Here's Why ACADIA Pharmaceuticals Jumped 17.7% in November

Image source: Acadia Pharmaceuticals.

What happened

Shares ofAcadia Pharmaceuticals(NASDAQ: ACAD), a commercial-stage biopharma focused on diseases of the central nervous system, rose by more than 17% in November, according to data fromS&P Global Market Intelligence. That was a large enough gain to outperform the red-hot biotech sector in general, as measured by the SPDR S&P Biotech ETF (NYSEMKT: XBI).

ACAD data by YCharts.

So what

Acadia showered its shareholders with good news during the month. Here's a recap of the highlights:

  • Sales of Nuplazid, the company's only FDA-approved drug that is used to treatParkinson's disease psychosis, came in at $5.3 million for the quarter. That was far ahead of the $2.6 million in total sales Wall Street was expecting.
  • The company made a lot of progress expanding formulary access to the Nuplazid drug during the quarter. Management stated that Nuplazid is now covered by nearly all Medicare plans, and that commercial payers are rapidly expanding access, too.
  • Net loss for the quarter came in at $71.6 million, or $0.61 per share. That was slightly higher than the $0.56 loss the pros were expecting.
  • Acadia ended September with more than $588 million in cash.

Here's how CEOSteve Davis summed up the quarter:

Beyond the quarterly results, Acadia also continued to build out its pipeline during the month:

  • The company announced that its new phase 3 trial ENHANCE-1 trial kicked off during the month. This study is testing Nuplazid as a potentialadjunctive treatment in patients who have schizophrenia and are not adequately responding to their current antipsychotic therapy.
  • The company also initiated its phase 2 ADVANCE study in November. This trial is evaluatingNuplazidas a potential adjunctive treatment in patients withnegative symptoms of schizophrenia.

Given the muchbetter than expected sales results and expanding possibilities for Nuplazid, it's not hard to understand why shares rallied so much during November. That's especially true when you consider that shares of Acadia tumbled more than 27% in October.

Now what

Roughly 400,000Americans suffer from Parkinson's disease psychosis, and currently, Nuplazid is the only FDA-approved treatment for the disease on the market. As providers and insurers grow more comfortable with the drug, it's highly likely sales will continue to scream higher.

The next catalyst investors can look forward to is a data readout from the company's phase 2 study using Nuplazid as a potential treatment of Alzheimer's disease psychosis. Top-line results are expected before the end of the year, which suggests Acadia's shares will likely have another volatile month ahead.

Overall, Acadia looks well positioned for strong growth in the years ahead, but the company remains a high-risk, high-reward proposition. I'd advise bulls and bears to both approach the stock with caution.

10 stocks we like better than ACADIA Pharmaceuticals When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now...and ACADIA Pharmaceuticals wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of November 7, 2016.

Brian Feroldi has no position in any stocks mentioned.Like this article? Follow him onTwitter where he goes by the handle@Longtermmindsetor connect with him on LinkedIn to see more articles like this.

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.