ACADIA Pharmaceuticals Inc (ACAD) 2017 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to ACADIA Pharmaceuticals First Quarter 2017 Financial Results Conference Call. My name is Sara, and I'll 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.

Thanks, Sara. Good afternoon, and welcome to ACADIA's First 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 May 23, 2017.

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

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, 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 future development or commercialization of our products and product candidates in each case, including NUPLAZID or pimavanserin; and future commercial and financial results.

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 events. 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.

Thanks much, Lisa, and good afternoon. Let me first say thanks to each of you for joining us on today's conference call.

Today, I'll comment on the launch of NUPLAZID, together with an update on our broad CNS clinical development program. Following my remarks, Todd will discuss our financial results for the quarter, and then Michael will follow with additional comments on our commercial activities and priorities, and then we'll open it up for Q&A.

As Lisa noted, Serge is also on the call today and will also be available to answer questions.

2017 represents a pivotal year for ACADIA as we focus on 3 main priorities to drive long-term value. First is the continued successful launch of NUPLAZID in PD Psychosis; second, the advancement of our AD Psychosis program into Phase III in the second half of this year; and third, the execution of our broad clinical development program in major CNS disorders which, together with PDP and ADP, totals 6 indications that we're pursuing.

Turning now to the launch. We got off to a strong start this year. Our first quarter results reflect continued solid execution of our growth strategy for NUPLAZID. Net sales rose to $15.3 million. On a gross sales basis, we increased sales by 37% Q1-over-Q4. As expected and previously noted, we had a higher gross-to-net in Q1-over-Q4, and Todd will speak to this in his remarks.

Let me highlight the key takeaways for Q1. During the quarter, we continued to see an increase in new prescribers and patients and an increase in the number of repeat prescribers. We also made great progress on reimbursement coverage. We can now report that commercial coverage has grown to 94% of commercial lives. That's up from over 60% as mentioned on our last call. As you're aware, NUPLAZID is on all Medicare formularies.

We're very pleased with the broad recognition by payers of the unmet need in PDP and the value that NUPLAZID delivers in addressing this need.

The vast majority of plans, whether Medicare or commercial, require a simple prior authorization, verifying that the patient has PD Psychosis.

So given the favorable access and reimbursement for NUPLAZID, at the beginning of April, we moved to a 14-day free product program from our original 30-day program. In addition, we've expanded our penetration into the long-term care market and recently onboarded 25 additional long-term care sales reps. With this new deployment, we now have approximately 155 sales specialists covering the U.S.

Furthermore, our latest market research points to positive prescribing experience and growing intended future use of NUPLAZID. Michael will add some additional color to this in his remarks.

We also had a strong presence in medical meetings with product symposia at the annual meetings of the American Academy of Neurology, the Pan American Parkinson's Disease and Movement Disorders Congress and the American Association for Geriatric Psychiatry.

So in sum, we continue to observe strong foundational elements that support NUPLAZID's growth and its potential to grow attractively in the quarters and years to come.

I'm going to turn now briefly to life cycle management. As we previously discussed, in addition to PD Psychosis, we are pursuing 5 other potential indications with pimavanserin. Just to level set with everyone, they are: AD Psychosis or Alzheimer's disease psychosis, Alzheimer's disease agitation, schizophrenia inadequate response, schizophrenia negative symptoms and major depressive disorder. These areas represent some of the most challenging neuropsychiatric diseases of our time, and they severely impact our health care system as well as, and perhaps most importantly, they impact the lives of both patients and their families. We believe pimavanserin has the potential to make a very meaningful difference in these patients' lives.

As I mentioned earlier, advancing our AD Psychosis program into Phase III is a high priority for us. Based on the positive Phase II data in AD Psychosis in our -019 Study that we announced last December, we're very excited about the potential of pimavanserin in ADP. As many of you know, there's no drug approved by the FDA for this indication.

We plan to meet with the FDA around the middle of this year and move our program into Phase III in the second half. We will provide more details on the program at that time. We also look forward to presenting data from our Phase II AD Psychosis study at a medical meeting in the second half of this year.

In addition, we continue to advance the studies that we initiated in the fourth quarter of last year in 4 additional substantial CNS indications.

Just to pause for a second and remind everyone, as we said before, we believe the unique pharmacological profile of pimavanserin that preferentially targets 5-HT2A receptors, together with the significant antipsychotic efficacy we've now observed in clinical studies in 3 disease states, that is, Parkinson's disease psychosis, Alzheimer's disease psychosis and schizophrenia that, together, these provide a strong rationale for pursuing pimavanserin in these additional CNS indications where we have very significant unmet needs.

So before I hand the call over to Todd, I'd like to introduce you to the newest member of our executive team, Michael Yang. Michael has extensive experience in successfully launching and growing major pharmaceutical products across a number of therapeutic areas. He comes to us from Janssen, where he previously served as President CNS and, more recently, President of Janssen Biotech. We're thrilled to have him onboard as our Chief Commercial Officer, and we look forward to introducing Michael to you in person over the coming weeks and months.

Now let me turn the call over to Todd, who will discuss our first quarter financial results.

Thanks, Steve, and thanks, everyone, for joining our call. I hope you're all having a great afternoon. Today, I'll discuss our Q1 financial results and provide expense guidance for Q2.

For the first quarter of 2017, we recorded $15.3 million of net product sales, with a gross-to-net percentage of approximately 26%. As I mentioned last quarter, we expected our gross-to-net percentages to be the highest of the year in Q1, and we still believe that will be the case. We expect our gross-to-net percentage to be in the low to mid-20s in the second quarter.

Consistent with previous quarters, we continued to recognize revenue using the sell-through accounting method. Under this approach, we recognize revenue when a specialty pharmacy dispenses NUPLAZID to a patient or when a specialty distributor sells NUPLAZID to a long-term care pharmacy or government facility.

On the cash front, we ended the first quarter with $469 million in cash and investment securities on our balance sheet. From a cash flow perspective, for the first quarter, cash used in operations was approximately $71 million, which was partially offset by $11 million of cash inflow from stock option exercises. Therefore, our net cash burn for the quarter was $60 million.

On the expense side of the P&L, total operating expenses, including cost of goods sold for the first quarter of 2017 was $104.1 million. This amount includes $15.6 million of noncash stock-based compensation.

Our R&D expenses increased to $35.4 million in the first quarter from $22.8 million in the first quarter of 2016. This increase year-over-year in R&D was driven by the expansion of our CNS development team and the initiation of clinical studies in 4 CNS areas beyond Parkinson's disease psychosis.

Our SG&A expenses increased to $65.7 million in Q1 2017 from $27.5 million in the first quarter of last year. This year-over-year increase has been driven by the commercial launch of NUPLAZID, including the addition of our sales force. With the recent expansion of our long-term care team that began ramping up in March of this year, our sales force is now comprised of approximately 155 sales specialists.

In addition to the sales team, we've built a supporting commercial infrastructure that includes NUPLAZIDconnect, we've increased our community programs focused on patients and caregivers, and we've continued to facilitate peer-to-peer activities for health care providers.

Looking ahead to the second quarter of this year, we expect our R&D expense to be in the high $30 million range and our SG&A expense to be in the high $60 million to low $70 million range as we continue to invest in the life cycle management of pimavanserin and the NUPLAZID launch.

As a reminder, all amounts provided in our press release and in the call today are U.S. GAAP amounts that include noncash stock-based compensation expense.

I'll now turn the call over to Michael.

Thanks, Todd, and good afternoon, everybody. Let me say at the beginning that I'm really excited to be part of the ACADIA team. I was attracted to this opportunity because of the potential for NUPLAZID, a transformational therapy for patients with Parkinson's disease psychosis. Not only is it first-in-class and the only FDA-approved treatment, NUPLAZID simply provides a remarkable clinical efficacy for patients. That said, there are always challenges in educating physicians, patients and caregivers when changing a treatment paradigm.

In my short time here at ACADIA, I have been impressed by the people, passion and commitment throughout the organization to make a positive impact on patient lives. We have an excellent foundation, and I'm looking forward to working with my colleagues to building upon that base to continue to grow NUPLAZID.

Regarding that foundation, we recently conducted a survey of 120 targeted physicians. There are a few insights from that survey that are very encouraging for the continued growth of NUPLAZID.

Importantly, 88% of the physicians surveyed who were aware of NUPLAZID intend to increase their future use for PD Psychosis. In addition, the majority of these targeted physicians using NUPLAZID gave it 1 of the 2 highest ratings in terms of physician satisfaction. And just to put that into context, in this same survey, less than 25% of surveyed physicians using Seroquel or clozapine gave them similar ratings.

While there is much work to do, I'm pleased to see the strong foundation we have in place and the favorable feedback we're hearing from physicians about NUPLAZID.

In my past experience with Janssen launching products in other specialty markets including CNS, now is an ideal time to pivot towards activating demand and capturing the compelling emotional components of this devastating condition.

An important stakeholder that we plan to give increased attention to is the caregiver. Parkinson's disease alone is very challenging, but when you add on the psychosis component of hallucinations and delusions, some of the simple every day tasks that we take for granted can be a struggle both for the patient and the caregiver.

The long-term care channel is another robust area of increased attention due to the impact of PD Psychosis on both the staffs and the residents. We have great access and high awareness for NUPLAZID. This is an exciting time for the brand. So I'll turn it back over to Steve.

Thanks much, Michael. In summary, we're off to a strong start in 2017. We plan to maintain sharp focus on the ongoing commercialization of NUPLAZID, continue to advance our clinical studies in the other CNS disorders that we described and prepare to move our AD Psychosis program into Phase III.

Just one additional note, my colleagues and I are inspired day in and day out by the patients we serve, and know that our best work happens when we make a positive difference in their lives. We're driven by our mission to provide innovative therapies to help improve the lives of patients suffering from CNS disorders.

I'll now turn the call over to Lisa, who will initiate the Q&A portion of the call.

Thanks, Steve. At this point, we will begin the Q&A portion of our call. (Operator Instructions) Sara, please open the call for questions.

(Operator Instructions) Your first question comes from Ritu Baral from Cowen.

So one first question for Michael. From your perspective, with fresh eyes, any new insights into the long-term care market challenges? And how comfortable are you with the expansion of the force, which I believe was planned before you came onboard? Are there any additional tweaks to that plan that you would like to implement at this point? And then I have a follow-up about ADP.

Hi, Ritu, and thanks for the question. And again, I'll just say that I'm really thrilled to be here at ACADIA. Your question is a good one in regards to a perspective on our expansion into long-term care. I would just say that beginning with the launch plan, it was clear that long-term care was an area of potential patients that we could access. However, there was just a lack of clarity about how we would go about doing that. After we got through the launch, it was clear that there was probably more opportunity in those facilities than we had access to with our current sales force. So I really do support the expansion. I've gotten first-hand engagement with our team on the ground. I think we're early days in regards to operational perspectives. But we are in the process of executing that and mapping out the key accounts. We've had early indicators of some success with regards to identifying patients in the facilities, and I'm optimistic about this area for future growth with NUPLAZID.

Got it. And then my follow-up is on FDA interactions about the upcoming Phase III ADP study. Steve and Serge, can you give us any sort of update on, well, whether the meeting has happened? And your thoughts on optimal trial design going into those discussions? And also, whether the -- I mean, there's not much data, but the Phase III top line success in agitation from Otsuka using Cohen-Mansfield, does that tell you anything about the potential for Cohen-Mansfield in ADP?

I think there might have been a couple of subparts to that. So I'm going to let Serge start, and I'll fill in if it seems like we didn't hit it all. Serge, go ahead.

Ritu, thank you for the question. We are preparing for the FDA meeting. It will happen midyear, so it did not happen yet. And in regard -- obviously, we have a very good idea what we will be proposing to FDA in terms of the Phase III trial, based on our learnings from the successful ADP Phase II trial as well as other considerations in terms of planning for the pivotal program. But at this point, we are not yet discussing this until we actually have the interaction and receive the feedback and have the opportunity to better understand what the final path for the Phase III development will be.

Got it. And then whether Otsuka's outcome gives you any additional comfort or any -- if there's any relevance of Cohen-Mansfield to this indication?

As we spoke earlier about results of other company's trials, we often refrain to comment on the outcome of the trials from competitors and other companies, mostly for reasons that we don't have a visibility to the data. In this particular case, the only information we have is the Otsuka's press release. And from that press release, it seems that they did identify, observed a signal of efficacy. But across 2 trials, particularly with a higher dose used in one of the trials, but there is some inconsistency in terms of the outcome from the 2 trials. And so the overall efficacy may be somewhat confounded and equivocal. Interesting for us, we were not surprised to see that one of the most commonly observed adverse events in the brexpiprazole group in these trials was agitation, which, as we spoke before, often happens in CNS trial. I would say while this was all -- we are always interested to learn from other people's trial, we are really focusing now on execution of our agitation trial. And obviously, these are 2 different molecules. Our selective unique mechanism of action, certainly, we remain to be very optimistic on the potential in the treatment of Alzheimer agitation. And additionally, I would say the SERENE trial has several different characteristics and features from the brexpiprazole trials as long as we could tell. Among others, there is some slight differences in patient population used in the trial, symptom severity at baseline, key secondary outcomes were different and country selection appears to be different. So overall, we are -- in terms of Cohen-Mansfield obviously, we are optimistic in its potential that to separate. We remain optimistic in terms of the potential of NUPLAZID and are very confident in the design of SERENE to be able to detect that therapeutic efficacy of NUPLAZID.

Your next question comes from the line of Charles Duncan from Piper Jaffray.

Congratulations on the commercial reimbursement organization progress in the quarter. Had 2 questions on commercial -- one commercial, one pipeline. One is actually for Michael. I just kind of -- it's nice to meet you by phone. I'm wondering as you crystal ball or look out, and I'm not looking for guidance. But if you look out a year from now, how will you measure success in your first year at the organization? And when do you anticipate us being able to see an impact on long-term sales reps on revenues?

Well, Charles, it's great to meet you as well. And I made a comment in my earlier remarks about my impression on the foundation that is very solid here at ACADIA. And I'm blessed, I think, in a situation that the market preparation and the brand preparation and the engagement we're currently having, both with the physicians and also with the payers in our NUPLAZIDconnect platform, they're very solid. I think that my greatest impact and focus in the coming months and days ahead is really focused on kind of 3 effective areas building off of that base of experience and solid foundation. And one -- and I think these are all natural things that one would consider at this phase of where we are in launch phase. But we need to move and focus on moving customers from trial to adoption. One of the things I'm going to be doing is working very closely with the sales and marketing organizations, spending time directly with our customers in the marketplace to get a first-hand understanding of both the opportunities and the barriers to making sure that we can do everything to optimize that transition that we've created here with the base experience, with the launch. The second is we're blessed in CNS in this particular therapeutic area, more than others, many in some cases, to have additional stakeholders. Obviously, the physician is a stakeholder. The patient is a stakeholder. But often, in the neuroscience area, the caregiver has an equal voice. And I think we have an opportunity to activate the voice of the caregiver and the consumer, leveraging the strong emotional components of this condition and the benefits of our product to create a stronger call to action for patients to, and caregivers to demand and request NUPLAZID. And I think that will be an exciting opportunity to kind of dig into. And then, finally, you can never rest when it comes to barriers to facilitate access. So while we have a good reimbursement and access situation today, in my opinion, there are always things we can do to improve and refine the delivery side of the equation. So those 3 things are where I would focus on.

That's helpful. And then one quick question for Serge. You've got a lot of potential label expansion opportunities going. We're looking forward to additional details on ADP study. And I'm not -- therefore, I'm not going to ask you specifics about that. But if you were to pick out one of the indications, and kind of crystal ball, which is the one that you're most excited for in terms of, I guess, reduced clinical risk or time to market? Do you have a favorite?

Thanks for the question, Charles. I would say I don't really have a favorite. All of the indications we are currently pursuing have a well-defined foundation, both in preclinical data, existing preclinical data, existing clinical analog data, as well as the clinical data. I do in -- having said that, it is also fair to say that, obviously, we have now positive data in Alzheimer disease psychosis and with the positive Phase II data, that obviously raises our level of optimism as we move forward. But we also have a positive data, as you know, in the schizophrenia, in the combination therapy, so that gives us optimism on that front. And naturally, there is much available data with analog chemical compounds there in major depression, both adjunctively and in monotherapy for the -- with the compounds with the same mechanism of action. And then we have a strong preclinical foundation on basis of which we are -- we moved forward into the Alzheimer agitation. So I would just briefly say, all of those indications are my favorites. They are really diseases with a significant medical need, and I hope that we will be successful in demonstrating ability of pimavanserin to provide a treatment benefiting all of these conditions.

Your next question comes from Tazeen Ahmad from Bank of America.

Maybe one on how -- some of the details of the launch. Steve, can you talk about what the continuation rate of treatment is? Meaning, I guess, I'm, in a different way, asking, what's the discontinuation rate? And also, in terms of how you're reporting your revenues, is there any kind of delay and is there any kind of stocking? I think you had answered this question at the beginning of the launch, but just wanted to double check that. And then I have maybe one question for Michael.

Yes, yes, you bet. So I'm going to let Todd take the question in terms of stocking. In terms of persistence and discontinuations, it's just too early to really get a good read on that. We need to observe that over an extended period of time. And of course, the patient installed base, so to speak, is building as we grow the brand. And so we just need to get more patient data over a more -- for a more extended period of time than we have today to really have a good fix on that. So there's not really much we can comment about on that today. So I'll stop there, ask Todd to pick up. And then I think you mentioned you have a question for Michael.

Tazeen, thanks for the call. As I had mentioned in the prepared remarks, we're still using the sell-through revenue recognition model. And so we only are recognizing revenue when our specialty pharmacies actually sell the product to the patient. Sort of the pipeline or pipe installed part is not recognizing revenue at this time because of the accounting method we're using. As we noted in the press release, deferred revenues did increase in Q1, the $4.1 million versus the $2.6 million we had at the end of the year. That increase is sort of what we would have increased by if not for the accounting method we're using. So we continue to evaluate our data. We expect to get another invoice from CMS on the Medicare side. And so we'll continue to evaluate the facts to determine if and when we switch to a sell-in model. And we'll obviously keep everyone apprised of that development as it progresses over the course of 2017.

Okay, great. And then, Michael, just based on the fact that you're coming from an area that has so much overlap and it's obviously great experience, I'm hoping you could give us a little bit of your view on kind of where the launch is right now and what things should be particularly important to look for? So for example, given that it's relatively early still, is it more important that you increase the number of physicians prescribing for NUPLAZID? Or is it more important that you have a physician increase the number of prescriptions that he or she is writing, for example?

Tazeen, Michael here, great question. I think that's a classic age-old question for any strategic conversation. I would say, where we are today, and I mentioned this in my comments earlier, I think it's really important to get some depth. I think we have -- we're always going to continue to want to add breadth to our portfolio of customers. And, certainly, we'll probably be more in the acquiring breadth in the long-term care segment. But as it relates to neurology, movement disorder specialists, center of excellence, high-volume neurologists, I think there's a lot of room to grow and go deep with these customers just yet. And I think that's an appropriate thing. We have been out in the market, got good brand awareness, and now we're getting a fix on some of those people. So I think the strategies that we'll be deploying, I think, are designed to get some -- a deeper breadth, a deeper penetration of those key targets.

And sort of realistically, how do you think -- how long do you think it's going to be before you reach whatever your internal estimates are for peak sales? Should we expect the hockey stick effect to happen soon? Or should this take some time?

Well, I wouldn't comment on the sales elements of this. I would just say that these things do take time. Remember, the penetration of our opportunity is a function of when these patients present. And so you have to think through the amount of patients that are coming through a neurologist's office, the ones that are available to us, both naive and treatment experienced. So it's going to take some time to build that. And I would expect that penetration to be steady and consistent.

Your next question comes from the line of Cory Kasimov from JPMorgan.

This is actually Brittany on for Cory. Just wanted to see if you could provide any insight on timing for when we can expect to see data from the ongoing expansion indications for NUPLAZID? And then just second, what medical meeting do you plan to release the full ADP data?

Serge? I think there were 2 questions there, I'm going to turn them both over to you.

Okay, thanks. Let me start with the second question. We haven't yet commented on where we'll present the data, other than saying that we will be presenting data in one of the conferences in the second part of the year. Once our abstract is accepted for presentation, we will certainly let you know where that will be. In respect to the ongoing clinical trials, we started these trials, just as a reminder to everybody, in the -- late in last year. And we are in the first 3 to 4 months of moving forward with this trial. So it's fairly early, and we would like to observe a little bit more the pace of recruitment before we project completion of the trials. In general, however, I would say that trials in these indications and of this size usually take 2 to 2.5 years to complete. So at this point, we have been sharing that the -- anticipation that the first results will be starting coming in the late 2018 and possibly beginning of 2019.

Your next question comes from the line of Salveen Richter from Goldman Sachs.

Just have 2 questions. First, how has the NUPLAZID launch so far aligned with your expectations there? And are there any kind of perhaps new initiatives you are considering or implementing to optimize the launch? And second of all, when do you think you will have visibility to and be comfortable to perhaps start providing some guidance for NUPLAZID sales?

Yes, great. so I'll answer the first part of that, and I'll let Todd answer the second part in terms of anticipated guidance. I would say -- I know I've said this before, but the thing that's probably been most remarkable is how closely the launch has tracked to what we expected. And in terms of the key structural components of the launch -- I'll make this really quick, because we said it before, but it bears -- it's worth repeating. The drug has performed almost exactly the same in the marketplace as we expected based upon the clinical profile of the drug. Same on efficacy, same on side effect and tolerability profile. And so -- and that's not always the case. So that's a really, really important element of the foundation that we refer to. Second, on the access and reimbursement side, it's been almost exactly what we predicted based upon the work that we did prior to launch. And perhaps most importantly, when we go out and survey physicians, the response that we get -- Michael mentioned this in his remarks -- is very positive. They like the drug. They like it because it works. And so I think the launch has tracked almost exactly as we expected. Now with any launch, you have a certain sequencing of things. You wouldn't want to go out and start activating or trying to educate caregivers and patients before you reach a certain level of education with the physician population. And so there's a certain sequencing of things. And so we're going through that sequence. And with any launch, you would expect sometimes to move things around in the sequence, and we've done a little bit of that. But, by and large, we've really executed the plan that we laid out. And so we're very, very happy with the launch at this point in time. I think we've done exactly what we expected to do in terms of laying a foundation. And I think as Michael mentioned in his remarks earlier, we're at a point now where we can now begin pulling even more levers on the launch. And it's time to do that, and so we're very excited about the prospect for that. And I think we've got -- as I said before, I think this is a drug that has the potential for very attractive revenue growth quarter-over-quarter, year-over-year. So paradigm shifts do take some time. But from our vantage point, everything we see in terms of building that foundation for that very strong revenue growth looks very, very good. So I'll pause there and turn it over to Todd in terms of guidance.

Yes. As Steve mentioned on guidance, right now, we are not yet ready to start guiding on top line revenue. It is something we expect to do. It isn't that we're never going to guide on it, but we're continuing to monitor lots of different metrics, including take on rate, discontinuation rates and the like. And we expect we will get there. I think our overall goal, as we've mentioned numerous times, is for you and the rest of the investment community to see the business like we do. And on average, we feel like people are seeing that very much at this time. And so again, not committing to when we'll do it but do expect that, in the future, we will start to guide on the top line.

Your next question comes from the line of Alan Carr from Needham & Company.

This is Danielle on for Alan. I just was wondering if there's any additional development requirements needed for your current label expansion studies? And then also if you've initiated all of the label expansion trials that you plan to, outside of ADP?

Yes. Serge, you want to take those 2 questions?

Yes, I certainly will. Thank you for the question. I -- one clarification, though, I'm not quite sure I understand your question about additional development requirements.

I just meant do all of these trials serve as registrational trials? Or some of them? Are you not sure?

Well, we're -- our inadequate response in schizophrenia trial is a Phase III trial. We had a meeting with FDA, end of Phase II meeting, agreed on the program. So from that perspective, we are very clear what is required and we are doing what is required and agreed with the FDA. Negative symptoms in schizophrenia is a Phase II trial. And depending on the results, we will then have a discussion in terms of what additional, if anything, would be necessary for that particular indication. Similar situation is with our Alzheimer agitation trial, which is also a Phase II trial. These are all robust trials, I would say. They are from -- for all intents and purposes, of a size and robustness of a Phase III trial, as we always want to do, even in a Phase II trial, a definitive evidence of efficacy. So the trials are sized up for -- to be able to provide that definitive information. And finally, our depression trial is a Phase II trial as well. So based on those results, we will consider further development in that indication.

I think if I could just add just a little bit of color to that, Danielle, just to kind of echo Serge's comments, but also just add one brief annotation. I think the honest answer is it depends on what we get from these studies. There are certain synergies that we might be able to capitalize on in these studies, depending on the results of the studies. So obviously, we're running 2 different studies in schizophrenia, looking at 2 different symptoms of the disease or 2 different, but similar, patient populations. And so there might be synergies that we can glean from that, that might have an impact on your question. And in Alzheimer's, same thing, we're looking at 2 different elements of symptoms that impact Alzheimer's patients. So the honest answer is there may be some synergies here that we can derive. It will really just depend on the results of these studies. But the most important thing, probably, that Serge said is all of these studies have been designed as registrational studies so that they could be used as part of a registrational package. Just what -- whether certain of these indications could be approved on the basis of a single study or a multiple study or a synergy between studies is something we'll just have to evaluate once we get the results of the studies.

Okay, great. That's helpful. And then is this all you plan to initiate outside of ADP?

Serge, you want to take that question?

Yes. Yes. Well, we continuously evaluate all of opportunities for NUPLAZID as well as additional developmental programs that we would like to consider. So it is hard to say that -- and I wouldn't say that this is all that we would do with NUPLAZID. There is a lot of -- will depend, obviously, on the progress of the current program or the -- our assessment of additional opportunities. And we will, in time, evaluate that and add additional developmental programs as it is warranted.

And I would just add to that, Danielle, that what you're seeing is the core of the life cycle management program. As Serge mentioned, there could be other things that we'll consider over time. There are other areas of interest that we have. Some of that could manifest itself in kind of a Phase IV type of trials that continue to support the PDP, the needs that patients have in that area. But what you see in the 5 indications that we described in addition to PDP is the core of the life cycle management program.

Your next question comes from the line of Paul Matteis from Leerink Partners.

This is Ben Burnett on for Paul Matteis. Actually, I had a follow-up question to the AD Psychosis commentary. I guess, in light of the fact that Otsuka ran 2 Phase III studies for brexpiprazole in AD agitation, I guess, would you expect to ultimately need to do 2 pivotal studies? So I guess to the extent that you can answer this at this time prior to the FDA meeting, any added color would be much appreciated. And I have one follow-up question.

Serge?

Yes. I think it's a bit premature for us to comment on what exactly the ADP, Alzheimer's disease psychosis, development program would look or a Phase III program would look before we have the opportunity to talk. Later in the year, after we have the opportunity to discuss this with FDA, we will certainly share the specifics and details of the program. And at that point, it will be much clearer to us and everybody else how will that program look. We have -- we are very clear right now what we want to propose to FDA. This is certainly a condition of a significant medical need with not currently approved treatments. And certainly, it's a great opportunity for a successful therapy with -- to be recognized, obviously, and that's acknowledged by the regulators as well. All I would say is, in many aspects, that would depend on the results of the study. And we have quite a bit of optimism and confidence that a well-designed trial will demonstrate therapeutic capabilities of NUPLAZID in this condition.

Okay, understood. And if I could just ask one more. I saw that you guys made a few tweaks to the NUPLAZID pricing and also the free sample period. I guess, how does this impact how we should be thinking about the sort of gross-to-net?

So I'll turn that question over to Todd. The question was -- Todd, I'm not sure if you could hear it -- how does the tweaking that we did on the price impact gross-to-net?

Yes, Ben, thanks for the question. We don't expect it to have a material impact on the gross-to-net percentage. And the 14-day free trial, that's treated as a sample that runs through SG&A expense, so it's not even in the gross-to-net equation.

Your next question comes from Jason Butler from JMP Securities.

So first, wondering if you could give us any color about where you're seeing new patient prescriptions come from? To what extent they're switches from other atypical antipsychotics versus patients who are -- who have not recently received atypical antipsychotics? And where you are seeing switches, can you talk about how that switch is being implemented? A phase-in, phase-out, a hard switch? Versus is there any combination use occurring?

Great. Michael is going to answer both questions, I think.

Jason, thanks for the question. I think it is a fairly standard thing at this juncture of a launch that we would source -- and I think we previously reported, sourcing most of -- 70% of our volume now from experienced patients and 30% from what we'd call treatment naive. And I don't think that's -- there's nothing really to comment more or further on that in regards to where we sit today. In regards to switching, this is a known thing. We expected this as a kind of a prelaunch condition of the market. Neurologists are very comfortable and understand how to maneuver these products with their patients that's kind of variable. There's a little bit of art, not -- a little bit of science. They do understand the kinetics of the product. But we have a little bit more work to do there on continuing to educate around our kinetics to make sure that doctors can be aware of the nuances there. I can't really comment on an official kind of total marketplace experience there because every physician, they have a wide variety of different techniques in their own practice that they might use.

Okay, great. And then just a follow-up on your focus on the caregiver. When you speak to caregivers, is there anything different that they're looking to get out of therapy for the patient versus the patient themselves or the caregiver or anything additional that they're looking to get out of treatment?

That's a very insightful question, Jason. I think one of the things that we have to unlock is, obviously, when a patient and a caregiver has a hallucination or a delusion that is disruptive, that's a clear call to action for treatment, and that's currently where we're competing for. We believe that there's more value or more patients that we could unlock where the caregiver is aware of something, the patient may not even have the insight. And we can stimulate that caregiver to seek additional intermediation with the physician and the patient. And that's an area that we'd like to activate. Certainly, our community involvement now, we're seeing the results of that kind of need or there's certainly a high degree of interest when we participate in these community events by the caregiver going, "Oh, that's something I've seen," or "I want to know more about that." And so we're going to get more specific and underneath that to really get to that compelling element. But right now, when there's a clear need by the caregiver or the patient, the doctor recognizes it, we're in there with NUPLAZID, and that's where we're competing. But as I mentioned, activating demand is really where there's a need to treat but the patient or the caregiver, in this case, can play a more active voice in having that conversation happen at the doctor level.

I think just to maybe add a little bit of additional color to that. We are the recipient of many, many anecdotes. And I think as we have engaged more on the patient and caregiver side to do more education there, reaching out directly to them, the distinctions between what they're experiencing and what physicians many times are hearing are pretty different. So the patients and the caregivers clearly are not always communicating exactly what they're experiencing to physicians. Now many times they are. But just a brief example of how what a patient is experiencing, how they diverge from what a physician expects. We had a recent anecdote of a patient in a long-term care facility -- this happened to be -- who would look out the window every day and observe children playing in the courtyard. They were hallucinations. And the staff -- the caregiver, in this case, the staff -- felt like it was a little -- it was relatively benign. It was amusing, until they had a thunderstorm. And then the patient became very, very agitated because the children were out in the rain, et cetera. And very difficult to -- they became very difficult to manage in that institution. And so it's just an example of how this is a new paradigm. No one's ever promoted a drug in this space before. We've got -- I think we've done a fantastic job with the medical education we've done. And, of course, we started with certain things like mechanism of action, because it's so different, we wanted to make sure we established that. And as we're progressing through the levers that we're pulling, we're seeing more and more opportunities to further educate and further get this drug to patients who clearly will benefit from it.

Your last question comes from Christopher James from Ladenburg Thalmann.

I'd like to just, I guess, really quickly dig a little bit deeper into your 120 targeted physician survey that you mentioned in your prepared remarks. Can you comment specifically on, one, I guess why were these physicians targeted? Whether any of these participating doctors were in the long-term care facility prescribing group? And then, what was the common theme behind their reason to increase their near-term prescribing habits? And then I have a quick follow-up.

Sure, great question. So this is a follow-up survey that we do to assess the usage and attitudes of physicians who have been exposed to our message. They're targeted in the sense that they're -- it's a sample of our targeted universe of physicians that we're actively engaged with. So that's the reason why they're targeted. They're on our target list. We're actively seeking to influence them, obviously, to use NUPLAZID. There were no doctors at this time in that survey for long-term care, so it was really exclusively from what we'd call the community or retail setting. And the #1 or 2 reasons why physicians really had an intent to use, and Steve had mentioned this earlier, is that it's really the safety and efficacy and the performance of the product thus far. So the product promise through the label that we were granted has met the expectations of the physicians who have used it. And that, in that trial experience, encourages them to broaden that and deepen that use into other patients in their practice. That's the intended use going up kind of statistic. That's further, I think, strengthened, I guess, as a foundation with the fact that physicians, a majority of physicians, in this case, are satisfied. So there's a high satisfaction, a high intent to use, because the product is performing exactly as the way it was promised. And as Steve had mentioned earlier, that is not always the case. So that's why we have a reason to be optimistic.

Great. And then regarding your outreach to patients, what specific metric could you point to that would trigger beginning your outreach to patient education?

Yes. Just to be clear, we were not speaking about patients, we're talking about caregivers in this case, so we're trying to activate the voice of the caregiver. I think it would be, at this point, premature to discuss the kind of metrics. But obviously, one clear metric would be an increased voice of demand in the offices for NUPLAZID. So that's kind of ultimately where the brass tacks meet. We would invest in these ideas and then, hopefully, we would hear that reported back from the offices that the caregivers are more aware and asking for NUPLAZID for their particular patient. So basically brand requests for NUPLAZID.

Mr. Davis, please proceed to closing remarks.

Great. So thanks again, everyone, for joining us on today's call and for your continued support. We look forward to updating you on our future progress.

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