Will Acadia Pharmaceuticals Stock Recover?

ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is at the forefront of neuroscience developing therapies for central nervous system conditions. The company primarily focuses on severe conditions of the brain.

The aging population and the related spike in the incidence of neurological disorders are responsible for the development of the central nervous system treatment market, which is expected to grow by 9.4% CAGR, reaching $166.53 billion by 2028.

The diagnostic rate for neurological disorders has gone up significantly over the past decades and is expected to keep growing.

Nonetheless, Acadia’s stock price performance is far from satisfactory and already down more than 45% this year. Most recently, investors have been subjected to disappointment due to the announcement that the company will stop trials of its antipsychotic drug because it failed to show results for schizophrenia patients so will the stock rebound anytime soon?

Promising Drug #1

The company has a varied portfolio of products in commercial stages, including two breakthrough products.

NUPLAZID, which the FDA approved in April 2016, is the only treatment in the U.S. for hallucinations and delusions associated with Parkinson’s disease psychosis (PDP).

NUPLAZID (pimavanserin) has the rare ability to not impair motor function, making it a promising treatment choice for those with PDP symptoms. The worldwide commercialization rights to pimavanserin are expected to help Acadia expand its presence in the central nervous system (CNS) disorders treatment market.

Promising Drug #2

The second breakthrough product is DAYBUE was the first drug approved for Rett syndrome, a calamitous neurological disease, in March 2023.

In August 2018, Acadia Pharmaceuticals acquired the rights from Neuren Pharmaceuticals to develop and commercialize DAYBUE for Rett syndrome and other indications in North America.

The approval of DAYBUE by the FDA was a result of the Phase 3 pivotal study, which confirmed that it did much better than placebo in the critical endpoints.

In July 2023, Acadia extended the scope of their partnership with Neuren, with Acadia acquiring the rights to trofinetide in regions outside North America and global rights of NNZ-2591, the leading candidate for Rett syndrome and Fragile X syndrome.

Further Pipeline Developments

In June of 2023, ACP-101 (intranasal carbetocin) was launched as a Phase 3 development candidate for the treatment of hyperphagia in Prader-Willi syndrome (PWS).

Acadia acquired rights to clinically advance ACP-101 with the acquisition of Levo Therapeutics in June 2022.

In November 2023, they started performing Phase 3 COMPASS PWS study in order to demonstrate the efficacy and safety of ACP-101 to treat hyperphagia among people who suffer from Prader-Willi syndrome.

By August 2022, Acadia Pharmaceuticals had proposed ACP-204, a new molecule that is based on what pimavanserin has been doing to treat neuropsychiatric symptoms.

The finding of a Phase 1 study showed good safety, which can be interpreted as a suggestion of the compound’s efficacy in Alzheimer’s disease psychosis (ADP) treatment.

In November 2023, a Phase 2 study started with the goal of assessing the effect of ACP-204 for hallucinations and delusions associated with ADP, while Acadia reserves worldwide rights for ACP-204.

In January 2022, Acadia also signed an agreement with Stoke Therapeutics, Inc. to discover, develop, and commercialize RNA-based medicines for the treatment of severe and rare CNS diseases in the genetic neurodevelopmental category.

Additionally, the company hoped that pimavanserin could be used for treating negative symptoms of schizophrenia, and it was engaged in corresponding clinical trials. However, a recent late-stage study showed that pimavanserin does not work as desired for the negative symptoms of this illness, and the company has decided to stop further studies.

Also, in 2021 and 2022, the company did not succeed in acquiring regulatory approval for the expanded use of pimavanserin in the treatment of psychosis associated with dementia and Alzheimer’s disease.

Revenues Are Impressive, Profits Not So Much

Net product sales, comprising NUPLAZID and DAYBUE, were $726.4 million and $517.2 million in the years 2023 and 2022, respectively.

NUPLAZID’s net product sales were $549.2 million and $517.2 million in the years 2023 and 2022, respectively. The increase was driven by higher unit sales versus the previous year, as well as a higher average net selling price.

Last year, DAYBUE closed with net product sales of $177.2 million. There were no net product sales of DAYBUE made during this fiscal year 2022.

Acadia’s net product sales of NUPLAZID stood at $484.1 million in 2021. Product net sales in 2022 were higher than in the year 2021, mainly attributable to the rise of NUPLAZID’s average gross selling price in 2022 relative to the previous year.

However, the company’s bottom line was in the red at the end of 2023, losing $61.3 million or $0.37 per share, in comparison to the prior year’s $216 million loss or $1.34 per share.

On December 31, 2023, it had $438.9 million in cash, cash equivalents, and investment securities versus $416.8 million on December 31, 2022, marking a $22.1 million increase primarily due to net cash provided by operating activities and increased cash proceeds from the exercise of employee stock options.

The company expects DAYBUE net product sales to come in the range of $370 to $420 million this year, while NUPLAZID net product sales are expected to be in the range of $560 to $590 million.

It’s clear that further product commercialization is needed to goose revenues to levels that will lead to profitability.

Will Acadia Pharmaceuticals Stock Recover?

The 19 analysts who cover Acadia Pharmaceuticals believe the stock will recover and have a consensus price target of $27.16 per share on it. If they are correct, Acadia has the potential to rise by as much as 89.1%.

Bears will point to the company’s lack of profitability as the reason why it’s best to steer clear but the company’s financials do show lots of bright spots, including good balance sheet liquidity and forecasts for net income to rise this year.

On a technical basis, the share price is oversold according the Relative Strength Index at this time. So with an oversold chart and trading at a discount to fair value, the odds favor Acadia Pharmaceuticals bouncing back.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.