Acadia Files Nuplazid Label Expansion; Analyst Sees ‘Significant’ Potential

Acadia Pharmaceuticals Inc. (ACAD) has announced that it has filed a supplemental New Drug Application (sNDA) to the U.S. Food and Drug Administration (FDA) to support a potential new indication for Nuplazid (pimavanserin) for the treatment of hallucinations and delusions associated with dementia-related psychosis (DRP).

The FDA previously granted Breakthrough Therapy Designation for pimavanserin for this indication.

“This is an important step forward for the approximately 2.4 million people in the U.S. who suffer from dementia-related hallucinations and delusions, representing a large unmet need with currently no approved treatment options,” said Steve Davis, Acadia’s CEO.

The application follows ACAD’s pivotal Phase 3 HARMONY study, which met its primary endpoint, demonstrating that pimavanserin significantly reduced the risk of relapse of psychosis by 2.8 fold compared to placebo.

The sNDA also includes positive efficacy results from two additional placebo-controlled studies, both of which met their respective primary endpoints, and a large safety and tolerability database of over 1500 patients.

Dementia affects approximately 8 million people in the U.S, with roughly 30% experiencing dementia-related psychosis. Only half, or 1.2 million, are diagnosed and treated.

Nuplazid was approved in the U.S. in 2016 as the first and only treatment for hallucinations and delusions associated with Parkinson’s disease psychosis (PDP). And looking forward, Acadia is also investigating pimavanserin as a treatment for the negative symptoms of schizophrenia and major depressive disorder (MDD).

Following the news RBC Capital’s Gregory Renza reiterated his ACAD buy rating with a $58 price target (25% upside potential).

“With the Breakthrough Therapy Designation of pimavanserin in DRP, we believe the application could receive priority review and therefore expect approval around year-end… which would not surprise given pim’s position as the first treatment option in DRP” he explained.

The analyst is modelling U.S. peak sales of Nuplazid reaching $2.4B in PDP and DRP, writing “[we] expect a 90% likelihood of approval in DRP which is a significant contributor to out-year revenues and drives over 40% of our valuation.”

He also recommends keeping an eye out for the MDD readout from the combined CLARITY 2/3 trials, which is expected in 3Q. “If successful, we believe the label expansion potential could bring additional upside to the company” says Renza, who sees $1.5B U.S. peak sales opportunities in MDD with a 50% probability of success.

Overall, ACAD scores a Strong Buy Street consensus with 9 buy ratings and 1 hold. The average analyst price target stands at $60 (30% upside potential). Shares are currently trading up 9% year-to-date. (See ACAD stock analysis on TipRanks)

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