Acadia Pharmaceuticals Inc. (ACAD, Financial) investors finally got some good news this week when the biopharma announced positive test results for its treatment for a rare neurological condition.
Shares of the San Diego-based company shot up about $2 to $21.80 after the announcement. That’s still light years away from the $55 the stock was trading for just over a year ago.
BioPharma Dive reported that Acadia is now in a good position to ask the Food and Drug Administration to approve trofinetide to treat Rett syndrome, a neurodevelopmental disorder that affects girls almost exclusively.
Rett’s is characterized by normal early growth and development followed by a slowing of development, loss of purposeful use of the hands, distinctive hand movements, slowed brain and head growth, problems with walking, seizures and intellectual disability, according to the National Institutes of Health. It is estimated to affect about one in 12,000 girls born each year and is only rarely seen in boys.
In clinical trials, trofinetide was not without issues. The drug has been tied to side effects such as diarrhea and vomiting, causing about 20% of the participants to drop out. Acadia tried to put the problem in perspective, pointing out that most of the side effects were relatively mild and they were also common symptoms of Rett.
Paul Matteis, an analyst at Stifel, wrote in a Dec. 6 note to clients that although the effectiveness of trofinetide was less than ideal, the drug will likely get the FDA’s nod because there are no other approved treatments for Rett’s, although that may not be the case much longer. Several companies have drugs in various stages of testing, including Anavex Life Sciences Corp. (AVXL, Financial), GW Pharmaceuticals (GWPH, Financial) and Ultragenyx Pharmaceutical Inc. (RARE, Financial). In late October, Novartis (NVS, Financial) ditched plans to move its Rett’s treatment into clinical trials after the drug disappointed in pre-clinical work.
Acadia’s ability to gain FDA approval of its medicines has been less than stellar. The company’s stock took a big hit in March when the regulatory body found "deficiencies" in Acadia’s application for approval for an additional indication for its only marketed drug, Nuplazid. The company plans to meet with the FDA soon to learn what information it can provide to allay the FDA’s concerns.
In a June article, Forbes wrote that Acadia was oversold at $22 after the Nuplazid conflict with the FDA. The article cited the company’s substantial growth in sales year over year and said it expected the shares to rebound in the near term. So far, that prediction hasn’t materialized.
Still, analysts are more optimistic about the company’s prospects. On Nov. 1, Guggenheim upgraded the shares from neutral to buy. Among 10 analysts, Acadia is now rated a buy or strong buy by eight of them: That’s a huge improvement from just a month earlier, when 15 of 21 Wall Street professionals surveyed by Yahoo Finance had the stock as a hold. The company has an average target price of just over $27 and a high of $39.
In the third quarter, Acadia topped the Zacks Consensus Estimate for revenue and earnings. Net sales of Nuplazed were $131.6 million for the three months ended Sept. 30, an increase of 9% as compared to the same period a year earlier. For the nine-month period in 2021 and 2020, Acadia reported net product sales of $353.4 million and $320.7 million, respectively.
For the quarter, the company reported a net loss of $14.5 million, or 9 cents per common share, compared to a net loss of $84.7 million, or 54 cents per common share, for the same period in 2020. For the nine months ended Sept. 30, the company reported a net loss of $124.8 million, or 78 cents per common share, compared to a net loss of $214.8 million, or $1.37 per common share, for the same period in 2020.
