ACADIA Pharmaceuticals Inc. — Q1 2016 Form 10-Q
Reporting period: Three months ended March 31, 2016; financial statements are unaudited. ACADIA is a biopharmaceutical company focused on central nervous system disorders. The filing reports results before NUPLAZID product sales began.
Key financial results
| Metric | Q1 2016 | Q1 2015 |
|---|---|---|
| Collaborative revenue | $4,000 | $4,000 |
| Research and development expense | $22.8 million | $16.3 million |
| General and administrative expense | $27.5 million | $24.3 million |
| Operating loss | $50.3 million | $40.6 million |
| Net loss | $49.8 million | $40.4 million |
| Basic and diluted loss per share | $0.45 | $0.40 |
| Net cash used in operating activities | $41.2 million | $25.3 million |
Product revenue was nil; the reported $4,000 was collaborative revenue. With virtually no revenue, operating margins are not meaningful. At March 31, cash and cash equivalents were $175.2 million and available-for-sale investments were $282.0 million, totaling $457.2 million in cash, cash equivalents and investments. Current assets were $462.4 million versus current liabilities of $21.1 million. The balance sheet reports no debt.
Changes and financing
- Net loss increased by $9.4 million year over year. R&D expense rose $6.5 million, reflecting expanded personnel and stock compensation, higher external service costs, and development activity. G&A rose $3.2 million; the comparison is affected by a one-time 2015 former-CEO transition charge, including $9.0 million of stock-based compensation.
- Operating cash use increased $15.9 million year over year. The company raised approximately $281.6 million net in a January follow-on offering, issuing 10.3 million shares. Financing activities provided $283.0 million; shares outstanding increased from 101.9 million at December 31, 2015 to 112.8 million at March 31, 2016.
- Management said existing cash, cash equivalents and investments were expected to fund planned operations for at least the next 12 months, while noting that significant additional financing may be needed in the future.
Outlook, developments and risks
- After quarter-end, on April 29, 2016, the FDA approved NUPLAZID (pimavanserin) for hallucinations and delusions associated with Parkinson’s disease psychosis (PDP). ACADIA planned a U.S. commercial launch in June 2016 and had hired approximately 135 specialty sales specialists. No product sales had been recorded in the quarter.
- FDA approval triggered an $8.0 million regulatory milestone payment to the Ipsen Group, due in Q2 2016. ACADIA also reported receiving $14.3 million in April under a settlement related to a former 10% stockholder’s 2013 share sales.
- Management expects continued operating losses and increased R&D and G&A spending, including launch costs, post-marketing studies, and development of pimavanserin for other indications. It expected to complete enrollment in its Phase II Alzheimer’s disease psychosis study around mid-2016 and report top-line results in Q4 2016; it also planned to initiate a Phase II Alzheimer’s agitation study in Q2 2016. These are expectations, not guarantees.
- Key launch risks include uncertain market adoption, pricing and reimbursement, the product’s boxed warning, and the company’s lack of prior commercial-launch experience. The FDA approval includes post-marketing study commitments; negative findings or noncompliance could affect the product’s label or approval.
- ACADIA relies on a single supplier each for NUPLAZID active ingredient and drug product, creating supply risk. A consolidated securities class action concerning prior statements about the NDA submission timing remained pending; the company said it could not estimate potential losses and had accrued no amounts beyond ongoing legal fees.
Important facts for investors to verify
- Whether the planned June 2016 launch occurred as expected and whether physician uptake, payer coverage, and sales support the product’s commercial potential.
- Actual cash burn and available liquidity after launch spending, the $8.0 million milestone payment, and the $14.3 million settlement receipt.
- Progress and results of required post-marketing studies and the Alzheimer’s disease psychosis and agitation programs.
- Manufacturing continuity, including whether alternative suppliers are secured, and the outcome of the pending securities litigation.
- The effect of the January equity offering and potential future financing on share count and existing stockholders.