Intra-Cellular Therapies Inc

NASDAQ:ITCI

Earnings Call Analysis

CAPLYTA Reports Robust Growth Amid Ongoing Expansion Plans.

CAPLYTA achieved a 46% increase in year-over-year sales for Q2 2024, driven by a 36% rise in prescriptions. The net product sales for the quarter were $161.3 million. The company plans to raise its 2024 net product sales guidance to $650-680 million and expand its sales force by 150 representatives. This expansion will boost primary care outreach and is expected to impact results significantly in 2025. CAPLYTA's potential approval for major depressive disorder (MDD) could increase its total addressable market from 50% to nearly 80% of antipsychotic prescriptions. Cash reserves rose to $1.025 billion from $499.7 million at the end of 2023, strengthening their financial position.

Strong Growth and Expanding Market for CAPLYTA

In the second quarter of 2024, CAPLYTA continued its impressive performance with a 46% increase in net product sales, reaching $161.3 million, compared to $110.1 million in the same period of 2023. The rise was driven by a robust 36% year-over-year growth in total prescriptions and a 10% quarter-over-quarter sequential growth. The company has seen a significant increase in the breadth of its prescriber base, now totaling nearly 43,000 unique healthcare providers. This growth indicates a strong uptake in market share, particularly for bipolar depression, and positions CAPLYTA well for future growth.

Sales Force Expansion and Primary Care Focus

To further capitalize on the growth opportunities, especially in the primary care segment, the company is expanding its sales force by approximately 150 representatives in the third quarter. This expansion will increase the company's reach to over 70,000 healthcare providers, with a specific focus on promoting CAPLYTA for bipolar depression in primary care offices. While the impact of this expansion is expected to be positive starting in the fourth quarter of this year, the full effect will likely be seen in 2025.

Major Depressive Disorder (MDD) Label Expansion

The company reported promising results from its Phase III clinical trials for MDD, which could significantly expand CAPLYTA's market. The two studies (501 and 502) showed robust efficacy with large separations from placebo in the primary endpoint, the MADRS total score. Symptom improvement was observed as early as one week, and the safety profile was favorable, similar to placebo. The potential FDA approval for an expanded label could increase the addressable market for CAPLYTA from nearly 50% to 80% of antipsychotic prescriptions.

Financial Performance and Guidance

The company is in a strong financial position with $1.025 billion in cash, cash equivalents, investment securities, and restricted cash as of June 30, 2024. They have updated their full-year 2024 net product sales guidance for CAPLYTA to be between $650 million and $680 million. SG&A expenses for the year are expected to be between $480 million and $510 million, primarily due to the sales force expansion and related marketing efforts. R&D expenses are projected to be lowered to a range of $210 million to $230 million.

Pipeline Advancement

The company continues to advance its development pipeline, including ITI-1284 for generalized anxiety disorder (GAD) and psychosis associated with Alzheimer's disease. Patient enrollment for these Phase II trials has begun, with primary endpoints focusing on symptom improvement and safety profiles. Other pipeline candidates, such as ITI-333 for various neuropsychiatric conditions and ITI-1549 for potential neuroplastic effects without hallucinogenic side effects, are also progressing. These efforts underscore the company's commitment to broadening its therapeutic offerings.

Earnings Call Transcript 2024-Q2

[Operator]

Good morning, ladies and gentlemen, and welcome to Intra-Cellular Therapies Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would like now to turn the conference over to your speaker today, Dr. Juan Sanchez, Vice President, Corporate Communications and Investor Relations. Sir, you may begin.

[Juan Sanchez, executive]

Good morning, and thank you all for joining us on our Second Quarter 2024 Earnings Call. Joining me on the call today are Dr. Sharon Mates, Chairman and Chief Executive Officer; Mark Neumann, Chief Commercial Officer; Dr. Suresh Durgam, Chief Medical Officer; and Larry Hineline, Chief Financial Officer.

During today's call, we will be making certain forward-looking statements. These forward-looking statements are based on current information, assumptions and expectations. Those statements are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our previous filings made with the Securities and Exchange Commission, including our quarterly and annual reports. You're cautioned not to place undue reliance on these forward-looking statements. These statements are made only as of the date of this conference call, and the company disclaims any obligations to update such statements.

I will now turn the call over to Sharon.

[Sharon Mates, executive]

Thanks, Juan. Good morning, and thank you for joining us today. We are pleased to report our strong progress in Q2 in addition to CAPLYTA's impressive growth trajectory, during the quarter, we announced robust positive results from our two Phase III clinical trials in major depressive disorder or MDD. These results from the basis for an expanded label for CAPLYTA, and we are on track to submit a supplemental NDA for CAPLYTA for the adjunctive treatment of MDD later this year. In addition, we continue to advance our broad development pipeline, which I will discuss later.

We are very pleased with the company's progress. Our vision has been to establish CAPLYTA as a first choice treatment across multiple depressive disorders, and we are well on our way to achieving this goal. CAPLYTA has already become an important treatment option for schizophrenia and bipolar depression, and we now have generated strong efficacy data and favorable safety and tolerability data in our Phase III studies in MDD. Pending FDA approval, we are confident in CAPLYTA's potential to become a leading medication for the treatment of MDD and a commercial success in this large market. This confidence is bolstered by our proven commercial capabilities and our strong financial position.

Before discussing progress with our pipeline, let me list highlights of our second quarter financial performance. In the second quarter, CAPLYTA net product sales increased to $161.3 million, representing a 46% growth versus the same period in 2023. The uptake of CAPLYTA remains strong, and we look forward to continued growth. Consequently, we are increasing our CAPLYTA net product sales guidance range for the full year 2024 to $650 million to $680 million. As we continue to maximize CAPLYTA's opportunity in bipolar depression, we plan to expand our reach in primary care during this quarter. Mark and Larry will provide further details on our expansion plans during their remarks.

I would now like to further discuss our adjunctive MDD program. Last quarter, we announced robust positive top line results from Studies 501 and 502. These studies evaluated lumateperone 42 milligrams as an adjunctive treatment to antidepressants in patients with MDD. We are particularly proud to have two global Phase III studies with robust and consistent positive results. Both studies demonstrated robust efficacy of lumateperone added to an antidepressant for the treatment of MDD in the primary endpoint, the MADRS total score, with a large separation versus placebo of 4.9 points in Study 501 and 4.5 points in Study 502. And a robust effect size of 0.61 in Study 501 and 0.56 in Study 502.

In both studies, symptom improvement occurred as early as one week. Both studies also met the key secondary endpoint, CGI-S and showed statistically significant efficacy in the patient's self-reported measure of symptom severity of depression for the QID score. The favorable safety and tolerability profile for lumateperone in these studies was consistent with our other CAPLYTA studies. We previously described the metabolic profile of lumateperone in Study 501. We are now pleased to share the lumateperone metabolic profile in Study 502.

Similar to Study 501, mean changes in key metabolic parameters, including glucose, insulin, triglycerides and total cholesterol including LDL and HDL cholesterol were similar between lumateperone and placebo. Importantly, mean changes in weight were also similar to placebo. Our team is currently preparing our supplemental NDA submission, which we expect to file with the FDA later this year. We look forward to sharing additional results from Study 501 and 502 with the medical community this fall at upcoming conferences, including [ TCMT and Site Congress ].

The opportunity for CAPLYTA in MDD is sizable. Current antidepressant therapies do not adequately address depressive symptoms in more than half of patients receiving treatment. We believe these patients deserve new treatment options. Depression now represents about 30% of all antipsychotic prescriptions in the U.S. similar to the percentage of antipsychotic prescriptions generated for bipolar disorder. We are very excited about the possibility of bringing CAPLYTA to patients with MDD and believe its efficacy, tolerability and safety profile, coupled with its convenient dosing, have the potential to make it a first choice for adjunctive treatment of MDD.

We continue to invest in lumateperone's development with the objective of helping a greater number of patients. To that end, our pediatric program is underway. This pediatric program includes an open-label safety study in schizophrenia and bipolar disorder, a double-blind, placebo-controlled study in bipolar depression and two double-blind placebo-controlled studies in irritability associated with autism spectrum disorder. Currently, pediatric patients have limited treatment options. There are only two antipsychotics approved for the treatment of irritability associated with autism spectrum disorder and two antipsychotics approved for the treatment of bipolar depression in the pediatric population. These treatments are associated with treatment-limiting side effects.

Given the characteristics of this patient population and CAPLYTA's favorable profile, we believe CAPLYTA may play an important role for this patient population. In addition, we have initiated two Phase III studies evaluating lumateperone for the acute treatment of manic or mixed episodes associated with bipolar I disorder commonly known as bipolar mania. Our adult bipolar mania program is a result of an agreement with the FDA in connection with our lumateperone pediatric exclusivity program. This agreement provides that pharmacokinetic studies in adolescents and children, together with bipolar mania studies in adults would be sufficient to satisfy our obligations with respect to obtaining pediatric exclusivity.

Completing the overview of our lumateperone programs, we continue to advance our long-acting injectable lumateperone program and expect to initiate Phase I studies with several formulations shortly. I also want to share updates on other candidates in our pipeline. ITI-1284 represents the most advanced product candidate in our pipeline. I am pleased to point out that we recently initiated patient enrollment in our Phase II clinical trial evaluating ITI-1284 for generalized anxiety disorder, or GAD, as adjunctive therapy to generalize anxiety medications.

We also initiated patient enrollment in our Phase II clinical study evaluating 1284 as monotherapy for psychosis associated with Alzheimer's disease. We also anticipate commencing patient enrollment in our Phase II program with 1284 for agitation in Alzheimer's disease shortly. These studies are large and designed as potential registration studies. In our GAD study, we expect to enroll approximately 705 patients randomized to three arms, placebo and two doses of 1284. The primary endpoint of the study is the improvement of anxiety symptoms versus placebo at week 6, as measured by the Hamilton Anxiety Rating Scale or HAM-A. The key secondary endpoint is the CGI-S. We expect to initiate a second GAD study evaluating ITI-1284 as monotherapy later this year.

In our Alzheimer's disease psychosis study, we expect to enroll approximately 370 patients randomized to 2 arms, placebo and a flexible dose of ITI-1284. The primary endpoint is to evaluate the efficacy of ITI-1284 versus placebo as measured by change from baseline to the end of week 6 and the behavioral pathology in Alzheimer's disease rating scale or BEHAVE-AD psychosis subscale score. The key secondary endpoint is the CGI-S.

Continuing with our pipeline. Next year, we expect to report top line results from our ongoing Phase II study with lenrispodun in Parkinson's disease. The primary endpoint of the study relates to motor symptom improvements and we are also exploring the effects of lenrispodun in cognition, a key nonmotor manifestation of the disease and measuring biomarkers of neuroinflammation to help inform next steps. ITI-1020, our second PDE 1 inhibitor is being developed for oncology indications and continues in a Phase I single ascending dose study in healthy volunteers.

Regarding ITI-333, our multiple ascending dose study and a positron emission tomography study are both ongoing. ITI-1549 continues to advance in preclinical development and we expect to begin clinical testing in 2025. ITI-1549 is a non-businogenic psychedelics, which we now refer to as a neuroplastogens that we believe lacks, hallucinogenic and cardiovascular side effects associated with psychedelics. Certain neuropsychiatric diseases, including MDD and anxiety are associated with loss of synaptic connectivity primarily in prefrontal cortical regions of the brain. These drugs have the potential to restore lost functional activity. Therefore, ITI-1549 has the potential to be a safe, effective medicine with a novel mechanism of action that can be safely and conveniently administered to patients for the treatment of these disorders.

In summary, we are thrilled with our second quarter results and progress with our pipeline. We are in a strong financial position ending the second quarter with approximately $1.025 billion in cash, cash equivalents and investment securities, and we have no debt. Lastly, we are excited to welcome Sanjeev Narula as our Chief Financial Officer later this month. Sanjeev is a finance leader with extensive experience in the pharmaceutical industry, and I look forward to working with him as we continue to build on ITCI success. You can read more about Sanjit's background in the press release we issued earlier this morning. I also want to thank Larry for his significant contributions and wish him all the best in his well-deserved retirement.

I'll now turn the call over to Mark to provide details on CAPLYTA's performance in our expansion plans. Mark?

[Mark Neumann, executive]

Thanks, Sharon. Good morning, everyone. It's great to be with you today. CAPLYTA's strong performance continued in Q2 with robust year-over-year growth in total prescriptions of 36% and an acceleration in quarter-over-quarter sequential growth of 10%. Once again, in CAPLYTA's quarterly prescription growth outpaced both the branded and overall antipsychotic -- reflecting its continued strong uptake in market share gains in bipolar depression. We have also seen significant strength in new-to-brand prescription hitting new all-time highs several times during the quarter, which is a leading indicator of robust future growth. The growth is being driven by increases in both the breadth of our prescriber base, which now stands at nearly 43,000 unique health care providers since launch having added more than 3,600 new first-time prescribers in Q2 as well as an increase in the average depth of prescribing as health care providers continue to identify more and more patients who are appropriate for CAPLYTA treatment.

The commercial opportunity for CAPLYTA within its current indications of schizophrenia and bipolar depression is large with those two indications representing nearly 50% of the approximately $68 million annual and as iconic market prescriptions in the U.S. An important dynamic in the bipolar market has been the increasing role of primary care in treating bipolar depression. CAPLYTA's broad label, which includes both bipolar I and bipolar II depression provides us with an opportunity to expand our reach and educational activities with primary care physicians. We believe CAPLYTA's clinical profile, including strong efficacy and a very favorable metabolic weight and movement disorder profile, coupled with once-daily dosing with no titration will be beneficial attributes for these providers in treating patients with bipolar depression.

To capitalize on this opportunity and optimize the growth of CAPLYTA in our base business, we are expanding our sales force by approximately 150 representatives during the third quarter of this year. Through this sales force expansion, we will be increasing our reach into this increasingly important prescriber segment and expanding our overall target audience to over 70,000. Once our new sales representatives are onboarded and trained by the end of the third quarter, they will promote CAPLYTA for bipolar depression in primary care offices. It will take some time for these representatives to be fully optimized in their territories. So while we expect some positive effect in the fourth quarter this year, most of the impact will be seen in 2025.

We have also made substantial progress in our commercialization planning for a potential label expansion in MDD and which would increase our total addressable market for CAPLYTA from nearly 50% of antipsychotic prescriptions for schizophrenia and bipolar depression to nearly 80% with the addition of MDD. To fully optimize the launch in MDD, we expect to further expand our sales team next year, and we will share more details of those plans with you as we get closer to potential approval by the FDA. In summary, we are very pleased with the continued adoption of CAPLYTA and are highly confident in continued growth in both the short and longer term.

I'll now turn the call over to Larry to further discuss our financial performance. Larry?

[Lawrence Hineline, executive]

Thank you, Mark. I will provide highlights of our financial results for the second quarter ending June 30, 2024. In the second quarter, net product sales of CAPLYTA were $161.3 million compared to $110.1 million for the same period in 2023, representing a year-over-year increase of 46%. Our net sales grew 11% sequentially versus Q1 2024 primarily driven by increased prescription demand. Our gross to net percentage in the second quarter was in the mid-30s and consistent with our guidance for the full year. We expect our gross to net percentage to be in the mid-30s for the remainder of the year. We believe underlying demand for CAPLYTA will remain strong. And thus, we are raising our CAPLYTA full year 2024 net product sales guidance range to $650 million to $680 million.

Selling, general and administrative expenses were $121.6 million for the second quarter of 2024 compared to $101 million for the same period in 2023. Research and development expenses for the second quarter of 2024 were $56.2 million compared to $49.8 million for the same period in 2023. As Sharon and Mark described, we expect to increase our sales force during the third quarter to continue to maximize CAPLYTA's opportunity in bipolar depression. And as a result, we are increasing our full year SG&A expense guidance range to $480 million to $510 million. This increase is primarily the result of sales, marketing and other expenses associated with our sales force expansion in the primary care segment in the second half of 2024.

We are also reducing our full year R&D expense guidance range to $210 million to $230 million. Our financial position remains strong. Cash, cash equivalents, investment securities and restricted cash totaled $1.025 billion at June 30, 2024, compared to $499.7 million at December 31, 2023. This concludes our prepared remarks. Operator, please open the line for questions.

[Operator]

[Operator Instructions] Our first question comes from the line of Andrew Tsai with Jefferies.

[Lin Tsai, analyst]

Congrats on strong quarter. So the first one is as we think about your revised guidance range, do you expect scripts in Q3 to grow at a similar pace or even a stronger pace than what you saw in Q2 or are you factoring in some potential slowdown due to summer seasonality, holidays and occasions? And then secondly, for MDD, it's very clear you're preparing for that potential approval and launch. So the question would be, would you expect the potential script inflection in MDD to be larger than what you saw in the bipolar depression launch, say, within the first 6 to 12 months.

[Sharon Mates, executive]

Maybe, Mark, do you want to take the first question and then you can also take the second, and then I'll chime in.

[Mark Neumann, executive]

Sure, Sharon. So Andrew, thanks for the question. As you know, our guidance has been increased for 2024, and we're confident in that guidance and in both the near term and the long-term growth prospects for CAPLYTA. As you know, from past years. Typically, we see some summer seasonality during the third quarter, and then we have a stronger fourth quarter. So I would say that that's all factored into the guidance that we've provided for the year. And then in terms of our preparations for MDD, they are well underway. We do expect if and when we get approved for MDD that we will see a significant increase in the trajectory of prescriptions, similar to what we saw with bipolar depression. And I think if you -- looking back at some of the recent launches in MDD, the kind of uplift that you get from a new indication in MDD is quite significant, and we would expect to see another inflection upon approval with MDD as well.

Sharon, You want to add to that?

[Sharon Mates, executive]

No, I think that covers both of your questions, Andrew. So operator, then we can move to next questions, please.

[Operator]

Our next question comes from the line of Jessica Fye with JPM Chase.

[Jessica Fye, analyst]

Congrats on the results. First, with respect to the sales force expansion, can you just confirm what that will bring your total sales force size to? And what's the right way to think about the additional sales force expansion plan for next year? Could that be similar in size of this increase, larger, smaller? And then separately, the press release mentions that you received notice from CMS that CAPLYTA qualified for the specified small manufacturer exception under the IRA. Can you confirm what you expect that to need for the product?

[Sharon Mates, executive]

Mark, I think this goes to you as well.

[Mark Neumann, executive]

Yes, in terms of the size of the sales force, we'll be adding approximately 150 sales representatives. So that will take us north of 500 representatives out in the field for us. Could you just repeat your second question on MDD?

[Jessica Fye, analyst]

Next year's expansion that you alluded to, should we think of it as similar in size, larger, smaller?

[Mark Neumann, executive]

So what I would say is we're excited about the commercial opportunity of a potential label expansion in MDD, and we will be looking to invest behind the brand at a level that we feel optimizes the launch and the prospects for the brand. As we've done in the past, we'll share more details of those efforts with you as we get closer to potential approval by the FDA.

[Sharon Mates, executive]

And then you asked about what we put in the press release about being a specified small manufacturer and having that exemption. So we -- that status. And so what it means is that we would be minimal phase in rebates. So we don't expect to have a big impact on the company at all, at least until the end of the decade into the next decade.

[Operator]

Our next question comes from the line of Brian Abrahams with RBC Capital Markets.

[Brian Abrahams, analyst]

Congrats and best of luck to Larry as well. So I guess I'm curious, as we look to the presentations of the MDD data this fall. I'm curious the key things that you're looking to highlight to the community and how we should be thinking about potential for an inflection once those data are in the scientific literature versus potential label expansion? And then I guess as a follow-up on the label expansion, I'm curious the key elements kind of that you're thinking about as you build out commercial infrastructure, what are the key elements towards achieving comparable share of voice to competitors? Is it all about boots on the ground? Or are there other important elements as well that you're considering strategically as you look towards next year?

[Sharon Mates, executive]

That's a lot of questions. So hopefully, we remember all of them. We will try and take them one by one. Maybe, Suresh, would you like to start talking about what we're going to be highlighting to the medical and scientific community as we go forward?

[Suresh Durgam, executive]

Yes. In terms of the data from the two studies, we will be presenting at different conferences, starting this second half of this year right now. And then we also have going to highlight the robust efficacy of the study, both studies we have seen in terms of what we have seen in an adjunctive setting, these are unprecedented results we have seen, and we will be highlighting those and also the safety profile that we have seen, which was similar to placebo in key aspects for antipsychotics, mainly the cardio metabolic side effects, the product in issues, weight gain, all these things will be highlighted at conferences.

[Sharon Mates, executive]

As well as what will be highlighted is the lack of movement disturbances as well such as [indiscernible], Parkinsonism, et cetera. And then I guess, going to the label expansion, talking to what we're looking at in terms of sales force and how we will maintain our equal share of voice. Mark, would you like to address that?

[Mark Neumann, executive]

When we think about achieving a comparable share of voice, in an area. It's really across the whole promotional mix that we have. The main elements being some of the ones that you cited, certainly, the size and the activities of our sales force is an important one. Our activities around medical education and educating physicians on the profile of CAPLYTA and then on the consumer side, maintaining a comparable share of voice in our DTC efforts and our digital presence. I think those are the three that are probably the main ones that we look at, but it really is across the whole promotional mix that we have.

[Operator]

Our next question comes from the line of Jason Gerberry with Bank America.

[Unknown Analyst]

This is Dena Ramadan on for Jason Gerberry. Congrats on the quarter. We just had a couple on ITI-1284. Do you view the Rexulti launch as a representative comp for an atypical launching into the Alzheimer's disease neuro like space. And curious what your thoughts are on the challenges in displacing generics and the resistance to prescribing atypical in a nursing home setting, and just how do you think lumateperone could win in a market with these barriers?

[Sharon Mates, executive]

So I'll start and I'll then ask Mark or Suresh, if they want to chime in. First, on the Rexulti launch, I think it's early days. And so I think what we're only seeing is exactly that. And sometimes these markets take time to develop and there is a great medical need in these patient populations. And I think that there is a large opportunity for a product with the right profile and I'd like to emphasize again, the safety and tolerability profile of lumateperone across every area where we have been investigating the use of lumateperone. So -- and I think that we will see in larger studies, whether the side effect profile we've seen in our early studies, whether this in elderly patients that this, again, holds true as we are in larger patient populations.

I think then maybe Mark, did you want to add anything to that?

[Mark Neumann, executive]

I think you're exactly right, Sharon. And this is a launch that we're watching carefully and seeing how the market there evolve I would reemphasize the point that Sharon made that we believe it is still in the early innings for the use of antipsychotics in a chronic sense for agitation and it takes some time for treatment paradigms like this to develop. So I think the story still needs to be told there, and we're watching that very carefully.

[Operator]

The next question comes from the line of Charles Duncan with Cantor.

[Charles Duncan, analyst]

First of all, congratulations on a really nice quarter. I had a question on regulatory strategy in adjunctive MDD. You may not answer, but I was curious as to what indications you'll be seeking? Will it be adjunctive MDD alone? Or would you include mix features? Or would you seek to just have that data in the label? And then I did have a question on 1284.

[Sharon Mates, executive]

So I'm going to take that, and then I'll ask Suresh, if he wants to add anything. So just to remind you, the clinical studies, the Phase III program was in adjunctive treatment of MDD. So you can assume that, that is the label that we are going for. I think it's a little bit early for us to discuss any more about the label other than that it's for the adjunctive treatment of MDD.

Suresh, do you want to add anything?

[Suresh Durgam, executive]

No, that's good.

[Charles Duncan, analyst]

And then I did have a question on 1284 and it kind of dovetails into -- that's often a comorbidity of depression. I'm wondering why you're not looking at lumateperone in that -- in that indication? And what it is about 1284 that you think suits it well for generalizing anxiety disorder. And then on lumateperone, in terms of pediatric data, do you think that we could see some pediatric information in 2025.

[Sharon Mates, executive]

Suresh, did you want to take that? Or do you like me to?

[Suresh Durgam, executive]

In terms of -- last question about the pediatric indications you're talking about. So we have posted on [ Pinta.gov ]. These are pediatric studies. It will take a little longer time than adults. So we will not be seeing the results in 2025, it maybe lesser than that. In terms of your question on -- looking at other indications for 1284 we are going to be looking at -- we are constantly reevaluating new indications. Right now, our cost indications, as we said, we started the GAD program in adjunctive program in GAD we have also started the psychosis in Alzheimer's patients. We have indicated that we have announced that we are going to start soon the agitation program as well as the monotherapy in GAD. Other indications, stay tuned, we will -- as we reevaluate, we will keep updating.

[Sharon Mates, executive]

As we go forward, we will be announcing new studies, other studies that we'll be doing with 1284. So as Suresh said, just stay tuned, have a little bit of patience. We'll tell you as soon as we get very close to or start enrolling those patient populations.

[Operator]

Our next question comes from the line of Marc Goodman with Leerink.

[Marc Goodman, analyst]

Can you talk about how you're thinking about business development these days and obviously, a massive sales force you'll have in a year with one product? Just curious how you're thinking about leveraging that sales force. And then just secondly, how are you thinking about CAPLYTA ex U.S.? And if there's any partnership arrangements that you're thinking about?

[Sharon Mates, executive]

So we have -- we do look at BD opportunities constantly. And obviously, what would be -- terrific would be if we are able to find a product that fits into the present sales force. We continue to look for that. And then we have also moved to adjacencies. So far, we haven't found products that we think fit the bill there, but we do continue to look. In addition, we look earlier. As you heard on this call today, we have a very, very robust internal pipeline. And while we progress that internal pipeline, we do also look to supplement it with external opportunities. So we look at all opportunities. Our Head of External Innovation is in charge of doing that and we will keep you informed on our progress there. Additionally, ex U.S., we continue to evaluate that. It is a landscaping. That landscape that has been rapidly changing. And so we will keep you updated as we go forward in the ex U.S. landscape as well.

[Operator]

Our next question comes from the line of Michael DiFiore with Evercore ISI.

[Michael DiFiore, analyst]

Congrats on all the progress this quarter. Two questions for me. Number one, with regards to the MDD trial Study 505. Any plan to shut this trial down? And if so, how should we think about R&D spend throughout the balance of the year? And my second question is on ITI-1284, specifically the Phase II [ anxiety ] trial, what you're powering and expectations for placebo response here and how you're controlling for it, especially since the trial has two active arms.

[Sharon Mates, executive]

Maybe we want to go in reverse since that's the top of our mind. Suresh, do you want to talk about the powering that we do. I can give you a very broad summary and that's we always power our studies. Well, why don't I let Suresh take it?

[Suresh Durgam, executive]

So these studies are powered as legislation studies. So all of them are powered at 90% power, that's what we typically do. And in terms of controlling for placebo response as we adjudicate every patient that goes into the trial to make sure that they actually meet the criteria, and there is different levels of that, and we do adjudicate each patient that is coming into the trials so that they have the correct symptomatology and also the severity also is there. And throughout the study, we monitor for any inconsistencies across different scales and things like that. So that we have done in other trials, and we'll continue to do that in this upcoming studies also.

[Sharon Mates, executive]

And I'll address the Study 505. We are coming down the home stretch and our evaluation of what will happen, what will be the fate there. But why don't you just give us just a little bit more time and we'll update you on the fate of 505 and then I think you had another question in there, but I'm not sure I remember it.

[Operator]

[Operator Instructions] Our next question comes from the line of Jeff Hung with Morgan Stanley.

[Lee Hung, analyst]

I guess for 1284 in Alzheimer's disease psychosis, can you just talk about your approach versus what others are doing for the indication and then just your confidence in 1284 for AD psychosis?

[Sharon Mates, executive]

Maybe I take it you're referring to the scale that we're using? Is that correct?

[Lee Hung, analyst]

I mean partially, but then also just in terms of the inter-candidate itself, your confidence in that versus the competing approaches for treating AD psychosis.

[Sharon Mates, executive]

Maybe Suresh, would you like to give just now on what we're doing? That would be great.

[Suresh Durgam, executive]

So for psychosis in Alzheimer's point on the mechanism of action of the drug, we believe, based on influence its effect on the dopamine system, serotonin and the ultimate system. We believe that this will be effective in psychosis of Alzheimer's disease. In terms of the study itself, we have -- this is a 6-week study that is going to be four weeks of trailing period followed by six weeks of double-blind treatment and a follow-up period of 30 days. And in terms of the study scale. We have picked the behaved AD psychosis subscale, which focuses mainly -- the subscale focuses mainly on the psychosis element of the disease, and it has sorry, it says 12 items, 7 items from the paramount and delusional ideation domain, 5 items from the hallucination domain and then we have a total score of 36.

And we also have a key secondary as CGI-S, that is the global severity improvement in patients with psychosis and Alzheimer's, dementia. All these are the design elements. And in terms of, again, I have indicated that in terms of the patients that get into the trial, we ensure that patients have the right diagnosis and also the right severity. And that is very key to successful of any clinical trials to have make sure that the patients have enough severity so that we can detect the change at the end of the study.

[Operator]

Our next question comes from the line of Ami Fadia with Needham & Company.

[Ami Fadia, analyst]

Maybe just with regards to 1284. What doses will you be evaluating across the three indications? And what's your rationale for evaluating two doses as well as in one adjunctive treatment in GAD. And maybe just a follow-up to the previous question on Alzheimer's disease psychosis. You explained the endpoint that you're using, but why do you believe that, that is the appropriate one for 1284 versus what some of the other companies are using?

[Sharon Mates, executive]

So I am going to start I need -- and this goes to Jeff's question as well. I need to understand a little bit better. There are a few different studies, but very few. And so I think we have chosen our parameters after interactions with the FDA and conclusions about the study -- the best design for our studies, which includes the best scales to use or the appropriate scale to use as well as the different doses that we're doing. So that's why we say we think we have early evidence of safety, of efficacy with different doses. And so now we're testing them, you get a lower range, you get an upper range. And that's the reason for choosing two doses.

I don't know, Suresh, do you want to add anything?

[Suresh Durgam, executive]

And yes, the scale, definitely, this as you have indicated that this was based on discussions we had with the agencies.

[Sharon Mates, executive]

If there's another question about the trials that we're missing, maybe you could let us know so you can try and address it.

[Ami Fadia, analyst]

Just with regards to GAD, the top class is behind evaluating it both as a mono and adjunctive therapy.

[Sharon Mates, executive]

We think it's appropriate. As you know, there are very few drugs that are approved for GAD and there are a few clinical studies ongoing, and we think that there's an opportunity for a drug with a good tolerability and safety profile as well as demonstrated efficacy. So I think that's why both the monotherapy and adjunctive therapy.

[Operator]

Our next question comes from the line of Joseph Thome with TD Cowen.

[Joseph Thome, analyst]

Maybe on the -- what proportion of bipolar depression patients are treated by primary care physicians to get a little bit of an idea of what growth you could see from this expanded sales force? And was the expansion related to something that you're seeing in the field specifically? Or is this because of the MDD trial or just the normal cadence of launch?

[Sharon Mates, executive]

Mark?

[Mark Neumann, executive]

Yes, I can take that, Sharon. Thanks, Joe, for your question. So the primary care, as we said, is playing an increasingly important role in the treatment of bipolar depression, and we believe that they account for about 25% of all the prescriptions written for bipolar depression. So they play an important role. Psychiatry is still the main treater of the disease, but they play an important role, and that role has been increasing over time. And so for us, this was a couple of things. Up until this point, our primary promotional efforts have been concentrated on psychiatrists and the nurse practitioners that support them. However, we've also been targeting a smaller segment of primary care that represents the highest volume prescribers in primary care.

And we've actually had good success with the primary care physicians. We've seen that have let us broad label including both bipolar I and bipolar II depression, coupled with the strong efficacy and favorable safety and tolerability and the convenient once-daily dosing with no titration is a very compelling profile for primary care treating patients with bipolar depression. So to fully leverage that growing opportunity, this expansion is allowing us to go deeper into primary care and extend our reach and frequency in this setting. And to your other point, yes, the robust results that we've seen in the two Phase III MDD studies gives us a high degree of confidence in the long-term growth prospects of CAPLYTA and gives us increased confidence to invest in the brand today at an even higher extent for our base business in bipolar depression. So for all those reasons, we believe now is the right time to be extending our reach in the primary care.

[Operator]

Our next question comes from the line of Graig Suvannavejh, Mizuho Securities.

[Graig Suvannavejh, analyst]

Congrats on the progress in the quarter, and congrats, Larry, on your retirement. Maybe, Sharon, this question is for you. It's a bigger picture strategy question. As you think about the pipeline that you have, which is quite extensive and with increased investment in either additional studies with lumateperone or 1281 -- I'm sorry, 1284. I'm just trying to think about how you're thinking about some of the other programs whether it be the 333 program or 1020 or the Parkinson's program and kind of the interest in getting the data, but then either investing further in those assets or perhaps using those assets as opportunities to perhaps find a partner to offload some of the R&D spend in order to advance those programs. So just philosophically how you're thinking about the pipeline?

[Sharon Mates, executive]

So first, thank you for acknowledging that we have a very robust pipeline. And we are very data driven. So the first thing to do is get the data. And these early studies with 1020 with 333, which you didn't mention, but a program we're extremely excited about 1549 while they will generate extremely valuable data, they're your earlier phase studies, and they are less costly than your later-stage programs. So I think the first thing for us to do is get the data and see if the data looks robust and is both in efficacy and also what the safety and tolerability profile looks like and we'll make our decisions as to do we move it along alone or do we move it along with partner or do we not move it along based on data. This company was founded on data-driven events, and we continue to look at the science and drive our decisions based on data that we get.

[Operator]

Our next question comes from the line of Corinne Jenkins with Goldman Sachs.

[Unknown Analyst]

This is Paula on for Corinne. Just one question from us. How are you thinking about for [indiscernible] profitability from here reported balance building out the commercial infrastructure and your R&D or against the backdrop of continued revenue growth.

[Sharon Mates, executive]

I'm sorry. You came through very muffled. I could not understand. Can you repeat, please?

[Unknown Analyst]

Sure, I can go again. Is this better?

[Sharon Mates, executive]

Much better.

[Unknown Analyst]

I was just asking, how are you thinking about the path to profitability from here as you sort of balance building out a commercial infrastructure and R&D efforts against the backdrop of continued revenue growth.

[Sharon Mates, executive]

I think you're asking about our path to profitability and balancing it against R&D and our continued growth. Larry, do you want to take that?

[Lawrence Hineline, executive]

Yes, sure. We haven't given any guidance as far as profitability. I mean, we feel -- we're very excited about the growth in scripts and in the path that that's taking. We've given you guidance on R&D spend for the rest of this year. We intend to finance these R&D projects to the best of our ability. And so having said that, we are focused on becoming profitable. But at this point, we can't give you any guidance. We'll keep you updated on the components of that as we go further.

[Operator]

Our next question comes from the line of Joel Beatty with Baird.

[Joel Beatty, analyst]

For the net sales for as expansion, is that something you're looking to do early in 2025 or later around the time of MDD approval?

[Sharon Mates, executive]

Mark?

[Mark Neumann, executive]

So as I mentioned in my prepared remarks, we're very excited about the commercial opportunity of this potential label expansion in MDD for CAPLYTA, and we intend to invest behind the brand at a level that will help us optimize the launch and our longer-term growth prospects. As we've done in the past, we'll share more of those details both in terms of the magnitude of the expansion and the timing of expansion as we get closer to potential approval by the FDA. So hang in there for a little while, and we'll come back to you as we get closer to that launch.

[Sharon Mates, executive]

I think we have time for one more question if there is one.

[Operator]

A final question will come from the line of David Amsellem with Piper Sandler.

[David Amsellem, analyst]

Just a quick one for me. On the bipolar mania, program. Can you talk about how additive do you think it is to the overall sales potential of CAPLYTA or maybe put it differently, I mean, what's the extent to which you're getting usage in patients who are manic and just help us understand your rationale for doing that program and getting that into the label.

[Sharon Mates, executive]

Suresh, do you want to start and I'll chime in.

[Suresh Durgam, executive]

We are looking at adults and pediatrics for any unmet needs that we have for drugs for looking for any drugs with efficacy, safety and tolerability needs. Coming specifically to your question on bipolar mania, we have an agreement with the FDA in connection with our pediatric exclusivity program. This agreement provides that the PK studies in adolescent and children together with the bipolar mania studies in adults would be sufficient to satisfy the obligations with respect to obtaining pediatric exclusivity. And that is the reason we were block planning and conducting the studies.

[Operator]

At this time, I would like to turn the call back over to Sharon for closing remarks.

[Sharon Mates, executive]

Great. Thanks, everybody. As you can see, I think we had a great quarter and we're moving forward. And we really look forward to our -- to an approval on the launch in adjunctive treatment in MDD and to advancing all of our other programs. So we thank you for your support and for listening and we have great opportunities ahead of us, and we look forward to informing you of yet more progress from ITCI as we move forward. With that, operator, you can disconnect.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.