Acadia Pharmaceuticals Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022; filed November 2, 2022. Acadia is a biopharmaceutical company focused on central nervous system disorders. NUPLAZID (pimavanserin), approved for Parkinson’s disease psychosis (PDP), was its only commercial product during the period. Financial amounts below are in millions, except per-share data.
Financial performance and position
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Product sales, net | $130.7 | $131.6 | $380.7 | $353.4 |
| Research and development | $81.3 | $58.6 | $285.8 | $172.5 |
| Selling, general and administrative | $78.1 | $81.7 | $264.7 | $290.1 |
| Operating loss | $(30.9) | $(15.3) | $(177.5) | $(125.8) |
| Net loss | $(27.2) | $(14.5) | $(174.3) | $(124.8) |
| Net loss per share, diluted | $(0.17) | $(0.09) | $(1.08) | $(0.78) |
- Q3 product sales were down about 0.7% year over year; nine-month sales grew about 7.7%, primarily due to a higher average net selling price.
- Cost of product sales was $2.1 million in Q3 and $7.8 million year to date, approximately 2% of sales in each period. The filing reports no Q3 or nine-month license fees and royalties in 2022; the Ipsen royalty obligation ended in October 2021.
- R&D rose sharply year over year, reflecting the $60 million Stoke upfront payment and $10 million Neuren milestone during the nine-month period, plus higher trofinetide and early-stage program costs. Q3 included the $10 million Neuren milestone following FDA acceptance of the trofinetide NDA.
- SG&A declined, mainly because of lower advertising and promotional costs. The company remained loss-making; no operating or net profit margin was reported.
- At September 30, cash and cash equivalents were $154.8 million and available-for-sale investments were $281.7 million, totaling $436.6 million. Cash, cash equivalents and restricted cash totaled $160.6 million.
- Nine-month operating cash use was $90.2 million, versus $102.5 million in 2021; investing activities provided $91.0 million, mainly reflecting net maturities of investment securities. Financing activities provided $6.6 million.
- Total assets were $602.5 million and stockholders’ equity was $425.7 million. The balance sheet reports no borrowings; operating lease liabilities totaled $63.0 million, including $9.2 million current.
Material developments and outlook
- The FDA accepted the trofinetide NDA for Rett syndrome in September 2022, with a PDUFA target action date of March 12, 2023. Approval and successful commercialization were not assured.
- On August 4, 2022, Acadia received an FDA complete response letter on its resubmitted application for pimavanserin in Alzheimer’s disease psychosis and said it was not planning additional studies for that indication at that time.
- The Phase 3 ADVANCE-2 study of pimavanserin for negative symptoms of schizophrenia was projected to complete enrollment in mid-2023. ACP-204, an internally discovered molecule, was in a Phase 1 trial.
- Acadia said available cash, cash equivalents and investments were expected to fund planned operations for at least 12 months. It also cautioned that additional financing might be needed; its ability to raise funds on acceptable terms was uncertain.
- Management expected substantial R&D spending to continue, including for trofinetide, schizophrenia development, NUPLAZID post-marketing studies and early-stage programs. The filing gives no specific numerical revenue or earnings forecast.
- Management said COVID-19 continued to weigh on NUPLAZID sales growth through fewer patient visits, lower long-term-care occupancy and reduced healthcare-professional access, although some conditions had improved from 2021 levels. Supply had remained uninterrupted, and the company did not anticipate a supply disruption at the time of filing.
Risks, contingencies and unusual items
- Generic manufacturers’ patent litigation concerning NUPLAZID remained ongoing; a joint trial was scheduled for May 15, 2023. A settlement permits Hetero to launch its generic product on July 27, 2038, subject to specified earlier-launch triggers.
- A securities class action concerning disclosures about the dementia-related psychosis application survived a motion to dismiss. The company said it could not estimate potential losses and had not accrued amounts other than incurred legal fees. Management did not believe pending claims were likely to have a material adverse effect, but litigation outcomes were uncertain.
- Potential milestone payments across the pipeline totaled up to $1.6 billion. The Stoke agreement included up to $907.5 million in potential additional milestones; Neuren’s $10 million development milestone was due in October 2022.
- Key risks include reliance on NUPLAZID as the sole marketed product, clinical and regulatory uncertainty, generic competition and patent outcomes, pricing and reimbursement pressures, dependence on third-party manufacturers, and macroeconomic and COVID-19 effects. The company also cited inflation, interest-rate changes, recession risks and the Russia-Ukraine conflict.
Important facts for investors to verify
- Progress and FDA review of the trofinetide NDA, including the March 12, 2023 target action date and any commercial-readiness costs.
- NUPLAZID prescription and net-sales trends, pricing and gross-to-net allowances, particularly given flat Q3 sales and continuing pandemic-related market effects.
- Cash burn and R&D spending following the Stoke and Neuren payments; management’s stated liquidity runway and potential financing needs.
- Developments in NUPLAZID generic patent litigation, including trial timing, outcomes and any implications for market exclusivity.
- Updates on the NUPLAZID post-marketing commitment and the schizophrenia program, as well as the implications of the Alzheimer’s psychosis CRL.
- Potential milestone and royalty obligations under collaboration and license agreements, and changes in material legal contingencies.