ACADIA Pharmaceuticals Inc. — Q1 2013 Form 10-Q
Reporting period: Three months ended March 31, 2013; filed May 7, 2013. ACADIA is a development-stage biopharmaceutical company focused on central nervous system disorders. Its lead candidate, pimavanserin, is being developed for Parkinson’s disease psychosis (PDP). The financial statements are unaudited.
Financial results and liquidity
Amounts below are in millions of dollars except per-share data and share counts.
| Metric | Q1 2013 | Q1 2012 / comparison |
|---|---|---|
| Revenue | $0.417 | $0.450 |
| Research and development expense | $4.430 | $5.021 |
| General and administrative expense | $2.151 | $1.660 |
| Total operating expenses | $6.581 | $6.681 |
| Operating loss | $(6.164) | $(6.231) |
| Net loss | $(6.123) | $(6.218) |
| Net loss per share, basic and diluted | $(0.08) | $(0.12) |
| Net cash used in operating activities | $(6.585) | $(5.230) |
- Revenue was principally from collaborations and grants; ACADIA reported no product-sale revenue. The filing does not provide a meaningful operating margin for this pre-commercial business.
- At March 31, cash and cash equivalents were $18.436 million and available-for-sale investments were $83.027 million. Management reported total cash, cash equivalents and investment securities of $101.5 million, versus $108.0 million at December 31, 2012.
- Current assets were $102.985 million; current liabilities were $5.695 million. Stockholders’ equity was $79.662 million, alongside $17.658 million of redeemable common stock.
- Cash used in investing activities was $33.086 million, mainly reflecting purchases of investment securities; financing activities provided $0.208 million. Cash and cash equivalents fell $39.463 million during the quarter.
- The balance sheet reports no long-term debt. The filing notes historical debt financing and repayment, but does not show a current debt balance.
Changes versus the prior comparable period
- Net loss improved modestly from $6.218 million to $6.123 million, while operating cash use increased from $5.230 million to $6.585 million.
- R&D expense declined $0.591 million, mainly because external service costs fell as the pivotal pimavanserin -020 study had been completed during 2012. Higher personnel and other R&D costs partly offset the reduction.
- G&A expense increased $0.491 million, primarily due to personnel costs and professional fees.
- Weighted-average common shares increased to 78.748 million from 52.903 million, reflecting prior share issuance; reported loss per share narrowed to $0.08 from $0.12.
- The research term of the 2003 Allergan collaboration ended in March 2013. ACADIA expected revenue to decline beginning in Q2 2013 as it would no longer recognize revenue from that agreement.
Outlook, management commentary, and material risks
- In April 2013, the FDA agreed that the positive pivotal -020 study, together with supportive pimavanserin data, could support an NDA filing for PDP. ACADIA cancelled its planned confirmatory Phase III -021 study and said it was completing supportive studies and chemistry, manufacturing and controls work. It targeted NDA submission near the end of 2014, subject to further FDA interactions; FDA review and approval remained uncertain.
- Management expected R&D spending to increase, including for the pimavanserin program and a planned Phase II Alzheimer’s disease psychosis trial. ACADIA also described potential future work in other indications.
- ACADIA expected to use $28–$32 million of cash resources to fund operations in 2013 and believed existing liquidity plus anticipated collaboration payments would fund operations at least into 2015. It nevertheless expected to need significant additional financing; availability and terms were uncertain.
- The company had an accumulated deficit of $373.8 million and expected continuing operating losses for at least several years. Failure to obtain financing could force it to delay, reduce, or discontinue programs or relinquish rights.
- A key contingency concerns 5,347,137 shares sold under the ATM program in 2012 for $17.7 million. A late Form 8-K filing may have made the sales ineligible for the shelf registration, creating potential purchaser rescission rights for up to the aggregate purchase price plus statutory interest, as well as possible regulatory penalties. No stockholder had asserted rescission rights as of the filing; the rights were expected to expire in 2013.
- ACADIA was contractually committed for up to approximately $15.9 million of future external research and development services, generally terminable on short notice without payment of the full contract amount. It also disclosed potential Ipsen milestone payments of up to $10.5 million, contingent on regulatory events and excluded from the contractual-obligations table.
- Other key risks include dependence on pimavanserin and collaborators, clinical and regulatory uncertainty, manufacturing and commercialization requirements, and the possibility of dilution or constrained financing. Management concluded disclosure controls were effective as of March 31, 2013.
Important facts for investors to verify
- Progress on supportive studies, CMC work, FDA discussions, and whether the targeted late-2014 PDP NDA timetable remains achievable.
- Actual cash use versus the $28–$32 million 2013 estimate, and whether projected funding into 2015 remains supported by liquidity and collaboration receipts.
- Revenue trends after the 2003 Allergan research term ended, and the status and funding of ongoing Allergan programs.
- Resolution and expiration of potential ATM share rescission rights, including any claims, settlements, or regulatory action.
- Changes in the reported $15.9 million external-services commitment and any contingent Ipsen payments.