Why These 2 Biotech Stocks Made Big Moves Late Thursday

The bull run continued on Wall Street, as the Nasdaq Composite (^IXIC 2.02%) once again had the biggest gains following an encouraging start to earnings season. Gains for the Dow Jones Industrial Average (^DJI 0.40%) were minimal, while the S&P 500 (^GSPC 1.02%) largely split the difference with solid gains.

Data source: Yahoo! Finance.

After the closing bell, biotech stocks were in the news. Acadia Pharmaceuticals (ACAD 2.45%) soared on a strategic deal that could be extremely lucrative for the company, but Theseus Pharmaceuticals (THRX) suffered a catastrophic loss on discouraging news regarding a clinical trial.

Here are all the details you need to know.

Acadia makes a deal

Shares of Acadia Pharmaceuticals jumped 23% in after-hours trading on Wall Street. The biotech company made a strategic move that could help it grow its business over the long haul.

Acadia entered into a deal with Australia's Neuren Pharmaceuticals that expanded its previous licensing agreement for its Rett syndrome treatment trofinetide, also known as Daybue. The expansion gives Acadia the rights to the drug for marketing outside North America. Daybue was the first treatment for Rett syndrome to receive U.S. Food and Drug Administration approval for treating the core symptoms of the disease.

In addition, the two parties broadened the scope of the licensing agreement to include global rights for another Neuren candidate treatment. Acadia will now have the rights to NNZ-2591, which is also a treatment for patients with Rett syndrome, as well as those suffering from Fragile X syndrome.

Under the deal, Neuren will get a $100 million payment up front. In addition, additional milestone payments of up to $427 million are available for both trofinetide and NNZ-2591, as well as potential royalty payments.

Acadia also released preliminary sales and guidance figures that show it generating $575 million to $600 million in revenue from Daybue and its Nuplazid treatment in 2023. That's well above what most investors were expecting, and it shows that Acadia is making progress toward reaching its growth goals.

Theseus gives up on THE-630

Moving the other way, shares of Theseus Pharmaceuticals plunged 70% in after-hours trading late Thursday. The biotech company took an extreme step with one of its candidate treatments, prompting the move lower.

Theseus announced that it would discontinue enrollment in its phase 1/2 study of gastrointestinal stromal tumor (GIST) candidate treatment THE-630. A pair of patients in the study experienced hand-foot skin reactions upon having their doses of the drug increased under the parameters of the study, which triggered the determination that the higher dosage exceeded the maximum tolerated dose.

The problem, though, is that Theseus doesn't believe that lower dosages will be adequate to show meaningful improvement, as it would provide exposure well below the target level Theseus had set. As a result, the company has terminated development of the candidate treatment for GIST patients.

That's not the end of Theseus, as the company hopes that it might be able to use lower dosages of the treatment in fighting mutations of the KIT gene. Accordingly, the company expects to choose a development candidate among potential KIT inhibitors in the first half of next year.

Theseus has enough cash on hand to fund operations until 2026 based on its current plans. However, the setback with THE-630 was significant, and investors now have to hope that other pipeline candidates will fare better.