Earnings Call Transcript - ACAD Q1 2025

Al Kildani, SVP of IR & Corporate Communications

Good afternoon, and thank you for joining us on today's call to discuss ACADIA's first quarter 2025 financial results. Joining me on the call today from ACADIA are Catherine Owen-Adams, our Chief Executive Officer, who will provide some opening remarks, followed by Tom Garner, our Chief Commercial Officer, who will discuss our strong commercial brand debut in new Plaza. Also joining us today is Elizabeth Thompson, Ph.D., Executive Vice President, Head of Research and Development, who will provide an update on our pipeline programs, and Mark Schneyer, our Chief Financial Officer, who will review the financial highlights. Catherine will then provide some closing thoughts before we open up the call for your questions. We are using supplemental slides that are available on our website's events and presentations section. Before proceeding, I would like to remind you that during our call today, we will be making several forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, including goals, expectations, plans, prospects, growth potential, timing of events, future results, and 2025 financial guidance, are based on current information, assumptions, and expectations that are inherently subject to change and involve several risks and uncertainties that may cause results to differ materially. These factors and other risks associated with our business can be found in our filings made with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which are made only as of today's date. And we assume no obligation to update or revise these forward-looking statements as circumstances change, except as required by law. I'll now turn the call over to Catherine for opening remarks.

Catherine Owen Adams, CEO

Thank you, Al. Good afternoon, everyone, and thank you for joining us. We're off to a strong start in 2025. Our performance this quarter reflects solid execution across the business and continued momentum behind our strategic priorities. From commercial progress to pipeline advancement, we're delivering on our commitments whilst positioning ACADIA for long-term growth. Let me walk you through the key highlights, starting with our commercial performance. We're pleased to report that our commercial business has had a strong first quarter, building on the solid foundation we established in 2024, with first-quarter revenues of $244.3 million, up 19% from a year ago. Starting with DAYBUE, this quarter represents a meaningful inflection point in the brand's trajectory. Over the past few quarters, we've successfully stabilized the business and established a solid base of growth to build on. Today, our focus is shifting towards accelerating that growth through deeper patient and provider engagement and by broadening our overall reach into the community. We generated $84.6 million in DAYBUE sales in the first quarter, up 11% from a year ago. Importantly, the number of unique patients receiving shipments was 954, up significantly from Q4 and, in fact, an all-time record for the brand. This gives us confidence in the sustainability of DAYBUE's growth, and we reiterate our four-year sales guidance. Turning to NUPLAZID, we reported $159.7 million in revenue for the quarter, up 23% from the prior year. As Mark will detail, that growth included 6% growth in volume, and the remainder was largely attributable to one-time changes in gross to net. We continue to see strong performance driven by our direct consumer efforts, which are helping drive patient awareness and pull through in the form of physician visits. As with DAYBUE, we are reiterating our full-year guidance for NUPLAZID and expect continued solid execution throughout the year. On the R&D front, we're making great progress, and are thrilled to update you that it's our timeline for the last patient in, and therefore, top-line results from our COMPASS PWS Phase 3 study in Prader-Willi syndrome are now both expected to happen before the end of 2025. We're also excited to host our first-ever R&D day next month that will offer a deeper look into our development strategy and allow us to showcase some of the promising innovation that's taking shape across our pipeline. We look forward to introducing you to more members of our team and sharing how we're thinking about the next wave of growth. With that, I'd like to turn the call over to Tom to discuss our commercial performance in the first quarter.

Tom Garner, COO

Thank you, Catherine. I'll begin with a review of DAYBUE, where we have made exciting progress. First-quarter sales were $84.6 million, up 11% from a year ago. Although sales were down sequentially, as we explained would be the case in our last call, the underlying patient dynamics were positive. During the quarter, 954 unique patients received paid shipments, up from 920 in the fourth quarter. In fact, as Catherine said, this was the highest number of patients served in a quarter since the launch of DAYBUE over two years ago. While we continue to add new patients, a key driver of this performance was a significant reduction in discontinuations and improvements in persistency. Discontinuations were down 35% sequentially from the fourth quarter of 2024, and declined 66% compared to the first quarter of 2024. Overall, our persistency rate remains above 50% after 12 months, driving a growing stable base of patients to remain on therapy long term, with 65% of our active patients now having been on therapy for 12 months or longer. With regard to patient mix, our strategy is playing out as intended. In the first quarter, we saw more new scripts from the community setting, including a high number of prescriptions from pediatricians. This was particularly encouraging as it occurred ahead of the field force expansion, which we announced in the first quarter. I'm pleased to share that all planned hires for the expansion have now been completed, and I'm confident our expanded customer model and refined strategy will begin contributing to further DAYBUE sales growth in the second half of the year. As a reminder, to date, roughly two-thirds of diagnosed Rett syndrome patients have yet to try DAYBUE. Turning to our plans outside of the U.S., we continue to lay the foundation for a strong launch outside the U.S. once we obtain approval from the EMA, which we anticipate in the first quarter of 2026. As a reminder, the opportunity in Europe is substantial, with an estimated 9,000 to 12,000 individuals affected by Rett syndrome. We have now hired an experienced General Manager for Europe and continue to build out the commercial team behind him. We have also initiated managed access programs and in April have already served the first Rett syndrome patient under this program in Germany. We continue to see strong interest in access to trofinetide prior to approval. For the rest of the world, we recently entered into distribution agreements for named patient access in geographies, including Latin America, the Middle East, Asia Pacific, and other countries around the world and are already receiving inquiries. In summary, I'm very pleased with the progress we have made with DAYBUE. As you can see from the first-quarter results, we have now started to see renewed growth in patients, and this gives us confidence that we will be able to accelerate growth in the second half of the year with our broadened field footprint as we expand penetration into the community setting. We believe we now have the strategy, structure, and resources available to maximize growth through 2025 and into 2026. Turning to NUPLAZID, we were pleased to see the strong momentum built throughout 2024 continue into 2025. NUPLAZID achieved first-quarter sales of $159.7 million, representing 23% revenue growth year over year, of which 6% came from volume. In fact, the first quarter of 2025 was the best quarter in terms of NUPLAZID prescriptions since 2020. We believe this gives us strong momentum for the rest of the year, even as we have a significant opportunity to further expand our share of the Parkinson's disease psychosis market. We continue to see the benefits from both our unbranded disease awareness campaign as well as our branded campaign. These efforts led to higher engagement across our unbranded disease awareness and NUPLAZID websites, helping to spark more meaningful conversations between patients and their physicians, with a nearly 30% increase in awareness of Parkinson's-related hallucinations and delusions since the launch of the More to Parkinson's campaign. Our consumer activation campaigns have complemented and enhanced the core growth drivers that have supported the NUPLAZID brand for over two years, including leveraging our published real-world evidence, showing an association of PIV events and use compared with other atypical antipsychotics in important outcomes like all-cause mortality. From a brand perspective, our primary focus is on identifying PDP patients earlier in their Parkinson's journey and ensuring they're aware of available treatments upon diagnosis. It's crucial to remember that while approximately 50% of Parkinson's disease patients will experience hallucinations and delusions, it's estimated that only 10% will ever self-report these symptoms. Therefore, we will continue to actively engage with the Parkinson's disease community across both HCP and consumer audiences to drive earlier awareness, diagnosis, and treatment of Parkinson's disease psychosis, and to help ensure that NUPLAZID is recognized as a first-line therapy for this challenging condition. Overall, we remain highly confident in our ability to drive meaningful growth for the brand through 2025 and beyond. I'll now turn it over to Liz.

Elizabeth Thompson, EVP and Head of R&D

Thanks, Tom. I'm delighted to start out today with an important update for our pipeline. As Catherine mentioned in her opening remarks, due to the diligence of our team and support of the community, the timeline for our COMPASS PWS Phase 3 trial for ACP-101 has accelerated. As a result, we now expect closed screening within the coming days, which should allow us to complete enrollment this quarter. With that, we're now expecting top-line results by early fourth quarter of this year. Assuming positive data, we believe that sets us up for a potential regulatory submission in the U.S. in the first quarter of 2026. As a quick reminder, ACP-101 is an intranasal delivery of Carbetocin, a long-lasting analog of human oxytocin. Carbetocin was developed to more selectively bind to the oxytocin receptor. We're developing it for the treatment of hyperphagia and Prader-Willi, which is a rare genetic neurobehavioral disorder. Hyperphagia, an intense, persistent sensation of hunger, is a defining characteristic of Prader-Willi. Again, we're pleased to pull these important milestones into 2025 and look forward to reporting results later this year. Next, I'll turn to our second late-stage clinical program, ACP-204, our new 5-HT2A inverse agonist that we designed based on learning from Pimavanserin. We continue to make important progress with ACP-204 as well, now moving it forward in two indications. First, we're currently conducting a global, double-blind, placebo-controlled Phase 2 study in Alzheimer's disease psychosis, or ADP. We've designed the program for seamless enrollment from Phase 2 to Phase 3. For this program, we continue to expect the last patient in during the first quarter of 2026, followed by top-line results around mid-2026. We're also advancing ACP-204 into a second indication, Lewy Body Dementia Psychosis, a serious neurodegenerative condition linked to alpha-synuclein buildup, and marked by cognitive, behavioral, and motor symptoms. Affecting over 1 million people in the U.S., LBD is one of the most common forms of dementia. Prior data with Pimavanserin showed encouraging signals in this population, supporting the potential of ACP-204 to address hallucinations and delusions. For Lewy Body Dementia Psychosis, we remain on track to initiate a Phase 2 study in the third quarter of this year. Now, I'd like to turn to our updated pipeline and provide a few additional updates. First, I'm looking forward to sharing more details on these programs at our R&D Day next month. In particular, I'm excited to share additional insight into our plans and the supported data regarding some of our most newly disclosed programs. The event is intended to provide a bit of a deep dive into each of these programs, as well as to allow you an opportunity to meet some of the senior members of our R&D team. We're also looking to give you an understanding of how we think about drug development here at ACADIA and the high bars we put on our potential medicines at every step along the way. You'll hear that from us, as well as through input from KOLs, caregivers, and patient advocates, who are our true north as we make tough decisions about what innovation to continue to pursue and where to focus our resources. At this time, I want to share an update related to our collaboration with Stokes Therapeutics. We continue to be excited by the data we are seeing from the SYNGAP1 program and look forward to getting to the next decision-enabling data early next year. With respect to the other discovery programs in the collaboration, ACADIA has reached the conclusion that there is not a viable path forward for the Rett or the Undisclosed Program. Accordingly, we will be winding down our efforts for both of these programs. Finally, I want to provide a brief update on trofinetide; our marketing authorization application for trofinetide in the EU remains under review, and we continue to anticipate approval in the first quarter of 2026. In Japan, our engagement with the PMDA remains productive. I'm pleased to share that we have officially received orphan drug designation, which has various benefits but, importantly, offers the potential for priority review. We remain on track to initiate a Phase 3 trial in Japanese patients with Rett syndrome in the third quarter of this year. And now, I'll turn it over to Mark for a financial update.

Mark Schneyer, EVP and CFO

Thank you, Liz. Let's now review our first quarter 2025 financial results. In the first quarter of 2025, we recorded $244.3 million in total revenue, up 19% from the first quarter of last year. First-quarter DAYBUE net product sales were $84.6 million, up 11% year-over-year on the strength of achieving an all-time high in terms of the number of unique patients receiving shipments. As we signaled on our Q4 call in February, we expected DAYBUE net sales to be down sequentially. Factors contributing to this included the fourth-quarter pull forward of approximately $3.5 million in net sales, typical beginning-of-year seasonality impacting both volume and net price, and a sequential decline in net price per bottle of DAYBUE attributable to the impact of the Medicare Part D redesign. The DAYBUE gross net adjustment for the quarter was 24.9%. Importantly, we continue to expect all the key metrics that drive DAYBUE net sales to increase throughout the remainder of the year, including unique patients served, bottle volumes, and net price. Turning next to NUPLAZID, first-quarter NUPLAZID net product sales were $159.7 million, up 23% year over year, with 6% attributable to volume. The anticipated net price benefit of 16% was largely attributable to a one-time change in gross to net as a result of the Medicare Part D redesign as part of the Inflation Reduction Act. Moving forward, we expect our gross to net to stabilize without significant quarterly fluctuations. And to remind you, ACADIA is benefiting from qualifying as a small company manufacturer under the Inflation Reduction Act. As a point of reference, our gross price for NUPLAZID in the quarter was up just over 2% year over year. The NUPLAZID gross to net adjustment for the quarter was 24.1%. R&D expenses were $78.3 million in the first quarter, up from $59.7 million from the first quarter of 2024 due to increased spend on clinical stage programs. SG&A expenses for the quarter were $126.4 million, up from $108 million in the first quarter of 2024. The increase was primarily driven by the continuation of our NUPLAZID consumer activation campaign as well as higher commercial operation expenses for our planned expansion of the DAYBUE team. Our cash balance as of March 31 was $681.6 million, while cash flow from operating activities was positive in the quarter, cash declined sequentially, primarily as a result of $98.8 million in payments made to Neuren, reflecting payments of a sales milestone and their share of the net proceeds from the sale of our PRV, as I explained on our last call. Let's turn to our 2025 guidance. As you can see on this slide, we are reiterating the full-year 2025 financial guidance first provided on February 26 with the exception of R&D expense. We now expect to spend $330 million to $350 million, up from our prior range of $310 million to $330 million. The increase is primarily related to the acceleration of the timeline for HCP 101, which is pulling forward spend from 2026. And to conclude, regarding uncertainty around the potential tariffs, it's important to note that for both NUPLAZID and DAYBUE, we have substantial inventory on hand in the United States. For NUPLAZID, we have enough inventory to meet anticipated demand into the mid to late 2030s, and for DAYBUE, we have a few years' worth of inventory. And now I'll turn the call over to Catherine for closing remarks.

Catherine Owen Adams, CEO

Thanks, Mark. Our first-quarter results reflect a strong start to 2025, and we are well positioned to build on this momentum. We are eager to deliver on the value-creating milestones you see on this slide in 2025 and 2026. I'm pleased that one of those significant milestones has been accelerated, with top-line results from COMPASS PWS now expected in the fourth quarter of this year. We have delivered on key commitments from our Q4 call, including expanding the DAYBUE field force and launching a global managed access program. We remain sharply focused on executing against our strategic priorities, accelerating DAYBUE's commercial trajectory, capitalizing on the continued momentum of NUPLAZID, expanding our global presence, and advancing a pipeline designed to deliver innovative therapies to underserved patient populations. In line with this strategy, we're pleased to invite you to our inaugural R&D day on June 25th, which will be broadcast live. I look forward to keeping you updated as we execute through the remainder of the year. And with that, I'll turn the call over to the operator.

Ritu Baral, Analyst, TD Cowen

Good afternoon, guys. Thanks for taking the question. I wanted to ask about, I guess, one question on 101 and then one question about DAYBUE for Europe. One, what does good 101 data look like? And can you discuss how that may relate to your last discussions with FDA on the filing strategy? And then, as far as Europe, how should we be thinking about modeling a European price for DAYBUE? And then just balancing the pricing risk from a potential most favored nation drug pricing development that I think we're all sort of watching. Thanks for taking the questions.

Catherine Owen Adams, CEO

Thanks, Ritu. I appreciate those two-part questions. So I'm going to ask Liz to kick us off on 101, and then I'll talk about the EU strategy.

Elizabeth Thompson, EVP and Head of R&D

Thanks, Catherine. Hi, Ritu, and thanks for the question. First off, I do want to reiterate how very pleased we are to find ourselves ahead of schedule with respect to 101 and looking to have data out of this study by the end of the year, which we think is going to be a pretty important milestone for ACADIA as a company and really reflects great effort by the team, as well as I think good enthusiasm from the community. So positive all the way around. In terms of your question about what a good outcome would look like here? The nature of the trial is such that I'm going to be very pleased if what we have is a statistically significant result. We've powered this such that we think that if we have statistical significance, we're going to have demonstrated a clinically meaningful impact on hyperphagia, which really is a defining and truly terrible symptom for these patients to be living with. There are a number of other things that we're looking at in this trial that we think are interesting, but that outcome on hyperphagia is really what's going to drive us here.

Catherine Owen Adams, CEO

And then I'll start on the EU. It was a two-part question, Ritu, about the price in terms of modeling and then the most favored nation. Let me maybe start with the most favored nation first. I think as we all look out into the unknown of the future of whatever might happen with the decisions on that, we're looking really to focus on the approval of DAYBUE in Europe. And then after that, as you know, reimbursement takes quite a period of time across the different member states and the countries. We'll assess any specific recommendations that come out of the administration with respect to most favored nation as we are able to understand it and make decisions as we move forward on pricing and reimbursement in individual countries. With respect to EU price, I think we've spoken before about a number of rare analogs that are out there that you can probably use for your modeling. What I will say is that we are confident in getting a strong EU price that allows us to display the value that we believe we're bringing with DAYBUE to our patients in the Rett community. And we will continue to update you as we have those discussions moving forward. Thanks, Ritu.

Ritu Baral, Analyst, TD Cowen

Thank you.

Tessa Romero, Analyst, JPMorgan

Good afternoon, Catherine and team. Thanks so much for taking our question. So for each of your brands, NUPLAZID, DAYBUE, what is the right way for us to be thinking about what we are likely to see sequentially from 1Q to 2Q from a growth perspective? What are the key factors and drivers we should be thinking about from a 1Q to 2Q basis as we are trying to model this out? Thank you.

Catherine Owen Adams, CEO

Thanks, Tess. I'm going to ask Tom to talk about maybe patients and models and Mark to talk about more of the financials if that's okay. So Tom, why don't you kick us off?

Tom Garner, COO

Thank you for the question. I’ll start with DAYBUE. We had a strong first quarter in terms of active patients, and we expect that trend to continue. In Q2, we will begin to fully see the impact of our expanded customer model, which aims to better connect with patients at their treatment locations. It’s important to note that we have significant growth potential outside of the Centers of Excellence, which make up about 65% of the overall Rett patient volume. With our expanded field model, we have increased our presence across all functions by approximately 30%. We anticipate continued growth in new patient additions at the top of the funnel, which is our main focus. Additionally, we have seen promising data regarding ongoing treatment adherence, with discontinuations decreasing. This reflects our commitment to supporting Rett families as they start on DAYBUE. Encouragingly, the discontinuation data shows improvements across all patient cohorts since launch, including those who have been treated for less than three months. This is crucial as we plan for the remainder of the year, ensuring every new patient can continue their treatment long-term. Regarding NUPLAZID, we are pleased with the influence of our unbranded and branded campaigns. We are seeing positive momentum in referrals, with our MBRXs looking good. Q1 of 2025 was our strongest quarter for NUPLAZID in nearly five years. We believe this encouraging momentum will carry into the rest of the year.

Mark Schneyer, EVP and CFO

Yeah, thanks, Tom. And I think from a financial perspective, starting with DAYBUE, both brands, it's really going to be a volume story throughout the rest of the year. And Tom explains the operational dynamics. On DAYBUE, from a kind of a net sale standpoint, we do expect kind of price to gradually increase over time as we benefit from kind of Medicaid, as you remember, DAYBUE is largely a Medicaid patient population. So the Medicaid pricing resets on a quarterly basis. So we should benefit from some price increases over time about the inflation level. And then in Q1, for DAYBUE, we do tend to have higher Medicaid rebates because we have a segment of our patient population are dual eligible Medicaid commercial payment patients. And those patients as they get through their out-of-pocket maximums tend to shift towards commercial payments over time. And so that also is a tailwind from a little bit of price. As we've talked about on our last call, and Tom mentioned, we've initiated our expansion of our DAYBUE field team, and we expect operationally to have a greater impact in the second half of the year. On NUPLAZID, I think it's probably more consistent. Our volume will drive the quarter-to-quarter performance. You don't have the same level of dynamics on changes in price over time. NUPLAZID is largely a Medicare patient population, so the pricing doesn't reset on a quarterly basis. So it's really a one-time reset towards the end of the year. So our gross to net subject to what anything can happen on a quarterly basis due to patient mix should be mostly stable throughout the remainder of the year. We did have the big time one-time adjustment, as we mentioned, comparing Q1 last year to this year. But going forward, probably pricing should be relatively consistent, and volume will drive the performance over the quarters.

Tessa Romero, Analyst, JPMorgan

Great. Thank you.

Ash Verma, Analyst, UBS

Okay. So congrats on the progress. I wanted to ask about the pipeline. So maybe just on Carbetocin, so the prior attempt by Levo Therapeutics had failed on the high-dose, but successful on the low-dose. And particularly, you generally don't see inverse-dose relationships. Like, what makes you confident that low-dose can generate positive data and be accepted by the FDA? And then just secondly, any thoughts on GLP-1 using predominantly? Thanks.

Catherine Owen Adams, CEO

Thanks, Ash. I think Liz is going to answer both of those for you.

Elizabeth Thompson, EVP and Head of R&D

Yes, indeed. Thanks, Ash. So exactly as you say, there was a prior Phase 3 trial that was run that had two doses, a 3.2-milligram dose and a 9.6-milligram dose. And the 9.6-milligram dose didn't show statistical separation from placebo. The 3.2-milligram dose did appear to separate from placebo, though, of course, that was only nominally statistically significant. So as you take a step back, when we think about this, there are a few things that give us confidence in the need to run a second trial with a 3.2-milligram dose and why that's a sensible thing to do. The first of this is that there is mechanistic reason to think that oxytocin and therefore Carbetocin is going to be relevant in Prader-Willi. The second piece is that as we look at that 3.2-milligram dose dataset, we do see some signs of internal consistency, so positivity at more than one time point and positivity on more than one endpoint. That helps give some additional reassurance about the consistency of that data set and the likelihood that it represents truth. And then finally, I'm always looking for an alternative explanation. Exactly as you say, the inverse dose response is not your typical thing, but it does happen. And there needs to be an explanation as to why that might be the case. It's not possible to prove ultimately with the data that we currently have in hand, but there is a good rationale for the idea that off-target impact of the vasopressin receptor could have the effect of essentially obscuring the ability to see an improvement on hyperphagia and that you get more of that at the higher dose. It's a plausible hypothesis as to how we could have gotten that dose response. And I take all those other pieces of information to pull together to give us some confidence in running this trial and in the likelihood that 3.2-milligrams is going to be useful. And then I apologize, I forgot to write down what the second, GLP-1. So, the data on GLP-1, there is some use of it within Prader-Willi. There certainly aren't definitive studies that make it clear that it is useful in this patient population. So, I would say the jury is still pretty out on whether GLP-1s are helpful for patients with Prader-Willi.

Catherine Owen Adams, CEO

Thank you, Ash. I believe we have a follow-up question.

Elaine Kim, Analyst, Canter

Hi, this is Elaine Kim for Charles. Thank you for taking our questions. I just wanted to ask for the Phase 3 COMPASS trial. Are there any phenotypic behaviors or patient subsets, like genetic subtypes or age groups that are more likely to respond to treatment?

Catherine Owen Adams, CEO

Thank you. I'll let Liz talk about it as well.

Elizabeth Thompson, EVP and Head of R&D

Sure. So, I do have to give the caveat here that, of course, the dataset we have based on right now is really the prior dataset, which is relatively small. That said, with the data that we have to date, we haven't been able to identify patient subsets that are more or less likely to respond to Carbetocin. We will get some more information out of this, out of the COMPASS trial, but, of course, that is a currently enrolling and currently blinded trial, so I'm not able to answer that right now. But thus far, nothing that clearly identifies for us patients who are more likely or less likely to respond.

Elaine Kim, Analyst, Canter

That makes sense. Congratulations on the accelerated enrollment. I wanted to follow up about the R&D day next month. I understand you'll be providing more details and data on the pipeline programs, but will you discuss each clinical program individually? I know that essential tremors was added recently, so could you share more about your plans?

Catherine Owen Adams, CEO

Let's go ahead and dive in. We expect to cover all of the currently clinically staged programs, including essential tremor. I am eager to share some new data on that specific program.

Basma Radwan, Analyst, Leerink Partners

Hi. Good afternoon. This is Basma on for Marc. Thank you for taking our question. We have a question on DAYBUE. Can you provide some color on the utilization rate or the compliance in the quarter? And also, if you can provide some color on the average age and weight of the patient on therapy to date and whether you see correlation between the age and the discontinuation rate. That's it for us. Thank you.

Catherine Owen Adams, CEO

Thanks. I'm going to let Tom talk to the compliance and any insight on the weight-age correlation.

Tom Garner, COO

So, in terms of compliance, if you recall in the fourth quarter, we said that our compliance rate was in the below 70% range. It was marginally down in Q1 in the very high 60s. We believe that this is down to primarily customers just becoming more confident in their titration strategies. We are seeing that some patients are actually starting on a lower dose and then moving upwards as they continue with therapy. We think that this may actually be contributing to the just ongoing persistency that we're now seeing with new patient starts as well. So encouraging is nothing that we are overly concerned about because our goal is to make sure that every single new patient start that we have is able to continue for the long term and truly see the benefits that we know that DAYBUE offers. So that's what I would say around that. In terms of our broader patient mix, I mean, it continues to be across a broad range of patients. We have started to see over time some older patients, more mature patients who may not have necessarily been there at the beginning come online. And obviously, they would be slightly heavier in terms of weight banding. But generally speaking, I think the dynamics that we've seen since launch have kind of held relatively stable.

Catherine Owen Adams, CEO

And I think the other part of that question was, do we see a dynamic between persistency and age? And I think the answer is we don't actually see anything across the age range in terms of a link between age and persistency.

Tom Garner, COO

Yeah. And as I mentioned, encouragingly, I think all of the cohorts that we saw throughout 2024, we've seen improvements in persistency across them all. And I think that, again, that gives us great confidence that as we move into ’25. We'll be able to continue with that kind of dynamic into the rest of the year.

Basma Radwan, Analyst, Leerink Partners

Yeah, thank you very much.

Unidentified Analyst, Analyst, Stifel

Hey there. This is Julian on for Paul. Thanks so much for taking our question. I guess another one on trofinetide for ex-U.S. approvals. I guess, what do you guys sort of see as maybe the biggest risk to the approval process? I guess, could you just speak to your confidence in getting EMA approval and eventual reimbursement there? And then I guess a second quick one is just where does BD fit on your list of priorities this year? Is this mainly about execution, under new management or are you interested in transacting? As other executives have mentioned that, valuations have come down and biotechs have sort of been reaching out to pharma for a partnership. Thank you.

Catherine Owen Adams, CEO

Hey, thanks, Julian. I'll start on both of those, and if Liz wants to add in. In terms of our EMA time clock, it's proceeding as per expectations. We're coming up to our 120-day questions. As you know, we've got approval in both the U.S. and Canada now. So the regulatory team is fairly well apprised of the questions. And we had nothing different or any communication to suggest that we're not proceeding according to the time clock. As and when we get our day 120 questions, we may share a little bit more. But for right now, we're feeling very confident that we're proceeding down the right path. In terms of BD, the question was, are we just going to execute or are we interested in transacting? I think we are very interested in transacting according to our principles. And as we've shared before, we're looking for exciting assets in areas of higher medical need where we can bring the ACADIA team into the space with confidence that we could commercially launch. And so we're looking for those assets right now. We're actively out there. We remain disciplined in terms of our P&L management and ensuring that we are keeping our P&Ls, as Mark likes to say, pristine. But we are very much looking actively, not only in our core spaces of neuro and neuro rare, but also to reinforce our direction at JPMorgan, where we explained that we've now opened our aperture and are actively looking at rare diseases outside the neuro space, including endocrine, metabolic, cardiovascular, immunology, and other spaces. So we're excited to continue to look at that and are diligently doing that right now. The market is what the market is. We're actively looking at those compounds against the criteria I've just shared. Mark, do you want to add anything to that?

Mark Schneyer, EVP and CFO

Yeah, I think for us, we're well positioned to act in the current environment. I think for us, the question when you have swings in valuations, do people on the other side of the table have their expectations reset? And I think for us, if that happens, we're able to get good strategic deals at good financial value for the company. We're ready to transact and expand the portfolio. And if that hasn't happened, we can stay patient until the right time.

Catherine Owen Adams, CEO

Does that answer your question, Julian?

David Huang, Analyst, Deutsche Bank

Hi there. Thanks so much for taking my questions. So first on DAYBUE, I just wanted to ask about the persistency you're seeing here long term at 12 months. I think you mentioned it was a little bit north of 50%. Is there more work to do there? Do you think that can materially improve or are we kind of more at steady state and it would be more beneficial to focus on net patient add? And then just with Prader-Willi, your asset versus commercial positioning of Soleno's product, which is now on the market. How do you kind of think about that? Thanks a lot.

Catherine Owen Adams, CEO

Great. Thank you for the two-parter, David. I'll let Tom start on that one.

Tom Garner, COO

Yeah. Thanks, David. So as we mentioned, yeah, our persistency is around 50% after 12 months. We expect that that's going to kind of stay within that ballpark moving forward. So we don't anticipate there's going to be big swings up or down given the data that we're seeing come through. Just as a reminder as to how we're getting there, obviously, we mentioned we've seen a nice continuation in terms of the discontinuation story that we showed in Q4 with a 35% improvement in the quarter. We believe that that's important as we now really focus all of our efforts on driving new patient starts. And that's been the primary angle and primary focus of the expanded customer model that we mentioned as well. So absolutely, I think you should be thinking about two main factors, new patient starts and active patients. Because it's going to be the active patients that we believe that we can continue to grow over time that are really going to be meaningful for the ongoing revenue uptick for this brand into the long term.

Elizabeth Thompson, EVP and Head of R&D

Sure. I'll start out with the fact that, I mean, we're delighted for the PWS community that there is now a first therapy available for them. That said, I think we see this as an area of significant high unmet need and complex patients who are dealing with a number of different challenges. It's the kind of space where we think that it's likely that there is going to be absolutely room for multiple agents that are used with different MOAs, with different benefit-risk profiles that physicians can use according to the patient that's in front of them. I don't know if there's anything you want to add here, Tom?

Tom Garner, COO

Well, the only thing I would add is we know that the Prader-Willi population, they have very complex and distinct needs. And we actually believe that there's going to be an opportunity for more than one product to play here. I think with therapeutic areas like this, the notion of combination therapy could also be something that plays out into the future as well. So, a pretty substantial patient population here in the U.S., and plenty of opportunity for more than one player to play. And we will be ready to launch the DAYBUE product.

Catherine Owen Adams, CEO

Yeah. And we do spend a lot of time, of course, talking to caregivers, advocacy organizations. And we hear pretty robustly that, again, they are delighted that there is something available for their family members now. And they absolutely think that there needs to be continued therapies and the ability to treat an individual patient for their individual needs.

Unidentified Analyst, Analyst, Morgan Stanley

Hi, good afternoon. This is Catherine on for Sean. Thank you so much for taking our question. Just one from us on your earlier pipeline. For ACP-711, you announced the successful completion of the Phase 1 MAD cohorts earlier this year. We're just curious if you can provide any color on what you observed here? And if you have an update on the status of that study. Thank you.

Catherine Owen Adams, CEO

Yeah, so I think what I'd share there is consistent with what we put out at the time. We were pleased with the safety and tolerability profile we were seeing in that study. There are some interesting pieces on the biomarker side that we'll be sharing at R&D Day. So please feel free to come in and look for that. Status-wise, we're continuing forward with additional explorations that we think are necessary to get us lined up for the Phase 2 that we're planning to start in 2026. So continued good progress there.

Tazeen Ahmad, Analyst, Bank of America

Hi, good afternoon. Thanks for taking my question. For trofinetide in the EU, can you maybe, Catherine, give us a sense on in what ways the launch could be different from the trajectory that DAYBUE has seen in the U.S.? I know you bring a lot of experience from launching products outside of the U.S. What kind of I guess attention to specifics should we be paying as we think about how to model out European launches for your drugs and how we think about DAYBUE in general?

Catherine Owen Adams, CEO

Thank you, Tazeen. To begin, the overall population in Europe is larger than in the U.S., which aligns with the size of the countries. There isn't a specific country with significantly more or fewer patients. Since Germany is the largest country in the EU, we will launch there first. Initially, there is a period of free pricing, after which we will start negotiations. Following that, we will evaluate each country and begin discussions with national payers. Both Tom and I have experience with launches in Europe, and we have assembled a strong team with rare expertise in the region. We are currently developing our dossiers and value proposition, and we are prepared to initiate discussions with authorities once we receive regulatory approval. Regarding what we've learned from the U.S. launch, it is essential to engage with families and share the titration strategies we have established. We are actively working with key opinion leaders and advocacy groups. In the U.S., we saw a strong initial patient response, and we are also receiving many inquiries from patients in the European Union. This is why we have established our main patient program and managed access program for physicians who want to access trofinetide where legally and regulatory permissible. We do not anticipate the same surge in patient dynamics as in the U.S., as each country will differ based on the number of patients on those managed access programs. We are confident in our approach to market entry and are strategically investing in building our teams and placing personnel. We will also consider any future administrative directives that may impact our plans. We are very mindful of this, yet excited, especially about the advocacy groups eager to access trofinetide for their loved ones. Thank you again, Tazeen, for your question.

Unidentified Analyst, Analyst, RBC Capital Markets

Hi, Catherine and team. It's Anish on for Greg. Congrats on the progress this quarter, and thanks for taking our questions. Firstly, as a follow-on to David's previous question, what unique aspects of your commercial engine or priorities within the target market do you believe you'll be able to leverage to rise above competitors in the PWS market, both with respect to Soleno and other therapies in development? And secondly, obviously, there's a lot of concern across the sector on macro and policy exposure for companies. I know you commented on inventory already, but maybe if you could just share some thoughts around where DAYBUE and NUPLAZID might be impacted along their respective supply chains and how you're navigating that. Thanks so much.

Catherine Owen Adams, CEO

Great. Thanks, Anish. Quite a few different subsets of questions there. So let me start by just giving you an overview of my thoughts around the commercial engine. I'll ask Tom to add, and then we'll throw it to Mark to talk about supply chain and tariff. So just in terms of commercial engine, we have a very strong team now, both in Neuropsych and in Rare, who understand the subtleties of launching within a rare space, and we've learned a lot through the DAYBUE launch. So we feel very well prepared as a company to work within the Prader-Willi community. We have strong associations with them already. We have our teams out there right now. And as Liz has already outlined, we feel very strongly that the community is asking for as many options as possible for their patients. These are complicated, complex patients. And we'll see over time the need, I believe, for more than one therapy option for sure. So we feel very confident in our ability to go out there and compete, but also offer patients choices which we believe are very important. Tom, is there anything you'd bring from that, your previous experience in Rare?

Tom Garner, COO

Yeah, I mean, I would say that clearly we have already launched a rare product in very recent history, DAYBUE. I think we've learned a great deal as we've gone through that launch. And as Catherine mentioned, I think both Catherine and I have had the privilege of launching products in other rare spaces. And I think being able to continue to kind of build that muscle, making sure that we're pulling through the experiences that we have and really making sure that as the 101 data reads out that we're able to leverage the product profile in an appropriate way as quickly as possible, taking all of the learnings that we already have, but also thinking about some of the unique aspects that we bring as ACADIA with a true kind of focus on the patient and on patient advocacy. I think we will have a significant leg up in making sure that we can be highly competitive, even as a fast follow.

Mark Schneyer, EVP and CFO

We are closely monitoring current events, especially regarding potential tariffs that could impact the industry. Currently, our supply chain is structured so that our API for both products is produced outside the U.S. The APU's drug product is manufactured in Canada and the U.S., while all drug product manufacturing for NUPLAZID occurs within the U.S. Recently, we have taken steps to consolidate as much inventory as possible, based on prior investments made by the company in anticipation of potential DRP approval. These investments in inventory contribute to our current supply, all of which is located in the United States and sufficient for our needs into the mid to late-2030s. We do not own any manufacturing sites or have any existing infrastructure related to our supply. Like others in the industry, we are evaluating our supply chain to ensure supply assurance, redundancy, high-quality suppliers, and reasonable pricing. If tariffs are imposed, that will factor into our overall supply costs. However, manufacturing considerations, time, and investment can alter the situation. While nothing is set in stone, changes do not happen overnight. We feel confident about our current inventory position and plan to maintain our supply chain as is until there is a compelling reason to make changes, which we can do in the future.

Catherine Owen Adams, CEO

Thanks a lot.

Yatin Suneja, Analyst, Guggenheim

Hey, guys. Thank you for taking my question. Question on the Prader-Willi study. Are you able to talk about the powering of the study and the kind of size of the study is pretty robust? What effect size are you powered for? What is the minimum delta you are able to achieve? Thank you.

Catherine Owen Adams, CEO

I'll ask Liz to talk about the effect size and the powering for our study.

Elizabeth Thompson, EVP and Head of R&D

I think the most important point to note is that we have a study that is significantly larger than the previous one, which showed only nominal significance. However, if the 3.2 study had been conducted on its own, we would have expected a significant p-value. This is a positive indication for us. Regarding the specifics of the powering behind this, we analyzed several potential powering scenarios to ensure we were adequately prepared for different possibilities. The one we disclosed is a minor increase in the difference between placebo and active, which reflects the fact that this trial has a slightly longer time frame than the prior study. Overall, our expectations align with historical data and various scenarios that demonstrate strong powering of over 80%.

Joel Beatty, Analyst, Baird

Hi, thanks for taking the question. It's a little bit of a math question on DAYBUE and the ability to find new patients starts faster than patients discontinue. And I guess it's in the context of you're getting close to 1,000 patients on therapy in a quarter now, and then a discontinuation or persistency rate at 12 months of about 50%. So putting those numbers together, I guess the question is, would that mean to expect about 500 patients dropping off over the course of a year? And then if so, how realistic is it to be able to find 500-plus patients of new starts to be able to replace that?

Catherine Owen Adams, CEO

Let me try to clarify the numbers a bit. As you mentioned, there were 954 patients treated in the quarter. Of those, just over 65% have been on the therapy for more than a year. It's important to recognize that within that group, there are different starting times, but more than 65% have been using the product for over a year. We continue to observe strong retention beyond the one-year mark, with no sudden drop-off. So, it really comes down to the patient cohorts regarding the numbers. We also consider the new patients added each quarter and how long they typically remain on therapy. We've shared the 12-month retention rate, but many patients are actually staying on the therapy for much longer. That's one way to look at it. Mark or Tom, if...

Mark Schneyer, EVP and CFO

I mean, when we talk about 12 months, that's the first 12 months of therapy. It's not each 12 months of therapy. So the rate of the persistency rates are very high; the kind of after the curve is like plateauing after as you get out in time. So it's really in that first 12 months that we keep more than 50% of our patients. And then beyond that time, it's a very high rate of persistency. So as Catherine mentioned, we have that stable base of patients that are on therapy more than 12 months, 65% of our current patients. And so then we're adding patients on top of that. And that's how the patient count grows over time.

Catherine Owen Adams, CEO

Maybe I'll just give you one statistic that gives you maybe a thought. As we went through 2024, we started sort of with 870 or so patients per quarter, and now we're at 954. So again, they don't drop off at the end of the year. They continue to stay on therapy. Hoping that that helps you out, Joel. If you need some more follow-up, I'm happy to do that too.

Sumant Kulkarni, Analyst, Canaccord Genuity

Good afternoon. Thanks for taking our questions. I have two quick ones. Given post-trial briefing is done on the Pimavanserin-2 case, could you remind us of your latest assumptions on when you might expect generic competition on NUPLAZID? And second, on trofinetide, do you expect to start recognizing European revenue from France via the paid early access program that country allows? And how important might that type of initiative be to give you a good sense of how the product might launch in the rest of Europe?

Catherine Owen Adams, CEO

Okay. I'm going to ask Mark to update you on NUPLAZID, and then I'll take the France question.

Mark Schneyer, EVP and CFO

Yeah. So on Pimavanserin and IP, we remain kind of in the view that we have bookends, right? The short end of the bookend would be October 2030. The long end of the bookend is February 2038. Really, nothing has changed with our reasoning behind that as we've been talking over the last month and year, whatever the timeframe would be. Really, the only update since the last time we've talked publicly is that oral arguments for the appeal on our composition of matter is now scheduled for June 6th of this year.

Catherine Owen Adams, CEO

In France, I’ll begin and Tom can provide additional details. I believe you’re asking about the ATU program in France, which now has a different name that I can’t recall at the moment. Essentially, it’s the early access program funded by the French government. We are working on establishing the necessary mechanisms for this program to be activated for DAYBUE in France. There are several regulatory and legal factors we need to address before this can happen, but we are actively pursuing this. As you know, once reimbursement is obtained through the Transparency Commission, patients transition to receiving the product funded by the French government. That is our current strategy. We need to assess the situation in France as the time approaches, but we are aiming for the ATU to be activated this year and for those patients to move to commercially available products once negotiations are finalized. Tom, did I miss anything?

Tom Garner, COO

No, I think as it relates to France, that's entirely true. I mean, the other thing I would say is obviously Germany, we will be having a managed access program there as well. And actually, Germany, if you recall, will be out the gates pretty significantly ahead of where we are in France. So I think if you want to kind of have a good kind of barometer as to what's going to be happening in Europe, the German launch will be the one to watch because we do anticipate having patients enrolled in that early access program. As a reminder, on day one, once we have a European approval, they will be able to be switched over to the commercial drug with free drug pricing as well. So more to come, but that's how we expect to see things playing out.

Malcolm Hoffman, Analyst, BMO Capital Markets

Hi, Malcolm for Evan from BMO. I wanted to touch on NUPLAZID gross net. I believe you said gross net for the quarter was roughly 24%, and the guide suggests a range for the year of 22.5% to 25.5%. Can you just talk through what pushes and pulls you expect could move this gross net one side or another of the guide? Thank you.

Mark Schneyer, EVP and CFO

Yeah, I think right now, at least the first quarter is kind of right in the middle of our guidance. It really is just patient mix, which we don't control. It's just the payers for our patient base can change over time. And that can influence quarterly fluctuations and what the gross net is on the year. The other thing that influences it is if we take any pricing action. We had a small modest price increase at the beginning of the year. We don't foreshadow when we may or may not take pricing action. We price our medicines to value, and we just announce that when and if we do it over time.

Catherine Owen Adams, CEO

Great. Thanks, Mark.

Operator, Operator

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Catherine Owen-Adams for closing remarks.

Catherine Owen Adams, CEO

Well, just thanks, everybody, for your questions this quarter. We look forward to continuing to deliver on our commitments to our patients and updating you on our progress next quarter. Thanks again for your questions.

Operator, Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.