edit: added EU consideration
I wanted to offer a few comments on ACAD valuation.
An initial back of the envelope calc for revenue with DRP would be:
Current 2019 PDP guidance * (DRP mkt / PDP mkt), which yields
$325m * (1.2m / 125k) = 3.12b
is based on current PDP mkt penetration of course, which looks to be
approx in the low teens, perhaps 11-12%. An estimate of what eventual
penetration might be would be the PhIII trial results where 41% of
patients saw a 7 pt or better improvement on SAPS-PD. Certainly,
penetration will continue to increase from here. We don't know what the
efficacy profile looks like for ADP, so real detail is TBD, but low
teens would seem (IMO) to be conservative for DRP.
cycle looks like (IMO) approx a Sep 2020 PDUFA, so the DRP ramp could
start Q4 next year. Since the sales channels for DRP are virtually the
same as PDP, a quick ramp is a reasonable expectation.
expansion opportuntites still to go for Nup are Schizo negative
response - a 1m patient market (according to ACAD), and MDD - a 2.5m
Then what multiple to put on the revenue? 8x yields ~25b; 3x yields 10b. Up to each investor to judge.
the indication expansion of Nup, ACAD licensed trofinitide for Rett's
syndrome last year and will begin a PhIII this year. That seems to be a
smaller opportuntity, so still a need for further expansion. They
hired a BD VP earlier, so ACAD CEO understands the need.
last Q was 38m, with 381m cash on the balance sheet, so ~2 1/2 years of
cash. I would expect burn to bend downward as revenue continues to
ramp, so no imminent need for a cap raise. They may still do one, but
there is no urgent requirement.
has said they would wait to file in EU until they have larger
indications in hand. DRP would certainly have been one of them, and
possibly the most important. Schizo nefative response will be known
soon. Remains to be seen if they would wait for MDD results. But at
minimum, the EU market should increase any valuation by ~50% IMO (1.5x
people * .33x price).
positive outcome resolves for the better likely the biggest disparity
between BB and potential acquirers, with BB (IMO) wanting a valuation
based at minimum on DRP success, and acquirers not. Schizo inadequate
response disparity has also been resolved, to the negative for this
Remaining disparities are Schizo negative
symptoms and MDD. Schizo would require new sales channels so would be a
long revenue ramp; and MDD share would likely be limited by SAGE-217,
which I would expect will take the lion's share for MDD in the future -
but it did not have 100% efficacy, so should still be some addressable
market for Nup. For these 2 then, the disparities are perhaps smaller
than for DRP. So perhaps the M&A possibility has just become real
As I write this, ACAD mkt
cap is approx 5.9b. For all the reasons above, valuation substantially
north of this over time (IMO) would be a likely outcome.