Acadia Pharmaceuticals' Alzheimer's Data Raises Some Questions

Acadia Pharmaceuticals (NASDAQ: ACAD) recently reported intriguing mid-stage study data for Nuplazid in Alzheimer's disease psychosis, which sent shares surging higher. However, the trial results do raise some important questions regarding the durability of Nuplazid's benefit and the likelihood of a phase 3 success. Can Nuplazid deliver an important win for Acadia in this tough-to-treat disease?

In this clip from The Motley Fool's Industry Focus: Healthcarepodcast, analyst Kristine Harjes is joined by contributor Todd Campbell to discuss the trial results and highlight what should be on investors' minds as Acadia Pharmaceuticals preps for phase 3 studies.

A full transcript follows the video.

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This podcast was recorded on Dec. 21, 2016.

Kristine Harjes: Some exciting Alzheimer's researchresults from a company calledAcadia Pharmaceuticalscame out yesterday.

Todd Campbell:Really interesting data. I thinkit's very helpful to walk investors through the pluses andpotentially the minusesassociated with the information that was released by AcadiaPharmaceuticals. I don't think this is a stockthat we have talked about in the past on the show, Kristine, do you?

Harjes:I don't believe we have ever talked about them. The deal with them is, they have this one drug, it's called Nuplazid. It is already approved forParkinson's disease psychosis. Now, they'retesting it in Alzheimer's disease psychosis.

Campbell:Right. This year, they just launched this drug, Nuplazid, for the treatment ofhallucinations and delusionswithin Parkinson's patients. It'sestimated that about 40% of all Parkinson's patientssuffer from psychosisthat this drug can address. The company is researching this drugacross a number of different similarindications where they think they may also be able to help. One of those indications,obviously, is Alzheimer's disease, where they've beenevaluating the drug in treating Alzheimer's diseasepsychosis,which is estimated to affect between 25% to 50% of theAlzheimer's disease population.

Harjes:Correct me if I'm wrong,but that's a much larger number of people total.

Campbell:Yeah. You go from 40% of a million with Parkinson's, so that's 400,000, to even 25% of the 5 millionAlzheimer's disease patients, that's an extra million. So, you'retalking about potentially going from being able to address 400,000 people to being able to address 1.5 million.

Harjes:So,the news that came out yesterday was some data from phase 2, saying that they had success, and six weeks into the trialthere was a statistical benefit. The stock was up 12% on the news.

Campbell:Yeah, the stock was slated to open pre-market up as much as 40%.

Harjes:Wow! I missed that!

Campbell:Yeah, don't ever trust pre-market or after-market, they're illiquid market quotes, and they're not going to tell you anything other than, maybe, direction.They'll tell you if it's indicated up or down. ButI wouldn't count on up 40% or down 40% read.

Harjes:That's crazy.

Campbell:Yeah. Once it opened up, the shares traded pretty volitively.It got down to a single-digit gain, then went back up to a double-digit gain by the end of the day. I think the reason for all of that is that first of all we've beendesperate for new advances in Alzheimer'sdisease treatment. There's not a lot of good treatments out there. The only things we have out theretreat the symptoms, they don't curbor crimp the disease.

Harjes:Yeah. Every stockworking in this space has been extremely volatile,trading emotionally up, down, every which way onAlzheimer's news.

Campbell:Right. Big disclaimer,even the data were giving you today is phase 2 data. If any indication has shown that phase 2 data does not hold a lot of water, it'sAlzheimer's disease. So you have to take thiswith a big grain of salt. But there's another reason that I wantinvestors to take this with a big grain of salt.

Harjes:Yes there is.

Campbell:What was that, Kristine?

Harjes:Yes there is,I was going to say it if you weren't going to, lay it out.

Campbell:Well,I don't know if it's the same thing you're going to mention,but I wasn't thrilled with the P value.

Harjes:Yep.(laughs) That's where I was going, as well. The P value here for the six weeks was 0.045, which,reminder about P values, it's astatistical measure. Basically, you want to see less than 0.05. We had 0.045, that's green light, in the clear, you're fine. But it'skind of close to that threshold of 0.05.

Campbell:Especially with a small patient population. I mean, I don't want to call it tiny --

Harjes:It's 181.

Campbell:Yeah. Butcompared to how big this indication is, andhow big previous Alzheimer's disease studies have been,this doesn't feel like a lot of patients to me.

Harjes:Right. And some other things to note here is that in theParkinson's disease trial, you had a P value of 0.001. That is way, way below the 0.05 that is the traditional threshold.

Campbell:Right. That's the gold standard number. That'swhat you would want to have.

Harjes:Absolutely. Theother detail that's worth mentioning,I mentioned this data was from six weeks -- when you look at the 12-week numbers, the treatment group that wasreceiving this drug, their numbers held steady. But theplacebo group experienced aplacebo effect that brought them in line with the treatment group,essentially closing the delta between the two groups, and then eliminating even that 0.05.

Campbell:Right, so you look at this, you have a P value of 0.045,you have a benefit thatloses its statistical significance between the six week and 12 week mark. What does that mean? The approval inParkinson's disease was based on six week data. So you could make an argument that six week is fine. Theother thing I'm curious about is the choice of the study or the scale or the score that they used forevaluating these patients. It was a nursing home score,because all of these were nursing home patients. That isn'tnecessarily one that you see typically usedin psychology trialsorAlzheimer's disease trials. They were asked about it on the conference call, and they did say another more common scoring system that was used didn't show a significant benefit. So, there's a lot of question marks here that make me say: Rein in someenthusiasm and let this thing play out,because we have seen,way too often, investors get excited about Alzheimer's disease drugs that just do not pan out in large studies.

Harjes:Yep,it's a lesson that watchers of this space are learning again and again lately.

Kristine Harjes has no position in any stocks mentioned. Todd Campbell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.