Everybody, good morning. Thanks for joining us. Welcome to the Bank of America Healthcare Conference. I'm Tazeen Ahmad, I'm one of the senior SMID Biotech analysts here. It's my pleasure to have with us our next presenting company, Cerevel Therapeutics. Presenting for Cerevel this morning is now outgoing CEO, Tony Coles. I do have a list of questions. Maybe you can start off, Tony, by giving us an overview of the company, and then I guess for those who didn't listen to the earnings call, talk to us about why you think now is the right time to transition the CEO seat. You'll still be with the company, of course, with the board. Yes Chair. How do you envision your role at the company continuing going forward? Let us start there, if we can. Yeah. Good morning. Good morning. First of all, good morning, everyone. Why don't we start with the upcoming transition? Most people are aware that I started my career with Cerevel as chair, at the end of 2018. I'm really returning to the original role. Mm-hmm. I added the CEO title and took on the duties of CEO in 2019. I think we had a good run. We started the company. We raised a billion and a half in capital. Mm-hmm. We delivered really stunning data for emraclidine in schizophrenia and for darigabat in anxiety. We've positioned the rest of the mid to late stage pipeline for success, and I think we've got a great foundation. As I thought about the next few months and years, I started a conversation with the board. Mm-hmm. As part of good governance and succession planning, the board, and I decided that we would, mount a search, and really work for a smooth and seamless transition. Now feels like the right time. We've got 7 data readouts in 2024. 2023 is a year of just focused execution, both on clinical trials, but also managing our expenses. Mm-hmm. trying to extend the runway for the company. This felt like the right time. The plus is I've known Ron Renaud, who will be the new CEO as of June twelfth, for more than a decade. Mm-hmm. It's really rare that you get to work with someone you know, and let alone a friend, and I think we'll have a great partnership. I'm looking forward to kind of the next chapter. Mrs. Coles is looking forward to the next chapter, although I've told her to be careful what she asks for, so... Okay. I'll be cleaning out all the closets in no time. We'll be looking forward to seeing your vacation photos, of course. Yes, of course. We'll miss you in the role. Maybe let's just, for those people that are not familiar with the company, just give us a two-minute overview. Sure. You've mentioned several data readouts are coming, but, what's the platform and how does the company differentiate from others that might be pursuing similar mechanisms and similar indications? Okay. Let me start with a really short bit of historical context. Mm-hmm. The pipeline we have in the main was something that was spun out of Pfizer in 2018, and it was Pfizer's entire neuroscience portfolio. The reason I start there is Pfizer had spent the better part of 10 years and $1 billion putting support and generating data for these particular programs. Bain actually agreed to form Cerevel with a commitment of $350 million in spend, and that was the origin of the company. The beautiful part about all of that is that what Pfizer gave us as a gift was a keen understanding of receptor biology and physiology. That's important because our distinct approach, which is the central thesis for all these programs, is that targeted receptor selectivity matters. Mm-hmm. Most receptors have subtypes. If you can interact with a specific receptor subtype, you can dial in efficacy and dial down side effects to improve tolerability. That's the thesis. You'll see that as a theme for emraclidine, for darigabat in epilepsy and anxiety when we get there, and for tavapadon. It really binds all the programs. To that great start, we've actually added some really interesting programs that were maybe a glint in the eye in 2018. We've got a program for kappa opioid receptor antagonist, the KORA program for MDD. Mm-hmm. That is, now, that's a mechanism that's now being validated, by Johnson & Johnson and others with great data there. We're excited about that. We have an M4 agonist program to complement what we're doing with emraclidine. Mm-hmm. Both for the mid and late stages, as well as the late discovery, early development, we've got a kind of a plethora, almost an embarrassment of riches to work on. That's the company. Mm-hmm. Well-capitalized, and I think in really, really good stead. Okay. The M4 pathway is something that's become pretty topical over the last few years with yourself and other companies pursuing somewhat related compounds. From where you sit today, you know, how do you think Cerevel is positioned? Do those other companies de-risk your programs? Based on what you know about companies that might be ahead of you in development, where do you think your main area of differentiation could be? I think the essential question. First of all, let me start by saying there have been no new mechanisms for psychosis and psychosis-related disorders. Mm-hmm. in 50 years. Mm-hmm. That alone is generating a lot of excitement amongst patients and providers. Yes. Because as we interact with them, they really just can't wait. There are good therapies today, but what they're looking forward to are even better therapies with fewer side effects, which has really been one of the rate limiting. Yeah. Problems. What's exciting about what's happening in this space is this potential new mechanism is repeatedly now, four of four studies, maybe five of five studies, being validated in terms of the role for the muscarinic pathway in the treatment of psychosis and psychosis-related disorders. That's probably the most exciting thing across all of the companies. I think the mechanism clearly is demonstrating that it works. The question we suspect the next 5- 10 years will be, is a selective approach interacting with only the M4 subreceptor or a non-selective approach better in the treatment- Yeah. -of these diseases? There's really good evidence to suggest that a selective approach is what will ultimately win the day. Mechanistically, it's certainly where we're placing our bets, both with emraclidine and with the M4 agonist that I mentioned a moment ago that's in late stages of discovery. Because we like the enhancement of efficacy, and we like the tolerability profile we've seen so far in our phase 1B study. What we do know, both scientifically and clinically, is that the M1 receptor interaction seems to contribute to the side effects that you see. Mm-hmm. with the muscarinic pathway, notably the GI side effects. That's one of the things that other companies are really trying to work through Yeah. To essentially create a more selective approach by diminishing the M1 side effects. We'll see. We'll see what happens in the marketplace. Competitively, if we can maintain the once-daily dosing we've started, and that's what we're studying in the pivotal program, the potentially pivotal program. I will be making some forward-looking statements. I should have started by saying that. Yeah. I know the team will want me to remind everyone of that. If correct dose and the no need for titration, we think those profile differences, in addition to the mechanistic focus on M4, will give us a potentially best-in-class therapy. With that in mind, you guys have a phase 2 program with emraclidine underway. You're actually looking at emraclidine in 2 indications, right? That's correct. ADP and Schizophrenia. Alzheimer's disease psychosis Okay. Yes. Schizophrenia. Schizophrenia. Yeah. Of the two, which one are you more excited about? I like them both. I know you'd expect a CEO to say that, but I like them both for different reasons. I love what we're doing in schizophrenia because you can tell by my comments, schizophrenia really does need- Yeah. new therapies. Based on what you said, even though the competition might be ahead, there's still room for differentiation. I think so, because our belief is it's better to be best than first. Mm-hmm. There are multiple analogs in this industry where if you have a potentially best-in-class therapy- Mm-hmm. that, it, you can actually be second, third, even fifth or sixth Mm-hmm. if you've got a better, a better set of, options and a profile. We like that. I like what's happening in schizophrenia because what is underappreciated is that Schizophrenia patients, when they come off their meds because of side effects, they relapse, clearly, and the number of relapses seem to predict a worse prognosis for them. Right. The whole goal in schizophrenia is to get people on effective therapy, minimize the side effects, improve tolerability so they remain on therapy. Compliance is really, really important. With the profile I've just described, once daily dosing, no need for titration, no discernible significant side effects like what we see in market today, we really do hope that we can provide a really highly effective and highly compliant alternative. I love that. Alzheimer's disease psychosis turns out to be something which predicts morbidity and mortality in the Alzheimer's population. It occurs in about 40% of those patients at some point. Importantly, it's really difficult for the families to manage. These are patients who are already cognitively impaired, and you add to that patients who then experience hallucinations and delusions. Right. You can imagine trying to take care of a loved one if they are hallucinating actively and deluded. For all of those reasons, if we can improve that symptomatology of that particular syndrome, that'd be huge. Certainly be huge to the caregivers who are responsible. Yeah. Let's focus on schizophrenia for a couple of minutes. Earlier in the year, the company had talked about some programs that were set to read out this year being pushed into next year. Part of the reason for the delay was because of, you know, difficulties at sites post-COVID. They haven't been able to get back to staffing levels that they used to be at, et cetera. Some of it had to do with not necessarily having drug-drug interaction data. Was the Schizophrenia program impacted at all by any of the delays that the company talked about earlier in the year? 'Cause we have guidance for the study to read out next year, but you didn't clarify when exactly next year. Sure. We expect the top-line data from both of the large phase 2- Mm-hmm. trials. It's a total of about 750 patients. Yeah. Should have all of the elements that would make those two studies pivotal. Those data we are expecting in the first half of 2024. Yeah. Just to put a fine point on it, they're inpatient studies. These are acutely psychotic patients. Mm-hmm. We have seen a distinction in the conduct and the execution for inpatient studies compared to the other outpatient studies. Mm-hmm. That's a really important piece. Yeah. We're not only reiterating the guidance, but so far enrollment has gone well. There's nothing to suggest that we can't make the first half of 2024. Mm-hmm. With the opportunity to deliver efficacy and safety data, but also really important information about dosing. We know 30 mg is likely to be the top dose, and we'll test 10 and 15 mg to see if there's a bottom dose, or a starting dose, if you will, that would also be helpful in this particular population. All systems go, as far as we can see. We are also continuing with the non-clinical and pre-clinical parts of an NDA package, as well as the CMC parts, 'cause we just wanna be ready. Sure. if these data are positive. Sure. like with the blood pressure study. Exactly. I'm glad you mentioned that because the blood pressure study was also an inpatient study, and that was started and completed in record time. Mm-hmm. We delivered those data, which were positive and suggest there was no blood pressure effect. That's another proof point for inpatient studies being different in terms of post-COVID effect, compared to outpatient studies. Okay. If we kind of flash forward to what the top line for the Schizophrenia study will contain, what level of data do you think will be in that, I guess, press release when it does come out, and what should we consider to be good data? We are measuring PANSS total score. Mm-hmm. We will also look at some of the subscales for positive and negative symptoms as well. Yeah. It's really the PANSS total score that we'll be looking at. These are acutely psychotic patients, as I mentioned, so this is only a question of whether we can manage their acute psychosis and at the end of six weeks. It'll be the comparison of the effect at the end of six weeks compared to baseline and that compared to placebo. The study has 90% power to detect a seven-point difference versus placebo. Just to put that in context, currently available antipsychotics have somewhere between a 5- 10-point improvement in the PANSS total score. Mm-hmm. This is powered for 7, so right in the middle of that fairway. What we observed in the phase 1B was a 12.7% improvement compared to baseline, in the patients who received emraclidine. Right. If all of that holds up, in this, then we should have some really interesting data to talk to everyone about across those two studies. Of course, we're thoughtful about the placebo response rate. Mm-hmm. because that's the one variable that- Yeah. Can move around a little bit. Right. As you go to larger numbers of patients. We're doing everything we can to control and manage that, including restricting the number of sites, to the really high-quality sites with really good training for all the professionals who have to make the assessment. We will see. I'm hopeful and excited. Yeah, you've talked about, like, making sure you have high-quality sites, especially for this type of study in schizophrenia. Is it something that all companies will want to account for? Meaning there's just gonna be popular sites that everybody tries to keep for their enrollment sites. Does that slow down enrollment if other companies are also trying to use the same approach that Cerevel is in sticking to just the highest quality sites? Yeah. We haven't seen the slowdown in enrollment in our studies. Yeah. I'll just comment on that one quickly. I think it behooves every company to pay attention to this. Mm-hmm. We've observed over the last several years that placebo response rates have been going up. Yeah. Really hard to explain other than the quality aspects I mentioned a moment ago. There, there does seem to be an absolute number of sites, for instance, that are good for these kind of pivotal studies. If you go beyond that, the variability in placebo response does seem to take over. Yeah. We're not only focusing on the quality of the sites, but we're focusing on containing the number of sites that we go to. I think there are plenty of sites for everyone who wants to. Right. -enroll schizophrenia patients. Okay. Thus far you've had a clean safety profile. Is it your expectation that by expanding out into these two programs, there shouldn't be any kind of outside unexpected risk events observed? We haven't seen anything in the data we've collected to date. Yeah. -that would point us in that particular direction. Okay. With the profile of the drug the way it is, what kind of a phase 3 program, design-wise, do you think would be ideal? Is it simply what you're gonna do in phase 2, but just bigger? Well, for schizophrenia, if we stick with that for a moment. If we're right. Mm-hmm. If these studies deliver positive data, then these studies should be, or we'll at least, make the case with the agency, they should be fileable. That's- let me. Yeah, yeah. I wanted to maybe probe on that for a couple minutes. Yeah, sure. For sure. Let's say that, you know, the company that's ahead of you in development now in schizophrenia is entering the market a couple of years ahead of you. How does FDA view unmet need in schizophrenia? There are a lot of drugs that are used- Mm. not necessarily effectively. There could be at least one company that has a newer modality get approved before Cerevel. Mm-hmm. this has become a question for investors with FDA across all different indications. Mm, mm-hmm. Right? How do you think the agency views that idea of unmet need and allowing, let's say, two big phase two studies to be used as pivotal or part of the pivotal program, rather than sticking to very large traditional registrational trials? Let's take a step back. Yeah. Obviously, everything we're about to say is subject to conversation with the agency. Sure. we wanna allow the agency to have agency. Yeah. in thinking about this. Here's what the agency does look for in terms of pivotal studies. They want an adequate characterization of the dose. Mm-hmm. Across these two studies, we'll test 10, 15, and 30 mg, as I've mentioned. They also want two adequately controlled large trials, and these two studies will enroll 750 patients. They want a demonstration of safety. This particular phase two program achieves all of those things. If the data are positive. Yeah. There's a case to be made that if the non-clinical and preclinical components and the CMC components were all compiled, that we could really have a conversation. Your question about unmet need is typically only a differentiator when the agency is thinking about something like Breakthrough or Accelerated Approval, where based on the unmet need, at least in my experience, for a particular indication, they will make way or accelerate the opportunity for approval based on the quality of the unmet need. On a regular application basis, which is at the moment what we'd be going for, their job will be to weigh the balance between risk and benefit and less unmet need. When you had designed this program and run it by the Agency, did you have the specific discussion that if the criteria that they look for are met in these studies, then they would qualify as registration? Well, we never disclose our conversations or communications with the agency. Suffice it to say, we had a really good, robust set of conversations, not only on efficacy, but also on safety and what the agency would like to see. It's with that in mind that I think if the data are positive, we feel good, obviously, the agency will decide about the package we could put in front of the FDA. Okay. Now, the 700 or so patients that you talk about in total for this program, how does that compare to other schizophrenia drugs that have gotten approved recently? I would say I don't have those numbers, right on the top of my head, but I would say comparable. Mm-hmm. I can't for the other near competitor, I don't know what the total number of patients have been in their trials, but I would say near comparable. Remember, this will all come down to the statistical powering. Sure. Because we've powered at the 90% level for that seven-point difference, that's what will ultimately carry the day in terms of the size of the trial. Okay. That's Schizophrenia. Let's now switch gears to ADP. Sure. This is also an area that interestingly, a lot of companies have pursued for the obvious reasons that it's a large patient population. For whatever reason, it's been difficult to drug in that category. The most recent one that comes to mind is Acadia Pharmaceuticals, which did try to get a secondary indication approved in that group of patients, ultimately, FDA did not allow for it. How do you think about the difficulty in designing for an ADP trial relative to, let's say, Schizophrenia, which might be more established? I think our understanding and our, at least the assumption we're working on is one of the challenges in these subsyndromes of a disease, and I'll call the Alzheimer's disease psychosis, if you will, a subsyndrome of Alzheimer's, is that the agency wants you to be really specific about the population under study. You can't include all comers with dementia and then make a claim separately... Mm-hmm. that in Alzheimer's disease Yes. psychosis, that you have a particular benefit if you didn't start with that pre-specified population. We're learning as we go. The great news is that we have Fast Track designation with the FDA, which simply means, unlike Accelerated Approval or Breakthrough, simply means we have the opportunity to converse with the FDA on the program as it unfolds. Mm-hmm. We expect that that will yield us a lot of rich information about how we should go. They're really interested in providing an alternative here, their specification about the pre-specification of the population, Alzheimer's disease. Yeah. -if you will, I think has been really helpful in our designing and thinking about this particular program. It's early days because we're in the PK and the healthy elderly part of the development cycle. Mm-hmm. I think the Fast Track designation will give us a lot of clarity about how we go to the next step. I think there's been a view from investors that FDA has kind of turned a corner on Alzheimer's with disease-modifying drugs and that their standards may or may not be a little bit more lenient than what they would have been years ago. Do you think that the sea change in the way that FDA is thinking applies solely to disease-modifying drugs or would that also filter down into related indications of these subgroups that you just mentioned, such as ADP? You know, it's, if we just take the recent example you suggested, of Acadia, they've actually raised the bar just a little bit. Mm-hmm. -for the subsyndromes, I think appropriately, because we know that psychosis and psychosis-related symptoms occur in a number of dementias, and their specification of the population beforehand, I think is probably an improvement. I don't know that they've necessarily relaxed the standards. There's clearly a difference between the two drugs. Yeah. -that delivered data. I think most people will acknowledge that the improvement in at least the efficacy demonstrated in the second drug to come to market or to soon to come to market is qualitatively different enough. I probably wouldn't comment, especially with leadership changes at the FDA in that particular division, as to whether they've relaxed their standards. What they have done, and this is something I've advocated for a long time, is taking a step towards the European approach, the collaborative approach to development design- Mm-hmm. hence the Fast Track designation. That's where I think we can work in partnership with the agency to really understand how they're thinking about these new opportunities. Okay. Can you give us a sense, similar question to when I asked you about the schizophrenia top line, what level of data should we expect to see there, and what would you consider to be good results? Well, this, the study that's being run now, for ADP is an MAD study. Mm-hmm. It will be the simple assessment and in non-patients, so these are all healthy elderly. Yeah. It will just be a simple assessment of the safety and the PK in those particular patients. Based on what you already know about the molecule. Mm. Are there real questions about what the safety might present? I think we have to ask and answer the question because remember, schizophrenia obviously skews a little younger. To date, we only have data on patients who are up to age 64, 65. Yeah. Going into an older population, we really wanna make sure that we understand dosing and the safety. We are using once daily dosing in the MAD study, so that shouldn't change, and there should be no need for titration in that population. We just wanna make sure we get the dose correct. Okay. What would be the next step after you reveal the top-line data for this ADP study? A proof of concept study, in elderly patients. Do you have a sense of how big of a study that might need to be? Oh, too early now. You would need to discuss with the agent. Exactly. Again, I keep coming back to the Fast Track designation. Yeah. It is the beauty of that particular designation. Mm-hmm. Okay. size-wise though, that could be a very large population. In terms of the opportunity. Yeah patients, yes. Yes, absolutely. Cause I think- It's 40% of Alzheimer's patients. Yeah. Yeah. People just kind of assume that schizophrenia would be your biggest indication, but do you think that that's the case, just given all the programs that you have in the clinic? I think we've gotta look at the data for both indications and really ensure that what we believe will be competitively important and in the best interest of patients really does pan out. If that's true, both these indications could be substantial and meaningful for patients. I guess before we leave, this molecule, I did wanna ask about schizophrenia drugs in general. For branded drugs, it does seem that the ones that have done well recently, like the Vraylar, for example, have not only Schizophrenia, but they also have bipolar disorder. Hmm. Do you think that that's something that's necessary to have both indications for a particular drug to be blockbuster in today's world? Well, you know, we are graced at the company with the presence of Dr. Ray Sanchez, who's our Chief Medical Officer. Mm-hmm. Who has a lot of experience in what we think of as the lifecycle management opportunity for these programs. He's responsible for Abilify and Rexulti and- Mm-hmm ... clearly understands the patient need and the opportunity. I would say that any drug, and this will be outside of schizophrenia or the psychosis-related disorders, because this was true many years ago, even for a drug like Plavix, which I was intimately- Mm-hmm ... involved in. Really having a good forward perspective about all of the opportunities where that new therapeutic could be used is critical to creating blockbusters. If there are other opportunities, outside of schizophrenia and ADP, somehow or across either emraclidine or M4 agonist- Mm-hmm ... because we now have the opportunity for a franchise approach to the broad beachhead of psychosis and psychosis-related disorders. I think we have an opportunity to win in a number of patients and do a lot of good for patients. In the few minutes we have left, I did wanna touch upon darigabat. Sure. In particular, your program in epilepsy. Can you just give us a reminder of that addressable population? Which portion of epilepsy are you initially trying to show efficacy in? Sure. This is focal epilepsy. Mm-hmm. Which is 60% of the epilepsy prevalence in, at least in this country. Total 3 million patients. Yeah. This is about 2 million patients who have focal epilepsy, so it's the largest single epilepsy indication, if you will, or opportunity. The interesting thing is that 30% of those 2 million patients don't have adequate seizure control. Despite the numerous therapeutics we have, they still break through even when they're on polypharmacy or multiple medications. That's the immediate opportunity really to try to control and eliminate seizures in that particular population. Those are the simple numbers. I think if we have an opportunity, this particular program, the phase 2 study, which we'll read out in by the middle of next year. Mm-hmm ... that study's at an 80% power for a 30% improvement in the frequency of seizures. We'll take the 60% of the full epilepsy, the 30% who don't have controlled seizures. Mm-hmm If we can improve their seizure frequency by 30%. Yes. That's the objective here. Mechanistically, what gives you confidence that this will work? Well, two things. If you ask an epileptologist, as someone who specializes in this field, what the best therapeutic is to control seizures, they'll tell you it's benzodiazepines. Mm-hmm. Because darigabat, which interacts with alpha-2/3/5, just as the benzodiazepines do, but spare alpha-1, which is the corresponding M1 from our previous conversation, it drives the side effects. Mm-hmm ... for this particular mechanism. Darigabat spares that. The difference between benzodiazepines, purportedly the most effective therapy, and darigabat, is that they interact with alpha-1 and create a number of side effects: sedation, dependence, withdrawal, addiction. We spare alpha-1. If we can demonstrate in this study, this epilepsy study, that we really have the efficacy of benzos without the side effects, that's huge. Not only in the simple treatment of patients, but in the length of treatment. Right now, benzodiazepines are restricted to subacute or PRN usage. Mm-hmm. As needed in the emergency room, for instance, to break a seizure for someone who's having difficulties. If you can take that subacute therapy opportunity and have a chronic or maintenance opportunity to help patients control their seizures over a long period of time without the fear of dependence or withdrawal, that's significant for patients. That's really life-changing for patients. Okay. Perfect. We could probably talk for another half hour. I bet we could. We're out of time for today. Okay. Tony, really do appreciate you making time to come by. Well, thank you. ... to see us here at the conference. Thank you. It's been great. Tazeen, this is probably my last investor conference. Oh, well, I at least feel honored that you're making us. Well, I'm happy to spend it with you. ... part of your last tour. Really happy. Yeah. Thank you. Thank you for your time, and thanks everybody for joining us today. All right. Thank you.