Acadia Pharma: A Great Pipeline for Profits

In Monday’s The Goldman Guide we talked about ugly duckling stocks.  The featured stock today has been a beauty queen over the last year.  ACADIA Pharmaceuticals (NASDAQ – ACAD - $20.28) is up nearly 1200% over the last year, and jumped almost 9% during yesterday’s run.

Is the run over?  From a technical standpoint, the answer is no, as the charts are bullish to very bullish in the short and intermediate time frame.  Most estimates have the company losing money next year and actually bringing in less revenue.  The stock is going up on the potential that the company has some serious game changers in the pipeline that could hit the market in 2015.

One major premise to consider before a decision can be made on buying ACAD is that that the population of the industrialized world is aging, a trend that will continue until at least 2050 from all accounts.  Therefore, the ailments and diseases that affect this group, or the 65 and older demographic, will drive a major market opportunity for several years.  Innovations in healthcare will help this group enjoy a higher standard of living, and will also present a major opportunity for profit.

ACADIA has 5 platforms in the pipeline, including Pimavanserin, a drug developed on the company’s proprietary and patented R-SAT platform.  This is the first drug that will enter the market, probably sometime in 2015, which selectively blocks the 5-HT2A serotonin receptor.  The drug will target Alzheimer’s disease and Parkinson’s disease psychosis (ADP and PDP respectively), as well as offer a symptom free treatment for schizophrenia.  As of right now, there are no drugs or treatments that target ADP and PDP.  If these drugs are approved and reach the market the company could easily reach the $2 billion sales mark.  A price target of $25 is definitely achievable.

I featured this stock in an article for Seeking Alpha that was released yesterday morning.  Here is the link below for those who are interested in reading further.

http://seekingalpha.com/article/1548422-acadia-pharmaceuticals-pipeline-set-to-assist-aging-population?source=yahoo

Have a great day.

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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