There were no surprises in the Food and Drug Administration's assessment of an Alzheimer's drug from Acadia Pharmaceuticals, and ACAD stock surged Wednesday.
Acadia is hoping to win FDA approval for its drug Nuplazid in patients who have Alzheimer's disease psychosis. Nuplazid is already approved to treat psychosis due to Parkinson's disease. But the FDA has questioned the drug's effectiveness in Alzheimer's patients, as well as the studies Acadia conducted.
On Friday, advisors to the FDA will discuss Acadia's drug and evidence. The agency will consider their recommendation before making a final decision on Nuplazid for this use. The agency already once rejected Nuplazid for Alzheimer's patients.
"There are no major surprises in the document with FDA highlighting the issues already disclosed by Acadia since the last (rejection)," Needham analyst Ami Fadia said in a report to clients. She noted FDA staffers discussed the issues with Acadia's studies in their documents.
"The issues FDA had with these (studies) appear to remain in place," Fadia said.
ACAD Stock: Two Studies In Question
On the stock market today, ACAD stock leapt 15.5% to 18.77.
The FDA took issue with two studies, dubbed Study 019 and Study 045, offered in support of Nuplazid as an Alzheimer's disease psychosis treatment.
The agency determined Study 019 was "insufficient and poorly controlled," Fadia said. It's also unclear whether patient improvement was clinically meaningful. Further, she noted Nuplazid-treated patients didn't show meaningful improvements on secondary goals of the study.
In the second study, Acadia combined Alzheimer's and Parkinson's patients. The FDA argues the latter group had better responses.
"FDA mentioned the positive response in this (study) was mainly derived from the Parkinson's disease psychosis group," Fadia said.
Fadia has a hold rating on ACAD stock.
Unlocking Unexpected Value
RBC Capital Markets analyst Gregory Renza expected the negative tone.
"That said, we believe the low expectation and expected criticality coupled with current share levels continue to make for an intriguing setup with positive skew where a clearing path for a (supplemental approval) could unlock greater value for Nuplazid well beyond what current value and sentiment are implying," he said in a report.
He has an outperform rating on ACAD stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
