Investors and analysts are focused on ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) this week as the company goes head to head with the Psychopharmacologic Drugs Advisory Committee (PDAC) of the U.S. Food and Drug Administration (FDA) to discuss the safety of Nuplazid, the company’s lead pipeline candidate. The meeting will take place on Tuesday, March 29.
Nuplazid, also known as pimavanserin, is under regulatory review to treat psychosis associated with Parkinson’s disease, or PDP. This affects about 40% of the Parkinson population. Since there are no approved drugs to treat PDP, Nuplazid has gained Breakthrough Therapy status by the FDA, which will accelerate the FDA’s review process. Analysts have been bullish on the company in light of this drug, as it is estimated to drive $1.4 billion in revenue for the company at peak sales.
However, don’t jump the gun just yet. On Tuesday, Acadia will meet the PDAC to discuss safety concerns surrounding Nuplazid. In a 6-week study of Nuplazid, 16 out of 202 patients who received the treatment experienced “serious adverse events.” On the other hand, 8 out of 231 patients taking a placebo experienced serious adverse effects, raising a red flag for some regarding the safety of the drug. Others argue that PDP has high mortality rates, making it hard to trace the serious adverse effects to Nuplazid or to the disease itself.
The FDA review was unable to draw a conclusive correlation between Nuplazid and serious adverse effects. The FDA brief for the PDAC meeting explains, “In summary, death associated with PDP is unfortunately a relatively common event… The deaths that occurred in the [Nuplazid] development program do not appear to be pathologically unique relative to deaths expected with the disease course of patients with PDP; however, they were numerically more frequent in the [Nuplazid] treatment group in the controlled trials, over the six-week treatment period.”
Analysts have also weighed in on Acadia in light of the upcoming meeting with the PDAC. Jason Butler of JMP Securities reiterated an Outperform rating on Acadia with a $43 price target on March 25, noting, “We continue to expect the panel to vote robustly in support of the drug’s benefit/risk profile; therefore, we anticipate FDA approval.” Butler echoes the FDA’s findings of being unable to conclusively relate the patient deaths to Nuplazid. He comments that while “the FDA did raise expected topics of debate/concern,” he sees the “overall tone” of the FDA’s briefing documents to be “relatively benign.”
Butler has been bullish on Acadia since 2013. According to TipRanks, he has 48% overall success rate recommending stocks with a 33.2% average return per rating.
Separately, Charles Duncan of Piper Jaffray reiterated an Overweight rating on Acadia with a $39 price target on March 25. Duncan believes that the committee will recommend a black box warning for Nuplazid, but remains optimistic that “the drug is approvable by the 5/1 PDUFA.” He adds, “The overall risk/benefit profile of NUPLAZID leaves the door open for future competitive candidates which offer improved efficacy and/or safety.”
Acadia will be urging the PDAC to look at the risk/reward profile of Nuplazid. At the end of the day, patients with PDP suffer high mortality rates. With no FDA-approved drug currently on the market for PDP and no conclusive correlation between patient deaths and the drug, analysts have reason to believe that the meeting will go smoothly. Although the FDA is not obliged to follow the recommendation of the PDAC, it usually does.
According to TipRanks, all 5 analysts who have rated Acadia in the last 3 months are bullish on the stock. The average 12-month price target between these 5 analysts is $55, marking a 170% potential upside from where shares last closed.