1/5/2017 6:25:57 AM
January 5, 2017
By Mark Terry, BioSpace.com Breaking News Staff
Acadia is a popular source of acquisition rumors. In June, it was rumored that AstraZeneca (AZN) was considering a buy. In April, Biogen (BIIB) was proposed as a potential suitor. Gilead SciGilead Sciences (GILD), Teva Pharmaceutical Industries (TEVA), Otsuka Pharmaceutical Co., Ltd. (OTSFK), Bristol-Myers Squibb (BMY) and AbbVie (ABBV) have also been floated as potential buyers.
Acadia’s appeal rests primarily on its sole product, Nuplazid (pimavanserin), which has been approved to treat Parkinson’s psychosis by the U.S. Food and Drug Administration (FDA). Brian Nichols, writing for BNL Finance, says, “The reason rests on Nuplazid’s potential for label expansion and also off label usage. Last weekend, BNL Finance reported that Nuplazid is already being used for treatment of Lewy body dementia, a disease that is similar to PDP with a much higher degree of occurrence. … We believe it won’t take long for acquirers to realize Nuplazid’s potential to dominate this market for the three most common neurodegenerative conditions. Ultimately, if successful, and with the right marketing approach, Nuplazid could achieve annual sales of $3-$5 billion, conservatively.”
Neither Pfizer nor Acadia have had anything to say about a possible deal. The Twitter rumors apparently indicated that Pfizer was considering buying Acadia for $44 per share. BNL, however, thinks if there was such a deal, it would be for a lot more than $44 per share. Nichols notes that Acadia’s biggest shareholders, such as the Baker Bros, won’t accept deals under $6, $7, or possible $10 billion. “Acadia management and its largest shareholders have been very patient, and if Pfizer wants Nuplazid, my belief is that it will have to pay for it.”
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Even if the deal is only found on the Internet, investors have reason to be happy. John Kilhefner, writing for InvestorPlace, says, “Regardless of whether Pfizer actually does buy Acadia, Acadia stock bulls are cheering right now because shares finally cracked through the 200-day moving average. This has been a thorn in Acadia stock’s side since it fell through it in early October. Like I said, it won’t last … but it’s nice to see that the bulls are tripping over themselves to kick down the doors on the slightest rumor.”
Another reason for the interest in a Pfizer deal is Pfizer’s August acquisition of Medivation (MDVN) for $14 billion. For the most part, analysts and investors believe Pfizer overpaid for the stock, suggesting that they’re concerned enough about growth to pay a premium for it. FoxBusiness notes that, “Even tacking on a Pifzer-esque premium to Acadia’s modest $2.7 billion enterprise value, the company might be a value opportunity. Its lead drug, Nuplazid (pimavanserin), has a chance of treating a much wider range of patients, including the rapidly expanding population with Alzheimer’s disease.”
And although the drug has launched to treat Parkinson’s psychosis, by the end of September it had only reported $1.9 million in deferred revenue related to sales. And there is some healthy skepticism on whether it will really prove to be effective for Alzheimer’s psychosis. Fox writes, “There’s reasonable doubt that the results seen in the 180-patient Phase II study can be repeated in a larger study, which will likely be necessary to support an FDA application for expansion from Parkinson’s to Alzheimer’s.”
However, approval for a major depressive disorder and schizophrenia, as the company hopes, would drive the stock up, whether Pfizer plans to acquire it or not.
Acadia stock is currently trading for $31.94.