ACADIA Pharmaceuticals Inc. — Q3 2015 Form 10-Q
Reporting period: Three and nine months ended September 30, 2015. Financial statements are unaudited. Amounts below are in U.S. dollars; financial figures are in millions unless stated otherwise.
Business context
ACADIA is a development-stage biopharmaceutical company focused on central nervous system disorders. It had no product sales; reported revenue was primarily collaboration-related. Its lead candidate, NUPLAZID (pimavanserin), was submitted to the FDA in September 2015 for Parkinson’s disease psychosis (PDP). The FDA accepted the NDA for Priority Review on October 30, 2015, with a PDUFA goal date of May 1, 2016. ACADIA retained worldwide commercialization rights to pimavanserin.
Financial performance and liquidity
| Metric | Q3 2015 | Q3 2014 | Nine months 2015 | Nine months 2014 |
|---|---|---|---|---|
| Revenue | $0.039 | $0.015 | $0.044 | $0.072 |
| Research and development expense | $18.7 | $17.0 | $53.4 | $42.4 |
| General and administrative expense | $20.3 | $8.1 | $65.7 | $22.3 |
| Operating loss | $(39.0) | $(25.0) | $(119.0) | $(64.7) |
| Net loss | $(38.9) | $(24.8) | $(118.7) | $(64.1) |
| Loss per share, basic and diluted | $(0.39) | $(0.25) | $(1.18) | $(0.66) |
- At September 30, cash and cash equivalents were $70.8 million and available-for-sale investments were $169.9 million, totaling $240.7 million. Current assets were $242.8 million and current liabilities were $17.7 million.
- Total liabilities were $18.0 million, including $0.2 million of long-term liabilities; the filing reports no debt balance.
- For the first nine months, operating cash used was $87.1 million, investing activities provided $90.8 million, and financing activities provided $5.2 million. Cash increased $8.9 million to $70.8 million.
- Accumulated deficit was $616.8 million. No meaningful operating margin was reported given minimal revenue and continuing losses.
Changes versus prior comparable periods
- Nine-month net loss widened to $118.7 million from $64.1 million; operating cash use increased to $87.1 million from $48.6 million.
- Nine-month R&D expense rose $11.0 million, primarily reflecting higher personnel costs and stock-based compensation. Q3 R&D increased $1.8 million, partly offset by lower pimavanserin manufacturing-development costs.
- Nine-month G&A expense increased $43.4 million, reflecting commercial-launch preparations, higher personnel and external-service costs, and a $9.6 million charge related to the former CEO’s transition agreement, including $9.0 million of stock-based compensation.
- Stock-based compensation for the first nine months rose to $31.3 million from $11.4 million.
- Cash and investments declined to $240.7 million from $322.5 million at year-end 2014. Financing cash flow was much lower than in 2014, which included net proceeds from a March 2014 public offering.
Outlook, risks and contingencies
- Management expected cash, cash equivalents and investments to fund planned operations at least into the second half of 2016. It expected continued losses for at least the next few years and rising R&D and G&A costs as it supported FDA review, developed pimavanserin for additional indications, and prepared for a potential launch.
- ACADIA expected to complete enrollment in its Phase II Alzheimer’s disease psychosis study in the first half of 2016 and expected to finish pimavanserin lifecycle-planning work around year-end 2015. It had not provided specific revenue or earnings guidance.
- The company had no approved products and remained dependent on regulatory approval and successful commercialization of NUPLAZID. Key risks include FDA review and manufacturing-quality requirements, launch execution, market acceptance and reimbursement, clinical-trial outcomes, and the need for future financing. Management cautioned that additional funding might not be available on acceptable terms.
- Allergan gave notice in September 2015 terminating the muscarinic collaboration focused on glaucoma; ACADIA regained program rights and reported no further payments expected under that agreement, apart from certain patent-cost reimbursements. The separate chronic-pain collaboration remained, but future payments depended on development milestones and Allergan could terminate it.
- Contractual commitments included $6.5 million in operating leases and up to approximately $30.4 million for future external-service work, generally stoppable on short notice. FDA acceptance of the NUPLAZID NDA triggered a $2.5 million Ipsen milestone payable in Q4 2015; a further $8.0 million milestone and royalties of up to 2% of net sales would apply if approval and sales conditions are met.
- Two putative securities class actions relating to statements about NDA-submission timing were consolidated. The company said it could not estimate potential losses and had not accrued amounts other than ongoing legal fees.
Most important facts for investors to verify
- FDA review progress and whether the May 1, 2016 PDUFA goal date or any regulatory requirements changed.
- Cash burn, commercial-preparation spending, and financing needs relative to the stated runway into the second half of 2016.
- Manufacturing readiness and reliance on a single supplier each for NUPLAZID drug product and active ingredient.
- Clinical progress in Alzheimer’s disease psychosis and future pimavanserin development priorities.
- Developments in the consolidated securities litigation, the Allergan chronic-pain collaboration, and the triggered Ipsen milestone payment.