Good day, ladies and gentlemen, and welcome to the Acadia Pharmaceuticals 4th Quarter and Full Year 2018 Financial Results Conference Call. My name is Christie, and I will be your conference operator for today. At this time, all participants are in a listen only mode. We will be facilitating a question and answer session towards the end of today's call. I would now like to turn the presentation over to Elena Ridloff, Senior Vice President of Investor Relations and Interim Chief Financial Officer at Acadia.
Please proceed.
Thank you, Christie. Good afternoon, and thank you for joining us on today's call to discuss Acadia's Q4 and full year 2018 financial results. Joining me on the call today from Acadia are Steve Davis, our Chief Executive Officer, who will provide a brief overview of our strategy, recent achievements, pipeline opportunities and financial performance Michael Yang, our Chief Commercial Officer, will provide updates on our commercial initiatives with NUPLAZID and Doctor. Serge Segovic, our President, will discuss our pipeline progress. I will then discuss our financial results before turning it to Steve for his final remarks and opening the call up for questions.
I would also like to point out that we are using supplemental slides, which are available on the Events and Presentations section of our website. Before we proceed, I would like to remind you that during our call today, we will be making a number of forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements, including goals, expectations, plans, prospects, growth potential, timing of events or future results are based on current information, assumptions and expectations that are inherently subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially. These factors and other risks associated with our business can be found in our filings made with the SEC. You are cautioned not to place undue reliance on these forward looking statements, which are made only as of today's date.
I'll now turn the call over to Steve Davis, our Chief Executive Officer.
Thank you, Alain. Good afternoon, everyone, and thank you for joining us today. In 2018, our team executed on all three of our strategic pillars: 1st, to grow. Robonucleicin is the only FDA approved treatment and standard of care for patients with Parkinson's disease psychosis or PDP. 2nd is to leverage, leverage the potential of pimavanserin in additional indications with unmet need.
And third is to expand our pipeline further through focused business development in CNS disorders, again with high unmet needs. Let's take a look at the progress we've made in advancing each of these pillars on Slide 6. We continued to grow NUPLAZID in PDP and achieved $59,600,000 in net sales in the Q4 of 2018, a 37% increase over the same period in 2017. Net sales for the full year 2018 were $223,800,000 which represents a 79% increase year over year. This growth was fueled by our commercial initiatives, including the launch of our 34 milligram capsule in August.
In late November, we launched our direct to consumer TV ad campaign and expect this to benefit new patient starts in 2019. Based on our execution and the growth we're seeing in 2019 as we enter the year, we are providing Uplazda net sales guidance of $275,000,000 to $300,000,000 for the full year 2019. Last year, we continued to leverage pimavanserin in clinical development for additional CNS indications. This was highlighted by our positive Phase II CLARITY results in adjunctive treatment of major depressive disorder. In addition, we recently completed our end of
Phase II meeting with the FDA,
and will be initiating 2 Phase III trials in the first half of this year. Importantly, in our end of Phase II meeting, we confirmed with the FDA that our Phase II CLARITY trial can be submitted as 1 of 2 pivotal trials to support a supplemental NDA filing. So we will need at least 1 of the 2 Phase III trials we're conducting
to also be positive.
We also strengthened our balance sheet with the success financing in the Q4. We ended 2018 with approximately $474,000,000 of cash and are well positioned to continue executing on all three pillars of our business strategy. Slide 7 represents what I think is probably the most underappreciated aspect of our business. On this slide, you see the addressable population for both the indication we're currently approved in, Parkinson's disease psychosis, together with the other indications that we're pursuing with pimavanserin. There are 3 take home messages I think are important here.
Point number 1 is we are pursuing very large markets. These are markets with either no FDA approved treatment or markets in which patients continue
to experience significant disease burden
due to the inadequacies of existing therapies. In aggregate, the additional indications you see on this slide represent an approximately 40 fold increase over the PDP addressable population. Point 2 is because we're advancing the same molecule pimavanserin in all of these indications, and of course, we're already approved in PDP, we know the safety and tolerability profile of the drug. We know the drug drug interactions. We know how to make it.
And point 3 is we have evidence of clinical efficacy in each of these indications. So we have substantially derisked these programs. And as I said before, we love to make these kinds of investments. With that, I'll now turn it over to Michael to discuss our commercial performance.
Thank you, Steve. Please turn to Slide 9. Today, I would like to provide you with an update on the progress we're making with our commercial activities that are driving continued growth of NUPLAZID. First, we are in the process of completing the transition to the 34 milligram capsule from the 17 milligram tablets. The single 34 milligram capsule was launched to provide patients with a single dosage form to achieve the once daily 34 milligram dosing recommendation for the treatment of PDP with NUPLAZID.
The introduction and adoption of the 34 milligram capsule has gone very well. The commercial team has successfully facilitated smooth healthcare professional and patient transition to the single 34 milligram capsule, and we believe this has resulted in a more positive patient experience. We are focusing on driving new commercial initiatives across the business, leveraging the introduction of the 34 milligram capsule in Q3 and the FDA reaffirmation of the positive benefit risk profile. As Steve mentioned, we launched a branded direct to consumer campaign at the end of November, an important time of year when extended families gather together and would be expected to notice any changes in their loved one. We look forward to seeing this positively impact new patient starts and revenue in 2019 along with our other commercial initiatives.
Beyond these efforts, I'd like to point out that the Movement Disorder Society recently published an update to their recommendations for treatments for non motor symptoms of Parkinson's disease. Within this update, NUPLAZID is the only treatment listed as both efficacious and having an acceptable level of safety risk without specialized monitoring for the treatment of psychosis. This conclusion adds to the level of confidence we have been establishing with physicians that their patients suffering with PDP should try VUPLAZID first. Of the roughly 125,000 patients who receive treatment for PDP, currently a low double digit percentage are taking NUPLAZID. As the only FDA approved therapy for PDP, NUPLAZID's addition to these recommendations is an important validation of the product's position in the treatment paradigm.
Slide 10 highlights our recent growth trends in the long term care channel. As you can see, we've seen continued growth in total bottle demand throughout 2018. The long term care channel represents roughly 25% of our total business as you can see from the pie chart on the right. Over the past two quarters, we've seen our channel specific long term care commercial initiatives gain traction and create momentum. This has delivered a higher growth rate in the long term care channel as compared to our specialty pharmacy channel.
Now, I would like to turn your attention to our specialty pharmacy channel and why we're encouraged by recent growth trends and new patient starts as shown on Slide 11. In the specialty pharmacy channel, which represents 2 thirds of our business, we are now seeing a nice return to sequential growth in new patient starts in the Q4 of 2018 compared to the Q3. We have seen this momentum continue into the New Year with average weekly new patient starts up quarter to date sequentially. The growth in new patient starts is supported with both the launch of the 34 milligram capsule and the FDA's public statement on the positive benefit risk profile of NUPLAZID as well as the launch of our branded DTC campaign. For the overall business, we achieved sequential growth of approximately 6% in total bottles in the Q4.
In addition, our refill rate has remained consistent. On Slide 12, we outline a typical patient journey starting with the time they or their caregiver recognizes their symptoms to when they are motivated to take action. Once patients feel compelled to take action, it typically takes weeks to months before they have that next visit with their physician to talk to their physician about their symptoms and seek treatment. Following these appointments, the majority of these prescriptions are then sent to the patient our patient access hub, which assists patients with a prior authorization and reimbursement process. The majority of our neoplasmid patients typically start on a free trial period during this time.
And as a result, there's typically a lag between our marketing efforts and when a new patient starts to contribute to revenue. We believe with our current commercial initiatives taking hold and the promising growth trends we have observed and new patient starts that we are back on track and we will significantly increase our market penetration over the next several years. I'll now turn it over to Serge to provide R and D updates on our pipeline.
Thank you, Michael. I'm extremely pleased with our R and D progress in 2018. Equally, I'm really looking forward to the next several quarters as we will be reporting results from a number of our ongoing late stage clinical trials. Let's start with Slide 40. Pimavanserin is a 1st in class selective serotonin in Versagowitz.
All other antipsychotics work primarily by blocking dopamine and that's particularly problematic in Parkinson's patients who suffer from the lack of dopamine. In addition to PDP, pimavanserin has already shown indication of efficacy in all 4 clinical categories we are pursuing and are currently evaluating in late stage programs. Furthermore, given our expertise in drug development or CNS, we licensed the rights to trofinetide in August. Trofinetide is a novel synthetic analog of the amino terminal tripeptide of the IGF-one insulin like growth factor. Trofinetide has positive Phase II data in its target indication of Rett syndrome.
In total, we have 5 late stage programs that we are advancing this year. On Slide 15 are just a few recent near term highlights I wanted to share with you. First, we recently completed our end of Phase II meeting with the FDA to discuss pimavanserin as adjunctive therapy for major depressive disorder. I'm happy to report that as we expected, the FDA agreed that the CLARITY trial would serve as one of the 2 pivotal trials for our supplemental NDA submission. As always is the case, the end of Phase II matters are ultimately subject to NDA review.
We will initiate our Phase III program as planned in the first half of this year. 2nd, we confirmed with the FDA our study design for Phase 3 trial with trofinetide, which we will initiate in the second half of twenty nineteen. And third, we remained on track to announce top line results from our ongoing Phase III ENHANCE trial in schizophrenia inadequate response midyear. Starting with Slide 16, we will now discuss our ongoing programs in a little more detail. The measure related psychosis affects about 1,200,000 patients in the United States and has very serious consequences, including repeated hospital stays and early progression to nursing home care, more rapid progression of dementia and an increased risk of morbidity and mortality.
There is no FDA approved treatment for DRP. As highlighted on Slide 17, our program in dementia related psychosis is leveraging the benefit we observed in 2 previous studies: our PDP pivotal trial study as well as our Phase II study in Alzheimer disease psychosis. Following these two studies, we had an end of Phase 2 meeting with FDA and agreed on our Phase 3 plan, and is represented on the next slide. As a reminder, this development program also received breakthrough therapy designation from FDA. Our Phase III HARMONY study is a relapse prevention study.
We have agreement with the FDA that robust results from this single study can serve as the basis for an sNDA submission. We anticipate final results of this study in 2020 with an interim read in the second half of this year. There are substantial unmet needs today in the treatment of major depressive disorder as outlined here on Slide 19. On the right hand side are the observed results from our Phase II CLARITY study testing pimavanserin as an adjunctive therapy for SSRI to SSRI or SNRIs. We have very promising overall study results.
Our primary endpoint, improvement in the 17 item Hamilton Depression Rating Scale, was achieved with a p value of 0.039. Our key secondary endpoint improvement in the Sheehan disability scale was achieved with a p value of 0.004. It is well known that disability represents a significant burden for patients with depression. We also observed positive results in 7 additional that exists in the treatment of MDD today. We believe these results are clinically and commercially meaningful as we seek to develop tiramavanserin as a potential best in class treatment for adjunctive MDD.
In Stage 1 of the CLARITY study, where all study patients are analyzed, we observe an equivalent efficacy result and achieve our primary endpoint shown here on Slide 20 with a p value of 0.000 3 and an impressive effect size of 0.63. As I mentioned, we recently completed our end of Phase 2 meeting with the FDA. And as we expected, the FDA confirmed that our CLARITY study could be submitted as one of the 2 pivotal studies in support of the an sNDA for the adjunctive treatment of major depressive disorder. Slide 21 shows our Phase III development program for MDD. We plan to conduct 2 6 week Phase III parallel design placebo controlled trials thus subsequently derisking substantively derisking our MDD program.
Our CLARITY study combined with at least one of these Phase III trials will be the basis for an NDA submission. Moving on, I would like to discuss our schizophrenia inadequate response program. Data from our early Phase II study with pimavanserin added to low dose of risperidone provided supportive evidence and proof of principle for further development of pimavanserin in this indication. As such, we initiated our ongoing Phase III ENHANCE study in 380 patients, and we remain on track to announce top line data from this study in mid-twenty 19. Slide 23 highlights the trial design for our INFINS trial.
This is a 6 week study evaluating patients who had an inadequate response to their current antipsychotic treatment for schizophrenia and are receiving either pimavanserin plus background antipsychotic therapy or placebo plus background antipsychotic therapy. The primary endpoint is the change from baseline on the positive and negative syndrome scale total score. Turning to Slide 24. There is no FDA approved treatment for the negative symptoms of schizophrenia. We are conducting a 380 patients Phase II study and expect to complete enrollment in the second half of this year.
Turning now to Rett syndrome and trofinetide on Slide 25. Rett syndrome is a debilitating neurodevelopmental disorder that occurs predominantly in females following apparently normal development for the 1st 6 months of life. Currently, there are no approved medicines for this rare disease, which affects approximately 6000 to 9000 patients in the United States. After recent interaction with the FDA, we have finalized our Phase III trial design for trofinetide. This 3 month study will evaluate approximately 180 females aged 5 to 20 with Tread syndrome.
If our Phase III trial is positive, there is a potential to submit an NDA in 2021 based on this single Phase III study. Slide 27 provides a summary of our upcoming clinical milestones for 2019 beyond. It is going to be an exciting time, and I look forward to updating you on our progress. With that, I will now turn the call over to Elena to discuss our financial performance.
Thank you, Serge. Today, I'll discuss our Q4 and full year 2018 results and our financial outlook. Please turn to Slide 29. In the Q4 of 2018, we reported $59,600,000 in net sales, an increase of $16,000,000 or 37 percent compared to the $43,600,000 of net sales in the Q4 of 2017. The gross to net adjustment for Q4 2018 was 16.8%.
Lease of inventory in the channel at the end of Q4 was consistent with Q3. Moving down the P and L, total operating expenses, including cost of goods sold, were $126,800,000 in the Q4 of 2018 compared to $113,600,000 for the same period in 2017. These amounts included $20,400,000 $22,000,000 of noncash stock based compensation expense, respectively. GAAP R and D expenses increased $48,200,000 in Q4 2018 from $43,200,000 in Q4 of 2017. 4th quarter R and D expense benefited from the timing of certain clinical trial related costs, which will now be realized in the Q1 of 2019.
GAAP SG and A expenses increased to $74,300,000 in Q4 2018 from $66,700,000 in the Q4 of last year. The increase was primarily due to an increase in marketing expense related to our branded direct to consumer advertising program. For the full year of 2018 on Slide 30, we recorded $223,800,000 in net sales, an increase of $98,900,000 or 79 percent compared to the $124,900,000 in net sales in 2017. The gross to net adjustment for the full year 2018 was 16.6%. Total operating expenses, including cost of goods sold, were $471,300,000 in 2018 compared to $417,300,000 in 2017.
These amounts included $81,600,000 $75,500,000 of noncash stock based compensation expense, respectively. GAAP R and D expenses increased $187,200,000 in 2018 from $149,200,000 in 2017. The increase is primarily due to additional clinical study costs incurred as we continue to invest in additional pipeline programs for pimavanserin as well as an upfront payment of $10,000,000 to Noren Pharmaceuticals for trofinetide in the Q3 of 2018. GAAP SG and A expenses increased to $265,800,000 in 2018 from $255,100,000 in 2017. The increase was primarily due to an increase in marketing expense related to our direct to consumer advertising program.
Please turn to our 2019 guidance on Slide 31. As Steve mentioned, for the full year 2019, we expect continued strong growth for NUPLAZID with net sales between $275,000,000 $300,000,000 At the midpoint of this guidance range, this represents an approximate 28% growth in revenue year over year and approximately 20% volume growth year over year. We expect a gross to net adjustment in the range of 18% to 19% for the full year. We project this to be higher than the full year 2018 adjustment as a result of an increase in manufacturers' donut hole obligation to 70% in 2019 from the previous 50%. With regards to the Q1, there are 3 factors to consider.
First, we're forecasting a gross to net adjustment of 20% to 30%. As a reminder, gross to net is typically highest in the Q1 due to the annual reset of zone and haul manufacturer obligation for Medicare Part D patients. 2nd, our ongoing DTC campaign initiated towards the end of last year, and therefore, the positive benefit to volume will largely be realized starting in the second quarter, with only partial benefit in Q1. And 3rd, as we complete the transition to a 34 milligram capsule from 17 milligram tablets this quarter, it is possible that our channel partners may experience a temporary reduction in inventory as they sell through the remaining 17 milligram inventory in the channel. On the expense side for 2019, we expect GAAP R and D expenses to be between $250,000,000 $265,000,000 The increase compared to 2018 is a result of our planned progression of 5 late stage clinical programs in 2019.
We expect the bulk of these investments to occur in 2019 2020. We expect GAAP SG and A to be between $280,000,000 $295,000,000 for the full year, and we expect non cash stock based compensation expense to be between $80,000,000 $90,000,000 in 20.19. We ended the year with $173,500,000 in cash and investments. Exclusive of our 2018 equity offering, we should model approximately 144,000,000 fully diluted shares for 2019.
And with
that, I'll turn the call back over to Steve.
Thank you, Elena. Please turn to Slide 33. In closing, our team is focused on executing on all three of our strategic pillars in 2019: 1, growing NUPLACID in Parkinson's disease psychosis 2, leveraging pimavanserin in additional large market CNS indications and 3, potentially expanding our pipeline through disciplined business development. As always, we appreciate the dedication and hard work of all of our employees who are committed to improving the lives of the patients and caregivers with CNS disorders. I'll now open up the call for questions.
Operator?
Your first question comes from the line of Cory Kasimov with JPMorgan. Your line is open.
Hey, guys. Thanks for taking my questions. This is Matthew on for Cory. My first question is on the Phase 3 MDD program. Can you discuss your decision to run both the U.
S. And an EU trial and how these might differ in respect to each other and the Phase II CLARITY study in terms of patient enrollment criteria?
Sure. Sarah, do you want
to take that? Yes. Thanks, Matt. Both Phase III trials are Phase 2 trials that we just performed. So in terms of the patient population that we are addressing, in terms of measures, outcome measures, it's a very similar
turning to schizophrenia for the ENHANCE study, curious to get your general level of confidence going into this readout and curious to what you're seeing so far with the proportion of patients that are either dosed up or dosed down with
level of confidence with every trial I do. Otherwise, I probably would not do that. So we do have I do have a conviction that pimavanserin can bring a benefit to patients with schizophrenia in an adjunctive treatment paradigm. Of course, I've been long in this business to know that each clinical trial has its own challenges. So I would say that I'm reasonably optimistic about the outcome of this trial.
From the perspective of what we see in the trial in a blinded fashion in terms of the dose, we one thing I can say that majority of patients are ending up on a 34 milligram dose, on the higher dose with a smaller proportion of patients on the lower doses. I would also say that we are seeing a nice retention, which gives us quite a bit of confidence in terms of the quality of trial and execution of the trial.
Great. Thanks for taking my questions. I'll hop back in the queue.
Thank you. Our next question is from Ritu Baral with Cowen. Your line is open.
Hi, guys. Thanks for taking the question. And apologies for the background noise. Serge, can you discuss
a little bit the conduct of the HARMONY study? And I know you've had the discussion about the alpha split for the interim, but how should we think about the probability of success at the interim, especially given the positive KOL feedback that we've gotten in our
Sorry, did you hear the question?
I did not understand the last part of your question, Rita. If you can just repeat, please.
Yes. Just how we should think about probability of success at the interim. KOLs have had good things to say about pimavanserin in the indication and seem reasonably confident. But it all depends on how you're splitting the alpha.
Right. Darren, a couple of comments in that respect. I mean, I will just reiterate my general optimism about the trials that we are conducting and potential opimavanserin in this indication. There are a couple of considerations one has to take here. As we previously mentioned that we the interim analysis alpha threshold is fairly high.
So we did not want to have a high alpha spend at the interim analysis. So we put that threshold rather high. And although quite possible, it's something to consider when thinking about the probability of success at the interim analysis. The second consideration is, of course, there are not too many precedents. Although
there are a
lot of precedents in schizophrenia and depression in terms of the relapse prevention trial and the rate of success at the interim analysis, which is fairly high. This is, to my knowledge, only a second relapse prevention trial in the area of dementia, psychotic psychosis or psychosis with agitation. Previous trial, DEVADA trial was with risperidone with psychosis and agitation. So from that perspective, we don't have a long historical record to assess probability of success. Having said all of that, I think it's reasonable to expect that there is a fair chance that this trial is going to end at that point.
And trial conduct in dropouts so far?
The trial is progressing very well. And as you know, one thing we can certainly see because the 1st 3 months is open label trial and we see quite a nice success in terms of the ability of pimavanserin to stabilize these patients and their ability then to meet criteria for randomization. So we are quite pleased with that with those results. And due to that, trial is progressing quite well in terms of the planned enrollment as well as randomization.
Got it. And my follow-up is on the DTC program. Are we going to get or are you guys tracking any metrics that will measure success of the DTC program?
Michael, you want to take that?
Yes. Thanks for the question. And I would just say that we're really pleased with the earlier early indicators we're seeing. And I think that is reflected in our guidance. We're hearing consistent reports that patients are requesting new plans by name and we're seeing a significant amount of increased traffic on our consumer and our physician websites.
So we are tracking a number of different early indicators. And of course, you're starting to see some reflection of that maybe perhaps in the new brand.
Got it. Thanks for taking the questions.
Thank you. Our next question is from Tazeen Ahmad with Bank of America Merrill Lynch. Your line is open.
Hi, good afternoon. Thanks for taking my questions. The first, Steve, if you can give us some color with regards to what, if any, impact you're seeing from last year's media articles? And I don't know if you could comment on what your sales force is hearing from physicians and whether or not you're seeing any questions coming in from insurance providers? And then I have a second question.
Yes. Thanks for the question, Tazeen. I think if we just go back to 2018 when we had some media articles, we said at the time that
we do
not anticipate any long term effect on the brand. We said that we're very confident in the safety profile of the drug and that we have the best information available to assess that. The FDA did a thorough evaluation, as I think everyone's aware, last year, and they concluded 3 things. 1, they saw no additional safety concerns. 2, they reminded patients, if you're taking the drug, you should keep taking it under the advice of your health care professional.
And 3, they reminded physicians that this is the only drug approved for the treatment of EDP. So as our what we thought in 2018 held through Zay, We continue to have high confidence in the growth of the brand. When we launched the drug, we said expect to see more of a linear progression. And that's what we've seen generally throughout the course of the drug. So we remain very highly confident in the longer term prospects of the drug.
And as we discussed on this call and on the last call, we're seeing some really encouraging indicators of new growth.
And I just want to address your question around payers and the sales force. We've not seen any change in our payer status. And at this juncture, the sales force, obviously, as I mentioned, is positioning the FDA reaffirmation of our safety profile, and that's being well received by the physicians in terms of confirming what they already suspected and already knew. So no change in the attitudes of the physician nor the guidance by payers.
Okay. Thanks, Michael. And maybe another one for you. As the launch is progressing, you've had some time to take a look at prescribing trends. And I guess based on what you know so far, are you making any changes to your targeted physician list?
Is it becoming longer? Is it becoming shorter? And do you have a preference on whether you'd like to see prescriptions from as many doctors as possible and they don't necessarily need to be multiple prescriptions? Or would you rather certain physicians be prescribing patient the drug to more of their patients?
Well, great question. First of all, I think we have seen quarter over quarter and we saw it in the Q4, significant growth in new time prescribers, first time prescribers. So we are still seeing additions to our breadth. But as a priority, we are now, I think, moving to a period where we want to get more depth. There's still a cohort of physicians we'd like to reach, but we're starting to get into a situation where many people have dabbled with the product and we're working deeper.
I think these guidelines we just talked about will help drive further confirmation
of the
use of NUPLAZID first line. That's where we are, is kind of moving more physicians deeper into our first line usage with NUPLAZID.
Okay. Thanks. Thank you. Our next question is from Charles Duncan from Cantor Fitzgerald. Your line is open.
Congrats
on a good year of progress. Quick question commercial and then one on R and D. With regard to guidance, 275 versus 300, could you give us a sense of kind of what the pressure points are around that or key determinants of that range? And then if you have any certain success goals that you'd like to share with us with the branded DTC, I'd love to hear them.
Charles, I think we heard the first question. Could you repeat the second question regarding DTC?
Yes. It was if you have any certain success goals with that, if you could outline those.
Sure. Got it. Okay. Eleni, do you want to take the first question?
So Charles, with regards to the guidance range, obviously, it's early in the year. So we account for a number of potential scenarios within our range. If you think about the range we've provided today, at the low end, it assumes mid teens annual year over year volume growth and at the high end, mid-twenty percent, as I mentioned previously, midpoint. We obviously incorporate a range of expectations with regards to growth, both in the specialty pharmacy channel and the long term care specialty distribution channel and as well as possible considerations with regard to price. I think you know, we took a price increase for the first time in the year at the end of December 2018.
Yes, Charles, just to follow-up on your question on DTC. So the first step that we do when we evaluate the campaign is can we execute the media target that we have, so we have a certain amount of reach and frequency and media weight. We are executing on that with our campaign. That move then to building the awareness with the target audience and then that's call to action. The first step to call to action is investigation and that's what I referred to with the significant traffic we've had intentionally on our websites and our digital properties.
Importantly, an important component of that is what we call high value actions. So more than just regular hits, but people who have downloaded videos, discussion guides, seeking their physician, etcetera. We then measure that in terms of action in the office. And from there, we convert that action into patient support. And we're hearing, as I mentioned, more physicians indicate that patients are asking for NUPLAZID by name.
So those are just some of the kind of goalposts along the way. But ultimately, our evaluation of this campaign and its success will be in its business to in its ability to arc the business in terms of paid starts.
Okay. Well, we'll look forward to seeing that over the course of the year. And then just a quick question for Serge. I'm wondering if you could share with us what you'd like to see out of schizophrenia inadequate response trial kind of the effect size that would be clinically meaningful? And then also just kind of share with us on the DRP study, why would you do an interim read?
What is really the practical implications of that?
Yes. Thanks, Charles. On the schizophrenia, if you look at the meta analysis of the effect sizes for all of the current antipsychotics that are all in monotherapy treatment paradigm, the effect sizes are anywhere from as low as 0.3 to majority of the effect sizes that we see are about 0.5 with a couple of notarable exception being Clozaril. So where we are where I would be in adjunctive paradigm, quite excited if we see that level of average effect size of around anywhere between 0.4, 0.5 would be quite exciting for us to see that effect size. Obviously, that depends on many elements, and there are other data that we will be looking in the overall results of the trial to determine the overall benefit because one of the benefits that we don't particularly discuss often is that in this combination, we may see some benefit on the safety and tolerability side in this combination, and that's something that we will be also looking when we look at
the overall results of the trial.
On the DRP side, we first of all, all of the randomized withdrawal trials because of its nature of the design where patients are stabilized on an active treatment and then that treatment is withdrawn for at least half of the patients in the design. There are some ethical considerations of and concerns not to prolong the implementation and execution of the trial if you already reached the evidence of efficacy. So from that perspective, interim analysis is sort of a mainstay in the design of the randomized withdrawal or relapse prevention trials. And second is the power of the trial is such that, as I mentioned earlier, at least in schizophrenia trial and in depression trial, this happened more often than not. So from that perspective, historically, it's also expectations that interim analysis makes whole lot of sense.
Okay. But there are no changes that could occur with the interim analysis such as numbers of patients involved or statistical analysis plan changes?
Absolutely not. What will occur is interim analysis will be performed, and that will be done by firewall group that will report to our data safety monitoring committee, and they will inform us whether the interim analysis yielded positive results, in which case, we will stop the trial and unblind analyze the data and before the data or if the criteria for stopping at the interim analysis for efficacy are not met, the trial is complete, continue without any changes.
So think as Serge mentioned earlier, the right way to think about the interim read is the study is going to empower for an interim read, of course, because
we're using a very, very small part
of the alpha there. If we hit that very high bar, right, the study is over. We'll move to a submission. The only reason we would stop the study is on a positive read for the interim read. If we don't stop the study at the interim read, that's fine.
We'll just continue executing the trial as planned. And the bar at the end of the study, of course, is much lower, and we're powered for that.
Okay. Very good. Thanks for the added color, Steve, and Serge and Michael
and Elle. Thanks.
Thank you. Our next question is from Selving Richter with Goldman Sachs. Your line is open. Please check your move button.
I'm sorry, this is Andrea on for Salveen. Thanks for taking our questions. Our first one is in light of your fiscal year 2019 guidance, which reflects about 28% year over year at the midpoint, can you help us think about drivers of growth? I know you've mentioned a couple. But on the forward, do you see this more as a reflection of true organic growth or a consequence of increase in pricing?
Yes. Michael, you want to take that question? Yes. We see this as a reflection of organic growth.
Can you speak a little bit
more about those core drivers then?
Yes, Of course, the ones that
I mentioned, we see great enthusiasm and greater ability to penetrate our long term care channel. And we're seeing great traction with that and we'll continue to drive on those levers. The other would be the extension of the 34 milligram launch, which is in itself a put up, obviously, but it's a way to refresh the efficacy and safety benefit message combined with the FDA reaffirmation statement and fueled by external resources now signing NUPLAZID as being a drug of choice in the category for PDP. So we'll be leveraging that. And of course, then that all is tied together with our large lever, which is closing the PDP awareness gap, of which DTC is one lever of it.
But we're doing a number of other things to reach consumers and patients to educate them around the symptoms. And so those are the core kind of drivers for creating organic growth in 2019.
Great. And then just as a follow-up to that, for your director to consumer campaign, I think previously you had mentioned that there was a skewed effect in the specialty channel that you were observing. Is this still the case? And how do you better target the long term care channel?
I didn't quite get the first part of your question.
So just in terms of the effect of your direct to consumer campaign, previously, you had mentioned that there was a greater effect observed for your specialty channel. So I was just wondering if that is something that is still the case and how you would go about targeting the long term care channel?
Right. Great question and good memory, yes. The first campaign that we had, which was the disease awareness campaign, our research indicated that we didn't really see much effect from the long term care channel. We're evaluating that now on the branded side, and there may be evidence that we could share later that it might be impacting the long term care channel, but a lot of data still has we have to still assess that. Our strategy for long term care is in terms of increasing penetration is mainly at the institutional education level.
These are systems of care, they're delivery networks, and we are largely integrating NUPLAZID into
treatment protocols
and it's a highly regulated environment. And so we're working within those regulations to increase the selection of DUPLAZID as a preferred agent in PDP for patients in long term care. So that's going to be more of an education, kind of system cell, and we're doing other things in regards to patient identifications in long term care. Maybe just
stated differently, one of the one very significant opportunity in PDP in the specialty pharmacy is the normal doctor office channel of the business is that there's this very large information gap between patients recognizing symptoms and having a discussion with their physician. There's less of a gap in the long term care channel. So that's why in the long term care channel, we have other mechanisms for continuing to educate the community on BUPALISSA.
Great. Thanks again.
Thank you. Our next question is from Danielle Brill with Piper Jaffray. Your line is open.
Hi, everyone. This is Niraj Shlai on for Danielle Brill. Apologies in advance if you have already covered this. I hopped on a little late. But I just wanted to get a little bit of information about the DTC campaign specifically, how long it will be running to and when the full on effects should be taking place?
Sure, Michael. Yes. Well, as I mentioned, we launched the campaign on Day, and our campaign is going to be running through the Q1. So that's kind of where we're going to stop and assess the program and the effects we believe we've given in a very large 4 month wait on the campaign and it's a significant investment.
Great. And just to echo Michael's thoughts. What we'll do when we complete the campaign that we're committed to funding now is we'll assess, of course, as we draw closer to the end of that, what the return on investment is from the campaign and that some of that assessment will roll past the end of the campaign. And then we'll determine what options we want to pursue going forward for the remainder of the year.
Got it. Okay, that's great. And the last question I had, and this is sort of for myself, just to remind myself is, when will the ENHANCE trial data be expected?
ENHANZE trial? Yes. Our schizophrenia inadequate response trial will report midyear.
Our next question is from Alan Carr with Needham and Company. Your line is open.
Hi, thanks for taking my questions. A couple of them.
One of them
around the pattern with new starts in your specialty pharmacy. You've had particularly strong first quarters for a little while here. I'm wondering if you can comment on that. And then also with respect to Europe, I think you've said in the past that you wanted to wait until you had more data on more indications or at least Phase 3 data on more indications. So at what point do you make a decision around Europe?
Is it after a second indication or a third one? Thanks.
Yes. Alan, I'll take the second one, then I'll ask Michael to respond to your first question. With respect to the second question, there's been no change in terms of our plans for filing outside of the U. S. We as we indicated earlier, we have frame shifted the filing, and the objective is to try to get data on more indications.
So as we said, as we get more and more data, we'll continue to reassess that. But at this point in time, we're continuing to frame shift our strategy outside of the U. S.
Yes. Thanks, Alan. In regards to the Q1, I don't think there's any, so to speak, magic with the Q1 versus other quarters, except to say that when we ran the last campaign a year ago and we ran this campaign, it is important for us to leverage that family gathering in the Q4. And so that tends to, I think, create more enthusiasm or more patient identification opportunities when we run our campaigns. So we've not run a campaign outside of the like late Q4 or into the Q1.
So I really can't comment on how that would affect other quarters in a comparison basis. But obviously, the Q1 is super important for this business in a chronic nature basis because the more patients we can acquire early in the year, the more impact it has to a positive benefit on our revenue.
I just add just a little bit of additional color there. I think last year, the Q1 of 2018, we have made a number of adjustments, which we spoke to previously in the second half of twenty seventeen. And I think those adjustments, we were not surprised with the Q1 we had in the Q1 of 2018 because of the adjustments we've made and the early indicators that we've seen leading into that. It's a little bit different situation as we're coming into the Q1 of 2019, but we're seeing some really encouraging early indicators of growth, but they're happening in a later they're frame a little bit from the indicators that we've seen last year.
Great. Thanks for taking my questions.
Thank you. Our next question is from Paul Matteis with Stifel. Your line is open.
Hey, this is Nate on for Paul. Thanks for taking our questions. Maybe first, can you you mentioned you took I think in December, you took a price increase for the first time this year. How are you thinking about approaching pricing as you start to move into some of these potentially much larger indications?
Michael, you want to take your question?
Yes. Well, obviously, we think there's great potential in the, let's say, largely indications like DRP or MDD and the benefit that NUPLAZID can provide these patients, given the clinical profile is substantial. And if you take MDD, we believe commercially that could be best in class adjunctive therapy for the reasons Serge already described. If you take DRB, there's no asset approved there. There's a significant unmet need for patients with psychosis that is not going to have dopaminergic cognitive impairing therapy.
So we believe that in both categories, significant unmet need. Conversely then, we're talking about payers and looking at situations where large patient populations and we believe in our early work that we've done with payers, given the clinical profile and our ability to use pricing mechanisms with the payers that we believe we can find that right price point for those different audiences that would be sequenced from PDP to DRP to MDD potentially. So we believe that we can work with the payers to get the right access points for those patient populations. It's important to note, on the MDD side that would be an expansion of our audience to a more commercialyounger population. And in that setting, we have more ability to negotiate in this context of not having a Medicare patient population.
So that's a different nuance.
Got you. That's helpful. And then maybe one more. Can you just elaborate a little bit on the end of the Phase 2 conversation with the FDA in terms of getting alignment on CLARITY as a pivotal? And then kind of specifically, I'm interested in how much discussion there was around its SPCD design and in particular the Stage 2 results?
Thanks. Well, going into the end of Phase II meeting, we already knew the position of the division in regard to how they consider the SPCD design and trials and what are the really important elements of the DEBT trial that they are particularly looking as an evidence of the efficacy of the drug. All of that came very clearly in the Alkermes Advisory Committee meeting. So we had a very good sense where their position is. And considering that our trial was positive overall as PCD design as well as very robustly positive stage 1, which FDA really consider as real evidence of efficacy for the drug in the context of SPCD design.
There was very little discussion actually about use of our trial, Phase II trial as one of the pivotal trial. I mean, that alignment existed almost before the meeting. So there was that wasn't a subject of any particular exchange.
Thanks.
Thank you. Our next question is from Roy Buchanan with JMP Securities. Your line is open.
Hi. I'm in for Jason Butler. Just hopefully one quick question. Just wanted to know how you guys are thinking about the regulatory path forward in negative symptoms of schizophrenia? Thanks.
Great. Serge, do you want to take that question?
Yes. Well, as we stated, there is nothing approved for negative symptoms schizophrenia at this point, particular and there is nothing in an adjunctive paradigm for that. We are obviously considering variety of options in terms of the regulatory path forward, but a lot of that will depend on actual data and results when we read out our Phase II trial. And based on the strength of that data, we will determine the exact path forward in terms of our regulatory approach.
Mr. Davis, please proceed to closing remarks.
Great. Thank you, operator, and thanks to each of you for joining us today. We look forward to updating you on our progress next quarter.
Thank you for your participation in today's conference call. This concludes the presentation and you may now disconnect. Good day.