Investors are pricing in some optimism in ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), after the drug maker announced that the FDA has granted Breakthrough Therapy Designation to pimavanserin for dementia-related psychosis. Dementia-related psychosis includes psychosis in patients with Alzheimer’s disease, dementia with Lewy bodies, Parkinson’s disease dementia, vascular dementia, and frontotemporal dementia. In addition, the company announced the initiation of HARMONY, a Phase III study to evaluate pimavanserin for the treatment of hallucinations and delusions associated with dementia-related psychosis, a serious medical condition for which there is no therapy approved by the FDA. The company also announced
ACADIA shares are up 6% to $41.49 in after-hours trading Wednesday.
ACADIA CEO stated, “With receipt of FDA’s Breakthrough Therapy Designation for pimavanserin, we are able to accelerate this important program […] Pimavanserin has a unique biological mechanism that distinguishes it from any other antipsychotic. We believe the profile we observed in our Phase II -019 Study in Alzheimer’s disease psychosis could be particularly beneficial in this elderly underserved population. In that study, pimavanserin demonstrated antipsychotic effect without impairing cognition and we also observed a very favorable tolerability profile. We were very excited to be the first and only FDA approved drug for the treatment of Parkinson’s disease psychosis and are equally excited about the potential to help many more patients suffering from dementia-related psychosis.”
ACADIA’s Head of Research and Development Serge Stankovic commented, “We are pleased the FDA has agreed to an efficient development path for pimavanserin in this broad indication and granted Breakthrough Therapy Designation in recognition of this serious unmet need […] Initiation of our Phase III study is supported by clinical and preclinical evidence of pimavanserin’s antipsychotic activity without detrimental effects on cognitive function or other side effects associated with antipsychotics currently used off-label for this indication.”
If the clinical development program is successful, and pimavanserin is ultimately approved by the FDA for the treatment of dementia-related psychosis, it would represent a significant expansion of the approved use of pimavanserin. Currently, pimavanserin is the only drug approved by the FDA for the treatment of hallucinations and delusions associated with Parkinson’s disease psychosis. It is marketed under the trade name NUPLAZID®.
Around 8 million people in the United States are living with dementia and approximately half are diagnosed with the disease. Studies suggest that approximately 30% of patients with dementia have psychosis, commonly consisting of hallucinations and delusions. Serious consequences have been associated with severe or persistent psychosis in patients with dementia such as repeated hospital admissions, earlier progression to nursing home care, more rapid progression of dementia, and increased risk of morbidity and mortality.
The initiation of the pivotal study in dementia-related psychosis, referred to as HARMONY, follows an End-of-Phase II Meeting and agreement with the FDA on the clinical development plan and the design of the Phase III study. ACADIA believes that robust positive results from one Phase III study together with supportive data from prior studies with pimavanserin could serve as the basis of a supplementary New Drug Application (sNDA) for the treatment of hallucinations and delusions associated with dementia-related psychosis.
Breakthrough Therapy Designation serves to expedite the development and review by the FDA of drugs that are intended to treat a serious or life-threatening disease or condition. The Breakthrough Therapy Designation for dementia-related psychosis was granted, in part, based on results of ACADIA’s Phase II -019 Study with pimavanserin in Alzheimer’s disease psychosis and results of the company’s Phase III -020 Study with pimavanserin in Parkinson’s disease psychosis. This is the second Breakthrough Therapy Designation for pimavanserin.
On the ratings front, ACAD stock has been the subject of a number of recent research reports. In a report issued on September 15, Needham analyst Alan Carr reiterated a Buy rating on ACAD, with a price target of $49, which implies an upside of 26% from current levels. Similarly, on September 4, Jefferies’ Michael Yee reiterated a Buy rating on the stock and has a price target of $47.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Alan Carr and Michael Yee have a yearly average return of 10.2% and 11.5% respectively. Carr has a success rate of 48% and is ranked #465 out of 4691 analysts, while Yee has a success rate of 66% and is ranked #294.
Sentiment on the street is mostly bullish on ACAD stock. Out of 5 analysts who cover the stock, 5 suggest a Buy rating . The 12-month average price target assigned to the stock is $51.2, which implies an upside of 32% from current levels.
ACADIA Pharmaceuticals, Inc. engages in the research, development and manufacture of pharmaceutical products. It focuses on the development and commercialization of innovative medicines to address unmet medical needs in central nervous system disorders.