By Michael Kramer
Yesterday, I wrote a piece on Acadia Pharmaceuticals (NASDAQ:ACAD) and my view on where the shorts went wrong. ACAD is most famously known for their drug Nuplazid, for the treatment of Parkinson Disease Psychosis (NYSEARCA:PDP), approved at the end of April. Nuplazid, a 5-HT2A inverse agonist, is the first drug of its kind and the only drug approved to treat PDP. Most of this is nothing new to many investors who like me are invested in ACAD. What I think most investors do not realize is how drastically this company has been reshaped since March of 2015, the time of the last NDA delay.
Many investors know the largest shareholders in the Company are the Bakers Brother and Fidelity. Combined the two investment firms own about 41.1 million shares or nearly 47% of the outstanding 88 million share float. However, the Bakers driving this company forward
When I presented ACAD as my best idea for 2016 at the Idea Generation Conference hosted By the Kaufman Brother on March 2nd, I decided to explore the current construction of the board and upper management. Below are my findings.
Hires as of the beginning of March 2016 to the company included:
Ryan E. Brown, Vice President, Chief Compliance Officer: Comes from Allergan
Bob Mischler, Vice President, Strategy and Business Development: Comes from Astrazenca
Changes to Board Included as of the beginning of March 2016:
Julian Baker: Baker Brothers
Daniel Soland - Came from Viropharma, sold to Shire. Baker Brothers owned about 13% of Viropharma.
The Rest of the Board as of the Beginning of March 2016:
Leslie Iversen, Ph.D.: Chairman
Stephen Biggar: Baker Brothers
Michael Borer: worked at Xcel sold to Valeant - Resigned 2/24/16
Laura Brege: Is on boards of Dyax, Pacira Pharmaceuticals and Portola - Baker Brother own 5% of Dyax, which was sold to Shire
William Wells: Worked at Biovail bought by Valeant.
Since the beginning of March 2016, it was announced Leslie Inversen, William Wells and Mary Gray were all resigning. Additionally, it was announced in their proxy statement filing the board would be reduced from 10 current board members to 7. That would mean that the new board would be look like:
What does this all mean to investors and how can you interpret these changes to the company? Clearly, the Bakers have put in a tremendous amount of time and money into reshaping the company. Additionally, they have been able to tighten their control on the company as whole. This will allow them to steer the company in the direction that they see fit.
Clearly the change at the CEO position and the addition of Julian Baker to the Board were the most significant of all of these changes. Also, reducing the size of the board and from 10 to 7 and eliminating the remaining board members from the past regimen helps. This in my view can essentially reduce the odds of an opposite from other board members.
Additionally, the Bakers because of their influence and prior relationship where able to recurit and bring in some key upper management personnal. This is I believe is very important and is crucial to successfully launching Nuplazid.
All of the changes mentioned above should help to drive the company forward in a postive way.
I am as well as the Clients of Mott Capital Management, LLC are long shares of ACAD.
Disclosure: I am/we are long ACAD.
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.
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