Winners and Losers - March 19th to March 23rd (ACAD, SCHL)

By Albert Phung | March 23, 2007 AAA


Acadia Pharmaceuticals Inc. (Nasdaq: ACAD) has been performing very exceptionally this week as evident by how its share price moved from $6.69 to about $14.45 (or a gain of 100+%).

When it comes to pharmaceutical companies, a doubling in share price over a week's time usually indicates that either: a) the company is receiving a very lucrative buy out offer or b) one of the company's treatments or drug candidates has been given a passing grade for some clinical trial. In this case, Acadia's drug candidate ACP-103 passed a Phase II clinical trial where it was found that the drug was statistically significant in creating a reduction in schizophrenic symptoms when combined in a treatment involving some existing drugs.

Where does this leave Acadia now? Well, the next logical step would be to proceed in a larger scale phase III clinical trial. However, due to the difficulty and high costs involved with operating this type of clinical trial, many (including the management at Acadia) would wish to find a partner to help co-develop the drug. If the drug works as well as the studies have come to indicate, it should not be that difficult to find a major drug company to take part in a multi-million (if not billion) dollar product.

While it could be some time before this drug will be approved by the FDA, this is still very encouraging news for the schizophrenics and their families, as better treatments means a better opportunity at having a normal life.


Book publisher Scholastic Corp (Nasdaq: SCHL) saw a substantial decline in its share price this week as it released its quarterly earnings. Its share price fell from $35.10 to $31.11 (or a decline of 11%) as it reported that earnings for the quarter ending on Feb 28th resulted in a loss of $0.18 per share, which was a $0.10 lower than consensus estimates (analysts expected a loss of $0.08 per share).

The bad news doesn't end the company also lowered its full year earnings from $1.55-$1.85 per share down to $1.40–$1.60 per share (analysts originally expected earnings of $1.74 per share). The company attributes the increased losses to higher bad debt and marketing costs incurred through the last year. The key point to take away from Scholastic was the lowered guidance was the result of costs not being reduced at the rate that everyone was expecting. More evidence of this, can be observed by the fact that the company's revenue forecasts did not change (it remained $2.1 – $2.2 billion).

It is not to say that SCHL's future will be totally bleak. As the final exploits of the world's most famous boy wizard is released in July (Scholastic publishes Harry Potter), perhaps there may be a large enough in the demand for the book that its next fiscal year will be a much different story.

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