As an amateur investor with no credibility among the elite of Wall Street, I remain both intrigued and satisfied as I watch the daily trading action around Acadia Pharmaceuticals (ACAD). Yes, my position about Pimavanserin's upcoming results feels as exuberant as a whimsical moment atop the Eiffel Tower. The stock fell today and closed at $2.48 per share with just over a million or so shares traded.
Thus, perhaps in my amateurish excitement, I am getting caught up in the wide-eyed notion that Acadia's Pimavanserin could report successful phase III clinical results. Perhaps I'm wrong. Perhaps, I am blinded by visions of adding to an already banner year where I paid no subscription fees to the next self-promoting genius who claims that he turned a dollar into fifty. But do know this: I accept the responsibility for the stock choices I make, both the good ones and the bad ones. I also return to this keyboard to remind the investing world about Acadia because I like their story and it profits me to tell it.
It warrants SA publication to first highlight what a long-term ACAD holder recently wrote:
For a pharma scientist and an investor, it can be revealing to trace a "novel" biotech idea/ drug and its precursor compounds. A 1997-era rationale for use of a selective 5HT-2a antagonist for treatment of psychosis can be found at: CNS Drug Reviews Vol3; 49-67. Primavanserin progenitors include: mianserin (Organon), ritanserin & ketanserin (Janssen), gelmanserin & volinanserin (HMR) pruvanserin (Lilly) and eplivanserin (Sanofi). The first four compounds all had substantial cross-over pharmacology at other brain receptors, including dopamine D2, histamine H1, alpha-1-adreneric receptors, etc. The latter three all showed strong potency/ specificity for 5HT-2a and good selectivity versus 5HT-2c, all comparable to primavanserin! Eplivanserin went thru phase III trials as an insomnia treatment, but received a complete response letter from the FDA in 2009 and was withdrawn. Pruvanserin was dropped after phase II trials for insomnia. Given anti-psychosis precedents set earlier with mianserin, it is likely Sanofi (SNY) and Lilly (LLY) considered the potential for a psychiatric "triple application" for their compounds. It raises the prospect that if Acadia does succeed in its ongoing phase III Parkinson's trials, other companies could re-launch their dropped compounds into similar psychosis trials, since they have already cleared pre-clinical and safety trials.
In reality, the issue isn't what's bubbling or popping in the biotech market 'here today gone tomorrow,' but where Acadia may be heading with Pimavanserin. As this pharma scientist observes, the potential cross-over applications for Pimavanserin have a precedent in laboratory and clinical studies. The reality is, if Pimavanserin is shown to help patients with Parkinson's disease, then there's a good probability that it will be applicable to other psychotic maladies.
To this amateur biotech investor, Pimavanserin represents more than the usual one-trick pony. Forgive my undying love for analogies, but Pimavanserin represents a stable of medical opportunities. For me, the bottom line is a matter of horse-sense. It makes good horse-sense to get into a biotech stock like Acadia, assuming all risks, but also knowing as I do that the current phase III study was based on both positive and negative data points.
You see despite being an amateur biotech investor, I happen to have a research background including laboratory experience working with chemists who taught me that no experiment is a true failure. You see that is what great clinical research often reflects. It's quite different from Wall Street that flips biotech shares upon hearing good or bad news, but rather great science is the dogged path that drives excellent biotech firms to discover that novel molecular chain that has a novel effect against various diseases that plague humanity.
If I am reading that pharma scientist correctly, he/she is telling investors that there are scientific reasons that support Pimavanserin's potential multiple applications. Therefore, for now I am sitting tight and holding my shares close to my chest though my nerves late at night may always remind me of the potential that Wall Street may not like the results Acadia will report. Nevertheless, with the daily churning and flipping I see going on around Acadia, I have this uncanny notion that other amateurs may think like I do about Acadia's potential success. I maintain a 'Strong Buy.'
Disclaimer: Investors buy and/or sell at their own risk. I declare that I may trade any stock at any time mentioned in this article. For me "long" is until I sell. I do not "short" stocks. This article is for entertainment purposes only. You are duly warned not to use this article for individual investor advice and you should seek the advice of a market professional.
Disclosure: I am long ACAD.