Acadia Pharmaceuticals (NASDAQ: ACAD), a mid-cap biopharma, saw its shares decline by 10.8% last month, according to data from S&P Global Market Intelligence. What provoked this double-digit sell-off?
Acadia's shares fell victim to the politically charged drug-pricing debate in the United States. While biopharma stocks in general struggled in April because of this hot-button issue, Acadia's shares were hit particularly hard because the company has aggressively raised the price of its Parkinson's disease psychosis medication, Nuplazid, since its launch in May 2016.
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Acadia has hiked Nuplazid's wholesale acquisition cost at about twice the annual rate of inflation in the U.S. over the past three years. That's not an unusual pricing policy for a fairly new branded medication, but it could draw the ire of key political leaders -- especially as the presidential election campaign kicks into high gear later this year.
Acadia, for its part, has needed to take regular price increases on Nuplazid because script numbers haven't quite lived up to expectations, and the company's rising clinical costs have kept it deep in the red. And with Acadia advancing Nuplazid in multiple trials at once and the company picking up another late-stage asset recently, this trend is likely to continue for the foreseeable future.
The next major event for Acadia's shares is the upcoming top-line readout for Nuplazid's schizophrenia adjunctive studies. If successful, this indication could add some much-needed juice to Nuplazid's commercial momentum heading into the next decade.
The flip side, though, is that the market has clearly built a massive premium into Acadia's shares based on the assumption that Nuplazid would eventually expand into more-lucrative indications. So these upcoming trial readouts may not provide much of a lift. The company's shares, after all, are already trading at a stately price-to-sales ratio of 15.7, which is well above the average for its peer group.
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