Earnings Call Transcript - ACAD Q2 2025

Operator, Operator

Good day, ladies and gentlemen, and welcome to the ACADIA Pharmaceuticals Conference Call. My name is Gerald, and I'll be your host for today. I would now like to turn the conference over to Al Kildani, Senior Vice President of Investor Relations and Corporate Communications at ACADIA. Please proceed.

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

Thank you. Good afternoon, and thank you for joining us on today's call to discuss ACADIA's second 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 commercial brands, DAYBUE and NUPLAZID. Also joining us today is Elizabeth Thompson, PhD, 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, which are available on our website's Events & 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 E. Owen Adams, CEO

Thank you, Al, and good afternoon, everyone. Our second quarter performance reinforces the momentum we're building across all facets of our business from commercial strength to our clinical pipeline and global expansion. We delivered total revenue of $264.6 million this quarter, driven by strong growth across our portfolio. This includes $96.1 million from DAYBUE with patient uptake continuing to grow for the second successive quarter and $168.5 million from NUPLAZID, bolstered by new patient starts and commercial execution. DAYBUE has now passed stabilization, moved into growth and is entering a new phase, expansion and acceleration. Our investments in patient support, community engagement and field expansion are starting to make a positive impact, as Tom will highlight in more detail. On NUPLAZID, we're encouraged by continued growth across all leading indicators, bolstered by recent litigation wins enforcing our intellectual property. These victories validate our long-term strategy and reinforce our ability to deliver NUPLAZID to patients through 2038. Our full year revenue guidance reflects this confidence. We are raising the low end of our NUPLAZID guidance based upon a foundation of disciplined execution and momentum delivered by our DTC campaign. We also hosted our first R&D Day, a milestone event that showcased our exciting and expanding pipeline, with 9 disclosed programs in development and 5 Phase II or Phase III data readouts expected through 2027. The excitement within ACADIA is palpable. Liz will walk you through that shortly. First, let's start with commercial. Over to Tom.

Thomas Andrew Garner, Chief Commercial Officer

Thanks, Catherine. Let's begin with DAYBUE. Q2 sales were $96.1 million, up 14% from a year ago. We observed steady progress across key performance metrics in the quarter. In Q2, 987 unique patients in the U.S. received paid shipments, increasing from 954 in Q1 and 920 in Q4 2024. The upward trend reflects encouraging signs of growth in both new patient starts and persistency. Long-term persistency remains a key strength for DAYBUE. Our 12-month persistency rate continues to exceed 50%, and we're now pleased to report that our 18-month persistency rate is above 45%. This trend reflects the growing and stable base of patients who remain on therapy over time. When we look at length of treatment among patients currently on therapy, 70% have been on treatment for at least 12 months, highlighting the sustained benefits that DAYBUE continues to deliver and the durability of our growing patient base. Notably, we're seeing more new prescriptions from the community setting, signaling progress in broadening reach beyond academic centers, which was a key element of our field force expansion, which is now complete. We finished hiring and training earlier this quarter, and we're already seeing encouraging signs that the new customer model is gaining traction. One of the most promising indicators in the second quarter is a meaningful uptick in our proportion of new referrals coming outside of Centers of Excellence, where a majority of Rett patients receive their primary treatment. Encouragingly, this increase was underpinned by a further increase in the number of new community-based writers for DAYBUE with 900 total HCPs now having written. Additionally, we launched a direct-to-consumer campaign for DAYBUE in July, and we are already seeing positive signs of early engagement from the Rett community. During Q2, we welcomed Allyson McMillan-Youngblood as Senior Vice President of our Rare Disease Franchise. Allyson brings a breadth of commercial experience across the U.S. biopharma business, including many launches. Her leadership will help to drive this critical business forward. As we look ahead with the expanded team now in place, we're continuing to execute against our strategy to drive long-term sustainable growth for DAYBUE. We expect this will translate into an increase in new patient starts towards the back end of the year. At the International Rett Syndrome Foundation meeting in June, our presence as a leader in the Rett therapy field was felt. As Liz will detail, we shared multiple compelling posters that add to the body of evidence for DAYBUE. Let's now turn our plans to trofinetide outside the U.S. In the EU, where the prevalent population is estimated to be between 9,000 to 12,000 Rett patients, named patient supply as requested by local HCPs is available through Clinigen. We've received requests from multiple countries and are continuing to support patients where regulatory frameworks allow. Named patient supply based upon HCP request is also in place in Israel through Rafa and in selective rest of world countries through FarmaMondo. Overall, we're pleased with the continued momentum of DAYBUE in the U.S. and with the global interest in trofinetide where we have already started serving patients through these programs. Now turning to NUPLAZID. Our commercial team delivered another strong quarter with revenue of $168.5 million, up 7% from a year ago, driven primarily by volume. We saw strength across all key metrics in Q2. Referrals were up 17% year-over-year, driven by continued momentum in our direct-to-consumer campaign. As a result, for the first time ever, both referrals and new prescriptions increased sequentially from Q1 to Q2. Another of the quarter's highlights was shipping the highest number of NUPLAZID bottles since launch, a strong indicator of growing demand as we continue educating both health care providers and patients with Parkinson's Disease Psychosis about the product's unique and differentiated profile. The DTC campaigns are doing exactly as we intended, sparking meaningful conversations with health care providers and reinforcing our commitment to educating caregivers about the symptoms of hallucinations and delusions related to Parkinson's disease. Visits to nuplazid.com have surged with a 17-fold increase in consumer traffic year-over-year, helping to drive more patients to speak with their physicians. To carry this momentum forward, we're pleased to extend our agreement with Ryan Reynolds and the More to Parkinson's campaign through February of 2026. The campaign continues to drive meaningful awareness of hallucinations and delusions in Parkinson's disease, and we believe a strong push through year-end is essential to build on that success. This quarter's NUPLAZID results reflect the strong executional focus of our field teams, coupled with the ongoing positive impact of our DTC efforts. Taken together, we expect to see sustained growth through the second half of the year and beyond. And with that, I'll hand it to Liz to review our pipeline progress.

Elizabeth H. Z. Thompson, Executive Vice President, Head of Research and Development

Thank you, Tom. Let me begin by revisiting the highlights from our inaugural R&D Day held in New York on June 25, where we showcased the strength and breadth of our pipeline. We were pleased with how the event came together, and I want to thank many of you on this call who were able to join us. While we had already disclosed all the programs on this chart, R&D Day gave us a great opportunity to provide more details, particularly for 2 newer molecules. The first is ACP-211, an orally administered, selectively deuterated form of R-norketamine, which we're developing for the potential treatment of major depressive disorder. Data to date support the potential for efficacy without significant sedation or dissociation, a profile we will continue to explore in Phase II and beyond. The second is ACP-271, a GPR88 agonist with potential applications in tardive dyskinesia and Huntington's disease. This is some of the most novel biology in our pipeline, and we believe it to be the first GPR88 agonist that will enter clinical trials. If you weren't able to participate in our R&D Day, I highly encourage you to visit our website, where you can access the webcast and the full set of presentation slides. The event was a clear demonstration of the momentum building across our pipeline. We're advancing with purpose and clarity, and the progress is tangible. Across our 9 disclosed programs, we anticipate initiating 7 Phase II or Phase III studies over the course of 2025 and 2026. Moreover, between 2025 and 2027, we expect 5 Phase II or Phase III readouts. These milestones underscore both the breadth of our pipeline and the strength of our R&D strategy. Specifically, we have several important trial initiations and data readouts on the horizon. In Q3 2025, we plan to initiate a Phase II study of ACP-204 in Lewy body dementia psychosis. Also in the third quarter, we expect to initiate our Phase III study of trofinetide in patients with Rett syndrome in Japan. In early Q4 2025, we expect to report top line results from the COMPASS PWS Phase III study of ACP-101 in Prader-Willi syndrome following the completion of enrollment in Q2. Also in Q4 2025, we anticipate initiating a Phase II study of ACP-211 in major depressive disorder. Wrapping up the year, we plan to begin a first-in-human study of ACP-271 in healthy volunteers before year-end. And finally, we also continue to progress through the review process with EMA for trofinetide with agency decision expected in the first quarter of 2026. In addition to these upcoming milestones, we continue to make meaningful contributions to the scientific literature for our marketed and pipeline products. The second quarter was a busy one for ACADIA-relevant medical meetings with major conferences for Rett syndrome, Prader-Willi syndrome and Alzheimer's. First, there were multiple DAYBUE-related presentations at the International Rett Syndrome Foundation meeting, continuing to expand the body of evidence describing DAYBUE's long-term impact in the Rett community. Several posters focused on caregiver-reported outcomes and real-world data, which importantly continue to align with what we have observed in clinical trials. Additionally, there were analyses evaluating treatment utilization in less commonly studied populations such as males and older patients. And finally, ACADIA shared an analysis of our clinical trial data suggesting that most patients who are going to benefit from DAYBUE show a response within 6 months, reinforcing our guidance to providers and caregivers. Together, these data points reflect a growing and maturing evidence base that continues to shape how DAYBUE is understood and used in the real world. In the pipeline, both ACP-101 and ACP-204 teams had important meetings in the quarter. In Prader-Willi syndrome, the end of June marked the United in Hope meeting, the joining together of 3 separate PWS organizations in a combined meeting. Those of you who tuned in to R&D Day will recall that our PWS panel, in part, was live from United in Hope. As we await data out of our Phase III trial, we nevertheless are contributing to the knowledge and understanding of PWS with posters about the experience of patients and families exploring comorbidities and the associated burden. In the Alzheimer's space, I'm also pleased to report multiple ACP-204 presentations at the Alzheimer's Association International Conference held last week in Toronto. This meeting represented a significant step in our public disclosure of detailed data from nonclinical and early-stage clinical studies supporting ACP-204's attainment to date of its desired profile. Presented data included the specificity for 5-HT2A and the supportive PK profile, indicating a faster time to steady state, support for daily dosing, the lack of QT prolongation and the ability to dose with and without food. We also shared clinical data, primarily focused on the 60-milligram dose across several Phase I trials with supportive safety and tolerability profiles to date, including in healthy elderly subjects. Collectively, the data provides support for the potential utility of ACP-204 and key aspects of its target profile. Lastly, I'll touch briefly on ACP-101, where we continue to expect top line results in early Q4. Just as a reminder, this is a 12-week placebo-controlled parallel group study. That design is important because, if successful, it would allow us to clearly describe for physicians and patients what to expect upon initiating therapy in a Prader-Willi syndrome patient population. Should the data be positive, we anticipate being in a position to file in the first quarter of 2026, and we continue to anticipate that this will qualify as a resubmission with the FDA with the associated shorter potential review clock with a potential PDUFA date in the third quarter of 2026. And now I'll pass over to Mark for a financial overview of the quarter.

Mark C. Schneyer, Chief Financial Officer

Thanks, Liz. Let's now review our second quarter 2025 financial results. The second quarter was strong across the board with $264.6 million in total revenues, up 9% year-over-year. Second quarter DAYBUE net product sales of $96.1 million represented 14% year-over-year growth, including 12% volume growth, primarily reflecting the increase in unique patients receiving shipments in the quarter. The DAYBUE gross to net adjustment for the quarter was 23.3%. Turning next to NUPLAZID. Second quarter net product sales were $168.5 million, up 7% year-over-year with 5% of that growth attributable to volume. The NUPLAZID gross to net adjustment for the quarter was 24.6%. R&D expenses were $78 million in the second quarter, up slightly from $76.2 million in the second quarter of 2024. SG&A expenses for the second quarter were $133.5 million, up from $117.1 million in the second quarter of 2024. The increase was primarily driven by increased expenditures for both DAYBUE and NUPLAZID in the U.S., including the planned expansion of the DAYBUE commercial team. We ended the quarter with a cash balance of $762 million, up from $681.6 million at the end of Q1 and $756 million at the end of 2024. Let's turn to our 2025 guidance. We are raising the low end of our NUPLAZID guidance range, reflecting the strength of the business and its performance to date. We now expect NUPLAZID net product sales for the year to be between $665 million and $690 million. This compares with our prior guidance range of $650 million to $690 million. Accordingly, we are also adjusting our U.S.-only total revenue guidance to reflect this change. As you can see on the slide, we are reiterating all other prior guidance ranges from our Q1 call. We're confident in our ability to execute against these targets and to continue creating value for patients and shareholders. I'd now like to hand it back to Catherine for closing remarks.

Catherine E. Owen Adams, CEO

Thanks, Mark. As you've heard, quarter 2 was a quarter of progress and momentum. Our teams are executing with urgency and precision, and we remain focused on accelerating DAYBUE's commercial trajectory, sustaining long-term growth and differentiation for NUPLAZID, advancing a deep pipeline through rigorous clinical development and continuing to build the pipeline through business development and expanding globally to reach more patients in need. The next major milestone is ACP-101's data readout in early Q4, and we're hopeful for what that could mean for families living with Prader-Willi syndrome. Thanks for joining today's call, and thank you for your continued support of ACADIA. And I'll now open it up for questions.

Operator, Operator

Our first question comes from Tess Romero from JPMorgan.

Tessa Thomas Romero, Analyst

So I actually wanted to ask about ACP-101 today. Liz, maybe could you orient us to the approach you plan to take with your top line? How much detail will you provide? And will this be more qualitative or quantitative in nature? And are there any secondary or other endpoints that you will think will matter beyond HQCT? And then as a follow-up, where are you really most focused from a clinical trial conduct perspective to manage any key risks?

Elizabeth H. Z. Thompson, Executive Vice President, Head of Research and Development

Thank you, Tess. That's a great question. Our main focus regarding our approach to the top line and the trial itself is primarily on the main endpoint and achieving success there. We will also look at our secondary endpoints, which include clinician assessments and a responder benchmark for the HQCT. When we make our announcement, you can expect a focus on the primary endpoint along with an overview of safety and tolerability. In terms of clinical trial conduct, we have been diligently monitoring how the assessments are being conducted and ensuring that any variability remains within our expected ranges. These are the key areas we have been concentrating on to maintain consistent behavior across the sites.

Operator, Operator

Our next question comes from Ritu Baral from TD Cowen.

Ritu Subhalaksmi Baral, Analyst

I wanted to talk a little bit or ask a little bit about the new momentum in DAYBUE. Could you tell us what percentage of patients or new patients specifically came from the community setting? And you mentioned the new number of 900 HCP writers. What percentage or at least movement of those writers were in the community setting on a quantitative basis? And then I have a Prader- Willi follow-up as well.

Catherine E. Owen Adams, CEO

Thanks, Ritu. We'll take the DAYBUE question first. I'll ask Tom to give you some more details on that.

Thomas Andrew Garner, Chief Commercial Officer

In response to your first question about the impact of our increased sales force, which went live in May, we are still in the early stages of measuring its effects, but we are encouraged by the initial results. During the quarter, referrals from our non-COE accounts rose to approximately three-quarters of our total referrals, which is an increase from about two-thirds in the previous quarter. This demonstrates progress in reaching the large patient population outside our COE centers, which account for roughly 65% of our patients. Regarding your second question about new writers in Q2, most of these new writers were also outside of the COEs. This rise in penetration suggests that our new model is starting to show positive results.

Catherine E. Owen Adams, CEO

Thanks, Tom. Do you want to ask your 101 question, Ritu?

Ritu Subhalaksmi Baral, Analyst

Yes. And just mopping up after Tessa's questions, can you talk to how the conduct, specifically dropouts of the Phase III Prader-Willi have gone? Are they within expectations? And are all the DSMB looks for the trial completed and if the SAP has been finalized with FDA?

Elizabeth H. Z. Thompson, Executive Vice President, Head of Research and Development

So I'm not going to comment on data from a currently ongoing trial aside from to say that, generally speaking, we are continuing to see this trial unfolding in an acceptable way. But obviously, it's blinded, and I'm not going to comment any further on that at this point. We do have an SAP in place. I do consider that we have the right to continue to modify until before we unblind the trial, but we do have our planned analyses established at this point.

Operator, Operator

Our next question comes from Sean Laaman from Morgan Stanley.

Michael H. Riad, Analyst

This is Mike Riad on for Sean. Congratulations on the quarter. So thinking about DAYBUE, the 987 new patient adds suggest a good steady growth rate quarter-over-quarter. How should we be thinking about this trajectory? Given the relatively lower prevalence, is it reasonable to expect that this would ever accelerate and doesn't need to? Or how should we be just thinking about that trajectory?

Thomas Andrew Garner, Chief Commercial Officer

So it's Tom here. I'll take that one. Thank you for the question. So we're pleased with the steady growth that we've seen over the last 3 quarters. I think as we mentioned in the call, if you look at Q4, we had around 920 patients. That increased to close to 954 in Q1, and we're pleased with the continued growth that we saw through Q2 with 987 active patients on therapy. Obviously, the plan that we have moving forward is that, that will continue to accelerate as we see the impact of our new customer model. And our goal is to make sure that we have more new patient starts continuing week-over-week and month-over-month and quarter-over-quarter. And I think now we have this very stable and growing group of persistent patients, many of whom have now been on treatment for 12 months or longer, I think gives us a real sense that we can really continue to grow this brand and take it to new heights.

Operator, Operator

Our next question comes from Jason Butler from Citizens JMP.

Jason Nicholas Butler, Analyst

Just one on NUPLAZID. Given that you're seeing a return on investment on, for example, DTC activities and now that you have the greater visibility with intellectual property, are there more investments or longer-term investments that you're considering for the franchise?

Catherine E. Owen Adams, CEO

Jason, thanks for the question. I think as we think about our strategy with NUPLAZID, I encourage us to sort of bifurcate the commercial strategy that we're putting in place now with the longer-term ability to now maximize the brand. So direct-to-consumer decisions that we're making are sort of relative to the 2038 shorter term. We're seeing impact from the DTC. We would have continued to invest regardless of the outcome of the IP trial because it has strong momentum for the next sort of 2 to 3 years potentially depending on how long we continue to invest. Beyond that now, what we have been able to do is think about the longer-term strategy for NUPLAZID. I'm looking forward to sharing a little bit more about that as we head towards the back end of the year in terms of how we now think about the investment longer term. But for right now, the DTC campaign is certainly paying dividends, as you point out, and we're excited about the continued momentum. And indeed, in terms of the More to Parkinson's campaign and raising awareness of hallucinations and delusions, we're delighted that Ryan Reynolds has agreed to continue supporting that campaign because we believe that's been one of the main drivers of increased awareness. And once the caregiver is aware, they're encouraged to go in and talk to their doctors. So it's been a very strong impact on caregivers, and we're excited to continue that.

Operator, Operator

Our next question comes from Brian Abrahams from RBC Capital Markets.

Brian Corey Abrahams, Analyst

Congrats on the quarter. Just 2 for me, I guess, just both on DAYBUE. As you've expanded the sales force, can you talk a little bit more, I guess, qualitatively around your learnings from the Rett patients outside of the Centers of Excellence just in terms of physician receptivity, number of prescriptions per physician, any early persistent signals and how well educated the docs are around the titration? And then can you also maybe talk about any hints of changes you may be seeing in overall DAYBUE persistence, both quarter-over-quarter and bigger picture trends and just how much the education around AE management and the efficacy message and importance of staying on therapy is resonating?

Catherine E. Owen Adams, CEO

Thanks, Brian. I'll let Tom come up with his thoughts on that.

Thomas Andrew Garner, Chief Commercial Officer

Yes, thank you for the question. We have learned quite a bit as we have expanded beyond the centers of excellence. One key takeaway is that there is a clear interest in DAYBUE outside of these centers. We recognize that there are doctors treating Rett patients who may not have been reached yet, and they need ongoing education to fully understand the product and how to use it effectively. We are leveraging our complete system to educate all these prescribers as quickly as we can. One aspect to keep in mind while modeling is that the buying process and the number of calls could take a bit longer for this group of prescribers compared to those at the centers of excellence, simply because they encounter Rett patients less frequently. Regarding persistency, we are very pleased with what we are observing. As I mentioned earlier, the 12-month persistency remains well above 50%. Furthermore, our 18-month persistency, while still developing, is already over 45%. This indicates that we have reached a stable level as we look at the long-term prospects for the product. With the increasing number of patients now undergoing treatment, we are confident that we can continue to elevate DAYBUE as we welcome new patients.

Operator, Operator

Our next question comes from Ami Fadia from Needham & Company.

Ami Fadia, Analyst

I have 2 quick ones. Firstly, just with regards to NUPLAZID, it continues to remain really strong with the number of shipped bottles that you mentioned. Can you give us some sense of what's driving the strength and maybe give us some color around where the growth is coming from across channels? And then with regards to DAYBUE, as you see increased adoption outside the COE setting, can you give us a sense of what you saw in your open-label study in terms of persistency out at 12 or 18 months in regards to patients that are being treated outside the COE setting, if you have that?

Catherine E. Owen Adams, CEO

Ami, thanks. I'm going to let Tom answer both of those and Liz maybe in terms of the longer term in the trial. But Tom?

Thomas Andrew Garner, Chief Commercial Officer

In terms of NUPLAZID, we are experiencing a positive increase in referrals, new prescriptions, and ongoing total prescription volume. Looking at the second quarter and the impact we observed, we were happy to see that our new prescription volume was consistent across all channels. We noted increases in both community settings and long-term care settings. Most of our patients are in the community, with a segment in long-term care, and we see continued strength across the diverse patient base we serve for NUPLAZID. We are very encouraged by this ongoing growth as we head into the second half of the year. Regarding DAYBUE and the real-world data, recent publications, including one at the IRSF, indicated a 40% persistence rate over 18 months. The latest data now shows a 45% persistence rate at the same timeframe, which aligns well with our clinical study findings. We believe this indicates the drug is performing as expected in practice, and we do not anticipate any significant deviation from the stable plateau we are currently experiencing.

Elizabeth H. Z. Thompson, Executive Vice President, Head of Research and Development

Thanks, Tom. In our actual clinical trial experience, we have about 9 months of data that can be considered reliable from a persistency viewpoint because, towards the end of the open-label extension, some patients transitioned to a marketed drug and exited the program. After examining that 9-month experience, we found a persistency rate of around 45%. What we continuously observe is that the real-world persistency appears to be somewhat better than what's been reported in the clinical trials.

Operator, Operator

Our next question comes from Marc Goodman from Leerink.

Marc Harold Goodman, Analyst

Can you talk about discontinuations for DAYBUE and what you saw in the quarter? And was there any inventory changes that were of any significance for either product?

Catherine E. Owen Adams, CEO

Thanks, Marc. I'll let Tom talk to that.

Thomas Andrew Garner, Chief Commercial Officer

Yes. We were pleased to have another quarter where discontinuations stayed below 10%. As you consider discontinuations within the broader context of DAYBUE, we have a stable and growing group of active patients, with relatively low discontinuation rates. This indicates that we have a solid understanding of the product profile, how to engage with the patient community, and a strong focus on the product's efficacy, which continues to improve thanks to the efforts of Liz and her team. We feel optimistic about the future direction of DAYBUE overall. I'll let Mark address the second question.

Mark C. Schneyer, Chief Financial Officer

Thanks for the question. Yes, there's nothing to report on in-channel inventory. NUPLAZID is consistent quarter-over-quarter. And then just as a reminder, that concept really doesn't exist for DAYBUE as our single specialty pharmacy really only takes control of the inventory for a brief moment before it goes directly to patients. So the DAYBUE model has always been really a sell-through model.

Marc Harold Goodman, Analyst

Fair enough. Mark, can you also comment on just the tax rate and how to think about it this year and going forward?

Mark C. Schneyer, Chief Financial Officer

Yes. Our book tax rate year-over-year is a bit higher because, under GAAP accounting, we can't account for all the credits and net operating losses we're actually using. For modeling purposes, our cash tax rate is currently in the mid-teens range. Long term, we expect it to move towards the mid-20s, not considering anything for OB3, which will start to be implemented next quarter. Additionally, we have about $400 million in U.S.-based R&D expenses that have been capitalized, which will allow for some accelerated expensing for U.S. tax purposes in the near term. Consequently, our tax rate is expected to decrease in the next year or two.

Catherine E. Owen Adams, CEO

OB3 is our internal vernacular for One Big Beautiful Bill just in case.

Operator, Operator

Our next question comes from Ash Verma from UBS.

Ashwani Verma, Analyst

So for NUPLAZID, I know like you've outlined that this is a largely Medicare patient population. Roughly by when do you think that it will be eligible for IRA price negotiation and implementation? And then secondly on the ACP-101, I wanted to ask like is it the same formulation from Ferring that required refrigeration? And do you think that could potentially become a hindrance at all in terms of thrice daily administration for this patient population? And then is there a plan for a room temperature stable variant here?

Catherine E. Owen Adams, CEO

Thanks, Ash. I'm going to let Mark answer the IRA question and then Liz on 101. And some of that was a little bit unclear. You broke up for a little bit, so you might have to just say your 101 question again for Liz so she can make sure she answers it correctly. But let's start with the IRA.

Mark C. Schneyer, Chief Financial Officer

Yes. In terms of potential timing for negotiation under the IRA, 2029 will be the first year that NUPLAZID is eligible for negotiation unless there's changes in the legislation like getting rid of the pill penalty. That's probably the year we anticipate we'd potentially be subject to negotiation. Just to remind you, as a small company, we have a limit on the discount we have to offer. It's in the range of 25% to 34% as outlined in the legislation. And then after that would be subject to negotiation like any other drug. From our standpoint, just due to the launch timing of NUPLAZID, if the pill penalty is removed, that could add another year before negotiation would likely be expected.

Catherine E. Owen Adams, CEO

Right. And the small company is for 2 years, right, 2 years...

Elizabeth H. Z. Thompson, Executive Vice President, Head of Research and Development

And with respect to ACP-101 and the question there, and then obviously tell me if there's anything that I didn't catch about your question that I neglect here. But we are using the same formulation as Levo used. An important thing to remember is that part of what we're doing here is a resubmission to the complete response letter. And so the intent is to provide the new information that FDA requires, which is an additional study to demonstrate efficacy while changing as few things as possible about the overall initial presentation. We have seen that to be acceptable and usable in our clinical trials and have not found it to be a concern. In terms of your question about next generation, we're always considering whether there are things that we can do to our products to make them more patient-friendly. And so I anticipate that we'll be thinking about that for 101 as well as we do for other things.

Operator, Operator

Our next question comes from David Hoang from Deutsche Bank.

David Timothy Hoang, Analyst

Congrats on the quarter. I just wanted to ask on ACP-101. Can you comment or say anything on the, I guess, open label extension for the Phase III study, like what you're seeing in terms of rollover rate? And would you ever consider adding a randomized withdrawal portion to the plan that I think was used by a competitor with improved product in the market to get that product approved?

Elizabeth H. Z. Thompson, Executive Vice President, Head of Research and Development

Thank you for your questions. To start with the open-label extension, I won't provide specific details at this time, but we have observed generally positive interest in our open-label extension and are continuing to gather information on patients who are enrolling. Regarding the randomized withdrawal, that's an intriguing question. Currently, we are focused on the results of our parallel arm study, with data expected in early Q4. We believe that if the results are favorable, it will clearly demonstrate to regulators, physicians, and patients what they can expect upon starting therapy. A randomized withdrawal study might be something we consider in the future, but for now, the parallel group study we are conducting is our primary focus, and we are looking forward to the data.

Operator, Operator

Our next question comes from Uy Ear from Mizuho.

Leo Gene Watson, Analyst

This is Leo on for Uy, and congrats on the quarter. For each of your brands, NUPLAZID and DAYBUE, what is the right way for us to be thinking about 2026 from a growth perspective? What are the key factors and drivers we should be thinking about? And maybe on the heels of the recent R&D Day, excitement is clearly growing in the pipeline. Which pipeline programs is the team most excited about?

Catherine E. Owen Adams, CEO

Thanks, Leo. I'm going to ask Tom to comment on how to think about growth in '26 for both brands and then Liz to tell us which is her favorite child in her pipeline.

Thomas Andrew Garner, Chief Commercial Officer

Yes. Thanks for the question. So let me start with DAYBUE. So as we've mentioned during the call, we've seen very nice continued growth for the last 3 quarters in terms of active patients. We do anticipate through the second half of the year that the rate that we are growing that number will accelerate as we see the impact of our new field force model really begin to pull through. As a reminder, our penetration rate in general across the entire Rett community remains kind of in the low 30%. So we've still got a significant opportunity here for this brand to continue to grow, and that's our goal through 2026 and beyond, is to really make sure that we engage with the Rett patient community in the right way. We really meet patients where they are, which is what we are doing with our new customer model. And we can really make sure that we take DAYBUE to the height that we know it can be. So that's our goal for '26. So it's really a story of continued and we plan for accelerating growth through the year. As it relates to NUPLAZID, it's a similar story in a way. I think we've seen this year and this quarter, in particular, some very nice numbers in terms of leading metrics. The team in the field continue to execute very well. Our campaigns are working for us very well and are giving us a nice tailwind as we think about the second half of this year. And we believe that, that sets us very nicely up for 2026. So I think the outlook for both brands from a commercial point of view is one of strength, and we really look forward to really capitalizing on that as we head into 2026.

Elizabeth H. Z. Thompson, Executive Vice President, Head of Research and Development

I love that Catherine teed this up as my favorite child because what I was going to say is I would never say who my favorite child is. I think that across our pipeline, we have a nice mix of assets that are relatively derisked from a mechanistic perspective, things like ACP-204, where we are following in learnings that we have from NUPLAZID as well as some areas of really novel biology like ACP-271. I think that we are excited about the fact that we've got a number of different ways we could potentially serve patients living with rare and neurological diseases. So there's a lot in our pipeline that we're very enthused about, and I'm not going to pick a favorite child today.

Catherine E. Owen Adams, CEO

Maybe I'll just come on top of that with, I think, what was exciting for us at R&D Day was to be able to share our expectations on the market opportunity that these brands, these new brands potentially, if approved, offer to ACADIA in terms of potential expansion. And we shared at R&D Day that we believe all 5 of the new products could hit blockbuster potential. We believe 3 of them have the ability to achieve over $2 billion should they be successfully approved. So we're moving into bigger markets with still high unmet medical need, and we're excited to continue to focus our development on really differentiated assets and ensuring that we're developing a pipeline of valuable innovation that patients from those underserved communities will really feel adds to their opportunity to see more memorable moments with their families. So we're excited for that.

Operator, Operator

Our next question comes from Tazeen Ahmad from Bank of America.

Tazeen Ahmad, Analyst

I wanted to inquire if the study for Lewy body dementia has commenced. I believe your guidance indicated it was expected to start soon, possibly this quarter. Additionally, I would like your insights on the ADP data that is anticipated in the middle of next year. If the results are positive, what is your perspective on the chances of the Lewy body study being successful, considering that the company previously examined Lewy body in a study with pima a few years back?

Elizabeth H. Z. Thompson, Executive Vice President, Head of Research and Development

Okay. The first easy one, which is we do continue to anticipate that the Lewy body study will get started this quarter, so hasn't gotten the first patient randomized yet, but we are confident we'll get it in the quarter. In terms of ADP and potential for read-through, I guess what I'll say is that I think that the data, while limited in terms of its numbers that we have from NUPLAZID, is pretty supportive of Lewy body. Again, there's a relatively small number of patients in that study, but roughly 20 patients in the active arm and 20 patients in the placebo arm, and there was a marked difference in relapse rate of patients on placebo versus patients who continued on drug. So I think we have some good reason to believe just based on the existing NUPLAZID data set. A positive ADP data set is certainly going to make me feel better, in particular, because that gives you clear evidence that this particular molecule is active, though we, of course, expect it to be based on all the nonclinical and Phase I work that we've done to date. So certainly, we are anticipating that ADP readout with a great deal of anticipation and feel good about Lewy body and its potential for success.

Operator, Operator

Our next question comes from Sumant Kulkarni from Canaccord.

Sumant Satchidanand Kulkarni, Analyst

Nice to see the progress this quarter. Could you give us some specifics on how ACP-2591 fits into your plans for Rett syndrome relative to your current efforts with DAYBUE?

Catherine E. Owen Adams, CEO

Thanks for the question. We haven't had a 2591 question for a while, so I'll let Liz answer that.

Elizabeth H. Z. Thompson, Executive Vice President, Head of Research and Development

Yes, when we consider ACP-2591, we were initially drawn to the program due to its mechanistic similarities to DAYBUE, which reduces some risks and suggests a potential difference in how it penetrates the brain. This could lead to a different benefit/risk profile. However, we need to see how this plays out in Rett patients to determine how we might use it alongside DAYBUE. Currently, we are conducting additional work to confirm the necessary information for Rett, and I look forward to sharing more updates at the right time.

Operator, Operator

Our next question comes from Salveen Richter from Goldman Sachs.

Salveen Jaswal Richter, Analyst

For PWS here beyond HQCT and CGI-S and CGI-C, do you plan to evaluate functional endpoints such as hyperglycemia control and weight loss in the Phase III trial? And what would be a clinically meaningful bar for success in this study?

Elizabeth H. Z. Thompson, Executive Vice President, Head of Research and Development

I would be very pleased if the results of this study are similar to the effect seen with the 3.2 milligram dose in the previous study. We are confident that this will represent a significant change, based on our own insights as well as conversations with physicians and patient advocacy groups. We believe that this would indicate meaningful progress. Regarding waist circumference, it is not something we are specifically targeting. We recognize that the situation is complex, involving the disease itself and the strategies that families use to manage their children's dietary access. Therefore, it has not been a focal point for us. Our primary focus will be on monitoring adverse events and blood profiles, and based on the previous study's data, we do not expect routine monitoring to be necessary. However, this will depend on the data we obtain from the current study.

Operator, Operator

Our next question comes from Yatin Suneja from Guggenheim.

Yatin Suneja, Analyst

Question is on 204, ACP-204. Could you just comment on the pharmacology that you think is better addressed with this molecule, which was not addressed with NUPLAZID, specifically as it relates to this ADP population? Just trying to get a sense in terms of how the setup is or how different the setup is into this ADP readout versus the DRP study that's ran with NUPLAZID.

Elizabeth H. Z. Thompson, Executive Vice President, Head of Research and Development

Thank you for the question. When I consider the differences with 204, they can be categorized into two main areas: molecular differences and program design differences. Both of these factors are important for what we expect to observe from the ADP study. Regarding the molecular aspects, it's worth noting that NUPLAZID does have QT prolongation, which, while not significant or clinically impactful, is something to consider in elderly and frail patients. This also limited our ability to range the dose. We've observed that differences in exposure response indicate that higher exposure levels may correlate with greater efficacy. This gives us increasing confidence in 204 within our ADP program. On the program design side, one major takeaway from our previous experiences is the need to have a program that focuses specifically on the disease being studied. I won't delve into the entire history of DRP, but that was a significant challenge. The ADP program we have designed specifically targets a more severe patient population in terms of psychosis, which has shown a better response, and we're actively confirming this with biomarkers. Considering these factors, we believe we have established a solid foundation for ACP-204 to demonstrate its potential, and we have good reasons to expect it may be more successful.

Operator, Operator

Our next question comes from Malcolm Hoffman from BMO Capital.

Malcolm Hoffman, Analyst

Back to DAYBUE. I noticed an improvement in the percent of active patients who have been on therapy for 12 months or longer from 65% to 70% this quarter. Can you just expand on this a little bit further? Is this more a factor again of just providers handling treatment, becoming more comfortable with the GI profile and how to manage it over time? Just would appreciate any color there.

Thomas Andrew Garner, Chief Commercial Officer

Yes, I'll address that question. Thank you. There are several factors at play. As I mentioned earlier, we are gaining more insight into the product as we progress. We are actively educating both the patient community and the caregivers, as well as healthcare professionals, on how to utilize the product effectively. When we examine the overall usage, our percentage to dose remains around 70%, which indicates that our user base is becoming more comfortable with titration. Over time, as they recognize the benefits of the product and we emphasize its efficacy, there's potential for further growth with DAYBUE in the long run. This reflects a continuous journey of knowledge. We are committed to educating properly and ensuring that all insights from our centers of excellence are shared within the community. This effort is supported by our updated customer model and strategy as we look ahead with DAYBUE.

Catherine E. Owen Adams, CEO

And I think just finally, the persistency that we continue to see sort of amplifies that. So the 65% to 70% is really a recognition of everything that Tom has just talked to, just a much more stable base than we were a quarter ago and then we were a year ago. So again, lots of steadiness and now we're driving the momentum into DAYBUE. Thank you for the question.

Operator, Operator

Our final question comes from Paul Matteis from Stifel.

Julian Hung, Analyst

This is Julian on for Paul. Congrats on the progress. I just want to circle back to something that was mentioned earlier in the Q&A about the SAP for ACP-101 and how you guys "retain the right to modify" SAP while you remain blinded. Just curious what types of modifications could potentially qualify or could be sort of in the realm of possibilities. Just curious if you could expand on that. And I have one quick follow-up as well on DAYBUE.

Elizabeth H. Z. Thompson, Executive Vice President, Head of Research and Development

Yes. No planned modifications. I purely meant that as just from a practical point of view, until you have unblinded your database, you can consider your SAP subject to the possibility to change. But no, there are no planned modifications.

Julian Hung, Analyst

Got it. That's helpful. And then on DAYBUE, it just sounds like things are going well. You're starting to see increased scripts in the community in addition to higher persistence or I guess, greater line of sight to the persistence of your patient population. I guess just thinking about the second half of the year, you've sort of messaged how you expect to see greater growth. Why the decision to not narrow guidance this quarter? It just seems like you'd kind of easily hit if you continue to add the patients that you have this year. Just curious if that's being conservative out of sake for being conservative or if there's anything else to that.

Mark C. Schneyer, Chief Financial Officer

Yes, I wouldn't place too much emphasis on the guidance. The reason we adjusted NUPLAZID is that we began the year with a wider range than usual, primarily due to uncertainties surrounding the Medicare Part D redesign. By mid-year, we felt that the NUPLAZID range was too broad. As for the other ranges, including DAYBUE, we decided to leave them as they are and will consider adjustments in the third quarter, which is typically the right time to start narrowing them down.

Catherine E. Owen Adams, CEO

Thanks, everybody, for the questions, and thank you, operator. We really appreciate everybody joining us today, and we look forward to updating you on our progress next quarter.

Operator, Operator

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