ACADIA Pharmaceuticals Inc.

Good day, ladies and gentlemen, and welcome to the Acadia Pharmaceuticals first quarter 2020 financial results conference call. My name is Sarah, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question and answer session towards the end of today's call. If at any time during the call you require assistance, please press star followed by zero, and the conference coordinator will be happy to assist you. I would now like to turn the presentation over to Mark Johnson, Vice President of Investor Relations at Acadia. Please proceed.

Thank you, Sarah. Good afternoon, and thank you for joining us on today's call to discuss Acadia's first 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 Q1 2020 financial performance and provide a review of our business operations and how we are addressing the ongoing COVID-19 pandemic. Also joining us today is Michael Yang, our Chief Commercial Officer, who will provide updates on our commercial initiatives, and Dr. Serge Stankovich, 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 are using supplement 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 the call over to Steve.

Thank you, Mark. Good afternoon, everyone, and thank you for joining us today. Please turn to slide five. Before we review our progress for the quarter, I'd like to take a moment and address the extraordinary circumstances we are all navigating with the COVID-19 pandemic. First, I hope all of you and your families are healthy and faring well. Second, I want to extend our gratitude to the healthcare workers on the front lines whose selfless care is helping so many who've been impacted by the virus. And third, I want to thank our employees. I'm grateful for their continued focus on the patients, caregivers, and the families we serve. Please turn to slide six. As the COVID-19 pandemic has evolved globally, Acadia has made it a priority to support patients who rely on our current and developing medicines, protect the health and safety of our employees, and do our part to minimize spread of the virus. As it relates to our business specifically, we view the challenges caused by the pandemic to be temporal. It does not change the underlying need of our medicines. Unfortunately, hallucinations and delusions associated with Parkinson's disease or dementia do not stop. Patients with major depression or the negative symptoms of schizophrenia still suffer. And patients with Rett syndrome and their families still need an effective treatment option. We remain focused on our mission because patients are waiting, and we continue to move forward to deliver on a multi-year cadence of potential product approvals over the next few years. During this time, we've taken numerous proactive steps to adapt our business. All of our office and field-based employees continue to work from home to reduce the potential risk of the virus. We've embraced new ways of working. Let me describe just a few quick examples. Although we are not physically in doctors' offices, we quickly moved our promotional and educational materials to portals accessible by healthcare professionals, enabling them and our field employees to be looking at the same document at the same time when we engage virtually. Recognizing the significant shift to telemedicine, we've rapidly moved to support key continuing medical education programs. On a related point, We also quickly expanded the ability for physicians to prescribe Neuplizid using our online tools, an important advantage when they are treating patients virtually. Regarding our supply chain, we continue to maintain an uninterrupted supply of medicine and have more than sufficient inventory. On an important related note, I'd like to remind you that patients never have to travel to an outside pharmacy to fill a Neuplizid prescription. We have always delivered Neuplizid directly to patient homes or directly to long-term care pharmacies and facilities. With respect to our clinical trials, we've made it a priority to protect the well-being of study participants and research partners. Like many others in our industry, we temporarily paused new patient enrollment in our studies and have been working with our clinical trial sites and study investigators to focus our efforts on current participants. We're also working with our sites and CRO partners to begin enrollment of new patients as soon as possible. We entered 2020 in a position of strength, and the fundamentals of the company remain strong. As we turn to slide seven, I'd like to highlight the progress across our business during the quarter. We expect 2020 to be a transformational year for Arcadia and are focused on our three strategic pillars, drive growth of nucleoside, deliver on the DRP opportunity, and develop new treatment options for patients. This year, we are investing in the continued growth of PDP as well as the potential approval and launch of DRP, transforming the nucleoside opportunity in the very near term. We're also advancing our MDD, Rett Syndrome, and Negative Symptoms of Schizophrenia development programs. If successful, we will have three additional approvals over the next three years that will drive our mid- and long-term growth. Let's take a closer look at New Plaza performance in Q1 as we turn to slide eight. For the first quarter of 2020, New Plaza achieved $90.1 million in net sales, a 43% year-over-year increase driven by strong commercial execution. While we have quickly pivoted to what we believe is best-in-class virtual education and engagement, there are some limitations in the current environment that are having a short-term impact on the rate of new patient growth. As a result, we are revising our net sales guidance to $420 to $450 million, representing a 28% growth year-over-year at the midpoint of the range. Importantly, we see continued growth in the plans of this year, and we remain confident in driving the long-term market opportunity in PDP. Michael will provide additional insight into our commercial performance during his remarks. As we turn to slide nine, I'm very pleased to share that we remain on track to deliver on the DRP opportunity, a potential second indication for PIM of answering. During the quarter, we met with the FDA and plan to submit our supplemental NDA this summer. With breakthrough therapy designation, we expect a priority review and a potential approval around year end. You'll hear more from both Michael and Serge on our progress with DRP. Please turn to slide 10. We continue to make important investments in our clinical portfolio while navigating the near-term impact of the pandemic. In our adjunctive major depressive disorder program, we're now prepared to reinitiate new patient enrollment at certain sites. As Serge will discuss, given that both of these identical studies are just over 50% enrolled, we're also pursuing a strategy to not enroll any additional patients and instead, combine these studies into one study, and if positive, submit an S&DA on the basis of this work and our previous positive physical clarity one study. Serge will discuss further details to this approach. In addition, we plan to initiate our advanced two study for the negative symptoms of schizophrenia in the second half of this year. In our Rett Syndrome program, where we are pursuing the first drug approval for the serious and rare neurological disorder, The FDA granted rare pediatric disease designation to Trufrinatide. We plan to reinitiate enrollment in the Lavender Rett Syndrome study as soon as possible. Today, we also announced a new licensing and collaboration agreement with Vanderbilt University. Through this collaboration, we've added a new muscarinic receptor program to our portfolio. What exactly did we license? The M1PAN program is a portfolio of early-stage clinical candidates that are complementary to our development pipeline focused on new potential therapies for CNS disorders. The lead compound is in phase one testing with several additional preclinical compounds. Finally, we continue to focus and invest in our future through additional business development opportunities that shape our long-term growth strategy. With that, I will now turn it over to Michael to discuss our commercial performance and highlights.

Thank you, Steve. Today, I'd like to review our first quarter performance which highlights the strength of the fundamentals of our business and gives us confidence in our long-term expectations for New Placid in Parkinson's disease psychosis. The strong base of PDP patients continuing on New Placid and our focus on growth initiatives will enable us to deliver double-digit volume growth in 2020. We're also on track and making good progress with our DRP launch plans. Please turn to slide 12. New Placid continues to transform the standard of care for patients with PDP. First, we have a strong base of patients continuing on New Placid. In the first quarter, we delivered net sales of $90.1 million, driven by year-over-year volume growth of 32%. Our commitment to programs to support patient access, and continued leverage of the 34-milligram capsule help to sustain consistently high monthly bottle fulfillment rates for patients established on therapy. Second, we continue to deliver new-to-brand patients consistent with previous quarters in both the specialty pharmacy and specialty distribution channels, reflecting positive customer engagement to our commitment to establish Nuplozit as standard of care for patients with PDP. As Steve mentioned earlier, we have quickly pivoted to what we believe is best-in-class virtual education and engagement. However, at the end of the quarter and into April, we have seen reduced patient visits and delayed diagnosis. According to a recent survey from Acuvia, in-person physician visits remain down significantly when compared to the pre-COVID time period. While neurologists have prior experience with telemedicine and are leveraging this technology to manage patients at a distance, overall visits remain significantly lower than pre-pandemic levels. Importantly, even during this time, New Plaza's new patient starts have outpaced the overall market new-to-brand trends. As such, our revised 2020 revenue forecast reflects 28% year-over-year revenue growth at the midpoint of the range. Let's review our growth initiatives further on slide 13. Parkinson's disease, hallucinations, and delusions are serious neuropsychiatric symptoms that can be very disruptive to the family and patients. As healthcare providers adjust to seeing patients with telemedicine during the recent crisis, PDP remains an important medical condition that needs to be addressed. To support new patient identification, we've done a number of things to optimize our approach to sales, marketing, and medical education in a virtual environment. For example, leveraging technology to conduct peer-to-peer educational programs and product theaters. Launched our online treatment form that is optimized for the telemedicine paradigm. This is important because patients can now be diagnosed and prescribed Nuplaza remotely, receive samples in the mail, and upon reimbursement verification, monthly prescriptions will be shipped to the patient's home. All of this keeping this vulnerable patient population safely sheltering at home. And finally, we continue to use digital campaigns to further stimulate patient and caregiver conversations with their physicians about PD psychosis and NUPLASID. Our commercial plan remains committed to increasing PDP awareness and establishing NUPLASID as standard of care. Importantly, we continue to educate on the inclusion of NUPLASID in the movement disorder society guidelines, new long-term patient safety data, and data on the positive impact on nuplosive therapy on the caregiver burden scale. Now, let's turn to our second potential indication for pimavanserin, dementia-related psychosis, on slide 14. We are excited about the opportunity to expand our label with another first and only FDA-improved indication. Dementia-related psychosis is a significant unmet need. and bringing PIM advancement forward as a treatment option could make a meaningful difference for patients and caregivers. We continue to advance our readiness plans focused on market research, disease awareness and education with the medical community on the high burden of disease. Most of these efforts have temporarily pivoted to virtual programs for obvious reasons. A few examples include advisory boards and payer engagements In addition, we are seeing strong HCP interest in learning more about DRP. For example, our disease education website, morethancognition.com, has had over 20,000 visitors since launch in late 2019, and we continue to see growth in site utilization month over month. Since New Plaza's launch in 2016, We have built significant awareness for the need to appropriately treat PD psychosis. The DRP opportunity is approximately 10 times larger than PDP, and we have previously outlined our field expansion expectations, but it should be recognized that we already have a significant base of engaged and experienced personnel to leverage. Much of the additional preparation for the DRP launch is scheduled to occur in the second half of 2020, mostly the hiring and training of our field-based teams. We made good progress in laying the groundwork and are well-positioned to execute on our launch plans. With that, I'd like to turn it over to Serge to discuss our R&D progress beginning on slide 15.

Thank you, Michael, and good afternoon. I would like to take this opportunity to share with you the important R&D updates that have occurred since we last spoke in February. As Steve mentioned, with the ongoing pandemic, we have made it a priority to protect the well-being of our study participants and research partners, as well as to minimize disruption to our clinical operations. We have been working with our clinical trial sites and study investigators on their plans to continue appropriate assessment and safety monitoring of outgoing study participants as well as to ensure adequate conditions for future enrollment of new patients in our late-stage clinical trials. I am pleased to report that our teams have been able to continue to collect data by implementing remote monitoring and at-home assessments. However, considering the rapid pandemic spread over the past couple of months, We have temporarily paused new patient enrollment in our clinical studies. To reinitiate enrollment, we will use a phased approach, which will be both study and site-specific and reflect local health authorities and regulatory guidances. Let's now turn to slide 16 for an update on the DRP regulatory part. As planned, we successfully completed a pre-SNDA meeting with the FDA and confirmed that the pivotal data from our Harmony Study, together with the confirmatory and supportive results from our Alzheimer's Disease Psychosis Phase II Study and our Parkinson's Disease Psychosis Phase III Study will all support the submission of an SNDA for Pimavanserin in dementia-related psychosis. In addition, we discussed the overall safety database and analysis plan. Our S.N.D.A. preparation remains firmly on track. As previously announced, we plan to submit the S.N.D.A. this summer. We expect a priority review with a potential approval for DRP around year-end. Turning to our major depressive disorder, or M.D.D. program on slide 17. Both our ongoing Clarity II and Clarity III Phase III studies have identical study designs with the same endpoints and analysis plans. Please turn to slide 18. Today, both our CLARITY Phase III studies have enrolled slightly over 50% of the total patients planned. The pandemic has created many uncertainties in regards to maintaining appropriate experimental conditions for the execution of clinical trials and the timing of results. As Steve mentioned earlier, We are now pursuing a strategy to move our depression program forward toward a timely and successful completion. Given our progress with enrollment and the identical design of the two studies, we are pursuing a strategy to not enroll any additional patients in the Clarity 2 and Clarity 3, and instead to combine these two studies into one study with a pre-specified statistical analysis plan. As a result, Potential top-line results of the combined study would be available in the third quarter of this year. If positive, these results, with our previously announced Positive Clarity I study, could serve as the basis of a supplemental MDA submission. If negative, we would initiate another pivotal Phase III MDD study in the second half of this year. We plan to discuss our proposal with the FDA in a meeting already scheduled for the second quarter. We look forward to updating you further on our plans for the MDD program. Moving to the negative symptoms of schizophrenia on slide 19. We are continuing to prepare for the second pivotal study, ADVANCE-2, which will utilize a fixed dose of 34 milligram and will be conducted exclusively in sites outside of the United States. We plan to initiate this study in the second half of this year. Rett syndrome is a rare and debilitating disorder with the unmet need highlighted here on slide 20. As I mentioned earlier, while we are continuing monitoring and assessment of ongoing study participants, We are currently initiating plans for gradual return to recruitment and enrollment in our Phase III Lavender study. At this time, we continue to anticipate the ability to complete and announce top-line results next year. Please turn to slide 21 to review our clinical stage pipeline, which now includes the M1-PAM program. We license Vanderbilt's M1 PAM program, which is comprised of a highly selective positive allosteric modulators, or PAMs, of the M1 subtype of muscarinic acetylholing receptor. This is an exciting new program for our pipeline, which may represent a novel approach for improving cognitive function and other neuropsychiatric symptoms in patients suffering from CNS disorders. The study of muscarinic modulators has been an area of high interest as there is an evidence of their ability to address cognitive and neuropsychiatric symptoms associated with CNS diseases and schizophrenia. Recent advances in the potential efficacy of muscarinic agonists have only increased this interest in the industry. The M1-PAM approach may achieve the efficacy recently observed with muscarinic agonists while minimizing the potential side effects. Consistent with our strategy, we remain focused on developing innovative new treatments, and that is reflected in our growing and advancing pipeline, both early and late stage. With that, I will now turn the call over to Elena to discuss our financial performance.

Thank you, Serge. Today I'll discuss our first quarter 2020 results and our updated 2020 financial outlook. Please turn to slide 23. In the first quarter of 2020, we recorded $90.1 million in net sales, an increase of approximately 43% compared to $63 million of net sales in Q1 of 2019. This was driven by approximately 32% volume growth year over year. The growth to net adjustment for Q1 2020 was 25.4%. As a reminder, growth to net is typically highest in the first quarter due to the annual reset of the donut holes for Medicare Part D patients. Weeks of inventory in the channel at the end of the first quarter were consistent with year end 2019. Moving down the P&L, gap R&D expenses increased to $72.6 million in Q1 2020 from $52.9 million in Q1 2019. The increase is primarily due to an upfront payment of $10 million to Vanderbilt University for the M1PAM program and increased development costs associated with terfenatide. GAP SG&A expenses increased to $102 million for the first quarter from $93.1 million in the first quarter of last year. This is largely due to increased personnel and medical affairs costs. Non-cash stock-based compensation expense during the quarter was $22.3 million compared to $19.9 million for the same period in 2019. Cash used in operations during the quarter was $49 million compared to $64.2 million for Q1 2019. Our cash balance at the end of the quarter was $651.4 million. Please turn to slide 24. For the full year 2020, we are revising our new plazid revenue guidance to $420 to $450 million from a previous range of $440 to $470 million to incorporate the short-term impact of COVID-19. The revised revenue range reflects year-over-year revenue growth of approximately 28% at the midpoint of the range. This guidance incorporates a range of scenarios which reflect our currently anticipated impact of COVID-19 on our business. Namely, at the low end, we've assumed a delayed return of face-to-face physician visits, resulting in recent new patient initiation trends persisting through the remainder of the year. At the upper end, we've assumed that we start to see an increase in face-to-face physician visits and an increased rate of new patient growth starting in the third quarter. We continue to anticipate overall growth to net discount in 2020 to be in the range of 17% to 18%. We forecast growth to net decreasing sequentially from 25.4% in the first quarter to approximately 13 to 15% in the second quarter. On the expense side for 2020, we expect GAAP R&D to be toward the low end of our previous range of $270 to $285 million. We expect GAAP SG&A to be between $425 to $445 million from a previous range of $440 to $460 million. This reduction reflects costs that will be naturally lower due to the current virtual engagement environment. Our guidance continues to reflect the important investments we are making to prepare for our DRP launch, including an expansion of the field team towards the end of the year. We continue to anticipate non-cash stock-based compensation expense to be between $90 and $100 million in 2020. We will end 2020 with a strong balance sheet and expect our year-end cash balance to be approximately $470 to $500 million, unchanged from our previous guidance. And with that, I'll turn the call back over to Steve.

Thank you, Elena. Please turn to slide 26. Acadia has proven the ability to quickly adjust and excel in the current environment. We have important work ahead of us and are focused on delivering on our commitments to our patients, caregivers, and physicians. As I stated earlier, the challenges caused by the pandemic will pass, but the underlying needs of our medicines remain. I have great confidence in our future as we look forward to delivering on the multi-year cadence of pivotal trial readouts and potential approvals. Finally, I'd like to acknowledge and again thank our employees who have simplified true leadership and resiliency during these challenging times. I will now open up the call up for questions. Operator?

As a reminder, if you have a question at this time, please press star and the number one in the touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Our first question comes from the line of Corey Kasimov with J.P. Morgan. The line is open. Corey, your line may be on mute. Can you hear us?

Can you hear me?

Yeah, we can go ahead.

Oh, sorry about that. So I wanted to start by asking on the clarity program in MDD. Exciting that data is coming sooner than anticipated now, but wanted to just make sure I get this. I understand the studies are identically designed, but one, if I recall correctly, one's U.S. based and one was outside of the U.S. So if that is the case, are there nuances to combining these? They kind of add incremental risk to the readout in terms of underlying baseline characteristics or anything like that. Are you confident in that front? And then the follow-up on this is just whether you have... I know you're meeting with the FDA this quarter, but do you have any preliminary feedback from the agency that gives you the confidence to publicly announce this new strategy now?

Yeah, thanks, Corey. I'm going to ask Serge to respond to both questions.

Yeah, Corey... We are obviously adding these two studies combining into one study. Based on the variability we have observed in each of the studies in terms of the baseline characteristics and the overall variability and other differences, we have not seen any indication of an increase or substantial difference between the two clarity studies in that respect. We feel fairly comfortable with that.

Okay. And then if the FDA agrees to your proposal this quarter, do you just lock the database at that point and begin the process of scrubbing and analyzing the data?

Yes. We're basically, as we mentioned, we paused the enrollment in the studies. We are seeing the last few patients going through the study, so following positive FDA interaction toward the end of this month, we will be moving forward cleaning the database, locking database, and producing the results.

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

Thank you. And our next question comes from the line of Nina Vitrito with Fitting. Your line is open.

Hey, guys. Thanks for taking my question. So I just want to ask about the DRP launch. You know, just thinking about whether or not there's going to be kind of a resurgence of COVID-19 kind of around the time that you would be launching and, you know, dementia patients are, of course, going to be in that higher risk bucket. I mean, how are you thinking about that? Are you kind of making plans to assume that this is going to be A virtual launch?

Yeah, thanks much for the question. I'll just start by saying we've done a lot of alternate scenario planning, and I'll let Michael fill you in a little bit more on that.

Yeah, hey, thanks. Thanks for the question. We have very thoughtful online plans to execute the expansion to support the launch that, number one, are tied to the key regulatory milestones As you've already alluded to, the environment is different than just simply a few months ago, and we're monitoring that environment very carefully. I just want to remind you that this is a significant expansion opportunity for Acadia and for New Plaza, but we already have a very well-established team. We have ongoing support in our operations model. on the ground supporting PDP so we can leverage that to build upon and support our launch plans. But again, you've outlined it. This is a fluid situation. We'll continue to kind of monitor this situation as things evolve, and we're being prepared for multiple scenarios, and I think we'll be ready to go no matter what environment we find ourselves into.

Okay, great. And then in terms of Just performance in the first quarter, you talked a little bit about specialty pharmacy versus specialty distribution channels. Could you just talk about, did you see any impact in one channel more than the other due to COVID-19, and in particular, kind of the long-term care setting and how you expect that to kind of play out moving forward and as we think about DRP kind of down the road?

Right, so... We anticipate growth in 2020 in both the specialty pharmacy and specialty distribution channel. As we've said in the past and we saw in the first quarter, often there is quarter by quarter variability and fluctuations between which channel grows versus another one. We would always anticipate, I think, the specialty distribution channel to be one-third of our franchise business. Obviously, long-term care is an important segment for us and one that has a lot of DRP patients already sitting there. And we'll be evaluating the go-to-market principles as it relates to the office setting versus the long-term care setting. But we expect that we'll be able to operate in both settings going forward.

Great. Thank you.

Thank you, and our next question comes from the line of Ritu Baral with Calwin. Your line is open. Ritu, are you on? If your phone is on mute, please unmute.

Ritu, are you on mute?

Please press star one once you get reconnected. Thank you.

Operator, let's go to the next question. We'll circle back.

Our next question will be from Alan Carr with Needham & Company. Your line is open.

Hi, this is Joey on for Alan. Thanks for taking our questions. A few quick ones on New Placid sort of performance. Can you comment on Overall market share and PDP, you know, previously you've given some metrics around that and how this sort of Most recent quarter and looking forward affects that market share, if at all. And also, maybe I missed this, but the quarter-over-quarter volume growth, could you maybe relate that? And I have a quick question on the DRP launch.

Yeah, I'm sure. So the sequential volume growth was minus 1% or essentially flat. Michael, do you want to take the other question? Sure.

Sure, yeah. You know, I think for a brand like New Plaza and where we sit, new to brand is an important focus of our efforts. We're still in the growth and penetration phase of the life cycle. As I mentioned, our share overall is in the high teens, but we have a higher share in the new to brand dynamic market. And that's based on a PDP market of 130,000 patients.

Okay, thank you. And just quickly on the potential DRP launch, you mentioned hiring second half of this year. How much of the existing Salesforce would you be able to leverage towards that? Thank you.

Right. Sure. And, you know, when I talk about force, that's not just reach and frequency representatives. That also includes our patient support and other capabilities. But in general, we've outlined our plans to go to between 400 and 500, and today we have around 180 to 200 personnel to leverage.

Great. Thanks for taking our questions.

And our next question comes from the line up to Dean Almaz with Bank of America. Your line is open.

Hi, good afternoon. Thanks for taking my questions. As it relates to guidance, can you give us a little bit more detail? I know you've made some remarks on your prepared statements, but for the area that you think is most at risk, can you just give us a little bit more color on that? Is it that it's new patient ads? from long-term care facilities or is it new patient ads perhaps in general because it does seem from the strategy that you laid out that for continuing patients it really should not be much of an issue at all to stay on job just given all the changes and just trying to get a better sense of where most of the exposure to COVID is coming from. Thanks.

Michael, you want to take that? Sure, yeah, thanks for the question. And as it relates to, you know, the guidance, I think the first thing to start with is that, you know, Parkinson's disease psychosis is a very serious situation and it's quite bothersome and disruptive to the family. So, therefore, it elevates on the ladder of need to treat. So, with that being said, that's a good thing. Another good thing is we have a strong base of continuing patients that we have continued to demonstrate a high and sustained fulfillment rate, so that's also good with the franchise. We do expect to grow new-to-brand patients both in the SP and the SD channel, but the thing that I was trying to articulate in my prepared remarks is that physician visits and diagnoses are down in general, and so it's really a funnel issue While we may have a higher share of the types of patients that we're seeing, overall visits are down. We're doing very well in engaging with our virtual tactics, but that's what is reflected really, I think, is in the new-to-brand area vis-a-vis the marketplace.

Delaney, you want to just offer additional thoughts on the overall volume growth that we're anticipating in our guidance?

Yeah, so the midpoint of our guidance assumes high teens year-over-year volume growth. And just as a reminder, when we see the impact we've seen to our new patient growth rate in the first part of the year, when you add patients in the beginning of the year, they have a cumulative benefit to the full year. So that's why when we look at the full year guidance range, we've reflected the change in our new guidance.

Okay, thanks, Alina. And can you tell us what percent of sales is coming currently from long-term care?

It's about 25%. I'm sorry? About 25% is from long-term care.

25%. Okay, perfect. Thank you.

Thank you. And our next question comes from the line of Mark Goodman with SVB Lerink. Your line is open.

Yes, hi. Can you talk about the M1 PAM that you guys licensed in? How is the products differentiated versus some of the others in development? You said the lead asset is in Phase I. What indication is that? Is it schizophrenia or Alzheimer's? And then just back on... New Placid, can you talk about just what April has looked like so far relative to March, relative to February, relative to maybe what you were expecting, just so we get a sense of what's happened so far? Thanks.

Yeah, we'll take those one at a time. Let me offer a couple of thoughts on the PAM program first, and I'll ask Michael to respond to the second question. So we really like this program. I'm sure many of you are aware there's a lot of literature describing the potential of muscarinic modulators both with the M1 and the M4 subtypes. The literature is mostly supportive of potential utility in schizophrenia and cognition and dementia. The challenge in this area has always been how to control or mitigate the unwanted cholinergic side effects. So there's some approaches that have been shown very intriguing promise by trying to, when you can block some of those side effects, you can really, what's been observed is a very strong efficacy signal. The approach that Vanderbilt's taken and that we are collaborating with Navar is by modulating the M1 receptor subtype through a positive allosteric modulators. and we believe this PAM approach is designed to achieve a similar level of efficacy but potentially without the side effects due to high selectivity of these PAMs. So we're very excited about the approach. We like the program a lot and eager to get it incorporated and get going. Michael, you want to take the other question?

Sure. Thanks for the question. Maybe this is a chance to brag a little bit. I'm really proud of the commercial team for what they've been able to do, quickly pivoting in a time of a crisis, whereby we were able to do a lot of things that optimized the commercial approach. I mentioned the ability to diagnose, treat, and get patients on therapy remotely. We've had product theaters that are very well attended. Our existing sales force Leveraging Their Relationships have had what I would call a surprisingly good take in their effectiveness to reach customers and engage in meaningful conversations. Obviously, the first part of the shelter-at-place, I think, was a pretty devastating thing for the country and the marketplace in general, but as physicians have come to get their feet under the ground, I've been impressed with their response to telemedicine. As I mentioned earlier, the PDP situation is one of serious need and therefore we have credible conversations and reasons to engage with customers. So I think April is certainly seeing better days than the latter parts of March when the pandemic was first raging and shelter in place was kind of a and a number of others.

pleased and proud of the work that his team has done in very quickly adapting to this very unusual and very different environment. I think what we've seen is, as Michael mentioned, while in-person visits are down, as you can see from our guidance and from the results that we've published, it has not had nearly as significant an impact on our revenues and our projected revenues and all of the early indicators that we look at. So the business continues to be very strong, and I think the quick pivot that we've done and the work that Michael's team has done is reflected in the fact that we've revised guidance down by only 5%. I think we feel very good about where we stand. Of course, we all recognize it's a fairly fluid situation, but I think our team has done a great job of working virtually.

And did the $90 million in the first quarter include any buy-in because of COVID, you know, like we've seen in other companies, or is this pretty much demand-driven?

No, it's demand-driven. Our inventory levels did turn the corner. Thanks.

Thank you. And our next question comes from the line of Charles Duncan with Cantor Fitzgerald. Your line is open.

Thanks, guys, Steve and team, for taking my questions. Congrats on a good quarter. I wanted to ask one commercial question and then probably two relatively simple pipeline questions. The commercial question for you is I know there's been a fair amount of discussion about the components of guidance and appreciate Elena's input there. But I'm specifically wondering about the dynamics in the long-term care facility setting. I know there's been some discussion about that setting being hit hard by COVID-19. And I guess I'm wondering if you're seeing continued persistence and or, I guess, improved or continued compliance in that setting in particular and what your assumptions are in the second half of the year with regard to the COVID-19 perhaps second wave.

Michael, do you want to take that?

Yeah, thanks, Charles. Thanks for the question. Our hearts go out to the patient in the long-term care setting, which is a setting that has seen a little bit more of an impact on the COVID. We expect to continue to see the similar dynamics in our ability to kind of operate, as I said, on the SP and the SP side. Recall that we have already a well-established Franchise, the product flow goes through there and continuing patients have shown no, we don't see a general impact on the continuing patients. As I mentioned earlier, for both SP and SD, the ability to get new patients, that's kind of where the focus is on the guidance and we're speculating in that guidance some reduction in that ability to get new patients starts in both SP and SD, but that's It's a fluid situation and we're continuing to monitor that and we'll continue to evolve our promotional and operational mix to that category when we see it. It could be that we get back to state-to-state and market-to-market opportunities and it's going to be an evolution of how we get back into that market.

That makes sense to me. However, we...

I'm sorry, go ahead. Just to be clear, the low end of the guidance assumes that new patients start to stay where are what we've observed so far. And we don't anticipate that to be the case. The hind of our guidance assumes that we're able to get back into physicians' offices in the third quarter and receive more growth on new patient starts. So I think the guidance, again, is very well-founded in what we're seeing today, recognizing, again, it's a fluid situation that could change.

Okay, very good. That's helpful, Steve. And then perhaps if I could ask a couple of pipeline questions. One, is related to DRP. Pretty clear guidance that you'll be filing an SNDA soon. I know that summer starts here in a matter of weeks, but I'm wondering if Sergio could provide us any additional color on kind of rate-limiting steps or additional work that needs to be done to file the DRP SNDA. And then on the MDD program like that, I think it's creative, interesting, but I'm wondering if you could give us some color around the impact on powering, if there's any penalties that you think from a statistical perspective you would take in combining those two studies.

Yes, thanks, Charles. On the first question, really, we are, as you can imagine, well advanced in the preparation of our supplemental NDA. Our discussions with FDA did not bring any significant or meaningful changes to that strategy, so we are continuing with finalization of the documents that are that are components of the supplemental NDA. And we are, as I mentioned earlier, completely on track for that submission in the summer. And, you know, with a six-month priority review, we are expecting that the action date will be toward the end of the year. Related to the second question in terms of the potential statistical impact or penalties for combining the study, all of this is done and will be done with alignment with the FDA and prospectively prior to any You know, the database lock or anything on that, it is, you know, as a part of our discussion, we're proposing statistical analysis plan and this is something that precedence already exists for this and it has been done and we anticipate that FDA will be open for such a solution. I do want to say is that starting... In general, even the regulators and most of the sponsors are recognizing that there are certain risks involved in stopping and starting the enrollment where a portion of patients will be assessed and enrolled pre-COVID and a portion of patients post-COVID. That solution also brings certain risks, and our assessment is that the proposal that we have offers an opportunity for us to still maintain our two shots on the goal strategy by already planning to, in case of negative outcome, Thank you very much. Thank you.

You know, it's from an academic and not to say anything about that, but would you see that as a pharmaceutically optimized compound or really a tool candidate to test the hypothesis with regard to the strategy to get to selectivity?

It's a great question, Charles. It's something that we spend a lot of time and our diligence on. Vanderbilt's done something that is a little different than what you typically see with academic institutions. They've really dedicated a lot of resources to building the same kind of capabilities in an independent lab structure they set up under Jeff Kahn to do the same kinds of things, have the same types of capabilities in-house as you would have at a pharmaceutical company or at a well-positioned biotech company. And so that was one of the real advantages we saw to partnering with them is not only have they gone through the same paces that we and others would go through, but they have the capability to continue doing that with other compounds. And by the way, Jeff Kahn, who leads this effort at Vanderbilt, spent a lot of time in industry, and they built up really a substantial platform there. So we're very excited about the mechanism, the program, the potential, but also the capabilities. They're great for our capabilities.

Very good. Thanks for the added color, Steve and team.

Thank you. Our next question comes from Gregory Renza with RBC Capital Markets. Your line is open.

Hey, guys. Thanks for taking my question. Congrats on all the progress. And also, thank you for all the color this afternoon and today. I really appreciate it. Steve, I just wanted to ask a bit, certainly more on COVID. And as you discussed really setting the company and the portfolio up for the longer term, I'm just curious, you've discussed in getting through some of the COVID-19 pressures now, but I'm just curious your thoughts on maybe more of the lingering Thank you very much. with helping to get products like Covaxin through to these patient populations. Thank you very much.

Yeah, thanks for the question. I'll start and then Michael or Serge, if you guys have additional commentary, please jump in. But look, this is obviously a really tragic situation that we're experiencing globally. The impact that we're seeing with COVID-19 is short-term. As we mentioned, it's not going to change the fact that symptoms with Parkinson's, dementia, depression, schizophrenia, and Rett syndrome, they continue to suffer symptoms despite the pandemic. I think in terms of longer term impact, I think it will underscore the utility of drugs that help treat these symptoms. I do think that we'll see some exacerbation of depression and anxiety induced depression. I think we'll see some, again, further impact on the hallucinations and delusions that Parkinson's and dementia patients suffer and in some respects the ability to actually treat those symptoms and possibly keep patients out of the nursing home longer or in a nursing home setting to be able to treat those symptoms to make Those patients have a higher quality of life and be easier to manage, et cetera, will be things that will be of an even higher value than the very high value they already have today. So I think as we think about the potential rippling effects, I guess I'd say, I think they will just underscore the utility of treating the diseases that we're pursuing and perhaps equally importantly treating them with An agent that, so far, has shown very robust efficacy and a very, very tolerable safety and tolerability profile. So I think it will just simply underscore the value of Nucleaza in all the indications that we're presenting. Michael or Sergey, do you have anything else to offer?

Yeah, Steve, I would offer a couple more things. One of the things that mental health has attached to it is number one, a stigma, and number two, an awareness. And a lot of our medical and consumer education is awareness. And obviously, folks being together in a longer period of time exposes that information or that situation, and that can make that a lot more front and center as a problem to solve. Second, I would say that I think that we're fortunate in that psychiatry and neurology are some of the two highest users of telemedicine. And I think the telemedicine trend that has been established as a necessity in this COVID environment, I think is going to continue long after this. And I think that telemedicine is going to be here to stay. Companies that are optimized for that kind of environment, and our product and company is, are going to continue to serve, I think, the physician customers extremely well. And then the third, and I just want to anchor this to Steve's comments, that in a product like Nuplazit whose overall positioning across the sequence of indications is improvement without impairment. In the case of PDP, that was a non-improvement of psychosis without impacting motor. In the case of dementia, it's potentially the impact on cognition, on falls and other Thank you for joining us.

I'll just add that likewise on the R&D side, we have been able to really quickly and efficiently move toward remote assessments and ability to properly monitor safety of the patients in a remote manner. I want to thank the regulators who reacted really fast in providing the guidelines for guidance for sponsors how to do this. And with application of all of this, now we have essentially systems in place to operate whatever circumstances come up. Of course, with pandemic, you never know if things may change. Get to some catastrophic level, but in the circumstances as it is, we can really run both models, both on-site visits or remote visits, and we are ready for any circumstance.

Great. Operator, I think we have time to get back to Ritu Baral from Cowan, and then I think we can take a couple more questions after that.

All right, Ritu Baral from Tally, your line is open.

Hey, guys. Thanks for fitting me back in. Really sorry about that. My question is for Serge. I know somebody asked a little bit of this previously, but how should we think about the activity of your M1 PAM from Vanderbilt? Specifically, how do we think about that allosteric modulation and what sets it apart? Activity-wise from like Xenomaline and how are you like, is it possible to separate the anti-muscarinic side effects from the antipsychotic effects that Xenomaline has shown? Can you walk us through that?

Well, Steve, do you want me to address this?

Yeah, please go ahead.

The one of the really distinguishing feature of the compounds that we in license is its high level of selectivity, which really would impact the entire side effect profile. In terms of the efficacy, you know, that it shouldn't be any distinguishing difference, but with the Allyson McMillan Youngblood are impressed with the wonderful compounds. It's high selectivity and their technology for producing the positive allosteric modulator with high precision. So we are really impressed with that and anticipate that we will ultimately see the efficacy that is observed already with M1, with mammooscarinic agonists, but with the side effect profiles. And some initial data that we have also are indicating in that direction.

Yeah, I'll just echo the last thing you mentioned. I mean, in these early stage programs, you always have a biochemical hypothesis, Do testing in vitro and then in vivo. Then you ultimately get in the clinic and can test out boxes in humans. And all of the data that we've seen so far is supportive of the theory that we have that through this positive allosteric modulation, that M1, we may be able to avoid the cholinesterase side effects. So again, it's an early stage program. The lead compound is in phase one now. It's in the early phase one.

And I think as we progress further, we'll give more updates on it.

But another thing we liked about the program is the fact that With these small molecule, early stage programs, you always want to have multiple shots on goal. And we've got other compounds that are progressing rapidly as well. So we feel good about the portfolio approach that Vanderbilt's taking.

And last question, I apologize if this is a repeat, but in your conversations with FDA about your DRP-FNDA, has the topic of the ADCOM come up now that ADCOMs are

We continue to expect that there is a high likelihood that we will have advisory committee and we are preparing for the advisory committee. That topic did not come up yet because it's not time for that. That's not something that generally is customarily discussed either at the at any of the meetings or of the pre-SNDA meeting. We expect that we will be once we file and file is accepted that we will at that point hear what their thoughts on that. I do want to remind everybody that it's not typical for supplemental NDA to have advisory committee but because this is the first approval of antipsychotic in this indication that we anticipate that there is a likelihood that we will have and we are behaving in that way.

Great. Thank you for taking me back into the queue.

And our next question has been in line of Salveen Richter with Goldman Sachs. Your line is open.

Thanks. Good afternoon.

With regard to the clarity trials, could you just comment on The risk in terms of differences previously seen with placebo response or other factors in the context of U.S. and ex-U.S. patients or U.S. and ex-U.S. sites. And then, you know, just to clarify in the muscarinic receptors, what the rationale is behind targeting M1 and not both M1 and M4.

Sir, do you want to take that?

Yes. In regard to clarity, First of all, let me just say that in terms of the placebo response in the depression trial, the differences that we were seeing, we generally see in schizophrenia, are not replicated in the depression trial. The regional organization of the studies is more related to the potential control of the overall variability. As I mentioned, The data we have and what we observed so far does not indicate that there is a significant concern in terms of the differential variability that we are observing in these two studies. So from that perspective, we are reassured that the risks are not of a concerning nature in that regard. Thank you very much. Cognitive slash neuropsychiatric symptoms are better addressed or more efficiently addressed with the agonism at M1 versus M4. There is a kind of school of thought that M1 is more on the cognitive side, that M4 is more on the acute psychotic symptom side, but there is no Actually, looking historically through the studies, I think that there are arguments to be made that both cognitive symptoms and more broader neuropsychiatric symptoms in schizophrenia, which would include both negative symptoms as positive symptoms, would be and can be addressed with M1. I will simply say that what we intend to do in developing these molecules is to simply listen to clinical observations and adjust our development programs as we are moving through the stages of development so that we pursue the most appropriate indications with this. But we are open-minded in that respect at this point.

Great, thank you.

Operator, I think we have time for one more question.

Yes, sir. And our next question is from the line of Chris Howerton with Jefferies. Your line is open.

Great. Thank you so much for taking the question. I'll try and make this quick. So, Steve, we've had, you know, some initial discussions about growing the company through BD. I just wanted to understand what the scope of the deals you're thinking about in the future, just given the precedent of these two relatively small deals that we've seen so far. So thanks.

Yeah, thanks for the question. As we've previously indicated, growing the company transactionally is a key pillar of our business plan. You'll see more transactions from us as we go forward. I think the two deals that we've done so far are good examples. I would characterize the kinds of deals we are doing, but I shouldn't limit the scope or assume that our scope is limited to just those kinds of deals or those kinds of deals. Of course, as I mentioned, tropinotide is a good example of a later stage opportunity that we are very excited about. We have presence both in neurology and psychiatry. We've built a very, I would characterize it as a very, very formidable R&D engine. I think the results that you guys have seen us produce support that. And I think we've built a very, very substantial presence commercially. So we've got capabilities that we can leverage, and we will continue to do that.

Okay. All right. Very good. Thanks for taking my question.

Thank you, and I'm not showing any more questions at this time.

Great. Thanks, Operator.

Look, I know we've run a little bit long here.

I just want to say thanks to all of you for joining us today. We appreciate it. Look forward to updating you on our progress next quarter.

Ladies and gentlemen, this does conclude the program. You may now disconnect. Everyone have a great day.