Acadia Pharmaceuticals Q3 2007 Earnings Call Transcript

| About: ACADIA Pharmaceuticals (ACAD)

Acadia Pharmaceuticals Inc. (NASDAQ:ACAD)

Q3 2007 Earnings Call

November 5, 2007 5:00 pm ET


Lisa Barthelemy - IR

Uli Hacksell - CEO

Tom Aasen - CFO


Alan Carr - Needham& Company

Ajim Tamboli - Lehman Brothers

Joe Pantginis - Canaccord Adams

David Amsellem - Friedman Billings Ramsey

Patrick Moriarty - Fortis Bank


Good day, ladies and gentlemen, and welcome to the AcadiaPharmaceuticals Third Quarter 2007 Financial Results Conference Call. My nameis Melanie, and I'll be your coordinator on today. At this time, allparticipants are in a listen-only mode. We will be facilitating aquestion-and-answer session toward the end of today's call. (OperatorInstructions).

I would now like to turn the presentation over to Ms. Lisa Barthelemy, Director of Investor Relations at AcadiaPharmaceutical, who will review the Company's forward-looking statements.Please proceed.

Lisa Barthelemy

Good afternoon, and welcome to the Acadia Pharmaceuticalthird quarter 2007 financial results conference call. This call is beingrecorded, and an archived copy will be available on our website through November 19.

Before we proceed, I would like to first remind you thatduring our call today we will be making a number of forward-looking statements,including statements regarding our anticipated financial results and ourresearch and development programs. These forward-looking statements are basedon current information and expectations that are inherently subject to changeand involve a number of risks and uncertainties that may cause actual resultsto differ materially from those contained in the forward-looking statements.These factors and other risks associated with our business can be found in ourfilings made with the SEC, including our annual report on Form 10-K for theyear ended December 31, 2006, and subsequent filings. You are cautioned not toplace undue reliance on these forward-looking statements, which are made onlyas of today's date. Acadia disclaims any obligationto update these forward-looking statements.

It is now my pleasure to turn the call over I'll to Dr. UliHacksell, our Chief Executive Officer.

Uli Hacksell

Thank you, Lisa, and let me take this opportunity to thankall of you for joining us on today's conference call. Also joining from the Acadia today are Dr. Roger Mills, our Executive VicePresident of Developments, and Thomas Aasen , our Chief Financial Officer.

I will begin the call by covering some of our recenthighlights. I will then ask Tom to review our financial results for the thirdquarter, and following these remarks we will briefly review our clinicalprograms. We will then open the floor to your questions.

Before we begin, and on behalf of all of us at Acadia, Iwould like to thank the financial community for their support and concern forour employees during the recent fire in San Diego. While many of the employees were among thelarge numbers temporarily displaced, we are fortunate to be able to say thatour physiologist and the homes of our employees were untouched by the fires.Again, your messages and thoughts very greatly appreciated.

Now, even the third quarter, we continue to make solidprogress with the ongoing clinical trials in our most advanced proprietaryclinical programs. This includes the first pivot trial in our Phase III programwith Pimavanserin, for the treatment of Parkinson's Diseasepsychosis, and our Phase IIb trial withACP-104, for the treatment of Schizophrenia.

We started both of these key trials during the summer, andour development teams had worked diligently to get the initial clinical trialsfully up and running, and advanced patient enrollments.

Meanwhile, following completion of the full analysis of ourPhase II Schizophrenia co-therapy trial with Pimavanserinearlier this summer, I’m excited to report that we are preparing to presentthis data in collaboration with Dr. Herbert Meltzer at the ACNP annualmeeting to be held in Boca Raton, Florida from December 9th-13th.

Given the prominence of this meeting in the neuropsychiatriccommunity, we believe that this is the ideal venture for the presentation ofthe data, highlighting the full analysis of this Phase II trial.

We recognize that the attendance at the ACNP meeting isgenerally limited to ACNP members and designated sponsors. Therefore, we havealso arranged to host an analyst and investor meeting in New York City on Friday, December 14th,immediately following the ACNP meeting, in order to provide the investmentcommunity with the opportunity to attend presentations on the full analysisfrom this exciting Phase II trial, and have access to leading clinicians in thearea of schizophrenia.

In addition to the progress we have made in our advancedclinical programs, our strong balance sheet that provides us with a solidfoundation to advance our clinical pipeline and execute on our growth strategy.We remain dedicated to providing meaningful improvements to patients who sufferfrom neuropsychiatric, and other CNS, disorders.

Before we review our clinical programs and our upcomingmilestones in more detail, let me turn the call over to Tom to discuss ourrecent financial results.

Tom Aasen

Thank you, Uli. I will provide you with a brief overview ofour financial results for the third quarter, was reported in our press releaseand Form 10-Q issued earlier today. Once again, I am pleased to report that ourfinancial results for the quarter were in line with our expectations,reflecting the planned investment in our advanced proprietary clinical programs.

We reported a net loss of $16.0 million, or $0.43 per commonshare, for the third quarter of 2007, compared to a loss of $11.3 million, or$0.38 per common share, for the third quarter of 2006. We continue to maintaina strong cash position, closing the third quarter with the total of $141million in cash and investment securities.

Let's briefly look at some of the components of our thirdquarter results. Our revenues totaled $2.0 million for the third quarter of2007, compared to $1.9 million for the third quarter of 2006, and were onceagain comprised of revenues from our collaborations with Sepracor and Allergan,as well as agreements with other parties.

Research and Development expenses totaled $16.9 million forthe third quarter of 2007, including $805,000 in stock-based compensation,compared to $15.5 million for the third quarter of 2006, including $550,000 instock-based compensation. The increase in R&D expenses was primarilyattributable to increased costs associated with the ongoing clinical trials inour advanced proprietary clinical programs, including the Phase IIb trial inour program with ACP-104, and the pivotal Phase III trial in our program with Pimavanserinfor Parkinson's disease psychosis.

External service costs increased to $9.7 million for thethird quarter of 2007, from $9.0 million for the comparable of 2006.

General and administrative expenses totaled $2.9 million forthe third quarter, and were comparable to the third quarter of 2006.

Finally, let me update you on our cash outlook. We believethat with our current balance sheet, we are well positioned to continue toadvance our proprietary clinical pipeline and execute on our business strategy.

We continue to expect that our cash and investmentsecurities will be greater than a $120 million at December 31, 2007, and thatour existing cash resources including expected payments from collaborators willbe sufficient to fund our operations through 2009.

I will now turn the call back over to Uli.

Uli Hacksell

Thank you, Tom. Let me now review our programs in moredetail. Acadia's pipeline includes five mid-to late-stage clinical programs. In our most advanced program, we are in PhaseIII development with Pimavanserin for the treatment of Parkinson's Diseasepsychosis.

Earlier this year, we reported positive top line resultsfrom the Phase II trial in our program with Pimavanserin, as a co-therapy for Schizophrenia.

We also have two proprietary Phase II stage clinicalprograms, which are ACP-104 for the treatment of Schizophrenia and Pimavanserin,for the treatment of sleep maintenance insomnia.

We have retained worldwide commercialization rights for allfour of these proprietary programs. In addition, we have a neuropathic painprogram in Phase II clinical trials in collaboration with Allergan.

My remarks today will mostly focus on our two advancedschizophrenia programs and our Phase III Parkinson's disease psychosis program

Let me start by discussing our program with Pimavanserin asa co-therapy for schizophrenia.

Despite the commercial success of [listing] antipsychotics,which exceed $16 billion in worldwide sales, current drugs that are used totreat schizophrenia and related disorders have substantial limitations,including severe side effects and inadequate efficacy.

We believe that good co-therapy with Pimavanserin, combinedwith a submaximal dose of atypical antipsychotics, can significantly improvethe way schizophrenia and related disorders are treated today.

As mentioned earlier, we look forward to presenting datafrom our Phase II schizophrenia co-therapy trial with Pimavanserin incollaboration with Dr. Meltzer at the upcoming 46th Annual Meeting of TheAmerican Society of Neuropsychopharmacology to be held in Boca Raton, Floridain December.

Dr. Meltzer's presentation will highlight findings from thefull analysis of our Phase II co-therapy trial. The full analysis confirmed therobustness of the top line results reported in March. This demonstratedimportant advantages of co-therapy with Pimavanserin when combined with asubmaximal dose of risperidone.

These advantages included enhanced efficacy, a faster onsetof antipsychotic action and an improved side effect profile. The analysis alsoprovides additional data in support of the benefits of Pimavanserin co-therapyand has served to further increase our excitement regarding the medical andcommercial potential of Pimavanserin.

Immediately following presentation on the Phase II data atthe ACNP meeting, we will host an analyst and investor meeting on Friday,December 14th in New York City.The meeting will feature presentations by Acadiaand key opinion leaders of data from our Phase II schizophrenia co-therapytrial with Pimavanserin, along with presentations of our Phase III program withPimavanserin for PDP or Phase II program with ACP-104 for schizophrenia and ourother discovery and development activities. We’ll be providing further detailsregarding our analyst and investor meeting later on this month.

I should also note that we’re planning to have a number ofadditional data presentations related to our Phase II schizophrenia co-therapytrial at future medical meetings. For example, we have an abstract accepted forpresentation at the 14th winter workshop on schizophrenia bi-polar disorders tobe held in Montreal Switzerland in early February thisnext year.

In addition to presentation some of clinical data, werecently presented preclinical data, highlighting the benefits of Pimavanserin co-therapyat the 37th annual meeting of the society for neuroscience held in San Diego.

This data show that Pimavanserin potential to be a action ofseveral of the most commonly used atypical psychotic agents in animal modelspredictive psychotic activity. And that we also reversed the adverse effects ofthese some pshychotic agents on cognitive function. This results suggest thatthe positive timings from clinical studies, evaluating Pimavanserin co-therapywith Risperidone maybe applicable to a wide range ofantipsychotic drugs.

You may recall that the following completionof the full analysis of the Phase II schizophrenia co-therapy trial, weindicated that we had initiated our process to explore potential strategicalliances during the summer. This process involves thoroughly exploring ourcommercial opportunities with Pimavanserin, but the focus on ensuring that anyalliance captures the proper commercial value for ACADIAas well as strong involvements and incentives for both parties.

Once again, you can appreciate that as we conduct ourprocess we are not providing specific details regarding our partnering process,discussions or potential timing. What we can say is that we have been verypleased to see the positive and enthusiastic reaction from both in medical andpharmaceutical communities and the strong level of interest from potentialpartners to evaluate this opportunity.

We are also excited by the results of the full dataanalysis, which only increased our confidence regarding the potential Pimavanserinto pay significant drove in the treatment of schizophrenia and relateddisorders.

It’s also important to note that while we explore ouropportunities to optimize the commercial value of these assets, we’ll continueto proceed in Phase III development with Pimavanserin as a treatment forParkinson's disease psychosis. Many of these targets and activities that we areconducting in this Phase III program may be leveraged to support thedevelopment of Pimavanserin in other indications. In other words we continue toadvance the development program of Pimavanserin across indications.

Let me now turn to our second schizophrenia program which isACP-104, as a stand-alone treatment for schizophrenia. ACP-104's uniquepharmacological profile combining m11 muscarinic agonist, 5-HT2A inverseagonist, and D2 and D3 partial agonist provides the potential for a superioratypical and psychotic efficacy profile with enhanced cognition. Currenttreatments are generally not effective in addressing negative symptoms and arealso not effective or may in fact worsen cognitive disturbances associated withschizophrenia.

We are pleased with the progress of our ongoing Phase IIb trialthat we initiated in late June this year. The environment for conducting schizophreniatrials continues to be favorable and we have seen strong interest in the trialby investigators and patients alike.

We believe that the solid progress that we are experiencingthis to Phase IIb trial, is a reflection of the critical need for new and theimprove therapies for patients with schizophrenia and the potential for ACP-104to provide a superior efficacy profile with enhanced cognition.

Let me briefly review the design and objectives of thisproduct. Our Phase IIb trial is a multi-center, double-blind,placebo-controlled study designed to evaluate the safety and efficacy of ACP-104in approximately 250 patients with schizophrenia who are experiencing an acutepsychotic episode. Patients in this trial are randomized to three differentstudy arms, which include two different doses of ACP-104 administered twicedaily, 100 mix and 200 mix and one placebo.

The primary endpoint of the trial is antipsychotic efficacyas measured using the Positive and Negative Syndrome Scale, or PANSS, anindustry standard rating scale commonly used in registrations schizophrenia products.

I am pleased to report that the progress today in this PhaseIIb trial should allow us to complete the study ahead of our initialexpectations. We currently anticipate reporting top line results from thistrial in the third quarter of 2008.

Recently, Acadia scientistsalso made presentation of preclinical data on ACP-104 at the Annual Meeting ofthe Society for Neuroscience. These data show that ACP-104 has a superior profilein animal models of cognitive function and proteins activity in models predictiveof antipsychotic efficacy.

We remain excited about the potential of ACP-104 to be greattreatment for schizophrenia that can address one of the largest unmet medicalneeds associated with the disease.

Let us now turn to another program that we are also veryexcited about, and that is our Phase III clinical program with Pimavanserin asa treatment for Parkinson's disease psychosis, or [PDP].

PDP is the debilitating neuropsychiatric disease that occursin up to 40% of patients with Parkinson's disease. There currently is no drugapproved in the United States for the treatment of PDP despite thefact that this is a very serious condition characterized by disturbinghallucinations and delusions.

In fact, PDP is the most common factor leading to nursinghome placements of patients with Parkinson's disease.

We believe that Pimavanserin is well positioned to be animportant first-in-class treatment for PDP.

We are pleased to have advanced this program into Phase IIIwith the initiation of our first pivotal trial in June this year.

Let me now take a moment to review the design and objectivesof the study.

This Phase III trial is a multicenter, double-blind andplacebo-controlled study that is designed to evaluate the safety and efficacyof Pimavanserin in approximately 240 patients with PDP.

Patients in this study are randomized to three differentstudy arms, including two different doses of Pimavanserin 10 mg and 40 mg andone placebo arm.

Patients receive oral doses of Pimavanserin or placebo oncedaily for six weeks, in additional to stable doses of their existing dopaminereplacement therapy. The primary endpoint of the trial is antipsychoticefficacy as measured using the scale for the assessment of positive symptoms orSAPS. Psychosis associated with Parkinson's disease is manifested mainly bypositive symptoms, specifically hallucinations and delusions.

The SAPS is the widely accepted tool to measure positivesymptoms and is considered the most appropriate scale to measure the psychosisin Parkinson's disease. Motoric tolerability is an important secondary endpointin the trial and is measured using the Unified Parkinson's Disease RatingScale, or UPDRS. We are pleased with the continued progress made by Roger andhis team in our ongoing Phase III trial.

Our development team has worked diligently to get theinitial trial sites up and running, to advance recruitment of patients atclinical centers located in the U.S.We continue to bring on new trial [science] including centers located throughoutEurope where we anticipate recruiting patientsimminently.

Additionally, patients who complete the Phase III pivotaltrial have the opportunity to enroll in an open-label safety extension study.This allows for continued treatment of these patients, while providing data tosupport our safety requirements.

Importantly, we also see high enthusiasm from the U.S.and European investigators, partly eager to find the treatments for thisdebilitating disease.

I am pleased to note that our Phase III development programwith PDP is progressing according to plan. Given the size of this patientpopulation in relation to schizophrenia and the fact that this is a pivotaltrial, we currently expect to report top line results from this Phase III trialduring 2009.

As a reminder, our Phase III [program] in PDP consists oftwo pivotal efficacy trials and a standard safety package. In addition to ourfocus on getting the first pivotal trial fully up and running in both the U.S. and Europe,we are conducting site planning and other start-up activities in preparationfor initiating the second pivotal trial.

We trapped around these trials in a [stagged] parallelfashion and we believe that we will be able to leverage the investment from thefirst trial to compress the development timeframe for the second pivotal trial.

Along with the advancement of our clinical programs, we continueto make good progress in our collaborative programs, including our Phase IIprogram in neuropathic pain with Allergan. In addition earlier in the thirdquarter, we announced that in our next collaboration with Allergan, we advancedour muscarinic agonist for glaucoma into the clinic.

Our productive discovery of gene continues to provide uswith the robust pipeline and drug programs to fuel our development efforts.

We are proud of the significant milestones that we haveachieved so far this year including our transition to a Phase III stage companywith Pimavanserin, the announcement of positive results from our large Phase IIschizophrenia co-therapy trial, the investigation of our Phase IIb trial withACP-104 and the strengthening of our balance sheet.

We believe that we have an exciting road ahead of us and welook forward to continue our momentum. We remain focused on a number of keyobjectives that we believe provide the potential to drive significantshareholder value for Arcadia.This includes our efforts to explore potential strategic alliances to optimizethe commercial opportunity around our schizophrenia co-therapy program toadvance our Phase III PDP program and to complete our Phase IIb clinical trialwith ACP-104.

We also look forward to presenting the full data set fromour Phase II schizophrenia co-therapy trial in December. We hope that many ofyou will have the opportunity to join our inaugural analyst and investormeeting in person or via webcast on December 14 to see this exciting data andto gain a deeper appreciation for the potential of our pipeline on nextgeneration therapies for patients who suffer from neuropsychiatrics and otherCNS orders.

That completes our update and we will now be happy toentertain any questions that you may have.



(Operator Instructions). And our first question comes fromthe line of Alan Carr with Needham.Go ahead.

Alan Carr - Needham & Company

Hi good afternoon everyone.

Uli Hacksell

Hi there.

Alan Carr - Needham & Company

Hi, yeah, sounds like you’re making some progress with thePimavanserin in PDP and that you’ve that enrollment is, I guess little bit moreclear here in terms of time lines. I was wondering if you can give any moredetail on when you think you might get the second one started? And has yourview changed, as whether or not this one is going to be exactly the same as thefirst or you are going to – are there going to be any differences between thetwo trials.

Uli Hacksell

Roger, may be you can give a short-term answer to thatquestion.

Roger Mills

Yeah, thanks Uli. So Alan, I think this will be the strategywas to position the two studies in a staggered manner, but obviously inparallel. So as we’ve been doing lot of work in getting the first study up andrunning, we’ve been doing the preparatory work for and that's well underway. Sowe will anticipate starting that study probably soon.

Alan Carr - Needham & Company

In the first half '08 probably, or even by yearend, do youthink?

Roger Mills

Actually starting, I won't give the exact time but it willbe a lot faster than the end of '08 I can assure you, its.

Alan Carr - Needham & Company

At first half?

Roger Mills

Probably soon.

Alan Carr - Needham & Company

Okay. And I guess that we missed, but didn't ask aboutpartnering for Pimavanserin and can -- I am wondering if youcan characterize those discussions to any degree as to whether or not, are youfinding any hesitation for patterning this drug because its an agent as apposed to a standalone drug or are there particular financialterm that you are looking for?

Uli Hacksell

Yes, so let me try to answer that question. First of all, aswe have indicated following the completion of the full analysis of our trial,we initiate this process to explore potential strategic alliances that reallycan help us to optimize the value of Pimavanserin. What we can say is that wehave been very pleased with the positive reaction on the Phase II data fromboth the medical and pharmaceutical communities. And what I can tell you isthat following the full analysis of the data from this trial, we are moreexcited than ever above the commercial potential for Pimavanserin and webelieve that this excitement is also evident in this captions with potentialpartners.

Now, when it comes to the kind of deal that we really areaiming for, it’s clearly -- we are looking for something that can help us toreally complete the comprehensive registration program that will maximize thevalue of this opportunity on the market. And we believe that this drug has a --represents a great commercial opportunity

I should also mention that, in general terms, our strategyis to try to retain rights to participate in the commercialization in areassuch as Parkinson's disease psychosis, in the U.S. And we certainly want to endup with the deal that has the right commercial aspects in it has stronginvolvement and incentives both for us and our potential partners.

Alan Carr - Needham & Company

Do you sense any hesitation by your potential partners inletting you all participate?

Uli Hacksell

As I said before, we don’t want to go into specific detailsof our process or these discussions. What I can say is again that we areexcited and we see excitement from our potential partners as well.

Alan Carr - Needham & Company

Okay. Thanks very much

Uli Hacksell



Our next question comes from the line of Ajim Tamboli withLehman Brothers. Go ahead.

Ajim Tamboli - LehmanBrothers

Good afternoon. On the pimavanserin presentation at the ACNPmeeting, following the data you've realized to-date, what incremental detailscan we expect to receive in December?

Uli Hacksell

Roger, do you want to take your shot on that?

Roger Mills

Yeah, thanks Uli. I think first thing is, I just want tostress is that when we did the top line data, those were very prettycomprehensive analysis that we done prior to that. So those – the messagingthat we've put out there to-date is being confirmed by the additional analysisthat we have done, a lot of it was just robust and striking. I think whatyou'll see is a broader aspect of some of the data behind the messaging that weput out to-date really reaffirming the key aspects of that the efficacy on thePANSS scale which is very clinically meaningful and was driven not by any oneelements of that, but across the Board. The accelerated response that we sawand the benefits in the side effect profiles with the weight gain,prolactinemia, there will be some data on the akathisia and weight gain. So Ithink you are going to see written essentially the background to the messagingthat we put out to-date.

Ajim Tamboli - LehmanBrothers

So I would have to assume no surprises other than thesupported data we've seen the date including on the side effect profile?

Uli Hacksell

Yeah, there are no surprises that we have that which is veryreassuring all our business analysis confirmed that the position that wereported early this year.

Ajim Tamboli - LehmanBrothers

Okay, great. And then on the ACP-104 Phase IIb trial onschizophrenia, can you tell us how many patients have been dose to-date andwhat the weekly blood monitoring requirements are, and whether we have seenadditional cases of leukopenia and any suggestion of agranulocytosis?

Uli Hacksell

Yeah again Roger, I think this is a question for you.

Roger Mills

Okay, thanks, Uli. We are not giving specific information onthe numbers of patients that are enrolled in this study. Apart from saying thatwe are very pleased with the performance on the study and we are very pleasedwith the progress that we are making there. And I think as Uli mentionedearlier, we expect to report top line results in the third quarter of next yearof '08.

In terms of the monitoring in the study, we're doing apretty standard monitoring which does include hematological data and that ispretty standard and we're moving along another, and as I said we are verypleased, we remain very pleased with the progress in the study.

Ajim Tamboli - LehmanBrothers

Is that weekly or biweekly?

Roger Mills

It's weekly.

Ajim Tamboli - LehmanBrothers

Weekly, okay.

Uli Hacksell

(inaudible) that we're following a very rigorous kind ofblood monitoring.

Ajim Tamboli - LehmanBrothers

Right. Okay, great. And then finally, Uli, I guess, as yousee think about partnering given that we have had data for few moments now forPimavanserin, how do you weigh that versus completing a partnership versus Iguess taking the program forward here in terms of timelines?

Uli Hacksell

Yes, Ajim, as I have said, many, many times, I thinkit's ideal to have a commercial partnerinvolved in the design of the complete Phase III program from a commercialpoint of view because if you want to make sure that you do the right start,it's from a commercial point of view in the area of schizophrenia. So clearly,we think that's a very interesting aspect of these discussions and that we're havingnow.

We've not excluded them that we may do additionalschizophrenia start-ups I have said, but again, I think the ideal kind ofscenario is to think to have a partner helping us to complete the registrationstudies that will enable us to maximize the commercial opportunity aroundPimavanserin.

Roger Mills

And you also may add to that we have the Parkinson's programalready ongoing, not only we continue to generate important clinical data, butwe also have the rest of the Phase III program which is appearing in parallelwith that clinical program designed obviously to provide a package registrationat the end.

Ajim Tamboli - LehmanBrothers

Great. Thanks for taking the questions.

Uli Hacksell



Our next question comes from the line of Joe Pantginis withCanaccord Adams. Go ahead.

Joe Pantginis -Canaccord Adams

Hi, guys, good afternoon. Thanks for taking the call.

Uli Hacksell

Hi, Joe

Joe Pantginis -Canaccord Adams

Hey, just quick question on the Phase II data, the top linedata, you guys presented or made the statement that even though you couldn'tget into as much detail as you can in the upcoming final data thatsignificantly impacted the negative symptoms. I was just wondering, I know youcan't get into the specifics now, but can you give us why it's importantrelative to what other treatments have not been able to show in impactingnegative symptoms?

Uli Hacksell

Do you want to answer that Roger?

Roger Mills

You want to give the background first.

Uli Hacksell

Yeah. Let me take a step back and look at schizophreniatherapy in general. So remember we have three symptom domains in schizophrenia.We have positive systems, that are the hallucinations and delusions, which arewell treated by almost antipsychotic agents. Then you have the negativesymptoms, which are poorly treated, or perhaps even worsen, by some of theantipsychotic drugs you see today. And the negative symptoms consist of socialwithdrawal etcetera and apathy in general. And then you have the third symptomdomain, which is the cognitive deficit induced by the disease and probablyworsened by all existing antipsychotic agents. So two of the untreated, or verypoorly treated areas, of schizophrenia symptoms are the negative symptoms andthe cognitive deficits And that why it's really interesting to look inparticular at improvements in negative symptoms like cognitive deficits with adrug like pimavanserin.

Now, before I let Roger to answer your question I shouldalso mention that in the data that we presented at the neuroscience meetingjust recently, we showed that, while all the atypical antipsychotic drug, infact, worsen for example, cognition. Pimavanserin is able to reverse thateffect, that negative affect on cognation and we think that cognitive aspectsof Pimavanserin therapy may extend also in the negativesymptom domain. So that is essentially the back ground that we have from theclinical experience with atypical antipsychotic drugs and with pharmacologicalexperiments in the same area. Roger.


Thanks Uli. I think what we saw in thePhase II study are those positioned appropriately to begin with, this waslooking at the full PANSS scale in a particular population of acute schizophrenicpatients. If one wishes to look specifically the negative symptoms or moreprobably use a more stable population and perhaps some one would want to use amore specific scale such as the SANS scale, which is the negative side of theSAPS scale that we are using in Parkinson's. And you would specifically designa study to really highlight those aspects and this study wasn't specificallydesigned for that reason, however, within the overall aspect to PANSS clearlythe end side of the PANSS related to negative symptoms and is really set asspecific demands to look at them.

What we saw in this study was a very nice robust affect, notonly on the positive symptomatology of the disease, but also, importantly, onthe negative symptoms and which is very encouraging for us. So we didn’t seeone particular element driving the results, it was across the spectrum of thedisease that one saw a benefit.

But in terms of highlighting that in further development onewould probably wish to use a more specific scale and the different design ofthe study to bring those potential benefits to the full.

Joe Pantginis -Canaccord Adams

Okay great. Thanks a lot that was helpful.


Our next question comes from the line of David Amsellem withFriedman Billings Ramsey. Go ahead.

David Amsellem -Friedman BillingsRamsey

Hi, thanks for taking my questions. So just on Pimavanserinyou have right now $140 million in cash realized that you are looking for theright commercial partner to be in place, but in the interim do you envisionrunning any additional, say Phase IIb type studies, say with other atypicalantipsychotic or do you plan to move forward with any other indications interms of running any exploratory studies. I am just trying to get a sense ofwhat you plan to do in terms of clinical trials for Pimavanserin in the interimwhile you are trying to secure partnership?

Uli Hacksell

Again, just to reiterate of what Rogers said before, we are moving forwardquite aggressively with Pimavanserin Phase III clinical studies for Parkinson'sdisease psychosis. We think what we do in that registration program willbenefit Pimavanserin development for other indications as well.

So, we haven't indicated to them what kind of additionalstudies we may do in the future. We haven't said that we may not do anythingelse. But, again that's something that we are thinking about clearly.

Rogers Mills

I think it's also important that the study that we didprovide a really good proof concept result and therefore I think, as you areindicating, [one good look at] doing other specific drugs to combine with. ButI think, as Uli had mentioned earlier, it's important that as we embark onfurther studies that we do so with a view to the maximizing the value of thiscompound in the marketplace.

And that's a very, one of the key elements of why we arelooking at partnership, so that we can specifically position further studies inorder to get the maximum value when the drug hits the marketplace.

David Amsellem -Friedman BillingsRamsey

And then a second question if I may on Pimavanserin, can yousay what portion of the sites in the Phase III study in PDP are U.S. versusex-U.S?

Rogers Mills

It is close to 50% a little more in the U.S. in the first study, but it'spretty close to sort of 50/50 overall.

David Amsellem -Friedman BillingsRamsey

Okay. Alright, thanks.


Our final question comes from the line of Patrick Moriartywith Fortis. Go ahead

Patrick Moriarty - FortisBank

Hi, good evening. Thanks for taking my questions. I have aquick follow-up on the ACNP data to be looked at. In terms of the efficacy youhave given the responder analysis using a 20% reduction. Are you going to lookat the magnitude of response in this presentation, in other words look at maybe 25% , 30% PANSS reduction at the various standpoints?

Rogers Mills

We not specifically stated what we are going to present atthat meeting. We have I think thought previously number of business check,obviously warm looks at the different aspects of what would be a responder, butI am not so certain that we have decided exactly what we are putting into thatpresentation yet.

Patrick Moriarty - FortisBank

Is it possible to comment on the robustness of responseside?

Rogers Mills

Only that we are comfortable the result we have reported isconfirmed as we said earlier. All the results are confirmed by the variousbusiness checks that we've done.

Patrick Moriarty - FortisBank

Okay, great. Thank you

Rogers Mills



Ladies and gentlemen, that does conclude ourquestion-and-answer session for today. Dr. Hacksell, please proceed to closingremark.

Uli Hacksell

So thanks again to everyone for joining us on today's calland for your continued support. We look forward for the opportunity to updateyou in the future on our ongoing process. Thanks.


Thank you for your participation in today's conferencescall. This concludes the presentation. You may now disconnect. Have a good day.

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