ACADIA Pharmaceuticals Inc.

Good day, ladies and gentlemen, and welcome to Acadia Pharmaceutical's fourth quarter and full year 2023 financial results conference call. My name is Abigail, 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. To ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. I would now like to turn the presentation over to Al Khaldani, Senior Vice President of Investor Relations and Corporate Communications at Acadia. Please proceed.

Good afternoon, and thank you for joining us on today's call to discuss Acadia's fourth quarter and full year 2023 earnings results. Joining me on the call today from Acadia are Steve Davis, our Chief Executive Officer, who will provide some opening remarks, followed by Brendan Thien, our Chief Operating Officer and Head of Commercial, who will discuss our strong commercial franchises, Debut and New Placid. 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 highlights. Steve will then provide some closing thoughts before we open up the call to your questions. In addition, Parag Miswani, Senior Vice President, Trophenotide 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 for opening remarks. Thank you, Al. Good afternoon, everyone, and thank you for joining us. Please turn to slide five. We transformed our business in 2023. Today, we are a cash flow positive company with two first in class commercial assets. We have three late stage assets and a robust early stage pipeline, and we continue to invest in future growth through business development. Let's begin with our commercial franchises, which delivered record revenues of $231 million in the fourth quarter of 2023. and $726.4 million for the full year. Debut, the first and only drug approved to treat Rett syndrome, generated fourth quarter sales of $87.1 million in its second full quarter of sales since it was launched in April of last year. We're proud of our early success with the launch and excited about the future of Debut. New Plaza continues to deliver and be strongly cash flow positive. Sales in the fourth quarter were $143.9 million and reflect our ability to gain market share and grow the revenue base while continuing to manage the expense base. In addition to our two successful commercial franchises, we have a deep and growing pipeline, which is making significant advances, including programs in the negative symptoms of schizophrenia, product willy syndrome, and Alzheimer's disease psychosis. but KD has never been in a stronger financial position. We delivered 40% revenue growth in 2023 on the strength of our successful debut launch. We are now in a position to generate substantial, sustainable cash flow to fund further growth in our business. We ended the year with $438.9 million in cash, even after deploying a little over $100 million for business development, and expect our cash balance to grow to between $585 million and $655 million by the end of 2024. Acadia is relatively unique amongst our biotech peers, combining successful commercial franchises, exciting late and early stage assets, and the financial strength to capitalize on these opportunities. This includes further expanding our portfolio and building on our success with Debut and New Placid in central nervous system and rare diseases. Let's next turn to a snapshot of our current products and pipeline on slide six. Nuclasid is our treatment for Parkinson's disease psychosis, which today remains the only drug approved for the treatment of this condition. In 2023, we added significant growth potential to our business with the introduction of Debut for the treatment of Rett syndrome. Here too, Debut is the first and only drug approved for the treatment of Rett. Behind these two successful commercial franchises, we have numerous late and early stage pipeline assets, including our negative symptoms of schizophrenia program with Pimivanserin. There are no FDA approved treatments for this disorder, so the unmet need is high. And we look forward to having top line results of our advanced two study by the end of this quarter. As a side note, obviously we do not have results as of today. ACP101 and Prader-Willi syndrome, where we are currently enrolling subjects. Part of will is a rare and highly debilitating genetic disease where patients have an unrelenting drive to eat called hyperphagia. The severity of this disorder translates into an average lifespan of 30 years. Here too, there are no FDA approved treatments. We're also currently enrolling our seamless phase two, phase three program with ACP204 in Alzheimer's disease psychosis patients. another disorder where there are no approved treatments. ACP 204 is our second generation 5-H T2A blocker, where we are leveraging our learnings from PIM of answering. And beyond that, we have a rich pipeline of early stage disclosed and undisclosed programs that position us for future growth. I'll now turn the call over to Brendan to discuss our commercial performance on slide seven.

Thank you, Steve. I'm pleased to provide additional commentary on our two commercial franchises, Debut and New Plaza, and the terrific performance both delivered in the quarter. Please turn to slide eight, beginning with Debut. We're now roughly 10 months into launch, and I'd like to begin by summarizing our accomplishments to date. The launch of Debut has been one of the most successful recent launches in rare disease. We've had the privilege of bringing this therapy to patients and their caregivers who previously had no approved therapeutic options, to help them deal with the debilitating condition. With an estimated 5,000 diagnosed Rett patients in the United States and a prevalent population of 6,000 to 9,000, there is a substantial opportunity in front of us to bring the benefits of this therapy to many more patients. We anticipate this will drive meaningful revenue growth well beyond this year. As the first drug approved for the treatment of Rett syndrome, we've experienced strong interest and demand from RET families. As we've previously reported, this strong interest produced a surge of new patient starts in the first four months of the launch, followed by a demand curve that is much closer to our pre-launch expectations and the linear-shaped curve we typically see in rare disease drugs. From a prescriber perspective, this initial surge was concentrated in RET Centers of Excellence, or COEs, and we have since significantly expanded the breadth and depth of prescribers. This surge has produced multiple benefits. It's enabled us to reach a critical mass of experience in the medical and caregiver communities dramatically faster than we otherwise would have. This has also enabled us to rapidly gain real-world insights that we've been able to use to further educate the medical and caregiver communities. Ten months into the launch, COEs continue to represent a rich source of new patient starts. In fact, today, approximately 40% of our new patient prescriptions come from COEs, and we are continuing to add depth in this sector. Non-COE high-volume institutions account for approximately 30% of our new patient prescriptions, this sector represents an additional important growth opportunity as we continue to increase our breadth and depth in these institutions. I'd like to focus now on seasonal dynamics we observed in the latter part of the fourth quarter and early part of the first quarter. In December, in particular, we experienced higher than average refill rates as families prepared for the holidays and health plan changes or reauthorizations in the new year. In January, we saw a decline in new prescriptions written, driven by seasonal and significant decline in RET clinic visits following the holiday period, where approximately 50% of COEs had either no clinic days or reduced clinic days available. We have since seen a return of RET clinic days in February, tracking back to historical levels and new patient prescription rates returning to the trends we observed prior to January. In January, we also saw a reduction in refills and conversion rates due to typical beginning of the year reauthorization and re-enrollment processes. This resulted in delays in patients receiving their first paid shipments in the new year. We're working through those authorizations and do not see any long-term issues associated with processing these. Let's turn to persistency on slide nine. What you see on this slide is updated persistency information. There are two key points I'd like to highlight. First, we continue to track at least 10 percentage points above our clinical trial experience, specifically the LILAC1 open label extension, where patients rolled over to trofinetide from placebo, and this differential has continued to be very consistent for several months now. When we look at these monthly milestones, they're improving. For example, our month four persistency number was 75% when we reported on our earnings call in November. And now at month four, you see that with many more patients, we're at 80% persistency. And our month six persistency, which we reported at J.P. Morgan last month, was 68% and now has risen to 70%. and we continue to see this data improve at all time points thus far. We are seeing improvements in persistency as patients and HCPs gain more experience with the safety and tolerability profile at debut. For clarity, the persistency rates we're including here are calculated based on the confirmed discontinuations plus those that are 60 days beyond their scheduled refill date counted as a discontinuation. Please turn to slide 10. As I mentioned earlier, we continue to generate and share data supporting the long-term benefits observed in patients treated with Day-View. Here we describe two important posters that we presented recently at the American Epilepsy Society or AES meeting in December that underscore the benefits of Day-View. The first poster details the long-term outcomes in patients who completed our lavender study and then continued into our open label lilac one and then lilac two studies. Data presented in the poster demonstrated that patients treated with trofinetide and lilac two continued to experience improvement in symptoms for up to 32 months. In addition, safety and tolerability were consistent with prior studies. Let's now turn to slide 11 for the second poster presented at AES. This poster presented the results of the caregiver exit interviews for RET patients treated with trofinetide in the Lavender and Lilac studies. You can see in the table on the left some of those specific real-world improvements caregivers cited in their interviews. Consistent with the unmet need often highlighted by caregivers, the top three areas of improvement noted by these respondents and their children were improvement in engagement, improvement in hand use, and improvement in eye gaze. We're pleased to have the feedback regarding the impact of trofinetide on the very symptoms that matter most to Rett families. And we're using this information to educate HCPs and Rett families about the potential benefits of Debut. Let's turn to slide 12. These quotes from caregivers reinforce some of the observations described above. which are consistent with the types of things we've been hearing for many months, such as caregivers noting higher levels of engagement, improvement in speech with a broadening vocabulary and improved engagement in conversations, more purposeful use of hands and decreased hand-wringing and stereotypies. We also regularly hear feedback about a loved one's increased cognitive ability or increased alertness, with patients now being able to better follow conversations. These testimonials all speak to the promise of treatment with Debut and underscore exactly why we at Acadia do what we do, to support and benefit those with greatest needs. Let's next turn to our plans to make Debut available to patients outside the United States on slide 13. We see a clear opportunity to launch Debut outside the United States and leverage the insights and learnings from the very successful US launch to help many more patients suffering from Rett syndrome. starting in Europe. It's estimated there are 9,000 to 14,000 RET patients between Europe and the UK. We've engaged with EMA this quarter, and we anticipate filing a marketing authorization application with the European Medicines Agency in the first half of next year. In Canada, it's estimated there are 600 to 900 RET patients. We expect to file our new drug submission later this quarter with the potential approval around year-end 2024. And in Japan, there are an estimated 1,000 to 2,000 RET patients. And this year, we're engaging the Japanese regulatory agency to kick off our efforts to pursue approval. Let's turn to slide 14 for a discussion of our NewPlazit franchise. Product sales of NewPlazit in 2023 were $549.2 million, an increase of 6% over 2022 as we continue to grow new patient starts and increase market share. Our primary financial objective for NewPlazit is to optimize cash flow in that franchise, and we do that in two ways. First, we're continuing to grow bottle shipments and market share. The most effective lever to drive growth recently has been the broad educational campaign we launched last year to bring attention to our real world evidence studies. These efforts have allowed us to grow new patient starts faster than the market. In fact, In 2023, new patient starts were up 12% year over year. The second way we optimize New Plaza franchise cash flow is by carefully managing expenses, and we'll continue to do that throughout 2024. These combined efforts have enabled us to generate over $300 million on a standalone, fully burdened basis in annual cash flow. We look forward to continuing to grow this franchise. 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 15.