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Acadia presented oral arguments this week to defend a key patent for Nuplazid, its treatment for Parkinson’s disease psychosis. A lower court previously ruled in Acadia's favor, upholding a patent that prevents rivals from launching generic versions of the drug's 34 mg capsules until 2038. This appeal is the final major hurdle in that legal battle.
The outcome is critical because Nuplazid is Acadia's primary source of cash. If the court eventually overturns the patent, cheaper generic competitors could enter the market much sooner than expected, which would sharply cut into the company's revenue. While management remains confident in their legal position, the stock's recent volatility shows how much the business relies on this specific legal protection.
Source: Business Wire
RBC Capital kept its outperform rating, which is its way of saying the stock should do better than the broader market. The analyst set a target of $38, suggesting the stock could nearly double from its current price of about $21.
This follows a quarter where both of the company's approved drugs, which treat Parkinson's psychosis and Rett syndrome, sold better than expected. While the average target among all analysts is lower at $30, this call reflects confidence that the company can continue to grow its sales and fund its own research without needing to borrow more money.
Source: RBC Capital
After Acadia reported its November results, we updated our fair value. We raised our sales projections for Daybue over the next year and added the tax payments the company now makes as a profitable entity to our model. We also added the impact of new Medicare rebate rules on sales growth for Nuplazid to what we track. We no longer include a successful result for the Remlifanserin clinical trial in our projections after it failed to meet its goals.
Acadia reported earnings of 31 cents per share, which was well ahead of the 20 cents analysts expected. Total revenue rose 22 percent to $342 million, led by Daybue, a treatment for a rare genetic disorder called Rett syndrome. Daybue sales grew 39 percent to $140 million, while the company's older Parkinson's drug, Nuplazid, also grew 12 percent.
This performance is a strong signal that Acadia is successfully managing its transition into a profitable commercial business. Management raised its full-year sales forecast for Daybue to a range of $505 million to $520 million, suggesting the drug is gaining more traction than previously thought. The company also plans to share more data on its Alzheimer's treatment pipeline later this month, which could be the next major driver for the stock.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Acadia is set to report its latest numbers today, and we are watching for updates on its two main drugs. Analysts are looking for revenue of about 330 million dollars. The real focus is on Daybue, the company's newer treatment for Rett syndrome, to see if it is still on track to meet its full-year sales goals. We are also looking for steady performance from Nuplazid, the older Parkinson's treatment that provides the cash the company needs to fund its research into new medicines.
Management consistently sets a bar they can clear, with seven beats in the last eight quarters. This pattern shows a business that is growing faster than its own forecasts suggest.
| Expectation | |
|---|---|
| EPS | $0.28 |
| Revenue | $363M |
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