ACADIA Pharmaceuticals Inc (ACAD) 2014 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the ACADIA Pharmaceuticals third-quarter 2014 financial results conference call. My name is Jackie, and I will be your coordinator for today.

(Operator Instructions).

I would now like to turn the presentation over to Ms. Lisa Barthelemy, Director of Investor Relations at ACADIA. Please proceed, ma'am.

Thank you. Good afternoon and welcome to ACADIA's third-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 November 24, 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 NUPLAZID development program and precommercial activities, and then we will open the floor up 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; 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 NUPLAZID; the timing, content or likelihood of regulatory meetings, filings or approvals, future developments, launch and commercialization of NUPLAZID; 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. To start off, let me address our third quarter and recent highlights, including what we mentioned in our press release today about the change in timing of our NDA submission of NUPLAZID. As you are aware, we now plan to submit the NUPLAZID NDA for Parkinson's disease psychosis or PDP in the first quarter of 2015.

We had previously planned to submit the NDA near the end of this year. The decision to move back the planned submission is based on additional time required to complete preparations needed to support the FDA's review of NUPLAZID.

The change in submission timing is not a result of any change to NUPLAZID's clinical or safety profile nor is it the result of any interaction with or request for information from the FDA.

We also reported today that we have successfully completed our drug-drug interaction program and our stability program for registration batches. This past quarter we announced that the FDA granted breakthrough therapy designation for NUPLAZID. This was a major achievement for our team and the program, reinforcing the large unmet medical need for the treatment of PDP and underscoring the importance of the NUPLAZID program.

Also, in this quarter, we announced that the FDA has provisionally approved NUPLAZID as our trade name for pimavanserin. In addition to providing a therapy for PDP, we believe that pimavanserin has the potential to transform the treatment of psychosis in a wide range of other neurological and neuropsychiatric disorders that are poorly served by existing antipsychotic drugs.

Alzheimer's disease psychosis or ADP is another area with severe unmet medical needs. We continue to advance enrollment in our Phase II study of pimavanserin in Alzheimer's disease psychosis, a study that was initiated late last year.

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.

We are also actively planning additional studies in our lifecycle management program to further characterize potential aspects of pimavanserin's clinical profile in areas such as sleep disturbance in PD patients and schizophrenia. Roger will provide you with additional information on these studies later in the call.

On the commercial front, Terry and his team continue to make important progress in advancing our preparations for the future launch and commercialization of NUPLAZID for PDP. We are building out our commercial capabilities and expanding our existing infrastructure, including commercial level manufacturing, medical affairs, quality control and compliance capabilities.

As far as commercial manufacturing, we are gearing up to be ready for the launch. As in our -020 Study and our other clinical studies, if approved, the 40 mg dose of NUPLAZID will be administered as two 20 mg tablets taken together once a day.

NUPLAZID will be manufactured by third parties on a commercial scale well in advance of our launch.

Terry will provide additional information later in the call about the market research we have conducted to understand the PDP market landscape, the work that has been done to understand foundational access and reimbursement, and what we are doing to build out the commercial organization and infrastructure.

Advancing our lead drug candidate NUPLAZID towards registration and preparing for a successful commercial launch remain our high priorities at ACADIA. We are excited about the transformational potential of NUPLAZID to improve the lives of patients with PDP.

In addition to NUPLAZID, we have a couple of other programs in our R&D portfolio. Together with Allergan, we have clinical stage programs in the areas of chronic pain and glaucoma. Allergan also is developing an additional development candidate, which was advanced last year from our collaborative research as a potential new treatment for glaucoma.

Let me now turn the call over to Steve, who will review our third-quarter financial results.

Thank you very much, Uli. Let me start by saying that our financial results for the third quarter continue to track our operating plan and reflect the strategy that we previously described. That is to do two things that I think are probably pretty self-evident to everyone on this call, but they are important. And that is first to increase our R&D investment in order to aggressively advance and build value in our NUPLAZID pimavanserin franchise and, second, to invest in preparing the organization for a US launch of NUPLAZID.

R&D expenses for the quarter increased to $17 million from $7.3 million for the comparable quarter of 2013. As noted in the release, this is due primarily to increased costs incurred in our development program for NUPLAZID.

I should also note that R&D expenses for the just completed quarter include $1.4 million in stock-based compensation expense.

G&A expenses increased to $8.1 million for the third quarter from $3.8 million for the comparable quarter of 2013. This reflects our continued investment in commercial preparations for the planned launch of NUPLAZID, and I will note here too that G&A expenses for the just completed quarter include $2.5 million in non-cash stock-based compensation expense.

I will now turn to our cash position. I think as everyone on this call probably recalls in March of this year we completed an equity offering raising net proceeds of approximately $197 million. This significantly bolstered our financial position. Today we continue to maintain the strong cash position. We ended the third quarter with $337.8 million in cash and investment securities.

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 in other indications.

Importantly, we have a very strong cash runway that we believe will enable us to expand and build additional value in our pimavanserin franchise and fund commercial activities. These activities 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.

We currently anticipate that under our current operating plan our cash resources will be sufficient to fund our operations into at least the second half of 2016.

With that, I have concluded remarks regarding our financial results, and I will turn the call over to Roger, who will provide you with an update on our NUPLAZID development program.

Thank you, Steve, and good afternoon. Let me first start with an update of the NUPLAZID program for PDP, and then I will discuss additional studies in other areas of unmet medical need.

As Uli mentioned in the beginning of the call, we are planning to submit our NDA in the first quarter of 2015 in order to complete preparations needed to support the review of NUPLAZID. We are diligently completing these preparations.

Importantly, we have made good progress in advancing key areas of our NUPLAZID program toward registration. This includes completing our DDI program and completing our registration stability program. In parallel, we continue to conduct our ongoing Phase III PDP open-label safety extension trial referred to as the -015 study, which is designed to continue until NUPLAZID is commercially available.

This 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 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 nine 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.

As you heard from Uli, we were delighted by FDA's recent decision to grant Breakthrough Therapy designation for NUPLAZID for Parkinson's disease psychosis. As a way of background, the Breakthrough Therapy designation was created by FDA to expedite the development and review of drugs that are intended to treat serious or life-threatening conditions.

For indications without approved therapy, drugs qualifying for this designation must show a substantial and clinically meaningful effect on an important outcome when compared to placebo. We are pleased that NUPLAZID met these criteria.

The Breakthrough Therapy designation is distinct from priority review, which can also be granted for the same drug during NDA review.

As many of you are aware, the vast majority of FDA's Breakthrough Therapy designations have been granted to drug candidates targeting cancer, infectious and orphan diseases. We believe NUPLAZID may be one of the first drug candidates to receive Breakthrough Therapy designation from the Psychiatry Division of the FDA.

While our main priority is a planned NDA submission to the FDA, you may recall during our call last quarter that we had outlined our path to registration in Europe. We plan to submit our application to the EMA around six to nine months following submission of the NDA.

Let me now turn to our program with pimavanserin for Alzheimer's disease psychosis or ADP. We continue to advance enrollment in the Phase II -019 Study, a randomized, double-blind, placebo-controlled trial designed to examine the efficacy and safety of pimavanserin in about 200 patients with ADP.

The study is assessing several key efficacy endpoints in addition to psychosis, including agitation, aggression, and sleep/nighttime behavior, as well as additional exploratory endpoints, including the cognitive status of patients. The design of this trial will allow us to explore the potential benefits of pimavanserin in this patient population and to inform us on an optimal design for future studies in this program.

We have also incorporated many study design concepts from our successful pivotal PDP trial into the -019 ADP study design. Beyond ADP, we are planning additional studies in our lifecycle management program for pimavanserin. Sleep disturbance is a frequent and major problem for patients with neurological disorders, including Parkinson's and Alzheimer's disease.

Research shows that sleep disturbances in Parkinson's disease can exacerbate psychosis, worsen cognition, lead to more falls and increase caregiver burden. Our own market research confirms this large unmet medical need.

As you may recall, we observed significant non-sedating sleep-related benefits of pimavanserin in clinical studies, including our pivotal Phase III -020 PDP study. We are currently planning for a study with pimavanserin in Parkinson's patients with sleep disturbances in the first half of next year. We will provide information on trial design at initiation of the study.

Another area that represents a large unmet medical need and tremendous commercial opportunity for pimavanserin is schizophrenia. Compliance is a major challenge in patients with schizophrenia. The consequences of poor compliance can be severe and lead to hospitalization and add to the high cost of treating the patient.

We are excited about the potential as monotherapy in the maintenance phase of schizophrenia, and that is a period of time between acute psychotic episodes. In this use, we believe pimavanserin's selective serotonin inverse agonism will allow for effective symptom control whilst avoiding interactions with dopamine and other receptors that are linked to many of the severe side effects caused by existing antipsychotics.

As a stand-alone treatment, we believe pimavanserin can provide a well-tolerated maintenance therapy for patients that may result in better compliance compared to existing antipsychotic drugs.

We are currently in the planning stages of this study and aim to initiate it during the second half of 2015.

I will now turn the call over to Terry, who will provide an update on our commercial activities.

Okay. Thanks, Roger, and good afternoon, everyone. As Uli mentioned, we have been working hard on preparations for the successful launch of NUPLAZID. I would like to take the time now to review in more detail the work we are conducting and the progress that we have made.

Over the last year, the commercial team has been focused on thoroughly understanding the PDP market landscape, preparing the product for commercialization and at the same time building out and preparing the commercial organization for launch.

So I will start with a brief description of the body of work we have now completed. We have conducted extensive market research with over 800 PDP-treating neurologists, psychiatrists and long-term care clinicians. Included in this research was a chart audit of over 700 PDP patients.

In addition, we have conducted market research with PDP patients and their caregivers to understand how they currently view PDP and what is important to them in terms of their unmet needs.

As Uli mentioned, we also completed our foundational access and reimbursement research, which was conducted with key decision-makers for payers covering 168 million lives.

Additionally, we have conducted scientific advisory boards with leading movement disorder specialists and PDP-treating psychiatrists in order to gain insight regarding how to position NUPLAZID to best address the needs of patients, caregivers and physicians.

So I will shift gears now and share with you some of the important findings from this work. Coming out of this work, we had some demographics. It turns out the average age of a PDP patient is 74 years, which roughly approximates the mean age in our Phase III study population.

The majority of PDP patients are males, and interestingly the majority of PDP patients suffer comorbid sleep disturbances. A majority of PDP patients are seen and treated in physicians' offices, and almost 90% of PDP patients have caregiver support with 74% requiring daily care.

Having studied the patients and the market, our next step was to identify the number of PDP patients currently being treated and who was the healthcare professional directly involved in treating their PDP.

So normally when identifying product prescribers for a launch, you would first look to the industry and market data for the number of patients with a target disorder and then the number of physicians who treat them. In the case of PDP, this was impossible because, one, PDP is not separately coded as a disease and, two, while atypical antipsychotics are used off-label in PDP, they are also used in many other disorders.

So we solved this problem by developing specific criteria to define PDP patients based upon their treatment history. We then applied these criteria to blinded patient claims data in order to determine the number of PDP patients being treated and cross matched this data to prescription claims data. This gave us the approximate number of physicians treating PDP, as well as the breakdown of these prescribers by specialty.

We estimate that there are roughly 11,000 PDP treating physicians, the majority of which are neurologists. We also now understand the important role played by psychiatrists in PDP, as well as physicians treating PDP in a long-term care setting. To address these three specialty segments, we plan to establish a sales force of around 135 sales representatives.

Based on additional findings from our research, it is clear that PDP-treating physicians are frequently dissatisfied with the off-label use of atypical antipsychotics due to the safety and tolerability profile of these atypicals, coupled with their black box labeling and the impact these drugs can have on motor function.

So consequently it's clear that physicians see a high unmet need for a safe and effective treatment for PDP that doesn't impair motor control. Interestingly, this was further confirmed by work we did to understand what's important to treating physicians. In market research, we asked physicians to identify and rank product attributes most important in the treatment of PDP.

The top three attributes were, one, does not negatively impact motor symptoms; two, resolves psychosis fully; and, three, has a low incidence of side effects. Interestingly, these are attributes which compare favorably with the profile we have observed with NUPLAZID in the clinic.

So, in summary, the findings from our market research have helped us to understand physicians' current approaches to diagnose and treatment of PDP; the unmet medical needs as viewed by these physicians; what drives their prescribing behavior; and, most importantly, how NUPLAZID can meet the needs of these patients, caregivers and prescribers.

As I mentioned earlier, we have completed our foundational access and reimbursement work with payers. Based on this work, we estimate the market is approximately a third commercial, a third Medicaid/Medicare Part D low income subsidy and a third Medicare Part D standard.

Our access and reimbursement work also provide us with insights with regard to the perceived value of NUPLAZID in terms of price and formulary placement. Our findings were very encouraging as payers have generally given us a very positive response. The attributes of NUPLAZID they valued most were the reduction of psychotic symptoms, safety and tolerability, no worsening of motor function and delaying institutionalization.

Payers are aware of the unmet need and the shortcomings associated with the off-label use of atypical antipsychotics, and they told us that with on-label use they could see a place for NUPLAZID on their formularies.

We are continuing to refine our access and reimbursement work, including pricing. While we will not publicly announce the price of NUPLAZID prior to launch, one point of reference we have used in our pricing work is the price of branded atypical antipsychotics such as Abilify, which at the 20 milligram dose is currently priced at approximately $13,000 per year.

So summing up our view of the PDP market: as we referenced previously, there are approximately 1 million Parkinson's disease patients in the US and about 40% or 400,000 of them with PDP.

In addition, our market research tells us that approximately half of the 400,000 PDP patients have what physicians often refer to as disruptive PDP symptoms.

And as you know, there are no FDA approved drugs for the treatment of PDP. Currently atypical antipsychotics are used off-label. These drugs have black box warnings, serious safety and tolerability issues and impede the effectiveness of therapies needed to treat the motor symptoms of PD.

We believe NUPLAZID has the potential to offer the first safe and effective treatment for PDP patients, as well as offering physicians a safe and effective alternative for earlier intervention. This reinforces our view of the attractiveness of the opportunity.

Lastly, I wanted to briefly touch on the commercial internal infrastructure needed to successfully launch NUPLAZID. We are currently building and we are on track to complete on time the necessary support systems for launch, including product distribution, core operational data management systems, all sales force automation systems, as well as third-party logistics integration.

We are pleased with the progress we have made in preparing the commercial organization for launch and look forward to taking our next steps as we draw closer to submitting our NDA for NUPLAZID.

So now I will turn it back over to Uli.

Thank you, Terry. In summary, we are working diligently on moving the NUPLAZID program toward registration, preparing for submission of the NDA in the first quarter of 2015, followed by a submission of an MAA in Europe six to nine months thereafter.

We continue to make important progress in building our commercial capabilities, and on the development side, we are actively pursuing a number of indications in which pimavanserin may represent a novel approach to treating certain disorders. We continue to make important additions to our team and are putting significant effort into hiring high quality and experienced leaders as we build out key areas of the organization to manage the planned launch and commercialization of NUPLAZID.

Importantly, we're in a strong financial position to launch our lead drug candidate NUPLAZID for PDP and also to further explore other areas where pimavanserin can have a profound impact in the treatment of other disorders.

It is an exciting time to be at ACADIA. All of us here remain deeply driven by our collective goal in bringing forward new medicines like NUPLAZID to patients suffering from neurological and related CNS disorders.

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

(Operator Instructions). Alan Carr, Needham.

Thanks for taking my questions. A couple of them. One of them, do you see this -- the NDA submission as something that is going to be earlier in the first quarter or later in the first quarter, and would you be able to contract that timeline between the NDA submission and the MAA submission? Then, also, does this shift have any impact on the commercial prep timing? Are you delaying any of the commercialization prep work?

Then, I guess, a bigger picture. You have talked about spending your resources on lifecycle management for pimavanserin, but do you have any plans, any business development plans? Thanks.

Many questions, so let me start with the NDA submission. All we guide on is that we expect to submit in the first quarter of 2015. When it comes to timing for the submission of the MAA to Europe, we have guided somewhere between six to nine months. We don't want to guide any closer than that because we expect that it will take some time to really go through the translation of the submission to the FDA before we can submit the European application.

The commercial preparation work is moving on as planned, and we, are, in fact, not delaying anything. We are ready for all kinds of scenarios, and we just want to make sure that everything really is done to ensure a successful commercial launch.

You had a fourth or fifth question. I don't remember which one that was?

I think it related to lifecycle and business development.

Okay. So when it comes to business development, first of all, when it comes to pimavanserin or NUPLAZID itself, all we have said is that we obviously want to do it alone in the US. When it comes to potential partnerships ex-US, we may decide to partner pimavanserin ex-US, but we have not made such a decision now. Really what we are doing, which I think is the smart thing to do, is to build additional value in pimavanserin and before we make a decision, we may very well make a decision to do it alone in Europe as well. But again, we will come back to that. When it comes to other aspects of BD such as potentially adding compounds that would supplement NUPLAZID on the market, what we have said is that we'll really take a close look at what is available out there, but we have no specific plans at the present.

Great. Thanks very much.

Cory Kasimov, JPMorgan.

Thanks for taking the questions. The first one I have for you is regarding NDA timing. And this is something that has been in the works with a similar timeline on it for quite a while now. So I guess I'm trying to get a little bit of a better understanding of why do you need this extra time at this point, even though it's still a relatively short amount of time.

Are there additional analyses that you decided to do after meeting with the FDA or as part of the submission you sent them to get the breakthrough designation?

So what we really can say is that the timing change is related to the fact that we have additional preparations that are required to support the FDA's review of NUPLAZID, and that is not really related to any kind of major hurdles. We have completed the drug-drug interaction program. We have stability as required in our registration program.

We have not had any kind of interactions with the FDA that pushes this. It's just that we need some more time to complete the preparations. It is just a timing issue, nothing else.

Okay. Fair enough. And then I had one follow-up question for you regarding the market research, and I appreciate you providing all the details this afternoon on that. Just curious if you have done or begun to or really started doing a similar type of exercise as with regards to Europe and curious how you believe that may compare with the US?

Hi, this is Terry. We do have a plan in place for our market research in Europe. We have got things in place to move forward with that. It's really too early to tell how that is going to compare until we have the research in.

Okay. Thanks, guys.

(Operator Instructions). Charles Duncan, Piper Jaffray.

Thanks for taking my question, and I guess I need to ask a similar question. It doesn't appear to be a big deal in the grand scheme of things, but I am wondering if the timing with regard to the NDA is related to any new observation with regard to that drug-drug interaction study or the stability work that you have been doing, or is this simply a Gantt chart thing where you are preparing the submission, for making the submission?

Hi, Charles. This is Roger. So I think you probably hit it in the last bit there. With regard to the data, we have got no data that would suggest we have developed any problem with the clinical data with the drug product. All those things have gone according to plan, not just the drug-drug interactions, but the stability program, all have gone pretty smoothly.

Importantly, looking at the safety profile of the drug, it really continues to be very consistent with everything we have seen in the past and, obviously, with the basis of that was really the submission that we made to FDA, and there is nothing changed in terms of the risk-benefit of the drug.

So I think you expressed it pretty well. It's just a matter of timing. You can call it a Gantt chart, if you wish.

Okay. Good deal. That's helpful. Thank you. Then with regard to the ADP progress, I doubt you will tell us exactly where you're at in terms of enrollment, but could you let us know when you think that will be completed? And then when you look at ADP, the psychosis component versus some of the other things you are studying such as the Alzheimer's education component, what do you think is the most important thing to be looking at within that study?

Let me start simply by saying that what we have guided is that the study will take about two years and that we started the study late last year. Roger, you can take the second part of the question.

In terms of the outcome of the study, this study is designed for Alzheimer's psychosis, and that will remain the primary focus of the study and how you should view the data coming out. And that's in line with the definitions of the condition and what has been agreed with the FDA.

However, pimavanserin is an interesting drug and the potential that it has may well impact other aspects of patients' lives with late stage Alzheimer's disease in the broader aspects of the behavioral disturbances. This is a Phase II study, and I think it would be -- one it would be a shame, and two, it would be an injustice to the drug not to consider that there may well be other benefits that are given to patients using pimavanserin during this condition.

And also, it will help us in terms of looking at what the next steps are following the data from the study. It may well be that it either helps us refine populations or, in fact, we could potentially look at other indications within the spectrum of the behavioral disturbance.

Last question is regarding formulation work and possibly lifecycle management. Have you looked at the drug within different formulations in which you might be able to give the drug over time or for a longer-term dosage formulations such as a depo?

It's a very interesting question. Now we already have a long-duration of the compound. So, in fact, even if a patient doesn't take the drug one day, the plasma level will be about the same when he or she has reached the plasma equilibrium.

The molecule itself doesn't lean itself to be coupled to a long chain fatty ester. So it cannot do what companies tend to do with their antipsychotic drugs here what we could do potentially and we still haven't developed the full lifecycle management plan for pimavanserin yet is to obtain other kinds of long-duration preparations of pimavanserin.

I think there are other things that we are considering, and we will certainly provide more information on that over time.

Thanks, Uli. Thanks, Roger, for the added information.

Ladies and gentlemen, with no further questions, I would like to ask Dr. Hacksell to proceed with closing remarks.

Right. 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.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect, and have a great day.