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Edited Transcript of ACAD.OQ earnings conference call or presentation 4-Nov-20 9:30pm GMT

·43 min read

Q3 2020 ACADIA Pharmaceuticals Inc Earnings Call SAN DIEGO Nov 6, 2020 (Thomson StreetEvents) -- Edited Transcript of ACADIA Pharmaceuticals Inc earnings conference call or presentation Wednesday, November 4, 2020 at 9:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * 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 ================================================================================ Conference Call Participants ================================================================================ * Alan Carr Needham & Company, LLC, Research Division - Senior Analyst * Andrea R. Tan Goldman Sachs Group, Inc., Research Division - Research Analyst * Charles Cliff Duncan Cantor Fitzgerald & Co., Research Division - Senior Analyst * Cory William Kasimov JPMorgan Chase & Co, Research Division - Senior Biotechnology Analyst * Danielle Catherine Brill Raymond James & Associates, Inc., Research Division - Research Analyst * Douglas Royal Buchanan JMP Securities LLC, Research Division - VP & Equity Research Analyst * Gregory James Renza RBC Capital Markets, Research Division - Analyst * Jeff Hung Morgan Stanley, Research Division - Equity Analyst * Marc Harold Goodman SVB Leerink LLC, Research Division - MD of Neuroscience & Senior Research Analyst * Neena Marie Bitritto-Garg Citigroup Inc., Research Division - VP & Analyst * Paul Andrew Matteis Stifel, Nicolaus & Company, Incorporated, Research Division - Co-Head of the Biotech Team, MD & Senior Analyst * Ritu Subhalaksmi Baral Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst * Sumant Satchidanand Kulkarni Canaccord Genuity Corp., Research Division - Analyst * Tazeen Ahmad BofA Merrill Lynch, Research Division - VP * Yatin Suneja Guggenheim Securities, LLC, Research Division - MD & Senior Biotechnology Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good day, ladies and gentlemen, and welcome to ACADIA Pharmaceuticals' Third Quarter 2020 Financial Results Conference Call. My name is Gigi, 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. -------------------------------------------------------------------------------- Mark C. Johnson, ACADIA Pharmaceuticals Inc. - VP of IR [2] -------------------------------------------------------------------------------- Thank you. Good afternoon, and thank you for joining us on today's call to discuss ACADIA's third quarter 2020 financial results. Joining me on the call today from ACADIA are Steve Davis, our Chief Executive Officer, who will provide an overview of our Q3 2020 financial performance and a review of our business. Also joining us on today's call is Michael Yang, our Chief Commercial Officer, who will provide updates on our commercial initiatives; and Dr. Serge Stankovic, our President, who will discuss our pipeline progress. Our Chief Financial Officer, Elena Ridloff, will then discuss our financial results in more detail before turning it back to Steve for final remarks and opening the call up for your questions. I would also like to point out that we're using supplement slides, which are available on the Events & Presentations 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 are 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 the call over to Steve. -------------------------------------------------------------------------------- Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [3] -------------------------------------------------------------------------------- Thank you, Mark. Good afternoon, everyone, and thank you for joining us today. Please turn to Slide 5. We've made important and significant progress on our 3 strategic pillars. First, we are driving the growth of NUPLAZID for patients with Parkinson's disease psychosis, or PDP, through a combination of best-in-class virtual engagement and in-person activities. Our second pillar is delivering on the dementia-related psychosis, or DRP, opportunity, a potential second indication representing a tenfold increase in the addressable market size for NUPLAZID. And third, we are developing innovative new treatments by advancing our development pipeline and acquiring new assets. Let's review in greater detail, starting on Slide 6. For the third quarter of 2020, NUPLAZID achieved $120.6 million in net sales, a 27% year-over-year increase, driven by strong commercial execution. This is a direct result of our ability to successfully pivot and execute in these uncertain times as well as a testament to the importance of treating PDP. As a result of our continued performance in 2020, we're reiterating our full year net sales guidance to be between $430 million to $450 million, representing 30% year-over-year growth at the midpoint of the range. We are well prepared to achieve the long-term market opportunity for NUPLAZID in PDP and look forward to the addition of the DRP indication. Let's move to the DRP opportunity on Slide 7. We are excited that pimavanserin could be the first and only FDA-approved medicine for the treatment of dementia-related psychosis. Psychosis is associated with serious consequences in patients with dementia, such as repeated hospital admissions, increased likelihood of nursing home placement, progression of dementia and increased risk of morbidity and mortality. Dementia-related hallucinations and delusions represent a high burden for patients and for caregivers. We are confident in both the efficacy and safety data supporting our supplemental NDA. And we'll continue to work with the FDA to facilitate their review with a PDUFA date of April 3, 2021. We continue to make important progress in our late-stage development pipeline, as shown on Slide 8, with ongoing Phase III studies with pimavanserin for the treatment of negative symptoms of schizophrenia and with trofinetide for the treatment of Rett syndrome. As part of our third strategic pillar, we remain focused on expanding and diversifying our development pipeline by investing in new treatments. Earlier this year, we brought in 2 very exciting investigational programs with the potential to bring differentiated approaches to areas of significant unmet need. In the spring, we in-licensed a muscarinic receptor program, including ACP-319 from Vanderbilt University. In this program, we are focused on improving cognition and neuropsychiatric symptoms through an ongoing research collaboration with Vanderbilt. Over the summer, we acquired CerSci Therapeutics, which is advancing first-in-class, non-opioid candidates for the treatment of acute and chronic pain and a portfolio of earlier-stage molecules focused on neurodegenerative disorders. Finally, I'd like to share one more positive update, which will be disclosed in the 10-Q we are filing later this afternoon. We're pleased to report that the Department of Justice notified us recently that it has concluded its investigation of the company and will not be taking any further action. And with that, I will now turn it over to Michael to discuss our commercial performance and highlights. -------------------------------------------------------------------------------- Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [4] -------------------------------------------------------------------------------- Thank you, Steve. Today, I would like to review our third quarter performance, which highlights the fundamental strength of our business and gives us confidence in the long-term expectations for the NUPLAZID franchise. Please turn to Slide 10. We have driven positive momentum in this quarter, growing our base of new prescribers and new patients in both channels. In the third quarter, we delivered net sales of $120.6 million driven by year-over-year volume growth of 14%. This quarter's growth was a result of our best-in-class virtual tactics, layered with a mix of opportunistic and COVID-appropriate, in-person interactions. We have been able to return to offices in several instances for physician visits as well as in-office promotional programs, all of which have been received well. Our commercial foundation is solid as we continue to leverage our digital platforms to stimulate patient and caregiver conversations with their physicians about PDP and treatment with NUPLAZID. Importantly, we continue to invest in the ability to prescribe NUPLAZID remotely. The specialty pharmacy channel contributed to the strong overall performance as new patient growth has remained at pre-COVID expectations. In addition, monthly fulfillment rates for both new and continuing patients in the quarter remained consistently high. As we mentioned on the last call, we observed a temporary, COVID-related impact to our growth in the long-term care channel. In the third quarter, long-term care facilities were able to get back on track from an operational standpoint and reopened their doors for new admissions. And now we have seen that over the past couple of months, NUPLAZID prescriptions in the LTC channel has stabilized. We continue to build a broad range of partnerships with professional organizations and national electronic health record systems and pharmacies. As a result, NUPLAZID continues to perform well on a relative basis, outperforming a basket of other LTC-promoted products according to IQVIA. Overall, we are well positioned to serve the needs of PDP patients with NUPLAZID wherever they are located. Let's discuss our dementia-related psychosis initiatives on Slide 11. Our DRP launch preparations, including disease awareness and talent recruitment, are on track. We are focused on preparing the market through disease data education initiatives and platforms. For example, we have generated over a quarter of a million views since we launched our disease education website, MoreThanCognition.com, with several exciting updates including enhanced capabilities for our live virtual expert panel webinars, the introduction of a dementia-related psychosis MD-IQ Quiz, and new key opinion leader videos focused on the neurobiology and unmet need in DRP. We are also syndicating our content from MoreThanCognition on third-party sites such as Doximity, Sermo, Healthcasts and Medscape. We continue to be very active at medical congresses with several disease education theaters and presentations on PDP and DRP. In addition, we are generating evidence to better understand the impact of dementia-related psychosis from the perspectives of patients, providers and payers. We recently completed an analysis of Medicare administrative claims data that showed that the average annual all-cause costs for a newly diagnosed DRP patient compared to a dementia patient without psychosis nearly doubles, reaching almost $90,000 during their first year with psychosis. These results were presented in a poster at the Academy of Managed Care Pharmacy's Nexus conference last month. Additional awareness opportunities include a disease education film we sponsored in partnership with The Lewy Body Dementia Association titled SPARK - Robin Williams and his Battle with Lewy Body Dementia. SPARK is adapted from the full-length film released this summer, Robin's Wish, and will be available to major academic research institutions and center of excellence to drive awareness and education on dementia and its symptoms. I'll now turn it over to Serge, who will provide an update on our development pipeline. -------------------------------------------------------------------------------- Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [5] -------------------------------------------------------------------------------- Thank you, Michael, and good afternoon. Please turn to Slide 13. First, I'm pleased to report that the review of our supplemental NDA for dementia-related psychosis is going well and progressing as we would expect. We are working with the FDA to facilitate their review in a timely fashion and are on track for the April 3 PDUFA date. Our Phase III studies are also progressing well. The ADVANCE-2 study for the treatment of negative symptoms of schizophrenia is bringing on sites and enrolling patients. The LAVENDER study for the treatment of Rett syndrome is enrolling well and remains on track for top line results in the second half of next year. We acquired 2 new promising clinical assets earlier this year, ACP-044 from CerSci and ACP-319 from Vanderbilt, and are working diligently to advance them in the clinic next year. Consistent with our strategy, we remain focused on developing innovative new treatments with high unmet need, and that is reflected in our growing and advancing pipeline. Now I would like to discuss ACP-044, which is the lead compound we brought in with the CerSci Therapeutics acquisition on Slide 14. ACP-044 is Reactive Species Decomposition Accelerant, or RSDAx, which represents a first-in-class, non-opioid mechanism being evaluated for the treatment of acute and chronic pain. Chronic pain is a major problem, and the CDC estimates that it affects approximately 20% of the U.S. adult population and has significant health and economic consequences. Furthermore, moderate-to-severe acute pain is prevalent following the vast majority of surgeries in the United States with more severe or extreme pain present in about one third of the cases. ACP-044 have shown compelling and promising results in several animal models of both acute and chronic pain. In Phase I clinical testing, we have seen favorable tolerability in pharmacokinetics. And in the first half of next year, we will initiate our Phase II program with clinical studies in models of both acute and chronic pain. Slide 15 highlights some of the exciting new scientific data on pimavanserin being presented at this week's Clinical Trial on Alzheimer's Disease conference, or CTAD. This Friday, Dr. Clive Ballard, from the University of Exeter Medical School, will present new analysis of pimavanserin clinical data from 4 placebo-controlled studies investigating pimavanserin impact on cognition in patients with neuropsychiatric symptoms related to neurodegenerative disease, including dementia-related psychosis. In addition, Dr. Daniel Weintraub, from the Perelman School of Medicine at the University of Pennsylvania, will present the poster analyzing the impact on motor function in patients treated with pimavanserin across multiple clinical studies. The presentations at CTAD continue to support the overall safety profile of pimavanserin in these vulnerable patient populations. We remain encouraged with the breadth of clinical data, which supports the potential role of pimavanserin, especially in elderly patients with dementia-related psychosis. Finally, I would like to mention an interesting and encouraging poster that was presented during this year's International Parkinson and Movement Disorder Society's Virtual Congress in September on Slide 16. It described a retrospective cohort study conducted in Medicare Parkinson's disease patients treated with either pimavanserin or a group of atypical antipsychotics, primarily quetiapine. The authors, which included members of the U.S. FDA, the Centers for Medicare & Medicaid Services and Stanford University, concluded that pimavanserin treatment was associated with reduced all-cause mortality compared to treatment with atypical antipsychotics. The figure you see on the slide is the Kaplan-Meier survival curve for the pimavanserin and atypical antipsychotics cohort. The key takeaway from this graph is that pimavanserin exhibited a higher survival probability through one year of treatment compared to atypical antipsychotics. This separation was chiefly exhibited in the first 180 days of treatment and among the 85% of patients who were not in nursing homes. These findings are in line with the way we view pimavanserin and is another contribution to the growing body of data supporting pimavanserin's safety profile. With that, I'll now turn the call over to Elena to discuss our financial performance. -------------------------------------------------------------------------------- Elena H. Ridloff, ACADIA Pharmaceuticals Inc. - Executive VP & CFO [6] -------------------------------------------------------------------------------- Thank you, Serge. Today, I'll discuss our third quarter results and our updated 2020 financial outlook. Please turn to Slide 18. In the quarter, we recorded $120.6 million in net sales, an increase of approximately 27% compared to $94.6 million of net sales in Q3 of 2019. This was driven by approximately 14% volume growth year-over-year. The gross-to-net adjustment for Q3 2020 was 13.2%. Weeks of inventory in the channel at the end of the third quarter were consistent with previous quarters. Moving down the P&L, GAAP R&D expenses increased to $120.1 million in the quarter compared to $62.6 million in Q3 2019. GAAP R&D expense included a $52.8 million upfront consideration and transaction expenses related to the acquisition of CerSci Therapeutics in August of 2020. GAAP SG&A expenses increased to $81.6 million in the third quarter from $72.7 million in the third quarter of last year. This is largely due to increased advertising and promotional costs as well as an increase in personnel and related costs. Non-cash, stock-based compensation expense during the quarter was $21.4 million compared to $22 million for the same period in 2019. Cash used in operations during the quarter was $22.8 million compared to $18.9 million for Q3 2019. Our cash balance at the end of the quarter was $644.4 million. Please turn to Slide 19. For the full year 2020, we are reiterating our 2020 net sales guidance to be between $430 million and $450 million. At the midpoint of this guidance range, this represents approximately 30% growth in revenue year-over-year. As a reminder, gross-to-net is sequentially higher in the fourth quarter as a result of accruing for the donut hole obligation associated with year-end inventory in the channel. On the expense side for 2020, we've increased our GAAP R&D guidance to be between $325 million to $340 million from a previous range of $265 million to $280 million. This increase is primarily a result of the upfront and transaction expenses associated with the acquisition of CerSci Therapeutics. We are reducing our GAAP SG&A guidance to $385 million to $400 million from the previous range of $400 million to $420 million. Non-cash, stock-based compensation expense is now anticipated to be between $80 million to $90 million in 2020. We'll end 2020 with a strong balance sheet and are reiterating our year-end cash guidance of $570 million to $590 million. And with that, I'll turn the call back over to Steve. -------------------------------------------------------------------------------- Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [7] -------------------------------------------------------------------------------- Thank you, Elena. Please turn to Slide 21. At ACADIA, we built a strong organization in neuroscience with best-in-class R&D and commercial capabilities to fully leverage the pimavanserin opportunities. Today, we are executing on our promise to deliver NUPLAZID to patients with PDP. We continue to grow the opportunity in PDP while preparing for a potential second indication in DRP and the ability to help a much larger magnitude of patients and their caregivers. We'll look forward to keeping you updated on our progress where continued momentum of our NUPLAZID franchise and the breadth and depth of our pipeline position ACADIA for long-term growth. In closing, I would like to thank our employees for their continued commitment and passion as we advance the business. I'll now open up the call for questions. Operator? ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Your first question comes from the line of Ritu Baral from Cowen. -------------------------------------------------------------------------------- Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD & Senior Biotechnology Analyst [2] -------------------------------------------------------------------------------- I wanted to just ask about unit growth. You guys noted that year-over-year, you had 14% volume growth. Can you give us quarter-over-quarter what you're seeing in unit growth? And also, if you could just separate the unit growth by the retail channel and the long-term care channel. -------------------------------------------------------------------------------- Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [3] -------------------------------------------------------------------------------- Sure. Thanks, Ritu. Elena, you want to take that question? -------------------------------------------------------------------------------- Elena H. Ridloff, ACADIA Pharmaceuticals Inc. - Executive VP & CFO [4] -------------------------------------------------------------------------------- Sure. Thanks, Ritu. So sequential volume growth in the quarter was approximately 3%, and that was driven largely by growth in the SP channel. As Michael mentioned in his remarks, we've seen stabilization in the SP channel in the third quarter sequentially. -------------------------------------------------------------------------------- Operator [5] -------------------------------------------------------------------------------- Our next question comes from the line of Neena Bitritto-Garg from Citi. -------------------------------------------------------------------------------- Neena Marie Bitritto-Garg, Citigroup Inc., Research Division - VP & Analyst [6] -------------------------------------------------------------------------------- I just wanted to ask a quick question about the DRP review. I guess based on the time lines that you discussed previously, is it kind of safe to say that we're at the point now where the FDA is probably not going to change their mind on holding an ad com? -------------------------------------------------------------------------------- Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [7] -------------------------------------------------------------------------------- Serge, you want to start? Serge, are you on mute? Let me go ahead and answer that. Serge may jump/hop in, in a second. No, I wouldn't say that. Just as a reminder, when the FDA indicated they accepted the submission for filing, they indicated to us at that time that they do not plan to have an ad com, and we don't have any information to the contrary at this juncture. But it is possible they could change their mind. And if you kind of work backward from the PDUFA date and think about when an ad com could be and then how much advance notice they need to give us in advance of that, we're not at the point yet where I would say we could rule out that they could change their mind. But at this juncture, we do not anticipate having an ad com. -------------------------------------------------------------------------------- Operator [8] -------------------------------------------------------------------------------- Our next question comes from the line of Cory Kasimov from JPMorgan. -------------------------------------------------------------------------------- Cory William Kasimov, JPMorgan Chase & Co, Research Division - Senior Biotechnology Analyst [9] -------------------------------------------------------------------------------- Question is probably for Michael. I appreciate the comments you made on the disease education you're doing in preparation for the potential DRP launch. I guess I'm curious what you're learning from all this. I mean can -- what does your outreach and market research suggest about the level of disease awareness and kind of like anticipation or even pent-up demand for NUPLAZID and DRP at this time? -------------------------------------------------------------------------------- Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [10] -------------------------------------------------------------------------------- Cory, thanks. -------------------------------------------------------------------------------- Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [11] -------------------------------------------------------------------------------- Yes, Michael. Go ahead. -------------------------------------------------------------------------------- Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [12] -------------------------------------------------------------------------------- Okay. Thanks, Steve. Cory, great question. So I think the market research that we see is there's great health care practitioner enthusiasm in part because there's an understanding that the disease treatments that they have all have some compromise associated with them, particularly in the areas of cognition, surprisingly more on the motor side, EPS, other things. So the safety profile -- really rather, the efficacy and safety profile together are really knocking the socks off of physicians in regards to the potential of the -- of NUPLAZID. And that fits in well into our platform that we're trying to do to really establish with NUPLAZID, which is efficacy without impairment. We were able to do that with PDP, as you know, without impacting motor function. And then I think cognition is important safety mechanism that they don't have that ability today. So we're reaching, I think, a good audience. I think the SPARK film will help a lot in terms of the consumer side. But on the physician side, I think we're doing really well in engaging with their awareness. -------------------------------------------------------------------------------- Operator [13] -------------------------------------------------------------------------------- Our next question comes from the line of Jeff Hung from Morgan Stanley. -------------------------------------------------------------------------------- Jeff Hung, Morgan Stanley, Research Division - Equity Analyst [14] -------------------------------------------------------------------------------- Just wondering if you can talk about what you've seen over the last month or so on new patient starts and persistence? And have you seen any changes in trends as we hear of cases of COVID increasing? -------------------------------------------------------------------------------- Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [15] -------------------------------------------------------------------------------- Michael, do you want to take that? -------------------------------------------------------------------------------- Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [16] -------------------------------------------------------------------------------- Sure. Yes. No, as I mentioned in my prepared remarks on our office-based neuroscience side, we're at -- new patient starts at pre-COVID levels. And we have not seen any impact to fulfillment or persistence, and we've seen a consistently high performance there. Long-term care, as we mentioned, is stabilizing. We are outperforming a basket of products, as I mentioned. I think it's important that, I think, the pandemic really hasn't obviated the symptoms of PDP, and thus, I think they become even more focal to treat. And we've been able to provide a wide variety of mechanisms to prescribe NUPLAZID, start NUPLAZID for patients in a remote digital environment. So we actually think we're catching patients, whether they're in the nursing home or in the office or even on the remote side. So from our standpoint, I think we're feeling really good about the potential to capture the patients. -------------------------------------------------------------------------------- Jeff Hung, Morgan Stanley, Research Division - Equity Analyst [17] -------------------------------------------------------------------------------- Just to clarify, so then was that strictly 3Q? Or does that also pertain to the last month as well? -------------------------------------------------------------------------------- Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [18] -------------------------------------------------------------------------------- Well, I would say, for long-term care, we've seen the market stabilize there in the last few months. I think persistence and fulfillment and new starts were for the third quarter on the neuroscience side or the retail side. -------------------------------------------------------------------------------- Operator [19] -------------------------------------------------------------------------------- Our next question comes from the line of Marc Goodman from SVB Leerink. -------------------------------------------------------------------------------- Marc Harold Goodman, SVB Leerink LLC, Research Division - MD of Neuroscience & Senior Research Analyst [20] -------------------------------------------------------------------------------- Serge, can you talk about ACP-044? What kind of proof-of-concept data did you look at, what you're seeing? I mean RSDAx, first-in-class, so maybe you could just give us a little sense of how confident we have something here. -------------------------------------------------------------------------------- Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [21] -------------------------------------------------------------------------------- Yes. Happy to do so. ACP-044 has shown promising results in the animal models, evaluating a variety of different pain models, in seasonal pain, inflammatory pain, neuropathic pain. And also, what we saw in the Phase I clinical pharmacology studies, displayed a favorable tolerability and pharmacokinetic properties. So we are fairly confident that, as one can be, based on the animal models and particularly a variety of animal models, addressing both acute pain as well as chronic pain that -- and as well as the properties of the drug in the Phase I studies, we are very confident to move into a Phase II development. And as it is right now, we are planning to initiate our Phase II study program in the first half of next year. And current plans include both acute and chronic human pain models in -- for the next stage of development. -------------------------------------------------------------------------------- Marc Harold Goodman, SVB Leerink LLC, Research Division - MD of Neuroscience & Senior Research Analyst [22] -------------------------------------------------------------------------------- And these animal models, I assume these are standard pain models. And so I'm sure that you have a lot of animal model data from what opioids do. So I was just kind of curious if the play here were better than opioids or were just as good. But obviously, we're not in opioids, so that's a huge advantage. -------------------------------------------------------------------------------- Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [23] -------------------------------------------------------------------------------- Yes. The mechanism of action of ACP-044 is such that it acts in periphery in a very different manner than the opioids, obviously, but has a strong analgesic properties that are primarily based in its ability to interfere with multiple pain pathways. And based on the animal data, obviously, you do comparative studies. Well, we compared with the opioids, and it displays impressive analgesic potential that we saw in the preclinical studies. So that gives us a level of confidence and optimism to move forward. So no opioid properties but a strong analgesic properties and mode of action that actually interfere with multiple pain pathways. -------------------------------------------------------------------------------- Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [24] -------------------------------------------------------------------------------- Marc, I would -- just to echo the Serge's thoughts, I would say, one of the things that we found very compelling is the consistency of the results in the animal models. Now we all know that animal models -- because they're animal models and you try to get predictive information for what happens in humans and in some disease states, those are more predictive than others. But in the models that we looked at, one, they were very consistent; two, I would say the results that we saw running against comparators in those models when they were run against opioids were -- produced results that were equal to or better than the opioid comparators. And in other models were at least equivalent to other pain-relieving agents. So I think it's too early to say whether the ultimate play would be better pain relief than you get with an opioid or just a pain relief that does not have the opioid addictive qualities. But I would just simply say that the consistency of the data in the animal models that we saw was very compelling and gives us very high hopes as we now launch into Phase II. -------------------------------------------------------------------------------- Operator [25] -------------------------------------------------------------------------------- Our next question comes from the line of Charles Duncan from Cantor. -------------------------------------------------------------------------------- Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [26] -------------------------------------------------------------------------------- Congrats on a good quarter. I'll try to be brief here and respect the rule. For Michael, perhaps, do you have any estimates of market penetration? And I think you mentioned consistently high fulfillment rates, any color on what that means? And then perhaps for Elena, you guided $430 million to $450 million for year-end revenue, I guess I'm wondering what triggers have to happen for the aspirational side of that guide. -------------------------------------------------------------------------------- Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [27] -------------------------------------------------------------------------------- Michael, do you want to take the first question, then we'll go to Elena? -------------------------------------------------------------------------------- Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [28] -------------------------------------------------------------------------------- Yes. Sure. Charles, the first part of your question is in terms of PDP, I would say that our share in the market is in the high teens, which is great. And in regards to fulfillment, there's -- obviously, for the patients that are taking the product, if patients get close to 3 bottles a month and that's a full fulfillment rate, and so it gives you some sense of what we're seeing. We're seeing very high fulfillment rates based on the potential of the number that -- you want to call it, take rate bottles per patient per quarter. And we track that. So that's been very consistent and very high throughout the past, really, year since the 34-milligram launch that we've seen that. -------------------------------------------------------------------------------- Elena H. Ridloff, ACADIA Pharmaceuticals Inc. - Executive VP & CFO [29] -------------------------------------------------------------------------------- And with regards to the -- your guidance question around what would need to occur to -- for us to achieve our -- the high end of our guidance. At the high end of our guidance, we would -- that would require us seeing improvements on the LTC channel. As Michael mentioned in his prepared remarks, we've seen stabilization there and we're outperforming a basket of peer products. Seeing improvement in the trends in LTC would lead us to the higher end of the range. And just a reminder, when you think about Q4 revenue and the full year guidance range, we do have higher gross-to-net sequentially in Q4, so that is a headwind in the fourth quarter. -------------------------------------------------------------------------------- Operator [30] -------------------------------------------------------------------------------- Our next question comes from the line of Tazeen Ahmad from Bank of America. -------------------------------------------------------------------------------- Tazeen Ahmad, BofA Merrill Lynch, Research Division - VP [31] -------------------------------------------------------------------------------- First one, maybe for Elena. Can you give us a little bit of color on SG&A? You are ticking up higher in 4Q. Should we expect that trend in general to continue going forward as you're prepping for the DRP launch? And then secondly, a question maybe for Michael about updated information you have about targeted physicians for DRP, how much overlap is there going to be with the physicians that you target for PDP? -------------------------------------------------------------------------------- Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [32] -------------------------------------------------------------------------------- Okay. Elena, do you want to go first then Michael? -------------------------------------------------------------------------------- Elena H. Ridloff, ACADIA Pharmaceuticals Inc. - Executive VP & CFO [33] -------------------------------------------------------------------------------- Sure. So -- yes, that is right, Tazeen, we will see an increase in SG&A in the fourth quarter. There's a few drivers there. As you mentioned, we are investing ahead of the DRP launch in both our commercial and medical affairs side -- and we are, as Michael mentioned, more recently shifted to more in-person field activities, which has higher costs associated with it. In addition, we are on air currently with our DTC campaign. And so that investment is in the fourth quarter as well. And as you look towards next year, we'll provide guidance on our year-end call. But to just qualitatively talk about a few things, we will be expanding the field team for DRP in the first part of next year. And we'll also be increasing our marketing investments for launch, both with disease education as well as brand investments, including DTC next year as well as our medical affairs investments to support the launch. -------------------------------------------------------------------------------- Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [34] -------------------------------------------------------------------------------- And then, Tazeen, the way I'd answer that question on targeting is a couple of ways. In many ways, we already have a fairly good footprint, for example, in the Parkinson's disease area and in long-term care. And mostly in long-term care, we also call on geriatric psychiatry. And we will have to go deeper, obviously, with some physicians, for example, if they're highly Lewy body, as an example, that would be an expansion within neurology. And then there are going to be physicians that we're going to be expanding into psychiatry and what we call dementia-care specialists, which are pseudo specialist physicians who are treating a lot of elderly patients and act like the de facto specialist -- dementia-care specialists in their general locations. I would also say from a facility and academic perspective, we have a good coverage of the key academic centers and the LTC facilities. Obviously, there will be more patients on a magnitude basis that are DRP versus PDP, so the audience and the patient opportunities are going to be larger, but we already do have a group focused on those key academic centers and those key LTC facilities. And we will have to expand a bit in terms of long-term care, specifically around memory care units that are within long-term care facilities. -------------------------------------------------------------------------------- Operator [35] -------------------------------------------------------------------------------- Our next question comes from the line of Salveen Richter from Goldman Sachs. -------------------------------------------------------------------------------- Andrea R. Tan, Goldman Sachs Group, Inc., Research Division - Research Analyst [36] -------------------------------------------------------------------------------- This is Andrea on for Salveen. Maybe a question for Steve. Big picture, just as you think about the 2 BD transactions you outlined, how are you thinking about additional ones on the forward? And is it likely to be a similar -- for a similar stage asset? -------------------------------------------------------------------------------- Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [37] -------------------------------------------------------------------------------- Yes. Great. Thanks for the question. I'm going to -- I'll start -- take a little bit of a running start at it. So growing the company transactionally is an important part of our strategy as I think we've been really clear. It's important for a couple of reasons. One is we've built, I think, a really highly competitive capability in both the R&D space and on the -- in the commercial space in the CNS therapeutic area. So we want to make certain we take advantage of opportunities to further leverage those capabilities and that infrastructure that we have. We started early. We started early for a reason. We wanted to be able to be strategic and judicious, and that's what we've done. But I have been very clear that you will see more deals coming from us. Sometimes, we don't always have the luxury of being able to pick the precise profile for a deal and match it up with timing that precise timing. And so I can't tell you whether the next deal would be an early-stage deal or a late-stage deal, but I'll simply say we've done both so far. Obviously, with trofinetide, we bought a Phase III -- a program that's in Phase III. With the Vanderbilt collaboration, we bought a program in Phase I. And with CerSci, we bought program that's Phase II ready. So I'll just simply say there will be more deals. And the same criteria that have driven our deal decision so far will continue to drive additional deals. One is we start with science. So there has to be compelling scientific and medical case. Two, we do a very good job, I think, of doing a cradle-to-grave analysis of assessing assets all the way through a projected life cycle of products. So we do a very full commercial assessment even when we're looking at very early stage assets. And then, of course, there has to be a good fit for our infrastructure and strategy. -------------------------------------------------------------------------------- Operator [38] -------------------------------------------------------------------------------- Our next question comes from the line of Paul Matteis from Stifel. -------------------------------------------------------------------------------- Paul Andrew Matteis, Stifel, Nicolaus & Company, Incorporated, Research Division - Co-Head of the Biotech Team, MD & Senior Analyst [39] -------------------------------------------------------------------------------- I thought that pimavanserin all-cause mortality poster comparing the drug to atypicals was super interesting. Are any of the FDA authors on that poster also involved in the DRP sNDA review? I know David Graham is a senior pharmacovigilance guy. Have you spoken to any of these authors? And do you still kind of correspond with them? -------------------------------------------------------------------------------- Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [40] -------------------------------------------------------------------------------- Serge, do you want to take that question? -------------------------------------------------------------------------------- Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [41] -------------------------------------------------------------------------------- Yes. The -- to our understanding, people from the FDA involved and these authors would come from the drug safety and pharmacovigilance, their group. We are not aware of anybody from the division being involved in this. But obviously, this group is involved in any review of the application. So they -- certainly, this group has been involved as well in the reviews on the safety of pimavanserin as it is involved on the ongoing basis. And to your second question, we -- no, we did not have any direct communication. We are looking forward -- we're obviously encouraged and find it very interesting and it's in line with how we understand the safety of pimavanserin, but certainly looking forward to maybe a manuscript or publication, where we would have a little better insight into the data and methodology applied for this. So at this point, all our knowledge comes from simple poster presentation. -------------------------------------------------------------------------------- Operator [42] -------------------------------------------------------------------------------- Our next question comes from the line of Jason Butler from JMP. -------------------------------------------------------------------------------- Douglas Royal Buchanan, JMP Securities LLC, Research Division - VP & Equity Research Analyst [43] -------------------------------------------------------------------------------- It's Roy in for Jason. Just hoping -- maybe I missed it, but you could characterize a bit your current level of in-person interactions with health care providers? And how do you think it compares to the broader field? We've heard that offices have opened up for patients, not necessarily for reps, so if you could just give a little characterization around that. -------------------------------------------------------------------------------- Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [44] -------------------------------------------------------------------------------- Michael, do you want to speak to that? -------------------------------------------------------------------------------- Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [45] -------------------------------------------------------------------------------- Sure. Yes. Thanks for the question. Obviously, it is a hybrid patch of different conditions throughout the country. So we leverage a sophisticated algorithm with our medical team to look at the COVID exposures. We look at local practices that are going on with the facilities and the offices. And so I would only be able to answer that question in general by it varies by region and by channel. And when I say that, long-term care facilities is one channel and then physician offices as another channel. And I would just characterize that it ranges, I would say, between probably 25% to 75%, depending on the territory region channel situation that we look at. -------------------------------------------------------------------------------- Operator [46] -------------------------------------------------------------------------------- Our next question comes from the line of Yatin Suneja from Guggenheim Partners. -------------------------------------------------------------------------------- Yatin Suneja, Guggenheim Securities, LLC, Research Division - MD & Senior Biotechnology Analyst [47] -------------------------------------------------------------------------------- Just wanted to refresh some of the HARMONY data with you guys. I think one of the pushback or things that we consistently hear is that -- if you look at the 12-week data, I think some might say that not all dementia subset performed equally well. And then we have not really seen the double-blinded portion. So perhaps, could you maybe talk about the consistency of effect among different dementia subtype that you see in both the open-label and randomized that gives you confidence for a broader label versus a particular subset? -------------------------------------------------------------------------------- Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [48] -------------------------------------------------------------------------------- Serge, do you want to take that? -------------------------------------------------------------------------------- Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [49] -------------------------------------------------------------------------------- Oh, yes, absolutely. Well, the data that we presented, particularly when you look at the open-label data with -- where the samples or subset of different dementia subtypes are larger, we see over 12 weeks, a fairly consistent, actually, response to pimavanserin treatment. The overall response rate as well as individual subtype response rates are very cohesive and consistent, and we presented that data at the last year's CTAD meeting. So obviously, some subtypes are represented with fewer patients just based on the pure epidemiology of the disorders, and that may affect a little bit of a variability. But the overall, there is a high level of consistency in terms of the strong response as well as whether you looked at on the proportion of responders or you looked at based on the overall decrease on the SAPS-H+ D score over the 12-week period. In both aspects, we do see consistency. In terms of the double-blind stage, the -- first of all, the analysis is prospectively defined for the overall dementia-related psychosis. But when you look at the subtypes, obviously, the numbers rapidly become very small. And it's very difficult to actually -- for some subtypes to draw conclusions. But the -- but those that are represented better, we do see fairly consistent response in that -- in the double-blind section as well. So I would a little bit disagree with the characterization that there is a variability in the response that we are seeing. -------------------------------------------------------------------------------- Operator [50] -------------------------------------------------------------------------------- Our next question comes from the line of Alan Carr from Needham & Company. -------------------------------------------------------------------------------- Alan Carr, Needham & Company, LLC, Research Division - Senior Analyst [51] -------------------------------------------------------------------------------- Coming back to marketing. So your SG&A budget, it is going up in 4Q, but you still bring your guidance down for spend for the year. I'm wondering what -- to what extent that's related to COVID-19. And Michael, I'm curious about your perspective on how much COVID-19 has changed marketing a specialty drug and -- or some of the changes permanent? -------------------------------------------------------------------------------- Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [52] -------------------------------------------------------------------------------- So Elena, do you want to go first then Michael? -------------------------------------------------------------------------------- Elena H. Ridloff, ACADIA Pharmaceuticals Inc. - Executive VP & CFO [53] -------------------------------------------------------------------------------- Yes. So it -- the savings are -- largely do reflect the current operating environment. And while we're returning to in-person engagement in the field when possible, congresses and speaker programs and other engagements continue to be virtual. Michael, do you want to take the second piece of the question? -------------------------------------------------------------------------------- Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [54] -------------------------------------------------------------------------------- Yes. Thanks, Alan. I think the opportunity is -- the way I would describe it in the COVID environment, is to really shore up the muscles around digital and remote engagement. And so I think from that standpoint, ACADIA and many other companies are building capabilities that, I think, are going to be sustainable and leverageable in a future environment. So I think that's a benefit. I'm certainly pleased that we've seen a response in our -- to our marketing tactics and getting back to pre-COVID expectations. And in part, I think that speaks to the value of the drug and the brand loyalty and exposure that we have, and we'll be using that, I think, to leverage and expand upon when we get to DRP. But I think that it's -- without question, a commercial organization is stronger in a face-to-face environment. I think that's clear. And so we're -- I think all of us are looking back -- looking forward to getting back into face-to-face interactions. But I think the mix will be enhanced with digital and remote tactics and to leverage telemedicine, to leverage virtual engagements more on the web and through other tactics. So I think the mix is going to shift, but I think -- I don't think going away from face-to-face tactics, I don't think that's the -- that's not where our best promotional commercial foot is put. I think we're better off with a -- face-to-face interactions. -------------------------------------------------------------------------------- Operator [55] -------------------------------------------------------------------------------- Our next question comes from the line of Gregory Renza from RBC Capital Markets. -------------------------------------------------------------------------------- Gregory James Renza, RBC Capital Markets, Research Division - Analyst [56] -------------------------------------------------------------------------------- Congrats on the quarter. Steve, just wanted to focus on Europe for a moment. And perhaps you could just provide your latest or refreshed views on the plan to unlock value with pimavanserin now that we're getting closer to 2021 and a potential DRP approval here stateside. And perhaps just analogously, just thinking about the schizophrenia trial that launched this quarter, just curious if you had any thoughts about how that is progressing, given that it's in Europe and the foresight of any potential impact with cases of COVID-19 there? -------------------------------------------------------------------------------- Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [57] -------------------------------------------------------------------------------- Yes, sure. I'll let Serge answer the second part. So as it relates to -- I always like to say when this topic comes up that the value pie for pimavanserin is heavily, heavily weighted to the U.S. There is value outside of the U.S., and we want to make sure that we leverage every element of value that exists. And as it relates to launching in Europe, I'll start there, our view has been that -- we made a decision a couple of years ago to frameshift things to try to get a better opportunity to get more indications within a same period of exclusivity. We have a global launch strategy that expands beyond Europe and with a certain sequencing that we anticipate going through. And at this juncture, I would just simply say that we're not quite yet at a point where we're ready to reveal more of that or talk more specific time lines for submissions outside of the U.S., but I would just simply say that we have a global -- a coordinated global plan for doing that. And as we progress in this frameshifted strategy that I described, we'll come back and speak more to it. Serge, do you want to take the schizophrenia question? -------------------------------------------------------------------------------- Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [58] -------------------------------------------------------------------------------- Yes. Sure. Our second pivotal trial in negative symptoms schizophrenia, ADVANCE-2, is progressing well. Now it's early in the study. We initiated it in the midsummer. So these are early months, but we are seeing very good interest and initial enrollment as well as scaling up the sites for the trial. It is done in Europe. And to your question related to COVID, obviously, it's -- although it's very difficult to make any generalization because there is a certain level of variability from country to country, how they are approaching COVID and to what extent, I think, overall -- in some countries, obviously, it's slowed down. But overall in the trial, we are so far pleased how things are progressing and the progress we are making. So that's generally the situation with the study. -------------------------------------------------------------------------------- Operator [59] -------------------------------------------------------------------------------- Our next question comes from the line of Danielle Brill from Raymond James. -------------------------------------------------------------------------------- Danielle Catherine Brill, Raymond James & Associates, Inc., Research Division - Research Analyst [60] -------------------------------------------------------------------------------- So I was just wondering if you could provide some color on any discussions that you've had with the agency on how the black box warning might be addressed for the DRP label. Or if those haven't been initiated yet, at what point during the review process do you think those conversations might start taking place? -------------------------------------------------------------------------------- Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [61] -------------------------------------------------------------------------------- Serge, do you want to address that? -------------------------------------------------------------------------------- Srdjan R. Stankovic, ACADIA Pharmaceuticals Inc. - President [62] -------------------------------------------------------------------------------- Yes. Danielle, the -- we -- it's early in the review process to -- for that sort of a discussion. Usually, that occurs toward the end of the review process when the labeling is discussed. So there were no -- any specific discussions with the FDA related to the box warning and -- other than us and them discussing the overall extent of the safety data that we will be including in our supplemental NDA. And I do want to repeat here that we feel very comfortable and confident in both efficacy and safety package that we included in the supplemental NDA. And definitely, it's the largest database -- safety database in this patient population that we are aware of. So we are comfortable with that, but it's too early and a bit premature for those kinds of discussions. So we didn't expect that, and -- but expect that towards the end of the review. -------------------------------------------------------------------------------- Operator [63] -------------------------------------------------------------------------------- We have time for one more question. Sumant Kulkarni from Canaccord. -------------------------------------------------------------------------------- Sumant Satchidanand Kulkarni, Canaccord Genuity Corp., Research Division - Analyst [64] -------------------------------------------------------------------------------- So from a commercial perspective, if a disease-modifying product is approved for Alzheimer's disease and is on the market, do you foresee any competitive impact at all for allocation of the payers' reimbursement dollar pipe for symptom management products such as pimavanserin when you hit the market next year for DRP? -------------------------------------------------------------------------------- Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [65] -------------------------------------------------------------------------------- Yes. Thanks for the question. Michael, do you want to start? -------------------------------------------------------------------------------- Michael J. Yang, ACADIA Pharmaceuticals Inc. - Executive VP & Chief Commercial Officer [66] -------------------------------------------------------------------------------- Sure. Thanks for the question. I think stepping back, it's really important to remember that in the dementia space, caregivers and patients have been waiting for some innovation for a very long time. It's important to note that dementia-related psychosis today is an unmet need with no approved medication. And so frankly, we take the view that both pimavanserin and the Biogen products are -- they're treating different indications. But the increased attention on available treatments for caregivers and patients in this space would be a very good thing. And so I think we don't view this as a takeaway. We view it as a net positive to market attention on a disease state that has been underserved for a long time. -------------------------------------------------------------------------------- Operator [67] -------------------------------------------------------------------------------- Mr. Davis, please proceed to closing remarks. -------------------------------------------------------------------------------- Stephen R. Davis, ACADIA Pharmaceuticals Inc. - CEO & Director [68] -------------------------------------------------------------------------------- Great. Thank you, operator. I just want to say thanks again, everyone, for joining us today. We very much appreciate your time. Look forward to updating you on our progress next quarter. -------------------------------------------------------------------------------- Operator [69] -------------------------------------------------------------------------------- Thank you for your participation in today's conference call. This concludes the presentation. You may now disconnect. Good day.