ACADIA Pharmaceuticals(ACAD) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Presents the unaudited condensed consolidated financial statements and related notes for Acadia Pharmaceuticals Inc ITEM 1. FINANCIAL STATEMENTS 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 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 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] - 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] Condensed Consolidated Statements of Comprehensive Income 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 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] - Net cash used in investing activities increased by $97.1 million, mainly due to increased net purchases of investment securities[18] - Net cash provided by financing activities increased by $13.2 million, driven by higher proceeds from common stock issuance[18] Condensed Consolidated Statements of Stockholders' Equity 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 Provides detailed explanations and disclosures for the figures presented in the condensed consolidated financial statements 1. Organization and Business 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] - NUPLAZID® (pimavanserin) approved by FDA in April 2016 for Parkinson's disease psychosis (PDP)[24] - DAYBUE™ (trofinetide) approved by FDA in March 2023 for Rett syndrome and by Health Canada in October 2024[24][25] 2. Basis of Presentation and Significant Accounting Policies 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] - Company actively monitors macroeconomic uncertainties (inflation, recession risks, geopolitical conflicts) and their potential impact[27] 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] - 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] 3. Earnings Per Share 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] 4. Stock-Based Compensation 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] 5. Balance Sheet Details 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 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] - 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][44] 7. Fair Value Measurements 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] 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 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] - 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] - 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] 9. Commitments and Contingencies 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] - Key license agreements include Neuren (DAYBUE, NNZ-2591), Stoke Therapeutics (SYNGAP1 program, MECP2 program discontinued), and Saniona (ACP-711 for essential tremor)[53][54][55][56] - 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][64][65] - 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][68][69][70] - The company cannot predict outcomes or estimate losses for these legal proceedings[70] 10. Leases 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] 11. Income Taxes 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] - 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] - 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] - 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] 12. Segment Reporting 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][81] - Substantially all revenues for the three and six months ended June 30, 2025 and 2024, were generated from customers in North America[81] 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 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] - OBBBA makes permanent domestic research cost expensing, the business interest expense limitation, and 100% bonus depreciation[82] - 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] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 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][87] 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][90][91] - 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] Financial Operations Overview 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] - Cost of product sales includes manufacturing, freight, duties, overhead, and license fees/royalties (e.g., to Neuren for DAYBUE)[95] - The use of initial pre-launch 'zero cost inventories' for DAYBUE affects the cost of sales percentage[96] - Research and development expenses are primarily fees to external service providers, personnel costs, and facilities expenses, charged as incurred[97] - Activities focus on pimavanserin, trofinetide, ACP-101, ACP-204, and other early-stage candidates, including post-marketing requirements (PMRs) for DAYBUE[98] - 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] - Income tax expense primarily consists of current federal and state tax due to a full valuation allowance against net deferred tax assets[102] - 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] Results of Operations 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] 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] - For the six months, it was 8% in 2025 and 9% in 2024[109] - 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][116] - 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][118] - 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][119] Liquidity and Capital Resources 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] - 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] - Future capital requirements are dependent on costs for acquiring product candidates, R&D programs, collaboration milestones, commercialization efforts, regulatory approvals, manufacturing, and litigation[121][128] - 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] Material Cash Requirements 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] - Contractual obligations include upfront license fees, development and commercial milestone payments, and royalties from collaboration/licensing agreements[126] - 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] Cash Flows 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] - 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] - 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] - 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] Off-Balance Sheet Arrangements 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] Recent Accounting Pronouncements 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] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 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] - All investment securities have a credit rating of at least Aa3/AA- or better, or P-1/A-1 or better[134] - 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] ITEM 4. CONTROLS AND PROCEDURES 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] - 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] PART II. OTHER INFORMATION Contains additional disclosures not covered in the financial statements, including legal proceedings, risk factors, and exhibits ITEM 1. LEGAL PROCEEDINGS 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] ITEM 1A. RISK FACTORS 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 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][144] - 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] - 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][172] - The company has a history of net losses and may require additional financing, which, if unavailable, could hinder business plans and future efforts[143][189][191] Risks Related to Our Products and Product Candidates 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] - Negative perceptions or inconsistent patient experiences could impact adoption[146] - 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][151][152][153] - Failure to obtain regulatory approval for trofinetide outside North America (e.g., EU) would limit commercial revenues[155] - Drug development is unpredictable; preliminary results do not guarantee final success[172] - Past failures include Phase 3 ADVANCE-2 and Phase 2 Pediatric Trial for pimavanserin[173] - Unfavorable outcomes in ongoing trofinetide programs or DAYBUE post-marketing studies could be major setbacks[175] - 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][181][182] Risks Related to Our Business 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][188] - 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][190] - Future capital requirements are substantial and depend on R&D programs, commercialization efforts, and business development[191] - Geopolitical and macroeconomic developments could limit access to additional financing[192] - Operating results are expected to fluctuate due to commercial success, R&D costs, PMRs, market dynamics, and geopolitical/macroeconomic conditions[193][198] - 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][200][201] - 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][203][204][205][206][207][208][209][210] Risks Related to Our Relationships with Third Parties 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][217] - Conflicts or disputes in collaborations (e.g., payments, strategy, IP ownership) could impair program progress, harm reputation, and reduce revenues[219][222][223] - 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][225] - 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][227][228][231][232][233] Risks Related to Our Intellectual Property 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] - Patent applications may not result in issued patents, or issued patents may be challenged, invalidated, or circumvented[236] - Competitors may develop similar technologies or design around existing patents[236] - Trade secrets are difficult to protect, and confidentiality agreements with employees and partners may not prevent unauthorized disclosure, potentially limiting competitive advantage[242] - 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][244][245] - An unfavorable outcome in IP disputes could lead to significant damages, injunctive relief, or costly licensing arrangements, preventing commercialization of products[247][249] - 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] Risks Related to Government Regulation and Our Industry 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][255][257] - NUPLAZID could be subject to negotiated prices as early as 2029[257] - 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] - 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][265][266][267][268] - Non-compliance could lead to substantial penalties, fines, and exclusion from government programs[268] - 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][284][289][293] - 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][298][299][300][303][306][308][311] ITEM 5. OTHER INFORMATION 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] - The arrangement provides for the sale of up to 64,625 shares of common stock[322] - The trading arrangement is effective from August 18, 2025, until August 18, 2026, or until all transactions are completed[322] ITEM 6. EXHIBITS 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] 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]