Acadia Pharmaceuticals: Here's What You Should Know About Its Surging Shares

Acadia's (ACAD) promising drug for Parkison's and Alzheimer's has investors cheering

Feb 26, 2014 at 2:30PM

If you're caring for someone with Parkinson's disease or Alzheimer's, you should be watching Acadia Pharmaceuticals (NASDAQ:ACAD). Acadia plans to file its novel compound for Parkinson's psychosis, or PDP, later this year, a move which could significantly change how patients are treated.

Last year, the FDA agreed to consider the use of just one late stage study as the basis for approving Acadia's new drug, pimavanserin. That news sparked a rally in Acadia's shares, resulting in Acadia being among last year's best performing biotechs.

ACAD Chart

ACAD data by YCharts

Why is this drug better than anti-psychotics?
Doctors treating PDP are stuck in a tough spot. They can use currently available anti-psychotic medication off-label; however, those medications possess black box warnings against use in elderly patients. Or, they can opt against treating the hallucinations and delusions recognizing the decision may speed patients more quickly into institutional care. Sadly, both choices could have significant impacts on patient morbidity.

Another drawback of using anti-psychotics in PDP patients is that they are designed to block dopamine receptors. However, those receptors are key targets of current Parkinson's treatments like generic Levodopa -- marketed by drugmakers including Mylan (NASDAQ:MYL) -- that boost motor control by manipulating the amount of dopamine in the brain. As a result, prescribing anti-psychotic drugs can effectively reduce Levodopa's benefit. 

Given anti-psychotics' poor profile, some doctors have shifted to prescribing atypical anti-psychotic medication like AstraZeneca's (NYSE:AZN)blockbuster Seroquel or Eli Lilly's (NYSE:LLY) former blockbuster drug Zyprexa; however studies haven't demonstrated efficacy for Seroquel or Zyprexa in PDP.  

Importantly, atypical anti-psychotics like Seroquel and Zyprexa may still reduce motor ability; they just do so less than first generation anti-psychotic medication. Additionally,Seroquel and Zyprexa remain contraindicated for use in elderly patients and dementia patients.

That suggests doctors may welcome pimavanserin with open arms. The drug not only lowered the number of psychotic events in trials, but its different mechanism of action showed it didn't interfere with Levodopa either.

Why should Alzheimer's patients care?
The troubles facing doctors treating PDP are similar to the challenges they face treating psychosis in Alzheimer's patients.

Anti-psychotic medication isn't recommended for use in elderly patients prone to the disease, and may increase mortality; however, not prescribing them could mean patients move more quickly into nursing homes.

So, Acadia is advancing pimavanserin through mid stage trials designed to determine whether the drug can successfully reduce psychotic events in Alzheimer's too. If the company's phase 2 trial is a success, it will launch into phase 3, and since the FDA has already indicated a willingness to consider a filing without multiple late stage studies for PDP, the company believes it will take a similarly favorable stance for ADP. That means less money spent on trials, and a quicker path to market.

How big is the need for this treatment?
Both PDP and ADP affect significant populations, without approved medications. Up to 40% of the 1 million Parkinson's patients in the U.S. will develop PDP and as many as half of the 5.4 million Alzheimer's patients may also be diagnosed with ADP during their lifetime.

While it's tough to gauge how much money drug makers are making from off-label scripts for anti-psychotics, it's potentially big given how much money anti-psychotic drugs are bringing in.

Before losing patent protection, Lilly was selling more than $800 million worth of Zyprexa each quarter. Astra sold more than $300 million worth of the extended release version of Seroquel XR in Q4, making it the 46th best selling drug in the U.S.,  and the original formulation of Seroquel was producing more than $1 billion a quarterly sales for Astra prior to losing exclusivity in 2012.

Fool-worthy final thoughts
As baby boomers age, there are likely to be more cases of Parkinson's and Alzheimer's. Currently, more than 50,000 patients are diagnosed with Parkinson's each year, and 11% of those over 65 years old are diagnosed with Alzheimer's.

Since so many of those patients will develop psychosis, and given there aren't any approved treatments for those that do develop it, it appears there may be a significant unmet need. Whether Acadia can tap into that need and produce enough sales to justify its current $2.6 billion market cap remains to be seen; however it isn't beyond possibility that an approval of pimavanserin would make the company attractive to a larger company, particularly to one of the makers of the anti-psychotics it seeks to displace. Regardless, Acadia remains a developing and speculative play.

Another early stage stock-and a $14.4 trillion market
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980's, before the consumer computing boom. Or purchasing stock in e-commerce pioneer in late 1990's, when they were nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play", and then watch as it grows in EXPLOSIVE lock-step with it's industry. Our expert team of equity analysts has identified 1 stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.


Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have shares in the companies mentioned. Todd also owns Gundalow Advisor's, LLC. Gundalow's clients do not have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information