Acadia Gets Halved (ACAD)

Acadia Gets Halved

Looking at how Acadia Pharmaceuticals (Nasdaq: ACAD ) lost almost half its value yesterday, you'd think that the company lost half of the drugs in its clinical pipeline.

Oh wait, it did lose half the clinical-stage drugs in its pipeline.

The development-stage drugmaker announced yesterday that its ACP-104 failed to show an effect treating schizophrenia patients in its phase 2b trial. In a refreshing move, unlike many companies without drugs on the market, Acadia didn't candy-coat the results and talk about how it'll analyze the data and try to test it against another disease. Besides publishing the negative results, it sounds like Acadia is done with ACP-104 and on to bigger and better things.

Essentially, that leaves Acadia with another antipsychotic, pimavanserin, which was previously referred to as ACP-103. It also has a deal with Allergan (NYSE: AGN ) to develop drugs to treat pain caused by neurological damage. Acadia could get milestone and royalty payments if Allergan successfully develops drugs from the partnership.

Pimavanserin is in two phase 3 trials, testing its ability to treat psychosis caused by the progression of Parkinson's disease. These trials should start to produce data next year. It's also being tested as a treatment for insomnia and, in combination with Johnson & Johnson's (NYSE: JNJ ) Risperdal, as a treatment for schizophrenia. The latter two indications seem to be on hold until Acadia can find a partner for pimavanserin.

Speaking of partners, Acadia has been saying that it would like to find a partner for pimavanserin since the phase 2 schizophrenia data came out in March of last year. Given the lack of a partner 15 months later, it seems like big pharma isn't all that interested in the drug -- and the lack of a backup drug, now that ACP-104 is out of the picture, would seem to work against Acadia at the bargaining table. Fortunately, the company doesn't have to find a partner for the drug tomorrow; Acadia says that it has enough money in the bank to make it through 2009. Even so, I'm sure investors would rather see one sooner rather than later.

Market making you crazy? Maybe this Foolishness can calm you:

Teva may get an exclusive selling period for its generic version of Johnson & Johnson's Risperdal.
The FDA wasn't too happy with Eli Lilly's long-lasting Zyprexa.
Corcept is still trying to get Corlux approved.

The Steve Jobs Betrayal
You may already know that in the final year of his life, Jobs revealed a stunning betrayal — and told his biographer, "I will spend my last dying breath... and every penny of Apple's $40 billion in the bank to right this wrong." What was it that made Jobs so irate — and why could it make a few in-the-know investors some major profits over the coming months and years?

Enter your email address below to find out what made Jobs so enraged!

Motley Fool Rule Breakers is always on the hunt for hot drug stocks and other cutting-edge picks. Click here to see all of our latest discoveries with a free 30-day trial subscription.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Johnson & Johnson is a selection of the Income Investor newsletter. The Fool has a disclosure policy.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.