ACADIA Pharmaceuticals Inc (ACAD) 2015 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to ACADIA Pharmaceuticals' third quarter 2015 financial results conference call. My name is Mike 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.

Thank you. And good afternoon and welcome to ACADIA's third-quarter 2015 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 19, 2015.

Joining me on the call today from ACADIA are Steve Davis, our President and Chief Executive Officer; Terry Moore, our Executive Vice President and Chief Commercial Officer; Bob Mischler, our Vice President of Strategy and Business Development; and Ed Harrigan, a consultant to the Company.

We will begin our call today with a business update and brief comments regarding our recently announced financial results. Following this, we will provide you with an update on our NUPLAZID development program and commercial preparations, 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; our commercialization plans; our manufacturing quality systems, and our strategy, including the timing, results, or implications of clinical trials or other development efforts; 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 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.

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. You are cautioned not to place undue reliance on these forward-looking statements, which are made only as of today's date. ACADIA disclaims any obligation to update these forward-looking statements.

I'll now turn the call over to Steve Davis, our President and 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.

Today, my prepared remarks are directed at three areas. First, I'll touch on the news we announced earlier this week about the FDA acceptance of NUPLAZID's NDA with priority review and the work we are doing to prepare for the planned commercialization of NUPLAZID in the United States. Second, I'll discuss the important work we've conducted to date in our comprehensive lifecycle planning project, and our planned expansion of pimavanserin into other areas of significant unmet medical need.

And last, I'll comment on our financial results for the third quarter. Following my review, Terry will lead a review of our precommercial activities for NUPLAZID, and then we'll open things up for questions.

We've had a productive last couple of months. We submitted our NDA for NUPLAZID for Parkinson's Disease Psychosis, or PDP, in early September. We announced on Monday of this week that the FDA accepted the NUPLAZID NDA for filing and granted priority review with a PDUFA date of May 1, 2016. This priority review comes on top of NUPLAZID's breakthrough therapy designation in PDP in 2014.

As a reminder, priority review accelerates the review timeline from 10 months to six months from the date of acceptance of filing, and is granted to drugs that may offer major advances in treatment or drugs that may provide a treatment where no adequate therapy exists. In NUPLAZID's case, we believe that it addresses both of these criteria. That is, it potentially offers a major advance in treatment, as it would be the first and only drug approved for psychosis associated with Parkinson's disease.

I understand that many of you may have questions about the NDA or our interactions with the FDA, but I'd like to note that with the review underway, there's really very little we can say about these topics. So, as I'm sure you'll understand, we don't intend to provide any specific updates or comments on our discussions and interactions with the FDA during the NDA review process.

With our PDUFA date set six months from now, I'd like to discuss the work we are doing to prepare for the planned commercial launch of NUPLAZID in the United States. We continue to build out our commercial team. We are now in the process of recruiting approximately 135 sales reps. We plan to bring the reps onboard around the time of NDA approval.

In addition to the sales force, we've built a commercial team with extensive experience in launching major drugs. The team we have on staff today includes seasoned executives, regional sales managers, regional account managers, marketing and sales leaders, and managed market experts. This team is on plan, as we establish key distribution channels and other important activities required for a successful launch. Terry will highlight these activities in more detail later on the call.

In addition to the commercial buildout, we've hired a very experienced team of medical affairs personnel. This group is making valuable contributions today, as we continue making important strides in educating the physician community about PDP through our Disease Awareness Campaign.

While our top priorities are obtaining FDA approval for NUPLAZID and successfully launching the drug in the United States, we also are conducting very important work in mapping out our multiyear plans to develop pimavanserin in indications beyond PDP. As we discussed on our last quarterly call, in the second quarter, we initiated a significant lifecycle planning project to prioritize the indications we plan to pursue with pimavanserin.

Given the unique and very attractive profile of pimavanserin, together with the long list of potential indications we could pursue, this is a substantial and a very important undertaking. Through the engagement of key thought leaders in the CNS space, a prominent pharmaceutical consulting firm, and the dedicated efforts of a cross-functional internal team, we are laying the foundation for how we plan to develop pimavanserin in the years to come.

On the second-quarter call in August, I noted that we were midstream on this project. We are now in the later stages of this work stream and intend to complete the project around the end of the year. I'm very pleased with the results thus far.

As part of this lifecycle management project, we've taken a ground-up approach to assessing the opportunities in each indication that we are considering, including Alzheimer's and schizophrenia. Though the project is still ongoing, we are far enough along in the process to discuss a few important findings, including one new indication we've not previously discussed.

In addition to our ongoing development of pimavanserin in Alzheimer's disease psychosis, we plan to develop pimavanserin in Alzheimer's Disease agitation, or A.D. agitation. We're elevating the priority of this new program and plan to initiate a Phase II study in AD agitation in the first half of 2016.

Let me describe a few of the underpinnings of these plans. As you are aware, Alzheimer's is one of the most devastating disorders of our time and will continue to grow as our population ages. Alzheimer's disease is a multidimensional disease associated with cognitive decline, psychotic symptoms and behavioral disturbances, including agitation.

Similar to psychosis, agitation -- which comprises agitation and/or aggression -- can have a major impact on the quality of life of patients and caregivers, and it's believed to accelerate cognitive decline. It's also a precursor to nursing home placement. Agitation presents earlier in the progression of Alzheimer's disease than psychosis. And once present, it tends to be recurrent and sustained.

The unmet need in AD agitation is significant. It's believed that there are more than 5 million patients with Alzheimer's disease in the United States. About half of these patients have been formally diagnosed with Alzheimer's. And of the around 2.5 million patients diagnosed with Alzheimer's disease, it's estimated that about 40% to 50% exhibit agitation.

Today, there is no FDA-approved therapy for AD agitation. With no approved therapy, physicians often prescribed typical and atypical antipsychotics off-label for patients with AD agitation. However, as we know, studies have shown that these antipsychotics are associated with increased morbidity and mortality in elderly patients with dementia and carry significant side effect burdens.

Furthermore, one important study, the Catie Alzheimer's disease study, has shown that atypical antipsychotics are associated with worsening cognitive function at a magnitude equivalent to one additional year of disease progression in an Alzheimer's patient. We believe pimavanserin is well-positioned to fill this unmet need in AD agitation.

Preclinical and clinical studies suggest that blockade of the 5-HT2a receptor is associated with decreased agitation and aggression. We believe pimavanserin selective activity at the 5-HT2a receptor may confer efficacy in AD agitation. And, in addition, pimavanserin's favorable side effect profile observed to date in treating elderly patients with PDP, may make it an ideal therapy for AD agitation.

We look forward to pursuing AD agitation in the clinic. We currently are in the planning stages of this Phase II study, and as I mentioned, plan to initiate the study in the first half of 2016. We believe our AD agitation program also strongly complements our ongoing Phase II program in Alzheimer's Disease Psychosis, or ADP, agitation and psychosis are both major components of the broader range of behavioral disturbances in Alzheimer's disease.

We continue to advance our Phase II 019 study with pimavanserin in ADP. And, as previously guided, anticipate enrollment in this study to be completed in the first half of 2016, with topline data reading out in the second half of 2016.

Let me now turn to our plans with pimavanserin and schizophrenia. We generated a large body of work in schizophrenia. It's an area where pimavanserin has shown clinical utility and is high on our priority list. As you are aware, schizophrenia is a vast market opportunity and a very complex disorder. It is multifaceted with multiple unmet needs.

Today's drugs carry significant side effects and do not adequately address some very important symptoms of schizophrenia, including negative symptoms. Schizophrenia is also an indication for which many drugs are approved and many of these approved drugs are generic. So, in addition to schizophrenia being a very complex medical disorder, the commercial landscape overlays an additional facet of complexity.

We previously discussed our plans to commence a monotherapy study in schizophrenia patients during the maintenance phase that is between acute psychotic episodes of the disorder. While we remain very interested in the maintenance part of schizophrenia, a couple of additional areas of interest within the schizophrenia umbrella have risen in priority. They, too, represent areas of large unmet medical need.

We are currently completing our assessment of these opportunities as part of our lifecycle management planning project. Until we finalize our development plans in schizophrenia, we will not start the maintenance study that was previously scheduled to begin around the end of this year or early next year.

Let me just pause and say we are taking a very disciplined and thorough approach in our lifecycle management project, and we want to be certain that we have a well-informed plan in pursuing the very best opportunities in this area. We expect to finalize our development plans in schizophrenia around the end of this year, and look forward to sharing with you further information about this program.

Also, as part of our lifecycle management planning project, we have decided not to pursue a separate sleep study with pimavanserin. We have concluded that a separate sleep study would not provide sufficient additional information to the strong sleep data we already have generated with NUPLAZID in clinical studies.

Now, turning to our plans in Europe, we plan to submit our NUPLAZID marketing authorization application, or MAA, to the EMEA in the second quarter of 2016, as previously guided. Our lifecycle planning project is, of course, part of our broader strategy to aggressively pursue the full utility of NUPLAZID, or pimavanserin. And a key underpinning of this plan is to continually grow and strengthen the organization, including the addition of key people and resources.

This year, we've added important new team members both internally and externally. A natural extension of a growing company is the recognition that you also have some departures during the process. As you'll see in a filing we'll make shortly, Roger Mills, our EVP and Chief Medical Officer, has recently left the Company for personal reasons.

We have a very strong team of both internal and external resources, and have long had robust succession plans for all key positions. We wish Roger well and appreciate his contributions to ACADIA.

In connection with today's discussion of the lifecycle management project, I'd like to introduce two key additions that have been instrumental to our lifecycle management project and our strengthening of ACADIA, generally. One key addition to the executive team is Bob Mischler, our Vice President of Business Development and Strategy. Bob has extensive experience in new product development in the pharmaceutical industry, and he is a critical driver of the lifecycle process internally.

Another key resource for us on both the lifecycle management project and in the development of NUPLAZID is Ed Harrigan, who serves as a consultant to ACADIA. Many of you on The Street may know Ed. For those of you who have not met him, Ed formally led the CNS drug development efforts at Pfizer. He then served as Pfizer's Global Head of Business Development. And, most recently, he was Pfizer's Global Head of Regulatory Affairs and Drug Safety. Both Bob and Ed will be available to answer questions during the Q&A session.

Let me now touch briefly on our financial results. Our financial results for the third quarter aligned with our strategy, which, as previously communicated, is to build a leading US specialty CNS franchise using pimavanserin as the foundation.

Turning now to the numbers, total operating expenses for the third quarter of 2015 were $39 million. R&D expenses for the quarter increased to $18.7 million from $17.0 million for the comparable quarter of 2014. So this was primarily due to increased personnel and related costs, including stock-based compensation expense associated with our expanded R&D organization. The increase in personnel and related costs was largely offset by pimavanserin manufacturing development costs incurred in the third quarter of 2014 that were not incurred in 2015.

G&A expenses increased to $20.3 million for the third quarter from $8.1 million for the comparable quarter of 2014. This reflected our continuing investment in commercial preparations for the planned US launch of NUPLAZID, and specifically, costs incurred during the third quarter of 2015 associated with medical affairs, disease awareness education programs, and market research activities.

We also had increased costs related to the buildout of our commercial organization and systems, including sales in managed markets. And lastly, G&A-related stock-based compensation expense increased by $2.8 million for the third quarter of 2015 over the comparable quarter of 2014.

Now let's turn to our cash position. We ended the quarter with $240.7 million in cash and investments. We expect our cash used in operations to continue to increase in future periods as we execute on our current business plan, as I described earlier on the call.

Importantly, we believe our strong cash runway positions us to continue making the kinds of investments that we believe will leverage the full potential of pimavanserin. Under our current plan, we anticipate our cash resources will be sufficient to fund our operations at least into the second half of 2016.

And with that, I'll now turn the call over to Terry who will discuss our commercial activities.

Thanks, Steve, and good afternoon, everyone. And you can tell it's getting very exciting around here. And I'm happy to report that, during the third quarter, our commercial activities in preparation for the expected launch of NUPLAZID in the United States, are progressing as planned and are on track.

You know, now that our NDA submission has been accepted and we have a PDUFA date for approval, I'd like to take a minute just to provide a little more detail around the breadth and depth of our launch preparation efforts. We have a project launch team comprised of senior leaders and department heads representing key functional areas across the Company. This team has developed a tactical plan for each of their respective areas as it relates to the launch.

To bring these plans together and ensure all activities merge onto the critical path for launch, the project launch team operates from an integrated Master Gantt chart that delineates all activities and the sequencing of these activities. I'm pleased to report that our activities are on track, and we'll be well-positioned for launch once we receive approval from the FDA to market NUPLAZID for patients with Parkinson's Disease Psychosis.

Now, I'm going to shift gears just a bit to our external efforts. In conjunction with our medical affair colleagues, we are continuing to execute on many of the pre-commercial activities that are required to ensure the successful launch of our product. The most visible of these, of course, has been our PDP Disease Awareness Education Program.

Our multichannel approach, which includes digital and print media, as well as key expert educational speaker programs, is continuing to garner interest and participation. During our last quarterly call, I shared that our website -- dedicated to educating healthcare professionals about PDP -- had recorded over 6,300 visits. I'm pleased to report that the total visits to this website now totals approximately 13,000 visits.

In addition to this, we have now had over 10,000 engagements with healthcare professionals who participated in live or Internet-based peer-to-peer physician PDP educational programs, including on-demand podcasts and Web-based educational videos. Now, given that we plan to call in about 11,000 PDP prescribers, we believe these activities, coupled with our strong presence at National Neurology and Psychiatry Association meetings over the past year, are really moving the needle in increasing PDP awareness.

In terms of our efforts in building our sales team, as many of you already know, in March of this year, we hired and brought onboard our field management team consisting of regional sales management and managed market account teams. Since joining ACADIA, these highly seasoned leaders continue to make significant progress in introducing themselves to and interacting with Parkinson's disease experts in their regional as well as the regional and key managed care account organizations.

Now, they are also focused on recruiting our sales force. As we stated before, we plan to bring onboard a sales force around the time of the potential approval of NUPLAZID by the FDA. We're well into this process. And, to date, I have to say I've been quite impressed with the level of talent of the individuals who are seeking to join ACADIA. So, things are moving along quite nicely.

And in closing, as we move closer to our anticipated approval of NUPLAZID, we'll continue to stay focused on executing all preparations and activities necessary to ensure we will have a successful commercial launch, and we remain very excited about the year ahead. So now I'll turn the call back over to Steve.

Thank you, Terry. In summary, this is an exciting and important time at ACADIA. Our priorities are clear -- to secure FDA approval for NUPLAZID in PDP; to successfully execute on the planned commercial launch of NUPLAZID in the US; and to continue to execute on our lifecycle management program with pimavanserin in other areas of large unmet medical needs.

We're energized by the opportunities, and recognize the need for continued innovation in the treatment of CNS disorders, such as Alzheimer's disease, Parkinson's disease, and schizophrenia. All of us at ACADIA are committed to bringing medicines to the market that will improve the lives of these patients.

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

(Operator Instructions) Alan Carr, Needham & Company.

This is Esther on for Alan, and thanks for taking my question. So my first question is, how are physicians receiving the Disease Awareness Campaign? And related to that, how is your level of confidence around the 150,000 PDP patients? I think you had said that on -- in a previous conference. And based on the Disease Awareness Campaign, is that number evolving?

I'm sorry. I missed the very first part of your question. Could you repeat that, please?

How are physicians receiving the Disease Awareness Campaign? Is it positive? I know you are getting more hits on your website, but have you received any feedback from them?

Yes. So, in addition to the feedback, we've had Advisory Boards for long-term care and other specialty areas. And the feedback, quite frankly, has been phenomenal. People are very eager for us to be on the market to treat these patients. And we get that from all angles, including the feedback on the program. We've had people comment from advocacy groups that their physicians have commented about the program and feel very, very good about it.

In relation to moving the needle, we know that we have moved the needle. We have seen -- especially with movement disorder specialists and psychiatry, and obvious unsolicited interest when talking about the campaign, and in terms of the 150,000, we think that, as you will recall, the market for us, even though it's 400,000 patients, really split into two sections. One was disruptive and nondisruptive.

We feel that that 150,000 is still an accurate number. But we feel that with a drug like NUPLAZID, given its favorable tolerability and safety profile, that physicians -- and our market research has confirmed this -- appear to be more willing to start their treatment early on in less severe patients.

Okay, thanks. And so moving on to the agitation study or the agitation program, do you think that if you start patients earlier on in Alzheimer's at the agitation level, that you would be able to prevent the psychosis?

You know, I think it's just way too early to speculate about what impact you might have. But there's nothing that we would want to try to speculate today in terms of what impact you might have treating any of these diseases earlier in the disease progression. It's an interesting question. It's something that I just think it's a little bit too early for us to speculate on.

Okay, thank you. That's all I have.

Cory Kasimov, JPMorgan.

This is actually Brittany on for Cory. Thanks for taking the questions. Could you just give us any color on early reimbursement progress and the initial feedback there? And then how quickly would you be able to launch, following potential approval on May 1? Thank you.

Sure. So, as you know, we've done extensive access and reimbursement work over the last year. We've refreshed that data. We feel that we have found our sweet spot that is commensurate with the value in terms of our pricing.

I think your question was, how long after approval do you think that we will launch? On average, given everything that happens, you can expect most companies to take about a quarter to get everything lined up. Of course, you have to get your label right and get your PI straight, and make sure that everything is teed up before you run out there. And, on average, that's usually what occurs. And we are thinking in those terms.

Let me just maybe just also add to that. Terry's group has done an exhaustive amount of work mapping out every potential scenario for launch timing. And obviously, we recognize the value of every day of getting the drug to the market. And so we will -- we are committed, and we have very thorough plans to get there just as fast as prudently possible.

Sometimes it can, as Terry mentioned, can take up to a quarter. Many times you see that; obviously, you see it sometimes sooner. There's a certain amount of logistics that you just have to deal with in terms of printing up your label, packaging, et cetera. So, what we can commit to is we will be very eager to get to the market as quickly as we prudently can.

And just to add to Steve's remarks, with prior review and an expedited timeline, we don't know exactly when that's going to occur. So we do have tactical plans in place for many scenarios based on varying dates. So we feel very well-prepared if things happen to change on us.

Great. Thanks so much.

And we have time for one more question. The last question is from Jason Butler with JMP Securities. Your line is open.

Thanks for taking the question. I just had a follow-up on an earlier question around the agitation patient population. Could you give us any idea of what your thoughts are around the overlap between the agitation and the psychosis patient populations are? And ultimately how much you think this patient population -- or agitation would increase your addressable patient population versus just reinforce, in a border patient population, different benefits the drug could have?

Yes, I'll give a first response to that. And Terry, feel free to jump in. It's meaningful. We -- first of all, let me just -- like I said, address the first question here. There is a nexus between agitation, aggression, psychosis. There's more of a nexus on the aggression end of things with psychosis. But there's certainly a nexus there.

Having said that, they're two very distinct indications. FDA is viewing them as distinct indications. When you talk to physicians, they view them as two very significant but different issues, recognizing there is some overlap between the two.

So, I hate to say this -- I know you'd like to get more detail and more color. It's a little bit premature for us to talk about just how much it would increase the potential for NUPLAZID for a couple of reasons, including the fact that, like PDP, there's no diagnostic code for ADP, nor for AD agitation.

And so, there is a -- as you probably recall, there's a lot of very important foundational work we did in PDP to really understand exactly how many patients there are, who the physicians are that are treating those patients, et cetera. And in due course, we'll do that -- go through that same kind of exercise in ADP and in AD agitation. But until we get to the point where we have a more solid footing for beginning to share some of that information, we probably just can't go there quite yet.

Okay, that's helpful. And then just a follow-up. Obviously, it's still early in terms of trial design, but can you help us out with your current thoughts on endpoints? Is this going to be the agitation aggression domain of the NPI? And what can you take away from other recent trials in the AD agitation space?

Yes, and it's a very good question. I'll start with the standard response and I'll add as much color as I can. The standard response is we're still in planning, so we're not prepared yet to say what endpoint we'll use as our primary endpoint. We know there are multiple scales, and the NPI scale and the CMAI scale are the two probably the most likely scales.

There is a -- it is a -- it's not like developing another statin. It is an area where there's a little bit of groundbreaking to do here with the Agency. And so, we are very much on top of and very focused on it, but it's a little bit premature for us to have determined that and talk about it.

Okay, great. Thanks for taking the questions.

There are no further questions. Mr. Davis, please proceed to closing remarks.

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