Acadia Pharmaceuticals Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. Financial statements are unaudited. Unless otherwise indicated, amounts below are in U.S. dollars.
Business context
Acadia is a biopharmaceutical company focused on central nervous system disorders. NUPLAZID (pimavanserin), approved in the U.S. for hallucinations and delusions associated with Parkinson’s disease psychosis (PDP), was its only marketed product and the source of product revenue. Development programs included pimavanserin for dementia-related psychosis (DRP) and schizophrenia, trofinetide for Rett syndrome, and ACP-044 for pain.
Financial performance and liquidity
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Product revenue | $131.6 million | $120.6 million | $353.4 million | $320.7 million |
| Operating expenses | $146.9 million | $206.5 million | $479.2 million | $540.2 million |
| Operating loss | $15.3 million | $85.9 million | $125.8 million | $219.4 million |
| Net loss | $14.5 million | $84.7 million | $124.8 million | $214.8 million |
| Net loss per share, basic and diluted | $0.09 | $0.54 | $0.78 | $1.37 |
| Net cash used in operating activities | Not provided for quarter | Not provided for quarter | $102.5 million | $108.7 million |
Q3 revenue increased about 9% year over year; nine-month revenue increased about 10%. Management attributed growth to higher NUPLAZID unit sales (about 3% in Q3 and 4% year to date) and a higher average gross selling price. Cost of product sales was $3.7 million in Q3 and $8.4 million year to date; Q3 included a $1.0 million write-down of finished goods inventory associated with a potential DRP launch.
At September 30, 2021, cash and cash equivalents were $94.6 million and available-for-sale investment securities were $445.7 million, totaling $540.3 million in cash, cash equivalents and investments. This was down $91.7 million from $632.0 million at December 31, 2020, primarily due to operating cash use. Total assets were $717.7 million; total liabilities were $150.7 million. The filing reports no debt balance; operating lease liabilities totaled $65.8 million. Current assets were $640.9 million and current liabilities $88.2 million.
Material changes and notable items
- Q3 research and development expense fell to $58.6 million from $120.1 million; nine-month expense fell to $172.5 million from $257.0 million. The main driver was lower acquisition-related upfront and transaction costs than in 2020, alongside lower trofinetide and MDD development costs; increased ACP-044 development costs partly offset the decline.
- Nine-month selling, general and administrative expense rose to $290.1 million from $267.9 million, reflecting higher advertising, promotion, charitable contributions, and personnel costs, partly offset by lower stock-based compensation.
- A change in estimate for performance-based awards reduced stock-based compensation expense by approximately $6.8 million in the first nine months of 2021.
- The 2% NUPLAZID royalty obligation to Ipsen terminated in October 2021.
Outlook, risks and contingencies
- Management expects cash, cash equivalents and investments to fund planned operations through at least the next 12 months, but expects operating losses to continue for the next few years and anticipates increased cash use as commercial and development programs advance. No specific financial guidance for full-year revenue or expenses is provided in the supplied filing text.
- The FDA issued a complete response letter in April 2021 for the DRP supplemental application. It cited efficacy concerns across dementia subgroups and limitations in the supporting Alzheimer’s psychosis study. The FDA indicated additional subgroup studies may be needed, while remaining open to reviewing further analyses. Timing and prospects for approval remain uncertain.
- COVID-19 continued to weigh on NUPLAZID sales through fewer patient visits, lower long-term-care occupancy, and reduced healthcare-provider access. Management reported some later-period improvement, but conditions remained below pre-pandemic levels. The company said supply had remained uninterrupted and it did not anticipate supply disruption at that time.
- Management expected LAVENDER Phase 3 trofinetide results in Q4 2021. ACP-044 bunionectomy study results were anticipated in Q1 2022 after slower enrollment related to postponed elective surgeries during the COVID-19 Delta surge.
- The company may owe up to $2.2 billion in aggregate development and commercial milestone payments under its agreements, in addition to royalties. CerSci-related potential milestone payments account for up to $887 million; trofinetide and the Vanderbilt M1 PAM agreement also carry significant potential milestones.
- Generic manufacturers filed challenges to NUPLAZID patents. Acadia settled with Hetero, permitting launch as early as July 27, 2038, subject to specified earlier-launch triggers; litigation with other generic applicants continued, with a joint trial scheduled for May 2023.
- Pending securities and derivative litigation includes claims relating to prior NUPLAZID disclosures and the DRP application. Acadia said it could not estimate possible losses, recorded no litigation accrual beyond attorneys’ fees incurred, and management did not believe the matters were likely to have a material adverse effect; outcomes remain unpredictable.
Important facts for investors to verify
- Whether NUPLAZID sales recover as pandemic-related care-access and long-term-care disruptions ease, and whether pricing and gross-to-net adjustments support continued growth.
- FDA feedback and the company’s next steps for DRP, including whether additional subgroup trials will be required.
- Results and regulatory progress for trofinetide, ACP-044 and other pipeline programs, alongside the related development spending and milestone obligations.
- Cash burn, investment balances and financing needs relative to management’s stated runway; the company cautions that additional financing may be required and could dilute shareholders.
- Developments in NUPLAZID generic patent litigation, the Hetero settlement’s launch provisions, and the potential financial or commercial effects of litigation outcomes.