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ACADIA Pharmaceuticals (NASDAQ:ACAD)

Q4 2013 Earnings Call

February 27, 2014 5:00 pm ET

Executives

Lisa Barthelemy - Director of Investor Relations

Uli Hacksell - Chief Executive Officer, President and Director

Thomas H. Aasen - Chief Financial Officer, Chief Business Officer, Principal Accounting Officer, Executive Vice President and Treasurer

Roger G. Mills - Chief Medical Officer and Executive Vice President of Development

Analysts

Charles C. Duncan - Piper Jaffray Companies, Research Division

Jason N. Butler - JMP Securities LLC, Research Division

Thomas Wei - Jefferies LLC, Research Division

Robert Cummins Hazlett - Roth Capital Partners, LLC, Research Division

Operator

Good day, ladies and gentlemen, and welcome to ACADIA Pharmaceuticals' Fourth and Full Year 2013 Financial Results Conference Call. My name is Crystal, and I will be your coordinator for today. [Operator Instructions] I would now like to turn the presentation over to Lisa Barthelemy, Director of Investor Relations at ACADIA. Please proceed.

Lisa Barthelemy

Good afternoon, and welcome to ACADIA's fourth quarter financial results conference call. This call is being recorded and an archived copy will be available on our website at www.acadia-pharm.com through March 13, 2014.

Joining me on the call today from ACADIA are Dr. Uli Hacksell, our Chief Executive Officer; Dr. Roger Mills, our Executive Vice President of Development and Chief Medical Officer; Tom Aasen, our Executive Vice President and Chief Financial Officer; and Terry Moore, our Executive Vice President and Chief Commercial Officer.

Uli will begin our call today with some introductory remarks, and then Tom will briefly comment on our fourth quarter financial results. Following this, Roger and Uli will provide you with an update on our development programs and business, and we will then open the floor to your questions.

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, including statements regarding our research and development programs and plans and our strategy, including the timing, results or implications of clinical trials or CMC development; the benefits to be derived from, future approval of and the commercial potential for product candidates in each case, including pimavanserin, the timing, content or likelihood of regulatory meetings, filings or approvals, future development and commercialization of pimavanserin, the expansion of the pimavanserin franchise and its value; and our future expenses, cash position and usage and growth potential.

These forward-looking statements 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 from those contained in the forward-looking statements.

These factors and other risks associated with our business can be found in our filings made with the SEC, including our annual report on Form 10-K for the year ended December 31, 2013, and other filings. You are cautioned not to place undue reliance on these forward-looking statements, which are made only as of today's date.

ACADIA disclaims any obligation to update these forward-looking statements.

I'll now turn the call over to Uli Hacksell, our Chief Executive Officer.

Uli Hacksell

Thank you, Lisa, and good afternoon. Let me first take this opportunity to thank all of you for joining us on today's conference call. As many of you know, 2013 was a truly transformational year for ACADIA, highlighted by several important achievements.

During the first half of the year, we presented data at clinical meetings from our pivotal Phase III -020 Study with pimavanserin for Parkinson's disease psychosis or PDP, we established an expedited path to registration with the FDA and we significantly strengthened our financial position through a successful public financing.

We followed this with strong performance in the second half of 2013, highlighted by publication of our -020 Study in the Lancet, important progress in our PDP program and initiation of our Phase II trial with pimavanserin in Alzheimer's disease psychosis or ADP.

2013 was clearly an extraordinary year for ACADIA. We look forward to building on this momentum during what we expect will be a busy and exciting 2014. And I am pleased to report today that we are off to a productive start.

Most importantly, as Roger will share with you later, we have continued to make outstanding progress in advancing our PDP program towards registration, and we remain on track for our planned submission of a new drug application, or NDA, near the end of this year.

Currently, no drug is approved in the United States to treat PDP, a debilitating disorder that can have a devastating effect on patients, as well as their caregivers and families.

Pimavanserin offers an innovative non-dopaminergic approach and has the potential to be the first safe and effective drug to treat PDP without compromising motor control, thereby significantly improving the quality of life for patients with Parkinson's disease.

To help prepare for the planned future launch of pimavanserin, we have successfully recruited a core team of professionals with extensive commercial experience. This team is busy with pre-commercial activities designed to position ACADIA for success in the planned PDP launch.

Meanwhile, in parallel with completing the remaining aspects of our PDP development program, we are pursuing a life cycle management program to strategically broaden our pimavanserin franchise.

Because of its selective mechanism of action and its efficacy on safety profile observed to date in elderly patients with PDP, we believe that pimavanserin also may be ideally suited to address other major neurological and psychiatric disorders, including ADP and schizophrenia, which are poorly served by currently available therapies.

We are excited to have initiated our Phase II ADP trial that Roger will discuss later in the call. As is the case with PDP, no drug is currently approved in the United States to treat ADP. And the off-label use of existing antipsychotics is linked to increased mortality, serious adverse events and cognitive decline in elderly patients with dementia-related psychosis.

In addition to ADP, we are actively planning additional studies in our life cycle program to further expand our pimavanserin franchise in other indication areas, including schizophrenia.

While pimavanserin is the most advanced asset in our project pipeline, we have several additional programs in our R&D portfolio.

Our pipeline also includes clinical stage programs in the areas of chronic pain and glaucoma, in collaboration with Allergan, and 2 programs in advanced preclinical stages directed at Parkinson's Disease and other neurological disorders.

All of our programs emanate from internal discoveries and offer what we believe are innovative approaches that may address large potential commercial market opportunities.

Our pipeline of product candidates, led by our Phase III PDP program with pimavanserin, positions ACADIA with multiple product and commercial opportunities and significant growth potential.

Before we review our programs in a bit more detail, let me ask Tom to comment on our recent financial results.

Thomas H. Aasen

Thank you, Uli. The fourth quarter financial results reflect our strategy to increase our R&D investments in order to aggressively advance and build value in our pimavanserin franchise, and to simultaneously conduct pre-commercial activities to position ACADIA for commercial success.

Our R&D expenses increased to $7.9 million for the fourth quarter from $4.9 million for the comparable quarter of 2012, primarily due to increased development costs incurred in our Phase III program for pimavanserin, as well as increased costs associated with our expanded R&D organization.

We expect our R&D expenses to increase in future quarters as we continue to conduct the remaining activities in our PDP program and pursue our life cycle management program for pimavanserin.

G&A expenses increased to $4.3 million for the fourth quarter from $2.3 million for the comparable quarter of 2012, largely reflecting increased non-cash stock-based compensation expense and professional fees, including costs related to our initial pre-commercial activities.

Finally, let's turn to our cash position and guidance.

We continue to maintain a strong cash position, which provides us with important financial flexibility.

We closed the year with $185.8 million in cash and investment securities compared to $108 million at December 31, 2012.

We used $10.4 million in cash during the fourth quarter to fund our operating activities.

In future periods, we expect our cash used in operations to increase as we advance our PDP program toward an NDA, conduct pre-commercial activities and execute on our pimavanserin life cycle management program, including conducting our Phase II trial in ADP.

We anticipate that our cash and investment securities will be greater than $120 million at December 31, 2014. Importantly, we have a strong cash runway that we believe will enable us to continue to build value in our PDP program.

Let me now turn the call over to Roger, who will provide you with an update on our pimavanserin program.

Roger G. Mills

Thank you, Tom, and good afternoon. As Uli mentioned, we are off to a very nice start to what we expect will be a busy and exciting year for ACADIA.

Our team has been focused on completing the remaining activities in our pimavanserin PDP development program that are needed for submission of an NDA.

This includes aspects of the CMC development, including stability testing of pimavanserin registration batches and the remaining supportive studies, including customary drug-drug interaction studies.

I'm delighted to report that our PDP development activities have continued to progress well.

In our CMC program, you may recall that our initial 3 registration batches of pimavanserin were successfully manufactured at the commercial launch scale, and registration stability testing on these drug product batches was initiated last October.

This registration stability program is designed to comply with ICH guidelines and to meet the regulatory filing requirements for major markets worldwide.

As expected, we have now observed the initial 3 months of stability on the registration lots, appears to be consistent with what we have observed earlier with our clinical trial formulation.

We have previously established long-term stability of pimavanserin on our clinical trial formulation, covering a 3-year period. This initial stability data on our registration batches, which is the same manufacturing suppliers and general processes as our clinical trial formulation, is very encouraging.

Meanwhile, we have also progressed with the remaining supportive studies, which include custom and short duration drug-drug interaction, or DDI studies.

I'm pleased to report that we are now in the process of filing -- of finalizing our planned DDI program, and that the profile of pimavanserin appears consistent with what we have observed in our long-term PDP safety extension studies.

Patients with PDP are frequently on a number of concomitant medications. Thus, we've had the opportunity to gain a significant amount of real-life clinical experience in this patient population through our clinical trials, in particular, our open label extension studies.

Importantly, we have continued to observe that pimavanserin is generally safe and well-tolerated in PDP patients.

We are continuing to conduct our Phase III PDP open label safety extension trial, referred to as the -015 Study, which is designed to continue until pimavanserin is commercially available.

This study has allowed us to generate a large amount of valuable, long-term safety data regarding the use of pimavanserin in patients with PDP.

We've already far exceeded the ICH guidelines for required 1-year exposures, with well over 250 patients having been treated for 1 year or longer. In fact, through our -015 Study and a similar extension study tied to our earlier Phase II trial, we have well over 100 patients that have been treated with pimavanserin for at least 2 years. And our longest single patient's exposure exceeds 8 years.

Our long-term safety data provides support for the potential of pimavanserin to offer significant advantages relative to current antipsychotics, frequently used off-label for the treatment of PDP.

Overall, we continue to be very pleased with the progress in our PDP development program and remain on track for a planned NDA submission near the end of 2014.

Consistent with our previous guidance, we plan to conduct routine pre-NDA meetings with the FDA this spring. These interactions will enable us to outline and discuss our planned submissions and how the NDA will be organized.

Whilst our focus is clearly on our planned NDA submission. We also have moved forward with efforts to outline the path to registration in EU.

We completed an initial series of interactions with the regulatory agencies from several EU member states. We'll continue with this process designed to clarify the pathway for registration in the EU.

Let me now turn to our Alzheimer's disease psychosis or ADP program. As Uli mentioned earlier, we are currently conducting our Phase II ADP trial, which we refer to as the -019 Study. This study is a randomized double-blind placebo-controlled trial designed to examine the efficacy and safety of pimavanserin in about 200 patients with ADP.

We're conducting the study through a large network of research care facilities established as part of the National Institute for Health Research Biomedical Research Centre for Mental Health at King's College London. The principal investigator is Dr. Clive Ballard, professor of age-related diseases at King's College and a renowned clinician in the field of Alzheimer's disease.

In this -019 Study, patients are randomized on a one-to-one basis to receive either 40 mg of pimavanserin or placebo, once daily for 12 weeks, following an initial 3-week screening period that includes brief psychosocial therapy.

The study is designed to assess several key efficacy endpoints, including the use of the Neuropsychiatric Inventory Nursing Home, or NPI-NH scale, to measure psychosis, agitation aggression and sleep nighttime behavior, as well as additional exploratory endpoints.

The key efficacy endpoints were based on the change of week 6 from baseline, which is a standard duration for psychosis studies. A full 12-week treatment period will allow us to explore additional endpoints, including the cognitive status of patients.

We were looking to show that we do not worsen cognition relative to placebo-treated patients. In contrast, currently marketed antipsychotics have been linked to cognitive decline in elderly patients with dementia related psychosis.

The 12-week treatment period will also provide the opportunity for demonstration of durability of response to pimavanserin beyond the 6-week placebo-controlled period tested in our pivotal PDP efficacy trial and the key efficacy endpoints in the -019 Study.

We've been very pleased with the study starter and the overall commitment shown by King's College clinical organization. We believe that conducting the study at this high-quality medical institution with its network of nursing care homes and its experience in this patient population provide several advantages in study execution.

Firstly, we were able to incorporate many design features from our successful pivotal PDP trial into the -019 Study design. Importantly, the geographically focused network of care facilities enable the use of a small group of highly trained raters, which we expect will enhance study precision.

Secondly, we believe this unique clinical research infrastructure and expertise provide access to a pool of well-characterized ADP patients, and facilitates data management and monitoring.

We continue to believe that this study positions us with the unique opportunity to demonstrate the potential benefits of pimavanserin in this patient population and to inform us on design for future studies in this program.

Beyond ADP, we are currently planning for additional studies as part of our life cycle management program to further characterize potential aspect -- aspects of pimavanserin's clinical profile and to position it for other indications.

This includes development planning and related commercial assessments of the various markets of pimavanserin.

One such indication, where we believe pimavanserin may play a beneficial role, is schizophrenia. Pimavanserin's selected blockade of the 5-HT2A receptor may enable it to be used in 2 different treatment approaches to improve the therapy for patients with schizophrenia.

Firstly, it may be used as a co-therapy, together with low doses of existing atypical antipsychotic drugs such as risperidone, to enhance the clinical profile as demonstrated in our earlier Phase II trial.

Secondly, in the maintenance space of schizophrenia therapy, we believe that a selective 5-HT2A treatment may allow for symptom control whilst avoiding interactions with dopamine and other receptors that are linked to many of the side effects caused by existing antipsychotics.

With its selected profile, we therefore believe that pimavanserin has the potential to be used as a standalone treatment in order to provide a well-tolerated maintenance therapy that may result in better compliance of schizophrenia patients.

We look forward to sharing more details on these planned studies in our life cycle management program later this year.

I'll now turn the call back over to Uli.

Uli Hacksell

Thank you, Roger. We continue to be excited with the progress in our PDP program, which moves us closer to our ultimate goal of bringing innovative compounds like pimavanserin to the market to improve the lives of patients with neurological and related central nervous system disorders.

PDP represents what we believe is an ideal lead indication of specialty market opportunity for pimavanserin.

Our strategy is to commercialize pimavanserin for this indication in the U.S. by establishing a small specialty sales force focused primarily on neurologists.

I'm excited to report that since our Q3 call, we made impressive progress with our commercial preparations.

Most importantly, we have assembled a core commercial organization to help prepare for the planned launch of pimavanserin for PDP. This includes highly experienced professionals in marketing, reimbursement and managed markets, marketing research and commercial operations, as well as sales force planning and management.

Over the last several months, this team has focused on several key activities to position ACADIA for success in the planned future U.S. market launch.

We are continuing to conduct extensive market research to optimize the positioning of pimavanserin in the PDP market in order to best serve the needs of prescribers, patients and payors.

Importantly, our research has confirmed the high unmet medical need for PDP patients, and has reinforced that prescribers are in need of safe and effective alternatives to the off-label use of antipsychotics that they often resort to currently.

In addition, we have initiated our supply chain distribution activities, which is a lengthy process, to ensure all channels of distribution are established at the projected time of product approval.

Let me add that the more our team examines the PDP market, the more excited we have become for the potential for pimavanserin to improve the lives of people impacted by this disease.

Finally, we are also underway with preparations to position us for the larger commercial organization that we plan to have in place at the time of launch, with a focus on infrastructure development, including customer relationship management and automation, size and structure analysis, compliance, training and other services, for both our planned sales force and the current management teams.

Interestingly, while we have not yet began formal recruiting for the commercial positions planned for later stage, we have experienced an increasing amount of interest from highly qualified and experienced professionals.

Overall, we are very pleased with our preparations to date and are looking forward to continue these important pre-commercial activities

Let me now touch briefly on the other programs in our pipeline. Together with Allergan, we have generated clinical stage programs in the areas of chronic pain and glaucoma.

Allergan also is pursuing preclinical development of an additional compound, which was advanced last year from our collaborative research, as a potential new treatment for glaucoma.

In addition, our 2 advanced preclinical programs, our ER-beta and Nurr1 programs, may offer novel approaches to treating Parkinson's disease and other neurological disorders.

Preclinical studies in our ER-beta program as a novel pain treatment are supported by a grant from the National Institute on Neurological Disorders and Stroke.

And we are also conducting preclinical studies with our ER-beta compound as an innovative approach to targeting neuro-degeneration associated with multiple sclerosis.

Preclinical studies in our Nurr1 program directed at Parkinson's Disease have been supported by a grant from the Michael J. Fox Foundation.

Finally, before I close, I would like to take this opportunity to acknowledge and thank our employees. ACADIA's extraordinary progress in 2013 was the direct result of the hard work, dedication and passion of our talented team.

Looking forward, I'm confident that we have the right team and the right strategy in place to capitalize on the vast opportunities ahead.

Our priorities remain clear. We are focused on building additional value in our pimavanserin franchise. We believe that our pipeline of product candidates, led by our Phase III pimavanserin program, positions ACADIA with multiple attractive products and commercial opportunities and significant growth potential.

And most importantly, all of us at ACADIA remain committed to advancing innovative medicines that will improve the lives of patients that suffer from neurological and psychiatric disorders.

Operator, you may now proceed with the Q&A session.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question will come from the line of Charles Duncan from Piper Jaffray.

Charles C. Duncan - Piper Jaffray Companies, Research Division

So my first question is on EU regulatory progress. Thank you, Roger, for the update. I'm just kind of wondering what you see as the key differences from the U.S. And is there a possibility of another study or what do you think is the key consideration for the regulators?

Roger G. Mills

Thanks, Charles. We've obviously, as mentioned began the interactions with regulatory agencies in Europe really to gain the background and some idea of the appropriate way to move forward to EU registration. We're currently working with some specific EU advisers now to take feedback in and really plan the next steps along that process. Importantly, I think there's a very clear understanding that our -020 study is a very strong study. And it's a very solid study in the way it was performed and the results. But also, importantly, I think there is a clear understanding of the limitations of the agents that are currently used in these patients. Obviously, there are some specific European elements to how they look at things. But I think importantly, we are moving ahead along a path in a careful but guided way.

Charles C. Duncan - Piper Jaffray Companies, Research Division

Do you think that you'll be able to define the path forward by, say, this calendar year?

Roger G. Mills

We're certainly not giving a specific guidance on that, but we are moving along very smoothly. We anticipate that we would be able to delineate a path by the end of the year.

Charles C. Duncan - Piper Jaffray Companies, Research Division

Okay. And then my second question, and then I'll hop back in the queue, is regarding the Alzheimer's disease study. Again, thanks for that update. I'm not sure if I missed it. Did you give a specific enrollment update?

Uli Hacksell

No, Charles, we didn't. As you know, customarily, we do not give guidance on enrollment in our studies. However, we are very pleased with the way the study has started. We're working with a site, which is very experienced, not only in doing Alzheimer studies, but importantly, very experienced with the use of the NPI. And all the way through the site, there are some very good people that we are working with. Importantly, they have this network of nursing homes that has been really set up specifically for doing these types of studies. So there's a great commitment within the group there. They're high-quality people, and we've been able to reproduce many of the factors that we have built into the -020 Study to ensure its success.

Operator

Our next question will come from the line of Jason Butler from JMP Securities.

Jason N. Butler - JMP Securities LLC, Research Division

Just a quick follow-up on Charles' question on the EU process. Have you actually formally entered into the scientific advice process or are you still yet to do that?

Roger G. Mills

We've been reaching out to individual member regulatory authorities. That's really the first step on the process through to the formal scientific advice.

Jason N. Butler - JMP Securities LLC, Research Division

Okay, great. And then on the -- for pimavanserin on the drug interaction studies. Can you talk about when those studies would be completed and if you'll give further updates on the findings there?

Roger G. Mills

We're well on the way to completing the entirety of the program. Obviously, the key thing for doing this is not -- these aren't go, no-go studies in as similar to efficacy and safety studies. They're really studies that are designed to help physicians and guide them to be able to use pimavanserin in a specific population in a safe and effective manner. So they're really for studies that just help within the multitude of different drugs that patients may encompass during -- or may encounter during their disease. So we've -- it really consists not only of clinical trial -- of clinical studies. Also importantly, a lot of earlier preclinical work that goes together to really create the broader profile, which then helps in terms of building that label. So we've done a mixture of clinical and preclinical studies. And it's really in line with what we expected beforehand. There's not been any major surprises or any surprises during that program.

Operator

[Operator Instructions] Our next question will come from the line of Thomas Wei from Jefferies.

Thomas Wei - Jefferies LLC, Research Division

Just a follow-up on the enrollment question in the ADP trial. I guess, if you're -- do you know when you might have a sense of what that enrollment curve looks like so that you could more narrowly define the timing of when we could have data? And then, I guess, I wanted to ask a question also on the 2 different schizophrenia approaches that you were considering. Why not look at both, and what exactly do you need to do between now and later this year to make that determination? Why not move forward more aggressively in those settings?

Roger G. Mills

Okay, Thomas, so I think the key thing, as I mentioned earlier, we don't give guidance specifically on enrollment. We're expecting that from start to finish of the study, we're looking at a 2-year period. But obviously, we continue to look at the enrollment over time. But obviously, if there is a major shift in that, we will note that and plan for that. In terms of schizophrenia, it really is an interesting opportunity that we have with the drug really aligned around the particular characteristics, both efficacy and safety, that we've seen in the program to date. As you'll recall, our previous study looked at the combination of pimavanserin together with low dose of risperidone and showed similar efficacy to a full dose of risperidone combined with a lower safety burden on the patients. However, subsequent to that, we've got very clear data from PDP of a very profound antipsychotic effect using pimavanserin as a standalone therapy. And it really begs the question that if you take that sort of efficacy and you marry it with the safety profile that we've seen to date, and bear in mind that the majority of our safety data has been generated in very sick, late-stage Parkinson's patients. So if you take that great profile and match that with the efficacy in a younger population of schizophrenia patients, it really offers the potential that the monotherapy may be an ideal therapy for patients in the maintenance phase of their disease. One of the key factors that really is challenging, too, with schizophrenia management is not, in fact, simply the acute phase, which lasts for a few weeks when you get exacerbations, but importantly, the management of patients over long-term periods, when we all -- when we know that compliance is very poor in those patients, which is driven by a number of factors, not the least of which is the burden of the side effects that these patients have. Furthermore, the dopamine antagonism could actually worsen the cognition of the patients in -- with schizophrenia. So there's a real chance that with pimavanserin as a monotherapy, we could really have a therapy that changes the paradigm of how you manage patients with schizophrenia on an ongoing basis. And therefore, it's something that we are really considering exploring with the drug, and exploiting the great potential that it has to deliver those benefits.

Uli Hacksell

I can just add on when you asked why we don't do both of the studies -- type of studies at the same time. It's certainly an interesting proposition. We think probably one needs to focus on one thing at a time. And that's one reason why we wouldn't do that necessarily. But in fact, the eventual design of the study may have components of those concepts. We strongly believe in the potential of pimavanserin in schizophrenia.

Operator

Our next question will comes from the line of Mr. Bert Hazlett from Roth Capital.

Robert Cummins Hazlett - Roth Capital Partners, LLC, Research Division

My question has to do with the ADP study. And I guess, the NPI scale, as it relates to the SAPS-PD scale that was considered in the Parkinson's study, how much, I guess, overlap or how much sameness is there between those 2 scales? And are you trying to match the patients in terms of the severity of the psychosis compared to what you saw in the PDP study? Just a little bit more color on how the individual scales may parallel one another in those trials so we can get an idea of the types of patients and the effect size that you may be considering in the study.

Roger G. Mills

I think the key thing in terms of which scales we use, remember that in Parkinson's psychosis, there hasn't been a great deal of work. We're right at the forefront of working the area. And there was no scale that had been specifically developed or designed for those patients. The SAPS, as you'll recall, was adopted from schizophrenia and then further adopted to focus on the hallucinations and delusions domains. Importantly, through our own work, we're able to refine it further into the SAPS-PD. And really, that, I think, provided something to the field there. However, the limitation of the SAPS in terms of measuring psychosis is that there needs to be involvement of the patient who is able to -- be able to understand very clearly, input into the assessments on that scale. The difference with our ADP program is that not only do the patients have psychosis, but importantly, they have a profound underlying condition. Obviously, a cognitive impairment that's inherent as part of their Alzheimer's disease. And therefore, it would be impossible to use the SAPS in these patients. The NPI as such is a scale which was developed specifically for this in these populations. And we're using a nursing home version, which will then validate and exactly the population that we're looking at in the -019 Study. It measures many of the same things, but it also has the potential for us to account for a broader number of potential benefit for agitation, aggression and obviously, and capture sleep as well, which we've seen time and time in previous PDP studies, the improvements to sleep maintenance. Given this is a very similar population in terms of impairment to sleep, the sleep disorders in these patients are important in terms of that pathology. We would hopefully see similar benefits with sleep, and the NPI-NH provides us with a tool which will actually capture that. Importantly, we -- one of the great lessons that we learned in the earlier PDP program was that patients with milder disease tend to respond more to being in a study approach, leading to higher placebo response. So whereas we, in -020, ensured by increasing the entry criteria or the need on the entry criteria for moderate to severe disease, we have a very similar structure in the entry criteria into the -019 Study.

Operator

Our next question will come from the line of Charles Duncan from Piper Jaffray.

Charles C. Duncan - Piper Jaffray Companies, Research Division

What I was going to ask is about the AD study. In addition to an enrollment update, what I was really wondering about is the geographic focus seems really great in terms of executing this study and getting a signal. But do you believe that you may need to replicate that study in a broader patient population or geography in Phase II? Or do you think that, that could inform the results of that study, a positive could inform well a Phase III program?

Roger G. Mills

Thanks, Charles. No, I think the study is a good study. And a positive from this study will really put us in a very good stead for taking the next step. So if we get a clear positive outcome out of this study, the results will stand.

Charles C. Duncan - Piper Jaffray Companies, Research Division

And it seems like there are similarities in this patient population despite the geographic focus for the eventual commercial population because like you were saying, with these patients, perhaps more of them are already institutionalized?

Roger G. Mills

Absolutely.

Operator

And with no further questions, I would now like to turn the call back over to Dr. Hacksell for closing remarks.

Uli Hacksell

Well, thanks again to everyone for joining us on today's call and for your continued support. We certainly look forward to updating you in the future on our ongoing progress. Thank you so much.

Operator

Ladies and gentlemen, that concludes today's presentation. You may now disconnect. Have a great day.

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