Drug news a bad trip for investors.
Acadia Pharmaceuticals (NASDAQ: ACAD, Stock Forum) shares lost about half of its market value when news hit the market that the company's experimental schizophrenia drug proved no better than existing drugs. The shares crashed as low as $4.30 against a 52-week high of $17.33.
Investors had a massive bet on the drug, and no wonder. In the last quarter, the company lost $17.6 million on $800,000 in revenue. ACAD still has a Parkinson's disease treatment, but that is in Phase III trials and there is no guarantee that it will make it to market.
In many ways, ACAD is typical of the risks that face biotech investors. The company's success has a foundation in two or three products, none of which may make it to market. Those that do get FCC approval may also face an unknown competitive environment.
Acadia has $106 million on its balance sheet, but burned through about $20 million last quarter. That means the firm will be facing real problems a year from now, if it does not come up with something spectacular.
