Shares of Acadia Pharmaceuticals (ACAD) tanked about 30% in after-hours trading today after the company reported that the CEO will retire and that the New Drug Application -- NDA -- for the company's Parkinson's drug will be delayed.
For starters, the company reported that Uli Hacksell is retiring immediately as CEO and board member of Acadia Pharma. The current Chief Financial Officer, Steve Davis, will take over as the Interim CEO until a replacement can be found. In the company's earnings conference call two weeks ago, Dr. Hacksell participated without any hint of imminent departure; he has been CEO since 2000.
Typically the CEO retiring immediately without explanation is devastating enough for a company, but in addition to that Acadia stated that it would have to delay the filling of Nuplazid -- pimavanserin - until the 2nd half of 2015. The company was supposed to have the filing done for Nuplazid by Q1 2015 which would mean that the company would have at least filed the NDA before the end of this month. It's too early to tell what exactly is going on at the company but it will be very risky for new traders or investors who want to purchase shares.
Nuplazid is a new chemical entity drug from Acadia Pharmaceuticals that is compromised of a selective serotonin inverse agonist -- SSIA -- that is used to target 5-HT2A Receptors in patients with Parkinson's Disease Psychosis (PDP). More specifically the company is using Nuplazid to target the non-motor functions of Parkinson's Disease Psychosis. These non-motor function problems associated with the disease deal with patients' mental problems. Such mental problems are delusions and hallucinations that occur in about 40% of patients with Parkinson's Disease.
If Nuplazid is ultimately approved it will be the first drug ever to be approved in the United States to treat Parkinson's Disease Psychosis; it has received a Breakthrough Therapy designation from the FDA. Data from the final phase 3 trial known as the "-020 Study" showed that Nuplazid was not only very safe for patients to take but that it generated substantial efficacy as well. Nuplazid met the primary endpoint in the phase 3 trial achieving a highly significant reduction of psychosis versus a placebo compound. In addition Nuplazid also passed a secondary endpoint of the trial which was testing for motoric tolerability. Motoric tolerability means how many of the patients took the drug and didn't worsen in motor function as compared to placebo. Management characterized the NDA delay as a 'course correction' and emphasized that it does not reflect any concerns on the part of the FDA.
The results shown to date are good, so these two pieces of bad news only ruins Acadia's current rally in the stock market. A day before these bits of bad news took place, Acadia's share price hit a 52-week high of $46.48 per share. As expected the share price of Acadia may continue to drop tomorrow so it may give those investors who were looking for entry point an opportunity to buy the stock if they think that the risk is worth it. We would take the side of caution because the combination of these recent developments seems all too suspect to us. There is no way of knowing for sure if something is totally wrong, but investors should consider that the risk to create a position for Acadia at the moment is high.
Acadia held a conference call this evening to discuss the two announcements. The issue as to how or why these two issues coincided was not discussed.
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