With the business potentially at an important milestone, we thought we'd take a closer look at ACADIA Pharmaceuticals Inc.'s (NASDAQ:ACAD) future prospects. ACADIA Pharmaceuticals Inc., a biopharmaceutical company, focuses on the development and commercialization of small molecule drugs that address unmet medical needs in central nervous system disorders. With the latest financial year loss of US$168m and a trailing-twelve-month loss of US$214m, the US$2.8b market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on ACADIA Pharmaceuticals' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Consensus from 21 of the American Biotechs analysts is that ACADIA Pharmaceuticals is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of US$101m in 2024. Therefore, the company is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 78% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for ACADIA Pharmaceuticals given that this is a high-level summary, but, take into account that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing we’d like to point out is that ACADIA Pharmaceuticals has no debt on its balance sheet, which is rare for a loss-making biotech, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
There are key fundamentals of ACADIA Pharmaceuticals which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at ACADIA Pharmaceuticals, take a look at ACADIA Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of important aspects you should further research:
Valuation: What is ACADIA Pharmaceuticals worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether ACADIA Pharmaceuticals is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on ACADIA Pharmaceuticals’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.