Acadia Hits Home Run In Phase III Trial And Brings Market Focus To Parkinson's

| About: ACADIA Pharmaceuticals (ACAD)

Last Tuesday, Acadia Pharma (NASDAQ:ACAD) announced successful top-line results from its pivotal Phase III trial evaluating the efficacy, tolerability and safety of pimavanserin in patients with Parkinson's disease psychosis (PDP). Pimavanserin met the primary endpoint in the Phase III trial 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.

The market responded in kind and sent the shares up nearly 140%, showing the kind of potential that lies in companies developing treatments for Parkinson's and Parkinson's-related diseases. The reason behind the supercharged gains in the stock lies in the significant market opportunity in PDP. According to the National Parkinson's Foundation, about one million people in the United States and from four to six million people worldwide suffer from Parkinson's disease. Parkinson's disease psychosis is a debilitating disorder that develops in up to 60% of patients with Parkinson's disease. Currently, there is no FDA-approved therapy to treat PDP in the United States.

The potential for pimavanserin in PKD was further reinforced by analyst comments and expectations. "This is a patient population that has very limited treatment options right now," said Jason Butler, a JMP Securities analyst. "Being able to use a drug that's as safe and easy to use as this drug could be a really meaningful improvement for patients." Mr. Butler projects peak sales at a minimum of $350 million to $400 million, a figure that doesn't include international sales or new indications. Keep in mind that the company market cap of ACAD is just under $300 million. Biotech stocks typically trade at a significant multiple to revenue.

"The data certainly look positive," said Brian Lian, an analyst with Suntrust Robinson Humphrey. "Across the board it appeared to show improvement on multiple measures and certainly across all the primary and secondary endpoints. Once you have those trial results, assuming they're positive, it sure seems like you have demonstrated efficacy and the safety profile is also very promising," said Lian, who estimates $220 million in sales for Parkinson's psychosis by 2020 and significantly more if the drug is also used to treat psychosis associated Alzheimer's disease.

The catalysts for the stock to continue moving higher are firmly in place now that the positive results are in. The market now will be closely following the status updates for Acadia's upcoming confirmatory pivotal Phase III trial using the same trial design. Additionally, sell-side analysts should continue coming out in support of the stock due to the positive trial results and expectations for the stock price. The mean analyst target for the stock is $8.75. So even after the 100% plus jump in the shares, analysts still anticipate a 70% jump in the stock. Another point to consider is the company's presentation schedule, keeping it constantly in front of sell-side analysts and investors. Just in 2012, Acadia has presented at six different sell-side conferences including Cowen, Roth, Needham, JMP Securities, Stifel Nicolaus, and Rodman & Renshaw.

Other recent Parkinson's-related events emphasizing the need for a cure includes news from Bristol-Myers Squibb (NYSE:BMY). The company just in September announced a partnership for the development of drugs for Parkinson's disease. Vanderbilt University and Bristol-Myers Squibb announced that they signed a collaboration agreement for the discovery, development and commercialization of novel therapies acting on the mGluR4 glutamate receptor, known as positive allosteric modulators or PAMs, for the treatment of Parkinson's disease.

Under the collaboration, the Vanderbilt Center for Neuroscience Drug Discovery will identify drug candidates from its existing program, which obtained major support from The Michael J. Fox Foundation for Parkinson's Research. Bristol-Myers Squibb will have the right to develop and commercialize products resulting from the collaborative research program.

As noted above, Acadia will definitely benefit from the market's increased focus on Parkinson's after strong results for its drug candidate in Phase 3 trials, however, other companies developing Parkinson's solutions should also benefit from the increased focus. Amarantus Bioscience (OTCPK:AMBS) is one of those companies. The company is a development-stage biotechnology company founded in January 2008. The company has a focus on developing certain biologics surrounding the intellectual property and proprietary technologies it owns to treat and/or diagnose Parkinson's disease, Traumatic Brain Injury and other human diseases. The company owns the intellectual property rights to a therapeutic protein known as Mesencephalic-Astrocyte-derived Neurotrophic Factor ("MANF") and is developing MANF-based products as treatments for brain disorders.

MANF is aimed at developing products to address the underlying Programmed Cell Death (Apoptosis) associated a wide range of devastating human disorders. With a global trend towards an prolonged life expectancy due to novel therapies and emerging countries gaining access to critical medical care, the development of Apoptosis-related treatments represents a significant market opportunity that addresses a critical unmet medical need: safely and effectively improving currently approved patient treatments.

The potential of MANF technology has been recognized by some of the biggest names in the biotech space. Just last month, the company announced that it has appointed Amgen Co-Founder Joseph Rubinfeld, PhD to its Corporate Advisory Board. "I believe in MANF," said Dr. Rubinfeld. "I have reviewed a great number of technologies in my 45 year career in the biopharmaceutical field, and I believe that MANF could be one of the biggest successes that I have ever seen... I believe that if we are able to further de-risk MANF with positive toxicology studies and early clinical data, the company's new orphan drug strategy could get MANF to market rather expeditiously." Dr. Rubinfeld went on to add that MANF has the commercial potential to become a blockbuster drug.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.