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ACADIA Pharmaceuticals Inc. Message Board

  • golfmaniac93 golfmaniac93 May 26, 2013 4:49 PM Flag

    Meaningful discussion on company future.

    Assuming eventual annual revenues of $1 billion (4-6 years down the road, which I think is pretty conservative) the company should be worth between 5-10 billion dollars. That would put the price per share between $52 (5 billion/96 million outstanding shares, assuming more shares are thrown into the pool for employee compensation) and $104 (10 billion/96 million outstanding shares). I truly believe these are realistic estimates.

    As another poster mentioned, Alexion Pharma (ALXN) just did $1 billion in revenue for 2012 with one drug pulling in most of the revenue and the company is valued at 20x sales. My calculations above are at 5-10x sales. If Pimavanserin proves effective for ADP, watch out because we will be much much more than $1 billion in annuals sales. Honestly even if it doesn't prove effective, I'm sure many doctors will prescribe it off label and we will see decent sales from that.

    My main question is what are some potential sources of dilution over the next few years? We have $200 million in the bank and even if they want to raise another 200-300 million when that runs out in a 1.5-2 years that will probably only require a 7-10 million share sale at $30 per share which is not a whole lot in the grand scheme of things concerning dilution. This all sounds too good to be true so anyone with an intelligent rebuttal I would love to hear it.

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    • You all are leaving me no choice but to increase my stake in ACAD!

    • i would imagine that there will be a stock split at 50-$60, then we hit $100...... and i would give acad %90+ of making it to $100....... i think acad is an empire and none of us can even imagine in our wildest dreams where the stock price will be within few years...........

      Sentiment: Strong Buy

    • I have no intelligent rebuttal but love your post.

    • Your question seems a tad ridiculous, no? You all but guarantee a 100 share price and then you ask about future dilution? Slow down buddy! Who would worry about dilution if the share price keeps rising???

      First thing's first- there are really ~100mm diluted shares outstanding assuming all warrants and shares exercised.

      Second, as someone else pointed out, there are numerous risks towards us having a clear path to a 10bn valuation. First and foremost, while pima is hopefully on the market by 2015, I don't think 1bn in sales for PDP is a sure thing, some analysts think they can grab 500mm peak sales. That alone wouldn't get you to 10bn valuation. We'd need a bunch of good breaks like ADP efficacy (given the similarities between PDP and ADP this is certainly possible) and as you pointed out, off label prescriptions for other indications.

      The future is bright. I think at $14 / sh, the discount rate the market is placing on the discounted cash flows for pima is extremely high. However, in the face of a product not coming to market for several years and with numerous risks before then, I am not so sure anything more than a 1-2bn valuation TODAY makes any sense.

      Thus, worrying about dilution in the face of a million other things that need to happen to get us where we need to be is rather silly. Just know the 200mm in the bank will get the company through their cash burn needs for 2 years or more and the rest we will worry about when we need to.

      • 1 Reply to the_spader_3000
      • Thank you for the very insightful post. I wasn't too far off with 96 million diluted shares. Yes we have quite a few hurdles to clear before we are actually selling Pimavanserin but I think we have already cleared some of the biggest ones. I hope and pray that we'll find ADP efficacy as well. I also hope and pray that those trials do not take forever but management now knows to take their time and recruit only the "best" patients.

        I would agree that at the moment the valuation is definitely very fair. That is why buyers today are taking a risk on future events and will be rewarded justly when they transpire down the road.

    • The rebuttal is, shti happens.

      A competitor appears with a product that does much the same as pimavanserin only better.
      They hit a problem in scale-up that delays the timeline.
      They hit a problem in drug interaction studies that greatly limits the potential market.
      Have they completed carcinogenicity studies? Always a threat.
      There was some chatter right after they announced the great Phase III results about how they used bogus endpoints; haven't heard more about that lately, but maybe it reappears during FDA review.

      None of this is making me sell - the path to $100/share seems relatively clear, as these things go.

 
ACAD
27.45+0.41(+1.52%)Sep 17 4:00 PMEDT

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