Acadia Pharmaceutical Inc.’s (ACAD) stock has been pummeled during the first four months of 2018, with the stock down nearly 46 percent on the year, and nearly 58 percent off its highs over the past 52-weeks. The company has come under scrutiny after CNN reported that Acadia’s only marketable drug, Nuplazid for the treatment of Parkinson’s disease psychosis (PDP), was responsible for hundreds of deaths, resulting in shares plummeting on the news.
Acadia’s upper management has a very different point regarding CNN’s reporting, with members of the upper management all choosing to exercise stock options on April 18, when shares were trading below $20. However, management did not exercise the options, and then sell them, no, they exercised those options and acquired the stock, choosing to hold the shares, in what appears to be a vote of confidence.
Insider transactions reported on form 4’s can often be a good indication of just what a management team or directors think about the valuation of their company. Sometimes during a time of turmoil, watching the transactions insiders are making can send clues about what management or directors think about a stock price, and where it is heading.
Management Buys Shares
Acadia’s management sent a convincing statement, putting their money where their mouth is, with several upper management team member exercising stock options, and not disposing of them, but acquiring them and holding the shares. The Chief Executive Officer, Executive Vice President and General Counsel, Chief Financial Officer, Chief Commercial Officer, and Head of R&D, all did just that, acquiring a total of about 325,000 shares of stock, at a price of $19.98, about $6.5 million.
The management stepped up in a period of adversity after a CNN article, cited a database called the FDA’s Adverse Event Reporting System (FAERS), noting a total of 712 reported deaths in connection to Acadia’s drug, Nuplazid, the only drug approved for the treatment of PDP.
The drug has been on the market since May of 2016 after the FDA approved the drug for the indication. Patients who have psychosis, associated with Parkinson’s are typically at a very advanced stage of the disease and face a high mortality rate. The database, however, does not state the drug is the cause of the death, only that the drug was one of the drugs the patient was taking at the time. The data also show there are many different types of adverse events reported, with no one clear connection to the drug.
CNN later came out and reported again on April 25, that the FDA was going to re-examine the drug sparking a controversy, that the drug may even get pulled from the market, causing share to plunge even further.
Acadia stated on April 27 that Nuplazid is safe and efficacious while releasing new data from recent studies to support the claim. The company also noted that patients taking Nuplazid, are at advanced stages of the illness, with a very high mortality rate. The company also reported the FDA had made no changes regarding the current status of the drug.
The debate may still rage about the safety over the drug, but one thing seems clear, management, for now, is not backing down.