J.P. Morgan Encouraged on ACADIA Pharmaceuticals Inc. (ACAD) Amid Surprisingly Positive Phase 2 Top-Line Results for Nuplazid; Shares Surge 20%


ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) shares were shooting as if out of a canon on a 20% upturn this morning thanks to positive top-line results from the firm’s exploratory Phase 2 trial of its pipeline drug Nuplazid in Alzheimer’s disease psychosis (ADP). Nuplazid revealed a statistically significant reduction in psychosis when compared to the placebo arm at week 6 of the study.

For J.P. Morgan analyst Cory Kasimov, this comes as quite an encouraging surprise, considering not only was he a skeptic that this study would prove successful, when taking into account the rumor mill buzz among other investors, he notes most were not betting for Nuplazid to win.

The analyst asserts, “This comes as an upside surprise to us, and we believe most others as well. Indeed, we haven’t spoken to a single investor who thought this trial would show compelling trends, let alone work; the perception was that even management was talking down the potential of the study. Nevertheless, this better-than-expected result, along with the initial 3Q commercial beat for Nuplazid in Parkinson’s disease psychosis (3Q revenue of $5.3M vs. consensus of $2.9M), should help to restore more positive sentiment in the name. Upside could also be generated by the fact that short interest is ~22% (according to Bloomberg).”

“Bottom line, we continue to believe ACAD has scarcity value with an approved wholly owned CNS asset that could provide a ‘pipeline in a pill’ of opportunities,” Kasimov contends.

As such, the analyst reiterates an Overweight rating on shares of ACAD with a $49 price target, which represents a just under 63% increase from current levels.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, Cory Kasimov is ranked #4,196 out of 4,288 analysts. Kasimov has a 30% success rate and faces a loss of 13.0% in his annual returns. When suggesting ACAD, Kasimov forfeits 9.6% in average profits on the stock.

TipRanks analytics exhibit ACAD as a Strong Buy. Out of 9 analysts polled by TipRanks in the last 3 months, 7 are bullish on ACADIA stock and 2 remain sidelined. With a return potential of nearly 64%, the stock’s consensus target price stands at $41.63.  

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