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Acadia Pharmaceuticals Inc (NASDAQ:ACAD)Q4 2018 Earnings Conference CallFeb. 26, 2019, 5:00 p.m. ET
Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks:
Operator
Good day, ladies and gentlemen, and welcome to the ACADIA Pharmaceuticals Fourth Quarter and Full Year 2018 Financial Results Conference Call. My name is Christie, and I will be your conference operator for today. At this time, all participants are in a listen only mode. We will be facilitating a question-and-answer session toward the end of today's call. (Operator Instructions)
I would now like to turn the presentation over to Elena Ridloff, Senior Vice President of Investor Relations and Interim Chief Financial Officer at ACADIA. Please proceed.
Elena Ridloff -- Senior Vice President, Investor Relations and Interim Chief Financial Officer
Thank you, Christie. Good afternoon, and thank you for joining us on today's call to discuss ACADIA's fourth quarter and full year 2018 financial results. Joining me on the call today from ACADIA are Steve Davis, our Chief Executive Officer, who will provide a brief overview of our strategy, recent achievements, pipeline opportunities and financial performance; Michael Yang, our Chief Commercial Officer, who will provide updates on our commercial initiatives with NUPLAZID; and Dr. Serge Stankovic, our President, who will discuss our pipeline progress. I will then discuss our financial results before turning it back to Steve for his final remarks and opening the call up for questions. I would also like to point out that we are using supplemental slides, which are available on the Events & Presentation section of our website.
Before we proceed, I would like to remind you that during our call today, we will be making a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements including goals, expectations, plans, prospects, growth potential, timing of events or future results, are based on current information, assumptions and expectations that are inherently subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially. These factors and other risks associated with our business can be found in our filings made with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which are made only as of today's date.
I'll now turn the call over to Steve Davis our Chief Executive Officer.
Stephen R. Davis -- Chief Executive Officer
Thank you, Elena. Good afternoon, everyone, and thank you for joining us today. In 2018, our team executed on all three of our strategic pillars. First is to grow. While NUPLAZID is the only FDA-approved treatment and standard of care for patients with Parkinson's disease psychosis or PDP. Second is to leverage. Leverage the potential of pimavanserin and additional indications with unmet need. And third is to expand our pop on further through focused business development in CNS disorders again with high unmet needs.
Let's take a look at the progress we've made in advancing each of these pillars on Slide six. We continue to grow NUPLAZID in PDP and achieved $59.6 million in net sales in the fourth quarter of 2018, a 37% increase over the same period in 2017. Net sales for the full year 2018 were $223.8 million, which represents a 79% increase year-over-year. This growth was fueled by our commercial initiatives, including the launch of our 34-milligram capsule in August. In late November, we launched our direct-to-consumer TV ad campaign and expect this to benefit new patient starts in 2019. Based on our execution and the growth we're seeing in 2019 as we enter the year, we are providing NUPLAZID net sales guidance of $275 million to $300 million for the full year 2019. Last year we continue to leverage pimavanserin in clinical development for additional CNS indications. This was highlighted by our positive Phase 2 CLARITY results in adjunctive treatment of major depressive disorder. In addition, we've recently completed our end-of-Phase 2 meeting with the FDA and we'll be initiating two Phase 3 trials in the first half of this year. Importantly, in our end-of-Phase 2 meeting, we confirmed with the FDA that our Phase 2 CLARITY trial can be submitted as one of the two pivotal trials to support a supplemental NDA filing. So we will need at least one of the two Phase 3 trials for conducting which will also be positive. We also strengthened our balance sheet with the successful financing in the fourth quarter. We ended 2018 with approximately $474 million of cash and are well positioned to continue executing on all three pillars of our business strategy.
Slide seven represents what I think is probably the most under appreciated aspect of our business. On this slide you see the addressable population for both the indication we are currently approved in Parkinson's disease psychosis together with the other indication that we are pursuing with pimavanserin. There are three single (ph) messages that I think are important here. Point number one is we're pursuing very large markets. These are markets with either no FDA-approved treatment or markets in which patients continue to experience significant disease burden due to the inadequacies of existing therapies. In aggregate, the additional indications you see on this slide represent an approximately forty-fold increase over the PDP addressable population. Point two is because we are advancing the same molecule, pimavanserin in all of these indications and of course we're already approved in PDP. We know the safety and tolerability profile of the drug. We know the drug interactions, we know how to make it. And point three is we have evidence of clinical efficacy in each of these indications. So we can substantially address these programs, and I've said before, we love to make these kinds of investments.
With that I'll now turn it over to Michael to discuss our commercial performance.
Michael J. Yang -- Executive Vice President, Chief Commercial Officer
Thank you, Steve. Please turn to Slide nine. Today, I would like to provide you with an update on the progress we are making with our commercial activities that are driving continued growth of NUPLAZID. First, we are in the process of completing the transition to the 34-milligram capsule from the 17-milligram tablets. The single 34-milligram capsule was launched to provide patients with a single dosage form to achieve the once daily 34-milligram dosing recommendation for the treatment of PDP with NUPLAZID. The introduction and adoption of the 34-milligram capsule is done very well. The commercial team has successfully facilitated smooth healthcare professional and patient transition to the single 34-milligram capsule and we believe this has resulted in a more positive patient experience. We are focusing on driving new commercial initiatives across the business, leveraging the introduction of the 34-milligram capsule in Q3, and the FDA reaffirmation of the positive benefit risk profile.
As Steve mentioned we launched a branded direct-to-consumer campaign at the end of November, an important time of the year when extended families gather together and would be expected to notice any changes in their loved one. We look forward to seeing this positively impact new patient starts and revenue in 2019 along with our other commercial initiatives. Beyond these efforts, I'd like to point out that the Movement Disorder Society recently published an update through the recommendations for treatments for non-motor symptoms of Parkinson's disease. Within this update, NUPLAZID is the only treatment listed as both efficacious and having an acceptable level of safety risk without specialized monitoring for the treatment of psychosis. This conclusion adds to the level of confidence we have been establishing with physicians that their patients suffering with PDP should try NUPLAZID first. Of the roughly 125,000 patients who received treatment for PDP currently a low double-digit percentage are taking NUPLAZID. As the only FDA-approved therapy for PDP NUPLAZID addition to these recommendations is an important validation of the part of physician in the treatment paradigm.
Slide 10 highlights our recent growth trends in the long-term care channel. As you can see we've seen continued growth in total bottle demand throughout 2018. A long-term care channel represents roughly 25% of our total business as you can see from the pie chart on the right. Over the past two quarters, we have seen our channel-specific long-term care commercial initiatives gain traction and create momentum. This has delivered a higher growth rate in the long-term care channel as compared to our specialty pharmacy channel.
Now I would like to turn your attention to our specialty pharmacy channel, while we're encouraged by recent growth trends and new patient starts as shown on Slide 11. In this specialty pharmacy channel, which represents two-thirds of our business. We are now seeing a nice return to sequential growth and new patient starts in the fourth quarter of 2018 compared to the third quarter. We have seen this momentum continue into the new year with average weekly new patient starts up quarterly, sequentially. The growth of new patient starts is supported with both the launch of the 34-milligram capsule and the FDA's public statement of the positive benefit list profile of NUPLAZID, as well as the launch of our branded DTC campaign. For the overall business, we achieved sequential growth of approximately 6% in total bottles in the fourth quarter. In addition, our refill rate has remained consistent.
On Slide 12, we outline a typical patient journey starting with the time, date or their caregiver recognizes their symptoms to when they are motivated to take action. Once patients feel compelled to take action it typically take weeks to months before they have that next visit with our physician to talk with their physician about their symptoms and seek treatment. Following these appointments the majority of these prescriptions are then sent to the patient -- our patient access hub, which assists patients with a prior authorization and reimbursement process. The majority of our NUPLAZID patients typically start on the free trial period during this time and as a result there is typically a lag between our marketing efforts and when a new patient starts to contribute to revenue. We believe with our current commercial initiatives taking hold and the promising growth trends we have observed and new patient starts that we are back on track and we will significantly increase our market penetration over the next several years.
I'll now turn it over to Serge to provide R&D updates on our pipeline.
Serge Stankovic -- President
Thank you, Michael. I'm extremely pleased with our R&D progress in 2018. Equally, I'm really looking forward to the next several quarters as we will be reporting results from a number of our ongoing late stage clinical trials. Let's start with Slide 14. Pimavanserin is the first-in-class selective serotonin inverse agonist. All other antipsychotics were primarily by blocking dopamine and then particularly problematic in Parkinson's patients who suffer from the lack of dopamine. In addition to PDP, pimavanserin has already shown the indication of efficacy in all four clinical categories we are pursuing that are currently evaluating in late stage programs. Furthermore given our expertise in drug development for CNS, we license the rights to trofinetide in August. Trofinetide is a novel synthetic analog of the amino-terminal tripeptide of the IGF-1, Insulin-like Growth Factor. Trofinetide has positive Phase 2 data in its target indication of Rett syndrome. In total, we have five late stage programs that we are advancing this year.
On Slide 15, are just the few reason that near term highlights I wanted to share with you. First, we recently completed our end-of-Phase 2 meeting with the FDA to discuss pimavanserin as adjunctive therapy for major depressive disorder. I am happy to report that as we expected the FDA agreed that the CLARITY trial would serve as one of the two pivotal trials for our supplemental NDA submission. As always is the case, the end-of-Phase 2 matters are ultimately subject to NDA review. We nearly initiated our Phase 3 program as planned in the first half of this year. Second, we confirm with the FDA our study design for Phase 3 trial with trofinetide, which we will initiate in the second half of 2019. And third, we remained on track to announce top line results from our ongoing Phase 3 ENHANCE trial in schizophrenia inadequate response mediator.
Starting with Slide 16, we will now discuss our ongoing programs in a little more detail. Dementia-related psychosis affects about 1.2 million patients in the United States and has very serious consequences, including repeated hospital stays and early progression to nursing home care, more rapid progression of dementia and an increased risk of morbidity and mortality. There is no FDA-approved treatment for DRP.
As highlighted on Slide 17, our program in dementia-related psychosis is leveraging the benefit we observed in two previous studies; our PDP pivotal trough study as well as our Phase 2 study in Alzheimer's disease psychosis. Following these two studies, we had an end of Phase 2 meeting with FDA and agreed on our Phase 3 plan and it's represented on the next slide. As a reminder this development program also received Breakthrough Therapy Designation from FDA.
Our Phase 3 HARMONY study is a relapse prevention study. We have agreements with the FDA that robust results from this single study can serve as the basis for an sNDA submission. We anticipate final results of this study in 2020, with an interim read in the second half of this year.
There are substantial unmet needs today in the treatment of major depressive disorder, as outlined here on Slide 19. On the right-hand side are the observed results from our Phase 2 CLARITY study testing pimavanserin as an adjunctive therapy for SSRI, to SSRI or SNRIs. We have a very promising overall study results. Our primary end point improvement in the 17-item Hamilton Depression Rating Scale was achieved with the p-value of 0.039. Our key secondary end point improvement in the Sheehan Disability Scale was achieved through the p-value of 0.004. And it's well-known that disability represents a significant burden for patients with depression. We also observed positive results in seven additional pre-specified secondary end points. Our results were very impressive given the high unmet need that exist in the treatment of MDD today. We believe these results are clinically and commercially meaningful as we seek to develop pimavanserin as a potential best-in-class treatment for adjunctive MDD.
In stage one of the CLARITY study, where all study patients are NOI, we observed unequivocal efficacy result and achieved our primary endpoint shown here on Slide 20, with the p-value of 0.0003, and an impressive effect size of 0.63. As I mentioned we recently completed our End-of-Phase 2 meeting with the FDA and as we expected the FDA confirmed that our CLARITY study would be submitted as one of the two pivotal studies in support of an sNDA for the adjunctive treatment of major depressive disorder.
Slide 21 shows our Phase 3 development program for MDD. We plan to conduct two six-week Phase 3 parallel designed placebo-controlled trials thus subsequently de-risking -- substantially derisking our MDD program. Our CLARITY study combined with at least one of these Phase 3 trials will be the basis for an NDA submission.
Moving on, I would like to discuss our schizophrenia inadequate response program. Data from our early Phase 2 study with pimavanserin added to low doses of risperidone provided supportive evidence and proof of principle for further development of pimavanserin in this indication. As such we initiated our ongoing Phase 3 ENHANCE study in 380 patients and we remain on track to announce top line data from this study in mid-2019.
Slide 23 highlights the trial design for our ENHANCE trial. This is a six-week study evaluating patients who have an inadequate response to their current anti-psychotic treatment for schizophrenia and are receiving either pimavanserin plus background antipsychotic therapy or placebo plus background antipsychotic therapy. The primary endpoint is the change from baseline on the positive and negative syndrome scale total score.
Turning to Slide 24, there is no FDA-approved treatment for the negative symptoms of schizophrenia. We are conducting a 380-patient Phase 2 study and expect to complete enrollment in the second half of this year.
Turning now to Rett syndrome and trofinetide on Slide 25. Rett syndrome is a debilitating neurodevelopmental disorder that occurs predominantly in females following apparently normal development for the first six months of life. Currently, there are no approved medicines for this rare disease which affects approximately 6,000 to 9,000 patients in the United States. After recent interaction with FDA, we have finalized our Phase 3 trial design for trofinetide. This three-month study will evaluate approximately 180 females aged five to 20 with Rett syndrome. If our Phase 3 trial is positive there is a potential to submit an NDA in 2021 based on this single Phase 3 study.
Slide 27 provides a summary of our upcoming clinical milestones for 2019 and beyond. It is going to be an exciting time and I look forward to updating you on our progress
With that, I will now turn the call over to Elena to discuss our financial performance.
Elena Ridloff -- Senior Vice President, Investor Relations and Interim Chief Financial Officer
Thank you, Serge. So I will discuss our fourth quarter and full year 2018 results in our financial outlook. Please turn to Slide 29. In the fourth quarter of 2018, we recorded $59.6 million in net sales, an increase of $16 million, or 37% compared to the $43.6 million of net sales in the fourth quarter of 2017. The gross-to-net adjustment for Q4 2018 was 16.8%. Recent inventory in the channel at the end of Q4 was consistent with Q3.
Moving down the P&L. Total operating expenses including cost of goods sold were $126.8 million in the fourth quarter of 2018, compared to $113.6 million for the same period in 2017. These amounts included $20.4 million and $22 million of non-cash stock-based compensation expense respectively. GAAP R&D expenses increased to $48.2 million in Q4 2018 from $43.2 million in Q4 of 2017. Fourth quarter R&D expense benefit from the timing of certain clinical trials-related costs which will now be realized in the first quarter of 2019. GAAP SG&A expenses decreased to $74.3 million in Q4 2018 from $66.7 million in the fourth quarter of last year. The increase was primarily due to an increase in marketing expense related to our branded direct-to-consumer advertising program.
For the full year of 2018 on Slide 30, we reported $223.8 million in net sales, an increase of $98.9 million, or 79% compared to the $124.9 million in net sales in 2017. The gross-to-net adjustment for the full year 2018 was 16.6%. Total operating expenses including cost of goods sold were $471.3 million in 2018 compared to $417.3 million in 2017. These amounts included $81.6 million and $75.5 million of non-cash stock-based compensation expense respectively. GAAP R&D expenses increased $187.2 million in 2018 from $149.2 million in 2017. The increase was primarily due to additional clinical study costs incurred as we continue to invest in additional pipeline programs for pimavanserin as well as an upfront payment of $10 million to Neuren Pharmaceuticals for trofinetide in the third quarter of 2018. GAAP SG&A expenses increased to $265.8 million in 2018 from $255.1 million in 2017. The increase was primarily due to an increase in marketing expense related to our direct-to-consumer advertising program.
Please turn to our 2019 guidance on Slide 31. As Steve mentioned for the full year 2019, we expect continued strong growth for NUPLAZID, the net sales between $275 million and $300 million. At the midpoint of this guidance range this represents an approximate 28% growth in revenue year-over-year and approximately 20% volume growth year-over-year. We expect the gross-to-net adjustment in the range of 18% to 19% for the full year. We projected to be higher than the full year 2018 adjustment as a result of an increase in manufacturer and donut hole obligation to 70% in 2019 from the previous 50%.
With regard to the first quarter, there are three factors to consider. First, we are forecasting a gross-to-net adjustment of 28% to 30%. As a reminder gross-to-net is typically high in the first quarter due to the annual reset of donut hole manufacturer obligation for Medicare Part D patients. Second, our ongoing DTC campaign initiating toward the end of last year and therefore the positive benefits of volume will largely be realized starting in the second quarter will be a partial benefit in Q1. And third as we complete the transition for the 34-milligram capsule from 17-milligram tablets this quarter it is possible that our channel partners may experience a temporary reduction inventory as they sell-through the remaining 17-milligram inventory in the channel.
On the expense side for 2019, we expect GAAP R&D expenses to be between $250 million and $265 million. The increase compares to 2018's results of our planned progression of five late-stage clinical programs in 2019. We expect the bulk of these investments to occur in 2019 and 2020. We expect GAAP SG&A to be between $280 million and $295 million for the full year. And we expect non-cash stock-based compensation expense to be between $80 million and $90 million in 2019. We ended the year with $473.5 million in cash and investments. Inclusive of our 2018 equity offering, we model approximately $144 million fully diluted shares for 2019.
And with that, I'll turn the call back over to Steve.
Stephen R. Davis -- Chief Executive Officer
Thank you, Elena. Please turn to Slide 33. In closing, our team is focused on executing on all three of our strategic pillars in 2019. One, growing NUPLAZID and Parkinson's disease psychosis; two, leveraging pimavanserin in additional large market CNS indications; and three, additionally expanding our pipeline through disciplined business development. As always we appreciate the dedication and hard work of all of our employees who are committed to improving the lives of the patients and caregivers with CNS disorders.
I'll now open up the call for questions. Operator?
Questions and Answers:
Operator
(Operator Instructions) Your first question comes from the line of Cory Kasimov with JPMorgan. Your line is open.
Matthew Holt -- JPMorgan -- Analyst
Hi, guys. Thanks for taking my question. This is Matthew on for Cory. My first question is on the Phase 3 MDD program. Can you discuss really, if you need to run both the US and EU trial and how these might differ irrespective of each other? And the Phase 2 CLARITY study in terms of patient enrollment criteria?
Stephen R. Davis -- Chief Executive Officer
Sure. Serge, do you want to take that?
Serge Stankovic -- President
Yeah. Thanks, Matt. Both Phase 3 trials are essentially identical in design and matched very closely almost identically to our stage one Phase 2 trial that we just performed. So in terms of the patient population that we are addressing in terms of the measures -- the outcome measures it's a very similar design.
Matthew Holt -- JPMorgan -- Analyst
Got it. Thanks. And then turning to schizophrenia for the ENHANCE study. I'm curious to get your general level of confidence going to this read out. And curious to what you're seeing so far with the proportion of patients that are either dosed up or dosed down with the flexible dosing?
Stephen R. Davis -- Chief Executive Officer
Yes. I have to say, I have always a very high level of confidence with every trial I do, otherwise we will not do that. So we do have -- I do have a conviction that pimavanserin can bring the benefit to patients with schizophrenia in an adjunctive treatment paradigm. Of course, I've been long in this business to know that it's clinical trial has its own challenges. So I would say that I'm reasonably optimistic about the outcome of this trial. From the perspective of what we see in the trial in a blinded fashion in terms of the dose, we -- one thing I can say that majority of patients are ending up on a 34-milligram dose on the higher dose with a smaller proportion of patients on the lower dose. I would also say that we are seeing a nice retention which gives us quite a bit of a confidence in terms of the quality of trial and execution of the trial.
Matthew Holt -- JPMorgan -- Analyst
Okay. Thanks for taking my questions. I'll hop back in the queue.
Operator
Thank you. Our next question is from Ritu Baral with Cowen. Your line is open.
Ritu Baral -- Cowen -- Analyst
Hi, guys. Thanks for taking the question and apologizes for the background noise. Serge, can you just tell us a little bit on the conduct of the HARMONY study? And I know you've had the discussion about alpha for the interim, but how should we think about the probability of success at the interim especially given, is there a positive payers feedback that is reached -- gotten from our stock (ph)?
Stephen R. Davis -- Chief Executive Officer
Serge, did you hear the question?
Serge Stankovic -- President
I did not understand the last part of your question, Ritu. If you can just repeat please.
Ritu Baral -- Cowen -- Analyst
Yeah. Just how you think about probability of success at the interim. Payers have had good things to say about pimavanserin and the indication and seen reasonably confident, but it all depends on how you are letting the outlook?
Serge Stankovic -- President
Right. Again a couple of comments in that respect. I mean, I will just reiterate my general optimism about the trials that we are conducting and potential of pimavanserin in this indication. There are a couple of consideration one has to take here. As we previously mentioned that we -- the interim analysis of our threshold is fairly high. So we did not want to have a high alpha spend at the interim analysis. So we put that threshold rather high, and although quite possible it's something to consider when thinking about the probability of success at the interim analysis.
The second consideration is of course there are not too precedents? Although there are a lot of precedents in schizophrenia and depression in terms of the relapse prevention trial and the rate of success as interim analysis which is fairly high. This is combined knowledge only the second relapse prevention trial in the area of dementia psychotic -- psychosis or psychosis with agitation. Previous trial, there were not trial with risperidone with psychosis and agitation. So from that perspective we don't have a long historical record with probability of success. Having said all of that, I think it's reasonable to expect that there is a fair chance that this trial is going to end at that point.
Ritu Baral -- Cowen -- Analyst
And trial conduct been broke out so far?
Serge Stankovic -- President
The trial is progressing very well. And as you know one thing we can certainly see because the first three months is open label trial and we had seen quite a next success in terms of the ideology of pimavanserin to stabilize these patients and their ability then to meet criteria for randomization. So we are quite pleased with that -- with those results. And due to that trial is progressing quite well in terms of the planned enrollment as well as randomization.
Ritu Baral -- Cowen -- Analyst
Got it. And my follow-up is on the DTC program. Are we going to get, or you guys tracking any metric that will measure the success of the DTC program?
Stephen R. Davis -- Chief Executive Officer
Michael, do you want to take that?
Michael J. Yang -- Executive Vice President, Chief Commercial Officer
Yeah. Thanks for the question. And I would just say that we're really pleased with the earlier indicators we are seeing. And I think that is reflected in our guidance. We're hearing consistent reports that patients are requesting NUPLAZID by name and we're seeing a significant amount of increased traffic on our consumer and our physician websites. So we are tracking a number of different early indicators. Of course, you're starting to see some reflection of that maybe perhaps in the ME2 (ph) brand.
Ritu Baral -- Cowen -- Analyst
Got it. Thanks for taking the questions.
Operator
Thank you. Our next question is from Tazeen Ahmad with Bank of America Merrill Lynch. Your line is open.
Tazeen Ahmad -- Bank of America -- Analyst
Hi, good afternoon. Thanks for taking my questions. The first, Steve, if you can give us some color with regards to what if -- any impact you're seeing from your last year's media articles? And I don't know you if could comment on what your sales force is hearing from physicians and whether or not you're seeing any questions coming in from insurance providers. And then I have a second question.
Stephen R. Davis -- Chief Executive Officer
Yeah, thanks for the question, Tazeen. I think, if we just go back to 2018, when we had some media articles, we said at the time that we do not anticipate any long-term effects on the brand. We said that we're very confident in the safety profile of the drug and that we have the best information available to asses that. The FDA did a thorough evaluation as I think everyone is aware of last year. And they concluded three things. One, they saw no additional safety concerns; two, they reminded patients, if you're taking the drug you should keep taking it under the advice of your healthcare professional; and three, they reminded physicians that this is the only drug approved for the treatment of PDP.
So as our -- what we thought in 2018 whole though the day, we continue to have high confidence in the growth of the brand. When we launched the drug, we said expect to see more of a linear progression. And that's what we've seen generally throughout the course of the drug. So we remain very highly confident in the longer term prospects of the drug. And as we discussed on this call and on the last call, we are seeing some really encouraging indications of new growth.
Tazeen Ahmad -- Bank of America -- Analyst
And...
Stephen R. Davis -- Chief Executive Officer
I just thought like I'd highlight just -- sorry, (Multiple Speakers) just, Tazeen I just want to address your question around payers and the sales force we are not seeing any change in our payer status. And at this junction the sales force obviously as I mentioned is positioning the FDA reaffirmation of our safety profile and that's being well received by the physicians in terms of confirming what they already suspected and already knew. So no change in the attitudes of the physician, nor the guidance by payers.
Tazeen Ahmad -- Bank of America -- Analyst
Okay. Thanks, Michael, and may be another one for you. As the launch is progressing you've had some time to take a look at prescribing trends. And I guess based on what you know so far are you making any changes to your targeted physician list, is it becoming longer? Is it becoming shorter? And do you have a preference on whether you'd like to see prescriptions from as many doctors as possible and they don't necessarily need to be multiple prescriptions, or would you rather have certain physicians be prescribing patient of the drug to more of their patients?
Michael J. Yang -- Executive Vice President, Chief Commercial Officer
Well, great question. First of all, I think we have seen quarter-over-quarter and we saw in the fourth quarter a significant growth in new time prescribers, first-time prescribers. So we are still seeing additions to our brand. But as a priority, we are now, I think moving to a period where we want to get more depth. There's still a cohort physicians we'd like to reach, but we're starting to get into a situation where many people dappled with the product and we're working deeper and I think these guidelines we just talked about will help drive further confirmation of the uses of NUPLAZID first line. That's where we are. It's kind of moving more physicians deeper into our first-line usage with NUPLAZID.
Tazeen Ahmad -- Bank of America -- Analyst
Okay, thanks.
Operator
Thank you. Our next question is from Charles Duncan from Cantor Fitzgerald. Your line is open.
Charles Duncan -- Cantor Fitzgerald -- Analyst
Thanks for taking the question and congrats on a good year of progress. Quick question in commercial and then one on R&D. With regard to guidance $275 million versus $300 million, could you give us a sense of kind of what the pressure points are around that or key determinants of that range? And then if you have any certain success goals that you'd like to share with us with the branded DTC, I'd love to hear them.
Stephen R. Davis -- Chief Executive Officer
Okay. Charles, I think we heard the first question. Could you repeat the second question regarding DTC?
Charles Duncan -- Cantor Fitzgerald -- Analyst
Yeah. It was -- if you have any certain success goals with that if you could outline those?
Stephen R. Davis -- Chief Executive Officer
Sure. Got it. Okay. Elena will take the first question.
Elena Ridloff -- Senior Vice President, Investor Relations and Interim Chief Financial Officer
So Charles with regards to the guidance range obviously early in the year, so we account for a number of potential scenarios within our range. If you think about the range we provided today, and at the low end it assumes mid-teens annual year-over-year volume growth and at the high-end mid 20% as I mentioned previously around 20% the midpoint. We obviously incorporate a range of expectations with regards to growth both in the specialty pharmacy channel and the long-term care specialty distribution channel and as well as possible considerations with regard to price. I think you know we took a price increase for the first time in the year at the end of December 2018.
Stephen R. Davis -- Chief Executive Officer
Yes, Charles. Just a follow-up on your question at DTC. So the first step that we do when we evaluate the campaign is can we execute the media target that we have? So we have a certain amount of reach and frequency and media wave. We are executing on that with our campaign. That move then into building the awareness with the target audience and then that's called action. The first step to call the action is investigation. And that's where referred to with the significant traffic we had intentionally on our websites and our digital properties. Importantly an important component of that is what we call high-value actions. So more than just regular hits, but people who have downloaded videos, discussion guides, seeking their physician et cetera. We then measure that in terms of action in the office and from there we convert that action into patient support. And we're hearing as I mentioned more physicians indicate that patients are asking for NUPLAZID by name. So those are just some of the kind of goalpost along the way, but ultimately our evaluation of this campaign is success will be as business to -- in its ability to arc the business in terms of paid starts.
Charles Duncan -- Cantor Fitzgerald -- Analyst
Okay. Well, we'll look forward to seeing that over the course of the year. And then just a quick question for Serge, I'm wondering, if you could share with us what you'd like to see out of schizophrenia inadequate response trial kind of the effect size that would be clinically meaningful? And then also just kind of share with us on the DRP study, why would you do an interim read? What is really the practical implications of that?
Serge Stankovic -- President
Yes. Thanks, Charles. On the schizophrenia, if you look at the meta-analysis of the effect sizes for all of the current antipsychotics that are all in monotherapy treatment paradigm. The effect size is anywhere from as low as 0.3 to majority of the effect sizes that we see at about 0.5 with a couple of exceptions above 0.5 going up to 0.8. Those are the exceptions being (inaudible). So where we are -- where I would be between an adjunctive paradigm quite excited if we see that level of average effect (ph) size of around anywhere between 0.4, 0.5 will be quite exciting for us to see that, that effect size. Obviously that depends on many elements and there are other data that we will be looking in the overall results of the trial to determine the overall benefit because one of the benefits that we don't particularly discuss often it is that -- in this combination we may see some benefit on the safety and tolerability side, in this combination and that's something that we will be also looking when you look at the overall results of the trial. On the DRP side, first of all, all of the randomized withdrawal trials because of its nature of the design where patients are stabilized on an active treatment and then treatment is withdrawn for at least half of the patients in the design. There are some ethical considerations of and concerns not to prolong the implementation and the execution of the trial if you already reached the evidence of efficacy. So from that perspective interim analysis is sort of a mainstay in the design of the randomized withdrawal or relapse prevention trials. And secondly is the power of the trial is such that as I mentioned earlier at least the schizophrenia trial and in the depression trial this happen more often than not. So from that perspective historically there's also expectation that interim analysis makes a whole lot of sense.
Charles Duncan -- Cantor Fitzgerald -- Analyst
Okay. But there are no changes that could occur with the interim analysis such as numbers of patients involved or statistical analysis plan changes?
Stephen R. Davis -- Chief Executive Officer
Absolutely not. What will occur is interim analysis will be performed and that will be done by firewall group that will report to our data safety monitoring committee and they will inform us whether the interim analysis yielded positive results in which case we will stop the trial and unblind analyze the data and report the data, or if the preparence for stopping at the interim analysis for efficacy are not met the trial will continue without any changes.
Charles Duncan -- Cantor Fitzgerald -- Analyst
Okay.
Stephen R. Davis -- Chief Executive Officer
So, I think as Serge mentioned earlier, that the right way to think about the interim read is steady (inaudible) for the interim reading course because we're using a very, very small part of the alpha there. If we hit that very high bar, right the studies over. We'll move to a submission. The only reason we will stop the studies on a positive read in interim read. If we don't stop of the study at interim read that's fine we'll just continue executing the trial as planned. And the bar at the end of the study of course is much lower, more power than that.
Charles Duncan -- Cantor Fitzgerald -- Analyst
Okay. Very good. Thanks for the added color, Steve, and Serge and Michael, and Elena.
Stephen R. Davis -- Chief Executive Officer
Thanks.
Danielle Brill -- Piper Jaffray -- Analyst
Thank you.Our next question is from Salveen Richter with Goldman Sachs.
Andrea -- Goldman Sachs -- Analyst
I'm sorry. This is Andrea on for Salveen. Thanks for taking our questions. Our first one is in light of your fiscal year 2019 guidance which reflects about 28% year-over-year at the midpoint. Can you help us think about drivers of growth? I know you've mentioned a couple but on the forward do you see this more of the reflection of true organic growth or a consequence of increasing pricing?
Stephen R. Davis -- Chief Executive Officer
Yeah. Michael, do you want to take that question?
Michael J. Yang -- Executive Vice President, Chief Commercial Officer
Yeah, we see this as a reflection of organic growth.
Andrea -- Goldman Sachs -- Analyst
Can you speak a little bit more about those core drivers?
Michael J. Yang -- Executive Vice President, Chief Commercial Officer
Yeah. Of course, the one dimension, we see great enthusiasm and greater ability to penetrate our long-term care channel and we're seeing great traction with that and continue to drive on those levers. The other would be the extension of the 34-milligram launch which is in itself a put up obviously, but it's a way to refresh the efficacy and safety benefit message combined with the FDA reaffirmation statement and fueled by external resources now citing NUPLAZID as being a drug of choice in the category for PDP. So we'll be leveraging that. And of course then -- and it's all tied together with our large lever which is closing the PDP awareness gap on which DTC is one lever of it. But we're doing a number of other things to reach consumers and patients to educate them around the symptoms. And so those are the core kind of drivers for greater organic growth in 2019.
Andrea -- Goldman Sachs -- Analyst
Great. And then just as a follow up to that. For your direct-to-consumer campaign I think previously you had mentioned that there was huge (ph) effect in the specialty channel that you were observing. Is this still the case, and how to you better target the long-term care channel?
Stephen R. Davis -- Chief Executive Officer
I didn't quite hear the first part of your question.
Andrea -- Goldman Sachs -- Analyst
So just in terms of the effect of your direct-to-consumer campaign previously you have mentioned that there was a greater effect of -- for your specialty channel. So I was just wondering if that is something that is still the case? And how you would go about targeting the long-term care channel?
Stephen R. Davis -- Chief Executive Officer
Right. Great question. And good memory, yes. The first campaign that we had is with the disease awareness campaign. Our research indicated that we didn't really see much effect from the long-term care channel. We're evaluating that now on the branded side and there may be evidence that we can share later that it might be impacting the long-term care channel. But a lot of data still has -- we have to still assess that. Our strategy for long-term care is in terms of increasing penetration is mainly at the institutional education level. These are systems of care, the delivery networks, and we are largely integrating NUPLAZID into treatment protocols and as a highly regulated environment. And so we're working within those regulations to increase the selection of NUPLAZID as a preferred agent in PDP for patients to get a long-term care. So that's going to be more of an education kind of system sell and we're doing other things in regards to patient educations in long-term care.
Andrea -- Goldman Sachs -- Analyst
Thank you so much.
Serge Stankovic -- President
May be just stated differently. One thing very significant opportunity in PDP in the specialty pharmacy is the normal doctor office channel of the business. Is that there is this very large information gap between patients recognizing symptoms their having discussion with their physician. There's less of a gap in the long-term care channels that's lies in the long-term care channel the other mechanisms for continuing to educate the community on NUPLAZID.
Andrea -- Goldman Sachs -- Analyst
Great. Thanks, again.
Operator
Thank you. Our next question is from Danielle Brill with Piper Jaffray. Your line is open.
Unidentified Participant -- -- Analyst
Hi, everyone. This is (inaudible) on for Danielle Brill. Apologies in advance, if you have already covered this. I hopped on a little late. But I just wanted to get a little bit of information about the DTC campaign specifically how one it will be running to? And when the four on effect should be taking place?
Stephen R. Davis -- Chief Executive Officer
Sure. Michael?
Michael J. Yang -- Executive Vice President, Chief Commercial Officer
Yeah. Well, as I mentioned we launched the campaign on Thanksgiving Day. And our campaign is going to be running through the first quarter. So that's kind of where we're going to stop and assess the program and the effects we believe we've given it a very large four-month wait on the campaign and it's a significant investment.
Unidentified Participant -- -- Analyst
Great. And...
Stephen R. Davis -- Chief Executive Officer
Just to echo on Michael's thoughts. What we'll do when we complete the campaign and we -- as we're committed to funding now, these will assess of course as we draw closer to the end of that what the return on investment is from the campaign and that some of that assessment will pass the end of the campaign. And it will determine what options we're going to pursue going forward for the remainder of the deal.
Unidentified Participant -- -- Analyst
Got it. Okay. That's great. And the last question I had and this is just sort of for my self, just to remind myself is when will the ENHANCE trial data be expected?
Serge Stankovic -- President
ENHANCE trial? Yeah, our schizophrenia/inadequate response trial will report midyear.
Unidentified Participant -- -- Analyst
Perfect. Okay. Thank you so much.
Serge Stankovic -- President
You bet.
Operator
Thank you. Our next question is from Alan Carr with Needham & Company. Your line is open.
Alan Carr -- Needham -- Analyst
Hi, thanks for taking my questions. A couple of them. One around the pattern with new starts in your specialty pharmacy. You had particularly strong first quarters for a little while I'm wondering if any comment on that. And then also with respect to Europe, I think you've said in the past that you wanted to wait until you had more data and more indications, or at least Phase 3 data more indications. So at what point do you make a decision around Europe? Is it after a second indication, or a third one? Thanks.
Stephen R. Davis -- Chief Executive Officer
Yeah. Alan, I'll take the second one and then I'll ask Michael to respond to your first question. With respect to the second question there's no change in terms of our plans for following outside of the US. As we indicated earlier, we are at frame shift to the filing and the objective is to try to get data on more indications. So as we've said -- as we get more and more data, we'll continue to reassess that. But at this point in time we're continuing to frame shift our strategy outside of the US.
Michael J. Yang -- Executive Vice President, Chief Commercial Officer
Thanks, Alan. In regards to the first quarter, I don't think there's any associated magic with the first quarter versus other quarters except to say that. When we ran the last campaign a year ago, we ran this campaign, it is important for us to leverage that family gathering in the fourth quarter. And so that tends to I think create more enthusiasm or more patient identification opportunities when we go to our campaigns. So we've run a campaign outside of the -- like late fourth quarter or into the first quarter. So I really can't comment on how that would affect other quarters in a comparison basis. But obviously the first quarter is super important for this business in a chronic nature basis, because the more patients we're going to acquire early in the year, the more impact it has to a positive benefit on our revenue.
Stephen R. Davis -- Chief Executive Officer
I just add -- just a little bit of additional color there. I think last year the first quarter of 2018, we have made a number of adjustments which we spoke to previously in the second half of 2017. And I think those adjustments look we were not surprised with the first quarter we are in the first quarter 2018, because of the adjustments we've made and the early indicators that we've seen leading into that. It's a little bit different situation as we're coming into the first quarter of 2019, where we're seeing some really encouraging early indicators of growth but to later a little bit from the indicators that we've seen last year.
Alan Carr -- Needham -- Analyst
Okay. Thanks for taking my questions.
Operator
Thank you. Our next question is from Paul Matteis with Stifel. Your line is open.
Nate -- Stifel Nicolaus -- Analyst
Hi, this is Nate on for Paul. Thanks for taking our question. May be first can you, you mentioned you took, I think in December you took a price increase for the first time this year. How are you thinking about approaching pricing as you start to move into some of these potentially much larger indications?
Stephen R. Davis -- Chief Executive Officer
Michael, do you want to take that question?
Michael J. Yang -- Executive Vice President, Chief Commercial Officer
Yeah. Well, obviously we think there is great potential in the -- let's say largely indications like DRP or MDD. And the benefit that NUPLAZID can provide these patients given the clinical profile is substantial. And if you take MDD, we believe commercially that could be the best-in-class adjunctive therapy for the reasons Serge already described. If you take DRP, there's no answer approve there. There is a significant unmet need to patients with psychosis that is not going to have dopaminergic cognitive impairing therapy. So we believe that in both categories significant unmet need. Conversely then we're talking about payers and looking at situations with large patient populations and we believe in our early work that we've done with payers given the clinical profile and our ability to use pricing mechanisms with the payers that we believe we can find that right price point for those different audiences that would be sequenced from PDP to DRP to MDD potentially. So we believe that we can work with the payers to get the right access points for those patient populations. It's important to note on the MDD side that will be an expansion of our audience to a more commercial/younger population. And in that setting we have more ability to negotiate in the context of not having a Medicare patient population. So that's a different nuance.
Nate -- Stifel Nicolaus -- Analyst
Got you. That's helpful. And then maybe one more. Can you just elaborate a little bit on the end of the Phase 2 commensurate with the FDA? In terms of getting alignment on CLARITY as a pivotal? And then kind of specifically I'm interested how much discussion there was around its SPCD design and in particular the stage two results? Thanks.
Stephen R. Davis -- Chief Executive Officer
Well, going into the end-of-Phase 2 meeting, we already knew the position of the division in regard to how they consider the SPCD design and trials. And what are the really an important elements of the -- that trial, that they are particularly looking as an evidence of the efficacy of the drug. All of that came very clearly in the outcome as the advisory committee meetings. So we had a very good sense where their position is, and considering that our trial was positive overall especially in design as well as very robustly positive stage one, which FDA really consider at a real evidence of efficacy for the drug in the context of SPCD design. There was very little discussion actually about use of our trial Phase 2 trial as one of the pivotal trial. I mean, that alignment existed almost before the meeting. So that wasn't a subject of any particular exchange.
Nate -- Stifel Nicolaus -- Analyst
Thanks.
Operator
Thank you. Our next question is from Roy Buchanan with JMP Securities. Your line is open.
Roy Buchanan -- JMP Securities -- Analyst
Hi. I'm in for Jason Butler. Just hopefully one quick question. Just wanted to know, how you guys are thinking about the regulatory fast-forward and negative symptoms of schizophrenia? Thanks.
Stephen R. Davis -- Chief Executive Officer
Great. Serge, do you want to take that question?
Serge Stankovic -- President
Yes. Well, as we stated there is nothing approved for negative symptoms schizophrenia at this point particular and there is nothing in an adjunctive paradigm for that. We are obviously considering variety of options in terms of the regulatory fast-forward. But a lot of that will depend on actual data and results when we read out our Phase 2 trial. And based on the strength of that data, we will determine the exact path forward in terms of our regulatory approach.
Roy Buchanan -- JMP Securities -- Analyst
Okay. Makes sense. Thank you.
Operator
Thank you. Mr. Davis, please proceed to closing remarks.
Stephen R. Davis -- Chief Executive Officer
Great. Thank you, operator, and thanks to each of you for joining us today. We look forward to updating you on our progress next quarter.
Operator
Thank you for your participation in today's conference call. This concludes the presentation and you may now disconnect. Good day.
Duration: 60 minutes
Call participants:
Elena Ridloff -- Senior Vice President, Investor Relations and Interim Chief Financial Officer
Stephen R. Davis -- Chief Executive Officer
Michael J. Yang -- Executive Vice President, Chief Commercial Officer
Serge Stankovic -- President
Matthew Holt -- JPMorgan -- Analyst
Ritu Baral -- Cowen -- Analyst
Tazeen Ahmad -- Bank of America -- Analyst
Charles Duncan -- Cantor Fitzgerald -- Analyst
Danielle Brill -- Piper Jaffray -- Analyst
Andrea -- Goldman Sachs -- Analyst
Unidentified Participant -- Analyst
Alan Carr -- Needham -- Analyst
Nate -- Stifel Nicolaus -- Analyst
Roy Buchanan -- JMP Securities -- Analyst
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