Seeking Alpha " Raising Target to $7.50 Acadia Forges Forward With Pimavanserin" LINKED
Acadia Forges Forward With Pimavanserin
Mar 13 2013, 09:06 By: Prop Think
Raising Target To $7.50 :We have now made some pretty significant changes to our DCF model post-data. We've dramatically reduced the discount rate (risk) in our model and are now using a rate of 13.8% (risk free of 2.00% + equity risk premium of 5.90% x 100% firm adjustment). We have also adjusted up slightly our peak sales estimate for pimavanserin in PDP, from $312 million in the U.S. based on 25% penetration to $378 million in the U.S. based on 33% penetration. The data from -020 are that good. On a global basis, with positive data in ADP that matches the outcome in PDP, pimavanserin is a $2+ billion drug. We also assume that Acadia does partner the drug in 2015, and lands $50 million upfront and up to $500 million backend potential with 20% royalty on sales.
Our model is telling us the stock is worth $7.50.