Should Investors Be Interested in Acadia Pharmaceuticals in 2017?

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Should Investors Be Interested in Acadia Pharmaceuticals in 2017? PART 2 OF 2

Acadia Could Report Robust Revenue Growth in 2017

Financial performance in 1Q17

In 2Q17, Acadia Pharmaceuticals (ACAD) recorded net product sales close to $30.5 million based on the sell-in method of accounting. Accordingly, the company recognizes its revenues at the point-of-sale when Nuplazid is sold to specialty distributors and pharmacies and not when these pharmacies sell the drug to customers, government facilities, and long-term care institutions.

The change in the accounting method was implemented in 2Q17, and thus the company had to add $3.6 million worth of deferred revenues to its quarterly figure in 2Q17. If this accounting method had been used since the start of 2017, Acadia Pharmaceuticals’ 1Q17 revenues would have been $16.8 million, while 2Q17 revenues would have been $26.9 million. The robust sequential growth in quarterly revenues is partly a result of the rapidly increasing demand for Nuplazid both from existing and new patients as well as the price rise implemented by Acadia Pharmaceuticals at the start of 2Q17. Further, after receiving favorable access for Nuplazid, the company reduced its free drug program from 30 days to 14 days in 2Q17. This move coupled with improved gross-to-net adjustments from 26% in 1Q17 to 18% in 2Q17 have played a pivotal role in boosting Acadia Pharmaceuticals’ revenue performance in 2Q17.

Acadia Could Report Robust Revenue Growth in 2017

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Acadia Pharmaceuticals had projected a higher gross-to-net adjustment for 1Q17, as Medicare patients renew their health plans in the first quarter of the calendar year. The company expects its gross-to-net adjustment to stay at mid-teen levels in 2H17.

Robust revenue growth

Wall Street analysts have forecasted Acadia Pharmaceuticals’ revenues to reach ~$113.3 million in 2017, which represents year-over-year (or YoY) growth of ~553.5%.

Acadia Pharmaceuticals also expects to report revenues in the range of $105 million to $115 million for full-year 2017. If the company manages to surpass these revenue projections, it could benefit its stock as well as the iShares Nasdaq Biotechnology ETF (IBB). Acadia Pharmaceuticals makes up about 0.71% of IBB’s total portfolio holdings.

For fiscal 2017, peers Ligand Pharmaceuticals (LGND), Jazz Pharmaceuticals (JAZZ), and BioMarin Pharmaceutical (BMRN) are expected to report revenues close to $134.4 million, $1.6 billion, and $1.3 billion, respectively.


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