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ACADIA Pharmaceuticals Inc. Message Board

  • ezvestor ezvestor May 17, 2013 1:49 PM Flag

    Buy Out Talks are Pre Mature

    While there is much speculation about a near term buy out, I doubt this is realistic.
    IMO, big pharma could negotiate a valuation/buy out with the Company based upon the stage of the NDA for PDP (for discussion lets assume $20 share). However, if you assume that ADP is maybe 5 Xs larger ($100 share) plus the other 2 or 3 other indications that combined might be 2 or 3 Xs the size of PDP ($20 to 50 share), its unlikely that a buyer and seller could agree upon a value for these revenue streams primarily because of the substantial uncertainty of an NDA approval and the time to get there.
    ACAD wouldn't sell the company based solely on the PDP valuation, hence they have raised the add'l $100 MM maybe to get thru the NDA process for these additional indications.
    Could ACAD cut a deal for just the PDP indication? Perhaps but it would be very messy especially for the off label revenues.
    My conclusion is that ACAD wants to maximize total value and that may take at least another 12 to 18 months, or longer, but the valuation will not be in the $25 range, it could be $100+ share if ADP goes well.

    GLTAL
    EBR

    Sentiment: Strong Buy

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    • I don't think in the long term that a buyout is a good thing. The only reason this would get "bought out" is because they expect to make a lot of money of it. This means that while the sshare holders will have a short term gain, in the long term we will lose out on a lot of share price. ACAD could be the next big thing in the pharma industry.

    • they need a big pharma partner soon to develop pimavanserin as a global opportunity in all indications. That really would increase the value dramatically. Don't forget, so far they didn't do anything internationally. That's a shame.

    • I agree, but you have to also look at it from the perspective of the potential buyers who want to have a lot of influence over any future clinical trials as they have a large impact of the ultimate value of pimavanserin. In other words, I can almost guarantee you that potential partners want to have influence over the NDA package, ADP clinical trial design and the design of any future schiz trials. It's true that the value of Acadia can go much higher with positive results, but upside can also be capped with missteps. I think they can see $35/share before the end of 2013 in a buyout.
      Also, pimavanserin isn't new to large pharma. They of course talked to the major players when they did their first business development process (that led to the Biovail deal). This comes down to risk/reward for both Acadia and potential partners. Acadia insiders and shareholders stand to make a lot of money and large pharma needs to maximize the value of this asset so development needs to be just right. Missteps by Acadia are too risky to both side so my own belief is that M&A is coming and it's later this year. All IMO.

      • 3 Replies to investormdpart2
      • Excellent points. I does seem like ACAD knows how (not at least) to conduct these studies/trials as demomanstrated by the first ever waiver in stage 2 Phase III in CNS as you have been astute to point out. I would think BB would be addidng some expertise/3rd party opinions here also.
        If you are correct and we do see a buy out this year at $30, we might have left a lot on the table but it would still have been a very positive experience/investment.

        When do you think we might see the first prelim results from the ADP study now under enrollment? That would seem to be the point of quantum leap in value to me.

        Also, if you or any of the other longs are coming to SD for the SH mtg I'd be happy to host for drinks after the mtg when there may be some more news. I live about 7 min from the ACAD offices and their law firm.

      • Investormdpart2...Enjoy your posts! I am interested in your view of pima peak sale for PDP alone. Where do you arrive with behind the envelope calculation?

      • I think Acadia (perhaps through BB) has been on the money in terms of their strategy and trial designs. I originally thought $3B or $37 (based on share count before recent offering) would get it done for pre-approval. Now I am not so sure. I think Acadia and BB smell blood and are willing to maximize value by letting this play out (ie. ADP trial results in 2015). I don't see big pharma paying more than $4B prior to ADP results so I don't see an acquisition happening soon.

    • Have you heard of Contingent Value Rights (CVR)? This is very commonly used to unlock future value in M&A. http://www.investopedia.com/terms/c/cvr.asp

      • 2 Replies to charlie14593
      • Yes, definitely know all about CVR's. However, you don't see them all that often and they can be problematic. I think there is a lot to be said for company ponying up significant dollars upfront if they want to play ball. If they want to offer potential upside to investors then offer all-stock deal. My problem with contingent value rights is that they're often too open to interpretation and the company is no longer around. I've seen some asset purchase deals that are heavy on CVR's but I don't think we'll see that type of deal here. The value is too high and demands a significant and clear heavy cash deal. GSK's buyout of Human Genome is a good example and I would go as far back as to cite Myogen's take-out by Gilead. I would even cite Teva's buyout of Cephalon is a $6 billion + cash deal. I think Pimavanserin is too attractive to make any compromises. I wouldn't do with any pharma not ready to put up all cash and heavy at that. CVR's are a pain.

      • Yes, and also tracking shares but I dont see them used often at all.

    • Bump

 
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