The Biotech Forum 3 Small Biotechs After Pullback | Page 5

Name: Acadia Pharmaceuticals (ACAD)
Market Cap: $2.7 billion
Stock Price: $23.50 a share
52-week high: $43.30 a share
Median Analyst Price Target: $45.50 a share
Cash On Hand: ~$600 million

Primary Drug: Nuplazid. This compound received recent FDA approval in the second quarter as the first drug to be green lighted for the treatment of psychosis often associated with Parkinson’s Disease. This disease affects approximately one million individuals in the United States with around 60,000 new cases annually. Psychosis occurs in 40% of the population. The compound is also in mid/late stage trials to treat the psychosis found in patients with Alzheimer’s. My own view is success for this indication is less than 50/50 but I could easily see physicians using Nuplazid “off label” if the drug shows some effect in this area. Parkinson’s alone should eventually garner $1 billion in annual sales.

Other Factors: Acadia is one of the few mid-caps in the biotech sector which is dominated by “whales” and “minnows”. It is often speculated as a buyout target which I think will eventually happen but not until the first half of 2017. Biogen (BIIB) is the most logical suitor. This company announced earlier this year it would be spinning off its hemophilia business that should be worth between $5 billion and $7 billion. The company has also stated it is interested in expanding its footprint in the neurology space. A hookup with Acadia seems like a match made in heaven.

These are three actionable ideas for biotech investors that want to take advantage of lower entry points created by the substantial pullback in the sector during October