We Might See A Profit From ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) Soon

ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. ACADIA Pharmaceuticals Inc., a biopharmaceutical company, focuses on the development and commercialization innovative medicines that address unmet medical needs in central nervous system (CNS) disorders and rare diseases in the United States. The US$2.6b market-cap company posted a loss in its most recent financial year of US$61m and a latest trailing-twelve-month loss of US$1.7m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which ACADIA Pharmaceuticals will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for ACADIA Pharmaceuticals

Consensus from 19 of the American Biotechs analysts is that ACADIA Pharmaceuticals is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of US$101m in 2024. So, the company is predicted to breakeven approximately a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 42% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for ACADIA Pharmaceuticals given that this is a high-level summary, though, keep in mind that typically a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. ACADIA Pharmaceuticals currently has no debt on its balance sheet, which is rare for a loss-making biotech, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

This article is not intended to be a comprehensive analysis on ACADIA Pharmaceuticals, so if you are interested in understanding the company at a deeper level, take a look at ACADIA Pharmaceuticals' company page on Simply Wall St. We've also put together a list of important aspects you should look at:

1. Valuation: What is ACADIA Pharmaceuticals worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether ACADIA Pharmaceuticals is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on ACADIA Pharmaceuticals’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com