Good morning, everyone. Welcome to day two of the 16th Annual Needham Healthcare Conference. Glad you could be here with us today. Next on our schedule is ACADIA Pharmaceuticals. I'm glad you guys could join us today. Presenting for the company, we've got CEO Steve Davis. I'll hand it over to you to give a review and update. Thanks.
Great. Thanks much, Alan, and thanks to each of you for coming out today to learn a little bit more about ACADIA. I think probably everyone in the room or listening in is familiar with the inherent risks and uncertainties that are associated with the development and commercialization of pharmaceuticals. Please see our SEC filings for the most recent description of how those risks relate to our business. At ACADIA, we're building a leading CNS company. The foundation for this is something we laid last year. In April, we received approval from the FDA for NUPLAZID as the first and only drug approved for Parkinson's disease psychosis. A month later, we launched the drug. In the fourth quarter, we initiated CNS studies in four major new indications, and we'll speak more about this a bit later in the presentation.
Also in the fourth quarter, we announced positive top-line results from a phase II study of pimavanserin, which is the generic name for NUPLAZID, by the way, for Alzheimer's disease psychosis. As I mentioned, we're focused on CNS conditions with large unmet need. Of course, the first indication that we're approved in is Parkinson's disease psychosis. NUPLAZID is administered as a monotherapy here. I'll go through each of these indications quickly at the front end, and then I'll go into greater detail as we work through the presentation. In Parkinson's disease psychosis, we have a situation where Parkinson's disease, of course, is a result of deterioration of the part of the brain that produces dopamine, and so Parkinson's patients are treated with dopaminergic therapy. That is, drugs that are either synthetic dopamine or mimic the action of dopamine.
All antipsychotics on the market today work through multiple mechanisms but work primarily by blocking dopamine. We have a situation where the drugs used to treat the motor symptoms of Parkinson's disease interfere with the drugs used to treat psychosis when Parkinson's disease patients develop psychosis and vice versa. NUPLAZID is a very different type of drug. I just want to pause here and emphasize this. We are a non-dopaminergic antipsychotic, so NUPLAZID or pimavanserin works entirely through blocking a serotonin receptor 5HT2A. We don't interfere with dopamine at all. That's not only important as it relates to Parkinson's disease psychosis, but through this very unique mechanism of action, we have a very favorable tolerability and safety profile that you don't see with drugs that work through dopamine. In addition to Parkinson's disease psychosis, we're pursuing Alzheimer's disease psychosis.
I mentioned in the fourth quarter, we announced positive results from a phase II Alzheimer's disease study. Like Parkinson's disease, Alzheimer's disease currently, at least before the approval of NUPLAZID in Parkinson's disease psychosis, there was no drug approved to treat Parkinson's disease psychosis and same thing holds true in Alzheimer's disease psychosis. There's no drug approved for the treatment of ADP today. There's also no drug approved today for the treatment of Alzheimer's disease agitation, which is the third indication that I'll mention that we're pursuing. Also very significant unmet need. I should note here that the agitation that we're referring to here is not the type of agitation that you might experience on your way to JFK at 5:00 today. It's a really very pervasive agitation that has a significant deleterious effect on quality of life.
The three indications noted on this side of the wheel here are all monotherapy indications. Again, in each of these, there's nothing approved or was nothing approved before the approval of NUPLAZID in PDP. On the right side of the wheel here, we're pursuing adjunct therapy in three additional indications. First up is schizophrenia, inadequate response. Schizophrenia patients, about a third of them respond to standard antipsychotic therapy. About a third have a response but don't have an adequate response. In other words, they still have meaningful symptoms. Then about a third of them just don't respond at all. There's a very significant need in schizophrenia in terms of those patients that don't adequately respond to standard therapy. I'll speak more to that a little bit later in the presentation.
In addition, in schizophrenia, there's been for a couple of decades, a strong push to develop drugs to treat the negative symptoms of schizophrenia. Usually when we think about schizophrenia, we think about the positive symptoms, the hallucinations, and delusions that these patients suffer from. The negative symptoms are more the social withdrawal aspects of the disease and in many respects, can be some of the most problematic and difficult to treat symptoms. Today there is no drug approved to treat negative symptoms, and we're pursuing NUPLAZID with this very unique mechanism of action, working through serotonin as opposed to dopamine, as adjunct therapy to see if we can boost the signal on negative symptoms. Also as adjunct therapy, we're pursuing a significant study in major depressive disorder.
Here too, even though the term antipsychotic is a little bit of a misnomer, because these drugs have been approved for more than just treating psychosis. The dopaminergic antipsychotics are approved to treat psychosis and schizophrenia. They're also approved to treat agitation in schizophrenia, many of them are. Then many of them are also approved as adjunct therapy in depression to treat those patients who don't adequately respond to serotonergic therapy or SSRIs. The issue with using these dopaminergic drugs in depression is, even though they're used at lower doses, they carry over a lot of the side effect baggage that you see, which limits the ability to dose these drugs higher with these patients. I'll speak more to this when I get to that part of the presentation.
The take home message here is that any one of these indications standing alone is a very significant unmet need, very large market opportunities. I am going to drill down just a little bit into PDP. As I mentioned, NUPLAZID is the first and only FDA-approved therapy proven to reduce the symptoms of hallucinations and delusions without impacting motor function, as I have already mentioned. It is also the first drug of its class to be approved by the FDA. It is the first SSIA or selective serotonin inverse agonist approved by the FDA for any indication. This represents a new treatment paradigm. Again, it is just very different than any other antipsychotic on the market. I have mentioned this already.
Not only do we avoid the issues that you have with, particularly in the case of PDP, of potentially interfering with the dopaminergic therapy, but we have a very favorable tolerability profile, which gives us the opportunity to pursue this in many of the indications that I have already mentioned. Parkinson's disease psychosis, just a little bit about the disease itself. There are approximately 1 million Parkinson's patients in the U.S. 40% of them, at any moment in time, suffer from Parkinson's disease psychosis. About 50%-60% of them will suffer from it at some point in the disease progression. PDP is characterized primarily by hallucinations and delusions. It is a chronic condition. It typically is progressive, worsens over time, and it is a leading cause of nursing home placement for Parkinson's patients.
Again, we have a situation where prior to the approval and launch of NUPLAZID, physicians had to compromise. They had to choose many times between aggressively treating the motor symptoms or when patients developed psychosis, aggressively treating the psychosis, and the frequent result is they would compromise on both fronts because of the interaction of these drugs. Just really quickly, a little bit about the clinical profile of NUPLAZID. In the pivotal phase III study that served as the basis for approval of NUPLAZID, we demonstrated about approximately a 37% improvement over placebo. I think most of you are familiar with CNS drugs and CNS studies. You almost always have a placebo response. We demonstrated a very, as you can see, the P value here, very highly statistically significant, clinically meaningful improvement over placebo.
Importantly, not only did we see a very strong improvement on the primary endpoint, but when we look at the response analysis of this drug and look at varying levels of improvement, we see a few things that are very noteworthy. By the way, this chart is one that we were successful in getting in the label, and this really serves as a very strong basis for talking points with the medical community to educate them about the benefits of NUPLAZID. A couple of points here. One is we see improvement at every level. Two, now of course, not every patient responds to therapy. That is true with just virtually all CNS drugs. Those that do, we see response at virtually every level.
It's important to point out that even a one-point improvement on the SAPS-PD scale can mean the difference between a patient having hallucinations or delusions daily versus weekly. Even getting a respite from daily hallucinations and delusions by the patient and frequently, as importantly, by their caregiver, which is typically their spouse, provides a very significant quality of life benefit to these patients. Of course, on the far end of the spectrum, we did see about 14% of patients with complete remission of all hallucinations and delusions, and we're very excited about that finding. While physicians in practice don't administer the SAPS-PD scale, they don't typically administer any scale in treating their patients. The anecdotal feedback, the market research that we have is strongly supportive of the findings that we saw in the clinic. In terms of our commercial focus, we are targeting approximately 12,000 neurologists and psychiatrists.
We announced earlier this year that we're in the process of expanding the sales force from 133 to approximately 155 reps. We've indicated that those reps will be deployed in the second quarter. That's imminent. On the payer side, we did exhaustive payer research before launching the drug and pricing the drug, and we're pleased to say that the payer response has been almost exactly what we predicted. We are on all Medicare formularies. Antipsychotics are a protected class, and so by virtue of that Medicare plans need to make formulary decisions within 90 days of the drug becoming available. We passed that very important hurdle. On the commercial side, those things typically lag a few quarters behind Medicare. We are now on about 60% of targeted commercial plans, and we expect that to continue to increase over the next quarter or so.
We've recently kicked off some very important prescriber and patient education campaigns, where because there was no drug approved for the treatment of PDP, it was very important for us to establish a baseline there and increase awareness. We began that process a couple of years before launching the drug in a very intense fashion, about a year before launch. I'm pleased to say that we've made very significant progress on that front. We have a very active KOL speaker program. Of course, we're present at all major medical meetings. The last bullet here is kind of an important one. We've recently initiated direct-to-patient programs where, particularly at the local level, we have a strong presence at Parkinson's disease functions.
It's enabling us to not only interface with the physician community where, of course, at the outset of our launch, we had a very strong focus, but also now with patients and caregivers. I'm going to move quickly through the pipeline of opportunities that we're pursuing in other indications. This is just a snapshot capturing where we are in development. As you can see, we're in late-stage development in each of these indications. Go into a little bit more detail now on Alzheimer's disease psychosis, which we're in the process of advancing into phase III. Alzheimer's disease affects approximately 5.4 million patients in the United States. About half of them are diagnosed. AD psychosis afflicts about 25%-50% of diagnosed patients. I should point out, in the case of ADP, it's also true with PDP, there's no diagnostic code.
We have to rely on literature to be able to estimate the size of the population here. As we move forward, we'll do more intense market research to try to further refine this. It's clear that it's a very significant population. More importantly, it's just a very important medical need. There's no drug approved by the FDA to treat AD psychosis, as I mentioned. I mentioned, in the case of PDP, the manner in which existing antipsychotics have the potential to interfere with the motor therapies, treating the primary symptom of the disease. We have a situation in Alzheimer's disease psychosis, and this also applies to Alzheimer's disease agitation, that's very similar. It's been demonstrated in a very large study that the administration of dopaminergic atypical antipsychotics in Alzheimer's patients that develop psychosis impairs cognition.
It makes the primary symptom of the disease, the cognitive deficits these patients suffer from, worse. It's not insignificant. It's equivalent to about one year of disease progression. We have, again, a situation where we have Alzheimer's disease patients suffering from a neurodegenerative disorder. They frequently develop psychosis as the disease progresses. When they do, today, we just don't have adequate therapies to treat that. Not only do they have the potential of worsening cognitive effects, but the dopaminergic drugs have significant safety and tolerability baggage as well. I mentioned that we reported in the fourth quarter top line positive results from our phase II exploratory study. This was a study evaluating 34 milligrams of pimavanserin, same dose that were approved in PDP, in 181 patients with AD psychosis. We observed a statistically significant reduction in psychosis on the primary endpoint.
Importantly, the antipsychotics usually are approved on the basis of about six weeks of therapy. In this case, we ran the study for 12 weeks because we wanted to also assess whether we would have any potential impact or any potential impairment on cognition. We felt like it was very unlikely that we would, but we wanted to demonstrate it in the clinic. We ran the study actually for 12 weeks. What we observed here, importantly, this is very different than what you would see with a dopaminergic antipsychotic or all the other antipsychotics available today, is we did not impair cognition as measured by the MMSE score over 12 weeks of treatment. Very excited about these findings. Should also note that pimavanserin was well-tolerated. Safety profile was very consistent with what's been observed in previous studies.
That's particularly noteworthy given the fact that the average age of the Alzheimer's patients that we studied in this study was more than a decade over the average age of patients that we studied in the Parkinson's disease pivotal study. Although the patients were more advanced in age and likely more frail, we saw a very favorable safety and tolerability profile, again, consistent with what we'd observed previously in PDP. Just in summary here on ADP, again, the SSIA, a mechanism, non-dopaminergic mechanism we think is very attractive. As I noted, we will be advancing this program into phase III in the second half of this year. We have an end of phase II meeting that will complete probably around the middle of the year and then be off and running into phase III.
Many of the things I said about Alzheimer's disease psychosis apply to Alzheimer's disease agitation. The epidemiology is about the same, at least in terms of number of Alzheimer's patients. In terms of the number of patients afflicted by AD agitation, it's very similar. Here, it's estimated to be between 40%-50% of diagnosed patients. If you recall, it was 25%-50% in ADP. Here too, no drug approved by the FDA for AD agitation. It is a chronic condition, precursor to nursing home patients, very diminished quality of life, et cetera. It's maybe one of the more problematic aspects of this disease, particularly from a caregiver perspective. The study that we're running is a substantial study. You'll see this theme play out in all of these studies. In the CNS space, you typically don't learn a lot by studying 20 or even 50 patients.
You really need to study a pretty sizable number of patients to get a good, clear signal. That's largely due to just the high placebo response you get and the fact that you're not measuring a biomarker, you're not measuring blood pressure, you're measuring things on kind of a subjective endpoint. As you'll see, these are all studies that are very substantial studies. They're meant to give us the maximal amount of information, optimal amount of information for the investment. This study will be in about 430 Alzheimer's disease patients. We'll be studying two doses of pimavanserin, 34 milligrams and 20 milligrams. Primary endpoint of this study at week 12 will be change in baseline on the CMAI scale. I'm going to flip now to schizophrenia. We are also studying pimavanserin in a very large schizophrenia study for patients that don't adequately respond to standard dopaminergic antipsychotic therapy.
Schizophrenia is a very debilitating lifelong disease that afflicts approximately 1% of the U.S. adult population. That statistic is also true globally. As I mentioned earlier, about a third of patients with schizophrenia have an inadequate response to antipsychotics. We have a situation today where all of the antipsychotics, other than NUPLAZID, are pretty much brothers, sisters, and cousins of each other. They work in a very similar fashion. For those patients that don't adequately respond to a single antipsychotic therapy, what we have is a polypharmacy situation where physicians with no other option frequently layer on top of one antipsychotic another antipsychotic that's very similar to the first one. We think with this very unique mechanism of action of pimavanserin that we can potentially improve the outcomes for these patients without layering on the side effects that you get with dopaminergic therapy.
Whether you get enhanced efficacy or not by layering on one drug that's very similar to the drug they're already taking is questionable. You're for sure getting additional side effects when you layer those drugs on. We think that there's a unique opportunity for pimavanserin to help these patients. The study we're running here too, very large study, 380 patients. We'll stabilize patients on existing antipsychotic therapy. Patients that on stable doses of antipsychotic therapy, but who still have significant and meaningful symptoms will be admitted into the study. It's a six-week study, again, they'll be on background therapy, their standard antipsychotic, and we'll dose pimavanserin on top of that.
Another important consideration here is, unlike some of the other indications we've talked about where there's nothing approved to treat those disorders, here of course, we have I think at last count 17 drugs approved to treat psychosis in schizophrenia patients in the U.S. We believe with this unique mechanism of action, by focusing on those patients that don't respond adequately to those therapies, we have an opportunity to not have to displace a lot of cheap generics in this arena, but focus on the patients that have the greatest unmet need and have the potential for successful here as adjunct therapy is being layered on top of whatever existing standard antipsychotic they're receiving.
In schizophrenia, I got into the biotech business 23 or 4 years ago, and the first thing I did was partner an antipsychotic program with a large pharmaceutical company designed to address the very inadequate job that existing antipsychotics have done. 24 years later, we've moved about an inch prior to the introduction of NUPLAZID. The most troublesome aspect then, the NIH when they declared the 1990s as the decade of the brain, noted that treating the negative symptoms of antipsychotics was the most significant unmet need. Nothing's changed in those intervening 20 years. Today, while existing antipsychotics can improve, at least for some patients, the positive symptoms, the hallucinations and delusions, none of those drugs are approved to treat the negative symptoms, the social withdrawal aspects of the disease. It's one of the most troubling aspects of schizophrenia. I mentioned demographics.
Schizophrenia affects approximately 1% of the adult population. Approximately 40%-50% of these patients suffer from prominent negative symptoms. Again, this is a flat affect, loss of interest, apathy, just social withdrawal. Still drug approved here. We think with our unique mechanism of action. Layered on top, again, of existing antipsychotics. We're not trying to displace cheap generics here, that we could have a very meaningful effect. The existing antipsychotics usually typically move the needle some on negative symptoms. They just don't move it enough to get approval for that indication. We think by layering our unique mechanism of action on top of those, we may be able to boost the signal sufficiently to get that approval. That would be a very, very meaningful step forward in the treatment of schizophrenia. Study we're doing here, also 380 patients, very similar design to the study I just mentioned.
Background therapy, standard antipsychotic. We'll layer pimavanserin on top of that, study the drug for about 6 weeks. Excuse me. Major depressive disorder is the last indication I'll cover, then I'll have just a couple of concluding remarks, and we'll go to Q&A. Very pervasive disorder. It afflicts approximately 16 million adults in the U.S. I don't think I need to explain what depression is or major depressive disorder is to this audience. Majority of patients do not respond to initial antidepressant therapy. Today we have a situation where for those patients who don't adequately respond to serotonergic therapy, which is the standard of care and gold standard in treating patients, at least as first-line therapy. For those patients who don't adequately respond, they frequently are prescribed a low dose of existing antipsychotics, and many of them are approved for this as adjunct therapy in this disorder.
As I mentioned earlier, the problem is they bring a lot of the side effect baggage. It's not uncommon to have up to about 20% of these patients, even at the low dose, that take these antipsychotics suffer from things such as akathisia. Akathisia is this feeling that you've got bugs under your skin. It's a very, very disconcerting side effect of these drugs. While it's rare, patients also can develop tardive dyskinesia, a motor dysfunction. It's also rare, but it can be permanent. This weighs heavily on the minds of doctors treating patients for depression, and they're very hesitant typically to try to push the dose. What we find in market research with these physicians is they feel like they could get better efficacy if they felt comfortable going higher on the dose.
This is the need that we'll seek to evaluate in the ongoing study that we have in depression. Again, adjunct therapy going on top of existing SSRI therapy or serotonergic therapy. What we'll be looking for here is to evaluate whether the unique profile of pimavanserin, with its very favorable safety and tolerability profile, allows us to achieve better outcomes both on side effects and perhaps on efficacy with these patients. We are headquartered in San Diego. We have approximately 400 employees. Cash position, we have a very strong balance sheet. Cash position at the end of the year was a little over half a billion dollars. As we think about 2017, there are a few key priorities I'd just like to highlight here. Of course, continuing the successful launch of NUPLAZID in the U.S. is job number one. That's our highest priority.
It's also very important that we advance into phase III Alzheimer's disease psychosis programs. I mentioned we're on schedule to do that. This is the year where we'll really make dramatic headway in advancing patients through these other four indications that we kicked off in the fourth quarter. That is our AD agitation, our schizophrenia inadequate response, negative symptoms of schizophrenia, and major depressive disorder. We'll have a very full year this year. It's a very important year. I would say 2016 was a foundational year in terms of getting the initial approval for NUPLAZID, getting it launched, getting a lot of these studies started. 2017 will be an extraordinarily pivotal year for us. We'll continue to advance in the commercialization of NUPLAZID and continue to advance the programs that you see here.
With that, I've concluded my prepared remarks. I think Alan's going to come up, and we'll open things up for a bit of Q&A.
Questions for Steve?
I'd like to know, I was taken by your comment on Parkinson's disease that about 14% showed complete remission. That's pretty remarkable. Are there follow-ups in terms of studies or anything else that would indicate why those patients responded so well?
Yeah, that's a great question. It's something that we have considered. We haven't done any genetic profiling of those patients, but I do think we're reaching a point where that kind of assessment, that kind of profiling, as we learn more and more, will be more and more useful in the CNS arena. It's a therapeutic area where we haven't seen as much headway in terms of genetic profiling of patients, and particularly as it relates to specific disease states or symptoms. I do think we're advancing more and more on that front. Part of the challenge you have in the CNS space is the brain has so much redundant wiring that most of these disorders are probably polygenetic and may involve multiple mechanisms. It's a little bit of a challenge, but it's certainly the kind of thing that we look forward to going forward.
I think the thing that again, we don't have physicians that'll typically administer a scale when they treat these kinds of patients or treat these symptoms. I would say that the anecdotal feedback we get from physicians through our field force, together with the market research we've done, has been strongly supported. We're definitely hearing physicians saying, "Wow, I've got a patient, this has just been life-changing." The complete remission of symptoms, or even if it's not complete remission, just we're getting so many stories about literally changing people's lives, and that's probably the most gratifying thing we do.
A casual observer might attempt to conclude from that perhaps those who have schizophrenic patients who do not in some further respond at all might be subject to an NSI claim.
It's a great observation. I didn't mention this in my remarks, what you see in the wheel there, where you have all these indications, is the result of about nine months, which we did last year. We started in the first quarter of last year. We spent about nine months really from soup to nuts, assessing where could we and should we go with this drug. When I say soup to nuts, everything from biochemistry through clinical durability, probability of success, projected payer reactions, et cetera. We settled on these six indications. I've said many times, this drug probably will not work in all six. If it does, we didn't try enough. Should have tried more. I think we've got a really good shot in these. There probably are some other indications that we didn't address here, where the drug may have utility.
I want to just be really careful. Of course, we're only approved in PDP today. That's the only thing we promote. From a lifecycle management perspective, there's a lot of great opportunities here, and that is absolutely one of them. The reason we settled on inadequate response as opposed to non-responders is the non-responders are probably the most challenging patients to treat. They're also, of course, where some of the greatest needs are. We felt like this was the right balance of probability of technical success, unmet need in the market, et cetera. You're absolutely right. It is very possible that this drug could help those patients as well.
You had a change in CCO from Terrence Moore to Michael Yang. You want to comment on that?
Thanks very much, Alan. In fact, I'm going to ask Michael Yang to stand for a second for those listening in. I know you can't see Michael. Terry Moore, who was our previous Chief Commercial Officer, came to me about two years ago, when I was taking over as CEO of the company, and said, "Look, my objective is to build the franchise, get this drug launched, and retire." Many of you met Terry. You may not realize that Terry's family actually lived in Tampa, Florida, and he was in our office in San Diego every day. You would not have known that his family was living somewhere else because that just illustrates how dedicated he was. Knowing that Terry would be wanting to retire, spend more time with his grandkids, et cetera, I began doing appropriate succession planning.
I went to Terry earlier this year and said, "Listen, I've got someone who I think is spectacular. I don't want to miss the opportunity." We agreed that Terry would retire, and Michael would join. Maybe I'll just ask Michael just to give a really quick snippet on his background. He can do it much better than me. Michael joins us from J&J.
Yeah. Hi, everybody. I spent my career at both Pfizer and Johnson & Johnson. Prior to this role that I'm in now, I was leading our U.S. immunology business at Janssen. It was an $8 billion portfolio of products in the biotech space. Prior to that, I was the U.S. lead for Janssen in the CNS space. I have a great personal dedication to this area in the past. I bring, I think, an experience also in the specialty pharmaceutical area, but also a deep experience in the neuroscience space. I'm anxious and looking forward to working with the executive team here at ACADIA to treat more patients and bring these indications to life.
One last one since we're running out of time.
Yeah.
Any comment on sales since your last quarterly call?
New patients every day, new doctors prescribing every day. I know some of you have heard me say this before. The thing that is probably most remarkable about this launch is how closely it's gone to plan. When you launch a drug, there's so many things. We literally had a 3,400-line Gantt chart preparing to launch the drug. With 3,400 action items, there's no way that everything's going to go exactly to plan. There were little logistical things that, of course, we encountered that we said, "Well, we need to course-correct this," and we did those very quickly. On the substantive elements, when you launch a drug, you study it in well-controlled clinical studies, and then you take it out into much broader populations. Sometimes the efficacy just doesn't replicate.
In our case, again, all the feedback we're getting is strongly supportive of what we saw in the clinic. Same thing on the side effect side of the equation. Suddenly you get into broader populations, you get more variability, and you see things you didn't see. The side effect profile and tolerability profile at this point in time looks exactly like it did in the clinic. On the payer side, as I mentioned, very similar reaction to what we projected. In terms of the fundamental things have gone extraordinarily well. We said from the beginning, this is a paradigm shift. Repetition of message is critical. Many times, physicians, you have to call them eight, 10, 12 times for it to sink in. We're in the process of doing that now.
I think we've laid a fantastic foundation and we do believe this is a drug that will have very attractive revenue growth year after year after year.