Yesterday morning we finally got to see the much anticipated data for Acadia Pharmaceuticals' (NASDAQ:ACAD) Phase III trial, which tested its flagship drug pimavanserin for the treatment of Parkinson's disease psychosis.
Reacting to the news, shares of ACAD rallied into the stratosphere and tacked on an incredible 136% by the closing bell -- bringing the stock from $2.28 to $5.43 in a single trading session. This was a welcome relief for long-term ACAD investors, who may have had positions decimated back in 2009 when pimavanserin failed its first Phase III trial in the treatment of Parkinson's disease psychosis. ACAD stock briefly touched the speculative highs made back in 2009, but profit-taking did cut down some of the enormous gains made in the stock yesterday.
Pimavanserin's clinical trial met its primary endpoint with a large degree of confidence (p=0.001). The primary endpoint was based on improvement in the nine-item SAPS-PD scale (a "Scale for the Assessment of Positive Symptoms" index), which is the same measurement scale that was used for pimavanserin in its failed trial from 2009. The secondary endpoint, which was based on measurements of motor function in Parkinson's patients who received pimavanserin, was also met with high levels of confidence. The study used the Unified Parkinson's Disease Rating Scale (UPDRS) to measure the motoric tolerability in PDP patients on pimavanserin, which showed that the drug was able to maintain stability in motor function relative to a placebo.
This endpoint was also strengthened with results gathered using something known as the CGI-I scale (the Clinical Global Impression Improvement scale), which observes the overall illness of the patients (and implies some extra evidence of pimavanserin's overall safety/efficacy profile). ACAD stated that there were issues with the structure of the old Phase III trial that could be addressed in the next trial, and it seems as if they were right.
The results were very good, and showed that pimavanserin is probably going to be the first true Parkinson's disease psychosis treatment. This will address the substantial unmet demand for a significant fraction of the ~1 million that are affected by Parkinson's disease, and provides some hope for the drug in other indications as well. Pimavanserin is also being developed for the treatment of psychosis in Alzheimer's disease, as well as schizophrenia.
Pimavanserin's mechanism of action is based on a specific serotonin receptor known as 5-HT2A, which is suspected to play a vital component in all people that experience symptoms of psychosis. We now know that the drug works quite well for Parkinson's disease psychosis. If 5-HT2A is an equally good therapeutic target in Alzheimer's disease psychosis and schizophrenia, we may see some stellar results from an upcoming clinical trial for pimavanserin in the treatment of those diseases as well.
The -020 study, the Phase III trial for pimavanserin in PDP that released data yesterday, is a precursor to another Phase III trial that ACAD plans to conduct to further build pimavanserin's efficacy profile (which will be referred to as the "-021 study") and an additional safety study that the company refers to as the "-015 study." These studies will be performed to solidify the chances of an FDA approval when the time comes for pimavanserin's first NDA submission. Although this means that investors will have to wait longer for pimavanserin's potential FDA approval, additional Phase III trials with statistically significant data significantly improve the drug's chances since they establish a more elaborate efficacy and/or safety profile for a drug.
With its recent jump, ACAD has reached a market capitalization of $307 million. The market should slowly change its perspective on ACAD due to the recent results, which prove that the drug actually works. It's no longer a matter of whether or not pimavanserin works or not, but rather a matter of how valuable the Parkinson's disease psychosis market is. There is also a lot of potential for schizophrenia, and even greater potential in Alzheimer's disease psychosis, of course. ACAD investors who are in for the long haul realize this, and will probably hold on in anticipation of a higher valuation for the company. Traders, on the other hand, have a lot of incentive to take their outsized profits from yesterday's trading in the pursuit of other biotech catalysts on the horizon. While ACAD stock could see some immediate downward pressure due to this, the intrinsic value that was added by pimavanserin's latest clinical trial data remains in place.