ACADIA Pharmaceuticals Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Amounts below are in millions of dollars unless stated otherwise. ACADIA is a biopharmaceutical company whose only marketed product was NUPLAZID (pimavanserin), approved in the U.S. for Parkinson’s disease psychosis.
Financial performance
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Product revenue | $134.6 | $115.2 | $250.0 | $221.8 |
| Cost of product sales | $2.7 | $2.5 | $5.6 | $4.7 |
| Research and development | $75.6 | $56.9 | $204.5 | $113.9 |
| Selling, general and administrative | $89.9 | $96.8 | $186.6 | $208.5 |
| Operating loss | $(33.7) | $(43.7) | $(146.7) | $(110.5) |
| Net loss | $(34.0) | $(43.9) | $(147.1) | $(110.3) |
| Loss per share, basic and diluted | $(0.21) | $(0.27) | $(0.91) | $(0.69) |
Q2 revenue increased 16.8% year over year; management attributed the increase primarily to a higher average net selling price, not stated volume growth. Product cost was approximately 2% of sales in both periods. No conventional debt is listed on the balance sheet; operating lease liabilities were $63.7 million.
Cash, liquidity and cash flow
- Cash, cash equivalents and investment securities totaled $436.4 million at June 30, 2022, down from $520.7 million at December 31, 2021. This included $139.8 million of cash and cash equivalents and $296.5 million of available-for-sale investments.
- Current assets were $532.5 million and current liabilities were $117.7 million. Total assets were $612.8 million; total liabilities were $177.9 million.
- For the first half, operating cash use was $89.5 million, investing activities provided $75.5 million, and financing activities provided $6.3 million. Cash, cash equivalents and restricted cash ended the period at $145.6 million.
- Management said existing cash, cash equivalents and investments were expected to fund planned operations for at least 12 months, while noting possible significant future financing needs. The company reported an accumulated deficit of $2.3 billion.
Period changes and business developments
- First-half R&D expense rose $90.6 million year over year, primarily reflecting the $60 million Stoke upfront payment, expensed in Q1, and increased development spending. Q2 R&D growth was attributed mainly to early-stage programs.
- First-half SG&A fell $21.9 million, which management attributed mainly to lower advertising, promotional and personnel costs. The Ipsen royalty obligation, previously 2% of NUPLAZID net sales, ended in October 2021; no license fees or royalties were recorded in the 2022 periods presented.
- In January 2022, ACADIA entered a Stoke Therapeutics collaboration covering RNA-based medicines for rare neurodevelopmental diseases and paid $60 million upfront. The agreement includes potential additional milestones of up to $907.5 million, plus royalties for certain programs.
- ACADIA submitted an NDA for trofinetide for Rett syndrome in July 2022, after positive Phase 3 LAVENDER results. On August 4, 2022, the FDA issued a complete response letter for the resubmitted pimavanserin application for Alzheimer’s disease psychosis; ACADIA said it planned to meet with FDA and was not then planning additional ADP studies. The filing also reports discontinuing the ACP-044 pain and ACP-319 M1 PAM programs.
Outlook, risks and contingencies
- No specific numerical financial guidance is provided in the supplied filing text. Management expects substantial R&D spending and operating losses for the next few years; timing and costs of development and regulatory outcomes are uncertain.
- Management said COVID-19-related reductions in patient visits, long-term-care occupancy and healthcare-provider access continued to weigh on NUPLAZID sales growth, although supply had remained uninterrupted. The filing also cites potential clinical-trial disruption from Russia’s invasion of Ukraine.
- Key risks include dependence on NUPLAZID as the sole commercial product, clinical and regulatory uncertainty for pipeline candidates, third-party manufacturing and distribution reliance, pricing and reimbursement pressures, and the possibility that financing may not be available on acceptable terms.
- NUPLAZID generic patent litigation remained pending against several manufacturers; a joint trial was scheduled for May 15, 2023. Hetero settled, with a stated potential launch date of July 27, 2038, subject to earlier-launch triggers. A separate securities class action related to the dementia-related psychosis application remained unresolved. Management said it could not estimate possible losses and had not accrued amounts beyond legal fees incurred.
- License and collaboration agreements could require aggregate milestone payments of up to $3.1 billion, depending on future events. These are contingent commitments, not amounts currently payable in full.
Important facts for investors to verify
- Whether NUPLAZID revenue growth reflects sustainable prescription demand or is primarily supported by pricing, and how pandemic-related access conditions affect sales.
- The FDA’s full rationale and next steps following the August 4, 2022 ADP complete response letter, and the review progress and requirements for the trofinetide NDA.
- Cash burn and available liquidity relative to planned R&D, commercialization, collaboration payments and the stated 12-month funding outlook.
- Developments in NUPLAZID patent litigation, including trial timing and potential generic-entry outcomes, and the status of the securities class action.
- Potential milestone, royalty and other obligations under collaboration and license agreements, and the effects of discontinued programs on planned spending.