FYI - post on ACAD valuation | ACAD Message Board Posts

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Msg  15618 of 15705  at  9/11/2019 7:53:32 PM  by

longusa


FYI - post on ACAD valuation

I posted this on the Biotech2k board as part of a thread - just FYI for those not on that board
 
 
edit: added EU consideration
 
I wanted to offer a few comments on ACAD valuation.
 
Revenue
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
 
This 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.
 
sNDA 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.
 
Indication expansion opportuntites still to go for Nup are Schizo negative response - a 1m patient market (according to ACAD), and MDD - a 2.5m patient market.
 
Then what multiple to put on the revenue?  8x yields ~25b; 3x yields 10b.  Up to each investor to judge.
 
Pipeline
Beyond 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.
 
Cash
Burn 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.
 
EU
ACAD 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).
 
M&A
The DRP 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 one. 
 
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 again.
 
Net net
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.


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