Welcome to the Morgan Stanley Global Healthcare Conference. I'm Jeff Hung, one of the biotech analysts. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. For this session, we have Acadia Pharmaceuticals, with CEO Steve Davis and Head of R&D, Doug Williamson. Welcome. Thanks much. We're pleased to be here. By the way, Mark Schneyer is with me, our CFO. Doug had a conflict today. For those who may not be as familiar with Acadia Pharmaceuticals, can you provide a brief introduction? Yeah, sure. Thanks much. So, at Acadia, we have two approved drugs in two different franchises. They serve as the foundation of the company. I'll take first our NUPLAZID franchise in Parkinson's disease psychosis. Our drug, NUPLAZID, is the first and only drug approved to treat Parkinson's disease psychosis, or PDP. PDP differs from the way most antipsychotics are used. They're typically used to treat schizophrenia. Sometimes they're used as adjunct therapy in depression, but they're not approved to treat Parkinson's disease psychosis patients, nor for that matter, Alzheimer's disease psychosis patients. NUPLAZID is, and NUPLAZID works through a very different mechanism, which gives it a very different profile that's perfect for these, for this patient population of frail and elderly patients. So with the mechanism with NUPLAZID, we have a very favorable safety and tolerability profile and it produces a very strong antipsychotic effect as well. So, for NUPLAZID, we're doing well over $500 million in sales now. That is a franchise that has been profitable and cash flow positive on a fully burdened standalone basis since 2019. With every drug that you launch at a certain point in the life cycle, when you shift your focus a little bit from top line to a balance of top line and bottom line. We've done that successfully with NUPLAZID. The frail elderly population has been disproportionately impacted by the pandemic, but during that time, we've continued to gain significant market share and make the franchise more and more profitable. We've taken out over $100 million in spend in that franchise from 2021 to the amount that we'll spend this year. So again, very profitable, strong cash flow franchise. DAYBUE, also, product, first and only drug approved to treat patients with Rett syndrome. It's a highly debilitating disorder where patients progress relatively normally until about age two, and then begin to deteriorate neurodevelopmentally. It's not a neurodegenerative disease, but it's a neurodevelopmental, so the neurons have a degraded ability to communicate across the synapse. They don't die, which is very helpful because it, it means you don't have to treat patients before their neurons die. But they do have this very substantial loss of neurodevelopmental capabilities. So DAYBUE is the first and only drug approved to treat Rett syndrome, where patients have a wide, wide array of, of highly debilitating symptoms. And we treat the core symptoms of Rett. That is, the neurodevelopmental symptoms, which many times are exemplified by loss of motor skill, loss of communication skills, stereotypies or hand slapping, and again, DAYBUE is the first and only drug approved to treat Rett syndrome. We have announced almost a full quarter of sales, and the second quarter, we had five-sixth of a quarter. We reported $23.1 million in revenues for that quarter. We guided to $45 million-$55 million for the third quarter, and we'll continue, plan to continue guiding on a quarter-by-quarter basis until at some point, we will switch to annual guidance. So we're super excited about this launch. It's gone extraordinarily well. We expected demand to be high. It is. We expected it to be tempered by access and the ability to gain access. It has been, but not quite as much as we expected in the early days, so we're operating ahead of plan there. And again, this is a franchise that we also expect to become profitable and cash flow positive, probably in a shorter timeframe than it took with NUPLAZID. In addition to our two approved drugs in those two franchises, we also have a phase III program in negative symptom schizophrenia. The short version there is, we've accomplished something that's very rare in that disorder, where there have been a lot of failures, of a positive pivotal study in negative symptom schizophrenia. I'm sure we'll speak more about that, through the Q&A. We have a second study, second pivotal study, that we have now fully enrolled. We'll have results from that study in the first quarter. In addition, before the end of the year, we'll be starting a phase III program in Prader-Willi syndrome, as a result of acquiring a company last year. We're very excited about the prospects there. More to come on that. And then in phase II, by the end of the year, we'll also be in Alzheimer's disease psychosis patients with a next-generation compound that works in a similar fashion to NUPLAZID, our drug to treat Parkinson's disease psychosis. And with this molecule, we're first targeting Alzheimer's disease psychosis. So, the benefits of NUPLAZID and improve upon them. And as we'll discuss more in Q&A, everything looks great in that respect, and we appear to be achieving all those objectives. We have a number of early-stage programs, some disclosed, some undisclosed, that we're also excited about, and we may touch on those as well. So again, pretty broad portfolio, business development, I guess I didn't touch on. It continues to be a very important part of our business. DAYBUE is an example of some of the success we've had in business development. We acquired that asset after it completed phase two, and then earlier this year, we also initially had rights to just North America, and we acquired rights outside of North America in a further extension of some of the business development success we've had. And we're eager to get moving in other countries as well. So with that, I'll turn it back over to you. Great. Thanks, Steve. So let's start with DAYBUE. As you said, you had a strong start, preannouncing two key sales above expectations, even though DAYBUE wasn't available until mid-April. So for those who may not have followed the DAYBUE story as closely, can you just highlight some of the initial metrics? Sure. So, as I mentioned, we expected demand to be high, and it is. So, what we didn't expect when we launched is the access to come a little bit faster than we expected. And in addition, we had a few Centers of Excellence. There are 18 Centers of Excellence in Rett syndrome, by the way. A few of them had accumulated a number of patients that they were able to get scripts out to right away. So in other words, in the months prior to our launch, they anticipated approval of the drug and had already educated their those families, and they were prepared to get going. So we had an increase in the number of scripts and in a positive benefit on the time it took to get access to those patients. And I think that's just a result of the recognition that payers get it. They understand that there's no drug approved to treat this disorder. It is an extremely debilitating disorder. And so we were able to get access faster than planned. So moved some of those patients earlier in the queue than we expected. So today, where we stand... So in the early days, 80% of patients were coming from Centers of Excellence and 20% from other sources. That is high-volume institutions, many of which operate like a Center of Excellence, so they're academic or large hospital networks, and then community practicing neurologists. And today, where we stand is now over half of patients are coming from non-COE treating physicians. We've continued to expand breadth and depth, and on the breadth side, we now have over 500 physicians that have written prescriptions. Of course, many of them more than one for DAYBUE. And again, continuing to execute on getting patients access to therapy just as quickly as we can. And I think I mentioned already, but if I didn't, I'll just double-click on from a plan perspective, if you think about it two ways. One is, payers getting initial access, which when a new drug is approved, and particularly in a rare disease space, where payers many times don't know a lot about the disease and takes them a while to become educated, they typically start, most plans start with a letter of medical exception or medical necessity, and, that's the way most patients start. It's important to get to formal plans as quickly as you can, and there we're ahead of plan. We're now up to over 70% of Rett covered lives now are subject to a formal plan by payers. So, from all metrics that we look at, things have gone at least as well, and in most cases, significantly better than our initial expectations. We're very, very pleased with that and very, very happy to be in a position where we can give these families hope. What kind of feedback are you hearing from physicians on treatment duration and time to observed benefit? So, you know, of course, in our business, you always look at what you observed in a clinical study, and then, sometimes that lines up exactly with what you see in human experiences, and sometimes it doesn't. And of course, in a clinical study, you're following a protocol, and in rare disease, you often don't have the opportunity to do dose ranging and other things that you would in other areas where you have access to more patients. So in our case, we are hearing reports, I should say, and a lot of this is anecdotes, so you want to be, you know, mindful that these are anecdotes. But we're definitely hearing about patients and physicians reporting benefits of the drug faster than we expected based upon the clinical study experience. So that's obviously very encouraging. In terms of just overall feedback, physicians and caregivers have been extremely excited and supportive of the drug. So we're seeing a very, very not only high demand, but very good response to drug. All drugs have safety or tolerability considerations to be mindful of, and we do as well. Many of you are probably familiar with this data, but Rett patients typically have about 80% of them have constipation. It's usually quite significant, can be very severe, can lead to hospitalizations, even a few reported deaths as a consequence of constipation and developing sepsis. In our case with DAYBUE, the number coincidentally happens to be the same, but in our clinical study, about 80% of patients had diarrhea. 97% of it was mild to moderate. These patients also wear diaper-type garments their entire lives. But it's there. And so we made a couple of significant pushes prior to the launch. One, in terms of just educating the patient community, caregiver community, excuse me, medical community, in terms of GI management strategies. Again, these patients have a lot of GI issues as a consequence of the disease. And then also, we're successful in getting the FDA to align around very explicit description in the label of potential ways to mitigate or help manage GI issues. So for instance, one of the most important things is the day a person starts on DAYBUE, they should stop taking their anti-constipation medication. We've got that very explicitly in the label. So anyway, that's a long-winded way of getting around to saying that we're very encouraged by what we're seeing. It's too early in the launch to have any quantitative data in terms of overall persistence, but the feedback we're getting qualitatively is very, very encouraging. Now, mid-July, you indicated some patients had already received 2 refills. Any updates on the refill rate, you know, average dose per patient or persistence? I've been talking- Yeah, sure. Thanks. I mean, all the right metrics to be looking at, of course, we're looking at all of them. I think, you know, as Steve mentioned, you know, many patients are, through guidance of their physician, titrating doses. You know, I think a common regimen is that patients would start about half the dose and over a four-six week period, kind of titrate up to either the recommended dose or the dose that gives them the best efficacy, tolerability profile. So I think in this early stage of launch, when you think that's that dynamic, and the first script that a patient will receive, despite a physician's intention to titrate, will be at the full dose. So a patient's getting a full dose for one month as an initial script and then may not be using it, you know, over the course of that full month. He may take them longer. So I think when we look at the data from all the patients that we have, you know, we see scripts, we see conversion, we see refills. You know, when you're looking at, you know, if has a patient refilled on time, or is it slightly delayed? Well, there's kind of all the questions that you asked about compliance, persistency, average dose they're taking is kind of compounded in between all that. So I think at this stage, it's a little bit noisy, so it's hard, as Steve mentioned earlier, to draw any conclusions. But will that over the coming kind of months and maybe quarters, will play itself out as we get to, you know, a more enduring patient population and be able to you know, share some qualitative and quantitative metrics on how, patients are utilizing the therapy. But qualitatively, going back, it's just, you know, we're very thrilled with the performance, feedback that we're getting from physicians and caregivers, and very excited about, you know, being able to continue to deliver this therapy to that patient. Now, as you mentioned, you guys provided 3Q net sales guidance for DAYBUE. Can you just talk about why you decided to provide guidance so early on in the launch, and what factors influenced the lower and the higher ends of the range for guidance? Yeah, I think maybe just to piggyback on your prior question. You know, there are a lot of inputs to a model here, and from a long-term basis, it's easy to get to kind of ranges and thoughtfulness in light of clinical data, commercial performance. In the early stages, you can make wild assumptions that can get to very extreme answers that, you know, probably are not in the realm of reality or helpful. So I think from our standpoint, we thought it was most informative to the investment community to give more the answer than the input. And so, you know, that's what we've done in terms of our guidance for the third quarter. We've given some quantitative and qualitative metrics through our earnings. And we'll continue to do that and continue to evaluate the right information to share with the investment community. And what we're gonna do in terms of guidance is we'll do this one go-forward guidance until such time that we get to annual guidance. And I don't know exactly when that will be. I suspect it'll be sometime next year, but it may not be in the beginning of next year, but likely sometime next year, we'll get to either guiding for the full year or the remainder of the year. And then going forward after that, just like new clouds, it will be annual guidance. And then, as you mentioned that you expanded your license agreement with Neuren, which includes ex-North American rights to DAYBUE. Historically, you focused on the US, and so can you talk about the rationale for expanding your license agreement and what your plans are for DAYBUE outside the US? Sure. So, the incidence rate of Rett is universal around the globe. The unmet need is very similar. Again, no drugs approved anywhere in the world other than the United States today, with DAYBUE, excuse me, other drugs that treat the core symptoms. So I guess first and foremost, we recognize there's a significant unmet need there, and particularly based upon the expected success that we would have in Rett, and now the realized success that we're having, we were very eager to acquire the ex-North American rights as well. If we could have done that the day we signed the original deal with Neuren, we would have. They weren't for sale, so we're very pleased to be able to do that. It was a competitive process. Took us over a year to work through that process and come out successful. It pencils out, you know, very well. I mean, we're very pleased to be able to give the same kind of hope around the globe that now families in the U.S. have. We'll be moving forward as expeditiously as possible. There is some foundational groundwork we need to do in Europe. You know, it'll probably take a couple of years to get to a point where we can look at an approved product. The requirements around, for example, manufacturing are a little bit different in Europe than the U.S., so there's some work we need to do there. We need to seek scientific advice, which we'll do as quickly as we can and move forward. We believe that the package that we have should be very compelling and should be sufficient for an approval in Europe. But again, we'll seek scientific advice to confirm that. In Japan, many times there is some additional clinical work you need to do, and so we'll be exploring that further as we move forward. And in other countries of the world, we'll be looking also to advance there as rapidly as we can. Great. Let's shift to ACP-204. You completed a phase 1 program with over 100 patients. How is ACP-204 differentiated from Pimavanserin, and what are the key properties of 204? So ACP204 is, as I referred to it earlier, our next generation compound that's both chemically and biochemically reasonably closely related, or closely related enough, is, I guess, the way I would say it, to Pimavanserin, to give it a different risk profile. And so it puts us in a position where we can compare in vitro data 204, in vitro data Pimavanserin, in vivo data 204, in vivo data Pimavanserin. With neuropsychiatry, once you get to humans, there's a little bit of art to the science in terms of picking a dose and moving forward with it. And one of the principal things that we look at in CNS or neuropsychiatric drug development is receptor occupancy. What dose gives you full receptor occupancy? You can do radioligand on a drug and do a PET study to determine the degree of receptor occupancy you have in the dose you get it. So with 204 and Pimavanserin, are also able to compare receptor occupancy data. So given that, those buckets of very useful information, it puts us in a position to be able to move aggressively with ACP-204. And so the clinical plan that we've unveiled is to run a seamless phase II, phase III program. And by that I mean, we'll run phase II, and then on a side-by-side basis, when a site has enrolled their last patient in the phase II study, the next... They'll just keep enrolling, and the next patient will go into one of the two phase III studies. This saves about a year on the development timeline. Now, again, I wouldn't do this with a new chemical entity and an unvalidated mechanism, but given the significant body of data we have around Pimavanserin, the ability to cross-correlate that with 204, it's the right plan. So we're eager to get going there. As I mentioned earlier, development objectives or the target product profile objectives with 204 were to first and foremost accomplish the same benefits we see with Pimavanserin. That is a very safe and well-tolerated compound with strong efficacy. Second, to mitigate, minimize or potentially completely eliminate the moderate QT signal that we see with Pimavanserin. In schizophrenia, that wouldn't be an issue, but in, again, elderly, more frail populations, it's much more of a consideration. And all the data we have so far, and now over 100 patients that we tested in phase I, indicate that we don't see a QT signal at this stage of development. We didn't see anything along those lines that would suggest that we should see something based on the preclinical work that we did as well. Last, Pimavanserin, through this mechanism, takes about, it has a 57-hour half-life, takes 12 days to get to steady state. We wanted to be able to improve on that so the patients begin seeing a benefit sooner. So instead of 12 days to steady state that we see with Pimavanserin, with ACP-204, it's about five days. So again, we've accomplished all of the objectives we have in this program. Just going back to receptor occupancy and in vivo data and in vitro data, that and the comparison we did between the two molecules, that data suggests to us that about 30 mg of ACP-204 would be equivalent to 34 mg of Pimavanserin. The only approved dose of Pimavanserin, but we couldn't go higher with Pimavanserin due to the QT signal that was observed. With 204, again, we're testing 30 and 60. So that will enable us to accomplish another key objective we have, and that is to go to higher equivalent dose, to be able to see if there's more efficacy or faster efficacy that we can establish through this mechanism. So we appear to be in a position to do that as well. Great. Moving to Pimavanserin for negative symptoms of schizophrenia. You know, developing drugs for schizophrenia is challenging, to say the least. You know, we were reminded this with the ulotaront update at the end of July. What steps have you taken to mitigate placebo response, and what gives you confidence in Pimavanserin for negative symptoms of schizophrenia? I'll try to do this quickly because we, I realize we're running a little bit short on time. So negative symptoms, as I mentioned, it's been a very frustrating, difficult, challenging area. We still nothing approved. We haven't moved the ball an inch in the last four decades. And when I refer to negative symptoms, I just want to clarify, with all antipsychotics that reduce the positive symptoms, the positive are the hallucinations, delusions, paranoia that these patients exhibit, that we're all very familiar with. The negative symptoms are the more the social withdrawal aspects that are actually the symptoms that really keep them, make it challenging to be in the workplace, make it challenging to live a normal life and much more impactful over the long run, as opposed to the episodic positive symptoms they have. So negative symptoms, all antipsychotics that treat positive will have a, at least a short term, apparent benefit on negative symptoms, but those are not the patients we're seeking to treat. We're seeking to treat the patients that after you've established that, and you've got them, their positive symptoms as well controlled as they can be, who continue to have predominant negative symptoms. That's about 40%-50% of schizophrenia patients... To get a drug approved to treat those patients, you need to study them over a longer period of time, not the six-eight weeks that antipsychotics usually are tested and approved on, but more like six months. So we're doing six months in those patients that already are well controlled on the positive symptoms, stay on the same dose of the same drug. Again, in our first pivotal study, we saw positive results there. In this study, the study is almost identical with two notable differences. One is in the first study, we did a little bit of dose ranging. Definitely saw a much stronger response at the high dose. That is the same dose that we're approved at for Parkinson's disease psychosis, 34 milligrams. In this study, we're only running the 34 milligram dose. And then secondly, it's well known, and many of you, I'm sure, have heard this from us and other companies, that it's increasingly difficult to separate from placebo in schizophrenia patients in the United States, and there's a lot of reasons for that I don't have time to go into here. And so we have enough patients, we believe, from the first negative symptom study. We don't need more US patients. And so this study is being run entirely outside the US, and that should help the probability of success as well. How are you thinking about the competitive positioning of Pimavanserin within the schizophrenia landscape? Yeah. So I think the most important point of differentiation, what I just described, I know there's a lot of talk, and we're very encouraged by some of the results we're seeing with non-dopaminergic new antipsychotic drugs on the positive symptoms. And of course, as we would expect, they are having some read-through on negative symptoms, but that's not the patient we're pursuing. So that's those are patients where, for those drugs, they'd be looking primarily at first-line therapy, displacing generic drugs. We and for the persistent negative symptoms that exist after you've achieved that benefit, we would be adjunctive therapy there. So very important difference. We're not trying to displace cheap generics, we're we'd be an add-on therapy to whatever antipsychotic that patient may otherwise be taking. That's probably the principal point of differentiation between our approach or the patient population that we're pursuing versus what you many times will hear companies talk about when they're talking about negative symptoms. You're on track to report data from the second phase III for negative symptoms of schizophrenia in 1Q. What's the bar for success for ACP-204, and what do you need to see? So I think in ENHANCE-2, having one pivotal study, positive pivotal study, under our belt, if we have a positive study, I'll come out of what I mean by positive in a second, then we think we'll be in a very strong position to submit an sNDA to the FDA and seek approval. You know, with neuropsychiatry, when you don't have approved drugs and you don't have an established clinical benefit that's well defined, there's, again, there's a little bit of art to the science here, perhaps. And so what we saw in the first study, when we looked at the 34 milligram dose, we saw a much stronger response. It was an effect size of 0.34. That's a very good effect size in neuropsychiatry. So if we can accomplish see something that we think is clinically meaningful, has a good effect size, and usually in neuropsychiatry, you think about that at 0.25, up to 0.3 or higher, then we'll be super thrilled. And again, we already know the tolerability and side effect profile of the drug, so I think we'll be in very good position at that point. Great! Your phase III for ACP-101 in Prader-Willi syndrome will begin later this year. Can you just talk about the rationale for Carbetocin treating hyperphagia? Yeah. And then maybe talk a little bit about the study design. Yeah. It's another area that's been tough. It's been tough having clinical success here. The first thing I would say is, Carbetocin is a derivative of Oxytocin, and Oxytocin, by the way, is not appropriate to try to treat Prader-Willi syndrome, because Prader-Willi is a chronic disorder. Many times people think of it as a metabolic disorder. It's not. And many of the drugs that have been tried tend to focus on kind of just pure appetite suppressant. It's really more of a behavioral disorder with where you have just this unrelenting desire to eat. You just can't get satiated. So families many times have all their food, refrigerators, cabinets, everything under lock and key. It's extremely disruptive to the family and, of course, to the patient. So in this case, there's a significant body of data around the potential of using this mechanism through Oxytocin. Carbetocin, again, being a derivative, and the way it's administered is through an intranasal spray. So we're very excited about the prospects here and eager to get our phase III study up and running. Great. Looks like we'll have to leave it there. Thanks so much for your time. Thank you. Thank you. Thanks so much.