Why Acadia Pharmaceuticals Stock Is on Fire Today

What happened

Shares of mid-cap drugmaker Acadia Pharmaceuticals (NASDAQ: ACAD) rose by as much as 13% in pre-market trading today. The biopharma’s stock is jumping in response to a presentation at the 12th Clinical Trials on Alzheimer’s Disease meeting Wednesday covering the latest trial results for Nuplazid’s late-stage dementia-related psychosis trial known as Harmony.

So what

Earlier this year, Acadia announced that Harmony had been halted early because patients on placebo were more than twice as likely to show worsening symptoms compared to those on Nuplazid. This latest update provided additional information on the drug’s all-important safety profile in this patient population.

Image source: Getty Images.

The big-ticket item is that Nuplazid didn’t produce any alarming safety signals in this study. Most importantly, the company said that no deaths were directly attributed to the drug. That’s key because Nuplazid has been flagged by regulators for safety concerns as a treatment for Parkinson’s disease psychosis in the past. It is important to note, however, that these concerns have never led to any adverse action by the Food and Drug Administration.

Now what

In the accompanying press release, Acadia’s management said that they plan to chat with the FDA about a possible regulatory pathway within the first half of next year. With such strong late-stage results and a clear-cut medical need, though, investors might be wondering why the company simply doesn’t proceed with a regulatory filing. The issue at play here is whether the FDA will require a confirmatory trial before giving the green light. So it’s prudent in this case to seek the FDA’s advice before wasting time and money on a regulatory application.

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George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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