Acadia Pharmaceuticals: 4 Different Insiders Have Sold Shares This Month

Apr.20.14 | About: ACADIA Pharmaceuticals (ACAD)

Summary

Four insiders sold Acadia Pharmaceuticals stock within one month.

The stock was not purchased by any insiders in the month of intensive selling.

All four of these insiders decreased their holdings by more than 10%.

Acadia Pharmaceuticals (NASDAQ:ACAD) focuses on innovative treatments that address unmet medical needs in neurological and related central nervous system disorders.

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Insider selling during the last 30 days

Here is a table of Acadia Pharmaceuticals' insider activity during the last 30 days.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Uli Hacksell CEO April 15 25,000 Yes 115,549 shares 17.8%
Laura Brege Director April 4 14,285 Yes 0 shares + 20,000 options 41.7%
Torsten Rasmussen Director April 4 30,000 Yes 8,500 shares + 27,357 options 45.6%
Thomas Aasen CFO April 4 15,000 Yes 23,848 shares + 82,971 options 12.3%
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There have been 84,285 shares sold by insiders during the last 30 days. All these shares were sold pursuant to a Rule 10b5-1 plan.

SEC Rule 10b5-1 is a regulation enacted by the United States Securities and Exchange Commission (SEC) in 2000. The SEC states that Rule 10b5-1 was enacted in order to resolve an unsettled issue over the definition of insider trading, which is prohibited by SEC Rule 10b-5. After Rule 10b5-1 was enacted, the SEC staff publicly took the position that canceling a planned trade made under the safe harbor does not constitute insider trading, even if the person was aware of the inside information when canceling the trade. This staff interpretation raises the possibility that executives can exploit this safe harbor by entering into 10b5-1 trading plans before they have inside information while retaining the option to later cancel those plans based on inside information.

For example, a CEO of a company could call a broker on January 1 and enter into a plan to sell a particular quantity of shares of his company's stock on March 1, find out terrible news about his company on February 1 that will not become public until April 1, and then go forward with the March 1 sale anyway, saving himself from losing money when the bad news becomes public. Under the terms of Rule 10b5-1(b) this is insider trading because the CEO "was aware" of the inside information when he made the trade. But he can assert an affirmative defense under Rule 10b5-1(c), because he planned the trade before he learned the inside information.

In general, it is a safer way for an insider to sell shares pursuant to a Rule 10b5-1 trading plan than without it.

Insider selling by calendar month

Here is a table of Acadia Pharmaceuticals' insider activity by calendar month.

Month Insider selling / shares Insider buying / shares
April 2014 84,285 0
March 2014 0 526,316
February 2014 67,000 0
January 2014 125,000 0
December 2013 59,117 0
November 2013 52,692 0
October 2013 40,000 0
September 2013 248,474 0
August 2013 127,771 0
July 2013 0 0
June 2013 0 2,340,314
May 2013 40,000 1,993,000
April 2013 328,476 0
March 2013 0 0
February 2013 0 0
January 2013 0 0
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There have been 1,172,815 shares sold, and there have been 4,859,630 shares purchased by insiders since January 2013.

Financials

Acadia Pharmaceuticals reported the full-year 2013 financial results on February 27 with the following highlights:

Revenue $1.1 million
Net loss $37.9 million
Cash $185.8 million
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On March 10, Acadia Pharmaceuticals closed a $197 million public offering.

Outlook

Acadia Pharmaceuticals anticipates that the level of cash used in its operations will increase in 2014, relative to 2013, in order to fund ongoing and planned development and pre-commercial activities for pimavanserin.

Pipeline and upcoming milestones

Acadia Pharmaceuticals' lead product candidate is pimavanserin, which is in Phase III development as a potential first-in-class treatment for Parkinson's disease psychosis.

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(Source: Investor presentation)

Acadia Pharmaceuticals' upcoming milestones include the pimavanserin Parkinson's disease psychosis program NDA submission, which is anticipated near the end of 2014.

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(Source: Investor presentation)

Competition

Acadia Pharmaceuticals' competitors include AstraZeneca (NYSE:AZN) with Seroquel, Eli Lilly (NYSE:LLY) with Zyprexa, and Pfizer (NYSE:PFE) with Xalatan. Here is a table comparing these companies.

Company ACAD AZN LLY PFE
Market Cap: 1.78B 79.82B 64.47B 193.08B
Employees: 48 51,500 37,925 77,700
Qtrly Rev Growth (yoy): -0.90 -0.06 -0.03 -0.02
Revenue: 1.14M 25.71B 23.11B 51.58B
Gross Margin: N/A 0.80 0.79 0.82
EBITDA: -38.22M 9.25B 6.99B 23.12B
Operating Margin: -33.45 0.26 0.24 0.33
Net Income: -37.95M 2.56B 4.68B 11.34B
EPS: -0.44 2.04 4.32 3.19
P/E: N/A 31.12 13.99 18.33
PEG (5 yr expected): -1.77 -2.92 15.04 5.12
P/S: 1,538.16 3.11 2.77 3.72
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Acadia doesn't have any approved products yet.

Here is a table of these competitors' insider activities this year.

Company Insider buying / shares Insider selling / shares
AZN N/A N/A
LLY

0

0
PFE 0 375,317
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Only Acadia Pharmaceuticals has seen intensive insider selling during the last 30 days.

Conclusion

There have been four different insiders selling Acadia Pharmaceuticals, and there have not been any insiders buying Acadia Pharmaceuticals during the last 30 days. All four of these insiders decreased their holdings by more than 10%. Acadia Pharmaceuticals has an insider ownership of 22.95%.

Acadia Pharmaceuticals has a $13 price target from the Point & Figure chart. I believe there is an opportunity for a short entry with the $13 price target. I would place a stop loss at $32, which is the all-time high. The two main reasons for the proposed short entry are a bearish Point & Figure chart, and the intensive insider-selling activity.

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Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in ACAD over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.