ACADIA Pharmaceuticals Inc (ACAD) 2016 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to ACADIA Pharmaceuticals' second-quarter 2016 financial results conference call. My name is Doris and I will be your coordinator for today. (Operator Instructions)

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

Thank you, Doris. Good afternoon and welcome to ACADIA's second-quarter 2016 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 18, 2016.

Joining me on the call today from ACADIA are Steve Davis, our President and Chief Executive Officer; Dr. Serge Stankovic, our Executive Vice President and Head of Research and Development; and Terry Moore, our Executive Vice President and Chief Commercial Officer.

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 strategy, including: the timing, results, or implications of clinical trials, other development efforts or regulatory approvals; the benefits or advantages to be derived from, future approval of, and the commercial potential for our product candidates, in each case including NUPLAZID or pimavanserin; and the future development and commercialization thereof. 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.

It's my pleasure now to turn over the call to Steve Davis, our President and Chief Executive Officer.

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

Today I'll address three areas in my prepared remarks. First, I'll touch upon the recent commercial launch of NUPLAZID for the treatment of hallucinations and delusions associated with Parkinson's disease psychosis, or PD psychosis. Second, I'll discuss the important work we're conducting to execute on our comprehensive lifecycle program and the planned expansion of pimavanserin into other areas of significant unmet medical need. And third, I'll review our second-quarter financial results.

Following my remarks, Terry will lead a review of the launch of NUPLAZID and our key commercial priorities. And Serge will lead a review of our pipeline, including ongoing and planned clinical programs for pimavanserin.

Let me first start by saying the past several months have been an exceptional period for ACADIA, with the FDA approval of NUPLAZID on April 29, followed by our commercial launch on May 31. As many of you know, PD psychosis is a very debilitating condition. It's characterized by hallucinations and delusions that increase in severity and frequency over the course of the disease. It is associated with significant caregiver burden, and it's one of the strongest independent predictors of nursing home placement for Parkinson's disease patients.

NUPLAZID is the first and only FDA-approved medicine to treat the hallucinations and delusions associated with PD psychosis. The introduction of NUPLAZID represents a major paradigm shift in the treatment of patients with PD psychosis.

As we all know, Parkinson's patients suffer from deterioration of a part of the brain that produces dopamine, and they take dopamine replacement therapy or dopamine agonists to treat their primary motor symptoms. We believe about 40% of Parkinson's patients suffer from psychosis, which tends to emerge in the more advanced stages of the disease when control of their motor symptoms can be very challenging.

Historically, drugs typically used to treat psychosis -- none of which are approved for the treatment of PD psychosis -- block dopamine and therefore can interfere with the drugs Parkinson's patients take to treat their motor symptoms. As a first-in-class, first-in-disease therapy, NUPLAZID treats hallucinations and delusions without blocking dopamine receptors and therefore does not impair motor function in these patients.

While we're in the early stages, we're very excited about the progress we're making on our launch. Operationally, the launch of NUPLAZID has gone very well, and we are executing on our plans to bring NUPLAZID to patients in need.

Just as a reminder, our key commercial priorities are to broaden awareness of NUPLAZID, to ensure patient access, and work with payers to secure reimbursement. While Terry will touch upon the work we are doing here in greater detail later on in the call, I'll provide you with a few highlights.

We onboarded and trained our sales specialists in April and May and deployed them at the time of launch. As a group, they bring with them extensive CNS sales experience and they, along with our medical affairs team, are educating physicians on NUPLAZID. At the time of approval, we launched our NUPLAZIDconnect patient and physician support system and began receiving treatment forms from physicians and calls from patients.

Along with our commercial team in the field, we are expanding awareness of NUPLAZID through a number of programs and initiatives. Our speaker program and digital and media campaigns for NUPLAZID were initiated at the time of launch and are ongoing.

We also had a strong presence at medical meetings, with product symposia at the American Psychiatric Association annual meeting held in mid-May and at the 20th International Congress of Parkinson's Disease and Movement Disorders held in mid-June.

We recently hosted a NUPLAZID national broadcast webinar featuring experts in the field of PD psychosis. Over 1,200 healthcare professionals participated in this national webinar broadcast.

On the payer front, our account team began meeting with national and regional payers upon approval. The continued execution on our commercial plan will be important as we educate physicians and payers about NUPLAZID.

While our top priority is the successful commercial launch of NUPLAZID, we are also conducting very important work in executing on our multiyear plans to develop pimavanserin in indications beyond PD psychosis. We have completed enrollment in our Phase II exploratory study with pimavanserin for Alzheimer's disease psychosis and remain on track to announce top-line results by the end of 2016. Serge will provide some additional color in a few minutes.

Turning now to Alzheimer's disease agitation, we look forward to initiating this Phase II study with pimavanserin in the second half of 2016. In addition to Alzheimer's psychosis and Alzheimer's agitation, we have additional clinical starts in other indications that we will announce by the end of this year.

Let me now turn to our second-quarter financial results. Net product sales for the quarter were $97,000. As we previously described, physicians are able to prescribe to any patient a 30-day free trial, and the mechanism for doing this is built into the form physicians use to initiate a prescription through our NUPLAZIDconnect site.

To date, the vast majority of patients have received the 30-day free trial. Of course, when patients are taking free samples, this does not result in revenues. Having launched the drug on May 31, the $97,000 of revenues we reported represents those patients who did not receive the free trial.

I just want to remind you that we currently recognize revenue when a specialty pharmacy dispenses NUPLAZID to a patient based on the fulfillment of a prescription or a specialty distributor sells NUPLAZID. This approach is frequently referred to as the sellthrough revenue recognition model, and is a common practice for companies launching their first product.

Total operating expenses for the second quarter of 2016 were $72 million. R&D expenses for the quarter increased to $20.5 million from $18.4 million for the comparable quarter of 2015.

This increase is driven by the following factors: one, increased personnel and related cost, including stock-based compensation expense, associated with our expanded R&D organization; and two, increased clinical cost related to the development of pimavanserin in additional indications other than PD psychosis. These increases were partially offset by decreased manufacturing development cost.

SG&A expenses increased to $50.8 million for the second quarter from $21.1 million for the comparable quarter of 2015, and this increase was driven by the following. First, increased costs related to preparations for and support of the commercial launch of NUPLAZID; second, costs associated with the hiring of our specialty sales force in April 2016; and third, increased costs related to additional medical education programs.

Let's now turn to our cash position. We ended the quarter with $412.6 million in cash and investment securities. For the second quarter, cash and investment securities decreased $44.6 million.

I'd just like to point out a couple of non-operating cash items for the quarter. On the inflow side, we received proceeds a $14.3 million during the quarter pursuant to a settlement agreement with certain stockholders who sold shares of the Company's stock in 2013 that may have resulted in impermissible short-swing profits. On the outflow side, we paid $8 million for a regulatory milestone payment during the quarter pursuant to our license agreement with the Ipsen Group, and this was in connection with the FDA approval of NUPLAZID.

We expect our cash used in operations to continue to increase in future periods in connection with our commercial activities and as we continue to make the kinds of investments in our pipeline that we believe will leverage the full potential of pimavanserin.

Let me now turn the call over to Terry, who will lead a discussion on the commercial launch of NUPLAZID.

Thanks, Steve, and good afternoon, everyone. I'm pleased to provide an update on our ongoing commercial activities for NUPLAZID. We're executing on a commercialization plan that is focused on broadening awareness of NUPLAZID, ensuring patient access, and achieving broad coverage.

While it is still very early days in the launch, based on our market research and feedback from the field, it's very gratifying to see the increased awareness of both PD psychosis and NUPLAZID as the first and only approved drug by the FDA for the treatment of hallucinations and delusions associated with PD psychosis. Market research we recently conducted showed that the number of PD psychosis trained physicians who recognize psychosis as a comorbidity associated with Parkinson's disease has more than doubled from where the number was prior to when we began our disease awareness campaign in 2015.

This research also showed that, of the PD psychosis prescribers who had been exposed to NUPLAZID information, 71% recall that NUPLAZID is the first and only FDA-approved treatment for hallucinations and delusions associated with Parkinson's disease psychosis. And among those aware of NUPLAZID, 73% are familiar with its attributes.

These early results are encouraging and tell us that the core messages we want to communicate about NUPLAZID are starting to resonate with our target physician audience. I'd like to emphasize that as we've said before, new products require market education, especially one with a new mechanism of action and in a disorder where there has been no approved therapy.

While it's very, very encouraging to see our core messages resonating with our audience, it takes time for this to translate into a change in physician prescribing behavior. I'd like to note that we believe the potential for strong growth over time is very attractive.

The majority of our early efforts have been focused on neurologists, who are the largest segment of our target market, as well as other PD psychosis prescribing physicians, including psychiatrists and doctors in long-term care facilities, as planned. We have identified over 12,000 healthcare professionals as our target audience of prescribers. Through the end of July, we have called on over 9,700 healthcare professionals.

We also have multiple healthcare professional awareness efforts underway to increase NUPLAZID recognition and highlight the innovation it provides. In addition to the national broadcast webinar we hosted last month, we have conducted 130 key opinion leader-led speaker programs for healthcare professionals through the end of July. These programs serve as educational peer-to-peer meetings for healthcare professionals who wish to learn more about NUPLAZID in PD psychosis.

In regards to the payer landscape, our account management team has made excellent progress in contacting and meeting with payers covering the majority of plans responsible for covering the majority of PD psychosis lives and educating them on the benefits of NUPLAZID.

In terms of formulary status and placement, as we shared previously, Medicare Part D payers have 90 days from the time the product is made available to review NUPLAZID and place the product on their formularies. Commercial plans can take up to six to nine months longer to make their formulary decisions, so it may be some time before we know our status there.

Consequently, most NUPLAZID prescriptions to date have been processed as exceptions rather than under formulary. The majority of NUPLAZID claims being adjudicated today require either a prior authorization or a medical letter of necessity.

Now, I do want to caution everyone that restrictions for any of these plans may change once NUPLAZID is formally reviewed and placed on formularies of plans that have not yet made a determination. While it is still early in the launch, as we've previously stated, we believe NUPLAZID will be broadly covered with the most common prior authorization to be confirmation of PD psychosis diagnosis.

Moving now to our patient and physician support system, the early anecdotal feedback on NUPLAZIDconnect has been quite positive, and we are pleased that our system appears to be both patient- and office staff-friendly. We're also pleased to see how quickly patients are able to receive product once the physician prescribes the 30-day free trial through NUPLAZIDconnect. On average, it takes about five to 10 days between the time a physician submits the form through NUPLAZIDconnect and product ships to patients.

In summary, we are energized and inspired by the Parkinson's patient community that we serve, and we're thrilled that were able to provide a new option for patients suffering from PD psychosis. And with that, I'll turn the call over to Serge.

Thank you, Terry, and good afternoon, everybody. We've had a very productive first half of 2016, with the FDA approval and launch of NUPLAZID. In parallel, we have also made significant progress in building our R&D capabilities to enable us to execute on the broad development plans for pimavanserin.

Let me start with our efforts in Alzheimer's disease and the two programs we are pursuing there. Similar to Parkinson's disease, Alzheimer patients experience a number of serious neuropsychiatric complications including psychosis and agitation. Today, there is no FDA-approved treatment available for patients with Alzheimer's disease psychosis or Alzheimer's disease agitation.

As Steve mentioned, we have completed enrollment in our exploratory Phase II study with pimavanserin in Alzheimer's disease psychosis, or AD psychosis. Just some background on this study.

This study, our first in AD psychosis, is being conducted through a single site with a large network of nursing homes in the London, England, area. As you are aware, the study has taken longer to enroll than we originally anticipated due in part to the logistics of having the study conducted at just one site.

Let me remind you of the key parameters of this study. This is an exploratory Phase II 12-week randomized double-blind placebo-controlled study designed to examine the efficacy and safety of 34-milligram pimavanserin compared to placebo in patients with AD psychosis. We enrolled 181 patients in this study.

The primary endpoint is psychosis as measured by the Neuropsychiatric Inventory, Nursing Home version, subscales for hallucinations and delusions, or domains A and B at study week six. We are also assessing secondary measures including behavioral symptoms and sleep.

Additionally, we are assessing Mini Mental Status Exam over 12 weeks of treatment in order to demonstrate that pimavanserin does not have a negative impact on the cognitive status of these patients as compared to placebo. We look forward to announcing top-line data from this study by the end of this year.

Let me now move to Alzheimer's disease agitation, or AD agitation, a new and complementary program to our AD psychosis program. Agitation is a debilitating condition that affects approximately 40% to 50% of Alzheimer patients. Similar to PD psychosis and AD psychosis, AD agitation can have a major impact on the quality of life of patients and caregivers and often is a precursor to nursing home placement.

Agitation presents early in the progression of Alzheimer's disease, and earlier than the psychosis symptoms and, once present, it tends to be recurrent and sustained. Symptoms of agitation include verbal aggression, physical aggression, and excessive motor hyperactivity. We plan to initiate a Phase II randomized placebo-controlled study with pimavanserin in AD agitation in the second half of 2016.

As Steve noted earlier, in addition to advancing in Parkinson's disease psychosis, Alzheimer's disease psychosis, and Alzheimer's disease agitation, we will be announcing later this year the advancement of pimavanserin in additional indications of high unmet need.

Now let me provide you with a brief update on the status of our proposed pediatric investigation plan, or PIP, for Europe. As you are aware, having an approved PIP or PIP waiver is a requirement prior to submission of our NUPLAZID Market Authorization application to the European Medicines Agency. We plan to resubmit our PIP to the EMA during this quarter.

To that end, we already had a presubmission teleconference with the Paediatric Committee rapporteur and peer reviewer regarding our planned PIP submission. We'll need to go through the PIP review process and obtain Paediatric Committee approval of our plan before we can file our MAA in Europe.

Let me now turn the call back over to Steve.

Thanks much, Serge. In summary, it's been an incredibly productive and rewarding last several months for all of us at ACADIA, as we received FDA approval of our first medicine to treat patients with hallucinations and delusions associated with PD psychosis and worked quickly to make it available to patients. Going forward, we'll continue to focus on a successful commercial launch of NUPLAZID and make investments in areas where we believe we can make a meaningful advance in patient treatment. We look forward to pursuing a broad development program with pimavanserin in areas of large unmet need.

I'll now turn the call over to the operator to commence the Q&A session.

(Operator Instructions) Ritu Baral, Cowen.

Thanks for taking the question. Steve, on the 9,700 physicians that you said that you have called on already, can you help us characterize who they are a little better? Like you said, are they mostly neurologists?

Do you have those physicians stratified by tier as far as who's a high potential responder, and how many of those represent the 9,700?

Yes, a great question. I'm going to turn that over to Terry.

Sure. Hi, Ritu. We knew ahead of time going into the launch who our high prescribers were, and those were the first places we stopped. We knew that they would be the low-hanging fruit, that they would have the most patients, and so our activity was directed there.

But also on other neurologists, as you heard, we had some really nice reach early on in the program. So we're able to get to not only neurologists but also psychiatrists and a number of key folks we had identified in the long-term care environment.

So we're very pleased with the folks that we got to and that we're seeing some of the fruits of those efforts.

What percentage of the 9,700 is low-hanging fruit? And how often do you plan on calling on them going forward, for the near term?

I probably can't give you the number in terms of giving some unnecessary guidance. But I think it's safe to say that the majority of our prescribers are neurologists, and that the frequency we've had on them to date has been significant.

Just to maybe add a little bit of additional color, we tier physicians on our target list into three tiers. The target list is a living document, so it changes.

One, we revise it to reflect local information from our reps, the vast majority of which are continuing to operate in the regions that they already lived and where they already knew the physicians when we hired them. And of course, with no diagnostic code it's required a lot of work -- no diagnostic code for PDP, it's required a lot of work, as we described before, for us to determine who is a PDP-writing physician and to be able to assess them.

So recognizing that, we also -- we knew that the list would not be perfect. There would be some physicians who would write new clients even if they were not on the list; and there would be, of course, a lot of physicians that were on the list that won't write NUPLAZID eventually.

But recognizing all of that, we prioritized. Our tier 1 list is about 1,000 physicians, so we prioritized them.

And I'm not sure that low hanging fruit is really the way to describe them. I think I would just say they are the highest priority; they are primarily movement disorder specialists; we know they're the ones that write -- that treat Parkinson's patients in higher volume. Based upon our research, they are the ones that treat PDP more frequently. So those are the ones that, of course, we prioritized highest.

Terry mentioned in his remarks and as we mentioned before, I just want to underscore two things. One is when you have a drug that represents a potential paradigm shift, it takes time, and that's what we would expect here.

Very quickly, though, I'll say based on our market research, based on everything we've seen in the launch so far -- and I will say the launch has gone exactly, about as close to as we would have expected as it possibly could. We are right on plan with the launch. And based upon all of that we think the potential for strong revenue growth over time is very, very attractive.

But it takes a little bit of time to penetrate the market and really educate physicians on the benefits of a drug where they've had nothing in the past and it's a very new mechanism of action.

Got it. Given how aggressive you've been on the number of calls, as we look at the SG&A for this quarter, the $50.8 million, should we see that as a run rate for quarters going forward? Or will it creep up even from here?

There are a lot of numbers that -- that is going to move around a lot; I wouldn't necessarily use that as the run rate going forward. There are a lot of expenses that we incurred with the launch, precisely around the specific launch of the drug, in terms of getting the sales force trained, national launch meetings, etc. So you have a number of nonrecurring types of expenses embedded in that as well.

Having said that, as I mentioned in my prepared remarks, our operating expenses will continue to go up over time. We anticipate that.

We need to make meaningful investments, which we will be making, in the further development of pimavanserin in the new indications that we've described. And we want to make certain that we're making the right investments today in the launch of the drug that we believe will pay dividends in the future.

Got it. Last question, hopefully this is going to be a quick one. Is the PIP the only rate-limiting event to you filing in Europe? Do you have clarity on not needing any comparator-controlled data for CHMP?

Serge, do you want to take that question?

Yes, absolutely. The answer is yes. Obtaining agreement on pediatric investigation and plan, it is a rate-limiting factor for our filing. Everything else, we had meetings with the EMA and we have a good understanding on moving forward with the filing once we obtain PIP agreement.

Great. Serge, Terry, Steve, thanks for taking all the questions.

Charles Duncan, Piper Jaffray.

Hi, guys. First of all, probably old news in the parlance of Wall Street, but congratulations on a transformational quarter.

Thanks, Charles.

Thanks, Steve. I had three quick questions, one on the NUPLAZID launch, one on ADP, and one on ADA. On the NUPLAZID launch, just maybe stepping back, what do you think -- if you look at the key operating metrics for tracking sales force productivity as well as NUPLAZID adoption, what's the thing that you're watching for internally, or that you might be able to talk about in the future? Besides prescriptions or revenue.

Well, let me start -- and Terry, feel free to jump in if you like. Let me just start by saying it's -- of course, we're monitoring information every day and we're getting a lot of data every day. It would be very tempting and very easy during the course of a launch to overinterpret the data and change course prematurely.

What I would say is what we're seeing so far has really played out just about exactly as we thought it would. Of course, there are some things that will evolve differently than we anticipated; but from an overall perspective, it's really operating just about exactly as planned.

So the important thing is to stay very much on plan and continue. We had a lot of time to prepare for this launch. We understand the marketplace better than anyone on the planet, and the important thing is just to continue on track, continue executing, making certain that we are both executing at an appropriate depth -- that is, frequency of calls on the physicians that are higher on our priority list or a higher tier -- but also establishing breadth. We need to get the word out.

We haven't hit all the physicians on our target list. We need to do that. We have hit more neurologists than psychiatrists, so we'll be expanding our reach even broader there.

So there are a number of things that we need to do to continue on track. But a little over 60 days into the launch I would say everything has gone very well so far. Terry, you have anything to add?

No, I think making sure that physicians are getting a high-quality message. As I shared, we're encouraged that early on, even with the frequency we've had at 60 days, there is message recall that tells us that the message is resonating. Those are key things we want to look at.

It's a matter of getting the right message to the right physician with the right amount of frequency. And we're off to a very good start there.

Super. That's helpful. Perhaps one or two for Serge in terms of the future. On the ADP program, Serge, I know that you didn't design it and it's been a challenging program. But let me ask you what you would be looking for beyond the obvious statistical significant difference in NPI; and perhaps what would you have done differently with ADP even before knowing the data out of ADP?

Well, it's -- obviously looking at things in retrospect is always easy, so I'll try to be very cautious about making certain judgments in absence on -- not being in a real situation at the time of the design of the study.

What I would say, first of all, very important question. We are doing this study to learn about the patients, about a suitable design, and a patient profile that is a responder.

So to your question, what I will be looking for in addition to just a simple statistical analysis is exactly that: looking at the profile of patients that have responded to treatment and have benefited from treatment, and try to tease out characteristics of those patients and what we can learn from the future trials in that respect.

Obviously, this trial is done in an environment of nursing homes. And implication of that is that there is a certain severity of disease in these patients and they are advanced in their disease. We will be looking at the benefits in that patient and maybe looking at if there are any differences in terms of severity of disease and symptoms, and advancement of cognitive symptoms, and how response is.

So there is a number of things that we are really looking forward to learn from this study that we will be able to apply into our further studies in this indication. Another thing that we are looking with a great interest is, as we are measuring a number of behavioral symptoms, we will be looking for signals of benefit in agitation, sleep, and other symptoms, so that we can actually learn a little bit more in terms of the benefits of pimavanserin in other neuropsychiatric symptoms.

Okay, that's helpful. Last question is regarding ADA. I'm wondering if you can provide any rough order of magnitude thoughts on the design or timing of that study. I imagine we'll hear details when it's actually listed on clintrials. But thoughts on sizing or timing on that?

Well, we will be, as you said, announcing that at the time of the initiation of the study. But this AD agitation study will not in terms of its size or the duration of recruitment, will not differ from the other studies that you've been seeing already being conducted in the Phase II programs that other companies have been pursuing.

That's helpful. Thanks for the added information. Congrats on a good quarter.

Bert Hazlett, Ladenburg.

Thank you very much. My question is with regard to gross margins. A number of other ones have been answered already. But my question is with regards to gross margin: at what point should we see a normalization of gross margin? Is that 10 months out? Is it seven months out?

And at what rough level would you expect that to stabilize?

Thanks for the question. In the early days, as I'm sure everyone on this call has experienced and as we said before, gross-to-net, that starts out can be very high, then it settles down.

COGS, same thing. Can start up very high and then settles down.

So the cost of goods that we reported for the quarter were $526,000 on $97,000 of revenue. So obviously, we're experiencing what you often experience as you've got a certain embedded cost or fixed cost, and then you also have occasionally nonrecurring costs that get loaded into those numbers, particularly in the early days of a launch.

The important thing, as we think about gross margins and we think about COGS is that what we anticipate, once the dust settles, is pharmaceutical-type margins for small molecules. So that is in the single digits.

So that's what we anticipate. It's a nine-step synthesis; it's a very straightforward manufacturing process. So we would anticipate very customary small molecule pharmaceutical margins going forward.

In terms of the amount of time it will take for the dust to settle and us to get there, it's really premature for us to say. It's a function of the ramp and when we get there.

But the time frame that you suggested of months or approaching a year or even beyond, that's probably the right way to think of it. This won't take years to settle down into that more predictable range, but it will take some months, at least.

Thank you. Then just one more question on the sales force. Obviously, things seem to be progressing along a course where you're comfortable with the traction. At what point do you really assess how -- the productivity and the size of the sales force?

Is it six months out? Is it a year out? Is it in terms of inflection points to scale it up, or not?

Terry, you want to take that question?

Yes. As Steve's mentioned, we are reshaping the way these patients are being treated. It takes time.

So we want to give it the right amount of time to be able to see our effectiveness. And it's the repetition of calls; it's getting out to the right doctors. So it's early, early days and it would be really hard to predict at what point we would try to consider making a change.

Okay, thanks. Congrats on the launch, guys.

Yes, thanks, Bert. I would just echo Terry's comment and just say we monitor day by day just where we are. So as I said earlier and as Terry just said, we don't want to be reactive or overinterpret very, very early returns; but we want to also make certain that we're staying right on top of things and making sure we're making the best use of information we have. So you can count on us to continue to do that, doing that through the remainder of the launch.

I guess I just have one more if I still can. Any sense in terms of patients that have received a new script or have paid for a script -- any sense of the percentage of those that are already taking some type of antipsychotic versus those that are newly diagnosed?

Yes, the short version -- Terry can chime in if you like -- the short version, it's too early for us to read anything into -- that's exactly the kind of thing that we monitor. But it's just way too early to make any sense of that.

Okay. Thanks again.

Cory Kasimov, JPMorgan.

Hey, guys. Good afternoon. Thanks for taking the questions. A couple of them for you.

I guess first of all, with regard to the NUPLAZID launch, I realize it's obviously very early. But are you seeing any emerging trends with who the early adopters or in what settings they treat patients in these initial days of the launch? Are you able to get any anecdotal patient feedback at this point?

Again, Terry, jump in if you have additional color. But I would say -- well, first of all, it's just too early to really have identified any meaningful trends. I will say that we are getting a lot of positive anecdotal feedback, as we should. Honestly, I would be concerned if we weren't getting that.

I don't think I would read too much into the fact that we're getting it. But we are. We're getting some very positive feedback.

Again, that's -- it's anecdotal evidence, it's helpful, it's nice, it's motivating to the team. But I just wouldn't read too much into that at these early, early stages.

Okay, understood. Then the follow-up question is with regard to the ADP trial and whether you think you'll be able to tease out enough information from this study to effectively make a go/no-go decision for Phase III. And when we do see that data, is that going to be six-week data or 12-week data or both?

Serge, you want to take that question?

Yes, absolutely. Let me take the second part. It will be the entire duration, so we will have a -- primary endpoint is at six weeks, but we will have a 12-week data as well. So the information we have will encompass the entirety of the study and all of the endpoints that we prospectively defined.

In regard to first, it is very difficult in absence of seeing the data to make any qualifications on whether one can make the decisions or not. What I would say with confidence is that we will have a sufficient amount of data to make a determination of whether we are seeing a positive signal or not and, based on that, to make certain decisions whether to move forward, repeat the experiment under different conditions, or maybe not.

Okay, great. Thanks. Appreciate you taking the questions.

Tazeen Ahmad, Bank of America.

Hi, good afternoon. Thanks for taking my questions. Maybe one on the two trials that are upcoming.

For Alzheimer's psychosis versus Alzheimer's agitation, how do doctors define the differences between the two conditions, based on your understanding right now?

Serge, you want to take that?

Yes. Well, the Alzheimer's psychosis is manifested by psychotic symptoms; and that predominately means actually delusions and hallucinations in Alzheimer patients.

Agitation, as I mentioned earlier, is manifested by hyperactivity, verbal or physical aggressivity. So it's a completely different quality.

So in the clinical practice there is a bit of an overlap of these symptoms. Although agitation symptoms tend to occur earlier in the progression of Alzheimer's disease compared to psychotic symptoms, there is an overlap, particularly in later stages. But a distinction between these two syndromes and classes of symptoms are fairly clear.

Now, is it the case that if left untreated that patients with agitation can advance to having psychosis?

Well, obviously the prognosis is, overall, for progression of disease in Alzheimer would be worse if agitation is left untreated and a patient is left untreated. But it's a natural course of disease that many patients progress towards psychotic symptoms over time. The matter is more in a speed of progression rather than evolution.

I see. So I guess I'm asking if it's the case that you ultimately have approvals in Alzheimer's agitation as well as Alzheimer's psychosis, could it be the case that, if you have efficacious treatment in the agitation population, that the potential population in psychosis might be smaller because you're treating people earlier? Is that the right way of thinking about it?

It's a very interesting question. I'm not sure I have a straightforward answer for you on that.

Obviously treating agitation would help. But we have a background underlying neuropathologic process that is progressing, so it's hard to say that just treating agitation would necessarily obviate occurrence or other symptoms.

Okay. Then I'm sorry if you mentioned this at the beginning of the call, but I just want to confirm that IMS or Wolters Kluwer or the vendors are not tracking the scripts. Is that the case?

Yes, that is correct.

Okay. All right, thank you.

(Operator Instructions) Alan Carr, Needham Company.

To follow up on that last one, since we won't have IMS or Symphony, I guess, can you give us your plans on guidance or maybe number of patients on drug, that sort of thing?

Also, what are your expectations for compliance and discontinuation rates?

And I guess the last one, payer split here. You had some expectations there heading into the launch. Are those evolving at all yet? Thanks.

Sorry, Alan, your first question, I'm sorry, I was trying to take a note. What was your first question?

Oh, the first one is around what sort of metrics you might be able to provide for us around number of patients. I understand you wouldn't; you haven't so far on this call.

But do you plan to do that in the future? What's your plans on that and guidance and that sort of thing?

Yes, yes. No, thanks. As we've said previously, we won't be guiding on top line, bottom line, or major components for at least several quarters. I do think there will be a point where we will probably find providing some semi-quantitative information could be helpful. It's not now.

I mean at this point, things are still just moving around so much it just wouldn't be helpful. It's hard for us to resist the temptation to overinterpret, and I just don't think it would be helpful at all.

But there probably will be a point in time. I can't say whether that's covered lives, or number of patients, or number of new starts at any given time frame, etc., and I can't say exactly when. I wish I could give you a more satisfying answer.

But what we've committed to is at a certain point where we feel like some of that kind of information will be helpful we'll be happy to share it. Our general philosophy is to try to be as transparent as possible.

When we don't disclose information, there is always a good reason for it. And it's really because we just feel like it's not helpful. It wouldn't be beneficial. But as soon as we feel like we can provide some of that information, we will.

Okay, thanks. Expectations around compliance and discontinuation rates, I guess?

Yes. I think in terms of compliance and continuation rates, we recognize that this is virgin territory. We're the first drug approved to treat PDP. It is a little bit of an uncertainty, to be honest with you.

What I can tell you is -- and I'm just going to repeat what I said before: We have cautioned people to recognize that the movement medications that Parkinson's patients take tend to reflect very high compliance rates. Because if they don't take that medication, they know it immediately.

And they're taking them several times a day. And keeping, maintaining that right balance of dopamine is a very fine balance, sometimes particularly in the more advanced stages of the disease. So there's a very strong consequence of not taking your medications, and so they are pretty -- very highly compliant with it.

When you look at Parkinson's patients and you look at the compliance rates of other medications they take, they tend to be a little bit higher than norm, but much closer to what the norm is for other drugs. So it's not uncommon to see compliance rates when we step outside of that window, when we look at compliance rates for antidepressants, for that matter, for anti-cholinesterase inhibitors, or other drugs, you tend to see compliance rates that are more in the 50%, 60%, 70% range.

So it's unclear to us, to be honest with you, exactly where will fall on that spectrum. It's one of the things that as you would expect we have factored into our detailing plan and factored into our commercial plan, to make certain that we emphasize how important it is -- this is a chronic disorder; you will have it the rest of your life -- and to emphasize how important it is to stay on top of therapy. But it's one of the things that we'll just have to see as this evolves.

And then the last point you asked about was the payer split. As Terry mentioned, it's skewed a little bit more toward Medicare in these early, early days.

Again, I just want to underscore a lot of these things are moving around a lot and this could move around a lot more. But a little bit toward Medicare than what our market research would have indicated at this very, very early stage.

I thought of one other last question that I'm hoping I can slip in here. When you say positive anecdotal feedback, what does that mean? Does that mean that physicians and patients are happy with the efficacy or safety profile? Can you elaborate on that?

Yes, I would say -- I'll give the first response and Terry may have a couple of others. One of the things that you always worry about when you launch a drug is: Will the experience that physicians and patients have outside of a controlled clinical trial be similar to what you saw in the controlled clinical trial?

And I would say -- and again, this is anecdotal feedback. But based upon the anecdotes that we've had, and frankly based upon all the data that we're evaluating, we're very pleased to see it. It appears both on the side effect and tolerance side as well as on the efficacy side. Everything is supportive of the profile that the drug demonstrated in clinical trials.

That's not always the case, so that's very helpful. And the anecdotes have been very consistent with the kind of anecdotes that we had and the kind of experience we had in the clinic.

We have had reports of -- and I want to be really careful about this. But in the clinical studies, we know that we saw about 14% of patients had complete remission. We have had some reports, even in these early days, of patients that have reported a complete remission.

Again, it's an anecdote. I wouldn't make too much of that. But it's an example of the kinds of things that are lining up, that we're seeing or we're hearing about in the marketplace that are consistent with what we saw in the clinic.

I would just tag on. One of the things I find interesting is we do have physicians report back to us that they are very pleased with what they're seeing in terms of efficacy. But what I find interesting is that they are reporting that the caregiver is reporting that they see the difference at home and that they are reporting that to the physician.

So it's encouraging -- it's early days, obviously -- that the benefits are seen through the eyes of the caregiver. And that's something that we were hoping was going to happen.

All right. Thanks very much.

Yes, you bet, Alan. Just again, I just want to reiterate. It's these early, early days. It's so difficult to really know how much of these are tea leaves and how much of these things will prevail.

It is the point in the launch where people tend to be excited. They tend to communicate more, etc.

So again I would put all of this under the umbrella of -- I would be concerned if we weren't getting some of these kinds of responses; it's very gratifying to hear it. But I just want to emphasize two things. I'm just going to repeat what I said earlier in the call, that, one, it takes time to really get the message across and for that to translate into what physicians actually do. It takes time, and we expect it to take time here.

The other thing, the other corollary of that is I do think and we continue to think that the overall potential for strong revenue growth with this drug is very, very attractive. So the long-term prospects we think are very, very good, but I just want to caution that it will take time.

Great. Thanks very much.

Robert LeBoyer, Aegis Capital.

Afternoon. I'm looking at the revenues for the quarter, and taking into account the 30-day promotional special and the cost of the drug; backing out the number of patients that are probably taking it; and wondering if that's a reasonable approximation or if that's just a completely invalid, or somewhere in between.

It's a great question, Robert. I would really strongly caution you against trying to back into it. Because one of the things that would significantly impact that is things like the gross to net adjustment which, again, in these early, early days is going to be a lot higher because you've got a certain amount of embedded costs that get distributed over such a tiny number.

So I just think it's really hard to do that. The one thing that I will just underscore is that the vast majority of patients are starting with the 30-day free trial. So what you're seeing for a grand total of 30 days is representative of -- that number is composed of patients that didn't get the free trial. And almost all do, but not all.

So I just -- I wish that I could be more helpful to you, but I would strongly caution against trying to read too much into that number. To be honest with you, we thought it could very well have been zero. But we knew it would be either zero or something really, really nominal and meaningless in that first month, because almost all patients are starting on a 30-day free trial.

Okay, understood. Thank you very much.

Mr. Davis, please proceed with closing remarks.

Well, 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.

Ladies and gentlemen, this does conclude today's conference call. You may now disconnect.