Piper raising ACAD target from $28 to $42 - Pipeline Progress Should Enhance Conviction in PDP This Year
COMPANY NOTE PIPER JAFFRAY March 7, 2014
ACADIA Pharmaceuticals (ACAD) Overweight
ACADIA recently reported 4Q13 results and provided pipeline updates, as well as completed an equity raise netting ~$197mn. Guidance for a "near YE" NDA filing for pimavanserin (pima') in PDP remain intact. Management indicated NDA preparatory activities, stability testing and drug-drug interaction studies are progressing well, and we believe these timelines may accelerate. ACADIA ended the year with $186mn. With the recent raise and despite anticipated expenses for establishing a US commercial infrastructure, we see current cash as sufficient to fund to profitability, contingent on our revenue projections being met.
• ADP thoughts. The company is constructive on the conduct of the Alzheimer's dependent psychosis (ADP) Phase II study, however, will not provide enrollment updates (we suspect it may be ahead of schedule given the trial design and patientcohort). Based on our diligence on pima’s potential beyond PDP, we are moving to a DCF-based valuation (Exhibit 1 vs. prior sales multiple in Exhibit 2) of the PDP and ADP indications to better capture ACADIA's intrinsic value, resulting in an increase of price target to $42 from $28, while use in schizophrenia remains as upside to our model.
• Measured progress. ACADIA provided updates to the pima' clinical program, with everything conservatively remaining on track to previously guided timelines. That said, we have enhanced conviction on the ability of this team to execute as a result of recent hiring of management with commercial experience. As a result of ongoing diligence on pima’ and the ADP study design, we are increasingly optimistic for the
prospects in ADP, the company outlined some of the advantages
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