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Edited Transcript of ACAD earnings conference call or presentation 1-May-19 8:30pm GMT

Q1 2019 ACADIA Pharmaceuticals Inc Earnings Call

SAN DIEGO May 9, 2019 (Thomson StreetEvents) -- Edited Transcript of ACADIA Pharmaceuticals Inc earnings conference call or presentation Wednesday, May 1, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Elena H. Ridloff

ACADIA Pharmaceuticals Inc. - Executive VP & CFO

* Mark C. Johnson

ACADIA Pharmaceuticals Inc. - VP of IR

* Michael J. Yang

ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer

* Srdjan R. Stankovic

ACADIA Pharmaceuticals Inc. - President

* Stephen R. Davis

ACADIA Pharmaceuticals Inc. - CEO & Director

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Conference Call Participants

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* Alan Carr

Needham & Company, LLC, Research Division - Senior Analyst

* Charles Cliff Duncan

Cantor Fitzgerald & Co., Research Division - Senior Analyst

* Cory William Kasimov

JP Morgan Chase & Co, Research Division - Senior Biotechnology Analyst

* Danielle Catherine Brill

Piper Jaffray Companies, Research Division - VP & Senior Research Analyst

* Jason Nicholas Butler

JMP Securities LLC, Research Division - MD and Senior Research Analyst

* Marc Harold Goodman

SVB Leerink LLC, Research Division - MD of Neuroscience & Senior Research Analyst

* Ritu Subhalaksmi Baral

Cowen and Company, LLC, Research Division - MD and Senior Biotechnology Analyst

* Salveen Jaswal Richter

Goldman Sachs Group Inc., Research Division - VP

* Sumant Satchidanand Kulkarni

Canaccord Genuity Limited, Research Division - Analyst

* Tazeen Ahmad

BofA Merrill Lynch, Research Division - VP

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to ACADIA Pharmaceuticals' First Quarter 2019 Financial Results Conference Call. My name is Shannon and I will be your coordinator for today. (Operator Instructions)

I would now like to turn the presentation over to Mark Johnson, Vice President of Investor Relations at ACADIA. Please proceed.

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Mark C. Johnson, ACADIA Pharmaceuticals Inc. - VP of IR [2]

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Thank you, Shannon. Good afternoon, and thank you for joining us on today's call to discuss ACADIA's First Quarter 2019 Financial Results. Joining me on the call today from ACADIA are Steve Davis, our Chief Executive Officer, who will provide a brief overview of our strategy, recent achievements, pipeline opportunities and financial performance; Michael Yang, our Chief Commercial Officer, will provide updates on our commercial initiatives with NUPLAZID; Serge Stankovic, our President, will discuss our pipeline progress; and Elena Ridloff, our Chief Financial Officer, who will discuss our financial results before turning it back to Steve for his final remarks and opening up the call for questions. I would also like to point out that we are using supplemental slides, which are available on the Events and Presentation section of our website.

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 within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, including goals, expectations, plans, prospects, growth potential, timing of events or future results, 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. 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.

I'll now turn over the call to Steve Davis, our Chief Executive Officer.

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [3]

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Thank you, Mark. Good afternoon, everyone and thank you for joining us today. During April, we at ACADIA were proud to honor Parkinson's Awareness Month. This was an important opportunity for our employees to share their commitment to Parkinson's disease patients and caregivers, whom we aim to serve every day. Many in ACADIA participated in awareness and charity walks alongside patients and their caregivers. In addition, we collaborated and placed our support to several Parkinson's patient advocacy organizations across the country to help make educational events possible year round and not just during April.

Please turn to Slide 6. We come in to 2019 with significant momentum, executing on all 3 of our strategic pillars. First, we continue to grow the sales of NUPLAZID as the only FDA-approved treatment for patients with Parkinson's disease psychosis. Second, we continue to leverage the potential of pimavanserin in additional indications of high unmet need. And third, we continue to explore multiple opportunities to expand our pipeline through disciplined business development to achieve our long-term vision in CNS.

Let's review our first quarter progress on Slide 7. We are extremely pleased with our team's efforts this quarter, driving our strong sales performance. In the first quarter, NUPLAZID achieved $63 million in net sales, a 29% year-over-year increase. Based on our execution and growth of NUPLAZID in the first quarter, we have raised the lower end of our revenue guidance and now forecast 2019 net sales to be between $280 million and $300 million.

On the clinical development front, I'm pleased to announce that we recently completed enrollment in both of our late stage schizophrenia studies. In our ENHANCE study, we're evaluating pimavanserin as an adjunct treatment in schizophrenia patients with inadequate response and we expect to report topline data midyear. Our ADVANCED study is evaluating pimavanserin as an adjunct treatment in schizophrenia patients with prominent [negative] symptoms and we now anticipate reporting top line results sooner than expected. We should have results from this study around the end of this year.

I'm also thrilled to announce that we recently initiated our Phase III CLARITY program, evaluating pimavanserin as an adjunctive treatment for major depressive disorder. And finally, we expect to initiate our Phase III program evaluating trofinetide as a treatment for Rett syndrome in the fourth quarter this year.

With that, I will now turn it over to Michael to discuss our commercial performance.

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Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [4]

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Thank you, Steve. Please turn to Slide 9. Today, I would like to provide you with an update on the progress we're making in delivering continued growth of NUPLAZID. This has been the result of our execution of our key commercial initiatives to establish NUPLAZID as the treatment of choice in management of PD Psychosis and we are pleased with the response we've seen from physicians, patients and their caregivers.

We have successfully completed our transition to the 34-milligram capsule in the first quarter and have stopped selling the 17-milligram tablets. We believe this will result in a more positive patient experience. NUPLAZID new patient starts in both the specialty pharmacy and the specialty distribution channels of our business continue to grow throughout the quarter. We believe this was due to the awareness [built by] our DTC campaign, showing the potential positive benefits of NUPLAZID as a treatment for PDP patients.

In February, we pointed out that the international Parkinson's and Movement Disorder Society published their updated treatment recommendations for PD Psychosis, which included pimavanserin as the only medication listed as efficacious and clinically useful. Our team started educating about these recommendations in the first quarter, which served as important peer review guidance on the appropriate care for patients with PD Psychosis. Physicians have told us that this guidance is useful to help support their treatment recommendations.

Turning to Slide 10, as you can see, we have established a solid growth trajectory in 2019. We believe this reflects our continued growth in new patient starts and continued expansion of our prescriber base, driven by the response to our DTC campaign and our customer-facing field force. Importantly, we continue to see more and more physicians use NUPLAZID as first-line treatment for PDP.

For the overall business, we achieved sequential volume growth of approximately 6.5% in the first quarter. We are especially pleased with the response to our long-term care specific commercial initiatives, which delivered a higher growth rate in long-term care this quarter. We continue to receive feedback from the community about the positive experiences patients and their caregivers are having with NUPLAZID. We estimate that over 125,000 patients received treatment for PDP and we intend to continue to grow our market share in this population. The current growth supports our confidence in our updated 2019 guidance and the long-term opportunity for NUPLAZID in PD Psychosis.

I'll now turn it over to Serge to provide R&D updates on our pipeline.

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Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [5]

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Thank you, Michael. Today, I look forward to sharing some exciting updates regarding our R&D progress. Let's start with Slide 12. Pimavanserin is first-in-class selective serotonin inverse agonists. All other antipsychotics worked primarily by blocking dopamine, which is particularly problematic in Parkinson's patients who suffer from a lack of dopamine. In addition to PDP, pimavanserin has already shown positive results in all 4 clinical categories we are currently evaluating in late stage clinical progress. We also plan to initiate a Phase III program for trofinetide in Rett syndrome later this year. In total, we are advancing 5 late stage programs.

On Slide 13, are just a few recent highlights I wanted to share with you. First, as Steve noted, we recently completed enrollment in both of our late stage schizophrenia studies, evaluating pimavanserin [as an attractive] treatment, ENHANCE for patients with an inadequate response to antipsychotic treatment and ADVANCE for patients with predominant negative symptoms. Second, we initiated our CLARITY Phase III program for pimavanserin as an adjunctive treatment for patients with major depressive disorder or MDD. And third, the positive Phase II results for trofinetide in Rett syndrome that were recently published in Neurology.

Starting with Slide 14, I will review our ongoing programs in a little more detail. There is no FDA-approved treatment for dementia-related psychosis or DRP. DRP is estimated to affect approximately 2.4 million patients in the United States, of which about half are diagnosed. Our Phase III HARMONY clinical study in DRP patients is leveraging the benefits we observed in 2 previous studies, our PDP pivotal study as well as our Alzheimer's disease psychosis study. HARMONY is a relapse prevention study. As a reminder, all patients are treated with pimavanserin for 3 months in an [off-label] fashion and only those patients with a stable response get randomized to either continue pimavanserin or to placebo and are followed for additional 6 months primarily -- primary outcome is time to relapse. We have agreement with the FDA that robust results with HARMONY can serve as the basis for a supplemental NDA submission. This development program received Breakthrough Therapy Designation from the FDA, the second such designation for pimavanserin. We anticipate final results of this study in 2020, with an Interim Reading in the second half of this year.

Let's turn to Slide 15 in our MDD program. Today, the standard of care for people with MDD is to initiate treatment with an SSRI or SNRI. However, a majority of patients do not adequately respond to this initial treatment and continue to experience significant symptoms of depression. As a consequence, approximately 2.5 million people in the United States take additional drugs as adjunctive therapy. Unfortunately, for these patients, the approved treatments for both first-line and adjunctive therapy in MDD can carry significant side effects burdens, leading to high unmet needs and sometimes difficult treatment decisions. We believe pimavanserin and its unique pharmacologic and clinical profile may represent an important new adjunctive therapy for patients struggling with MDD.

Slide 16 highlights the result of our Phase II CLARITY trial compared to the significant unmet needs that exist today. We have positive overall study results, including achieving statistical significance on our primary and key secondary endpoints relative to placebo. The results were even more robust in Stage 1. CLARITY results are impressive, given the high unmet need that exists in the treatment of MDD. We believe these results are clinically important as we seek to develop pimavanserin as a potential adjunctive treatment for MDD.

Slide 17 shows our Phase III development program for pimavanserin for adjunctive treatment of MDD, which we recently initiated. CLARITY-2 and CLARITY-3 are both 6-week parallel designed, randomized double-blind placebo control multicenter study, designed to evaluate the efficacy and safety of pimavanserin as adjunctive treatment in patients with MDD, who have an inadequate response to standard antidepressant therapy with either an SSRI or SNRI. CLARITY-2 has initiated enrollment and will involve approximately 280 patients in the United States. CLARITY-3 will initiate enrollment in the coming months and will enroll approximately 280 patients outside of the United States. The primary endpoint in both studies is the change from baseline on the 17 item Hamilton Depression Rating Scale total score. Our Phase II CLARITY study, combined with at least one of these Phase III trials, could be the basis of supplemental NDA submission.

I'll now review our 2 schizophrenia programs, starting on Slide 18. Approximately 1% of the adult U.S. population suffers from schizophrenia and approximately 30% of those patients have an inadequate response to therapy, meaning they show some response to treatment but remain highly symptomatic, requiring additional therapy. With no FDA-approved therapy for inadequate response, we believe the addressable U.S. population is roughly 700,000 patients. We have completed enrollment in our 6-week ENHANCE study and remain on track to announce topline data midyear. As a reminder, the primary endpoint in this study is the change from baseline on the positive and negative syndrome scale.

On Slide 19, we have a graphic representation of the ENHANCE study design. Turning to Slide 20, there is no FDA-approved treatment for the negative symptoms of schizophrenia. Approximately 40% to 50% of schizophrenia patients experience predominant negative symptoms, which provide us with the potential U.S. addressable population of approximately 1 million patients. Predominant negative symptoms include apathy, lack of emotion, social withdrawal and cognitive impairment. We have fully enrolled our 26-week ADVANCE study ahead of our expectations and now expect to announce results around year-end. The primary endpoint is the change from baseline on the negative symptom assessment 16 items scale.

On Slide 21, we have a graphic representation of the ADVANCE study design. Turning to Rett syndrome and trofinetide on Slide 22, Rett syndrome is a debilitating neurodevelopmental disorder that occurs predominantly in females, following apparent normal development for the first 6 months of life. Currently, there are no approved medicines for this rare disease, which affects approximately 6,000 to 9,000 patients in the United States. We plan to initiate Lavender, our Phase III study for trofinetide in Rett syndrome, in the fourth quarter of this year. This 3-month study will evaluate approximately 180 females with Rett syndrome, aged 5 to 20. If our Phase III trial is positive, there is a potential to submit an NDA in 2021, based on the single Phase III study.

Slide 24 provides a summary of our updated clinical milestones for 2019 and beyond. This is an exciting time for ACADIA in R&D and I look forward to updating you on our progress. I'll now turn the call over to Elena to discuss our financial performance.

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Elena H. Ridloff, ACADIA Pharmaceuticals Inc. - Executive VP & CFO [6]

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Thank you, Serge. Now I'll discuss our first quarter 2019 results and financial outlook. Please turn to Slide 26. In the first quarter of 2019, we recorded $53 million in net sales, an increase of $14.9 million or approximately 29% growth, compared to the $48.9 million of net sales in the first quarter of 2018. This was driven by approximately 19% volume growth year-over-year. The gross to net adjustment for Q1 2019 was 24.4%. The gross to net adjustment this quarter was less than our forecast, primarily due to stronger than anticipated performance in the specialty distribution portion of our business, which has more favorable growth to net. As a reminder, gross to net is typically highest in the first quarter, due to the annual reset of the [donut hole] for Medicare Part D patients. Basic inventory in the channel at the end of the first quarter was consistent with year-end 2018.

Moving down the P&L, total operating expenses, including cost of goods sold, were $150.6 million in the first quarter of 2019, compared to $103.7 million for the same period of 2018. These amounts included $19.9 million and $20.4 million of noncash, stock-based compensation expense, respectively.

GAAP R&D spend has increased to $52.9 million in Q1 2019, from $39.3 million in Q1 of 2018. The increase was primarily due to [supplemental] clinical study costs for pimavanserin, as well as development costs for trofinetide. GAAP SG&A expenses increased to $93.1 million in Q1 2019, from $60.9 million in the first quarter of last year. The increase was primarily due to the increase in marketing expenses related to our DTC advertising campaign, as well as increased charitable contributions. Cash used in operations during the quarter was approximately [$64.2] million, compared to the $45.2 million for the first quarter of 2018. We ended the quarter with $414.3 million in cash and investments on our balance sheet.

Please turn to our annual guidance on Slide 27. As Steve mentioned, for the full year 2019, we expect continued strong growth for NUPLAZID and have raised the lower end of the guidance range. We now forecast 2019 net sales to be between $280 million and $300 million. At the midpoint of this guidance range, this represents approximately 30% growth in revenue year-over-year and approximately 20% volume growth year-over-year. We continue to expect gross to net adjustment in the range of 18% to 19% for the full year and forecast Q2 gross to net adjustment in the mid-to-high teens.

Turning to expenses, we continue to forecast GAAP R&D expense to be between $250 million and $265 million. On a quarterly basis, R&D expense will step up starting in the second quarter. This is related to the commencement of our Phase III program for major depressive disorder and manufacturing scale up to the trofinetide Phase III program.

We continue to forecast GAAP SG&A expense to be between $280 million and $295 million for the full year 2019. On a quarterly basis, we expect SG&A expense to step down starting in the second quarter. This is due to a reduction of advertising expenses related to the completion of our DTC campaign and reduced charitable contributions. We continue to expect noncash stock-based compensation expense to be between $80 million and $90 million in 2019.

And with that, I'll turn the call back over to Steve.

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [7]

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Great. Thank you, Elena. Please turn to Slide 29. In closing, our team is off to a great start, executing on all 3 of our strategic pillars in 2019. First, growing NUPLAZID in Parkinson's disease psychosis. Second, leveraging pimavanserin in additional large market CNS indications. And third, pursuing digital and business development.

We truly appreciate the dedication and hard work of all of our employees who are driving our company's continued success. I'll now open up the call for questions. Operator?

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Questions and Answers

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Operator [1]

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

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Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD and Senior Biotechnology Analyst [2]

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My first question is a little more detail on why you would discontinue the DTC or ramp that down, given it seems to be working for you. Or is there an option to keep that going? Are you thinking about other commercialization strategies to basically keep the renewed growth going? And I've got a follow-up on the negative symptom study.

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [3]

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Okay. Let's deal with DTC first. Mike, do you want to take that question?

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Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [4]

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Yes. Ritu, I think that our campaign we had already -- always planned to have it run through the first quarter, which we did execute that. And with campaigns like this, you create a bolus of attention and awareness and that is now going to flow through as people kind of go through the website, go see their positions, which will be benefiting from that throughout the second quarter and into the summer. It's very -- it's not normal to keep a campaign on 24/7, 365. So we will be learning more along the way as we're doing assessments. And, again, the campaign just ended a few weeks ago, so now we'll be in the process of pulling that awareness through to physicians and generating that demand. So we don't see a need to keep the campaign running throughout the year.

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Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD and Senior Biotechnology Analyst [5]

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Got it. And then -- go ahead.

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [6]

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On Ritu's question. No, please go ahead. On negative symptoms.

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Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD and Senior Biotechnology Analyst [7]

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Yes. And as we think about the upcoming Phase II data on the PAN's negative symptom scale, what constitutes good data? What constitutes the minimal clinically important difference? What's truly clinically meaningful to these patients? What would good data look like here, especially in comparison to the landscape?

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [8]

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Right. Serge, you want to take that question?

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Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [9]

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Just to clarify, Ritu, are you asking about the ENHANCE study for inadequate response? Or are you asking about negative -- predominantly negative symptom study?

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Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD and Senior Biotechnology Analyst [10]

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Predominantly negative symptoms.

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Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [11]

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Okay. This one we will be [running] our -- we will be reading out later this year toward the year-end. We may for the design of the study and the sizing of the study, we made assumptions that are very comparable to the effect sizes of a very few negative symptom trials that exist out there and that are considered clinically meaningful. We didn't disclose specifically what are the effect sizes we assume. But the negative symptom assessments scale has been used and is validated for this and we made certain assumptions in that regard that are clinically accepted as meaningful endpoints.

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Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD and Senior Biotechnology Analyst [12]

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What is that delta that you powered around?

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Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [13]

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Yes. As I said, we didn't really disclose this. We are not disclosing the details. That's usually in our trials. But of course, we made appropriate, clinically meaningful assumptions around that.

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Operator [14]

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Your next question comes from Cory Kasimov with JP Morgan.

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Cory William Kasimov, JP Morgan Chase & Co, Research Division - Senior Biotechnology Analyst [15]

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I actually had a very -- the first one is similar to what Ritu was asking, but for the upcoming inadequate responder schizophrenia study this summer. And [there] curious -- I guess you're not going to disclose the exact effect size, but can you speak in, at least general terms, to kind of what you're looking for in the study? Maybe the feedback you've gotten from KOLs from this front? And then my second trial will probably be for Serge as well, was for MDD and CLARITY, and I'm just curious on your expectations for bringing sites online and the potential enrollment in these studies, especially the U.S. one first, since that's already up and running. Is there anything you can glean on this front from all the other Phase III trials you've run with pimavanserin?

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Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [16]

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Yes. Let me start with the ENHANCE study and the assumptions around that. With the inadequate response, our ENHANCE study, it's a little different because there is a plethora of studies and approved products in this. So there is a wide range of effect sizes that we saw with the currently approved treatment in monotherapy [of this] . And they range from starting somewhere of 0.25 to 0.3. A majority is between that and 0.5 effect size, with only a few exceptions going above 0.5. So our assumptions, as you imagine, are in that range of 0.25 to 0.5 on the scale, but we don't really, again, specifically discuss the deltas that we assume for the trial when we were sizing the trial. I just want to make one more comment here and that is, this is an adjunctive treatment. There are no other treatments for adjunctive therapy, so all of the assumptions around this are related to the monotherapy trials in schizophrenia in MDD. With regard to MDD, obviously, in the U.S. trial, we have a benefit of the number of sites that we worked on our CLARITY trials -- in the Phase II trials. So we, in terms of engaging the [size] , there was a quite a bit of interest. And with the positive results, we had quite a bit of interest for participation of the trials, so from that perspective, recruitment of study sites to participate was a very smooth process. We expect, ultimately, that recruitment will be going fairly similarly, like we have in our CLARITY trial, and that will -- even probably a little bit better because of now, with the positive result, there is a higher level of interest, obviously, on CLARITY. Compared to other pimavanserin trial, as you asked that as well, I mean we -- I have to say, we have a fairly smooth recruitment across our different indications in all of the trial and is reflected in the way how we were able to follow our projected timelines for recruitment. So depression is no exception to that.

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Cory William Kasimov, JP Morgan Chase & Co, Research Division - Senior Biotechnology Analyst [17]

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Can you just remind us how long it took you to recruit the Phase II CLARITY trial?

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Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [18]

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It was a little more than 2 years. So we are expecting in this trial that it will be a similar situation, about 2 to 2.5 years to complete the trial.

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Operator [19]

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Your next question comes from Jason Butler with JMP Securities.

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Jason Nicholas Butler, JMP Securities LLC, Research Division - MD and Senior Research Analyst [20]

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First one, on the commercial, another follow up on the DTC, can you maybe frame for us that bolus you mentioned before and how it compares to the impact or the positive impacts you got from the DTC campaign this time last year?

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [21]

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Jason, I just want to make sure we're clear on the question. The bolus you're referring to is what?

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Jason Nicholas Butler, JMP Securities LLC, Research Division - MD and Senior Research Analyst [22]

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So the bolus of patient inflow into the -- you mentioned in answer to a previous question that you got out of the DTC campaign this year versus last year, that you're now in the process with this year going through and looking to pull patients through on therapy.

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [23]

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Okay. Yes, I don't think we used the term bolus, but I get the question and I think Michael does too, so Michael, do you want to try to answer it?

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Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [24]

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Yes, let me address the second part first. The first campaign that we did a year ago was disease awareness. And of course, this is a brand-new campaign, so I think it's very hard to compare the two in regards to impact. In fact, we believe we're, obviously, getting a better brand request rate and interest rate with the branded campaign. With regards to the bolus, what I was referring to was is that we generate a lot of awareness and interest with the campaign. That's really what the original -- the first phase of the campaign is designed to do, stimulate interest and awareness. What we're now seeing is a very healthy attention [rate] into our digital properties, websites, et cetera. So we're getting good engagement there. We're also hearing both anecdotally and starting to attract some data at the doctor level. Those patients that are in the process will become, after they go on an appropriate trial, paid patients and generate revenue in ensuing quarters. So that's why we phase the campaign in the beginning of the year, so we'll get the benefits of that throughout 2019.

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [25]

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And just a little bit of additional color there. I think on the last earnings call, we kind of walked through the process of patients becoming aware of the drug. They -- Parkinson's patients typically see their doctor every 3 months, sometimes every 6 months, sometimes a bit more frequently. So many times, this repetition of messaging to create awareness, then they have an appointment in some months later and then we start the process of them getting a prescription and going through a free drug and then a paid drug and then it's a full quarter right after beyond all of that that you get the full benefit from a full quarter of revenue from a patient that you started by increasing awareness. So I think the point Michael was making earlier is, the work that we've done in DTC over the last several months, we'll expect the benefit of that to continue on for some period of time.

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Jason Nicholas Butler, JMP Securities LLC, Research Division - MD and Senior Research Analyst [26]

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Great. Okay. And just one question on the negative symptoms trials. Can you just talk about the background positive symptom score you expect to enroll in the study? And what happens? Is there anything built into the protocol if a patient has worsening positive symptoms at any point during the trial?

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [27]

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Sure. Serge, you want to take that question?

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Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [28]

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Right. We -- the -- in the negative symptom study, there is a requirement that the positive symptoms are fairly well controlled for the patient to be [able] . So it's predominantly negative symptom studies. So the positive symptoms are capped at a certain minimum of severity to be able to enroll in the study. In terms of potential worsening of positive symptoms, obviously, it's a clinical decision by the physician investigator whether they want to discontinue the trial and apply change in the patient's therapy. It's not something that we in the trial saw frequently or there is something that we anticipate will happen, because patients are continuing on their background antipsychotic, so if they have a good control of positive symptoms, but still express negative symptoms, that should be continued throughout the trial and for the most part, that's what we are seeing.

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Operator [29]

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Your next question comes from Salveen Richter with Goldman Sachs.

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Salveen Jaswal Richter, Goldman Sachs Group Inc., Research Division - VP [30]

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So in the Phase II schizophrenia trial, you used NUPLAZID and risperidone and you saw some benefits in PAM score in positive and negative symptom subscales. But your patient demographic wasn't specifically inadequate responders or negative symptom patients. So how should we think about the readthrough here to these 2 patient demographics?

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Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [31]

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Salveen, yes, that's -- you're correct, the paradigm in that study was somewhat different. In that study, we used a sub-therapeutic doses of risperidone. In other words, a 2-milligram risperidone versus therapeutic dose of 6-milligram risperidone and combined it with pimavanserin, while 6-milligram risperidone was alone. And what we saw is that the efficacy that we saw in the trial was comparable and in some aspects, little bit better than what we saw with the full therapeutic dose of risperidone and improvement on the tolerability side of the trial. So we, obviously, that trial demonstrated synergies of between atypical antipsychotic risperidone with pimavanserin. What we are looking in this trial is a little different paradigm, obviously, people that are on atypical antipsychotic, but don't have a full response. And we are still [looking] for that synergistic effect to enhance the efficacy of the adjunctive treatments. So hence, the name ENHANCE.

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Salveen Jaswal Richter, Goldman Sachs Group Inc., Research Division - VP [32]

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Got it. And then maybe just a second question on your commentary that DTC didn't provide much benefit to the long-term care setting. Are there other strategies other than awareness that could be undertaken here?

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [33]

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So Salveen, I'm going to just ask Michael, and you wanted to first clarify the point here.

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Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [34]

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Salveen, yes. No, I don't believe that I said that we did not see an impact in LTC. Maybe you misheard that. What I mentioned is when we did the first campaign, to compare the first campaign, which was disease awareness, to the branded campaign, there are different dynamics. And a point in fact, actually, we are seeing is an unexpected benefit from the branded campaign in long-term care. We believe that was part of the wind in our sails in long-term care in the first quarter. And conversely, we did not see that benefit specifically in long-term care with our disease awareness campaign. So we are seeing benefits. Now whether that is sustained over time, we'll be evaluating that. But we're very pleased with that impact that we saw in long-term care with our disease, with our branded campaign that we have on air, just finished.

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [35]

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I'm sorry, just to be crystal clear, disease awareness campaign ran a year ago. We did not see much in the back of long-term care. Branded ad, which just finished this year, we see an impact.

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Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [36]

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That's correct.

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Operator [37]

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Your next question comes from Tazeen Ahmad with Bank of America Merrill Lynch.

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Tazeen Ahmad, BofA Merrill Lynch, Research Division - VP [38]

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Steve, just wanted to ask you a question with regards to the guidance. So on the call so far, you stated that you feel good enough with DTC that you're ready to wind that down a bit and focus on all the leads that you have. I think you also mentioned you had an uptick in long-term care. So I guess what more would you need to see in order to raise the higher end of guidance as well as the lower end? And then I have a follow-up.

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [39]

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Tazeen, I'm going to let Elena answer the question.

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Elena H. Ridloff, ACADIA Pharmaceuticals Inc. - Executive VP & CFO [40]

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Tazeen, as we discussed year-over-year in the first quarter, we had 19% volume growth. At the midpoint of our guidance, that's pretty -- for the full year, that's pretty much on track with what's included in the midpoint of our guidance. So at this point in the year, we feel very pleased with how we are executing against our guidance and, hence, why we will increase the low-end of the range. As Michael mentioned, we have a number of commercial initiatives and are pleased with what we're seeing so far with DTC, and we'll continue to track that and how we're tracking versus our full year guidance. And as appropriate, we will adjust it in the future.

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Tazeen Ahmad, BofA Merrill Lynch, Research Division - VP [41]

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So just to clarify -- go ahead.

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [42]

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I'm just going to say that to be clear, as we mentioned earlier, on the DTC campaign, it's not that we stopped it because we've seen a certain result. We ran the campaign exactly as planned, so ran it through the planned conclusion of the television -- televised portion of the campaign, but we expect benefits to run beyond that. And you do reach a point where -- of saturation, where you do actually need to stop the television campaign in [order to poll benefit] . So we feel really good about the early returns that we have in the campaigns.

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Tazeen Ahmad, BofA Merrill Lynch, Research Division - VP [43]

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And then can you just give a little bit more color on your free drug program? How long does it last and how many times can a patient renew? Has that changed?

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [44]

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Michael?

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Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [45]

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Yes. So the standard program is a 14-day free trial when they come through our hub and distribution services. And they can re-up for that for another 14-day if the patient needs it. So we are not -- we don't hold the -- hold that as a hard rule, but if someone needs an extra 14 days, we give it, but the majority of patients get 14 days.

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Tazeen Ahmad, BofA Merrill Lynch, Research Division - VP [46]

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And the use of that program? Has that been stable? Or has that changed?

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Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [47]

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It's been pretty stable.

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Operator [48]

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Your next question comes from Charles Duncan with Cantor Fitzgerald.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [49]

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First of all, congrats on a good quarter progress and I had two, one commercial and one pipeline. The first regarding commercial, you had some comments on long-term care and the growth and you talked about the positive impact of DTC, at least initially. I'm wondering what else is contributing to the long-term care growth rate that was a little higher than you expected. And perhaps if you could touch on persistence now with the 34-milligram tablet versus the 2 by 17.

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [50]

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Sure. Michael?

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Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [51]

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Charles, we were very pleased with what we saw in both long-term care and our SP. So I want to be clear, we are very pleased with the bottle demand, the [unit demand] of long-term care and our new brand growth in our specialty pharmacy channel. Specifically, in addition, to what we mentioned around the benefit of awareness through the campaign in the long-term care, I think what you're starting to see is really a continued maturation of our long-term care commercial capabilities, that it's helped us drive growth in this setting. Basically, what we're doing is focusing on generating deeper demand in accounts and systems, where we have set up deposit access at the pharmacy, we've identified and nurtured a PDP disease champion, and then we further followed that up with a patient identification process. And that's a system by system account system that we have. So that started to pay on dividends with our commercial execution. That is in part also aided by the awareness driven by the DTC campaign. And that's what you're starting to see I think pay off in long-term care.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [52]

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Okay. And then my second question is perhaps for Serge. On the pipeline and, specifically, ENHANCE versus ADVANCE, and several questions have been asked on the design and effect size assumptions, et cetera. But I wanted to step back and just ask you, when you think about the unmet need in terms of inadequate response versus negative symptoms, you laid out the number of patients, but where do you think the potential is to make a greater clinical impact on patient care and, therefore, perhaps, even pharmacoeconomic value of the 2 indications?

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [53]

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Yes. Serge?

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Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [54]

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Charles, that's a great question, actually, and one that provokes a lot of thinking on -- one interesting point I wanted to make here at the beginning is, that both of these trials are adjunctive trial. And currently, there is no any antipsychotic approved for adjunctive treatment in schizophrenia. Now it is true that in the ENHANCE trial, we are using patients that have symptomatology, both in the -- on the positive and negative syndrome scale, while in the ADVANCE trial, we are more focusing on the adjunctive therapy. Obviously, negative symptoms is holy grail. There is nothing that truly demonstrating efficacy in treating negative symptoms of schizophrenia. And from that perspective, it could be a great advancement in medical practice it would demonstrate a benefit in that adjunctive paradigm. But I would also say that on the adjunctive treatment of schizophrenia in general, even though there is nothing approved, there is a great many patients that are treating with 2 or more antipsychotic at the same time, because one antipsychotic is not able to control psychotic symptoms. And from that perspective, numbers vary widely, but they go from 25% to 65% of patients that are on the 2 antipsychotics or more at the same time. So from that perspective, looking at that, it would be a great advantage and advancement if we demonstrate a positive efficacy benefit and safety for adjunctive treatment, rather than using the antipsychotic that more or less are hitting on the same receptors and on the same neurotransmitters. And, therefore, even if they are producing some benefit, they are also producing a myriad of side effects and tolerability issues that we do not expect to see. I hope this is just a kind of brainstorming here. It's a very interesting question and I would like to talk more when I see you about this.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [55]

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That sounds good. Sorry for a clarification request, and that is that -- and I appreciate you taking it, is ADVANCE seemed to enroll perhaps a little quicker than we had expected and I'm just kind of wondering, are physicians equally or more or less interested in enrolling one or the other study, if you have them onboard?

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Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [56]

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You know, in the last maybe several months, ADVANCE sort of caught up with the ENHANCE study. And they are, essentially, continuous recruitment approximately at the same time. I wouldn't say that, that's a reflection of as much interest, as much dynamics in the clinical trials out there and competitive environment, countries where we are doing the trial. There are many factors that influence that. And -- but perhaps there is also an interest. I wouldn't discount that, but I don't think that this is the only factor that contributed to us. We always expect that these 2 trials would actually progress at the same time. The delay on the ADVANCE trial is just because it's a 6-month trial versus 6-weeks trial. So the readout will be 6 months later.

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Operator [57]

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Your next question comes from Alan Carr with Needham & Company.

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Alan Carr, Needham & Company, LLC, Research Division - Senior Analyst [58]

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A follow-up on the previous one, around ADVANCE and ENHANCE. Are you all disclosing which background meds are being used most often and which antipsychotics are being used most often at baseline in those 2 trials? And then with respect to ADVANCE in particular, is there any sort of run-in period to ensure that there is stability on positive symptoms? The last one is around charitable contributions. If you could comment on that. I think you said there would be reductions in that. Can you elaborate?

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [59]

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Serge, do you want to take the first 2 questions?

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Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [60]

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Yes. In regard to...

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [61]

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Maybe if you could rephrase the first part I think.

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Alan Carr, Needham & Company, LLC, Research Division - Senior Analyst [62]

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The background meds.

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Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [63]

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Background meds, yes, we've been always saying that there is no secret about that -- all atypical antipsychotics that do not have a warning related to QT prolongation are allowed in our trials. So the only reason we excluded some of the antipsychotic was because of QT prolongation and our label and their label indicated that combination without a drug that prolong QT is not allowed. So from that perspective, all -- we should consider all atypical antipsychotics. So there is no secret about that.

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Alan Carr, Needham & Company, LLC, Research Division - Senior Analyst [64]

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I was wondering if you all are disclosing which specific drugs or do any of them dominate in terms of the patient enrolled in the trial?

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Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [65]

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Well, you know, we didn't -- of course, we will review that at the time of top line results. But we have a fair representation of the antipsychotic. This, obviously, somewhat depends also on the countries where we are. In some countries, there are different drugs approved and not approved. But naturally, I mean, the most -- this follows fairly, fairly accurately what is the use of these antipsychotics out there. So the most frequently used antipsychotics is the most that we see in our trials. But we didn't go into specifics on -- in that regard.

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Alan Carr, Needham & Company, LLC, Research Division - Senior Analyst [66]

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Okay. And a run-in in ADVANCE, is there anything like that to see if they are..

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Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [67]

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Well, you know, we -- first of all, there is a run-in period. There is a screening period, where we evaluate patients at the qualification of the trial and the screening phase and then in the baseline visit and they do need to meet same criteria for entering the trial over that period that may go up to 3, 4 weeks. So that's one thing. In addition, we are also very careful in selecting the patients to make sure that they have levels of background antipsychotic in their blood to confirm that actually symptoms we are seeing are results and in spite of background antipsychotic therapy. That's a particularly relevant, well, that's relevant for both of these trials. So we are, in some sense, looking both at the stability and the symptoms we're seeing are results of inadequacy in therapy, rather than noncompliance with treatment.

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [68]

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Charitable contributions, you asked about as well, Alan. Elena, do you want to take that question?

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Elena H. Ridloff, ACADIA Pharmaceuticals Inc. - Executive VP & CFO [69]

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Sure. Alan, contributing to independent charitable foundations that provide assistance to patients in need is part of our commitment to help ensure patients have access to their prescribed medications and treatment. For 2019, a greater portion of those donations are occurring in the first quarter of the year.

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Operator [70]

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Your next question comes from Danielle Brill with Piper Jaffray.

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Danielle Catherine Brill, Piper Jaffray Companies, Research Division - VP & Senior Research Analyst [71]

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I just had a quick question on the usage of NUPLAZID and a more specific question on channel distribution. Would you be able to provide some color on what percentage of patients with PDP are actually on NUPLAZID? I think you mentioned that it was 25% previously.

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [72]

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I'm going to let Michael answer that. Do you want to first clarify what was said previously?

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Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [73]

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Yes. We previously said that there are 125,000 patients treated and our penetration was around the low double digits. Currently, we're, I would say, in the mid-teens in that regard. So that's how I would answer the question.

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Danielle Catherine Brill, Piper Jaffray Companies, Research Division - VP & Senior Research Analyst [74]

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I see. Great, okay. And I guess the other question I had was would you be able to provide some color on the volume growth trends between specialty and LTC and which channels are growing faster, if specialty has caught up? Any sort of color would be helpful.

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Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [75]

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Yes. Great question. So we've always represented that the FD, specialty distribution, of which long-term care is about 2/3 of that component, has roughly been about 1/3 of our business, the FD part of our business is 1/3. And our SP side, which represents more of the office space channel, is about 2/3. And that makes it generally pretty much where it's been. It waxes and wanes, depending on different dynamics. In the way, just a way to think about it is the way we see it, which is they're independent channels. They have different dynamics, different ecosystems and things kind of wax and wane. One of the things to note, though, is that in the long-term care, specifically, we have always said that we're little underpenetrated and that has a more volume growth ahead of it because we were -- we did not recognize that, that's a more rich channel that we didn't launch that as with the kind of robust efforts in the beginning. So as you know, we expanded our sales force and we've continued to evolve our commercial model there. So we're getting good results out of that, but SP is also going to be growing as well. So both channels have a lot of opportunity to grow, 1/3, 2/3 would be the split.

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Operator [76]

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Your next question comes from Marc Goodman with Leerink.

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Marc Harold Goodman, SVB Leerink LLC, Research Division - MD of Neuroscience & Senior Research Analyst [77]

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Can you talk about business development a little bit? Should we expect another trofinetide type of opportunity to get added to the pipeline this year?

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [78]

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Sure. So as we said very clearly on this call and on many previous calls, business development is one of our 3 strategic pillars. We think it's very important that we focus on that in a disciplined way, the disciplined way that we have, and trofinetide is a really great example of the kind of fruits that we expect to continue to yield from that process.

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Marc Harold Goodman, SVB Leerink LLC, Research Division - MD of Neuroscience & Senior Research Analyst [79]

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Maybe just ask the question in a different way, I guess, trofinetide was [practically] Phase III ready, right? So I was curious about as you're thinking about early phase, late phase, what are you looking at? How should we expect you to bring products in from that perspective?

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [80]

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Yes. So we -- just as a matter of policy, we don't get into too much detail regarding specific assets or specific categories. We do have priorities, but we don't talk specifically about them. I would just simply say I think every asset is case dependent. Of course, late stage assets have a different risk-reward profile than earlier stage assets. And if it's helpful for just some additional color, I would say when we launched NUPLAZID, before we launched NUPLAZID, we did a survey when the companies that launched their first drug acquire additional assets, and what we saw is a very small blip on the radar screen in about year 3 and then a big blip at about year 7 and I just didn't see any reason to wait. I'd rather look at more assets over a longer period time so that would be more judicious and more strategic and that's what we're doing.

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Operator [81]

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Your next question comes from Paul Matteis with Stifel.

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Unidentified Analyst, [82]

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This [Denver Addon] on for Paul Matteis. I just wanted to ask a clarifying question on the regulatory path for schizophrenia. I guess if both schizophrenia studies are positive, the negative symptom study and the inadequate response study, would you expect this to be enough to file on for both indications i.e., like would you be able to include negative symptoms in that or would you anticipate needing additional confirmatory studies? And then I just have one real quick follow-up.

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [83]

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Sure. Serge, you want to take that question?

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Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [84]

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Yes. What we know, similarly as with major depression, the regulatory requirement for approval in adequate response would be a 2 confirmatory trials. But we of course are looking at a variety of options, but it is just premature for us until we see the results of the trial to speculate on potential regulatory paths for approval and we will certainly, once we have the results, we will certainly address that and address that with FDA as well.

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Unidentified Analyst, [85]

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Okay. Great. Understood. And I just had one other question on the DRP HARMONY program. I guess at this point, what proportion of patients are you seeing get through the treatment run-in in the study? And if you're willing to disclose this, or if you can, how is this comparing to your expectations going into it?

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Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [86]

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Right. I can say what I -- which I shared before, and that's pretty much continuing, and that is that we are seeing in the 3-month open label treatment phase of the study that somewhat -- a bit larger number of patients are achieving stable -- stabilization over 2, 8-week and 12-week period and are being randomized than we initially anticipated. So other than that, we did not disclose specific numbers, but I can say, we made this assumptions on the basis of what we are -- we saw in previous trials with pimavanserin and are seeing around that or a little bit better than that.

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Operator [87]

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Your next question comes from Sumant Kulkarni with Canaccord.

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Sumant Satchidanand Kulkarni, Canaccord Genuity Limited, Research Division - Analyst [88]

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I have a couple. The first one, we have an important interim read in the dementia related psychosis HARMONY trial coming up later this year, but my question is on your SERENE trial and Alzheimer's- related agitation. We know the trial was discontinued in October 2017, but patients enrolled in that study were allowed to continue. Given SERENE is now showing up as completed as of late March according to ClinicalTrials.gov, do you plan to share any data there? Or how should we think about your expectations heading into the interim read on HARMONY?

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [89]

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Serge, did you hear the question? You got it? On Alzheimer's-related agitation trials.

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Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [90]

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I assume that well we shared the data from that trial as it is required in the ClinicalTrial.gov with the results from that trial and, obviously, we will as, necessary -- as we see fit, we will further share the information and data. That's a trial that we stopped for business reasons at the point when we were moving to DRP. So it's incomplete trial, but there are some learnings that we really applied as we move forward with the trial. The core of the data is already available, obviously.

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Sumant Satchidanand Kulkarni, Canaccord Genuity Limited, Research Division - Analyst [91]

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Sure. And the second question is on your Rett syndrome trial. How do you expect enrollment in that trial relative to potential competition from other approaches, like gene therapies, that might be coming up?

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [92]

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Right. Serge, do you want to take that question?

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Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [93]

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You know, naturally, we are following all of the developments in the Rett syndrome, specifically to your question, gene therapy is a little bit behind. And it's probably going to take a little more time for them to actually get into the clinical stage. So from the competitive perspective, in terms of the execution of our Phase III trials, I do not see that, that will interfere. Now there may be other trials in Rett syndrome, some addressing specifically -- specific symptoms of Rett, rather than the core symptomatology of Rett syndrome, that may be going on but we don't see there will be a significant overlap. I have to say that we are working very closely with advocacy groups and understand that there is quite a bit of interest on the basis of positive data from the Phase II trial [in] participation in our trials. So we do not anticipate a significant competitive pressures on recruitment.

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Operator [94]

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Mr. Davis, please proceed to closing remarks.

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Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [95]

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Great. Thank you, operator. I just want to close by saying thanks to each of you for joining us today and we look forward to updating you on our progress next quarter.

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Operator [96]

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