ACADIA Pharmaceuticals Inc (ACAD) 2014 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the ACADIA Pharmaceuticals second quarter 2014 financial results conference call. My name is Lacey 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 Lisa Barthelemy, Director of Investor Relations at ACADIA. Please proceed.

Good afternoon, and welcome to ACADIA's second 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 August 19, 2014.

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

We will begin our call today with some introductory remarks and brief comments regarding our recently announced financial results. Following this, we will provide you with an update on our development programs and business, and we will then open the floor to your questions.

Before you 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, our commercialization plans and our strategy, including the timing, results, or implications of clinical trials or manufacturing development; the benefits or advantages to be derived from, future approval of and the commercial potential for our product candidates, in each case including pimavanserin; the timing, content, or likelihood of regulatory meetings, filings or approvals; future developments and commercialization of pimavanserin; the expansion of pimavanserin into additional indications; and our future expenses, cash position, and usage and growth potential.

During our call today we may use words such as anticipate, believe, could, expect, intend, may, plan, potential, predict, project, should, or the negative of those terms and similar expressions that convey uncertainty of future events or outcomes to identify these forward-looking statements. 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, including our report on Form 10-Q filed earlier today. 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 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.

The first half of 2014 was a productive and exciting period for ACADIA. We continued to make important progress in advancing our lead program with pimavanserin for Parkinson's disease psychosis, or PDP, toward registration. Currently, no drug is approved in the 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 therapy and has the potential to be the first safe and effective medicine to treat PDP without compromising motor control. During the second quarter, we completed our pre-NDA meetings with the FDA and we are pleased by the positive interactions with the agency. Our focus remains on completing NDA-enabling activities for pimavanserin and I am delighted to report that we remain on track for a planned submission of a new drug application, or NDA, near the end of this year.

On the commercial front, Terry and his highly experienced team have been working diligently on building the commercial infrastructure necessary to support the planned launch of pimavanserin for PDP in the United States.

In parallel with the advancement of our PDP program in the United States, we also have outlined the path to registration for pimavanserin in Europe. Following informative interactions with regulatory agencies from multiple EU member states and in consultation with our European regulatory advisors, I am pleased to report that we plan on submitting an application to the EMA next year, around 6 to 9 months following our NDA submission.

In addition to PDP, we believe pimavanserin has broad application and may transform the treatment of psychosis in a range of other neurological and neuropsychiatric disorders that are poorly served by existing anti-psychotic drugs. Given pimavanserin's demonstrated and psychotic effects, benefits on sleep, and favorable safety profiles that we've observed in clinical trials to date, we are excited about the opportunity to evaluate pimavanserin in other indications.

To that end, we have continued to advance enrollment in our phase 2 study of pimavanserin in Alzheimer's psychosis or ADP. As is the case with PDP, no drug has been 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 our ongoing ADP study, we are planning other studies in our lifecycle management program to further characterize potential aspects of pimavanserin's clinical profile and to position it for other indications. During the first half of this year, we also successfully completed a public offering and significantly strengthened our financial position. Importantly, we are well-capitalized to be able to expand the breadth of and build additional value in our pimavanserin franchise and invest in our commercial activities.

We have also continued to bring in seasoned professionals to ACADIA, and most recently announced the appointment of Steve Davis as our Executive Vice President, Chief Financial Officer, and Chief Business Officer. It is my pleasure to introduce Steve on the call today. Steve is a highly accomplished industry executive with extensive financial and operational experience and a proven track record of building and growing companies.

We are delighted to have Steve on board and look forward to his contributions as we pursue our strategy of building a leading US specialty neurology franchise, using pimavanserin as the foundation. On that note, I will now pass the call over to Steve, who will comment on our second-quarter results.

Thank you very much, Uli. Let me first start off by saying that I am delighted to be a part of the ACADIA team. I've had the pleasure to interact with many of you in other venues and I'm happy to reconnect here. It is indeed a very exciting time to be joining the Company.

Our second-quarter financial results continue to reflect the strategy we described previously. That is simply to increase our R&D investment in order to aggressively advance and build value in our pimavanserin franchise. Our R&D expenses increased to $13.8 million for the second quarter from $7.1 million for the comparable quarter of 2013. This was due primarily to increase costs primarily associated with NDA-enabling activities in our pimavanserin development program. R&D expenses for the just completed quarter also include $1.1 million in stock-based compensation expense.

G&A expenses increased to $8 million for the second quarter from $2.5 million for the comparable quarter of 2013. This reflects our continued investment in commercial prelaunch activities. I should point out that G&A expenses for the just-completed quarter include $3.2 million of the $8 million in stock-based compensation expense.

Finally, let's turn to our cash position. In March, we raised net proceeds of approximately $197 million, which significantly bolstered our financial position. We continue to maintain a strong cash position, ending the second quarter with $354.5 million in cash and investment securities.

We used approximately $14.8 million in cash during the second quarter to fund our operating activities. In future periods, we expect our cash used in operations to increase as we continue to advance our PDP program to an NDA, conduct commercial activities, and execute on our pimavanserin lifecycle management program.

Importantly, we have a strong cash runway that really positions us well on two very important fronts. It enables us to expand and build additional value in our pimavanserin franchise through work we are doing, as Uli mentioned, in ADP and planning in sleep and schizophrenia. And it also equips us to fund important commercial activities. These include prelaunch activities designed to optimize positioning for the planned PDP launch as well as subsequent sales and marketing efforts through and beyond the projected timeframe of our market launch.

As previously guided, we currently anticipate that under our current plan, our cash resources will be sufficient to fund our operations at least into 2017. With that, I have concluded my remarks and I will turn the call over to Roger, who will take you through an update on our pimavanserin program.

Thank you, Steve, and good afternoon. As mentioned, we continue to make important strides in advancing our pimavanserin PDP program toward registration.

During the second quarter, we held routine pre-NDA meetings with the FDA. These interactions are positive and enabled us to outline and discuss our planned submission and how the NDA will be organized. Based on these positive interactions, we remain on track for the planned NDA submission near the end of 2014.

Importantly, our team has remained focused on completing the remaining activities in our pimavanserin PDP development program that are needed for the submission of our NDA. This includes aspects of the CMC development, including stability testing of the pimavanserin registration batches and supported studies including drug-drug interaction studies.

I am pleased to report that our CMC program has continued to advance as planned. You may recall that our three required registration batches of pimavanserin were successfully manufactured at the commercial launch scale. And registration stability testing on these drug product batches was initiated last October.

During the second quarter, we completed an assessment on the first six months of stability data from these registration lots and, importantly, confirmed that these data are consistent with historical data observed with our clinical trial formulation. We are continuing to accumulate data in our registration stability program, which is designed to comply with the ICH guidelines of 12-month stability of regulatory batches and to meet the regulatory filing requirements for major markets worldwide.

In addition, we continue to make very good progress with supported studies, which include drug-drug interaction or DDI studies. The profile of pimavanserin appears consistent with what we have observed to date in our long-term PDP safety extension studies.

Our phase 3 PDP open label safety extension trial, referred to as the -015 study, is designed to continue until pimavanserin is commercially available. This ongoing study has allowed us to generate a large amount of valuable long-term safety data regarding the use of pimavanserin in patients with PDP.

We have already far exceeded the ICH guideline for a quiet one-year exposure, 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 2 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 treatment of PDP. Whilst our main priority is our planned NDA submission with the FDA, we have also outlined the path to registration in Europe. As Uli mentioned, we plan to submit our application to the EMA next year around 6 to 9 months following the submission of the NDA.

As you may recall, we have completed a series of interactions with regulatory agencies from multiple EU member states. These initial interactions were very informative. We believe it is clear that our pivotal phase 3 -020 study was seen as a strong study. In addition, as is the case of the United States, there are concerns surrounding the current use of atypicals in this patient population.

Following consultation with our European regulatory advisors, and as we have completed our pivotal clinical program, we have decided not to apply for scientific advice to the EMA. We believe the optimal and most efficient path forward in the EU is to submit a marketing application to the EMA.

Let me now turn to our lifecycle management program for pimavanserin in Alzheimer's disease psychosis or ADP. As you may recall, we initiated the phase 2 trial for ADP late last year. We continue to advance enrollments in this randomized double-blind placebo-controlled trial referred to as the -019 study, which is designed to examine the efficacy and safety of pimavanserin in about 200 patients with ADP. We are excited about the design of the study, which we believe provides an excellent opportunity to explore the potential benefits of pimavanserin in treating the psychosis as well as the related behavioral disturbances associated with Alzheimer's disease.

Importantly, we have incorporated many study design concepts for our successful pivotal PDP trial into the -019 ADP study design. Beyond ADP, we are planning additional studies in our lifecycle management program designed to further characterize and highlight aspects of pimavanserin's clinical profile in other neurological and neuropsychiatric indication areas.

One area of keen interest for us is sleep disturbance, which represents a frequent and major problem for patients with neurological disorders including Parkinson's and Alzheimer's diseases. Benefits on sleep in this population are of particular importance because sleep disturbances in PD can exacerbate psychosis, worsen cognition, and lead to more falls and increased caregiver burden. Poor nighttime sleep quality and excessive daytime sleepiness are associated with a lower quality of life for PD subjects and their caregivers.

We have observed significant non-sedating sleep-related benefits of pimavanserin in clinical studies, including our pivotal phase 3 -020 PDP study. In the -020 study, pimavanserin demonstrates a significant improvement in nighttime sleep. And this improvement was not accompanied by any sedation or hangover effect. Pimavanserin also produced a significant improvement in daytime wakefulness in PDP patients.

As you may recall, the positive effects of pimavanserin on nighttime sleep and daytime wakefulness did not correlate with psychosis measures, thus indicating that sleep and wakefulness improvements of pimavanserin may represent independent treatment benefits. We believe that an additional study in the sleep area may allow us to further characterize and highlight these potentially important clinical benefits.

Another area that represents a large unmet medical need and a tremendous commercial opportunity for pimavanserin is schizophrenia. Today, compliance is a major issue in patients with schizophrenia. In fact, 74% of patients discontinue their antipsychotic medications because of lack of efficacy or intolerable side effects according to a landmark government study financed by the National Institute of Mental Health. Furthermore, the consequences of poor compliance in schizophrenia can be severe, lead to hospitalization, and add to the high cost of treating the patient.

We are very excited about the potential of pimavanserin to be a monotherapy in the maintenance phase of schizophrenia. In this application, we believe that pimavanserin selective 5HT2-A blockade could allow for effective symptom control whilst avoiding interactions with dopamine and other receptors that are linked to many of the side effects caused by existing antipsychotics. We believe a novel well-tolerated maintenance therapy could result in better compliance for patients with schizophrenia and are planning a study in this area.

I will now turn the call back over to Uli.

Thank you, Roger. We continue to be excited about the prospect of pimavanserin to be the first drug approved in the United States to treat PDP. PDP represents what we believe is an ideal lead indication and specialty market opportunity for pimavanserin. Our strategy is to commercialize pimavanserin for this indication in the United States by establishing a specialty sales force focused primarily on neurologists and a small group of high prescribing psychiatrists and long-term care physicians.

During the second quarter, our commercial team continued to conduct precommercial activities and made progress in preparing our supply chain distribution, preparing the product in terms of optimizing product positioning, and preparing the organization in terms of structure, size, and timing. These ongoing efforts are designed to ensure that the robust commercialization process and optimal strategy are in place to position ACADIA for success in the planned US market launch.

Our most recent market research efforts have focused on understanding how pharmacy and medical director decision-makers in managed care settings view currently available treatments for PDP. Our findings indicate that payers recognize that there are no treatment options on the market with an approved indication to treat PDP, and that safe and effective treatment of PDP is a significant unmet medical need and is a value driver for a product treating PDP.

As was found in our market research with physicians, payer source indicated that the ability to treat the PDP symptoms without impacting motor control is one of the most important attributes in a drug for PDP. As we have said before, because no drugs are approved to treat PDP in the United States, today physicians frequently resort to off-label use of existing antipsychotic drugs, even though these drugs carry a black box warning for use in elderly patients with dementia-related psychosis due to increased mortality and morbidity.

Many physicians have indicated that they will only consider initiating treatment with current therapies when the patient's symptoms become disruptive to the caregiver and/or to the patient's family. In addition, physicians face a dilemma because current antipsychotics' can worsen motor-symptoms in PDP patients by counteracting the customary dopamine replacement therapy for the motor-symptoms in Parkinson's disease. Because of its innovative non-dopaminergic 5HT2-A inverse agonist mechanism of action, pimavanserin avoids this dopamine dilemma and has the potential to be the first safe and effective medicine to treat PDP without compromising motor control, thereby significantly improving the quality of life for patients with Parkinson's disease.

Consequently, with pimavanserin, physicians could have a treatment option that could be initiated at the onset of PDP symptoms without the safety concerns in off-label use of currently available atypical antipsychotics. The more we learn about how various stakeholders' view PDP and its unmet needs, the more excited we are regarding the potential for pimavanserin to improve the lives of people impacted by their disease. We believe that, if approved, pimavanserin has the profile to become the gold standard in the management paradigm for PDP.

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

In addition, we have two advanced unpartnered preclinical programs, our ER-beta and Nurr1 programs, which may offer novel approaches to treating Parkinson's disease and other neurological diseases. Preclinical studies in our ER-beta program as a novel pain treatment are supported by grants from the National Institute on 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 Nurr-1 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 add that the excitement here at ACADIA is palpable. We are growing as a Company and establishing the foundation to transform ACADIA into a successful development and commercial organization.

Our priorities remain clear. We are focused on our planned submission of our NDA for pimavanserin in PDP near the end of this year. We are conducting commercial activities in preparation for a planned successful launch in the US. And we are executing on our lifecycle management of pimavanserin in other areas of significant unmet medical need. We believe that our pipeline of candidates led by our phase 3 pimavanserin program positions ACADIA with multiple attractive commercial opportunities and significant growth potential.

And most importantly, all of us at ACADIA remain committed to bringing innovative medicines like pimavanserin to the market to improve the lives of patients with neurologicaland related central nervous system disorders. Operator, you may now proceed with the Q&A session.

(Operator Instructions) Corey Kasimov, JPMorgan.

This is actually Whitney on for Corey. Pardon if I missed this, but can you just review the rationale for not applying for scientific advice in EMA?

Hi, Whitney. This is Roger. Yes. The -- we actually worked extensively with a leading group of regulatory advisors in Europe. These are the ex-leading regulators from major countries in the EU. And under their guidance, they have advised that really for central advice, it is designed for an earlier program and it is not the role of that to guide on the approvability of an MAA package.

We have reviewed the package or the program that we have done to date, as we said, with various individual member states as well as having a critical review by these regulatory experts of the program. And, based on that, we feel that the appropriate way forward is to go directly with the MAA.

Got it. Then my second question was in your plans in sleep, you mentioned you are designing a trial there. Can you give us any details on that trial or say whether or not it is in PDP or ADP, or you are sort of exploring something else?

The actual first study that we would look at in sleep, we're formulating or crystallizing our ideas now. We would intend it being in PD patients.

Alan Carr, Needham and Company.

To follow up on the previous one, can you give us any sense on timing for either the schizophrenia or sleep disturbance trials, whether or not those might happen late this year or if they are 2015 events? And, also, with respect to gating events for the NDA submission in the US, are you done with all the necessary clinical trials -- supportive clinical trials? Thanks.

So, just in terms of the timing, the schizophrenia study will clearly be next year in terms of start. We are really looking at how the design of that study would best be achieved, the particular patient population that we would want to access and the duration of that study, so the real meat of the study design. And when we pull that together, and we will seek expert advice through the process, we will be able to give a better picture as to, one, not just when we are going to start, but, two, the design and patient population that we are looking at.

In terms of sleep, that will be -- we should be able to get a study in the sleep area started earlier. Whether it will be the end of this year or early next year, we haven't finalized yet. And then, I think your third question was regarding the -- our (multiple speakers) where we are in the NDA process. Yes.

So we are actually well underway in terms of pulling everything together. Obviously, the program involves the -- well, on the supportive studies, it includes a large amount of preclinical work looking at enzymes, and then this clinical work. And then obviously, importantly, is pulling together reports. We are well underway in getting the reports from those -- from that program together and putting it in the format for the NDA.

So the only remaining gating event is finishing up the one year with the stability testing.

That has been the key -- as sort of the key event through this program. So -- and obviously, 12-month stability takes 12 months.

Jason Butler, JMP Securities.

Just a follow-up on the European regulatory strategy. Have you actually had any conversations specifically with members of CHMP that give you confidence that a single trial specifically as going to be sufficient for approval?

I think I mentioned, we have not actually spoken to the CPMP (sic) individual there. But obviously the key thing is that the external experts that we have used, they have been the very leading people until recently in the agency, within that committee. And we sought advice from them, and it is based on that advice that we are moving along the path that we are.

Perhaps I can add to what you said, Roger, that we believe that we have a strong data package and our intention is obviously to use the same data package that was submitted to the FDA also for the EMA application. Our opinion is that this data package should be good enough for approval, but we still need to have the discussions with EMA and we certainly will learn over time if they agree with us. If they don't, we will argue because we think that there are very strong arguments why the current data package should be sufficient.

I think it is important to remember that the challenges facing patients and doctors in the United States are just the same as those facing doctors and patients in the EU. And the concerns, obviously, are the same, both sides of the water.

Okay. And then, can you just walk us through the next steps in the European MAA process? I mean, is the first interaction you will have with EMA and CHMP the submission of the file? Or are there any pre-submission discussions that you will be able to have?

In terms of process, we actually notified them that we are intending to submit the MAA and then some procedural things that follow that. But the key thing will be the submission of the MAA.

(Operator Instructions) Bert Hazlett, Ladenburg.

I have got a follow-up or two again on Europe. So, just to be a little more -- to drill down a little bit more specifically, what are the gating items, then, for the particular submission? I mean, if it is roughly the same package, is the interaction the gating item? Is there additional data to be generated that is the gating item? Could you just describe a little bit more granularity what is required that is different between the two jurisdictions?

Our gating item is the NDA itself. That is what we are focused on. We want to put a successful submission in to the agency and make sure that, when that goes in, that we are fully focused on supporting that to ensure a smooth process through the NDA review.

There are -- the scientific essence of the NDA is exactly the same for the MAA, but there are obviously European styles or slightly different documents that go into it. They are not significantly different from the NDA. Obviously it's all ICH compliant. So clearly, I think, as I say, we want to focus on the NDA and make that successful, and then be able to focus on the MAA to make sure that that, too, is successful.

Okay. Thank you for the color. And then, in terms of your commercialization strategy in the EU, how do you think about potential partners -- interaction with potential partners, if you are considering that? And then, lastly, could you describe -- are you prepared to share any of the data at all, with regard to drug interaction studies or work you have done there at this point?

So just let me take you through our commercial strategy. We have been very clear that we want to build a US specialty neurology franchise in the US, and that we have no intention of partnering pimavanserin, therefore, in the US. In the rest of the world, we have all the options open because we have worldwide rights to pimavanserin.

What we are doing currently is we are building additional value in pimavanserin through various actions, through the NDA that will be submitted to eventual approval through the API program -- sorry, the Alzheimer's disease psychosis program and additional programs that we will move forward with pimavanserin. So we are not in a rush to partner in the rest of the world. Obviously, we can move forward and achieve a registration without a partner, and we can even commercialize pimavanserin in Europe without a partner. But, we will come back to this at a later stage. We are not in a rush currently.

Okay. And then, any of the drug interaction data, is there any data that you might be able to share with us at this particular point with regard to those studies?

We are not giving specifics on that program right now, but we have not seen anything that causes us concern to date.

Sir, we have no questions at this time. Dr. Hacksell, please proceed to closing remarks.

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 your presentation. You may all disconnect. Good day, everyone.