UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number:
(Exact Name of Registrant as Specified in Its Charter)
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(State of Incorporation) |
(I.R.S. Employer Identification No.) |
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(Address of Principal Executive Offices) |
(Zip Code) |
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(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class |
Trading Symbol |
Name of Each Exchange on Which Registered |
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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.
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).
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.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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
Total shares of common stock outstanding as of the close of business on October 25, 2021:
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Class |
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Number of Shares Outstanding |
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Common Stock, $0.0001 par value |
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ACADIA PHARMACEUTICALS INC.
FORM 10-Q
TABLE OF CONTENTS
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PAGE NO. |
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Item 1. |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 6. |
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63 |
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i
PART I. FINANCIAL INFORMATION
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ITEM 1. |
FINANCIAL STATEMENTS |
ACADIA PHARMACEUTICALS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
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September 30, 2021 |
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December 31, 2020 |
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(unaudited) |
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Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Investment securities, available-for-sale |
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Accounts receivable, net |
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Interest and other receivables |
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Inventory |
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Prepaid expenses |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Restricted cash |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity |
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Accounts payable |
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$ |
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$ |
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Accrued liabilities |
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Total current liabilities |
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Operating lease liabilities |
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Other long-term liabilities |
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Total liabilities |
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Commitments and contingencies (Note 9) |
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Stockholders’ equity: |
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Preferred stock, $ and December 31, 2020; December 31, 2020 |
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Common stock, $ and December 31, 2020; outstanding at September 30, 2021 and December 31, 2020, respectively |
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Additional paid-in capital |
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Accumulated deficit |
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Accumulated other comprehensive (loss) income |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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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)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2021 |
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2020 |
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2021 |
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2020 |
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Revenues |
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Product sales, net |
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$ |
131,612 |
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$ |
120,577 |
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$ |
353,387 |
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$ |
320,748 |
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Total revenues |
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Operating expenses |
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Cost of product sales |
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License fees and royalties |
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Research and development |
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Selling, general and administrative |
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Total operating expenses |
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Loss from operations |
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Interest income, net |
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Other income (expense) |
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( |
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Loss before income taxes |
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Income tax expense |
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Net loss |
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$ |
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$ |
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$ |
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$ |
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Net loss per common share, basic and diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted average common shares outstanding, basic and diluted |
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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)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2021 |
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2020 |
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2021 |
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2020 |
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Net loss |
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$ |
( |
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$ |
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$ |
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$ |
( |
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Other comprehensive income: |
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Unrealized (loss) gain on investment securities |
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Foreign currency translation adjustments |
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( |
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Comprehensive loss |
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$ |
( |
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$ |
( |
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$ |
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$ |
( |
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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)
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Nine Months Ended September 30, |
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2021 |
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2020 |
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Cash flows from operating activities |
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Net loss |
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$ |
( |
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$ |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock-based compensation |
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Amortization of premiums and accretion of discounts on investment securities |
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Amortization of intangible assets |
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(Gain) loss on strategic investment |
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Loss on disposal of assets |
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— |
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Depreciation |
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Non-cash in-process research and development |
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— |
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Changes in operating assets and liabilities: |
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Accounts receivable, net |
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Interest and other receivables |
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Inventory |
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Prepaid expenses |
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Operating lease right-of-use assets |
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Other assets |
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Accounts payable |
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( |
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( |
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Accrued liabilities |
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( |
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Operating lease liabilities |
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( |
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( |
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Long-term liabilities |
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( |
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Net cash used in operating activities |
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Cash flows from investing activities |
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Purchases of investment securities |
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Maturities of investment securities |
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Purchases of property and equipment |
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( |
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Net cash (used in) provided by investing activities |
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Cash flows from financing activities |
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Proceeds from issuance of common stock, net of issuance costs |
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Net cash provided by financing activities |
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Effect of exchange rate changes on cash |
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Net (decrease) increase in cash, cash equivalents and restricted cash |
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Cash, cash equivalents and restricted cash |
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Beginning of period |
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End of period |
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$ |
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$ |
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Supplemental disclosure of noncash information: |
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Common stock issues in connection with merger agreement |
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$ |
— |
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$ |
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Property and equipment purchases in accounts payable and accrued liabilities |
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— |
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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)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2021 |
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2020 |
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2021 |
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2020 |
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Total stockholders’ equity, beginning balances |
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$ |
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$ |
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$ |
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$ |
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Common stock: |
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Beginning balance |
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Issuance of common stock from exercise of stock options and units |
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— |
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— |
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Ending balance |
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Additional paid-in capital: |
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Beginning balance |
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Issuance of common stock in connection with merger agreement |
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— |
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— |
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Issuance of common stock from exercise of stock options and units |
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Issuance of common stock pursuant to employee stock purchase plan |
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— |
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Stock-based compensation |
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Ending balance |
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Accumulated deficit: |
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Beginning balance |
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( |
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( |
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( |
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( |
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Net loss |
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( |
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( |
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( |
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( |
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Ending balance |
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( |
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( |
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( |
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( |
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Other comprehensive income (loss): |
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Beginning balance |
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Other comprehensive (loss) income |
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( |
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( |
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( |
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Ending balance |
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( |
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Total stockholders’ equity, ending balances |
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$ |
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$ |
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$ |
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$ |
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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, 2020 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. Sales of NUPLAZID in 2021 were negatively impacted by ongoing conditions related to the COVID-19 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):
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Nine Months Ended September 30, 2021 |
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Nine Months Ended September 30, 2020 |
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Beginning of period |
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End of period |
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Beginning of period |
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End of period |
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Cash and cash equivalents |
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$ |
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$ |
|
|
|
$ |
|
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|
$ |
|
|
|
Restricted cash |
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|
|
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|
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|
Total cash, cash equivalents and restricted cash shown in the statement of cash flows |
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$ |
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|
|
$ |
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|
$ |
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$ |
|
|
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 September 30, 2021 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.
In connection with the FDA approval of NUPLAZID in April 2016, the Company made a one-time milestone payment of $
Royalties incurred in connection with the Company’s license agreement with the Ipsen Group, as disclosed in Note 9, Commitments and Contingencies, are expensed to license fees and royalties as revenue from product sales is recognized.
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 to research and development 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 September 30, 2021 and 2020, stock options, employee stock purchase plan rights, restricted stock units, and warrants totaling approximately
7
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):
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2021 |
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2020 |
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2021 |
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2020 |
|
||||
|
Cost of product sales |
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$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Selling, general and administrative |
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
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 vesting period. 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. During the nine months ended September 30, 2021, the Company had a change in estimate related to the achievement of certain performance-based criteria for performance-based stock awards which resulted in a reduction in stock-based compensation expenses by approximately $
5. Balance Sheet Details
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September 30, 2021 |
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December 31, 2020 |
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Finished goods |
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$ |
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$ |
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Work in process |
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Raw material |
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$ |
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$ |
|
|
Accrued liabilities consisted of the following (in thousands):
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|
September 30, 2021 |
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|
December 31, 2020 |
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||
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Accrued compensation and benefits |
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$ |
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$ |
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|
Accrued research and development services |
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Accrued consulting and professional fees |
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Current portion of lease liabilities |
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Accrued sales allowances |
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Current portion of accrued branded prescription drug fees |
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Other |
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$ |
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$ |
|
|
8
6. Investments
The carrying value and amortized cost of the Company’s investments, summarized by major security type, consisted of the following (in thousands):
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September 30, 2021 |
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Amortized Cost |
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Unrealized Gains |
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Unrealized Losses |
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Estimated Fair Value |
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U.S. Treasury notes |
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$ |
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|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
Government sponsored enterprise securities |
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|
|
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— |
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|
( |
) |
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Municipal bonds |
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|
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— |
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( |
) |
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Commercial paper |
|
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|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
December 31, 2020 |
|
|||||||||||||
|
|
|
Amortized Cost |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Estimated Fair Value |
|
||||
|
U.S. Treasury notes |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
Government sponsored enterprise securities |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
Corporate debt securities |
|
|
|
|
|
|
|
|
|
|
— |
|
* |
|
|
|
|
Commercial paper |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
_______________________
|
* |
Unrealized loss was less than $ |
The Company has classified all of its available-for-sale investment securities as current assets on its consolidated balance sheets based on the highly liquid nature of the inv