So, those are the main factors that go into the guidance range that we provide. And I think you also had a question on how to think about gross to net for 2024. So, for that I’ll turn it over to Larry.
Larry Hineline: Yes. Yes, thanks, Mark. Yes, the gross to net in 2024 is going to be — we project to be in the mid 30s, and that’s compared to the low 30s that we saw in 2023. Now, there are several primary drivers for this increase where we have increases in volume going through the commercial channel as a result the strong uptake in the bipolar program. Plus, there are also been recent improvements in Medicare Part D coverage. So, those two are main drivers for the increase from the low 30s to the mid 30s.
Operator: All right. Does that answer the question?
Sharon Mates: Yes. Why don’t you go ahead with our next call please?
Operator: Thank you. One moment please. Our next question is from Jeff Hung with Morgan Stanley. Please proceed.
Michael Riad: Hi, this is Michael Riad on for Jeff Hung. Thank you for taking our question. For adjunctive MDD, to what extent does the background ADT influence the placebo effect? And, how should we be thinking about placebo response variability between Studies 501, 502 and 505? Are the three studies balanced in terms of the background regimens? Thanks so much.
Sharon Mates: Suresh, would you like to look to that?
Suresh Durgam: Yes. Yes, so, in this program for MDD with adjunctive treatment for MDD, we have allowed SSRIs, SNRIs, and antidepressants to be the background. And all anti that are approved are allowed into this. So, that the background in terms of you are talking about the placebo response, again in all CNS trails and MDD trails, in particular placebo response we try to mitigate it by taking several measures. So, this is no different in this study also that we are measures allowing for proper adjudication of patients, making sure that they have a right severity that they are coming in. So, we have taken those measures in terms of the placebo response. In terms of individual medications, we group them based on SSRIs and SNRIs. Individual medications will not be taken into account and just be taken into account from a — class wise.
Sharon Mates: And all of the program — the whole program has been done the same way. So, we allow–
Suresh Durgam: Yes.
Sharon Mates: Yes, in each of our studies in depression.
Michael Riad: That’s very helpful.
Suresh Durgam: And also have in addition to — in addition all the drugs that are approved also are — are being done the same way.
Michael Riad: Thanks.
Operator: All right, thank you. One moment for our next question please. And it’s from the line of Umer Raffat with Evercore. Please proceed.
Michael DiFiore: Hi, guys. This is Mike DiFiore in for Umer. Thanks so much for taking my question and congrats on all the progress in 2023. Two from me, one is variation of the question just asked. In the Study 501, the adjunctive MDD trial seems to have a little bit more diverse set of ex-U.S. countries participating compared to Study 502. And my question is, could there be any local or regional differences in the way medicine is practiced that makes you more or less confident that the — in Study 502, it would be successful, given that both trials are designed exactly the same? And I have a follow-up.
Sharon Mates: Yes. So, this is Sharon. Thanks of the question, Mike. And I’ll start and I’ll ask Suresh if he wants to fill in. We plan all of our studies the same way that are late stage global studies. And, that is you look at the different countries. And we plan for the U.S. to have a proportion of patients and for ex-U.S. to have a proportion of patients. And that proportion of patients is typically around 30% U.S. And then, ex-U.S. fills in. And this is no different. So, 501 and 502 are the same. I don’t — I didn’t quite get your part of the question where you seem to think there is a difference because there isn’t any difference. Some of the countries are different. But, it’s ex-U.S. and U.S. patient population as per what is common practice and what in discussions with the FDA what they like to see.
Michael DiFiore: Got it. That’s helpful. I am sorry. Do you have anything more to add?
Sharon Mates: I don’t know. Suresh, did you have anything to add?
Suresh Durgam: Again, that’s true. We have about 30% coming from the U.S. and ex-U.S. And, the question about different countries but these are all standard practice guidelines that’s pretty observed throughout the world. So, in terms of the practice guidance and other factors, we look into that and we select countries that have similar practice patterns.
Michael DiFiore: Thank you so much.
Sharon Mates: Right. And to be clear, I couldn’t hear what Suresh said. I will just make clear. We aim for around 30%, give or take a percent or a two on either side.
Michael DiFiore: Got it. That’s helpful. And my follow-up question is — and forgive me if I missed this, have you met with the FDA to discuss the mix features data in context of the broader adjunctive MDD indication? And if so, would you be able to offer any commentary or color there? Thank you.
Sharon Mates: Yes. Thanks, Mike. Yes, in our prepared remarks I did say that we did recently have a meeting with the FDA and that it was a constructive meeting, and that as is our practice, we always wait for the FDA minutes before we say anything. And so, once we have the minutes, we will further update you on the program and on final meeting. So, we are good.
Michael DiFiore: Got it. Thank you.
Operator: Thank you. One moment for our next question please. All right, it comes from the line of Marc Goodman with Leerink Partners. Please proceed.
Marc Goodman: Thanks so much for taking my question. This will be likely for Mark, congrats on the quarter. So, can you maybe talk about CAPLYTA’s growth trajectory moving into first quarter ’24? How should we think about a sequential growth versus fourth quarter given the seasonality? And maybe additional color on the DTC campaign you plan in 2024? Thanks.
Sharon Mates: Thanks. Mark, you want to take that please?
Mark Neumann: Yes, sure. Thanks for the question. So, we had very strong fourth quarter accelerating our total prescription growth to 10%. So, we come into the year in 2024 with significant momentum in that regard. Typically as you alluded to in the first quarter, you see some typical headwinds associated with patients switching market access plan when you have a product like ours. With an increasing portion of the business commercial channel, you also have increased copay assistance required as patients deductibles reset for the year. And then, typically that decreases over the course of the year. So, we feel very good about the momentum we have. The underlying business, the demand in the business, the reception that physicians have had to the product and the feedback that they provide to us on their experience and the patient’s experience, but yes, typically in the first quarter you do see some headwinds, and then in the second quarter, you see a reacceleration and growth.
So, that’s in general how I would think about the upcoming quarters.
Operator: Thank you. One moment for our next question please. Having an issue promoting the next question. One moment please. All right. Our next question comes from Joseph Thome from TD Cowen. Please proceed.
Joseph Thome: Hi, there. Good morning. Thank you for taking my question. And congrats on the quarter. Maybe just if you could talk a little bit on the expected size of the sales force expansion that will be necessary if the MDD indication is allowed to move forward under the label? I know you have had some success in MDD in the primary care setting. So, would you look to expand a little bit more there? And is any of your expense guidance for 2024 earmarked for expansion for MDD? Or, that will be more of a 2025 move? Thank you.
Sharon Mates: Mark, would you like to take that?
Mark Neumann: Yes, sure. Thanks Joseph for the question. Yes, so the answer to the second part of the question first. Our SG&A guidance for the year for ’24 does not contemplate any material expansion in our salesforce. We continually evaluate our marketing activities and our salesforce sizing, and we take advantage of any opportunities that we see to fuel additional growth, but in terms of any major expansion, we don’t contemplate that in 2024. Once we have the data and we understand that we’re on the track for filing and approval, we do expect to increase the size of our salesforce to ensure that we’re optimizing CAPLYTA and the growth opportunity we would see in MDD, which is a very significant market. To give you a little bit of background, for bipolar depression and schizophrenia, we currently target about 43,000 physicians that are primarily psychiatrists and the nurse practitioners that support them and a smaller segment of primary care physicians who do treat a lot of bipolar depression and are high-volume prescribers of antipsychotics.
They are included in our current 43,000 physician target list. As we contemplate an approval in MDD, that target list will increase significantly, and it will increase mostly in the area of primary care, because there are many more primary care physicians who are comfortable treating MDD with adjunctive antipsychotics who aren’t very high-volume prescribers for bipolar depression, and certainly not for schizophrenia. And it would be for that group of physicians that we would look to expand our salesforce. Now the 43,000 physicians that we currently call on will be able to leverage them because virtually all of the 43,000 who are high volume prescribers for bipolar depression will also be high volume prescribers for MDD. And they’ll have about four or five years of experience with the brand.
So, we think we’ll be able to have a really good jumping off point with that group of physicians. And the extent to which we expand our salesforce will be determined by how far and how quickly we want to go into primary care. And those are the things that we have been working on. And as we get a little bit closer to the talking about our launch plans, we’ll come back to you with more specifics about that. So, hopefully, that background is helpful for you, and I’ll leave it at that for now.
Joseph Thome: Great. Thank you.
Operator: Thank you. One moment for our next question, please. All right. And it comes from the line of David Amsellem with Piper Sandler, please proceed.
David Amsellem: Thanks. So, just two quick ones, one is with the MDD label expansion, can you talk to payer access and particularly how we should think about rebating with commercial plans and the gross to net overtime with MDD in the mix. So, that’s number one. And then, number two, regarding deuterated lumateperone, I wanted to get your early thoughts on how you’re thinking about the value proposition here in terms of differentiation from the legacy product, particularly on tolerability and safety, given that the current form of lumateperone is ostensibly pretty well-tolerated and widely seen as pretty safe within the category, so, just wanted to get your thoughts on that. Thank you.
Sharon Mates: Great. Hi, David. Thank you for the question. And maybe I’ll ask Mark to start out, and then I’ll take the 1284, and I may need to ask you to repeat it if I can’t remember it by then, but let’s start with Mark.
Mark Neumann: Yes, sure. Thanks for the question, David. Yes, for the potential label expansion into MDD, we would expect a pretty seamless process to the addition of MDD to the label when it comes to payer access. In general with the antipsychotic category, the payers manage these products at the brand level, not at the indication level, meaning that whatever your coverage is for the existing indication, that coverage gets carried over to the new indication as well. That’s what we experienced when we moved from schizophrenia to the label expansion for bipolar depression, and we’ve seen similar dynamics with competitive products who have added MDD to an already existing schizophrenia and bipolar depression label. So, we would expect it to be a fairly similar process, and it’s another reason why we expect to be able to get off to a quick start with that potential approval in MDD.
So, with that, maybe I’ll turn it back over to Sharon for the second question that you had around 1284.
Sharon Mates: Great. Thanks a lot. So, just for those listening who may not be familiar with 1284, let me just remind everyone that 1284 is a deuterated form of lumateperone, where the carbon deuterium bonds are strategically replaced with carbon hydrogen bonds. So, it is a new molecular entity and it’s formulated as an ODT-SL to be delivered once a day sublingually. we have done a Phase 1 program that found that 1284 ODT-SL was very rapidly absorbed into the systemic circulation, was metabolically stable, and resulted in high systemic exposure. Just a minute. Sorry. So, we have, and you’re, you were right to point out that that lumateperone has a very good safety and tolerability profile. What we have seen with 1284 is that we have seen some things in the PK profile that we think may be even more advantageous, especially as we studied it in a small population of the elderly and other populations based on the PK characteristics that we think make it amenable.
And that is, so, in the elderly populations with Alzheimer’s disease and the general population with GAD. So, we think, and that’s why we’re doing these studies. So, we do believe that there are some advantages to 1284 over lumateperone, and we are doing the studies to confirm that. And we’ll keep you apprised of these studies and of the results as we move forward. So, thanks a lot for the question.
David Amsellem: Okay. Thanks, Sharon.
Operator: Thank you. One moment for our next question, please. It comes from the line of Jason Gerberry with Bank of America. Please proceed.
Jason Gerberry: Hey, good morning. Thanks for taking my questions. First, just Sharon, I just wanted to clarify, so is the thinking that you only need one of these three MDD trials coupled with your mixed feature positive trial to satisfy the efficacy requirement for the MDD filing, I just wanted to get your sense of confidence around that. And then, for Mark, just your current kind of understanding of what’s going on in the adjunctive landscape for MDD with these atypical antipsychotics. Is the Vraylar launch kind of lifting all boats, so to speak, with the different atypical, or is there a market share grab game? I’m just wondering how much of a switch dynamic is involved here with some of the agents. Thanks.
Sharon Mates: Great, maybe I’ll ask Mark to start and then I’ll come in.
Mark Neumann: Yes, sure, Jason, the dynamics that we’re seeing in the MDD space for adjunct of antipsychotics is very encouraging to us in terms of the potential opportunity for CAPLYTA in the future and by that I mean Vraylar has had a very successful launch in MDD significantly growing that market, which is not a surprise to us. But rather is confirmation of what we believe to be a very significant unmet medical need in MDD for an adjunct of antipsychotic with a good efficacy and safety profile. So, we don’t believe it’s a share grab. Rexulti’sbusiness does not seem to have been impacted significantly by the launch in Vraylar. So, we think we’re seeing a lot of market growth there. And with successful studies and a successful filing and approval, when we get to the market, we see that as a very, very robust opportunity for CAPLYTA.
