What happened

Shares of ACADIA Pharmaceuticals (NASDAQ:ACAD) soared 46% last month, according to data provided by S&P Global Market Intelligence. The catalyst was a positive statement from the U.S. Food and Drug Administration at the conclusion of a postmarketing review of Nuplazid, approved to treat hallucinations and delusions associated with Parkinson's disease, in which the regulatory body reaffirmed the treatment's safety profile. 

Additionally, the FDA reminded healthcare providers that Nuplazid is the only antipsychotic drug approved to treat Parkinson's disease psychosis. Considering the drug posted revenue of roughly $106 million in the first half of 2018 and is the only commercial product of ACADIA Pharmaceuticals, the results of the postmarketing review were about as good as investors could have hoped for. But investors still need to watch one key metric going forward. 

Several lines on a chalkboard trending upward.

Image source: Getty Images.

So what

As The Motley Fool's Dr. Brian Orelli noted in September, the FDA initiated the postmarketing review following a report that alleged hundreds of patients taking Nuplazid had died, and that the drug played a critical role. That worried investors, especially considering Nuplazid comes with a boxed warning that it can increase the risk of death in elderly patients with dementia-related psychosis.

However, after reviewing the data on patient deaths where Nuplazid was prescribed, the regulatory body concluded that the safety profile of the drug since marketing approval has been consistent with observations from clinical trials. That said, the significant negative publicity may cause doctors to hesitate to prescribe the drug. That's why investors need to keep a close eye on Nuplazid sales in the coming quarters to make sure the growth story remains intact.

Now what

Investors can breathe a sigh of relief -- for now. While Nuplazid escaped further regulatory scrutiny, there's still an open question of whether or not the drug's commercial prospects will be harmed going forward. Considering the drug comprises four of five clinical programs under development by ACADIA Pharmaceuticals, this may not be the last time investors are confronted with uncertainty or hesitation concerning the drug's safety.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.