Will Acadia Pharmaceuticals Stock See Higher Levels After A Large 26% Rally In A Month?

[Updated: Jan 6, 2022] ACAD Stock Rise

The stock of Acadia Pharmaceuticals (NASDAQ: ACAD), a biopharmaceutical company focused on neuroscience drugs, has seen a rise of 26% over the last month. ACAD stock rose from levels of around $19 in early December to levels of $27 on December 20, before cooling off to levels of $24 currently. This rise can be attributed to positive data for its drug, Trofinetide, which is being tested for the treatment of Rett syndrome, a rare neurological condition that causes uncontrolled hand movements primarily in girls and women. Also, the company announced that based on clinical data, it will resubmit its supplemental New Drug Application for Nuplazid, as a treatment for hallucinations and delusions associated with dementia, in the current quarter.

The company intends to expand its label for Nuplazid, which is currently used to treat hallucinations associated with Parkinson’s disease psychosis, and it will also seek regulatory approvals for Trofinetide, both of which could be positive triggers for ACAD stock. For now, given that ACAD stock is up a large 26% in a month, will it continue its upward trajectory, or is a fall imminent? Going by historical performance, there is a slightly higher chance of a rise in ACAD stock over the next month. Out of 272 instances in the last ten years that ACAD stock saw a twenty-one day rise of 26% or more, 141 of them resulted in ACAD stock rising over the subsequent one month period (twenty-one trading days). This historical pattern reflects 141 out of 272, or about 52% chance of a rise in ACAD stock over the coming month, implying that ACAD stock may continue to see higher levels in the near term. See our analysis on Acadia Pharmaceuticals Stock Chance of A Rise for more details.

While ACAD stock may see higher levels going forward, it is helpful to see how its peers stack up. Check out Acadia Pharmaceuticals Stock Comparison With Peers to see how ACAD stock compares against peers on metrics that matter. You can find more such useful comparisons on Peer Comparisons.

Calculation of ‘Event Probability‘ and ‘Chance of Rise‘ using last ten years data

• After moving -4.3% or more over a five-day period, the stock rose in the next five days on 55% of the occasions.
• After moving -12.8% or more over a ten-day period, the stock rose in the next ten days on 50% of the occasions
• After moving 25.7% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 52% of the occasions.

This pattern suggests that there are slightly higher chances of a rise in ACAD stock over the next five days and one month, while there is an equal chance of a rise or a fall over the next ten days.

Acadia Pharmaceuticals Stock Return (Recent) Comparison With Peers

• Five-Day Return: ACT highest at 0.3%; ENDP lowest at -7.3%
• Ten-Day Return: LIVN highest at 7.8%; ACAD lowest at -12.8%
• Twenty-One Days Return: ACAD highest at 25.7%; ENDP lowest at -25.7%

Below you’ll find our previous coverage of ACAD stock where you can track our view over time.

[Updated: Sep 7, 2021] ACAD Stock Update

We believe that Acadia Pharmaceuticals stock (NASDAQ
NDAQ
: ACAD), a biopharmaceutical company focused on neuroscience drugs, is a good buying opportunity at the present time. ACAD stock trades around $17 levels currently and it is, in fact, down 64% from its pre-Covid high of around $47 in February 2020 – before the coronavirus pandemic hit the world.

Acadia hasn’t had a great year thus far with its stock plummeting 68% year-t0-date. Much of this decline came in March after the U.S. FDA rejected the supplementary new drug application for Nuplazid, which is currently used to treat hallucinations associated with Parkinson’s disease psychosis, stating it lacked statistical significance in some of the subgroups of dementia. However, we continue to believe that ACAD stock is oversold now, and it is likely to see higher levels going forward. While the rejection of supplementary new drug application was surely negative, Nuplazid continues to see strong demand from PDP treatment. Moreover, Acadia says it will work with the FDA to resolve discrepancies in its application for dementia-related psychosis treatment. Apart from Nuplazid, the company also has three more programs in its pipeline, including Trofinetide, which is being investigated for the treatment of Rett Syndrome and it has peak sales potential of over $500 million.

While ACAD stock has seen lower levels during the current Covid-19 crisis, how did it fare in the 2008 crisis? In this note we focus on a comparative analysis of Acadia stock during the 2008 recession vs now in our interactive dashboard.

Timeline of 2020 Coronavirus Crisis:

• 12/12/2019: Coronavirus cases first reported in China
• 1/31/2020: WHO declares a global health emergency.
• 2/19/2020: Signs of effective containment in China and hopes of monetary easing by major central banks helps S&P 500 reach a record high
• 3/23/2020: S&P 500 drops 34% from the peak level seen on Feb 19, 2020, as Covid-19 cases accelerate outside China. Doesn’t help that oil prices crash in mid-March amid Saudi-led price war
• Since 3/24/2020: S&P 500 rallies 103% from the lows seen on Mar 23, 2020, as the Fed’s multi-billion dollar stimulus package suppresses near-term survival anxiety and infuses liquidity into the system.

In contrast, here is how ACAD stock and the broader market fared during the 2007-08 crisis

Timeline of 2007-08 Crisis

• 10/1/2007: Approximate pre-crisis peak in S&P 500 index
• 9/1/2008 – 10/1/2008: Accelerated market decline corresponding to Lehman bankruptcy filing (9/15/08)
• 3/1/2009: Approximate bottoming out of S&P 500 index
• 12/31/2009: Initial recovery to levels before accelerated decline (around 9/1/2008)

ACAD and S&P 500 Performance Over 2007-08 Financial Crisis

ACAD stock plummeted from from levels of about $16 in October 2007 (pre-crisis peak for the broader markets) to levels of $3 in September 2008 before plunging to under $1 in March 2009 (as the markets bottomed out), implying ACAD stock lost 95% from its peak. It saw a small recovery immediately post the 2008 crisis, to levels of over $1 by January 2010. In comparison, the S&P 500 Index saw a decline of 51% from its peak in September 2007 to its bottom in March 2009, followed by a sharp recovery of 48% by January 2010.

Acadia Fundamentals Over Recent Years Have Been Robust

Acadia’s revenues increased from $125 million in 2017 to $463 million for the last twelve-month period, led by increased sales of Nuplazid. The company is currently running into losses, partly due to higher R&D investments. That said, the losses have narrowed to $1.65 per share over the last twelve-month period, compared to a loss of $2.36 per share in 2017.

Does Acadia Have Sufficient Cash Cushion To Meet Its Obligations?

Acadia’s total debt rose from zero to around $66 million currently, while its total cash increased from $341 million in 2017 to $557 million currently. It utilized $136 million in cash for its operations over the last twelve-months period. The company has a comfortable liquidity position to meet its near term requirements.

Conclusion

Phases of Covid-19 Crisis:

• Early- to mid-March 2020: Fear of the coronavirus outbreak spreading rapidly translates into reality, with the number of cases accelerating globally
• Late-March 2020 onward: Social distancing measures + lockdowns
• April 2020: Fed stimulus suppresses near-term survival anxiety
• May-June 2020: Recovery of demand, with gradual lifting of lockdowns – no panic anymore despite a steady increase in the number of cases
• Since late 2020: Weak quarterly results, but continued improvement in demand and progress with vaccine development buoy market sentiment. Multiple countries have undertaken large-scale vaccine programs for Covid-19, though new variants of coronavirus resulted in an uptick in active cases.

Overall, ACAD stock looks oversold and it is likely to see a rebound in the near term, in our view. Even if we look at the average of analysts price estimates of $26, it reflects over 50% upside from the current levels.

While ACAD stock can see a rebound, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for IDEXX vs Vertex.

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