ACAD :Announces Positive Phase II Results of ACP-104 in Schizop
2006-07-14 11:56 (New York)
Piper Jaffray & Co. Company Note
(ACAD - $7.69)
Outperform Volatility: Medium
Announces Positive Phase II Results of ACP-104 in Schizophrenia
Edward A. Tenthoff, Sr Research 212 284-9403,
edward.a.tenthoff@pjc.com
KEY POINTS:
Yesterday, July 13, ACADIA announced positive results from the three Phase II
trials of ACP-104 for the treatment of schizophrenia.
* Results demonstrated ACP-104 to be generally safe and well-tolerated, with
initial signs of anti-psychotic efficacy from the multi-dose study. ACP-104
is the major metabolite of clozapine that acts as a dopamine 2 and 3 partial
agonist, M1 muscarinic agonist and 5-HT2A inverse agonist. The effect is an
anti-psychotic drug with potential cognitive benefit and fewer negative
side-effects.
* The first trial was a single-dose escalation study in 24 patients to
establish the safety and tolerability of ACP-104 in doses from 25-250mg. The
results demonstrate ACP-104 to be safe and well-tolerated with no dose-
limiting toxicities (DLT), serious adverse events (SAE's) or maximum
tolerated dose (MTD) achieved. The most common AE's were mild sedation with
no reported QTc elongation or extrapyramidal side-effects.
* The 14-day multi-dose trial involved 40 patients in 6 dose cohorts from
100mg (50mg, BID) to 800mg (400mg, BID) daily. The results indicate that
ACP-104 is generally safe and well-tolerated up to the MTD of 600mg per day.
At 800mg 3 patients were withdrawn from the study including 2 SAE's. The
first was a seizure unrelated to the drug and the second fever on day 13,
followed by mild leukopenia that was likely due to viral infection but could
not be ruled completely unrelated to drug. Although not necessarily related
to agranulocytosis as seen with Clozapine, this is something to keep an eye
on in the future. Other AE's included tachycardia and hypertension related
to ACP-104.
* Importantly, the multi-dose trial demonstrated initial signs of efficacy in
the 400 and 600mg cohorts as measured by a decline in the PNASS psychosis
scale and through patient interactions.
* The third trial is a PET study which demonstrated significant brain receptor
occupancy. This helps ACADIA establish the appropriate plasma levels
required to dose the drug effectively for the Phase IIb study.
* We look for the 42-day placebo controlled Phase IIb study to commence later
this year and enroll ~250 schizophrenics to evaluate efficacy of ACP-104.
From To Price: $7.69
Changes (Previous) (Current) 52 Week High: $17.94
Rating -- Outperform 52 Week Low: $7.60
Price Tgt -- $19.00 Price Target: $19.00
FY06E Rev (mil) -- $8.5 Proj Enterprise Value of
FY07E Rev (mil) -- $8.0 $500M + YE'06 Cash of $80M
FY06E EPS -- ($1.46) Shares Out (mil): 29.3
FY07E EPS -- ($1.73) Market Cap. (mil): $225.3
Avg Daily Vol (000): 301
Book Value/Share: $1.36
Cash Per Share: $3.82
Debt to Total Capital: 0%
Est LT EPS Growth: NM
P/E to LT EPS Growth (FY06): NA
Est Next Rep Date: 08/09/2006
Fiscal Year End: Dec
Cash/sh includes impact of recent follow-on offering
Note: 3Q:05 excludes $5.9MM litigation
charge
Rev (mil) 2005A 2006E 2007E EPS 2005A 2006E 2007E
Mar $2.3A $2.5A NA Mar ($0.31)A ($0.38)A NA
Jun $2.5A $2.0E NA Jun ($0.26)A ($0.35)E NA
Sep $3.7A $2.0E NA Sep ($0.28)A ($0.35)E NA
Dec $2.4A $2.0E NA Dec ($0.42)A ($0.39)E NA
FY $11.0A $8.5E $8.0E FY ($1.27)A ($1.46)E ($1.73)E
CY $11.0A $8.5E $8.0E CY ($1.27)A ($1.46)E ($1.73)E
FY RM 20.5x 26.5x 28.2x FY P/E NM NM NM
CY RM 20.5x 26.5x 28.2x CY P/E NM NM NM
Note: 3Q:05 excludes $5.9MM litigation
charge
INVESTMENT RECOMMENDATION:
We reiterate our Outperform rating and $19 price target. Shares of ACAD have
been under significant pressure with the weak markets; however, we look for
real progress over the next 12 months. Our target is based on a projected
enterprise value of $500 million, valuing 2 Phase III programs (ACP-103 in
sleep and PD) and 2 Phase II schizophrenia programs, plus increased year-end
cash of $80 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 accurately reflect my personal views about.. |
