Why Nuplazid Alzheimer’s Data Is Great for ACADIA Pharmaceuticals (NASDAQ:ACAD) Stock Owners, & Acquirers

- December 20, 2016

acad-stockACADIA Pharmaceuticals (NASDAQ:ACAD) saw its valuation jump 18% after reporting that Nuplazid met its primary endpoint of a statistically significant reduction in psychosis at week 6 versus placebo. However, ACAD stock has since given back half of its gains due to rising questions about the study’s design, and whether or not the results are positive.

The randomized study enrolled 181 patients to receive either 34 mg of Nuplazid or placebo everyday. Nuplazid showed a 3.76 point improvement at week 6, compared with 1.93 for placebo, as measured by a scale called Neuropsychiatric Inventory-Nursing Home (NPI-NH). However, the drug essentially quit working by week 12, or was too small of a margin to be statistically significant.

Some argue that the marginal benefit versus placebo at 6 weeks, coupled with the inability to show a statistically significant benefit at 12 weeks, suggests that Nuplazid will be unsuccessful in a larger Phase 3 trial. However, we beg to differ, and believe the implications of this data are far greater than ACADIA stock bears realize.

With that said, BNL Finance is bullish ACAD stock, but has also been very fair to criticize management for their lack of marketing ability. We even suggested recently that 2017 is setting up to be a challenging year for ACAD stock owners. Nonetheless, our long-term outlook is bullish because we believe the market is significantly undervaluing the potential for a drug like Nuplazid.

Why Nuplazid data is positive for ACAD stock

Nuplazid is the only drug ever approved to treat Parkinson’s disease psychosis, and if approved for Alzheimer’s drug psychosis, it will be the only drug approved in that label as well. Nuplazid has a Breakthrough designation; was granted a fast track approval by the FDA; and has very few side effects in an antipsychotic market that is dominated by unsafe drugs.

Therefore, Nuplazid has a lot of superlatives to its name. That’s important because there is no industry of healthcare with a higher degree of off label drug usage than antipsychotics. While ACADIA Pharmaceuticals management will never admit it, the “successful Phase 2 study” in treating Alzheimer’s disease just gave Nuplazid another ribbon. For a patient population that has no current treatments, and for doctors who currently use unproven drugs as a form of treatment, these Phase 2 results go a long way towards letting Nuplazid span beyond PDP.

Granted, many will say that’s unethical, but it is the current reality of how diseases in this space are treated. Nuplazid is a low-risk drug that just proved successful in treating patients in a Phase 2 trial. That could be enough for ACADIA Pharmaceuticals and Nuplazid to start dipping into the ADP space before the Phase 3 trial enrolls. Furthermore, physicians could start feeling more comfortable about using Nuplazid as a way to treat conditions like anxiety, depression, etc. In the past, we suggested that Nuplazid could become the Aspirin of this industry, and we still think that’s a very real possibility.

Beyond the potential for off label usage, we think ACADIA Pharmaceuticals has a shot to succeed in the larger Phase 3 trial. Remember, it is not going head-to-head with a successful drug. Currently, there are no approved drugs for ADP, which means marginally effective is better than nothing at all. ACADIA just proved that Nuplazid does work to treat ADP, regardless if it is “marginal”. And with 183 patients in that randomized study, one has to believe the Phase 2 results could carry to Phase 3.

Ultimately, this bodes well for ACAD stock.

Continue to page 2 for a look at ACADIA’s M&A outlook following these results

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