ACADIA Pharmaceuticals Inc. — Form 10-Q Summary
Reporting period: Quarter and six months ended June 30, 2015. Unaudited financial statements; amounts below are in U.S. dollars. ACADIA is a development-stage biopharmaceutical company focused on neurological and central nervous system disorders. It had no product sales; reported revenue was primarily collaboration-related.
Financial performance and position
| Metric | Three months ended June 30, 2015 | Six months ended June 30, 2015 | Comparable 2014 period |
|---|---|---|---|
| Revenue | $1,000 | $5,000 | $28,000 and $58,000, respectively |
| Research and development expense | $18.4 million | $34.7 million | $13.8 million and $25.5 million |
| General and administrative expense | $21.1 million | $45.4 million | $8.0 million and $14.3 million |
| Net loss | $39.4 million | $79.8 million | $21.5 million and $39.3 million |
| Basic and diluted loss per share | $0.39 | $0.80 | $0.22 and $0.41 |
| Operating cash used | Not separately presented | $55.2 million | $31.1 million for the six months |
At June 30, 2015, cash and cash equivalents were $93.2 million and available-for-sale investments were $177.6 million, totaling approximately $270.8 million in cash, cash equivalents and investments. Total assets were $275.5 million; total liabilities were $19.7 million, with no debt reported. Stockholders’ equity was $255.8 million. The accumulated deficit was $577.9 million. Management said existing liquid resources were expected to fund planned operations at least into the second half of 2016.
Six-month investing cash flow was positive $82.5 million, mainly reflecting the timing of investment maturities and purchases; financing cash flow was positive $4.0 million. Cash and cash equivalents rose by $31.4 million from year-end 2014 to $93.2 million.
Changes versus prior comparable periods
- Second-quarter net loss increased to $39.4 million from $21.5 million; first-half net loss increased to $79.8 million from $39.3 million.
- First-half R&D expense rose by $9.2 million, reflecting personnel and stock-based compensation growth and higher external services costs, including work on manufacturing quality systems.
- First-half G&A expense rose by $31.1 million, largely from commercial launch preparation, higher personnel and external services costs, and a $9.6 million charge related to the former CEO’s transition agreement, including $9.0 million of stock-based compensation.
- First-half operating cash use increased by $24.1 million. The company raised $199.8 million in financing cash in the first half of 2014, mainly from a public offering, versus $4.0 million in the 2015 period.
Outlook, commentary and significant risks
- ACADIA planned to submit an NDA for NUPLAZID (pimavanserin) for Parkinson’s disease psychosis in the second half of 2015. The timing had been updated after additional time was needed to prepare manufacturing quality systems. The company reported positive pivotal Phase III results and FDA Breakthrough Therapy designation, but approval remained uncertain.
- Management expected R&D and G&A expenses to increase as it prepared for the NDA and potential launch, continued an open-label safety study and Phase II Alzheimer’s disease psychosis study, and developed commercial capabilities. Enrollment in the Alzheimer’s study was expected to be completed in the first half of 2016.
- The company had no approved products and expected operating losses for at least several more years. It may need additional financing; unavailable or unfavorable funding could force reductions, delays or termination of programs, or licensing of product rights on less favorable terms.
- Commercial success depends on regulatory approval, manufacturing readiness, launch execution, physician and patient adoption, and payer coverage and reimbursement. ACADIA had limited commercialization experience and relied on third parties for manufacturing; at the filing date it had one API supplier and one drug-product supplier.
- After quarter-end, on August 3, 2015, ACADIA entered into a manufacturing agreement with Patheon for U.S. commercial drug product supply, subject to the agreement’s terms. It still needed a long-term commercial API supply agreement.
- Two putative securities class actions alleged misleading statements about the timing of the planned NDA submission. The company could not estimate potential losses and had not accrued amounts beyond ongoing legal fees.
- Up to $29.7 million of future external-service obligations were reported, generally terminable on short notice. Potential Ipsen payments included $2.5 million upon successful FDA filing and $8.0 million upon first FDA approval, plus royalties of up to 2% of net sales if applicable.
Most important facts for investors to verify
- Whether and when the NUPLAZID NDA was submitted, accepted for review and acted on by the FDA, and whether manufacturing quality requirements were satisfied.
- Actual cash use, available liquidity and financing needs relative to management’s stated runway into the second half of 2016.
- Progress on commercial API supply, Patheon readiness, and the company’s ability to build launch and sales capabilities.
- Future clinical results and timelines for pimavanserin in Parkinson’s disease psychosis, Alzheimer’s disease psychosis and other indications.
- Developments in the securities litigation, collaboration programs with Allergan, and any resulting financial or operational effects.