Good day, ladies and gentlemen, and welcome to the ACADIA Pharmaceuticals' Second Quarter 2018 Financial Results Conference Call. My name is Krista, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's call. [Operator Instructions] I would now like to turn the presentation over to Elena Ridloff, Senior Vice President of Investor Relations at ACADIA. Please proceed.

Thank you, Krista. Good afternoon, and thank you for joining us on today's call to discuss ACADIA's second quarter 2018 financial results. Joining me on the call today from ACADIA are Steve Davis, our President and Chief Executive Officer; Todd Young, our Chief Financial Officer; Michael Yang, our Chief Commercial Officer; and Dr. Serge Stankovic, our Head of Research and Development. I would also like to point out that this quarter we are using supplemental slides, which are available in the Events and Presentation section of our website. Unfortunately, we are having technical issues with the webcast, we apologize. We will have a webcast replay available at a later time. Before we proceed, I would like to remind you that during our call today, we will be making a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements includes goals, expectations, plans, prospects, gross potentials, timing of events or future results are based on current information, assumptions and expectations that are inherently subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially. These factors and other risks associated with our business can be found in our filings made with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which are made only as of today's date. I'll now turn the call over to Steve Davis, our President and Chief Executive Officer.

Thank you, Elena. Good afternoon everyone and thank you for joining us today. On today's call, I'll provide an overview of our performance in the second quarter, updates on NUPLAZID, and perspectives on the pipeline opportunities we see ahead. Following my remarks, Serge will discuss our pipeline progress, Michael will provide updates on our commercial initiatives, and Todd will review your second quarter financial results. We'll then open up the call for questions. Starting with our financial results revenue for the second quarter was $57 million, sequential revenue growth was 17% and sequential volume growth in the quarter was 3%. When we spoke in May, we discussed our focused efforts to address the dishing questions resulting from Two April CNN articles. At that time, I stated that while feedback from physicians indicated our messaging regarding the safety profile of NUPLAZID was well understood, things may be bumpy as we work through the impact of the articles. Ensuring the accuracy of information surrounding NUPLAZID and driving overall brand awareness has continued to be a key priority for us in the quarter. In the second quarter, we did see an impact to growth resulting from the CNN articles. To expand on this and put it into context, we entered 2018 with significant positive momentum. In the first quarter of the year, we saw a significant increases in the daily rate of patient starts while maintaining very stable refill rates. This positive momentum was a result of work we did in the second half of 2017 to optimize our cells operations in the Q4 2017 initiation of out DTC, disease awareness campaign. In the second quarter following the CNN articles, we saw the impact on new patient starts. Importantly, over the last eight weeks we've seen stabilization of this key demand metric. In…

Thank you, Steve. NUPLAZID, the only medication approved in the United States for treatment of hallucinations and delusions associated with Parkinson disease like causes addresses an important and previously unmet need. NUPLAZID was approved based on the pivotal Phase 3 study that demonstrated clinically robust and highly statistically significant efficacy along with supported data from other clinical studies. NUPLAZID provided the efficacy benefit without interfering with moderate symptoms of Parkinson's disease. As we announced in late June, we have received FDA approval of a new dosing formulation and strength for NUPLAZID to provide the approved daily dose in one small 34 milligram capsule and make available a 10-milligram tablet to provide patients with an optimized lower dose strength for those who are also receiving strong PA4 [ph] inhibitor. There has been multiple reason, presentation and publications highlighting demands [ph] in safety and efficacy. Also note, in May NUPLAZID was included in a presentation by the FDA division of psychiatric products at the American Society of Clinical Psychopharmacology. In this presentation entitled, The Benefit Determination for Treatments of Behavioral and Psychological Symptoms of Dementia, the FDA highlight pimavanserin as an example of how they make risk decisions in areas of unmet medical needs. In the presentation, the FDA also reiterated it's previous statement about the safety and efficacy of NUPLAZID. This conference brings together more than 1,200 academic and industry investigators, research pharmacist and juniors [ph]. Turning to our clinic-stage programs; we are advancing four late-stage development programs with pimavanserin where there are either no approved treatments or there is a strong need for treatment options. I will now provide a brief update on each of these studies. First; we have completed enrollment in our Phase 2 CLARITY studying major depressive disorder and anticipate release of top line results from the…

Thank you, Serge. The field team is working hard to ensure that physicians understand the safety and efficacy data contained within NUPLAZID label and we will continue to focus on increasing education and awareness of PD psychosis with patients and caregivers in the community. As we said before, Parkinson's Disease Psychosis is a serious condition. A recent survey conducted by the Parkinson's and Movement Disorder Alliance showed that 90% of the respondents experienced non-movement symptoms and 84% reported the base symptoms and had negative impact on their quality of life. And almost half with non-movement symptoms had more challenging to live with then movements symptoms. Last quarter, we discussed our actions to address physician questions resulting from an April CNN article. We need engagement physicians and industry experts to communicate from safety and efficacy profile. Based on the prescribing data, we're confident that most physicians appreciate and understand NUPLAZID's unique profile as the first and only treatment approved for Parkinson's Disease psychosis. However, we still have more work to do with the Parkinson's disease community mainly patients and caregivers. We cannot allow lack of disease awareness or misinformation about the availability of an NDA approved and effective treatment for PD Psychosis hinder patients from seeking and getting the care, they need to treat their symptoms. We are executing on multiple initiatives which I will just touch in detail shortly. This quarter we are providing several metrics on a temporary basis to share current business trends. As you can see on slide 17, in the specialty pharmacy channel which represents two-thirds of our revenues. The top of the slide shows a graph which Steve mentioned is our most important driver of growth which is new patients starts. In the fourth quarter of last year, we optimized our commercial strategy and initiated…

Thank you, Michael. Today I'll discuss our Q2 results and our financial outlook. Our first half financial results are available in the press release we issued this afternoon. In the second quarter of 2018 we recorded $57.1 million in net sales an increase of $26.6 million or 87% growth compared to $30.5 million in net sales in the second quarter of 2017. Compared to Q1 of this year, Q2 net sales grew $8.2 million was approximately 17%. The gross to net discount rate for Q2 was approximately 30% compared to approximately 24% in Q1. This quarterly decrease in the discount rate was anticipated as the Medicare Part D billable obligation for our established patient pace is mostly incurred in the first quarter of the year. Our inventory channel of Q2 was unchanged from Q1. Moving down the P&L. Total operating expense including cost of goods sold were $121.1 million in the second quarter of 2018 compared to $98.5 million for the same period in 2017. These amounts included $20.6 million and $18.2 million of non-cash stock-based compensation expense respectively. R&D expenses increased to $46.6 million in the second quarter of 2018 from $34.2 million in Q2 2017. This change was driven by increasing enrolments across all of our clinical studies. We also made additional R&D investments to bring the 34 milligrams capsule and 10 milligram tablets market. As C&A expenses increased to $69.5 million in Q2 2018 from $61.1 million in the second quarter of last year. This increase was primarily related to our direct-to-consumer disease awareness campaign. Turning to revenue guidance. We expect NUPLAZID net sales for the third quarter to be $52 million to $59 million with a gross to net discount of approximately 13%. For the full year, we are reducing our 2018 revenue guidance to $210 million to $225 million versus the prior range of $255 million to $270 million. This reduction results from the softness we saw in new patients started on NUPLAZID during Q2 which impacts revenue for the remainder of the year. As Michael discussed, new patient starts have stabilized over the last eight weeks and we are deploying numerous initiatives to catalyze growth. On the expense side for Q3, we expect R&D expenses to be in the mid $50 million which includes the $10 million upfront licensing fee for trofinetide and the initial R&D investments associated with its development. SG&A expenses for Q3 are expected to be approximately $70 million. Turning to cash, our net operating cash flow for Q2 was approximately $41 million compared to approximately $59 million in the second quarter of 2017. We had the second quarter of 2018 with $259 million in cash and investments on our balance sheet. We anticipate that our cash balance at the end of this year will be between $155 million and $170 million. And with that, I'll turn the call back over the Steve.

Thank you, Todd. We made important progress during the quarter despite the near-term challenges and we remain steadfast in our commitment to the safe and effective use of NUPLAZID. And delivering on our key priorities by increasing accessibility of important information about NUPLAZID to the Parkinson's disease community for keeping patients and caregivers. By executing on the 34 milligrams capsule launch, by driving overall brand awareness and growth in new patient starts to deliver on the long-term opportunity for NUPLAZID and PDP and by advancing knowledge to this clinical program and areas that have significant unmet need including major depressive disorder, dementia-related psychosis, schizophrenia and now Rett syndrome. As always, we appreciate the dedication and hard work of all of our employees who are committed to improving the lives of patients and caregivers with C&S orders. Operator, I'll now open up the call for questions.

[Operator Instructions] Your first question comes from the line of Cory Kasimov from JP Morgan. Please go ahead. Your line is open.

Hi, good afternoon guys. Thank you for taking my questions. I guess first one for you is with regards to the 2018 guidance. Does this updated guidance assume any price increases and along those lines given that the revised guidance for the second half is basically flat to up maybe as much as I think it's 12% over the first half? How do investors get comfortable with the growth outlook in 2019 and beyond for PDP? And then I have a follow-up.

Great. Thank you. Thanks Cory. I'm going to take the first question as Michael is going to take the second. So, in terms of price increase the guidance for the remainder of the year does not assume a price increase. We had assumed a price increase consistent with standard pharmaceutical practices in the earlier guidance we gave this year. But the current guidance does not include it. Michael, you want to take the second question?

Hi Cory. Our expectations for the opportunity in PDP hasn't really changed. As you know PDP is a very serious disease and we are a relatively underpenetrated opportunity right now. So, as we stabilize to the balance of this year, we'll begin to kind of formulate what we think 2019 can add to with the various market dynamic. It's a little too early to call that right now.

Okay. And then the follow-up is probably for Serge. You commented on the ongoing trails you have with pimavanserin, but I'm curious on whether or not there has been an impact on the pace of enrollment in the ongoing studies especially the DRP1 on the heels of these CNN articles. Have they noticeably slowed at all?

Thanks for the question. The answer is no. We acutely are doing quite well and within - within or above expectations and plans for our DRP recruitment and we did not expect any slowdown in any of the studies as related to the CNN article.

Your next question comes from the line of Tazeen Ahmad from Bank of America Merrill Lynch.

Hi good afternoon guys. Thanks for taking my questions. A couple from me, so Steve you talked about you know the raw sense of some new patients to want to start therapy. At what point did you see that? Was that immediately following the CNN article, or was there a delayed effect and I don't know if you have any way of tracking those, but in terms of - I mean you've talked about it stabilizing now, but in terms of did you notice a rise and then a peak and then a drop off or is it more of stabilization now, and I guess how are you comfortable that the guidance you have provided today is the right number?

Thanks Tazeen. Let me just first directly answer the first part of your question. The invitation that we've seen with patients and caregivers has risen more recently. So, if you recall the CNN articles were in the middle and end of April and our earnings call on May 8, we stated that while it's early and then said be bumpy in the near term as we work through this, we haven't seen a meaningful impact on the business that - at that point in time, would we just change our full year 2018 guidance. At that time, feedback we have from the medical community indicated that our messaging on safety was well understood and that continues to be the case. Since the May 8 earnings call, what has surfaced is concern among patients and caregivers resulting from the CNN article. And as we mentioned, this has resulted in some patients expressing hesitation to start therapy or not following through on therapy to initiate their prescriptions. As we discussed, we're currently, very, very focused on increasing the level of accurate information in the patient and caregiver community. And did this, as we indicated, we've seen varied instance of stabilization and key demand metrics over the last eight weeks and we believe the initiatives we have underway and those planned will catalyze future growth.

Okay and how are you deriving that the current guidance, I mean does it assume that the patient starts are stable, are you baking in potentially more deceleration of the patient starts?

No, I think the guidance that we've given assumes continued stabilization, not a further degradation, and so as we advance on the initiative that we have, as I mentioned we are confident in our ability to catalyze new growth. Part of the competence lies on what we saw and what we did in the first quarter this year. If you recall, we took several initiative in the second half of last year including the addition of DTC disease awareness campaign in the fourth quarter and those things resulted in a very significant out tick and patient starts ended revenues in the first quarter. As we now have dropped down to a lower base, we have a whole battery of exercises and initiatives that we're going through grow from this space.

Okay. Thanks for that color Steve, and then wanted to follow-up on the comments about the titration that being done with the 17 mg doses and understand that the efficacy is much better with a 34 single pill or taking the full 34 mg doses. Is there any concern that you know some physicians might just prefer titrating and that we do see this and other indications for other companies that we followed, there are certain drugs are preferred because you can't titrate those. Is there any rest of the physicians that are choosing to treat patients in that way, might be less motivated to put new patients on when 17 mg is not available any longer.

You know as you might expect Michael and his group have done an awful lot of research around this, their topic and I'll let him answer the question.

Yeah, thanks. We've been doing a lot of market research and preparing for this event for quite some time. We had a very intense focus and identification of physicians and kind of a free assessment based understand what physician's attitude and where they've been along that spectrum. And I think we're very prepared to address those concerns and we feel very confident that for the most part we will be able to convert physicians over the course of time to this new treatment paradigm of treating with the 34 side. And things could get a little choppy with the channel, but we are working through that I think very well with our partners and on the physician side, I think we'll have them convert it frequently.

Your next question comes from the line of Ritu Baral from Cowen, please go ahead. Your line is open.

Steve and Michael, What do you guys see as far as the split between new prescribers and new prescription from repeat prescribers when you talked about new patient starts. Are you seeing a differential and a willingness to prescribe between those two populations? And you know has one been more - one group been more successful than the other?

Michael, is going to take.

Sure, I think that's a great question and we've actually seen pretty robust actions by both repeat users, so that will be both through writer prescriptions in the past and continue to write for new patients. That continues to show strength as well as bringing on new prescribers. Perhaps the thing that we've seen the most impactful over last eight weeks or 16 weeks has been that numbers of those prescriptions has not been as high as it was in the first quarter. So, we're trying to turn that back up with the initiatives I described and the launch. But we've not seen or very - I guess pleased with the consistency and enthusiasm from our customer base that has not shown any kind of erosion.

Got it. And what else can you tell us as far as Slide 17, you show the four weeks ending August 3, there is a potentials like tick-ups - uptick there. What other metrics can you give us that would give us confidence that, that little tick-up is real and not any sort of variability I guess?

I would just call attention to the - maybe the 16-week trends there. They are all within a pretty tight range and we're looking at calling that as kind of like that base and we're looking to grow from there. I think it's important to note on the right, as you see those are - those patients in green eventually take bottles, that it translates into those graphs on the right, and those would take rates from patients that we get into the funnel. They stay very consistent whether they are new patient acquired during the quarter or patient that is coming in on a repeat basis. So, really the key for us for future growth is to keep the new patient starts as high as possible, our number one, one of our highest focused items as we move to try and get back to growth.

Got it. And my last question, I guess I'm surprised that your SG&A guidance for next quarter is in line with Q2, given the new initiative that you outlined. How should we think about that, I mean what's the extent of the new initiatives that your -- if your SG&As are going up?

We continue to allocate SG&A where we think we have the biggest opportunity to change the prescribing dynamics and each quarter -- while the spinning may not change a lot where that money goes and what the focus is, you can't change until -- Mike and his team are very focused on getting the new patient starts going while the dollars are similar -- the initiative are -- the ones you outlined earlier today.

Your next question comes from the line of Salveen Richter from Goldman Sachs.

Thanks for taking my questions. Mariana [ph] for Salveen. I have a couple, one of them -- I wanted to ask about the MDD, the Major Depressive Disorder studies on, and whether you guys looked at the historical outcomes of antipsychotics? And how do you think it will do in this study? And another one was on Rett study design, I was wondering what if the age of the girls that you are planning to treat and also how you are thinking about this thing?

Great. Serge is going to answer the above questions.

The first on MDD, I didn't really quite clearly hear your question. I think what I heard is that you were asking about how we anticipate pimavanserin being doing to relations to under antipsychotic that are used attractively?

Yes.

Well, first of all, let me just pull back and say that there is quite a bit of literature and evidence out there that 5-HT2A antagonist act synergistically with SSRIs and SNRIs. And the pimavanserin tolerability and safety profile is quite distinguished from the antipsychotics that are currently used attractively in the MDD and we anticipate that in our Phase 2 trial, we will see that demonstrated in the -- with the Phase 3 tolerability data. So, we do anticipate those advantages while actually seeing the efficacy that we anticipate from seeing the Phase 2 trial. Related to your second question on the Phase 3; we are currently, obviously finalizing Phase 3 design having discussions with our colleagues in Neuren and this trial will be focused on the pediatric population of Rett syndrome, but what under age we are still determining that, so I wouldn't at this point try to be decisive in that respect.

Your next question comes from the line of Alan Carr from Needham & Company.

Quickly, I'm not sure if I missed this or not, but gross-to-net, what was it for this quarter? And then also, maybe you can comment a bit more about your thoughts with the ongoing FDA review around safety profile? And then also, what percent of patients do you think are using 2017 mix, upfront initially? Thanks.

Alan, the gross-to-net for the quarter was approximately 13%.

Serge is going to address the question on FDA review.

Alan, your respective question was regarding the evaluation that FDA is doing. And the steps, is that correct?

Yes.

Certainly, first let me just say that we have already -- we'll continue to respond to all of the requests we received from the agency as part of their ongoing PSI evaluation. As a matter of policy, we don't comment on the ongoing interaction as they happen, but I will remind you that the FDA has stated that evaluation does not mean that they have determined that there was a new safety risk; in fact, the FDA has stated that based on the data today, it has not identified specific safety issue that is not already adequately described in the product label. As I mentioned earlier, based on the totality of available information we have, we are confident in NUPLAZID efficacy and safety profile which remains unchanged, and is appropriately described in the product labeling. And in terms of duration of this evaluation, as you know, there is no statutory requirement for this and sometimes these evaluations take many months or longer. So, you know that's the most we can say about it.

One last question regarding the proportion of patients that start on 17 milligrams, it's a majority of patients according to our data that start on 17. A majority of those patients who start on 17 is the high majority, then do titrate up to 34. But as we mentioned, the disadvantage of starting on 17 is patients are getting a diluted and significantly delayed effect of the drugs, so we think the 34 milligram single capsule will be an important development in the brand.

How long are they staying on 17 when they titrate?

It varies a lot. We haven't got into specific numbers there but there is a lot -- they do usually titrate up within a matter of weeks or a few months up to 34 milligrams. There is small part that stayed on 17, but high majority of those which start on 17 titrate up. But then, again, the important point is that they are just not getting the full effect of the drug and we by moving to the 34 milligrams capsule we'd be able to see the drive seat whole lot faster.

Your next question comes from the line of Jason Butler from JNP Securities.

Just wondering if you have even any anecdotal feedback from a field in terms of the types of patients that are being started on drug still or not being started on drug anymore. For example, are physicians starting to select patients or exclude patients on the basis of age or severity of disease. And also, are you seeing any characteristics of the profile of the physicians that are continuing to write or slowing down their prescription habits again, in terms of specialty or type of institutional practice that they are in?

Just to remind you, we do have a segment of our business that is long-term care. So, in that segment most of those patients exclusively are older in general and have more morbidity and we continue to see enthusiastic prescribing in that channel. In our office space, there are specialty pharmacy business, I would say there is no specific breakdown to the type of patients, we see them across the whole spectrum. And I don't see anything really that would be any kind of pattern. Obviously, the patient who has more to kind of live in Parkinson's, the earlier patient in terms of symptomology that is more from the relief of the symptoms for their life. So that's probably more [ph] most for is the patient that has a lot to live for as early insights that they have a PDP. And Jason, one other point that's probably important that helps give the appropriate context is with repeat prescribers what we're not seeing is a lot of the repeat prescribers abandoning the brand and stop writing the drug. What we have seen is a reduction in the number of new patient starts that those repeat the drug [ph], so they are still prescribing the drug, they are still starting to new patients -- but it said they lower rate and again, that is consistent with the other data we have indicating that the area we'd really need to focus on right now is patients and care first, and that's where we have a lot of effort that we're undertaking now.

Your next question comes from the line of Paul Matiz [ph] from Stifel.

First question, you gave a lot of color on persistence in long-term care centers but I just wanted to ask about community and academic centers. Have you seen an impact here relating to the senior articles?

No, we really haven't impact -- I think by kind of type of institution or especially physician -- there hasn't been anything delineated better.

And then I guess just a question about the pipeline for your depression program. I guess I was just wondering you can provide your thoughts on the path forward for pimavanserin in depression assuming positive Phase 2 data. Like you expect that you will need two Phase 3 studies?

Yes. In terms of the clarity study in anticipation of clarity topline results for the quarter this year we are preparing multiple developmental scenarios and strategies. So of course, the ultimate decision regarding entity development will be made after we evaluate findings from the Phase 2 study and determine the best development strategy to move forward. As I said, we have developed different strategies and scenarios but we will be able to speak these in more detail once we have the top line results and evaluate the results.

Your next question comes from the line of Daniel [ph] from Piper Jaffray.

Just kind of expanding on the impact of the prescription uptake, are there specific regions where you noticed uptake was impacted the most or was it pretty evenly dispersed?

As you can imagine, we've sliced and diced all various metrics here. We don't see any particular pattern specific to that question.

And then on trofinetide, what's the IP status there?

The IP status on trofinetide is the -- first of all, they have open drug designation on the drug. And then secondly, in terms of patent exclusivity, we expect the patent exclusivity to run through 2032 or beyond. And while I'm under topic, which is also -- just want to confirm something we said earlier, our anticipation is that we'll start the Phase 3 study in the second half of 2019 and if that is successful we believe we could be in a position to file in 2021.

And the final question today comes from the line of Ritu Baral from Cowen.

Also on trofinetide, can you talk a little bit about what the FDA interactions have been? I mean it sounds like there have been some because you've got those co-primary endpoints. And are you thinking about dose ranging -- what Phase 2 work has been done to sort of give you guys something on the dose?

Following the successful Phase 2 study in children 5 to 15 years old, we're actually - evaluated three different doses in terms of [indiscernible] and tolerability as well as efficacy and established positive efficacy as a high dose. They have an interaction with the FDA and the Phase 2 meeting where the Phase 3 program was discussed and that is what we are building upon that is captured in our next Phase 3 program. So the dose ranging is already done, the Phase 3 study that we're planning to do will be just randomized double-blind placebo-controlled study and we'll evaluate one dose of trofinetide and placebo in approximately 180 girls with Rett syndrome. As you mentioned the primary/co-primary efficacy measure will be Rett syndrome became your question there and CGII.

So why the extra work on manufacturing; is it a hard peptide or make or the oral formulation is difficult?

We don't see challenges with the ability to make it but we do need to scale up the process for Phase 3.

Mr.Davis, please proceed to closing remarks.

Great. Thanks to all of you for participating in our second quarter 2018 earnings call. Our mission is to offer effective treatments to address serious medical conditions and we care deeply about the well-being of those individuals who use our medication. NUPLAZID is well positioned to the standard-of-care for BD psychosis patients based on it's unique profile and we are enthusiastic about advancing our late-stage clinical pipeline. Again, thank you for joining today's call.

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