Good day, ladies and gentlemen, and welcome to the ACADIA Pharmaceuticals second quarter 2018 financial results conference call. My name is Krista and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question and answer session towards the end of today's call. If at any time during the call you require assistance, please press star followed by zero and a coordinator will be happy to assist you. I would now like to turn the presentation over to Elena Ridloff, Senior Vice President of Investor Relations at Acadia. Please proceed.
Thank you, Krista. Good afternoon, and thank you for joining us on today's call to discuss Acadia's second quarter 2018 financial results. Joining me on the call today from Acadia are Steve Davis, our President and Chief Executive Officer, Todd Young, our Chief Financial Officer, Michael Yang, our Chief Commercial Officer, and Dr. Serge Stankovic, our Head of Research and Development. I would also like to point out that this quarter we are using supplemental slides which are available in the events and presentations section of our website. Unfortunately, we are having technical issues with the webcast. We apologize. We will have a webcast replay available at a later time. 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 include goals, expectations, plans, prospects, growth potential, timing 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 and may cause actual results to differ materially. These factors and other risks associated with our business can be found in our filings 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 President and Chief Executive Officer.
Thank you, Elena. Good afternoon, everyone, and thank you for joining us today. On today's call, I'll provide an overview of our performance in the second quarter, updates on NUPLAZID, and perspectives on the pipeline opportunities we see ahead. Following my remarks, Serge will discuss our pipeline progress, Michael will provide updates on our commercial initiatives, and Todd will review our second quarter financial results. We'll then open up the call for questions. Starting with our financial results, revenue for the second quarter was $57 million. Sequential revenue growth was 17%, and sequential volume growth in the quarter was 3%. When we spoke in May, we discussed our focused effort to address physician questions resulting from two April CNN articles.
At that time, I stated that while feedback from physicians indicated our messaging regarding the safety profile of NUPLAZID was well understood, things may be bumpy as we work through the impact of the articles. Ensuring the accuracy of information surrounding NUPLAZID and driving overall brand awareness has continued to be a key priority for us in the quarter. In the second quarter, we did see an impact to growth resulting from the CNN articles. To expand on this and put it into context, we entered 2018 with significant positive momentum. In the first quarter of the year, we saw significant increases in the daily rate of new patient starts while maintaining very stable refill rates. This positive momentum was the result of work we did in the second half of 2017 to optimize our sales operations and the Q4 2017 initiation of our DTC disease awareness campaign.
In the second quarter, following the CNN articles, we saw an impact on new patient starts. Importantly, over the last eight weeks, we have seen stabilization of this key demand metric. In addition, in Q2, we continued to grow the number of new prescribers and saw repeat prescribers add new patients, but at a lower rate than in the first quarter. We have not seen an impact on refill rates or discontinuations for patients on therapy longer than two months. In addition, in our long-term care channel, we are seeing early indications of a return to growth in long-term care bottle demand. Based on the prescribing data I just described and our market survey work, we are confident that most physicians appreciate and understand NUPLAZID's unique profile as the first and only treatment approved for Parkinson's disease psychosis.
We still have more work to do with Parkinson's disease community, namely patients and caregivers. We cannot let a lack of disease awareness or misinformation about the availability of an FDA-approved and effective treatment for PD psychosis hinder patients from seeking and getting the care they need to treat their symptoms. We are actively working to educate patients and their caregivers about NUPLAZID's benefit risk profile to help them make informed decisions. In addition, we are continuing and expanding our initiatives with healthcare professionals. Serge and Michael will discuss these in more detail. Based on our initiatives underway and planned, we remain confident in NUPLAZID's unique profile and its long-term opportunity in PDP.
Given reduced patient starts in Q2, we are guiding Q3 revenues to a range of $52 million-$59 million and are reducing our full year 2018 revenue guidance to $210 million-$225 million versus the prior range of $255 million-$270 million. Todd will discuss our guidance in greater detail. Last month, we announced FDA approval of a new 34-milligram capsule and a new 10-milligram tablet strength of NUPLAZID. We will be launching these next week. Following a transition period, 17-milligram tablets will no longer be available. While 34 milligrams has always been the only approved dose for NUPLAZID, the availability of 17-milligram tablets has resulted in a significant portion of our patients starting on 17 milligrams and then titrating over time to 34 milligrams. This can result in a diluted and significantly delayed effect of the drug upon initiation of therapy.
Our market research shows that physicians report significantly higher levels of satisfaction when patients are on 34 milligrams versus 17. The transition from 17-milligram tablets to a single 34-milligram capsule will facilitate patients getting the full benefit of NUPLAZID and getting that benefit as fast as possible. Turning to our pipeline. During the quarter, we continued to advance our four late-stage clinical programs. These programs target disorders where there is either no approved treatment or a strong need for new treatment options. We recently completed enrollment in our MDD or Major Depressive Disorder phase II CLARITY study and expect to announce top-line data in the fourth quarter. Also, on the development side, we are very pleased to announce an exclusive North American license agreement with Neuren for the development and commercialization of trofinetide, a potential treatment for Rett syndrome.
Rett syndrome is a debilitating neurological disorder that occurs in females following apparently normal development for the first six months of life. Today, there are no approved therapies to treat this devastating disease. This program is a perfect fit with our mission to develop novel therapies to improve the lives of patients with CNS disorders. We plan to initiate a phase III study for trofinetide in the second half of 2019. If positive, we project an NDA filing in 2021 and believe the peak U.S. sales potential for trofinetide in Rett syndrome could be in excess of $500 million. With that, I will now turn the call over to Serge.
Thank you, Steve. NUPLAZID, the only medication approved in the U.S. for treatment of hallucinations and delusions associated with Parkinson's disease psychosis, addresses an important and previously unmet need. NUPLAZID was approved based on the pivotal phase III study that demonstrated clinically robust and highly statistically significant efficacy, along with supportive data from other clinical studies. NUPLAZID provided the efficacy benefit without interfering with motor symptoms of Parkinson's disease. As we announced in late June, we received FDA approval of a new dosing formulation and strength for NUPLAZID to provide the approved daily dose in one small 34-milligram capsule and make available a 10-milligram tablet to provide patients with an optimized lower dose strength for those who are also receiving strong CYP3A4 inhibitors. There have been multiple recent presentations and publications highlighting pimavanserin's safety and efficacy.
Of note, in May, NUPLAZID was included in a presentation by the FDA Division of Psychiatry at the American Society of Clinical Psychopharmacology. In this presentation, entitled "The Benefit-Risk Determination for Treatments of Behavioral and Psychological Symptoms of Dementia," the FDA highlighted pimavanserin as an example of how they make benefit-risk decisions in areas of unmet medical need. In the presentation, the FDA also reiterated its previous statement about the safety and efficacy of NUPLAZID. This conference brings together more than 1,200 academic and industry investigators, research pharmacists, and clinicians. Turning to our clinical stage programs. We are advancing four late-stage development programs with pimavanserin, where there are either no approved treatments or there is a strong need for treatment options. I will now provide a brief update on each of these studies.
First, we have completed enrollment in our phase II CLARITY study in major depressive disorder and anticipate release of top-line results from the study in the fourth quarter. MDD is the leading cause of disability for ages 15 to 44. The majority of people who suffer from MDD do not respond to initial antidepressant therapy. Second, dementia-related psychosis, a serious medical condition for which there is no FDA-approved therapy. Studies suggest that 30% of patients with dementia have psychosis, commonly consisting of hallucinations and delusions. Related to this, last week, the International Psychogeriatric Association published the Delphi Consensus recommendations for the management of behavioral and psychological symptoms in people with Alzheimer's disease. The International Delphi Consensus process included an expert panel comprised of 11 members with clinical and research expertise in BPSD management. We were very pleased to note that the publication stated the following.
When considering emerging treatments for future management of psychosis, there was a clear consensus that of the pharmacological compounds currently in trials, the most promising first-line approach is pimavanserin." Our phase III HARMONY study in dementia-related psychosis has garnered significant interest among the investigators, which has led to a continued solid enrollment. We are very pleased with the progress of the study. Third, schizophrenia inadequate responder study. According to American Psychiatric Association, about 30% of patients with schizophrenia have inadequate response to antipsychotic medication, meaning that they exhibit improvement but continue to have residual hallucinations or delusions. Enrollment continues to progress well in this study, we expect top-line data in mid-2019. In addition, we recently met with the FDA regarding our proposal for a pediatric development program for adjunctive treatment of schizophrenia.
We had a successful meeting and look forward to completing the process with FDA in initiating our pediatric clinical program. Fourth, schizophrenia negative symptoms study. There is currently no drug approved for treatment of negative symptoms in schizophrenia. Studies show that about 40%-50% of schizophrenia patients suffer from prominent negative symptoms. Because currently available antipsychotics target positive symptoms, most patients remain functionally impaired due to negative symptoms, cognitive deficit, and limited social functioning. We expect to complete enrollment in the second half of 2019. In total, these four studies will enroll more than 1,000 patients in randomized, placebo-controlled clinical studies as we continue to evaluate the full clinical utility of NUPLAZID and further expand our robust safety database. Most of our studies are monitored by independent Data and Safety Monitoring Boards.
To date, no changes to our ongoing studies have been requested by the DSMBs on the basis of their safety reviews. We are also on track to complete our NUPLAZID post-marketing commitments. In summary, the clinical and post-marketing pharmacovigilance data today, including our most recent periodic safety report, remain consistent with the benefit-risk described in NUPLAZID's label. Lastly, we are very pleased to have recently added trofinetide to our development portfolio. trofinetide is a novel synthetic analog of the amino terminal tripeptide of the IGF-1, insulin-like growth factor. It is designed to reduce neuroinflammation and support synaptic function. In the central nervous system, IGF-1 is produced by both of the major types of brain cells, neurons and glia. IGF-1 in the brain is critical for both normal development and for response to injury and disease.
trofinetide has been granted U.S. FDA Fast Track status and Orphan Drug designation in the United States and Europe. Rett syndrome is a debilitating neurological disorder that occurs in females following apparently normal development for the first six months of life. Typically, between six to 18 months of age, patients experience a period of rapid decline with loss of purposeful hand use and spoken communication and inability to inadequately conduct activities of daily living. I'm sorry, independently. Sometimes also includes seizures, disorganized breathing patterns, scoliosis, and sleep disturbances. Rett syndrome occurs in approximately one in every 10,000 to 15,000 female births, and currently there are no approved medicines for the treatment of Rett syndrome. Acadia plans to initiate a phase III randomized, double-blind, placebo-controlled study evaluating trofinetide in females with Rett syndrome in the second half of 2019, following completion of additional manufacturing activities.
Thank you, Serge. This study will evaluate trofinetide and placebo in approximately 180 girls with Rett syndrome and will measure the Rett Syndrome Behaviour Questionnaire, a caregiver assessment, and the Clinical Global Impression of Improvement, a physician assessment, as co-primary efficacy endpoints. If positive, there is the potential to submit an NDA in 2021 based on this single phase III study. I will now turn the call to Michael to discuss our commercial performance.
Thank you, Serge. The field team is working hard to ensure that physicians understand the safety and efficacy data contained within NUPLAZID's label, and we will continue to focus on increasing education and awareness of PD psychosis with patients and caregivers in the community. As we've said before, Parkinson's disease psychosis is a serious condition. A recent survey conducted by the Parkinson & Movement Disorder Alliance showed that 90% of the respondents experienced non-movement symptoms, and 84% report that these symptoms had a negative impact on their quality of life, and almost half rated non-movement symptoms as more challenging to live with than movement symptoms. Last quarter, we discussed our actions to address physician questions resulting from an April CNN article. We immediately engaged with physicians and industry experts to communicate NUPLAZID's safety and efficacy profile.
Based on survey work and prescribing data, we're confident that most physicians appreciate and understand NUPLAZID's unique profile as the first and only treatment approved for Parkinson's disease psychosis. However, we still have more work to do with the Parkinson's disease community, namely patients and caregivers. We cannot let a lack of disease awareness or misinformation about the availability of an FDA-approved and effective treatment for PD psychosis hinder patients from seeking and getting the care they need to treat their symptoms. We are executing on multiple initiatives, which I'll discuss in detail shortly. This quarter, we are providing several metrics on a temporary basis to share current business trends.
As you can see on slide 17, in the specialty pharmacy channel, which represents two-thirds of our revenue, the top of the slide shows a graph which Steve mentioned is our most important driver of growth, which is new patient starts. In the fourth quarter of last year, we optimized our commercial strategy and initiated an unbranded disease awareness campaign, and throughout the first quarter of 2018, we saw a significant momentum in new patient starts and prescriber growth driven by these initiatives we started late last year. However, following articles by CNN in mid and late April, we saw a decrease in patient starts as some patients expressed hesitation about initiating NUPLAZID treatment. Importantly, over the last eight weeks, as you can see from the bottom left of the slide, new patient acquisition has stabilized.
In addition, as you can see from the bottom right, our refills have remained stable. Turning to the long-term care business on slide 18, you can see that we've had relatively consistent growth in both bottle demand and the number of pharmacies ordering NUPLAZID through the first quarter of 2018. In the second quarter, this growth did slow. We believe this was partially a result of a few medical directors acting in an administrative capacity, making institutional decisions to take patients off of NUPLAZID. We have followed up with these institutions, and through education, we are seeing early indications of a return to growth in bottle demand and long-term care. As I mentioned earlier, we believe most physicians appreciate and understand NUPLAZID's safety and efficacy profile. However, we need to do more to increase our communication channels directly to patients and caregivers.
These efforts will complement our continued engagement with healthcare providers. We are actively working on this front and have several initiatives already launched and more underway. For example, as you can see on slide 19, we are increasing resources and access to information directly to patients and caregivers. We are doing this through our branded and unbranded websites and posting caregiver and patient stories highlighting real-life experiences with PD psychosis and NUPLAZID. We are continuing our engagement with physicians through physician training and numerous independent publications and presentations highlighting NUPLAZID's safety and efficacy profile. As I mentioned before, the slowdown we saw in new patient starts has stabilized over the last eight weeks. We believe these initiatives we are deploying will recatalyze growth in PDP. Near term, we are looking forward to the launch of the 34 milligram capsule next week.
Our plan is to execute through a transition period with availability of both 17 milligram tablets and 34 milligram capsules in order to support physicians and patients to start on the 34 milligram capsule. While the approved NUPLAZID dose is 34 milligrams, today's presentation of a 17 milligram tablet allows physicians to dose titrate at initiation of treatment. This is not optimal for patients. Our market research shows that currently a significant portion of patients are titrated from 17 to 34 milligrams. We believe starting patients initially on the approved dose of NUPLAZID in a single 34 milligram capsule is important for patients. NUPLAZID is well-positioned to be the standard of care for PD psychosis patients based on its unique profile.
Given our current growth in prescribers and new patient starts, the 34-milligram launch, and the multiple initiatives we have underway, we are confident in the long-term opportunity in PD psychosis. I will now turn it over to Todd to discuss our financial performance.
Thank you, Michael. Today, I will discuss our Q2 results and our financial outlook. Our first half financial results are available in the press release we issued this afternoon. In the second quarter of 2018, we recorded $57.1 million in net sales, an increase of $26.6 million, or 87% growth compared to the $30.5 million of net sales in the second quarter of 2017. Compared to Q1 of this year, Q2 net sales grew $8.2 million or approximately 17%. Our gross-to-net discount rate for Q2 was approximately 13% compared to approximately 24% in Q1. This quarterly decrease in the discount rate was anticipated as the Medicare Part D donut hole obligation for our established patient base is mostly incurred in the first quarter of the year. Our inventory in the channel at the end of Q2 was unchanged from Q1.
Moving down the P&L, total operating expenses, including cost of goods sold, were $121.1 million for the second quarter of 2018 compared to $98.5 million for the same period in 2017. These amounts include $20.6 million and $18.2 million of non-cash stock-based compensation expense, respectively. R&D expenses increased to $46.6 million in the second quarter of 2018 from $34.2 million in Q2 of 2017. This change was driven by increasing enrollments across all of our clinical studies. We also made additional R&D investments to bring the 34-milligram capsule and 10-milligram tablet to market. SG&A expenses increased to $69.5 million in Q2 2018 from $61.1 million in the second quarter of last year. This increase was primarily related to our direct-to-consumer disease awareness campaign.
Turning to revenue guidance, we expect NUPLAZID net sales for the third quarter to be $52 million-$59 million, with a gross-to-net discount of approximately 13%. For the full year, we are reducing our 2018 revenue guidance to $210 million-$225 million versus the prior range of $255 million-$270 million. This reduction results from the softness we saw in new patients starting on NUPLAZID during Q2, which impacts revenue for the remainder of the year. As Michael discussed, new patient starts have stabilized over the last eight weeks, and we are deploying numerous initiatives to catalyze growth. On the expense side for Q3, we expect R&D expenses to be in the mid-$50 million range, which includes the $10 million upfront licensing fee for trofinetide and the initial R&D investments associated with its development. SG&A expenses for Q3 are expected to be approximately $70 million.
Turning to cash, our net operating cash burn for Q2 was approximately $41 million compared to approximately $59 million for the second quarter of 2017. We ended the second quarter of 2018 with $257 million in cash and investments on our balance sheet. We anticipate that our cash balance at the end of this year will be between $155 million and $170 million. With that, I'll turn the call back over to Steve.
Thank you, Todd. We made important progress during the quarter despite the near-term challenges. We remain steadfast in our commitment to the safe and effective use of NUPLAZID and delivering on our key priorities by increasing accessibility of important information about NUPLAZID to the Parkinson's disease community, particularly patients and caregivers, by executing on the 34-milligram capsule launch, by driving overall brand awareness and growth in new patient starts to deliver on the long-term opportunity for NUPLAZID in PDP, by advancing our late-stage clinical program in areas that have significant unmet need, including major depressive disorder, dementia-related psychosis, schizophrenia, and now Rett syndrome. As always, we appreciate the dedication and hard work of all of our employees who are committed to improving the lives of patients and caregivers with CNS disorders. Operator, I'll now open up the call for questions.
Ladies and gentlemen, if you wish to ask a question, please press star followed by the number 1 on your touch-tone phone. If your question has been answered or you wish to withdraw your question, press the pound key. Please limit yourself to two questions. Press star 1 to begin. Please stand by for your first question. Your first question comes from the line of Cory Kasimov from J.P. Morgan. Please go ahead. Your line is open.
Hey, good afternoon, guys. Thank you for taking my questions. I guess the first one for you is with regards to the 2018 guidance. Does this updated guidance assume any price increases? Along those lines, given that the revised guidance for the second half is basically flat to up maybe as much as, I think it's 12% over the first half, how do investors get comfortable with the growth outlook in 2019 and beyond for PDP? Then I have one follow-up.
Great. Thanks, Cory. I'm going to take the first question and ask Michael to take the second. In terms of price increase, the guidance for the remainder of the year does not assume a price increase. We had assumed a price increase consistent with standard pharmaceutical practices in the earlier guidance we gave this year, but the current guidance does not include an increase. Michael, you want to take the second question?
Hey, Cory. Our expectations for the opportunity in PDP hasn't really changed. As you know, PDP is a very serious disease, and we're a relatively under-penetrated opportunity right now. As we stabilize throughout the balance of this year, we'll begin to kind of formulate what we think 2019 can arc to. With the various market dynamics, it's a little too early to call that right now.
Okay. The follow-up is probably for Serge. You commented on the ongoing trials you have with pimavanserin, but I'm curious on whether or not there's been an impact on the pace of enrollment in the ongoing studies, especially the DRP on the heels of these CNN articles. Have they noticeably slowed at all?
Hi, Cory. Thanks for the question. The answer is no. We actually are doing quite well and within or above expectations and plans for our DRP recruitment, and we did not expect any slowdown in any of the studies as it relates to the CNN article.
Okay. Thanks for taking the questions. I'll hop back in queue.
Your next question comes from the line of Tazeen Ahmad from Bank of America. Please go ahead. Your line is open.
Hi. Good afternoon, guys. Thanks for taking my questions. A couple from me. Steve, you talked about the reluctance of some new patients to want to start therapy. At what point did you see that? Was that immediately following the CNN articles, or was there a delayed effect? I don't know if you have any way of tracking this, but you've talked about it stabilizing now, but in terms of did you notice a rise and then a peak and then a drop off, or is it more of a stabilization now? I guess, how are you comfortable that the guidance you have provided today is the right number?
Thanks, Tazeen. Let me just first directly answer the first part of your question. The hesitation that we've seen with patients and caregivers has arisen more recently. If you recall, the CNN articles were in the middle and end of April. As of our earnings call on May 8th, we stated that while it's early and things may be bumpy in the near term as we work through this, we haven't seen a meaningful impact on the business that at that point in time would lead us to change our full year 2018 guidance. At that time, feedback we had from the medical community indicated that our messaging on safety was well understood, and that continues to be the case. Since the May 8th earnings call, what has surfaced is concern among patients and caregivers resulting from the CNN article.
As we mentioned, this has resulted in some patients expressing hesitation to start therapy or not following through on therapy to initiate their prescriptions. As we discussed, we're currently very focused on increasing the level of accurate information in the patient and caregiver community. As we indicated, we've seen very consistent stabilization in key demand metrics over the last eight weeks, and we believe the initiatives we have underway and those planned will catalyze future growth.
Okay, how are you deriving the current guidance? Does it assume that the patient starts are stable, or are you baking in potentially more deceleration of the patient starts?
No, I think the guidance that we've given assumes a continued stabilization, not a further degradation. As we advance on the initiatives that we have, as I mentioned, we're confident in our ability to catalyze new growth. Part of the confidence lies in what we saw and what we did in the first quarter of this year. If you recall, we took several initiatives in the second half of last year, including the addition of DTC disease awareness campaign in the fourth quarter, and those things resulted in a very significant uptick in patient starts and in revenues in the first quarter. As we now have dropped down to a lower base, we have a whole battery of exercises and initiatives that we're going through to grow from this base.
Okay. Thanks for that color, Steve. I wanted to follow up on the comments about the titration that's being done with the 17 mg doses and understanding that the efficacy is much better with the 34 single pill or taking the full 34 mg doses. Is there any concern that some physicians might just prefer titrating? We do see this in other indications for other companies that we follow, that certain drugs are preferred because you can titrate. Is there any risk that physicians that are choosing to treat patients in that way might be less motivated to put new patients on when that 17 mg is not available any longer?
As you might expect, Michael and his group have done an awful lot of research around that very topic. I'll let him answer the question.
Yeah, thanks. We've been doing a lot of market research and preparing for this event for quite some time. We've had a very intense focus and identification of physicians in a kind of a pre-assessment phase to understand what physicians' attitudes are and where they stand along that spectrum. I think we're very prepared to address those concerns, and we feel very confident that for the most part, we will be able to convert physicians over the course of time to this new treatment paradigm of treating with the 5-HT2A. Things could get a little choppy with the channel, but we are working through that, I think very well with our partners. On the physician side, I think we'll have them converted pretty quickly.
Okay. Thanks very much.
Your next question comes from the line of Ritu Baral from Cowen. Please go ahead. Your line is open.
Good afternoon, everyone. Thanks for taking the question. Steve and Michael, what do you guys see as far as the split between new prescribers and new prescriptions from repeat prescribers? You talked about new patient starts, but are you seeing a differential in a willingness to prescribe between those two populations? Has one group been more successful than the other?
Michael's going to take a shot.
Sure. I think that's a great question, and we've actually seen pretty robust action by both
Repeat users, so that would be folks who have written prescriptions in the past and continue to write for new patients. That continues to show strength, as well as bringing on new prescribers. Perhaps the thing that we've seen the most impactful over the last eight weeks or 16 weeks has been the numbers of those prescriptions has not been as high as it was in the first quarter. We're trying to turn that back up with the initiatives I described and the launch. We're very pleased with the consistency of enthusiasm from our customer base. That has not shown any kind of erosion.
Got it. What else can you tell us as far as slide 17, you show the four weeks ending August 3rd, and there's a potential slight uptick there. What other metrics can you give us that would give us confidence that that little tick-up is real and not any sort of variability, I guess?
Well, I would just call attention to maybe the 16-week trends there. They're all within a pretty tight range, we're looking at calling that as kind of like the base, and we're looking to grow from there. I think it's important to note on the right, as you see, those patients in green eventually take bottles, and they translate to those graphs on the right. Those take rates from patients that we get into the funnel, they stay very consistent, whether they're a new patient acquired during the quarter or a patient that is coming in on a repeat basis. Really the key for us for future growth is to keep the new patient starts as high as possible, and that's our number one of our highest focused items as we move to try and to impact our growth.
Got it. My last question. I guess I'm surprised that your SG&A guidance for next quarter is in line with Q2, given the new initiatives that you outlined. How should we think about that? I mean, what's the extent of the new initiatives if your SG&A is not going up?
Thanks Ritu. It's Todd. Yeah, we continue to allocate SG&A to where we think we have the biggest opportunity to change the prescribing dynamics. Each quarter, while the spending may not change a lot, where that money goes and what the focus is can change. Michael and his team are very focused on getting the new patient starts going. While the dollars are similar, the initiatives are the ones he outlined earlier today.
Got it. I'll hop back in the queue. Thanks.
Your next question comes from the line of Salveen Richter from Goldman Sachs. Please go ahead. Your line is open.
Yes, hi. Thanks for taking my questions. Marianna Bertman for Salveen. I have a couple. One of them, I wanted to ask about the MDD, the major depressive disorder study design and whether you guys looked at the historical outcomes of antipsychotics and how do you think and what it will do in this study. Another one was on Rett study design. I was wondering what is the age of the girls that you're planning to treat, and also how you're thinking about dosing.
Great. Serge is going to answer both questions.
Hey. Hi, Salveen. To the first on MDD, I didn't really quite clearly hear your question. I think what I've heard is that you were asking about how we anticipate pimavanserin will do in relation to other antipsychotics that are used adjunctively.
Yes.
Yeah. Well, first of all, let me just pull back and say that there is quite a bit of literature and evidence out there that 5-HT2A antagonism acts synergistically with SSRIs and SNRIs. The pimavanserin tolerability and safety profile is quite distinguished from the antipsychotics that are currently used adjunctively in the MDD. We anticipate that in our phase II trial, we will see that demonstrated with the safety and tolerability data. We do anticipate those advantages while actually seeing the efficacy that we anticipate we'll see in the phase II trial. Related to your second question on the phase III, we are currently obviously finalizing phase III design, having discussions with our colleagues and Neuren. This trial will be focused on the pediatric population of Rett syndrome. What other age, we are still determining that.
I wouldn't, at this point, try to be precise in that respect.
Got it. Thank you.
Your next question comes from the line of Alan Carr from Needham & Company. Please go ahead. Your line is open.
Hi, thanks for taking my questions. A quick easy one. I am not sure if I missed this or not, but gross-to-net, what was it for this quarter? Also, maybe you can comment a bit more about your thoughts with the ongoing FDA review around safety profile. Also, what % of patients do you think are using 17 mgs upfront initially? Thanks.
Alan, the gross-to-net the quarter was approximately 13%. Serge is going to address the question on the FDA review.
Yeah. Alan, your second question was regarding the evaluation that FDA is doing.
Yes.
Is that correct?
Yeah.
Oh, yeah. Certainly. First, let me just say that we have already and will continue to respond to all of the requests we received from the agency as part of their ongoing PSI evaluation. As a matter of policy, we don't comment on the ongoing interaction as they happen. I will remind you that the FDA has stated that evaluation does not mean that they have determined that there was a new safety risk. In fact, the FDA has stated that based on the data to date, it has not identified a specific safety issue that is not already adequately described in the product label. As I mentioned earlier, based on the totality of available information we have, we are confident in NUPLAZID efficacy and safety profile, which remains unchanged and is appropriately described in the product labeling.
In terms of duration of this evaluation, as you know, there is no statutory requirement for this, and sometimes these evaluations take eight months or longer. That's the most we can say about it.
Alan, I think you had one last question regarding the proportion of patients that start on 17 milligrams. It's a majority of patients, according to our data, that start on 17. Now, a majority of those patients who start on 17, it's a high majority, do titrate up to 34. As we mentioned, the disadvantage of starting on 17 is patients are getting a diluted and significantly delayed effect of the drug. We think the 34 milligram single capsule will be an important development in the brand.
How long are they staying on 17 when they titrate?
It varies a lot. We haven't got into specific numbers there, but it varies a lot. They do usually titrate up within a matter of weeks or a few months up to 34 milligrams. There is a small part that has stayed on 17. The high majority of those who start on 17 titrate up. Again, the important point is that they're just not getting the full effect of the drug, and by moving to the 34 milligram capsule, they'll be able to see the full benefit of the drug and see that a lot faster.
All right. Thanks for taking my questions.
Your next question comes from the line of Jason Butler from JMP Securities. Please go ahead. Your line is open.
Hi. Thanks for taking the question. Just wondering if you have even any anecdotal feedback from the field in terms of the types of patients that are being started on drug still or not being started on drug anymore. For example, are physicians starting to select patients or exclude patients on the basis of age or severity of disease? Also, are you seeing any characteristics of the profile of the physicians that are continuing to write or slowing down their prescription habits, again, in terms of specialty or type of institutional practice that they're in?
Well, I would just say thank you for the question. Just to remind you, we do have a segment of our business that is long-term care. In that segment, most of those patients exclusively are older in general and have more comorbidities, and we continue to see enthusiastic prescribing in that channel. In our office space, our specialty pharmacy business, I would say there's no specific breakdowns of the type of patients. We see them across the whole spectrum. I don't see anything really that would be of any kind of pattern. Obviously, the patient who has more to kind of live in Parkinson's, the earlier patient in terms of symptomology, benefits more from the relief of these symptoms for their life.
That's probably what we're angling most for is the patient that has a lot to still live for and has early insights that they have PDP.
Jason, one other point that's probably important that helps give the appropriate context is with repeat prescribers, what we're not seeing is a lot of repeat prescribers abandoning the brand and stop writing the drug. What we have seen is a reduction in the number of new patient starts that those repeat prescribers. They're still prescribing the drug, and they're still starting new patients, but it's at a lower rate. Again, that is consistent with the other data we have indicating that the area we really need to focus on right now is patients and caregivers. That's where we have a lot of effort that we're undertaking now. Okay, great. Thanks for taking the question.
Your next question comes from the line of Paul Matteis from Stifel. Please go ahead. Your line is open.
Hey, thanks so much. This is Benjamin Burnett on for Paul Matteis. First question, you gave a lot of color on persistence in long-term care centers. I just wanted to ask about community and academic centers. Have you seen an impact here relating to the CNN articles?
We really haven't seen an impact, I think, by type of institution or specialty of physician. There hasn't been anything delineated there.
I guess just a question about the pipeline for your depression program. I guess I was just wondering if you could provide your thoughts on the path forward for pimavanserin in depression, assuming positive Phase II data. Do you expect that you'll need two Phase III studies?
Yes. In terms of the CLARITY study, in anticipation of CLARITY top-line results fourth quarter this year, we are preparing multiple developmental scenarios and strategies. Of course, the ultimate decision regarding MDD development will be made after we evaluate findings from the phase II study and determine the best development strategy to move forward. As I said, we have developed different strategies and scenarios, but we will be able to speak to these in more detail once we have the top-line results and evaluate the results.
Okay, thanks very much.
Your next question comes from the line of Danielle Brill from Piper Jaffray. Please go ahead.
Thanks for the questions. Just expanding on the impact of the prescription uptake. Were there specific regions where you noticed uptake was impacted the most, or was it pretty evenly dispersed?
As you can imagine, we've sliced and diced all various metrics here. We don't see any particular pattern specific to that question.
Okay, great. On trofinetide, what's the IP status there?
The IP status on trofinetide is, first of all, they have Orphan Drug designation on the drug. Secondly, in terms of patent exclusivity, we expect the patent exclusivity to run through 2032 or beyond. While I'm on that topic, let me just also confirm something we said earlier. Our anticipation is that we'll start the phase III study in the second half of 2019. If that study is successful, we believe we could be in a position to file in 2021.
Great. Thanks so much for the question.
The final question today comes from the line of Ritu Baral from Cowen. Please go ahead.
Hi, guys. Thanks for taking the follow-up. Also on trofinetide, can you talk a little bit about what the FDA interactions have been? It sounds like there have been some because you've got those co-primary endpoints. Are you thinking about dose ranging? What phase II work has been done to give you guys confidence on the dose?
Yeah. Thanks, Ritu. Yes. Following successful phase II study in children five to 15 years old, where actually, Neuren evaluated three different doses in terms of total safety and tolerability as well as efficacy, and established a positive efficacy at a high dose. They had an interaction with FDA end of phase II meeting where the phase III program was discussed, and that is what we are building upon, that discussion and in our next phase III program. The dose ranging is already done. The phase III study that we're planning to do will be just a randomized, double-blind, placebo-controlled study and will evaluate one dose of trofinetide and placebo in approximately 180 girls with Rett syndrome. As you mentioned, the co-primary efficacy measure will be a Rett Syndrome Behaviour Questionnaire and CGI-I.
Why the extra work on manufacturing? Is it a hard peptide to make, or is the oral formulation difficult?
We don't see challenges with the ability to make it, we do need to scale up the process for phase III supplies.
Got it. Thanks for taking the follow-up.
Mr. Davis, please proceed to closing remarks.
Great. Thanks to all of you for participating in our second quarter 2018 earnings call. Our mission is to offer effective treatments to address serious medical conditions. We care deeply about the well-being of those individuals who use our medication. NUPLAZID is well-positioned to be the standard of care for PD psychosis patients based on its unique profile. We are enthusiastic about advancing our late-stage clinical pipeline. Again, thank you for joining today's call.
Thank you for your participation in today's conference call. This concludes the presentation. You may now disconnect. Good day.