Executive Summary / Key Takeaways

• ACADIA Pharmaceuticals is leveraging the commercial success of its two anchor products, NUPLAZID for Parkinson's disease psychosis and DAYBUE for Rett syndrome, to fund pipeline expansion and global market entry.
• DAYBUE is showing positive underlying patient dynamics with increasing unique patients served and improving persistency, driving confidence in future growth despite initial sequential sales fluctuations.
• NUPLAZID continues strong performance driven by volume growth, real-world evidence, and targeted consumer campaigns, increasing market share against off-label competitors.
• The company's pipeline, featuring late-stage assets like ACP-101 in Prader-Willi syndrome (with accelerated timeline) and ACP-204 in Alzheimer's disease psychosis and Lewy body dementia psychosis, represents significant future growth potential in areas of high unmet need.
• ACADIA maintains a strong financial position, is cash flow positive, and is actively pursuing strategic business development opportunities to expand its portfolio beyond neuro-rare diseases.

A Foundation Built on Innovation: From PDP to Rett Syndrome and Beyond

ACADIA Pharmaceuticals Inc. is a biopharmaceutical company strategically focused on addressing significant unmet medical needs within central nervous system (CNS) disorders and rare diseases. Its journey has been marked by the successful development and commercialization of innovative therapies, establishing a solid foundation for future growth. The company's initial breakthrough came with the FDA approval of NUPLAZID (pimavanserin) in April 2016, the first and only drug specifically indicated for hallucinations and delusions associated with Parkinson's disease psychosis (PDP). This launch in May 2016 laid the groundwork for ACADIA's neuroscience franchise.

Building on this success, ACADIA strategically expanded into the neuro-rare disease space through business development. A key move was the 2018 license agreement with Neuren Pharmaceuticals (NPHLF) for North American rights to trofinetide, leading to the landmark FDA approval of DAYBUE (trofinetide) in March 2023 for Rett syndrome. DAYBUE, also a first-in-class therapy, anchored the company's second core franchise. Further collaboration with Neuren in 2023 expanded trofinetide rights globally (ex-North America) and added NNZ-2591 to the pipeline. ACADIA also entered a collaboration with Stoke Therapeutics (STOK) for RNA-based CNS rare disease programs and licensed ACP-711 from Saniona (SAJNY) for essential tremor, demonstrating a commitment to pipeline diversification. While some programs, like two under the Stoke collaboration, have been discontinued based on strategic assessments, this history illustrates ACADIA's proactive approach to portfolio building through both internal R&D and external partnerships.

At the heart of ACADIA's strategy lies its differentiated technology platforms, primarily focused on small molecule therapeutics targeting specific neurological pathways. Pimavanserin, the active ingredient in NUPLAZID, is a selective serotonin inverse agonist and antagonist preferentially targeting the 5-HT2A receptor. This mechanism is distinct from traditional antipsychotics, which often target dopamine receptors and can exacerbate Parkinson's motor symptoms. The benefit of this targeted approach is evidenced by NUPLAZID's efficacy in reducing psychosis symptoms without worsening motor function, a critical advantage in PDP.

Trofinetide, the active ingredient in DAYBUE, is a synthetic analog of the naturally occurring neurotrophic peptide glycine-proline-glutamate (GPE). Its precise mechanism in Rett syndrome is not fully understood but is believed to involve modulating synaptic function and reducing neuroinflammation. The tangible benefit is the first FDA-approved treatment for the core symptoms of Rett syndrome, offering improvements in various clinical endpoints. Real-world data indicates that DAYBUE achieves a persistency rate above 50% at 12 months, and patients on average take between 75% and 80% of the labeled dose, with a product consumption rate in the low 70% range across the patient population. These metrics, while reflecting the complexities of managing a rare disease, highlight the real-world utilization and retention of the therapy.

ACADIA's R&D efforts are focused on building upon these successes and exploring new mechanisms. ACP-204, a second-generation 5-HT2A inverse agonist, is designed to improve upon pimavanserin's profile. Early data suggests potential advantages, including no sign of QT prolongation at tested doses, a wide dose range supporting potentially higher equivalent doses than NUPLAZID, and faster steady-state PK, hinting at an earlier onset of activity. These technological advancements, if successful, could provide a significant competitive edge in areas like Alzheimer's disease psychosis and Lewy body dementia psychosis by offering improved safety or efficacy profiles. ACP-101, an intranasal carbetocin for Prader-Willi syndrome, leverages a long-acting oxytocin analog delivered directly, aiming to address hyperphagia. ACP-711 targets the GABAA-α3 receptor for essential tremor, representing a novel approach in a condition with limited effective treatments.

The "so what" for investors is clear: ACADIA's technology provides a basis for developing first-in-class or potentially best-in-class therapies in areas with high unmet needs. These differentiated mechanisms and targeted approaches contribute to a competitive moat, supporting pricing power and market share gains against less specific or older treatments. The ongoing R&D, particularly with ACP-204, aims to extend the lifecycle and expand the reach of ACADIA's core expertise, while new programs like ACP-101 and ACP-711 open entirely new market opportunities, diversifying the revenue base and reducing dependence on existing products.

Competing in Complex Landscapes

ACADIA operates within highly competitive CNS and rare disease markets, facing both large pharmaceutical companies and smaller, specialized biotechs. Its competitive positioning is defined by its focus on specific, underserved patient populations and its development of differentiated therapies.

In the Parkinson's disease psychosis market, NUPLAZID competes primarily with the off-label use of generic atypical antipsychotics such as quetiapine, clozapine, risperidone, aripiprazole, and olanzapine. While these generics are cheaper, NUPLAZID holds the advantage of being the only FDA-approved treatment, with a mechanism designed to avoid exacerbating motor symptoms. ACADIA's strategy involves leveraging real-world evidence demonstrating NUPLAZID's differential outcomes, including lower all-cause mortality risk compared to other atypical antipsychotics, and educating physicians and caregivers through targeted campaigns. This has resulted in increasing market share, reaching approximately 25% of patients receiving atypical antipsychotics for PDP, up from 20% previously. This indicates successful penetration against established generic alternatives, although the majority of the market still uses off-label options.

In the Rett syndrome market, DAYBUE is currently the first and only FDA-approved treatment. Direct competition is limited, but other companies are developing therapies for Rett syndrome or its symptoms, including Anavex (AVXL) (Anavex 2-73), Taysha Gene Therapies (TSHA), and Neurogene (NGNE) (gene therapies), and Unravel Bio/Vanderbilt University Medical Center (vorinostat). While these are in earlier stages, they represent future competitive threats. ACADIA's advantage lies in its first-mover status and the growing body of real-world evidence supporting DAYBUE's benefits. The company is focused on expanding penetration beyond specialized Centers of Excellence (COEs) into high-volume institutions and community practices, where the majority of Rett patients are treated but penetration is currently lower (around 25% vs. 55% in COEs). The expansion of the DAYBUE field force is a direct response to this competitive dynamic and market opportunity.

In its pipeline indications, ACADIA faces competition from companies developing treatments for Prader-Willi syndrome (e.g., Soleno Therapeutics (SLNO) with DCCR, now on the market), Alzheimer's disease psychosis (overlapping with broader Alzheimer's players like Biogen (BIIB) and Eli Lilly (LLY) with their amyloid-targeting drugs, although these do not specifically target psychosis), Lewy body dementia psychosis, and essential tremor. Large pharmaceutical companies like Biogen, Eli Lilly, Pfizer (PFE), and AbbVie (ABBV) possess significantly greater financial resources, R&D scale, manufacturing capabilities, and commercial infrastructure. Their broader portfolios and established market presence pose a challenge to ACADIA's more focused approach. For instance, while ACADIA's Q1 2025 revenue growth (19% total) is robust, its absolute revenue and profitability (TTM Net Margin 22.97%) are considerably smaller than these giants (e.g., Lilly's Q1 2025 revenue up 26%, TTM Net Margin 24%; Pfizer's Q1 2025 revenue up 12%, TTM Net Margin 13%). ACADIA's strength lies in its ability to identify and develop therapies for niche, high-unmet-need populations that may be overlooked or deprioritized by larger players, leveraging its specialized expertise in neuro-CNS and rare diseases.

Indirect competition comes from alternative therapies, symptom management approaches, and the inherent challenges of diagnosis and patient access in rare and complex neurological conditions. Payor dynamics, including coverage policies, reimbursement rates, and cost-containment measures (like those under the IRA), significantly influence market access and profitability, impacting ACADIA's ability to compete effectively on price and value. The company's reliance on third-party manufacturers and distributors also introduces supply chain risks that larger, vertically integrated competitors might mitigate more easily.

ACADIA's strategic response to this competitive landscape involves:

1. Maximizing the commercial potential of NUPLAZID and DAYBUE through targeted marketing, real-world evidence dissemination, and expanding sales reach.
2. Advancing a differentiated pipeline targeting areas of high unmet need with potentially superior or first-in-class profiles.
3. Pursuing strategic business development to acquire new assets and diversify into adjacent rare disease areas, leveraging its financial strength and commercial capabilities.
4. Building global commercial capabilities, starting with Canada and Europe, to expand market opportunities beyond the U.S.

Performance Reflecting Strategic Execution

ACADIA's recent financial performance demonstrates the impact of its commercial strategy and the growing contributions from its two key products. Total revenues in Q1 2025 reached $244.3 million, marking a 19% increase compared to Q1 2024. This builds on a strong 2024, where full-year total revenue hit $957.8 million, up 32% from 2023.

NUPLAZID continues to be a significant revenue driver. Q1 2025 net product sales were $159.7 million, a 23% increase year-over-year. This growth included a solid 6% increase in volume, with the remainder attributed to favorable gross-to-net adjustments, including a one-time benefit from the Medicare Part D redesign. Full-year 2024 NUPLAZID sales were $609.4 million, up 11% from 2023, with growth split roughly evenly between volume and price. Management highlights that Q1 2025 saw the best quarter for NUPLAZID prescriptions since 2020, reflecting positive momentum driven by direct consumer efforts, real-world evidence, and the label clarification. The company's market share in the PDP segment has increased, indicating successful penetration against off-label competitors.

DAYBUE, despite being earlier in its launch cycle, is rapidly becoming a substantial contributor. Q1 2025 net product sales were $84.6 million, an 11% increase year-over-year. While Q1 sales saw a sequential decline from Q4 2024 ($96.7 million), this was anticipated due to typical seasonal factors and Medicare Part D redesign impacts on net price. Crucially, underlying patient metrics showed positive trends, with 954 unique patients receiving shipments in Q1 2025, an all-time record for the brand and a meaningful increase from Q4 2024 (920 patients). Discontinuations decreased significantly (down 35% sequentially from Q4 2024 and 66% from Q1 2024), leading to improved persistency, with 65% of active patients now on therapy for 12 months or longer. Full-year 2024 DAYBUE sales were $348.4 million, a remarkable 97% increase from its launch year in 2023. The growth is driven by increasing unique patients and higher bottle utilization as patients titrate towards their optimal dose.

Operational expenses reflect the company's investment in growth. R&D expenses in Q1 2025 were $78.3 million, up from $59.7 million in Q1 2024, primarily due to increased spending on clinical-stage programs. Full-year 2024 R&D was $303.2 million, down from $351.6 million in 2023, mainly due to lower business development payments, partially offset by increased clinical costs. SG&A expenses in Q1 2025 were $126.4 million, up from $107.9 million in Q1 2024, driven by the NUPLAZID consumer activation program and expansion of the DAYBUE commercial team. Full-year 2024 SG&A was $488.4 million, up from $406.6 million in 2023, reflecting increased marketing and commercialization investments.

Profitability metrics show a company transitioning towards sustained profitability. The TTM Gross Profit Margin stands at a healthy 92.04%, reflecting the high-value nature of its pharmaceutical products. The TTM Operating Profit Margin is 23.58%, and the TTM Net Profit Margin is 22.97%. While profitability can fluctuate with R&D and SG&A investments, these margins indicate the underlying economic viability of the commercial products.

Liquidity remains strong. As of March 31, 2025, cash, cash equivalents, and investment securities totaled $681.6 million. Although this was a decrease from $756.0 million at the end of 2024, the change was primarily due to significant cash payments to Neuren in Q1 2025 ($48.8 million for the PRV share and $50.0 million for a sales milestone). Net cash provided by operating activities was positive at $20.3 million in Q1 2025. The company is cash flow positive and expects its current financial resources, combined with anticipated product sales, to fund operations through and beyond the next 12 months. The sale of the Rare Pediatric Disease Priority Review Voucher in Q4 2024 for $150 million (before fees and expenses, with one-third owed to Neuren) further bolstered the balance sheet, providing capital for future investments, including business development.

Outlook and Strategic Trajectory

ACADIA's outlook for 2025 signals continued growth and significant pipeline progress, underpinned by strategic investments. The company has provided specific guidance for the year:

• Total Revenues: $1.03 billion to $1.095 billion
• DAYBUE U.S. Net Sales: $380 million to $405 million
  • This guidance anticipates 9% to 16% year-over-year volume growth, with approximately 10% more new patient referrals expected at the midpoint compared to 2024. Net price growth is projected to be modest (~0.5%).
  • DAYBUE gross-to-net is projected between 21.5% and 24.5%, an increase from 2024, influenced by an early January pricing action and the impact of the Medicare Part D redesign (DAYBUE does not qualify for the small manufacturer phase-in).
  • Sequential DAYBUE sales are expected to decline in Q1 2025 but increase quarter-over-quarter starting in Q2.
  • Managed Access Program related revenues from certain ex-U.S. markets are expected to contribute a modest amount in 2025 (not included in guidance).
• NUPLAZID Net Sales: $650 million to $690 million
  • At the midpoint, the net sales increase is expected to be split roughly evenly between volume and net price.
  • NUPLAZID gross-to-net is projected between 22.5% and 25.5%, expected to reduce by approximately 300 basis points due to the IRA specified small manufacturer phase-in, partially offset by increases in other channels. Gross-to-net is expected to stabilize quarterly after the Q1 adjustment.
• R&D Expense: $330 million to $350 million (increased from prior guidance)
  • The increase is primarily related to the acceleration of the ACP-101 timeline, pulling forward spend from 2026.
• SG&A Expense: $535 million to $565 million
  • Growth is driven by the continuation of the NUPLAZID consumer activation campaign and increased personnel/investments for DAYBUE U.S. and ex-U.S. commercialization.
• Cash Guidance: $575 million to $625 million (as of year-end 2024, prior to Q1 2025 results)

The guidance reflects management's confidence in the continued commercial momentum of both products and the progress of the pipeline. The accelerated timeline for ACP-101, with top-line results from the Phase 3 COMPASS PWS study now expected by early Q4 2025 (previously 1H 2026), is a key value-driving milestone. Assuming positive data, this could support a U.S. regulatory submission in Q1 2026.

For ACP-204, the Phase 2 study in Alzheimer's disease psychosis is expected to complete enrollment in Q1 2026, with top-line results around mid-2026. The planned initiation of a Phase 2 study for ACP-204 in Lewy body dementia psychosis in Q3 2025 further expands the potential reach of this asset. The Phase 2 study for ACP-711 in essential tremor is on track to initiate in 2026.

Global expansion is also a strategic priority. Following Health Canada approval in October 2024, first DAYBUE sales in Canada are expected in Q3 2024. The marketing authorization application for trofinetide in the EU remains under review, with approval anticipated in Q1 2026. Managed access programs are being initiated in certain European countries. In Japan, the company received Orphan Drug Designation and remains on track to initiate a Phase 3 trial in Q3 2025.

The strategic focus remains on accelerating DAYBUE's commercial trajectory through field force expansion and enhanced patient/provider engagement, capitalizing on NUPLAZID's momentum with targeted campaigns and real-world evidence, expanding globally, and advancing the pipeline through internal R&D and strategic business development. The company is actively seeking BD opportunities in neuro and neuro-rare diseases, as well as adjacent rare disease areas, leveraging its strong cash position and commercial capabilities.

Risks and Challenges

While ACADIA's outlook is positive, several risks and challenges could impact its ability to achieve its goals.

Commercialization risks for both NUPLAZID and DAYBUE include achieving and maintaining market acceptance, physician prescribing, patient adherence, and favorable payor coverage and reimbursement. Competition from off-label generics for NUPLAZID and emerging therapies for Rett syndrome and pipeline indications could limit market share and pricing power. Payor dynamics, particularly the implementation of the IRA's drug price negotiation and rebate provisions, could negatively impact net revenue and profitability.

Regulatory risks are inherent in the biopharmaceutical industry. While NUPLAZID and DAYBUE are approved, they are subject to ongoing requirements, including post-marketing studies (PMRs for DAYBUE), which could lead to label changes or additional requirements. Regulatory approval for trofinetide outside North America and for pipeline candidates like ACP-101 and ACP-204 is not guaranteed and could be delayed or denied. The EU's stance on the ACP-204 master protocol, while not expected to derail the program, illustrates potential regional regulatory hurdles.

Clinical trial risks include potential delays, suspensions, or failures for pipeline programs, which would increase costs and delay potential revenue. Manufacturing and supply chain risks, including dependence on third parties and potential impacts from geopolitical events or tariffs, could disrupt product availability.

Intellectual property risks, such as patent challenges and litigation (including ongoing ANDA litigation for NUPLAZID), could impact market exclusivity and expose the company to significant costs or loss of revenue.

Macroeconomic uncertainties, including inflation, recession risks, and volatility in financial markets, could affect the company's ability to raise additional financing if needed, although current liquidity is strong. Geopolitical conflicts and trade tensions could also impact supply chains and market conditions.

Litigation risks, including securities class actions and derivative suits, could result in substantial costs and divert management attention. Data privacy and security risks, given the handling of sensitive patient data, could lead to regulatory actions, litigation, and reputational harm.

Management is implementing strategies to mitigate some of these risks, such as maintaining substantial U.S. inventory for commercial products to buffer against supply chain disruptions and investing in patient support programs to improve adherence and persistency for DAYBUE.

Conclusion

ACADIA Pharmaceuticals stands at a pivotal juncture, successfully leveraging its two commercial anchors, NUPLAZID and DAYBUE, to fuel an ambitious growth strategy. The company has demonstrated strong commercial execution, driving significant revenue increases for both products through targeted initiatives, real-world evidence, and expanding market reach. This performance, coupled with a solid financial position and positive cash flow generation, provides the necessary resources to invest in its promising pipeline and pursue strategic business development opportunities.

The pipeline, featuring late-stage assets like ACP-101 with an accelerated timeline and the next-generation ACP-204, holds the potential to deliver new therapies in areas of high unmet need, diversifying future revenue streams and expanding ACADIA's footprint in CNS and rare diseases. While the competitive landscape is challenging and regulatory/commercial risks persist, ACADIA's focus on differentiated technologies and underserved patient populations provides a strategic foundation. The company's outlook for exceeding $1 billion in total revenue in 2025 underscores its commercial momentum. For investors, the story is one of a company transitioning from a single-product focus to a multi-franchise, pipeline-driven entity with global aspirations, where continued commercial execution and pipeline success are key factors to watch.