Acadia Pharmaceuticals Inc. — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023. Amounts below are in millions of dollars unless stated otherwise. Acadia is a biopharmaceutical company commercializing NUPLAZID for Parkinson’s disease psychosis and, following its March 2023 FDA approval and April launch, DAYBUE for Rett syndrome.
Financial highlights
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Product revenue | $165.2 | $134.6 | $283.7 | $250.0 |
| Operating income (loss) | $3.0 | $(33.7) | $(50.5) | $(146.7) |
| Net income (loss) | $1.1 | $(34.0) | $(41.9) | $(147.1) |
| Operating cash flow | Not stated for quarter | Not stated for quarter | $(9.7) | $(89.5) |
- Q2 revenue rose about 23% year over year. NUPLAZID sales were $142.0 million, up from $134.6 million; management attributed the increase mainly to higher average net selling price and, to a lesser extent, unit growth. DAYBUE contributed $23.2 million; it had no prior-year sales.
- Q2 cost of product sales was $7.5 million, approximately 5% of revenue; reported gross margin was about 95%. Six-month cost of product sales was $9.1 million, approximately 3% of revenue. These margins reflect, in part, DAYBUE launch inventory whose manufacturing costs were previously expensed to R&D.
- Q2 R&D expense decreased to $58.8 million from $75.6 million, mainly due to lower pre-approval trofinetide manufacturing costs. SG&A increased to $96.0 million from $89.9 million, primarily due to DAYBUE launch personnel costs. For the six months, R&D was $127.9 million versus $204.5 million, reflecting the prior-year $60 million Stoke upfront payment and lower overall program spending; SG&A was $197.2 million versus $186.6 million, mainly due to DAYBUE commercialization.
- At June 30, cash and cash equivalents were $107.9 million and available-for-sale investments were $267.4 million, totaling $375.4 million. Including restricted cash, cash, equivalents and restricted cash were $116.1 million. The company reported $492.6 million of current assets and $187.9 million of current liabilities. It had no reported borrowings; operating lease liabilities totaled $58.8 million.
- Total assets were $642.8 million, total liabilities $247.0 million, and stockholders’ equity $395.8 million. Accumulated deficit was $2.4 billion. Common shares outstanding were 163.4 million at June 30 and 163.7 million as of July 26, 2023.
Changes, outlook and notable items
- Six-month operating cash use improved to $9.7 million from $89.5 million in 2022. Cash, equivalents and investments declined $41.4 million from year-end 2022, partly reflecting the $40 million DAYBUE approval milestone paid to Neuren. Management said existing cash, equivalents and investments should fund planned operations through and beyond the next 12 months, while noting that future financing could be needed.
- In July 2023, Acadia expanded its Neuren agreement for rights to trofinetide outside North America and global rights to NNZ-2591 for Rett and Fragile X syndromes. The agreement includes a $100 million upfront payment, potential milestones of up to $426.3 million for trofinetide and $831.3 million for NNZ-2591, plus royalties. These are potential contractual amounts, not reported Q2 expenses.
- Management expects top-line results from the Phase 3 ADVANCE-2 study of pimavanserin for negative symptoms of schizophrenia in Q1 2024. It planned to initiate a Phase 3 study of ACP-101 for Prader-Willi syndrome and a Phase 2 study of ACP-204 for Alzheimer’s disease psychosis in Q4 2023. The filing provides no clear numerical revenue or earnings guidance.
- DAYBUE’s reported cost of sales benefited from “zero-cost” launch inventory; approximately $29.9 million of pre-approval manufacturing costs had been expensed as R&D. Acadia estimated that, after this inventory is used, overall cost of product sales would be mid-single-digit to high-single-digit percentage of total product sales.
- Acadia may owe Neuren one-third of the value of the DAYBUE rare pediatric disease priority review voucher when sold or used; $29.6 million was accrued for the estimated amount and capitalized as an intangible asset. The company disclosed up to $1.6 billion of aggregate potential pipeline milestone payments under agreements.
- Patent litigation concerning generic NUPLAZID remains active against MSN and Aurobindo in separate cases; a Zydus settlement permits specified future generic launch dates, subject to earlier-launch triggers. A securities class action related to prior disclosures is in discovery. Management said it could not estimate possible losses and had not accrued litigation amounts other than incurred legal fees.
- Other principal risks include successful commercialization and payer access for both products, regulatory and post-marketing requirements, clinical-trial outcomes, third-party manufacturing and supply, intellectual-property disputes, and macroeconomic or financing-market disruption. Management reported disclosure controls were effective and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- DAYBUE prescription uptake, payer coverage, sales allowances and net sales in subsequent quarters, and whether launch costs and margins evolve as management expects.
- NUPLAZID unit growth and pricing trends, plus outcomes and timing in the remaining post-marketing commitment and generic patent cases.
- Cash burn and liquidity after the July Neuren agreement, including the timing of its $100 million upfront payment and future milestone and royalty obligations.
- Progress and results for ADVANCE-2, ACP-101 and ACP-204, and whether planned study timelines are achieved.
- Developments in the securities class action and other litigation; the filing states potential losses cannot currently be estimated.