Start Time: 14:00 January 1, 0000 2:26 PM ET
ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD)
JPMorgan Healthcare Conference
January 09 2019, 14:00 PM ET
Steve Davis - President and CEO
Conference Call Participants
Cory Kasimov - JPMorgan
All right. Good morning, everyone. My name is Cory Kasimov. I’m the senior large cap biotech analyst at JPMorgan. It’s my pleasure to introduce our next company which is ACADIA Pharmaceuticals. Here to present for ACADIA and tell us what we can expect in 2019 and beyond is the company’s CEO Steve Davis. And please note that following Steve’s presentation, there will be a breakout session down the hall to the left in the Olympic Room.
So with that, I’ll turn it over to Steve.
Great. Thanks much, Cory. Good morning and thanks to each of you for coming out to hear a little bit more about ACADIA. I need to start this morning just by reminding us all that the business of pharmaceutical development and commercialization has certain inherent risks, so please see a copy of our most recent SEC filings for a description of how risks relate to our business.
So this morning I’d like to start with just a little bit of a reminder about why we do what we do? The pictures you see on this slide are of actual patients together with some of our dedicated employees. The patients we seek to serve either have no approved treatment or they continue to suffer because the treatments that are approved do not adequately treat their symptoms.
Some of the patients you see are Parkinson’s disease psychosis patients. These are patients that are typically in their 60s, 70s, 80s. They have a debilitating disease. It impairs their movement and their daily activities that we all just take for granted. Of course, it gets progressively worse over time. And for PDP patients they develop psychosis typically in the more advanced stages of the disease where they’re already carrying a very high disease burden.
So I’d like to ask you to just a moment to look at the faces in this picture. These are not a stock price, they’re not a revenue projection, they’re not a CAGR. These are people, people with productive years to live, people with families and people that we can help. So I’ll spend the reminder of the time this morning talking about the business of ACADIA, but I wanted to just start by calling out the people to whom we owe our very best and that’s the patients that we seek to serve.
That desire to help people fuels our vision. Our vision is to become the leading pharmaceutical company dedicated to the advancement of innovative medicines that improve the lives of patients with CNS disorders. Today, our commercial organization is focused on NUPLAZID, the first and only FDA approved treatment for hallucinations and delusions associated with Parkinson’s disease psychosis. Our R&D team is focused on advancing five late-stage clinical programs.
This slide represents what I think is probably the most underappreciated aspect of our business. This is the addressable population for both the indication we’re current approved in, in Parkinson’s disease psychosis together with the indications that we’re pursuing that I just referred to. And there are three take-home messages that I think are important here.
One is if you look at Parkinson’s disease psychosis on the far left-hand side where we project to in the year 2018 with $220 million to $225 million in revenues in our second calendar year of launch with a growth trajectory that’s had a very attractive and liner curve and where we think this is going to be a very big drug, there are about 125,000 PDP patients that are being treated. Now there are actually about 350,000 to 400,000 Parkinson’s disease patients altogether but about 125,000 of them are being treated.
Schizophrenia inadequate response is over 5x larger than PDP. In schizophrenia inadequate response there is no approved treatment today. There’s also no approved treatment for schizophrenia negative symptoms which is about 8x larger than PDP. In dementia-related psychosis, again no approved treatment. It is 10x larger than PDP. And in major depressive disorder where we just reported very exciting Phase 2 results, it’s about 20x larger than Parkinson’s disease psychosis.
So point number one is these are very large indications. Point two is because we’re advancing the same molecule in all of them and we’re approved in Parkinson’s disease psychosis, we know the safety and tolerability profile of the drug. We know the drug-drug interactions. As I’ve said before, we love to make these kinds of investments. And point three is we have evidence of clinical efficacy in everything you see on this slide.
There are three pillars to achieving our vision. First is to grow. Grow NUPLAZID as the only approved treatment and standard of care for patients with PDP. Second is to leverage pimavanserin, which is the generic name for NUPLAZID, in the indications that I just referred to. And third is to expand our pipeline further through focused business development in CNS disorders with high unmet needs.
Let’s take a quick look at how we’ve scored on advancing each of these pillars. Most recently, we launched a 34 milligram capsule of NUPLAZID in the third quarter of 2018. This is important from a couple of perspectives. One is it provides a more convenient dose for patients but much more importantly because the drug was launched with two 17 milligram tablets taken simultaneously, many physicians although they didn’t need to titrated the drug. That titration would often lead to a diluted and delayed onset of action with the drug. Now that we have a 34 milligram capsule, single capsule that we’ve recently launched we’ll be pulling the 17 milligram tablets out of the system and that will help result in a much better brand experience for the drug.
We’ve recently launched a DTC campaign in the fourth quarter. I’ll be speaking more about that in a second. In major depressive disorder, as I mentioned, we have highly positive results from the Phase 2 CLARITY study, a very large Phase 2 study that we recently ran. We’ll be initiating Phase 3 in the first half of this year. In dementia-related psychosis, we’ve made excellent progress in advancing our Phase 3 program there. We’ll have results from the dementia-related psychosis study next year, but we’ll be doing an interim read in the second half of this year.
And in schizophrenia we’ve advanced the two programs I referred to earlier, one in inadequate response and the other in negative symptoms. And in the fall we acquired rights to trofinetide – North American rights I should say to trofinetide, a treatment for Rett syndrome and we’ll be initiating a Phase 3 study in Rett syndrome in the second half of this year.
So let’s focus for a second on the first pillar of growing NUPLAZID sales. NUPLAZID, as I mentioned, is not only the first and only approved treatment for PDP but it is a selective serotonin inverse agonist or SSIA. For about 60 years we’ve been treating psychosis with one class of molecules, dopaminergic molecules. And these things all are brothers, sisters and cousins of each other and they have a lot of commonalities, including very significant side effect burden. These dopaminergic drugs result in impairing motor function, they have – patients experienced heavy daytime sedation, they can experience very dramatic weight gain, orthostatic hypotension. One drug in particular can result in very serious potentially life-threatening blood disorders. So they’re far from perfect drugs.
Our drug is not dopaminergic. This is the first and only non-dopaminergic antipsychotic approved. Our drug works with its SSIA profile exclusively by targeting 5-HT2A receptors. So this unique profile has resulted in demonstrating significant efficacy in reducing hallucinations and delusions in PDP. And in fact in our pivotal study that served as the basis of approval, we saw that 74% of patients experienced improvement in their psychotic symptoms.
When we launched the drug we said, you should expect kind of a linear shaped curve with this kind of a drug, was the first drug in its class, there’s been nothing approved. We’ve got a great opportunity to reeducate the medical community and rewire the way they think about Parkinson’s disease psychosis and that’s exactly what we’ve seen. As I mentioned, we’ve guided to $220 million to $225 million in revenues for this year. In our most recently reported quarter, we reported $58.3 million of revenue in the third quarter. That represented 64% year-over-year growth.
So I think the question – it’s an appropriate question to ask so where do we go from here? What do we see is the market opportunity in PDP? Well, there are about 1 million patients in the U.S. that have Parkinson’s disease; 50% of them experience psychosis over the course of their disease. At any moment in time the point prevalence is about 350,000 to 400,000 of them have PDP. And as I mentioned earlier, about 125,000 of them are being treated. Now the reason only 125,000 out of the 350,000 or 400,000 are being treated is because when there was no drug to treat, physicians developed a habit of many times waiting until the symptoms got to be very disruptive before they treat it.
So we think with the new drug approved and as patients get more and more experience with a very favorable tolerability profile and the strong efficacy that we have that we’ll be able to grow that market and physicians will likely begin treating earlier in the treatment paradigm. And in fact we’ve begun to see some of that. Just to underscore the need, in one study illustrated that over a six-year period 24% of all hospitalizations for Parkinson’s disease patients were for psychosis alone. An additional 25% of hospitalizations were as a result of motor and psychiatric complications.
Focusing even more on kind of where we stand at this moment in time, on the left-hand side we have our specialty pharmacy business which is about two-thirds of our business. The right-hand side is our long-term care channel business. We start with the specialty pharmacy business. So what we’re seeing here is very nice sequential growth in new patient starts. Just to be clear, this is not revenues. These are new patient starts with an early indicator or a precursor of revenues for us. So we’re very pleased to see this nice growth particularly late in the fourth quarter. There is a lag. There is a period of time before these translate. We see the full benefit on the revenue side. But it certainly sets us up very well as we enter 2019.
On the right-hand side on long-term care, these are very different bars here. These represent total bottles. So these are both patients that are already on therapy where we’re refilling drug. That’s the vast majority of these bars and then layered on top of that are the new patient starting on therapy, so we’re continuing to see nice growth in the long-term care channel as well.
One important way that we’re leveraging the growth that we’ve seen is through the – in addition to the 34 milligram capsule launched that I described earlier is through a DTC branded campaign that we initiated on Thanksgiving Day. This campaign follows an unbranded disease awareness campaign that we began last year about this time. And we think the time is really ripe now for a branded campaign.
The objective of both campaigns is to address a significant issue that exists today. I mentioned earlier that PDP typically occurs in the later stages of the disease. And for that reason, when we occurs many times patients and caregivers do not connect the dots. They don’t associate the psychosis that the patient is experiencing with their Parkinson’s disease. They just simply think, my God in addition to having Parkinson’s disease now I have hallucinations; I’m seeing things or sometimes they become delusional.
And that coupled with the fact that physicians developed a practice of historically waiting to treat has resulted in a lot of patients not having necessary discussions with their physicians that could result in them get a benefit much sooner in the disease progression. So the target of this campaign as well as the disease awareness campaign is to address that very significant need today.
Going to shift gears now and go to the second pillar. Just quickly, wanted to provide a graphic representation of the pipeline as you can see and as I mentioned we have five late-stage programs that we’re advancing this year; four of them are pimavanserin. Dementia-related psychosis affects about 1.2 million patients in the U.S. It has very serious consequences, including repeated hospital stays and earlier progression to nursing homecare, more rapid progression of dementia and an increased risk of morbidity and mortality.
There is no approved treatment for Parkinson’s disease psychosis. The dopaminergic antipsychotics that are approved today are approved for schizophrenia, for bipolar disorder, et cetera. They are not approved to treat dementia-related psychosis patients in the same way that they’re not approved to treat Parkinson’s disease psychosis patients. They are used off label occasionally because there’s no other treatment option for physicians. And in the very large study it was demonstrated that when these dopaminergic antipsychotics are used off label, they actually accelerate cognitive decline in Alzheimer’s patients. And it’s not insignificant. It’s equivalent to about one year of disease progression. In addition, they carry all of the same side effect burden that I described earlier.
Our program in dementia-related psychosis is leveraging studies that we’ve done in both Parkinson’s disease psychosis as well as Alzheimer’s disease psychosis. And what you see on the left-hand side of the side here is that in our pivotal Parkinson’s disease psychosis study we’ve reduced symptoms by – we showed a 36.5% improvement in psychotic symptoms in these patients with a P value of 0.0014. It’s important to note that in this study we also had some patients that also had dementia. So about 25% of the patients in this study also had dementia and we saw similar results in those patients with a P value of 0.0018.
On the right-hand side are the results of an Alzheimer’s disease study we ran where we saw similar results on efficacy. We saw a 39.5% improvement. Importantly in this study we actually dosed patients although the primary endpoint was six weeks, we dosed patients for 12 weeks. And the reason for dosing for 12 weeks is so that we could also study the patients long enough to determine if we had an impact on cognition. And what we saw was no impairment of cognition in that timeframe. So unlike the dopaminergic antipsychotics we feel like pimavanserin could be an ideal drug to treat this patient population that has no treatment options today.
Following these two studies, we had an – in a Phase 2 meeting with FDA and agreed on our Phase 3 plan and it’s represented here on this slide. We’re running a relapse prevention study. It’s a single study. We have an agreement with the FDA that with robust results from this single study that can serve as the basis for an NDA submission – SNDA submission, excuse me. And the study is very straightforward. Patients come in highly symptomatic. They all go on our drug pimavanserin. They’re treated for 12 weeks. If they have a stable response at both week eight and week 12, so we’ve significantly reduced their symptoms at both time points, they stay in the study. If they haven’t, they exit the study.
For those patients who stay in the study it showed they were highly symptomatic, significant response to our drug, then they’re randomized into two groups. Half of the patients stay on our drug and half of them move to placebo. And the endpoint of the study is quite simply the average time to relapse between pimavanserin and placebo. So it’s a very straightforward, very highly statistically powerful design and we will have results of this study next year in 2020. We’ll also do an interim read in the second half of this year.
Major depressive disorder, as I mentioned earlier, we have some very recent highly positive results in this indication. Just to set it up quickly, depression is a very pervasive disorder, over 16 million patients in the U.S. alone. The standard of care in MDD is to start patients on an SSRI or SNRI. A majority of patients do not adequately respond to this. So they respond but they’re still highly symptomatic. That results in about 2.5 million patients in the U.S. being treated with adjunctive therapy on top of the SSRIs or SNRIs.
We did significant amount of market research during the development of this molecule and you can see on the left-hand side of this slide there are very substantial unmet needs today. On the right-hand side I’ll go through the results of our study. So the study we ran is a Phase 2 study was a SPCD design study; so two stage studies, so two parts to this study. And we ran the drug on top of adjunctive therapy on top of SSRIs or SNRIs.
We had very successful results. Primary endpoint was achieved with a P value of 0.039. We also achieved positive results on the key secondary endpoint which is a measure of disability and something that’s rarely seen with antidepressants. Here our P value was 0.004. We also had positive results on seven additional pre-specified secondary endpoints.
Importantly, what we saw in this study is not only these very significant efficacy results. We saw them early. If you look at the left-hand side of the slide you see faster onset of action is one of the key unmet needs in depression today. So we had results within one week of dosing. In addition, we saw an improvement in sexual function. A majority of patients on SSRIs or SNRIs actually experienced sexual dysfunction. Not only did we not make that worse, which is sometimes seen when you add adjunct therapy, we actually improved sexual function in these patients.
We also had no meaningful weight gain. That’s another significant issue with some of the adjunct therapies available today. We saw a reduction in daytime sleepiness. The SSRIs together with the adjunctive therapies, the dopaminergic antipsychotics used on top of them both caused sedation in a combination, very significant sedation. Not only did we not cause daytime sedation, we actually had a reduction in daytime sleepiness. We had no impairment of motor function. So we were really thrilled with the results. We think this positions pimavanserin if approved in MDD to potentially move to the head of the class of adjunctive therapies and be the standard of care for adjunctive treatment.
I mentioned it’s a two-part study. It’s important to note in Stage 1 of the study which is kind of a tried and true parallel design study, we had very, very high efficacy results with a P value of 0.0003 and an effect size of 0.626. Just to put this into context with antidepressants you often see an effect size in the 0.3 to 0.35 range, so very strong effect here.
The reason it’s important to point out this part of the study in addition to the very strong efficacy we saw is because this is, as I mentioned, the standard type of the study, the Stage 2 type part of the study we ran in Phase 2 is many times done in Phase 2 is more exploratory. But this study is the study design we’ll use in Phase 3. So we’ll run two Phase 3 studies using the same design.
Our next steps are to meet with the FDA for an end of Phase 2 meeting in early 2019 and given the robust positive results that we’ve seen, we believe the CLARITY study can serve as one of two pivotal trials required for a SNDA submission. And as I mentioned we’ll initiate Phase 3 in the first half of this year.
Schizophrenia inadequate response; schizophrenia affects approximately 1% of adults in the U.S. and globally as well. And today what we see with schizophrenia patients are treated with dopaminergic antipsychotics is about a third don’t respond, about a third respond but are still highly symptomatic and about a third adequately respond. And it’s that middle circle there, the third that partially respond that we’re particularly focused on in our development here.
Without a drug to use adjunctively, without a drug approved, many times what happens today is a lot of polypharmacy of adding again brothers, sisters and cousins of the same kind of drug on top of each other and that can lead to increased side effects, poor compliance and subsequent relapse. We ran an earlier phase – early in the development of the drug, we ran a Phase 2 study using pimavanserin on top of one of the dopaminergic antipsychotics with positive results. That has led to us running this Phase 3 study in 380 patients. That’s a very substantial study and again we expect data in mid-2019.
Schizophrenia negative symptoms are a very similar situation. Schizophrenia patients experience both positive symptoms in terms of the hallucinations and delusions as well as negative symptoms which are more of the social withdrawal aspects of the disease and about 40% to 50% of schizophrenia patients experience these prominent negative symptoms. We’re also studying our drug as adjunctive therapy and we think with this very unique profile we have it can be a very important new drug in the treatment of negative symptoms with schizophrenia where no drug is currently approved. And we expect complete enrollment of this study in the second half of 2019.
Now that I’ve completed kind of the recap of where we stand on the additional opportunities with pimavanserin, I’d just like to reiterate again. Collectively if we’re successful in all of these indications that we’re pursuing – and by the way when we began the process of starting these programs all simultaneously, many of you heard me say that we probably won’t win in everything. We don’t need to if just one of them is successful, it’s worth the investment. Today we’re betting a thousand, so I’m kind of regretting saying that. But if we’re successful in getting approvals in all four of these, it would increase the addressable population for pimavanserin by 40, that’s 4-0, 40 fold.
Moving to the third pillar, expanding. Our business development strategy is focused on CNS disorders with high unmet need. We’re leveraging our highly talented CNS focused R&D and commercial organizations and we’ve begun executing on this strategy with the North American license agreement for trofinetide for Rett syndrome in the fall of last year.
Rett syndrome is a highly, highly debilitating disorder. It occurs primarily almost exclusively in females at young ages. It results in cognitive, sensory, emotional and motor impairment, loss of independence, loss of purposeful hand movement, loss of spoken communication.
Today, there are about 6,000 to 9,000 Rett syndrome patients in the U.S. There’s a very active patient efficacy organization with a registry of 5,000 patients. Again, there’s no approved treatment. Trofinetide is a novel analog of the tripeptide of IGF-1. It’s designed to treat the core symptoms of Rett syndrome by reducing neuroinflammation and supporting synaptic function.
In the most recent Phase 2 study, Neuren Pharmaceuticals, the company from whom we licensed, trofinetide had positive results in their Phase 2 study both on the Rett Syndrome Behavioral Questionnaire and on Clinical Global Impression Scale. We plan to initiate Phase 3 after we finish scaling up for clinical trial material in the second half of 2019. This drug has U.S. Fast Track status and Orphan Drug Designation in the U.S. and Europe.
Looking holistically at the clinical milestones that we have coming up, we’ve got a lot. In major depressive disorder we’ll have our end of Phase 2 meeting. We’ll commence our Phase 3 program in the first half. In schizophrenia inadequate response we expect results in the middle of this year. In dementia-related psychosis, as I mentioned, we’ll have results next year in 2020. We’ll also do an interim read this year in 2019. In schizophrenia negative symptoms we expect to complete enrollment of that study in the second half of this year. And finally in Rett syndrome, as I mentioned, we’ll initiate the Phase 3 program also in the second half of this year.
So in sum, we’re committed to executing on our key priorities in 2019. Our number one priority is continuing to grow NUPLAZID and executing on the commercial initiatives that we have to grow NUPLAZID in PDP. We are also leveraging the potential of pimavanserin and advancing trofinetide. As I mentioned, we’ll have five Phase 3 studies, one Phase 2 study, two potential Phase 3 study readouts during this year and we’re starting with a very strong balance sheet to advance our pipeline and the potential to expand through business development.
So thank you very much. I look forward to taking your questions in the breakout.