Cerevel Therapeutics Holdings, Inc. (NASDAQ:CERE) Q2 2023 Earnings Call Transcript

Cerevel Therapeutics Holdings, Inc. (NASDAQ:CERE) Q2 2023 Earnings Call Transcript August 2, 2023

Cerevel Therapeutics Holdings, Inc. misses on earnings expectations. Reported EPS is $-0.61 EPS, expectations were $0.65.

Operator: Good morning and welcome to Cerevel Therapeutics Second Quarter Financial Results Conference Call. At this time, all participants are in listen-only mode. Later, you will have the opportunity to ask questions during the Q&A portion of the call. Please note that this call may be recorded. I will now hand the call over to Matt Calistri, Vice President of Investor Relations.

Matthew Calistri: Thank you. Good morning, everyone. We appreciate you joining us for our second quarter 2023 earnings call. On today’s call, you will be hearing from Dr. Ron Renaud, our President and Chief Executive Officer; Dr. Ray Sanchez, our Chief Medical Officer; Dr. John Renger, our Chief Scientific Officer; and Susan Altschuller, our Interim Chief Financial Officer. During our call today, please refer to our press release from this morning, detailing our second quarter 2023 performance, as well as our updated corporate presentation, both of which are available on our website. I would like to remind you that, we will be making forward-looking statements that reflect our current views related to, among other things, the potential attributes and benefits of our product candidates and the format and timing of our product development activities and clinical trials.

We strongly encourage you to review the information that we file with the SEC regarding specific risks and uncertainties. I will now hand the call over to Dr. Ron Renaud, President and CEO of Cerevel to provide an overview of our achievements and outlook.

Ron Renaud: Good morning everyone. And thank you for joining us for our second quarter 2023 business results call. I’m pleased to be here with all of you today as the new president and CEO of this exceptional company. In my time at Cerevel so far, I have seen immense passion and dedication from the team, and I’m incredibly enthusiastic about our science and innovation as we aim to build a world-class neuroscience company. Before getting into the specifics, let me share some of my initial observations of this organization. Cerevel is comprised of smart, energized with deep experience in neuroscience drug, energized people with deep experience in neuroscience drug development, and notable track records of success. We have an unparalleled pipeline with the potential to bring new treatments to some of the most challenging neuroscience diseases.

We are also focused on discipline, execution, aware that patients and loved ones are waiting for these important new treatment options. Before I joined the company, I was impressed with this enviable portfolio. Now that I have had an opportunity to work with this team and dive deep into the details of the science and the programs, I’m even more excited about all we have ahead of us. Turning to our lead programs. Let me start with Emraclidine, our M4-Selective Positive Allosteric Modulator or PAM. At Cerevel, we are exploring all aspects of the M4 muscarinic pathway as we seek to build a franchise that can address a broad range of diseases via this mechanism. Emraclidine is a highly selective for M4 and we believe it has the potential to change the way we view and treat schizophrenia, Alzheimer’s disease, psychosis, and other serious mental illnesses.

We announced this morning that our Emraclidine Phase II EMPOWER program is now expected to read out in the second half of 2024. A change resulting from recent, slower than expected enrollment. We are deploying measures to restore our pace of enrollment, and I am personally working closely with Ray and the team on mitigation strategies. Ray will provide more details including our go forward approach and our reasons for confidence in our updated timing. As always, we are focused on ensuring the quality of Emraclidine data, and we will be thoughtful in our plans to add new sites or countries to ensure we maintain our rigorous standards. Moving now to Tavapadon, the first D1/D5 partial agonist in the development for treatment of Parkinson’s disease.

We believe our registrational Phase III tempo program has the potential to establish Tavapadon as the backbone treatment across the spectrum of Parkinson’s disease therapy. Tavapadon has the opportunity to serve as both the preferred monotherapy for newly diagnosed patients and the ideal adjunctive therapy to L-Dopa as the disease progresses. We expect TEMPO-3 to be our first data readout of 2024, while data from TEMPO-1 and TEMPO-2 will read out in the second half of 2024. Turning now to Darigabat, our selective Alpha 2/3/5 GABA. A PAM currently in development for both epilepsy and panic disorder. Our Phase II realized trial and focal epilepsy is designed to address an area of tremendous unmet medical need for patients who need better control of their seizures.

We expect this program to be our second data readout next year, coming mid-year of 2024. We also recently initiated the ADAPT trial of Darigabat, a Phase II proof-of-concept trial in panic disorder. We have confidence in the potential of Darigabat to treat anxiety related disorders given its selective receptor subtype profile and its avoidance of Alpha 1. The receptor subunit, we believe is the main driver of side effects for benzodiazepines. On the financial front, we have a strong balance sheet that is expected to support all of our anticipated late stage data readouts next year. Before I hand it over to Ray, I want to take a moment to welcome the newest members to the Cerevel Executive Team; Dr. Susan Altschuller, Chief Financial Officer; and Paul Burgess, Chief Business Development and Strategic Operations Officer.

Susan brings financial management, investor relations, and business planning experience from leading biopharma companies. Paul brings deep experience in corporate development, business development, and operations key skills during this important juncture for Cerevel, all three of us have been warmly welcomed by Cerevel’s senior leader’s seasoned leadership team. I’m proud of how in just seven weeks we have come together as a new invigorated executive team. I’m energized by all that we will do together, along with all of our Cerevel colleagues to build a world-class neuroscience company with multiple commercial products. With that, I will now turn the call over to Dr. Ray Sanchez, our Chief Medical Officer, to provide some added color about our lead programs.

Ray.

Raymond Sanchez: Thank you, Ron, and good morning everyone. Let me start with Emraclidine, our highly selective M4 Positive Allosteric Modulator or PAM, which we are currently developing in both schizophrenia and Alzheimer’s disease psychosis, or ADP. In ADP, our Phase I healthy elderly volunteer trial is ongoing and the results of this trial will guide our clinical development plan as we advance in this important indication. Turning to schizophrenia and our Phase II EMPOWER program. As a reminder, EMPOWER-1 and EMPOWER-2 are two adequately powered three arm trials that each include 372 adults living with schizophrenia and experiencing an acute exacerbation of psychotic symptoms. The first trial is studying Emraclidine 10 milligrams and 30 milligrams once daily versus placebo, and the second trial is 15 milligrams and 30 milligrams once daily versus placebo.

We designed these trials to potentially meet the criteria necessary to serve as pivotal trials based on what we expect the FDA will evaluate in a registrational package. We are also enrolling in EMPOWER-3, our 52 week open label safety extension trial, and prioritizing the completion of non-clinical and clinical pharmacology studies to accelerate a potential registrational package for Emraclidine and schizophrenia. As Ron discussed, we have seen a recent slowdown in enrollment. Enrollment in this program had strong momentum at the outset, but we have observed a slowing of that initial pace in recent months with some XUS sites taking longer to stand up than planned and several U.S. sites yielding slower enrollment. We are responding accordingly with mitigation measures, including increased site and investigator outreach and plans to enhance enrollment in existing sites.

We will also look to add additional high quality sites in the U.S. and one to two more countries without going beyond a total of 30 sites per trial to preserve data quality and mitigate the placebo response risk. We will continue to stay laser focused on executing these trials while maintaining the quality of the data. We recognize the central importance of Emraclidine to Cerevel, our investors and the patients we seek to serve, and we are acting with deliberate speed to address these potential headwinds and restore our prior pace of enrollment. With the strong efforts of the team, I’m highly confident in our ability to deliver within these revised timelines. Turning now to Tavapadon, our D1/D5 partial agonist are Phase III trials known collectively as the TEMPO trials are ongoing, along with the corresponding open-label extension in which we are encouraged by a high rollover rate of 90% or more.

We expect data for TEMPO-3 to be our first data readout in 2024 with data for TEMPO-1 and TEMPO-2 coming in the second half of 2024. I will now discuss Darigabat, our selective GABA. A PAM, which is currently in development for epilepsy and panic disorder. We believe Darigabat has the potential for both anti-epileptic and endogenous activity comparable to currently available benzodiazepines, but with reduced side effects. Darigabat’s novel mechanism of action and expected tolerability profile provides the potential for a new treatment option that may be used chronically. Our Phase II realized and focal epilepsy is progressing and we expect results in mid-year 2024. Here, we also are encouraged by a continued high rollover rate into the realized open-label extension.

Beyond epilepsy, we are excited about expanding the potential applications of Darigabat through the initiation of the ADAPT trial, a Phase II trial in panic disorder. The ADAPT trial will evaluate Darigabat 25 milligrams twice daily versus placebo and enroll 228 patients with panic disorder. The primary endpoint will be the proportion of subjects, who are free of panic attacks during the last two weeks of the maintenance period. And key secondary endpoints will be the change from baseline in the Panic Disorder Symptom Scale or PDSS total score at week 14 and the change from baseline in panic attack frequency during the last two weeks of the maintenance period. A Mu drug has not been approved in panic disorder in nearly 20-years. So we are excited about the potential of providing Darigabat to patients in need of new therapies.

With that, let me turn it over to Dr. John Renger, our Chief Scientific Officer, to provide an update on our early stage portfolio. John.

John Renger: Thank you, Ray, and good morning, everyone. I’m very pleased with the progress that we have made in discovery research and early clinical development. Let’s begin with our kappa opioid receptor antagonist, or KORA program also known as CVL-354. We recently completed both our single and multiple ascending dose trials in which a broad range of doses were administered and considered well tolerated. These trials will enable us to interrogate a wide range of receptor occupancies of both the Kappa and Mu opioid receptors. This dose range will provide us with the potential for the selection of doses that can either preferentially target the Kappa receptor or provide a dual native ore activity at both Kappa and Mu receptors simply by increasing exposures.

We anticipate that this dose flexibility will enable us to explore efficacy and better understand tolerability across a number of populations of interest, which include major depressive disorder, post traumatic stress disorder, and substance use disorder. Our results to-date demonstrate pharmacokinetics is important to date administration and the ability to dose without regard for meals. In addition, we have demonstrated a predictive dose related change in serum biomarkers that are consistent with opioid antagonist. We are also pleased to announce that, we received additional National Institutes of Drug Abuse or NIDA grant funding of to $8.1 million over three-years to support the ongoing clinical development of CVL-354, including our recently initiated Phase I PET receptor occupancy trial that will include determination of both Kappa and Mu receptor PET tracer for displacement to further characterize selectivity across compound exposures.

We anticipate providing updates in our internal Phase I data and plans for next steps in the future. Moving to other exciting news in our early stage pipeline, we recently received a grant from the Michael J. Fox Foundation for Parkinson’s research to advance our internally initiated TMM-175 program, which is aimed at slowing and or stopping the progression of Parkinson’s disease. As context, TMM-175 or transmembrane protein 175 is a recently identified and structurally unique protein, which is believed to be an endolysosomal potassium and proton channel. This target has been of particular interest to our team because of its strong genetic relationship to idiopathic Parkinson’s disease. Our TMM-175 program consists solely of internally identified compounds that have been discovered by our Cerevel chemist and scientists.

It represents one of our initial efforts to develop potentially disease modifying therapies intended to stop the progression of debilitating neurodegenerative disease. We look forward to working closely with the Michael J. Fox Foundation. This grant will support our program’s research efforts and enable progress to be made in finding promising new chemical matter. We look forward to sharing more details in the compelling science behind this effort as we continue to advance this program. With that, I’m now going to turn it over to Cerevel’s Chief Financial Officer, Dr. Susan Altschuller, who is going to review our financial performance of the second quarter. Susan.

Susan Altschuller: Thank you, John. For the second quarter of 2023, operating expenses were approximately $97 million, comprised of 74 million of research and development expenses, and 23 million of general and administrative expenses. We ended the second quarter with roughly $825 million in cash and marketable securities on the balance sheet, which provides us runway comfortably into 2025. Opportunistically bolstering the balance sheet remains a priority for the company to ensure we maintain the financial strength to maximize the value of our broad pipeline. As our track record shows, we will be thoughtful about how we access capital, and we will consider a variety of options including evaluating partnerships and regional collaborations in service of meaningful value creation for our patients and our shareholders. With that, I will hand the call back over to Ron for his concluding remarks.

Ron Renaud: Thanks Susan. At Cerevel, we believe we have an unparalleled pipeline in neuroscience. We are thinking big, and as I start my tenure as CEO, I can tell you that the potential of this company is inspiring. We are committed to bringing important new treatment options to patients facing some of the most devastating neuroscience conditions, including schizophrenia, Alzheimer’s disease psychosis, Parkinson’s disease, epilepsy, and panic disorder. I’m pleased and honored to be at the helm of this company and to be part of the incredible work we are doing together here. I have gone under the hood and I have taken a close look at our operations, and I can assure you we are focused on execution. Our entire executive team is working together to deliver on promises to bring new medicines to patients as quickly as possible.

With our Tavapadon TEMPO-3, data expected in the first half of 2024, followed by Darigabat realized data mid-year and a busy second half of 2024 with the EMPOWER and remaining TEMPO readouts. I look forward to updating you as we advance this robust portfolio. I would like to conclude with my sincere thanks to our employees and to the patients and investigators in our clinical trials who graciously make everything we do possible. With that, let’s open the call for questions.

Operator: [Operator Instructions] At this time, I would now like to turn the conference back over to Ron Renaud for closing remarks.

Ron Renaud: Operator, I think there should be some folks in the queue. I see them on here, so could you double check, please?

Q&A Session

Operator: Our first question comes from the line of Umer Raffat from Evercore ISI.

Michael DiFiore: Hi, this is Michael DiFiore on for Umer. Thanks so much for the question and welcome Ron. Looking very forward to working with you. A few for me, I just want to better understand the drivers of the schizophrenia trial delays. Second, what if you can, what is the CRO that you are using? And Ron, just as an outsider coming in and with a wealth of experience, there is something seems to be that different in the conduct of psychosis or schizophrenia studies. What do you think it is that in general is causing them to be more delayed, maybe reasons outside of COVID? Thank you.

Ron Renaud: Yep. So thanks for the questions. You know, I will let Ray provide some color on some of the logistical issues. But basically, we said this in our prepared remarks, we will say it again. We know the importance of Emraclidine. We know the potential for this to be a truly transformative therapy for patients. And I think you can hear in our comments that we are moving to bring this ahead as quickly as possible, but while we do this, we are going to continue to be incredibly rigorous in our site selection with an eye towards minimizing variability and some of the other factors that Ray can talk about in terms of things that play a role in placebo effect. But we are not going to compromise on this at all. To your point, yes, undeniably, we have reported delays in the past with some of our other programs, Tavapadon, Darigabat, and now Emraclidine.

And I think, what I would tell you here is as I’m new, Susan is new here, Paul is new here, we are taking a fresh look at everything, we are putting a fresh set of eyes on how we do everything and how can we do a better job at forecasting these enrollment timelines. We know that this is critical given the importance of, of Emraclidine, Tavapadon and Darigabat in their respective indications. And what I can tell you is we do need to do a better job at this and we are committed to getting this right. And these are some of the things that we are looking at right now. With regard to some of the specific issues around the factors driving delay and the CRO, I will let Ray take that.

Raymond Sanchez: Thank you, Ron. And good morning, Mike. So Mike, what I can tell you is that, all the principal investigators that I continue to talk to in the Emraclidine program are extremely excited about this new class, specifically Emraclidine because of its once daily and dosing and no need for titration. So there is a lot of excitement there. We are continuing to understand the root cause of some of these delays at the site level. Importantly because we strive to use the best sites, we are not going to compromise on data quality, data integrity, trying to manage and mitigate placebo response. But you have to understand that each of the sites also they rely on referrals to ensure that we get the right patients. And that is the key thing, getting the right patients.

And so, in doing so, some months are better than others but collectively that those are some of the bottlenecks that really hold getting the right patients into the trial. But again, because we are so focused, so laser focused, as I said in the call earlier on, getting this right, making sure that we just don’t exacerbate the placebo response, that we work closely, which we are with the investigators, we are heightening our communication plan with them to ensure the greatest likelihood of success for these trials. So that is really our main focus. And those are some of the challenges that we are, um, up against in terms of the sites and what they are experiencing.

Operator: Our next question goes on the line of Mohit Bansal from Wells Fargo.

Mohit Bansal: Thank you very much for taking my question and welcome Ron, Susan and Paul looking forward to working with you with. So my question is also the same line because, so Ron, I mean in the limited time you have spent with the company so far, when you look at the timelines, I mean there could be one or two reasons. Like, one is obviously, was this a case of, a little bit providing aggressive timelines to investors and now realizing that is probably not fair, or it is the other way around where, there is something fundamentally changing in the marketplace, where it is hard to enroll these patients. I’m asking this because, I mean, like, these especially the cytopenia trial, this looks – I mean, look, it is a short trial.

So it is still – we are still ways away from the point where we can say that, the trial is fully enrolled. So just trying to understand if it is, like, what exactly is the underlying cause is? And then the second part of my question is that, so you mentioned that you are doing some more work in terms of filling out the right data package for the filing for schizophrenia trial. So it is been asked that. So how should we think about the timelines for schizophrenia in terms of filing timelines and how much data you need to generate there? Thank you.

Ron Renaud: Yes. So thanks for the good words. First of all, again, I will keep coming back to this and you will hear us say this over and over again. Our focus remains on ensuring the quality of data, and we are going to be rigorous in our site selection. We are going to be rigorous in the investigators that we work with and our focus on placebo variability reduction strategies. You have seen in the industry what happens as the number of sites increase, as the number of patients increase, that variability increases. And that is something that we are really focused on minimizing. And so we are just not going to compromise in any way, shape or form, on the quality of the sites that we work with. I know there is going to be a natural – there is always a natural inclination at the sponsor to want to speed things up, to want to hurry up and meet the timeline.

And it is unfortunate that, we push this out. On the other hand, again, we are not going to compromise the quality of the sites that we are using here and so we are going to continue to stay focused on that. And so with that data reading out in the second half, I don’t want to point towards, exactly when we would file anything with the agency. That being said, we are putting all of the pieces in place, and we have been putting all of the pieces in place to be prepared to file an NDA for Emraclidine here. And so we are working down that pathway at the same time that we are focused on execution of this program. And that is all happening in conjunction with each other.

Operator: Our next question comes from the line of Graig Suvannavejh from Mizuho Securities.

Graig Suvannavejh: Thank you for taking my question. And Ron, Susan and Paul, my congrats on the new positions and I look forward to work with and partnering with you. I have two questions, if I may. First, Ron, just bigger picture as you step-in as new CEO. Maybe just a broad question on, whether you are coming in with a view that, you need to do a review of the business and you need 6 months before making any changes? Any kind of thoughts on, like, overall strategy, just bigger picture thoughts. And then my second question, maybe is best for Ray, with regards to this Emraclidine trials, and I just wanted to ask in light of the Phase III negative readout for the [Sinovion and Otsuka Tier1] (Ph) program where it was ascribed to a very large placebo response.

Could you just remind us, the measures that you are putting in place in order to best minimize the chance that you’ll potentially see a high placebo response in order to ensure that we minimize the risk of a negative trial outcome? Thanks.

Ron Renaud: Yes, so thanks for the question, and I will take the first part of that, and then I will, as you asked to let Ray take the second part. So, absolutely, coming in, we are seven or eight weeks into this. Obviously, I want to turn over as many stones and make sure from an operational perspective, we are working as efficiently and as effectively as we possibly can. There is a lot going on here. We have more than 2000 patients on Cerevel’s studies right now. We are double-digit number of studies, not to mention the number of those studies that are part of registrational pathways. And so, I will tell you my initial views on everything here at Cerevel is that our company, our fundamentals are very strong. I believe we have an unparalleled pipeline of neuroscience assets.

I think you would be – I think you would struggle to find another portfolio of neuroscience assets in the industry that looks as broad and as robust as what we have here in Cerevel. But we have got to continue to focus on the progress of these clinical trials, the execution of these clinical trials in making sure that we can forecast these enrollment timelines much more effectively. Obviously, we know that that helps all of the folks in the investment community, as they try to figure out what we are doing. But it is also helpful for us, it is important for us in our planning as we think about how we roll these programs out. And so, we are looking at that. We continue to prioritize the progress of these trials and we are preparing for multiple pivotal trial readouts next year.

And I want to make sure we execute very well on all of those.

Raymond Sanchez: Greg, thanks for the question, and as we have underscored how we are trying to mitigate the placebo response. And no doubt that the data that you outlined, just a few moments ago was quite sobering, I think, to the field. So what we are doing and what we have mentioned before, is ensuring that we get the right patients and how you do that is really critical. And so, we have a process in place to do that really looks at the patient qualification. Because as you know, and others know that the patient profile really drives the outcome of these trials, as does the quality of the raters at the site. When we say quality sites, we are talking not just about the ability to access the right patients, but their ability actually to have competent really robust raters and so, we have a plan in place to address that.

Other things that we are doing is we have a placebo mitigation protocol at each of the sites that allows for certain interventions to be made or not be made to ensure that the placebo response is kept at bay as much as possible, but also limiting the number of sites and limiting the number of countries. And when you do that, invariably you are going to see waxing and weighing of the enrollment. However, at no point do you dilute the data and you position your trial for the greatest likelihood of success. So collectively, that is the confidence that we have, that these trials are positioned for the greatest likelihood of success and outcome.

Operator: Our next question comes to the line of Tazeen Ahmad from Bank of America.

Tazeen Ahmad: Ron and team congrats on the new roles, and we look forward to working with you. I just wanted to clarify, you have mentioned now on a call several times that you need to find the right patients for the schizophrenia program. Can you maybe give us a little bit of color on what the right patient looks like and how that might translate into what you ultimately think the market opportunity would be in schizophrenia? Would it be for the broader population or are you thinking that there is a subset of the population, which could still be quite large, that might be best suited for your drug? And then secondly, can you just remind us what your cash runway is? Thanks.

Ron Renaud: So, I will turn the first part of your question over to Ray and Susan on the second part.

Raymond Sanchez: Thank you for that question. So, the trials are meant for the generalized schizophrenia population. When we talk about the right patient, remember we are conducting clinical trials, so we are trying to detect the signals this therapy has. And so in order to do that, you need to refine the patient population in terms of the severity of disease. So, as you know, we have a PAN score of at least 85 up to 120. And those CRI and a variety of other criteria, it is really to define the patient population that is going to really give you the best opportunity to detect the signal of the miraculously to be a robust therapeutic in the population. However, it doesn’t mean that you are restricting the population in any way to suggest that it only works in certain patients and not others.

It is really for the general schizophrenia population. But because you are conducting a clinical experiment, you have to have certain controls in place to ensure the greatest likelihood of success.

Susan Altschuller: As noted, we are well capitalized and ended the second quarter with 825 million on the balance sheet. So that funds us through all our key data read outs next year and comfortably into 2025. So we will continue to be thoughtful about resource allocation and opportunistic and bolstering the balance sheet, but we feel very good about our cash position.

Operator: Our next question goes through the line of Paul Matteis from Stifel.

Paul Matteis: On Emraclidine, we noticed that a drug interaction study was put on clinical trials.gov. Is that just a typical study check the box for an NDA, or are you actually expecting to elucidate an interaction that you know could be significant as it relates to how people prescribe the drug? And then separately, I had a couple pipeline questions on the Kappa program. I was curious in your perspective now that it seems like we have a couple external studies suggesting this target has an antidepressant effect, I guess, do you agree with that and do you plan on moving more quickly now in depression? And then, John, to your point on a dose range as it relates to Kappa and MU do we want to be targeting MU as well. I was under the impression that that produced more side effects. So maybe you could just kind of speak to the scientific hypothesis behind your compound and how you are thinking about it. thanks so much.

Ron Renaud: It sounds like John can take all of these.

John Renger: You don’t want to try Ron? Thanks Paul. I appreciate the plethora of questions here. So, yes, the DDI profiling is standard for registrational package. And so as you know, you have to inform the label on potential for DDI and any kind of a dose adjustments so the physician can make the right decision for each patient based on their background therapies. And so these are pretty much standard. For KORA, we are really excited. So now as you mentioned, the second company has shown. So as you know the first colleague company, I will say, showed a nice potential for looking at core mechanism of action is an adjunct on the standard of care in the MDD. The Major Depressive Disorder, and now recently we have seen a another colleague company showing that, a monotherapy also showed a nice effective benefit in the MDD as a monotherapy.

So we think this is very consistent with the mechanism of action, what has been published quite extensively in preclinical models. As you know, there is a lot of potential for this mechanism to actually go beyond MDD. And so that is going to lead into the answer to the next one, which is, as you know, we have been working closely with NIDA, we received, like I mentioned, this morning, an additional funding to go, fourth even more studies there in the clinic, PET receptor occupancy being one of them. And so, when you think about what it is that you want to achieve. So if you look at the both competitor molecules, the first one is a very kind of non-selective approach that we have seen as the adjunct and what you have seen with the more recent data is one that we consider to be highly selective to Kappa.

And so in both cases, you have a nice demonstration that either a mixed activity or a highly selective activity is effective. However, as you think across what the different potential indications could be, some of those may actually benefit from having some new activity. And so, what we want to do is be able to think about how we take this particular molecule and actually look at dose ranges that are appropriate for different indications. And so as an example, if you went into a substance use disorder order study in opioid patients, you definitely do not want to have new activity because you could induce withdrawal. This is extremely on price unpleasant for the patient. And so that would be a different dose range and potentially another indication, where you would actually benefit from having some new activity.

So I think with this molecule knowing that we can cover a very broad range in a wall tolerated fashion, it gives us a potential to actually look at dose ranges that are appropriate for different indications based on what we know about the etiology of the disease and what would benefit each group. And so, it is a really exciting molecule, really exciting science. And so stay tuned, and we will share more as we can.

Operator: Our next question comes from the line of Joseph Thome from TD Cowen.

Joseph Thome: Maybe the first one, as we are thinking about Emraclidine and ADP, I guess, what would you be looking for in that healthy volunteer study to advance the next level and, I guess, how tied are the EMPOWER results to advancement in ADP, do you want to wait for the EMPOWER studies to read out before committing to the next step? And then maybe just a quick one on the Durigabat panic disorder study. Can you comment a little bit on how severe, patient symptoms are at baseline in terms of pretreatment or, I guess, just baseline severity and then when we think about through the titration and maintenance period, can patients use any rescue medications if they do have an attack? Thank you.

Ron Renaud: So I will turn that over to John and Ray.

John Renger: Sure. So I will I will speak to the ADP questions first and then Ray can address the second set. So as you know, the population for ADP is, differentiated from the schizophrenia population, primarily by age. And so what we have to do is a healthy elderly TK study and then what you would want to do is then go into the patient population. So what will we be looking for, what we want to demonstrate is that we can achieve the exposures of drug that we have related previously to PET receptor occupancy data so that we are confident that we are able to achieve CNS receptor occupancies that will test the mechanism of the M4 NADP patients. And so, what we are looking for is safety and tolerability at the exposures that we want to achieve to take forward into the ultimate patient population.

And so, as you know what we were in the middle of is a multiple sending dose study to do that. And so that data will help us then demonstrate that we have a path forward. And so, what we are looking for is really just to see that we have the same kind of well tolerated profile that we have demonstrated previously. As it is a very different population than the schizophrenia population. So it is difficult, I think, to make any conclusions about whether one would inform on the other at this point. Obviously, there is rationale to believe it will be effective in both, and so that is the question that we need to answer, but we are going as quickly as we can and we are not waiting for anything else to gate our decision to progress in this indication or potentially others.

And so, I think it is not a wait and see type of approach. It is go as fast as we can and safely as we can.

Ron Renaud: Thank you, John. Good morning, Joseph. So listen, we are really excited about the potential to come up with a new therapy, which is much needed in the landscape or panic disorder. Nearly 20-years ago that was the last medication approved for that. So the population that we are using is a moderate population and so we are, looking at the panic disorder symptoms scales severity of 12 or greater, 12 being the threshold of moderate disease. They also have to have at least eight panic attacks with no free week of panic attacks in the month prior to the screening visit. And in the two weeks leading to the baseline visit, have at least four panic attacks. And so, that is something that severity does drive and so appreciate that question.

Severity does drive the outcome in a lot of these studies. So we are using the right population to ensure the greater likelihood of success. No rescue medication is allowed in the trial as that potentially could confound the outcome. So rescue medication is not allowed. And we are also at every visit doing screens to make sure that they are not using other therapies as rescue. So those patients would be censored or discontinued appropriately. So, all in terms of how do you design the trial with the right methodology to ensure the greatest likelihood of success, and that is what we are trying to achieve.

Operator: Our next question goes to the line of Jeff Hung from Morgan Stanley.

Jeff Hung: Congrats to Ron, Susan and Paul on the new roles. Two questions for me. First, can you talk about the challenges for identifying the appropriate patient population for dementia related apathy, and in the context of challenges identifying appropriate patients, what is your latest thinking on the size of the market opportunity for this indication? And then second, for the ADAPT study and panic disorder, how’s enrollment going and can you remind us of what you need to see to consider the proof-of-concept the success? Thanks.

Ron Renaud: Again, John or Ray.

John Renger: Yes, so I will start with – thank you Jeff with the dementia related apathy was that this is a new path that we are carving forward. We receive Fast Track designation from the FDA in order to do so, so we will be working very closely with them. But it is an experiment that the trial that we are conducting is truly experimental. We are looking at various primary endpoints and so forth in terms of scales, but not that there is no formal hypothesis testing per se. One of the challenges is, of course, the landscape, recognizing who these patients are, so the families, the caregivers, the practitioners, really, really understanding what apathy is. So we have been working very closely with the ISCPM Group, which FDA has been involved with in order to understand the criteria to identify these patients.

So, that is the biggest challenge is really to identify the patients out there because we know that half of the patients with dementia suffer from apathy. It is the leading neuropsychiatric syndrome and a predictor of disease progression. So we are continuing to stay laser focused on that trial and also helping the sites identify the right patients. In terms of the panic disorder trial, so as you know, it is a 14-week trial really with a 12-week maintenance phase. It is 80% powered to detect a difference of 20% in the proportion of patients, meaning between active and placebo in the proportion of patients who are free of panic attacks during the last two weeks of the maintenance phase. And why that endpoint? Because that is the endpoint that has been, that the precedent has been said and that the FDA has historically wanted to understand and as you know, it takes time for patients to respond to therapy so that seems like an appropriate endpoint.

So those are the parameters and so we are excited about continuing at that trial, as you know, it just initiated within the last few weeks. So we have not provided any timelines at this point and we will, but we are excited about the progression of the program moving forward. And so stay tuned as the program continues.

Operator: Our next question goes on the line of Michael Yee from Jefferies.

Michael Yee: Following-up on the questions around the enrollment for schizophrenia, we wanted to ask around clarification and color. You know, you go up to the ct.gov you have got a lot of sites listed up there. I think some of them overlap at the major centers as some of the competitor enrollment center and so I just wanted to understand, is it sites getting up, is it, Hey, we have got the sites, but we don’t really like the criteria or the patients that are coming in and we are not really happy with some of that. Maybe just shed a little bit of light on that because what we see is a lot of centers and we are just trying to think about what the actual logistical issues are. And then related to that I know that you are running non-clinical studies and other studies that are related to the NDA.

I know that the competitor is taking many months, but typically it is standard to file an NDA around six months after a completion of the data set. So do you feel comfortable based on the timelines that if your data comes out in second half of 2024, that the timing of all the non-clinical studies and all that should have a filing in first half of 2025?

Ron Renaud: Yes, Ray.

Raymond Sanchez: So Michael, good morning. So as you know, we are always seeking the best sites and of course everyone else potentially are as they are as well. So there are going to be some overlapping sites with other sponsors. To that end, it is really around, to your point, really looking at getting the right patients and so, we have a method by which we help the site achieve that. That is independent of the actual site, proposing the patient exclusively. So we have another independent committee that looks at the criteria to make sure we have the right patients in the trial. And that waxes and wanes over time, and it is really patient accessibility that sometimes can be a bit of the bottleneck. We are working with the sites closer to measure that and continue to understand the root causes of what’s holding them up in certain cases.

But just to remind you that, we started with a bulbous of patients, really, an exciting very ahead of schedule type of enrollment initially. In the last few months, we have seen this slowing down, in the U.S. Secondly, for XUS site, and of course, we choose countries where historically we have had good data that we know the sites well. There has been also a slowing down of getting those protocols approved, really, and the bottleneck there is really at the country level, at the IRB level at those countries and I do think it is just a volume issue that they are grappling with. But we have all the sites that we need currently up and running. We are looking at new countries and new sites potentially in the future and again, always focused on data quality, not diluting the data in any way, not exacerbating placebo response.

So we want to get this therapy out to the patients sooner than later, but we also know in order to do that, we need very robust data and that is what we are trying to achieve as well.

John Renger: And, Mike, I will speak to the second question. So in reference to our preparedness for submission. So obviously, we are, all over the timelines to make sure that, we have all of the preclinical data, the CMC data for the CMC module and the NDA and also all the required clean farm studies to inform on dosing and those types of things. And so we will, definitely – I’m not going to commit to how much time it is, but we will definitely position to have the data in hand when we get the readouts. And so we are very focused on minimizing that timeline from data readout to submission and we are doing all the work necessary to make sure that we get the NDA completed as quickly possible.

Michael Yee: I think that can’t be underemphasized. It is pretty important part of the package besides the Phase III data. Thank you.

Operator: Our next question comes from the line of Charles Duncan from Cantor Fitzgerald.

Charles Duncan: I had a question on Emraclidine, and then actually on Darigabat. With regard to Emraclidine and the over in the sites where you see overlap with a direct agonist. I guess, I’m wondering if you have any feedback to share with regard to investigator interest. And then in addition to enrollment rate, can you provide any color on dropouts from that study and then also in EMPOWER-3, do you have any patients that have rolled over to that open label?

Ron Renaud: Thanks for the questions Charles. I will let Ray take those.

Raymond Sanchez: So Charles, yes, we have patients rolling over. That is the way they program and set up that patients have the opportunity when they complete the six weeks trials to roll over into the 52 week open-label extension and of course, that is for us to continue to gather the exposure data, the long-term exposure data that we need when we do file that NDA. In terms of Emraclidine, and the investigators, as I mentioned earlier in the call, that one of the things that I have been really comforted by and excited by is really the level of enthusiasm that the investigator community has for Emraclidine, but specifically for this new class, really giving patients a better alternative to treat their psychotic symptoms. So, again, we are working closely with them to ensure we get the right patients as we have been mentoring mentioning through the morning. And so, I hope that answers your question. Is there anything else you would want to know about that?

Charles Duncan: No, I think that is clear, and appreciate all the color that you have provided on your efforts for enrollment. Just moving on quickly to the Darigabat, I guess I’m wondering about the high rollover rate that you mentioned in the open label extension. I’m quite intrigued with that to me in an epilepsy patient that perhaps reflects enthusiasm about the therapeutic profile. So I guess I’m wondering if you could provide any further color on that.

Ron Renaud: Yes, so it is always difficult to predict the rollover rate in terms of patients rolling over. So when you see robust rollovers, as we are seeing, we get excited about the potential of the therapy in that patient population. And they are quite eager, as to try to come up with a therapy that we are really suppressed or seizure activity. So, we continue to be excited about the rollover rate, and we are monitoring it closely. We are getting the exposures ultimately over time that we will need when we do file in phase – after our Phase III program. So it speaks to all of that.

Charles Duncan: Might the rollover rate as well as persistence within open label speak to the tolerability as well. Differentiated tolerability.

Ron Renaud: It may at this point, it will be conjecture, because we obviously have to look at the data, but obviously if somebody rolls over and stays on your therapy for a long period of time then it puts tolerability in a good light. But in terms of what that would look like, I think we should just wait for the data to read out.

Operator: Our next question comes from the line of Douglas Tsao from H.C. Wainwright.

Douglas Tsao: Congrats to everybody for joining the team. Maybe to start with Emraclidine, not to beat a dead horse, but Ray, I’m just curious in terms of finding the right patients, are you taking any sort of logistical or any additional screening issues? I mean, obviously we have the patient inclusion exclusion criteria to get the right patients. But are there any logistical things that are perhaps slowing down the process a little bit and what benefits might those provide?

Raymond Sanchez: So, Douglas, there is nothing that is slowing down the process. Remember that, we started with great momentum and the process hasn’t changed from that to what we have seen in the last few months. We have a very robust kind of safety net place to make sure that, as I mentioned earlier, that the investigators stay true to form, to make sure that we get the right patients, it ultimately drive the success of the trial. So that is not slowing the trial down. I think it is really around that. It is really around finding the right patients and that waxes and wanes over time. But we have to stay steadfast and we have got to stay very committed and focused to ensuring that at no time we get the wrong patients. And again, that is what we are doing and positioning these trials with the greatest likelihood of success based on those parameters and that quest.

Douglas Tsao: And then just as a follow-up, just given some of the moving parts with the pipeline, and obviously some studies are now reading out later than was originally planned, does that affect how you think about moving some of the earlier stage assets into later stage development just as you think about sort of managing your cash runway?

Ron Renaud: You know, I will take that one. Look, we are very conscious of the balance sheet, and we pay close attention to that. And as Susan mentioned, we are going to do what we need to do to be opportunistic to make sure that that balance sheet can continue to support not only the late stage programs that we spent most of our time talking about today, but many of these really interesting and important early stage programs. And so, the early stage program we won’t shortchange that as well. And so this is something that is equally as important as making sure we get the late stage program right.

Operator: Thank you. At this time, I would not like to turn the conference back over to Ron Renaud for closing remarks.

Ron Renaud: So I want to first of all, thank everybody for the questions this morning, but also for the warm welcomes. I know that Susan and Paul and I are super excited to be here, to be part of one of the most exciting pipelines in neuroscience and to really be part of building this world-class neuroscience company. It is something that I’m incredibly excited about. We are well funded with the resources to maintain, all the work we are doing well into 2025. We are looking at things with a fresh set of eyes and we will have lots of discussions with all of you and many more over the coming months as to the things we are learning along the way. But I think on balance, what you are going to find is there is a lot of incredibly important work going on here at Cerevel.

two late stage programs, two NDA registrational programs underway here. And then a significant number of programs right behind that, that is going to keep us busy not only with these NDAs for the next 12 to 24-months, but for the foreseeable future after that. And that is incredibly exciting. So I look forward to having more discussions with all of you on all of these programs as we move ahead. Thanks a lot, and hope everyone has a great day.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.