Acadia's FDA Breakthrough Designation For Pimavanserin Draws Mixed Response

ACADIA Pharmaceuticals Inc. ACAD stock initially jumped above $41 per share on Thursday after the FDA granted Breakthrough Designation to the company’s dementia-related psychosis drug candidate Pimavanserin. However, the stock quickly reversed direction as the market digested the news and was trading at under $39 in the early afternoon session as the market digests the news.

In addition to the FDA ruling, Acadia announced it's initiating its Phase II trial of Pimavanserin for treatment of DRP. Piper Jaffray analyst Charles Duncan said that the market’s initial bullish reaction was the correct one.

“Yesterday’s reveal of a novel clin/reg strategy in a broad set of dementia-related psychoses, which we see as risk-reduced by previous data and trial design, enhances our conviction in ACADIA driving upside to its base case in PDP,” Duncan wrote in a Thursday note.

Acadia is also terminating its Phase II SERENE study related to Alzheimer’s agitation/aggression to focus on collecting patients for the new Phase III HARMONY study. Duncan said focusing on the HARMONY trial is the right move for the company, as positive results could result in a much larger indication than just Alzheimer's patients.

However, Stat News biotech reporter Adam Feuerstein wasn’t thrilled with the decision to discontinue the Alzheimer's study. He blasted both Acadia and the FDA ruling in a series of tweets on Wednesday:

PiperJaffray expects the new Phase III program will take roughly two years to complete.

In light of the news, Piper Jaffray raised its price target for Overweight-rated Acadia stock from $54 to $61.

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