Buyout potential
I think that ACADIA’s drug could be huge, and there are two big pharma companies that may want to add this drug to their pipeline. Two of the companies that would consider buying out ACADIA are Pfizer Inc. (NYSE:PFE) and Merck & Co., Inc. (NYSE:MRK). I think both these companies need a new additional capital after suffering huge blows last year.
Pfizer is having a lot of problems with the pipeline. Pfizer Inc. (NYSE:PFE) has a market cap of $236.7 billion, and the company has had sales of $57.6 billion over the last 12 months. Despite that, Pfizer needs a new blockbuster drug to keep its revenue in good shape. I think that Pfizer acquiring ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) Pharmaceuticals would be a good fit.
One thing that I believe will push Pfizer to seek acquisitions is that the company is losing its patent on Lipitor. Lipitor is used to treat patients with Cholesterol problems. The patent for Lipitor expired on Nov. 30, 2012, and now, it seems that the company will need to find a new drug to bring in huge income once again. Lipitor, at its peak in 2010, earned Pfizer $10.7 billion. Pimavanserin being acquired, and being sold to millions of Parkinson’s patients, could fill that gap.
Merck & Co., Inc. (NYSE:MRK) has had some problems as well over the past few years. Merck, like Pfizer Inc. (NYSE:PFE), is also facing intense competition from generic drug makers with its top selling drug losing its patent. Merck’s drug, that went off patent in August last year, is called Singulair. Singulair is used to treat patients with asthma and allergies. So, what did the loss of Singular mean for the company? Well, Merck reported that in the last quarter of 2012, Singulair had lost 67% of its revenue, only making $480 million in sales.
Merck also has been facing substantial problems with the FDA in getting pipeline drugs approved. In June last year, Merck had been seeking FDA approval for a drug that is used to treats patients with soft tissue sarcoma, known as Ridaforolimus. The FDA rejected the drug claiming that the efficacy was not enough to counter the severe side effects of the drug. For these reasons, I think that Merck needs to add something to its pipeline after its most recent failures to keep the company going. If ACADIA is acquired by Merck & Co., Inc. (NYSE:MRK), it could be a huge boost in revenue.
Final thoughts
ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) has released some amazing results for Parkinson’s disease psychosis. With the huge amount of patients that can be treated with Pimavanserin, I don’t doubt that some big pharma company will put a bid for ACADIA. Not only will they get Pimavanserin, but they will also obtain a pipeline of other drugs. As mentioned before, Pimavanserin can be expanded to Alzheimer’s patients as well. This biotech is poised to rise higher in the coming months,and I would say that ACADIA is still a good long-term buy for investors who are patient enough to see its full potential.
The article This Stock Should Get Better in the Long Run originally appeared on Fool.com and is written by Terry Chrisomalis.
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