Acadia Pharmaceuticals Inc. (Nasdaq: ACAD) have roughly doubled over the past two trading days on expectations that the Phase III clinical data for its Parkinson’s related psychosis candidate pimavanserin will be released soon, and the trial will meet its primary endpoint.
Institutional investors are piling on heavily in the options market on nearly 20 times average volume, as the stock’s chart now shows breakout potential to $8.
Top-line results for the first of two Phase III trials is expected by the end of the third quarter, which has the market positioning for potentially positive news in coming days.
Last April, pimavanserin met the endpoint of the study as it did not worsen Parkinson’s symptoms. The candidate was well tolerated by test subjects. It also showed promise as a co-therapy for schizophrenia in a Phase II study back in March 2007.
Nearly $16.7 billion will be spent in the U.S. this year on medications to treat mental illnesses including bipolar disorder schizophrenia, according to Thomson Pharma. The top drug in the antipsychotic category is the bipolar disorder drug Seroquel, made by AstraZeneca plc (NYSE: AZN), with expected sales of $5.4 billion, accounting for about a third of all antipsychotic drug sales. The No. 2 drug in the category is Eli Lilly & Co.’s (NYSE: LLY) Zyprexa, for treating bipolar disorder and schizophrenia. Expected sales this year are $4.6 billion.
Has the stock rallied too much? Perhaps. The stock has added nearly $90 million in market value over the past two sessions. The speculative rise in value comes on anticipation that the candidate could find a market among a potential market of only 600,000 patients in the U.S. But pimavanserin may only have a small portion of that market, especially at the beginning.
The market now appears to be pricing in expectations that pimavanserin will find a specialized market in Parkinson’s patients, as well as a larger market in treating Alzheiemer’s disease psychosis. If approval were granted for both conditions, the drug could then reach a potential market of 2.5 million patients or more.
That however, is not likely to happen for several more years, if it happens at all. – Mike Tarsala
