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ACADIA Pharmaceuticals (ACAD): Top Analyst Does Not See ‘Real Safety Signal’ for Nuplazid

Cowen's Ritu Baral's conversations with key experts in the field with Nuplazid experience leave her positive; albeit somewhat 'cautious' on the impact of ACAD's controversy.


ACADIA Pharmaceuticals (NASDAQ:ACAD) suffered a Wall Street thrashing yesterday to the sharp blow of 25% after CNN put the drug maker on blast for its lead asset pimvanserin (Nuplazid). CNN’s research highlights mounting risks circling Nuplazid as a treatment for Parkinson’s disease psychosis (PDP)- a drug that may be inflicting more harmful side effects than beneficial assistance to suffering patients.

Top analyst Ritu Baral at Cowen has not been swayed away from the bulls despite the nosedive in valuation yesterday. After all, Baral’s chats with key opinion leaders (KOLs) that boast substantial experience with the drug lead her to believe it “unlikely a safety signal” for Nuplazid.

However, the analyst does acknowledge that because the media machine has drawn “heavy investor” fire regarding the deaths associated with Acadia’s Nuplazid, “concern in the community is now widespread and we are cautious on the impact the controversy will have on near-term Nuplazid sales.”

That said, the analyst reiterates an Outperform rating on ACAD stock with a $50 price target, which implies a massive 203% upside from current levels.

Is this largely just “shock value?” Baral cannot help questioning, as she writes: “No comparable background rates of deaths or events or adjudication of cases with which give to optically high case numbers context or reference were given, leaving investors and the parkinson’s Community with little meaning and largely only the sensational shock value of a 700+ case number. We note Nuplazid was approved by the FDA for Parkinson’s disease psychosis (PDP), which is typically seen in elderly patients with numerous medical comorbidities and with high risk of morbidity and mortality. The drug has been marketed since June 2016.”

“We also strongly believe FAERS is difficult to interpret as the data is not systematically collected, especially given the incredibly high (87%) preponderance of consumer driven reports (again likely a result of speciality distribution) […] we do not think there is a fundamental novel safety concern,” continues the analyst.

Though Baral pinpoints substantial apprehensions circling how the safety event will be perceived and the hit Nuplazid’s future sales could take in “an already controversial launch,” she surmises that KOLs deem it improbable that the FAERS death cases poijnt to “a real safety signal.” Taking under account the advanced age of the patients coupled with the fact the PDP population carries meaningful co-morbidities, Baral stands by Acadia’s opportunity.

Ritu Baral has a very good TipRanks score with a 54% success rate and a high ranking of #24 out of 4,756 analysts. Baral earns 31.2% in her annual returns. However, when recommending ACAD, Baral forfeits 0.8% in average losses on the stock.

When taking a glance at TipRanks data, analytics point overwhelmingly to bullish confidence on this drug maker’s prospects. Out of 7 analysts polled in the last 3 months, 6 rate a Buy on ACAD stock while just 1 maintains a Hold. Notably, the 12-month average price target stands at $52.83, marking a healthy 220% upside from where the stock is currently trading.