Why Acadia Pharmaceuticals Is Up Today

What: Shares of Acadia Pharmaceuticals , a clinical-stagebiopharmaceutical company focused on disorders of the central nervous system, were up more than 16% in late afternoon trading today on heavy volume after the companyreleased good news related to its pending New Drug Application, or NDA, with the FDA.

So what: The company announced that its NDA filing for its drug Nuplazid, which was submitted earlier this year as a potential treatment for Parkinson's disease psychosis,has been accepted for priority review by the FDA.A priority review designation accelerates the timeline for review from 10 months to six months from the date of acceptance of filing, and thus a targetaction date of May 1, 2016 has been set.

Given the good news of a faster review timeline, investors in the company got excited today and bid up it shares accordingly.

Now what:There is a huge need for drugs that treat Parkinson's disease psychosis since an estimated 40% of patients with Parkinson's disease develop psychosis. Given that there are 5 to 7 million patients around the world with the disease, it is truly a huge problem, so if Nuplazid can help treat the disease, it could certainly be a revenue boom for the company.

In clinical trials, Nuplazid was able to meet its primary and secondary efficacy endpoints in treating the disease, with no worsening of motor function. Based on the results, the FDA designated Nuplazid with the Breakthrough Therapy designation, so odds look favorable that it will be approved next year.

Given the huge potential for Nuplazid and the good news about the accelerated review, I certainly think the market was right to bid up shares today.

The article Why Acadia Pharmaceuticals Is Up Today originally appeared on Fool.com.

Brian Feroldi 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.