ACADIA Pharmaceuticals Inc (ACAD) Message Board

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Biotech / Medical : ACADIA Pharmaceuticals Inc (ACAD)

ACAD 25.44

+2.3%

3:59 PM EST

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From: mopgcw	9/16/2005 5:26:17 PM
	of 588

piper 9/05: Yesterday after the close, ACADIA announced that the company lost a sexual harassment/wrongful termination suit against a former employee. The jury awarded compensatory damages of $3.9 million and punitive damages of $2.2 million. * ACADIA stressed that it strongly disagrees with the ruling and intends to appeal and fight the damages awarded. We view this award as excessive. * While we do believe shares of ACAD will be under pressure due to this ruling, we argue that any cash settlement will take years to resolve and will have no meaning impact on the company's business. o ACADIA retains cash of $67 million, which we estimate should last through mid-2007. ACADIA will receive a $10 million equity investment from Sepracor in January 2006. o In 2H:05, ACADIA is scheduled to release significant clinical data, and we recommend purchase on any weakness ahead of these events. o We look for Phase II data on ACP-103 as adjunctive therapy in schizophrenia in 2H:05. ACADIA has initiated a larger 400-patient trial with other antipsychotic agents. Recruitment is on-going in the U.S. and will begin shortly in Brazil, and we look for an interim analysis of this trial in 2006. o ACADIA should also present interim Phase II data on ACP-104 (the major metabolite of clozapine) as a stand-alone therapy for the treatment of schizophrenia and begin a larger trial assessing cognitive benefits by year-end 2005. o The June Phase II interim analysis increased our confidence that ACP-103 could be an adjunctive therapy in Parkinson's disease. We expect this trial to complete later this year with full data available by early 2006. If all goes well, we believe this program could advance into Phase III trials next year. o In addition, we will likely receive an update from Allergan (AGN) on its neuropathic pain compound, which could advance into Phase II trials. PRICE TARGET AND JUSTIFICATION: We reiterate our Outperform rating and $13 per share price target based on a projected enterprise value of $250 million. The loss of the court ruling has no appreciable impact to our price target. RISKS TO ACHIEVEMENT OF TARGET PRICE: Risks associated with shares of ACAD are common to all drug discovery companies, including developmental, clinical and regulatory. Drug candidates could fail in the clinic, ACADIA may not enter into new collaborations or achieve milestones in existing alliances. The company may require future capital funding and may face future unforeseen litigation.

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