Cory Kasimov, one of the senior biotech analysts here at Evercore ISI, and it's my pleasure to host our next session with Acadia Pharmaceuticals. We have CEO Catherine Owen Adams, CFO Mark Schneyer, and Elizabeth Thompson, who heads up R&D, so thank you all for joining us today. Appreciate the time. Maybe to start, Katherine, why don't I hand it over to you for a quick overview of Acadia, and in addition, given that you just recently joined as CEO, I'd love to know more about what attracted you to this opportunity and kind of the primary initiatives you have as you start out.
Yeah, so thanks for the opportunity. So Acadia, a commercial stage biotech company based in San Diego with two commercial drugs: one Nuplazid for the treatment of hallucinations and delusions of Parkinson's disease, and the other Daybue, just launched 18 months ago for the treatment of Rett syndrome. We have around a $1 billion top line right now, and moving into next year, have aspirations to continue to grow that top line. We also have a pretty nice pipeline, which Liz leads. Liz joined Acadia a couple of months ahead of me. We have a product for Alzheimer's disease psychosis, ADP, and so that's ACP-204, and a product for Prader-Willi syndrome, ACP-101. And those are in phase two right now and heading into phase three. So we'll be sharing more about the timelines for both of those products at J.P. Morgan. And then financially, we're cash flow positive.
We have a pretty nice balance sheet right now at $600 million plus and a strong focus on managing that balance sheet for the short and long term, obviously investing in R&D, but also looking strongly at business development opportunities. We recently sold our PRV, as you would have seen, for $150 million, which has added nicely to the balance sheet, and then just signed a deal with Saniona for SAN711 for the potential treatment of essential tremor. What attracted me to Acadia, hopefully the above summarizes my attraction to Acadia. Having had 30 years in large pharma, both U.S. and global, I was looking for a slightly different opportunity, and a biotech company with this amount of commercial firepower, as well as a strong R&D pipeline and a strong balance sheet, was a rare opportunity and a highly attractive opportunity.
Two months in, I'm more excited than I was when I joined.
Perfect. That's good to hear. So I actually covered Acadia for a very long time in my prior life. What do you think is most underappreciated about the company by investors today?
You know, I think Mark might have an opinion as well, but I'll start with, I think the most underappreciated part of Acadia is the pipeline and where we can take the product, but also the potential for growth on Daybue. We're only 18 months into launch, and we have a strong future for the product, looking to launch it in Europe, filing in Q1 and launching in early 2026 and beyond that into Japan. There are a large number of patients who have Rett syndrome outside the US, and we're excited to globalize the product as well. So I think that's underappreciated, but I'll give Mark an opportunity to chat.
Thanks for that question. I just think if you look at the totality of what we have as the company, right, between a commercial portfolio that's, you know, at a $1 billion run rate, a pipeline, late to late stage assets, an early stage pipeline, you know, a cash balance of $600 million, not including the proceeds from the PRV, and a cash flow positive company. So I think you take that all together in totality, that you can pick your point of what you think may or may not be undervalued, but from my perspective, you know, that total package of value is underappreciated by the market. Okay, makes sense. All right, so let's start off and talk a little bit more about Daybue. You had a very strong initial launch. Your last call, you talked about reaching a steady state of new patient starts.
You know, kind of where's your confidence level in sort of continued growth of the brand and what strategies can you implement to kind of ensure that growth?
Yeah, so I think, you know, as you said, very strong out the gate, very strong community excitement around the approval of Daybue. And then sort of two quarters in, we saw the typical sort of steadying of new patients in the top of the funnel, which is pretty much the signature of all rare launches, right? You start, you penetrate the COEs and then you start moving out. You know, unfortunately, I think Daybue was compounded with the realization that the management of Daybue in the first few months is critical, and we needed to do more to help patients titrate on Daybue to the right dose, but also manage the GI side effects, which are real.
What we've learned in the last year is that if we focus on that and we help both physicians and families through that first crucial few months, that we can really ensure patients start and stay on therapy. What's exciting about Daybue is that it's not a light switch event. It continues to have efficacy and compound over time. So the improvements that families see in their loved ones at 12 weeks is different to what they see at a year, which is different to what they see at two years. And that is giving us a sort of a 12-month persistency rate above what we saw in the clinical trials and above most analogs of rare launches as well. We're above 50% at 12 months.
And so moving into next year, what we believe in terms of growth opportunity is with currently 30% penetrated in the Rett population in terms of patients that have tried Daybue. And obviously, there's 70% more that we can talk to and get excited about the opportunity. And so that gives us a reason to believe that there will be stronger growth next year because we need to tell the story a little bit more specifically around the efficacy that we're seeing over time. And we can tell that story now much better than we could even six months ago.
Okay. And then the impediments to adding new patients, is it just, as you alluded to, going beyond centers of excellence and into the community? It just takes more time to find the patients, to educate the physicians, things like that?
Yes. And what we're learning is it also takes more time for families to decide to start Daybue and work with their physician on when they're going to start it and how they're going to start it, which sounds like an obvious thing to say, but when you have a child that's neurodevelopmentally disabled, they're medically complex. These children have multiple comorbidities. And so what we're learning is we have to have multiple conversations with the physicians for them to choose the right patient and then for the family to be in the right position to start the product. And so it's just taking a little bit more time, Corey, than we thought in terms of that initial first script.
What we're finding is once a doctor has prescribed Daybue for the first time, that confidence level increases and they're much, much more willing to start it on a second and a third patient, but again, it's then finding those patients and getting them at the right stage of their decision making to start Daybue.
Okay. Okay, makes sense. And then so let's switch over to Nuplazid just in the interest of time. You know, you've seen an uptick here recent quarters. You've sound bullish on the brand. I feel like I've been following this brand for a very, very long time. You know, what's driving the recent performance and how sustainable is that?
So two things I would say to try and make it quick. Real-world evidence, which we have now, large populations of patients treated with Nuplazid and compared to those treated with off-label antipsychotics showing a hard mortality endpoint in favor of Nuplazid. We're now starting to get that data out there and show it at different forums, and doctors are starting to hear the message. The second thing is that through COVID, we did actually lose a lot of patients, as well as it was difficult to communicate with the market as effectively as it had been previously.
Now that we've started a DTC campaign again, both an unbranded awareness campaign led by Ryan Reynolds, who is sort of, you know, celebrity du jour and has had a real impact on raising the awareness of the symptoms of Parkinson's disease, psychosis, and hallucinations and delusions, but also then a backend DTC campaign. Those two things together are starting now to compound themselves, and we're seeing more patients coming into their doctor's offices aware of the signs and symptoms and asking to talk about Nuplazid.
Is the impact of this DTC campaign different than DTC campaigns the company has run in the past? And in the past, how sustainable are the kind of benefits you get from it?
Yes, it is different. You know, even I think the last campaign was 2019, roughly.
I think one later than that, but kind of into COVID.
Into COVID. In that time, I think our ability to find patients and target them efficiently and effectively through different media channels, not using mainstream national TV, but using Addressable TV, optimized TV streaming, is much more sophisticated than it even was two and three years ago. Being able to, on the backend, very quickly see what's working and change it on a weekly basis in terms of where we are approaching these people in cyberspace, how we're showing up, and how they are engaging with us, it's just much more efficient and effective than it used to be. And so the ROI on these campaigns is much better, and you can spend less dollars to get the same effect.
Okay. And the other thing that's just different from, because it was heavily kind of mainstream television, right, that pulsed over shorter periods of time. So with the media strategies now of being able to reach patients, the dollars not only are more targeted, they also last longer. So essentially, the campaign is going to run longer, which will make the effect of the campaign more durable. Interesting. Okay. And then lastly, on Nuplazid, I wanted to ask about the IP and kind of where things stand. Can you walk through the litigations that are out there with generic manufacturers? And I apologize in advance. One of the litigations going on actually right now on the formulation trial, so I'll kind of not comment on that in light of what's happening this week. But so I'll come back to that one.
There were two sets of litigation ongoing related to composition of matter for Nuplazid and the formulation that I just mentioned. Last year, we won decisively at the trial court level for the composition of matter. Since then, there's a similar case with, you know, MSN versus Allergan, and Allergan won an appeal over the summer. We believe there's read-through to our case from the results of that trial. Just gives us further confidence that will prevail. Our composition of matter will last through October 2030, inclusive of six months pediatric extension. Our hearing for the appeal has not been scheduled yet. We've been asked for timeframes between, you know, some time ago and February. If that happens, we'll find the results of that, you know, sometime in the first half of next year is our expectation.
Just to touch on very briefly without going into detail on the formulation patterns, that can get us extended exclusivity through February 2038. We'll let the trial run and then comment on it afterwards. Got it. Okay. All right, so let's transition over and speak about the pipeline. We'll start with ACP-101 and Prader-Willi. Can you, I guess, update us on the phase three enrollment progress? And given the prior trial had some mixed results and there was an inverse dose response, what's your overall level of confidence here?
So I'll say, generally speaking, the enrollment is going along well. We've been really pleased with the enthusiasm we're seeing with the investigator community. In terms of specifics of timing, we'll be talking early next year about specifics of when we could expect seeing results out of this trial. In terms of what gives us confidence here, I think there are a couple of pieces that are worth considering. The first of these is, I'll start with what ACP-101 is, which is it is an inhaled carbetocin that's a modified version of oxytocin that was modified to improve its PK properties as well as improve its specificity. There's a lot of different levels of evidence that suggest the involvement of oxytocin in Prader-Willi syndrome. So from a mechanistic and biological perspective, we think there's a good hypothesis here.
The prior phase 3 trial did have mixed results and inverse dose response. There are some plausible explanations for why the higher dose might have underperformed. Most likely of these is off-target effects that we're seeing at another receptor. At the end of it, though, we're going to need to run an additional trial, and we have that ongoing. We're looking at the lower dose, which did show signs of efficacy in the phase 3 trial. And I should note fairly consistent signs of efficacy across a number of different secondary endpoints in that original trial. So those pieces are what give us confidence, and we'll see how the trial works out.
Okay, great. And then can you talk a little bit about the landscape here for this disease and what you see as the ultimate market opportunity for the asset?
Yeah, so in the U.S., there are something like 8,000-10,000 patients living with Prader-Willi. And this is a complex disease. It's got a neurobehavioral component to it. And what it's, you know, one of its key symptoms is hyperphagia, which is this just unrelenting hunger. These patients will eat to the point of causing themselves physical harm. They have a high tendency towards obesity and cardiovascular impact and numerous other behavioral problems and challenges. So this is a patient population with significant unmet medical need. And I say that because I think it's exactly the kind of patient population where there is a high likelihood that multiple different agents are going to be necessary and appropriate. And so I don't see this as the kind of market where it's likely there's going to be a single drug that's going to solve everything for all patients.
In terms of the competitive marketplace, the furthest advanced is a company called Soleno. They have a drug that's currently under evaluation by the FDA, original PDUFA date at the end of December that just recently got moved out until March. We will see how that plays out. But again, I think the important thing here is that there really is a high likelihood that we're going to need multiple different agents to be able to address the needs of patients in this space.
Okay. And how's the market awareness, like in terms of from a physician and the patient community for the kind of new therapies potentially coming to market? How much education is going to be required?
So I think that on the spectrum of disease organizations, this is actually a fairly engaged and aware patient population. There are active advocacy organizations and physicians. Again, I noted that the investigators have been pretty enthused in the trial. So I think that, you know, any new area, there's always a certain degree of education and awareness that's necessary. But this does seem to be a patient population where there is good engagement and good awareness.
Okay, great. And then with regards to the Alzheimer's disease psychosis program, ADP, so I guess that's what, ACP-204. I believe you said you were going to be providing updates in January. Is there anything else you can say about the program now and maybe the learnings you had from the Nuplazid experience when it was being evaluated here?
Yeah, absolutely. So Nuplazid, you know, this is a good drug with a good profile, but there were a few things that we wanted to address in a second generation. So there's some molecule considerations and some study considerations, and I will try to keep it brief.
Oh, you're good.
On the molecule consideration side, you know, Nuplazid has an on-label QT prolongation. And while this is not a substantial QT prolongation, this is important in a patient population that is elderly and frail. And so that's important in and of itself, but it's also important because it limited our ability to dose range with Nuplazid. And why that matters is that in the work that we've done with Nuplazid and ADP, there is some suggestion of an exposure response analysis or exposure response relationship from an efficacy perspective. So there are suggestions that with higher exposures, we might be able to get higher efficacy. In the study we're running right now, the lower dose that we're looking at is roughly the equivalent of the currently marketed dose of Nuplazid. The higher dose is roughly twice that exposure.
It's going to give us the opportunity to see if we can get higher efficacy at a higher exposure. In addition, we've learned a lot on the study design perspective from historical experiences. I think key among these is the importance of having a dedicated study that's specifically looking at this patient population. This is an Alzheimer's disease psychosis study, and we're going a step further and confirming that with biomarkers. Our intent here is to feel very confident from a technical success perspective about the homogeneity of the population, but also from a regulatory perspective. We fully expect that by the time we would be bringing this data package to regulators, they would be looking for biomarker-confirmed Alzheimer's as a patient population.
Okay, terrific. All right, so in the last couple of minutes, I did want to ask about business development. You guys were just in the news recently, so a good place to start is the essential tremor acquisition you just made. I had Saniona, is that, am I saying that right?
Yep.
Can you tell us a little bit more about sort of the rationale behind it and why you're so excited about this asset?
Sure, I'll start and then I'll let Mark and Liz have a quick go, but you know, when we were looking at opportunities, we're looking at neuropsych as our sort of core competency and then rare disease outside. Within neuropsych, we're looking at areas of higher medical need where there's low competition and there's the opportunity to be the first in class or the best in class. Obviously the BD team have been looking at opportunities for a while since I, and it didn't magically happen since I came along, but it came along at a time where we had just really aligned behind our strategic rationale for the company in the future, and this fit squarely in the middle of that. For us, it fit the opportunity. The science is really interesting in terms of the alpha-3 subunit.
The upfronts were relatively low, and so all of those things came together with Saniona, and we're excited about the opportunity for the future.
Okay. And do you have an appetite for additional business development after this, or enough on your plate for right now?
Yeah, no, we have appetite for seeing even more. I mean, I think we've done a variety of deals over the past handful of years since I've joined the company. You know, we have the appetite and capacity to do a greater volume and greater amount. I think the general goal is to have a growing and sustainable company. So for a company like ours, you need to, you know, for us to get our hands on exciting, what we think are exciting commercial opportunities like Nuplazid and Daybue, most likely we'll have to invest in pipeline to get those input development dollars at risk to prove out kind of the commercial case that we'd like to market. Of course, if commercial assets came our way, we'd be very interested in evaluating them. It's just that's not something we're counting on.
And if you're going to do pipeline, there's attrition, so we just want to make sure we're making the right amount of investments so things will come out of the pipeline to continue to be able to sustain the company.
Okay, perfect. In our last 30 seconds, if you could just highlight what do you see as kind of the key sort of value inflecting potential catalysts on the horizon in 2025?
I think in 2025, you know, we're going to be growing Daybue, putting in place our plans to launch Daybue in Europe, and Liz will be sharing our timelines on our later stage assets, and I think those inflection points will come for a little bit after 2025, but we're excited to share that. Overall, I think right now we're in a place where we have a strong base and we're looking at several inflection points in the future should everything work out.
Terrific. Well, thank you guys very much for being here.
Thank you.
Thank you.
Thank you for having us.
It's hard.