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Form 10-Q ACADIA PHARMACEUTICALS For: Jun 30

August 9, 2022 6:02 AM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-50768

 

ACADIA PHARMACEUTICALS INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

06-1376651

(State of Incorporation)

(I.R.S. Employer Identification No.)

 

12830 El Camino Real, Suite 400

San Diego, California

92130

(Address of Principal Executive Offices)

(Zip Code)

 

(858) 558-2871

(Registrant’s Telephone Number, Including Area Code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, par value $0.0001 per share

ACAD

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

Total shares of common stock outstanding as of the close of business on July 28, 2022:

 

Class

 

Number of Shares Outstanding

Common Stock, $0.0001 par value

 

161,843,185

 

 


 

ACADIA PHARMACEUTICALS INC.

FORM 10-Q

TABLE OF CONTENTS

 

 

 

PAGE NO.

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements

 

1

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets

 

1

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations

 

2

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Loss

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity

 

5

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

6

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

16

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

23

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

23

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

24

 

 

 

 

 

Item 1A.

 

Risk Factors

 

24

 

 

 

 

 

Item 6.

 

Exhibits

 

60

 

 

 

SIGNATURES

 

61

 

i


 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ACADIA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

 

 

 

June 30,
2022

 

 

December 31,
2021

 

 

 

(unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

139,833

 

 

$

147,435

 

Investment securities, available-for-sale

 

 

296,518

 

 

 

373,271

 

Accounts receivable, net

 

 

67,953

 

 

 

64,366

 

Interest and other receivables

 

 

936

 

 

 

978

 

Inventory

 

 

6,327

 

 

 

7,881

 

Prepaid expenses

 

 

20,952

 

 

 

23,892

 

Total current assets

 

 

532,519

 

 

 

617,823

 

Property and equipment, net

 

 

7,016

 

 

 

8,047

 

Operating lease right-of-use assets

 

 

57,417

 

 

 

58,268

 

Restricted cash

 

 

5,770

 

 

 

5,770

 

Long-term inventory

 

 

6,205

 

 

 

6,217

 

Other assets

 

 

3,839

 

 

 

3,997

 

Total assets

 

$

612,766

 

 

$

700,122

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Accounts payable

 

$

11,854

 

 

$

6,876

 

Accrued liabilities

 

 

105,827

 

 

 

89,192

 

Total current liabilities

 

 

117,681

 

 

 

96,068

 

Operating lease liabilities

 

 

54,693

 

 

 

56,126

 

Other long-term liabilities

 

 

5,544

 

 

 

7,034

 

Total liabilities

 

 

177,918

 

 

 

159,228

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 5,000,000 shares authorized at June 30, 2022
   and December 31, 2021;
no shares issued and outstanding at June 30, 2022 and
   December 31, 2021

 

 

 

 

 

 

Common stock, $0.0001 par value; 225,000,000 shares authorized at June 30, 2022
   and December 31, 2021;
161,842,369 shares and 161,012,695 shares issued and
   outstanding at June 30, 2022 and December 31, 2021, respectively

 

 

16

 

 

 

16

 

Additional paid-in capital

 

 

2,736,318

 

 

 

2,694,646

 

Accumulated deficit

 

 

(2,300,643

)

 

 

(2,153,576

)

Accumulated other comprehensive loss

 

 

(843

)

 

 

(192

)

Total stockholders’ equity

 

 

434,848

 

 

 

540,894

 

Total liabilities and stockholders’ equity

 

$

612,766

 

 

$

700,122

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

1


 

ACADIA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Product sales, net

 

$

134,563

 

 

$

115,221

 

 

$

250,031

 

 

$

221,775

 

Total revenues

 

 

134,563

 

 

 

115,221

 

 

 

250,031

 

 

 

221,775

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product sales

 

 

2,667

 

 

 

2,526

 

 

 

5,617

 

 

 

4,711

 

License fees and royalties

 

 

 

 

 

2,680

 

 

 

 

 

 

5,187

 

Research and development

 

 

75,646

 

 

 

56,935

 

 

 

204,501

 

 

 

113,908

 

Selling, general and administrative

 

 

89,901

 

 

 

96,789

 

 

 

186,580

 

 

 

208,450

 

Total operating expenses

 

 

168,214

 

 

 

158,930

 

 

 

396,698

 

 

 

332,256

 

Loss from operations

 

 

(33,651

)

 

 

(43,709

)

 

 

(146,667

)

 

 

(110,481

)

Interest income, net

 

 

580

 

 

 

133

 

 

 

685

 

 

 

333

 

Other (loss) income

 

 

(497

)

 

 

178

 

 

 

(157

)

 

 

323

 

Loss before income taxes

 

 

(33,568

)

 

 

(43,398

)

 

 

(146,139

)

 

 

(109,825

)

Income tax expense

 

 

443

 

 

 

473

 

 

 

928

 

 

 

494

 

Net loss

 

$

(34,011

)

 

$

(43,871

)

 

$

(147,067

)

 

$

(110,319

)

Net loss per common share, basic and diluted

 

$

(0.21

)

 

$

(0.27

)

 

$

(0.91

)

 

$

(0.69

)

Weighted average common shares outstanding, basic and diluted

 

 

161,654

 

 

 

160,421

 

 

 

161,443

 

 

 

160,217

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

2


 

ACADIA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss

 

$

(34,011

)

 

$

(43,871

)

 

$

(147,067

)

 

$

(110,319

)

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (loss) gain on investment securities

 

 

(236

)

 

 

5

 

 

 

(658

)

 

 

(1

)

Foreign currency translation adjustments

 

 

5

 

 

 

(1

)

 

 

7

 

 

 

3

 

Comprehensive loss

 

$

(34,242

)

 

$

(43,867

)

 

$

(147,718

)

 

$

(110,317

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3


 

ACADIA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(147,067

)

 

$

(110,319

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Stock-based compensation

 

 

35,475

 

 

 

35,189

 

Amortization of premiums and accretion of discounts on investment securities

 

 

547

 

 

 

1,176

 

Amortization of intangible assets

 

 

 

 

 

739

 

Loss (gain) on strategic investment

 

 

158

 

 

 

(323

)

Depreciation

 

 

1,031

 

 

 

1,085

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

(3,587

)

 

 

(3,120

)

Interest and other receivables

 

 

42

 

 

 

1,582

 

Inventory

 

 

1,465

 

 

 

(878

)

Prepaid expenses

 

 

2,940

 

 

 

(512

)

Operating lease right-of-use assets

 

 

3,172

 

 

 

3,289

 

Other assets

 

 

 

 

 

9

 

Accounts payable

 

 

4,978

 

 

 

572

 

Accrued liabilities

 

 

16,854

 

 

 

(11,331

)

Operating lease liabilities

 

 

(3,972

)

 

 

(2,583

)

Long-term liabilities

 

 

(1,490

)

 

 

(51

)

Net cash used in operating activities

 

 

(89,454

)

 

 

(85,476

)

Cash flows from investing activities

 

 

 

 

 

 

Purchases of investment securities

 

 

(125,377

)

 

 

(202,526

)

Maturities of investment securities

 

 

200,925

 

 

 

217,317

 

Purchases of property and equipment

 

 

 

 

 

(1,121

)

Net cash provided by investing activities

 

 

75,548

 

 

 

13,670

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from issuance of common stock, net of issuance costs

 

 

6,298

 

 

 

12,731

 

Net cash provided by financing activities

 

 

6,298

 

 

 

12,731

 

Effect of exchange rate changes on cash

 

 

6

 

 

 

3

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(7,602

)

 

 

(59,072

)

Cash, cash equivalents and restricted cash

 

 

 

 

 

 

Beginning of period

 

 

153,205

 

 

 

331,798

 

End of period

 

$

145,603

 

 

$

272,726

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4


 

ACADIA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(Unaudited)

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Total stockholders’ equity, beginning balances

 

$

444,797

 

 

$

581,606

 

 

$

540,894

 

 

$

627,009

 

Common stock:

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

16

 

 

 

16

 

 

 

16

 

 

 

16

 

Ending balance

 

 

16

 

 

 

16

 

 

 

16

 

 

 

16

 

Additional paid-in capital:

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

2,712,025

 

 

 

2,633,710

 

 

 

2,694,646

 

 

 

2,612,663

 

Issuance of common stock from exercise of stock options
   and units

 

 

806

 

 

 

1,268

 

 

 

3,273

 

 

 

8,994

 

Issuance of common stock pursuant to employee stock
   purchase plan

 

 

3,025

 

 

 

3,737

 

 

 

3,025

 

 

 

3,737

 

Stock-based compensation

 

 

20,462

 

 

 

22,094

 

 

 

35,374

 

 

 

35,415

 

Ending balance

 

 

2,736,318

 

 

 

2,660,809

 

 

 

2,736,318

 

 

 

2,660,809

 

Accumulated deficit:

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

(2,266,632

)

 

 

(2,052,154

)

 

 

(2,153,576

)

 

 

(1,985,706

)

Net loss

 

 

(34,011

)

 

 

(43,871

)

 

 

(147,067

)

 

 

(110,319

)

Ending balance

 

 

(2,300,643

)

 

 

(2,096,025

)

 

 

(2,300,643

)

 

 

(2,096,025

)

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

(612

)

 

 

34

 

 

 

(192

)

 

 

36

 

Other comprehensive (loss) income

 

 

(231

)

 

 

4

 

 

 

(651

)

 

 

2

 

Ending balance

 

 

(843

)

 

 

38

 

 

 

(843

)

 

 

38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders’ equity, ending balances

 

$

434,848

 

 

$

564,838

 

 

$

434,848

 

 

$

564,838

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

5


 

ACADIA PHARMACEUTICALS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Business

Acadia Pharmaceuticals Inc. (the Company), based in San Diego, California, is a biopharmaceutical company focused on the development and commercialization of innovative medicines to address unmet medical needs in central nervous system disorders. The Company was originally incorporated in Vermont in 1993 as Receptor Technologies, Inc. and reincorporated in Delaware in 1997.

In April 2016, the U.S. Food and Drug Administration (FDA) approved the Company’s first drug, NUPLAZID® (pimavanserin), for the treatment of hallucinations and delusions associated with Parkinson’s disease psychosis (PDP). NUPLAZID became available for prescription in the United States in May 2016.

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company should be read in conjunction with the audited financial statements and notes thereto as of and for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K (Annual Report) filed with the Securities and Exchange Commission (the SEC). The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the accompanying financial statements reflect all adjustments (consisting of normal recurring adjustments) that are necessary for a fair statement of the financial position, results of operations, cash flows, and stockholders’ equity for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ materially from those estimates.

 

Risk and Uncertainties

The global pandemic resulting from the disease known as COVID-19, caused by a novel strain of coronavirus, SARS-CoV-2, has caused national and global economic and financial market disruptions and has adversely impacted the Company’s business. Since the beginning of the pandemic, the growth of sales of NUPLAZID have been negatively impacted by ongoing conditions related to the pandemic. At this time the Company cannot predict the magnitude of the pandemic or the full impact that it may have on the Company’s financial condition, operations, suppliers, and workforce.

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the statement of cash flows that sum to the total of the same such amounts shown in the statement of cash flows (in thousands):

 

 

 

Six Months Ended June 30, 2022

 

 

Six Months Ended June 30, 2021

 

 

 

Beginning of
period

 

 

End of
period

 

 

Beginning of
period

 

 

End of
period

 

Cash and cash equivalents

 

$

147,435

 

 

$

139,833

 

 

$

326,028

 

 

$

266,956

 

Restricted cash

 

 

5,770

 

 

 

5,770

 

 

 

5,770

 

 

 

5,770

 

Total cash, cash equivalents and restricted cash shown in
   the statement of cash flows

 

$

153,205

 

 

$

145,603

 

 

$

331,798

 

 

$

272,726

 

 

6


 

Accounts Receivable

Accounts receivable are recorded net of customer allowances for distribution fees, prompt payment discounts, chargebacks, and credit losses. Allowances for distribution fees, prompt payment discounts and chargebacks are based on contractual terms. The Company estimated the current expected credit losses of its accounts receivable by assessing the risk of loss and available relevant information about collectability, including historical credit losses, existing contractual payment terms, actual payment patterns of its customers, individual customer circumstances, and reasonable and supportable forecast of economic conditions expected to exist throughout the contractual life of the receivable. The Company has not historically experienced significant credit losses. Based on its assessment, as of June 30, 2022 the Company determined that an allowance for credit loss was not required.

License Fees and Royalties

The Company expenses amounts paid to acquire licenses associated with products under development when the ultimate recoverability of the amounts paid is uncertain and the technology has no alternative future use when acquired. Acquisitions of technology licenses are charged to expense or capitalized based upon management’s assessment regarding the ultimate recoverability of the amounts paid and the potential for alternative future use. The Company has determined that technological feasibility for its product candidates is reached when the requisite regulatory approvals are obtained to make the product available for sale.

Acquisitions

The Company accounts for acquisitions of an asset or group of similar identifiable assets that do not meet the definition of a business as asset acquisition using the cost accumulation method, whereby the cost of the acquisition, including certain transaction costs, is allocated to the assets acquired on the basis of their relative fair values. No goodwill is recognized in an asset acquisition. Intangible assets acquired in an asset acquisition for use in research and development activities which have no alternative future use are expensed as in-process research and development on the acquisition date. Intangible assets acquired for use in research and development activities which have an alternative future use are capitalized as in-process research and development. Future costs to develop these assets are recorded to research and development expense as they are incurred. Contingent milestone payments associated with asset acquisitions are recognized when probable and estimable. These amounts are expensed if there is no alternative future use associated with the asset, or capitalized as an intangible asset if alternative future use of the asset exists. The Company includes the costs of asset acquisitions as component of cash flows from operations on the consolidated statements of cash flows.

3. Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares and common stock equivalents outstanding for the period determined using the treasury stock method. For purposes of this calculation, stock options, employee stock purchase plan rights, restricted stock units, and warrants are considered to be common stock equivalents but are not included in the calculations of diluted net loss per share for the periods presented as their effect would be anti-dilutive. The Company incurred net losses for all periods presented and there were no reconciling items for potentially dilutive securities. More specifically, at June 30, 2022 and 2021, stock options, employee stock purchase plan rights, restricted stock units, and warrants totaling approximately 21,646,000 shares and 19,489,000 shares, respectively, were excluded from the calculation of diluted net loss per share as their effect would have been anti-dilutive.

4. Stock-Based Compensation

The following table summarizes the total stock-based compensation expense included in the Company’s statements of operations for the periods presented (in thousands):

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Cost of product sales

 

$

346

 

 

$

423

 

 

$

669

 

 

$

586

 

Research and development

 

 

7,232

 

 

 

7,319

 

 

 

12,696

 

 

 

12,149

 

Selling, general and administrative

 

 

12,934

 

 

 

14,263

 

 

 

22,110

 

 

 

22,454

 

 

 

$

20,512

 

 

$

22,005

 

 

$

35,475

 

 

$

35,189

 

 

7


 

The fair value of each employee stock option and each employee stock purchase plan right granted is estimated on the grant date under the fair value method using the Black-Scholes valuation model, which requires the Company to make a number of assumptions including the estimated expected life of the award and related volatility. The fair value of restricted stock units is estimated based on the market price of the Company’s common stock on the date of grant. The estimated fair values of stock options, purchase plan rights, and restricted stock units are then expensed over the requisite service period, which is generally the vesting period. For restricted stock units requiring satisfaction of both market and service conditions, the estimated fair values are generally expensed over the longest of the explicit, implicit and derived service periods. Performance-based stock awards vest upon the achievement of certain pre-defined company-specific performance-based criteria. Expense related to these performance-based stock awards is generally recognized ratably over the expected performance period once the pre-defined performance-based criteria for vesting becomes probable.

5. Balance Sheet Details

Inventory consisted of the following (in thousands):

 

 

 

June 30,
2022

 

 

December 31,
2021

 

Finished goods

 

$

2,081

 

 

$

1,114

 

Work in process

 

 

4,246

 

 

 

6,767

 

Raw material

 

 

6,205

 

 

 

6,217

 

 

 

$

12,532

 

 

$

14,098

 

Reported as:

 

 

 

 

 

 

    Inventory

 

$

6,327

 

 

$

7,881

 

    Long-term inventory

 

 

6,205

 

 

 

6,217

 

    Total

 

$

12,532

 

 

$

14,098

 

Amount reported as long-term inventory consisted of raw materials as of June 30, 2022 and December 31, 2021. The Company has raw materials beyond one year production plan that help limit the exposures from potential supply interruption. Those raw materials that beyond one year production plan were classified as long-term inventory.

Accrued liabilities consisted of the following (in thousands):

 

 

 

June 30,
2022

 

 

December 31,
2021

 

Accrued research and development services

 

$

39,767

 

 

$

27,270

 

Accrued compensation and benefits

 

 

23,351

 

 

 

25,896

 

Accrued sales allowances

 

 

14,237