ACADIA Pharmaceuticals Inc. — FY2019 Form 10-K
Reporting period: Year ended December 31, 2019; filed February 26, 2020. ACADIA is a CNS-focused biopharmaceutical company. NUPLAZID (pimavanserin), approved in the U.S. for Parkinson’s disease psychosis (PD Psychosis), was its only marketed product and generated essentially all revenue.
Financial performance and liquidity
Amounts in millions, except per-share data. Fiscal-year comparisons are 2019 versus 2018; Q4 figures are unaudited.
| Metric | FY2019 | FY2018 | Q4 2019 |
|---|---|---|---|
| Net product revenue | $339.1 | $223.8 | $98.3 |
| Gross profit | $327.7 | $211.4 | $95.3 |
| Gross margin | 96.7% | 94.5% | 97.0% |
| Operating expenses | $585.6 | $471.3 | Not separately stated |
| Operating loss | $(246.5) | $(247.4) | Not separately stated |
| Net loss | $(235.3) | $(245.2) | $(53.0) |
| Net loss per diluted share | $(1.60) | $(1.94) | $(0.34) |
| Net cash used in operations | $(151.1) | $(167.5) | Not separately stated |
- Revenue grew 51.5% year over year, principally reflecting approximately 33% growth in NUPLAZID unit sales, a higher average gross selling price, and a $3.3 million benefit from a Medicare accrual estimate change.
- R&D expense rose 28% to $240.4 million, primarily from clinical development of pimavanserin and trofinetide. SG&A rose 23% to $325.6 million, including higher external costs, charitable contributions, legal fees, and personnel costs.
- Cash, cash equivalents and investment securities were $697.4 million at year-end, up from $473.5 million. Working capital was $685.4 million; total stockholders’ equity was $699.1 million. Management said available resources were expected to fund planned operations for at least 12 months.
- No conventional borrowings are reported in the supplied financial statements. Operating lease liabilities were $9.8 million; total contractual obligations were $66.2 million, including $61.5 million of operating leases.
- The company remained loss-making, with a $1.7 billion accumulated deficit. It raised approximately $271.5 million net in a September 2019 stock offering; share count increased, and the filing also reports substantial stock-option exercises.
Material changes, outlook and risks
- Pipeline: Phase 3 HARMONY for dementia-related psychosis (DRP) was stopped early after meeting its primary endpoint. Top-line results showed a 2.8-fold reduction in relapse risk versus placebo (HR 0.353; one-sided p=0.0023); ACADIA planned an FDA supplemental application for summer 2020. Approval was not assured.
- Phase 3 CLARITY studies of pimavanserin for adjunctive major depressive disorder were underway; top-line results were projected for Q4 2020 and Q1 2021. Phase 2 ADVANCE met its primary endpoint for schizophrenia negative symptoms, but not its key secondary endpoint; a further study was planned. The Phase 3 ENHANCE study for inadequate-response schizophrenia did not meet its primary or key secondary endpoint, and ACADIA said it did not plan further studies in that indication.
- ACADIA initiated the Phase 3 LAVENDER study of trofinetide for Rett syndrome in October 2019; results were expected in 2021. The North American license carries potential milestone payments up to $455 million and tiered, escalating double-digit royalties, contingent on future milestones and sales.
- Management expected continued operating losses and increased cash use as it funded commercial activity, clinical programs, and NUPLAZID post-marketing commitments. The filing provides no specific quantified FY2020 revenue or earnings guidance.
- Key business risks include dependence on NUPLAZID, regulatory and clinical-trial uncertainty, reimbursement and drug-pricing pressure, and reliance on third-party manufacturing. Four U.S. customers accounted for approximately 77% of 2019 revenue.
- The NUPLAZID label carries a boxed warning concerning increased mortality in elderly patients with dementia-related psychosis treated with antipsychotics; the drug is not approved for DRP unrelated to PD Psychosis. The filing also describes required post-marketing studies and ongoing safety oversight.
- ACADIA received a DOJ civil investigative demand in 2018 concerning NUPLAZID sales and marketing and said it was cooperating. A securities class action and a derivative action were pending; the company could not estimate potential losses and had not accrued amounts other than legal fees incurred.
Most important facts for investors to verify
- Whether NUPLAZID sales growth, unit trends, pricing, and Medicare rebate estimates are sustainable.
- Whether the HARMONY results support an FDA filing and eventual DRP approval, and the timing and costs of that process.
- Clinical progress and readouts for CLARITY, ADVANCE-2, and LAVENDER, including safety and endpoint results.
- Cash burn, planned commercial expansion, future financing needs, and dilution from equity issuance or awards.
- Developments in the DOJ investigation and shareholder litigation, NUPLAZID safety monitoring, and concentration among major customers and suppliers.