Shares of Acadia Pharmaceuticals Inc. (NASDAQ:ACAD), a biopharmaceutical company focused on treating central nervous system disorders, fell 19.1% last year, according to data from S&P Global Market Intelligence. Clinical trials with its lead drug, Nuplazid, gave mixed signals regarding an important label expansion.
Nuplazid recently earned approval from the Food and Drug Administration as a treatment for the roughly 400,000 U.S. patients with Parkinson's disease-related psychosis. Last April, it became the first drug to receive a green light from the FDA for this indication, but the $5.37 million in revenue the drug has recorded since its launch and the end of September didn't come close to stopping the company from bleeding money.
An approval for Alzheimer's disease related psychosis would expand Nuplazid's addressable patient base by perhaps 1 million patients or more. Unfortunately, the stock has been on a roller coaster while analysts argue about the significance of data presented from a trial with Nuplazid in Alzheimer's patients.
In a 181-patient study, patients receiving Nuplazid produced psychosis test scores better than those given a placebo. Unfortunately, the improvement was just strong enough to be considered statistically significant at six weeks, and at 12 weeks the benefit decreased to an insignificant level.
In the first nine months of 2016, Acadia Pharmaceuticals lost $194.6 million, and advancing Nuplazid into a large enough Alzheimer's disease trial to support an FDA application would probably increase its cash burn rate, with a chance it may not succeed.
With $588.9 million in cash on its books at the end of September, the company probably won't need to visit the equity tap again to keep operations humming along. It's expected to generate about $86 million in revenue this year from Nuplazid in the Parkinson's disease indication.
Investors will want to keep an eye on Nuplazid sales and look for more concrete data on its benefits in Alzheimer's disease. The drug is also being investigated for a benefit in patients with major depressive disorder and schizophrenia, making its peak potential hard to estimate. Nuplazid could top out with annual sales of more than $2 billion, but it's still too early to be certain.