ACADIA Pharmaceuticals Inc. (NASDAQ: ACAD) is tumbling in the market this morning, falling more than 10% in the premarket hours. The declines come after the company announced that it has received a Complete Response Letter, or CRL, from the FDA surrounding a recent supplemental New Drug Application, or sNDA.
While there’s a good reason for the declines, this may prove to be a massive opportunity. Here’s what’s going on:
ACADIA Pharmaceuticals Announces CRL News
In the press release, ACADIA Pharmaceuticals announced that it received a CRL surrounding its NUPLAZID sNDA. Through the application, the company hoped to achieve FDA approval for the treatment as a potential option for patients with hallucinations and delusions associated with dementia-related psychosis, or DRP.
ACADIA Pharmaceuticals explained that the FDA completed its review of the application and concluded that it could not be approved in its present form.
The FDA pointed to a lack of statistical significance in some of the subgroups of dementia and insufficient numbers of patients with certain less common dementia subtypes as a lack of substantial evidence of effectiveness to support approval.
In the release, the company explained that the pivotal HARMONY study surrounding the treatment met its primary and secondary endpoints, showing statistical superiority of the drug over placebo.
Importantly, the company explained that certain minimum numbers of patients with specific subtypes were not among the prespecified requirements.
There are a few positive points to consider however:
- ACADIA Pharmaceuticals is planning on scheduling a Type A meeting with the FDA to talk about the fastest path toward approval given the current standing of the drug.
- The CRL didn’t site any safety or tolerability concerns raised through the clinical trials.
- The Phase 2 Alzheimer’s disease psychosis study is still supportive as evidence for an sNDA filing.
So, while the CRL is concerning, the fat lady isn’t singing just yet.
In a statement, Steve Davis, CEO at ACADIA Pharmaceuticals, had the following to offer:
ACADIA stands behind the robustly positive results from the pivotal Phase 3 HARMONY study and the prospectively agreed trial design and criteria for establishing efficacy in DRP. Over the entire course of the review, the Division did not raise any concerns regarding the agreed upon study design, including the issues raised in the CRL.
We will immediately request a Type A meeting to work with the FDA to address the CRL and determine an expeditious path forward for the approval of pimavanserin in DRP.
This Could Be A Massive Opportunity
ACADIA Pharmaceuticals stock is down, and rightfully so. The fact of the matter is that the CRL is upsetting. Even if the drug is approved down the line, the CRL means that more time and money will be needed to get to that point, and the investing community is an impatient one.
Nonetheless, this could prove to be a massive opportunity.
The fact of the matter is that the CRL didn’t point to any safety or tolerability concerns. Moreover, much of the issue with the application is that the company simply didn’t enroll enough patients with specific subtypes of the condition.
All in all, the issues raised in the CRL may be relatively easy for the company to address, meaning that approval could come down the line. Moreover, with the CRL announced, the stock is trading at a discount, so these declines give investors a way to jump in while prices are low.
Should all go well from here, those that remember the opportunity today will be kicking themselves if they don’t take advantage of it.
The Bottom Line
The bottom line here is simple. ACADIA Pharmaceuticals stock is feeling pain, and with the CRL in mind, there’s good reason for that pain. However, after reading through the information that’s readily available online, the long-term potential here hasn’t really changed.
As happens with any company from time to time, ACADIA Pharmaceuticals has found itself at a roadblock. However, the management team has no intentions of curling up into a ball and waiting for the storm to pass.
Instead, the company plans on being proactive and working hard to gain the approval they, and investors, have been hoping for.
As such, today’s declines are likely creating an opportunity that simply shouldn’t be ignored, making ACAD stock one for the books.