Great call and must listen for all longs. Shorts too.
I'll not list details as I think people should listen for themselves. However, this was the first time I've heard them mention the potential of pimavanserin in bipolar disorder and autism. Maybe they briefly mentioned it before, but if so I don't recall. I'm definitely excited to hear about bipolar, but the improved sleep in this population is essential. It's a huge market and definitely under served.
I liked that they highlighted the sleep benefits quite a lot today. The improved sleep, improved wakefulness and improved next-day functioning are extremely important to numerous disorders. It seems to me that Pimavanserin has a bit of a dual-action. The antipsychotic benefits are very clear and I personally doubt that this comes down to improved sleep. I also doubt that the improved sleep is due to the antipsychotic actions. It may be that this receptor is controlling multiple mechanisms or the molecule is hitting areas other than 5HT2a.
If you've ever seen anyone truly unwell with Alzheimer's, stroke or some other dementias then you know these patients just don't sleep. Benzodiazepines are a disaster because they lead to next-day sedations and falls. There are not approved answers that really work. Pimavanserin is looking like one of those drugs that may have multiple actions contributing to the efficacy being seen. I know it's a very clean 5HT2a inverse agonist, but even very clean drugs often have off-site impacts and definitely downstream impacts.
I need to point out two items that struck me as very significant.
1. Roger highlighted that Breakthrough Designation has not really happened in CNS and that it's usually in cancer or infectious diseases. Nuplazid is one of the first drugs to receive it. My own thinking is that this also may have delayed the filing as there is a real chance (in my opinion) that the FDA will not wait 6 months to
approve Nuplazid and will go much faster. This happened with Medivation. Please have a look.
Acadia may simply need more time to get their ducks in a row. It's pretty clear that the delay was not a negative other than the 3 months or so. My interpretation is that they need to be ready for a launch as the chances look excellent for approval and maybe a quick approval.
2. In Roger's section he talked about symptoms seem in Alzheimer's patients such as psychosis, agitation, aggression, sleep issues, cognitive disturbance, etc. Then in the Q&A he said during the Piper questions that
Pimavanserin could end up impacting other aspects of ADP patients and that there may be other benefits to Alzheimer's patients. He didn't give specifics and definitely didn't say they had concrete data.
However, I have never heard Acadia talk about anything outside of psychosis. It just makes me wonder if there is blinded data coming out of the ADP study that was unexpected and definitely positive.
If Pimavanserin is helping other aspects of Alzheimer's then all bets are off. This will absolutely go through the roof and beyond the moon.
If possible I would love to hear from others who listened to the CC.
All my opinion and please do your own DD
There could be a few of reasons. One is large groups hedging their positions, but I don't believe it's BB since they have been such strong hands. Another reason could simply be that people think the market will correct and biotech will overreact. However, I think one of the main reasons is simply that the shorts don't understand Acadia. They may believe that Acadia's data package for the NDA is somehow weak because a second Phase 3 was waved off. They would be missing that the FDA proactively waved this second Phase 3 off and it's the first time in CNS that it has ever happened. My own opinion is that there are lots of rookie investors out there...even in the hedge fund world. Listening to some of the "experts" talk biotech is laughable. The constantly recommend buying Gilead and Celgene...very tough calls..haha. I own both but I own them because my dog (he's quite smart though!) would pick them also. Anyway, my point is that even many experts are not truly experts when it comes to biotech and especially CNS. Tough field to analyze and you must know your history. In the history of CNS, nothing like this has ever happened before...there has never been another Acadia. No other company has had a second Phase 3 waved off.
All my opinion and please do your own DD.
I've always believed that M&A is likely here. Acadia faces the possibility of a very fast approval post-NDA filing.
I recall that Medivation received approval just after getting a priority review designation (post NDA filing). They also had breakthrough therapy designation.
If Acadia's website is current, they still haven't made key sales force hires or filled other key positions. So why haven't they filled these positions? My opinion is that they plan to go the route of M&A and they need more time to handle their discussions. The worst situation would be FDA approval and no infrastructure to launch Nuplazid. We all know they've had ample time to make these hires so why have they held off? I'm banking hard that it's because they have no plan to launch Nuplazid. It's my opinion that M&A may happen before the NDA filing.
All my opinion but next two months could be very interesting. The other choice is simply that Acadia needs more time to make key hires because they know they face the possibility of a quick approval. My own opinion is that it's not that. I think it's because they may not need to make these hires. Especially if M&A is on the
All my opinion.
Pure speculation on my part and many of you know that I believe Acadia will have an exit via M&A with contingency value rights attached. I know biotechs are rebounding today, but I found it interesting that Acadia in particular is rebounding so drastically. Just makes me wonder if perhaps Abbvie or Shire were potential partners at one time. We shall see...
Acadia could be a closely watched/followed stock in 2015. I suspect that we will climb to the $40 range with no additional news. We're still too cheap.
And one other point. They definitely mentioned looking for the improved sleep quality in Alzheimer's patients. I know that some experts have questioned whether the underlying mechanisms of psychosis between PDP and ADP are the same, but they may not appreciate that improved sleep quality, next-day wakefulness and next-day functioning may translate into big gains in this population. I'm starting to believe it's the dual action of pimavanserin that makes it such an effective drug. It may be the combination of antipsychotic activity and improved sleed quality/improved wakefulness that makes it truly unique. I'm not at all convinced that this is mediated through only 5HT2a so good luck to other groups who try to design their own molecule. Uli has said it before at conferences, but this looks like a franchise molecule.
To be honest, this looks like a passive aggressive hit piece. To say that sales "could" be higher with positive ADP data is just funny. Of course they would be higher and way way higher.
Also, this author talks up delays in the NDA filing. The delay was baked in long ago as this NDA filing wasn't rushed in the least. If anything it has been delayed as to make sure all bases were covered.
There is no talk of breakthrough therapy designation which definitely increases the chances of getting to market rapidly upon NDA filing. There is also no talk off obvious off-label use in other CNS indications.
Finally, there is no talk of M&A when the entire sector is on fire and Acadia is obviously sitting on a potential blockbuster candidate so they're clearly in play.
I think this piece was designed to create uncertainty around the NDA timeline and the overall potential of Pimavansin. Most of these authors are jokes. Let's be real about it.
Teva announced that they're going to drop 14 programs and will focus heavily on CNS and respiratory going forward. Acadia has to be on their radar big time.
I personally believe that a JV or tie-up between Allergan and Acadia makes sense. Allergan is of course fighting off a bid from Valeant at the moment. Part of Allergan's strategy to avoid a deal with Valeant is to build shareholder value through M&A with other outfits. As has recently become clear, they are no longer in talks with Salix which may mean that they have decided to build the next phase of the company around a blockbuster drug candidate and pipeline that can compliment what Allergan is already doing.
JPM recently discussed that Acadia would be targeting long term nursing homes right out of the gate with Nuplazid. The aging population guarantees that there is a huge potential market for Nuplazid in nursing homes where it’s sometimes very difficult to tell the difference between ADP, psychosis related to stroke or some other dementia. The fact is that the picture is often mixed. Many of these patients are put on an atypical antipsychotic such as risperidone even though these patients cannot tolerate these meds. Imagine an eventual Nuplazid label that allows for the broad treatment of psychotic illnesses in the elderly. Nuplazid could quite literally take the entire market. Factor in that Nuplazid helps sleep quality, a huge problem in nursing home patients, and you can see that many nursing home patients could benefit from Nuplazid. This is in addition to the market that will also exist outside of nursing homes which is also likely to be significant.
Where do I see synergy with Allergan? Think about conditions impacting nursing home patients. Top conditions would include Alzheimer’s (Nuplazid), urinary incontinence (Botox), ophthalmic conditions such as dry eye and AMD (Allergan), sleep quality related to psychosis or CNS disease (Nuplazid). In addition, patients with CNS disorders can have issues with involuntary muscle movements (Botox).
This is pure speculation on my part, but I can see M&A between Allergan and Acadia.
Up 9.75% on a day like today. Something may be up. Let's see what the rest of the week brings.
Heading into the end of October and start of November. Clock is ticking down on NDA filing. Shorts are definitely playing with fire.
I think the bet is that the market is correcting and companies like Acadia will take a disproportionately large hit. However, what the shorts likely don't understand is that Acadia is probably on the radars of companies looking at M&A. I'm not sure how things will unfold, but I do know that the shorts will get crushed if an M&A happens or if they hold their short positions for too long. I know many longs here are against M&A because they can't see a $40-50 price being fair (even with CVRs). However, I think longs would chuckle if an offer came in that suddenly propelled the stock to $40/50 as the shorts would be properly roasted.
I don't think there was anything on that CC to be nervous about. If anything, they confirmed that the stability and drug-drug interaction work is done. The big question here seems to be about M&A and if this could cause a delay. First off, let me just say that guessing about M&A is really tough. I'm of course of the opinion that Acadia will be acquired for numerous reasons. Perhaps the strongest reason is simply that M&A in the bio pharma sector is on fire. This is fueled by cheap cash (cheap to borrow), dwindling large pharma pipelines and groups needing to buy in order to be progressive and fend off being acquired themselves.
Can M&A activities delay the filing? My understanding is that M&A does not need to be disclosed if it's discussion phase. If a solid offer is place in a true term sheet (not a discussion purposes term sheet) then the BOD likely must disclose.
Now in terms of reasons to delay for M&A, I can think of some.
Most important is that any acquirer is likely to want to control the NDA filing from start to completion. It could be very disruptive to the process to have the filing started by one group and then handled by another.
Next, Acadia is a lean company. If M&A is ongoing it's likely that they truly don't have the time to handle both M&A
discussions and the NDA at the same time. A 3 month delay gives them more room to conduct both activities properly.
Finally, the biggest issue for Acadia is hiring. The last thing you want to do is hire a sales force that isn't needed. An acquirer may have a sales force in place already. This puts Acadia I'm a tough spot since filing now can lead to a rapid approval. Acadia must hire a sales force now if they file now to be ready for launch.
We don't know if M&A is the reason, but my opinion is that there are a number of reasons to delay if M&A is on the table. And let's face it, M&A is on fire right now as pharma is shopping. All my opinion and please do dd.
Let's put it this way: I have just about no doubt that large pharma is chasing Acadia and if a serious discussion has started that could definitely cause a delay in the NDA filing. Acadia wanting to become a specialty pharma does not mean large pharma will care or honor this desire. Acadia's strongest card to play to avoid M&A is the huge block owned by Baker Bros, but even Baker will have their price. It's good to have them in Acadia...they won't let a bad group win the deal IMO.
Having said all of this, Acadia wanting to go it alone also could have caused the NDA delay. They have given mixed messages about building a nursing home sales force and then saying that one of the key value drivers for Acadia is keeping people out of the nursing home. Put simply, they're not ready for a launch and I think that very easily could also explain the delay. I don't think Nuplazid will require a 6 month review. Like Medivation, I think they could end up with a very fast approval. They need to know their focus before that happens and it seems to me that they're still figuring out how best to position Nuplazid. It's a tough decision too....of you target nursing homes exclusively how do you then argue for higher pricing because you keep patients out of nursing homes? My guess is that it's a happy medium and it's not really likely that it's going to keep patients out of nursing homes. It might delay the cross-over, but the patients in the nursing home will also need Nuplazid quite clearly. How to communicate this to insurance companies and all of those other things needed before launch could easily explain the delay. Remember, the second phase 3 was waved off. They have been going flat out for over a year but they may just need more time. I am okay with that.
My core opinion remains that Acadia is an extremely attractive buyout candidate and an official offer would need to be disclosed. I may put a list of potential M&A partners together and share.
I would only add that I thought the statement about Nuplazid having the ability to keep patients out of nursing homes worse important and Uli highlighted that this has economic importance. This will certainly have an impact on how they build the sales force. Do you target doctors that treat patients before the nursing home or those working in the nursing home? It sounds like both which is a good problem to have. Also, if Nuplazid works in schizophrenia that's definitely an indication that is not in a nursing home setting. They may just need to expand the sales force as the market for Nuplazid expands.
By the way, the pricing will be excellent for Nuplazid if they can argue that it keeps patients out of the nursing home. I don't have any figures to share, but it's a real benefit to the patient and system if they can stay at home. Big breakthrough here for the care of sick parents. Gotta love that.
I'm a bit shocked by how many shorts are trapped at the moment. I have no idea why they chose Acadia. Not smart.
I know there are differing opinions on this, but M&A activity continues to be extremely active in this space. Shorts would be destroyed if that were to happen. It's a real risk for them. I have no idea why they wouldn't close out their positions. Crazy.
It was the Piper Jaffray conference. It was a bit like a roundtable with open Q&A. Go to Acadia's homepage and on the first page you will see a link for investor webcasts. You can access it there.
I don't know liptrader, but the bottom line is that pimavanserin demonstrated excellent efficacy and safety in a well designed Phase 3. Schizophrenia is quite different from PDP and ADP. I'm personally not crazy about the schizophrenia market because it's crowded and there are lots of generics. However, if it works then patients will want it and use it because the atypicals are just terrible in terms of side effects.
In terms of the harassment case, I actually remember that. All I can really say is that the people at Acadia are solid citizens from what I've seen and heard.
I definitely can see it happening. The way to fully value Acadia is to attach CVRs or contingent value rights to the deal. If Nuplazid pans out in ADP or schiz the CVRs would allow for more upside to go to shareholder of record at the time of the close of the transaction. I'm being a bit simplistic, but you can see how I'm thinking about this.
Roche bought Intermune for over $8 billion. Acadia's valuation is under $2.4 billion. If a pharma company puts down $5B I can see a deal happening. The environment for M&A is super hot and there is no way around the fact that Acadia is sitting on a blockbuster and Acadia is undervalued. If I'm a large pharma interested in CNS I'm looking at Acadia.