Why 2 Acadia Pharma Analysts Are Bracing For FDA Rejection Of Nuplazid In Dementia

ACADIA Pharmaceuticals Inc. ACAD said late Monday it was notified by the Food and Drug Administration of deficiencies in its regulatory application to expand the label for pimavanserin, which goes by the brand name Nuplazid.

The company is seeking approval for Nuplazid as a treatment option for dementia-related psychosis.

The Acadia Analysts: Raymond James analyst Danielle Brill downgraded Acadia shares from Strong Buy to Outperform and lowered the price target from $65 to $35.

Stifel analyst Paul Matteis downgraded the shares from Buy to Hold and reduced the price target from $68 to $27.

Why RayJay Says Rejection Is Most Likely Outcome: Given the lack of feedback from the FDA to Acadia's multiple inquiries since the March 3 notification, a complete response letter is now the most likely outcome for pimavanserin by its April 3 PDUFA date, Brill said in a Tuesday note.

The deficiencies are likely to be minor, as the FDA had not flagged any issue in its previous interactions with the company, the analyst said.

A delay in approval is likely, she said.

"Until this point, we have been confident in the data generated in DRP with Nuplazid, and note that KOL feedback had also been consistently positive," Brill said. 

Although Raymond James isn't ready to accept a negative verdict as of yet, it lowered the probability of success from 90% to 25% due to the uncertainty.

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Stifel Moves To The Sidelines On Acadia: There's huge opacity in FDA's communication to Acadia, and additionally the company hasn't been able to follow up with the agency, Matteis said in a note. 

Nuplazid's approval in dementia-related psychosis is unlikely, the analyst said.

Whenever FDA used the exact language used with Acadia in the past, it has resulted in complete response letters, he said. 

Stifel sees the possibility of FDA approval in the current cycle, with a limited delay, and a push back in the drug's launch to 2024.

It's also likely that the FDA asks the company to do another acute efficacy study, Matteis said. 

ACAD Price Action: At last check, Acadia shares were plunging 47.99% to $23.81 on above-average volume.

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