j. birchenough, lehman
December 17, 2007
Acadia Pharmaceuticals (ACAD - US$ 12.03) 1-Overweight
Company Update
Analyst Day Preludes an Eventful 1H08
Investment Conclusion
We reiterate our 1-Overweight rating following
ACAD's Analyst Day on Friday. With detailed data
for pimavanserin confirming prior positive topline
results in schizophrenia, we expect a major
partnership will soon materialize. In addition, with
phase 2b data for second schizophrenia drug
candidate ACP-104 now expected in Q208, we
view two major value inflection events in 1H08.
Summary
À‰ A review of detailed phase 2b data for
pimavanserin in schizophrenia by lead investigator
Dr. Meltzer confirmed prior topline results and in
fact provided added robustness in demonstrating
a highly statistically significant reduction in positive
and negative symptom score (PANSS) with the
addition of pimavanserin to low dose Risperdal,
and with comparable efficacy, faster onset and
lower adverse events than higher dose Risperdal.
Further preclinical data suggested that
pimavanserin works well with other atypicals.
À‰ The phase 2b trial for ACP-104 has completed
enrollment months sooner than expected and
topline results should be available in Q208.
Positive results for ACP-104 in schizophrenia
could represent an even larger opportunity than
pimavanserin.
United States of America
Healthcare
Biotechnology
Reuters ACAD
Bloomberg ACAD
ADR
EPS (US$) (FY Dec)
2006 2007 2008 % Change
Actual Old New St. Est. Old New St. Est. 2007 2008
1Q -0.39A -0.42A -0.42A -0.42A N/A N/A -0.46E -8% N/A
2Q -0.43A -0.29A -0.29A -0.29A N/A N/A -0.49E 33% N/A
3Q -0.38A -0.43A -0.43A -0.43A N/A N/A -0.45E -13% N/A
4Q 0.42A -0.41E -0.41E -0.46E N/A N/A -0.44E -198% N/A
Year -1.61A -1.55E -1.55E -1.59E -1.56E -1.56E -1.66E 4% -1%
P/E N/M N/M
Market Data
Market Cap (Mil.) 445
Shares Outstanding (Mil.) 36.97
Float (%) 76
Dividend Yield N/A
Convertible No
52 Week Range 17.33 - 6.63
Financial Summary
Revenue FY07 (Mil.) 8.0
Five-Year EPS CAGR N/A
Return on Equity N/A
Current BVPS 3.51
Debt To Capital (%) 1.11
Stock Overview
ACADIA PHARMACEUTICALS 12/12/07
6
8
10
12
14
16
18
000'S
0
20
40
VOLUME
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Stock Rating Target Price
New: 1-Overweight New: US$ 28.00
Old: 1-Overweight Old: US$ 28.00
Sector View: 2-Neutral
ACAD held an R&D Day on December 14, 2007, reviewing key results and clinical programs for ACP-103 and ACP-104, as well as scientific
and historical background for pimvanserin.
5-HT2a Hypothesis
Dr. Herbert Meltzer, one of the authors of the serotonin hypothesis, reviewed agents for psychosis, in particular highlighting their side effects
(e.g. weight gain), which are dose-dependent. Meltzer noted that decreasing the dosage of these drugs would favorably impact side effect
profile. Meltzer summarized background work that led to the 5-HT2a hypothesis. He noted that atypical antipsychotics have more potent
affinity for 5-HT2a than D2 receptors in contrast to haloperidol which has the converse ratio. The key discovery was that pimvanserin, a 5-HT2a inverse agonist, potentiated the dopamine efflux induced by atypical antipsychotics but inhibited dopamine efflux of haloperidol. This
discovery led to the notion that pimvanserin could enhance efficacy of subtherapeutic doses of atypical antispsychotics.
ACP-103
Schizophrenia
Additional detail was provided to supplement the March 19 announcement of positive Phase II co-therapy topline results for novel antipsychotic
ACP-103. Overall, there was a highly statistically significant reduction in positive and negative symptom score (PANSS) with the
addition of ACP-103 to low dose Risperdal and with comparable efficacy, faster onset and lower adverse events than higher dose Risperdal.
The placebo-controlled study had five arms (N=423): (1) low dose haloperidol 2 mg (1x daily) plus placebo (n=83); (2) low dose 2 mg
risperidone (1 mg 2x daily) plus placebo (n=83); (3) 2 mg haloperidol plus 20 mg ACP-103 (n=82); (4) 2 mg risperidone (1 mg 2x daily) plus
20 mg ACP-103 (n=85); and (5) 6 mg risperidone l (3 mg 2x daily) plus placebo as a control group (n=85). The primary endpoint of the
study was reduction in negative and positive symptoms (after Day 42 vs. baseline) of schizophrenia patients treated with subtherapeutic
doses of haloperidol or risperidone in combination with ACP-103 (to assess dose-sparing effect) versus risperidone. The study was
powered to demonstrate a 15% reduction in PANSS score primary endpoint versus baseline, which is considered clinically relevant.
The pimvanserin/risperidone arm exhibited a significantly greater decrease in PANSS total score than low-dose risperidone from Day 15
onwards, and also demonstrated a significantly greater decrease in PANSS at Day 43 (p=0.007). PANSS positive score decrease was
significantly greater in the period Days 15-36 as well (p<0.05). There was no significant difference in PANSS positive scale score decrease
between the pimvanserin/risperdone arm and the high dose risperidone arm. With respect to the PANSS negative scale, the decrease was
significantly greater in the pimvanserin/risperidone arm versus the low-dose risperdone arm from Day 15 onwards (p<0.05). There were no
significant differences in change in PANSS negative scores between the co-therapy arm and the high-dose risperidone arm. With respect
to PANSS general change, co-therapy arm decrease was significantly greater than that in the low-dose risperidone from Day 15 onwards
(p<0.005). The co-therapy arm demonstrated trends in score change relative to high-dose risperidone at Days 15 and 22. On the PANSS
cognitive change scale, the score decrease on the co-therapy arm was significantly greater than that on the low-dose risperidone arm at
Day 36 (p<0.05) with superiority trends on Days 22 and 43 (p<0.08 and p<0.07 respectively). On the CGI (Clinical Global Impression
Scale), co-therapy arm demonstrated significantly greater change in baseline than in the low-dose risperidone from Day 15 onwards; there
was no significant difference in changes between co-therapy arm and high-dose risperidone arm. Additionally, the co-therapy arm had
significantly less weight gain than high-dose risperidone arm (roughly 1 kg vs. 2kg; p=0.05). Co-therapy arm also had a significantly smaller
proportion of subjects with greater >=7% weight gain at roughly 6% versus roughly 16% for low-dose risperdone (p=0.08) and roughly 18%
for high-dose risperdone (p=0.031). Prolactin levels were significantly less in cotherapy arm versus high-dose risperdone (p=0.015 and
p=0.004 respectively for men and women). On the Simpson-Angus scale, both pimvanserin arms demonstrated less extrapyramidal
symptoms than haloperidol and risperidone arms. Finally, there was a trend for less akathisia in the co-therapy groups versus respective
risperdone and haloperidol arms.
Parkinson’s disease psychosis
The phase III program in Parkinson’s disease psychosis will consist of two pivotal safety and efficacy studies, a long-term safety extension
study, and other studies to enable an NDA. ACAD suggested that FDA supports a first-line indication, 6-week treatment durations, specified
study population, and primary and secondary endpoints. Each phase III trial will enroll approximately 240 patients each with a diagnosis of
Parkinson’s disease with at least a one-year duration and psychotic symptoms (specifically, visual and/or auditory hallucinations and/or
delusions during the four weeks prior to study screening). Each trial will have two active arms and a placebo arm. The primary endpoint of
the trials will be antipsychotic efficacy as measured using the Scale for the Assessment of Positive Symptoms (SAPS), with a key
secondary endpoint of tolerability as measured by the Unified Parkinson’s Disease Rating Scale (UPDRS). Exploratory endpoints will
evaluate sleep. The first phase III trial was initiated in June 2007. Assessing site feasibility is ongoing for the second trial.
ACP-104
Results from initial clinical studies for ACP-104, which were originally released in mid-2006, were summarized, followed by an update on the
ACP-104 phase IIb trial which has completed enrollment. There were 3 phase II studies of ACP-104 in schizophrenia, including a single
ascending-dose and a multiple ascending dose study, both of which were randomized, double-blind, and placebo-controlled. The third
study was an open label single-dose positron emission tomography (PET) study. A fourth study was a single-center, food-effect study. In
the single ascending dose study (N=24), there no DLTs or SAEs at all doses tested (up to 250mg). There were no significant changes in
ECG (including QT/QTc interval), clinical chemistries, and hematology; and no extrapyramidal side effects were observed. PANSS score
decreased by 8-9 in both the 225 and 250mg patients but only decreased by 3 in placebo patients. In the multiple ascending dose study
(N=40 distributed to 6 dose cohorts), there were initial efficacy signals (reduction in PANSS scores at two of the dose levels), and the MTD
was determined to be 600mg. There were no significant changes in ECG measures or clinical chemistries; and there were no
extrapyramidal side effects. There were two SAEs – seizure and short-lasting fever of unknown origin. The former was not related to study
drug, and the latter was attributed to viral infection. Average half-life was determined to be roughly 20 hours. The open-label PET study
(N=12) examined plasma levels of drug and receptor occupancy, which demonstrated good brain penetration (67% maximum receptor
occupancy) and good tolerability. The open-label, single-center food-effect study (N=16) demonstrated no food effect.
The phase IIb trial is a multi-center, double-blind, placebo-controlled, proof-of-concept study (N=248) designed to evaluate the safety and
efficacy of ACP-104 in approximately 240 patients with schizophrenia who are experiencing an acute psychotic episode. Patients in the trial
will be randomized to three different study arms, which will include two different doses of ACP-104 (100 mg twice daily and 200 mg twice
daily) and one placebo arm. Patients will receive oral doses of either ACP-104 or placebo for six weeks (with gradual dose titration up to 13
days followed by fixed-dosing for at least 4 weeks). The primary endpoint of the trial is antipsychotic efficacy as measured using the Positive
EQUITY RESEARCH
3
and Negative Syndrome Scale (PANSS). Secondary endpoints include PANSS subscale scores and CGI-S. Enrollment was completed
ahead of schedule, and top-line data are expected in Q208.
Remarks on R&D Strategy
ACAD highlighted key aspects of its R&D strategy: 1) Optimize the pimvanserin opportunity (including pursuit of strategic alliances), 2)
Position ACP-104 for partnership, and 3) Expand CNS pipeline. ACAD noted it is pursuing follow-on to ACP-104 in the form of ACP-106 as
well as several molecules from its serotonin platform..
ACAD - Milestones
Product Event Timeframe Endpoints/Details
ACP-103
(pimavanserin)
-
selective
5-HT2A
inverse
agonist
Partnership 1H08 ACAD is now fully engaged in partnership discussions for pimavanserin following completion of the full
analysis of the phase II data. With greater than $15bln in Global antipsychic sales in 2006 and significant
generic risk emerging against market leading atypical anti-psychotics between 2007-2012, we believe that
pimavanserin co-formulation data could support an attractive line extension strategy for several atypical
brands like Risperdal that are going generic over the next 4-5 years. Phase 2b results for pimavanserin
demonstrated a highly statistically significant reduction in positive and negative symptom score (PANSS) with
the addition of pimavanserin to low dose Risperdal and with comparable efficacy, faster onset and lower
adverse events than higher dose Risperdal. 27% PANSS reduction was in-line with historical data for
marketed anti-psychotics, and pimavanserin also demonstrated a 2 week improvement in response with 50%
lower weight gain (roughly 1 kg vs. 2kg).
Phase III trial in Parkinson’s disease
psychosis (PDP)
Initiated June
2007
Topline results:
2009
ACAD initiated the first of two double-blinded pivotal phase III trials in PDP in June 2007 for which it
anticipates randomizing 240 patients to 3 arms (ACP-103 10 mg and 40 mg vs. placebo) for 6 weeks of
treatment. Patients will receive oral doses of either pimavanserin or placebo once daily for six weeks in
addition to stable doses of their existing dopamine replacement therapy. The primary endpoint of the trial is
antipsychotic efficacy as measured using the Scale for the Assessment of Positive Symptoms (SAPS), with a
key secondary endpoint of motoric tolerability as measured by the Unified Parkinson’s Disease Rating Scale
(UPDRS). The initiation of the second pivotal trial, which is expected to be similar to and run in parallel to the
first, will occur after the first trial is underway (i.e. staggered). ACAD anticipates submitting a standard safety
package to the FDA, and expects to conduct extension studies to meet safety requirements.
Determine phase II plans for sleep
maintenance insomnia
Phase II plans for ACP-103 in sleep maintenance insomnia are under review with priority now being given to
opportunities in schizophrenia and PDP and pending dose selection as well as input from a potential partner.
A previous double-blind, placebo-controlled clinical proof-of-concept study in 45 healthy volunteers
demonstrated a dose-related statistically significant increase in slow wave sleep, as well as positive results in
sleep maintenance measures, such as the number of awakenings after sleep onset and time awake after
sleep onset. Latency to sleep onset and daytime functioning were not impaired and ACP-103 was well
tolerated.
ACP-104 -
clozapine
metabolite
Phase IIb study in schizophrenia Initiated:
June 2007
Completed
enrollment:
December 2007
Topline results:
Q208
The trial is a multi-center, double-blind, placebo-controlled study designed to evaluate the safety and efficacy
of ACP-104 in approximately 250 patients with schizophrenia who are experiencing an acute psychotic
episode. Patients in the trial will be randomized to three different study arms, which will include two different
doses of ACP-104 (100 mg twice daily and 200 mg twice daily) and one placebo arm. Patients will receive
oral doses of either ACP-104 or placebo for six weeks. The primary endpoint of the trial is antipsychotic
efficacy as measured using the Positive and Negative Syndrome Scale (PANSS).
In mid-2006, ACAD released results from 3 phase II studies of ACP-104 in schizophrenia, including a single
ascending-dose and a multiple ascending dose study, both of which were randomized, double-blind, and
placebo-controlled. In the single ascending dose study (N=24), there no DLTs or SAEs at all doses tested.
There were no significant changes in ECG (including QT/QTc interval), clinical chemistries, and hematology;
and no extrapyramidal side effects were observed. In the multiple ascending dose study (N=40 distributed to
6 dose cohorts), there were initial efficacy signals (reduction in PANSS scores at two of the dose levels), and
the MTD was determined to be 600mg. There were no significant changes in ECG measures or clinical
chemistries; and there were no extrapyramidal side effects. There were two SAEs – seizure and short-lasting
fever of unknown origin. The former was not related to study drug, and the latter was attributed to viral
infection. The third study, an open label single-dose positron emission tomography (PET) study (N=10),
examined plasma levels of drug and receptor occupancy and demonstrated good brain penetration.
ACP-105 Initiate phase I ACAD nominated ACP-105, a non-steroidal and selective androgen receptor agonist (SARM), as a clinical
candidate for muscle-wasting conditions, osteoporosis and other disorders in Q106.
ACP-106 Initiate phase I ACAD has introduced ACP-106, a selective 5-HT2A inverse agonist, as their newest clinical candidate. ACP-
106 is in a different structural class than ACP-103. ACAD will consider pursuing several indications for ACP-
106, beyond the three being pursued with ACP-103 (schizophrenia, Parkinson’s disease psychosis, and sleep
maintenance insomnia). |
