What happened
Shares of Acadia Pharmaceuticals (ACAD -1.47%) rose by as much as 19.2% in premarket trading Tuesday morning. The biotech's stock is taking flight today in response to a positive clinical readout for its experimental Rett syndrome drug known as trofinetide.
Rett syndrome is a rare genetic disorder characterized by the progressive degeneration of motor and speech skills. This inherited disorder affects girls almost exclusively.
Image source: Getty Images.
So what
After the closing bell yesterday, Acadia announced that trofinetide met both of its co-primary endpoints, as well as a key secondary endpoint, in the phase 3 Lavender trial. The drug's safety profile is a point of concern, however.
A noteworthy 17.2% of patients in the trofinetide group reportedly dropped out of the study due to treatment emergent adverse events, compared to only 2.1% in the placebo group. Fortunately, the most common side effects associated with the drug, diarrhea and vomiting, are treatable in most cases.
Now what
Acadia plans on having a pre-regulatory filing meeting with the Food and Drug Administration (FDA) early in 2022. The company expects to have trofinetide under regulatory review with the FDA by the middle of next year if this upcoming meeting goes according to plan.
What does trofinetide mean to the company from a top-line standpoint? Acadia thinks this experimental Rett syndrome drug could generate upward of $500 million in sales at peak. That's a tidy sum for a company with a $3 billion market cap. That being said, the FDA still has to weigh in on the drug's clinical profile.
Shareholders, in turn, probably shouldn't start baking these future trofinetide sales into their valuation models just yet. The regulatory review process, after all, is rarely straightforward.
