Acadia Pharmaceuticals' Alzheimer's Data Raises Some Questions

Acadia Pharmaceuticals (ACAD -1.46%) recently reported intriguing mid-stage study data for Nuplazid in Alzheimer's disease psychosis, which sent shares surging higher. However, the trial results do raise some important questions regarding the durability of Nuplazid's benefit and the likelihood of a phase 3 success. Can Nuplazid deliver an important win for Acadia in this tough-to-treat disease?

In this clip from The Motley Fool's Industry Focus: Healthcare podcast, analyst Kristine Harjes is joined by contributor Todd Campbell to discuss the trial results and highlight what should be on investors' minds as Acadia Pharmaceuticals preps for phase 3 studies.

A full transcript follows the video.

This podcast was recorded on Dec. 21, 2016.

Kristine Harjes: Some exciting Alzheimer's research results from a company called Acadia Pharmaceuticals came out yesterday.

Todd Campbell: Really interesting data. I think it's very helpful to walk investors through the pluses and potentially the minuses associated with the information that was released by Acadia Pharmaceuticals. I don't think this is a stock that we have talked about in the past on the show, Kristine, do you?

Harjes: I don't believe we have ever talked about them. The deal with them is, they have this one drug, it's called Nuplazid. It is already approved for Parkinson's disease psychosis. Now, they're testing it in Alzheimer's disease psychosis.

Campbell: Right. This year, they just launched this drug, Nuplazid, for the treatment of hallucinations and delusions within Parkinson's patients. It's estimated that about 40% of all Parkinson's patients suffer from psychosis that this drug can address. The company is researching this drug across a number of different similar indications where they think they may also be able to help. One of those indications, obviously, is Alzheimer's disease, where they've been evaluating the drug in treating Alzheimer's disease psychosis, which is estimated to affect between 25% to 50% of the Alzheimer's disease population.

Harjes: Correct me if I'm wrong, but that's a much larger number of people total.

Campbell: Yeah. You go from 40% of a million with Parkinson's, so that's 400,000, to even 25% of the 5 million Alzheimer's disease patients, that's an extra million. So, you're talking about potentially going from being able to address 400,000 people to being able to address 1.5 million.

Harjes: So, the news that came out yesterday was some data from phase 2, saying that they had success, and six weeks into the trial there was a statistical benefit. The stock was up 12% on the news.

Campbell: Yeah, the stock was slated to open pre-market up as much as 40%.

Harjes: Wow! I missed that!

Campbell: Yeah, don't ever trust pre-market or after-market, they're illiquid market quotes, and they're not going to tell you anything other than, maybe, direction. They'll tell you if it's indicated up or down. But I wouldn't count on up 40% or down 40% read.

Harjes: That's crazy.

Campbell: Yeah. Once it opened up, the shares traded pretty volitively. It got down to a single-digit gain, then went back up to a double-digit gain by the end of the day. I think the reason for all of that is that first of all we've been desperate for new advances in Alzheimer's disease treatment. There's not a lot of good treatments out there. The only things we have out there treat the symptoms, they don't curb or crimp the disease.

Harjes: Yeah. Every stock working in this space has been extremely volatile, trading emotionally up, down, every which way on Alzheimer's news.

Campbell: Right. Big disclaimer, even the data were giving you today is phase 2 data. If any indication has shown that phase 2 data does not hold a lot of water, it's Alzheimer's disease. So you have to take this with a big grain of salt. But there's another reason that I want investors to take this with a big grain of salt.

Harjes: Yes there is.

Campbell: What was that, Kristine?

Harjes: Yes there is, I was going to say it if you weren't going to, lay it out.

Campbell: Well, I don't know if it's the same thing you're going to mention, but I wasn't thrilled with the P value.

Harjes: Yep. (laughs) That's where I was going, as well. The P value here for the six weeks was 0.045, which, reminder about P values, it's a statistical measure. Basically, you want to see less than 0.05. We had 0.045, that's green light, in the clear, you're fine. But it's kind of close to that threshold of 0.05.

Campbell: Especially with a small patient population. I mean, I don't want to call it tiny --

Harjes: It's 181.

Campbell: Yeah. But compared to how big this indication is, and how big previous Alzheimer's disease studies have been, this doesn't feel like a lot of patients to me.

Harjes: Right. And some other things to note here is that in the Parkinson's disease trial, you had a P value of 0.001. That is way, way below the 0.05 that is the traditional threshold.

Campbell: Right. That's the gold standard number. That's what you would want to have.

Harjes: Absolutely. The other detail that's worth mentioning, I mentioned this data was from six weeks -- when you look at the 12-week numbers, the treatment group that was receiving this drug, their numbers held steady. But the placebo group experienced a placebo effect that brought them in line with the treatment group, essentially closing the delta between the two groups, and then eliminating even that 0.05.

Campbell: Right, so you look at this, you have a P value of 0.045, you have a benefit that loses its statistical significance between the six week and 12 week mark. What does that mean? The approval in Parkinson's disease was based on six week data. So you could make an argument that six week is fine. The other thing I'm curious about is the choice of the study or the scale or the score that they used for evaluating these patients. It was a nursing home score, because all of these were nursing home patients. That isn't necessarily one that you see typically used in psychology trials or Alzheimer's disease trials. They were asked about it on the conference call, and they did say another more common scoring system that was used didn't show a significant benefit. So, there's a lot of question marks here that make me say: Rein in some enthusiasm and let this thing play out, because we have seen, way too often, investors get excited about Alzheimer's disease drugs that just do not pan out in large studies.

Harjes: Yep, it's a lesson that watchers of this space are learning again and again lately.