Piper (dated) ACAD :Publishes ACP-104 Dopamine Receptor Agonism Study
2005-09-23 08:55 (New York)
(ACAD - $10.90)
Outperform Volatility: Low
Publishes ACP-104 Dopamine Receptor Agonism Study
Edward A. Tenthoff, Sr Research 212 284-9403,
edward.a.tenthoff@pjc.com
William T. Ho, Research Analyst
212 284-9308, william.t.ho@pjc.com
KEY POINTS:
* Yesterday, September 22nd, ACADIA announced the publication of a study in
the Journal of Pharmacology and Experimental Therapeutics demonstrating
ACP-104 as a partial agonist that causes weak activation of dopamine D2 and
D3 receptors.
* ACP-104 is the major metabolite of clozapine (a dopamine receptor blocker
with high D4 affinity) being developed by ACADIA as a stand-alone therapy
for the treatment of schizophrenia with the potential benefit of improving
cognition and producing fewer motor side effects.
* The study compares ACP-104's ability to alter dopamine D2, D3 and D4
receptor activity to 40 marketed and experimental antipsychotic drugs. The
results demonstrate that only ACP-104 and aripiprazole (ABILIFY) were
partial agonists, causing weak activation of D2 and D3 receptors. Other
anti-psychotics were found to be dopamine receptor antagonists.
* D2 receptors are abundant in motor areas of the brain such as the basal
ganglia, while D3 and D4 receptors are mainly located in the limbic and
cortical areas and may play a psychiatric role.
* ACP-104 combines D2 and D3 partial agonism, M1 muscarinic agonism and 5-
HT2A inverse agonism to create an anti-psychotic drug with fewer negative
side-effects.
* We look for ACADIA to present significant clinical data through year-end
serving as the primary value driver for the stock.
* The June interim analysis of Phase II data on ACP-103 in Parkinson's
disease increased our confidence in a successful outcome. We expect this
trial to complete later this year with full data available by early 2006.
If all goes well, we believe this program could advance into Phase III
trials next year.
* We look for Phase II data on ACP-103 as adjunctive therapy in schizophrenia
by year-end. ACADIA has initiated a larger 400-patient trial with other
antipsychotic agents. Recruitment is on-going and we look for an interim
analysis next year.
* Lastly, ACADIA should also present interim Phase II data on ACP-104 as a
stand-alone therapy for the treatment of schizophrenia and begin a larger
trial assessing cognitive benefits in schizophrenics by year-end.
Price: $10.90
52 Week High: $11.31
Rating -- Outperform
52 Week Low: $5.70
Price Tgt -- $13.00
Shares Out (mil): 23.5
Market Cap. (mil): $256.1
Avg Daily Vol (000): 82
Book Value/Share: $2.60
Cash Per Share: $2.93
Est LT EPS Growth: NM
P/E to LT EPS Growth (FY06): NA
Est Next Rep Date: 11/16/2005
Fiscal Year End: Dec
INVESTMENT RECOMMENDATION:
We reiterate our Outperform rating and $13 per share price target based on a
projected enterprise value of $250 million.
RISKS TO ACHIEVEMENT OF TARGET PRICE:
Risks associated with shares of ACAD are common to all drug discovery
companies, including developmental, clinical and regulatory. Drug candidates
could fail in the clinic, ACADIA may not enter into new collaborations or
achieve milestones in existing alliances. The company may require future
capital funding and may face future unforeseen litigation.
COMPANY DESCRIPTION:
ACADIA Pharmaceuticals is a biopharmaceutical company developing novel small-
molecule drugs to treat CNS disorders. ACADIA has partnerships with Allergan
and Sepracor.
Important Research Disclosures
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Analyst Certification - Edward A. Tenthoff, Sr Research Analyst
The views expressed in this report, including th |
