Q3 2022 ACADIA Pharmaceuticals Inc Earnings Call
Okay.
Good day, ladies and gentlemen, and welcome to Acadia Pharmaceuticals third quarter 2022 financial results Conference call. My name is Gigi and I'll be your coordinator for today.
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'd now like to turn the presentation over to Mark Johnson, Vice President of Investor Relations at Acadia. Please proceed.
Thank you Gigi good afternoon, and thank you for joining us on today's call to discuss <unk> third quarter 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 third quarter performance and a review of our business.
<unk> and our Chief operating officer head of commercial to provide updates on our commercial performance and Cathy picked up our chief Scientific officer and head of rare disease, who will provide an overview of <unk>.
Act research Yankovich, our President will then discuss our pipeline progress Mark Schneider, our Chief Financial Officer will discuss our financial results and guidance 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 supplement slides, which are available available on the events and presentations section of our 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 for us.
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.
Please turn to slide five.
As we presented last quarter to achieve our mission, we're investing our resources to optimize our commercial investment in Parkinson's disease psychosis.
Paying for the launch of impact for Ret syndrome.
And positioning ourselves for long term success through internal R&D and strategic business development.
With PDP, we are focused on investing in the highest ROI activities that efficiently drive demand for the brand and maximize the value of the deposit franchise.
In addition, we are investing for a successful launch of <unk> for the treatment of Ret syndrome, a potential second commercial product.
We're investing in our pipeline of late and early stage clinical candidates, most notably our negative symptoms in schizophrenia phase III program and our ATP tool for Phase one program.
And finally, we continue to position ourselves to leverage an increasingly attractive opportunity set for business development in CNS and rare disease.
The positive cash flow from our NUPLAZID franchise allows us to invest in our future growth opportunities without the need to raise additional capital.
Let's turn to slide six.
For the third quarter NUPLAZID achieved $137 million in net sales.
This was driven by a sequential demand growth of 2% and an acceleration of growth in the long term care channel.
Revenues were offset by a reduction of in channel inventory impacting net sales by approximately $7 million.
To highlight a couple of items related to the current landscape for NUPLAZID.
Recently, we've seen an increase in prescription growth in the LTC channel as this segment is starting to show early signs of improvement.
This was driven by incremental but steady increase in LTC occupancy rates supported by an increase in new admissions.
As Brendan will elaborate a new admission is a critical time for potential diagnosis of psychosis and potential treatment with NUPLAZID.
However, the in office channel continues to be unchanged and is still impacted by fewer in person patient visits with their doctors as compared to pre pandemic levels.
We have not yet observed the same level of incremental improvements as we have in the OTC channel.
As we look forward, we will continue to evaluate and execute on the best way to optimize and maximize our PDP business, which as a reminder has been cash flow positive since 2019.
Let me highlight a couple of important dynamics.
One our relative outperformance since the beginning of the pandemic on total scripts of NUPLAZID when compared to baskets of the top Parkinson's neurology and LTC medicines together with our ability to increase share in a constrained environment.
Give us confidence in our ability to maximize the brand in the long run.
And to the recent publications and presentations of real World studies, comparing the use of NUPLAZID to other anti psychotics.
And expand on the favorable safety profile of NUPLAZID for use in PDP patients.
We will continue to support the dissemination of these important data sets within the treating community.
Let's move on to our late stage programs on slide seven.
We are in prelaunch preparations while in parallel facilitating the Fda's review of our new drug application for <unk> in Ret syndrome.
We announced in the quarter that the FDA granted priority review for our NDA filing and assigned a <unk> action date March 12 2023.
Approved to finish that will be the first and only FDA approved treatment for ret syndrome.
In addition, we would expect to receive a pediatric priority review voucher.
Our commercial team is working diligently on preparing for launch including market development disease State education, consumer profiling and broader care team identification.
Next expect we expect to complete enrollment in our negative symptoms in schizophrenia, a phase III study in advance to around the middle of next year.
Today, we estimate that there are over 700000 schizophrenia patients receiving treatment with anti psychotic therapy in the U S, who still have persistent and impactful negative symptoms.
As we previously described there is no FDA approved drug for the treatment of these negative symptoms.
For context. This is about five times the size of the PDP market.
<unk> is currently approved.
If approved the answer would be indicated as an adjunct therapy that would not need to replace or compete against first line generic drugs.
Let's now turn to slide eight to discuss our early stage programs.
As we mentioned last quarter, we've been working on a new molecule <unk> core for the past few years.
Currently in phase one development.
Acadia developed ACP to abort internally and maintains worldwide rights with no economic obligation.
To any third party.
ACP tool horses.
Leverage the learnings from him of answering it hits, a nice sweet spot its share some important similarities to payment of answering which provide the potential for reduced development risk.
And also is designed to explore important opportunities for improvement.
In addition, we remain excited about our other early stage programs, including our collaboration with <unk> Therapeutics.
And we will continue to develop and invest in our pipeline, while evaluating investing in business development.
Leveraging our internal commercial and R&D expertise across secretary and neurology.
Broad and rare disease areas.
To discuss our commercial efforts in greater detail I'll now turn it over to Brexit.
Thank you Steve Please turn to slide 10.
Our commercial team continues to perform at a high level and delivered demand growth for NUPLAZID quarter over quarter.
As Steve mentioned for the third quarter of 2020 to NUPLAZID achieved $137 million in net sales.
This was driven by sequential demand growth of 2% with particular demand acceleration demonstrated in the long term care channel.
Let's start with LTC.
As shown in the graph on slide 10, we have delivered sustained growth since without about the pandemic, which was the first quarter of 2021.
Recall, the LTC channel experienced significant declines early in the pandemic and while things have been improving modestly you'll note that the occupancy rates remain significantly suppressed today from where they were pre tax pre pandemic.
The recent improvement in occupancy rates over this period is one contributor to NUPLAZID growth in LTC.
More specifically the growth occurs in an environment of increased new resident admissions. This is important as new admissions are critical time for the diagnosis of the symptoms of psychosis in the selection of NUPLAZID.
This rise in new admissions, coupled with our proprietary data sources that help our teams focus on facilities with the highest number of PD residents enable us to target the best opportunities to treat newly diagnosed PDP patients in this key market segment.
As you can see in this environment of modest LTC occupancy growth.
<unk> growth rate has outperformed these improvements in fact, we are delivering some of the strongest prescription growth we've ever had in this segment.
Looking at the auto space channel, while our market share has grown over the pandemic, albeit at a slower rate, we're still constrained by a lack of meaningful improvements and in office patient visits with their physicians.
This is a critical time for the diagnosis of the symptoms of psychosis in a prescription for NUPLAZID.
Looking ahead, our team is now sharing data from real World studies with physicians and payers.
<unk> evaluated the safety of treatment with NUPLAZID in PDP population versus off label anti Psychotics boring.
For example, starting in the middle of the third quarter and the LTC channel, we started to share with payers. Some of the recently presented retrospective study of a PDP Medicare claims database, which concluded that theme of answering treatment lowered in.
That resulted in lower all cause and site related hospitalizations, lower all cause and site related emergency room visits and fewer nursing facilities days versus off label atypical anti psychotics in.
In addition to fewer stays patients on theme of answer and had shorter stays in hospitals and facilities.
More recently.
In the early fourth quarter, we've been sharing a recent publication with physicians that highlights the safety profile of NUPLAZID compared to treatment with off label anti Psychotics in PDP.
These are important data for clinicians to understand when making treatment decisions for patients and residents facing PD psychosis symptoms in the first line setting.
We will continue to thoughtfully invest mindful of the gradual normalization of the PDP market optimizing our PDP investments on the highest ROI activities.
We're focused on both topline and bottom line growth for the NUPLAZID franchise, which enables us to invest in our newest growth opportunity tryphena side as well as the R&D portfolio.
Let's now turn to our prelaunch strategy and activities for tryphena tied on slide 11.
As we look ahead to the launch of <unk>, we see a tremendous opportunity to improve the lives of patients and caregivers suffering from <unk> syndrome.
<unk> is a significant growth opportunity for us and we're investing appropriately to deliver a successful launch.
Our efforts are focused on prelaunch market development as well as the build out of our commercial and medical organizations.
Important to every launch, but especially in a rare disease like ret syndrome with no approved treatment is the focus on disease education and awareness of the unmet need of those living with or caring for someone with risk.
For years, Rick Treaters have had very limited options only being able to treat some of the noncore symptoms of ret syndrome, such as seizure burden or constipation.
At the same time caregivers live with the daily uncertainty of Ret and are often not able to get help with core symptoms that have a profound impact on daily life.
Such as hand, wringing, purposeful eye gaze and communication, which to date could not be fully addressed in part because there are no treatments available to address these needs.
The opportunity exists to establish a shared understanding of red and the foster less fragmented seamless communication across the care team and caregivers and ultimately turn the spotlight on the still unmet untreated core symptoms of the disease that matter to caregivers and that <unk> may address that.
That is where we're focused today.
As an illustration of these efforts at the recent child Neurology Society Conference, which included many of our target pediatric neurologists providers, who treat ret, we launched red dialogue Dot com a website focused on shedding light on the current limitations in care and increasing physician awareness of the breadth and depth of need.
To address the core symptoms of Ret syndrome.
To supplement these educational efforts our medical team is presenting our clinical data at important medical and market access congresses, highlighting the potential clinical value proposition of <unk> tied with Kols and payers.
We are additionally, preparing for launch by augmenting our customer facing team with our rare disease commercial organization.
We have made substantial progress in building, our seasoned leadership team with breadth and depth of rare disease expertise, while leveraging the existing elements of our neurology franchise.
Today, we know there are approximately 4500 rare patients diagnosed and treated in the United States and are cared for at IRS F designated centers of excellence non Coa academic institutions and other targeted neurology practices.
We're already mapping our HCP target universe and patient database. So our field force will know where best to target are treating audience at launch and beyond.
In addition to our targeting work we recognize how critical it is to provide caregivers and physicians with end to end support they need to help patients start and stay on therapy and ensure an optimal treatment experience. This is a key area of investment for our team.
I would like to mention that that October was ret syndrome awareness month, we were proud to support disease awareness and educational activities across the United States within the REIT community.
Our ultimate launch objective will be to establish <unk> as the foundational treatment for ret syndrome, and ensure access to all patients in need and we're well on our way to achieving that goal I'll now turn it over to Kathy to continue our discussion entrepreneur type.
Thank you Brendan please turn to slide 13.
As you know ret syndrome is a serious and debilitating rare disorder for which there is no FDA approved treatment. We estimate there are between six to 9000 patients in the United States the threat syndrome, and we have.
Data, indicating there are approximately 4500 patients currently diagnosed and being treated.
With Brendan briefly mentioned, we continue to present clinical data for <unk>.
Tide at important medical Congresses for the rack community.
Including at the recent American Academy of Pediatrics, and child Neurology Society meeting.
This includes the positive phase III Lavender study results, where we hit both co primary endpoints in our key secondary endpoint.
We also presented interim data from our Das adult study in younger Ret syndrome girls H two to four.
As you may recall from the phase III Lavender study, we observed consistent results across age groups and severity of disease.
This additional data has been submitted to the FDA in support of our NDA for chip at that time.
In addition, we are pleased with the positive feedback and then series the Adam we are receiving from both the medical community and the caregivers at these events as we approach a potential tariff in the Tiger program.
During the quarter, the FDA accepted our application for filing and granted priority review.
It is the action date is March 12 2023.
SBA continues to indicate that they're not planning to hold an advisory Committee meeting.
And I'll now turn it over to search for an update on our other pipeline programs.
Thank you Kathy and good afternoon, everyone.
Let's move on to our second potential indication for <unk>, starting on slide 15.
Or is this the negative symptoms of schizophrenia remain one of the largest unmet needs in CNS.
And as of today, there is still no approved treatments for these symptoms, which can lead to low social functioning long term disability and significant caregiver burden.
We are evaluating <unk> for those patients whose positive symptoms are controlled on currently available anti psychotics.
<unk> continued to experience predominant negative symptoms we.
We believe <unk> can be effective as an adjunctive treatment to help close that gap.
As part of our development program.
We have one positive pivotal study advance one where we observed statistical separation on the primary endpoint is overall.
And even more robust results in patients receiving 34 milligrams of <unk>.
Compared to the lower doses.
To maximize the probability of success in our ongoing phase III study advanced SKU, we have optimized the dosing using only the 34 milligram dose of <unk> compared to placebo.
We remain on track for enrollment completion around the middle of next year.
As a reminder, this is a six month study duration.
We look forward to keeping you updated on our progress.
Now, let's discuss our ACP dual core program on slide 16.
ACP Tau is a new molecule, which is designed to leverage the learnings for improvement have answered it.
For several years, we have sought to build upon our <unk> franchise by investigating and developing other molecules focused on the <unk> system.
Remember virtually all of the antipsychotic on the market today are taught to work predominantly through block exalt Permian and in particular, the dopamine <unk> receptor.
<unk> is thought to work entirely through Sarah Cogan, which can provide a very deeper and favorable safety and tolerability profile.
Of course small molecule, especially in early clinical development have high attrition rate.
But with ACP tool for we're working with the known mechanism and we have a good understanding of where to go and where not to go in the chemical space. So our risk profile.
To some extent.
Specifically with HCP tool for we may have an opportunity to maximize the efficacy put them, so while reducing the risk of tier three prolongation.
We are currently in Craig's wanted to development.
We have advanced phase one studies covering our target dose range based on the preclinical in vitro and in vivo data.
Clinical data to date supports the targeted dose range and also may allow exploration of additional higher exposure.
We plan to complete these additional credit Guan work in order to finalize doses will be evaluated in phase two and three studies.
In respect to potential indications Stuart about right there are a lot of opportunity.
With Alzheimer disease psychosis, beating of the talk of that bleeds.
With that I.
I will turn the call over to Mark to discuss our financial.
Thank you Serge let's start by reviewing our quarterly financial performance on Slide 18.
In the third quarter, we recorded $137 million in net sales driven by 2% sequential demand growth from the second quarter.
While our inventory levels continue to be within historical averages. We did experience a reduction of in channel inventory during the quarter, which impacted net sales by approximately $7 million.
Our gross to net adjustment increased to 18, 6% during the quarter compared to 15, 2% in the third quarter of last year.
The increase in gross to net is primarily due to these two factors.
One an increase from $3 40 volumes and to a higher gross to net adjustment to account for in channel inventory rebates associated with the inflation reduction Act, which I will speak to more in a moment.
GAAP R&D expenses increased to $81 3 million in the quarter compared to $58 6 million in Q3 2021.
The increase was primarily due to a $10 million milestone payment accrued to narrow in on the acceptance of the <unk> NDA filings and increased cost of our commercial supply for chip N type of approximately $8 million.
The cost of which are classified as R&D expenses prior to approval.
GAAP SG&A expenses decreased to $78 1 million in the third quarter from $81 $7 million in the third quarter of last year.
On a year to date comparisons of 2021 net sales were up 8% and SG&A expenses were down 9% as we continue to optimize our commercial PDP spec.
R&D expenses were higher than 2021, primarily due to the $60 million upfront for the Stoke collaboration.
Marine milestone and approximately $80 million of <unk> commercial supply Bill.
And finally, we ended the quarter with a cash balance of $436 6 million.
Essentially unchanged from the $436 $4 million cash balance at the end of the last quarter.
Our balance sheet remains strong and we continue to be confident in our ability to generate sustainable growth with our existing cash resources subject to the size and scope of future business Paul.
Before I give an update on guidance, let's address the newly passed inflation reduction Act on slide 19.
As a reminder, the IRI is focused on Medicare beneficiaries of NUPLAZID as a payer mix that includes approximately 75% Medicare patients.
Whereas we expect your <unk> payer mix to have a Medicare population less than 10%.
We have assessed various aspects of the legislation, including the potential implications of the inflation adjusted pricing mechanism as well as the Medicare part D redesign inclusive with a small manufacturer facing.
All in all while there are several puts and takes from year to year, we expect the overall financial impact on Acadia, we relatively modest for the remainder of the decade.
The inflation reduction act did have an impact on our most recent pricing action from August 2022.
Earlier in the summer we initiated the process to implement to nine 4% price increase on NUPLAZID, which we completed in late August .
As a result of the IRA which went into effect. During this time, we will realize a net pricing benefit of approximately 3% from this latest pricing action of.
A 3% net price benefit will last through the end of the third quarter 2023, after which it will be reassessed against an updated inflation adjusted price as of October one 2023.
The approximate 6% difference between the nominal and net price change from our August pricing action will result in an additional Medicare rebate, which will be accounted for as an increase to our gross to net adjustments.
Let's move onto our financial guidance on slide 20.
Regarding net sales guidance for this year, we are now guiding for a range of $510 million to $520 million.
The midpoint of the range assumes that we continue to have similar demand for NUPLAZID for the remainder of 2022 and.
In addition, it reflects the inventory drawdown, we experienced this quarter and the 2022 impact of being patient reduction.
We have increased our gross to net guidance to a range of 21%, 22% for fiscal year, 2022% to account for additional Medicare rebates associated with the inflation reduction in.
In addition, we are tightening our expense ranges at the midpoint remains unchanged.
We're also tightening our expected year end cash balance raising the bottom of the range by $15 million.
Now I'd like to turn the call over to Steve for closing remarks.
Great. Thanks, so much Mark please turn to slide 22.
Today, we are executing on our promise to deliver NUPLAZID to patients with PDP with a focus on long term growth and maximizing the value of the franchise.
In addition, we are preparing for our second commercial product launch with <unk>, we're advancing our phase III program for the negative symptoms of schizophrenia and developing several additional programs, including ACP tool core are pursuing attractive business development opportunities.
With a strong balance sheet and our focus on top and bottom line growth, we are well positioned to create sustainable long term value.
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 line.
Before moving to Q&A I'd like to mention Medicaid <unk> recently appointed Dr. Dora in due to its board of directors.
As the Biopharma executive with significant regulatory and clinical experience.
With her extensive background in rare disease or skill set nicely complement those of our current board membership and it'll be a real asset to us as we further commercialize and expand our pipeline.
And finally as you may have seen in our announcement last week surge, our president will be retiring at the end of the year.
Over the past seven years search has been a great partner as we have fundamentally transformed acadia into what it is today a.
Our commercial stage biopharmaceutical company with proven capabilities and exciting portfolio of late and early stage programs.
CNS and rare disease.
Personally it's been a great pleasure to work alongside search and I Hope you will join me in thanking inquiries distinguished service to Acadia, the scientific community and most importantly to patients and their families.
Going forward surgical transition to an advisory role and will continue to benefit from just keen in saks and vast experience.
I will now open up the call for questions operator.
Ladies and gentlemen, if you wish to ask a question. Please press star followed by one one on your Touchtone telephone. Please limit yourself to one question I repeat please limit yourself to one question press Star one one to begin.
Please standby for your first question.
Our first question comes from the line of Charles Duncan from Cantor Fitzgerald.
Hi, Yes, hi, Steve and team Thanks for taking the question and appreciate all.
All of the detail, particularly on.
Okay.
<unk> answering our NUPLAZID, but I'll limit my one question to a multi part question on rack and Trofim tight I guess I'm wondering with the Paducah date do you anticipate that manufacturing inspections are yet to be done or have they been.
And then secondarily I think Kathy mentioned additional data from Daffodil was submitted was that submitted before or or or was it submitted with the package or was it submitted after the package.
And then finally with regard to the PRP and you may not be able to answer this right now, but would you anticipate using that internally or monetizing that thank you.
Thanks, So much Charles let me take the first one and the third one and then I'll ask Kathy to respond to the middle question.
Just starting with the third it's just premature for us to say what would you do with the pediatric review voucher.
I think in terms of your question regarding the.
Manufacturing inspections.
We said previously our policy is just not to comment on.
Day to day interactions are back and forth during the review period, what I will say, though is.
All indicators that we have every year appears to be exactly on track and we're eager to get to the Paducah date.
And Charles I'll, just clarify for your second question regarding the interim data from the.
A long term extension studies as well as from ADESA dose study in the younger age tier four interim data was submitted as part of the NDA ready NDA filing.
Okay. That's helpful.
Back in the queue. Thank you.
Okay.
Thank you one moment for our next question.
Our next question comes from the line of Neena <unk> Garg from Citi.
Hey, guys. Thanks for taking my question I just wanted to add.
You asked about <unk>.
<unk> Plaza and if you can comment on the proportion of sales now coming from the long term care channel I know you've said historically, it's been about 25%. If that's changed at all and then what you think it will take two.
Get patients coming back into the office channel and why you think.
Admission rates are going up in LTE, but are still lagging.
Okay sure thanks, much for the questions Brendan.
Brendan do you want to address that.
Sure.
Thanks for the question.
I'm encouraged by what we're seeing in the long term care channel and I should say that we've had an increase in prescription growth quarter over quarter and it is an indication of early signs of improvement. We think that's driven by occupancy rates that have gradually increased over the last several quarters, but for us the <unk>.
Important element of that are the new residents that are showing up and I think that's a really important contrast to the DN office channel but.
When a new resident shows up there is a clinical evaluation that takes place.
An ideal time for the identification of Parkinson's disease psychosis symptoms and a great chance for a start on NUPLAZID, we've seen quarter over quarter that NUPLAZID growth rate is outpacing carbon at the levodopa is also outpacing the top 15 narrow brands.
The top 15, LTC brands in the space, which gives us a sense that.
The clinical proposition of NUPLAZID and that market dynamic is working to our advantage. The difference in the in office channel is that there was a decline in the number of PD patients within office visits at the beginning of the pandemic I think what is encouraging is that we've seen that stabilize so it's at a lower.
At a lower level, but it hasnt continued to decline.
Im encouraged on two levels there one.
There is an incidence rate for Parkinson's disease, and we would fully expect patients to begin to return more readily to through the office.
And secondarily in this marketplace, we're going to continue to compete for first line use as I mentioned in my prepared remarks with the real world evidence that we have available to us that further differentiates NUPLAZID from other off label atypical anti psychotics in a way that we don't think clinicians have seen previously so youll see our focus.
Is on share gain and looking for.
A more first line use of NUPLAZID in that setting.
And yes, I'm sorry, I can also confirm that LTC is still roughly about 25% of our overall bottlenecks.
Got it thank you.
Thank you one moment our next question.
Okay.
Our next question comes from the line of.
Ritu <unk> from Cowen.
Good afternoon, guys. Thanks for taking the question.
And Serge wishing you all the best in your next stage, it's been great working with you for for 10 years, almost 10 years now from this side.
I asked a question is for you and and Steve and.
Steve I know you won't comment on day to day interactions with the agency.
But just given the next the last review cycle that you guys had with a different division.
With DRP I guess.
Investors that I'm speaking to you just want some level of comfort that.
This review cycle is going.
<unk> then the original DRP, where you had pretty much no communications during that period I guess can you give us any color.
Compare and contrast on things like mid cycle review meetings or any request for information that may have may have come in past and.
Just something to show us that the.
The track is different from what has happened with <unk> in the past.
Yes, yes, no. Thanks for the question I think two things I can I'll give as much color as I can and key things I can point out one is this is a NDA.
Course.
With the ERP slice ADP it was an S NDA.
So it was a next NDA you just don't have as much structured milestones.
And so it's a little bit looser and so.
And the advantage of course is going through the NDA process in comparison, because you do have more structured milestones.
And we and as I mentioned earlier it appears from all during the week.
We can see the DFT is right on track.
The second thing I'll mention is also within SMB, because you don't have as many structured milestones.
Sometimes you just don't have as much.
Dialogue and communication during the review cycle.
And we didn't have very much.
With that application we have had.
The appropriate level of communication, it's significantly more than we had with the last application, but we've.
You need to have a very.
Productive and appropriate dialogue throughout the region.
Got it.
That's very helpful.
One last question.
For search surge you mentioned Q4 can you give us.
Some sort of update on timing.
For when you may announce additional formerly announced additional indications for Q4 and Windows Pcs might start.
Yes. Thank you read through first thank you for your kind words and I just wanted to say that it's weak whether it was my pleasure.
To work, we do to work with this broader group.
<unk> always had a very thoughtful and.
Thought provoking questions.
It's been really a great pleasure to periodically update you on the progress of our <unk> program. So I will this is the part that I missed.
Among many things.
As a slow down in the future periods.
Got to HCP tool for it's a little bit premature for us to talk.
About the indications as I said, there is a number of potential indications very high on the list is always gotten their disease psychosis.
Imagine there is a little bit of work for us to complete in the phase one the.
The good news is that.
Based on the work we already completed.
We.
There is an opportunity for us to look to a higher exposure a range is there an hour.
Target those is that based on our preclinical data.
We assign.
Signed and targeted so that's that's a great news.
Neuropsychiatric indications as you know it's always good to define.
A broader range we have not.
Yes.
Decline.
<unk>.
Minimum tolerated dose so it's up.
It's a great opportunity for us to expand that range and we would like to take a little bit of more time to complete that work and following that when we complete that we will.
B B.
It'd be more.
Open to discuss.
Potential indications in the development plan that we are thinking about.
Great. Thanks.
Thank you one moment our next question.
Our next question comes from the line of Kadena MA from Bank of America Merrill Lynch.
Hey, guys. This is Daniel on for <unk>. Thank you for taking our question.
We just had a quick question on tool for.
And the opportunity for ADP. We are just wondering what you were thinking about in terms of the competitive landscape on the line with <unk> four agonist also moving into that space.
And maybe any comment on how the different mechanisms of action might play into that indication.
Okay.
Yes, thanks, so much for the question.
I think.
I'd like to draw a distinction between kind of the ideal profile for an anti psychotic drug to treat schizophrenia, and an anti psychotic drug to treat.
A much more frail elderly population mark.
Parkinson's disease psychosis, Alzheimer's disease psychosis.
What we have with drugs to treat.
Schizophrenia patients, whose drugs and also products that have a lot of baggage.
Sub optimal drug stable hot side effect.
Burton.
But.
They are used in those populations because the.
The medical medical need is so significant and.
And so.
And we don't have better alternatives yet.
In.
But that's one of the reasons that those drugs are not approved for use in Alzheimer's disease psychosis patients with Parkinson's disease psychosis as you know for that matter any.
Dementia.
Psychosis.
Yes.
When you get to these more frail and elderly patients you need to have obviously a drug that works you would have.
A strong antipsychotic effects, but it is equally important to have drug is very very safe and extremely well tolerated because the the bar for tolerability issues. There's just a lot higher and so I think we have a.
I'm very excited about some of the.
Very exciting work going on in the muscarinic area.
Hopefully that will lead to improved.
Improved anti Psychotics and.
And I think the area where.
There is the greatest opportunity is in is in schizophrenia.
We'll have to see how the profile of those kinds of drugs.
Emerges and evolves to assess how well position there'll be.
And then more elderly populations one thing we know about convention.
And the profile and the area that we're working with with two <unk>.
By implication is that this.
Mechanism that we're working through and serotonin is very well tolerated.
A very different profile than what we typically see with anti psychotic drugs.
So again I think the key element there will be.
Not only efficacy, but also safety and Tolerability and I'll ask Serge as anything else you'd like to contribute.
Second everything Steve said I'll, just add one other element and that is we have.
On our side are quite a bit of experience with this mechanism and this patient population.
We intend to use that experience and knowledge to our competitive advantage as we are designing the trials and moving.
Through develop them all basically to a bar.
Okay, great. Thank you.
Okay.
Thank you.
One moment for our next question.
Purchases purchase decisions and you know going forward inventory always fluctuates from quarter to quarter and over the long term, we expect our cell in to match you know demand with respect to channel inventory purchases.
Thanks.
Thank you one moment for our next question.
Our next question comes from the line of Mark Goodman from S. B B.
With respect to SG&A can you just give us a sense of what is going on.
You know it appeared that you were.
King down some spending and then you know it it it's it's kind of.
Pop back again, this next quarter of giving your guidance and so just give us a sense of what you're doing out there with new plazas and are you doing any more T. T. C are there plans for that how should we think about SG&A into next year, just give us a sense of the ebbs and flows cause it looks very strange. Thanks.
Uhm arguments data.
Sure No problem. Thanks for the question I think.
As we look.
Over the course of the year, you know, we have reduced our <unk> and.
Incidentally by reduction in you know selling a marketing expense, we've not run a D. D. C campaign this year.
We'll look to that in the future as we essentially see that being a positive ROI investment, but today, we haven't done that.
Keep you informed if we change our mind as we move forward quarter to quarter. It does fluctuate there's some seen it seasonality to some of our expenses. So that's what you're seeing where continue to just be in line for our you know your expectation for total Sg&a's elephant, which is why we just reduced the you know the range.
Of our guidance and kept it at the midpoint.
And from where we go next year clearly will give.
I didn't when we do our fourth quarter earnings call for next year, or what we mentioned and kind of during the second quarter call. If this holds true today that we expect our overall ingest SDH spend to be approximately the same next year. It is this year as we still use as.
We will certainly have a budget to ensure successful launch.
<unk>, while also just continuing to optimize it'd be efficient with our spend.
Well R&D also be flattish for next year or do you think that'll be a step up.
So I think you know again I just share what we what we did last quarter and we R&D is a little bit different just because of the impact of business development payments of you'd take that out which can fluctuate from year to year and as a reminder.
Then kind of year to date expenses for R&D or for about about almost at $80 million a BB payments the largest of which is this stoke upfront payment of $60 million.
So taking that aside we did you know.
We do have an expectation just with kind of beyond going kind of new.
Continuing the programs that are and based upon the portfolio that we have today will reduce the that approximately $35 million in R&D spend next year.
Thanks.
Thank you one moment for our next question.
Our next question comes from the line of <unk>.
Hi, This is James on for Paul maybe just a quick one on on a C. P. G O four.
I guess given your experience with some of answering and kind of you know anything you've learned in your interactions with the F. D. A as it relates to a D P.
I guess, how we think about clinical development going far and of course, you're in and it says one now but I guess, if you think about <unk> future trials had have you kind of started out or gotten any sort of I guess guidance on that kind of design and password that would be most productive for I guess kind of like a rapid development pattern and ADP any color there would be great.
Thanks.
Yeah, <unk>, let me.
I'll I'll open the average up a little bit and then try to focus down on your precise question [noise] with a C. P. Two O four.
I think we'll have multiple indications that we will want to consider and development once we exit saves one.
The top of the list just to be absolutely clear as as you alluded to as a D. P.
We know today Tim of answering.
Will only.
Only be approved in Parkinson's disease, psychosis, and possibly negative symptoms of schizophrenia.
Possibly autism, where we're running pediatric studies pay now.
That leaves a lot.
Of indications where NUPLAZID.
New plans, we will not be approved.
And that's one consideration nothing only but certainly one consideration in terms of wherever we wanted to go to a halt so [noise].
So as it relates to ADP, we know we know a lot about this mechanism we know a lot about the chemical space. We're operating in that gives us a reduced risk profile.
As we as we move forward in that gives us the potential for moving more aggressively.
To the space. We also know a lot about a D. P. We had a really good feel for all patients.
Respond to anti psychotic treatment et cetera, So I think all of those things to get it put us in a position where we we cause I mentioned it.
Archives Adp's, our first indications perceived put us in a position where we think we can.
Move very aggressively and an indication.
Start doing anything else you Wanna S.
Just a little bit of additional color our experienced in conducting trials in this patient population and working with a sides.
Worldwide also provide us with a valuable experience and lessons in terms of the selecting the right patients and selecting the right sides court.
Trials no the only thing I'm, a perspective of the speed of recruitment, but also quality.
All patients and quality of data that we can generate.
Thanks, so much.
Thank you.
One moment for our next question.
Our next question comes in the line of <unk> Oppenheimer.
Oh, Hey, thanks for taking the question and I Wanna add my congrats to surge in all the best to you for your retirement.
Based on the preclinical profile of a C. P. Two or four can you talk about your expectations for the potential clinical advantages of two O four that could be demonstrated when.
When compared to payment of answering and how you plan to leverage those advantages. Thank you.
Yeah sure Sir would you Wanna go ahead.
Yes. Thanks J. Thanks for the good wishes, what I would say is the principle.
Advantage that we are seeing with a C. P. Two O four is in a favorable toilet or ability crawl file. That's so far we have been seeing through the towards the clinical development and that's important on February 11th one.
Guilty lettuce liability and potential to eliminate the mild signaled that we have with the onscreen provided us with the opportunity to expand our dose range that weekend evaluate and my dad potential to.
Actually Ah Ah Ah Ah Ah Ah Ah better efficacy and identified the the the mortified applications doses, which we had a certain limitations we'd be mobile considered in addition over all told everybody said overall tolerability at age provides us with a good.
Good opportunity to evaluate the efficacy in the context, let's see if earlier mansion and that is the safety, which is very important for this patient population.
Excellent Super helpful. Thank you very much.
Thank you.
One moment for our next question.
Our next question comes from the line of solving Viktor Krum Goldman Sachs.
Good afternoon. Thank you for taking my question just wanted to get a sense of how you're thinking about the trajectory for PDP in in 2023 and beyond just given the channel dynamics that you've noted.
Okay. Thanks, much further questions, having bring anyone to take that.
Sure thank solving.
There's the current environment in which we operate and then the future environment that we envision.
So for me I think we're seeing the early indicators of improvement in long term care. If those continue I like the trajectory, we're seeing for new pleasant both in terms of market itself in our individual performance as I said in my prepared remarks are.
Quarter over quarter growth has outpaced carpeted leave the bill in the top 15, LTC brands that gives me confidence.
Both that we have that we have a favorable market environment, but also that where we have the right message that we're delivering the clinicians there.
Similarly, I in the in the in inpatient community setting I think what we see is the ability and my hope is pending continuing improvement in in the environment around us.
PDP patients will begin returning to the an office setting.
Regardless of that you see the way we're approaching the business on the community side, which is leveraging real world evidence to go after share in the first line studying.
For Us I think you should expect to see a posture of putting material in front of these physicians that have the deepest pools of patients and demonstrating the real world outcome differences.
Should suggest a higher use of NUPLAZID in the first line setting so for US I think in the community, you'll see us more and more competing for sure in the in the community.
Britain and you wanted to just remind everyone what the real world evidence publications or that you're referring to and kind of the timing of those.
Sure. Thanks. Thanks for the question. So the important differences that are being brought to brought to light. These are I would call. This an emerging body of evidence that supports the use of NUPLAZID versus off label multi receptor anti psychotics.
We've had our first opportunity in the middle of the third quarter share information that is looking at all.
All cause hospitalizations E. R visits steak visits and and nursing home stays all of which are demonstrating significant advantages for NUPLAZID versus all other a typical anti psychotics that's.
That's attractive on two levels as attractive clinically because obviously, you're looking to make the best decision for residents in a longterm care facility.
Also attractive from the economics of avoiding rehospitalization.
For which facilities are looking for appropriate reimbursement. So I think that that information is resonating again, we're very early on in the discussions of that data didn't really start until the middle of the third quarter.
The second data set also very compelling we started sharing early in the fourth quarter and that's a recent publication in the American Journal of Psychiatry.
It's important because neurologist don't generally get the American journal of Psychiatry. So it's not added that they would necessarily have seen on their own. It's a retrospective Medicare claims analysis that compares the risk of all all cause mortality associated with new closet versus all other atypical anti psychotics used off.
Label in patients with Parkinson's disease psychosis.
The important and importantly, there's a large subset that are receiving low dose quetiapine, principally the therapy that might otherwise be used instead of NUPLAZID.
The authors conclude that the theme of answering was associated with an approximately 23 per cent lower mortality than the other a typical anti psychotics.
360 days for us that is very compelling information very informative too H C. P. As as they make decisions about how to treat their patients and residents again, we're very early on into this the dissemination of that data, but we are encouraged by the community's response to it.
Yeah.
Thank you one moment spring your next question.
Our next question comes from the line of the <unk> from Griffin, Brian Partners.
Thank you for taking my question I have a couple on rat given that I think it's going to be a focus next year. So can you maybe fame for us how should we think about a ramp on a launch their.
Understand you know there are about 4000 or 4500 patient diagnosed how many you might have a line on site on how should we think about the <unk> and the pricing I understand <unk>, but maybe give us some calm to think about thanks.
[noise], Yeah, I'm sure I'll start and then I'll aspirin it into touch on it as well.
So I think as we think about kind of the shape of the curve on launch and Red syndrome.
Our anticipation is it will be a linear taco progression sometimes in rare disease, you have expanded access programs, where you have a large bowl of some patients that suddenly converted to commercial pay patients.
We I think for very good reasons, we did not do that here and so so as we.
Get the drug approved and launched it does take a little bit of time to get on formularies and it does take a little bit of time to work through the access process of course, a lot of the early scripts will be based on letters a medical necessity, but you just take a little bit of time to get everything in place.
So that you begin ramping up so for all those reasons.
We <unk>, we anticipate a a very attractive linear shaker in the early days in quarters of the of the of the launch [noise] I think.
As we move beyond that we do have a fairly a sizeable prevalent population and then an incident population beyond that that will continue to provide attractive growth opportunities as we go forward, bringing knowledge I'll turn it over you and let you address the other part of the question.
Sure. Thanks, Stephen and thank you for the question as I said in my prepared remarks, and I think what's been very encouraging to us as we've been able already to map that HCP target universe in the database as Kathy also alluded to her patients that we know are already being treated and where they are being true.
<unk>. So we have that as an advantage to know where to be at the time of launch at these IRS center centres of excellence.
Another big number of patients that are treated at <unk> academic institutions, and we know some of the targeted neurology practices, where these patients will be treated.
Steve's point the feedback from payers has been that they treat rare diseases largely similarly in their feedback to US does suggest that they will go through there for their normal processes with with <unk>. So I think Steve is absolutely right when it comes to.
Sort of a normal early trajectory you'd expect in a in a drug like that in a rare disease setting.
As you mentioned I would say, it's premature for us to discuss price, but I I think you know Hell Acadia has viewed price in the past we match price with the value. We think the product is and <unk> and partying and we absolutely want to make sure we insure access to the <unk> community.
<unk>, having unequivocal efficacy and a tolerability profile that is very well received.
We we know retrieving the course symptoms of a devastating disease and we know that we're looking to to make meaningful difference in the lives of patients and their families.
The function of that.
Would expect that will price the product in the range of other rare pediatric disease products to give you just some some sense of direction.
Thank you one moment our next question.
Our next question comes in the line of Danielle Brown calm Raymond James.
Hey, guys. This is Alexandra Danielle Uhm forgive me for asking the same question basically two quarters in a row, but I know you mentioned you presented lavender and daffodil at <unk> at some medical conferences. Those presentations include the open label Lilac studies and if not when do you expect to present those data.
You Wanna take care.
Yeah. So for the first <unk> study lilac, one will be complaining that study here. The end of this year as I mentioned, we submitted <unk> data.
Part of the N B a.
<unk> completion.
Sure and then we anticipate submitting that for presentation at medical.
That's likely in the spring.
Great. Thanks.
[noise]. Thank you.
Our next question.
One moment for our next question.
Our next question comes in the line up to ninth Kulkarni from Canaccord your annuity.
Good afternoon, and thanks for taking my question and I'll add my best wishes to surge on his upcoming retirement. So on the packing since Denise market do you think <unk> optimally resource to capitalize on a potential return to normal.
<unk> issue outside of the companies controlling has dependent.
Simply amplify the larger issue related to a paucity of innovation and excitement in terms of other novel products cut back and since that's driving fewer office visits for example.
Britain did you wanted to take that.
Yeah sure. Thanks for the question.
I think what we've seen is and has somewhat continued to be <unk>, but the early indications that we're seeing in the longterm care channel have been favorable.
And they are demonstrating a differential preference for new plaza over a competitive set.
So for me I find that very encouraging when I look at the real world evidence that is now available to us it really hasn't existed for the trading community to have previously.
<unk> was approved versus a.
Placebo and a placebo controlled study there are clinicians out there that think that it that it is every bit as logical to use some of these off label atypical antipsychotics, because they really haven't seen any contrast between those two therapies now I think we have a growing body of evidence that that states that there really is a meaningful.
Real World difference.
And I am enthusiastic about our opportunities moving forward in the quarters ahead again. It is it's early on but with our market share at or around 20%.
Plenty of room for us to to continue to grow the brand that I think are nice scientific.
Scientific platform that.
<unk> provides that differentiation for us.
Thanks.
Thank you one moment for our next question.
Our next question comes from the line of Gregory <unk>.
[noise] Hey, Steven team. Thanks for taking my question and also let me add my well wishes to search them as well just a quick one on business development, Steve US wondering if you could update us on any of the the latest catalyzing or even gating factors to accelerating those those external.
Investments and efforts and just curious if at all Uhm Iranian and inflation reduction has an input to you on how you were thinking about the evolving pipeline and looking external thank you very much.
Yeah. Thanks for the question here.
You look I H we've.
You indicated earlier.
We we've been successful business development trip and it is a great example of that but we we've had an enormous competitor for the last five to seven years, we and everyone else and that is the capital markets and I think as the cap remark as it turned three less.
Supportive and stable.
Yeah that does that will have a reach you on business development, you've seen as in power cycles like this but it usually takes awhile it usually takes three or four quarters for it to.
Kind of realize the whole impact on that so you know we don't <unk>, we don't need to worry scalpel. So we.
In some respects the capital markets, becoming lots of a competitor and business development is.
It is really just a positive for us.
And so I think we are beginning to see across the business development landscape.
A change some companies.
You know just having a harder time financing your business, particularly those who don't.
Don't have a strong balance sheet and don't have.
Revenues and cash flow and and and need to finance their business from Wall Street.
So as a consequence, I think if the capital markets stay.
Choppy for the foreseeable future then I think that the pressure on these companies to.
Get more aggressive on business development, which has grown grown and I think we'll we're very well positioned to be beneficial.
So as we look forward to our footprints in both psychiatry neurology rare disease Android applications.
We I think there's a growing.
Growing and growing really attractive opportunity.
More and more attractive opportunity to to leverage those capabilities CBT.
Got it thank Steve I appreciate the color.
And Greg was there are parts of your question I'm sorry.
I think there was a part two to your question Greg.
I'm trying to recall what it was.
It's whether the inflation reduction at will.
Okay Yeah.
Thanks, Greg Greg Native products look I think the answer is it it it's gonna have a pretty significant impact on our industry I think over time.
And so you know from.
Yeah, I think we begin to see some evidence of that just in the last week or so.
And so I think over time people will be much more conscious of modality small molecules versus.
Large molecules and there'll be more sensitive to the payer mix and so I think.
It will have an impact on our industry and therefore that it will also have an impact on business development.
Estimates.
Thank you I'm, sorry that we are out of time Mr. Davis. Please proceed to closing remark.
Alright, thanks, so much operator, well. Thanks, so much for all of you for listening and we look forward to updating your next quarter.
Thank you for your participation in today's conference call. This concludes the presentation you may now disconnect good day.
The conference will begin to T to raise your hand, <unk> you can dial star one one.
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Mmm.