ACADIA Pharmaceuticals Inc.

Good day, ladies and gentlemen, and welcome to Acadia Pharmaceuticals' third quarter 2023 financial results conference call. My name is Kathy, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We'll be facilitating a question and answer session toward the end of today's call. I would now like to turn the presentation over to Al Khadani, Senior Vice President of Investor Relations and Corporate Communications at Acadia. Please proceed.

Thank you, Kathy. Good afternoon, and thank you for joining us on today's call to discuss Acadia's third quarter 2023 earnings. Joining me on the call today from Acadia are Steve Davis, our president and chief executive officer, who will provide some opening remarks, followed by Brendan Keehan, our chief operating officer and head of commercial, who will discuss the debut launch and New Plaza execution. Doug Williamson, our head of research and development, will provide an update on our pipeline programs and Mark Schneier, our Chief Financial Officer, will review the financial results. Steve will then provide some closing thoughts before we open up the call for your questions. In addition, both Kathy Bishop, our Head of Rare Disease and External Innovation, and Parag Miswani, Senior Vice President, Trophinatide Rare Disease Franchise, will be available for the Q&A session. We are using supplemental slides, which are available on our website's Events and Presentations section. Before proceeding, I would like to remind you that during our call today, we will be making several 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 several risks and uncertainties that may cause 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, Al. Good afternoon, everyone, and thank you for joining us. Please turn to slide five. Acadia is entering a transformational period of growth, delivering record revenue in the third quarter. Our rapidly growing franchise and debut complements our highly profitable New Plaza business, and our robust R&D pipeline provides rich opportunities to fuel growth to even higher levels in the years ahead. We plan to capitalize on this opportunity set by executing on our strategic priorities. Let me touch briefly on... First, we are extraordinarily pleased with the success of Debut. We generated $66.9 million of net sales in the third quarter, our first full quarter since launch, demonstrating a high level of excitement in the RET community as soon as Debut became available. As we'll discuss today, we're seeing strong indicators across all launch metrics underlying these results, including demand, persistency, and access. Second, our New Plazid franchise continues to be highly profitable and strongly cash flow positive. New Plazid revenues for the quarter were $144.8 million. These results reflect our ability to continue to gain market share and grow the revenue base. Third, in addition to these successful marketed products, we have a deep and growing pipeline, including our Phase III Advanced II study of Pimivanserin in negative symptoms of schizophrenia, where we expect to have top-line results in the first quarter of 2024, our Phase III study evaluating ACP101 in Prader-Willi syndrome, where we expect to commence enrollment later this month, In leveraging our learnings from Nucleazid, we've developed ACP204, our next generation 5-HT2A blocker. Here too, later this month, we will commence enrollment of patients in our seamless phase two, phase three program, studying ACP204 in Alzheimer's disease psychosis. Fourth, the success of DebutUS Launch underscores the opportunity we have to expand in the global markets following our expanded license agreement for Debut announced in July. which granted us worldwide rights to the asset. Our early U.S. experience serves as an important reminder of the significant unmet medical need worldwide with no approved treatments for Rett syndrome outside the United States. We're meeting with Health Canada this month to discuss a planned new drug submission for trofinetide in Canada. In addition, we're engaging with European regulators in advancing plans in other geographies. Fifth, we have a deep early stage portfolio that includes disclosed and undisclosed programs. focused on neuropsychiatric and rare disease disorders that represent significant opportunities to continue to build on our current growth. In addition, we continue to remain very active in business development to further expand our portfolio and build on our success with debut in New Placid in CNS and rare disease. Let's discuss our debut launch and some of the launch dynamics on slide six. Five and a half months into the launch, we've provided hope to a community that has never had an approved treatment for Rett syndrome. We've seen Rett patients respond in amazing and inspiring ways to debut therapy. We've established critical relationships in the medical and caregiver communities, and we've provided a strong base for future continued success. During this time, from mid-April through September, we've booked approximately $90 million in revenue. In preparing for the approval and launch, we made significant investments in both the medical and caregiver communities, in medical education, in launch preparations, and the result, everything about the launch thus far has gone either according to plan or exceeded our plans, and in some measures, greatly exceeded our pre-launch expectations. Prior to launch, we expected demand to be high. It has been. In fact, one area where we significantly exceeded our prelaunch plans is just how fast the demand came immediately upon launch, particularly from centers of excellence. Another area where we have exceeded prelaunch expectations is the speed at which we've established access with payers. As Brendan will speak to shortly, this access has come faster, both in terms of the pace at which payers have adopted formal coverage plans and the pace at which they have approved treatment under letters of medical necessity prior to the adoption of written plans. These two dynamics, pent-up demand from centers of excellence and more rapid access than anticipated, coupled with high levels of patient persistence on therapy, have resulted in just over 800 patients on debut as of September 30. Importantly, these dynamics have produced a substantial foundation that will continue to benefit our launch as we move forward. We've established significant breadth and depth of physician experience with Debut in a short amount of time. A high number of patients and families are sharing their positive experiences at this early stage, enabling us to gain momentum sooner. And establishing access well ahead of plan enables us to further build on that momentum. Turning to persistence, we've previously reported that we're very encouraged by what we're seeing, and that continues to be the case. As Brendan will discuss shortly, Our real-world evidence to date indicates 81% of patients starting debut remain on therapy four months after treatment initiation, and only an additional 6% are beyond 60 days since their last scheduled refill. In comparison, in our LILAC1 open-label extension study, 65% of patients who started debut treatment after rolling over from placebo remained on therapy four months after initiation. To sum up, we continue to operate at or ahead of plan. Prior to launch, we projected a linear growth curve producing attractive revenue growth year after year. This is what we typically see in rare disease launches. Of course, what we didn't anticipate with the debut launch is the surge in demand that accelerated our penetration and the associated contributions to revenues in these early quarters. As we move forward, we'll continue to leverage this strong foundation as we increase breadth and depth in all sectors of the REC community. Let's turn to a snapshot of our current products and pipeline on slide seven. What we see is an overview of our two successful commercial products and our pipeline of late and early stage programs that represent substantial long-term growth opportunities for Acadia. As we've noted, New Plaza continues to be a highly successful franchise, generating significant cash flow. In Parkinson's disease psychosis, we continue to gain market share in both our office-based and long-term care channels, and we booked another record quarter in the long-term care channel. Our commercial team is continuing to successfully leverage the real-world evidence studies rolled out earlier this year, and the impact is becoming increasingly evident each month and quarter. Building on this, Debut provides dramatic growth potential to our business, and we have a robust pipeline behind that where we'll be commencing late-stage studies in two programs later this year. In our negative symptom schizophrenia program, we have something rarely seen in this indication. That is a positive pivotal study. There are no FDA-approved treatments to treat the negative symptoms of schizophrenia. The unmet need is high, and we look forward to having results from our second pivotal study in the first quarter of next year. Later this month, we will commence our phase three study with ACP101 and Prader-Willi syndrome. Prader-Willi is a rare and debilitating genetic disease for patients having an unrelenting drive to eat. Here too, there are no FDA approved treatments. November will be a busy month for us as we also commence our seamless phase two, phase three program with ACP204 in Alzheimer's disease psychosis patients. And behind that, as I've mentioned, we have a rich pipeline of early stage disclosed and undisclosed programs that position us for long term growth. I'll now turn it over to Brendan to provide additional insights on our debut launch execution and New Placid's commercial performance on slide eight.

Thank you, Steve. Let me provide additional commentary on our two commercial franchises, Debut and New Placid, and the terrific performance both delivered in the quarter. Let's begin with Debut on slide nine. We have three commercial execution priorities I'd like to discuss today. Demand, persistency, and conversion to paid treatment. Debut's launch has outperformed across each parameter since approval. As Steve noted, we have seen a surge in demand for Debut since the launch in mid-April, resulting in just over 800 patients on Debut as of September 30th. This initial wave of demand for us was a bit unique, likely due to several factors, including a very strong patient advocacy community. 800 patients on therapy is a great start, but we still have a lot of RET patients who can benefit from DayVu, many of whom have fewer interactions with centers of excellence and with patient advocacy organizations. This segment represents the majority of patients who have not yet been prescribed DayVu. As we previously described, approximately 25% of RET patients are treated in centers of excellence. Another 60% are treated in high volume institutions and the remainder in community practices. As we look to engage this next significantly larger segment of the rent market, we expect a more linear adoption curve, as we've seen with other orphan rare disease launches. New patient requests are coming in at the rate we expected at this point in the launch and will support the continued attractive growth of Dayview. Our experience so far with new starts, coverage, efficacy, and persistency reinforce our conviction that Debut will achieve a high degree of penetration in the market. To penetrate this larger segment of the market, we are now employing a number of initiatives, including delivering HCP and caregiver webinars, which bring together experienced HCP treaters and caregivers with loved ones already on therapy to speak about their successful experience starting and staying on Debut. We're participating in local RET events, especially during RET Awareness Month in October, that provide an opportunity to bring together patients and families already on debut treatment with those that are still looking to learn more. In addition, we're delivering HCP peer-to-peer programs to have experienced treaters help newer-to-brand HCPs with best practices on getting started and remaining on debut to realize long-term benefits. Let's next turn to a discussion of persistency on debut on slide 10. Real world persistency thus far is meaningfully better than we saw in our clinical trials. When we measure persistency based on confirmed discontinuations, 81% of patients who started debut remain on therapy at four months since treatment initiation. When we measure persistency based on confirmed discontinuations plus any other patients who are more than 60 days past their last scheduled refill, the real-world persistence is 75%. In comparison, in our Lilac One open-label extension study, 65% of patients who rolled over to drug from placebo remained on therapy at the end of four months. This is important because we believe high levels of persistence early on translate into a higher number of patients staying on therapy long term. Further supporting this outlook is the extremely high level of persistency we've seen from patients that transitioned from the open label extension to commercial therapy. This stronger early persistency does not surprise us. We expect the real-world experience to be different from what we observed in our clinical trials, where caregivers and patients did not have all the information we now have about proven clinical benefits as well as proper GI management, including specific language in our label that instructs HCPs and caregivers to discontinue anti-constipation medications prior to initiating debut, further supporting a better initial clinical experience. I'd now like to turn to a discussion of conversion and dose compliance on slide 11. In addition to outperforming on demand, we executed well ahead of plan on access. This is what enabled us to take that surge of demand and quickly convert it to paid therapy. A significant proportion of this surge converted to paid in the second quarter, but most converted in the third quarter. This leaves a smaller number of yet to convert patients carrying over into the fourth quarter as we continue shortening the time between a script being written and converting to paid treatment. To quantify our progress with payers, our early foundational work has resulted in payers adopting formal plans covering almost 80% of lives to date. Now let me turn to titration and compliance to dose. Two factors that have been helpful in starting and keeping patients on therapy. Compliance to dose through three months is in the range of 75 to 80% of the labeled dose. As we expected, the majority of patients begin debut treatment by titrating up from a lower dose to determine their optimal long-term dose. Most patients typically start at approximately 50% of their prescribed dose and titrate up over a period of four to six weeks. We believe this compliance range provides insight into using titration to find the most appropriate dose so caregivers and patients can benefit long-term. Finally, I'd like to turn to what matters most, the real-world benefits caregivers are sharing with us about the improvements they're seeing in their loved ones being treated with Debut. Please turn to slide 12. We are excited and gratified to see the real-world daily stories of the impact debut is having on the lives of Rett syndrome patients through the caregiver testimonials you see on this slide. A few representative examples of the day-to-day important benefits families are describing include improvement in speech or even speaking for the first time in years, broadening vocabulary and improved engagement in conversations, improved gait and feet placement, purposeful eye contact, and improved communication through the patient's eyes. decreased hand-wringing and stereotypies, coupled with more purposeful use of hands. We also regularly hear feedback about the loved one's increased alertness, with patients now being able to better follow conversations or complete activities they were previously unable to complete. These testimonials all speak to the promise of treatment with Dayview and will continue to monitor experiences as patients continue treatment. I'd now like to move to slide 13 for a discussion of the great progress we're seeing in our new Placid franchise. As Steve noted, the new Placid franchise is increasingly cash flow positive and continues to provide a strong foundation for our overall business. Leveraging the emerging real-world evidence data, we continue to increase our PDP market share versus off-label atypical antipsychotics in a contracted overall Parkinson's disease market. Product sales of New Placid in the third quarter were $144.8 million. The broad educational campaign we started at the beginning of the year leveraging the real-world evidence studies continues to deliver increasing value. The more often we are able to speak with customers about these important observations regarding New Placid and off-label antipsychotics, the greater their confidence in choosing New Placid over other alternatives. These results reinforce the impact these data sets have on our efforts to drive new patient starts. Looking at the broader market dynamics, we see that carbidopa levodopa prescriptions remain essentially flat over the first three quarters of 2023 versus the first three quarters of 2022, while Nuplasid continues to grow, outpacing the market by a wide margin. As you can see on this slide, in the office space channel during this time frame, We've grown new patient starts 9%, while all other PDP products have increased only 1%. Turning to the LTC channel, where we delivered a record bottle quarter for New Placid, we also continue seeing improvement in new resident admissions, indicating some degree of market recovery. In this channel, New Placid has substantially outpaced the class. growing 16% during this time period, while all other products used to treat PDP in the long-term care setting have grown just 7%. Understanding that the large majority of revenues we record during any given quarter are the result of refills by continuing patients, these significant increases in New Plazid new patient starts in both market segments are encouraging. I'll now turn it over to Doug Williamson, our head of research and development, to provide an update on our pipeline programs starting on slide 14.