ACADIA Pharmaceuticals Inc. — Form 10-Q Summary
Reporting period: Quarter ended September 30, 2019; comparisons are with the three and nine months ended September 30, 2018 unless otherwise noted. ACADIA is a CNS-focused biopharmaceutical company. NUPLAZID (pimavanserin), approved in the U.S. for Parkinson’s disease psychosis (PD Psychosis), was its only marketed product.
Financial performance
| Metric | Q3 2019 | Q3 2018 | Nine months 2019 | Nine months 2018 |
|---|---|---|---|---|
| Revenue | $94.6 million | $58.3 million | $240.8 million | $164.2 million |
| Operating loss | $45.4 million | $61.3 million | $190.1 million | $180.2 million |
| Net loss | $42.0 million | $62.1 million | $182.2 million | $179.7 million |
| Loss per share, diluted | $0.29 | $0.50 | $1.26 | $1.44 |
| Cash used in operating activities | Not presented for quarter | Not presented for quarter | $121.4 million | $128.4 million |
- Revenue increased 62% in Q3 and 47% year to date, primarily on NUPLAZID unit-sales growth of approximately 38% and 31%, respectively; higher average gross selling prices also contributed. Q3 revenue additionally benefited by $2.2 million from a Medicare accrual estimate change.
- Product cost was 3% of net sales in both Q3 and the nine-month 2019 period, versus 7% and 6% in the respective 2018 periods. This implies product gross margin of approximately 97% before royalties and other operating expenses.
- Q3 operating and net losses narrowed year over year. For the nine months, operating loss increased about 6% and net loss increased about 1% as higher revenue was outweighed by increased development and commercial spending.
- At September 30, cash and cash equivalents were $385.5 million and available-for-sale investments were $298.4 million, totaling $683.8 million, up $210.3 million from December 31, 2018. Nine-month financing cash inflow was $328.8 million, mainly reflecting a September equity offering.
- No conventional borrowings are reported. Current liabilities were $67.7 million. Operating lease liabilities totaled $10.3 million; a separate, uncommenced office lease carries $53.7 million of minimum payments over its initial term.
Material developments and outlook
- In September, the Phase 3 HARMONY study of pimavanserin for dementia-related psychosis (DRP) met its primary endpoint at a planned interim analysis and stopped early for efficacy. Full results, including detailed safety and secondary-endpoint data, were not yet available. ACADIA planned to meet with the FDA in the first half of 2020 to discuss a possible supplemental NDA.
- The Phase 3 CLARITY program for adjunctive treatment of major depressive disorder began in April 2019. The Phase 3 ENHANCE schizophrenia study did not meet its primary or key secondary endpoint; ADVANCE results were expected in Q4 2019.
- ACADIA began the Phase 3 LAVENDER study of trofinetide for Rett syndrome in October 2019. Its Neuren license includes up to $455 million in potential development and sales milestones, plus tiered royalties.
- Management expects operating losses for the next few years and substantial, increasing R&D spending on pimavanserin, post-marketing studies, and trofinetide, as well as commercial spending. It stated existing cash, cash equivalents, and investments were expected to fund planned operations through at least the next 12 months; additional financing may be needed thereafter.
- Risks include dependence on NUPLAZID commercialization, its boxed warning and continuing post-marketing obligations, clinical and regulatory uncertainty, reimbursement and drug-pricing pressure, and reliance on third-party manufacturers. The filing notes that FDA approval for PD Psychosis does not establish approval for other indications.
Contingencies and other items
- A securities class action alleges misleading statements about NUPLAZID safety and regulatory scrutiny. ACADIA could not estimate potential losses and recorded no litigation accrual other than ongoing legal fees.
- The company is cooperating with a Department of Justice civil investigative demand concerning NUPLAZID sales and marketing; timing and outcome are uncertain.
- Disclosure controls were assessed as effective as of September 30, 2019, and management reported no material change in internal control over financial reporting during the quarter.
Key facts for investors to verify
- Full HARMONY results, safety data, and the FDA’s requirements and timing for a DRP filing.
- NUPLAZID prescription and unit-sales trends, net pricing, and the sustainability of gross-to-net estimates, including Medicare rebates.
- Cash burn and spending plans against the stated cash runway, including effects of planned clinical programs and the new office lease.
- Progress and results for CLARITY, ADVANCE, and LAVENDER, and the implications of ENHANCE’s missed endpoints.
- Developments in the DOJ investigation and securities litigation, and any resulting financial or operational consequences.