During Friday's earnings conference call, Acadia's management team said that a 30-day supply of Nuplazid would be priced at $1,950. That comes to about $24,000 a year and is significantly higher than what investors were expecting. Executives said that they determined this to be an appropriate price for the drug after extensive research and because Nuplazid works in a unique way.
I had expected annual pricing of the drug to be significantly lower: $14,000. That was based upon a slight premium to the prices of nongeneric atypical antipsychotics. Clearly, I wasn't the only observer who was happily surprised; shares of the stock were climbing Monday, and at around 2 p.m. EST they were up $1.58, or 5.7%, at $29.23.
The disclosed pricing raises my estimates about the drug's annual revenue potential. Maximum annual sales are now likely to be $3.0 billion, up from $2.0 billion. This is based on the assumption that there are about 130,000 patients with psychosis related to Parkinson's disease. Nuplazid treats hallucinations and delusions associated with that psychosis.
Because Nuplazid has lower side effects than atypical antipsychotics, Parkinson's patients who currently have mild psychosis symptoms may elect to receive treatment with Nuplazid.
Assuming a price-to-sales ratio of 4, Acadia Pharmaceuticals could have a potential valuation of $12 billion. Such a ratio seems reasonable when you look at the trailing 12-month price-to-sales ratios for Eli Lilly and Pfizer. The one key difference is that Acadia Pharmaceuticals offers significantly more growth potential.
It's disappointing to hear that there would be a delay in the filing in Europe for Nuplazid. In the long term, this is not a big deal, however. Just like it did following the new drug application delay for Nuplazid, Acadia will sort out whatever needs to be done to get a filing properly done.
The main focus in the short term is the pricing of Nuplazid and the launch of the drug here in the U.S. Again, Nuplazid offers something very unique in that is able to treat psychosis without impairing motor functions. This is something atypical antipsychotics are unable to do since they are dopamine blockers.