Is Acadia Pharmaceuticals Almost Tripling On Phase III Data A Good Omen For Celsion?

 |  About: Celsion Corporation (CLSN), ACAD
by: Heisenberg Principle

ACADIA Pharmaceuticals (NASDAQ:ACAD) on Tuesday morning reported their long awaited Phase III top-line trial results which evaluated "the efficacy, tolerability and safety of pimavanserin in patients with Parkinson's disease psychosis (NYSEARCA:PDP)." ACAD reported that the trial met the primary endpoint by "demonstrating highly significant antipsychotic efficacy as measured using the 9-item SAPS-PD scale (p=0.001). Pimavanserin also met the key secondary endpoint for motoric tolerability as measured using Parts II and III of the Unified Parkinson's Disease Rating Scale, or UPDRS. These results were further supported by a highly significant improvement in the secondary efficacy measure, the Clinical Global Impression Improvement, or CGI-I, scale (p=0.001). In addition, clinical benefits were observed in all exploratory efficacy measures with significant improvements in nighttime sleep, daytime wakefulness and caregiver burden. Consistent with previous studies, pimavanserin was safe and well tolerated in this Phase III trial."

To put it in more simple terms for the average investor like me who lacks a PhD in biochemistry -- the top line results kicked major butt ("unprecedented advance for Parkinson's patients who suffer from the psychosis frequently associated with this disease") and sent the shares of ACAD stock soaring to nearly a triple in a single day and finished the day at $5.43, up 136% on massive volume of 60 million shares. This also lead to analyst upgrades and the street welcomed the news with open arms.

Celsion (NASDAQ:CLSN) shareholders must be salivating as they wait for what they hope to be a similar move in CLSN stock when it releases its Phase III data expected in January 2013. As I detailed in my first article on CLSN, the Phase III data is the big catalyst shareholders are waiting for, with an opportunity of a multitude of gains as I detailed why in my second article.

Now let's compare ACAD to CLSN to see if the ACAD move could be an example of what shareholders may see with CLSN:

(1) Catalyst.

Both ACAD and CLSN shareholders have been waiting on Phase III top line results for their respective treatments that could each represent breakthroughs in medical science. Check.

(2) FDA Designation.

Celsion has been granted special protocol assessment by the FDA, fast track and orphan drug designation, and expects to receive priority review from the FDA. No mention of this by ACAD. Advantage CLSN.

(3) Potential Market Size.

If FDA approval is granted, the potential market opportunity for ACAD has been estimated at $400 million. For CLSN, at least $1 billion. Advantage CLSN.

(4) Insider Buying

CLSN insiders have been buying shares in the open market from time to time. ACAD insiders actually weren't. I'll submit that it means ACAD shareholders were more so caught by surprised by the positive results. Advantage ACAD.

(5) Market cap.

ACAD going into the results had a market cap of under $150 million. CLSN currently has a market cap just over $250 million. All things being equal, this means expectations have already been priced in a little bit more for CLSN. Advantage ACAD.

(6) Institutions and short interest.

ACAD last reported institutional ownership percentage: 56.83%

CLSN last reported institutional ownership percentage: 13.42%

ACAD last reported short interest: 2,436,000 and short ratio of 1.4

CLSN last reported short interest: 5,541,000 and short ratio of 7.1

Though it's up for debate what the institutional ownership difference means. Why aren't more institutions already in CLSN vs. ACAD? In any event it would suggest positive news would be more priced in with ACAD as institutions had already bought up a large percentage of the float whereas CLSN institutions have lighter positions so the "getting caught off guard" factor in a positive way with good news seems to be more likely with CLSN. In short, CLSN may simply be off radar more.

The short interest is less up for debate. It's much more large with CLSN both as a percentage of the float and versus daily average volume measured as a short ratio. ACAD had and has very little realistic chance of a short squeeze of any magnitude whereas CLSN larger short interest and short ratio makes this possibility very real. Short squeezes tend to give increased hopes for larger potential rallies. Advantage CLSN.

In summary, there's lots of arguments that can be made that ACAD's rally was unique to ACAD and CLSN having great Phase III trial data may not rally the stock price as much. But there's also a lot of evidence that suggests a much bigger rally is quite possible on the news. I'm in the "Advantage CLSN" camp overall. I get big things. I think ACAD's stock price performance is a positive omen that will be reflected in CLSN come January 2013.

Disclosure: I am long CLSN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.