Sunday, September 1, 2013

ACAD: Future Value of ACAD ($19.96)

The goal for this post is to compare any similar drugs on the market today, particularly a anti psychotic, and compare the prices with what Acadia's Pimavanserin might be able to sell for once the drug is approved for Parkinson's Disease Psychosis (PDP) and goes to market in 2015.  From there, we can come up with some revenue estimates and market capitalization and finally a fair stock price per share estimate based on peak revenues.

For comparison's, I have inquired about the price of Abilify, which is a anti psychotic drug used to treat various psychotic conditions and will remain a non generic drug until April 2015.  I choose Abilify because it is a non generic, and many anti psychotic drugs are the only treatments available at present to treat PDP off-label. Clozapine is another anti psychotic drug used, but, it is now generic, so an apples to apples comparison cannot be made.  I was quoted prices at CVS and Sam's Pharmacy for Abilify.

Cost of Abilify at CVS Pharmacy
$14,484.00 per year supply 30 mg daily tablet.
$1,207 for a 30 day supply of 30 mg tablet.
$40.23 per pill cost daily 30 mg tablet.

Cost of Abilify at Sam's Pharmacy
$11,587 per year supply 30 mg daily tablet.
$965.60 for a 30 day supply of 30 mg tablet.
$32.18 per pill cost daily 30 mg tablet.

We'll use the average of the CVS retail price and discounter Sam's to derive the annual cost of Abilify 30 mg tablets for comparisons purposes of what Acadia's Pimavanserin might be able to sell for once it reaches commercialization in 2015. Which is $40.23 + $32.18 = $72.41 / 2 = $36.20 per 30 mg Abilify daily tablet.
But to be conservative, I am going to discount the daily cost of the Abilify tablet down around -10% to $32.80 per daily use priced to the consumer.

Which equates to:
$11,808 per annual supply.
$984.00 monthly supply.
$32.80 per pill daily 30 mg tablet.

I am going to refer to different analyst revenue prediction reports and Acadia presentations to draw further conclusions on future revenue based on the overall US Parkinson's Disease Psychosis market.
1,000,000 With Parkinson's in US.
30% develop PDP or Parkinson's Disease Psychosis at some point.
300,000 total patients with PDP.
50% penetration rate of those with the psychosis.
150,000 the actual number treated for PDP with Pima out of 1 million Parkinson's total victims - conservatively.
$32.80 = retail price per tablet per day of treatment, based on the Abilify retail pharmacy prices.
$18.00 = Sales to Acadia per 40 mg tablet before all the wholesale roughly (35%) and retail (35%) markups prior to being sold to the consumer.
$6,480 = Per patient ACAD annual revenue, ($18.00 per day * 30 days * 12 months)
$972,000 million = Total peak revenue to ACAD, (150,000 patients * $6,480 annual revenue to ACAD) U.S. Parkinson's Psychosis indication only.

The average biotechnology acquisition is a market capitalization of 3-4 times peak sales.  So, at three times peak sales from Pimavanserin for U.S. PDP, we calculate a share price by taking peak annual revenue of $972,000 million * 3 =  $2.916B market capitalization / 100,000,000 (approx. shares outstanding) = $29.16 stock price. The stock is currently trading at $20.00 per share or just 2.0 times peak sales.

Assumptions to future stock value
A)  The price above of $32.80 per daily tablet, reflects the mark up by the wholesaler and the pharmacy company selling to the consumer, not the price Acadia sells from manufacturing.  I believe the figures above are close enough to work with and scale backwards.
B)  Pima can price at $32.80 per tablet to the public.
I view the $32.80 per tablet as fair given the fact that Pimavanserin has a clean safety profile compared to Abilify and there is not another drug to compete with Pimavanserin for PDP.
C)  ACAD can penetrate 50% of the US market (50% of  300,000) for the patients that develop PDP.
PDP has an unmet need, and Pimavanserin has a clean safety profile compared to other anti psychotics that are being used today that have black box warnings.

Further note, that these revenue figures only include PDP in the U.S. and not Alzheimer's Disease Psychosis or ADP which patient's have similar symptoms. The ADP market is roughly four times the size of the PDP market that I just ran revenue figures on above. The math get's a lot more fun if ACAD can prove through trials that Pimavanserin works as well with Alzheimer's patients as it does with Parkinson's Disease patients as they are planning a phase II Alzheimer's Disease Psychosis study by year end 2013.  Also, the company holds world wide rights to Pimavanserin and the above revenue potential does not include the rest of world outside of the US, nor does it include any potential off-label for other indications.  The U.S. patent for Pimavanserin runs until mid 2028, and European patent runs through 2024.  Thank you for reading.

Disclosure:  We currently hold shares of ACAD.

No comments:

Post a Comment