Good day, ladies and gentlemen and welcome to ACADIA Pharmaceuticals’ Second Quarter 2023 Financial Results Conference Call. My name is Jeda and I'll be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's call. I would now like to turn the presentation over to Jessica Tieszen, Associate Director of Investor Relations at ACADIA. Please proceed.

Thank you. Good afternoon and thank you for joining us on today's call to discuss ACADIA's second quarter 2023 financial results. Joining me on the call today from ACADIA are Steve Davis, our Chief Executive Officer, who will provide some opening remarks followed by Brendan Teehan, our Chief Operating Officer and Head of Commercial who will discuss the DAYBUE launch and NUPLAZID execution. Doug Williamson, our Head of R&D will provide an update on our pipeline programs; and Mark Schneyer, our Chief Financial Officer will review the financial results. Steve will then provide some closing thoughts before we open the call up for your questions. In addition, Kathie Bishop, our Head of Rare Diseases and External Innovation will be available for the Q&A session. We are using supplemental slides which are available on the website's Events and Presentations section. Before we proceed, I would first like to remind you that during our call today, we'll be making several forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements including goals, expectations, plans, prospects, growth potential, timing of events or future results are based on current information, assumptions, and expectations that are inherently subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially. These factors and other risks associated with our business can be found in our filings made with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which are made only as of today's date. I'll now turn the call over to Steve.

Thank you, Jess. Good afternoon, everyone. Thank you for joining us today. Please turn to Slide 5. ACADIA is entering a transformational period of growth as we continue to execute across all strategic priorities. First, NUPLAZID is an increasingly cash flow positive franchise and is the financial foundation to our business. Our real-world evidence studies, which we began rolling out at the beginning of the year, have had a positive impact on new patient starts and despite a contracted Parkinson's disease market, NUPLAZID continues to gain market share and outpace new patient starts over other antipsychotic products used off-label in the PDP market. Second, the launch of DAYBUE is off to an exceptional start. We are seeing high demand and broad reach since U.S. commercial availability on April 17. We continue to see a broad distribution of prescriptions written across all account types including high-volume institutions and community practices in addition to centers of excellence. As Brendan will discuss further in his section, we are very pleased to be receiving highly positive caregiver feedback regarding the benefits they are seeing. In addition, we are receiving positive feedback from healthcare providers and caregivers regarding the level of support they are receiving through our ACADIA Connect services and we are seeing these efforts translate into sustained demand. Third, last month we announced our expanded licensing agreement for trofinetide and we now have worldwide rights to the asset. The successful launch of DAYBUE in the U.S. underscores the opportunity we have to execute our global strategy. We expect to file a new drug submission for trofinetide in Canada in the next 18 months and we will engage with European and Japanese regulators soon. There is a significant unmet medical need worldwide and no approved treatment for Rett syndrome outside of the United States. Incidence rates around the world are similar to those in the U.S. We estimate prevalence in Europe and the U.K. combined to be between 9,000 and 14,000 patients. Based on birth rates, mortality rates, and other data, we expect the prevalence in Japan to be between 2,000 and 3,000 patients. Fourth, we have multiple late-stage programs with near-term milestones including our Phase 3 ADVANCE-2 study of Pimavanserin for the negative symptoms of schizophrenia, where we have now completed enrollment and expect top-line results in the first quarter of 2024. We have a Phase 2 study of ACP-204 for Alzheimer’s disease psychosis that is expected to begin in the fourth quarter. Later in his section, Doug will discuss more about how that study will seamlessly integrate into two Phase 3 studies, all three of which could potentially support an NDA submission. And ACP-101 is also expected to start a Phase 3 trial in Prader-Willi syndrome in the fourth quarter of this year. Fifth, we have a deep early-stage portfolio that includes disclosed and undisclosed programs focused on neuropsychiatric and rare disorders, and we remain active in business development to further expand our portfolio. As an important side note, through the success of our DAYBUE and NUPLAZID franchises, our business has now reached cash flow neutrality. Let's turn to NUPLAZID on slide 6. The NUPLAZID franchise has been cash flow positive going back to 2019 and we've generated increasing cash flow from this franchise each year since then by focusing on both the top and bottom lines, inclusive of reducing expenses by over $100 million when comparing 2021 results to our expectations for 2023. Our second quarter performance of $142 million in net sales was driven by an increase in new patient starts across both office-based and long-term care channels with particularly strong performance in LTC. As we've laid out previously, there are two dynamics which we believe can contribute to top-line growth for our NUPLAZID franchise. One is the awareness and understanding by healthcare professionals of the three real-world studies that demonstrate the benefits of them compared to off-label atypical antipsychotics. As Brendan will elaborate further in his section, it's clear that these studies are gaining traction as evidenced by an increase in our market share of new therapy patients in PDP. The second is our ability to continue to grow this share despite no significant improvements in Parkinson's disease market dynamics. Let's turn to slide seven to discuss our top-line highlights. Here we have a big-picture overview of our two commercial and numerous early-stage and late-stage top-line programs. Each of these contributes to our leadership in the development and commercialization of new medicines for central nervous system diseases and shapes our long-term growth opportunities. We have Phase 3 programs underway in both negative symptoms in schizophrenia and Prader-Willi syndrome. We also have a Phase 2 program quickly getting underway in Alzheimer's disease psychosis. And behind that, we have a rich pipeline of early-stage disclosed and undisclosed programs that position us for long-term growth. I'll now turn it over to Brendan to provide additional insights on our DAYBUE launch execution and NUPLAZID's commercial performance starting on slide eight.

Thank you, Steve. Let me provide commentary on both of our commercial franchises, DAYBUE and NUPLAZID, each of which are performing exceptionally well. Let's start with DAYBUE on slide nine. We're excited to report that our DAYBUE launch continues to exceed our expectations. Before I get into important metrics to date, I'd like to first describe the most important element of this launch illustrated through the caregiver testimonials you see on this slide regarding day-to-day improvements in real-world use of DAYBUE that these families are sharing with us. Just 15 weeks into the launch, hearing these important examples about the tangible impact DAYBUE is having on patients and families makes the value of this first-ever treatment for Rett syndrome all the more meaningful. A few examples of benefits families are describing include improvement in speech or speaking for the first time in years, broadening vocabulary, and improved engagement in conversations. We also hear regular feedback about increased alertness, such as the testimonials on this slide in which patients are able to better follow conversations or complete activities they were previously unable to complete, and decreased hand-wringing and stereotypies. These proof points all speak to the promise of treatment with DAYBUE and we will continue to monitor and share those experiences as patients continue treatment. Let's now turn to prescriber metrics on Slide 10. I'd first like to speak to the significant breadth of demand we're seeing from prescribers. To date, well over 400 prescribers have written prescriptions for DAYBUE. This demand is coming from all sectors, including centers of excellence, high-volume institutions, and community practices. We received prescriptions from all 18 of the designated centers of excellence within the first five weeks post-product availability. In addition to the broad distribution of prescriptions across account types, we're seeing enrollment forms from every region of the country and from each of our 36 territories. We're also seeing a significant number of DAYBUE prescribers who have written more than one prescription, pointing to not only encouraging breadth, but also increasing depth of prescribing at this point of launch. While we're pleased with both the breadth and depth of prescribing, there is still significant opportunity to penetrate the broader Rett syndrome market. With respect to advancing these prescriptions to paid therapy, to date, about seven out of 10 written prescriptions from the second quarter have converted, and we expect the remainder to convert in the weeks ahead. The rate of conversion to paid scripts continues to improve monthly. In terms of process, the vast majority of centers are treating patients as they come to see them during planned Rett syndrome clinic days. Some centers have increased the number of Rett clinic days to accommodate patients and families. Looking at the mix of patients early on, we are seeing characteristics such as weight, age, and gender that are consistent with the broad label that we have and the demographics of the Rett community, including a meaningful number of male patients and patients above the age of 20. We're pleased to see a high degree of titration to help patients reach their optimal dose. While many of the patients who started treatment early post-launch are now reaching their most appropriate dose, more recently added patients will continue to titrate up from their starting point. Overall, we are very encouraged by what we're seeing at this stage of launch given our broad label. Let's discuss our patient support services next on Slide 11. We continue to be very proactive in providing a wide range of support services to HCPs and caregivers with a special emphasis on educating about the benefits of DAYBUE and providing strategies for our GI management plan. Our One ACADIA team has received excellent feedback from both the medical community and from caregivers underscoring the benefit of our programs. As a reminder, we have fully staffed teams of nurse care coordinators at our hub as well as family access managers who are paired with each patient and caregiver from the moment the prescription is written. Our field-based family access managers, or FAMs, also reach out proactively to the prescribing physicians to develop strong relationships with office staff leading to faster prior authorizations, pull-through, and approvals. Our sales team is staffed with rare disease experts who are highly engaged with the Rett Centers of Excellence, high-volume institutions, as well as the smaller community practices. They are educating on the DAYBUE package label and clinical program as well as our support services to ensure that all practices are well supported. Our field-based rare disease medical science liaisons provide timely insights based on healthcare provider requests for further clinical information as they start treating patients with DAYBUE. Overall, our One ACADIA approach to supporting the Rett community has been instrumental to our early success. Let's discuss access dynamics on slide 12. Since commercial launch, written coverage policies for DAYBUE have, as expected, been accelerating. At this stage, payers have adopted formal policies covering approximately one-third of Rett lives. This written policy process has progressed somewhat faster than we anticipated at this stage of the launch and underscores that payers understand the severity of Rett syndrome, the impact it has on patients and their families, as well as the clinical evidence that supports DAYBUE's approval. As we projected, Medicaid makes up about 60% of coverage, with commercial plans covering about an additional 25%. The rest of the mix is Medicare and other federal programs. For those two-thirds of patients who have payers that have not yet adopted a formal policy, DAYBUE prescriptions are fulfilled through medical exception or letters of medical necessity. Looking at prescription reauthorizations, these are generally consistent with our expectations and reflective of what has been seen for other rare disease specialty products. Most reauthorizations are at six or 12 months, with some at three months, then annually thereafter. Let's now turn to NUPLAZID on Slide 13. As Steve noted, the NUPLAZID franchise is significantly cash flow positive and increasingly so year after year. We have introduced operational efficiencies that have lowered our cost base while simultaneously increasing our market share versus off-label atypical antipsychotics in a contracted overall Parkinson's disease market. Driven by increased PDP, new patients starts. Our net product sales of NUPLAZID in the second quarter were $142 million, up 6% year-over-year. We began our broad educational campaign leveraging newly available real-world evidence studies at the beginning of the year and are pleased to see these efforts beginning to drive both NUPLAZID brand preference and, most importantly, an increase in new patient starts across both the community and long-term care segments of our business. Since the beginning of the pandemic, the overall Parkinson's disease market has contracted significantly. Looking at Carbidopa-Lividopa prescriptions over the first half of 2023 versus the second half of 2022, we continue to see this trend. Despite this, during the same timeframe, NUPLAZID's performance has continued to run against the current and we have grown new patient starts significantly. As you can see on this slide in the office-based channel during this timeframe, we've grown new patient starts 13% while all other PDP products have declined 3%. Turning to the LTC channel where we're seeing improvement in new patient admissions, NUPLAZID has substantially outpaced the class. Growing fully 20% during this period while all other products used to treat PDP in the long-term care setting have grown just 1%. Understanding that the large majority of revenues we record during any given quarter are the result of refills by continuing patients, these significant increases in NUPLAZID and new patient starts in both market segments are encouraging.

Thank you, Brendan. I'd now like to update you on the continued progress of our clinical programs, starting with Pimavanserin as a potential treatment for the negative symptoms of schizophrenia on Slide 15. As Steve mentioned, we've now completed enrollment on schedule in ADVANCE-2, our second study of Pimavanserin in negative symptoms of schizophrenia and are on track for high-level results in the first quarter of 2024. I want to remind you of the opportunity that we're pursuing in this program. Predominant negative symptoms remain one of the largest unmet needs in schizophrenia, and as of today, there are still no approved treatments for these symptoms. Let's first understand the distinction between treating the positive and negative symptoms of schizophrenia. The positive or psychotic symptoms of schizophrenia are characterized by hallucinations, delusions, and thought disorders. They typically resolve with appropriate antipsychotic treatment over a period of weeks and often occur in discrete episodes. The negative symptoms of schizophrenia are characterized by social withdrawal, lack of motivation, and blunted affect. Negative symptoms often persist following acute episodes of psychosis and continue to worsen between episodes. These symptoms can lead to greatly diminished social functioning, increased caregiver burden, poor occupational outcomes, and long-term disability. Drugs that treat the positive symptoms, including drugs approved to treat schizophrenia today, may also show a benefit on negative symptoms during the acute treatment phase, but thereafter fail to resolve the chronic, persistent, and significant negative symptoms affecting approximately 700,000 patients in the U.S. Our late-stage Adjunctive Pimavanserin program is designed to treat these patients whose positive psychotic symptoms are adequately controlled, but who still suffer from persistent and uncontrolled negative symptoms inhibiting their ability to lead a normal, productive life. In order to demonstrate utility in this population and obtain FDA approval for treatment of negative symptoms, it's necessary to study patients with predominant negative symptoms whose positive symptoms are under control for a sufficient period of time, usually several months. Please turn to the next slide. Let me just highlight a few key elements of our now fully-enrolled Phase 3 clinical trial, ADVANCE-2, to treat the negative symptoms of schizophrenia. Negative symptoms of schizophrenia have proven to be an exceedingly difficult drug development challenge, with multiple industry failures over several decades. Therefore, with our previous positive ADVANCE-1 study of Pimavanserin, we achieved something very rare in this population. In our second pivotal study, ADVANCE-2, we're following the same design as our positive ADVANCE-1 study with two key differences, both of which are aimed at improving the probability of success. First, in the ADVANCE-1 trial, we studied patients on a flexible dose range of 20 to 34 milligrams, and while the primary endpoint of improvement in all patients was met, we clearly saw that the patients on 34 milligrams had a meaningfully stronger response, so as a result, in ADVANCE-2, we're only treating patients with the 34-milligram dose, the same dose for which NUPLAZID is approved for Parkinson's patients without dementia. Secondly, ADVANCE-2 is being conducted solely in sites outside the U.S. It's well understood in our industry, as well as by the FDA, that separating from placebo has become more difficult in U.S. schizophrenia trials over the past couple of decades, largely because of differences in the way schizophrenia patients are treated and the way clinical trials are run here. Therefore, because we already have all the U.S. patients we need, ADVANCE-2 is being run solely outside the U.S. Again, having recently completed enrollment, we remain on track to announce top-line results from this study in the first quarter of 2024. Please turn to Slide 17 to discuss our program in Prader-Willi syndrome. In early June, we announced the addition of our Phase 3 development candidate, ACP-101, for the treatment of hyperphagia in Prader-Willi syndrome, or PWS. ACP-101 in PWS reinforces our ongoing strategy to increase our footprint in rare disease. Prader-Willi syndrome is a rare genetic neurobehavioral syndrome that affects approximately 8,000 to 10,000 patients in the United States and represents a significant unmet need. There are currently no therapies approved to treat the characteristic hyperphagia in patients with PWS. ACP-101 is an intranasal formulation of carbatocin, which is a synthetic analog of the naturally occurring hormone oxytocin. Oxytocin deficiency is believed to play a particularly important role in PWS, resulting in increased appetite and behavioral symptoms such as anxiousness. However, oxytocin has a very short half-life, is usually administered intravenously or by eye and injection, and accordingly is not a viable treatment for PWS. Carbatocin has improved drug qualities relative to oxytocin, including a much greater half-life which allows for three times daily dosing. It also has greater activity for oxytocin receptors compared to off-target vasopressin receptors, reducing the risk of anti-diuretic effects such as hyponatremia. In addition, ACP-101's intranasal administration of carbatocin provides direct delivery of the drug to the brain and greatly reduces systemic exposure, further reducing the potential for side effects. On this slide, we've laid out the design of a Phase III Global Multicenter Randomized Double-Blind 12-Week placebo-controlled study evaluating the efficacy and safety of ACP-101 in approximately 170 patients with Prader-Willi syndrome. In this study, we will evaluate 3.2 milligrams of ACP-101 compared to placebo. The primary efficacy endpoint is improvement of hyperphagia as measured by the Hyperphagia Questionnaire for Clinical Trials, or HQCT, scale. This was the same primary endpoint on which the 3.2 milligram dose group achieved statistically significant separation from placebo in the previous Phase III study conducted by Levo Therapeutics. Those patients who complete the study will be eligible to enroll in an open-label long-term extension study. I'd like to provide some additional perspective regarding the 3.2 milligram dose. Prior to ACADIA's acquisition, LIVO conducted a Phase 3 multi-center, randomized, double-blind, eight-week placebo-controlled study evaluating two doses of ACP-101, 3.2 milligrams and 9.6 milligrams, versus placebo. The study was underpowered and the 9.6 milligram dose while it demonstrated improvement compared to placebo did not achieve statistical significance. However, top-line results showed that ACP-101 demonstrated statistically significant efficacy at the 3.2 milligram dose. With regard to safety and tolerability, 3.2 milligrams of ACP-101 had a very clean profile with no serious adverse events of concern, both in the LIVO Phase 3 study and an open-label extension study that followed. If data from this Phase 3 study is positive, we plan to submit a new drug application for the treatment of hyperphagia in PWS to the FDA. We look forward to working with the Prader-Willi community and clinical experts as we continue to advance the development of this program. We know that patients and their families are waiting for a treatment. On Slide 18, let's shift now to ACP-204, our next-generation 5-HT2A compound which we're developing as a potential treatment for Alzheimer's disease psychosis. ACP-204 continues to make excellent progress and we believe has a potentially exciting future. ACP-204 works primarily as an inverse agonist at the 5-HT2A receptor. Our experience with Pimavanserin suggests that this mechanism is very well suited for elderly populations with multiple comorbidities and concoctions providing antipsychotic efficacy with a highly tolerable safety profile and a low drug-drug interaction liability. With ACP-204, we're seeking to build on those learnings. As Steve mentioned, we have completed a comprehensive Phase 1 program for ACP-204 involving over 100 subjects including both adult and elderly volunteers. This Phase 1 effort reflects our goal of characterizing ACP-204 as fully as possible early in development in order to accelerate late-stage development. Our work completed to date supports our target product profile for ACP-204, a profile that could represent a significant improvement over an already strong product profile for Pimavanserin. Firstly, we wanted to mitigate or eliminate a QT signal. This was an important goal as it limited the dose of Pimavanserin. To date, we've seen no signals of risk of QT prolongation at planned doses in our studies with ACP-204. Next, we wanted to explore doses of ACP-204 higher than the equivalent of 34 mg of Pimavanserin. We believe the 30 mg and 60 mg doses of ACP-204 we are taking through to Phase 2 development represent up to twofold that dose. Finally, we wanted ACP-204 to have a faster onset of action. ACP-204 has a shorter half-life than Pimavanserin and it reaches a steady state in less than half the time, roughly five days compared to around 12 days. In addition, in our Phase 1 studies, ACP-204 demonstrates a very favorable safety and tolerability profile with a low propensity for drug-drug interactions similar to Pimavanserin. Please turn to Slide 19. Armed with this strong data from Phase 1, we're preparing to start our Phase 2 study of over 300 patients for ACP-204 in the fourth quarter. We've designed Phase 2 so that if successful, it could be considered a pivotal registration study. As we previously described, we recently met with the FDA to get alignment on our Phase 2-3 development plan and be able to move seamlessly from Phase 2 into two Phase 3 studies. With this accelerated development plan, we can move seamlessly from Phase 2 to two Phase 3 studies with the same sites continuously enrolling patients. As each site completes their Phase 2 site allocation, they will move directly into enrolling patients for one of the Phase 3 studies. Once the full study allocation of patients for Phase 2 is complete, we will analyze and report Phase 2 results, by which time the two Phase 3 studies will already be underway. This plan will ultimately provide three potential pivotal studies for submission. Overall, we're very excited with the progress of this program, and we've already begun exploring a potentially rich life cycle plan for ACP-204, which will comprise other indications where 5-HT2A inhibition plays a significant role. And now, I'll turn it over to Mark for a financial update on Slide 20.

Thank you, Doug. Let's review our quarterly performance on Slide 21. In the second quarter, we recorded $165.2 million of total net sales. NUPLAZID net product sales were $142 million, up 6% from the second quarter of last year. Our gross-to-net adjustment for NUPLAZID was 20.7% for the quarter. Year-over-year demand and selling growth were each up approximately 3% in the quarter, driven by an increase in new patient starts across both the office-based and long-term care channels, with particularly strong performance in long-term care. Turning to DAYBUE, net product sales were $23.2 million in the first quarter of commercial availability. As a reminder, DAYBUE is sold directly to our single specialty distribution partner using a consignment model. Our revenue is recognized when customer orders are filled to the pharmacy warehouse, which is essentially right before product is shipped to the patient. However, there is no in-channel inventory stocking for DAYBUE. R&D expenses decreased to $58.8 million in Q2 2023 from $75.6 million in Q2 2022. The decrease was mainly due to the inclusion of pre-approval manufacturing supply expenses for trofinetide in last year's second quarter. SG&A expenses increased slightly to $96 million in Q2, 2023 from $89.9 million in Q2, 2022. The increase was driven by commercial costs associated with the DAYBUE launch, partially offset by efficiencies in our commercial support of NUPLAZID. We ended the quarter with a cash balance of $375.4 million, compared to $416.8 million at the end of 2022. The decrease is primarily due to the $40 million milestone payment to Neurin related to DAYBUE's first commercial sale. As a reminder, our pro forma cash balance is approximately $275 million after considering the $100 million upfront payment related to our expanded licensing agreement with Neurin for worldwide rights to trofinetide that we completed in July. Finally, as Steve mentioned, our existing business as a whole has now reached cash flow neutrality. Our PDP franchise has been cash flow positive going back to 2019, and we've generated increasing cash flow from this franchise each year since then by focusing on both the top and bottom lines, inclusive of reducing expenses by over $100 million when comparing 2021 results to the midpoint of our 2023 SG&A expense guidance range. Turning to Slide 22, we are reiterating our third quarter DAYBUE net sales guidance of $45 million to $55 million. Our full-year NUPLAZID guidance also remains unchanged, with net sales expected to be in the range of $530 million to $545 million, and gross to net expected to be in the range of 22% to 25%. On the expense side for 2023, we now expect R&D expenses to be between $335 million and $355 million adjusted for the $100 million upfront payment to Neurin that we will record as R&D expense in the third quarter. We are raising our SG&A expense guidance range to $380 million to $400 million. The increase is primarily due to an increase in operating costs as a result of favorable business performance. And now I'd like to turn the call over to Steve for closing remarks.

Thanks much, Mark. Please turn to Slide 24. I'd like to end today's preparative remarks by reiterating where I started. ACADIA is entering a transformational period of growth as we continue to execute across all strategic priorities. And with that, I'll turn the call over to the operator to begin Q&A.

Thank you. Your first question comes from Tessa Romero of JPM. Please go ahead.

Great. Thanks so much for taking our question. Hi, Steve and team. So our question is, can you give us a sense of what the new patient starts are looking like month to month qualitatively? Any trend you'd point out? And to the extent you can provide any directional color into July that may be informing the guide, that would be helpful. Thanks so much.

Yes, thanks much for the question, Tessa. Brendan, you want to take that?

Sure. Thanks, Tess. So I think we're focused on providing output instead of input at this point with the revenue guidance we provided for the quarter. We're doing so principally because we know there are a number of adjustments that we make from the time of a new patient start to fully realizing revenue. As you know, it's a weight-based prescription. There's also titration that takes place to find that optimal dose, which isn't always reflective of the written prescription. So rather than give sort of a single metric on patients, we believe it's more productive at this point to guide to revenue, which takes into account each of those variables for the quarter. If and when we get to metrics that we think are dependable and reliable, we'll surely help you, and we'll surely share those when we have them. But for today, I think we've outlined the strong breadth of demand we're seeing, the number of positions that have written, as well as insights into the patient mix that we're seeing in these initial months post-launch.

Okay, thank you so much for taking our question.

Thank you. One moment for your next question. Your next question comes from Charles Duncan of Cantor Fitzgerald. Please go ahead.

Hey, good afternoon, Steve and team. Congrats on a great quarter. Nice to see the uptake on DAYBUE. Lots of questions to be asked, but I'll limit mine to just one. And that is on the negative symptoms for schizophrenia with the Pimavanserin trial. I think Doug mentioned this on the call about conducting the study solely outside the U.S. Can we assume that that was discussed with the agency in advance? And secondly, with regard to the predominant negative symptoms versus positive symptoms, maybe in the U.S., can you help us understand how that might be a little bit different or why that's a little bit different outside the U.S. and just to gauge probability of success for that trial? Thanks.

Yes, Charles, I'll take the first part of that and then I'll ask Doug to answer the second part. So, in terms of running this study, it means to entirely outside of the United States. As Doug mentioned, it's well understood in the community and certainly also at the FDA that it's just become increasingly difficult over the last few decades, as Doug mentioned, to separate from placebo and it's based upon some of the things that Doug referred to that we probably need to go into here. We have enough patients in the United States today, so we don't need to enroll more. In terms of the broad plan for negative symptoms schizophrenia, yes, we did discuss that at the early stage of development with the FDA, but we're confident that we have enough U.S. patients in the database today. Doug, you want to take the second part?

Yes, Charles, can you clarify your second question? You were asking about the difference between positive and negative symptoms between the U.S. and Europe?

Yes, just quickly, Doug, you mentioned that it was important to study predominant negative symptoms patients, and I guess I'm wondering if you would have seen that in the states or is there something different in the treatment paradigm that results in that?

No, positive and negative symptoms are pretty consistent regardless of what the region is. The reason for conducting it outside of the U.S., as Steve said and as I said on the call, is the lower placebo rate, and the gradual difficulties over the last couple of decades of separating from placebo in U.S. schizophrenia studies.

But isn't that usually seen in positive symptoms? Not, I don't know, you have a large database on negative symptoms.

It's a general finding across actually all psychiatry studies, not just schizophrenia studies, and in fact we did see this in ADVANCE-1 in our first negative symptom study. We saw a similar pattern.

Okay, thanks for taking my question.

No problem.

Thank you. One moment for our next question. Your next question comes from Marc Goodman of Leerink. Please go ahead.

Yes, hi. Can you give us a sense for DAYBUE, the titration plan, the persistence, what's happening, just how the patients are going on drug and staying on drug, and just give us a sense of the average selling price in the quarter and what's happening there. It's kind of all wrapped together. Thanks.

Yes, thanks much for the question, Mark. Brendan, you want to take that?

Sure, thanks, Mark. I'm going to start with persistence and simply state that we're encouraged by what we're seeing early on as it relates to persistency. As you know, DAYBUE was never intended to be an acute care treatment. We want patients to have the long-term benefits of DAYBUE, so staying on therapy long-term is critical. We learned a lot from the Phase 3 study, obviously, and we took a comprehensive approach from the outset to support both the patient family and the health care professionals from the outset. To that end, we've done a lot of medical education on GI management with the HCPs and caregiver communities. We've worked directly with the families with nurse care coordinators to essentially certify these caregivers and make them comfortable with both the benefits they'll see with DAYBUE, but also GI management strategies as they start the journey. Our family team, our family access managers, are all paired with each patient and caregiver to further reinforce those clinical benefits and timing and to be with them every step of the way. And then our teams do the very same thing with every HCP before they start treatment with DAYBUE. So for us, that comprehensive patient and caregiver-focused programming was expected to deliver benefits in the early days for persistency, and we're certainly seeing that early on. The second part of your question was around titration, which I want to say we're also happy to see. HCPs and families obviously want nothing more than to find that optimal dose for each individual patient to make sure that they can stay on therapy and get the long-term benefit to be derived from treatment. And unlike the clinical trial where you're essentially trying to define the treatment benefit of the product, in the real world, physicians and families can take all of those learnings from the trial and translate those into a treatment plan that can lead to the highest long-term success rate. I should say separately that payers do approve prescriptions on a monthly basis, so we don't see families ending up with large excesses of product on hand as a function of that. And then in terms of actual titration rates, while it varies from physician to patients, they tend to reflect the starting dose in the area of about 50% of the target dose with a scheduled titration rate or should say titration time, over a period of about two to six weeks. That obviously varies from patient to patient with their experience, and as you would expect, we would expect patients to settle in on their optimal dose over that period of time and then create a consistent dosing schedule from there.

What does that mean for pricing?

Sorry. Yes, good question. So based on what we said prior to launch, the fundamentals of how we described pricing for DAYBUE remain largely the same. Many patients are titrating, as we said. The average weight is perhaps slightly higher than expected because of our broad label and a meaningful number of patients over the age of 20. But other than that, the elements of both titration, dosing, and patient mix support our expectations for a net realized price.

Thank you. One moment for our next question. Our next question comes from Gregory Renza of RBC Capital Markets. Please go ahead.

Hey, good afternoon, Steve and team. Congrats again on the progress, and thanks for taking my question. I will keep it to one and maybe just pivoting back to negative symptoms schizophrenia. For Doug, certainly helpful to hear about the unmet need and characterization in the population there. But maybe, Steve, as you get closer to the readout, it would be great to just hear a little bit about that commercial opportunity, maybe how you're thinking about leveraging the existing infrastructure, what that would look like, especially as you direct the NUPLAZID now and the base business to leverage and cash flow positivity. Any additional color there on what the opportunity looks like pending positive readout would be great. Thanks so much.

Yes, thanks very much, Greg. I'll start, and Brendan and Doug feel free to chime in for any additional color you would like to add. So about 700,000 patients in the United States have, as Doug described, these prevalent negative symptoms that continue on despite the fact that they've got positive symptoms under control and have already received many times transitory benefits from getting that under control. So the size of the population is about five times the size of Parkinson's disease. It is a very significant unmet need, and there are no drugs approved to treat the negative symptoms of schizophrenia. So when we think about the pricing and the penetration in the market, we do not anticipate any difference on pricing in negative symptoms than where we're priced currently to treat Parkinson's disease psychosis. Again, the needs are very similar. No drug approved. So we're going to go back to that. Very similar. No drug approved. Significant unmet need. So when we think about how to leverage the capabilities we have in place today, obviously with NUPLAZID and PDP, we have a drug that treats psychiatric symptoms that are predominantly written by neurologists. So we have a strong franchise, both in neurology and psychiatry. Negative symptoms of schizophrenia are treated predominantly by psychiatrists. So we would anticipate having an expansion of our field force to cover that much broader footprint. We would anticipate that it would, again, be an expansion, not a separate sales force that we would stand up. We would expand the force that we have to cover the same territories. Territories would have to be slightly different in size. And today, with neuropsychiatric drugs, the franchises that we stand up are dramatically smaller than what we did in the industry a few decades ago. We think it's all very manageable. And of course, there's an opportunity to significantly leverage all of the other components of our commercial franchise as we move into negative symptoms schizophrenia. So I think we're very, very well positioned to capitalize on a potential approval here. And we're very excited about it. Brendan, anything you'd like to add?

Yes, I completely agree. I was just going to reinforce that final point. We are foundational in the CNS space. And we have a lot of internal capabilities that are leverageable across indications. So beyond the addressable physician population, which we would augment our current field footprint to support, we have lots of capabilities internally, whether those are patient support services, account management, or our marketing leadership team that we're in good shape.

Greg, I'm sorry. Just one other component that I think is just important to remind everyone of. As Doug mentioned, the population we're seeking to treat is not first-line therapy for schizophrenia patients. For those patients, particularly if they're focused on the positive symptoms, there are more than a dozen approved drugs that are now generic. They're relatively inexpensive. So we are not trying to displace those drugs. We would be adding on top of those drugs as adjunctive therapy to treat the persistent negative symptoms. So from a pricing perspective, it's a little bit different dynamic than the way we would think about the market if we were seeking to treat positive symptoms as first-line therapy.

That's great, Steve, thanks so much. Appreciate it.

Thank you. One moment for your next question. Your next question comes from Tazeen Ahmad of BOA. Please go ahead.

Hi, thanks so much for taking my question. Maybe to go back to the topic of DAYBUE, as it relates to managing the initial signs of diarrhea, how have doctors found it to be the best way to go about it? And are they made aware that a patient is having severe diarrhea right away? Or how does that communication work to get that treatment started? Thanks.

Yes, thanks much, Tazeen. Brendan?

Sure, Tazeen, thanks so much for the question. I'll go back to all of the preparation work we did as a function of what we learned from phase three. So the Phase 3 study gave us a pretty clear image of the product profile for DAYBUE. As a function of that, you've seen us with GI management guidelines that have been written. We have a hub that educates all patients and families in advance of starting treatment. We do the same with HCPs. And we're grateful that the label for DAYBUE also includes information about discontinuing anti-constipation medicines so you can prepare the patient for the best treatment journey ahead. In terms of how the families interact both with our family access managers and their treating physicians, for sure, as they run into any issues that they might have with tolerability, they are alerting their healthcare professionals and they're looking for guidance on best ways to manage that. I think, as I said, we're pleased with what we've seen in terms of both titration and persistency. I think those are intertwined, a thoughtful approach to finding the optimal dose, constant interaction, I would say, between families and their providers to talk about that treatment journey and then choosing the appropriate adjustments to get to the best dose for the individual patient.

Thanks, Brendan. You guys felt comfortable providing a range for 3Q sales already for DAYBUE. Is that because the initial management of the diarrhea symptoms is pretty similar among all patients? And you can more accurately predict what patients are going to drop out?

Tazeen, the reason we gave Q3 guidance is we felt like we have a good handle on exactly what we're seeing overall. And we felt like it was more productive and more useful to you and everyone else that's on this call to get the output as opposed to various inputs in hopes that people get to the right conclusion. So that was the reason for guiding on Q3. As it relates to persistence and continuation of therapy, I would just simply repeat what we said earlier, and that is we're very encouraged by what we're seeing. It's still very early, and we don't have perfect line of sight on these things once a patient starts therapy, but we have good access to information, particularly through our FAM system and what we're hearing, we're very, very encouraged by.

Thank you. One moment for your next question. Your next question comes from Sumant Kulkarni of Canaccord Genuity. Please go ahead.

Good afternoon. Thanks for taking our question. Could you comment on what the specific primary endpoint you might be using will be in the Phase 2 and 3 trials for ACP-204 for Alzheimer's disease psychosis and how that compares to the prior study for Pimavanserin in DRP?

Yes, thanks much for the question, Doug. You want to take that?

Yes, we'll be using the same primary outcome measure, the SAPS HD.

Thanks.

Thank you. One moment for our next question. The next question comes from Jason Butler of JMP. Please go ahead.

Hey, thanks for taking the question. I'll jump in with a follow-up there on the ACP-204 Phase 2, 3 trial design. If you're using the same endpoint, is the 30% improvement in symptoms threshold that you use for responders still a relevant marker for clinical significance? And what drove the decision to go for a six-week endpoint, given that you saw improving efficacy through at least eight weeks in the run-in in the last phase three trial? Thanks.

Yes. Doug, you want to take that?

Sure. I mean, the 30% improvement is generally kind of regarded as a clinically significant change, so we're sticking with that. And even though we're seeing, even though you may see continued improvement past six weeks, when we looked at the existing data we had for Pimavanserin, we decided six weeks was the optimal treatment period.

Great. Thank you.

Thank you. One moment for our next question. Your next question comes from Yatin Suneja from Guggenheim.

Hey, guys, thanks for taking the question. Another one on ACP-204. Could you just comment on how consistent was the pharmacokinetics in younger, healthy volunteers versus the elderly? And then with regard to the studies that you are running, I mean, are these patients going to roll over to the long-term safety study? Because that generally tends to be a gating factor from an NDA perspective for some of these new indications. Thanks.

Yes. Doug, two questions.

Yes, I'll have to come back to you on the second one, because I couldn't hear it properly. So how consistent were the pharmacokinetics findings in the young adults versus elderly? It was consistent with many other studies of comparing young adults with elderly. We did see slightly higher exposures in the elderly population. But we've chosen our doses based on that, based on the elderly volunteers that we studied. And can you repeat the second part of the question again?

Yes, the second question was, will patients roll over into the long-term extension? And the answer is yes.

Yes.

Thank you. One moment for your next question. Your next question comes from Ami Fadia of Needham and Company. Please go ahead.

Hi, good evening. Thanks for taking my question. Going back to the negative symptoms of schizophrenia study, can you talk to the subset analysis of the ADVANCE-1 study between the U.S. and ex-U.S. patient population and talk about the magnitude of effect size you saw in the patients out of Europe in the 34-milligram dose? And if you could just remind us if you've disclosed any details around the powering of your ADVANCE-2 studies. Thank you.

I'll maybe start at a very high level and Doug feel free to chime in. So as Doug mentioned, what we saw in the ADVANCE-1 studies, we did see a differential between U.S. sites and ex-U.S. sites. It's very consistent. We see this all the time in schizophrenia. We also saw it, by the way, when we did an earlier study to treat difficult-to-treat patients with positive and negative symptoms. We saw a similar pattern there, a higher response outside of the U.S. as opposed to U.S. So it's a very consistent result that we see. And as Doug mentioned, the results were in the 34-milligram dose I think you were asking about, were highly improved over the total population where we allowed dose flexibility down to 20 milligrams. And with the 34 milligram dose, we saw an effect size of 0.34. Doug, anything else you want to add?

No, I think the effect size was consistent across regions. It was really the separation from placebo that differed.

Thank you. One moment for our next question. Your next question comes from Jay Olson of Oppenheimer. Please go ahead.

Hey, thank you for taking the question. We're curious about ACP-101. Can you describe the size of the commercial opportunity in Prader-Willi syndrome? And since that's been a notoriously challenging therapeutic area, what learnings can you take away from previous studies that should help you increase the probability of success? Thank you.

Yes, thanks, Jay. Brendan, you want to take that?

Yes, sure. Thanks for the question. As we, I think, noted in a prior call, there is a higher prevalent population for Prader-Willi. I would put the unmet medical need similar to what we've seen in the Rett syndrome community. There are no approved treatments. This is a life-changing type of opportunity. For us, that's the way we would approach ACP-101 in PWS.

And learnings from previous studies will help you increase?

I can help out there. So I think one advantage we have is we do have access to the full data and the learnings from LIVO's previous Phase 3 studies that they conducted with this exact product, intranasal carbatocin. And we've very carefully gone over all that data in great detail, which has helped us plan our Phase 3 clinical trial that we're going to be starting in the fourth quarter here. We'll be talking exactly about the trial design, I think, as we start the trial. But we've, based on that data, I think, made some tweaks to the inclusion and exclusion criteria. And as we talked about previously, this is a 12-week trial. We made it a little bit longer because we do see greater benefit the longer retreat with that previous experience. You're exactly right. The Prader-Willi field is quite experienced in clinical trials. There's been quite a bit of work done there. Unfortunately, no approved treatments to date. So I think some disappointments in the field. But that's also an advantage because we do have very experienced clinical trial sites, and they're able to use some of those learnings, I think, also in the execution of the trial. So we're working with experienced sites and a CRO that's experienced in Prader-Willi trials to, as you mentioned, tap into that previous experience.

Great. Thank you very much.

Thank you. One moment for your next question. Your next question comes from Danielle Brill of Raymond James. Please go ahead.

Hey, guys. This is Alex on for Danielle. Thanks for taking our question. This question on DAYBUE. So I know you said the reauthorization requirements were within expectations. But to us, when reading some of the enacted payer policies, it seems that the reauthorization requirements are on the more stringent side, requiring documented measured treatment benefit, not just physician attestation. So we were just curious how you were thinking on a quantitative basis, roughly what percentage of patients may fall off DAYBUE therapy, whether by reauthorization rejections at the six-month time point over discontinuations throughout the first six months to one year. Thanks so much.

Brendan, you want to take that?

Yes, thanks. I appreciate the question. I would characterize what we've seen among payers today as seeing them take a thoughtful approach to DAYBUE coverage and looking to ensure appropriate use. And so we work very closely with them on a regular basis to look at their coverage policies and make sure that these are elements that payers and families are going to be able to meet to continue to not only get approved but to stay on therapy. So we believe, by and large, when we look at paid claims and the published coverage criteria, the payers are recognizing the challenges, the unmet needs, that affect Rett syndrome, and are valuing the clinical benefit that DAYBUE is bringing to address those patients.

Thank you. One moment for your next question. We do only have time for one more question. So please stand by for that. Your last question comes from Ritu Baral of TD Cowen. Please go ahead.

Hi, guys. This is Athena on for Ritu. Thanks for taking the question. Another one on DAYBUE. How long do caregivers give DAYBUE a chance to show benefit before determining it doesn't work for their child?

Yes, Brendan, you want to speak to this?

Yes, sure, Athena. Thanks for the question. I think we've been encouraged by guidance that the Rett community, the treaters, are giving to caregivers to set appropriate expectations. Obviously, the LAVENDER study is 12 weeks in duration, which gives people some sense of what they should be looking forward to see the initial signs of improvement and DAYBUE. But many physicians are saying, look, this is a lifelong illness that we're dealing with here. It's the first-ever drug approved. Twelve weeks worth of treatment is a relatively short treatment course and are encouraging families and caregivers to look out to six months to make sure that they're seeing the benefits that they would expect to see. Now, with that said, in our prepared remarks, we're already very encouraged to hear caregivers note differences, day-to-day improvements that are occurring well before that time period. So I think it's a balance of those two, but at least the guidance given is to give the drug a thoughtful period of time to work.

Thank you.

Thank you. Mr. Davis, please proceed to closing remarks.

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

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