Core Viewpoint - The article discusses the potential of the ALPS Medical Breakthroughs ETF (SBIO) as a strong investment option in the biotech sector, particularly in light of anticipated rate cuts that could benefit tech and biotech firms [1][6]. ETF Performance - The SBIO ETF charges a fee of 50 basis points and tracks a market cap-weighted index of biotech firms with drugs in Phase II or III clinical trials, focusing on companies with at least $200 million in AUM and up to $5 billion [2]. - SBIO has returned 16% over the last three months, outperforming its ETF Database Category average of 6.4% and FactSet Segment average of 7.4% [2]. Technical Indicators - The fund's price has surpassed both its 50 and 200-day simple moving averages, indicating healthy momentum and a potential buy signal [3]. Notable Holdings - Merus (MRUS) has shown significant performance, returning 59.6% year-to-date (YTD) as of September 11, focusing on clinical stage immuno-oncology [4]. - Akero Therapeutics (AKRO) has returned 55.4% YTD, developing treatments for serious metabolic diseases [5]. - Acadia Pharmaceuticals, Inc. (ACAD) has achieved a 29.7% return YTD, specializing in drugs for central nervous system disorders [5]. Market Environment - Rate cuts could facilitate borrowing for biotech firms while awaiting drug revenue, and may also ease M&A activity targeting these companies, making the biotech ETF a noteworthy investment in a lowering rate environment [6].

Company Overview - ACADIA Pharmaceuticals Inc. is a biopharmaceutical company focusing on therapies for central nervous system disorders and rare diseases [2] - Key approved products include NUPLAZID for Parkinson's disease psychosis and DAYBUE for Rett syndrome, both showing commercial growth [2] Financial Performance - In Q2 2025, NUPLAZID net sales increased by 7% year-over-year to $168.5 million, while DAYBUE sales grew by 14% to $96.1 million, reaching nearly 1,000 unique patients in the U.S. [2] Pipeline Development - A significant catalyst for 2025 is the upcoming Phase 3 readout of the COMPASS trial for ACP-101 in Prader-Willi Syndrome, with top-line results expected in early Q4 [3] - Positive trial outcomes could lead to a New Drug Application filing in Q1 2026 and potential approval by Q3 2026, expanding the company's pipeline into rare neurodevelopmental disorders [3] Research and Development Initiatives - The company is advancing multiple programs targeting neuropsychiatric symptoms and rare neurological diseases, including Alzheimer's disease and psychosis [4] - During its R&D Day in June 2025, ACADIA unveiled nine disclosed programs, with seven planned to enter Phase 2 or 3 stages from 2025 to 2026, and five anticipated readouts through 2027 [4] Market Position and Legal Developments - Recent patent litigation wins have secured market exclusivity for NUPLAZID through 2030 and extended formulations through 2038, providing stability for the commercial franchise [5] - With strong product momentum and a deepening pipeline, ACADIA is positioned for continued growth in CNS and rare disease therapies [5]

Summary of Acadia Pharmaceuticals FY Conference Call Company Overview - **Company**: Acadia Pharmaceuticals (NasdaqGS:ACAD) - **Date**: September 09, 2025 Key Points Industry and Market Penetration - Acadia Pharmaceuticals has a strong market share of approximately **60%** in Centers of Excellence (COEs) for new patients initiating therapy on DAYBUE, while penetration in the broader community setting is around **20%** [1] - The company aims to increase its community penetration through an expanded field footprint initiated in Q2 2025, with expectations for significant uptake in new patient starts in Q4 2025 [2] Patient Demographics and Adoption - DAYBUE is being utilized across all age brackets, with a notable trend of higher adoption among younger patients, primarily driven by motivated caregivers [4][5] - The company is actively working to broaden education regarding Rett syndrome and the availability of DAYBUE to improve diagnosis rates among older patients [5] European Market Strategy - Acadia has filed for approval of DAYBUE with the European Medicines Agency, with an expected approval timeline in Q1 2026 [6] - Germany is anticipated to be the first country for launch, with pricing discussions expected towards the end of 2026 [7] Acadia Connect Program - Acadia Connect, a patient service hub, is designed to assist patients with therapy initiation, insurance reimbursement, and refills, and is scalable for future product launches [9] NUPLAZID Sales Growth - Recent sales growth for NUPLAZID is attributed to renewed investment in disease awareness campaigns, including a partnership with Ryan Reynolds, and traditional direct-to-consumer marketing efforts [10][11] - The company reported a **17%** year-over-year growth in new referrals for NUPLAZID, indicating the effectiveness of these campaigns [11] Pricing Pressure and IRA Impact - NUPLAZID is primarily prescribed to a **70%** Medicare patient population, making it subject to the Inflation Reduction Act (IRA) [12][13] - The first year NUPLAZID would be eligible for negotiation under the IRA is projected to be **2029**, with potential pricing pressure expected thereafter [14][15] Pipeline Development - Acadia is focused on replicating successful trial outcomes for ACP-101 in Prader-Willi syndrome, aiming for a competitive regulatory package [19] - The company emphasizes the importance of being first to market with differentiated therapies, rather than entering as a late competitor with undifferentiated products [20][21] - Acadia has a broad pipeline with a peak sales opportunity estimated at approximately **$12 billion**, indicating strong potential for future growth [23] External Innovation Strategy - Acadia is looking to invest in both late-stage and early-stage assets, with a focus on neurological and rare disease sectors [24][25] - The company aims to maintain a disciplined approach to business development, avoiding forced deals due to patent cliffs or urgent needs [25] Additional Insights - The company is not constrained by financial limitations in its investment strategy, allowing for flexibility in pipeline expansion [23] - Acadia's proactive approach to education and awareness in the market is crucial for driving adoption and improving patient outcomes [5][11]

PresentationSean LaamanHead of Healthcare Research & Equity Analyst Good morning, everyone. Welcome to Morgan Stanley Global Healthcare Conference. I'm Sean Laaman, Head of U.S. Mid-cap Biotech Equity Research here at the firm. For important disclosures, please see Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales rep. For this session, we have the pleasure of hosting from ACADIA CEO, Catherin ...

Summary of Acadia Pharmaceuticals FY Conference Call Company Overview - **Company**: Acadia Pharmaceuticals (NasdaqGS:ACAD) - **Date**: September 08, 2025 - **Key Speakers**: CEO Catherine Owen Adams, CFO Mark Schneyer, EVP Elizabeth Thompson Industry Context - **Focus**: Neuroscience and rare diseases - **Competitive Landscape**: Minimal current focus on China, but interest in future innovation opportunities in the region [2][56] Key Points and Arguments Competitive Position and Strategy - Acadia Pharmaceuticals has minimal current engagement in China but recognizes the potential for future involvement in innovation [2] - The company has appointed a new Chief Business Officer with experience in the Asia-Pacific region to explore business development opportunities [2] AI Integration - The company has appointed a Chief Innovation and Data Officer to leverage AI as a growth driver, focusing on R&D applications such as trial selection and data monitoring [3] Regulatory Environment - The company is monitoring the Most Favored Nation (MFN) pricing model and its potential impact on DAYBUE's regulatory approval in Europe [5] - No significant changes in FDA interactions have been reported, indicating stable engagement with regulatory bodies [8] Product Performance: NUPLAZID - NUPLAZID has shown strong growth attributed to a direct-to-consumer campaign, with a market share of approximately 20% [10] - The company plans to expand its commercial footprint by 30%, increasing sales representatives from 160 to 210 [10] - Long-term care accounts for 22% of NUPLAZID's business, with a higher market share compared to community settings [12] Product Performance: DAYBUE - The DAYBUE field force has been expanded by 40% to stabilize commercial uptake and reach community physicians [18] - The company anticipates patient growth to accelerate in Q4 2025 due to improved outreach and education efforts [19] Pipeline Development - ACP-204, a new 5-HT2A inverse agonist, aims to optimize treatment for patients with Parkinson's disease, with a focus on avoiding QT prolongation risks [23][24] - The company is conducting a phase 2 study for ACP-204, with results expected in mid-2026 [29] Market Opportunities - Alzheimer's disease psychosis (ADP) represents a significant unmet need, with approximately 7 million patients in the U.S. [27] - The company is exploring opportunities in ADP and Lewy body dementia psychosis, with a focus on developing effective treatments [27] Financial Outlook - Acadia Pharmaceuticals expects significant operating leverage from sales growth and pipeline investments, with potential blockbuster drugs anticipated [45] - The company is committed to maintaining a strong balance sheet while investing in growth opportunities [53] Future Expectations - The company is optimistic about upcoming data readouts and the potential for significant value inflection points over the next two to three years [62] - Acadia Pharmaceuticals aims to enhance its pipeline with both early-stage and later-stage molecules, focusing on rare diseases and neurology [52] Additional Important Insights - The company is actively looking for innovation opportunities outside the U.S., particularly in Asia and Japan [56] - Acadia Pharmaceuticals emphasizes the importance of addressing the needs of underserved patients in neurological and rare diseases [64]

Summary of Acadia Pharmaceuticals (ACAD) FY Conference Call - August 13, 2025 Company Overview - Acadia Pharmaceuticals is a neurological and rare disease company with two commercial assets: NUPLAZID for Parkinson's disease psychosis and Debut for Rett syndrome [6][7] - The company anticipates over $1 billion in net sales for both assets combined this year [7] Key Products and Pipeline NUPLAZID - NUPLAZID is the first and only approved treatment for Parkinson's disease psychosis [7] - The company has seen solid growth due to effective field team execution and direct-to-consumer (DTC) marketing efforts, including a partnership with Ryan Reynolds [31][32] - A 17-fold increase in website traffic for NUPLAZID was reported, indicating successful engagement with the patient community [33] - The product is sensitive to legislative changes, particularly the Inflation Reduction Act, which may affect pricing and negotiation starting in 2029 [38][39] Debut (Trofinetide) - Debut is approved for Rett syndrome and has shown strong patient persistency rates: over 50% at 12 months and above 45% at 18 months [11][12] - Approximately 40% of patients treated with Debut are from Centers of Excellence (COEs), with a significant opportunity for growth in the remaining 60% [18][19] - The company is expanding its field team to increase penetration in underrepresented areas [19][22] - Acadia is seeking approval for Debut in the European Union, with expectations for Q1 of next year [27][29] Pipeline Assets - ACP-101 is in Phase 3 trials for Prader-Willi syndrome, with results expected in early Q4 2025 [8] - ACP-204 is being tested for Alzheimer's disease psychosis and Lewy Body dementia psychosis, with Phase 2 results anticipated mid-next year [8] - The company aims to leverage its experience from NUPLAZID to compete effectively in the Alzheimer's market, which has a large patient population [48][49] Business Development and Strategy - Acadia is actively pursuing business development opportunities to enhance its pipeline and sustain growth [9] - The company is focused on bringing in assets that are either first-in-class or best-in-class, with a preference for mid to late clinical-stage products [56][57] - The management emphasizes the importance of data-driven decision-making regarding investment in pipeline assets [52][53] Market Dynamics and Challenges - The company acknowledges the potential impact of legislative changes on its marketing strategies and pricing models [35][38] - Acadia is committed to maintaining compliance with all regulations while seeking innovative ways to engage with healthcare providers and patients [37][40] Conclusion - Acadia Pharmaceuticals is positioned for growth with its unique product offerings and a robust pipeline focused on neurological and rare diseases. The company is actively expanding its market presence while navigating potential regulatory challenges.

Core Insights - Acadia Pharmaceuticals reported Q2 2025 earnings of $0.16 per share, exceeding the Zacks Consensus Estimate of $0.14, but down from $0.20 in the same quarter last year [1][6] - Total revenues reached $264.6 million, surpassing the Zacks Consensus Estimate of $260 million, with a year-over-year increase of 9% driven by sales of Nuplazid and Daybue [1][2][6] Revenue Breakdown - Nuplazid sales increased by 7% year over year to $168.5 million, outperforming the Zacks Consensus Estimate of $166 million [3][6] - Daybue generated net product sales of $96.1 million, a 14% increase year over year, with 987 unique patients receiving shipments, indicating strong growth potential [4][6] Financial Performance - Year-to-date, Acadia's shares have increased by 29.7%, significantly outperforming the industry growth of 0.2% [5] - R&D expenses for Q2 were $78 million, up 2% year over year, while SG&A expenses rose by 14% to $133.5 million, primarily due to increased marketing costs [8] Financial Outlook - Acadia revised its 2025 revenue guidance to $1.045-$1.095 billion, up from $1.030-$1.095 billion, with Nuplazid sales expected between $665-$690 million [10] - Projected R&D expenses for 2025 are between $330-$350 million, and SG&A expenses are expected to be between $535 million and $565 million [11] Regulatory and Legal Updates - Acadia received favorable court rulings extending Nuplazid's patent protection in the U.S. through 2030 and 2038, safeguarding against generic competition [6][15][16] - A regulatory filing for Daybue in the EU is under review, with approval anticipated in Q1 2026 [13]

Core Insights - Acadia Pharmaceuticals reported Q2 2025 earnings with a slight beat on both GAAP earnings and revenue, driven by growth in NUPLAZID and DAYBUE product lines [1][5] - GAAP EPS reached $0.16, exceeding analyst expectations of $0.14, while revenue stood at $264.6 million, above the consensus of $262.0 million [1][2] - Revenue increased by 9.3% compared to Q2 2024, although GAAP net income declined due to higher tax and selling expenses [1][8] Financial Performance - Q2 2025 EPS (GAAP) was $0.16, down 20.0% from $0.20 in Q2 2024 [2] - Revenue for Q2 2025 was $264.6 million, with NUPLAZID net product sales at $168.5 million (up 7.0% year-over-year) and DAYBUE sales at $96.1 million (up 14% year-over-year) [2][6] - Research & Development expenses rose by 2.4% to $78.0 million, while Selling, General & Administrative expenses increased by 14.0% to $133.5 million [2][7] Business Overview - Acadia Pharmaceuticals focuses on developing treatments for central nervous system disorders, with primary products being NUPLAZID for Parkinson's disease psychosis and DAYBUE for Rett syndrome [3][4] - The company's strategy includes maximizing its drug franchises in the U.S., expanding internationally, and advancing its pipeline of new drug candidates [4] Market Position and Strategy - Acadia's drug pipeline includes nine experimental programs, with seven expected to enter Phase 2 or Phase 3 studies in the next two years [10] - Recent patent litigation victories have strengthened NUPLAZID's market protection, extending product exclusivity until at least 2030 [11] - The company is progressing its international plans for DAYBUE, with regulatory submissions in Europe under review and commercial launch activities ramping up ahead of anticipated approvals in 2026 [12] Guidance and Future Outlook - Management updated its full-year 2025 financial outlook, raising the lower bound of projected revenue and NUPLAZID net product sales guidance [13] - Total U.S. revenue guidance for FY2025 is set at $1.045 billion to $1.095 billion, with R&D expense guidance maintained at $330 million to $350 million [13] - Investors should monitor DAYBUE's patient ramp-up and retention rates, NUPLAZID's market share, and the progress of late-stage development programs [14]

Summary of Acadia Pharmaceuticals Core Viewpoint Acadia Pharmaceuticals reported better-than-expected quarterly earnings and revenue, indicating strong performance in the medical-biomedical and genetics industry, despite mixed estimate revisions for future earnings. Financial Performance - Acadia reported quarterly earnings of $0.16 per share, exceeding the Zacks Consensus Estimate of $0.14 per share, but down from $0.20 per share a year ago, representing an earnings surprise of +14.29% [1] - The company posted revenues of $264.57 million for the quarter, surpassing the Zacks Consensus Estimate by 1.87% and up from $241.96 million year-over-year [2] - Over the last four quarters, Acadia has surpassed consensus EPS estimates three times and topped revenue estimates four times [2] Stock Performance - Acadia shares have increased approximately 28.8% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.1% [3] - The current Zacks Rank for Acadia is 3 (Hold), indicating expected performance in line with the market in the near future [6] Future Outlook - The consensus EPS estimate for the upcoming quarter is $0.14 on revenues of $271.4 million, and for the current fiscal year, it is $0.49 on revenues of $1.06 billion [7] - The outlook for the industry, particularly the Medical - Biomedical and Genetics sector, is currently in the bottom 42% of Zacks industries, which may impact stock performance [8]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents the unaudited condensed consolidated financial statements and related notes for Acadia Pharmaceuticals Inc [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents Acadia Pharmaceuticals Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, cash flows, and stockholders' equity, along with detailed notes explaining accounting policies, segment reporting, and other financial details for the periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity as of specific dates Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change (vs. Dec 31, 2024) | | :-------------------------------- | :------------ | :---------------- | :-------------------------- | | **Assets** | | | | | Cash and cash equivalents | $253,637 | $319,589 | $(65,952) | | Investment securities, available-for-sale | $508,359 | $436,404 | $71,955 | | Total current assets | $960,553 | $938,318 | $22,235 | | Total assets | $1,225,555 | $1,187,756 | $37,799 | | **Liabilities & Stockholders' Equity** | | | | | Total current liabilities | $330,024 | $394,870 | $(64,846) | | Total liabilities | $403,173 | $454,963 | $(51,790) | | Total stockholders' equity | $822,382 | $732,793 | $89,589 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Presents the company's revenues, expenses, and net income over specific reporting periods Condensed Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Product sales, net | $264,566 | $241,963 | $508,882 | $447,794 | | Total operating expenses | $232,192 | $211,526 | $457,219 | $402,147 | | Income from operations | $32,374 | $30,437 | $51,663 | $45,647 | | Net income | $26,666 | $33,389 | $45,653 | $49,944 | | Basic EPS | $0.16 | $0.20 | $0.27 | $0.30 | | Diluted EPS | $0.16 | $0.20 | $0.27 | $0.30 | - For the three months ended June 30, 2025, net product sales increased by **$22.6 million (9.3%)** year-over-year, while net income decreased by **$6.7 million (20.1%)** year-over-year[13](index=13&type=chunk) - For the six months ended June 30, 2025, net product sales increased by **$61.1 million (13.6%)** year-over-year, while net income decreased by **$4.3 million (8.6%)** year-over-year[13](index=13&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Details the company's net income and other comprehensive income components, such as unrealized gains/losses on investments Condensed Consolidated Statements of Comprehensive Income Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $26,666 | $33,389 | $45,653 | $49,944 | | Unrealized (loss) gain on investment securities | $(55) | $(113) | $95 | $(371) | | Foreign currency translation adjustments | $24 | $3 | $19 | $8 | | Comprehensive income | $26,635 | $33,279 | $45,767 | $49,581 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $84,279 | $54,092 | | Net cash used in investing activities | $(167,343) | $(70,231) | | Net cash provided by financing activities | $17,794 | $4,608 | | Net decrease in cash, cash equivalents and restricted cash | $(65,251) | $(11,523) | | Cash, cash equivalents and restricted cash, End of period | $263,108 | $182,904 | - Net cash provided by operating activities increased by **$30.2 million**, primarily due to increased product revenue[18](index=18&type=chunk) - Net cash used in investing activities increased by **$97.1 million**, mainly due to increased net purchases of investment securities[18](index=18&type=chunk) - Net cash provided by financing activities increased by **$13.2 million**, driven by higher proceeds from common stock issuance[18](index=18&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Outlines changes in the company's equity accounts, including common stock, additional paid-in capital, and accumulated deficit Condensed Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total stockholders' equity, beginning balances | $732,793 | $431,755 | | Additional paid-in capital, ending balance | $2,980,693 | $2,897,916 | | Accumulated deficit, ending balance | $(2,158,733) | $(2,380,893) | | Total stockholders' equity, ending balances | $822,382 | $516,700 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures for the figures presented in the condensed consolidated financial statements [1. Organization and Business](index=8&type=section&id=1.%20Organization%20and%20Business) Acadia Pharmaceuticals Inc. is a biopharmaceutical company based in San Diego, California, focused on developing and commercializing innovative medicines for central nervous system (CNS) disorders and rare diseases. Its key approved products are NUPLAZID® for Parkinson's disease psychosis and DAYBUE™ for Rett syndrome, with DAYBUE recently receiving marketing authorization in Canada - Company focuses on CNS disorders and rare diseases[23](index=23&type=chunk) - NUPLAZID® (pimavanserin) approved by FDA in April 2016 for Parkinson's disease psychosis (PDP)[24](index=24&type=chunk) - DAYBUE™ (trofinetide) approved by FDA in March 2023 for Rett syndrome and by Health Canada in October 2024[24](index=24&type=chunk)[25](index=25&type=chunk) [2. Basis of Presentation and Significant Accounting Policies](index=8&type=section&id=2.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) The financial statements are prepared in accordance with GAAP for interim information, reflecting all necessary adjustments. The company monitors macroeconomic uncertainties and details its accounting policies for cash, accounts receivable, revenue recognition (operating as a single segment with North American sales), and intangible assets, including amortization related to the DAYBUE license - Unaudited condensed consolidated financial statements prepared in accordance with GAAP for interim financial information[26](index=26&type=chunk) - Company actively monitors macroeconomic uncertainties (inflation, recession risks, geopolitical conflicts) and their potential impact[27](index=27&type=chunk) Product Sales, Net (in thousands) | Product | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | NUPLAZID | $168,479 | $157,409 | $328,199 | $287,332 | | DAYBUE | $96,087 | $84,554 | $180,683 | $160,462 | | Total | $264,566 | $241,963 | $508,882 | $447,794 | - Intangible assets related to DAYBUE (trofinetide) license are amortized on a straight-line basis through early 2036[33](index=33&type=chunk) - Amortization expense was **$2.7 million** and **$2.3 million** for the three months ended June 30, 2025 and 2024, respectively, and **$5.4 million** and **$7.6 million** for the six months ended June 30, 2025 and 2024, respectively[33](index=33&type=chunk) [3. Earnings Per Share](index=11&type=section&id=3.%20Earnings%20Per%20Share) This note details the calculation of basic and diluted earnings per share, which are derived from net income and weighted average common shares outstanding, including the effect of potentially dilutive common shares from equity awards and employee stock purchase plan rights Earnings Per Share (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income - basic and diluted | $26,666 | $33,389 | $45,653 | $49,944 | | Weighted average shares outstanding (Basic) | 167,827 | 165,551 | 167,321 | 165,174 | | Weighted average shares outstanding (Diluted) | 168,681 | 166,174 | 168,219 | 166,391 | | Basic EPS | $0.16 | $0.20 | $0.27 | $0.30 | | Diluted EPS | $0.16 | $0.20 | $0.27 | $0.30 | - Potentially dilutive shares excluded from EPS calculation due to anti-dilutive effect were **19,595 thousand** for Q2 2025 and **18,707 thousand** for H1 2025[38](index=38&type=chunk) [4. Stock-Based Compensation](index=12&type=section&id=4.%20Stock-Based%20Compensation) This note summarizes the stock-based compensation expense recognized across various operating expense categories, detailing the valuation methods used for employee stock options, purchase plan rights, restricted stock units, and performance-based stock awards Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of product sales | $18 | $362 | $352 | $515 | | Research and development | $4,477 | $3,749 | $7,910 | $7,842 | | Selling, general and administrative | $9,845 | $11,574 | $17,458 | $22,078 | | Total | $14,340 | $15,685 | $25,720 | $30,435 | - Stock-based compensation expense is estimated using the Black-Scholes valuation model for options and purchase rights, and market price for restricted stock units, expensed over the requisite service period[39](index=39&type=chunk) [5. Balance Sheet Details](index=12&type=section&id=5.%20Balance%20Sheet%20Details) This note provides a detailed breakdown of inventory components (finished goods, work in process, raw material) and accrued liabilities, including sales allowances, consulting fees, compensation, R&D services, lease liabilities, and royalties Inventory Composition (in thousands) | Inventory Type | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Finished goods | $23,439 | $20,461 | | Work in process | $3,406 | $1,488 | | Raw material | $83,681 | $69,741 | | Total | $110,526 | $91,690 | | Reported as: | | | | Inventory | $26,124 | $21,949 | | Long-term inventory | $84,402 | $69,741 | Accrued Liabilities (in thousands) | Accrued Liability | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Accrued sales allowances | $191,204 | $148,280 | | Accrued consulting and professional fees | $30,030 | $27,435 | | Accrued compensation and benefits | $28,773 | $36,551 | | Accrued research and development services | $24,774 | $27,181 | | Current portion of lease liabilities | $11,693 | $9,958 | | Accrued royalties | $10,050 | $11,608 | | Accrued contingent payments | $0 | $102,262 | | Other | $13,403 | $15,403 | | Total | $309,927 | $378,678 | [6. Investments](index=14&type=section&id=6.%20Investments) This note details the company's available-for-sale investment securities, primarily U.S. Treasury notes and government-sponsored enterprise securities, including their amortized cost, unrealized gains/losses, and fair value. It also provides a maturity profile and confirms no material credit losses Investment Securities, Available-for-Sale (in thousands) | Security Type | Amortized Cost (June 30, 2025) | Fair Value (June 30, 2025) | Amortized Cost (Dec 31, 2024) | Fair Value (Dec 31, 2024) | | :-------------------------------- | :----------------------------- | :------------------------- | :----------------------------- | :------------------------- | | U.S. Treasury notes | $364,223 | $364,752 | $245,584 | $245,903 | | Government sponsored enterprise securities | $143,674 | $143,607 | $190,452 | $190,501 | | Total | $507,897 | $508,359 | $436,036 | $436,404 | - As of June 30, 2025, **57%** of available-for-sale securities mature in one year or less, and **43%** mature after one year but within two years[42](index=42&type=chunk) - The company had **36 investment securities** in an unrealized loss position as of June 30, 2025, with total unrealized losses of **$117 thousand**, but determined year-to-date credit losses were immaterial[42](index=42&type=chunk)[44](index=44&type=chunk) [7. Fair Value Measurements](index=15&type=section&id=7.%20Fair%20Value%20Measurements) This note outlines the fair value hierarchy (Level 1, Level 2, Level 3) used for classifying financial assets, primarily cash equivalents and available-for-sale investment securities. It specifies that Level 1 assets are valued using quoted market prices, and Level 2 assets use observable inputs from third-party pricing services - Investment policy defines allowable securities and guidelines for credit quality, diversification, and maturities, with all securities having a credit rating of at least Aa3/AA- or better, or P-1/A-1 or better[45](index=45&type=chunk) Fair Value Measurements at June 30, 2025 (in thousands) | Asset | Total Fair Value | Level 1 (Quoted Prices) | Level 2 (Observable Inputs) | Level 3 (Unobservable Inputs) | | :-------------------------------- | :--------------- | :---------------------- | :-------------------------- | :---------------------------- | | Money market fund | $157,009 | $157,009 | $0 | $0 | | U.S. Treasury notes | $364,752 | $364,752 | $0 | $0 | | Government sponsored enterprise securities | $143,607 | $0 | $143,607 | $0 | | Total | $665,368 | $521,761 | $143,607 | $0 | Fair Value Measurements at December 31, 2024 (in thousands) | Asset | Total Fair Value | Level 1 (Quoted Prices) | Level 2 (Observable Inputs) | Level 3 (Unobservable Inputs) | | :-------------------------------- | :--------------- | :---------------------- | :-------------------------- | :---------------------------- | | Money market fund | $151,555 | $151,555 | $0 | $0 | | U.S. Treasury notes | $245,903 | $245,903 | $0 | $0 | | Government sponsored enterprise securities | $190,501 | $0 | $190,501 | $0 | | Total | $587,959 | $397,458 | $190,501 | $0 | [8. Stockholders' Equity](index=16&type=section&id=8.%20Stockholders%27%20Equity) This note describes the company's equity incentive plans, including the 2024 Equity Incentive Plan and the 2024 Inducement Plan, and the issuance of performance stock units (PSUs) with market conditions. It outlines the shares authorized and available for grant under these plans - In March 2024, the Company began issuing performance stock units (PSU) with a market condition based on relative total stockholder return (rTSR) over a three-year period[49](index=49&type=chunk) - The 2024 Equity Incentive Plan, effective May 2024, permits various equity awards to employees, directors, and consultants, with **10,948,088 shares** available for new grants at June 30, 2025[50](index=50&type=chunk) - The 2024 Inducement Plan, adopted September 2024, allows grants to new employees/directors, with **538,787 shares** available for new grants at June 30, 2025[51](index=51&type=chunk) [9. Commitments and Contingencies](index=16&type=section&id=9.%20Commitments%20and%20Contingencies) This note details the company's collaboration, license, and merger agreements, outlining potential milestone payments up to $3.3 billion. It also provides updates on significant legal proceedings, including patent infringement cases for NUPLAZID, a securities class action, opt-out litigation, and a derivative suit - The Company may be required to make milestone payments up to **$3.3 billion** in aggregate for pipeline candidates[52](index=52&type=chunk) - Key license agreements include Neuren (DAYBUE, NNZ-2591), Stoke Therapeutics (SYNGAP1 program, MECP2 program discontinued), and Saniona (ACP-711 for essential tremor)[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - Patent infringement cases for NUPLAZID against Aurobindo, MSN, and Zydus are ongoing, with favorable judgments received against MSN and Aurobindo in June 2025, both under appeal[59](index=59&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - A securities class action, opt-out litigation, and a derivative suit are pending, all related to alleged misstatements regarding pimavanserin for dementia-related psychosis[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk) - The company cannot predict outcomes or estimate losses for these legal proceedings[70](index=70&type=chunk) [10. Leases](index=20&type=section&id=10.%20Leases) This note provides details on the company's operating lease commitments for facilities and equipment, including lease costs, cash flow information, and the maturity schedule of lease liabilities. It also highlights a new corporate office lease in Princeton, New Jersey, expected to commence in Q1 2026 Net Operating Lease Cost (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $3,869 | $2,826 | $7,907 | $5,636 | | Operating sublease income | $(594) | $(385) | $(1,183) | $(670) | | Net operating lease cost | $3,275 | $2,441 | $6,724 | $4,966 | Total Operating Lease Liabilities (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Current portion included in accrued liabilities | $11,693 | $9,958 | | Operating lease liabilities | $44,601 | $42,037 | | Total operating lease liabilities | $56,294 | $51,995 | - The company entered into a new lease agreement for corporate office space in Princeton, New Jersey, with total minimum lease payments of **$24.5 million** over 12 years and 2 months, expected to commence around Q1 2026[77](index=77&type=chunk) [11. Income Taxes](index=24&type=section&id=11.%20Income%20Taxes) This note details the income tax expense and effective tax rates for the three and six months ended June 30, 2025 and 2024, explaining variations from the U.S. federal statutory rate due to federal and state income tax expense offset by valuation allowance - For the three months ended June 30, 2025, income tax expense was **$13.5 million** on pre-tax income of **$40.2 million**, resulting in an effective tax rate of **33.7%**[79](index=79&type=chunk) - For the three months ended June 30, 2024, income tax expense was **$3.8 million** on pre-tax income of **$37.2 million**, resulting in an effective tax rate of **10.2%**[79](index=79&type=chunk) - For the six months ended June 30, 2025, income tax expense was **$22.3 million** on pre-tax income of **$68.0 million**, resulting in an effective tax rate of **32.9%**[80](index=80&type=chunk) - For the six months ended June 30, 2024, income tax expense was **$8.2 million** on pre-tax income of **$58.2 million**, resulting in an effective tax rate of **14.1%**[80](index=80&type=chunk) [12. Segment Reporting](index=24&type=section&id=12.%20Segment%20Reporting) This note confirms that the company operates as a single business segment focused on the development and commercialization of innovative medicines, with substantially all revenues generated from North America. It provides a breakdown of net revenues by product - The Company operates as a single business segment: development and commercialization of innovative medicines[36](index=36&type=chunk)[81](index=81&type=chunk) - Substantially all revenues for the three and six months ended June 30, 2025 and 2024, were generated from customers in North America[81](index=81&type=chunk) Net Revenue by Product (in thousands) | Product | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | NUPLAZID | $168,479 | $157,409 | $328,199 | $287,332 | | DAYBUE | $96,087 | $84,554 | $180,683 | $160,462 | | Total | $264,566 | $241,963 | $508,882 | $447,794 | [13. Subsequent Event](index=24&type=section&id=13.%20Subsequent%20Event) This note discloses the enactment of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, which makes permanent key elements of the Tax Cuts and Jobs Act, including domestic research cost expensing, business interest expense limitation, and 100% bonus depreciation. The company will evaluate its impact on deferred tax balances in Q3 2025 - The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025[82](index=82&type=chunk) - OBBBA makes permanent domestic research cost expensing, the business interest expense limitation, and 100% bonus depreciation[82](index=82&type=chunk) - The company will evaluate the effects of OBBBA on deferred tax balances and other financial statements in the three months ended September 30, 2025[82](index=82&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=26&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial condition and operational results, highlighting key revenue drivers, expense trends, liquidity, and capital resources. It covers the performance for the three and six months ended June 30, 2025, compared to the prior year, and discusses factors influencing future performance [Overview](index=26&type=section&id=Overview) Acadia Pharmaceuticals is a biopharmaceutical company focused on CNS disorders and rare diseases, with two commercial products, NUPLAZID and DAYBUE, generating $508.9 million in net product sales for the first six months of 2025. The company has a pipeline of product candidates, including ACP-101 (Prader-Willi syndrome) and ACP-204 (Alzheimer's disease psychosis), and has an accumulated deficit of $2.2 billion as of June 30, 2025 - Acadia Pharmaceuticals focuses on CNS disorders and rare diseases with two core franchises: neuroscience (NUPLAZID) and neuro-rare diseases (DAYBUE)[86](index=86&type=chunk)[87](index=87&type=chunk) Net Product Sales (in millions) | Product | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------- | :----------------------------- | :----------------------------- | | Total Net Product Sales | $508.9 | $447.8 | - Key pipeline candidates include ACP-101 for Prader-Willi syndrome (Phase 3 enrollment completed, top-line results expected early Q4 2025), ACP-204 for Alzheimer's disease psychosis (Phase 2 initiated), and essential tremor (ACP-711), major depressive disorder (ACP-211), and GPR88 agonist (ACP-271) in earlier stages[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) - The company had an accumulated deficit of **$2.2 billion** as of June 30, 2025, and expects to incur operating losses due to R&D and commercialization costs[92](index=92&type=chunk) [Financial Operations Overview](index=27&type=section&id=Financial%20Operations%20Overview) This section outlines the company's revenue sources from NUPLAZID and DAYBUE, the components of cost of product sales (including zero-cost inventory impact), and the nature of research and development expenses (external service providers, personnel, post-marketing requirements, pipeline advancement). It also describes selling, general and administrative expenses and the factors influencing income tax expense, including the impact of the recently enacted OBBBA - Net product sales are derived from NUPLAZID (approved April 2016) and DAYBUE (approved March 2023 in US, October 2024 in Canada)[94](index=94&type=chunk) - Cost of product sales includes manufacturing, freight, duties, overhead, and license fees/royalties (e.g., to Neuren for DAYBUE)[95](index=95&type=chunk) - The use of initial pre-launch 'zero cost inventories' for DAYBUE affects the cost of sales percentage[96](index=96&type=chunk) - Research and development expenses are primarily fees to external service providers, personnel costs, and facilities expenses, charged as incurred[97](index=97&type=chunk) - Activities focus on pimavanserin, trofinetide, ACP-101, ACP-204, and other early-stage candidates, including post-marketing requirements (PMRs) for DAYBUE[98](index=98&type=chunk) - Selling, general and administrative expenses include commercial personnel, sales forces, medical education, executive, finance, business development, legal, and patent costs, and are influenced by market dynamics[101](index=101&type=chunk) - Income tax expense primarily consists of current federal and state tax due to a full valuation allowance against net deferred tax assets[102](index=102&type=chunk) - The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, will impact financial statements from Q3 2025, affecting domestic R&D expensing, interest expense, and bonus depreciation[103](index=103&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Operating results fluctuate due to commercial activities, pipeline development, and macroeconomic factors. For Q2 2025, net product sales increased to $264.6 million (from $242.0 million in Q2 2024), driven by growth in both NUPLAZID and DAYBUE unit sales and higher average net selling prices. R&D expenses increased to $78.0 million (from $76.2 million), mainly for ACP-204 and ACP-101. SG&A expenses rose to $133.5 million (from $117.1 million) due to increased commercial expenditures for both products - Operating results are expected to fluctuate due to commercial activities, pipeline development, DAYBUE PMRs, sales allowances, and geopolitical/macroeconomic developments[105](index=105&type=chunk) Product Sales, Net (in millions) | Product | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | NUPLAZID | $168.5 | $157.4 | $328.2 | $287.3 | | DAYBUE | $96.1 | $84.6 | $180.7 | $160.5 | | Total | $264.6 | $242.0 | $508.9 | $447.8 | - Cost of product sales remained relatively flat at approximately **8%** of net product sales for the three months ended June 30, 2025 and 2024[108](index=108&type=chunk) - For the six months, it was **8%** in 2025 and **9%** in 2024[109](index=109&type=chunk) - The impact of previously expensed 'zero cost inventory' for DAYBUE was approximately **$1.5 million** for the three months and **$4.4 million** for the six months ended June 30, 2025[115](index=115&type=chunk)[116](index=116&type=chunk) - Research and development expenses increased to **$78.0 million** (Q2 2025) from **$76.2 million** (Q2 2024), and to **$156.2 million** (H1 2025) from **$135.9 million** (H1 2024), primarily due to increased expenditures for ACP-204 and ACP-101, and personnel expenses[110](index=110&type=chunk)[118](index=118&type=chunk) - Selling, general and administrative expenses increased to **$133.5 million** (Q2 2025) from **$117.1 million** (Q2 2024), and to **$259.9 million** (H1 2025) from **$225.1 million** (H1 2024), driven by increased expenditures for NUPLAZID and DAYBUE in the U.S., including DAYBUE team expansion[111](index=111&type=chunk)[119](index=119&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company funds operations through product sales, equity securities, and interest income, expecting current resources to be sufficient for the next 12 months. Future capital requirements depend on pipeline advancement, business development, and commercialization costs. Geopolitical and macroeconomic developments pose risks to obtaining additional financing, which, if needed, may dilute existing stockholders - Operations are funded primarily by product sales, equity securities, and interest income[120](index=120&type=chunk) - Current cash, cash equivalents, and investment securities, along with anticipated product sales, are expected to fund planned operations through and beyond the next 12 months[120](index=120&type=chunk) - Future capital requirements are dependent on costs for acquiring product candidates, R&D programs, collaboration milestones, commercialization efforts, regulatory approvals, manufacturing, and litigation[121](index=121&type=chunk)[128](index=128&type=chunk) - Geopolitical and macroeconomic developments (e.g., Ukraine-Russia conflict, Middle East conflicts, tariffs) could limit access to additional financing, potentially leading to delays or reductions in programs[122](index=122&type=chunk) [Material Cash Requirements](index=35&type=section&id=Material%20Cash%20Requirements) The company's material cash requirements include operational, manufacturing, and capital expenditures, funded by current financial resources and anticipated product sales. Key uses of cash involve employee and consultant payments, clinical trials, marketing, infrastructure, and investments in facilities. Contractual obligations include collaboration/licensing fees and potential rebates under the Inflation Reduction Act of 2022 - Primary uses of cash include paying employees and consultants, administering clinical trials, marketing products, and providing technology/facility infrastructure[125](index=125&type=chunk) - Contractual obligations include upfront license fees, development and commercial milestone payments, and royalties from collaboration/licensing agreements[126](index=126&type=chunk) - The company expects to receive its first invoice for rebates under the Inflation Reduction Act of 2022 (IRA) from Medicare Part D unit sales in 2025[127](index=127&type=chunk) [Cash Flows](index=37&type=section&id=Cash%20Flows) As of June 30, 2025, cash, cash equivalents, and investment securities totaled $762.0 million, an increase of $6.0 million from December 31, 2024. This was driven by $84.3 million in net cash from operating activities (up from $54.1 million in H1 2024) and $17.8 million from financing activities (up from $4.6 million), partially offset by $167.3 million used in investing activities (up from $70.2 million), primarily due to increased investment security purchases - Total cash, cash equivalents, and investment securities increased by **$6.0 million** to **$762.0 million** at June 30, 2025, from **$756.0 million** at December 31, 2024[129](index=129&type=chunk) - Net cash provided by operating activities was **$84.3 million** for the six months ended June 30, 2025, an increase from **$54.1 million** in the prior year, primarily due to increased product revenue[129](index=129&type=chunk) - Net cash used in investing activities increased to **$167.3 million** for the six months ended June 30, 2025, from **$70.2 million** in the prior year, mainly due to increased net purchases of investment securities[130](index=130&type=chunk) - Net cash provided by financing activities increased to **$17.8 million** for the six months ended June 30, 2025, from **$4.6 million** in the prior year, primarily due to increased proceeds from employee stock option exercises[131](index=131&type=chunk) [Off-Balance Sheet Arrangements](index=37&type=section&id=Off-Balance%20Sheet%20Arrangements) The company has not engaged in any relationships with unconsolidated entities or financial partnerships that would result in material off-balance sheet arrangements, thus not being materially exposed to related financing, liquidity, market, or credit risks - The company has not engaged in any material off-balance sheet arrangements with unconsolidated entities or financial partnerships[132](index=132&type=chunk) [Recent Accounting Pronouncements](index=37&type=section&id=Recent%20Accounting%20Pronouncements) For a discussion of recent accounting pronouncements, the company refers to Note 2, Summary of Significant Accounting Policies, in its Annual Report - Refer to Note 2, Summary of Significant Accounting Policies, in the Annual Report for a discussion of recent accounting pronouncements[133](index=133&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=37&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risk is interest rate risk, managed by investing excess cash in investment-grade, interest-bearing securities with short maturities. A 10 percent change in interest rates as of June 30, 2025, would not have a material effect on the fair value of its investment portfolio - The company invests excess cash in investment-grade, interest-bearing securities (money market funds, U.S. treasury notes, government sponsored enterprises) with maturities generally less than one year[134](index=134&type=chunk) - All investment securities have a credit rating of at least Aa3/AA- or better, or P-1/A-1 or better[134](index=134&type=chunk) - A **10 percent** change in interest rates as of June 30, 2025, would not have a material effect on the fair value of the investment portfolio[134](index=134&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=38&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, concluding they were effective at a reasonable assurance level. No material changes to internal control over financial reporting were identified during the last fiscal quarter - Disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of June 30, 2025[136](index=136&type=chunk) - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the latest fiscal quarter[137](index=137&type=chunk) [PART II. OTHER INFORMATION](index=39&type=section&id=PART%20II.%20OTHER%20INFORMATION) Contains additional disclosures not covered in the financial statements, including legal proceedings, risk factors, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=39&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section incorporates by reference the detailed information regarding legal proceedings from Note 9 to the unaudited condensed consolidated financial statements - Information on legal proceedings is incorporated by reference from Note 9 to the unaudited condensed consolidated financial statements[140](index=140&type=chunk) [ITEM 1A. RISK FACTORS](index=39&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section outlines significant risks and uncertainties that could materially and adversely affect the company's business, financial condition, results of operations, and future growth prospects. These risks span product commercialization, drug development, business operations, third-party relationships, intellectual property, government regulation, and common stock volatility [Summary Risk Factors](index=39&type=section&id=Summary%20Risk%20Factors) The company faces numerous risks, including high dependence on successful commercialization of its products, challenges in achieving market acceptance, the need for regulatory approval outside North America for trofinetide, potential decreases in payor coverage, ongoing regulatory requirements, reliance on third-party distributors, the unpredictable nature of drug development, and the need for additional financing - Prospects are highly dependent on successful commercialization of NUPLAZID and DAYBUE; failure to maintain or increase sales could materially adversely affect the business[143](index=143&type=chunk)[144](index=144&type=chunk) - Risks include products not gaining maximal acceptance, inability to obtain regulatory approval for trofinetide outside North America, diminished revenues due to decreased payor coverage or high patient out-of-pocket costs[143](index=143&type=chunk) - Drug development is long, expensive, and unpredictable with a high risk of failure; there is no guarantee of success in clinical trials or regulatory approval for product candidates[143](index=143&type=chunk)[172](index=172&type=chunk) - The company has a history of net losses and may require additional financing, which, if unavailable, could hinder business plans and future efforts[143](index=143&type=chunk)[189](index=189&type=chunk)[191](index=191&type=chunk) [Risks Related to Our Products and Product Candidates](index=41&type=section&id=Risks%20Related%20to%20Our%20Products%20and%20Product%20Candidates) Commercial success of NUPLAZID and DAYBUE is subject to risks such as patient and physician acceptance, regulatory approval scope, reimbursement adequacy, and potential adverse side effects. Estimating market potential is difficult due to underdiagnosis and adherence issues. Clinical trials for product candidates like ACP-101 and ACP-204 face high failure rates and potential delays, with unfavorable outcomes significantly impacting programs and stock value. Post-marketing studies for DAYBUE and regulatory approvals outside the U.S. are critical, and expanded access programs introduce additional risks - Commercial success depends on patient/physician acceptance, FDA approval scope, reimbursement, and managing adverse side effects[146](index=146&type=chunk) - Negative perceptions or inconsistent patient experiences could impact adoption[146](index=146&type=chunk) - Market potential for NUPLAZID and DAYBUE is difficult to estimate due to factors like underdiagnosis (PDP), patient adherence/persistence (Rett syndrome), and potential negative publicity (NUPLAZID's boxed warning)[149](index=149&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) - Failure to obtain regulatory approval for trofinetide outside North America (e.g., EU) would limit commercial revenues[155](index=155&type=chunk) - Drug development is unpredictable; preliminary results do not guarantee final success[172](index=172&type=chunk) - Past failures include Phase 3 ADVANCE-2 and Phase 2 Pediatric Trial for pimavanserin[173](index=173&type=chunk) - Unfavorable outcomes in ongoing trofinetide programs or DAYBUE post-marketing studies could be major setbacks[175](index=175&type=chunk) - Clinical trials face risks of delays, suspensions, or terminations due to regulatory requirements, patient enrollment, adverse events, or supply issues, increasing costs and delaying revenue generation[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk) [Risks Related to Our Business](index=51&type=section&id=Risks%20Related%20to%20Our%20Business) The company's growth depends on developing, acquiring, or in-licensing new product candidates, a process fraught with integration challenges and high costs. Despite a history of net losses and an accumulated deficit of $2.2 billion, the company expects current resources to fund operations for the next 12 months, but future capital needs are uncertain. Operational results are expected to fluctuate due to various factors, including geopolitical and macroeconomic developments. Changes in tax laws, such as the OBBBA, and limitations on net operating loss carryforwards could increase tax liabilities. Global economic conditions, international trade policies (tariffs, supply chain reliance on foreign manufacturers), and catastrophic events pose significant operational and financial risks. Compliance with evolving laws and regulations, including corporate governance and environmental standards, also incurs substantial costs and risks - Failure to develop, acquire, or in-license new product candidates or products, or difficulties in integrating them, could limit business prospects and incur significant costs without guaranteed benefits[187](index=187&type=chunk)[188](index=188&type=chunk) - The company has an accumulated deficit of approximately **$2.2 billion** as of June 30, 2025, and expects future operating losses, requiring significant revenues to achieve sustained profitability[189](index=189&type=chunk)[190](index=190&type=chunk) - Future capital requirements are substantial and depend on R&D programs, commercialization efforts, and business development[191](index=191&type=chunk) - Geopolitical and macroeconomic developments could limit access to additional financing[192](index=192&type=chunk) - Operating results are expected to fluctuate due to commercial success, R&D costs, PMRs, market dynamics, and geopolitical/macroeconomic conditions[193](index=193&type=chunk)[198](index=198&type=chunk) - Changes in tax laws (e.g., OBBBA), limitations on net operating loss carryforwards (Sections 382/383), and potential reallocation of taxable income among subsidiaries could increase overall tax liability[197](index=197&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk) - Unfavorable global economic conditions (inflation, credit market volatility) and international trade policies (tariffs, reliance on foreign suppliers like China for APIs) could adversely affect business, increase costs, and disrupt supply chains[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk) [Risks Related to Our Relationships with Third Parties](index=62&type=section&id=Risks%20Related%20to%20Our%20Relationships%20with%20Third%20Parties) The company relies heavily on third-party collaborations for product development and commercialization, which carry risks of insufficient resources, intellectual property disputes, and termination. Dependence on Contract Research Organizations (CROs) for clinical trials and third-party manufacturers for product supply exposes the company to potential delays, increased costs, and regulatory non-compliance. Disruptions in the supply chain, particularly from geopolitical and macroeconomic factors, could jeopardize commercialization and development efforts - Dependence on collaborations for product candidates and commercialization (e.g., DAYBUE outside U.S.) carries risks that collaborators may fail to develop/commercialize, lack resources, misuse IP, or terminate agreements[216](index=216&type=chunk)[217](index=217&type=chunk) - Conflicts or disputes in collaborations (e.g., payments, strategy, IP ownership) could impair program progress, harm reputation, and reduce revenues[219](index=219&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk) - Reliance on CROs for clinical trials and data analysis poses risks of delays, suspensions, or terminations if they fail to perform, meet regulatory obligations, or provide accurate data[224](index=224&type=chunk)[225](index=225&type=chunk) - Dependence on third-party manufacturers (e.g., Patheon, Siegfried, Corden, FIS, CoreRx) for products and product candidates creates risks if facilities are not approved, manufacturers fail to comply with cGMPs, or supply chains are disrupted (e.g., DAYBUE API takes two years to produce)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk)[233](index=233&type=chunk) [Risks Related to Our Intellectual Property](index=68&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) The company's competitive position relies on robust intellectual property protection, primarily patents and trade secrets. However, patents are susceptible to challenges (e.g., ANDA filings, post-issuance reviews), and trade secrets are difficult to protect. Litigation concerning infringement or misappropriation is costly and time-consuming, potentially leading to significant damages or commercialization limitations. Changes in patent laws, such as the America Invents Act, and varying international protections further complicate IP defense - Commercial success depends on obtaining and maintaining intellectual property rights, including patents and trade secrets, and defending them against third-party challenges[235](index=235&type=chunk) - Patent applications may not result in issued patents, or issued patents may be challenged, invalidated, or circumvented[236](index=236&type=chunk) - Competitors may develop similar technologies or design around existing patents[236](index=236&type=chunk) - Trade secrets are difficult to protect, and confidentiality agreements with employees and partners may not prevent unauthorized disclosure, potentially limiting competitive advantage[242](index=242&type=chunk) - Intellectual property litigation is substantial in the biotechnology and pharmaceutical industries, including ANDA lawsuits and post-issuance review proceedings (e.g., IPRs) under the America Invents Act, which often favor challengers[243](index=243&type=chunk)[244](index=244&type=chunk)[245](index=245&type=chunk) - An unfavorable outcome in IP disputes could lead to significant damages, injunctive relief, or costly licensing arrangements, preventing commercialization of products[247](index=247&type=chunk)[249](index=249&type=chunk) - Changes in patent laws (e.g., America Invents Act) and varying international protections can limit exclusivity periods and make it harder to obtain or defend patents[251](index=251&type=chunk) [Risks Related to Government Regulation and Our Industry](index=72&type=section&id=Risks%20Related%20to%20Government%20Regulation%20and%20Our%20Industry) Healthcare reform measures, including the ACA and IRA, may negatively impact profitability by increasing rebates, lowering reimbursement, and introducing drug price negotiations. The OBBBA could further reduce Medicaid spending and ACA marketplace enrollment. The company faces liability for off-label promotion and non-compliance with healthcare fraud and abuse laws, false claims laws, and data privacy regulations (e.g., HIPAA, GDPR, CCPA). Disruptions at regulatory agencies, intense competition, and product liability lawsuits also pose significant risks. Cybersecurity threats, including ransomware and supply-chain attacks, could compromise sensitive data and disrupt operations, leading to regulatory actions, litigation, and reputational harm - Healthcare reform measures (ACA, IRA) may negatively impact profitability through increased rebates, Medicare Part D changes, and drug price negotiations[254](index=254&type=chunk)[255](index=255&type=chunk)[257](index=257&type=chunk) - NUPLAZID could be subject to negotiated prices as early as 2029[257](index=257&type=chunk) - The One Big Beautiful Bill Act (OBBBA) is expected to reduce Medicaid spending and enrollment, narrow ACA marketplace access, and decline to extend enhanced premium tax credits, potentially reducing the number of insured Americans[256](index=256&type=chunk) - The company is subject to stringent federal, state, and foreign healthcare laws (Anti-Kickback Statute, False Claims Act, HIPAA, Physician Payments Sunshine Act) and data privacy regulations (GDPR, CCPA, PIPL)[262](index=262&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk) - Non-compliance could lead to substantial penalties, fines, and exclusion from government programs[268](index=268&type=chunk) - Risks include liability for off-label promotion, disruptions at FDA and other government agencies, intense competition from other pharmaceutical companies, and product liability lawsuits[280](index=280&type=chunk)[284](index=284&type=chunk)[289](index=289&type=chunk)[293](index=293&type=chunk) - Information technology systems and data are vulnerable to cyberattacks (ransomware, social engineering, supply-chain attacks), personnel misconduct, and AI-enhanced threats, potentially leading to data breaches, operational disruptions, regulatory actions, litigation, and reputational harm[297](index=297&type=chunk)[298](index=298&type=chunk)[299](index=299&type=chunk)[300](index=300&type=chunk)[303](index=303&type=chunk)[306](index=306&type=chunk)[308](index=308&type=chunk)[311](index=311&type=chunk) [ITEM 5. OTHER INFORMATION](index=92&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section discloses that Mark C. Schneyer, Executive Vice President and Chief Financial Officer, adopted a Rule 10b5-1 trading arrangement on May 19, 2025, for the sale of up to 64,625 shares of common stock, effective from August 18, 2025, to August 18, 2026 - Mark C. Schneyer, EVP and CFO, adopted a Rule 10b5-1 trading arrangement on May 19, 2025[322](index=322&type=chunk) - The arrangement provides for the sale of up to **64,625 shares** of common stock[322](index=322&type=chunk) - The trading arrangement is effective from August 18, 2025, until August 18, 2026, or until all transactions are completed[322](index=322&type=chunk) [ITEM 6. EXHIBITS](index=94&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including corporate governance documents, compensation policies, lease agreements, equity incentive plan forms, certifications, and financial statements in iXBRL format - Exhibits include Amended and Restated Certificate of Incorporation and Bylaws, common stock certificate forms, Non-Employee Director Compensation Policy, Lease and Lease Agreement, Equity Incentive Plan forms, CEO and CFO certifications (302 and 906), and iXBRL formatted financial statements[324](index=324&type=chunk) [SIGNATURES](index=96&type=section&id=SIGNATURES) This section contains the official signatures, confirming due authorization for the filing of the report on behalf of Acadia Pharmaceuticals Inc. by its Executive Vice President and Chief Financial Officer - The report is duly signed on behalf of Acadia Pharmaceuticals Inc. by Mark C. Schneyer, Executive Vice President and Chief Financial Officer, on August 6, 2025[330](index=330&type=chunk)