Acadia Shares Soar on Alliance With Biovail for Parkinson’s Psychosis Drug

5/4/09Follow @xconomy

Acadia Pharmaceuticals struck an important deal this morning to continue developing a Parkinson’s drug. The San Diego-based biotech company said it will get $30 million in upfront cash through an alliance with Biovail to develop a new drug for psychoses related to Parkinson’s and Alzheimer’s disease.

Acadia (NASDAQ: ACAD) stands to get as much as $395 million in milestone payments from Mississauga, Canada-based Biovail. Besides the upfront payment, Acadia stands to get $160 million in milestone payments if it can successfully complete clinical trials and regulatory applications, another $160 million in sales milestones, and $45 million if the drug can be applied for another use. Acadia will receive 15 percent royalties on sales below $100 million a year, and that percentage will rise to 20 percent for sales above that threshold.

The news was a major boost to Acadia, causing its stock to more than double this morning from $1 to $2.52 at 9:53 am Eastern. Even more importantly, the partnership brings in much needed cash. Acadia had about $60 million in cash entering this year. So this deal, in combination with a Japanese partnership announced in March that brought in $25 million upfront, will keep its balance sheet from relatively healthy compared to the many biotechs running out of money for their drug development programs.

The drug, pimavanserin, is designed to block a receptor called 5-HT2a, which appears on cells in the brain. The compound is currently in the final stage of clinical trials for patients with psychosis related to Parkinson’s disease. Psychosis is considered common in Parkinson’s patients, and is thought to be caused by overuse of the standard L-dopa medication to relieve symptoms of the disease, like tremors and rigidity. About 1.5 million people in the U.S. have Parkinson’s, and Acadia estimates that as many as four out of 10 patients suffer from psychosis, which can be in the form of hallucinations or delusions. There is no treatment for this condition in Parkinson’s patients.

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