Hi, everyone. Thanks for joining us today for the ACADIA Pharmaceuticals presentation. I'm covering analyst Ritu Baral of Cowen. We're going to start with a few slides today presented by CEO Steve Davis, followed by a fireside chat discussion with the whole team, actually. Once we finish the slides, I'll intro those folks in the room to the participants in the chat. In the meantime, let me turn over to CEO Steve Davis.
Great. Thank you, Ritu, and thanks to each of you for coming out today to learn a little bit more about ACADIA. I think everyone in the room is familiar with the fact that the business of pharmaceuticals has certain inherent risks. Please see our latest SEC filings for a description of those risks as they relate to our business. At ACADIA, we're building a leading CNS company. The foundation for that company is NUPLAZID, which was approved by the FDA in April 2016. We launched the drug a month later. In the fourth quarter of 2016, we initiated 4 major CNS studies with pimavanserin and additional indications I'll speak to in a second. We also announced positive top-line results from our study of pimavanserin in Alzheimer's disease psychosis. As I mentioned, the foundation for pimavanserin is in Parkinson's disease psychosis, where we are approved.
The trade name for pimavanserin in that indication is NUPLAZID. Parkinson's disease psychosis affects about 400,000 patients. There are about 1 million Parkinson's disease patients in the U.S. 40% of them, at any point in time, suffer from PDP. About 200,000 of them suffer from what are frequently referred to as disruptive symptoms. Traditionally, patients with PDP have been treated with the off-label use of antipsychotics that are not approved for this indication. Those drugs when used off-label, not only have many of the side effects that they're burdened with in other indications such as sedation, but these drugs also have the potential to interfere with the motor therapy. Parkinson's patients, of course, suffer from a lack of dopamine or deterioration of the part of the brain that produces dopamine.
To treat those motor symptoms, the most prevalent symptoms of the disease, they take dopamine replacement therapy or dopamine agonists. All antipsychotics on the market other than NUPLAZID work through multiple mechanisms, but primarily work by blocking dopamine. You have a situation where patients who are being treated with dopamine agonists in many cases, or dopamine replacement therapy, pushing the system one direction. When they present with psychosis, then were faced with the only option being taking a drug that pushes the system in the opposite direction. Physicians have had to compromise. Now with NUPLAZID, which works completely independently of the dopaminergic system, physicians do not have to compromise. I mentioned that we reported out in December of last year, positive results from a phase II study in Alzheimer's disease psychosis, kind of a similar situation. In Alzheimer's psychosis, you don't have patients taking dopamine agonists.
The antipsychotics used off-label in Alzheimer's disease psychosis have a similar impairing effect on the primary symptom of Alzheimer's. Of course, the primary symptom of Alzheimer's is cognition, and it's been demonstrated that those drugs used off-label to treat Alzheimer's patients impair cognition, and it's not insignificant. It's equivalent to about one year of disease progression. A similar situation where the off-label drugs used historically undermine the treatment of the primary symptom of the disorder. We, in the fourth quarter of last year, initiated a study in Alzheimer's disease agitation. Here, too, many of the atypical antipsychotics historically have been used off-label to treat agitation in these patients. You have exactly the same drawbacks as using those drugs to treat psychosis in these patients. They have the potential to impair cognition in addition to the tolerability drawbacks of these drugs, particularly around sedation.
We also, in the fourth quarter, commenced a study in schizophrenia for inadequate response. About a third of schizophrenia patients respond appropriately to a single antipsychotic. About a third of them don't respond at all, and about a third of them respond, but they don't respond adequately. We have a situation in schizophrenia where many of these patients take polypharmacy. They take multiple antipsychotics. The challenge with the drugs used today is these drugs are all more or less brothers, sisters, and cousins of each other. Whether you're getting additional therapeutic benefit or additional efficacy or not is questionable, but you're certainly getting additional side effects. There's a very significant unmet need in schizophrenia. Here, everything that I mentioned that's on the left-hand side of the slide are monotherapy approaches. As I go down the right-hand side, you'll see these are all adjunct therapy approaches.
The approach here in schizophrenia is to evaluate pimavanserin as a drug to boost the signal in patients already taking existing antipsychotics. We're not seeking to displace cheap generic antipsychotics in this space, but instead demonstrate if we have an additive effect that would be meaningful. Schizophrenia negative symptoms is another area where we commenced a large study in the fourth quarter. Unlike schizophrenia inadequate response, there is nothing approved at all for the treatment of negative symptoms in schizophrenia. We view this as a very significant unmet need. Existing antipsychotics boost the signal somewhat on negative symptoms, but not enough to warrant approval for that indication. Our objective is to test pimavanserin with our very unique mechanism of action and evaluate whether we can boost the signal sufficiently to get that indication.
Finally, our last indication that we're pursuing at the moment and the last of the adjunct therapies is major depressive disorder. Here, many antipsychotics have been approved as adjunct therapy at lower doses than they're used for schizophrenia to treat depressed patients who don't adequately respond to SSRIs. However, even at low doses, you have a lot of the side effects that you have when these drugs are used at higher doses in schizophrenia patients. You have metabolic effects. You have the potential for motor effects, including tardive dyskinesias, which can be permanent. These things weigh heavily on the minds of physicians treating these patients. Of course, the last thing they would want to do is take a depressed patient and give them a permanent motor disorder.
You also have sedation, as I mentioned earlier, as well as akathisia, which is the feeling of bugs crawling under your skin. Pretty significant drawbacks with the existing drugs here. Our objective is to evaluate pimavanserin in these patients. We commenced a large-scale study to do that again in the fourth quarter. At the center of this, I just want to point out, I mentioned this earlier, but just to give a little bit more color, pimavanserin is a very different antipsychotic. It does not work through the dopaminergic system at all. It works very selectively by blocking 5-HT2A, one of the serotonin receptor subtypes. Our objective in PDP is to transform the treatment of Parkinson's disease psychosis with this very unique profile.
It's the first and only drug approved by the FDA to treat Parkinson's disease psychosis or to treat the hallucinations and delusions with PDP. It's also the first SSIA, the sort of first selective serotonin inverse agonist approved by the FDA. In such, it represents a new treatment paradigm, as I mentioned earlier, where physicians do not have to compromise. I didn't mention earlier, but I'll just note here that in addition to not interfering with motor therapy in these patients, we have what we believe is a very favorable tolerability profile, which is important, particularly in some of these frail and elderly populations. This next slide is just a graphic representation of where we are in development in these total of six indications. Of course, we're approved in PDP. In these other indications, we're either in phase II or phase III.
Probably the take-home message here is, as we explore these other indications, each of these studies that you see represented on the slide here are very substantial, pivotal type studies that could serve as part of a registration package. We'll have to get the results of the studies to evaluate what next steps we take. We size these studies consciously in a way designed to give us the most information and give us the most optionality when these studies read out. Our key priorities, I'll just touch on quickly and then we'll go to Q&A. Of course, our number one priority is to continue the successful execution of the launch of NUPLAZID in the United States. Another high priority for us this year is to advance our Alzheimer's disease psychosis now into phase III.
We will commence phase III in the second half of the year, subject to an end-of-phase II meeting with FDA that we're in the process of scheduling now. To advance the other life cycle management programs through these very significant studies that we initiated last year. That includes, of course, again, AD agitation, schizophrenia, inadequate response, negative symptoms of schizophrenia, and major depressive disorder. With that, I'll conclude my brief overview of the company, and we'll go to Q&A.
Hello, everybody. Thanks, Steve. Do you want to come on over here? With us for Q&A, we have Todd Young, CFO. We have Terrence Moore, Head of Commercial. Serge Stankovic, Head of Clinical Development, and Steve, who you just heard. We'll start the discussion. Folks from the audience should feel free to pipe up with any follow-up questions or any particular points. Maybe we could start with the most recent quarter, Q4, which was a great quarter. Some of the discussion between us has been how we want to be able to put the quarter-over-quarter growth in Q4 in perspective for what quarter-over-quarter growth for Q1 could be. Maybe you could talk about what was unique to Q4 to maybe drive some of the pull-through and how we should be thinking about some of the coverage challenges of Q1.
Great. Can you hear me? Really quickly, we noted this on the call, I'll just touch on it briefly and then take any additional questions if you'd like us to drill deeper. There are two dynamics that we pointed out, you've heard us say this before, what we try to get the Street to think about the business the way we think about it, we wanted to point out that in Q4, we probably had some pull forward into Q4 from Q1. It's a very common phenomenon, particularly when you're dealing with patient populations that are elderly, many times on fixed incomes. Whether they're getting financial assistance or not, they often are very cognizant.
It's just kind of hardwired into their system to take advantage of the fact that they've met their deductibles at the end of the year knowing that they'll need to re-enroll in Medicare in the first quarter. That was one dynamic. The second was just simply a reflection that we expect our gross-to-net to be higher in the first quarter than the fourth quarter. As Todd mentioned on the call, we were in the low 20s in the fourth quarter. We expect to be in the high 20s in the first quarter. That's just simply a reflection of us starting the year over on Donut Hole coverage.
Is there anything unique to this quarter in terms of combining those two either given your ?
I think the main thing that we wanted to point out was just those dynamics which we expect to have to be reflected in Q1. I think as we look forward, we don't see similar dynamics. We will continue to have donut hole exposure throughout the year as new patients start therapy. Of course, in the first quarter, you've got everyone starting over again.
Right now, given the progress that you've made on insurance coverage and discussions, are they pretty much wrapped up at this point? Are there any major moving parts left to figure out, any big items left outstanding?
Terry, you want to take that?
Sure. The question was with regard to access, reimbursement, and coverage. We were very fortunate that because we're in a protected class, it was mandated that Medicare review and place on formularies any protected class drugs within the first 90 days. NUPLAZID was on all Medicare Part D formularies by the end of the first quarter after launch. The commercial does not have that time constraint, it does take time. Just recently, we've seen data that tells us that 60% of the lives are now covered. For those that aren't covered, there appears to be no problem in getting the medication other than writing a letter of medical necessity. I should tell you that for the formularies where we are on, the vast majority require a prior authorization, which is simply just a verification of the PDP diagnosis.
You mentioned on the call that the Medicare portion of patients, I think about 75%. Is that greater than you originally anticipated? Were there any lessons to that?
Right. The question was that on our call, we talked about our marketing mix being about 75% Medicare Part D, which was different than what we had originally thought. We originally thought it was going to be about two-thirds. We think it's just a matter of patients in this age group seeking out treatment. That some of it has to do with the commercial plans not having it on formulary yet.
Got it. That could still change.
That could still change.
Okay. How has the balance of switch patients versus non-switch patients evolved since we were [starting] versus in the beginning of the business with switch to [therapy] failures. What's the naive patient proportion right now, and how can you talk about that shift?
Sure. The question is the patient mix. In the beginning, as you can imagine, we were getting the very refractory patients with a brand-new drug that physicians weren't familiar with. Over the course of time, we've seen our business go to switch patients, mostly from Seroquel, but our latest research shows that we now have about 30% of our mix of all NUPLAZID patients being treatment-naive patients. What this does is a very positive signal because it tells us that physicians now have confidence in starting their new patients on NUPLAZID. Right now, we have 30% patient naive and about 70% switch.
Would you expect that to continue?
It's hard to say. There are a lot of patients currently being treated. I would expect that to some extent, we will continue to see switches, but certainly as physicians gain confidence with NUPLAZID, we'll see more and more treatment-naive patients.
You mentioned in a response on the call that really prescription response is too early in the launch to really say if it's going to be popular. Can you talk to maybe some metrics like average number of pills per day for the average patient or just general feedback on tolerability, perceptions of efficacy, what that looks like at all?
You want to take that, Steve?
Yeah. Go ahead. I'll chime in.
In terms of pills per day, it's actually too early for us to really tell. We have a lot of patients that are on samples. It's hard to read what their daily dosage is. Some physicians, even though they write for two pills a day, often verbally tell their patients to start out with one for the first week. We haven't reached that point of equilibrium where we can really tell what our pill per day count is. The second question was?
Anecdotes on tolerability.
Anecdotes on tolerability. What we know is that physicians who are switching are experiencing two things. One is a lack of efficacy that they don't get with Seroquel, and it requires them to increase their dose. As they increase the dose, it increases sedation. It also increases the likelihood of motor symptom interference. They're switching for those reasons. With NUPLAZID, we've been very pleased to see that just about everything that was in our label, in terms of adverse events, has been consistent with what we've seen in the field. This is also true of efficacy in terms of the % of patients who respond to the medicine.
Moving to long-term care. You mentioned before the launch that you expect long-term care to be about 20% of the market opportunity, you're seeing something different now. Any thoughts as to where the ultimate long-term care proportion of the market opportunity could be? What was it that you saw that indicated there may be some commercial opportunity on the table?
The question is around commercial opportunity and long-term care. As many of you know, we've announced that we're expanding our long-term care sales force by about 23 sales reps. What really prompted that was feedback, quite frankly, early on from our sales representatives who said, "Honestly, I can't cover all the business that is out here." A big part of that has to do with the fact that the way they sell in that environment is complicated. You have many stakeholders involved. You have the director of nursing, you have consultant pharmacists, you have the roving consultant physician who writes the order, and you also have purchasing agents that you have to deal with. It's a very time-consuming thing.
We realized after speaking with our reps, who were very successful, that in order to keep up with the potential that was available, we needed to reduce the size of their territories and increase the number of reps to cover the business.
There were more points of call than you had originally planned.
That's true. There were more points of call and it time consuming than we had originally anticipated.
Got it. Another thing I wanted to discuss was initial psychiatrist uptake, which seems lower than at least how it was originally anticipated, at least by the fact that there was the launch season there as well. Can you talk to whether psychiatrist uptake has met your expectations and how you manage their needs differently?
The question revolves around psychiatry prescribing, and we originally thought there'd be a little less than a third of our market would be prescribed by psychiatrists. At today, we're seeing a little less than 15%. I would say at this stage of the game, we're not disappointed. We feel that psychiatrists in general see much fewer patients and get those referred out, and it just takes time for them to see those patients. We believe that there are really 2 types of psychiatrists. Psychiatrists that are consulting long-term care and others that are consulting in the community. We feel that we'll have a much better reach in long-term care now that we're expanding our sales force, and we would expect that number to go up somewhat.
That ultimate 30% is still a goal in your mind, but ramping to see lower?
It could change. It was our original estimate based on what we knew at the time. Remember, there's no diagnosis code for PDP, and the prescriptions that were being written at the time did not link back to the diagnosis. We did some rigorous research with some business rules in place to try to determine the number of psychiatrists that were in long-term care, and that was about what we thought at the time and in the community.
Got it. Okay. We'll move to the Alzheimer's disease research data now. Questions have been for Serge. There has been significant investor focus around the lack of significance at the 12-week follow-up versus the week 6 primary endpoint of the ACP-103-012 study. You mentioned the placebo effect. What do you think drives that placebo effect, which in other studies I've seen [from small] over time. Why in this population is actually going up over time?
Yeah. You're right. We actually don't call it placebo response because you're right. Usually, you see a placebo response in the early stages of the trial or in the second stages of the trial. There may be other factors that contributed to that. Most important and encouraging to us is that the response to pimavanserin treatment in the pimavanserin treatment arm remains stable. We don't see any indications for tachyphylaxis. As a matter of fact, percentage decrease in psychotic symptoms, as measured by the NPI psychosis scale, is slightly nominally better at week 12 than at week 6. However, we do see between week 6 and week 12 a significant decrease in placebo group in symptoms, which essentially then ultimately contributes to lack of separation at week 12.
Do you think that's a problem with the trial protocol?
It may be. We have a number of hypotheses. It is difficult to be sure what is happening. Actually, one element to that may be that a natural variability in disease. We all know how difficult it is to assess symptoms, any symptoms in Alzheimer's disease, and the placebo group may have a higher variability week to week or assessment to assessment, which we could see, and we actually see in the data. The second element may be the protocol as designed had a primary outcome measure at week 6, but it was going for week 12, and that was obviously apparent to all involved in the trial. We may have some more attention paid in the first part of the trial as the assessments are going vis-à-vis later trial. It is possible that there are other elements contributed to this observation.
Like I said, most important for us is when we look at the pimavanserin curve over that whole entire 12-week period, that curve looks exactly the same as how we saw it in the PDP trial after the six weeks patients went into open label.
the primary endpoint for this study was [the two step scale for positive and negative symptoms, or the NPI. As you start planning for your FDA meetings, what are some of the endpoints that you are considering? What are some of the endpoints that the literature is suggesting you should think about in that evaluation of that?
Well, based on the previous trials that are done with antipsychotics in this same patient population, different instruments were used, including NPI, but also SAPS-H+D, Scale for Assessment of Positive Symptoms–Hallucinations + Delusions, BEHAVE, BPRS, Brief Psychiatric Rating Scale. Right. That was used in the trial where a combination of psychosis and agitation was in the trial with risperidone. There were a number of measures. We have experience with SAPS-H+D, which was used in our previous trial. We have now experience with NPI, which was also used. There is a menu of scales we possibly could use in the trial.
Is there a favorite amongst the psychiatrist community or the Alzheimer's clinician community?
Psychiatrists are very familiar with PANSS and SAPS and those scales. Maybe somewhat less with NPI. It's more really from the perspective of regulators. It's important to agree on the psychometrically appropriate scale.
As you look at the data, which will be presented in the second half of the year, what sort of image of the ideal patient is emerging in your mind? Sort of from a data-driven point of view, Terrence, from a commercial point of view. As you look at it, who would be the right patient, potentially at this point, do you think for an Alzheimer's patient?
Based on our experience with 019 study and general experience with pimavanserin, we have a fairly good idea what would be the patient population that would be optimized for the clinical trial. We haven't been really going into specifics about what are they, even though we have a very good idea about that. We believe we know what would be the ways to optimize patient populations enrolled in the trial to enhance the signal. As we see from our Study-019 data and in a different pre-specified analysis, how that signal can be actually significantly enhanced.
Is this a commercially viable subpopulation within ADP, or is this a sort of a tagline that you think won't have much impact on the ultimate label?
We feel fairly confident that optimization of patient population or trial design would not have any limiting impact on the ultimate labeling. It just would fall into a usual enrichment of patient population that is done in any trial via entry criteria.
Overall, what do you see the addressable population in Alzheimer's in general as being? As now that at least you've read through the literature and you're actually speaking to KOLs, I'm actually surprised that there's a fair range of perceived prevalence of Alzheimer's disease patients that were poorly addressed in the literature.
The question revolves around the market potential for ADP. I have to confess that we've done extensive research for PDP, and we know those numbers inside and out. We've not done that level of research to date. We do know preliminarily that there is an unmet need. Cognition is impaired when patients are treated with off-label antipsychotics. Certainly, tolerability will play into it. In terms of the ideal patient, we've not gotten to that point.
I would just add to that, just to compare and contrast between PDP and ADP. PDP is about 1 million patients in the U.S. Excuse me, PD, Parkinson's disease, about 1 million. Alzheimer's disease is about 5.2 million. About half of them are treated, so 2.6 million are treated. It's estimated between a quarter and a half of them suffer from ADP, AD psychosis. The numbers are potentially quite a bit larger in ADP than in PDP. As Terry mentioned, because there's no diagnostic code, it's really difficult to get high resolution of that at this juncture. That's the kind of thing that we'll look forward to as we progress in the clinic.
Last question. As you look at the meetings that you have on your slide with the adjunct therapy on the right side and the more advanced programs on the left, how do you look at the relative value of each of those? You mentioned ADP is significantly bigger than PDP, but on a relative basis, how do you see adjunct dementia, adjunct depression?
It's a great question. I think that many times in our business, we think about life cycle management, and we think of it in terms of, we've got a drug approved in one space, can I add incremental value elsewhere? I view this as a situation that's actually more akin to what you frequently see in oncology, where you get approval of one tumor type and then another and another, and they're all independently very substantial. That's the way we view these.
They're stepwise. One can be as big as the other.
Yeah. Absolutely. You've heard me say this before. If we succeed in one of these, it will be well worth the investment in all of them. I'm not going to predict today that we'll get approval in anything else, but I will say, I think these are all very substantial opportunities and very interesting opportunities with a really strong basis. What you typically see with other antipsychotics is they usually do get approved in more than one indication. We think we've got a really good shot at these, and they're great investments to make. It's the kind of thing you love to make this kind of investment if you're in this business, because we know the safety profile of the drug, we know tolerability, we know the drug interactions, we know how to make it.
The only thing we don't know today is the full utility of the molecule therapeutically, that's what we'll find out through these studies.
Is it fair to say that any individual one of those could be at least as big as PDP if not larger?
I'm hesitant to go exactly there, but I would say at least conceptually, for sure that's the case. The only reason I hesitate to commit to that is in PDP, as Terry said, we've done a lot of exhaustive market research because there was no diagnostic code there. We needed to do that. We haven't done that yet in some of these others, but at least at the outset, they all look like they could well be at least the size of PDP.