Hi everybody, my name is Ash Verma. I'm a SMID Cap Biotech and Spec Pharma analyst at UBS. Welcome to UBS Virtual CNS Day, and with us we have Acadia Pharma as our next company, and Stephen Davis, who is President and CEO, is with us today. Hi Steve. Good morning, how are you? I'm good, doing well. This is a back-to-back CNS Zoom marathon, so trying to survive that. But I think there is a lot of interest in your story recently, and I will say that Daybue has been a topic of conversation amongst many investors. And I think I would love to pass through some of the discussion points around the growth opportunity that is represented by Daybue. So that's the plan for the call. Maybe I think it'll be helpful if there are some investors that are not as familiar with the story, if you can give a quick one-minute overview about the platform, and then we can dive right into the questions. Yeah, that sounds great. So we're a CNS company. We have two approved products: Daybue for Rett syndrome and Nuplazid for Parkinson's disease psychosis. We're a cash flow positive company. We have a robust pipeline. I'll speak to it in a second. Let me just give a very, very high-level overview of the two commercial products first. Daybue is the first and only drug approved for the treatment of Rett syndrome. That's a very rare, highly debilitating disorder. And we launched that drug in April of last year, had a very, very highly successful launch. We'll speak more to some of the metrics as we go forward in this call. Nuplazid, our other approved product for Parkinson's disease psychosis, was approved in April of 2016. So we're approaching eight years on the market now. And that product, our primary objective with that product is to maximize cash flow. Of course, we do that two ways: growing the top line and carefully managing the bottom line. That franchise on a standalone, fully burdened basis is throwing off well over $300 million a year in free cash flow. Then in terms of our pipeline, we have a phase 3 rare disease program in Prader-Willi syndrome. We just initiated that phase 3 program in the fourth quarter of last year. It'll take a couple of years to run that study, but we're very excited about the prospects there. Then we have an asset that we also started in late-stage development in the fourth quarter of last year, and this is ACP-204, a next-generation 5-HT2A blocker. So it's a next-generation version of Nuplazid that we put into a seamless phase 2, phase 3 program in Alzheimer's disease psychosis, which is a very, very vast market. And then we have a number of disclosed and undisclosed programs that are in preclinical development that are advancing. Business development continues to be a very important part of our business. Daybue is kind of an example of some of the success we've had there. I should also mention last year we expanded our rights with Daybue to beyond North America. When we originally licensed the product, we just had North American rights. Now we have global rights, as well as additional rights to another molecule that the party that we license this from has as well. So BD, again, will continue to be a very important part of our business. And I look forward to getting into more detail on all these fronts on this call. Great. All right. So I think, look, I mean, yeah, like you said, the launch was pretty strong out of the gate for Daybue, and this is something that has a pretty high unmet need. So I think this Daybue presents a good opportunity. I wanted to go in and ask some specific questions around the discussion that came out from the fourth quarter call that you had. So one of the aspects that you outlined was that more than 50% of Centers of Excellence did not have any Rett therapy days in January. And then you saw a good comeback on metrics in February. So what I wanted to ask is, I mean, we've talked to some of these Centers of Excellence, and I have not heard that particularly on this no Rett therapy days in January. Can you elaborate on that? What are you seeing? I mean, you obviously have a much better vantage point to look at these things and try to understand what is exactly happening. Why was there this sort of a lapse in terms of there being no Rett days available? And then what has caused that to now kind of reverse, and now you have presumably more stronger metrics on the launch in February and March, I'm assuming? Yeah, no, thanks for the question. So what we said is between 25%-30% of them had no Rett clinic days in January, and another 25%-30% had half the number of Rett days that they have. A component of that, particularly the reduced Rett days or clinic Rett clinic days, part of that was due to some severe weather in the middle of the country that caused them to reduce the number of Rett clinic days they did. I think otherwise, the centers that did not have Rett clinic days, what we hear from them is that that's just typical in January. And so we just and it's probably multifaceted. Some of it probably has to do with just the timing for families. There's a little bit of a holiday impact and getting they typically have other kids too, getting kids back into school, etc. It's just not the best time for them. It's something that we experienced. We don't know that we'll see that every year going forward, but we're assuming that we'll have some kind of that type of impact. It may be to a greater or lesser extent than we saw this year, but we're anticipating that in future years, we'll see that. We did see, as we mentioned, a significant rebound in new patient prescriptions in February. We saw a meaningful reduction in January, and then a significant rebound. We're back to kind of a similar demand curve that we had been on, and just continuing to track consistently with what we typically see in rare disease drugs. The prevalent population in the U.S. is 6,000-9,000. 5,000 diagnosed patients. We've seen that increase somewhat since we launched. The tally when we launched was 4,500. We often see that gap between diagnosed and prevalent populations narrow once a product is on the market. So we'll continue moving through that prevalent population. We still have a lot of patients to get on therapy and continue to see strong demand across all sectors. But again, it's been tracking for the last several months along the lines of what we expect in rare disease. What we saw in our case was, so if rare disease growth tends to be kind of linear, growth curve like that, we've seen the same thing, except we just stepped up based upon this large surge that we had in the first few months after launch. It's almost as if we leapfrogged into year two of the launch. There's some real benefits that come with that. We get to a point where there's a critical mass of experience and understanding of the drug in the medical community and the caregiver communities much faster. Yeah, that's great. I think the comment that you provided on the persistence rate for where things are for four months or six months, that has been slightly different versus what we've talked about earlier. What do you think is leading to this improvement in the monthly persistence rates for Daybue? Where do you think it eventually shakes out? What is kind of the tail opportunity for these patients, and how confident are you about that? Yeah, so what we said is we've seen some incremental improvement on those parameters from when we initially reported to what we reported on the earnings call. And there I think probably a number of again, I think it's probably multifaceted. Probably one of the more relevant factors that we monitor is what dose are patients starting on? And we have seen some modest reduction in the starting dose. And we would have expected that. Right out of the gates, almost all prescriptions were written at the top dose, but most doctors said, "I don't want you to take that. I don't want you to titrate it." So they titrated up over a month or 2, sometimes even a little bit longer, but usually within the first couple of months, they were titrated up to whatever the physician and family felt was the optimal dose. And so we expected that with more experience of the drug, as I was referring to earlier, getting kind of that critical mass, that physicians would probably start writing lower than the labeled dose for patients to start with. And we have seen some of that. And so I think between better consistency on titration, which a lot of physicians are doing, and just gaining more experience with the drug in terms of what dose to even start patients at, those are the kinds of things that can contribute to improvements in persistency. I will say, on all these parameters, they do move around a little bit. But we think the undercurrents that I described will continue to be beneficial. And where it settles out, it's hard to say. But we're very pleased with where we are at this point in time, where we continue to track about 10 percentage points above our clinical trial experience in terms of the real-world persistency that we're seeing. Yeah. I mean, in terms of the real-world persistency, this has been kind of an eye-opening metric to look at, that you're 10 percentage points above the clinical trial experience. I mean, if you fundamentally think about what would happen in a clinical trial, as long as the patients are able to, let's say, tolerate the drug, and I'm assuming that they would continue to take the treatment, whereas in the real world, they might also discontinue if they're not seeing any kind of a benefit of that. So there would be more of an inclination, let's say, for patients to discontinue in a real-world setting versus in a clinical trial setting. So that's just something that I've been trying to understand. If that would be the case, if you agree with that, then how come there is such a big step up in terms of where we are seeing the persistency? Do you think that this is primarily being driven off the titration and how physicians are able to handle this better in a real-world scenario? Yeah, so there's a number of branches on the tree there. Let me make sure I'll try to make sure I hit them all. I think we expected to be able to establish persistency that is greater than our clinical trial experience. Because in the clinical trial, titration was not prescribed. In the clinical trial, we had not established a GI management plan until very late. And then it wasn't implemented consistently, primarily because families have a high concern, typically with constipation, and they were reticent to withdraw the constipation medications when they started on Daybue, which is now a clear description of the GI plan that's in the label, and that we make sure that we message that. And so we expected that we'd be able to have a positive impact on that, and that's what we've seen. We do also track data in terms of reasons that patients give for discontinuing. Not surprisingly, the most common reason is tolerability. We do see some patients that don't respond to therapy. That's very common in drugs where you have subjective endpoints or subjective benefits that you're measuring. We see this all the time in neuropsychiatry, where it's very common to see about 3 out of 4 patients respond to therapy and 1 out of 4 don't. Then the magnitude of the response can differ, of course, as well. So we do track patients that don't show a benefit, but it's significantly less. It's further down. We're going to have some of that. We're going to have patients that don't respond to therapy. Again, when you have subjective endpoints, we do have some of that. The most common reason is tolerability. Many times when patients discontinue, they say, "We're interested in trying again. Please stay in touch with us. We may come back." But it's just not the right time. So we monitor all of these things. And I would say the rate of discontinuation, we continue to be very optimistic about, and the rationale, the reasons people give, are what we would have expected. Yeah, yeah. Okay. All right. So now. Steve, if I can just add one thing? Did I ask for? Please do. Yeah, I think you're right. If you compare how patients are being treated in a clinical trial setting versus the commercial, there are differences. And so we can't get a pure apples-to-apples comparison. But for the persistency data that we shared, we're looking in comparison to placebo patients in the double blind that rolled over into the open-label extension trial. So at that point, it really is a voluntary participation for the medicine. And again, while it's not pure apples-to-apples, we think it's the best comparison to make to try to monitor what the commercial setting is versus patients that were part of the clinical trial experience. Yeah. Yeah, thanks for that additional detail, Mark. Mark's right. Yeah, thanks for jumping in there, Mark. Sorry. So I guess the question that I was going to ask next, just around the competitive landscape, I mean, there are two companies that we are following, Taysha and Neurogene. They both have these gene therapy programs that are reading out this year. So just curious, what are you expecting to learn from that? And how do you think this can potentially impact Daybue in the long run? Yeah, thanks much. So let me speak broadly, and then I'll narrow the aperture quickly. So with gene therapy, I mean, the promise of gene therapy is really very intriguing across our entire industry. It's going to be a bumpy ride, I think, determining precisely how to optimize. In the case of Rett, there's an additional challenge to finding just the right level of protein expression for these patients. Because if you overexpress, you get basically the same symptoms you get by the deficit that Rett patients have today. So it's a Goldilocks type of kind of window of expression. And so while gene therapy in general and in Rett has great promise, it also has some challenges and some challenges that are unique to Rett. Now, having said that, we're the first therapy to get to the market in Rett, but we certainly you can't talk to these families and physicians on a daily basis as we do and not just really appreciate the gravity of their situation and how challenging this disorder is. So we'll be thrilled if there are additional therapies that can benefit this population. I think as it relates to gene therapy, we don't typically see absolute cures with gene therapy. But with gene therapy, these patients are so highly symptomatic, if you reduce the symptom burden by 50% or even 75%, they would still be highly symptomatic. So we think that when we look into how we project the future, and we run multiple scenarios, but under a scenario where there are gene therapies that get to the market, and it will still be several years before that happens. But if that were to happen, we believe that Daybue would be very complementary, likely very complementary to gene therapy approaches as well. Yeah, yeah. Okay. I'll just take a minute here to see if there are any questions from investors on the line. If not, then I have a few follow-ups on the pipeline. Sure. To ask a question, please use the raised hand feature at the bottom of the Zoom interface. If you do have a question, please use that, and we'll call them. There are currently no questions on the line. Okay. All right. So I guess maybe just another question that I had was just around Nuplazid. Yeah, I mean, it was kind of disappointing to see that we didn't get the intended result on the negative symptoms. Did you try to do any sort of—I mean, I know it's only a week has passed, but have you learned anything? Was the benefit not accrued from recruiting the patients in a presumably less of a placebo effect population, or was there just no activity of Nuplazid in negative symptoms at that dose? So you're right. We still have a lot more data that we need to process. But at the top-line results data that we have now, we did see a drug response in this study that was equivalent to the drug-treated response in our ADVANCE-1 study. The difference between the two studies is we saw a much higher placebo response in ADVANCE-2 than we saw in ADVANCE-1. So when that happens, it's always hard to say with 100% certainty, well, how much of the response is due to placebo versus how much of it is due to drug. But in this case, because we have the earlier study that was almost identical other than the dose, where we ran only the 34-milligram dose in this study, and the vast majority of patients were on 34 in the previous. Other than that, the studies were almost identical. It's a situation that we sometimes see in neuropsychiatry that is part of the nature of our industry. It's sometimes difficult to predict placebo response in these studies. It's something that we take a lot of steps to try to mitigate this, contain it. It's not always possible. It doesn't necessarily make patients feel any better, nor us feel any better to know that many times we're in this industry, particularly neuropsych, sometimes even when drugs work, so even for drugs that are approved, they have many times pivotal studies that fail along the way, and there are a number of examples of that. Unfortunately, in this situation, I can't fully explain the placebo response. There's some theories that we're following up on. Unfortunately, that's the result of this study. Yeah, yeah. And maybe looking at some of the other upcoming pipeline opportunities for you. So ACP 101, like you mentioned, for Prader-Willi. So yeah, I know there are lots of different companies pursuing this indication. Just how do you think that ACP 101 is differentiated in the competitive landscape? Yeah. So the hallmark symptom of Prader-Willi is hyperphagia. So we're trying to get right at the core of the issue on hyperphagia. The earlier study done, there was a previous phase 3 study done by the company that we acquired and by which we acquired this program that showed at the dose that we're testing, 3.2 milligram, that showed a response on hyperphagia. So we're zeroing in right on what we think is the core of the issue in these patients. And by the way, I should just really briefly mention, also, highly, highly debilitating disorder. These patients have just this constant hunger. They can't get satiated. And just to cut to the chase, the bottom line is their average lifespan is 30 years. So it's a very, very significant disorder. And if we can get right to the heart of the issue and mitigate this unrelenting hunger that they have, then we think that we can get very significant benefit. Here too, there are other people working in the space. And where this shakes out will depend on our trial results, of course, as well as others. But we feel very excited about this program and are eager to open the envelope on our own results. Yeah, yeah. Okay. And then just the last one, the ACP-204, so for this Alzheimer's disease psychosis. Yeah, I mean, I guess the question that I had here was just what should we assume about the patent life or exclusivity on this? And do you see this as an extension of Nuplazid that you can try to build on the same set of indication that Nuplazid has had? Or are you going to pursue this as a totally novel indication? Yeah. No, thanks for the question. I think there were two parts. I'll try to cover them both really quickly. Just in terms of exclusivity, we were going through the typical ANDA litigation. In our case, actually, two sets of litigation, one on composition of matter patent, the other on multiple formulation patents that we have issued. On the composition of matter patent, we won at the trial court level. Won decisively. We put forth three arguments. The court only got to two of them. We won on both of them. We only needed to win on one. That's being appealed. That appeal process will play out over about the course of the next year or thereabouts. Again, we feel like the law is on our side, and we'll continue to very vigorously defend our position there. On the formulation patents that have not yet come to trial at the trial court level, that is scheduled to come to trial in December of this year. We did win a Markman hearing. That's a hearing that's set up to try to kind of narrow the range of issues that are then litigated at the trial. We won decisively on that. That doesn't mean we necessarily win at the trial court decision, but it certainly puts us in a stronger position, at least as it relates to the issue of infringement. So it kind of narrows the issues to the other side, probably focusing primarily on trying to invalidate the patent. We feel very good about that as well. We feel like our patents are very strong, and again, we'll continue to vigorously defend them. Composition of matter patent is scheduled to expire in 2030, and the formulation patents effectively in 2037. So in terms of indications for 204, our target indication, our initial indication is Alzheimer's disease psychosis, where again, there's no drug approved, super high in need. It is a very, very large population. But in addition, there are other indications that we're interested in, including Parkinson's disease psychosis, including Lewy body dementia, and others as well. We haven't announced precise plans in terms of what we expect to do there, but there are some additional indications that we're interested in. And we feel like this next generation compound 204 has meaningful, we've made meaningful improvements over Nuplazid. Yeah. Great. With that, we are out of time. So thank you so much, Stephen and Mark, for taking part in our conference. And yeah, I look forward to learning about the programs as we go along. So thanks. Thanks so much. Good luck with everything. Thank you. Take care. Bye. Bye.