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Intrinsic Value Of Acadia: Deep Dive And Financial Analysis


  • Historical safety and efficacy data of NUPLAZID.
  • Forward looking on revenue growth & expansion of other indications.
  • Valuation by DCF model: bull for long term; weak and volatile for short term.

The stock price of ACADIA Pharmaceutical Inc. (NASDAQ:ACAD) dropped >60% in the last 9 months from ~40 to 14-ish. A few reasons may explain this dramatic fall including 1) lack of catalyst in terms of clinical readout and market/regulatory events; 2) concerns on sustained revenue growth; 3) negative opinions brought up recently on the safety/efficacy profile of Nuplazid. More than dozens of articles on ACAD were published in Seeking Alpha in the last 3-5 years; however, the author thinks it is worth to do a deep dive to revisit the revenue growth potential and recent catalysts. In addition, financial models were conducted for equity valuation based on the probability of success to expand indications for the sole product, NUPLAZID. In summary, the recent weakness in the stock price greatly reduced the downside risk of ACAD. The weakness of stock price might remain in the next 3-6 month due to two upcoming binary events but it also creates a good entry point for long-term investors.

Historical safety and efficacy data of NUPLAZID

Key takeaway

1. Highly unmet clinical needs, the only FDA-approved drug for this indication and extremely high burden on society.

2. A unique mechanism for treatment of PDP without compromising Parkinson disease. Adequate efficacy including 13% placebo –subtract complete response (no psychosis symptoms after treatment).

3. Comparable safety profile to previous “standard of care” (off-label use of antipsychotics) and no new risk identified in the 2-year real-world practice.

4. Very low risk for imposing additional restriction on its medical use, and the impact on the sales should be minimal and temporary.

Nuplazid® (pimavanserin) is the sole product for ACADIA and it is currently used for the treatment on Parkinson disease psychosis (PDP). Recently, the “controversial” efficacy and safety profile, and the unsmooth development/approval process were brought up again by news (

This article was written by

Scientist. Focus on Biotech/Pharma pipelines, clinical trials and regulatory approval updates.

Analyst’s 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (25)

Excellent write-up; thank you for your work!

I'm considering ACAD, but I'm not sure about the entry point. As it gets closer to $12 I'm tempted even more, but wonder about your thought about an entry point as you seem to know the company well.
Pharmyang Investment profile picture
Thanks for the reading and compliment.

I am not optimistic about the near-future clinical readouts, so I will keep side. This is not an investment suggestion, just my own opinion.
Elvis99 profile picture
So, my numbers are a bit different. 7 Quarters revenue is $ 148.7 millions or $ 21.24 Mill per quarter. Average no of patients is ($21.24 mill / $2,000 / 3-months) 3,540. Death rate is 887/3540 or 25% and if 6 months is the average stay its about 50% which i well above 28.2 %. And hence the safety issue.
Pharmyang Investment profile picture
Thanks for your reading and calculation. Three things we should consider for this calculation given the caveat I mentioned in the article that this number itself cannot be interpreted alone to evaluate safety issue.

1. The face cost is around $2000/month, but the net price should be lower than that considering the discount for medicare and commercial payer. I think at least 10-20% discount is a reasonable range.

2. Acadia provided 28-day free sample to new patients when they launched the product until some time in 2017, and then switched to 14-day free sample program. We should consider this to reflect more patients which was not included in the revenue calculation.

3. The duration of patients who took the medicine. In my article, I was using an average 6 months as it is a conservative estimation and it serves my purpose to demonstrate there is no higher death rate even with this conservative estimation. However, the average duration might be higher since the product is launched by 2Q 2016.
Superb writeup. Detail and clarity. Thanks for sharing the work.
Pharmyang Investment profile picture
Thanks for reading.
Care to comment on the disappointing guidance today?
Pharmyang Investment profile picture
I am not comfortable about the low guidance on Q3. It is difficult to explain why the Q3 revenue will be lower than Q2. Is it because management wants to beat earning in Q3 so intentionally set up a low guidance or they really see the trend that the prescription is lower or completely reaching plateau? Anyway, it is concerning to me and I will stay side until more clarity.
Grinder Capital profile picture
Well written article regarding Acadia and the positive and negatives associated with the company. We agree valuation is very compelling but Nuplazid negative publicity overhang, and questions regarding management's handling of situation have kept shares in the penalty box. Encouraged by recent position taken by Point72 as a sign investor sentiment could be more favorable over the next 6-12 months. However, given the significant erosion in shareholder value, a bit surprised an activist investor hasn't stepped in, possibly asking for management to sell the company. The addition of new pipeline opportunities could be a longer-term positive, but assuaging Nuplazid safety concerns, and upcoming clinical readouts for expanded use opportunities, are likely the key catalyst to move shares higher from current levels.
Pharmyang Investment profile picture
Thanks for reading and informative comments. I was not aware of Point72's recent position so good to know it. I do see the downside is limited with the current valuation. However, the next two catalysts are binary events to me. It may go down further in the next 3-6 months with unfavorable revenue and clinical readouts.
takeone1 profile picture
HI Pharmyang ,
Must be a good article ,cause Vitamanrocks is un-usually quiet..Hah....have a good one
Pharmyang Investment profile picture
west281356 profile picture
Very good article. Thank you.
Pharmyang Investment profile picture
Excellent article, but if Nuplazid's average death rate is 14.7%, how is it "in the ball park" if the historical death rate is 28.2 deaths per 100 patients (28.2%)? That's quite a difference.
Pharmyang Investment profile picture
Thanks for reading carefully. 14.7% was not normalized by usage duration. I was assuming average duration for patients taking this drug is only 6 months (given the drug is on the market for less than 2-year as of Mar 2018 when the data was collected), so it translates to similar 28.2 deaths per 100 patients/year.
Thanks for clarifying this.
i agree with everything but I think you've neglected off label use. i expect that to be significant for positive symptoms of SZ. 5HT2A influences dopamine indirectly, and plaz should reduce + symptoms. In depression with psychotic features, I also expect significant off label use, if the MDD trial fails.
Pharmyang Investment profile picture
Thanks for the point. I am not sure how much sales I should assign to off label use for schizophrenia. From limited clinical data I have seen so far, the effect of pimavanserin in SZ is comparable to other approved SZ drugs (such as Risperidone). However, all those are generic drugs, why should we expect significant off label use when the efficacy are comparable. The only chance is that some patients might not be tolerable to other antipsychotics, so they may want to use Pimavanserin. Do you have any source to show significant off-label use for SZ? Thanks.
Good write up. Thanks!
Pharmyang Investment profile picture
Thanks for reading.
I have been watching Acadia for a year and am glad I did not buy it. Most times I turn around it keeps going lower and lower. They have a good product, but it doesn't look like it is cutting it.
Pharmyang Investment profile picture
I don't recommend to buy it now due to uncertainty ahead. But in the long run, I still think its valuation is reasonable.
Theodore Cohen profile picture
Excellent overview. I like the new agreement on Retts...no longer a one-trick pony!
Pharmyang Investment profile picture
Thanks for reading! I will take a look at the news.
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