ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) Q4 2022 Earnings Call Transcript

ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) Q4 2022 Earnings Call Transcript February 27, 2023

Operator: Good day, ladies and gentlemen. And welcome to ACADIA Pharmaceuticals Fourth Quarter and Full Year 2022 Financial Results Conference Call. My name is Gigi, and I will be your coordinator for today. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of today’s call. I would now like to turn the presentation over to Mark Johnson, Vice President of Investor Relations at ACADIA. Please proceed.

Mark Johnson: Thank you. Good afternoon. And thank you for joining us on today’s call to discuss ACADIA’s fourth quarter and full year 2022 financial results. Joining me on the call today from ACADIA are Steve Davis, our Chief Executive Officer, who will provide an overview of our performance and a review of our business; Mark Schneyer, our Chief Financial Officer, will discuss our financial results and guidance; then Brendan Teehan, our Chief Operating Officer, Head of Commercial, will provide updates on our new private commercial performance before being joined by Kathie Bishop, our Chief Scientific Officer and Head of Rare Disease, to provide an overview on trofinetide. Our newly appointed Head of Research and Development, Doug Williamson, will provide an update of our pipeline programs before turning it back to Steve for final remarks and opening the call up for your questions.

I would also like to point out that we are using supplemental slides, which are available on the Events and Presentations section of the 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 will now turn the call over to Steve.

Steve Davis: Thank you, Mark. Good afternoon, everyone, and thank you for joining us today. Please turn to slide five. The execution of our strategic priorities in 2022 has set us up for 2023 to be an important and transformational year for ACADIA. Last, our NUPLAZID franchise in PDP achieved $517.2 million in the sales, a 7% increase year-over-year. We submitted our new drug application for trofinetide, the potential first-ever approved treatment for Rett syndrome with an upcoming PDUFA date of March 12. We advanced our Phase III negative symptoms of schizophrenia program and expect to complete enrollment around the middle of this year. And we advanced our next-generation 5-HT2A program with ACP-204, which is currently in Phase I clinical development.

With cash flows from our NUPLAZID franchise and a strong balance sheet, we are well positioned to deliver on these four strategic priorities that will shape our desks in 2023 and beyond without the need for additional capital. Let’s review our PDP business further on slide six. We continue to maximize the value of our NUPLAZID franchise in PDP. Over the past few years, we have thoughtfully strategically grown share for NUPLAZID in the current PDP market environment. We are delivering steady volumes while concurrently optimizing and reducing our commercial expense base. As a result, we have been able to significantly grow cash flow from this franchise every year since it turned profitable in 2019. Looking back at 2022, our NUPLAZID performance was led by continued improvement in the long-term care channel, which represents approximately 25% of our total business.

In the LTC channel, demand growth was up 4% sequentially for the fourth quarter and 5% for the full year. In fact, the fourth quarter represented a record high for NUPLAZID volume in the LTC channel. Our previous high was Q4 of 2019, the last quarter before the pandemic hit. In the office space channel, which makes up about 75% of our business, we continue to gain market share in a declining Parkinson’s disease market, still impacted by pandemic conditions. This netted out to an overall 3% decline in demand in this channel for the year compared to 2021. More recently, we have experienced relatively steady demand sequentially in the fourth quarter. Overall, across all channels for the full year, demand growth for the NUPLAZID franchise was steady compared to 2021.

Given the current market conditions and our profitability objectives for the franchise, we will continue to optimize our PDP commercial spend and expect stable demand volumes in the near-term environment. There are two important factors with the potential to catalyze near to intermediate term volume growth. One is a change in the pandemic conditions related to Parkinson’s disease psychosis market. In other words, we believe this is a temporal situation, which will normalize at some point in the future. We believe we are seeing early indicators of that in the LTC channel. And second is a simulation in the medical community of three very important new publications that demonstrate the benefits of pimavanserin relative to the off-label atypical antipsychotics, which were historically used before NUPLAZID’s approval.

Today, we are providing 2023 NUPLAZID net sales guidance of $520 million to $550 million, which incorporates a range of assumptions, which Mark will describe further in his section. Turning to slide seven, we are very much looking forward to and preparing for the upcoming March 12 PDUFA action date for trofinetide. Later, Brendan will describe in greater detail some of the key launch initiatives we are working on. But first, I’d like to take a moment to remind everyone what an important drug trofinetide could be for a community with such a large unmet need. As you know, Rett syndrome is a rare genetic neurodevelopmental disorder that severely impacts the lives of patients and their families. The approval of trofinetide would represent a significant step forward in the treatment of Rett syndrome.

Trofinetide’s established efficacy profile is supported by positive broad improvements across two co-primary endpoints in a randomized double-blind Phase III study. Kathie will review these results in greater detail in her section, as well as provide initial topline results from a recently completed open label extension study. And from a regulatory and IP perspective, trofinetide has orphan drug status and is protected by a method of used patent for the treatment of Rett syndrome, which provides exclusivity with expected Hatch-Waxman patent extension into early 2036. We are very excited about the prospect of bringing trofinetide to the market and eagerly await our PDUFA date. Let’s briefly discuss our next two programs on slide eight. The negative symptoms of schizophrenia, characterized by social withdrawal, lack of emotion or flat affect, is frequently referred to as the most significant unmet need for people living with schizophrenia.

Our adjunctive pimavanserin program is designed to treat those patients whose positive symptoms, the hallucinations, delusions and paranoia, are adequately controlled but who still suffer from persistent and uncontrolled negative symptoms. Negative symptoms has been an exceedingly developed area with lots of industry failures over multiple decades. With pimavanserin, we have achieved something very rare in this population, a positive pivotal study, our ADVANCE-1 study. We expect to complete enrollment in our second pivotal study, ADVANCE-2, around the middle of this year, with results expected in early 2024. And finally, in our next-generation 5-HT2A program, we are investing in a novel molecule, ACP-204, targeted for Alzheimer’s disease psychosis or ADP.

Similar to pimavanserin, ACP-204 works primarily by blocking 5-HT2A. We believe this mechanism is ideally suited for frail and elderly populations, and with ACP-204, we are seeking to improve further on the learnings from pimavanserin. Doug will speak to this further in a few minutes. Currently, we are working on completing Phase I development and look forward to advancing ACP-204 into Phase II studies later this year. I will now turn it over to Mark to discuss our 2022 financial performance and 2023 guidance.

Mark Schneyer: Thank you, Steve. Let’s start by reviewing our quarterly and full year performance on slide 10. In the fourth quarter, we recorded $136.5 million in net sales, up 4% from the fourth quarter of last year. Our gross to net adjustment for the quarter was 23.8%. For the full year 2022, we recorded $517.2 million in net sales, up 7% year-over-year. Our gross to net adjustment for the year was 20.8%. This adjustment was relatively unchanged compared to 2021, excluding the impact of the IRA legislation. As Steve mentioned, demand was relatively steady for full year 2022 over 2021 and in-channel inventory at the end of 2022 was relatively unchanged compared to the end of 2021. GAAP R&D expenses increased to $361.6 million in 2022 from $239.4 million in 2021.

Investments in our portfolio in 2022 included a $60 million upfront payment for our Stoke collaboration, a $10 million milestone payment to our partner Neuren and $23 million in cumulative payments related to as of yet still undisclosed BD transactions. Also in 2022, there was a total spend of approximately $30 million in trofinetide commercial supply build. GAAP SG&A expenses decreased to $369.1 million in 2022 from $396 million in 2021, representing a 7% decrease year-over-year. There are two important considerations here. One, we significantly reduced our PDP franchise expense base by approximately $60 million from 2021, optimizing the business and increasing cash flows from the franchise. And two, we have been making the right investments to be well prepared for the upcoming trofinetide launch.

We ended the year with a cash balance of $416.8 million, compared to $520.7 million at the end of 2021. Our balance sheet remains strong and we continue to be confident in our ability to generate sustainable growth with our existing cash resources. Let’s review our 2023 guidance on the next slide. Please note that while our expense guidance for 2023 assumes a potential trofinetide launch, we are not providing sales guidance for trofinetide this year. As a result, we are also not providing guidance on our future cash balance. For our NUPLAZID PDP business, we are providing net sales guidance to be between $520 million and $550 million this year. The middle of the range assumes approximately 1% volume growth and about a 2.5% net price increase for NUPLAZID in 2023.

We are projecting gross to net to be between 22% and 25% for the full year given the need to accrue for Medicare rebates related to the IRA. As a reminder, Q1 is the highest gross net quarter for the year. Given the first time impact of the IRA on our full year gross to net, we are providing gross to net guidance for Q1 this year, which we expect to be between 28% and 30%. As for the remainder of the year, we anticipate gross to net for Q2, Q3 and Q4 will be relatively consistent with patterns we have seen in prior years, with Q2 and Q3 being our lowest quarters and an increase in Q4. On the expense side for 2023, we expect GAAP R&D expenses to be between $235 million and $255 million, including approximately $20 million in stock-based compensation.

Our R&D range does not guide for incremental spend for business development transactions. We expect GAAP SG&A expense to be $360 million and $380 million for the full year, including approximately $45 million in stock-based compensation. While SG&A expense is expected to be relatively flat year-over-year, we will be investing to fully support a successful commercial launch of trofinetide, while at the same time, further optimizing and reducing our PDP franchise spend by an additional $50 million. In aggregate, since 2021, we have reduced our PDP spend by approximately $110 million significantly enhanced cash flow generation from this franchise. And now, I’d like to turn the call over to Brendan.

Brendan Teehan: Thank you, Mark. I am now going to discuss our NUPLAZID brand and we will return later after Kathie speaks to discuss our trefinetide commercial launch points. Please turn to slide 13. For NUPLAZID, we continue to drive share growth in a smaller PD market, delivering steady volumes and growing cash flow. We are accomplishing these goals by optimizing promotion of the brand. As Steve mentioned, the PDP franchise has been profitable since 2019 and we have continued share while optimizing expenses. Beyond these efforts, there are two important areas that could catalyze future growth. One is the change in pandemic conditions related to the PDP market. We have already seen some early improvement in the LTC channel, with new admissions returning to pre-pandemic levels and census levels continuing to improve.

Both present further opportunities to identify the signs and symptoms of PDP and to treat with NUPLAZID. In the community setting, which represents approximately 75% of our total business, we have not yet observed this type of improvement as patient in-person visit volumes remain down double digits versus prior to the pandemic. The second potential catalyst is the promotion of three important real-world evidence studies that have been recently pushed, which demonstrate the differential benefits of initiating treatment in patients with pimavanserin for PDP as opposed to off-label atypical antipsychotics. I have already discussed the key conclusions for and they are presented on the slides. While we are still in the early days of engaging healthcare professionals or HCPs, long-term care facilities and payers with these important new data sets, we are encouraged by the level of engagement we are seeing.

Photo by Myriam Zilles on Unsplash

This data is creating an important dialogue with treaters and is giving us a patient focused and critically important message to further differentiate NUPLAZID. In the office space channel, we have only just recently begun sharing and discussing these data sets at the top of this slide with HCPs. We look forward to the opportunity to share these very important data sets and we will update you on our progress. In long-term care facilities, we have been sharing the conclusions from the Kumar S., et. al. paper shown at the bottom of the slide since the latter portion of 2022. The study compares health care resource utilization specifically around hospitalizations, ER visits and nursing home stays in patients who received NUPLAZID versus other off-label antipsychotics.

These data have been well received as they clearly suggest the use of pimavanserin may improve important outcomes that directly impact facility star ratings, which could make a real difference in patient care and favorably impact their business. Again, we will update you on our progress. Now I’d like to turn it over to Kathie to discuss our exciting second potential commercial product, trofinetide, starting on slide 14.

Kathie Bishop: Thank you, Brendan. I would like to begin by noting that tomorrow, February 28th, is Rare Disease Day. On behalf of ACADIA, we support the mission to raise awareness and generate change for the 300 million people worldwide living with a rare disease, their families and those who care for them. We have been very touched and grateful for the involvement and support of the Rett disease community as we develop trofinetide. Please turn to slide 15. Rett syndrome is an extraordinarily debilitating disorder affecting not only the patients, but their caregivers and families. There is a period of normal development followed by a loss of skills, leaving a typical child unable to use their hands, walk, eat or speak. Rett syndrome affects a broad set of core symptoms, including deficits in breathing, hand movements or serositis, repetitive behaviors, nighttime behavior, vocalizations, facial expressions, eye gaze and move .

Despite this complex very involved disorder, many individuals with Rett live into adulthood, but do require one-to-one care for their entire lives. There are no FDA approved treatments for the core symptoms of Rett syndrome, and as such, this is the tremendous unmet need. Let’s discuss trofinetide as a potential treatment starting on slide 16. We evaluated trofinetide in a robust Phase III clinical study, LAVENDER, involving 187 young women in growth with Rett syndrome. The 12-week double-blind study design is shown here. Please turn to slide 17. The Phase III LAVENDER study was overwhelmingly positive and demonstrates the compelling benefit profile for patients. The study met both of its co-primary endpoint, achieving statistically significant separation from placebo on both the Rett Syndrome Behavioral Questionnaire or RSBQ, a caregiver assessment and the Clinical Global Impression of Improvement or CGI-I, a physician assessment tool.

The RSBQ was positive with a p-value of 0.0175 and an effect size of 0.37. Overall, a mean 5.1 improvement was observed for patients in the trofinetide group at 12 weeks compared to baseline. In addition, there are eight domains in the RSBQ, which capture the broad array of symptoms. There was a directional improvement across all eight domains in favor of trofinetide compared to placebo. The co-primary endpoint, CGI-I, was also positive with a p-value of 0.003 and an effect size of 0.47. The efficacy results were consistent across all age groups and severity of disease. In addition, the key secondary endpoint, which was related to non-verbal communication was also positive. Upon completion of LAVENDER, patients continue in to LILAC. Slide 18 shows the study design for this 40-week open-label extension study, which recently completed.

154 patients rolled over to the LILAC study from LAVENDER. Upon completion of LILAC, patients could continue into LILAC-2 and can remain in that study until we transition them to a commercially available product if trofinetide is approved. Let’s review some of the key findings of the LILAC study starting on slide 19. Regarding efficacy, we are pleased that for both of the co-primary LAVENDER endpoint, we observed a sustained and continued improvement in LILAC. For the RSBQ, the caregiver assessment, we observed an improvement of more than 7 points compared to the LAVENDER baseline. Importantly, this magnitude of effect was also observed for patients who transitioned from placebo to trofinetide for the LILAC study. Let’s review the CGI-I scores on slide 20.

As a reminder, the CGI-I is assessed by physicians on a 7-point Likert scale. Thus, a score of 4 indicates the physician saw no improvement, scores greater than 4 do note a worsening of disease, as scores less than 4 indicate an improvement. Recall that in LAVENDER, trofinetide patients improved approximately half a point in 12 weeks to a score of 3.5. And in the LILAC study, their baselines were reset, and over the next 40 weeks, all patients who completed the study demonstrated additional improvement on average of almost 1 full point with a mean score of 3.1 at the end of 40 weeks. These are very meaningful findings in both the RSBQ and CGI-I, and important for patients and caregivers. I’d like to briefly review the topline safety and tolerability findings on slide 21.

In the 40-week LILAC study, we observed a consistent adverse event profile compared to the LAVENDER study. Importantly, no new safety or tolerability findings were reported. Over the course of the study, the most common adverse events reported were diarrhea, vomiting and COVID-19. Diarrhea and vomiting rates were consistent with those from the LAVENDER study and were almost all mild or moderate in nature. Discontinuation in the study related to an adverse event of diarrhea were 21% over the 40 weeks. The overall discontinuation rate was approximately 46%. There was no single reason contributing to the additional discontinuations and this rate is not uncommon when compared to other long-term open-label studies. For context, patients continued and completed LILAC over a span of several years.

GI management plans were only added towards the end of the study and this would not have made much of a difference in the overall data collected. However, discontinuations did decrease the longer patients stayed on therapy. This is further evidenced by a much smaller discontinuation rate in the ongoing LILAC-2 extension, and notably, so far in LILAC-2, we have had no discontinuations due to diarrhea. I will now turn it back to Brendan to outline our launch initiatives.

Brendan Teehan: Thank you, Kathie. Please turn to slide 22. We are very excited to be on the verge of potentially bringing the first ever treatment of Rett syndrome to the patients, families and HCPs looking for novel solutions. As you would expect, we are making significant investments and progress in preparing for the successful of trofinetide. Let me break down our priorities to three areas of focus, disease awareness, patient identification and ongoing support. Our first priority is to drive disease state awareness education about the core symptoms of Rett. An important part of the foundation we are laying now is continuing to build the awareness of the core symptoms of Rett so that physicians and caregivers are better equipped to recognize the unique benefits trofinetide stands poised to deliver.

It is equally important to educate HCPs and caregivers on the potential therapeutic value of trofinetide and to set up the right expectations for both efficacy and tolerability to ensure patients receive the full long-term benefits of treatment. Our second priority is to fully characterize the identified 4,500 patients who are currently diagnosed in the United States. Rett patients are primarily cared for in three principal treatment settings. About 25% of patients are treated in centers of excellence, as designated by Rett patient advocacy foundations. There are currently 22 centers of excellence, with more that are in the process of receiving the designation. Beyond these COEs, a significant majority of current Rett patients are cared for other large institutions, including academic hospitals.

And finally, there are a small percentage of patients cared for out in the community setting as standalone neurology offices not associated with the hospital. In preparation for the launch of trofinetide, we have hired a highly seasoned commercial leadership team with significant experience in rare disease to build out a field force sized to address this relatively concentrated HCP audience. And the third critical launch priority is continuing to develop best-in-class support services for patients and their families, and to leverage the strong support we have in the Rett community. At the center of this support is our hub, Acadia Connect. Here, we have developed comprehensive resources that will soon provide patients, caregivers and HCPs with the extensive support they need.

Our people are at the center of our service model, including our field based family access managers, as well as on-call pharmacists and nurse care coordinators at our hub. These team members will be educating caregivers and families on the benefits they should observe with treatment, as well as appropriate implementation of our GI management plan. To ensure we are the best partners we can be to the Rett community, we are investing in 24×7 support to ensure every patient journey on trofinetide is the best it can be from day one. We are in great shape to launch and we are eager to get to March 12th. And with that, I will turn it over to Doug Williamson, our newly appointed Head of R&D. Doug?

Doug Williamson: Thank you, Brendan. Please turn to slide 24. I’d like to begin by just taking a moment to introduce myself before sharing some thoughts on ACADIA’s R&D programs and some of the exciting potential we have in front of us. I am a psychiatrist by training and following a few years spend in clinical practice and academic research. I have spent almost 30 years in neuroscience drug development in both large and small pharma, spanning all phases of clinical development and medical affairs. We have already discussed NUPLAZID and trofinetide, so I won’t spend too much time on them, but I would like to reiterate the importance of these two drugs. NUPLAZID selectivity for the 5-HT2A receptor represents an important and differentiated approach to antipsychotic treatment in contrast to other antipsychotics, which target dopamine and other receptors.

And this has provided a safe and effective treatment for tens of thousands of families affected by Parkinson’s disease psychosis. Trofinetide, meanwhile, is poised to potentially become the first and only therapy approved to treat Rett syndrome, as well as being ACADIA’s second commercial product. Neuroscience drug development is full of unique challenges. We are still a long way from understanding the brain, as well as we are beginning to understand the rest of the body. But the unmet need and the cost to society of brain disorders is huge and it will require focus and persistence to achieve success. And one of the main reasons I joined ACADIA is because we have consistently demonstrated those qualities throughout the company’s history. Beyond PDP and Rett syndrome, I am very excited to help lead the development of two other areas of significant unmet need, our negative symptoms of schizophrenia and Alzheimer’s disease psychosis programs.

Let’s continue with the negative symptoms program on slide 25. Persistent negative symptoms remain one of the largest unmet needs in schizophrenia, and as of today, there are still no approved treatments for these symptoms. Once the acute psychotic symptoms have been controlled, it is the crippling lack of motivation, low energy, social withdrawal and blunted mood, which prevent those living with schizophrenia from returning to the relationships, employment opportunities and quality of life, which we often take for granted. Enables care for themselves, the burden of looking after them often passes to the caregivers instead. We are evaluating pimavanserin for the estimated 700,000 people living with schizophrenia in the U.S. today whose positive symptoms are adequately controlled on currently available antipsychotics, but who continue to experience predominant negative symptoms.

We believe that pimavanserin as an adjunctive treatment has the potential to alleviate negative symptoms and enable them to take that next step to a more fulfilling life. Slide 26, as Steve mentioned earlier, as part of our development program, we have one positive pivotal study, ADVANCE-1. Our next study, ADVANCE-2, had an important modification. The ADVANCE-1 study included some dose ranging and while we achieved the primary endpoint, we clearly observed more robust results in patients who took the 34-milligram dose, as shown on the slide. Note that this is the same commercially available dose, which demonstrated the strongest efficacy for PDP. ADVANCE-2 is now close to completing enrollment, which should occur around midyear. If all continues to go well, we should have topline results in early 2024 and we look forward to keeping you updated on our progress.

Now let’s discuss our ACP-204 program. ACP-204 is a novel molecule, but one which is designed to build on our experience with pimavanserin. With ACP-204, we may have an opportunity to optimize the efficacy potential, while also reducing the risk of QT prolongation and all with a potentially faster onset of action. We are currently finalizing our Phase I work, and once complete, we will engage the FDA our potential development plan for ACP-204 as a treatment for Alzheimer’s disease psychosis. Following discussion with the FDA, we plan to initiate Phase II trials in patients with ADP later this year. We anticipate being able to leverage our familiarity with this class of compounds to be aggressive in late-stage development, but it will still be very important to appropriately characterize the pharmacology of this novel asset prior to entering Phase III.

With that, I will turn it over to Steve for closing remarks.

Steve Davis: Thanks much, Doug. Please turn to slide 29. I’d like to end today’s prepared remarks with a slide outlining our key development milestones. First, our upcoming PDUFA for trofinetide is just two weeks away. Second, we should complete enrollment in our second pivotal study for the negative symptoms of schizophrenia around the middle of the year, with topline results expected in early 2024 and we plan on advancing ACP-204 into ADP patient trials later this year. And finally, given the cash flows from our PDP franchise and our strong cash balance, we have the ability to execute our current operating plan without the need to raise additional capital. As always, I would like to thank our employees for their accomplishments and their ongoing commitment and passion as we continue our mission to elevate life. And with that, I will now turn things back over to the operator for Q&A.

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Q&A Session

Operator: Our first question comes from the line of Ritu Baral from Cowen.

Ritu Baral: Good afternoon, guys. Thanks for taking the question. On trofinetide, can you elaborate just a little bit more on the diarrhea management plan that you alluded to in the Acadia Connect program, I guess, is what the nurse care coordinators and on-call pharmacists will help manage? Can you describe what you are going to recommend the support and then do you think that your assumptions for diarrhea discontinuation rate will resemble what you featured today in LILAC? Thanks.

Steve Davis: Yeah. Thanks much for the question, Ritu. I am going to ask Brendan to answer your question as it relates to the activities that we have stood up in terms of how we will offer very comprehensive care and support to patients and their families and then will take the very last part of your question.

Brendan Teehan: Sure. Thanks. Thanks for the question. As we said in our prepared remarks, we are building our caregiver and patient support around our hub, also known as Acadia Connect. This is intended to provide comprehensive end-to-end support to both caregivers and patients and it’s critical to do that to help patients not only start, but stay on therapy and ensure the optimal treatment experience. We will also have 24×7 clinical pharmacists — clinical nurse coordinators at the hub, and then in the field, we are supplementing that with family access coordinators, family access managers that are intended to be face-to-face with families as they start and then begin to stay on trofinetide.

Steve Davis: Great. Thanks, Brendan. Ritu, in response to the last part of your question regarding diarrhea discontinuation rates. I think with any drug sometimes there can be differences between what you see in clinical studies and what you see in real-world practice. And I think the way I would think about this, and as we have said very consistently, with drugs that have symptomatic relief on subjective endpoints, you will have a certain amount of discontinuations in the early months of therapy. We see that in neuropsychiatry a lot, we see that with NUPLAZID and so you will see that. I would think of this population in two components. One is the prevalent population. So there’s a sizable prevalent population that we will — that will access the drug first.

We will work through that population and then there’s an incident population beyond that. And so as we think about the dynamics of this molecule, we recognize that there’s — it’s a very, very highly debilitating disease. There’s no approved therapy. The benefits that we see with trofinetide offer hope for the first time to these families and so I think there will be a high motivation to access the therapy. And then what we anticipate over time is as we work through the prevalent population, the — in the early months of therapy where we have a lot of patients going through that simultaneously, then the discontinuation rates will settle in — will flatten out and settle into a much more normal cycle. So I hope that’s helpful. We will go to the next question now.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Tessa Romero from J.P. Morgan.

Tessa Romero: Hey, guys. Thanks so much for taking our question. So just one from us on trofinetide. So can you just remind us, in your prepared remarks, you talked a little bit about your healthcare practitioner audience here. How do these different practices from your centers of excellence to your academic hospitals to your community centers compare on average with respect to number of Rett patients treated, physician awareness of trofinetide or any other kind of key distinguishing characteristics we should be thinking about? Thanks so much.