Why should an investor consider buying ACADIA Pharmaceuticals (ACAD 1.64%) stock? Not because the biotech's Nuplazid stormed out of the gate after winning FDA approval in April. It didn't. There are reasons to buy ACADIA, though. These three charts show why the biotech stock could become a winner over time.

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More Parkinson's disease psychosis patients

Roughly 1 million Americans currently have Parkinson's disease (PD). An estimated 40% of those patients also have Parkinson's disease psychosis, a condition in which PD patients experience hallucinations and delusions. Both indications are becoming more prevalent.

Data sources: Parkison's Disease Foundation and ACADIA Pharmaceuticals. Chart created by author. 

The number of Parkinson's disease psychosis patients is expected to increase as baby boomers in the U.S. age. ACADIA set its price for Nuplazid at $23,500 per year. That translates to a market potential of over $9 billion with the current number of patients diagnosed with PD psychosis. By the end of the next decade, though, the market size could be close to $17 billion. 

More indications potentially on the way

If ACADIA's wishes come true, additional indications will be forthcoming for Nuplazid. The biotech's pipeline includes more clinical studies evaluating the drug.

Image source: ACADIA Pharmaceuticals.

Alzheimer's disease psychosis appears to be a natural next step for Nuplazid. ACADIA expects to report results from its phase 2 study targeting the indication by the end of this year. The company also plans to initiate a phase 2 study evaluating Nuplazid in treating Alzheimer's disease agitation in 2016.

Allergan (AGN) currently stands atop the market for Alzheimer's disease psychosis. While the company's Namenda lost patent protection last year, Allergan launched a follow-up product called Namenda XR. The two versions of the drug combined to pull in over $1.3 billion in 2015. If Acadia ultimately wins regulatory approval for the Alzheimer's disease psychosis indication, Nuplazid could emerge as an even bigger winner than Namenda.

More attractive to bigger players

Speaking of Allergan, the company could be one of a handful of bigger players interested in scooping up ACADIA at some point in the future. ACADIA's declining market cap makes the small biotech a better bargain than it has been previously.

ACAD Market Cap Chart

ACAD Market Cap data by YCharts.

ACADIA's shares have been hurt this year largely due to skepticism that the company can be successful commercializing Nuplazid on its own. While ACADIA now has a sales force of around 135 specialists promoting the drug to physicians, this is the biotech's first product. Bringing a partner on board -- or selling the company -- could unlock additional value through access to a larger sales team with proven expertise in the neurological market.

Allergan is no stranger to making deals. Nuplazid should be a good fit alongside Namenda. However, Allergan doesn't have the cash to pull off an acquisition of ACADIA and already carries a huge debt load. Those factors could prevent the company from moving forward even if it was interested in a buyout. Of course, ACADIA could attract interest from other larger drugmakers.

Looking ahead

ACADIA announces its third-quarter results soon. Those results should reveal if Nuplazid has picked up momentum. The biotech also should release data within the next month or two from the midstage study of Nuplazid in treating Alzheimer's disease psychosis. Good news on either of these fronts should help ACADIA's stock to rebound.