ACADIA Pharmaceuticals Inc
NASDAQ:ACAD
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Estee Lauder Companies Inc
NYSE:EL
|
Consumer products
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Church & Dwight Co Inc
NYSE:CHD
|
Consumer products
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
American Express Co
NYSE:AXP
|
Financial Services
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Target Corp
NYSE:TGT
|
Retail
|
| US |
|
Walt Disney Co
NYSE:DIS
|
Media
|
| US |
|
Mueller Industries Inc
NYSE:MLI
|
Machinery
|
| US |
|
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
14.29
31.77
|
| Price Target |
|
We'll email you a reminder when the closing price reaches USD.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Estee Lauder Companies Inc
NYSE:EL
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Church & Dwight Co Inc
NYSE:CHD
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
American Express Co
NYSE:AXP
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Target Corp
NYSE:TGT
|
US |
|
|
Walt Disney Co
NYSE:DIS
|
US |
|
|
Mueller Industries Inc
NYSE:MLI
|
US |
|
|
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
This alert will be permanently deleted.
ACADIA Pharmaceuticals Inc
Earnings Call Analysis
Q3-2023 Analysis
ACADIA Pharmaceuticals Inc
The company celebrated a robust start with the launch of DAYBUE, a treatment for Rett syndrome, surpassing expectations in terms of demand, persistency, and paid treatment conversion. More than 800 patients were on DAYBUE as of the end of September, and with a focus on broadening access to the Rett patient population, a significant increase in adoption is anticipated. Persistency rates, an indicator of continued usage, have been encouraging with 81% of patients maintaining treatment at the four-month mark, outperforming the rates seen during clinical trials. The company's successful strategy also translated into securing coverage for almost 80% of potential beneficiaries, ensuring widespread access to DAYBUE.
Caregivers and healthcare professionals have reported substantial benefits from DAYBUE treatment, including improvements in speech and engagement, which underscores the drug's potential to significantly improve the quality of life for patients with Rett syndrome.
NUPLAZID, indicated for Parkinson’s disease psychosis, continued its upward trajectory, with a 14.1 million increase in net product sales year-over-year. The company's strategic educational campaigns have bolstered confidence in NUPLAZID's superiority over other treatments within the market, which is evident from its superior growth compared to other Parkinson’s disease psychosis medications.
Exciting progress was made in clinical programs for other conditions, including a Phase 3 study of ACP-101 for hyperphagia in Prader-Willi Syndrome, aiming to address a significant unmet need. Furthermore, the advancement of next-generation compound ACP-204 for Alzheimer's disease psychosis shows a potential for significant improvement beyond the current product, Pimavanserin, thereby strengthening the company's portfolio in the CNS space.
The company reported total revenues of $211.7 million, with an updated full-year net sales guidance for NUPLAZID falling between $537.5 million to $545 million. DAYBUE contributed $66.9 million in net product sales in its first quarter of commercialization. Despite elevated R&D expenses due to strategic investments, including the acquisition of rights to Trofinetide, the company demonstrated financial strength with a cash balance of $345.9 million and expects to remain cash flow positive over the long term.
The company is awaiting the district court’s final decision regarding NUPLAZID's patent litigation. They remain confident in their legal position and stress the importance of legal battles in protecting their innovation.
There is a continued focus on expanding the commercial reach of its products. For DAYBUE, the initial emphasis will be on Canada, followed by Europe and Japan, with broader global expansion thereafter. Strategies include targeted physician engagement and leveraging the crossover between current CNS-focused products and the treatment community for schizophrenia's negative symptoms, aiming at comprehensive value across their portfolio.
The company believes there is a significant market opportunity for DAYBUE internationally, especially in Europe, where the number of Rett patients exceeds those in the U.S. While pricing dynamics could vary, the leadership is optimistic about the drug’s future and is dedicated to navigating through upcoming regulatory challenges.
You don't have any saved screeners yet
Good day, ladies and gentlemen, and welcome to Acadia Pharmaceutical's Third Quarter 2023 Financial Results Conference Call. My name is Kathie, and I will be your coordinator for today. [Operator Instructions]I would now like to turn the presentation over to Al Kildani, Senior Vice President of Investor Relations and Corporate Communications at Acadia. Please proceed.
Thank you, Kathie. Good afternoon, and thank you for joining us on today's call to discuss Acadia's 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 Teehan, our Chief Operating Officer and Head of Commercial, who will discuss the DAYBUE launch and NUPLAZID execution. Doug Williamson, our Head of Research and Development, will provide an update on our pipeline programs, and Mark Schneyer, our Chief Financial Officer, will review the financial results. Steve 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 Meswani, Senior Vice President for Trofinetide-Rare Disease Franchise, will be available for the Q&A session. We are using supplemental slides, which are available on our website's 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, 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 5. Acadia is entering a transformational period of growth, delivering record revenue in the third quarter. Our rapidly growing franchise and DAYBUE complements our highly profitable NUPLAZID business, and our robust R&D pipeline provides rich opportunities to fuel growth to 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 first, we are extraordinarily pleased with the success of DAYBUE. 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 Rett community as soon as DAYBUE became available. As we'll discuss today, we're seeing strong indicators across all launch 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 these successful marketed products, we have a deep and growing pipeline, including our Phase III Advanced II study of pimavanserin in negative symptoms of schizophrenia, where we expect to have top-line results in the first quarter of 2024. Our Phase III study evaluating ACP-101 in Prader-Willi syndrome, where we expect to commence enrollment later this month. In leveraging our learnings from NUPLAZID, we have developed ACP-204, our next generation 5-HT2A blocker. Here too, later this month, we will commence enrollment of patients in our seamless Phase II, Phase III program, studying ACP-204 in Alzheimer's disease psychosis.Fourth, the success of DAYBUE's U.S. launch underscores the opportunity we have to expand in the global markets following our expanded license agreement for DAYBUE announced in July, which granted us worldwide rights to the asset. Our early U.S. experience serves as an important reminder of the significant unmet medical need worldwide, with no approved treatments for Rett syndrome outside the United States. We're meeting with Health Canada this month to discuss a planned new drug submission for trofinetide in Canada. In addition, we're engaging with European regulators in 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 that 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 DAYBUE and NUPLAZID in CNS and rare disease.Let's discuss our DAYBUE launch and some of the launch dynamics on Slide 6. 5.5 months into the launch, we've provided hope to a community that has never had an approved treatment for Rett syndrome. We've seen Rett patients respond in amazing and inspiring ways to DAYBUE therapy. We've established critical relationships in the medical and caregiver communities, and we've provided a strong base for future continued success. During this time, from mid-April through September, we've booked approximately $90 million in revenue.In preparing for the approval and launch, we've made significant investments in both the medical and caregiver communities, in medical education, in 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 expectations.Prior to launch, we expected demand to be high. It has been. In fact, one area where we significantly exceeded our pre-launch plans is just how fast the demand came immediately upon launch, particularly from Centers of Excellence. Another area where we have exceeded pre-launch expectations is the speed at which we've established access with payers.As Brendan will speak to you shortly, this access has come 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 plans. These 2 dynamics, pent-up demand from Centers of Excellence and more rapid access than anticipated, coupled with high levels of patient persistence on therapy, have resulted in just over 800 patients on DAYBUE as of September 30.Importantly, these dynamics have 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 DAYBUE in a short amount of time. A high number of patients and families are sharing their positive experiences at this early stage, 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've previously reported that we're very encouraged by 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 DAYBUE remain on therapy 4 months after treatment initiation, and only an additional 6% are beyond 60 days since their last scheduled refill. In comparison, in our LILAC-1 open label extension study, 65% of patients who started DAYBUE treatment after rolling over from placebo remained on therapy 4 months after initiation.To sum up, we continue to operate at or ahead of plan. Prior to 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 DAYBUE launch is 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 this strong foundation as we increase breadth and depth in all sectors of the Rett community.Let's turn to a snapshot of our current products and pipeline on Slide 7. What we see is an overview of our 2 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've 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, DAYBUE provides dramatic growth potential to our business, and we have a robust pipeline behind that where we'll be commencing late-stage studies in 2 programs later this year. In 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 Prader-Willi Syndrome. Prader-Willi is a rare and debilitating genetic disease where 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 commence our seamless Phase II, Phase III program with ACP-204 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 DAYBUE launch execution and NUPLAZID'S commercial performance on slide 8.
Thank you, Steve. Let me provide additional commentary on our 2 commercial franchises, DAYBUE and NUPLAZID, and the terrific performance both delivered in the quarter. Let's begin with DAYBUE on Slide 9. We have 3 commercial execution priorities I'd like to discuss today, demand, persistency, and conversion to paid treatment. DAYBUE's launch has outperformed across each parameter since approval. As Steve noted, we have seen a surge in demand for DAYBUE since the launch in mid-April, resulting in just over 800 patients on DAYBUE as of September 30. 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 Rett patients who can benefit from DAYBUE, many of whom have fewer interactions with Centers of Excellence and with patient advocacy organizations.This segment represents the majority of patients who have not yet been prescribed DAYBUE. As we previously described, approximately 25% of Rett patients are treated in Centers of Excellence, another 60% are treated in high-volume institutions, and the remainder in community practices. As we look to engage this next significantly larger segment of the Rett market, we expect a more linear adoption curve, as we've seen with other orphan rare disease launches. New patient requests are coming in at the rate we expected at this point in the launch and will support the continued attractive growth of DAYBUE.Our experience so far with new starts, coverage, efficacy, and persistency reinforce our conviction that DAYBUE will achieve a high degree of penetration in the Rett 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 DAYBUE.We're participating in local Rett events, especially during Rett Awareness Month in October, that provide an opportunity to bring together patients and families already on DAYBUE treatment with those that are still looking to learn more. In addition, we're delivering HCP peer-to-peer programs to have experienced treaters help newer-to-brand HCPs with best practices on getting started and remaining on DAYBUE to realize long-term benefit.Let's next turn to a discussion of persistency on DAYBUE 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 discontinuations, 81% of patients who started DAYBUE remain on therapy at 4 months since treatment initiation.When we measure persistency based on confirmed discontinuations plus any other patients who are more than 60 days past their last scheduled refill, the real-world persistence is 75%. In comparison, in our LILAC-1 open label extension study, 65% of patients who rolled over to drug from placebo remained on therapy at the end of 4 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 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 HCPs and caregivers to discontinue anti-constipation medications prior to initiating DAYBUE, further supporting a 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 convert it 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 a script being written and converting to paid treatment. To quantify our progress with payers, our 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, 2 factors that have been helpful in starting and keeping patients on therapy. Compliance to dose through 3 months is in the range of 75& to 80% of the labeled dose. As we expected, the majority of patients begin DAYBUE treatment by titrating up from a lower dose to determine their optimal long-term dose. Most patients typically start at approximately 50% of their prescribed dose and titrate up over a period of 4 to 6 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 DAYBUE.Please turn to Slide 12. We are excited and gratified to see the real-world daily stories of the impact DAYBUE is having on the lives of Rett 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 in conversations, improved gait and feet placement, purposeful eye contact and improved communication through the patient's eyes, decreased hand-wringing and stereotypies coupled with more purposeful use of hands. We also regularly hear feedback about the loved one's 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 DAYBUE and we'll continue to monitor experiences as patients continue treatment.I'd 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 antipsychotics in a contracted overall Parkinson's disease market.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 antipsychotics, 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 Carbidopa-Levodopa prescriptions remain essentially flat over the first 3 quarters of 2023 versus the first 3 quarters of 2022, while NUPLAZID continues to grow, outpacing the market by a wide margin. As you can see on this slide, in the office-based channel during this timeframe, 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 bottle quarter for NUPLAZID, we also continue seeing improvement in 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%. Assuming that the large majority of 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, Brendan. In addition to our 2 commercial products, we have a strong pipeline of clinical programs providing us with several opportunities to further expand our growth. Let's start with pimavanserin as a potential treatment for the negative symptoms of schizophrenia on Slide 15. Predominant negative symptoms remain one of the largest unmet needs in schizophrenia, and as of today, there are still no approved treatments for these symptoms.Our adjunctive pimavanserin program is designed to treat patients whose positive psychotic symptoms are adequately controlled, but who still suffer from persistent and uncontrolled negative symptoms, inhibiting their ability to lead a normal, productive life. As we stated last quarter, we have completed enrollment in advance-2, our second study of pimavanserin 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 2 pipeline programs with entirely new compounds and developments, ACP-101 and ACP-204. 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 in Prader-Willi syndrome. This is a program we're very excited about. Prader-Willi syndrome is a rare genetic neurobehavioral syndrome that affects approximately 8,000 to 10,000 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 PWS.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 in approximately 170 Prader-Willi patients. The primary efficacy endpoint is improvement of hyperphagia as measured by the Hyperphagia Questionnaire for Clinical Trials, or HQCT, 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 in PWS to the FDA. We look forward to working with the Prader-Willi community and clinical experts as we continue to advance development of this program.Please turn to Slide 17. We continue to advance ACP-204, our next-generation 5-HT2A compound, which we're developing as a potential treatment for Alzheimer's disease psychosis. As we previously described, ACP-204 works primarily as an inverse agonist of the 5-HT2A receptor. Our experience with pimavanserin 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-204, we're seeking to build on those learnings and believe it has an exciting future.Our work completed to date includes a comprehensive Phase I program and supports our target product profile for ACP-204. As you can see on the slide, ACP-204's profile could represent a significant improvement over an already strong product profile for pimavanserin.Please turn to Slide 18. Armed with this strong data from Phase I, we're preparing to start our seamless Phase II, Phase III program for ACP-204 in the coming weeks. Our plan includes an initial Phase II study with over 300 patients, which is designed to roll seamlessly into 2 Phase III studies. This Phase II study has been designed and sized in such a way that if successful, 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 II directly into 2 Phase III studies with the same sites continuously enrolling patients. As each site completes their Phase II site allocation, they will move directly into recruiting patients for one of the Phase III studies. Once the full study allocation of patients for Phase II is complete, we will analyze and report Phase II results, by which time the 2 Phase III studies will already be underway. This plan, which we've aligned on with the FDA, will ultimately provide 3 potential pivotal studies for a 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. The $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 attributable to lower 340B volumes, and $3 million as a result of 2% demand growth.Our gross 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 net was primarily attributable to increased rebates associated with the Inflation Reduction Act, partially offset by the reduction in 340B volumes I just mentioned.Turning to DAYBUE, 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 Neuren Pharmaceuticals for worldwide rights to trofinetide, 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 increase was driven by commercial costs associated with our stronger-than-expected DAYBUE launch, partially 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 trofinetide, we were cash flow neutral as a company. With our successful launch of DAYBUE, we were cash flow positive in the third quarter, also when excluding the recent trofinetide 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 net guidance, and our new range is 24.5% to 25%. Additionally, we are providing fourth-quarter DAYBUE net sales guidance of $80 million 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 SC&A guidance of $390 million to $400 million narrows to the upper half of our prior range.And now, I'd 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 I would like to thank our employees for their accomplishments and their ongoing commitment and passion as we continue our mission to elevate life.Operator, I'll turn it over to you to start the Q&A.
[Operator Instructions] Our first question comes from the line of Ritu Baral of TD Cowen.
[indiscernible]
Ritu, you're coming through very muffled.
I'm sorry.
Could you turn up your volume, please?
[indiscernible]
Yes, I'm 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, but we'll bring our next questioner up. Your next question comes from the line of Tess Romero with JP Morgan. You may proceed.
Congratulations on all the progress. Our question is around cadence of patients starting DAYBUE, specifically in 3Q 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?
Brendan, do you want to take this?
Yes, sure. Tess, 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's 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 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 to [indiscernible] and other rare disease launches, though some of those didn't have the early step up that we've seen.
And Brendan, I think the second part of the question was regarding any difference we see in terms of patients that discontinue.
Sorry, great question. No, I would say that it's been what we would have expected in terms of discontinuations. 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.
Our next question comes from the line of Yatin Suneja with Guggenheim.
Very impressive results today, particularly on DAYBUE. So I have a question on the guidance. Could you comment on some of the push and pulls into that guidance of $80 million to $87.5 million, like what constitutes the lower, what is the high end, what are some of the drivers that can help you maybe be closer to the higher end versus the low end?
Mark, do 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 build up to a financial forecast, persistency, demand, access, and conversion, and all of those together kind of come together to the range. Obviously, higher gets you towards the higher end, lower towards the lower end. One other thing kind of potentially on the lower end, we've yet to go through the Christmas holiday period with DAYBUE. So we don't know if the last couple of weeks of the fourth quarter could impact bottles and sales on the lower end of the range.
Our next question comes from the line of Ritu Baral with TD Cowen.
So obviously, congratulations on a series of consensus-leading quarters. I wanted to ask about insurance coverage. As I'm sure you know, we've been conducting tracking surveys of the DAYBUE launch. And one of the things we hear over and over again from doctors is complaints about coverage denials. Despite the good numbers, it seems like there's still patients left on the table denials around efficacy, denials around this, denials around that. We wanted to see what you guys were hearing around denials, maybe how long it takes for these exception letters to come through. And now that we're 6 months out, what are you seeing on reauthorization?
Yes, Ritu. Brendan?
Sure. Ritu, so what we've seen is that published coverage policies have been very helpful. Now 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. That's why we've provided them with so much support in the prior authorization process and the work that our hub can do on their behalf. What 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 reauthorizations, those have 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 DAYBUE and most of those reauthorizations are at a 6 or 12-month period. Some of them are at 3 months, and then annually thereafter. But thus far, we have not had a final denial for a reauthorization for any DAYBUE patients.
Just to maybe annotate on that last point, there are denials and there are denials. So it's not uncommon, particularly if a plan 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, but still doctors and [ neuro ops ] have to deal with that, as we do in terms of supporting them. But as Brendan mentioned, in terms -- the other kind of denial is a denial where a plan just does not move off of that. That is very rare. And so it does create a little bit of noise and administrative effort in the system, which does then subside as more and more plans get formal policies in place.
Our next question comes from Gregory Renza with RBC Capital Markets.
This is Anishan for Greg. Congrats on the quarter. Firstly, from your interactions with physicians treating Rett, 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 DAYBUE availability ex-U.S., specifically by region?
I'm going to ask Parag Baswani to take the first question and the second question. Parag?
Sure. So what I'll say at the outset is that overall physician feedback regarding DAYBUE is encouraging and points to a high level of caregiver interest, regardless 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 variance or differences as to when patients are diagnosed. What we do see are differences when patients are coming in for their follow-up assessment. 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 and more patients become familiar with DAYBUE and DAYBUE's product profile.
Yes. Thanks, Parag. Brendan, ex-U.S.?
Yes. So for outside the United States, we are obviously excited about the opportunity to be able to bring trofinetide to a broader audience. Our first progress will be in Canada. As we've described, we're already in conversations to bring DAYBUE to Canada in the next 18 months. We've also began our conversations with regulators in taking scientific advice in Europe and are also prepping 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.
Your next question comes from Jeff Hung with Morgan Stanley.
You said that centers are treating existing prevalent patients during planned clinic days. So I guess with expectations of more linear trajectory going forward, have the number of clinic days remained stable or are they starting to decrease as centers work through existing prevalent patients?
Jeff. Parag, you want to take that?
Yes, happy to take that question. So I would say that it's variable. We know that a number of Centers of Excellence have actually increased their clinic days as a consequence of the approval of DAYBUE. Some have gone from a clinic day a month to a clinic day a week. Others don't have the infrastructure yet. As Brendan mentioned before on the payer question, there may be just 1 or 2 clinicians who 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 and facilitating those sorts of connections through Centers of Excellence and through the community as well. But this is a new muscle that they're learning to flex in many ways. And as more patients are being treated and seen, clinic days are being added to meet the demand that's coming in through the clinic doors.
Your next question comes from the line of Charles Duncan of Cantor.
Congrats on a great quarter for DAYBUE. I think I'll ask a couple of questions on the pipeline since other good questions have been asked on the commercial. On the pipeline, first of all, a 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-204, I guess I'm assuming that there are going to be primarily Alzheimer's disease patients that are later on in their journey. And how will you confirm that there are Alzheimer's patients versus other etiologies? Or is that not an issue for you for the conduct of this study?
Charles, it's tempting to answer the first question. We just typically don't comment on projected enrollment until we 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, and it's a great question, Charles, because that's actually 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'll conduct a biomarker, a blood-based biomarker, into the diagnostic procedure to just add an extra level of certainty that we're getting the diagnosis correct.
Your next question comes from the line of Ash Verma with UBS.
So just in terms of persistency on DAYBUE, I wanted to get your thoughts on how you think this could trend over time. I mean, it's very encouraging to see this 4-month data and get this type of granularity. But how do you think this might look at, like, 6, 9, or 12 months? And any updates on the LILAC-2 study? And would that be a more representative data point for what we are seeing in the real world?
Yes, I'll take the first question. I'll ask Kathie to take the second. So with respect to the first question, it's early still. We do have, as we've mentioned, 800 patients on therapy, so now we have a meaningful amount of data on multiple parameters, including persistency. So we have a strong number of patients that have completed 4 months of therapy. And as we go forward, we'll continue to monitor this and update. We have, obviously, not as many patients at 5 months as we have at 4 and at 6 months and 5, et cetera. But I would say that as we look at the data that we have, with this separation between what we're seeing in the real world and what we're seeing from the LILAC-1 open-label rollovers, which, again, as we said, we think is the best clinical trial comparison because those are patients starting therapy knowing they're starting on DAYBUE, we continue to see this 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.Kathie, you want to take the second question?
Yes. With regards to the LILAC-2 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, at the American Epilepsy Society meeting. But I will say in LILAC-2, we had very, very few dropouts. So as long as they enrolled in LILAC-2, they stayed in LILAC-2. And I think that's consistent with what Brendan mentioned, is we think if we can sort of get them through that first period, then they continue to stay on trofinetide or DAYBUE.
Your next question comes from the line of Tazeen Ahmad with BofA Securities.
Maybe I'll switch topics for a bit. On the upcoming ADVANCE-2 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, do you want to take that?
Sure. So the top-line data we expect to see, we're using the NSA-16. And 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 does good data look like, the effect size that we saw at the 34-milligram dose in ADVANCE-1 was around about 0.3. I think it was 0.34, coincidentally. 0.34 was the effect size. So I think that's consistent with what generally constitutes a clinically significant change in psychiatric studies. So if we saw that replicated, I think we'd regard that as good data.
Operator, next question.
Our next question comes from the line of Uy Ear with Mizuho.
Congrats on the good quarter. I guess I'll switch drug. On NUPLAZID, you mentioned that you benefited from the 340B program this quarter. Just wondering if this is a one-time thing, or do you expect this benefit to persist going forward?
Thanks much for the question. Mark, do you want to take that?
Yes. So generally speaking, kind of the 340B 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 one-time increase last year that didn't happen this year. So that provided kind of a net change benefit and revenue when you're comparing the quarters. I think as we go forward, we'll continue to expect slow to modest growth in the 340B volumes as we've seen over the last couple of years.
Our next question comes in line of Marc Goodman with Leerink Partners.
This is Madhu on the line for Marc. A couple other follow-up questions on DAYBUE from us. First, are you seeing any increases in overall diagnosis rates or numbers of rep patients who have been identified in the community or when might you start to expect to see that? And then for the side effects, are you hearing anything on whether the side effects are better tolerated in specific patient subgroups like older versus younger patients?
Brendan, why don't you take the first question? Parag, do you want to take the second?
Yes. Can you -- forgive me. Can you repeat the first question? I apologize.
The point was did we see -- or have we seen any increase in diagnosis rates?
Oh, yes. Forgive me. Forgive me. So diagnosis rates, yes. We are -- so we're about 2 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 it's early on. Our first goal is obviously to try and close that gap between the prevalent population, which we know is 6,000 to 9,000, and the 4,500 or so diagnosed and treated patients in the U.S. We will continue to track that very closely. We know as a 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, Brendan. Parag?
Sure. And 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, and that informed the basis of a very comprehensive approach to educating both providers and caregivers at the outset, post-approval. And I would say that that's been received really favorably. We've designed a footprint inclusive of a patient support services team that is paired with every single new caregiver, every single new family that goes on DAYBUE, and we supplement that with extensive education to providers as well. So that is started at launch. It remains a core part of our communication point, day in and day out, with providers and with caregivers, and because of that, the experience that we're seeing and hearing both from a prescriber perspective and from a caregiver perspective is that a much better tolerability experience with tools to mitigate any tolerability issues as they arise, whether that's diarrhea or other issues as well.
Your next question comes from the line of Salveen Richter with Goldman Sachs.
This is Matt on for Salveen. You all highlighted NUPLAZID is 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're expecting an update by the end of the month. Do you have any update there for us?
Yes, I'll take the second question first, and I'll ask Mark to answer the first one. 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's nothing really that we have to say at this point other than I'll just say what we said before, and that is we believe the law is on our side, and we're highly confident in our position. So we're eager to get to a decision as well.Mark, you want to take the second question?
Yes, on 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, we'll decide to the level of support and investment for the franchise with the focus being both on top-line growth and near-term profitability.
Your next question comes from the line of Sumant Kulkarni with Canaccord Genuity.
Assuming that pimavanserin is 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 resourced from a Salesforce perspective?
Two-part question. Brendan, why don't you take the second part? Actually, why don't you take both of them, if you don't mind?
Yes, sure. So for us, in terms of pricing, we're not going to discuss where we are at this point other than to say we certainly will be looking at pimavanserin value across our portfolio of indications. When we stop to think about resourcing, we are a CNS-focused company, and there's a fair amount of crossover between the treaters 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 that tends to focus on these negative symptoms' patients.
Your next question comes to the line of Ami Fadia with Needham & Company.
Congratulations on the strong performance of DAYBUE. Maybe just one follow-up on DAYBUE from me. Can you talk about sort of the time to approval for patients, whether they are under an exemption or whether they are under an insurance plan where DAYBUE has been put on the formulary? And I'm trying to sort of get a better sense of where you are in the launch, as you've indicated that the growth from here will be more linear. Is this more to do with sort of the initial bolus of patients already getting on DAYBUE, and now it's more about really blocking, impacting, and getting waiting for new patients to be diagnosed? So if you can give any color on that.
Two-part question. Brendan, you want to take the first and Parag the second?
Sure. That would be great. 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 too, we now have almost 80% of covered lives that have planned -- written plan coverage for DAYBUE. And as we've seen almost on a month-by-month basis, we've seen more 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'd 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 the end of December. But we are pleased with the coverage we already have and the increasing pace at which those enrollment forms are becoming prescriptions.Do you want to take the second piece, Parag?
Yes. Ami, repeat the second question, please, if you don't mind or Steve, do you want to repeat that?
I think it was the linearity of the adoption of DAYBUE as a function of sort of what's happening for treatment dynamics in the fourth quarter or opposed to surge.
Yes, sure. So at this stage, as Brendan mentioned in his prepared remarks and in the Q&A as well, through a really effective pre-launch education and connecting closely with the Rett community with providers, we had led to a step up in uptake 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 Rett patients and patients that aren't having the same degree of frequency of visits in 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 pre-launch expectations. So looking ahead, given this early demand, we're expanding our efforts beyond COE to reach physicians who have fewer Rett patients as well as families that aren't as connected to clinicians or regularly visiting their Rett providers on a day-to-day basis.
We have time for one more question, which comes in the line of Jay Olson with Oppenheimer.
Congrats on the quarter. Based on the impressive DAYBUE launch dynamic so far, could you please share your latest thoughts on the longer-term commercial potential in terms of what peak sales are achievable and how does the commercial value of the ex-U.S. opportunity compare to the U.S. opportunity?
Thanks so much for the question, Jay. Mark, you want to take that?
Yes, clearly, Jay, we're very excited about what we've experienced in the launch so far DAYBUE, 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 pimavanserin, just as a matter of, and higher, but as a matter of just our company policy in this, we don't put out peak sales estimates. The size of the opportunity outside the U.S., there are more Rett patients just by population in Europe than there are in the U.S., a little less in Japan than there are in the 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 regulatory efforts, so more to come to discuss in the coming years.
This completes our question-and-answer session. Mr. Davis, please proceed to closing remarks.
Great. Thanks 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.