Nuplazid’s Phase 2, marginally effective, data on Alzheimer’s disease psychosis was the last major catalyst for ACAD stock until February script data next month. Beyond that, 2017 is not figured to be too exciting for ACADIA Pharmaceuticals Inc (NASDAQ:ACAD).
However, we believe the marginally effective ADP data is a big deal because it opens the door for increased off label usage of Nuplazid. This is an ACAD stock catalyst that we believe the market has ignored. That’s because reimbursements for off label drug use in today’s market is not an easy task, especially given Nuplazid’s price.
This belief does not weigh the fact that off label drug use in the antipsychotic market is profound. It’s kind of the status quo in this particular space. In fact, we have reason to believe that off label usage of Nuplazid is becoming more prevalent, and will increase throughout 2017 because of the marginally effective ADP results and lack of options.
Nuplazid and Lewy body dementia
Lewy body dementia is a disease with effects that are similar to Parkinson’s disease. According to sources, Acadia Pharmaceuticals’ Nuplazid is currently seeing some use for Lewy body dementia as an off label treatment.
While some may be skeptical regarding Nuplazid’s off label potential, the fact that Lewy body dementia has no FDA approved options and is close enough to PDP, physicians can get Nuplazid approved for use by “documenting failure with other treatments” as an “accepted alternative (Nuplazid)” to obtain insurance approval, according to one source.
Remember, there are only one million Parkinson’s disease patients, and psychosis occurs in just 25-60% of those patients. However, there are 1.4 million patients with Lewy body dementia and a whopping 5.2 million with Alzheimer’s disease. Collectively, that’s the three most common neurodegenerative conditions.
That said, I can not speak to the percentage of Nuplazid scripts that are being used off label. However, if physicians are using Nuplazid for Lewy body dementia, and getting reimbursed, then ADP should not be that difficult.
Like Lewy body dementia and PDP before Nuplazid, there are no FDA approved treatments for ADP. In a market where off label usage is prevalent, one has to believe that our theory on ADP data sparking an increase in off label Nuplazid usage could be right.
If so, this would be a huge catalyst for ACAD stock.
ACAD stock in 2017
If Nuplazid works to treat the symptoms of PDP, there’s a good chance physicians will try Nuplazid as a treatment for all three neurodegenerative conditions. This is especially true given Nuplazid’s Phase 2 success in treating ADP and the lack of treatment options Lewy and ADP.
The one wildcard has always been reimbursement. However, if physicians are getting Nuplazid approved to treat Lewy body dementia, then chances are they can with ADP too.
With that said, I am not certain that Nuplazid script data will be all that robust in February due to rising expectations and management’s own shortcomings. However, by the middle of 2017, Nuplazid sales should far outpace Acadia Pharmaceuticals’ full year revenue expectations of $86 million. If so, expect gains in ACAD stock.