Pros And Cons Of All The News Out Of Acadia Pharma This Week

At time of publication, shares of Acadia Pharma were up 1.12 percent at $38.73 in Friday's pre-market session.

Analyst Paul Matteis noted that Acadia Pharma announced the initiation of a phase III study, dubbed HARMONY, to assess pimavanserin in various dementia-related psychosis.

The analyst clarified that the study will include patients with Alzheimer's disease, dementia with Lewy Bodies, Parkinson's disease, vascular dementia and frontotemporal dementia.

Leerink expressed surprise at the breadth of the patient population in this pivotal study, which was previously aimed at patients with AD. The firm sees both merits and shortcomings to this broader approach.

The firm noted that the company is simultaneously discontinuing enrolment in the ongoing phase 2 pimavanserin AD agitation study due to patient/site overlap with this new phase III program. The firm also noted that the FDA has granted the Breakthrough Therapy Designation to pimavanserin for treating dementia-related psychosis.

Significance Of FDA's Breakthrough Therapy Designation

If a drug is designated as a breakthrough therapy, the FDA expedites the development and review of such a drug, by rolling reviews, allowing smaller clinical trials or giving alternative trial designs. The FDA would review the requests for BTD within 60 days of receipt and would either grant or deny the request.

Leerink said the receipt of BTD renders the full data presentation at CTAD on Nov. 3 to be of greater interest. The firm views both the FDA according BTD and allowing for a single pivotal study as encouraging, especially with respect to how the agency views pimavanserin safety.

If the study succeeds, the firm thinks the addressable population could be very large, rendering how it currently models the Alzheimer's Disease Psychosis revenue opportunity conservative.

Challenges Remain, Risky Strategies Persist

However, the firm sees additional challenges in this basket approach to this new phase III study. The firm said the inclusion of such a heterogeneous population in a single pivotal is a risky strategy.

"Psychosis across some of the dementias outlined above has to our knowledge never before been studied in a rigorous[ly] controlled trial (though Lewy Bodies Dementia psychosis is known to have some similarities to PDP)," the firm said.

Meanwhile, the firm believes the receipt of BTD could create excitement for the stock ahead of the CTAD meeting. Given the discontinuation of the AD agitation study, the firm said the next major dementia readout for pimavanserin may not occur until 2020.