JPMorgan Lifts Acadia Price Target After Nuplazid Patent Victory

In May, the U.S. District Court for the District of Delaware ruled in favor of ACADIA Pharmaceuticals Inc. ACAD regarding its ‘721 formulation patent for Nuplazid (pimavanserin), Acadia’s drug for the treatment of Parkinson’s Disease Psychosis.

In order, the court ruled in favor of Acadia on infringement and validity arguments in its formulation patent litigation against Aurobindo Pharma Limited and other ANDA (Abbreviated New Drug Application) filers.

“We are very pleased with today’s decisive ruling in our favor, which provides patent protection for NUPLAZID 34 mg capsule formulation into 2038,” said CEO Catherine Owen Adams.

JPMorgan sees the ruling as “as a clear positive.”

Also Read: Acadia Pharmaceuticals (ACAD) Stock Explodes 26% After Patent Court Victory

Analyst Tessa T Romero writes, “We believe it is logical to assume the parties would appeal the ruling, a process that could take ~1-2 years from start to finish.”

JPMorgan on Friday increased the price target from $26 to $30, reiterating the Overweight rating.

The analyst also notes the appeal in the composition of matter (COM) patent litigation at the U.S. Court of Appeals for the Federal Circuit is scheduled for June 6. The patent at issue is the ‘740 COM patent, which covers pimavanserin and salts thereof into 2030, including a patent term extension approved by the U.S. Patent and Trademark Office.

The JPMorgan analyst is confident that the U.S. Court of Appeals will favor Acadia on the ‘740 patent case. The analyst points to three reasons:

• In December 2023, a lower court ruled in Acadia’s favor, confirming the patent’s validity.
• A similar case involving Allergan also ended positively, which supports Acadia’s position.
• Legal experts consulted by JPMorgan believe there’s a 95% chance the ruling will go Acadia’s way.

The increased price target is based on the analyst’s conviction around a favorable outcome from the U.S. Court of Appeals for the Federal Circuit on the ‘740 patent.

Analyst Romero extended Nuplazid LOE assumption to 2038 from 2030 and, at the same time, accounted for potential headwinds from price negotiations under the IRA in the outer years as well as potential competitive threats from certain generic entrants, which could become available following the expiry of Nuplazid’s COM patent in 2030.

ACAD Price Action: ACADIA stock is up 2.18% at $21.81 at publication on Friday.

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