Acadia Pharmaceuticals (NASDAQ:ACAD), a small firm based in San Diego, Ca is developing pimavanserin, a promising new drug for PDP (Parkinson's Disease Psychosis).
Psychosis is a disabling nonmotor complication of the Parkinson's disease. Visual hallucinations are the most common clinical manifestation, which have been observed in up to 40 percent of patients.
PDP has no FDA-approved medicine. The FDA indicated in April that, given the strength of the Acadia's Phase 3 trial results on all primary and secondary endpoints, it would accept just one trial for regulatory filing.
Pimavanserin is expected to be approved at the end of 2014 and begin producing revenue from the start of 2015.
Pimavanserin is special because it does not cause side effects like other antipsychotics, and it showed statistically significant benefits in trials.
The company's share price had a huge run up in the past 52 weeks but fell back in recent days.
PDP is quite common: 40 percent of the 1 million Parkinson's patients in the U.S and over 4 million worldwide is a large number and it is expected to increase as the population ages. It is a serious disorder, which typically consist of disturbing visual hallucinations and paranoid delusions.
These tend to progress over time and get worse. It is extremely difficult for the patients, hard on the caregivers and it is the leading cause of nursing home placements among Parkinson's patients. Today there is nothing approved to treat PDP in the United States.
Why can't the existing antipsychotics be used?
The reason is that all of these agents block the dopamine receptors. The same receptors are the target for the Parkinson's therapy itself and so the therapies work in the opposite directions.
High dopamine levels are needed for adequate control of the motor symptoms, but dopamine levels are need to be reduced to alleviate psychosis.
So the use of the antipsychotics can actually counteract the Parkinson's therapy and cause a worsening of the motor functions in these patients.
Current treatment requires either a reduction in medications for mobility or the addition of atypical antipsychotics, none of which are approved in the U.S. for Parkinson's, and which are associated with major drawbacks.
Pimavanserin provides a novel solution: it selectively blocks the 5-HT2A receptor, which plays a key roll in psychosis. It doesn't interact with the dopamine receptor at all, and therefore is able to achieve the antipsychotic effects without interfering with the motor control.
The Phase 3 trial of pimavanserin demonstrated a significant antipsychotic efficacy. That efficacy was achieved while maintaining the motor control in the patients.
The trial was a double-blind, placebo controlled study involving about 200 patients at 63 locations, the groups divided 1:1 between pimavanserin and placebo. 40 mg pimavanserin tablets were given once daily for 6 weeks. At the end of the six weeks the patients had the opportunity to roll into an open label extension study and nearly all did that.
The primary end point was antipsychotic activity as measured with the SAPSPD scale (Scale for the Assessment of Positive Symptoms).
SAPSPD is a scale used to specifically assess psychosis in Parkinson's patients and the assessments were done by a group of raters completely independent from the clinical side. The trial also had secondary end points to demonstrate that psychosis can be treated without interfering with the motor functions.
The secondary end point in motoric tolerability was also met. No deterioration was found in the motor function, in fact, patients had a slight improvement during the course of the study.
The trials brought out some other interesting effects.
There was an improvements in nighttime sleep. It's important to note that pimavanserin is not sedating, it doesn't put the patient to sleep, but when they sleep, they are able to sleep deeper and wake up less frequently. And not surprisingly, there is a corresponding improvement in daytime wakefulness with no hangover effects seen at all.
And beyond the patients, investigators looked at caregiver burden in the study as reported by the caregivers themselves. The study showed a significant reduction in the caregiver burden. Caregivers, who in most cases are a spouse or other family member, were able to see the profound reduction in stress as a result of the pimavanserin use compared to those on placebo, who saw no benefit whatsoever.
All this points to a substantial economic benefit: the opportunity to keep patients in an independent setting longer and potentially delay the time in nursing home placement.
The dopamine dilemma and the use of antipsychotics is similar in the Alzheimer's population as well.
A worsening of a cognitive ability in these patients is believed to be a result of the dopamine block. One of the worse things you can possibly do to an Alzheimer's patient is to use antipscychotic dugs and make their cognitive deficit worse.
The symptoms in the psychosis in Alzheimer's and Parkinson's patients are similar: visual hallucinations and paranoid delusions. The visual hallucinations are caused by the over stimulation of the same receptors in both diseases, and can be blocked with the use of pimavanserin.
Parkinson's and Alzheimer's patients represent a gigantic market that is not served well, if at all.
The antipsychotic drugs are a tremendous business today: worldwide they generate over $25 billion in sales per year and about one third of the prescriptions are for off label use.
This affects mainly the elderly population, many struggling with neurological disorders like Parkinson's and Alzheimer's. The drugs are not approved for these indications and many carry a Black Box warning for use in elderly patients with dementia-related psychosis due to the increased mortality.
Pimavanserin may represent a solution. It is positioned as the first drug to be approved for Parkinson's disease psychosis, but the company sees an opportunity to extend it to the other areas of neurological disorders with a very similar psychosis, like ADP (Alzheimer's Disease Psychosis), and Lewy body dementia.
ADP alone represents an enormous commercial opportunity. it affects between 25 and 50 percent of the more than 5 million Alzheimer's patients in the U.S. alone and there is no treatment available.
Antipsychotic drugs represent a large commercial success. They leave a lot to be desired, but pimavanserin can play an important role to alleviate their side effects in various combinations.
Risperdal at 2 mg doesn't do much if used alone; at least 6 mg is needed to have an impact. But when pimavanserin is added to the low dose, it achieves an efficacy similar to the high dose of Risperdal. And it also much improves the side effect profile; for example, results in significantly lower weight gain.
Combining pimavanserin with different antipsychotic drugs could reduce a wide range of side effects, and the approach could be applied to a number of different psychiatric disorders.
To submiit pimavanserin for FDA approval, the company has to comply with additional requirements. Manufacturing registration batches of pimavanserin for testing for stability is likely to begin by year-end 2013. Drug on drug interaction studies are underway.
A pre-submission meeting with the FDA and meetings with European regulatory officials are planned before year-end.
The company has also organized a specialty neurology sales force for the U.S. market.
Preparations are also underway for a Phase 2 trial to test pimavanserin in ADP, scheduled to start in the second half of 2013. The 12-week trial is expected to enroll 200 patients randomized equally against placebo. Several elements of the Phase 3 trial in PDP will be incorporated into the trial; for example, the use of independent raters.
Partner Allergan (NYSE:AGN) has nominated a second compound for development in glaucoma, and preclinical studies are underway. Allergan will be responsible for all development and commercialization costs.
The current standard of care for controlling PDP consists primarily of two drugs, AstraZeneca's (NYSE:AZN) bipolar and schizophrenia medication Seroquel and Novartis' (NYSE:NVS) schizophrenia drug Clozaril.
These medications are merely bandaids for PDP. Novartis' Clozaril can potentially lead to a rare white blood cell condition known as agranulocytosis (a failure of the bone marrow to make enough white blood cells), making it necessary for patients on the medication to get weekly blood tests for the first six months.
Pimavanserin, if approved, could change that and gradually take market share from the antipsychotic drugs currently used in treating PDP.
Acadia's revenues totaled $451,000 for the second quarter compared to $599,000 for the second quarter of 2012 and came from the collaborations with Allergan, as well as from research grants.
The company has run up substantial operating losses since the beginning due to research and development expenditures. At the end of June, Acadia had an accumulated deficit of $382.9 million. Operating losses are expected to continue for the next several years.
Acadia ended the second quarter with $205.5 million in cash, up from $101.5 million in the first quarter. The reason for the increase is the $107.9 million in net proceeds from the sale of 9,200,000 shares of common stock in a public offering in May 2013.
The company used about $12 million in cash during the first half of 2013 to fund operations. In the second half and beyond, cash use will increase as the PDP program advances toward the FDA filing, and the pimavanserin program addresses other indications.
Cash and investment securities are anticipated to total at least $183 million at the end of December, which is sufficient to advance the PDP program.
In the past 52 weeks the stock price ranged from $1.80 to $29.73, a huge run-up, which shows the desire and hope of investors to see a success in this medical area. But the run-up may not be sustainable, and in recent days the stock price showed weakness.
The concept is sound, as far as an outsider can determine.
Pimavanserin is a 5HT2A inverse agonist. Its antipsychotic effects coupled with its lack of motor side effects could make it an ideal drug for treating psychotic symptoms in Parkinson's, a major unmet need.
Behind pimavanserin, there are two additional clinical stage programs in the areas of chronic pain and glaucoma in collaboration with Allergan. Allergan is responsible for the development and Acadia is eligible for milestones and royalties.
An innovation that is actually working is welcome news in the barren landscape of the Parkinson's and Alzheimer's research. One more innovation may be needed -- someone should figure out how to move revolutionary ideas like pimavanserin through the approval process and into the clinic a little faster.
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.