ACAD

ACAD has transformed from a perennial money-loser into a genuinely profitable specialty pharma: FY2025 revenue of $1.07B (+11.9% YoY) and net income of $391M (+72.7%) translate to a 36.5% net margin and 31.9% ROE. The two-franchise model — NUPLAZID for Parkinson's disease psychosis and DAYBUE (trofinetide) for Rett syndrome — generated $1,071.5M in product sales per MD&A, and the balance sheet is fortress-like: $1.23B equity against just $337M total liabilities (0.27x leverage), with negligible debt. At $23.36, the stock trades for 10.2x trailing EPS and 3.7x sales — a discount to specialty-pharma peers that reflects real but knowable risks, not broken fundamentals.

The filing language sharpens the picture in two important ways. First, the Legal Proceedings section confirms ACAD has settled the NUPLAZID Hatch-Waxman litigation with Hetero, granting generic entry on February 27, 2038 (subject to earlier-launch triggers) — that is a remarkably long patent runway for the franchise that anchors the P&L, and it materially de-risks the cash-cow side of the story versus a typical small-pharma situation. Second, the MD&A discloses that ACAD still owes Neuren up to $350M in remaining milestones plus tiered double-digit royalties on DAYBUE — a real drag on go-forward DAYBUE economics that the headline net margin doesn't capture, and likely part of why operating income fell 54.6% YoY to $105M even as net income surged (the net line is being flattered by a tax benefit / deferred-tax revaluation, not pure operating leverage).