ACADIA Pharmaceuticals Inc. is up 8 percent on a favorable FDA ruling on a company drug. Analysts have a more mixed view of the news.
ACADIA Pharmaceuticals Inc. sell side analysts react
Panel in a nutshell. In line with our expectations, all three voting questions at yesterday’s AdCom went in favor of Nuplazid (12-2 on substantial evidence of efficacy; 11-3 on adequate characterization of safety; 12-2 on benefit outweighing risk). We believe that to the extent that one can extrapolate on approvability, yesterday’s AdCom was as positive as it gets for a new drug in a new indication. Overall, we expect the agency to approve Nuplazid by the May 1st PDUFA. Meanwhile, in our view, the open question coming out of the AdCom was not the approvability of the drug, but instead: (1) whether the agency will elect to further qualify the label indication (from “psychosis associated with PD” to “psychosis associated with PD treated with dopaminergic agents”); and (2) whether the agency will attach a black box warning to the label. We believe that both are likely albeit not material developments. We have previously guided that a boxed warning was a high likelihood, but that it would not significantly impact the uptake of the drug. Following yesterday’s AdCom endorsement of Nuplazid, and in anticipation of the May 1st PDUFA, we reiterate our Buy rating and $50 PT.
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We expect BULLS to focus on the fact that Nuplazid is a wholly owned CNS drug that’s now highly likely to be approved (thus significant scarcity value); given that it will be the only drug indicated for PDP it can still sell well even if label is restricted; plus still have optionality with pending ADP data. Conversely, BEARS may assume label will spook docs/patients and subsequent launch will struggle, which hurts strategic value; and ADP is very high risk.
Today the bulls are winning, but only time will tell who is correct at the end of the day!