Q3 2023 ACADIA Pharmaceuticals Inc Earnings Call
Okay.
Good day, ladies and gentlemen, and welcome to Acadia Pharmaceuticals third quarter 2023 financial results Conference call. My name is Cathy and I will be your coordinator for today.
At this time all participants are in a listen only mode, we'll be facilitating a question and answer session towards the end of today's call.
I would now like to turn the presentation over to Al Qahtani Senior Vice President of Investor Relations and corporate communications at Acadia. Please proceed.
Thank you Kathy and good afternoon, and thank you for joining us on today's call to discuss third quarter 2023 earnings.
Joining me on the call today from Acadia are Steve Davis, our President and Chief Executive Officer, who will provide some opening remarks, followed by Brendan.
Our chief operating officer, and head of commercial who will discuss the debut launch of NUPLAZID execution.
Deborah Williamson, our head of research and development will provide an update on our pipeline programs and Mark Schneider, Our Chief Financial Officer will review the financial results.
He will then provide some closing thoughts before we open up the call for your questions.
In addition, both kathie Bishop our head of rare disease, and external innovation and Parag <unk> Senior Vice President Tryphena tight rare disease franchise will be available for the Q&A session.
We are using supplemental slides, which are available on our website events and presentations section.
Before proceeding I would like to remind you that during our call today, we will be making several forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095.
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 several risks and uncertainties that may cause 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 al good afternoon, everyone and thank you for joining US please turn to slide five.
Acadia is entering a transformational period of growth delivering record revenue in the third quarter.
Our rapidly growing franchising debut complements our highly profitable NUPLAZID business and a robust R&D pipeline provides rich opportunities to fuel growth even higher levels in the years ahead.
We plan to capitalize on this opportunity set by executing on our strategic priorities, Let me touch briefly on <unk>.
First we are extraordinarily pleased with the successful debut.
We generated $66 $9 million of net sales in the third quarter, our first full quarter since launch.
Demonstrating a high level of excitement in the community as soon as debut became available.
And we will discuss today were seeing strong indicators across all watch metrics underlying these results, including demand persistency and access.
Second our NUPLAZID franchise continues to be highly profitable and strongly cash flow positive.
NUPLAZID revenues for the quarter were $144 $8 million.
These results reflect our ability to continue to gain market share and grow the revenue base.
Third in addition to the successful marketed products, we have a deep and growing pipeline, including our phase III advance two study a team of answering and negative symptoms of schizophrenia.
Or we expect to have topline results in the first quarter of 2024.
Our phase III study evaluating <unk> 101 in <unk> Willi syndrome, where we expect to commence enrollment later this month.
And leveraging our learnings for NUPLAZID, we've developed ACP tool for our next generation five Ht to a blocker.
Here too later this month, we will commence enrollment of patients in our seamless phase III phase III program.
Steadying ACP tool for in Alzheimer's disease psychosis.
Fourth the success that they've used U S launch underscores the opportunity we have to expand into global markets. Following our expanded license agreement for debut announced in July which granted us worldwide rights to the asset.
Our early U S experienced serves as an important reminder of the significant unmet medical need worldwide with no approved treatments for ret syndrome outside the United States.
We're meeting with health, Canada. This month to discuss our planned new drug submission for Trinidad and Canada. In addition, we're engaging with European regulators and advancing plans in other geographies.
Fifth we have a deep early stage portfolio that includes disclosed and undisclosed programs focused on neuropsychiatric and rare disease disorders. They represent significant opportunities to continue to build on our current growth.
In addition, we continue to remain very active in business development to further expand our portfolio and build on our success with debut of NUPLAZID in CNS in rare disease.
Let's discuss our debut launch instead of the launch dynamics on slide six.
Five and a half months into the launch we've provided it hopes to a community.
Had an approved treatment for ret syndrome.
We've seen red patients respond and amazing and inspiring ways to debut therapy.
We've established critical relationships in the medical and caregiver communities.
And we provided a strong base for future continued success.
During this time from mid April through September, we booked approximately $90 million in revenue.
In preparing for the approval and launch we made significant investments in both the medical and caregiver communities in medical education and launch preparations and the result, everything about the launch thus far has gone either according to plan or exceeded our plans.
And in some measures greatly exceeded our pre launch.
<unk>.
Prior to launch we expected demand to be high it has been.
In fact, one area, where we significantly exceeded our pre launch plans. It's just how fast the demand came immediately upon launch, particularly from centers of excellence.
Another area, where we have exceeded prelaunch expectations is the speed at which we've established access with Payors.
As Brendan will speak to shortly this access is cut faster both in terms of the pace at which payers have adopted formal coverage plans.
And the pace at which they have approved treatment under letters of medical necessity prior to the adoption of written plants.
These two dynamics pent up demand for our centers of excellence and more rapid access and anticipated coupled with high levels of patient persistence on therapy have resulted in just over 800 patients on debut as of September 30.
Importantly, these dynamics are produced a substantial foundation that will continue to benefit our launch as we move forward.
We've established significant breadth and depth of physician experience with debut in a short amount of time.
A high number of patients and families are sharing their positive experiences at this early stage innate.
Enabling us to gain momentum sooner.
And establishing access well ahead of plan enables us to further build on that momentum.
Turning to persistence. We previously reported that we are very encouraged about what we're seeing and that continues to be the case.
As Brendan will discuss shortly our real world evidence to date indicates 81% of patients starting debut remain on therapy for months after treatment initiation.
And only an additional 6% or beyond 60 days since their last scheduled refill.
In comparison in our lilac one open label extension study.
65% of patients who started <unk> treatment after rolling over from placebo remained on therapy for months after initiation.
To sum up we continue to operate at or ahead of plan.
The launch we projected a linear growth curve producing attractive revenue growth year after year.
This is what we typically see in rare disease launches.
Of course, what we didn't anticipate with the debut launches the surge in demand that accelerated our penetration and the associated contributions to revenues in these early quarters.
As we move forward, we'll continue to leverage the strong foundation as we increased breadth and depth in all sectors of the REIT community.
Let's turn to a stab shot of our current products and pipeline on slide seven.
Well, we see it as an overview of our two successful commercial products and our pipeline of late and early stage programs that represent substantial long term growth opportunities for Acadia.
As we've noted NUPLAZID continues to be a highly successful franchise generating significant cash flow.
In Parkinson's disease psychosis, we continue to gain market share in both our office based and long term care channels.
And we booked another record quarter in the long term care channel.
Our commercial team is continuing to successfully leverage the real world evidence studies rolled out earlier this year and the impact is becoming increasingly evident each month and quarter.
Building on this debut provides dramatic growth potential to our business.
And we have a rock bus pipeline behind that.
Mincing late stage studies in two programs later this year.
And our negative symptoms schizophrenia program, we have something rarely seen in this indication.
That is a positive pivotal study.
There are no FDA approved treatments to treat the negative symptoms of schizophrenia.
The unmet need is high and we look forward to having results from our second pivotal study in the first quarter of next year.
Later this month, we will commence our phase III study with ACP 101 in <unk> Willi syndrome.
<unk> released a rare and debilitating genetic disease for patients have an unrelenting drive to eat.
Here too there are no FDA approved treatments.
November will be a busy month for us as we also commenced our seamless phase II phase III program with HCP to all four in Alzheimer's disease psychosis patients.
And behind that as I've mentioned, we have a rich pipeline of early stage disclosed and undisclosed programs that position us for long term growth.
I'll now turn it over to Brendan to provide additional insights on our debut launch execution enterprises commercial performance on slide eight.
Thank you Steve let.
Let me provide additional commentary on our two commercial franchises debut in NUPLAZID and the terrific performance both delivered in the quarter, let's begin with debut on slide nine.
We have three commercial execution priorities I'd like to discuss today dimmed.
Demand persistency and conversion to paid treatment.
Debuts launch has outperformed across each parameter since approval.
As Steve noted, we have seen a surge in demand for debut since the launch in mid April resulting in just over 800 patients on debut as of September 30th.
This initial wave of demand for us was a bit unique likely due to several factors, including a very strong patient advocacy community.
800 patients on therapy is a great start, but we still have a lot of red patients who can benefit from debut many of whom have fewer interactions with centers of actual excellence and with.
Patient advocacy organizations.
This segment represents the majority of patients who have not yet been prescribed debut.
As we've previously described approximately 25% of <unk> patients are treated in centers of excellence. Another 60% are treated in high volumes from institutions and the remainder in community practices.
As we look to engage this next significantly larger segment of the rent market, we expect a more linear adoption curve as we've seen with other orphan rare disease rare disease launches.
New patient requests are coming in at the rate we expected at this point in the launch and we will support the continued attractive growth the debut.
Our experience so far with new starts coverage efficacy and persistency reinforce our conviction that debut will achieve a high degree of penetration in the market.
To penetrate this larger segment of the market. We are now employing a number of initiatives, including delivering HCP and caregiver webinars, which bring together experienced HCP treaters and caregivers with loved ones already on therapy to speak about their successful experience starting and staying on debut.
We are participating in local red events, especially during ret awareness month in October that provided an opportunity to bring together patients and families already on debut treatment with those that are still looking to learn more in.
In addition, we are delivering HCP peer to peer programs to have experienced treaters help newer to brand hcp's with best practices on getting started and remaining on debut to realize long term benefit.
Let's next turn to a discussion of persistency on debut on slide 10.
Real World Persistency, thus far is meaningfully better than we saw in our clinical trials.
When we measure persistency based on confirmed discontinuation, 81% of patients who started debut remain on therapy at four months since treatment initiation.
When we measure persistency based on confirmed discontinuation plus any other patients who are more than 60 days past their less scheduled refill the real world persistence is 75%.
In comparison in our lilac one open label extension study, 65% of patients who rolled over to drug from placebo remained on therapy at the end of four months.
This is important because we believe high levels of persistence early on translate into a higher number of patients staying on therapy long term.
Further supporting this outlook is the extremely high level of persistency, we've seen from patients that transitioned from the open label extension to commercial therapy.
This stronger than stronger than the stronger early persistency does not surprise us.
We expect the real world experience to be different from what we observed in our clinical trials, where caregivers and patients did not have all the information. We now have about proven clinical benefits as well as proper Gi management, including specific language in our label that instructs hcp's and caregivers to discontinue anti constipation medications prior to.
Waiting debut.
Further supporting our better initial clinical experience.
I'd now like to turn to a discussion of conversion and dose compliance on slide 11.
In addition to outperforming on demand we executed well ahead of plan on access. This is what enabled us to take that surge of demand and quickly converted to paid therapy.
A significant proportion of this surge converted to paid in the second quarter, but most converted in the third quarter. This leaves a smaller number of yet to convert patients carrying over into the fourth quarter. As we continue shortening the time between our script being written and converting to paid treatment.
To quantify our progress with payers are early foundational work has resulted in payers adopting formal plans covering almost 80% of lives to date.
Now, let me turn to titration and compliance to dose two factors that have been helpful in starting and keeping patients on therapy.
Compliance to dose through three months is in the range of 75% to 80% of the labeled dose.
As we expected the majority of patients begin debuted treating treatment by tight trading up from a lower dose to determine the optimal long term dose.
Most patients typically started approximately 50% of their prescribed dose and titrated up over a period of four to six weeks.
We believe this compliance range provides insight into using titration to find the most appropriate dose so caregivers and patients can benefit long term.
Finally, I'd like to turn to what matters. Most the real world benefits caregivers are sharing with us about the improvements they're seeing in their loved ones being treated with debut.
Please turn to slide 12.
We are excited and gratified to see the real World Daily stories of the impact debut is having on the lives of Ret syndrome patients through the caregiver testimonials you see on this slide.
A few representative examples of the day to day important benefits families are describing include improvement in speech or even speaking for the first time in years broadening vocabulary and improved engagement and conversations improved gait and feet placement purposeful I contacted improved communication through the <unk>.
<unk> size.
Decreased hand, wringing in stereotypic, coupled with more purposeful use of hands.
We also regularly hear feedback about the loved ones increased alertness with patients now being able to better follow conversations or complete activities. They were previously unable to complete.
These testimonials all speak to the promise of treatment with debut and we will continue to monitor.
Experiences as patients continue treatments.
I would now like to move to slide 13 for a discussion of the great progress we're seeing in our NUPLAZID franchise.
As Steve noted the NUPLAZID franchise is increasingly cash flow positive and continues to provide a strong foundation for our overall business.
Leveraging the emerging real world evidence data, we continue to increase our PDP market share versus off label atypical anti psychotics in a contracted overall occupancy Parkinson's disease market Prada.
Product sales of NUPLAZID in the third quarter were $144 $8 million.
The broad educational campaign, we started at the beginning of the year leveraging the real World evidence studies continues to deliver increasing value.
The more often we are able to speak with customers about these important observations regarding NUPLAZID and off label anti psychotics, the greater their confidence in choosing NUPLAZID over other alternatives.
These results reinforce the impact these datasets have on our efforts to drive new patient starts.
Looking at the broader market dynamics, we see that carpet opened levodopa prescriptions remained essentially flat over the first three quarters of 2023 versus the first three quarters of 2022.
While NUPLAZID continues to grip outpacing the market by a wide margin.
As you can see on this slide in the office space channel. During this time frame, we've grown new patient starts 9%, while all other PDP products have increased only 1%.
Turning to the LTC channel, where we delivered a record bottom quarter for NUPLAZID. We also continue seeing improvement new resident admissions, indicating some degree of market recovery.
In this channel NUPLAZID has substantially outpaced the class growing 16%. During this time period, while all other products used to treat PDP in the long term care setting have grown just 7%.
Understanding that the large majority of the revenues we record during any given quarter are the result of refills by continuing patients.
These significant increases in NUPLAZID, new patient starts in both market segments are encouraging.
I'll now turn it over to Doug Williamson, our head of research and development to provide an update on our pipeline programs starting on slide 14.
Thank you Brandon and addition to our two commercial products, we have a strong pipeline of clinical programs, providing us with several opportunities to further expand our.
Let's start with answering as a potential treatment for the negative symptoms of schizophrenia on slide 15.
Predominant negative symptoms remained one of the largest unmet needs in schizophrenia and as of today. There are still no approved treatments for these symptoms.
Our adjunctive <unk> program is designed to treat patients whose positive psychotic symptoms are adequately controlled but who still suffer from persistent and uncontrolled negative symptoms inhibiting our ability to lead a normal productive life.
As we stated last.
We have completed enrollment in advance to our second study of <unk> in negative symptoms of schizophrenia, we look forward to sharing top line results in the first quarter of 2024.
Please turn to slide 16.
We also have two pipeline programs with entirely new compounds in development, ACP 101, and ACP tool for Alban.
I'll begin with ACP 101.
We have completed all the necessary steps to initiate the phase III study evaluating ACP 101 for the treatment of hyperphagia and progress Willi syndrome.
This is a program we're very excited about.
<unk> Willi syndrome is a rare genetic in Europe behavioral syndrome that affects approximately eight to 10000 patients in the United States and represents a significant unmet need.
There are currently no therapies approved to treat the characteristic hyperphagia in patients with gws.
On this slide we've laid out the design of the phase III Global multi center randomized double blind 12 week placebo controlled study evaluating the efficacy and safety of ACP 101, and approximately 170 probably patients.
The primary efficacy endpoint is improvement of hyperphagia as mentioned as measured by the hyperphagia questionnaire for clinical trials, our HQ Cte scale.
Those patients who complete the study will be eligible to enroll in an open label long term extension study.
If data from this phase III study is positive we plan to submit a new drug application for the treatment of hyperphagia and Peter <unk> to the FDA.
We look forward to working with the private really community and clinical experts as we continue to advance development of this program.
Please turn to slide 17.
We continue to advance ACP to our for our next generation <unk> compound, which we're developing as a potential treatment for Alzheimer's disease psychosis.
As we previously described ACP two or four works, primarily as an inverse agonist of the five <unk> receptor.
Our experience with Tennant answering suggests that this mechanism is very well suited for elderly populations with multiple comorbidities and concomitant medications, providing antipsychotic efficacy with a very attractive tolerability profile and low drug drug interaction liability.
With ACP to our floor, we're seeking to build on those learnings and believe it has an exciting future.
Our work completed to date, including a comprehensive phase one program and supports our target product profile for ACP to reform.
As you can see on the slide ACP <unk> profile could represent a significant improvement over an already strong product profile for <unk>.
Please turn to slide 18.
Armed with this strong data from phase one we're preparing to start our seamless phase II phase III program for <unk> in the coming weeks.
Our plan includes an initial phase II study with over 300 patients, which is designed to role seamlessly into two phase III studies.
This phase II study has been designed and sized in such a way that if successful festival it could be considered a pivotal registration study.
As a reminder, with this accelerated development plan, we can eliminate dose finding and move from phase III directly into two phase III studies with the same sites continuously enrolling patients.
As each site completes our phase III site allocation, they will move directly into recruiting patients for one of the phase III studies.
Once the full study allocation of patients of phase two is complete we will analyze and report phase II results by which time the two phase III studies will already be underway.
This plan, which we've aligned with the FDA will ultimately provide three potential pivotal studies for our submission.
Overall, we're very excited with the progress of this program. It represents an important component of our strategy to continue to provide attractive opportunities to grow our business.
And now I'll turn it over to Mark for a financial update on slide 19.
Thank you, Doug Let's review our quarterly performance on Slide 20.
In the third quarter, we recorded $211 7 million of total revenues.
NUPLAZID net product sales were $144 8 million in the quarter compared to $130 7 million in the prior year.
$14 $1 million increase year over year is comprised of a $7 million in channel inventory reduction in the prior year that did not recur. This year $4 million is attributable to lower 340, <unk> volumes and $3 million as a result of 2% demand growth.
Our gross to net adjustment for NUPLAZID was 19, 9% for the quarter as compared to 18, 6% in the third quarter of last year. The increase to gross to net was primarily attributable to increased rebates associated with the depletion reduction act, partially offset by the reduction in 340 <unk> volumes I just mentioned.
Turning to debut net product sales were $66 9 million in the first full quarter of commercialization, reflecting the significant early demand and strong commercial performance described earlier by Steve and Brendan.
R&D expenses increased to $157 million in Q3, 2023 from $81 3 million in Q3 2022.
The increase was mainly due to the $100 million upfront payment to <unk> pharmaceuticals worldwide rights to <unk>, partially offset by a reduction in other R&D expenses.
SG&A expenses increased to $97 9 million in Q3 2023 from $78 1 million in Q3 2022 the.
<unk> was driven by commercial costs associated with our stronger than expected debut launch.
Actually offset by reductions in our spend on NUPLAZID.
We ended the quarter with a cash balance of $345 9 million on a year to date basis, excluding the upfront payment for worldwide rights to <unk>, we were cash flow neutral as a company.
With our successful launch of debut we were cash flow positive in the third quarter also when excluding the recent trip in a tight upfront payment.
Going forward, we expect to be cash flow positive over the long term subject to the size and scope of future business development.
Turning to slide 21, we are raising the bottom end of our full year NUPLAZID net sales guidance and our new range is $537 5 million to $545 million.
We are also raising the bottom end of our full year NUPLAZID gross to net guidance and our new range is $24, 5% to 25%.
Additionally, we are providing fourth quarter debut net sales guidance of 80 to 87 $5 million.
On the expense side, we are narrowing our guidance ranges as we near the close of the year, our full year R&D guidance of $340 million to $350 million narrows to the middle of our prior range, our full year SG&A guidance of $390 million to $400 million.
Narrows to the upper half of our prior range and now I would like to turn the call over to Steve for closing remarks on slide 22.
Thanks Mark.
Acadia is entering a transformational period of growth as we continue to execute across all our strategic priorities and we will.
Please proceed I would like to thank our employees for their accomplishments and their ongoing commitment and passion as we continue our mission to elevate locks.
Operator, I'll turn it over to you to start the Q&A.
Yes, Thank you ladies and gentlemen, if you wish to ask a question. Please press star one on your telephone if you wish to withdraw your question Press Star one again.
Please limit yourself to one question.
Please limit yourself to one question. Please standby, while we compile our Q&A roster.
Our first question comes from the line of Brett to borrow of TD Cowen You May proceed.
Thanks.
Cool.
Okay.
Retail youre coming through very muffled.
Could you turn up your volume please.
Oh.
Yes, Im sorry, Ritu, we can hear you talking we can't understand what you're saying you could get in the queue again and try again.
Our next question are up just a moment please.
Your next question comes from the line of Tessa Romero with Jpmorgan you May proceed.
Good afternoon, everyone. Congratulations on all the progress.
Our question is around <unk>.
TB patient starting debut specifically in <unk>, and how that looked exiting the quarter.
And then second question if I could.
Any trends with respect to the type of patient that might drop off earlier than the average.
Thanks, so much.
Yes. Thanks, so much for the question Brendan do you want to take us.
Yes sure test. Thank you so much for the question.
I think the right way to think about our demand early on is a pull forward of the demand we would have expected to see in the first place. We had a highly engaged group of families that got started early.
It is important to note that prescriptions that came in the second quarter, many would be filled in the third quarter simply due to conversion.
And then in the third quarter continued to see in the early part of that quarter that surge many of which were then filled in the third quarter. Some I think will also carry over into the fourth quarter. So what we're seeing is I think we've brought the launch to sort of a stepped up basis basis in terms of number of.
Families and patients already on therapy, and what we would expect to see leaving the third quarter is more linear growth, but on the same slope very familiar particularly seen in other rare disease launches those some of those didn't have the early step up that we've seen.
And Brennan I think the second part of the question was regarding any <unk>.
Different obviously in terms of patients that discontinued sorry.
Great question and no I would say that it's been.
What we would have expected in terms of discontinuation as with any rare disease product launch with subjective endpoints some patients aren't going to see.
Benefit early enough to stay on therapy, some will discontinue due to tolerability, but we've seen that across age ranges and weights.
Okay. Thank you. Our next question comes from the line of Yadkin Sarnia with Guggenheim You May proceed.
Hey, guys. Thank you for taking my question very impressive results to date.
Particularly on debut so I have a question on the guidance could you comment on some of the push and pulls into that guidance of 80% to $87.
Like what constitute to lower Washington.
And what are some of the drivers.
That can help you maybe be closer to the higher than most of the other lines. Thank you.
Yes, thanks, so much for the question Mark.
Mark you want to take that yes, so as we've been discussing I think we've looked at kind of all the key parameters that kind of buildup to a financial Corp forecast persistency demand.
Access and conversion and all of those together kind of come together to the range of.
Obviously higher towards the higher and lower towards the lower end.
One other thing kind of potentially on the lower end, we've yet to go through.
Christmas holiday period with debut so we don't know the last couple of weeks of the fourth quarter.
<unk> impact.
Bottles and sales on the lower end of the range.
Yeah.
Thank you.
Our next question comes from the line of Brett to borrow with TD Cowen You May proceed.
Hi, guys can you hear me now.
Yes, yes. Thank you.
I'm, so sorry about that translation nor apologetic.
So obviously congratulations on a series of.
Quarters.
I want to ask about insurance coverage.
Sure you know.
We've been conducting tracking survey of.
JP launch and why don't we hear over and over.
<unk> again from doctors.
Complaints about.
Coverage denials.
Despite the good numbers it seems like there is still.
Patients left on the table because of denials around.
Efficacy denials.
I was around that.
I wanted to see what you guys were hearing around.
Ill, maybe how long maybe exception letters to come through and now that we're six months out what are you seeing them re optimization. Thanks.
Okay.
Okay. Thanks Ritu Brendan.
Sure. Thanks Ritu.
And thanks for the question. So what we've seen is that published coverage policies have been very helpful. Obviously in the early days, there's going to be a bit of a backlog in patients because we'll get the prescription in we have to work through the prior authorization process and this is probably.
A bit compounded by the size of the rare disease treating audience. As you know this tends to be even in centers of excellence, maybe a single physician.
And an assistant doing some of this work Thats why we provided them with with so much support in the prior authorization process.
And the work that our hub can do on their behalf, but I can say is that approvals have continued to accelerate as we've moved further into the launch coupled with these coverage policies that we've seen now covering approximately 80% of lives for your specific question around re authorizations those are very much.
Been consistent with our expectations and are reflective of what we've seen for other rare disease specialty products. They generally require a physician attestation that the patient is receiving clinical benefit from debut and most of those reauthorization or at a six or 12 month periods. Some of them are at three months and then annual.
Thereafter, but thus far we have not had a final denial for a reauthorization for any debut patients.
Just maybe an update on that last point.
Their denials and their denials, so it's not uncommon, particularly if a plant doesn't have a formal coverage policy in place when a prescription comes in to issue an initial denial and so that is kind of noise in the system much of the time and but still doctors and they also have to deal with that as well.
We do in terms of supporting them, but.
But as Brendan mentioned and the other kind of dollars into now a plant just does not move off of that that is very rare and so.
So it does create a little bit of noise and administrative effort in the system, which does that subside as more and more plans get formal policies in place.
Thank you. Our next question comes from Gregory <unk> with RBC capital markets. Your line is open now.
Hi, this is a niche on for Greg Congrats on the quarter and thanks for taking my questions. Firstly from your interactions with physicians treating a ret what should one expect on seasonality of diagnoses, perhaps even stratified by age and also if I could how should we be thinking about potential value unlock for debut availability ex U S. Specifically by region. Thanks again.
Yes. Thanks, so much I'm going to ask Parag was wanting to take the first question. The second question.
Brian.
Sure. Thanks for the question so what I'll say at the outset is that overall physician feedback regarding debut is encouraging and points to a high level of caregiver interest.
<unk> of age gender weight range, so on and so forth. So we feel very confident about their view of the product profile in terms of diagnosis rates, we don't really see any barrier. There are differences as to when patients are diagnosed when we do see our differences when patients are coming in for their follow up.
One of the things that Brendan mentioned in his prepared remarks is that there is a different cadence of when patients are going in to see their clinician and over time, we expect that to accelerate as more of a patient's become familiar with debut at <unk> product profile.
Yes, thanks, Rob Thanks Brendan.
Ex U S. So for outside the United States. We are obviously excited about the opportunity to be able to bring tryphena tied to a broader audience.
Our first.
Progress will be in Canada. As we've described we're already in conversations to bring to bring data to Canada.
In the next 18 months, we've also began our conversations with regulators and taking scientific advice in Europe and are also prepping for four.
For Japan, we will look opportunistically at the rest of the world as well for opportunities for us to continue our global expansion from there.
Okay.
Thank you. Your next question comes from Jeff Hung with Morgan Stanley. Please proceed.
Thanks for taking my question, you said that centers are treating existing prevalent patients during planned clinic days. So I guess, what your expectations of more linear trajectory going forward have the number of clinic days remained stable or are they starting to decrease of centers works through existing prevalent patients. Thanks.
Yes.
Thanks for the question, Jeff Ravi you want to take that yeah happy to take that question. So I would say that it is variable. We know there are a number of centers of excellence that actually increase their clinic data as a consequence of the approval of debut.
Gone from a clinic day, a month to a clinic day week, others don't have the infrastructure yet.
As Brendan mentioned before on the payer question. There, maybe just one or two clinicians are responsible for everything from clinic visits to payer access issues and managing clinical trials as well. So over time, we are seeing more and more clinic days being added we're encouraging that in facilitating those sorts of connection.
Through centers of excellence and through the community as well, but this is a new muscle at the length of flex in many way and as more patients are being treated and seen clinic days are being added to meet the demand thats coming in through the clinic doors.
Thank you. Your next question comes from the line of Charles Duncan of Cantor. Please proceed.
Hey, good afternoon, Steve and team congrats on a great quarter.
For a debut I think I'll ask a couple of questions on the pipeline since other questions Finance Guy.
On the commercial on the on the pipeline first of all question regarding ACP 101 helpful context in terms of the number of patients can you give us a sense of how quickly you would anticipate that study to enroll and for ACP tool for.
Yes.
Assuming that they're going to be primarily Alzheimer's disease patients that are later on in their journey and how will you confirm that their Alzheimer's patients versus other etiologies or is that not an issue for you for the conduct of the study.
Yes, thanks, so much Charles.
Tim thing is to answer the first question. We just typically don't comment on projected enrollment until we get into actually get some enrollment experience. So we'll have to get back to you on that.
And then I'll ask Doug to answer the second question regarding Alzheimer's patients yes.
Yes, that's a great question Charles because that's obviously a conversation we had with the FDA.
And their outcomes assessment group are increasingly interested in validating the diagnosis of Alzheimer's. So we've agreed with them that we will conduct a biomarker of blood based biomarker.
Okay.
In into the diagnostic procedure to just add extra.
Extra level of certainty that we're getting the diagnosis correct.
Yeah.
Thank you.
Your next question comes from the line of Ash Verma with UBS. Please proceed.
Hi, Thanks for taking our question so just.
In terms of persistency on debut.
I wanted to get your thoughts on how you think this could trend over time I mean, we its very encouraging to see this four month data.
And this type of granularity, but how do you think this might look at like six nine or 12 months and any update on the <unk> two study.
And would that be a more representative.
Dana point for what we are seeing in the real world.
Yes, thanks, so much.
I'll take the first question I'll ask Kathy to take the second so.
With respect to the first question.
It's early still.
We do have as we've mentioned 800 patient on therapy. So now we have a meaningful amount of data on multiple parameters, including persistency so ever.
Strong number of patients that have completed four months of therapy and as we go forward. We will continue to monitor this and update.
We are obviously not as many patients.
At five months ago over four to six months and five et cetera.
But I would say that as we.
Look at the data that we have.
With the separation between where we're what we're seeing in the real world and what we're seeing.
The lilac one open label Rollovers, which again as we said we think has the best clinical trial comparison, because those patients starting therapy, knowing they are starting on debut.
We continue to see the separation and so we'll look forward to updating you as we go forward, but we're highly encouraged by what we're seeing.
We expect it to be able to improve on our clinical experience, we put significant investments in it and so far we are Kathy you want to take the second question.
With regard to the Lilac case study, we just completed that study as we had those patients continue on therapy until the drug was approved and they had the opportunity to go on commercial therapy over 90% of those patients did rollover directly onto commercial therapy.
We now have those results in hand, and we actually plan on presenting them in early December so in about a month.
American Epilepsy Society meeting.
But I will say in lilac too we had very very few dropouts. So as long as they enrolled in <unk>. They stayed in my life and I think that's consistent with what Brendan mentioned is we think if we can get them to that first period then.
They continue to stay on track finished hydro JV.
Thank you. Your next question comes from the line of <unk> Ahmad with Bofa Securities. Please proceed.
Hi, guys. Good afternoon. Thanks for taking my question, maybe I'll switch topics for a bit.
Upcoming advance two study.
Can you just remind us what type of data to expect at that top line readout in 2024, and what would you consider to be good data.
Thanks for the question, Doug you want to take that.
Sure.
So the topline data, we expect to see we're using the Nsa's 16.
The primary outcome is the overall change in the NSA 16, which is a very well validated and accepted scale for assessing negative symptoms in terms of what is good data look like we are.
Effect size that we saw at the 34 milligram dose in advance one was around about three I think was three four coincidentally.
Uh huh.
Three for Rosneft.
It wasn't perfect size, so I think thats consistent with what generally constitutes a clinically significant change in psychiatric studies. So if we saw that replicated I think with regard that as good data.
Operator next question.
Operator can you hear me.
Yes. Thank you. Our next question comes from the line of view Air with Mizuho.
You May proceed.
Hey, guys congrats on the good quarter.
I guess I'll switch drug on NUPLAZID, you mentioned that you benefited from the 340 B program. This quarter. Just wondering if this is a one time thing or do you expect this benefit to persist going forward. Thanks.
Thanks, So much for the question Mark you want to take that yes. So generally speaking kind of the $3 40 volumes as part of our mix has been.
Slowly growing I think what you saw in the results. This quarter was the artifact of.
Kind of a onetime increase last year that didn't happened. This year. So with that provided kind of a net change benefited revenue when you're comparing the quarters I think as we go forward, we will continue to expect.
Slow to modest growth in the 340 <unk> volumes as we've seen over the last couple of years.
Okay.
Thank you.
Our next question comes from the line of Marc Goodman with Leerink Partners you May proceed.
Hi, Thanks. This is <unk> on the line from Mark.
Couple of other follow up questions on Debbie from US first are you seeing any increases in overall diagnosis rates or numbers of rep patients, who have been identified and the community or when when might you start to expect to see that and then four.
For the side effects are you hearing anything on weather.
The side effects are better.
Better tolerated and specific patient subgroups like older versus younger patients. Thanks.
For anyone who would take the first question Prague and I'll take the second.
Yes so.
Thanks for the question.
Can you.
Forgive me can you repeat the first question.
Apologize.
The point was did we see or have we seen any increase in OEM forgive me forgive me. So diagnosis rate. Yes. We are so we're about two quarters into the launch of the drug and as we look at data at this point, we're not seeing meaningful changes in diagnosis rates.
I think it's safe to say that its early on our first goal is obviously to try and close that gap between the prevalent population, which we know is six to 9000 and the 4500 or so diagnosed and treated patients in the U S. We will continue to track that very closely we know as.
Our first to market drug is approved you tend to see increases.
You can see increases in the diagnosed population and I think we'll continue to share those insights over time.
Thanks Brennan for sure.
Sure and then the second question, what I'll say at the outset is that we're very encouraged with the real world experience both from an efficacy perspective and from a tolerability perspective remember we learned a lot from our phase III program in net and formed the basis of a very comprehensive approach to educating both providers and caregivers at the outset.
At post approval and was it thats been received really favorably we've designed it footprint inclusive of our patient support services team that is paired with every single new caregiver every single new family that goes on debut and we supplement that with extensive education to providers as well so that is.
Started out launch and remains a core part of our communication point.
Gain in doubt with providers and caregivers and because of that the experience that we're seeing hearing both from a prescriber perspective and from a period, where perspective is that a much better tolerability experience with.
With tools to mitigate any tolerability issues as they arise whether that diarrhea or other issues as well.
Okay.
Thank you. Your next question comes from the line of <unk> Richter with Goldman Sachs. You May proceed with your question Hi.
Hey, Thanks, This is Matt on for Sterling.
You all highlighted in deposits increasingly cash flow positive could you share what kind of margins you have right now and where you see that headed longer term and then on.
The litigation the patent litigation for NUPLAZID I think we were expecting an update by the end of the month.
Do you have any update there for us thank you.
Yes, I'll take the second question first and I'll ask Mark to answer the first one so so the district court has not issued a decision yet.
We think highly likely that the court will by the end of the year for sure.
And.
Just in terms of update or commentary. It's litigation. There is nothing really that we have to to say at this point other than I'll, just say, what we said before and that is we believe the loss on our side and we're highly confident in our position. So we're.
To get to a decision as well aren't you going to take the.
The cash profitability of NUPLAZID, we generate approximately $300 million of cash flow on a fully allocated cost basis of the franchise.
We expect that to continue to grow over time, obviously on a year to year basis as we go through our budget plans and investment cycles on a.
For year over year will decide to the.
The level of support and investment for for the franchise.
With our focus being both on top line growth and near term profitability.
Thank you. Your next question comes from the line of Sumit Kulkarni with Canaccord Genuity you May proceed.
Good afternoon. Thanks for taking my question, assuming that the momentum and the successful in negative symptoms of schizophrenia.
How are you thinking about potential pricing given the product is already on the market and do you think you're appropriately resource from a sales force perspective.
Two part question Brendan when you take the second part.
Sure.
Actually why don't you take both of them if you don't mind.
Yes sure so.
For us.
In terms of pricing, we are not going to discuss where we are at this point other than to say, we certainly will be looking at <unk> answer and value across our portfolio of indications. When we start to think about Resourcing. We are our CNS focused company and there is a fair amount of crossover between the treat.
<unk> of negative symptoms of schizophrenia, which will allow us to kind of capitalize on core resources, we have within the organization, but we will obviously logically expand our footprint to cover both the locations treating these patients and the broadened psychiatry population.
It tends to focus on these negative symptoms patients.
Thank you.
Your next question comes from the line of Amy <unk> with Needham <unk> Company you May proceed.
Good evening, Thanks for taking my question and congratulations on the strong performance of debut.
Maybe just one follow up on <unk> from me.
Can you talk about.
Set up the time to approval.
For patients whether they are under a medical exception.
Sure.
Whether they are on their insurance plan, where they.
<unk> has been put on the formulary.
And I'm trying to sort of get a better sense.
Where you are in the launch.
<unk> that the growth from here will be more linear or is this more to do it.
Set up the initial bolus of patients.
That is getting on day here and now it's more about really blocking and tackling and.
Getting waiting for new patients to be diagnosed.
You can give any color on that thank you.
Thanks, So much for the question two part question Brendan do you want to take the first and probably the second.
Sure that would be great. So thanks, so much what we've seen and unsurprisingly and very similar to other rare disease launches.
The initial approvals have come through letters of medical necessity letters of medical exception that was in the second quarter and somewhat in the third quarter.
As I've pointed to we now have almost 80% of covered lives that have planned written plan coverage for debut and as we've seen almost on a month by month basis, we've seen more in in the same month approvals second month approvals third month approvals over.
Time as these written plans have gone into place. So as I think we said on our last call by the end of the year. We would expect most of those policies that are going to be published to happen before the end of the year, we would expect to see a few more between now.
And at the end of December, but we are pleased with that.
Coverage, we already have and the increasing pace at which those.
Enrollment forms are becoming prescriptions.
To take the second piece for <unk> can you repeat the second question. Please if you don't mind.
Yes.
First Steve you want to repeat that.
It was the the linearity of the.
Okay.
The adoption of debut as a function of sort of what's happening for treatment dynamics in the fourth quarter.
Sure posed to Serge yes sure.
I would say is as Brendan mentioned in his prepared remarks and in the Q&A as well.
Through a really effective prelaunch education connecting closely with the REIT community with providers.
We have led to a flight to step up and update during the first couple of quarters at this stage. Our plan for growth is to really identify physicians and patients that have a smaller number of patients.
<unk>.
And patients that arent, having the same degree of frequency.
Visits.
The clinics as they had in the first couple of quarters of the year. So our goal moving forward is to establish a strong foundation that we've had so far in terms of demand, which is a significant breadth and depth of physician experience. So far a high number of patients and families sharing positive experience in the marketplace and access that has happened much faster than our initial prelaunch expectations.
<unk>. So looking ahead given this early demand, we're expanding our efforts beyond Seo to reach physicians, who have fewer outpatient as well as family that arent as connected to clinicians irregularly visiting their rep providers Davis.
Thank you we have time for one more question, which comes from the line of Jay Olson with Oppenheimer. You May proceed.
Oh, Hey, congrats on the quarter and thank you for taking our question.
Based on the impressive debut launch dynamics, so far could you. Please share your latest thoughts on the longer term commercial potential.
In terms of what peak sales are achievable.
How does the commercial value of the ex U S opportunity compared to the U S opportunity. Thank you.
Thanks, So much for the question Jean Marc you want to take a.
Clearly J thanks for that we're very excited about.
What we experienced in the launch so far debut as we've said many times. We expect this to be a very very meaningful product in terms of size in the U S. It could be similar to pivotal a answering just as a matter of and higher.
But as a matter of kind of just our our company policy and this we don't put out peak sales estimates.
The size of the opportunity outside of the U S. They're more more rep patients just by population in Europe than there are in the U S with a less in Japan than there are in U S.
The pricing dynamics in those markets could be a little different but we're still working through that as we advance towards our.
Our regulatory efforts so more to come to discuss in the coming.
Yes.
Thank you very much.
Okay. Thank you. This concludes our question and answer session. Mr. Davis. Please proceed to closing remarks.
Hi, great. Thanks, so much operator.
Thanks again, everyone for joining us today, we look forward to updating you on our progress next quarter.
Thank you again for your participation in today's conference call. This concludes the presentation and you may now disconnect good day.
Okay.
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Okay.
Yes.
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