipeline of product candidates, led by our Phase III pimavanserin program, positions ACADIA with multiple attractive products and commercial opportunities and significant growth potential. And, most importantly, all of us at ACADIA remain committed to advancing innovative medicines that will improve the lives of patients that suffer from neurological and psychiatric disorders.

Operator, you may now proceed with the Q&A session.

(Operator Instructions) Charles Duncan, Piper Jaffray.

Congratulations on a great year and thanks for taking my questions. My first question is on EU regulatory progress. Thank you, Roger, for that update.

I'm just kind of wondering what you see as the key differences from the US. And is there a possibility of another study? Or what do you think is the key consideration for the regulators?

We have obviously, as mentioned, begun the interactions with regulatory agencies in Europe, really to gain the background and some idea of the appropriate way to move forward to EU registration. We are currently working with some specific EU advisors now to take feedback in and really plan the next steps along that process.

Importantly, I think there is a very clear understanding that our -020 study is a very strong study. And it is a very solid study in the way it was performed and the results. Also importantly, I think is the clear understanding of the limitations of the agents that are currently used in these patients.

Obviously, there are certain specific European elements to how they look at things. But I think importantly, we are moving ahead along a path in a careful but guided way.

You think do that you will be able to define the path forward by, say, this calendar year?

We are certainly not giving a specific guidance on that, but we are moving along very smoothly and would anticipate that we would be able to delineate a path by the end of the year.

Okay. And then my second question, and then I will hop back in the queue, is regarding the Alzheimer's disease study. Again, thanks for the update. I'm not sure if I missed it, did you give a specific enrollment (technical difficulty)?

No, Charles, we didn't. As you know, customarily we do not give guidance on enrollment in our studies. However, we are very pleased with the way the study has started.

We are working with a site which is very experienced, not only in doing Alzheimer's studies, but importantly very experienced with the use of the NPI. And all the way through the site there are some very good people that we are working with.

Importantly, they have this network of nursing homes that have been really set up specifically for doing these types of studies. So there is a great commitment within the group there. They're high-quality people and we have been able to reproduce many of the factors that we have built into the -020 study to ensure its success.

Jason Butler, JMP Securities.

Just a quick follow-up on Charles's question on the EU process. Have you actually formally entered into the scientific advice process or are you still yet to do that?

We have been reaching out to individual member regulatory authorities. That is really the first step on the process through to the formal scientific advice.

Okay. Great. Thanks. And then, on the -- for pimavanserin, on the drug-drug interaction studies, can you talk about when those studies would be -- could be completed, and if you will give further updates on the findings there?

We are well on the way to completing the entirety of the program. Obviously, the key thing for doing this is not -- these are not go/no-go studies as similar to efficacy and safety studies. They are really studies that are designed to help physicians and guide them to be able to use pimavanserin in the specific populations in a safe and effective manner.

So they are really for studies that just help within the multitude of different drugs that patients may encompass during -- or may encounter during their disease. So it really consists not only of clinical studies, also importantly what of earlier preclinical work that goes together to really create the broader profile, which then helps in terms of building that label.

So we have done a mixture of clinical and preclinical studies, and it is really in line with what we expected beforehand. There has not been any major surprises or any surprises during that program.

Okay. Great. Thanks for taking the questions.

(Operator Instructions) Thomas Wei, Jefferies.

Just a follow-up on the enrollment question in the ADP trial. I guess, if you -- do you know when you might have a sense of what that enrollment curve looks like, so that you could more narrowly define the timing of what we could have data?

And then, I guess I wanted to ask a question also on the two different schizophrenia approaches that you were considering. Why not look at both? And what exactly do you need to do between now and later this year to make that determination? Why not move forward more aggressively in those settings? Thanks.

Okay. Great, Thomas. So I think the key thing, as I mentioned earlier, we don't give guidance specifically on enrollment. We are expecting that from start to finish of the study, we are looking at a two-year period. But obviously we continue to look at the enrollment over time, and obviously if there is a major shift in that, we will note that and plan for that.

In terms of schizophrenia, it really is an interesting opportunity that we have with the drug, really aligned around the particular characteristics, both efficacy and safety, that we have seen in the program to date. As you will recall, our previous study looked at the combination of pimavanserin together with a low dose of risperidone, and showed a similar efficacy to a full dose of risperidone combined with a lower safety burden on the patients.

However, subsequent to that, we got very clear data from PDP of a very profound antipsychotic effect using pimavanserin as a standalone therapy. And it really begs the question that if you take that sort of efficacy and you marry it with the safety profile that we have seen to date -- and bear in mind, the majority of the safety data has been generated in very sick, late-stage Parkinson's patients.

So if you take that great profile and match that with the efficacy in a younger population of schizophrenia patients, it really offers the potential that the monotherapy may be an ideal therapy for patients in the maintenance phase of their disease. One of the key factors that really is challenging with schizophrenia management is not, in fact, simply the acute phase, which lasts for a few weeks when you get exacerbations. But, importantly, the management of patients are over long-term periods when we know that compliance is very poor in those patients, which is driven by a number of factors, not the least of which is the burden of the side effects that these patients have.

Furthermore, the dopamine antagonism can actually worsen the cognition of the patients with schizophrenia. So there is a real chance that with pimavanserin as a monotherapy, we could really have a therapy that changes the paradigm of how you manage patients with schizophrenia on an ongoing basis. And, therefore, it is something that we are really considering exploring with the drug and exploiting that great potential that it has to deliver those benefits.

And I can just add on. When you ask why we don't do both of the studies, half those studies at the same time, it is certainly an interesting proposition.

We think probably one needs to focus on one thing at a time and that is one reason, but we wouldn't do that necessarily. But, in fact, the eventual design of the study may have components of both concepts. We strongly believe in the potential of pimavanserin in schizophrenia.

Thanks.

Bert Hazlett, ROTH Capital.

My question has to deal with the ADP study, and I guess the NPI scale as it relates to the SAPS-PD scale that was considered in the Parkinson's study. How much overlap or how much sameness is there between those two scales? And are you trying to match the patients in terms of the severity of the psychosis compared to what you saw in the PDP study?

Just a little bit more color on how the individual scales may parallel one another in those trials, so we can get an idea of the types of patients and the effect size that you may be considering in the study.

Hi, Bert. So I think the key thing in terms of which scales we use, remember that in Parkinson's psychosis, there hasn't been a great deal of work. We are right at the forefront of work in the area. And there is no scale that has been specifically developed or designed for those patients.

The SAPS, as you recall, was adopted from schizophrenia and then further adapted to focus on the hallucination and delusions domains. Importantly, through our own work, we were able to refine it further into the SAPS-PD and really, I think, provided something to the field there.

However, the limitation of the SAPS in terms of measuring psychosis is that there needs to be involvement of the patient who is able to be able to understand and very clearly input into the assessments on that scale.

The difference with our ADP program is that not only do the patients have psychosis, but, importantly, they have a profound underlying condition, obviously a cognitive impairment, that is inherent as part of their Alzheimer's disease. And, therefore, it would be impossible to use the SAPS in these patients.

The NPI as such, is a scale which was developed specifically for this in these populations. And we are using the nursing home version, which has been validated in exactly the population that they are looking at in the -019 study.

It measures many of the same things, but it also has the potential for us to account for broader number of potential benefits: agitation aggression, and obviously in captured sleep as well, which we have seen time and time in previous PDP studies, an improvement in sleep maintenance. Given this is a very similar population in terms of impairments of sleep, the sleep disorders in these patients are important in terms of their pathology.

We would hopefully see similar benefits with sleep and the NPI and H provides us with a tool which will actually capture that.

Importantly, one of the great lessons that we learned in the earlier PDP program, was that patients with milder disease tend to respond more to the being in the study approach leading to a higher placebo response. So whereas we, in -020, ensured by increasing the entry criteria or the need on the entry criteria for moderate to severe disease, we have a very similar structure in the entry criteria into the -019 study.

That's very helpful. Thank you very much for the color. I appreciate it.

Charles Duncan, Piper Jaffray.

What I was going to ask is about the [A/D] study. In addition to an enrollment update, what I was really wondering about is the geographic focus seems really great in terms of executing this study and getting a signal. But do you believe that you may need to replicate that study in a broader patient population or geography in Phase II, or do you think that that could inform the results of that study, a positive could inform well A Phase III program.

Thanks, Charles, and sorry about the technical difficulties. It usually happens to me. No, I think the study is a good study. And a positive from this study will really put us in a very good stead for taking the next steps. So if we get a fair positive outcome out of this study, the results will stand.

It seems like there are similarities in this patient population despite the geographic focus for any eventual commercial population because, like you were saying with these patients, perhaps more of them are already institutionalized.

Absolutely.

Okay. Thanks for the added color, guys, and sorry for the technical issue.

And with no further questions, I would now like to turn the call back over to Dr. Hacksell for 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 so much.

Ladies and gentlemen, that concludes today's presentation. You may now disconnect. Have a great day.