NEW YORK, Sept 1 (Reuters) - Acadia Pharmaceuticals Inc said on Tuesday its experimental drug for psychosis related to Parkinson's disease failed to meet its primary goal in a late-stage trial, sending its shares down 68 percent.
The drug, pimavanserin, which is being co-developed with Canada's Biovail Corp, failed to significantly cut psychotic episodes, such as hallucinations and delusions, compared with a placebo.
The steep drop in Acadia shares illustrates the risks in biotech investing, after a number of high-profile clinical successes this year have sent shares of several companies soaring.
As of Monday, shares of Acadia had run up nearly sixfold since late April to $5.84 on hopes for pimavanserin, the company's lead experimental product. The shares fell to $1.86 in morning trading Tuesday. Shares of Biovail were down 2 percent in Toronto.
An estimated 600,000 of the 1.5 million Americans with Parkinson's disease are prone to psychotic episodes, according to Acadia. Parkinson's is a progressive neurological condition that causes tremors and other motor skills problems.
Patients in the 298-patient trial who were taking pimavanserin showed improvement in psychosis measures, but the difference was not statistically significant. Acadia said the lack of a significant difference was primarily due to the larger-than-expected improvement in patients taking the placebo.
The trial did reach a secondary goal related to motor function. San Diego-based Acadia said it was continuing with a second Phase III clinical trial with pimavanserin in patients with Parkinson's disease psychosis.
'While we obviously are disappointed with the results of this Phase III study, we continue to believe in the potential of pimavanserin based on our clinical experience to date,' Acadia Chief Executive Officer Uli Hacksell said in a statement.
In an interview with Reuters last month, Hacksell said pimavanserin could fetch far bigger sales if it is eventually approved to treat other types of psychosis, including psychosis that often accompanies Alzheimer's disease.
Citigroup on Tuesday cut its rating on Acadia to 'sell' from 'hold,' citing the trial failure.
But JMP Securities analyst Charles Duncan said it may be too early to write pimavanserin's epitaph.
'Acadia will do additional analyses over the next month and will then tell us whether they will alter the ongoing Phase III study in Parkinson's disease psychosis, and whether they'll start (trials) in Alzheimer's psychosis,' Duncan said.
A number of antipsychotic drugs have failed in clinical trials because of surprisingly strong placebo responses and because measures of effectiveness tend to be very subjective, only to be approved after other trials suggested they indeed improved symptoms.
Duncan said he was encouraged that pimavanserin did not appear to worsen Parkinson's motor symptoms, such as tremors, because standard antipsychotic medicines do worsen such symptoms.
Not all Acadia investors were losers on Tuesday. Short interest, representing bearish bets in Acadia, amounted to about 3.5 percent of its outstanding shares as of Aug. 14.
Biovail, Canada's biggest publicly traded pharmaceutical company, last year announced a shift in its focus to central nervous system treatments and away from controlled-release products.
Since then, it has made a string of acquisitions and licensing deals, including the co-development deal struck with Acadia in May.
(Reporting by Lewis Krauskopf and Ransdell Pierson; additional reporting by Shailesh Kuber in Bangalore and Scott Anderson in Toronto; Editing by Anne Pallivathuckal; Editing by Derek Caney and John Wallace) Keywords: ACADIA BIOVAIL/ (lewis.krauskopf@thomsonreuters.com; 646-223-6082;Reuters Messaging:Lewis.Krauskopf.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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