Piper: ACAD :ACP-103 Improves Side-Effect Profile of Antipsychotic Therapy
2004-09-15 12:55 (New York)
Edward A. Tenthoff, Sr Research
ACADIA (ACAD - $7.76)
Outperform
Volatility: High
Price Tgt -- $11.00
Price: $7.76
52 Week High: $7.95
52 Week Low: $4.95
Proj Mkt Cap of $200MM
Shares Out (mil): 16.9
Market Cap. (mil): $131.1
Avg Daily Vol (000): 30
Book Value/Share: $2.27
Cash Per Share: $2.89
KEY POINTS:
* This morning, ACADIA reported the results of its clinical trial of ACP-103 as an adjunctive therapy to haloperidol. The companybelieves that inverse agonism of 5-HT 2A receptors may reduce the side effects caused by existing antipsychotic drugs such as haloperidol, Risperdol, Seroquel and Zyprexa.
* In the double-blind, placebo controlled study, 18 healthy volunteers were administered a 7.5mg dose of haloperidol and
examined for side effects. The study observed a 3x increase
in prolactin secretion and 11 subjects also developed akathisia.
* Patients were subsequently administered a 100mg dose of ACP-103 and demonstrated a reduction in therapy-induced akathisia including the elimination of symptoms in 4 subjects. Further, increased prolactin secretion caused by haloperidol therapy was reduced by a statistically significant 33%.
* The study demonstrated that no drug-drug interactions or severe adverse events were observed from the co-administration of ACP-103 and haloperidol. We believe this study supports the use of ACP-103 as adjunctive therapy in combination with anti-psychotics.
* If ACP-103 proves effective as an adjunctive therapy, then ACADIA could form partnerships with Big Pharma to create new combination therapies and extend the patent life of antipsychotics.
* For example, U.S. sales of Risperdol exceed $2 billion and Zyprexa over $3 billion with each facing patent expirations in 2008 and 2011, respectively. We believe such combination drugs could represent a huge opportunity for ACADIA.
* We look for ACADIA to advance ACP-103 into additional Phase II studies to examine the tolerability and the efficacy of combination therapy with haloperidol and Risperdol and present data in 2005.
INVESTMENT RECOMMENDATION: We are maintaining our Outperform rating and 12-month price target of $11 per share. We project ACADIA's enterprise value should should increase to $180 million based on its clinical pipeline, supporting a market cap of $200 million. We look for ACADIA to create value by conducting three Phase II trials, filing two INDs with Allergan, and potentially entering into new collaborations.
RISKS TO ACHIEVEMENT OF TARGET PRICE: Among the risks associated with shares of ACAD are those typical with all drug discovery companies including developmental, clinical, and regulatory risks, particularly in CNS. ACP-103 and ACP-104 could fail in clinical trials. ACADIA may not enter into new collaborations or achieve milestones in existing alliances. The Company will require additional funding. ACADIA could face future unforeseen litigation that could adversely impact business.
COMPANY DESCRIPTION: ACADIA Pharmaceuticals is a biopharmaceutical company located in San Diego developing novel small-molecule drugs to treat CNS disorders. The Company's lead drug is ACP-103 in Phase II trials for Parkinson's disease. ACADIA should also commence Phase II trials of ACP-103 and ACP-104 for schizophrenia soon. Partner Allergan should advance two pain drugs into the clinic this year. |
