Acadia stock crashed to an 11-month low Tuesday after an outsized placebo effect torpedoed the company's efforts to expand Nuplazid to schizophrenia patients.
Acadia Pharmaceuticals had been hoping its antipsychotic, Nuplazid, would make a difference for people with the negative symptoms of schizophrenia. These include social withdrawal and emotional disorders. Nuplazid is already approved to treat Parkinson's disease psychosis.
But in the Phase 3 study called Advance-2, placebo patients had an 11.1-point improvement on a scale measuring the negative symptoms of schizophrenia. Nuplazid recipients had an 11.8-point improvement.
"We will continue to analyze these data with our scientific advisors, but we do not intent to conduct any further clinical trials with pimavanserin," Chief Executive Steve Davis said in a written statement.
On today's stock market, Acadia stock plunged 17.2% to 19.98, sending shares to their lowest point since last April.
Acadia Stock: 'Lot Of Failures' In Negative Symptoms
Current antipsychotics on the market focus on the positive symptoms of schizophrenia, Davis told Investor's Business Daily in a February interview. These include the hallucinations, delusions and illogical changes in behavior that are hallmarks of the disease.
"Once you have the positive symptoms controlled as best as they can be, about 40% of patients continue to have these predominant negative symptoms," he said. "They have this very debilitating lack of social interaction."
There have been a lot of failures in this space, he said. The Advance-1 study was promising with Nuplazid recipients showing an 11.6-point improvement in symptoms vs. an 8.5-point improvement for the placebo group.
Mizuho Securities analyst Uy Ear slashed his price target on Acadia stock to 25 from 39. He also downgraded shares to a neutral rating "as we see no near-term major catalysts in 2024."
Acadia is running studies of potential treatments for Prader-Willi syndrome and Alzheimer's disease psychosis, Ear said in a report. The latter is a $1 billion-plus opportunity. But the results of those tests aren't due until 2025 or 2026. Prader-Willi syndrome causes behavioral problems, intellectual disability and short stature.
Focus Returns To Daybue
With Nuplazid's failure, the story now turns back to Acadia's Daybue launch, RBC Capital Markets analyst Gregory Renza said in a report. Daybue treats Rett syndrome, a disease caused by a genetic mutation that typically affects girls. Over time, patients lose coordination, speech and the use of their hands.
Renza cut his price target on Acadia stock to 30 from 35, but kept his outperform rating.
"While the opportunity had accounted for a small portion of valuation, we are fully removing any contributions of Nuplazid expansion from our mode, recasting the company revenue trajectory through the 2020s and returning focus back to Rett syndrome, the current state of Parkinson's disease psychosis and the pipeline build out for longer-term value," he said.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
