Earnings Call Transcript - ACAD Q3 2024

Operator, Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Third Quarter 2024 ACADIA Pharmaceuticals Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Al Kildani, Senior Vice President, Investor Relations, and Corporate Communications. Please go ahead.

Al Kildani, Senior Vice President, Investor Relations, and Corporate Communications

Thank you. Good afternoon and thank you for joining us on today's call to discuss Acadia's third quarter 2024 earnings 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 Brendan Teehan, our Chief Operating Officer and Head of Commercial, who will discuss our strong commercial franchise's DAYBUE and NUPLAZID. Also joining us today is Liz Thompson, Ph.D., Executive Vice President, Head of Research and Development, who will provide an update on our pipeline program, and Mark Schneyer, our Chief Financial Officer, will review the financial results. Catherine will then provide some closing thoughts before we open up the call for your questions. We are using supplemental slides which are available on our website's events and presentation section. Before proceeding, I would like to remind you that during our call today, we will make 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 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, beginning on Slide 4.

Catherine Owen-Adams, CEO

Thank you, Al. Good afternoon, everyone, and thank you for joining us. I'm Catherine Owen-Adams, the new CEO of Acadia, and I'm honored to speak with you today. I want to share a bit about my background and how it aligns with Acadia's goals, as well as my motivation for joining the company. I bring over 30 years of experience in the pharmaceutical industry. Most recently, I was the Senior Vice President and General Manager of the U.S. business at Bristol Myers Squibb, and before that, I led their international major markets business. I spent 25 years at Johnson & Johnson, working in their pharmaceutical and med-tech sectors in Europe and the U.S. Throughout my career, I have led teams that successfully launched and managed drugs across various therapeutic areas, including rare diseases and neurology. In the last five years, I have been involved in nine drug launches both in the U.S. and internationally, including several in the rare disease category. I joined Acadia because I am excited about its foundational business and the future potential of its pipeline. I am truly inspired and honored to lead Acadia in advancing therapies that can significantly impact people's lives. I see substantial opportunities to grow our current portfolio and advance the innovations in our pipeline, particularly with two late-stage assets targeting new patient communities with high unmet medical needs. I believe there is a strong potential to enhance shareholder value as we execute on our commercial priorities and advance our pipeline assets. Regarding our commercial front, we have two growing franchises that, based on our Q3 results, are projected to exceed $1 billion in annualized sales, an impressive milestone for a biotech of our size. Our strong pipeline includes two late-stage assets for Prader-Willi Syndrome and Alzheimer’s disease psychosis, along with many promising early-stage programs. Additionally, our financial strength is backed by positive cash flows and a growing cash balance of $565 million. Now, let’s discuss DAYBUE, which had a solid quarter with sales of $91.2 million, representing a 36% increase year-over-year and an 8% sequential growth. I want to share some observations about the DAYBUE launch based on my experience. After six quarters, with $429 million in sales, we can confidently say it has been a successful launch. Every rare disease launch is unique, but DAYBUE shares common challenges that require coordination within the healthcare system, especially focusing on the patient journey to ensure they start and continue therapy. We have established a steady state of new patient starts with DAYBUE and are determined to enhance this in the coming quarters. Growth will rely on continual engagement with our clinical data to illustrate DAYBUE's impact on patients and generating real-world insights from ongoing studies. We will also concentrate on the initial stages of the patient's journey, as families and physicians collaborate to determine the right dose. I am confident in DAYBUE's potential for growth and its ability to reach more patients who can benefit from it. Turning to NUPLAZID, it had an excellent quarter with net sales of $159.2 million, a 10% increase year-over-year. This success was driven by favorable trends, including impactful real-world evidence studies, last year’s label clarification, and what seems to be a stable market for Parkinson's disease psychosis. In August, we launched an unbranded disease awareness campaign to increase awareness around Parkinson's-related hallucinations and delusions, and we are pleased with the early results from this campaign. Additionally, we initiated a direct-to-consumer campaign that we believe will support NUPLAZID's growth in 2025. Now, regarding our pipeline, it is a significant aspect of why I was drawn to Acadia, as I believe it is undervalued. We have a Phase 3 asset, ASCP 101, being evaluated for Prader-Willi syndrome, a rare genetic disorder with no FDA-approved treatment, characterized by an uncontrollable urge to eat. Following that, we are conducting Phase 2 studies for ACP-204, our second-generation 5-HT2A blocker, which has the potential to broaden our neuropsychiatry offerings. These drugs will provide new options for patients in underserved populations. We also have several exciting early-stage assets, and we look forward to discussing them as they progress. We are actively pursuing opportunities to expand our pipeline through business development, a strategic focus as we aim to shape our growth for the future. I’ll now hand it over to Brendan to discuss our commercial performance further.

Brendan Teehan, COO and Head of Commercial

Thank you, Catherine. Let's take a look at both our DAYBUE and NUPLAZID franchises. Starting first with DAYBUE on Slide 9. In Q3, we continued to drive growth in our DAYBUE business with $91.2 million in net sales. That growth was primarily driven by continued penetration of the prevalent population and increased demand as measured by dispense rates among our continuing patients. During the quarter, 923 patients received paid shipments, which compares to 917 receiving shipments in Q2 and 871 in Q1. Importantly, the average number of bottles each patient received increased as our patient cohorts mature and begin reaching a dose that they will likely remain on longer term. Weekly patient discontinuations in the quarter were similar to Q2 and continue to be down significantly from Q1. Importantly, we now have over 60% of all active DAYBUE patients on treatment for 10 months or more since treatment initiation. This is significant as the persistency curve for patients out past 10 months on treatment is flattening, suggesting a strong enduring patient base benefiting from treatment over time. Looking out 12 months and beyond, we see persistency rates at 50% or higher. This compares favorably to other chronic therapies at similar stages. Turning to prescriber dynamics. We have continued to expand the breadth of prescribers, with now approximately 800 unique prescribers having written a prescription for DAYBUE. We have further increased our penetration of the 21 RETT centers of excellence, or COEs, and we see an increasingly large proportion of new starts coming from non-COE high-volume institutions as well as community-based practices. This is important as approximately 70% of all RETT patients are treated outside of COEs. We are focusing on driving depth of prescribing among those HCPs who have prescribed DAYBUE to one or two patients where we know they also have additional patients under their care who can benefit from DAYBUE. Let's discuss our ongoing efforts to drive future adoption. Please turn to Slide 10. As Catherine mentioned, to expand treatment to more of the prevalent RETT patient population, we are focusing on further educating prescribers about DAYBUE's efficacy and the real-world day-to-day benefits patients and their families are experiencing. This is especially important outside of COEs where HCPs do not have as deep an understanding of RETT syndrome or DAYBUE's efficacy profile. These caregiver and HCP reported real-world benefits include improved quality of life, improved mood, more purposeful use of hands, increased alertness, better engagement in conversations, and improvements in both verbal and nonverbal communication skills, which, among other benefits, are the driving force behind continued penetration of the RETT population. As an example of these tangible daily benefits, I was excited to speak to one of our caregivers at a recent program about what her daughter is now capable of doing on her own now that she's been treated with DAYBUE. She shared that since her 8-year-old daughter started treatment, she can now grab and hold on her own everyday items like utensils and other objects, including, much to her delight, ice cream cones. Her daughter has become more expressive and increased her vocalization, improving her overall ability to communicate as well. Other caregivers tell us about their loved ones improved ability to communicate non-verbally with their Tobii iGas device. Each of these benefits are helping create better connections with RETT patients and their caregivers. These are just a few very tangible and exciting examples of the real-world benefits we want all HCPs and caregivers to hear, understand, and pursue. We are sharing these stories within the RETT community where these types of improvements will surely resonate. One of our best sources of real-world efficacy is our ongoing LOTUS observational study that continues to yield valuable insights for both HCPs and families about the number and breadth of clinical benefits caregivers are reporting in their loved ones as well as their GI management experiences. We are sharing this data with HCPs to allow them to make more informed prescribing decisions for their RETT patients. In summary, our primary focus for growth is on demonstrating DAYBUE's efficacy and real-world benefits in our sales materials, peer-to-peer engagements, and our caregiver programming, sharing these benefits with all HCPs and families. We continue to increase penetration of the RETT population and are building a strong and enduring patient base. We're confident in our growth outlook based on the current rate of new patients entering at the top of the funnel combined with a growing base of enduring patients. And we plan to continue to drive growth while helping HCPs and families better manage tolerability challenges and improve the early treatment journey. With now over 30% of the 5,000 and growing diagnosed RETT patients in the U.S. having started DAYBUE, we have a substantial opportunity ahead of us to continue growing the brand. Now let's turn to NUPLAZID on Slide 11. Q3 was another outstanding quarter for the NUPLAZID franchise with $159.2 million in net sales representing the highest ever quarterly sales for the brand with 10% growth year-over-year. We achieved this growth by increasing active patients on NUPLAZID across all market segments. This strong performance in the quarter follows what we've seen throughout the year as we've grown demand quarter-over-quarter throughout 2024. Q3 volume growth was driven by two key initiatives that have been the focus of our discussions with HCPs. First, leveraging the published real-world evidence demonstrating the important differential outcomes Parkinson's disease psychosis patients have experienced with NUPLAZID, including a lower overall risk of all-cause mortality versus all other off-label antipsychotics, most notably low-dose cotyapine. Second, educating the market about last year's label clarification which helps HCPs understand that they can treat Parkinson's disease patients experiencing hallucinations and delusions with or without comorbid dementia. These two factors helped us increase HCP conviction in NUPLAZID as their first-line therapy of choice for PDP, leading to a higher demand and market share. Looking at the broader market, we are seeing a return of Parkinson's patients as measured by in-office visits as well as long-term care resident census numbers. This market dynamic supports continued future growth for NUPLAZID. We are excited about NUPLAZID's Q3 results, which were achieved in advance of the benefits we expect to see from our recently launched direct-to-consumer campaigns, which I'll discuss now. Please turn to Slide 12. As we announced in August, we launched an unbranded disease state education campaign featuring Ryan Reynolds and his mother, Tammy, focused on the non-motor symptoms of hallucinations and delusions that can often accompany Parkinson's disease. The early results of this disease state awareness campaign suggest it is among the most successful campaigns ever in this category. Here are just a couple of the impressive early measures demonstrating this. Over 3.9 billion media impressions in just the first eight weeks or so of airing and nearly 200 media placements, including approximately 75% with headline mentions of the campaign. These are very encouraging early indicators. Concurrently, we also launched a branded campaign featuring NUPLAZID as the first and only treatment for PDP. In just the first two weeks post campaign, we saw a nearly threefold increase in Parkinson's disease patients who visited Nuplazid.com and subsequently visited a PD specialist. As a reminder, we expect the vast majority of the benefits of these campaigns to be seen in 2025 as new patients schedule appointments with their specialists and seek treatment for hallucinations and delusions with NUPLAZID in the months ahead. In summary, we're excited about the growth we're seeing in NUPLAZID and we'll look to capitalize on that momentum with our consumer campaigns in the weeks and months ahead. I'll now turn it over to Liz on Slide 13.

Liz Thompson, Executive Vice President, Head of Research and Development

Thanks, Bren. Please turn to Slide 14. I'd like to start today highlighting some good news on the global expansion front. We recently received approval from Health Canada for DAYBUE as the first and only approved therapy for patients in Canada living with RETT syndrome. Our next focus is in the EU, where we are targeting a submission of the marketing authorization application in the first quarter of next year. We're now building up our team and expertise in Europe in order to plan for that launch. In addition to European expansion, we've had productive conversations with PMDA, the regulatory agency in Japan regarding the potential to bring DAYBUE to patients there. We very much look forward to continuing to collaborate with PMDA and Japanese experts to progress our program. Continuing on regarding support of our marketed medications, I'd also like to touch upon some of the analyses that we continue to generate and share about NUPLAZID on Slide 15. At the recent movement disorder society meeting, we presented data on sedation and sleep, both sleep quality and the avoidance of unwanted sedation are key areas of interest for physicians treating Parkinson's disease psychosis. In some studies with Pimavanserin across healthy volunteers, patients with PDP, and patients with neuropsychiatric symptoms related to a neurodegenerative disease, we've included various exploratory measures of sleep. Taken together, the data across these trials suggested that Pimavanserin may be associated with low levels of sedation and other sleep-related adverse events. Just last week, we also presented data at the site Congress meeting, examining patients in our PDP studies who had complete resolution of their hallucinations and delusions. The literature suggests that symptoms of Parkinson's disease psychosis will tend to worsen over time if left untreated, but there's little information about the impact of treating earlier versus later. In an integrated analysis, including 135 patients with PDP, of whom 21 reported no symptoms after receiving Pimavanserin, treatment initiated following the onset of hallucinations and delusions was associated with a higher probability of achieving a complete response than later treatment. Turning to Slide 16, I'll discuss our late-stage clinical programs starting with the ACP-101 program in Prader-Willi syndrome. As a reminder, Prader-Willi is a rare genetic neurobehavioral disorder; roughly 8,000 to 10,000 patients in the U.S. are living with Prader-Willi. As we've described before, the defining characteristic is hyperphagia, which is an unrelenting hunger. This manifests very early in life and can lead to obesity and myriad complications like Type 2 diabetes or heart disease, as well as behavioral changes like anxiety and aggression. Unfortunately, life expectancy is currently only around 30 years, largely due to cardiovascular disease. Our Phase 3 study called COMPASS PWS is currently enrolling. This study is global, multicenter, randomized, double-blind, and placebo-controlled. We've built on prior Phase 2 experience in terms of both dose and endpoint selection. We've been truly pleased with the enthusiasm we are seeing in the Prader-Willi community, and we look forward to continuing to work with them and clinical experts as we advance through the study. I anticipate providing more specific guidance on timing early next year. Now turning to our second late-stage clinical program, ACP-204 on Slide 17. Here, we have utilized our extensive neuropsychiatry expertise and pathway understanding to develop a next-generation 5-HT2A compound designed to build upon the strong product profile of NUPLAZID. To date, we've seen no sign of QT prolongation at the dose of our study, a wide dose range, supporting the potential for a dose equivalent to approximately twice the approved NUPLAZID 34-milligram dose and steady PK achieved in less than half the time of NUPLAZID, projecting the potential for an earlier onset of activity. Currently, ACP-204 is in development as a potential treatment for Alzheimer's disease psychosis in a master protocol that includes a Phase 2 and two Phase III studies. The program is global and contains randomized, double-blind, placebo-controlled studies. The Phase 2 involves over 300 patients. We continue to plan that the two Phase 3 studies will be of roughly equivalent size. Once the Phase 2 study data are collected, we'll analyze and report results by which time the two Phase 3 studies will already be underway. I look forward to also providing more specific timing guidance on this program early next year. And now I'll turn it over to Mark for a financial update beginning on Slide 18.

Mark Schneyer, CFO

Thank you, Liz. Let's review our quarterly financial performance on Slide 19. In the third quarter, we recorded $250.4 million in total net sales, up 18% from the third quarter of last year. DAYBUE net product sales were $91.2 million in the third quarter, up from $66.9 million in the third quarter of last year. Sequentially, DAYBUE sales were up 8% from the second quarter, comprised of 4% volume growth and 4% net price growth. NUPLAZID net product sales were $159.2 million in the third quarter, up 10% versus the prior year's third quarter, comprised of 7% volume growth and 3% net price growth. Gross to net for NUPLAZID was 24.9% in Q3. R&D expenses decreased to $66.6 million in the third quarter of 2024 from $157 million in the third quarter of 2023. The decrease in research and development expenses was related to a reduction in business development expenses as we made the $100 million upfront payment to Neuren for ex-North American rights of trofinetide in Q3 of last year. SG&A expenses increased to $133.3 million in the third quarter of 2024 from $97.9 million in Q3 2023. The increase was mainly due to the ongoing NUPLAZID consumer activation campaign as well as one-time costs related to our CEO transition. We ended the quarter with a cash balance of $565.3 million, which increased by $64.4 million versus the prior quarter. I also have an update to share on our rare pediatric disease priority review voucher. Yesterday, we entered into an agreement to sell the PRV for $150 million. We expect this transaction to close in the fourth quarter. As a reminder, as part of our licensing agreement with Neuren for trofinetide, we will owe Neuren one third of the net proceeds received from this transaction. Please turn to Slide 20 for a discussion of our latest 2024 financial guidance. For DAYBUE, based on our third quarter results and the dynamics Brent described, we are narrowing our guidance range for DAYBUE and now expect net sales of $340 million to $350 million. For NUPLAZID, we are narrowing our guidance range to the high end of our previous range and now expect net sales of $600 million to $610 million. As Brent said earlier, this guidance does not rely on a meaningful impact from our recently launched DTC campaigns, the benefit of which will largely be achieved in 2025. We are also narrowing our full-year NUPLAZID gross to net guidance, and our new guidance range is 26% to 27%. On the expense side, based on year-to-date results, we are reducing our R&D guidance to $280 million to $290 million and increasing SG&A guidance to $480 million to $495 million. Lastly, we are raising our cash guidance range to $600 million to $640 million reflecting our expectations for our operational performance. This range does not reflect the anticipated net proceeds from our sale of our PRV. And now I'll turn the call over to Catherine for closing remarks.

Catherine Owen-Adams, CEO

Let's now please turn to Slide 21. As we head towards the end of the year, our business today is built on a strong foundation, and I am excited for us to drive further growth in 2025 and beyond. We will continue to execute on the significant opportunity that remains in front of us for both DAYBUE and NUPLAZID to drive that growth. We will also work diligently to enroll our two late-stage trials as well as our pipeline programs and potential for business development deals. We're pleased to be generating sustainable and expanding cash flow from operations to fund future growth. As I stated upfront, I truly believe that the deeper dive into the company, the more enthusiastic I am about Acadia's incredible potential for future growth. With that, I'll turn it over to the operator for our Q&A.

Operator, Operator

And our first question comes from Gregory Renza with RBC Capital Markets. Your line is now open.

Gregory Renza, Analyst

Great. Good afternoon, Catherine and Acadia team. Congrats on the progress. Catherine, welcome aboard. Thank you. To start, I’ll refrain from asking a question about Ryan Reynolds, but you gave us some interesting color on the rationale and what you saw the attractiveness of joining Acadia. You mentioned business development and certainly the early-stage pipeline, I'm sure is of interest to us. Just wondering if you could just add a little more color about how you break down the strategic framework, what the capabilities are for Acadia to sort of welcome in some of those business development assets as well as really nominating and fleshing out the early-stage pipeline that was of interest to you.

Catherine Owen-Adams, CEO

Great. Thanks for the question, Greg. So yes, I'll ask Brent to talk about Ryan at a more appropriate point. But I will focus on business development. So yes, in terms of the focus of growth for the company, I believe business development is going to play an important role in our future. As you know, it's played an important role up until now in our growth with the acquisition of trofinetide. And so as we think about the framework that you asked around, obviously, we have a very strong footprint in neuropsychiatry and continue to develop drugs in that area, and I believe that will be part of our future and possible additional business development areas. Rare disease, we now have a year and a half under our belt, strong, successful launch with DAYBUE and it continues to be a strong focus for the company. Beyond that, I'm working with the team to discuss further areas of interest, and we'll be sharing that probably at a slightly later date. But just to confirm that we are in a strong financial cash position, as Mark has outlined, and we feel very strongly that we are in a great position to look at business development deals as they come forward in the next few months.

Gregory Renza, Analyst

That's helpful. Thank you. And maybe a question for Brendan. Just on the latter part of 2024 with respect to DAYBUE and as you think about coming into the holiday season, and we reflect on some of the December to January to February patient visits and DAYBUE utilization from patients and families, how should we be thinking about some of the patterns when it comes to us entering Thanksgiving and the December holiday season and how it relates to transitioning to 2025? Thank you again. And congrats.

Brendan Teehan, COO and Head of Commercial

Sure, Greg. Thanks so much for the question. Just as a reminder, this will be just our second first-quarter transition as we head into 2025. A lot has changed in the DAYBUE franchise since then. First of all, we have a much better understanding of the re-verification process and requirements for our patients. We've built out those capabilities both within our hub and our family access manager team that's working closely with each of our families during that transition. A very important difference is our patient mix heading into 2025, which is quite different than the mix we had in the first quarter of 2024. As I mentioned in our prepared remarks, we have over 60% of our current DAYBUE patients currently on treatment for 10 months or longer, which obviously wasn't even possible in the first quarter of 2024 when there were far less than 10% of patients at that time that had been on therapy that long. So I think that provides a much more dependable base of business for first-quarter demand. In terms of patient dynamics, I would think that, as we've seen in Parkinson's disease, patients don't tend to schedule as many appointments in January, so that wouldn't be a surprise to me. But otherwise, we fully expect to grow patients and sales in 2025 over the longer period.

Operator, Operator

And the next question comes from Jason Butler with Citizens. Your line is now open.

Jason Butler, Analyst

Hi, thanks for taking the questions. Congratulations on the quarter. I have a couple of questions about NUPLAZID. Can you provide insight into the profile of patients starting therapy now in relation to the branded and unbranded campaigns? Additionally, regarding the label change, are you seeing more older patients starting therapy, and to what extent are you seeing patients begin treatment earlier in their diagnosis or when experiencing early psychosis symptoms?

Catherine Owen-Adams, CEO

Thanks for the question, Jason. I'm going to let Brian answer that for us.

Brendan Teehan, COO and Head of Commercial

Thanks, Jason, for the question. I would say, first, we’re in very early days post-launch of both of those campaigns. But I can tell you from what we’re seeing for patient dynamics thus far, the mix of prescribers still seems to reflect what we saw in the second and third quarters. So we're seeing the same kind of prescribers that are our targets and a similar number of new physicians that are new to the brand. In terms of the age of our patients, it's been largely what we would expect. I think the caregiver campaign has helped connect families to identify perhaps more readily subtle changes that they're seeing in their loved ones. But I don't think we've seen a substantial change in the age of our patients so far.

Operator, Operator

And our next question comes from Ami Fadia with Needham & Company. Your line is open.

Unidentified Analyst, Analyst

Hi, this is Poorna on for Ami. You've suggested that you'll be having $1 billion in sales in 2025. Just wondering, are you anticipating any decline in DAYBUE sales relative to 2024? What is the mix of the two products? Thank you.

Catherine Owen-Adams, CEO

Thanks, and I’ll let Mark answer that.

Mark Schneyer, CFO

Yeah. So let me just clarify that. Thanks for the question. I think what we're saying is right now, we have $250 million in sales in the quarter, and that equates to a run rate of $1 billion. So we're not suggesting guiding yet for the full year 2025. But we're pleased to kind of have a run rate milestone that’s over $1 billion, and then we'll guide into next year. At this time, we can share that we expect growth in both franchises and overall growth over that period.

Operator, Operator

And our next question comes from Marc Goodman with Leerink Partners. Your line is open.

Unidentified Analyst, Analyst

Hi. This is Padma filling in for Marc. We have a question about DAYBUE. Regarding the 50% or 60% of patients still on therapy, do we know the percentage of those who respond and actually experience clinical benefits? Should we assume that all of them are currently responders and benefiting from the therapy? Additionally, could you provide us with more information on the discontinuation data? What are the main factors that lead to discontinuation of therapy? Is it related to the profile or the lack of treatment effect? Thank you.

Catherine Owen-Adams, CEO

Thank you, Padma. I think I'm going to ask Brendan to take us through those two questions.

Brendan Teehan, COO and Head of Commercial

Sure. No problem. Thank you for the question. First, just to confirm, yes, we have over 60% of patients at 10 months or longer. What we see there is the flattening of the persistency curve out to 15 months for the latest cohort that we're looking at, which is very encouraging. That would suggest to us that patients have worked through the treatment journey and have found the dose that they're settling in on and are benefiting. Our family access manager team and our clinical nurses at home would confirm that these patients are benefiting and continuing. So I think that answers that question. The second question around discontinuations, we still see that the majority of discontinuations happen in the first one or two fills on treatment. The reasons for discontinuation tend to be diarrhea or vomiting and not so much a lack of treatment effect. It's really the tolerability in the early sales that drives discontinuation.

Operator, Operator

And our next question comes from Tess Romero with JPMorgan. Your line is open.

Unidentified Analyst, Analyst

Hi, team. This is Caroline Potter on for Tessa Romero with JPMorgan. Thanks for taking our questions. First, in your prepared remarks, you mentioned that the DAYBUE launch is now at a steady state of new patient flow. We were just curious if you could just clarify the statement. Does this mean steady net ads? And then you mentioned it will be a focus to grow this over the next few quarters. Is there anything that has fundamentally changed in your strategy to accelerate new patient starts, and are you considering changing or pivoting any facets of the launch strategy going forward? Thank you.

Catherine Owen-Adams, CEO

Thanks, Caroline. I'll take some of that in terms of the perspectives that I've developed with the team over the last six weeks. To go back to the original part of the question, in terms of the steady state, yes, we're seeing a steady state of patient ads after a very strong start to the DAYBUE launch. That's not unusual in rare disease launches. You see a big burst of patients out the door with the high unmet medical need and then tend to go to a plateau phase. But we are looking to see how we can recharge that growth and start to see more patients coming in at the top of the funnel. We believe that there is a strong possibility of driving that growth. Let me tell you about the areas that we're focusing on in order to achieve that. The first is efficacy. What we've learned over the last six quarters is that the scales used in our clinical trials need to be brought to life for physicians, so they can understand the impact of DAYBUE for their patients in terms of changes in cognition, communication, and hand-wringing. So bringing the efficacy to life is our first focus, as well as starting to enhance the data generated around the LOTUS study and ensuring that the message is amplified to physicians. The second, Brendan just mentioned, is managing the patient journey; with all rare diseases, we need to think about the patient journey when they start therapy and as they continue to persist. Now we have a strong mature cohort of patients, towards the end of the treatment, out beyond 15 months, and ensuring that our families are supported throughout that journey. Finally, we talked about DAYBUE's penetration into the currently diagnosed patient population of 30%. We've seen the diagnosis rate increase since the launch of DAYBUE by around 10%, allowing us to go after more patients and make them aware of DAYBUE. Moreover, 70% of our patients are treated outside our COEs, providing a strong opportunity for growth. By enhancing efficacy, focusing on the patient journey, and driving growth outside COEs, I feel strongly that we will see strong DAYBUE growth as we move into 2025.

Operator, Operator

And the next question comes from Joe Beatty with Baird. Your line is open.

Joe Beatty, Analyst

Hi, thanks for taking the question. What do you think of the ratio of patients on therapy to the number of unique prescribers? It looks like there have been about 1,500 patients who have started therapy at some point with about 800 unique prescribers, which might be less than two patients per prescriber, and perhaps I would have expected it to be a little bit more concentrated?

Catherine Owen-Adams, CEO

Thanks, Joe. That's a great observation and one that I know we've been looking at. So Brendan, do you want to share a little bit more about that?

Brendan Teehan, COO and Head of Commercial

For sure, Joe. Thanks for the question. You are correct; there is a concentration and a long tail. For a first mover in a rare disease area, the centers of excellence still have the vast majority of prescribers that have multiple referrals for DAYBUE. High-volume institutions have a concentration of physicians who have written three or more prescriptions, and we're continuing to penetrate those. In the community, as we've gone further in, it is common to see a physician with one or two patients, mostly primary care physicians and some pediatricians who likely will have one patient to offer. However, we are focused on those physicians who have written one or two prescriptions for DAYBUE, and we know they have additional patients for follow-up.

Operator, Operator

And the next question comes from Keith Tapper with BMO Capital Markets. Your line is open.

Keith Tapper, Analyst

Thanks, good afternoon team. And thanks for taking my question. Welcome and congratulations to Catherine for Acadia. For DAYBUE, can you remind us what to expect from the Canadian approval in '25 and '26 regarding launch expenses and the potential impact on revenues, assuming everything goes well? Have you provided guidance on timeless revenues in Europe and Japan? Additionally, I know it's early, but could you discuss 2591, which you have rights to in gradual? Is the strategy for it similar to that of DAYBUE? Any insights would be appreciated.

Catherine Owen-Adams, CEO

Thanks, Keith. I'm going to ask Brendan to elaborate more about our strategy in Canada, Europe, and Japan, and then we’ll ask Liz to take the 2591 question for RETT.

Brendan Teehan, COO and Head of Commercial

Thanks. We're obviously excited to have an ex-U.S. approval for Canada and are very much looking forward to serving that patient population. Post-approval, we will enter into negotiations with health technology assessment approvals. We're going to be talking with stakeholders about public and private reimbursement. We anticipate having limited coverage in 2025 through private payers, and the public payer process tends to take longer. In the interim, we have a great opportunity to work with the centers that have RETT patients in Canada to generate interest in signing patients up for when we do have reimbursement approval. So we'll be doing that in the interim. Otherwise, we look forward to making DAYBUE accessible to patients as soon as we can while actively engaging those necessary stakeholders to secure coverage.

Liz Thompson, Executive Vice President, Head of Research and Development

To comment on 2591, I think I'll start out by noting that we see DAYBUE as a great treatment for patients living with RETT but are obviously interested in finding new ways to serve that community. 2591 and other assets that you may see come from us in the future demonstrate our commitment to this patient population. At this point, it's probably premature to discuss in detail what we're thinking about from a clinical perspective. I'll just add that we are learning from Neuron and the interesting data they have compiled so far, as well as compiling our own set of information necessary to create a RETT-specific strategy with this asset. More will be shared in the future.

Catherine Owen-Adams, CEO

In terms of Europe and Japan, we are preparing our MAA as Liz has already referred to in the prepared remarks. We started building out a team in Europe to support that launch and are looking forward to making our DAYBUE product available for patients in Canada and in Europe and beyond. In Japan, our discussions with PMDA are ongoing.

Operator, Operator

Our next question comes from Tazeen Ahmad with Bank of America Securities. Your line is open.

Tazeen Ahmad, Analyst

Hi, good afternoon. Thanks for taking my questions. Catherine, welcome from me as well. I wanted to get your thoughts on how to think about the European launch. In your previous role, you managed ex-U.S. launches. Are there rules of thumb to be aware of as it relates to rare disease launches in Europe that you can share with us today? And can you talk to us about your general plan forward in that region? Thanks.

Catherine Owen-Adams, CEO

Sure. Thanks, Tazeen. As I just mentioned, we are preparing for our MAA application early next year in Europe. There is a set time clock in Europe, normally taking up to a year for that document to be assessed. We start the clock with each of the national HTAs on reimbursement, and we would normally expect to launch in Germany first, followed by Switzerland and then other countries depending on how long local negotiations take. Managing a rare disease launch in Europe from my experience is relatively similar to a rare disease launch in the U.S. albeit a little easier due to the single healthcare system in all of our countries. Access to medicines, once prescribed, is a lot easier as we’re not dealing with payers on a case-by-case basis. We need to wrap around support for physicians and patients, which looks slightly different in terms of the individual patient journey. With my experience and the team already being built up in Europe, I feel confident that we will have DAYBUE available post-registrational approval, and we're looking forward to making that launch successful.

Operator, Operator

Our next question comes from Jeff Hung with Morgan Stanley. Your line is open.

Jeff Hung, Analyst

Thanks for taking my question. For ACP, just wondering if there's any update on whether regulators have agreed to your master protocol? Can you remind us of the strategy there? Thanks.

Catherine Owen-Adams, CEO

Yeah, I'll ask Liz to take that one for us.

Liz Thompson, Executive Vice President, Head of Research and Development

Sure. We haven't reengaged with them about the master protocol, particularly the Phase 3 portion. We anticipate doing that a little further into the Phase 2 portion of the study. That said, all this means is that Europe may be a little slower up and running on the Phase 3 portion of the master protocol. The advantage is that potentially we'd be in a position of starting Phase III there with data in hand from the Phase 2 portion, which is always helpful for investigator interest. It's a little bump in the road, but we don’t see this having an overall implication on strategy or timeline.

Operator, Operator

And our next question comes from Ritu Baral with TD Cowen. Your line is open.

Unidentified Analyst, Analyst

Hey, guys. This is Athena on for Ritu. Thanks for taking my question. I had another follow-up on high-value academic centers and community practices. How should we think about forward adoption rates here? And how comfortable are these physicians when it comes to titrating DAYBUE? What learnings are you applying from the earlier stages of DAYBUE's launch to your conversations with these folks? Thank you.

Catherine Owen-Adams, CEO

Thanks, Athena. I'll let Brendan elaborate on that.

Brendan Teehan, COO and Head of Commercial

Sure. Thank you for the question. COEs were instrumental in the early part of the launch, and they still continue to contribute. I'm pleased with what we've seen for high-volume institution penetration growth over the past year. I'm similarly pleased with our ability to get into the community to find those physicians that have RETT patients and see them continue to start prescribing DAYBUE. The further you get from a COE, the more education on RETT syndrome and the clinical profile for DAYBUE we need to provide, and we’re leveraging clinical champions for programs like Discovery DAYBUE to connect a clinician and caregivers who have had positive experiences on DAYBUE to share real-world performance expectations of the product with new physicians. That combination has been successful for us.

Operator, Operator

And our next question comes from Paul Mattis with Stifel. Your line is open.

Unidentified Analyst, Analyst

Hi, this is Julien on for Paul. Just a really quick one. What are your expectations for ROI on the DTC campaign in 2025 for NUPLAZID? Obviously, you've demonstrated strong execution in 2024. Just curious if you have any more commentary you can provide for next year? Thank you.

Catherine Owen-Adams, CEO

Thanks. So Brendan, do you want to talk about the direct-to-consumer campaign?

Brendan Teehan, COO and Head of Commercial

For sure. We initiated this campaign in the middle of August, and it's really just picking up momentum in terms of patient visits starting to see their neurologists or movement disorder specialists. We expect the majority of the benefit to begin in 2025. The lifetime value of our NUPLAZID patients, both in the community and long-term care, will extend beyond 2025. So we'll see both an increase in new patient starts and their continuing value throughout the 2025, '26, and '27 period. I don’t think we'll fully realize all of its value in '25, but we're enthusiastic about early signs in patient visits and early returns.

Operator, Operator

The next question comes from Charles Duncan with Cantor. Your line is open.

Charles Duncan, Analyst

Hey, good afternoon, Catherine, and team. Thanks for taking our question. And Catherine, congrats on the new opportunity with Acadia. I had a quick question regarding ACP-204 in terms of the data release protocol. I appreciate the master protocol in terms of facilitating enrollment, but I'm a little confused as to whether or not you'll be releasing any information from Phase 2 in terms of efficacy, etc., as the enrollment of the Phase 3s is ongoing. So please provide a little color there. Thanks.

Catherine Owen-Adams, CEO

Thanks for the question, Charles. I'm going to let Liz answer that.

Liz Thompson, Executive Vice President, Head of Research and Development

Yeah. Our current expectation is that we would be releasing some data at an appropriate time. The expectation was always that we could use the Phase 2 data to modify Phase 3 as needed.

Operator, Operator

And our next question comes from Jay Olson with Oppenheimer. Your line is open.

Jay Olson, Analyst

Hey, thank you for providing the updates and thanks for taking our question. For Catherine, could you please talk about your due diligence and any key considerations that you were contemplating as you considered taking on the role of CEO at Acadia? Then maybe elaborate on your longer-term vision for Acadia. Where would you like to see this company go in the future? Thank you.

Catherine Owen-Adams, CEO

Thank you, Jay. In terms of the approach I had looking at an opportunity, I was really looking for the combination of three things. First, I wanted a commercial base where I could come in and add value based on my experiences, 30 years so far in the commercial side of the pharma business, and that is what I found with NUPLAZID and DAYBUE. These are very exciting core brands that we can look to grow and develop over the coming years. The second important area I was looking at was the pipeline, which I was really excited about, especially with our two late-stage clinical trials in Prader-Willi and Alzheimer's disease psychosis. I am still very excited by that. Finally, it was about a strong financial position, which Acadia has, along with a solid board and strong investors. These three things together made Acadia a very attractive and exciting option for me. I can tell you, six weeks in, I'm even more motivated and excited than I was when I first walked in the door here in San Diego. I'm very enthusiastic about the future and truly believe that this company has only to go from strength to strength.

Operator, Operator

And our next question comes from Sumant Kulkarni with Canaccord. Your line is open.

Sumant Kulkarni, Analyst

Good afternoon, thanks for taking my question. Another one on DAYBUE. Other than patients being at centers of excellence versus not, what's your understanding of the key bottleneck that may be preventing new patients from starting DAYBUE? What is the main variable you need to focus on to see an inflection in DAYBUE sales from current levels?

Catherine Owen-Adams, CEO

Thanks, Sumant. Very fair question. I’m going to let Brendan answer that.

Brendan Teehan, COO and Head of Commercial

Thanks so much for the question. We are focused entirely, once you get beyond centers of excellence and some of the academic centers on education around efficacy in the real-world setting. It’s a combination of focusing on physicians and explaining to them how the translation of CGII and RSBQ correlates with daily improvements that families are seeing. We’re doing this through a combination of peer-to-peer programming and having caregivers with longer-term successful experiences on DAYBUE talk about what they’ve been able to see in their loved ones over time. We have several programs that look at patients between the ages of 2-5, 5-10, preteens, teenagers, and patients over the age of 20 so that we can tailor our messaging to caregivers based on similar experiences they may see in loved ones who have already started DAYBUE. Those are our primary areas of focus: elucidating efficacy and what the clinical benefits can be for both of these audiences.

Operator, Operator

And the next question comes from Danielle Brill with Raymond James. Your line is open.

Unidentified Analyst, Analyst

Hey, guys. This is Alex on for Danielle. Thanks for taking the question. Continuation on DAYBUE patient numbers. Just curious about your level of effort to potentially getting patients who have tried DAYBUE and discontinued back on treatment given the ongoing learnings from real-world mitigation strategies to the adverse events. Thanks.

Catherine Owen-Adams, CEO

Great. Thank you, Alex. I’ll let Brendan answer that as well.

Brendan Teehan, COO and Head of Commercial

Sure. Great question. It’s important to realize that we stay in contact with every family, and as you know, there are some patients that will discontinue after just one or two fills due to tolerability challenges. With those families, we're checking to see their GI management experience and looking to further educate them on strategies around GI tolerability and engaging their HCPs to ensure they have a strategy in place. We are understanding more about their dosing and treatment journey because there could be alternate approaches where they could work to a dose that would be more effective. We will continue to focus on this over time, but thus far, up to now, the restarts of patients have been significantly less than 10% of our overall patient base.

Operator, Operator

And at this time, I would like to turn the call back over to Catherine Owen-Adams for closing remarks.

Catherine Owen-Adams, CEO

Great. Thank you, operator. Thanks again, everyone, for joining us today. I really appreciate the warm welcome you have given me into the Acadia community. We look forward to updating you further on our progress in the next quarter.

Operator, Operator

This does conclude today's call. Thank you so much for participating. You may now disconnect.