ACADIA PHARMACEUTICALS INC Q4 2025 earnings call

Good afternoon, and thank you for joining us on today's call to discuss Acadia's fourth quarter and full year 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'll 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 to your questions. We are using supplemental slides, which are available on our website under the Events and Presentations section.

On today's call, both GAAP and non-GAAP financial measures will be discussed, including non-GAAP NUPLAZID net sales and non-GAAP total revenues. The non-GAAP financial measures that are also referred to as adjusted financial measures, are reconciled with the most directly comparable GAAP financial measures in our earnings press release and slide presentation, which has been posted on the investors page of the company website. 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 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.

Thanks, Al, and good afternoon, everyone. I'm pleased to report that Acadia delivered another strong quarter, capping off a milestone year for our company. We achieved adjusted total revenues of $298 million in the fourth quarter, up 16% from the prior year. For the first time in our company's history, annual revenues exceeded $1 billion, reaching $1.08 billion in adjusted 2025 revenues, which represented 14% growth from the prior year. This achievement underscores the strength of our commercial execution and positions us for sustained growth in the coming years. We are presenting adjusted revenues because during the fourth quarter, we received our Inflation Reduction Act invoices from CMS for NUPLAZID, which were higher than anticipated and required a non-recurring accounting change in estimates that you see reflected in our financials.

Mark will walk you through the details later in the call. As a result, we delivered adjusted NUPLAZID net sales of $189 million in the fourth quarter and $692 million for the full year. These results were up 17% and 15%, respectively, and in terms of volume, represented 13% in the fourth quarter and 9% for the full year. Together, demonstrating the continued strength of NUPLAZID and further reinforcing our confidence in its long-term growth trajectory. Now looking forward to 2026, we expect NUPLAZID net sales of $760 million-$790 million, which would represent between 10%-14% growth over 2025 adjusted net sales, placing the brand on a strong trajectory towards our expectation of achieving blockbuster status with $1 billion of net sales in 2028.

Turning to DAYBUE, we delivered net product sales of $110 million in the fourth quarter and $391 million for 2025, representing 13% and 12%, respectively, year-over-year sales growth. This growth was driven primarily by our expanded reach into the community physician setting in the U.S. and our ex-U.S. main patient supply programs, including countries outside the European Union, where we're seeing strong interest to access DAYBUE. We're excited about the launch of DAYBUE STIX, our new powder formulation, which is still in the very early stages, but already generating significant interest from both healthcare providers and caregivers. Tom will share more details on how this new formulation is being received and the opportunities we see ahead. I do want to briefly address the regulatory developments in the EU.

We shared, following our oral explanation to the Committee for Medicinal Products for Human Use, or CHMP, which we gave to support our trofinetide marketing application, we were informed that the outcome was a negative trend vote. Liz will provide details on our plan to request a reexamination, subject to the formal opinion. Our commitment to advancing access to trofinetide in the EU remains unchanged. Importantly, our named patient supply programs remain active, ensuring patients maintain access to treatment as we move through the regulatory process. For our 2026 DAYBUE guidance, we expect global net sales between $460 million and $490 million, which would represent between 18% and 25% growth over 2025, driven by contributions from the fixed launch in the U.S. and continued growth of our named patient supply outside the U.S.

Due to the current status of our application within the EMA, this 2026 guidance does not include potential commercial sales that would result from this regulatory approval. However, it does include contributions from our global named patient supply programs, including countries within the EU, where we continue to see strong interest. Longer term, we continue to project 2028 global net sales for DAYBUE of $700 million, inclusive of the EU, and we'll update our expectations after clarity on the final EMA opinion. Just for perspective, of our projected $700 million in 2028 sales, the EU sales represent less than 15% of the total, meaning we have ample opportunity for growth ahead under any scenario.

Turning to our robust R&D pipeline, we are excited for the phase II readout of remlifanserin in the August through October 2026 timeframe, as this presents a key event for our company this year. Beyond that, we see several important catalysts, which Liz will detail. Importantly, we have four unique molecules targeting large addressable markets with a combined full peak sales potential of $11 billion. Approximately $4 billion of that potential is specifically attributable to remlifanserin across both the Alzheimer's disease psychosis and Lewy body dementia psychosis indications, highlighting the transformative potential this asset represents for Acadia's future growth trajectory. I'll now turn the call over to Tom for an update on our commercial brands.

Thank you, Catherine. I'm pleased to share the strong fourth quarter performance delivered by our commercial portfolio, beginning with NUPLAZID. NUPLAZID delivered another outstanding quarter, with adjusted net sales of approximately $189 million in the fourth quarter. Importantly, as Catherine mentioned, underlying quarterly volume growth remained exceptionally strong at 13%, accelerating the momentum we've built throughout the year. This growth was broad-based, with strength across all channels. For the full year, volume increased 9%, reflecting sustained and durable demand for NUPLAZID. Several key metrics underscore this commercial momentum. New prescriptions led the way, growing 18% year-over-year in the fourth quarter. This performance reflects continued traction in the marketplace and validates the effectiveness of our commercial strategy to improve awareness and diagnosis of Parkinson's disease psychosis, while positioning NUPLAZID as the preferred treatment option earlier in the course of the disease.

This has been supported by a refined approach to targeting and segmentation. While on the direct consumer front, our new branded campaign launched in the fourth quarter, and we expect pull-through benefits to build throughout 2026. From an execution standpoint, we have now completed a 30% expansion of our customer-facing teams to better support our evolving prescriber base, with representatives now fully deployed in the field. Based on our experience with DAYBUE, we expect a six to nine month ramp before the full impact of this investment is reflected in results. Our expanded team is now equipped with enhanced tools and resources to engage a broader and evolving prescriber base. Notably, 40% of NUPLAZID prescribers in fiscal year 2025 were new to brand, and we are now even better positioned to meet the needs of this growing group of HCP writers.

Overall, 2025 was a very strong year for NUPLAZID, and we are well positioned to build on this momentum in 2026 and beyond. As reflected in our guidance, we expect another year of solid growth, as Catherine noted, we remain confident in NUPLAZID's path to approximately $1 billion in annual sales by 2028. Now, turning to DAYBUE. We delivered another quarter of meaningful progress across multiple growth drivers. Fourth quarter sales were approximately $110 million, driven primarily by strong U.S. performance, with growing contributions from our Rest of World programs. This represents 13% year-over-year sales growth, supported by 12% volume growth. In the fourth quarter, 1,070 patients received DAYBUE shipments globally, which represents record highs in both the U.S. and outside the U.S.

This milestone highlights our continued success in reaching more patients who can benefit from therapy. As the business matures, we expect to increasingly emphasize sales-based metrics over patient counts as our primary performance indicator. Core business fundamentals remain consistent with what we reported last quarter, including strong persistency, low discontinuation rates, and continued penetration within the approximately 6,000 diagnosed Rett syndrome patients in the United States, reinforcing the significant opportunity that remains. We continue to see growing momentum from our community expansion strategy. In the fourth quarter, 76% of new prescriptions originated from community-based physicians, validating our strategy on expanding access beyond specialty care centers and bringing DAYBUE closer to where patients receive their ongoing care. Now, turning to DAYBUE STIX, one of our most exciting recent developments. In December, the FDA approved this new formulation of DAYBUE, a powder for oral solution.

We believe this represents a meaningful advancement in how we can serve patients and families. DAYBUE STIX has been developed based on the feedback we've heard directly from caregivers and HCPs. The powder formulation allows flexibility in mixing with different liquids and adjusting volume based upon patient preference. It requires no refrigeration, offers enhanced portability through compact packaging, and contains low sugar and carbohydrate content with no red dye or preservatives. Based on our analysis, we believe there's an incremental opportunity of over 400 patients, including treatment-naïve and those who have previously discontinued DAYBUE due to formulation concerns. We've been very encouraged by the early response to the approval of DAYBUE STIX across the Rett community. Initial product is already in channel, and the first patients have already begun receiving shipments.

Early patient mix is tracking in line with our expectations. We remain on track for a broader commercial launch in early Q2 as we ensure appropriate inventory levels and a smooth transition for patients. Outside the United States, we continue to make progress expanding global access to trofinetide. DAYBUE Liquid is now approved in three markets, including Israel, following recent approval by the Ministry of Health, further expanding our international footprint. Looking ahead, we see a strong growth outlook for DAYBUE, reflected in our 2026 guidance.

Key drivers include the U.S. launch of STIX, continued benefits from the expansion of our customer-facing teams, and ongoing contributions from the named patient supply programs internationally. Overall, the fundamentals of the DAYBUE business remain strong, with multiple demand drivers in the U.S., coupled with a runway for continued growth as we expand access globally. I'd like to thank the Acadia Commercial organization for their outstanding commitment to both NUPLAZID and DAYBUE in 2025. I look forward to further building on the strong momentum we've established as we head into 2026. With that, I'll turn the call over to Liz.

Thank you, Tom. I'm pleased to have the opportunity to discuss progress on our robust R&D pipeline, where we continue to see real momentum building across multiple programs and to provide some regulatory updates. As we updated last month, across our eight disclosed programs, we anticipate initiating five additional phase II or phase III studies by the end of 2027, demonstrating the breadth and depth of our development portfolio. Over recent quarters, we've achieved several important milestones with new study initiations. Among these, we initiated a phase II study of remlifanserin in Lewy body dementia psychosis, initiated a phase III study of trofinetide in Japan, and launched our phase II study of ACP-211 in major depressive disorder. Soon, we expect to initiate our first-in-human study of ACP-271 in healthy volunteers, marking an important advancement for this novel asset into clinical development.

As a reminder, our current target indications are tardive dyskinesia and Huntington's disease. We continue to expect to deliver four phase II or phase III study readouts by the end of 2027. The next milestone will be top-line results from our phase II study of remlifanserin in Alzheimer's disease psychosis. Based on the pace of enrollment, we remain confident in the updated August to October 2026 timeline we shared last month. Recruitment in our remlifanserin study for Lewy body dementia psychosis is getting off to a solid start and is tracking in line with our expectations. Turning to our trofinetide regulatory and international development updates, as we announced earlier this month, we were informed of a negative trend vote from the CHMP. We expect to receive the final opinion this week, which we expect will be adopted following the CHMP meeting currently taking place.

Based on the trend vote, we do anticipate that final opinion to be negative. We are currently intending to follow the normal regulatory process for reexamination. In total, this process would be expected to take approximately 120 days from the adoption of the negative opinion. Assuming that timeline holds, we would expect the reexamination process to lead to a new final CHMP opinion around the end of Q2. Again, our intention to request reexamination is based on our current understanding of the trend vote, though we will need to review the final opinion to determine our optimal path forward. While we look to bring trofinetide to patients in the EU, we continue to make progress on other fronts. In Japan, as I mentioned, we recently initiated our phase III study, which represents an exciting opportunity to bring trofinetide to Japanese patients with Rett syndrome.

We anticipate results from this pivotal study between Q4 2026 and Q1 2027, which would position us for a potential regulatory submission in 2027 in this important market. The strength and diversity of our pipeline continues to position Acadia for sustained growth, with multiple potential opportunities to bring truly meaningful innovation to underserved patients living with rare and neurological diseases. 2025 was a milestone year for Acadia in many ways, I am particularly proud of what the R&D team has done to continue to move our science and our pipeline forward. With that, I hand the call over to Mark.

Thank you, Liz. I'm pleased to walk you through our strong financial performance for the fourth quarter and full year 2025. Fourth quarter total revenues were $284 million, and for the full year were $1.07 billion on a GAAP basis. Turning to NUPLAZID, fourth quarter GAAP net product sales were $174 million, and for the full year, 2025, were $680 million. We are also reporting results on a non-GAAP basis to adjust for the accounting impact on NUPLAZID from receiving our first invoices for inflation cap rebates under the Inflation Reduction Act, or IRA.

While we've been accruing for inflation cap rebates since Q4 2022, based upon historical data that we received from the federal government and our customers, the invoices we received from CMS indicated that our Medicare volume for NUPLAZID was higher than we had been accruing for. This volume difference required us to make a change in estimate for our IRA rebate accruals in fiscal year 2025, which is accounted for as an increase in gross to net and resulted in a non-recurring $20 million reduction in net sales. A reconciliation from our GAAP results to non-GAAP adjusted NUPLAZID net sales and total company revenues is presented on slide 15. The adjusted net sales methodology apportions the previously described $20 million change in estimate to the years in which the applicable NUPLAZID net sales volumes occurred.

As you can see on this slide, the change in estimate is only a modest change in net sales when looking over the entire four fiscal year period. For the fourth quarter, adjusted NUPLAZID net sales were $189 million, up 17% year-over-year. For fiscal year 2025, our adjusted NUPLAZID net sales were $692 million, up 15% year-over-year. For the quarter, gross to net for NUPLAZID was 29.4% on a reported basis and 23.6% on an adjusted basis. Our gross to net for NUPLAZID for the full year was 25.9% on a reported basis and 24.6% on an adjusted basis.

For DAYBUE, we achieved $110 million in net sales in Q4, up 13% year-over-year, demonstrating continued strong momentum in this brand. The gross to net adjustment for DAYBUE in the quarter was 19.5%. Full year DAYBUE net sales were $391 million, up 12% year-over-year. DAYBUE gross to net was 22.3% for the year. Turning to our operating expenses, R&D expenses for the fourth quarter were $85 million, down from $101 million in the fourth quarter of 2024. The decrease was primarily attributable to the $28 million upfront payment for ACP-711 in the fourth quarter of 2024.

SG&A expenses for the fourth quarter were $156 million, up from $130 million in the fourth quarter of 2024, primarily driven by increased marketing investments to support NUPLAZID and from our DAYBUE field expansion and marketing investments. With regard to taxes, we released the valuation allowance on the company's deferred tax assets, resulting in a one-time non-cash income tax benefit of approximately $250 million in the fourth quarter. Our cash balance at the end of 2025 was $820 million. Looking ahead to fiscal year 2026, I'm pleased to provide our financial guidance, which reflects our confidence in the continued growth trajectory of both NUPLAZID and DAYBUE.

While we will be making some foundational SG&A investments this year, we expect them to deliver meaningful top line and operating income growth as we move forward into 2027 and 2028. For total revenues, we expect to achieve between $1.22 billion and $1.28 billion, representing meaningful year-over-year growth that builds upon our strong 2025 performance. For NUPLAZID, we're guided to net sales between $760 million and $790 million. Sales growth is primarily expected to be driven by expanding volume. Gross to net is expected to be in the range of 22%-24%. This aligns with the Medicare volume mix implied by our IRA inflation cap invoices received from CMS.

For DAYBUE, we're guiding to net sales in the range of $460 million-$490 million, driven by DAYBUE STIX and continued growth in our named patient supply programs. Given the delay to any potential EMA approval, this guidance range does not assume EU commercial sales. gross to net is expected to be in the range of 22%-24%. We expect R&D expense to be between $385 million and $410 million.

The increase in R&D spend expected in 2026 compared to 2025, is primarily attributable to an increase in clinical and personnel costs as we advance and have broadened our R&D portfolio. Our R&D expense guidance assumes our remlifanserin program continues into the phase III portion of the program. We expect SG&A expense to be between $660 million and $700 million for the full year. The growth in SG&A year-over-year is primarily due to our expansion of customer-facing personnel and marketing investments for NUPLAZID, and increased spend to support the launch of DAYBUE STIX, as well as the annualization of our DAYBUE field force expansion that took place in Q2 2025. This guidance reflects our confidence in the underlying strength of our business and positions us well for continued growth as we advance towards our 2028 objectives.With that, I'll turn the call back to Catherine.

Thank you, Mark. Looking ahead, in addition to the strong revenue growth we've highlighted on this call, we have a series of exciting milestones to support our growth in 2026 and beyond. Our most significant catalysts arrive later this year, with top-line results from the phase II study of remlifanserin in Alzheimer's disease psychosis, expected between August and October, an opportunity with the potential to meaningfully shift our long-term growth profile. We also plan to initiate our first-in-human study of ACP-271 before the end of the first quarter. With a strong balance sheet, we also have the flexibility to pursue business development opportunities that complement and support our future growth. Taken together, our commercial execution, advancing pipeline, and financial strengths, Acadia is well positioned for sustained growth and value creation. With that, I'll turn the call back to the operator to begin our Q&A session.