Good day, ladies and gentlemen, and welcome to ACADIA Pharmaceuticals Fourth Quarter and Full Year 2019 Financial Results Conference Call. My name is Liz, and I will be your coordinator for today. [Operator Instructions] I would now like to turn the presentation over to Mark Johnson, Vice President of Investor Relations at ACADIA. Please proceed..

Thank you, Liz. Good afternoon and thank you for joining us on today’s call to discuss ACADIA’s fourth quarter and full year 2019 financial results.

Joining me on the call today from ACADIA are Steve Davis, our Chief Executive Officer, who will provide an overview of our Q4 and full year 2019 financial performance and share our 2020 guidance and priorities. Also joining us today is Michael Yang, our Chief Commercial Officer, who will provide updates on our commercial initiatives; and Dr.

Serge Stankovic, our President, who will discuss our pipeline progress; our Chief Financial Officer, Elena Ridloff will then discuss our financial results in more detail, before turning it back to Steve for final remarks and opening up the call up for your questions.

I would also like to point out that we are using supplement slides, which are available on the Events & Presentations section of our website. Before we proceed, I would first like to remind you that during our call today, we’ll be making a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements, including goals, expectations, plans, prospects, growth potential, timing of events, or future results, are based on current information, assumptions, and expectations that are inherently subject to change, and involve a number of risks and uncertainties that may cause actual results to differ materially.

These factors and other risks associated with our business can be found in our filings made with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which are made only as of today’s date. I’ll now turn the call over to Steve..

Thank you, Mark. Good afternoon, everyone, and thank you for joining us today. Please turn to Slide 5. 2019 was the year of strong growth for ACADIA as we continue to transform the standard of care for patients with Parkinson's Disease Psychosis or PDP.

Since launching in 2016, NUPLAZID with its breakthrough selective serotonin inverse agonist profile has been helping patients, caregivers and families with a very high burden and cost for Parkinson's disease psychosis.

We continue to track growth of NUPLAZID in PDP and achieved $98.3 million in net sales in the fourth quarter of 2019, a 65% increase over the same period in 2018. Net sales for the full year 2019 were $339.1 million which represents a 52% increase year-over-year.

This growth was fueled by our commercial and medical initiatives including the inclusion of NUPLAZID in the Movement Disorder Society guidelines, completing our transition to the 34 milligram capsule and continuing our education efforts to help encourage much needed and appropriate dialogue between physicians and patients regarding the signs and symptoms of PDP.

2019 was also a strong execution for ACADIA on the research and development front. We announced positive results from two pivotal studies one in Dementia Related Psychosis or DRP and one for the negative symptoms of schizophrenia. In addition in 2019, we advanced our Phase 3 programs in two other indications.

We initiated two new studies for the adjunctive treatment of MDD based on our first pivotal study from 2018 and really shaded our Phase 3 program for trofinetide in Rett syndrome.

On Slide 6, we highlight the breadth and depth of our pipeline which is generating a multi-year cadence of pivotal study readouts and potential regulatory approvals that position ACADIA for significant and attractive long term growth.

In 2020, we are driving toward a potential approval in DRP by year end in three additional approvals over the next three years. In the 2021, 2022 timeframe, we could see approvals for adjunctive treatment of MDD. Trofinetide in Rett syndrome is getting approval in 2022.

And in 2023, we can see approval for the negative symptoms of schizophrenia which could be the fourth indication for pimavanserin. Let’s turn now to our strategic focus for 2020 beginning on Slide 7. The momentum we have going into 2020 sets us up for a transformational year. There’s transformational on two fronts.

First investments we're making for the continued growth in PDP as well as for the potential approval and launch of DRP will transform the new placit opportunity in the very near term.

And second in 2020, we'll also be making foundational investments in our future with our late stage clinical development programs in MDD, Rett syndrome and negative symptoms of schizophrenia. These investments will continue to further drive our mid and longer term growth. In 2020, look for us to continue to execute on these three strategic pillars.

And as we turn to Slide 8, I’ll highlight priorities within each of these areas. First, we will drive the continued growth of NUPLAZID. Based on our growth in 2019, we have provided NUPLAZID net sales guidance of $440 million to $470 million for the full year 2020. At the midpoint of the range, this represents net sales growth of 34% year-over-year.

Second, we plan to meaningfully to expand our commercial and medical footprint with a second indication for pimavanserin, dementia-related psychosis and market expansion opportunities 10 times larger than PDP today.

Here we are on track with our regulatory timelines and Michael will provide you with more color on our commercial investments as we prepare for potential approval and launch. Third, we'll also set the stage for our potential third indication for pimavanserin as adjunctive treatment for major depressive disorder.

The top line results from one of our ongoing phase 3 studies before the end of this year. For the negative symptoms of schizophrenia, where we recently announced positive results from our ADVANCE study and it's very difficult to treat patient population, we'll be initiating a second pivotal study ADVANCE 2 this summer.

We will also continue to invest in our future through focused business development and opportunities to shape our long term growth strategy. I'm incredibly excited about the year ahead. As we prepare for new indications and progress the clinical milestones in our pipeline.

With that, I’ll now turn it over to Michael to discuss our commercial performance and highlights..

Thank you, Steve. Please turn to Slide 10. We had a very successful 2019 from a commercial execution standpoint. Our underlying growth dynamics remain strong and we look forward to continuing this momentum throughout 2020. We had plenty of opportunities for continued growth in PDP from our current market share of the high teens.

Our new patient share continues to exceed our overall market share, an additional growth will be driven by the following initiatives including our ongoing focus to elevate deposit as a standard of care, a highlighting new and relevant information, the medical and patient caregiver community.

Increasing awareness of the inclusion of new deposit in the MDS Evidence based guidelines, sharing new long term patient safety data, highlighting data on the positive impact of NUPLAZID therapy on a caregiver burden scale, continued investment in our integrated patient, caregiver, consumer campaigns, which help drive awareness of NUPLAZID and connected us between patients, caregivers and their physicians with the need to treat.

We also expect to leverage the benefits of the 34 milligram capsule as we continue to observe high compliance and long-term adherence rates with NUPLAZID. The leading indicators such as new patient starts and new prescribers remain strong for NUPLAZID across both the specialty pharmacy and the specialty distribution channels.

These dynamics support our 2020 net sales guidance which reflects approximately 25% volume growth at the midpoint of the range. Looking ahead, we are excited about being the first and only FDA approved therapy for dementia-related psychosis and the difference we can make for patients and caregivers on Slide 11.

As we prepare for a DRP launch, one of the most important aspects we can focus on now is to educate the medical community on the high burden of disease. Our ACP website morethancognition.com will help physicians better understand the important aspects of dementia-related psychosis.

Dementia-related hallucinations and delusions represent a high burden and significant unmet need. Psychosis is one of the most common reasons why patients end up in a long-term care facility.

The burden on caregivers who are most often close family members is especially challenging when dealing with a loved one already struggling with dementia with the difficult addition of halluciations and delusions.

In HARMONY study, pimavanserin demonstrated clinically significant reductions in hallucinations and delusions, and the maintenance of that effect when continued on therapy. Patients who continued on therapy demonstrated almost a threefold reduction in the risk of relapse, other psychosis and compared to placebo over six months.

Furthermore, in ADVANCE, we did not show negative impacts on cognition, motor function or sedation. As we evaluate the DRP market, I'd like to discuss some of the key similarities and differences on Slide 12, highlight how we will be leveraging and expanding commercially.

In both PDP and DRP, there is unfortunately a high use of off-label dopamine blocking antipsychotics that can exacerbate the core symptoms of disease. In PDP, the blocking dopamine is the last thing you want to do for Parkinson's patients and it is associated with the worsening of the motor symptoms.

For DRP, the negative impact on cognition is particularly worrisome in patients with dementia.

Importantly, a key difference and significant opportunity in DRP is that for physicians treating dementia patients, the association between cognition and neuropsychiatric symptoms such as hallucinations and delusions is dramatically greater than it is for physicians treating PDP are typically more focused on motor symptoms.

Pimavanserin's unique profile with high selectivity and the robust clinical study results we observe today will be a welcome new treatment option for DRP in a market where nothing else is approved. Our preparations to deliver the DRP opportunity to the market are well underway and the commercial team is excited about the transformational year ahead.

With that, I’d like to turn it over to Serge to discuss our R&D pipeline..

Thank you, Michael. I'm very pleased with the R&D progress in 2019 and our ongoing and plan development for 2020. Please turn to pipeline chart on Slide 14. Last year, we made significant advancements in R&D pipeline. We initiated a Phase 3 CLARITY program for MDD and the Phase 3 LAVENDER study for Rett syndrome.

We announced positive results from the pivotal HARMONY study in DRP and the pivotal advanced study for the negative symptoms of schizophrenia. Starting with MDD program on Slide 15. There remains significant unmet need in depression with millions of patients having an inadequate response to their SSRI or SNRI therapy.

Please turn to Slide 16 for a review of our clinical development program. The first CLARITY study evaluated MDD patients using pimavanserin as adjunctive therapy for which we achieved robust efficacy results. In addition, we observed a broad range of meaningful secondary outcomes.

Due to enthusiasm among investigators, the Phase 3 studies have continued to enroll well, and we expect to announce top line results from one study by the end of this year with our second study reporting out shortly thereafter.

If we are successful, our Phase 2 CLARITY study combined with at least one of the Phase 3 trials would be the basis of a supplemental NDA submission. Turning to negative symptoms of schizophrenia on Slide 17. About 40% to 50% of schizophrenia patients experience predominant negative symptoms.

These symptoms are prominent residual symptoms often observed with anti-psychotic therapy in spite of adequate control of hallucinations, delusions, agitation and other so-called positive symptoms.

Unlike positive symptoms, the negative symptoms of schizophrenia are characterized by the degradation and loss of important psychological and functional abilities, resulting in blunted effect and a lack of emotions, loss of interest, cognitive symptoms and ultimately severe social withdrawal.

In many cases, this results in a profound deficit syndrome where these symptoms become predominant clinical presentation, very difficult to treat and very challenging for patients and their caregivers. On Slide 18, we review the positive ADVANCE data and our next steps.

As a reminder, the ADVANCE study was a 26-week Phase 2 study evaluating pimavanserin as a treatment for schizophrenia patients with predominant negative symptoms while controlling for their positive symptoms on a stable anti-psychotic background therapy.

All patients started on 20 milligram dose of pimavanserin and could titrate up to 34 milligrams or down to 10 milligrams within the first eight weeks. We are extremely pleased to have observed positive results in the primary endpoint improvement in negative symptoms assessment 16 items scale, in this very difficult to treat population.

Importantly at the 34 milligram dose we saw robust efficacy with the p-value of 0.0065 as shown in the graph on the right. The second pivotal study ADVANCE-2 will commence in the summer of this year utilizing a fixed dose of 34 milligram and will be conducted exclusively in sites outside of the United States.

Rett syndrome is a debilitating disorder with the unmet need highlighted here on Slide 19. There are about 6,000 patients to 9,000 patients in the United States. These young girls start life with a normal development and then at about six months to a year begin to experience neurocognitive decline.

They often lose their independence and can experience the loss of purposeful hand movement and spoken communication. We initiated a Phase 3 program with LAVENDER in the fall of last year and expect topline results next year. Slide 21 highlights why 2020 will be transformational year for our team.

We will be submitting a supplemental NDA for DRP, the second indication for pimavanserin this summer. Before the end of the year we expect to announce top line results from our Phase 3 MDD study, a potential third indication for pimavanserin.

In addition, we will initiate this summer a second pivotal study for the negative symptoms of schizophrenia potentially pimavanserin’s fourth indication. I will turn now the call over to Elena to discuss our financial performance..

Thank you, Serge. Today I’ll discuss our fourth quarter and full year 2019 results and our 2020 financial outlook. Please turn to Side 23. In the fourth quarter of 2019, we reported $98.3 million in net sales, an increase of approximately 65%, compared to $59.6 million of net sales in Q4 of 2018. This was driven by 42% volume growth year-over-year.

The gross-to-net adjustment in Q4 2019 was 15.4%. At the end of the fourth quarter days-on-hand channel inventory increased relative to the third quarter. This increased Q4 2019 revenue by approximately $2.5 million. Sequential volume growth in the fourth quarter was 9%.

Without this increase in channel inventory, sequential volume growth in Q4 would have been approximately 6%. Moving down the P&L, GAAP R&D expenses increased to $57.5 million in Q4, 2019 from $48.2 million in Q4 of 2018. GAAP SG&A expenses increased to $91.9 million in Q4 of 2019 from $74.3 million in the fourth quarter of last year.

Non-cash, stock-based compensation expense during the quarter was $19.8 million, compared to $20.4 million for the same period in 2018. Cash used in operations during the quarter was $29.7 million, compared to $39.1 million for 4Q, 2018. Please turn to slide 24.

For the full year 2019, we recorded $339.1 million in net sales, an increase of 52%, compared to $223.8 million of net sales in 2018. This was driven by 34% year-over-year volume growth. Gross-to-net adjustment for the full year 2019 was 15.6%. GAAP R&D expenses increased to $240.4 million in 2019 from a $187.2 million in 2018.

The increase is primarily due to additional clinical study cost incurred as we continued to invest in additional pipeline programs for pimavanserin and trofinetide. GAAP SG&A increased to $325.6 million for 2019 from $265.8 million in 2018.

The increase was primarily due to increased general and administrate expenses including charitable contributions and personnel costs. Non-cash stock-based compensation expense for 2019 was $82.3 million compared to $81.6 million for 2018. Cash used in operations during the year was $151.1 million compared to $167.5 million in 2018.

We ended the year with $697.4 million in cash and investments on our balance sheet compared to $473.5 million at year end in 2018. This increase reflects our successful equity offering with net proceeds of $271.5 million and proceeds from employee option exercises of $91.6 million. Please turn to our financial guidance on Slide 25.

For the full year 2020, we expect continued strong growth for NUPLAZID with net sales guidance of $440 million to $470 million. At the midpoint of this guidance range, this represents 34% growth in revenue year-over-year and 25% volume growth year-over-year. We expect gross-to-net adjustment in the range of 17% to 18% for 2020.

We project this to be higher than the full year 2019 adjustments as a result of the manufacturer's obligation for the donut hole increasing in 2020. As we model 2020, there are two considerations for the first quarter.

First, as a reminder gross-to-net is typically highest in the first quarter due to the annual reset of the donut holes manufacture obligation for Medicare Part D patient. In addition as I just mentioned, the manufacturer obligation is increasing in 2020.

As a result, we expect sequential growth to net increase from 15.4% in the fourth quarter to approximately 30% in Q1.

Second we expect a $2.5 million increase in channel inventory we saw at the end of the fourth quarter while we reduced [indiscernible] historical average inventory levels in Q1 and this will impact sequential revenue and volume growth.

As a result of the higher growth to net and a reduction of channel inventory in Q1, we expect first quarter net sales to be down sequentially. As Michael mentioned, with our leading indicator such as new patient starts and new subscribers strong we expect growth in net sales to resume in the second quarter and continue throughout the year.

On the expense side for 2020, we expect GAAP R&D expenses to be between $270 million and $285 million. The increased compared to 2019 is a result of advancing four pivotal studies in 2020. We expect GAAP SG&A to be between $440 million and $460 million for the full year.

The increase compared to last year reflects a similar level of investment in PDP as well as our strategic investments we are making to prepare for the DRP launch, including disease-state education and expansion of our commercial and medical affairs team.

For 2020, we expect non-cash, stock-based compensation expense to be between $90 million and $100 million. We anticipate ending 2020 with a strong balance sheet our cash flow is expected to be between $470 million and $500 million at the end of 2020. And with that, I’ll turn the call back over to Steve..

Thank you, Elena. Please turn to Slide 27. In closing, we expect 2020 to be another great year for ACADIA as we drive continued growth in the net sales of new clients in PDP, deliver the DRP opportunity to the market with the potential approval around year-end, and develop new and innovative treatments with our ongoing implant pivotal studies.

We look forward to keeping you updated on our transformational year ahead, as we drive towards the future with the breadth and depth of our pipeline. We’re generating a multi-year cadence of pivotal study readouts and potential approvals that positions ACADIA for long-term growth.

As always we appreciate the dedication and hard work of all of our employees to make 2019 such a success, and who are committed to our 2020 goals and improving the lives of those with CNS disorders. I’ll now open up the call for questions.

Operator?.

[Operator Instructions] Your first question comes from Ritu Baral with Cowen. Your line is now open..

Congratulations on the continuing growth through 2019 into 2020. I wanted to ask about sort of the evolving patient, is the new start patient in 2020 looking different than it was two years ago.

Is that profile changing at all and is that - a result of some of these refinements of the commercial strategy Michael that you outlined?.

Thanks for the question Ritu. Michael is going to t take the question..

Yes, hi Ritu, thanks for the question. I think that I would take it kind of two parts. In long-term care I don't think the profile of that patient has changed and as you know because we're getting a more severe and later stage patient.

I don't know that we have exact statistics, but my impression is that we are starting to get a younger more functioning patient in the context of Parkinson's in the community.

That is to say we still get where psychosis occurs is in the later stages, but we often are seeing examples anecdotally of younger patient and the profile of PDP or Parkinson's and they're more functional perhaps will have a longer period of time, but - a period of time on the drug, but more to come on that later..

Great, very quick follow up.

The sNDA for DRP what's left to do before the summer submission?.

Serge you may take that question..

Yes hi Ritu. We have all of the data that will constitute our supplemental NDA. The pivotal HARMONY study results will be the basis of the sNDA submission which was previously agreed upon at the end of Phase 2 meeting.

And in addition, we will have supportive efficacy results from our previous short-term studies which provided evidence of acute efficacy of pimavanserin in Alzheimer disease and in Parkinson's disease psychosis for patients - with patients with dementia. And finally, we plan to submit our extensive safety data from completed an ongoing study.

So what is left for us is to essentially put that altogether in the format required for the supplemental NDA, all the study reports and summary documents and once we agree with FDA on that to submit..

And so you've generated all the safety data and safety analysis used for that NDA, sNDA sorry?.

Yes, we generated all the - both efficacy and safety data that we will be submitting with that supplemental NDA..

Your next question comes from Tazeen Ahmad with Bank of America. Your line is now open..

Thanks for taking my questions, maybe a commercial one on DRP. I think in the prepared remarks you talked about upsizing the size of your marketing team from its current roughly 200, so let's say roughly 500.

Have you already commenced adding those new folks to your marketing team? I guess that’s the first part of the question? And then secondly how much overlap is there based on your market analysis of the doctors who are treating PDP patients versus those that you're going to be detailing for DRP? Thanks..

Michael, do you want to take that?.

Yes it’s a great question and I just want to reframe. We're not hiring or planning to hire those as marketing people. When I'm referring to the 200 commercial roles they included a variety of roles our patients services, our field sales team, our long-term care et cetera. So it's not - marketing in that context.

And we are appropriately planning for the expansion to be aided in times to the regulatory milestone. So at this juncture, we're well-prepared to execute for a potential launch at the end of the year.

But for the most part, we are obviously going after a state leadership positions so that they can be prepared to cascade the variety of different roles that we have to hire. So, that has from a hiring perspective not started.

From a PDP or DRP perspective obviously the positions in neurology and psychiatry physician-based we’ll have an overlap of DRP, but we’ll be going into a much broader audience of psychiatrists. And additionally - what we are calling dementia care specialist or geriatric PCPs who are acting as like pseudo specialists.

So, we’ll be expanding into an audience. So it's kind of a bulk - in its current footprint penetration, but also an expansion of our journey..

And this as a quick follow up as it relates to how we should think SG&A throughout the year. If we assume that a good percentage of the increase in SG&A this year is going towards prepping for DRP, should we assume that it's evenly spread throughout the year or maybe is that more back half related or maybe that’s an Elena question? Thanks..

Elena, do you want to take that?.

Yes certainly and so, our SG&A expense will be relatively consistent throughout the year, but it will be highest in the fourth quarter as we ramp up although further at that point under the DRP..

Your next question comes from Marc Goodman with SVB Leerink. Your line is now open..

Elena, maybe just to continue on with the spending, just give us a sense of - when you're thinking about adding the additional reps in the year. When should we put that - in the year? How much of the year are we going to have that, half a year, full year.

Also can you give us a sense of direct-to-consumer advertising? Will you be spending an equal amount of money in 2020 as you did in 2019, what are the other push polls? I mean, obviously it's a pretty significant step up we can all figure out, if you are adding 200 sales reps, we know what that cost.

But what else is going on and just give us a sense of when the reps are coming in, so we understand the run rate for the following year? Thanks..

So, few questions in there so, first with regard to DRP spend for the year. A portion of the spent is related to expansion of the CLT so we’re also making investments in medical spares, advanced disease awareness initiative. So increasing spend is really and more broadly to our preparations for DRP and not the sales team alone.

With regards to PDP, our investments are going to be pretty flat year-over-year. We don't specifically comment on our DTC spend, but overall from the investment perspectives, reps going to learn it year-over-year spend..

And Marc I think you, you also asked about the timing of - perhaps and as Michael mentioned that's mostly in the second half as we get closer to launch..

Our next question comes from the line of Yatin Suneja with Guggenheim. Your line is now open..

This is Derek on the line for Yatin. I was hoping if we could just have a couple about MDD. Can you just maybe talk a little bit about the confidence of the study design and maybe what you've done to avoid the professional patient problem at U.S. sites.

And then many changes that that you may have done just to enrolling patients likely to respond?.

Serge, do you want to take that question?.

Yes, yes so, let me start first by, by saying that we are doing our Phase 2 pivotal trials, two trials for essentially one positive trial The design of both trials are identical and they are very similar to the design of Stage 1 of the Phase 2 CLARITY study, where we showed a sizable effect size of 0.63 and p-value of 0.0003.

So we feel a quite good about the design of the studies. And in these studies, we are applying a variety of quality and compliance measures that we utilize in all of our trials and that served us very, very well until now in the execution of our clinical trials. The most importantly, I would say when you talk about the professional patients.

We are quite careful about applying independent blinded interviews with - every subjects potentially to be enrolled in our trial.

So that there is in addition to investigators assessment there is an independent assessment on the suitability of the patients in terms of their diagnoses, in terms of the sufficiency of duration of inadequacy of the dose, of the underlying SSRI or SNRI.

So we are quite careful about making sure that the appropriate patients are enrolled in the trial.

We also from the compliance perspective have a unique opportunity in the adjunctive trial to actually measure levels of the background SSRI or an SNRI during the screening period which gives us quite a good view on the patients compliance with the medication even before they are randomized in the trial and we are doing that in this trial as well.

And finally, we monitor very carefully the ratings throughout the trials with opportunity to intervene when there are - when we observe that our readers are not either spending sufficient time in evaluating patients for their depression symptoms or there are some conflicting ratings in that.

So we are really putting quite a bit of energy in trying to make sure that we have a proper patients in the trial that they are appropriately evaluating and then continuously have really a close contact with our collaborators and research sites..

That's very helpful, maybe just a quick clarity on that. Part of that process is also I assume it's looking at baselines and the existing therapy and compliance you're able to kind of tease out patients who are not so severe that the refractory us sort of all new therapies..

Yes.

We're applying the independent evaluation it's called a safer evaluation where the assessment is done not only on the proper and appropriate diagnosis but appropriate severity of depression as well as appropriateness of the treatment - background treatment thereon in terms of are they sufficiently long and at appropriate therapeutic dose on that medication and still experience the inadequate symptom.

And as I said unique feature is that we also measure plasma levels of those background medications and of course the people that are not compliant with that medication are not taking it are not randomizing to the trial..

Your next question comes from Cory Kasimov with JPMorgan. Your line is open..

This is Gavin on for Cory. Thanks for taking our questions. Maybe on commercial, the commercial metrics. You know you mentioned that the penetration is in the high teens seems like it has been there for you know maybe the last couple of quarters.

Any color on - on moving the needle there? And then secondly on adherence any reasons why we should think that the compliance rate in DRP label expansion should differ from PDP? Thank you..

Two questions.

Michael, do you want to take both of them?.

Sure. So the second question from a compliance perspective with DRP and PDP we think that will be a very similar dynamics. Obviously, there is a little bit more long-term care in DRP patient population. So they tend to take a little less because of their medical condition.

So, we get into the whole denominators of the - of the patients that we get both from the community and for long-term care.

In regards to the PDP market penetration as I mentioned before, the thing that we’re, we’re focused on is winning the dynamic patient population and in that case our market share, our numbers are higher than our overall share, so as we continue to drive greater acquisition of both the new and the switch patients that will then begin to add to our total patient penetration..

And in addition to, add to that, I don't see, it may seem like a couple of quarters because we mentioned high teens at JPMorgan, but a quarter ago was mid to high teens, what that means, we actually have continued to gain share throughout for the last two to three quarters..

Your next question comes from Charles Duncan with Cantor Fitzgerald. Your line is now open..

Had a quick question perhaps for Michael, if you think about the guidance of, call like 25% volume growth, I'm wondering if you could identify one key lever that would make it on the lower end versus the upper end of that and then I have to follow up on a couple of earlier questions regarding the sales footprint that you're talking about going forward, just kind of wondering what the increased number of field roles will pick up for you? What is, what is the key goal of that, of that expansion?.

And I think in regards to what we said on, PDP and if you did hear, the enthusiasm that I have for more data, we are now executing on some, sound like, some expanded datasets I would call that more evidence-based communication we launched with a lot of awareness and we had our pivotal study, but now showing you know long term or our long term extension data we're well over 300 and well over a year where the patients exposure on the drug and we’ve caregiver burden data and end-to-end guidelines, all that starts to build a mountain of evidence to I would say the lag in a doctor to try and to be positive.

And I just would remind folks out there that we're competing here with historical generic products that are kind of habitual in the doctor's practice. So that it takes a quite a bit more effort to extract their habits. And so I think we’re that can be - would be the fulcrum of you know higher or lower volume guidance.

And the second question is just regards to the footprint. So the roles that we have today are multi-factorial. We've become much more sophisticated in our approach to the market meeting the physicians and customers where they are.

And so many of the roles or the bulk of those roles are what I would call traditional blocking and tackling demand generating, sales representatives both in long term care and the community, but we do have a very sophisticated group of people that help with patient pull through. They work with the offices to make sure the product.

We have a center of excellence team that works with the academic teaching hospitals. We have business development folks to walk into the market that in terms of new products, but in terms of emerging business partnerships and models, so that we can stay at the forefront of how medicine is evolving.

And so all of those roles that I just described are working to be expanded what I will call commercial feel for our….

And if I may, Steve, I’ll ask one question of surgeon that is for asset that I'm sure you won't get any other questions on the trofinetide and the LAVENDER study.

I'm wondering if you could characterize in your ability to identify those patients and enroll them in the study and if - if it's run long enough so any of them have actually come off and gone onto the open label expansion and what is governing the timing? You know I think you mentioned data 2020, 2021 but that's you know full 12 months so any granularity on that would be great..

Thanks for the question Charles. It’s a very important study to us.

So Serge do you want to take that question?.

Yes. First, you know the important factor in the level of enthusiasm that we are seeing out there in the Rett community for those - for LAVENDER study is the fact that the Phase 2 study was conducted in the United States. And so, the Rett community already has an experience with trofinetide.

And so, even before we started with the study, we have from very beginning have a good involvement with both the Rett community as well as key opinion leaders in the area people that actually were instrumental both in the conduct over the Phase 2 study as well instrumental for our Phase 3 LAVENDER program. And that was extremely helpful.

So our interest for the study, enthusiasm for the study is very high and we are in enrolling exactly as planned.

You know there are - there is a definite number of centers of excellence in terms of the treatment of rare diseases, we’re involved with all of them, they’re participating in our program and you know these are primarily academic centers, so they are doing a really extremely careful job in enrolling the patients.

So studies going very well, exactly as planned and to your sub-question yes there have been patients that have completed and rolled over into our extension trial, open-label extension trial.

So we as usually we don't - we're still at the beginning of the enrollment and until we have a better sense of the pace and cadence of the enrollment probably sometimes by mid-year or later in the year we will be more precisely defining the timeline for the completion of the trial in our NDA submission..

Your next question comes from Salveen Richter with Goldman Sachs. Your line is now open..

This is Andrea on for Salveen. Maybe just to follow up on the DTC campaign, just any insights if there have been new learnings came from the second one compared to the first? And then where if you have a sense here, which channels are being most impacted by this effort? Thank you..

I'm sorry, Andrea could, you were little bit - could you repeat the question?.

Just with respect to the DTC campaign if there are any new learnings or observations that you see in second launch compared to the first and then which channels are you seeing the most impact from?.

Thank you very much. Michael you want to take it..

So we have and we continue to learn campaign to campaign.

I think the first thing I would say is the need has not subsided in regards to the education and awareness and predominantly as because from a dynamic point of view new Parkinson's patients when they’re diagnosed are still not necessarily told as part of their disease spectrum that, there's a 50% chance over the course of their disease is they're going to get hallucinations and delusions and so consequently we have to have this campaign and paused the TV campaign to broaden the awareness so that when those symptoms do occur both with the patient and the caregiver, they are appropriately primed to have those positive conversations and treatment conversations with their doctor.

We support those campaigns and our pausing strategy with TV, we’ll support those campaigns with digital and other tactics.

The learnings that we've gotten though, I think are more in regards to how we approach the mix, the types of programs that are running, the rhythms of them, and I think we are more efficient and can bring greater value with less money or less, we're more efficient with our capital allocations from a media buying perspective and I think that's something that we’re, we continue to look at our ROI assessments..

And then just I guess if you’re seeing impacts in any particular channels?.

Are you are you referring to say do we see impact in like our long-term care channel?.

Right..

You know we see impact.

I would say the overwhelming impact we see is in our specific pharmacy, which is basically reflecting the office space environment, but we do see an impact in the long-term care when we run the commercials because caregivers have seen it there, staff has seen it there, maybe the patients are able to articulate it, but it does help us with our initiatives there in the long-term care..

Your next question comes from Jason Butler with JMP Securities. Your line is now open..

Steve, just wanted to come back to a comment you made in your prepared comments about business development. Can you maybe give us a sense to how you view new business development opportunities as a priority for 2020 versus 2019? And then maybe touch on how you think you could best leverage R&D versus commercial capacity? Thanks..

Thanks for the question Jason. I'll just start by reiterating that it is one of the key - a key component one of our pillars of our business strategy to grow the company through transactions and through business development. You've heard me say before that we started early.

We did a survey to German win companies typically do this and we started way before those companies and we did it for a reason. We wanted to be in a position where we could access more opportunities over a longer period of time, the more strategic and more conditions and that has worked on.

As you know we completed you know in 2018 to acquire a North America rights for trofinetide. And that deal we said at that time and we’ve said again today it represents kind of our deal strategic fit and seeing that’s and that leverages both our development and commercial expertise.

So, I would simply say we will be doing more transactions, you’ll see that coming. It remained a high priority for us, but doing the right deals in the range and equally not power..

Your next question comes from Danielle Brill with Piper Sandler. Your line is open..

This is a Nirav on for Danielle.

Just a quick question from me if you could provide us with just some color on the trends that you saw over 4Q and 2019 in the growth between various channels and how you expect that to sort of evolve going forward?.

Answer the question Michael..

Yes thanks, thank you. Throughout 2019 and in the fourth quarter, both channels and as I say specialty pharmacy and specialty distribution channels continue to grow and we would anticipate that to be the same throughout 2020..

Our next question comes from the line of Paul Matteis with Stifel. Your line is now open..

This is Alex on for Paul. Just a quick question on your upcoming sNDA meeting. Just wondering if you could sort of give us a sense of what your goals are for the meeting, what you expect to discuss with the FDA just generally and if you'll provide us with an update once that occurred? Great. Thank you..

Serge, do you want to take that?.

Yes happy to. As I mentioned earlier, we’re meeting with FDA primarily to review the content and format of our application, meaning, we will be discussing with them the totality of the data we are bringing both efficacy and safety data.

We're bringing to the sNDA as well as the different ways of analyses and pooling of the data in order to present better and enable reviewers to do their review both on the efficacy and the safety side. So discussing that content and the format of that data presentation is our main objectives in the discussion with FDA..

Great, and do you expect to update us once that’s occurred?.

We typically don't talk about our interactions with FDA. And I think provided we continue to stay on track to summit sNDA in the summer of this year and it’s probably not, there’s going to be a lot to talk about from this meeting. And again to just reiterate our plan is to submit this summer.

And everybody will just every destination we think this is very high and likelihood. We're going to be probably review and should be looking at PDUFA date at the end of the year..

Your next question comes from Gregory Renza with RBC Capital Markets. Your line is now open..

Thanks for taking my question and congratulations on 2019 as well as the path forward..

Thank you..

Steve I maybe had to start with a broader question, generally when years ago you pointed to and recently pointed just looking at years ago the risk and perhaps on conventionalism of launching several pivotal trials maybe something unique to the industry at the time and really yielding kind of the - growth that it has and the growth forward.

I'm just curious if you could perhaps point to where you are now? Any analogous strategic steps or decisions that you're taking in this new phase of the company that perhaps would be similar to those decisions in the past about launching trials whether it's in the context of really execution that you have over 2020 or something more broadly? Thank you very much..

Yes, thanks so much for the questions. I'll take a little bit of running start at it. When we got an approval for NUPLAZID in PDP, we immediately turned towards a lifecycle management program that we commenced about nine months earlier to really explore where should we go with this drug.

And we think the indications that we pursued and we said at the time, you know this is the kind of investment we’d love to make. We know a lot about this drug, we know that drug interactions we know the safety profile. One thing we don't really have a full data set on yet is the full extent of the utility molecule.

So fast forwarding today, what we see today as we see in multiple clinical studies, a molecule with a very strong pharmacology and a very favorable safety and tolerability profile. And what we see on the - efficacy side as we see in multiple patient populations a robust antipsychotic effect.

And we see a robust effect on mood as manifested in depression or in negative symptoms of schizophrenia. So, we really filled in a lot of the blanks and throughout all of this, it doesn't always happen. We continue to see a very consistent clinical profile.

Usually when you go to more and more patients broader and broader populations, people when you get on the market things emerge. And what we've seen is this very consistent profile.

So there is a consequence of all of that what we have today is a molecule that has a very different profile than previous generation antipsychotics that work primarily about walking dopamine.

So as we look forward to where we stand today, we now see these opportunities ripening and what we need to deliver on this is the same kind of executions that we've had on R&D on the commercial front and to deliver these opportunities. You know look I know we've all these things about his eyes I can’t tell you how excited we are to do that.

We’ve got very high confidence that this is going to be an extremely important drug. It is a game changing drug and I think when we all look back and look back of history books in a decade or two decades, we’ll agree that this was a real turning point from a medical perspective in terms of opportunities for these patients..

Your next question comes from Jay Olson with Oppenheimer. Your line is now open..

Congrats on all the progress and thank you for taking my questions. I wanted to follow up on the sNDA for DRP and I think you mentioned PDUFA by the end of the year. So I apologize if I missed this.

But I was wondering if we should expect a priority review and then also if you think there will be an advisory committee meeting? And then, separately with regards to MDD, I was wondering if maybe you could just talk about where pimavanserin might fit into the evolving landscape of both existing and new MDD treatments currently in development? Thank you..

Serge, do you want to take the first question?.

I'm sorry. I missed - I didn't quite hear.

Can you repeat it please?.

Yes, I thought I heard you mentioned that there could be a PDUFA for the sNDA for DRP by the end of the year.

And I was wondering if we should expect a priority review and whether or not you're expecting advisory committee?.

Oh, yes, yes. You know historically, all of the drugs with the breakthrough designation or - almost all of the drugs to our knowledge have received the priority review once the NDA is filed.

So, we do expect considering that pimavanserin has a breakthrough therapy designation for dementia-related psychosis that we will be receiving a priority review as well. Having said that, obviously FDA will inform us about that and make that decision once we filed so, we fully expect that that will happen, but we'll confirm once after we filed..

Okay, great.

And do you expect an advisory committee meeting?.

Because this - there is nothing approved for dementia-related psychosis, we think there is a higher likelihood that we will have advisory committee. Again - the FDA will let us know about that - during review process. So we, again we cannot say for sure, but we are preparing and expecting that there will be advisory committee..

Okay.

Great, and?.

I think your other question related to where does pimavanserin potentially fit in the MDD landscape..

Yes..

Let me take that. I think today there are 17 million patients in the United States that have depression. A majority of them do not respond adequately to standard SSRI or SNRI therapy and as a consequence the majority of them not adequately responding 2.4 million patients take adjunctive therapy on top of those baseline therapies.

And of those patients, the adjunctive therapies that are approved today are the same dopaminergic antipsychotics that are also approved for adjunctive depression that we see used in schizophrenia bipolar disorder et cetera.

So, as a result those therapies and the side effect profile that those drugs have present we think a very right opportunity for a different kind of drug. And so, with pimavanserin and what we've seen so far in the clinical work that we've done, is a very robust anti-depressive effect. We saw a rapid onset of action results within a week.

We do not see weight gain which is a significant issue with available therapies today. We do not see sedation in fact we saw a increase in the daytime wakefulness.

We do not see impairment on motor function in those patients, and importantly where depression patients many time have sexual dysfunction which can be exacerbated by the therapies they’re on. Not only did we not see - exacerbation in sexual function which is on improvement in sexual function.

So, our view is we think pimavanserin based on the profile we saw so far in the clinic is ideally situated to move to right to the head of the class of adjunctive therapy. And so, we're very excited about getting results of our first of the two pivotal studies that we're running currently, by the end of this year.

And if one of these studies is positive that will serve as a basis when combined with the one pivotal study that positive pivotal study we already have, certainly in basis for sNDA next year..

This concludes the Q&A session. Mr. Davis, please proceed with the closing remarks..

Great, thank you so much for joining us today. As always we - appreciate the hard work of your employees and we look forward to updating you on our next progress, on our progress next quarter..

Thank you for your participation in today's conference call. This concludes the presentation. You may now disconnect. Good day..