Buy this biotech when it is in trouble

Acadia (ACDA) used to be a Wall Street darling not long ago but it got decimated lately due to significant in house problems with the share prices dropping from $46 to $34. People got euphoric about its leading drug, Nuplazid (pimavanserin) for the indication for Parkinson’s disease psychosis (PDP), an indication that is currently having no good drug available and is poorly treated by off-label use of antipsychotics that cause a host of unwanted side effects. Obviously this is a significant unmet medical need and will be very profitable (estimated to reach $1B sales in a few years), especially considering there is not much competition in the foreseeable future in the horizon. Most importantly, they have successfully completed a phase 3 study for this indication. So why is the Street suddenly losing the interest on Acadia and running away emass? It appears it is due to the 2 major concerns: they have to delay the submission because of housekeeping issues related to the chemistry, manufacturing and controls (CMC) section of the NDA for Nuplazid and then the sudden resignation of its CEO that was most likely related to the submission issues. This turmoil for Acadia is certainly painful for those who have already got in, especially those who entered when the euphoria reached its climax with a high share price. But for those who have stayed on the sidelines like myself, this is a great tradable opportunity with a very successful odds of winning. One thing we have to learn in the stock market is to find good companies which are facing significant short-term but resolvable problems. We all want to buy good stocks at good prices but no one is stupid to sell you good stocks with discount without specific concerns. But crisis and challenges are always associated with opportunities as long as we are clear what and how we want to play with them. I think the market is offering you a great opportunity at the moment. I don’t know how soon they will overcome their challenges but to me it is just a matter of time and when the initial shock goes away, the renewed interest will come back to bid up its price. There is also the possibility some big companies may even become interested in acquiring Acadia. Of course, this is a high risk speculation, especially in the short term. I don't know if it has already bottomed and it may continue to go down from here. Just be prepared for the volatility and mind your position size. Using dollar averaging may be a good way to initiate your position for it.