ACADIA Pharmaceuticals Inc

NASDAQ:ACAD

Earnings Call Analysis

Earnings Call Transcript 2024-Q2

[Operator]

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the ACADIA Pharmaceuticals Second Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to Al Kildani, Senior Vice President of Investor Relations and Corporate Communications at ACADIA. Please go ahead.

[Albert Kildani, executive]

Thank you, Daniel. Good afternoon, and thank you for joining us on today's call to discuss ACADIA's second quarter 2024 earnings. Joining me on the call today from ACADIA are Steve Davis, our Chief Executive Officer, who will provide some opening remarks followed by Brendan Teehan, our Chief Operating Head of Commercial, who will discuss our commercial franchises, DAYBUE and NUPLAZID. Also joining us today is Elizabeth Thompson, PhD, Executive Vice President, Head of Research and Development, who'll provide an update on our pipeline programs; and Mark Schneyer, our Chief Financial Officer, who will review the financial highlights. Steve will then provide some closing thoughts before we open up the call to your questions. In addition, Parag Meswani, Senior Vice President, trofinetide, Rare Disease franchise as well as Kimberly Manhard, Senior Vice President, Global Strategic Planning and execution 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 1995. These forward-looking statements, including goals, expectations, plans, prospects, growth potential, timing of events, future results and financial guidance 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, and we assume no obligation to update or revise these forward-looking statements as circumstances change, except as required by law.

I'll now turn the call over to Steve for opening remarks.

[Stephen Davis, executive]

Thank you, Al. Good afternoon, everyone, and thank you for joining us.

Please turn to Slide 5. The foundation of ACADIA's business is built on our 2 commercial products, NUPLAZID for the treatment of hallucinations and delusions associated with Parkinson's disease and DAYBUE for the treatment of Rett syndrome. Together, these commercial franchises delivered $242 million in revenues for the second quarter. In addition to these successful commercial products, we have a deep and growing pipeline headlined by our Phase III Prader-Willi syndrome program and our Phase II Phase III program in Alzheimer's disease psychosis. Our 2 profitable franchises drove 46% year-over-year revenue growth and provide ACADIA with a strong financial foundation. We are a cash flow positive company and now have over $500 million in cash with no debt. This gives us a great deal of confidence in our ability to fund future growth by advancing our current pipeline programs as well as investing in future business development opportunities.

Please turn to Slide 6. I I'll now discuss some highlights from each of our commercial products that Brendan will expand upon further in his section. I'll begin the DAYBUE. In the second quarter, DAYBUE net product sales were $84.6 million, up 11% sequentially. During the quarter, we returned to growing active patients on therapy. Today, we are at 900, which is back to where we ended 2023 following the surge of new patients we experienced soon after DAYBUE's launch and is 66 patients above our low point late in the first quarter. Consistent with our expectations, numerical discontinuations dropped significantly in the quarter, with the rate of weekly discontinuations decreasing 46% in the second quarter versus the first quarter. New patient starts rebounded in the quarter, but with the rate of weekly starts increasing 12%. This rate of growth was slower than projected. So while things are moving in the right direction, they have not moved as fast as we anticipated. As a consequence, and as Mark will discuss in his section, we're lowering our guidance range for DAYBUE for the year to $340 million to $370 million. Brendan will discuss in his section, our outlook for the remainder of the year and beyond.

Now turning to NUPLAZID. Net product sales were up 11% in the second quarter of 2024 over second quarter of 2023 to $157.4 million. For the first half of 2024, net product sales were up 10% compared to the first half of 2023. There are 2 under current supporting this growth. First, the Parkinson's disease psychosis market, which was hit very hard during the pandemic has now stabilized. Second and more importantly, we're getting very good traction on the real-world evidence studies we've previously discussed and on a positive label change announced late last year, clarifying that NUPLAZID can be used in Parkinson's disease psychosis patients, who also have dementia. Our performance year-to-date and the favorable undercurrents I've just described have led us to increase our annual sales guidance for NUPLAZID in 2024 from a previous range of $560 million to $590 million, up to a new range of $590 million to $610 million.

Before I leave NUPLAZID, I want to touch on one other important point. Our market research demonstrates that the awareness of hallucinations and delusions dropped drastically during the course of the pandemic and since, which means patients many times may be experiencing these symptoms do not raise them with their doctor. This gap creates an opportunity to raise that awareness in a market that has now stabilized. As Brendan will describe, we are initiating a targeted campaign to close the hallucinations and delusions awareness gap and capitalize on this opportunity. Our NUPLAZID franchise has never been in a stronger position and we look forward to sharing more details about our growth initiatives.

Let's turn to Slide 7. Before giving an overview of our current products and pipeline, I'd like to take this opportunity to officially introduce Dr. Elizabeth Thompson, as our Executive Vice President, Head of Research and Development. Liz is a preeminent drug research and development leader with extensive experience, and we're thrilled to have her on board. Liz joins us from Amgen where she served as Executive as President, Research and Development Rare Disease, following its acquisition by Horizon -- of Horizon Therapeutics.

Turning to our products and pipeline. As you heard, both NUPLAZID and DAYBUE form the growing core of our commercial business. In addition to these successful commercial franchises, we have numerous attractive late- and early-stage pipeline assets. These include ACP-101 for Prader-Willi syndrome, where we are currently enrolling subjects in our Phase III study. Prader-Willi is a rare and debilitating genetic disease the patients have an unrelenting drive to eat called hyperphagia. There are no FDA-approved treatments for this condition. We are also currently enrolling our Phase II Phase III program with ACP-204 in Alzheimer's disease psychosis patients, another disorder, where there are no approved treatments. ACP-204 is our second-generation 5-HT2A blocker where we are leveraging our learnings from NUPLAZID. It represents an opportunity to expand and extend our neuropsychiatry [indiscernible]. And behind that, we have a rich pipeline at early stage disclosed and undisclosed programs that position us for future growth.

I'll now turn it over to Brendan to discuss our commercial performance beginning on Slide 8.

[Brendan Teehan, executive]

Thank you, Steve. Today, I'll be focusing my comments on the current state of business in our NUPLAZID and DAYBUE franchises.

Starting with DAYBUE, my comments will address 3 key areas: First, results to date in 2024, new data we are messaging based on the real-world experiences from caregivers and health care providers and core elements of the business that drive the long-term value and revenues.

Please turn to Slide 9. Let's start with how the business has progressed thus far in 2024. The second quarter marked a return to growth in total active patients on DAYBUE. As you know, the first quarter saw a slowdown in new starts. That dynamic, coupled with the first quarter increase in numerical discontinuations associated with the large surge in new patient starts soon after launch, resulted in a decline in total active patients during the first quarter. Our second quarter recovery in total active patients was driven by a sequential increase in demand and a decrease in numerical discontinuations. First, we generated an increase in new patient starts on DAYBUE with weekly new starts coming in 12% higher than in the first quarter. At the same time, we experienced a significantly lower rate of weekly discontinuations, decreasing 46% in the second quarter versus the first quarter. While we made important progress on both fronts in the second quarter, our rate of increasing active patients on therapy was lower than anticipated. This is a function of numerical discontinuations decreasing in line with our expectations but our rate of new patient starts, while growing total patients on therapy has been slower than projected. As we expand our penetration in high-volume institutions and community practices, there are obviously substantially more positions we're engaging, each of whom we need to educate on the clinical benefits of DAYBUE so they can best communicate those benefits to their caregivers and patients. Our increased penetration in these treatment settings over the past quarter indicates this will happen and it just takes time to reach this broader audience.

With that, let me now turn to our view of the business for the second half of the year and opportunities to accelerate new patient starts. As of August 1, we have 900 active patients on DAYBUE therapy, which is fully back to where we were in late 2023. By the close of the second quarter, approximately 30% of all diagnosed Rett patients in the United States had initiated DAYBUE treatment. After less than 15 months on the market, This, of course, means 70% of the Rett population is still available, and we've continued to grow our penetration early in the third quarter. Beyond the centers of excellence, we have also driven greater penetration in both the high-volume COE like institutions as well as in community practices, where almost 3/4 of all Rett patients are treated. Today, approximately 2/3 of all DAYBUE prescriptions are coming from these 2 segments with the remaining 1/3 continuing to be sourced in COEs where we see a steady stream of volume. As previously described, we expect this shift in the source of business to continue over time as we achieve greater penetration in the high volume and community practices. Having launched DAYBUE in mid-April of last year, we are now at a point where we have a significant body of real-world relevant experiences from both health care providers and the caregiver community. We're now communicating these proof points back into these communities to further inform their understanding of the clinical benefits DAYBUE can provide in the context of their own experience. We further underscore how these real-world experiences are consistent with our LAVENDER results and how this body of data can contribute to the establishment of potential best practices.

Let's turn to Slide 10 to discuss this further. It's essential that we communicate to physicians and families, the benefits of treatment with DAYBUE they can expect to experience over time. To that end, we recently presented at the IRS F conference in June or posters describing 3 studies: LILAC-1, LILAC-2 and LOTUS, where caregivers speak to both the number, diversity and durability of benefits seen over time. as well as their utilization of GI management strategies. Liz will go into more detail in her section. As we enter the third quarter, we are sharing more success stories families are experiencing across a wide range of patient ages as well as disease severities, all intended to paint the patient picture for DAYBUE. Those stories told by the caregivers whose loved ones are benefiting from DAYBUE treatment show us that the results we're seeing in the real world are very consistent with what we've seen in our clinical studies. But importantly, can now be expressed in more understandable and relevant terms to caregivers. On the GI management front, we are seeing a growing body of evidence that diarrhea may be more manageable in the real world than what was observed in the LAVENDER study. As a reminder, there was no proactive GI management protocol associated with the Phase III study. Today, with authentic examples of the benefits patients are seeing, coupled with a proactive GI management plan, our commercial and medical teams are better equipped than ever to educate HCPs and caregivers about DAYBUE's real-world benefits and tolerability.

Let's turn to Slide 11 where I'll discuss my third DAYBUE topic, the core elements of our business that drive long-term value and revenues. First, I'll start with the size of the opportunity and physician intent to treat. As I noted a few minutes ago, today, there is a sizable population of approximately 5,000 diagnosed Rett patients in the United States. We expect this diagnosed population to continue to grow and further close the gap with the estimated 6,000 to 9,000 total prevalent population. Of the 5,000 diagnosed patients today, approximately 30% have initiated DAYBUE therapy, leaving a very large opportunity to continue to grow the drug.

I'd like to share a few key elements of our market research, further informing our view of the attractiveness of the remaining opportunity. Today, 92% of HCPs treating Rett syndrome are aware of DAYBUE. Surveyed HCPs state that over the next 24 months, they expect to increase their prescriptions of DAYBUE to treat in the aggregate more than 70% of their eligible Rett patients. Physician site improvement in quality of life as the primary reason to expand their DAYBUE prescribing. When asked, fully 60% of physicians reported they are extremely willing to proactively recommend DAYBUE to a caregiver and approximately 80% are extremely willing to honor a caregiver request for DAYBUE. Second, as we've previously stated, we see the opportunity for a sizable enduring population on DAYBUE. Real-world persistency on DAYBUE is continuing to track about 10 percentage points higher than what we observed in our clinical trials, specifically the placebo rollover patients from the LILAC-1 study. Consistent with our prior reports, today, our real-world persistency rate on DAYBUE at 9 months remains 58% and with a now much larger number of patients having reached that 9-month point, demonstrating the durability of this measure. Knowing additionally that approximately 40% of patients who initiate a DAYBUE on our Phase III program remain on therapy today and have now been on therapy more than 3 years, this 10 percentage point improvement informs our expectation that in the real world, half or more patients who initiate DAYBUE therapy will be long-term enduring patients.

Third, let's turn to DAYBUE utilization rates. As we've previously described, upon initiating DAYBUE, there many physicians choose to titrate their patient up and some down. In other words, they may start dosing below the label dose and work up, or they may start at the full label dose and they may choose to decrease the dose. In both cases to determine the best therapeutic dose for their patient, if that is not 100% of the label dose. Following any dose adjustments during this treatment initiation period, our data consistently indicates the average dose patients take is between 75% and 80% of the label dose. When we take into consideration our full patient mix, which includes patients that are titrating, patients at their post titration dose and patients who may, from time to time, pause therapy due to comorbidities or other reasons, the product consumption rate across our entire patient population is in the low 70 percentage range. Fourth, for the sake of completeness, we've established access to DAYBUE across multiple payer types with now greater than 80% of plans having written policies covering DAYBUE largely to label. We further see conversion rates to paid treatment of approximately 90% over time as our monthly patient cohorts mature. And finally, as I described above, we have a growing body of real-world evidence demonstrating the clinical effectiveness of DAYBUE that is much more relatable to HCPs and caregivers. We believe in these long-term value drivers of DAYBUE, and we'll continue to leverage them.

Please turn to Slide 12 for an update on NUPLAZID. Turning to NUPLAZID. We had an outstanding second quarter with 11% year-over-year growth. This performance has been driven by our leveraging of the real-world evidence studies demonstrating NUPLAZID's unique clinical profile for patients suffering from Parkinson's disease-related hallucinations and delusions as well as last year's label update. Our sales team has done an excellent job of effectively educating HCPs about the key findings of these important real-world evidence studies published over the past 2 years, which demonstrate the differential benefits of initiating treatment in patients with NUPLAZID for PDP as opposed to off-label atypical antipsychotics. We've bolstered these efforts with peer-to-peer programming with PDP experts educating their peers on these data sets and the need to consider NUPLAZID as the first and best choice for treating PDP. In addition to these important new data sets, last year, the FDA approved a positive change to NUPLAZID's label, making it clear that NUPLAZID can be prescribed to treat patients with Parkinson's disease psychosis with or without dementia, thereby addressing confusion that existed with prescribers about NUPLAZID's addressable patient population. Today, our sales teams can address these questions clearly and help clinicians make the best decision for their patients suffering from PDP.

Let's now turn to look at how NUPLAZID is performing relative to the broader Parkinson's disease market. Please turn to Slide 13. There are 2 takeaway points from this slide. First, we've observed that the Parkinson's disease market has now stabilized following significant upheaval during the pandemic years as the Parkinson's community was particularly hard hit given the advanced age and medical condition of people with Parkinson's and the number of patients who reside in long-term care facilities. For several quarters in a row now, utilization of carbidopa/levodopa the staple of Parkinson's motor therapy has been stable. More importantly, as you can see in the chart, NUPLAZID new patient starts in the second quarter grew 4% sequentially, while new patient starts for other antipsychotics declined 8%, leading to NUPLAZID's share of new starts increasing 11% during this time period. This is terrific progress and sets us up nicely for the second half of the year as new patient starts in the first and second quarter become our continuing patients in subsequent quarters. The second quarter also marked a significant new milestone as we ended the quarter with the highest number of patients ever on NUPLAZID in the community setting. This is a reflection of both strong performance among our continuing patient population as well as share gains I described above for new patient starts.

Please turn to Slide 14. With the PDP market now having stabilized and NUPLAZID both gaining share from our competitors and growing treated patients, we see an attractive opportunity to further engage patients and caregivers to bridge a gap that exists today regarding the awareness of hallucinations and delusions as well as NUPLAZID's central role in treating these non-motor symptoms of Parkinson's disease.

Let's look at the market research that backs this up and what we plan to do. As you can see from the chart on this slide, among caregivers and patients unaided awareness of hallucinations and delusions associated with Parkinson's is down significantly from a peak of 33% in May of 2020 to around 8% more recently. To address this decline in patient and caregiver awareness and help identify new patients, we will soon launch a targeted unbranded DTC campaign intended to raise disease awareness by speaking directly to this audience. As a reminder, this is a dynamic population that has a high patient turnover. Thus, many patients suffering with PDP today will not have seen or benefited from our prior educational campaigns. It's therefore critical we continue identifying and educating new patients and caregivers with these improving market conditions, most of whom have not heard this type of messaging. On top of this low level of awareness of hallucinations and delusions, we know awareness of NUPLAZID among this audience as a treatment option is also low at approximately 15% according to the latest data. These 2 dynamics resulted in fewer discussions with HCP is about the non-motor symptoms of PDP, undoubtedly leading to some patients not receiving the treatment they need. Despite these low levels of awareness, hallucinations and delusions and of NUPLAZID, our market research indicates that approximately 65% of physicians if receiving a request for NUPLAZID from a patient or caregiver indicate they are extremely likely to prescribe it upon that request. We recently launched a branded DTC campaign designed to raise awareness of NUPLAZID as the only FDA-approved treatment option for patients suffering from hallucinations and delusions associated with Parkinson's disease. It's intended to be a complement to the upcoming disease awareness campaign. We look forward to sharing our progress on both of these programs as they roll out in advance of the upcoming fall months. and the holidays where we know families will get together and assess potential changes they see in their loved ones as a function of their disease. The current strength of our NUPLAZID business has been driven by both the real-world evidence studies that we've shared with HCPs as well as the positive label clarification. That success now leads us to increase our guidance for NUPLAZID sales this year.

To be clear, we are not relying on our new DTC campaigns to establish our 2024 revised guidance. as the projected impact of these campaigns is expected to be realized in 2025 and beyond. Equally importantly, we will be able to absorb the investments in these new campaigns without increasing our SG&A guidance for 2024. Mark will provide the details shortly.

I'll now turn it over to Liz Thompson, Executive Vice President, Head of Research and Development, to provide an update on our clinical studies and pipeline programs, starting on Slide 15.

[Unknown Executive]

Thanks, Branden. I'd like to start out by saying that it's a pleasure to be with you all today. I'm pleased to be joining the ACADIA team. I came here based on my enthusiasm for what our marketed medicines are bringing to patients for the potential of our pipeline and the opportunity to continue to feed and grow that pipeline. I look forward to our conversation today and going forward.

Now turning to today's content. We continue to make progress on enrollment in our late-stage clinical programs. First, let's turn to Slide 16 and which gives an overview of our ACP-101 program in Prader-Willi syndrome. Let me start with some background on the disease. Prader-Willi is a rare genetic neurobehavioral disorder that affects approximately 8,000 to 10,000 patients in the United States. It's defining characteristic at hyperphagia, which is an unrelenting hunger, a constant craving for food that never ends because patients living with Prader-Willi never feel bold. This manifests very early in life and can lead to obesity and myriad complications like type 2 diabetes or heart disease as well as behavioral changes like aggression and anxiety. And unfortunately, life expectancy is currently only around 30 years old, largely due to cardiovascular disease.

Please turn to Slide 17. As a reminder, we're currently running a Phase III study called COMPASS PWS. This study is global, multicenter, randomized, double-blind and placebo-controlled. Building on the prior Phase III experience, this trial focuses on the 3.2 milligram dose that was previously shown to reduce hyperphagia behaviors. We also utilized the same primary endpoint as was used previously, the hyperphagia questionnaire for clinical trials. We anticipate giving more specific guidance on timing as we get further into enrollment. But thus far, it is proceeding well. We've been truly pleased with the enthusiasm we're seeing in the Prader-Willi community, and we look forward to continuing to work with them and clinical aspects as we advance through the study. And of course, if data from this Phase III study are positive, we plan to submit a new drug application for the treatment of hyperphagia in PWS and to the FDA.

Turning to Slide 18. Now on our second late-stage clinical program, ACP-204. You've heard from both Steve and Brendan today about the strong growth in NUPLAZID. We're looking to build upon that solid foundation with ACP-204, our next-generation 5-HT2a compound that we're developing with the intent to expand our neuropsychiatry portfolio. We're very encouraged by what we've seen so far with ACP-204 in a comprehensive Phase I program. No sign of QT prolongation at the doses we're studying a wide dose range supporting the potential for a dose equivalent to approximately twice the approved NUPLAZID 34-milligram dose and steady-state PK achieved in less than half the ton of NUPLAZID, suggesting the potential for an earlier onset of activity. ACP-204's profile could represent a significant improvement over the already strong product profile for NUPLAZID.

Please turn to Slide 19 to review our ongoing clinical trials. Currently, ACP-204 is in development as a potential treatment for Alzheimer's disease psychosis. The program is global and contains randomized, double-blind, placebo-controlled studies. We've previously discussed our approach to making enrollment in the Phase II, Phase III program seamless under a master protocol, which we aligned upon with FDA and other regulators. However, regulators in the EU haven't agreed to this master protocol to enrollment at sites in that geography only will be limited to Phase II at this time. We continue to plan for a Phase II study with over 300 patients and 2 Phase III studies of roughly equivalent size. The Phase II study is ongoing and they're designed and sized in such a way that if successful, it could be considered an adequate and well-controlled registrational study. Once the full Phase II study data are collected, we will analyze and report results by which time the 2 Phase III studies will already be underway at all study sites outside of EU with the EU sites joining the Phase III program a little later. Again, I anticipate giving more specific guidance on timing as we get further into enrollment.

Finally, moving to DAYBUE on Slide 20, where we continue to make progress in our ambition to bring this medicine to patients outside the U.S. living with Rett syndrome. We've made our submission to Health Canada and continue to look forward to a regulatory decision in the fourth quarter. We are also targeting the submission of the marketing authorization application in the EU in the first quarter of next year. And finally, we've had productive conversations with PMDA, the regulatory agency in Japan regarding potential to bring DAYBUE to patients there. As is typical, additional clinical work will be necessary to support approval in Japan and PMDA has given us valuable initial guidance on a potential development plan. We very much look forward to continuing to collaborate with PMDA and Japanese experts to design a clinical program. We also continue to build the body of evidence around DAYBUE through presentations at medical meetings and in the peer review literature.

A few highlights are included on this slide. I'll start with LILAC-1 and LILAC-2, which were the open-label extensions of Lavender, our pivotal study for DAYBUE. Patients completing the pivotal study were first eligible to enroll in LILAC-1 for up to 40 weeks and then upon completion, could enroll in LILAC-2 for an additional 3 years. So in total, the studies represent the potential for nearly 4 years of continuous treatment with DAYBUE. And while they are important caveats with long-term open-label studies like this, for instance, patients who aren't doing well tend to drop out, they can give us important insight into the effect that long-term treatment can have. And what we saw on LILAC-1 and LILAC-2 as a long-term treatment continue to improve symptoms of Rett syndrome without evidence of new safety concerns. And importantly, in those caregivers who chose to participate in exit interviews, 96% said they were satisfied or very satisfied with treatment efficacy and over half so they had changes in their daily lives as a result of their child improvement. Both of these studies were recently published in med. LOTUS is a real-world evidence study enrolling patients who are prescribed commercial DAYBUE. Real-world evidence studies can provide supplemental information to the necessary constraints of a clinical trial. Although this is ongoing and data will continue to accrue, it's notable that there's evidence of significant variation in an approach to titration and dialer management, with only a minority of caregivers reporting use of antidiarrheal medications or supplemental fiber. These data on diarrhea management in particular, suggest there could be room for continued improvement in the patient experience. LOTUS has also allowed us to collect information from caregivers, outlining the nature of improvements they see with nonverbal communication, alertness and social interaction and connectedness as the most consistently cited. These data were presented at the recent International Rett Syndrome Foundation Annual Meeting.

And now I'll turn it over to Mark for a financial update beginning on Slide 21.

[Mark Schneyer, executive]

Thank you, Liz. Let's review our quarterly financial performance on Slide 22. In the second quarter, we recorded $242 million in total net sales, up 46% from the second quarter of last year. DAYBUE net product sales were $84.6 million in the second quarter up from $23.2 million in the second quarter of last year. Sequentially, DAYBUE net sales were up 11% from the first quarter comprised of 7% follow growth and a 4% increase in net price. NUPLAZID net product sales were $157.4 million in the second quarter, up 11% versus the prior year second quarter. Gross to net for NUPLAZID was 23.8% in Q2. Our NUPLAZID franchise achieved 4% demand bottle growth and 6% selling bottle growth when comparing Q2 2024 to Q2 2023. In this year's quarter, our selling modestly outpaced demand while demand modestly outpaced sell-in in last year's quarter. On a year-to-date basis for 2024, sell-in has equal demand. R&D expenses increased to $76.2 million in the second quarter of 2024 from $58.8 million in the second quarter of 2023. The increase in research and development expense was mainly due to increased costs for ACP-101, ACP-204 and early-stage programs, partially offset by a reduction in costs associated with our pimavanserin negative symptoms of schizophrenia program. SG&A expenses increased to $117.1 million in the second quarter of 2024 from $96 million in Q2 2020. The increase was primarily driven by upfront costs related to a new consumer activation program to support our NUPLAZID franchise increased marketing costs in the U.S. to support DAYBUE and investments to support the potential commercialization of trofinetide outside the U.S. We ended the quarter with a cash balance of $500.9 million which increased $30.4 million versus the first quarter.

Please turn to Slide 23 for a discussion of our 2024 financial guidance. For NUPLAZID, we are increasing our guidance for net sales from a range of $560 million to $590 million to a range of $590 million to $610 million based upon our strong performance year-to-date. As Bren mentioned, this guidance increase does not rely upon an impact from our new DTC campaigns, the benefits of which will largely be achieved in 2025 and 2026 through a combination of accelerated new patient starts and refills from these new patients. In terms of gross to NUPLAZID, we are narrowing our guidance to a range of 26% to 28% as we are now halfway through the year. When thinking ahead to 2025 for NUPLAZID gross to net and considering the specified small manufacturer phase-in as a part of the inflation Reduction Act, we expect NUPLAZID gross to net to reduce by approximately 300 basis points year-over-year. For DAYBUE, as discussed earlier, while we saw a rebound in new patient starts and a reduction in patient discontinuations, our overall growth in net patient adds has been slower than expected. As a result, we are updating our guidance for DAYBUE net sales to a range of $340 to $370 million, down from our previous guidance range of $370 million to $420 million. Taking NUPLAZID and DAYBUE together, our guidance for total revenues is $930 million to $980 million. For both R&D and SG&A, with half of the year completed, we are narrowing our guidance range. We are narrowing SG&A expenses for the year to the higher end of our previous range and now expect between $465 million and $480 million for SG&A expenses.

As Brent mentioned, we are able to absorb the expenditures associated with the new DTC campaigns without the need to increase our guidance range for SG&A spend. We are also narrowing R&D expenses for the year to the lower end of our previous range and now expect between $305 million to $315 million for R&D expects. Lastly, we are updating our cash guidance range of $575 million to $625 million, reflecting our updated guidance ranges for net sales and operating expenses.

And now I'll turn the call over to Steve for closing remarks.

[Stephen Davis, executive]

Thanks much, Mark. Please turn to Slide 24. We have a strong foundation for our business today and are excited to build on our successes and drive future growth. We are focused on continuing to execute on the significant opportunity that remains in front of us for both DAYBUE and NUPLAZID. We look forward to further enrolling our 2 late-stage programs, including our Phase III program for Prader-Willi syndrome and our Phase II Phase III program in Alzheimer's disease psychosis. We're pleased to have these exciting pipeline assets while at the same time being in a position to generate sustainable and increasing cash flow from operations to fund future growth.

With that, I'll now turn it over to the operator for Q&A. Operator?

[Operator]

[Operator Instructions] And our first question comes from Ritu Baral with TD Cowen.

[Ritu Baral, analyst]

I guess I wanted to ask about the difference that you guys are seeing in the ongoing discontinuation rate and the new start rate between the community and the COEs. I believe you said that 2/3 of the new prescriptions were coming from the COE like high volume in the community. But how are those centers and doctors managing discontinuations versus the COEs. And then I was wondering second part of this one question, how the dose titration discussion that was featured significantly at IRS factored into that as well?

[Stephen Davis, executive]

Thanks much for the question, Ritu. Brendan, do you want to take that?

[Brendan Teehan, executive]

Sure. Thanks, Ritu. So first, just in terms of discontinuation rates between COEs and non-sales we see it's reasonably steady between the both, meaning to say that there's more consistency that we see in our persistency curves, whether you're in a COE or a high-volume institution. . From a new patient start perspective, our audience will recall that we started in COEs and had excellent uptake. Obviously, these were the practices that were involved in our clinical trials, the vast majority of them. So our penetration of COEs was and is significantly higher than it is outside of those COEs. So it's logical that as we continue to talk about the DAYBUE message and expand our breadth the majority of our prescriptions are going to, over time, begin to come from non-COEs and from the community. As a reminder, about 1/4 of all Rett patients will be found in centers of excellence, of which there are now 21. So it gives you a sense for just patient processing ability from that segment. And then the other 75% are going to be found in these high-volume and community practices. So we continue to increase our penetration there. 2/3 of our new starts come from there. And we still have a steady flow of about 1/3 of our prescriptions coming from COEs.

I think you also made a reference to IRSF for dose titration. I'll try to touch on that. If I don't answer your question, please ask it differently. But we did speak at IRSF about dose titration and the ability of physicians if they deem it appropriate to start at a lower dose, a lower dose and titrate up. we are definitely seeing that. And we're seeing that both in COEs and outside of COEs. We also have been encouraging families to stay in close contact with their physicians to make sure that if there are needs to make any adjustments to their GI plan, they do that in the first 2 to 4 weeks. All of that is intended to help increase the ability of patients and families to stay on therapy through those first early couple of weeks on treatment with DAYBUE and get out to the benefits that we expect they'll see with longer-term treatment.

[Operator]

And our next question comes from Charles Duncan with Cantor.

[Charles Duncan, analyst]

Unfortunately, it's a 2-parter, and that is related to the bookends in terms of DAYBUE guidance. Now that we're in the third quarter, I guess I'm wondering what gives you confidence to hit one end versus the other, what has to happen? And then just a clarification from Liz. I wasn't sure I understood. Are you going to read out the Phase the Phase II from the ACP-204 study and then the Phase III, could you go back and repeat your comments there?

[Stephen Davis, executive]

Yes. Thanks much for the 2-part question, Charles. Mark, do you want to answer the first part?

[Mark Schneyer, executive]

Yes, sure. Thanks for the question. I guess in terms of day guidance, where we're tracking today with kind of all the key metrics. I would say we're tracking towards the lower half of our revised guidance range. With all the initiatives that we have in place and the new information and data that we're going to share with HCPs and caregivers about benefits and I management plans. We think all of that can take us to increasing our metrics and getting towards the high end of the range. And the low end of the range would need to see our metrics turn a little backwards from what we're achieving today. Liz?

[Unknown Executive]

Absolutely. So for clarification there. So how this is going to work? Is that sites can enroll in the Phase II and then sites that are not in the EU, once they're done enrolling in the Phase II, move over and start enrolling in the Phase III what that means practically speaking, is that Phase II data are going to come out while the Phase III is still enrolling. So we think that's actually going to be a helpful thing to then continue to spur enrollment thereafter, and it will help the EU to come on quickly because Phase II data are always motivational for physicians and for patients. So hopefully, that clarifies it.

[Operator]

Our next question comes from Gregory Renza with RBC Capital Markets.

[Anish Nikhanj, analyst]

It's Anish on for Greg. Thanks for the update just on DAYBUE, how are you thinking about the potential impact of the summer months with respect to drug holidays time to start and even restarts. So what are you seeing so far into the summer months? And as a supplement, could you quantify for us what percentage of patients that have taken to DAYBUE that have stopped, have not restarted?

[Stephen Davis, executive]

Thanks so much for the question, Brendan, do you want to take these?

[Brendan Teehan, executive]

Sure. Thanks. So I would say that the summer looks like the summer in terms of what we see for just patient cycling. July, there are patients that are taking holidays that are also HCPs taking holidays. But COEs are operating at the same cadence. And we would expect that we will -- as families come back from vacations and get into the regular preparation for the upcoming school year. that we would expect to see our new patient starts continue to progress as we get into August and September.

The second question was around discontinuations. There are really 2 different types that we've described. One is the discontinuation where a family has told us. And as you know, we have really exquisite relationships with our patients and families. We have our FAM team that's out in the field with them as well as our clinical nurse coordinators that speak with them on a regular basis. So we know a patient is discontinued. But there are also those who may just be taking a pause, maybe having a medical procedure and may just have a lapse in treatment. What we've seen over time is if you have -- if you've gone out past 60 days, there's still about 20% of those patients that will come back to refill. That gives you some sense for it.

In terms of actual discontinued patients, fewer patients that discontinued -- have at least date, returned to DAYBUE treatment.

[Operator]

Our next question comes from Joel Beatty with Baird.

[Joel Beatty, analyst]

I can guess on the progress and thanks for the detailed update. For the 70% of diagnosed patients who have not initiated on DAYBUE, are you able to break that group down into any market segments that might be helpful for thinking about that opportunity -- so just perhaps what percent have awareness of DAYBUE or what percent have discussed it with a physician. And then as a second part, you mentioned a survey that mentioned that over the next 24 months, to professionals expect to increase the prescriptions that they do to more than 70% for their patients. Anything about what percent of that survey population they were currently at that point in time of the survey?

[Stephen Davis, executive]

Yes. Thanks much for the question. Brendan?

[Brendan Teehan, executive]

I may ask you to repeat the second question. You trailed off at the end, I wasn't sure what that was. But I can answer the first one, for sure. So in terms of the 70% of the population that remains, first, I would remind everyone that DAYBUE has a very broad label. It is for ages to end up. We see both male and female patients being treated. And thus far, the patient population is very much reflective of the prevalent population. So we see a wide range of ages and disease severities treated. In terms of the remaining 70%, unsurprisingly, the highest penetration that's expected is in the 2- to 20-year-old range. It's slightly lower in the 21-plus-percent range, but it's still substantially higher than what physicians have been treating to date? And then for the second question, I didn't hear precisely how it was stated.

[Joel Beatty, analyst]

If the docs expect to be treating 70% of their patients in the future, what percent of their patients are they currently treating today according to that survey?

[Brendan Teehan, executive]

Sorry. Thanks for the repetition. Yes, no problem. So we know that we have prescriptions -- we've started 30% of patients. We have prescriptions for more than that. And the physicians that responded felt that their patient population, they had treated about 40%. So when I say 70% in aggregate, that's stating that they would increase from their 40% to a total of their total addressable population of approximately 70%, which varies by age category.

[Operator]

Our next question comes from Marc Goodman with Leerink.

[Marc Goodman, analyst]

Yes. We've talked a lot about DAYBUE, can you talk about NUPLAZID a little bit, just the rest of the year, the puts and pulls on making the high end and low end of the numbers?

[Stephen Davis, executive]

Yes. Thanks much for the question, Marc. Mark Schneyer, do you want to take that?

[Mark Schneyer, executive]

Yes. Thanks, Marc. On NUPLAZID, yes, we're certainly pleased with our performance to date and have increased our range as we talked about on the prepared remarks for NUPLAZID, on the metrics we are -- where we are today, we're tracking around the midpoint of the guidance. So kind of high and low from there, outperformance we'll have new patient starts kind of beyond where we're tracking towards today and potential early positive benefits beyond our timing expectations for the DTC campaign, lower end would just be us falling a little behind our performance on where we are today. And then, of course, with the brand in NUPLAZID, small fluctuations of gross to net or in-channel inventory can impact where our final results will be for the year.

[Operator]

Our next question comes from Jeff Hung with Morgan Stanley.

[Lee Hung, analyst]

For ACP-101 in Prader-Willi, can you just talk about your confidence in your approach versus what competitors are doing it? What is your current thinking about potentially expanding development into other indications with hyperphagia or obesity?

[Stephen Davis, executive]

Yes. Thanks much for the question. I'm going to ask Kimberly Manhard, to take that.

[Kimberly Manhard, executive]

Yes. So with respect to Prader-Willi, you're probably aware of Celino compound GCCR, which is diazoxide, disecholine control release Diazoxide is originally approved for hypoglycemia. So it's been out in the market for some time, but this is a different form coliticholine. And they have indicated back in late June that they filed their NDA and so they had a randomized controlled trial that was not positive for the overall data set. But when they looked at it in patients and data up through the start of COVID, they were able to see a statistically significant difference between the placebo and active and then they conducted an open-label extension and from an open-lable extension an agreement to do a randomized withdrawal period of the open-label extension saw a positive benefit. So -- but we think that there are a lot of opportunities for treatment of hyperphagia and Prader-Willi syndrome. It's a very devastating disease and new treatments are needed. If the product is approved, then we've done an analysis to show that they should be able to be given together since there are very different mechanisms of action. And also, there's no PK interaction or no overlapping toxicities. The main toxicities were hypertecosis and pulmonary edema and hybrid glycemia. So we don't see those in our trials.

[Stephen Davis, executive]

And Jeff, maybe just to Dan and take that a little bit. I think the confidence in our making an investment here and in running the Phase III study. It really comes from the data. It comes from the Phase II data where we see a nominally significant reduction in hyperphagia associated with Prader-Willi syndrome at the dose that we're testing is the same primary endpoint in the Phase III study of Phase II. And so the -- there are lots of things that go into these assessments, but the principal data that we're resting on is that Phase II data.

[Operator]

Our next question comes from Keith Tapper with BMO Capital Markets.

[Unknown Analyst]

Congratulations to this on the transition to ACADIA. First, a question on DAYBUE. Would be helpful to understand the impact of the community engagement and how that's underway to address discontinuations. Just wondering the effort or the impact of GI management efforts on patient dynamics, could you provide color on when the efforts began to reach the community and when the impact should be fully realized? And is there an effort to drive restart maybe through patient claims surveillance or revisiting providers?

[Stephen Davis, executive]

Yes. Thanks much for the question. I'm going to ask Parag Meswani to address those questions. Parag?

[Parag Meswani, executive]

Yes. Thanks for the question. So as a reminder, in our last call, we talked a lot about the consistent application of GI management and GI mitigation strategy. That's an ongoing effort, right? We do that with physicians on a regular basis, and we're doing that with provider caregivers on a regular basis as well. So ensuring consistent with addition of simple things like stopping on to the patient medication, adding fiber to our diet, hydration and usable oparamide, dose modifications if there's a new part of the algorithm that's now being utilized more and more often as well. we're starting to see the impact of that. You saw that in the second quarter, right? We've begun to implement a more consistent message to providers and caregivers on that. We're starting to see some of the benefits of that just in terms of is all as the patients on therapy and the decline in numerical discontinuation that we saw in the past quarter, and we'll continue to reinforce that for the remainder of this year. On restarts, we're beginning to see some patients begin to come back on to therapy, but our focus has been on ensuring a very positive treatment initiation and supporting those patients that have been on therapy for the long term.

[Operator]

Our next question comes from David Hoang with Citigroup.

[David Hoang, analyst]

So I wanted to ask about patients on DAYBUE long term. Do you have any data points or maybe kind of the earliest patients that initiated therapy? Have any reached a year or more? And do we have any visibility on, I guess, 12-month persistency rate compared to 9 months? And then just one follow-up would be on ACP-204. If I heard correctly, it sounded like EMA did not agree to a seamless Phase II/III protocol. And so I'm just curious as to kind of why that might be? What was the pushback? And how might that impact the regulatory path in Europe?

[Stephen Davis, executive]

Yes. Thanks much, David. Brendan, do you want to take the merge question? And then, Liz, you want to take the second?

[Brendan Teehan, executive]

For sure. Thanks, David, for the question. And as I said in my prepared remarks, we actually have a number of patients that are out past 2 or 3 years that are on DAYBUE. And actually, in some of our programming, we have caregivers of those loved ones that speak about the benefits they're seeing at 6 months. at a year and 2 years, often providing really the marker for other families on what they might hope to see with longer-term treatment. You also asked about persistency curve. So the LILAC-1 study, the placebo rollovers are the ones that we're using to look at our performance in the real world as opposed to that study, where we track more 10 or more percentage points above that out to 9 months. And at 12 months, we don't have a comparator to give you but are still seeing excellent persistency rates well above 50% that give us that confidence in the longer-term persistency we're expecting to see in the real world with the support we're able to give.

[Stephen Davis, executive]

And just one additional point there. All the patients that started DAYBUE in our Phase III program, 40% of them are still on DAYBUE today. So again, that's -- they've been on therapy for 3-plus years. And if all of those patients that rolled over on the commercial drug, they've all stayed on therapy during the 15 months that we've been in market with the exception of ONE patient that discontinued.

[Unknown Executive]

And for the 204 points, just to clarify, so how we were doing this is running it under a master protocol, and it was really just a master protocol, the concept that the EU had an issue with at this point. So we fully running Phase II and then running a separate -- rolling them into Phase III at a later time. So Europe will participate in the Phase III we anticipate that this is going to be acceptable for regulatory purposes. And it's really just that they can't go straight through with the seamless enrollment under a master protocol right now.

[Operator]

Our next question comes from Paul Matteis with Stifel.

[James Condulis, analyst]

This is James on for Paul. Maybe one on NUPLAZID and you mentioned the DTC and you don't expect the effect to kind of really take to take effect until 2025 and 2026. I guess, what are your expectations in terms of like what growth can look like and what your ROI on BTC could look like for NUPLAZID? And then -- can you just remind us on how gross net is going to evolve for NUPLAZID over time? I missed it a little bit. So I just want to make sure.

[Stephen Davis, executive]

Yes, I'll take the first question, Mark, I'll ask you to answer the second. We've run DTC campaigns previously in the NUPLAZID franchise. It's an important part of the communications this patient population, as we mentioned in our remarks, it turns over pretty quickly. And so there's a kind of a continual feet of new patients that have not heard messaging before. And we based on the previous DTC campaigns we've done, we've seen -- they had very positive ROI, and we've seen a meaningful impact on being able to grow this franchise. We're now 8 years in -- we paused DTC during the pandemic in the few years since because the market was pretty turbulent and it just wasn't in an ideal environment for making these investments. We indicated at the time that if market conditions change and we see an opportunity to make these investments, we will. The opportunities that we have today, I think, is really as well as an attractive a set up as it could be. As Brendan described in his remarks, the awareness of pellucinations and delusions is down dramatically. That's important because when patients are diagnosed with Parkinson's disease, many times their physicians don't talk about the patients into logs because they don't come up until years later, and they only impact about half the population. So when they happen, these patients just don't like connect the dots. They just don't associate them with Parkinson's as so many times they go untreated for a very long period of time. And so it's really important to get this messaging out there. I think we have a very, very portal environment to make this investment, and we're very excited about making.

[Mark Schneyer, executive]

And I can jump in to address the question on gross to net. So for next year, starting 2025, we expect the Medicare Part D redesigned to take place. And as part of that, we will qualify for the specified small manufacturer phase in, as I mentioned in the prepared remarks. So as we look from gross to net from this year to next year for NUPLAZID, we expect our gross net go down by about 300 basis points as that small manufacturer phase-in starts. And then from there, it will -- gross debt will likely gradually increase as that small manufacturer phasing unwinds over the coming years.

[Operator]

Our next question comes from Yatin Suneja with Guggenheim Securities. .

[Eddie Hickman, analyst]

This is Eddie on for Yatin. For DAYBUE, were there any gross to net differences from 1Q to 2Q, how much of that revenue growth came from an increase in net price versus patient growth? And then on the patient number, you told us there was 900 as of August 1. Are you able to give us a sense of how many of those came in July?

[Stephen Davis, executive]

Yes, I'm going to ask Mark to take the first question, Brendan the second.

[Mark Schneyer, executive]

Yes. So as we said in the prepared remarks, our volume and price split sequentially for DAYBUE with 7% [indiscernible] growth, so essentially volume and patient growth and 4% net benefit from price as we took a price increase midway through the second quarter. .

[Brendan Teehan, executive]

And for the second question around the 900 patients, just a couple of things. There's -- as a reminder, it was towards the end of the first quarter that we hit sort of our low point for patients -- active patients on treatment. Throughout that time period moving forward, we've seen nice incremental month-over-month growth in active patients. So 900 wasn't a sudden overnight thing. This was a fairly steady progression of those 66 patients added over a 90-plus day period.

[Stephen Davis, executive]

Yes. And I might just add to that, that you start looking at things on daily or weekly basis, which we do every day, of course, things move around a little bit. Last week, it was one of the best weeks we've had in a couple of quarters. So we're hesitant to try to break things down short a period. But as Brendan mentioned, the trend that we've seen has been a consistent trend throughout the quarter. .

[Operator]

Our next question comes from Tessa Romero with JPMorgan.

[Tessa Romero, analyst]

Specifically, where are you most focused with respect to your commercial strategy for the second half year, particularly to accelerate adds -- and for DAYBUE and have you thought about altering or changing your sales infrastructure to best target key providers or new providers? And can you also just remind us with your current subscriber base number and where that's sitting is getting versus your overall target?

[Stephen Davis, executive]

Thanks much, Tess. Keep us honest to you make sure we answer. I think there's a 3-part question. I'm going to ask Parag to start it.

[Parag Meswani, executive]

Yes. So I'll start with the first question which in was where are we going to source growth from here from an ACV perspective. One thing I can the outset is there is still plenty of opportunities at the centers of excellence, right? They are still a core constituent in driving prescriptions and patient adds. But we have been pivoting our business and our priorities outside of the center of excellence for all the reasons that we've talked about before, 3 out of 4 patients are being seen outside of COEs they are getting more and more comfortable with the new tools in their toolkit. And at this stage, we're seeing a very even distribution of where our prescriptions are coming from. About 1/3 from COEs, about 1/3 from that middle bucket of [indiscernible] institutions, and 1/3 from the community. And if we're going to continue to fish where the majority patients are being seen. And so our priority has been and continue to be for the remainder of Q3 and into Q4, growing our business and getting our fair share of business from the population that is being treated outside of the center excellence. And we expect to see continued breadth of prescribing in those account settings but also depth of prescribing. We have well over 700 unique prescribers at this point. Just prescribe to a single patron. And our goal is to continue to get more physicians to prescribe and for those that have more than a patient has been prescribed it to more of the patients that they are currently treated.

[Stephen Davis, executive]

Tess, did we catch every -- all aspects of your question. I think, Brendan, maybe...

[Brendan Teehan, executive]

Yes, I think Tess, you spoke a little bit to structure and Parag, if I missed anything, feel free to add to it. But yes, I think 16 months in, we've seen a couple of great opportunities that have emerged. We've put a team out there called the PACE team, that's the patient and community education team. This is for families that have expressed a lot of interest in DAYBUE and more information but have not yet signed up for a prescription. Unsurprisingly, as people learn more and more, they have a lot of questions some of which clinicians can clearly answer, but others, they just want to know about the access and reimbursement process. They want to know what support they're going to be able to get from the from ACADIA along the journey, which gives us a chance to talk about our fan team and others. So we've had already successes of families meeting with our PACE team members and then deciding to get started on a prescription. We have them all placed regionally so that they can be face-to-face with families either individually or at community gatherings. And as you know, we're heading into Rett awareness month or really what I would call more like Rett awareness quarter because it happens between September and November really, where we'll have lots of opportunities to engage those families. Then we also have TLLs or thought leader liaisons that are engaging with thought leaders in Rett, but also thought leaders that have a lot of experience with DAYBUE to help just better describe the treatment journey. The dos and don'ts and how to be successful in starting patients on therapy. So a couple of enhancements to our promotional field footprint.

[Parag Meswani, executive]

Yes. The only thing I'll add, Tess, to what Brendan said is we currently have with our field sales put 100% coverage. So with the 5,000-plus patients that are out there, we have 100% coverage of the treating physician for all of those with the field footprint that we have. We continue to fine-tune that model and Brendan mentioned a couple of fine-tune adjustments to that, which is the addition of new role that give us great opportunities to engage with the prescriber base on the keeping and leader side, but also to have a new resource that can engage directly with wet caregivers and help them better understand JV's product profile and whether it's right for the look.

[Operator]

Thank you. This concludes the question-and-answer session for today's call. Mr. Davis, please proceed to closing remarks.

[Stephen Davis, executive]

Great. Thank you operator. Thanks again, everyone, for joining us today. We look forward to updating you on our progress next quarter.

[Operator]

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