acad-10q_20200331.htm
false 2020 Q1 0001070494 --12-31 Large Accelerated Filer P0Y0M4D P5Y0M29D true P10Y9M P10Y7M 2020 P5Y us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:AccruedLiabilitiesCurrent us-gaap:AccruedLiabilitiesCurrent 0001070494 2020-01-01 2020-03-31 xbrli:shares 0001070494 2020-04-22 iso4217:USD 0001070494 2020-03-31 0001070494 2019-12-31 iso4217:USD xbrli:shares 0001070494 2019-01-01 2019-03-31 0001070494 2018-12-31 0001070494 2019-03-31 0001070494 us-gaap:CommonStockMember 2019-12-31 0001070494 us-gaap:CommonStockMember 2018-12-31 0001070494 us-gaap:CommonStockMember 2020-03-31 0001070494 us-gaap:CommonStockMember 2019-03-31 0001070494 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001070494 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001070494 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0001070494 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0001070494 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0001070494 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001070494 us-gaap:RetainedEarningsMember 2019-12-31 0001070494 us-gaap:RetainedEarningsMember 2018-12-31 0001070494 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0001070494 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0001070494 us-gaap:RetainedEarningsMember 2020-03-31 0001070494 us-gaap:RetainedEarningsMember 2019-03-31 0001070494 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001070494 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001070494 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0001070494 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0001070494 2016-04-01 2016-04-30 0001070494 2016-04-30 0001070494 us-gaap:CostOfSalesMember 2020-01-01 2020-03-31 0001070494 us-gaap:CostOfSalesMember 2019-01-01 2019-03-31 0001070494 us-gaap:ResearchAndDevelopmentExpenseMember 2020-01-01 2020-03-31 0001070494 us-gaap:ResearchAndDevelopmentExpenseMember 2019-01-01 2019-03-31 0001070494 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2020-01-01 2020-03-31 0001070494 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-01-01 2019-03-31 0001070494 us-gaap:USTreasurySecuritiesMember 2020-03-31 0001070494 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2020-03-31 0001070494 us-gaap:DomesticCorporateDebtSecuritiesMember 2020-03-31 0001070494 us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember 2020-03-31 0001070494 us-gaap:USTreasurySecuritiesMember 2019-12-31 0001070494 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2019-12-31 0001070494 us-gaap:DomesticCorporateDebtSecuritiesMember 2019-12-31 0001070494 us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember 2019-12-31 acad:Security 0001070494 us-gaap:MoneyMarketFundsMember 2020-03-31 0001070494 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel1Member 2020-03-31 0001070494 us-gaap:USTreasuryNotesSecuritiesMember 2020-03-31 0001070494 us-gaap:USTreasuryNotesSecuritiesMember us-gaap:FairValueInputsLevel1Member 2020-03-31 0001070494 us-gaap:EquitySecuritiesMember 2020-03-31 0001070494 us-gaap:EquitySecuritiesMember us-gaap:FairValueInputsLevel1Member 2020-03-31 0001070494 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member 2020-03-31 0001070494 us-gaap:DomesticCorporateDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member 2020-03-31 0001070494 us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember us-gaap:FairValueInputsLevel2Member 2020-03-31 0001070494 us-gaap:FairValueInputsLevel1Member 2020-03-31 0001070494 us-gaap:FairValueInputsLevel2Member 2020-03-31 0001070494 us-gaap:MoneyMarketFundsMember 2019-12-31 0001070494 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel1Member 2019-12-31 0001070494 us-gaap:USTreasuryNotesSecuritiesMember 2019-12-31 0001070494 us-gaap:USTreasuryNotesSecuritiesMember us-gaap:FairValueInputsLevel1Member 2019-12-31 0001070494 us-gaap:EquitySecuritiesMember 2019-12-31 0001070494 us-gaap:EquitySecuritiesMember us-gaap:FairValueInputsLevel1Member 2019-12-31 0001070494 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member 2019-12-31 0001070494 us-gaap:DomesticCorporateDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member 2019-12-31 0001070494 us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember us-gaap:FairValueInputsLevel2Member 2019-12-31 0001070494 us-gaap:FairValueInputsLevel1Member 2019-12-31 0001070494 us-gaap:FairValueInputsLevel2Member 2019-12-31 0001070494 2019-09-01 2019-09-30 0001070494 2018-11-01 2018-11-30 0001070494 acad:OptionToPurchaseAdditionalSharesMember 2019-09-01 2019-09-30 0001070494 acad:OptionToPurchaseAdditionalSharesMember 2018-11-01 2018-11-30 0001070494 2016-08-01 2016-08-31 0001070494 acad:OptionToPurchaseAdditionalSharesMember 2016-08-01 2016-08-31 0001070494 2016-01-01 2016-01-31 0001070494 acad:RegistrationRightsAgreementMember us-gaap:MajorityShareholderMember 2016-01-31 0001070494 acad:RegistrationRightsAgreementMember us-gaap:MajorityShareholderMember 2016-08-31 0001070494 acad:RegistrationRightsAgreementMember us-gaap:MajorityShareholderMember 2018-11-30 0001070494 acad:RegistrationRightsAgreementMember us-gaap:MajorityShareholderMember 2019-09-30 0001070494 acad:RegistrationRightsAgreementMember 2016-01-01 2016-01-31 0001070494 2012-12-01 2012-12-31 0001070494 acad:ExpireOnDecemberSeventeenTwoThousandAndNineteenMember 2012-12-31 0001070494 acad:ExpireOnDecemberSeventeenTwoThousandAndNineteenMember 2012-12-01 2012-12-31 0001070494 acad:ExpireOnDecemberSeventeenTwoThousandAndNineteenMember 2020-03-31 0001070494 acad:ExpireOnDecemberSeventeenTwoThousandAndNineteenMember 2020-01-01 2020-03-31 xbrli:pure 0001070494 srt:MaximumMember 2020-01-01 2020-03-31 0001070494 acad:ExclusivityDeedMember acad:NeurenPharmaceuticalsLimitedMember 2018-05-31 0001070494 acad:ExclusivityDeedMember acad:NeurenPharmaceuticalsLimitedMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2018-05-01 2018-05-31 0001070494 us-gaap:OtherAssetsMember 2020-03-31 0001070494 us-gaap:OtherAssetsMember 2019-12-31 0001070494 us-gaap:OtherExpenseMember 2020-01-01 2020-03-31 0001070494 us-gaap:OtherExpenseMember 2019-01-01 2019-03-31 0001070494 acad:LicenseAgreementsMember acad:NeurenPharmaceuticalsLimitedMember srt:NorthAmericaMember 2018-08-01 2018-08-31 0001070494 acad:LicenseAgreementsMember acad:NeurenPharmaceuticalsLimitedMember srt:NorthAmericaMember 2020-03-01 2020-03-31 0001070494 srt:MaximumMember acad:LicenseAgreementsMember acad:NeurenPharmaceuticalsLimitedMember srt:NorthAmericaMember 2018-08-31 0001070494 srt:MaximumMember acad:LicenseAgreementsMember acad:NeurenPharmaceuticalsLimitedMember srt:NorthAmericaMember 2020-03-31 0001070494 us-gaap:ResearchAndDevelopmentExpenseMember acad:LicenseAgreementsMember acad:NeurenPharmaceuticalsLimitedMember srt:NorthAmericaMember 2018-07-01 2018-09-30 0001070494 us-gaap:ResearchAndDevelopmentExpenseMember acad:LicenseAgreementsMember acad:NeurenPharmaceuticalsLimitedMember srt:NorthAmericaMember 2020-01-01 2020-03-31 0001070494 us-gaap:LetterOfCreditMember acad:CorporateCreditCardProgramMember 2020-03-31 0001070494 us-gaap:LetterOfCreditMember acad:FleetProgramMember 2020-03-31 0001070494 srt:MinimumMember 2020-01-01 2020-03-31 utr:sqft 0001070494 stpr:CA acad:CorporateOfficeSpaceLeaseAgreementMember 2018-12-31 0001070494 stpr:CA acad:CorporateOfficeSpaceLeaseAgreementMember 2020-02-29 0001070494 stpr:CA acad:CorporateOfficeSpaceLeaseAgreementMember 2020-03-31 0001070494 acad:CorporateOfficeSpaceLeaseAgreementMember 2018-12-31 0001070494 acad:CorporateOfficeSpaceLeaseAgreementMember 2020-02-29 0001070494 stpr:CA acad:CorporateOfficeSpaceLeaseAgreementMember 2020-01-01 2020-03-31 0001070494 acad:CorporateOfficeSpaceLeaseAgreementMember us-gaap:LetterOfCreditMember 2020-03-31

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-50768

 

ACADIA PHARMACEUTICALS INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

06-1376651

(State of Incorporation)

(I.R.S. Employer Identification No.)

 

3611 Valley Centre Drive, Suite 300

San Diego, California

92130

(Address of Principal Executive Offices)

(Zip Code)

 

(858) 558-2871

(Registrant’s Telephone Number, Including Area Code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class 

Trading Symbol

Name of Each Exchange on Which Registered 

Common Stock, par value $0.0001 per share

ACAD

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

☐  

Smaller reporting company

 

 

 

 

Emerging growth company

  

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

Total shares of common stock outstanding as of the close of business on April 22, 2020:

 

Class 

 

Number of Shares Outstanding 

Common Stock, $0.0001 par value

 

155,724,104

 

 

 

 


 

ACADIA PHARMACEUTICALS INC.

FORM 10-Q

TABLE OF CONTENTS

 

 

 

PAGE NO.

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements

 

1

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets

 

1

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations

 

2

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Loss

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity

 

5

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

6

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

15

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

22

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

23

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

24

 

 

 

 

 

Item 1A.

 

Risk Factors

 

24

 

 

 

 

 

Item 6.

 

Exhibits

 

58

 

 

 

SIGNATURES

 

59

 

 

 

i


 

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

ACADIA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

 

 

 

March 31,

2020

 

 

December 31,

2019

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

173,059

 

 

$

189,680

 

Investment securities, available-for-sale

 

 

478,347

 

 

 

507,749

 

Accounts receivable, net

 

 

41,636

 

 

 

35,781

 

Interest and other receivables

 

 

2,935

 

 

 

2,093

 

Inventory

 

 

6,318

 

 

 

6,341

 

Prepaid expenses

 

 

22,126

 

 

 

18,606

 

Total current assets

 

 

724,421

 

 

 

760,250

 

Property and equipment, net

 

 

5,089

 

 

 

3,180

 

Operating lease right-of-use assets

 

 

8,613

 

 

 

9,524

 

Intangible assets, net

 

 

2,215

 

 

 

2,585

 

Restricted cash

 

 

5,770

 

 

 

4,787

 

Other assets

 

 

1,342

 

 

 

2,857

 

Total assets

 

$

747,450

 

 

$

783,183

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Accounts payable

 

$

6,623

 

 

$

7,222

 

Accrued liabilities

 

 

93,118

 

 

 

67,604

 

Total current liabilities

 

 

99,741

 

 

 

74,826

 

Operating lease liabilities

 

 

6,090

 

 

 

6,361

 

Other long-term liabilities

 

 

3,237

 

 

 

2,861

 

Total liabilities

 

 

109,068

 

 

 

84,048

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 5,000,000 shares authorized at March 31, 2020

   and December 31, 2019; no shares issued and outstanding at March 31, 2020 and

   December 31, 2019

 

 

 

 

 

 

Common stock, $0.0001 par value; 225,000,000 shares authorized at March 31, 2020

   and December 31, 2019; 155,441,052 shares and 155,275,300 shares issued and

   outstanding at March 31, 2020 and December 31, 2019, respectively

 

 

15

 

 

 

15

 

Additional paid-in capital

 

 

2,428,987

 

 

 

2,402,945

 

Accumulated deficit

 

 

(1,792,145

)

 

 

(1,704,122

)

Accumulated other comprehensive income

 

 

1,525

 

 

 

297

 

Total stockholders’ equity

 

 

638,382

 

 

 

699,135

 

Total liabilities and stockholders’ equity

 

$

747,450

 

 

$

783,183

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

1


 

ACADIA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Revenues

 

 

 

 

 

 

 

 

Product sales, net

 

$

90,068

 

 

$

62,959

 

Total revenues

 

 

90,068

 

 

 

62,959

 

Operating expenses

 

 

 

 

 

 

 

 

Cost of product sales

 

 

2,799

 

 

 

2,950

 

License fees and royalties

 

 

2,175

 

 

 

1,630

 

Research and development

 

 

72,636

 

 

 

52,923

 

Selling, general and administrative

 

 

101,973

 

 

 

93,090

 

Total operating expenses

 

 

179,583

 

 

 

150,593

 

Loss from operations

 

 

(89,515

)

 

 

(87,634

)

Interest income, net

 

 

2,989

 

 

 

2,934

 

Other expense

 

 

(1,497

)

 

 

(229

)

Loss before income taxes

 

 

(88,023

)

 

 

(84,929

)

Income tax expense

 

 

 

 

 

375

 

Net loss

 

$

(88,023

)

 

$

(85,304

)

Net loss per common share, basic and diluted

 

$

(0.57

)

 

$

(0.59

)

Weighted average common shares outstanding, basic and diluted

 

 

155,368

 

 

 

143,981

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

2


 

ACADIA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Net loss

 

$

(88,023

)

 

$

(85,304

)

Other comprehensive income:

 

 

 

 

 

 

 

 

Unrealized gain on investment securities

 

 

1,226

 

 

 

577

 

Foreign currency translation adjustments

 

 

2

 

 

 

2

 

Comprehensive loss

 

$

(86,795

)

 

$

(84,725

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

3


 

ACADIA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(88,023

)

 

$

(85,304

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

22,348

 

 

 

19,883

 

Amortization of premiums and accretion of discounts on investment securities

 

 

87

 

 

 

(1,006

)

Amortization of intangible assets

 

 

370

 

 

 

370

 

Loss on strategic investment

 

 

1,497

 

 

 

229

 

Depreciation

 

 

294

 

 

 

415

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(5,855

)

 

 

(3,868

)

Interest and other receivables

 

 

(842

)

 

 

(2,113

)

Inventory

 

 

(37

)

 

 

(557

)

Prepaid expenses

 

 

(3,520

)

 

 

(3,015

)

Operating lease right-of-use assets

 

 

1,187

 

 

 

833

 

Other assets

 

 

18

 

 

 

105

 

Accounts payable

 

 

(599

)

 

 

108

 

Accrued liabilities

 

 

24,057

 

 

 

11,035

 

Operating lease liabilities

 

 

(360

)

 

 

(938

)

Long-term liabilities

 

 

376

 

 

 

(352

)

Net cash used in operating activities

 

 

(49,002

)

 

 

(64,175

)

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchases of investment securities

 

 

(100,773

)

 

 

(73,945

)

Maturities of investment securities

 

 

131,315

 

 

 

97,525

 

Purchases of property and equipment

 

 

(934

)

 

 

(822

)

Net cash provided by investing activities

 

 

29,608

 

 

 

22,758

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock, net of issuance costs

 

 

3,754

 

 

 

4,176

 

Net cash provided by financing activities

 

 

3,754

 

 

 

4,176

 

Effect of exchange rate changes on cash

 

 

2

 

 

 

1

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(15,638

)

 

 

(37,240

)

Cash, cash equivalents and restricted cash

 

 

 

 

 

 

 

 

Beginning of period

 

 

194,467

 

 

 

139,584

 

End of period

 

$

178,829

 

 

$

102,344

 

Supplemental disclosure of noncash information:

 

 

 

 

 

 

 

 

Property and equipment purchases in accounts payable and accrued liabilities

 

$

1,269

 

 

$

21

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 


4


 

ACADIA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(Unaudited)

 

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Total stockholders’ equity, beginning balances

 

$

699,135

 

 

$

479,079

 

 

 

 

 

 

 

 

 

 

Common stock:

 

 

 

 

 

 

 

 

Beginning balance

 

 

15

 

 

 

14

 

Ending balance

 

 

15

 

 

 

14

 

 

 

 

 

 

 

 

 

 

Additional paid-in capital:

 

 

 

 

 

 

 

 

Beginning balance

 

 

2,402,945

 

 

 

1,948,300

 

Issuance of common stock from exercise of stock options

 

 

3,754

 

 

 

4,176

 

Stock-based compensation

 

 

22,288

 

 

 

19,826

 

Ending balance

 

 

2,428,987

 

 

 

1,972,302

 

 

 

 

 

 

 

 

 

 

Accumulated deficit:

 

 

 

 

 

 

 

 

Beginning balance

 

 

(1,704,122

)

 

 

(1,468,863

)

Net loss

 

 

(88,023

)

 

 

(85,304

)

Ending balance

 

 

(1,792,145

)

 

 

(1,554,167

)

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Beginning balance

 

 

297

 

 

 

(372

)

Other comprehensive income

 

 

1,228

 

 

 

579

 

Ending balance

 

 

1,525

 

 

 

207

 

 

 

 

 

 

 

 

 

 

Total stockholders’ equity, ending balances

 

$

638,382

 

 

$

418,356

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

5


 

ACADIA PHARMACEUTICALS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Business

ACADIA Pharmaceuticals Inc. (the “Company”), based in San Diego, California, is a biopharmaceutical company focused on the development and commercialization of innovative medicines to address unmet medical needs in central nervous system disorders. The Company was originally incorporated in Vermont in 1993 as Receptor Technologies, Inc. and reincorporated in Delaware in 1997.

In April 2016, the U.S. Food and Drug Administration (“FDA”) approved the Company’s first drug, NUPLAZID® (pimavanserin), for the treatment of hallucinations and delusions associated with Parkinson’s disease psychosis (“PD Psychosis”). NUPLAZID became available for prescription in the United States in May 2016.

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company should be read in conjunction with the audited financial statements and notes thereto as of and for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K (“Annual Report”) filed with the Securities and Exchange Commission (the “SEC”). The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the accompanying financial statements reflect all adjustments (consisting of normal recurring adjustments) that are necessary for a fair statement of the financial position, results of operations, cash flows, and stockholders’ equity for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates.

 

Risk and Uncertainties

The global pandemic resulting from the disease known as COVID-19, caused by a novel strain of coronavirus, SARS-CoV-2, has caused national and global economic and financial market disruptions and may adversely impact our business. Although the Company did not see a material impact on its net revenue in the first quarter of 2020 due to the COVID-19 pandemic, the Company cannot predict the duration or magnitude of the pandemic or the full impact that it may have on the Company’s financial condition, operations, suppliers, and workforce.

During the three months ended March 31, 2020, there have been no changes to the Company’s significant accounting policies as described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2019, except as described below and in Note 6, investments.

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the statement of cash flows that sum to the total of the same such amounts shown in the statement of cash flows (in thousands):

 

 

 

March 31, 2020

 

 

March 31, 2019

 

 

 

Beginning of

period

 

 

End of

period

 

 

Beginning of

period

 

 

End of

period

 

Cash and cash equivalents

 

$

189,680

 

 

$

173,059

 

 

$

134,758

 

 

$

97,557

 

Restricted cash

 

 

4,787

 

 

 

5,770

 

 

 

4,826

 

 

 

4,787

 

Total cash, cash equivalents and restricted cash shown in

   the statement of cash flows

 

$

194,467

 

 

$

178,829

 

 

$

139,584

 

 

$

102,344

 

 

6


 

Accounts Receivable

Accounts receivable are recorded net of customer allowances for distribution fees, prompt payment discounts, chargebacks, and credit losses. Allowances for distribution fees, prompt payment discounts and chargebacks are based on contractual terms. As described further in Note 10, Recent Accounting Pronouncements, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 326-20, Financial Instruments – Credit Losses (“ASC 326-20”) as of January 1, 2020. The Company estimated the current expected credit losses of its accounts receivable by assessing the risk of loss and available relevant information about the collectability, including historical credit losses, existing contractual payment terms, actual payment patterns of its customers, individual customer circumstances, and reasonable and supportable forecast of economic conditions expected to exist throughout the contractual life of the receivable. Based on its assessment, as of March 31, 2020 the Company determined that an allowance for credit loss was not required.

Although the Company has not historically experienced significant credit losses, the Company’s exposure may increase due to uncertainties associated with the global economic recession and other disruptions resulting from the COVID-19 pandemic.

License Fees and Royalties

The Company expenses amounts paid to acquire licenses associated with products under development when the ultimate recoverability of the amounts paid is uncertain and the technology has no alternative future use when acquired. Acquisitions of technology licenses are charged to expense or capitalized based upon management’s assessment regarding the ultimate recoverability of the amounts paid and the potential for alternative future use. The Company has determined that technological feasibility for its product candidates is reached when the requisite regulatory approvals are obtained to make the product available for sale.

In connection with the FDA approval of NUPLAZID in April 2016, the Company made a one-time milestone payment of $8.0 million pursuant to its 2006 license agreement with the Ipsen Group in which the Company licensed certain intellectual property rights that complement its patent portfolio for its serotonin platform, including NUPLAZID. The Company capitalized the $8.0 million payment as an intangible asset and is amortizing the asset on a straight-line basis over the estimated useful life of the licensed patents through the second half of 2021. The Company recorded amortization expense related to its intangible asset of $0.4 million for each of the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, estimated future amortization expense related to the Company’s intangible asset was $1.1 million for the remainder of 2020 and $1.1 million for 2021.

Royalties incurred in connection with the Company’s license agreement with the Ipsen Group, as disclosed in Note 9, Commitments and Contingencies, are expensed to license fees and royalties as revenue from product sales is recognized.

3. Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares and common stock equivalents outstanding for the period determined using the treasury stock method. For purposes of this calculation, stock options, employee stock purchase plan rights, restricted stock units, and warrants are considered to be common stock equivalents but are not included in the calculations of diluted net loss per share for the periods presented as their effect would be anti-dilutive. The Company incurred net losses for all periods presented and there were no reconciling items for potentially dilutive securities. More specifically, at March 31, 2020 and 2019, stock options, employee stock purchase plan rights, restricted stock units, and warrants totaling approximately 21,064,000 shares and 20,623,000 shares, respectively, were excluded from the calculation of diluted net loss per share as their effect would have been anti-dilutive.

4. Stock-Based Compensation

The following table summarizes the total stock-based compensation expense included in the Company’s statements of operations for the periods presented (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Cost of product sales

 

$

849

 

 

$

995

 

Research and development

 

 

8,457

 

 

 

7,880

 

Selling, general and administrative

 

 

13,042

 

 

 

11,008

 

 

 

$

22,348

 

 

$

19,883

 

 

7


 

5. Balance Sheet Details

Inventory consisted of the following (in thousands):

 

 

 

March 31,

2020

 

 

December 31,

2019

 

Raw material

 

$

2,907

 

 

$

3,175

 

Work in process

 

 

988

 

 

 

1,685

 

Finished goods

 

 

2,423

 

 

 

1,481

 

 

 

$

6,318

 

 

$

6,341

 

Accrued liabilities consisted of the following (in thousands):

 

 

 

March 31,

2020

 

 

December 31,

2019

 

Accrued sales allowances

 

$

27,581

 

 

 

11,326

 

Accrued consulting and professional fees

 

 

21,711

 

 

 

13,691

 

Accrued research and development services

 

 

16,433

 

 

 

14,273

 

Accrued compensation and benefits

 

 

16,030

 

 

 

21,080

 

Accrued royalties

 

 

3,776

 

 

 

1,971

 

Current portion of lease liabilities

 

 

2,909

 

 

 

3,434

 

Other

 

 

4,678

 

 

 

1,829

 

 

 

$

93,118

 

 

$

67,604

 

 

6. Investments

The carrying value and amortized cost of the Company’s investments, summarized by major security type, consisted of the following (in thousands):

 

 

 

March 31, 2020

 

 

 

Amortized

Cost

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Estimated

Fair

Value

 

U.S. Treasury notes

 

$

238,541

 

 

$

1,588

 

 

$

 

 

$

240,129

 

Government sponsored enterprise securities

 

 

71,030

 

 

 

292

 

 

 

 

 

 

71,322

 

Corporate debt securities

 

 

112,075

 

 

 

74

 

 

 

(491

)

 

 

111,658

 

Commercial paper

 

 

55,204

 

 

 

40

 

 

 

(6

)

 

 

55,238

 

 

 

$

476,850

 

 

$

1,994

 

 

$

(497

)

 

$

478,347

 

 

 

 

December 31, 2019

 

 

 

Amortized

Cost

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Estimated

Fair

Value

 

U.S. Treasury notes

 

$

228,609

 

 

$

7

 

 

$

(13

)

 

$

228,603

 

Government sponsored enterprise securities

 

 

88,920

 

 

 

5

 

 

 

(30

)

 

 

88,895

 

Corporate debt securities

 

 

87,785

 

 

 

262

 

 

 

(8

)

 

 

88,039

 

Commercial paper

 

 

102,151

 

 

 

61

 

 

 

 

 

 

102,212

 

 

 

$

507,465

 

 

$

335

 

 

$

(51

)

 

$

507,749

 

 

The Company has classified all of its available-for-sale investment securities, including those with maturities beyond one year, as current assets on its consolidated balance sheets based on the highly liquid nature of the investment securities and because these investment securities are considered available for use in current operations. As of March 31, 2020 and December 31, 2019, the Company held $3.0 million and $24.3 million, respectively, of available-for-sale investment securities with contractual maturity dates of more than one year and less than two years. The Company has classified all equity securities as other assets on its Consolidated Balance Sheets.

8


 

At March 31, 2020 and December 31, 2019, the Company had 21 and 20 available-for-sale investment securities, respectively, in an unrealized loss position. The following table presents gross unrealized losses and fair value for those available-for-sale investment securities that were in an unrealized loss position as of March 31, 2020 and December 31, 2019, aggregated by investment category and length of time that the individual securities have been in a continuous loss position (in thousands):

 

 

 

Less Than 12 Months

 

 

12 Months or Greater

 

 

Total

 

 

 

Estimated

Fair Value

 

 

Unrealized

Losses

 

 

Estimated

Fair Value

 

 

Unrealized

Losses

 

 

Estimated

Fair Value

 

 

Unrealized

Losses

 

March 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

$

89,774

 

 

$

(491

)

 

$

 

 

$

 

 

$

89,774

 

 

$

(491

)

Commercial paper

 

 

24,806

 

 

 

(6

)

 

 

 

 

 

 

 

 

24,806

 

 

 

(6

)

Total

 

$

114,580

 

 

$

(497

)

 

$

 

 

$

 

 

$

114,580

 

 

$

(497

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Than 12 Months

 

 

12 Months or Greater

 

 

Total

 

 

 

Estimated

Fair Value

 

 

Unrealized

Losses

 

 

Estimated

Fair Value

 

 

Unrealized

Losses

 

 

Estimated

Fair Value

 

 

Unrealized

Losses

 

December 31, 2019:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury notes

 

$

148,397

 

 

$

(13

)

 

$

 

 

$

 

 

$

148,397

 

 

$

(13

)

Government sponsored enterprise securities

 

 

61,103

 

 

 

(30

)

 

 

 

 

 

 

 

 

61,103

 

 

 

(30

)

Corporate debt securities

 

 

11,334

 

 

 

(8

)

 

 

 

 

 

 

 

 

11,334

 

 

 

(8

)

Total

 

$

220,834

 

 

$

(51

)

 

$

 

 

$

 

 

$

220,834

 

 

$

(51

)

 

As described further in Note 10, Recent Accounting Pronouncements the Company adopted FASB Accounting Standards Codification 326-30, Financial Instruments – Credit Losses (“ASC 326-30”) as of January 1, 2020. ASC 326-30 requires the Company to determine whether a decline in the fair value below the amortized cost basis of available-for-sale securities is due to credit-related factors. At each reporting date, the Company performs an evaluation of impairment to determine if any unrealized losses are the result of credit losses. Impairment is assessed at the individual security level. Factors considered in determining whether a loss resulted from a credit loss or other factors include the Company’s intent and ability to hold the investment until the recovery of its amortized cost basis, the extent to which the fair value is less than the amortized cost basis, the length of time and extent to which fair value has been less than the cost basis, the financial condition of the issuer, any historical failure of the issuer to make scheduled interest or principal payments, any changes to the rating of the security by a rating agency, any adverse legal or regulatory events affecting the issuer or issuer’s industry, any significant deterioration in economic conditions.

 

The Company does not intend to sell the investments in unrealized loss position and it is unlikely that the Company will be required to sell the investments before the recovery of their amortized cost basis. Based on its evaluation, the Company determined its year-to-date credit losses related to its available-for-sale securities were immaterial at March 31, 2020.

 

Although the Company has not historically experienced significant losses on its investments, the Company’s exposure may increase due to uncertainties associated with the global economic recession and other disruptions resulting from the COVID-19 pandemic.

7. Fair Value Measurements

The Company’s investments include cash equivalents, available-for-sale investment securities consisting of money market funds, U.S. Treasury notes, and high quality, marketable debt instruments of corporations and government sponsored enterprises in accordance with the Company’s investment policy, and equity securities. The Company’s investment policy defines allowable investment securities and establishes guidelines relating to credit quality, diversification, and maturities of its investments to preserve principal and maintain liquidity. All investment securities have a credit rating of at least A3/A- or better, or P-1/A-1 or better, as determined by Moody’s Investors Service or Standard & Poor’s.

The Company’s cash equivalents, available-for-sale investment securities and equity securities are classified within the fair value hierarchy as defined by authoritative guidance. The Company’s investment securities and equity securities classified as Level 1 are valued using quoted market prices. The Company obtains the fair value of its Level 2 financial instruments from third-party pricing services. The pricing services utilize industry standard valuation models whereby all significant inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, bids, offers, or other market-related data, are observable. The Company validates the prices provided by the third-party pricing services by reviewing their pricing methods and matrices, and obtaining market values from other pricing sources. After completing the validation procedures, the Company did not adjust or override any fair value measurements provided by these pricing services as of March 31, 2020 and December 31, 2019.

9


 

The Company does not hold any securities classified as Level 3, which are securities valued using unobservable inputs. The Company has not transferred any investment securities between the classification levels.

The recurring fair value measurements of the Company’s cash equivalents, available-for-sale investment securities and equity securities at March 31, 2020 and December 31, 2019 consisted of the following (in thousands):

 

 

 

 

 

 

 

Fair Value Measurements at

Reporting Date Using

 

 

 

March 31,

2020

 

 

Quoted Prices

in Active

Markets for

Identical

Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

Money market fund

 

$

139,886

 

 

$

139,886

 

 

$

 

 

$

 

U.S. Treasury notes

 

 

251,128

 

 

 

251,128

 

 

 

 

 

 

 

Equity securities

 

 

810

 

 

 

810

 

 

 

 

 

 

 

Government sponsored enterprise securities

 

 

71,322

 

 

 

 

 

 

71,322

 

 

 

 

Corporate debt securities

 

 

111,658

 

 

 

 

 

 

111,658