September 19, 2019
BIOINVEST NEWS: Acadia (ACAD)
BIOINVEST BREAKING NEWS – Special Update – ACAD — HARMONY Data De-risks ACAD, DRP Market Much Larger Than PDP, Raising BUY to 46 and TARGET to 60
ACAD’s Phase III HARMONY trial recently delivered robust statistically superior data (p=0.0033) compared to placebo in time to relapse of dementia-related psychosis (DRP). In our view, this outstanding data represents a key inflection point for the company as the “pipeline in a drug†thesis has now been validated in a much larger patient population that PDP. The company estimates ~1.2 million patients in the U.S. alone are diagnosed with dementia-related psychosis. Recent discussions with KOLs confirm the size of the market and that up to 70% are eligible for potential treatment with pimavanserin.
On September 9, ACAD delivered excellent Phase III pimavanserin data in the very difficult to treat dementia-related psychosis (DRP) patient population. The HARMONY trial was stopped early due to overwhelming efficacy (https://clinicaltrials.gov/ct2/show/NCT03325556?term=pimavanserin+dementia&rank=1). The drug is proving that it is a pipeline in a pill and an important new tool to treat DRP in addition to its current approval for PDP.  The HARMONY trial further de-risks ACAD and we believe it also increases the odds of premium takeout as Big Pharma/Big Bio are always on the prowl for approved drugs that work in large markets and multiple diseases. Adding to odds of a premium acquisition is the fact that ACAD has a very strong Board of Directors led by the famous Baker Brothers investors. The company took advantage of the recent news and has raised $250 million at $40 per share which allows for large funds to invest in ACAD post-HARMONY.
In our view, the recent data and new shareholders will both help the stock work its way higher as the stock has previously been dominated by short sellers who have now been proven wrong. ACAD has two near-term catalysts with the presentation of the full HARMONY data at a peer-reviewed conference and the top line Phase II data from ADVANCE for the treatment of schizophrenia negative symptoms, both due by year end. With two strong upcoming catalysts and a potential premium acquisition, in our view, ACAD is positioned to go higher.