Good day, ladies and gentlemen. And welcome to ACADIA Pharmaceuticals Fourth Quarter and Full Year 2022 Financial Results Conference Call. My name is Gigi, and I will be your coordinator for today. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of today’s call.

I would now like to turn the presentation over to Mark Johnson, Vice President of Investor Relations at ACADIA. Please proceed..

Thank you. Good afternoon. And thank you for joining us on today’s call to discuss ACADIA’s fourth quarter and full year 2022 financial results.

Joining me on the call today from ACADIA are Steve Davis, our Chief Executive Officer, who will provide an overview of our performance and a review of our business; Mark Schneyer, our Chief Financial Officer, will discuss our financial results and guidance; then Brendan Teehan, our Chief Operating Officer, Head of Commercial, will provide updates on our new private commercial performance before being joined by Kathie Bishop, our Chief Scientific Officer and Head of Rare Disease, to provide an overview on trofinetide.

Our newly appointed Head of Research and Development, Doug Williamson, will provide an update of our pipeline programs before turning it back to Steve for final remarks and opening the call up for your questions.

I would also like to point out that we are using supplemental slides, which are available on the Events and Presentations section of the website.

Before we proceed, I would first like to remind you that during our call today, we will be making a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements, 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 will now turn the call over to Steve..

Thank you, Mark. Good afternoon, everyone, and thank you for joining us today. Please turn to slide five. The execution of our strategic priorities in 2022 has set us up for 2023 to be an important and transformational year for ACADIA. Last, our NUPLAZID franchise in PDP achieved $517.2 million in the sales, a 7% increase year-over-year.

We submitted our new drug application for trofinetide, the potential first-ever approved treatment for Rett syndrome with an upcoming PDUFA date of March 12. We advanced our Phase III negative symptoms of schizophrenia program and expect to complete enrollment around the middle of this year.

And we advanced our next-generation 5-HT2A program with ACP-204, which is currently in Phase I clinical development. With cash flows from our NUPLAZID franchise and a strong balance sheet, we are well positioned to deliver on these four strategic priorities that will shape our desks in 2023 and beyond without the need for additional capital.

Let’s review our PDP business further on slide six. We continue to maximize the value of our NUPLAZID franchise in PDP. Over the past few years, we have thoughtfully strategically grown share for NUPLAZID in the current PDP market environment. We are delivering steady volumes while concurrently optimizing and reducing our commercial expense base.

As a result, we have been able to significantly grow cash flow from this franchise every year since it turned profitable in 2019. Looking back at 2022, our NUPLAZID performance was led by continued improvement in the long-term care channel, which represents approximately 25% of our total business.

In the LTC channel, demand growth was up 4% sequentially for the fourth quarter and 5% for the full year. In fact, the fourth quarter represented a record high for NUPLAZID volume in the LTC channel. Our previous high was Q4 of 2019, the last quarter before the pandemic hit.

In the office space channel, which makes up about 75% of our business, we continue to gain market share in a declining Parkinson’s disease market, still impacted by pandemic conditions. This netted out to an overall 3% decline in demand in this channel for the year compared to 2021.

More recently, we have experienced relatively steady demand sequentially in the fourth quarter. Overall, across all channels for the full year, demand growth for the NUPLAZID franchise was steady compared to 2021.

Given the current market conditions and our profitability objectives for the franchise, we will continue to optimize our PDP commercial spend and expect stable demand volumes in the near-term environment. There are two important factors with the potential to catalyze near to intermediate term volume growth.

One is a change in the pandemic conditions related to Parkinson’s disease psychosis market. In other words, we believe this is a temporal situation, which will normalize at some point in the future. We believe we are seeing early indicators of that in the LTC channel.

And second is a simulation in the medical community of three very important new publications that demonstrate the benefits of pimavanserin relative to the off-label atypical antipsychotics, which were historically used before NUPLAZID’s approval.

Today, we are providing 2023 NUPLAZID net sales guidance of $520 million to $550 million, which incorporates a range of assumptions, which Mark will describe further in his section. Turning to slide seven, we are very much looking forward to and preparing for the upcoming March 12 PDUFA action date for trofinetide.

Later, Brendan will describe in greater detail some of the key launch initiatives we are working on. But first, I’d like to take a moment to remind everyone what an important drug trofinetide could be for a community with such a large unmet need.

As you know, Rett syndrome is a rare genetic neurodevelopmental disorder that severely impacts the lives of patients and their families. The approval of trofinetide would represent a significant step forward in the treatment of Rett syndrome.

Trofinetide’s established efficacy profile is supported by positive broad improvements across two co-primary endpoints in a randomized double-blind Phase III study. Kathie will review these results in greater detail in her section, as well as provide initial topline results from a recently completed open label extension study.

And from a regulatory and IP perspective, trofinetide has orphan drug status and is protected by a method of used patent for the treatment of Rett syndrome, which provides exclusivity with expected Hatch-Waxman patent extension into early 2036.

We are very excited about the prospect of bringing trofinetide to the market and eagerly await our PDUFA date. Let’s briefly discuss our next two programs on slide eight.

The negative symptoms of schizophrenia, characterized by social withdrawal, lack of emotion or flat affect, is frequently referred to as the most significant unmet need for people living with schizophrenia.

Our adjunctive pimavanserin program is designed to treat those patients whose positive symptoms, the hallucinations, delusions and paranoia, are adequately controlled but who still suffer from persistent and uncontrolled negative symptoms. Negative symptoms has been an exceedingly developed area with lots of industry failures over multiple decades.

With pimavanserin, we have achieved something very rare in this population, a positive pivotal study, our ADVANCE-1 study. We expect to complete enrollment in our second pivotal study, ADVANCE-2, around the middle of this year, with results expected in early 2024.

And finally, in our next-generation 5-HT2A program, we are investing in a novel molecule, ACP-204, targeted for Alzheimer’s disease psychosis or ADP. Similar to pimavanserin, ACP-204 works primarily by blocking 5-HT2A.

We believe this mechanism is ideally suited for frail and elderly populations, and with ACP-204, we are seeking to improve further on the learnings from pimavanserin. Doug will speak to this further in a few minutes. Currently, we are working on completing Phase I development and look forward to advancing ACP-204 into Phase II studies later this year.

I will now turn it over to Mark to discuss our 2022 financial performance and 2023 guidance..

Thank you, Steve. Let’s start by reviewing our quarterly and full year performance on slide 10. In the fourth quarter, we recorded $136.5 million in net sales, up 4% from the fourth quarter of last year. Our gross to net adjustment for the quarter was 23.8%. For the full year 2022, we recorded $517.2 million in net sales, up 7% year-over-year.

Our gross to net adjustment for the year was 20.8%. This adjustment was relatively unchanged compared to 2021, excluding the impact of the IRA legislation. As Steve mentioned, demand was relatively steady for full year 2022 over 2021 and in-channel inventory at the end of 2022 was relatively unchanged compared to the end of 2021.

GAAP R&D expenses increased to $361.6 million in 2022 from $239.4 million in 2021. Investments in our portfolio in 2022 included a $60 million upfront payment for our Stoke collaboration, a $10 million milestone payment to our partner Neuren and $23 million in cumulative payments related to as of yet still undisclosed BD transactions.

Also in 2022, there was a total spend of approximately $30 million in trofinetide commercial supply build. GAAP SG&A expenses decreased to $369.1 million in 2022 from $396 million in 2021, representing a 7% decrease year-over-year. There are two important considerations here.

One, we significantly reduced our PDP franchise expense base by approximately $60 million from 2021, optimizing the business and increasing cash flows from the franchise. And two, we have been making the right investments to be well prepared for the upcoming trofinetide launch.

We ended the year with a cash balance of $416.8 million, compared to $520.7 million at the end of 2021. Our balance sheet remains strong and we continue to be confident in our ability to generate sustainable growth with our existing cash resources. Let’s review our 2023 guidance on the next slide.

Please note that while our expense guidance for 2023 assumes a potential trofinetide launch, we are not providing sales guidance for trofinetide this year. As a result, we are also not providing guidance on our future cash balance. For our NUPLAZID PDP business, we are providing net sales guidance to be between $520 million and $550 million this year.

The middle of the range assumes approximately 1% volume growth and about a 2.5% net price increase for NUPLAZID in 2023. We are projecting gross to net to be between 22% and 25% for the full year given the need to accrue for Medicare rebates related to the IRA. As a reminder, Q1 is the highest gross net quarter for the year.

Given the first time impact of the IRA on our full year gross to net, we are providing gross to net guidance for Q1 this year, which we expect to be between 28% and 30%.

As for the remainder of the year, we anticipate gross to net for Q2, Q3 and Q4 will be relatively consistent with patterns we have seen in prior years, with Q2 and Q3 being our lowest quarters and an increase in Q4.

On the expense side for 2023, we expect GAAP R&D expenses to be between $235 million and $255 million, including approximately $20 million in stock-based compensation. Our R&D range does not guide for incremental spend for business development transactions.

We expect GAAP SG&A expense to be $360 million and $380 million for the full year, including approximately $45 million in stock-based compensation.

While SG&A expense is expected to be relatively flat year-over-year, we will be investing to fully support a successful commercial launch of trofinetide, while at the same time, further optimizing and reducing our PDP franchise spend by an additional $50 million.

In aggregate, since 2021, we have reduced our PDP spend by approximately $110 million significantly enhanced cash flow generation from this franchise. And now, I’d like to turn the call over to Brendan..

Thank you, Mark. I am now going to discuss our NUPLAZID brand and we will return later after Kathie speaks to discuss our trefinetide commercial launch points. Please turn to slide 13. For NUPLAZID, we continue to drive share growth in a smaller PD market, delivering steady volumes and growing cash flow.

We are accomplishing these goals by optimizing promotion of the brand. As Steve mentioned, the PDP franchise has been profitable since 2019 and we have continued share while optimizing expenses. Beyond these efforts, there are two important areas that could catalyze future growth. One is the change in pandemic conditions related to the PDP market.

We have already seen some early improvement in the LTC channel, with new admissions returning to pre-pandemic levels and census levels continuing to improve. Both present further opportunities to identify the signs and symptoms of PDP and to treat with NUPLAZID.

In the community setting, which represents approximately 75% of our total business, we have not yet observed this type of improvement as patient in-person visit volumes remain down double digits versus prior to the pandemic.

The second potential catalyst is the promotion of three important real-world evidence studies that have been recently pushed, which demonstrate the differential benefits of initiating treatment in patients with pimavanserin for PDP as opposed to off-label atypical antipsychotics.

I have already discussed the key conclusions for and they are presented on the slides. While we are still in the early days of engaging healthcare professionals or HCPs, long-term care facilities and payers with these important new data sets, we are encouraged by the level of engagement we are seeing.

This data is creating an important dialogue with treaters and is giving us a patient focused and critically important message to further differentiate NUPLAZID. In the office space channel, we have only just recently begun sharing and discussing these data sets at the top of this slide with HCPs.

We look forward to the opportunity to share these very important data sets and we will update you on our progress. In long-term care facilities, we have been sharing the conclusions from the Kumar S., et. al. paper shown at the bottom of the slide since the latter portion of 2022.

The study compares health care resource utilization specifically around hospitalizations, ER visits and nursing home stays in patients who received NUPLAZID versus other off-label antipsychotics.

These data have been well received as they clearly suggest the use of pimavanserin may improve important outcomes that directly impact facility star ratings, which could make a real difference in patient care and favorably impact their business. Again, we will update you on our progress.

Now I’d like to turn it over to Kathie to discuss our exciting second potential commercial product, trofinetide, starting on slide 14..

Thank you, Brendan. I would like to begin by noting that tomorrow, February 28th, is Rare Disease Day. On behalf of ACADIA, we support the mission to raise awareness and generate change for the 300 million people worldwide living with a rare disease, their families and those who care for them.

We have been very touched and grateful for the involvement and support of the Rett disease community as we develop trofinetide. Please turn to slide 15. Rett syndrome is an extraordinarily debilitating disorder affecting not only the patients, but their caregivers and families.

There is a period of normal development followed by a loss of skills, leaving a typical child unable to use their hands, walk, eat or speak.

Rett syndrome affects a broad set of core symptoms, including deficits in breathing, hand movements or serositis, repetitive behaviors, nighttime behavior, vocalizations, facial expressions, eye gaze and move [ph].

Despite this complex very involved disorder, many individuals with Rett live into adulthood, but do require one-to-one care for their entire lives. There are no FDA approved treatments for the core symptoms of Rett syndrome, and as such, this is the tremendous unmet need. Let’s discuss trofinetide as a potential treatment starting on slide 16.

We evaluated trofinetide in a robust Phase III clinical study, LAVENDER, involving 187 young women in growth with Rett syndrome. The 12-week double-blind study design is shown here. Please turn to slide 17. The Phase III LAVENDER study was overwhelmingly positive and demonstrates the compelling benefit profile for patients.

The study met both of its co-primary endpoint, achieving statistically significant separation from placebo on both the Rett Syndrome Behavioral Questionnaire or RSBQ, a caregiver assessment and the Clinical Global Impression of Improvement or CGI-I, a physician assessment tool.

The RSBQ was positive with a p-value of 0.0175 and an effect size of 0.37. Overall, a mean 5.1 improvement was observed for patients in the trofinetide group at 12 weeks compared to baseline. In addition, there are eight domains in the RSBQ, which capture the broad array of symptoms.

There was a directional improvement across all eight domains in favor of trofinetide compared to placebo. The co-primary endpoint, CGI-I, was also positive with a p-value of 0.003 and an effect size of 0.47. The efficacy results were consistent across all age groups and severity of disease.

In addition, the key secondary endpoint, which was related to non-verbal communication was also positive. Upon completion of LAVENDER, patients continue in to LILAC. Slide 18 shows the study design for this 40-week open-label extension study, which recently completed. 154 patients rolled over to the LILAC study from LAVENDER.

Upon completion of LILAC, patients could continue into LILAC-2 and can remain in that study until we transition them to a commercially available product if trofinetide is approved. Let’s review some of the key findings of the LILAC study starting on slide 19.

Regarding efficacy, we are pleased that for both of the co-primary LAVENDER endpoint, we observed a sustained and continued improvement in LILAC. For the RSBQ, the caregiver assessment, we observed an improvement of more than 7 points compared to the LAVENDER baseline.

Importantly, this magnitude of effect was also observed for patients who transitioned from placebo to trofinetide for the LILAC study. Let’s review the CGI-I scores on slide 20. As a reminder, the CGI-I is assessed by physicians on a 7-point Likert scale.

Thus, a score of 4 indicates the physician saw no improvement, scores greater than 4 do note a worsening of disease, as scores less than 4 indicate an improvement. Recall that in LAVENDER, trofinetide patients improved approximately half a point in 12 weeks to a score of 3.5.

And in the LILAC study, their baselines were reset, and over the next 40 weeks, all patients who completed the study demonstrated additional improvement on average of almost 1 full point with a mean score of 3.1 at the end of 40 weeks. These are very meaningful findings in both the RSBQ and CGI-I, and important for patients and caregivers.

I’d like to briefly review the topline safety and tolerability findings on slide 21. In the 40-week LILAC study, we observed a consistent adverse event profile compared to the LAVENDER study. Importantly, no new safety or tolerability findings were reported.

Over the course of the study, the most common adverse events reported were diarrhea, vomiting and COVID-19. Diarrhea and vomiting rates were consistent with those from the LAVENDER study and were almost all mild or moderate in nature. Discontinuation in the study related to an adverse event of diarrhea were 21% over the 40 weeks.

The overall discontinuation rate was approximately 46%. There was no single reason contributing to the additional discontinuations and this rate is not uncommon when compared to other long-term open-label studies. For context, patients continued and completed LILAC over a span of several years.

GI management plans were only added towards the end of the study and this would not have made much of a difference in the overall data collected. However, discontinuations did decrease the longer patients stayed on therapy.

This is further evidenced by a much smaller discontinuation rate in the ongoing LILAC-2 extension, and notably, so far in LILAC-2, we have had no discontinuations due to diarrhea. I will now turn it back to Brendan to outline our launch initiatives..

Thank you, Kathie. Please turn to slide 22. We are very excited to be on the verge of potentially bringing the first ever treatment of Rett syndrome to the patients, families and HCPs looking for novel solutions. As you would expect, we are making significant investments and progress in preparing for the successful of trofinetide.

Let me break down our priorities to three areas of focus, disease awareness, patient identification and ongoing support. Our first priority is to drive disease state awareness education about the core symptoms of Rett.

An important part of the foundation we are laying now is continuing to build the awareness of the core symptoms of Rett so that physicians and caregivers are better equipped to recognize the unique benefits trofinetide stands poised to deliver.

It is equally important to educate HCPs and caregivers on the potential therapeutic value of trofinetide and to set up the right expectations for both efficacy and tolerability to ensure patients receive the full long-term benefits of treatment.

Our second priority is to fully characterize the identified 4,500 patients who are currently diagnosed in the United States. Rett patients are primarily cared for in three principal treatment settings. About 25% of patients are treated in centers of excellence, as designated by Rett patient advocacy foundations.

There are currently 22 centers of excellence, with more that are in the process of receiving the designation. Beyond these COEs, a significant majority of current Rett patients are cared for other large institutions, including academic hospitals.

And finally, there are a small percentage of patients cared for out in the community setting as standalone neurology offices not associated with the hospital.

In preparation for the launch of trofinetide, we have hired a highly seasoned commercial leadership team with significant experience in rare disease to build out a field force sized to address this relatively concentrated HCP audience.

And the third critical launch priority is continuing to develop best-in-class support services for patients and their families, and to leverage the strong support we have in the Rett community. At the center of this support is our hub, Acadia Connect.

Here, we have developed comprehensive resources that will soon provide patients, caregivers and HCPs with the extensive support they need. Our people are at the center of our service model, including our field based family access managers, as well as on-call pharmacists and nurse care coordinators at our hub.

These team members will be educating caregivers and families on the benefits they should observe with treatment, as well as appropriate implementation of our GI management plan.

To ensure we are the best partners we can be to the Rett community, we are investing in 24x7 support to ensure every patient journey on trofinetide is the best it can be from day one. We are in great shape to launch and we are eager to get to March 12th. And with that, I will turn it over to Doug Williamson, our newly appointed Head of R&D.

Doug?.

Thank you, Brendan. Please turn to slide 24. I’d like to begin by just taking a moment to introduce myself before sharing some thoughts on ACADIA’s R&D programs and some of the exciting potential we have in front of us. I am a psychiatrist by training and following a few years spend in clinical practice and academic research.

I have spent almost 30 years in neuroscience drug development in both large and small pharma, spanning all phases of clinical development and medical affairs. We have already discussed NUPLAZID and trofinetide, so I won’t spend too much time on them, but I would like to reiterate the importance of these two drugs.

NUPLAZID selectivity for the 5-HT2A receptor represents an important and differentiated approach to antipsychotic treatment in contrast to other antipsychotics, which target dopamine and other receptors. And this has provided a safe and effective treatment for tens of thousands of families affected by Parkinson’s disease psychosis.

Trofinetide, meanwhile, is poised to potentially become the first and only therapy approved to treat Rett syndrome, as well as being ACADIA’s second commercial product. Neuroscience drug development is full of unique challenges. We are still a long way from understanding the brain, as well as we are beginning to understand the rest of the body.

But the unmet need and the cost to society of brain disorders is huge and it will require focus and persistence to achieve success. And one of the main reasons I joined ACADIA is because we have consistently demonstrated those qualities throughout the company’s history.

Beyond PDP and Rett syndrome, I am very excited to help lead the development of two other areas of significant unmet need, our negative symptoms of schizophrenia and Alzheimer’s disease psychosis programs. Let’s continue with the negative symptoms program on slide 25.

Persistent negative symptoms remain one of the largest unmet needs in schizophrenia, and as of today, there are still no approved treatments for these symptoms.

Once the acute psychotic symptoms have been controlled, it is the crippling lack of motivation, low energy, social withdrawal and blunted mood, which prevent those living with schizophrenia from returning to the relationships, employment opportunities and quality of life, which we often take for granted.

Enables care for themselves, the burden of looking after them often passes to the caregivers instead. We are evaluating pimavanserin for the estimated 700,000 people living with schizophrenia in the U.S.

today whose positive symptoms are adequately controlled on currently available antipsychotics, but who continue to experience predominant negative symptoms. We believe that pimavanserin as an adjunctive treatment has the potential to alleviate negative symptoms and enable them to take that next step to a more fulfilling life.

Slide 26, as Steve mentioned earlier, as part of our development program, we have one positive pivotal study, ADVANCE-1. Our next study, ADVANCE-2, had an important modification.

The ADVANCE-1 study included some dose ranging and while we achieved the primary endpoint, we clearly observed more robust results in patients who took the 34-milligram dose, as shown on the slide. Note that this is the same commercially available dose, which demonstrated the strongest efficacy for PDP.

ADVANCE-2 is now close to completing enrollment, which should occur around midyear. If all continues to go well, we should have topline results in early 2024 and we look forward to keeping you updated on our progress. Now let’s discuss our ACP-204 program.

ACP-204 is a novel molecule, but one which is designed to build on our experience with pimavanserin. With ACP-204, we may have an opportunity to optimize the efficacy potential, while also reducing the risk of QT prolongation and all with a potentially faster onset of action.

We are currently finalizing our Phase I work, and once complete, we will engage the FDA our potential development plan for ACP-204 as a treatment for Alzheimer’s disease psychosis. Following discussion with the FDA, we plan to initiate Phase II trials in patients with ADP later this year.

We anticipate being able to leverage our familiarity with this class of compounds to be aggressive in late-stage development, but it will still be very important to appropriately characterize the pharmacology of this novel asset prior to entering Phase III. With that, I will turn it over to Steve for closing remarks..

Thanks much, Doug. Please turn to slide 29. I’d like to end today’s prepared remarks with a slide outlining our key development milestones. First, our upcoming PDUFA for trofinetide is just two weeks away.

Second, we should complete enrollment in our second pivotal study for the negative symptoms of schizophrenia around the middle of the year, with topline results expected in early 2024 and we plan on advancing ACP-204 into ADP patient trials later this year.

And finally, given the cash flows from our PDP franchise and our strong cash balance, we have the ability to execute our current operating plan without the need to raise additional capital. As always, I would like to thank our employees for their accomplishments and their ongoing commitment and passion as we continue our mission to elevate life.

And with that, I will now turn things back over to the operator for Q&A..

[Operator Instructions] Our first question comes from the line of Ritu Baral from Cowen..

Good afternoon, guys. Thanks for taking the question.

On trofinetide, can you elaborate just a little bit more on the diarrhea management plan that you alluded to in the Acadia Connect program, I guess, is what the nurse care coordinators and on-call pharmacists will help manage? Can you describe what you are going to recommend the support and then do you think that your assumptions for diarrhea discontinuation rate will resemble what you featured today in LILAC? Thanks..

Yeah. Thanks much for the question, Ritu. I am going to ask Brendan to answer your question as it relates to the activities that we have stood up in terms of how we will offer very comprehensive care and support to patients and their families and then will take the very last part of your question..

Sure. Thanks. Thanks for the question. As we said in our prepared remarks, we are building our caregiver and patient support around our hub, also known as Acadia Connect.

This is intended to provide comprehensive end-to-end support to both caregivers and patients and it’s critical to do that to help patients not only start, but stay on therapy and ensure the optimal treatment experience.

We will also have 24x7 clinical pharmacists -- clinical nurse coordinators at the hub, and then in the field, we are supplementing that with family access coordinators, family access managers that are intended to be face-to-face with families as they start and then begin to stay on trofinetide..

Great. Thanks, Brendan. Ritu, in response to the last part of your question regarding diarrhea discontinuation rates. I think with any drug sometimes there can be differences between what you see in clinical studies and what you see in real-world practice.

And I think the way I would think about this, and as we have said very consistently, with drugs that have symptomatic relief on subjective endpoints, you will have a certain amount of discontinuations in the early months of therapy. We see that in neuropsychiatry a lot, we see that with NUPLAZID and so you will see that.

I would think of this population in two components. One is the prevalent population. So there’s a sizable prevalent population that we will -- that will access the drug first. We will work through that population and then there’s an incident population beyond that.

And so as we think about the dynamics of this molecule, we recognize that there’s -- it’s a very, very highly debilitating disease. There’s no approved therapy. The benefits that we see with trofinetide offer hope for the first time to these families and so I think there will be a high motivation to access the therapy.

And then what we anticipate over time is as we work through the prevalent population, the -- in the early months of therapy where we have a lot of patients going through that simultaneously, then the discontinuation rates will settle in -- will flatten out and settle into a much more normal cycle. So I hope that’s helpful.

We will go to the next question now..

Thank you. One moment for our next question. Our next question comes from the line of Tessa Romero from J.P. Morgan..

Hey, guys. Thanks so much for taking our question. So just one from us on trofinetide. So can you just remind us, in your prepared remarks, you talked a little bit about your healthcare practitioner audience here.

How do these different practices from your centers of excellence to your academic hospitals to your community centers compare on average with respect to number of Rett patients treated, physician awareness of trofinetide or any other kind of key distinguishing characteristics we should be thinking about? Thanks so much..

Yeah. Thanks much for the question.

Brendan, do you want to take that?.

Sure. Thanks. Thanks for the question. Many times in a rare disease, you would expect it to be a little challenging on where you find your patients. We do not see that in the Rett community. This is a well-organized group with advocacy groups that have membership lists well into the thousands.

We have already identified the 4,500 or so already diagnosed and cared for patients in the United States. So, from that perspective, we don’t see finding where to locate our patients as Rett limiting.

When you think in terms of both the prescribing community and where we are going to find those Rett patients, they do, as you pointed out, break into three principal groups. The first would be those centers of excellence, of which there are 22 currently designated and there are roughly 25% of the Rett population treated in those centers.

The vast majority of patients are then treated at high volume institutions, principally academic centers and children’s hospitals with strong neuroscience capabilities. And then there’s a smaller percentage of patients that are treated at individual neurology practices. So that’s principally how the audience breaks out..

And then do you expect kind of the cadence of patients starting treatment to be different dependent on type of practice, just as a quick follow-up..

A fair question. A couple of things. I think we would expect given the results of the LAVENDER program that we would see a motivated group of families with patients that are on the younger end of the spectrum. So I wouldn’t be surprised if we skew towards younger patients and younger families in the early days for treatment.

Also with the volumes that we are seeing at centers of excellence and at these high volume institutions, that’s where we principally expect the majority of patients to be given the opportunity to be treated with trofinetide in the early days.

That is, I think, important to be -- it’s important to understand that while there is a high interest in treatment, we will still be working through access with each of the payer organizations and the logistics of family simply getting to these facilities to have an opportunity to be treated..

Thank you. One moment for our next question. Our next question comes from the line of Marc Goodman from SVB Leerink..

Just as a follow-up on these 4,500 diagnosed and cared for patients. That number seems to be the same number that you all have been using for in the past year or so.

I was just curious as you have kind of dug into this market, is that just a number that you are just using conservatively or are you finding more patients and it just seems like as you would look over the past years I would have [Audio Gap].

We have access to databases, so we are able to track, diagnose and treated patients with Rett.

As mentioned in the prepared remarks, there’s a prevalent population of 6,000 to 9,000 and it is not uncommon after the introduction of a first-to-market therapy that there could be an increase in diagnosis rates, particularly in older patients who may have been clinically diagnosed earlier on in life, but for which there hasn’t been perhaps a confirmatory genetic test.

Other than that, using the claims database is available to us while there is an incident population that will be introduced over time. It’s still roughly in the 4,500 or so range for those diagnosed and treated in the United States.

The separate question you had refers to NUPLAZID and LTC, and I think, we are encouraged by the early signs we have seen on two fronts. One, we know that the long-term care portion of the market had a more profound drop as a function of the pandemic.

Frankly, patients residents passed away and we saw that trough in the middle of 2021 from which we have seen a steady increase in census over time, slow but steady and that’s been driven by new residents entering long-term care facilities.

The reason that’s so important to NUPLAZID is that is the time where the signs and symptoms of Parkinson’s disease psychosis are identified, it’s a great opportunity for NUPLAZID to be chosen as a treatment. That sort of dynamic, coupled with the fact that we have had the real-world evidence from the Kumar S. et al.

study in the second half of 2022 and that really preceded some of the other studies that are being introduced in the community setting, have provided a strong basis for why NUPLAZID is a logical voice in the first-line setting for those residents.

The two of those coupled to create our highest bottle volume in long-term care since, as Steve noted, the fourth quarter of 2019, the highest we have had in the history of -- for long-term care. I think that it’s fair to say that, that segment has led the way.

When we look at the in-office setting, we still see in-person patient visits down double digits. So using the same logic, the challenge there is, physicians really want to see a patient face-to-face if they are going to prescribe a branded therapy.

So we are encouraged that in-patient or in-office visits are dominant and we are not seeing much telemedicine anymore. We would just like to see the frequency of those visits increase. I hope that’s helpful..

Thank you. One moment for our next question. Our next question comes from the line of Tazeen Ahmad from Bank of America Merrill Lynch..

Okay. Hi, guys. Maybe another trofinetide question or two for me.

How should we be thinking about the initial days of uptake? So you have got patients identified, but for meaningful uptake, do you think you are going to need a J Code or because of the rare nature of the disease and lack of any therapies, that won’t matter? And then secondly, I know you will be announcing pricing at the time of approval, but what’s the appropriate range that we should be thinking about for modeling purposes as we get closer? Thanks..

Yeah. Thanks so much.

Brendan, do you want to take these questions?.

Sure. So thanks for the question, Tazeen. In terms of the early days of launch, let’s be clear, we definitely want to establish trofinetide as the foundational treatment for the treatment of Rett syndrome and we will be working from the outset to ensure access.

If you look at other rare disease launches, you will see that there tends to be high demand that’s mitigated by some of the logistical issues that one would handle, particularly access. The second being the time it takes for patients to get to their appropriate physician. So for us, those are counterbalancing.

We know there will be a high interest in prescribing the drug. We know that payers have proven receptive to letters of medical exception and an opportunity to get patients started perhaps before they have made a coverage decision. But we still expect there to be a linear shaped uptake curve.

Unlike some other rare diseases where there might be an early access program where you might create a bolus of patients, that’s not really what we had here.

As Kathie described, there is an open-label extension in LILAC-2 and we do expect the majority of those patients to transition over to commercial drug, but that’s going to be a function of and subject to their individual payer access time lines by geography. I think your second question was around pricing.

So we are not going to disclose pricing before approval to levels that we can add a little bit of context. With rare disease therapies, there tends to be an established range of prices and there are several elements that tend to contribute to where products tend to price. The first is the severity of the disease.

The second is the level of unmet medical need and the ability of a product to address those needs. And then third, is the relative rarity of the disease itself. So if we are thinking about Rett syndrome in particular and then the value of trofinetide, Rett syndrome is a very devastating disease.

It causes substantial disability to patients and it disrupts the lives of families and caregivers who provide essentially a round-the-clock care to patients.

The unmet medical need is equally high here with no approved therapies available to address the core neurodevelopmental symptoms of Rett syndrome, creating a critical void that needs to be filled. Given the robust response seen in our Phase III studies for trofinetide, it is potentially poised to address that unmet need.

And then finally, there is the relatively small prevalent population estimated at 6,000 to 9,000 in the United States with the 4,500 or so currently diagnosed and treated patients.

So with that background, I think you should expect us to price trofinetide as the first and only therapy poised to address that high level of unmet need and to ensure broad access for patients and families who stand to benefit from treatment..

Thank you. One moment for our next question. Our next question comes from the line of Charles Duncan from Cantor Fitzgerald..

Yes. Good afternoon. Thank you for sharing the LILAC information that you did today.

I guess I am wondering if you had any, I guess, patterns that you recognize with regard to discontinuations and/or diarrhea specifically with regard to timing and severity, and do you anticipate actually formally engaging with the agency regarding Rett?.

Yeah.

Kathie, do you want to take that question?.

Hi, Charles. Thanks for the question.

With regards to the pattern of discontinuation due trofinetide -- due to diarrhea associated with trofinetide, I will say that the pattern discontinuations in LILAC was very similar to that in LAVENDER and that we have a very similar discontinuation rate within about the first three months and then a smaller rate after that.

And as I mentioned on the call, in the subsequent study, LILAC-2, we have a very low discontinuation rate and none do the diarrhea to-date. So one pattern that emerges from this is that the longer you are in trofinetide, longer you are able to stay on it.

As I mentioned, it is also notable, though, that in the early years of these trials, they did extend over several years, we did not have the diarrhea management plan in place.

So as we think ahead to launch, we are instituting that plan and Brendan is there to provide many resources to caregivers and the patients to manage the diarrhea to be able to give them on drug..

Yeah. I think, Charles, our standard response when we are in registration is not to comment on back and forth we have with the agency. But I just simply say that, they have been very engaged. We are eager to get our PDUFA day, but we don’t comment on things otherwise. I -- just one important contextual point, I just want to mention in terms of diarrhea.

I know we have said it before, it’s a really important point, though. Rett patients on average have about 80% of them have significant constipation and it can get quite severe. It can lead to impaction, hospitalization. They have even a few reported cases of death due to sepsis associated with constipation and infection.

So this is very top of mind in the right community with physicians, as well as caregivers. And so in some respects, the diarrhea effect that we see with trofinetide can be somewhat of a trade-off. And you also have a situation where almost all of these Rett patients were diaper type garments sertraline.

And so just some additional context around that, and as Kathie mentioned, a lot of diarrhea management mitigation regimen steps that we took late in or that we developed late in the LAVENDER study that time, significant majority of patients in LILAC had already been completed that 40-week program as well.

So we are very eager to get to the finish line here.

And as Brendan described earlier, we have a lot of resources that will put -- that will bring to bear to help families manage the tolerability of trofinetide, which we think is significantly outweighed by the significant benefits that we see, which we see continuing sustained and continuing to grow through the LILAC study..

Thanks, Steve and Kathie..

Thank you. One moment for our next question. Our next question comes from the line of Neena Bitritto-Garg from Citi..

Hey, guys. Thanks for taking my question. Just a follow-up on the last question on the impact of diarrhea and discontinuation. Just curious if you can comment on what happened when you did implement the diarrhea management program in the LILAC open-label extension study.

Did you see that patients who were maybe earlier in the OLE did have a lower discontinuation rate? I am just trying to contextualize how to think about the impact of the diarrhea management on the discontinuation rate? Thanks..

Yeah. Thanks for the question..

Kathie, go ahead..

So as we implemented the diarrhea management plan, which as Steve mentioned, it’s really important to keep into context that 80% of these patients have constipation, which can be very severe.

The first step in the plan is to stop taking your anti-constipation medications and many of these patients are on two or three of those and then to implement anti-diarrhea over-the-counter measures such as increase in fiber in the diet and over-the-counter loperamide.

So as that plan rolled out and then became implemented by the caregivers and the physicians in the trial, we certainly hear feedback that those steps are helping to control the diarrhea and later on in the trial keep patients trofinetide.

I should also add, as we are talking about diarrhea, remember that the diarrhea is almost all mild or moderate in nature and it’s not a safety concern. It does not lead to dehydration, does not lead to weight loss, does not lead to hospitalization.

So this is really a management issue and through the trials and working with some of the study nurses and clinicians, I think, we put in place steps to help parents better manage it and that’s what we intend to do as we move towards hopeful commercialization..

Got it. Thank you..

Thank you. One moment for our next question. Our next question comes from the line of Yatin Suneja from Guggenheim Partners..

Hey. This is Eddie on for Yatin. Congrats on the quarter. Do you expect any impact on the trofinetide filing or review now that Billy Dunn has departed? And do you expect to have any restrictions or limitations on the label or have to complete any post-marketing studies after potential approval? Thanks..

Yeah. Yeah. I will take the first part of that. We don’t anticipate any impact from Billy Dunn leaving FDA. We -- as you might expect, we reached out the FDA today, heard back and they expressly confirmed that we should not -- this should not have any impact on our application. Dr.

Buracchio has been acting Deputy Director of the Office of Neuroscience for some time and will continue with that role, as well as the Director of the Neurology 1 Division. So I understand the reason for asking the question, but we don’t think it will have any impact on our application..

Okay..

And second part of the question with respect to, I think, you talked about post-marketing requirements and labeling. Since we are under review, we don’t comment on that at this point..

Got you.

Do you think you could clarify how many LILAC-2 patients you currently have on drug?.

Yeah. So the LILAC-2 study is currently ongoing. So at this time we can’t get into any further specifications rather than what I mentioned in the prepared remarks..

Thank you. One moment for our next question. Our next question comes from the line of Gregory Renza from RBC Capital..

Great. Thanks, Steve, and congrats on the progress. Thanks for taking my question.

Steve, maybe just a question on perhaps longer term or even post the March PDUFA for trofinetide, just on the premise of a potential trofinetide approval and entering the market, how does that shape your prioritization of your pipeline and maybe looking externally as you and Brendan certainly mentioned trofinetide as foundational to Rett patients, I am curious if you have any input on whether it’s the ASO program or others that you think are important to tack on to or at least to think about when it comes to serving these patients? Thanks so much..

Great. I am sorry I didn’t hear the -- I heard the first part relating to what impact it would have on our portfolio just, I didn’t hear the second part of the question..

Yeah. Just with respect to what’s in your pipeline, the ASO program and how you are thinking about the pipeline and external, how an approval would shape your prioritization and focus there? Thank you..

Yeah. Okay. Thanks much. So the short answer is it wouldn’t. I think that we have always viewed -- since we have data from study with trofinetide where we have both co-primary endpoints, recognize a very dramatic unmet need. We have felt like this is a drug that’s needed and with a high lack of approval. So we find our business accordingly.

We will continue -- we are very excited about other assets we have including our early assets and including the programs we have partnered the Stoke Therapeutics that you referred to.

From a business development perspective, our strategy remains the same, as we have described for the last couple of years and that is -- it’s a very important part of our business.

As we have described in the most recent quarters, the fluctuations in the capital markets have significantly impacted business development opportunity set and that really works to the advantage of companies like us, companies that have strong balance sheets, established revenues and don’t go back to the capital markets versus those that do, and so as a consequence of that, we are seeing opportunities to continue to improve, but we are well positioned to leverage that..

Got it. Thanks, Steve. Appreciate it..

Thank you. One moment for our next question. Our next question comes from the line of Jeff Hung from Morgan Stanley..

Thanks for taking my question. Can you share with us some of the current -- recent feedback you have been hearing from your conversations with payers of trofinetide, is there anything that you found surprising? Thanks..

Yeah. Thanks much for the question.

Brendan, do you want to take that?.

Sure. Yeah. Thanks for the question. Just in context, we have had discussions with payers really since we acquired the program dating back over a year at this point. But even more recent conversations, I would say that, payers have very logical questions that we are able to address. The first is many payers simply don’t know what Rett syndrome is.

We have to describe this as a devastating disease, the fact that it requires a round-the-clock support and dimensionalize it for them from the outset.

They are very well aware that trofinetide would be the only FDA approved drug for treating the core symptoms of Rett in that it is different than some of the individual symptomatic types of medications that may have proceeded it.

They are aware of now from our education trofinetide, that positive benefit risk profile and understand that this is a rare disease space with a pricing model for products like this that they have come to expect and that this is a very rare and difficult population.

So, given that, we feel confident that we are going to be able to ensure access to patients -- to appropriate patients and their families if we are lucky enough to have an approval in the near-term.

Thank you..

Thank you. One moment for our next question. Our next question comes from the line of Paul Matteis from Stifel..

Hello. Thanks for taking my question. This is Catherine [ph] on for Paul. Just on trofinetide on the regulatory side. What do you see as the greatest risk to approval at this point if any and then on the launch, how are you thinking about the cadence post approval and how soon after you can expect to start treating patients? Thanks..

Yeah. Thanks much for the -- for two questions.

Brendan, do you want to take the second question first?.

Sure. Thanks for the question. As you would expect, we are doing everything that you would expect of a company getting ready to launch a first-in-class product in a rare disease and we will be ready to go pretty quickly after approval. There are really just a few things from a logistical perspective that takes some time.

One is the finalization of a label, obviously, because it has lots of implications about product drug availability, also training our field force to make sure that they are 100% prepared to support the physicians that want to prescribe and the families that want to get started.

But other than those simple logistics, we see no other reasons for delay and we know that the community is waiting..

Thanks, Brendan. I will take the second part of the question. I think in terms of risk to an approval, I will start just repeating what we said before and that is, we just don’t comment on back and forth with the agency and we are in under review, it’s just always been our standing policy.

Having said that, as we have said, we are eager to get to March 12. The FDA -- we are very happy with the level of engagement we have had with FDA, and as noted a second ago, they just confirmed this recently as this morning that Billy Dunn’s departure will not have any impact and so we are eager to get to March 12.

Everything appears to be on track at this point..

Thanks so much..

Thank you. One moment for our next question. Our next question comes from the line of Ami Fadia from Needham..

Hi. Good afternoon. This is Will Cindy [ph] on for Ami. Thanks for taking my question. Maybe just a two-parter on PDP.

First, could you comment on kind of the longer term trajectory of the franchise and whether we could see a reacceleration of growth in 2024? And then, second, does your guidance range in 2023 assume kind of improving inpatient volumes or whatnot to take place sometime this year? Thank you..

I will briefly answer first question. We don’t guide beyond the current year. So as we progress this year, we will continue to offer as much color as we can feels appropriate.

Brendan, do you want to take the second part of the question?.

Sure and thanks for the question. When we look at 2023, I think, we described in our prepared remarks where we think things are. We do see some improvement in the long-term care channel. We will certainly look to continue to capitalize on that. In the in-office channel, we are focused on market share and new patient starts.

You see that as evidenced by the use of the real-world evidence studies that help us differentiate NUPLAZID further from off-label atypical antipsychotics that preceded us. So in terms of market dynamics, we are operating in that market dynamic and I believe our guidance reflects that. There are two areas where we could see catalysts for growth.

The first is, if in addition, to in-office visits being the preferred route for patients to see their clinicians, which we know is the case, we just need to see a frequency there increase, because frequency is going to get those patients back in front of a doctor who can see the signs and symptoms of Parkinson’s disease psychosis and treated.

We are confident in the story for NUPLAZID in that environment. We just want more opportunities for a patient to be identified. The second, which could catalyze growth is, the real-world evidence data in the form of the Mosholder Study and the Lincoln Study.

The Mosholder Study was really a fourth quarter introduction and the Lincoln Study article really didn’t come out until late December. So it’s really early days in the in-office environment to be describing that. I will say anecdotally that the audience has found the information interesting, compelling and very much patient focused.

So we look forward to talking about that further as the year progresses, again, early days, but that’s kind of the market dynamic we are operating in..

Great. Thank you..

Thank you. One moment for our next question. Pardon me, one moment for our next question. Our next question comes from the line of Jay Olson from Oppenheimer..

Oh! Hey. Thanks for the ACADIAN’S for taking the question and congrats to Dr. Doug Williamson on joining ACADIA. I was wondering if you could talk about his vision for the future of R&D and the pipeline at ACADIA and are there any gaps in the pipeline that you would like to know? Thank you..

Yeah.

Doug?.

Thanks. I appreciate the question. I think I have been here seven weeks now. So I am still taking the time to understand the -- fully the existing pipeline and its potential let alone look to the future. I can tell you that I am very excited to be at ACADIA.

I have spent most of my career in neuroscience clinical research and I think it’s one of the most difficult areas of drug development.

So one of the things that appeals to me about ACADIA is the focus and the persistence this company has always shown in taking on, I think, the challenges of developing novel treatments for people suffering from brain disorders where, of course, there’s significant unmet need.

So I don’t really want to get into detail about gaps or where we are headed, except that we will be developing over the -- shortly in the future, we will be developing more clarity around what direction we are headed, but I can’t give you any more detail on that right now..

Let me just add one annotation. Yeah. Mark Schneyer mentioned in his remarks that, there are some deals that we have done that we don’t disclose. So when we do a deal, we determine from an SEC perspective, do we need to disclose it, and we do, of course, we disclose it.

If we don’t, sometimes we take programs on and want to get to a certain destination or answer a certain question before talking publicly we get from those programs. So, as Doug alluded to, as we progress this year, we will talk more about those programs that we haven’t disclosed yet..

That’s great. Thanks for taking the question..

Thank you. One moment for our next question. Our next question comes from the line of David Hoang from SMBC Nikko..

Hi. Thanks for the update and taking my question. So I just had a follow-up or two on the in-office channel for NUPLAZID in PDP.

How long do you think or do you have any estimate on how long you think the presentation of the real-world evidence will take before that becomes reflected to any extent in script volumes? And do you have any sense of the decreased patient start -- patient visits, is there any feedback from the prescriber end as to what they are seeing and if they expect those number of visits to rebound?.

Brendan, do you want to take that?.

Sure and thanks for the question. As you would expect, we ever since the beginning of the pandemic, we have been paying very close attention to what we think are leading indicators for patient return to in-office -- to the in-office setting. We saw a dramatic rise in telemedicine, obviously, but that’s largely gone away.

What we have seen, however, is we are still down double digits for inpatient volumes of visits. And that’s a function of two things. One, I think there was a mortality in the PD patient population during the pandemic. We see that in a surrogate marker for carbidopa/levodopa scripts.

One would expect carbidopa/levodopa as a treatment to rise with an incident population just as you would in the broader community. Over the pandemic, use of carbidopa-levodopa was still down about 5%. That’s sort of the top of the funnel for the treatment of patients.

So what we are looking for is and I think what we have started to see is some stabilization in those in-office visits. What we want to see is ARISE [ph]. ARISE helps us in two ways.

One, we believe, as I said, early days on the real-world evidence, but we do know that we are getting time with physicians, they find the information compelling and there’s an opportunity for us to use that as a real platform for differentiation of NUPLAZID versus the atypical antipsychotics that preceded it.

The second is the audience to treat and if we can get more patients to return to the office, I think, that combination is very helpful in the midterm and longer term for NUPLAZID growth..

Thank you. We have time for one more question. Our next question comes from the line of Kyle Qian from Canaccord Genuity..

Hello. This is Kyle speaking on behalf of Sumant Kulkarni. Thanks for squeezing us in.

In terms of answering negative symptoms of schizophrenia given you have a positive Phase III already, what point do you expect to learn from the FDA as to exactly what your second Phase III trial may need to show? And related to that, will a trend be enough given no product has ever been approved specifically for this indication? Thanks..

So you were muffled a little bit. I think I got the question. Let me just try -- if I don’t answer everything you asked, let me know. There’s nothing approved to treat the negative symptoms of schizophrenia. In terms of where we stand, so we, again, as Doug mentioned in our prepared remarks, we have something very unusual in this space.

It’s been a very difficult space for decades. It’s long been talked about as the most significant unmet need in schizophrenia. So it’s very rare to have a positive pivotal study, which we have in the case of ADVANCE-1. So we are running our second study now, ADVANCE-2.

We should complete enrollment there in the middle of this year and then have results early next year.

So, at that point the two positive pivotal studies, if ADVANCE-2 successful, we will plan to submit on that basis and we follow the difficult path there where we would have a pre-submission meeting with FDA, we would submit and then go through the normal review process.

Did that answer both of your questions?.

Yes.

So in the second Phase III, will a trend be enough, given no product has been approved indication as if the primate did not hit?.

Well, I think, we -- at this point, we just need to complete the study and get the results. We are eager to do that. As Doug mentioned, having very strong results at the dose that we are testing now in ADVANCE-2 and our ADVANCE-1 study certainly gives us every means for optimism here.

And the two things that I have pointed out that are different between ADVANCE-1 and ADVANCE-2 both should improve, we will probably have success. So I think until we actually open the outlook, which we are going to do, there’s not a lot more news to take [ph]..

Okay. Thanks..

Yeah. You bet..

Thank you. Mr. Davis, please proceed to closing remarks..

Yeah. Great. Thanks much, Operator. Thanks again everyone for joining us today. This will be a very significant year for us. We are eager to get to March 12 as I mentioned and we look [Audio Gap] next quarter..

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