Acadia Pharma Shares Crash After Lead Parkinson’s Drug Fails in Trial

9/1/09

San Diego-based Acadia Pharmaceuticals stock price collapsed today on news that its drug for psychosis related to Parkinson’s disease failed in a late-stage clinical trial. It’s a big setback for the small firm because it has no products on the market, and the Parkinson’s drug was the candidate furthest along in its development pipeline.

The company (NASDAQ:ACAD) reported this morning that its experimental drug, pimavanserin, was unable to significantly reduce the number of hallucinations and delusions associated with Parkinson’s disease when compared with a placebo in a study of 298 patients. While two groups in the trial that were treated with pimavanserin showed a reduction in psychotic events, there was also an “unexpected” reduction in such occurrences in the patients who took placebo, according to the company. Acadia’s stock price lost more than two-thirds of its value on the news, and shares traded as low as $1.87 just before noon Eastern time.

As Denise wrote back in May, Acadia had been hoping to silence its critics on Wall Street by reporting positive results in this trial. Also, this clinical trials setback is a blow to Parkinson’s disease patients because there are no approved treatments for psychosis related to their illness. Parkinson’s is a chronic neurodegenerative disease that affects about 1.5 million people in the U.S., according to the American Parkinson Disease Association, and an estimated 40 percent of patients suffer from psychosis. This is also bad news for Acadia’s collaborator Biovail, the Canadian biotech firm that forked over $30 million upfront this spring as part of deal to develop pimavanserin for Parkinson’s patients.

Still, Acadia is awaiting results of a second late-stage clinical trial of pimavanserin and is also developing the drug to treat Alzheimer’s disease, according to Alan Carr, a biotech analyst at investment banking and research firm Needham & Company in New York. “While we expect the stock to trade at… $1.78 [per] share … for the foreseeable future, we believe there is modest long-term potential for pimavanserin in another [central nervous system] indication,” Carr wrote in a note to investors this morning. His firm is maintaining a “hold” rating for Acadia’s stock.

Acadia has other drugs in earlier stages of clinical development, including an experimental treatment for chronic pain and another for glaucoma in partnership with the California-based healthcare products firm Allergan (NYSE:AGN). And at least as of May, when Denise last covered Acadia, the firm had enough cash in the bank to support operations into 2011.

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