Good day, ladies and gentlemen and welcome to ACADIA Pharmaceuticals' Second Quarter 2019, Financial Results Conference Call. My name is Michelle and I will be your coordinator for today. [Operator Instructions] I would now like to turn the presentation over to Mark Johnson, Vice President of Investor Relations at ACADIA. Please proceed.

Thank you, Michelle. Good afternoon and thank you for joining us on todays call to discuss ACADIA's second quarter 2019 financial results. Joining me on the call today from ACADIA are Steve Davis, our Chief Executive Officer, who will provide a brief overview of our strategy, recent achievements, pipeline opportunities and financial performance. Michael Yang, our Chief Commercial Officer, will provide updates on our commercial initiatives with NUPLAZID. Serge Stankovic, our President, will discuss our pipeline progress. And Elena Ridloff, our Chief Financial Officer, who will discuss our financial results before turning it back to Steve for his final remarks and opening up the call for questions. I would also like to point out that we are using supplemental slides, which are available on the Events and Presentation section of our website. Before we proceed, I would first 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, including goals, expectations, plans, prospects, growth potential, timing of events or future results, are based on current information, assumptions and expectations that are inherently subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially. These factors and other risks associated with our business can be found in our filings made with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which are made only as of today's date. I'll now turn over the call to Steve Davis, our Chief Executive Officer.

Thank you, Mark. Good afternoon, everyone and thank you for joining us today. Our team delivered strong sales performance this quarter, as you can see on slide five. In the second quarter NUPLAZID achieved at $83.2 million in net sales a 46% year-over-year increase. Based on our execution and the growth in NUPLAZID in the second quarter, we've raised our full year revenue guidance to $320 million to $330 million from a previous range of $280 million to $300 million. This represents a 45% year-over-year revenue and 30% year-over-year volume increase at the midpoint of the range. We continue to leverage our R&D capabilities as we pursue several pipeline programs by pressing unmet needs in the CNS space with very large market opportunities. In dementia related diagnosis, we continue to make good progress with our pivotal Phase 3 HARMONY study and expect to announce top line results in the second half of next year 2020 with an intermediate in the second half of this year. In major depressive disorder, we have now initiated both of our Phase 3 studies. In schizophrenia, we look forward to completing dosing in our ongoing advanced study, evaluating pimavanserin in schizophrenia patients with predominant negative symptoms and remain on track to announce top line results around the end of this year. And finally, we plan to initiate our Phase 3 study LAVENDER, evaluating for trofinetide into treatment for Rett syndrome in the fourth quarter of this year. With that, I'll turn it over to Michael to discuss our Commercial performance.

Thank you, Steve. Please turn to slide seven. We are very pleased with the strong performance we achieved in the second quarter. This is a reflection of our team's continued execution on our key commercial initiatives, driving awareness of PD Psychosis and the adoption of NUPLAZID as a treatment of choice. In the second quarter, we continued to expand our reach adding new prescribers for NUPLAZID and new long term care pharmacies, as well as new patient starts and growing volume at long term care facilities. As a result, we achieved sequential volume growth of approximately 15% and year-over-year volume growth of approximately 34%. In the quarter, we were able to increase demand for NUPLAZID in both specialty pharmacy and specialty distribution channels. Principal drivers of growth were the completion of the 34 milligram transition of the 17 milligram tablets and a successful brand DTC campaign. Patient screening and care planning tools developed for healthcare practitioners also contributed to driving growth in the long term care channel during the quarter. In the second quarter, we realized of an increase in compliance for established patients and additional new patients starting on paid treatment. Both of these benefits contributed significantly to the sequential volume growth and will continue to benefit our year-over-year growth for the remainder of 2019. Since we launched NUPLAZID, we have seen very consistent high compliance for patients who continue on therapy. Notably during the second quarter, we saw this compliance to therapy increased even further, which was a strong contributor to our second quarter performance. Reaching patients and caregivers directly is an important part of our promotional strategy. According to market research, our initiatives have resulted in increased awareness of PD Psychosis and NUPLAZID as the only FDA approved treatment choice. Motivated caregivers and patients are actively seeking additional information on PDP and NUPLAZID and having conversations with their healthcare practitioners. Given the positive return we're seeing from our DTG campaigns, we plan to invest in an additional DTV advertising in the second half of 2019 to complement our ongoing patient and caregiver commercial initiatives. As a reminder, we would anticipate it live for realizing positive benefits associated with new patients initiating treatment. We believe we have the right disciplined approach and cadence with these initiatives to deliver an attractive return on investment, while continuing to increase brand awareness for new closet. Looking ahead, we will continue to implement and execute on our commercial initiatives to grow NUPLAZID in PDP. I'd like to thank our teams to delivering a strong quarterly performance as now more patients and caregivers are able to experience the benefits of NUPLAZID in the treatment of their PD Psychosis. I'll now turn it over to Serge to provide R&D updates on our pipeline.

Thank you, Michael. As usual, I will provide updates regarding our R&D progress. Slide nine highlights our pipeline programs, which I will be reviewing with you today. In total, we have four programs in late stage clinical development. Let's start with our dementia related psychosis or DRP program on slide 10. There is no FDA approved treatment for the DRP. DRP is estimated to affect approximately 2.4 million patients in the United States, of which only about half are diagnosed. We've currently conducted HARMONY, a Phase 3 relapse prevention study. We have agreement with the FDA that robust results from HARMONY can serve as the basis for a supplemental NDA submission. On slide 11, we have a high level illustration of the Phase 3 HARMONY relapse prevention study. We plan to announce the final top line results for HARMONY in the second half of 2020, with an interim read in the second half of this year. As a reminder, the statistical threshold for the interim read is very high. Let's turn to slide 12 to discuss our MDD program. The majority of patients with major depressive disorder do not adequately respond to their treatment and continue to experience significant depression. Based on the positive and robust study results from our CLARITY study, we believe pimavanserin may represent an important new adjunctive therapy for patients struggling with their depression. Slide 13 shows our Phase 3 development program for pimavanserin for attractive treatment of MDD. We are very encouraged by the investigators enthusiasm for our CLARITY-2 study and this study is already enrolling well. In addition, we recently initiated our second Phase 3 study CLARITY-3. If we are successful, our Phase 2 clarity study combined with at least one of the Phase 3 trials would be the basis of a supplemental NDA…

Thank you, Serge. Today I'll discuss our second quarter 2019 results and our financial outlook. Please turn to slide 21. In the second quarter of 2019 we recorded at $83.2 million in net sales an increase of approximately 46% compared to $57.1 million in net sales in the second quarter of 2018 which was driven by approximately 34% volume growth year-over-year in Q2. For the first half of 2019, NUPLAZID volume growth was approximately 27% year-over-year. The gross to net adjustment in Q2 was 13.2%. Gross to net this quarter was favorable versus our expectations as a result of the higher compliance rate for established patients. Basic inventory in the channel at the at the end of the second quarter were consistent with the previous quarters. Moving down the P&L, GAAP R&D expenses increased to $67.3 million in Q2 2019 and $46.6 million in Q2 of 2018. The increase was primarily due to development costs for trofinetide and additional clinical study costs for pimavanserin. GAAP SG&A expenses increased $68 million in Q2 2019 from $69.5 million in the second quarter of last year. The decrease was primarily due to timing of DTC advertising expense, versus the prior year partially offset by an increase in personnel costs. Non cash stock based compensation expense during the quarter was $20.4 million, compared to $20.6 million for the same period in 2018. Cash used in operations during the quarter was approximately $38.4 million compared to $40.9 million for the second quarter of 2018. We entered this quarter with $381.9 million in cash and investments on our balance sheet. Please turn to our 2019 guidance on slide 22. We're increasing our net sales guidance to be between $320 million to $330 million from the previous range of $280 million to $300 million. This reflects the…

Thank you, Elena. Please turn to slide 24. We're very pleased with our strong quarterly performance and outlook for the remainder of the year. Ultimately, we don't measure our success by financial metrics alone, but by the true difference we can make in people's lives. Because of our commercial initiatives, more patients with Parkinson's disease psychosis are getting the treatment they need. Not only are their lives improving the treatment, but also those of their caregivers. Beyond PDP, we are excited that pimavanserin and trofinetide they offer hope to patients and their caregivers who struggle with dementia related psychosis, depression, schizophrenia, and Rett Syndrome. Please turn to slide 25. Looking ahead and we will continue to execute on all three of our strategic pillars. Grow the delta of NUPLAZID in PDP, leverage the potential of our pipeline programs and expand our pipelines with focused business development. I'd like to close by thanking our employees whose dedication and hard work are driving our company's continued success and execution of our three pillars strategy. I'll now open up the call for questions. Operator?

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

Hi, this is Gavin on for Corey. Congrats on the quarter. We just had one on the Phase 3 HARMONY study, anything you can provide on the – like as far as qualitative data on event rates? And then I know it's a long shot, but can you provide granularity on timing i.e. Q3 versus Q4. Any color would be helpful. Thanks.

Yeah, sure, Serge will take both those questions.

Yes. Thanks for the questions. First question, in terms of – we have been providing just some of the insight on the progress on recruitment and success rates in the open label study. We haven't been providing details on the relapse rates because that's a very variable and it's really not an indicator because it's very independent driven event in the trial, so from that perspective, no change. We are progressing very well in both enrolling patients in the trial, as well as, as I've always said, our success rates have been somewhat better than what we initially anticipated, but mostly, for the most part around those numbers. So that's all I can say about that. Your second question, I'm not quite sure. Are you referring to higher granularity around the final analysis or the interim analysis? If you would, please clarify that?

Right, I was talking about the interim as far as the 2H '19. Can you provide any granularity in terms of Q3 or Q4?

Well, we have not been commenting on specific timing on that. Other than that, it will definitely happen in the second half of this year.

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

Hi, good afternoon. Thanks so much for taking my questions. Maybe a couple for Michael, just to follow up on your prepared remarks, you talked about improvements or continued improvement in compliance rates, particularly seen this quarter. Can you give us a little bit more granularity on why you think that particular trend is occurring and whether you would continue to expect improvement in compliance? And then secondly, I think you mentioned that you are planning a new DTC campaign to start in the second half of the year, I was curious as to how that might be any different from the DTC campaign that you had going on which you ended in I believe the last quarter?

Sure, Michael?

Yeah. Hi, Tazeen. Thanks for the question. So when I talk about the compliance, I'm referring specifically to the number of bottles that a patient takes in the quarter and specifically around established patient's are continuing patients. And as I mentioned, historically, we've seen a very consistent and high compliance rate for those patients. We've in the past commented on the 34 milligram and how we believe that's going to lead to a better patient and physician experience. And notably as I mentioned, in this quarter, we saw an increase from those historical norms. So I think that if we were to attribute it then number one, the 34 milligram and also I think the strong endorsement of the value proposition and the profile of new closet. So I think all of those things in totality, I think you'll start to see that benefit in the base for the coming year and rest of the year. And that'll be part of our new base. In regards to DTC, I think you're going to see the same kind of look and feel that we've had with the prior campaign. Of course, we've learned a lot along the way and we'll be implementing those learning's mostly on the back end and in our refined other tactics. But from a consumer point of view, I think you're going to see a very similar campaign from the external perspective.

And I guess why are you choosing to restart DTC?

Right, yeah, there's a number of factors we look into when we evaluate TV media, we have an ongoing initiative to support caregiver and patient awareness and education. And those are on all the time. In terms of the TV, the pivotal, obviously element to our campaign in general and we take things into consideration as how fresh and compelling our creative is the media weight and the intensity to reach our target audience. And more importantly, the time it takes for those behaviors to manifest themselves in actions that benefit the brand. In totality we believe we have the right cadence and approach.

Okay, thank you.

Our next question comes from Jason Butler of JMP securities. Your line is open.

Hi, thanks for taking the questions and congrats on the quarter. A couple questions for Michael, again, any more granularity you can give us around the trends in the new patient ads or changes in the trends of patients who drop off therapy early versus those that go on to stay on the drug longer?

Hey, Jason, great question. So in regards to patient dynamics, obviously, the continuing benefit we're seeing in the take rate, we're going to have to have more borders to see how that plays out. In regards to duration of therapy, I can't say that we're ready to comment on duration of therapy. But certainly the intra quarter dynamics has benefited from what we think as I mentioned before the improved experience with the 34 milligram. We added new patients, we added new physicians, long term care pharmacies ordering the drug. So I think we still have a lot more penetration, but nothing really unusual to comment in regards to intra patient dynamics in regard to drop offs et cetera just yet.

Okay, great. And then with the continued investment in DTC, any thoughts on the current size and structure of the field force and how you're thinking about that for the second half of the year?

I'm not quite sure I heard the question was a DTC and the sales force.

Obviously, you're continuing to invest on driving awareness, driving more interest in the product. Are you on the back end? Do you feel like you have the right size and structure of the sales force to capture that?

Yes, right. Great, great question, yeah, so over the past year or so and I think we've commented on this, we've added capabilities in the organization focusing on increasing – for example, we've increased the footprint of our long term care group. In the past we've added kind of a key account function. So we're going to continue to make the commercial, I say adjustments to make sure that we capture all the best wind in the sales, if you will. So I think we're optimizing and I think we're operating at a very high level at the moment.

Great, thanks for taking the questions and congrats again on the quarter.

Thanks.

Our next question comes from Salveen Richter of Goldman Sachs. Your line is open.

Hey, thanks for taking the question. This is Andrea on for Salveen. Maybe a question for Serge. As a follow up to Gavin's question on the HARMONY study. When you think about how rapidly the trial has been enrolling, can you say if that's due to the large number of patients that are eligible to come on to the trial? Or if that's perhaps more reflective of the proportion of patients that are responding to therapy, who are then continuing on to the double blinded portion? Thanks.

Thanks, Andrea. And it is hard to speculate about – I think that is a little bit of both involved. There is –certainly we had and we've been reporting significant interest in the trial by the investigators and families and patients. And I think that's in large part also due to the kind of design of the trial where patients are starting treatment with the open active treatment for three months and that's much more akin to what standard clinical practice is. So we definitely had a high interest in participation in the trial and so from my perspective that's probably a reason that we saw a very – kind of a steady enrollment and interest throughout the execution of the trial. On the other side, I also do believe that with the inclusion of all subtypes of dementia, that definitely there is a large population of patients and that also reflected itself in potential candidates for the trial study participation.

Sure, so maybe just to follow up on that, I guess maybe what we're trying to understand is, if the enrollment and the pace of that is because of that large population or I guess, in terms of the number of patients who are responding and moving on to that second portion, right, like you could have, that could be the driving factor where you're seeing rapid progression of patients, because so many people are responding to the drug me open label portion.

Well, the response rates that we anticipated are based on the response rates that we were seeing in the Parkinson disease psychoses trials that we conducted. And as I said, we are seeing approximately probably slightly higher rates of response after – stable response, I want to say after eight and 12 weeks of treatment, so that's certainly encouraging. And I would not say that that may not play a role in the continued interest by the investigators in enrolling the patients in the trial. But it would be a pure speculation on my part to say to what extent is that, to what extent is overall design of the trial and to what extent is just this is a huge patient population.

Got it, alright, thanks for the color.

Your next question comes from Ritu Baral of Cowen. Your line is open.

Hi, guys, thanks for taking the question. My first question is a little, I guess, broader. How do you guys think about pricing assuming either negative symptoms goes through – MDD goes through or Alzheimer's, I'm sorry. DRP goes through. How do you think of the current price and the current dose for PDP? And how might that flex into traditional indications? And have you done any payer discussions on the value proposition? More specifically, have you talked to payers about what relapse prevention clinical data actually means for DRP?

Great, I think there's several questions in there. I'm going to turn it over to Michael. I'll try to keep you honest and get them fair enough maybe to this.

Yeah. So I guess the first place to start from a commercial perspective is really the unmet need that we're going after, whether it's DRP, a junk of MDD, negative symptoms, these are all high unmet needs and the weight of the clinical evidence that we've seen, obviously, we don't have the results of the approval studies. But going into these studies, when we've done the research, we do see that there is recognition of the commercial value or the patient value in the innovation. So if there's a lot of innovation, the payers recognize that. We've done a research on each of those indications that we're doing, what I would call multi indications scenario planning. Broadly speaking, without getting into too many specifics, you're mixing it. We're having mix and match books of business with insurance companies. So for example, MDD has a larger footprint or wait on commercials. DRP is going to be very similar in regards to our current PDP profile and of course, schizophrenia is an entirely new bottle of x entirely. Despite all those things, we do believe there is a way for us to find way to partner with payers for the appropriate access and know that we're not in any of the indications going up against cheap generics. We are playing and specialty tiers and that affords us the appropriate new criteria that payers are looking to see.

If I may just add one thing to just not to – in order to remind everybody. In addition to our relapse prevention trial, which is a long term treatment trial, we also have positive data in two acute short term trials that are done in a classical parallel design. So I think from the payers' perspective and from overall, looking at the data, we have a fairly complete package that is actually more comprehensive than you usually have at approval.

Got it, Mike, you recognized my first question had about four different parts by Design. Serge, can you just comment on the characteristics of HARMONY enrollment across the background diseases? You'd mentioned earlier this year that enrollment sort of tracking on epidemiology, is that still the case or is it shifting?

Yes, it's absolutely the case. We as you can imagine, follow that fairly continuously. And both in terms of the enrolling people in the open label trial as well as people that qualify for that essentially respond and then qualify for a randomized double blind stage of the trial. We are tracking very, very close to epidemiological data on the proportion of different subtypes.

And I'm sorry, if I missed it in your prepared remarks, did you say precisely what your role over to the open label rate is?

No, we did not. I did not say a specific number. It remains at the same, slightly above what we were anticipating. But they're about – it's firmly steady.

Got it, thanks for taking all the questions guys.

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

Hi, Steve and team. Let me add my congratulations on what looked to be a very nice quarter. My first question was kind of related to guidance. And I'm going to take a page out of Ritu's book and ask – call it a multi pronged question. But if you look at guidance going forward, if we're ahead to identify one particular driver of that, would it be prescriber base increasing, would it be new patient ads increasing, would it be compliance increasing or would it be pricing? What would be the main driver to the guidance?

Charles, I'm going to ask Michael to answer that question.

Sure. Hi,, Charles, thanks for the question. Yeah, going forward, I think we've created a lot of momentum, as I mentioned in the business across all the levers that we're looking to affect, adding new physicians, adding new patients, penetrating our long term care channel both in the new pharmacies and deeper depth out of the existing pharmacies. So I would just say continued volume growth out of existing patients and also adding new patient starts to be the primary drivers to the to the forecast.

And maybe just to reiterate what Michael said, one of the things that we saw in the second quarter was a significant uptick in the take rate from existing patients. And so as Michael mentioned, we see that carrying through into the third quarter and the fourth quarter as well. Now, the impact on rate of growth, obviously is different than the higher base rate that we have at those at those compliance levels. But we didn't reflect that in our guidance for the remainder of the year.

That makes sense especially given the clinical value of 34 migs. If I could just ask one more question that would be probably absurd, related to the MDD program. Could you help us understand maybe the differences between CLARITY-2 and CLARITY-3 between the two Phase 3s, but also those two Phase 3s relative to Phase 2? Are you using different sites or different entry criteria or anything? Because I think you mentioned that CLARITY-1 with one of the two Phase 3s would be sufficient for SNDA. And so I guess I'm wondering if there's different probability of success for the two Phase 3s.

The two studies, two Phase 3 studies CLARITY-2 and CLARITY-3 are identical with one exception, CLARITY-2 is done in the United States and CLARITY-3 is done in Europe. In regard to the sites, obviously, our CLARITY study, Phase 2 study was done in the United States. And we naturally included in the CLARITY-2 those sites that were performing well in the previous study. So I can say that they're identical sites because CLARITY-2 has had more sites and also – but there is a considerable overlap in that respect. So that's one, there are also in regard to design differences between Phase 2 and Phase 3 trials, there is not much difference with exception that remind you of Phase 2 was SPCD design, so had two phases. Phase 3 trials are just parallel stage one sort of design of the trial. So there is no other differences in – there are minor differences in terms of certain things that we learned in trail, but they're not really – the trials are essentially identical with the stage one of the Phase 2 trial. And in regard to the size of these trials, as you will remember, we had about 200 plus – a little more than 200 patients in Phase 2 here, these trials are 280, which is fairly close for the difference between Phase 2 and Phase 3. And we were able to do that on a basis on the robust results that we had in Phase 2 and then counting to continue to do a relatively smaller trial where we can control the quality.

And just to clarify with regard to CLARITY-3 parting upon that is an X US trial only.

Yes, yes. Correct.

Okay. Thanks for taking the questions. Congrats on a great quarter.

Your next question comes from Marc Goodman of SVB Leerink. Your lines open.

Hi, this is Roanna on the line for Mark. I just want to ask a quick question. In the past, you've highlighted certain initiatives focusing on LTC. And we were wondering if you could add any color on those such as what are their main goals and what percentage of contribution do you see them making to overall sales? Has that changed at all from 1Q to 2Q et cetera?

Great, Michael?

Sure. Thanks for the question. As I mentioned in my prepared remarks, the patient screening and care plan tools, we believe contributed to the growth that we saw in long term care. Importantly, in the long term care channel where you're dealing with more of an institutional kind of facility approach, treatment algorithms and electronic health records are very important. Resident patient management processes, kind of at the facility level. So what we've done is we've designed a number of different tools to meet education, patient screening, et cetera that helps the facilities and healthcare practitioners and the staff fit into their existing treatment algorithms and care pathways. That helps them identify appropriate patients and more importantly, helps them facilitate the documentation necessary in a heavily regulated environment. And I think we're well on our way to establishing advocacy with these tools as it related to patient identification. In regards to long term care and what we see is just as a reminder, we have two segments of our business to channels, the SP, specialist pharmacy reflects mostly like a community based physician setting and the specialty distribution setting or channel of which two thirds of that are two thirds of that one third is long term care. We've not seen any shifts in our historical splits of the business in that regard.

Great, thanks.

Just to add to Michael's comment, we've seen continued growth and including in this quarter in both SP and SD channel.

Yeah, good point.

Our next question comes from Alan Carr of Needham & Company. Your line is open

Hi, thanks for taking my questions. Couple of them, with respect to the two CLARITY trials, do you have any perspective biases in terms of which one of these might be more risky? Because I remember last week after the schizophrenia trial, you had mentioned that you had some concerns over European sites versus US sites. Do you have any kind of bias for the effort for depression? And then the other one is, I think in the past, you've said – again on the last call, you said about 15% penetration of 125,000 patients. What are your updated numbers on that and do you think that hundred 125 can grow? Thanks.

So Serge, I'm going to ask Serge to take the first question, Michael.

Hi, Alan. The short answer is, I do not have any bias one or the other way. And the reason for that is just the different condition. And when we look at the literature and the trials and the picture with a major depressive disorder, trial versus schizophrenia trial and a placebo response rates being higher in the United States has probably more to do with study participants that are more specifically related to schizophrenia as a condition then major depression. So it is more depends on the sites, country, circumstances of the trials then uniformly as it is seen in the schizophrenia trial.

Right, Michael?

Yeah. Thanks, John. Good memory. Those are, I think the right metrics you have in regards to market share in the market of PDP. We'll be updating the VIP forecast, I would anticipate the 125 number will go up as you expect with patient populations bogging up update the model, but for now, we're saying that mid teens if you had it and the 125 in the PDP market.

Great, thanks for taking my questions.

We have time for two final questions. Our next question comes from Paul Matteis of Stifel. Your line is open.

Hey, thanks so much. This is Ben Burnett on for Paul Matteis. Just one more on PIM events and you mentioned a little bit about long term care clinics and adoption here. I was wondering how the compliance or the script per patient compares in long term clinics versus like academic or community centers. Do you have any window into that or anything anecdotally that you've heard?

Yeah, great question. I will identify or just really characterize the long term care patient who has Parkinson's disease, and that has Parkinson's disease psychosis is that a later and more advanced stage. And so the amount of duration therapy, if you will, is shorter. And in turn we see in long term care, but it is in the community, in part because the fragility of patient and the mortality, morbidity, complications that occurred. With that being said, though, the long term care facility also in part has a higher concentration at times of patients with Parkinson's disease psychosis than say a general neurologist. So there's kind of an offsetting element, there's more patients perhaps, but they're also a little less in terms of duration therapy, but nonetheless, it's a very big opportunity for us to penetrate and get greater depth in that market.

Okay, okay. Thank you for the color there. And I get I just had one other question on the just the design of the Phase 3 CLARITY studies. Are there any details that you can provide, I guess, regarding the powering of the study on the HAMD Rating Scale?

Serge, do you want to take that?

Yes, I think that we –there was – in terms of the design and in terms of the powering there were same assumptions, very similar assumptions that we made with our Phase 2 trial. So the only difference is this Phase 3 trials are powered at 90%. So that's really it. Otherwise, we made the same starting assumptions in designing this trial. And I want to use this opportunity and thank you for going back to MDD trial. To prior question one other thing that I would add is important. People may wonder, why did we do one trial in the United States and another trial ex US, rather than mixing the two regions like it is done with schizophrenia? The simple reason for that is that assessment of depression, there are significant cultural impacts on the plasticity of depression symptoms and that may play a role in the variability. So staying within the region is well advised in that respect and that's what's the reason why we chose to go with this setup for the Phase 3 trial.

Okay, I appreciate it. Congrats, guys.

And our last question comes from Daniel Brill of Piper Jaffray. Your line is open.

Hi, guys. Thanks for the questions. I guess I'll stick with MDD first. Wondering when we can expect an update on enrollment and the anticipated timing of data. And then going back to DRP, sorry, if I missed this before, but just wanted to clarify, powering is based on an estimated response rate during the lead in is that correct? And can you remind me if there's a utility component to the interim? Thanks.

Okay, I'll try three questions there. So I'll try one by one. On the MDD trial, we are in early months of initiation of this Phase 3 trial, recruitment and interest is going very well. In the United States, we were we started earlier, we are seeing a very – quite a bit of enthusiasm for the trial and positive data always helps in that I would say, but it's going well. But then we are just very early to make any more precise predictions on this trials when as we always say take about two years, two and a half years. And at this point, we would stay with that general kind of estimate. But as we are recruiting further, we will be in better position and we will be reporting a more precise timing for the expectations of top line results. On the DRP study and assumptions for powering on the study, actually we powered the study on the number of events and the difference in the proportion of the relapses that were the core on placebo versus drug. So it's not really power on the response in the open label stage, but it's rather power on the assumption of what there will be a difference in the relapses between treatment arms in the double blind stage of the study.

Got it and then yeah, utility component.

Yeah. No, there is – the interim analysis is designed and statistical analysis that is being done as a part of interim analysis is designed around efficacy, there is a certain threshold or hazard ratios or P values that you need to reach in order to declare the efficacies demonstrated and start a trial would stop for efficacy. Obviously, this trial like other trials that we conduct also has an independent data monitoring committee that will receive this statistical analysis and inform us of the outcome of that analysis. But there is no futility statistical analysis. I do want to say data safety monitoring committee for a variety of reasons had always the ability to stop the trial for one of the other reason, but there is no futility included in the interim analysis here.

Great, thanks for the clarification.

Mr. Davis, please proceed to closing remarks.

Great, thank you operator. I thank each of you for listening in today and we look forward to updating you on our progress next quarter.

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