February 6, 2017
By Mark Terry, BioSpace.com Breaking News Staff
Acadia Pharmaceuticals made an unexpected rise on Friday, largely on the basis of takeover rumors. Shares are currently trading for $36.61.
Based in San Diego, Acadia focuses on central nervous system (CNS) disorders. Last year, the company received approval by the U.S. Food and Drug Administration (FDA) for Nuplazid (pimavanserin) to treat Parkinson’s psychosis. And there is nothing new about Acadia being the target of takeover rumors. In January, there were rumors that Pfizer was in talks to buy the company, which made the stock pop 12 percent. In June, the rumored buyer was AstraZeneca , who is once again the source of rumors.
In April 2016, Biogen was floated as a potential suitor, joining a crowd that includes Gilead Sciences , Teva Pharmaceutical Industries , Otsuka Pharmaceutical Co., Ltd. , Bristol-Myers Squibb and AbbVie .
In January, Brian Nichols, writing for BNL Finance, said, “The reason rests on Nuplazid’s potential for label expansion and also off label usage. Last week, BNL Finance reported that Nuplazid is already being used for treatment of Lewy body dementia, a disease that is similar to PDP with a much higher degree of occurrence. … We believe it won’t take long for acquirers to realize Nuplazid’s potential to dominate this market for the three most common neurodegenerative conditions. Ultimately, if successful, and with the right marketing approach, Nuplazid could achieve annual sales of $3-$5 billion, conservatively.”
On Friday, Schaeffer’s Investment Research wrote, “Acadia Pharmaceuticals is higher today on M&A buzz, with sources reporting the biotech firm has received a takeover offer from AstraZeneca (AZN). The news had Acadia as much as 8.6 percent higher earlier, though the shares were last spotted up 4.6 percent at $36.84, on pace for their highest close since August. Meanwhile, traders have been rushing to the stock’s options pits, with Acadia calls changing hands at five times the expected intraday rate.”
According to Zacks Investment research, the consensus recommendation on Acadia is 1.75, based on a scale from 1 to 5. 1 is a Strong Buy and 5 is a Strong Sell. The 1.75 Consensus Analyst Recommendation was 30 days ago, although it was the same both 60 and 90 days ago as well. In terms of price targets, 12 analysts had a consensus price target mean of $42.25, with a high of $60 and a low of $25. The company’s market cap is $4.43 billion.
On January 30, Keith Speights, writing for The Motley Fool, analyzed the pros and cons of Acadia. The pro was definitely Nuplazid sales. As of September 30, 2016, sales of the drug totaled $5.4 million, most of which accrued in the third quarter. But, Acadia had more than $50 million in selling, general, and administrative expenses in that quarter.
Speights wrote, “Launching a new drug isn’t free—and it isn’t easy. That’s especially true when the drug carries a black-box warning that says elderly people with dementia-related psychosis taking antipsychotic drugs are at an increased risk of death, as Nuplazid does.”
Having someone like AstraZeneca or Pfizer, with their deep pockets and commercial expertise, would be a motivator for an acquisition. But a lot of the drug’s future relies on label expansion. It is evaluating the drug for five other indications, as an adjunct treatment of schizophrenia in patients who haven’t responded well to current antipsychotic therapy, and as adjunct treatment in patients who responded negatively to schizophrenia treatment. It’s also looking at Alzheimer’s disease psychosis, which would be one of the biggest opportunities for the drug.
Speights wrote, “There’s also a decent chance that Acadia attracts interest from larger companies looking to make an acquisition. Several biopharmaceutical companies could be good fits. I’d put Eli Lilly (LLY) high on the list. Lilly experienced a big setback with the late-stage clinical study failure for solanezumab in treating Alzheimer’s disease. Despite this major disappointment, the big drugmaker continues to invest in developing drugs targeting the disease. Lilly also has early-stage programs focused on dementia and schizophrenia.”
One thing is certain—there are a lot of potential buyers of Acadia Pharmaceuticals.
