piper: 12/2/05
* ACADIA presented Phase II data showing that ACP-103 reduces akathisia caused
by haloperidol therapy in schizophrenics. Akathisia is a debilitating side-
effect that causes restlessness or spasticity in patients and can limit
effective dosing of haloperidol.
* The Phase II placebo-controlled study enrolled 34 schizophrenics. Four
patients were excluded for protocol violations. Of the remaining thirty
patients, 14 were given 60 mg of ACP-103 once-daily with their current dose
of haloperidol. The patients were evaluated on Days 1, 3 and 5 using the
Barnes Akathisia Score.
* While the study did not achieve statistical significance for the a priori
defined primary endpoint of BAS Item 4 (global clinical assessment of
akathisia) on day 5 due to a high placebo effect, ACP-103 did reduce BAS
Item 1 (objective akathisia) on Day 5 (p=0.04) and demonstrated significant
improvement (p<0.05) and trends (p<0.1) for other BAS Items.
* This data is in line with our expectations based on earlier results in
healthy volunteers and increases our confidence that ACP-103 could serve as
an effective adjunctive therapy for schizophrenia.
* ACADIA has initiated a larger 400-patient trial of ACP-103 with haloperidol
or risperidone in the U.S. and Brazil with an interim data analysis of 200
patients expected next year.
* Also in schizophrenia, ACADIA should complete all 3 ongoing Phase II trials
of ACP-104 and present data during 1H:06. ACADIA will then likely initiate a
200 patient, 42-day efficacy study assessing cognitive benefits of ACP-104
in schizophrenics.
* An interim analysis of Phase II data on ACP-103 in Parkinson's disease
increased our confidence for a successful outcome with full data available
early 2006. If all goes well, we believe this program could advance into
Phase III trials next year.
* ACADIA retains cash of $63 million and will receive an additional $10
million from Sepracor in January, which should last through mid-2007.
From To Price: $10.29
52 Week High: $11.85
Rating -- Outperform
52 Week Low: $5.70
Price Tgt -- $13.00
Price Target: $13.00
FY05E Rev (mil) -- $11.0
FY06E Rev (mil) -- $6.7
FY05E EPS -- ($1.20)
Shares Out (mil): 23.3
FY06E EPS -- ($1.70)
Market Cap. (mil): $239.8
Avg Daily Vol (000): 75
Book Value/Share: $2.11
Cash Per Share: $2.69
Est LT EPS Growth: NM
P/E to LT EPS Growth (FY06): NA
Est Next Rep Date: 02/09/2006
Fiscal Year End: Dec
INVESTMENT RECOMMENDATION:
We reiterate our Outperform rating and $13 price target based on a projected
enterprise value of $300 million for the clinical pipeline plus year-end 2006
cash of $23 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.
ACP-103 AS ADJUNCTIVE THERAPY FOR SCHIZOPHRENIA
ACADIA is developing ACP-103 as an adjunctive therapy for schizophrenia. It is
widely accepted that serotonin (5-HT) plays a partial role in schizophrenia as
evidenced by the efficacy of atypical anti-psychotic agents such as clozapine.
ACP-103 is a selective 5-HT 2A inverse agonist. ACADIA believes that excessive
dopamine blockage of anti-psychotic drugs leads to a range of negative side
effects. The company's goal is to develop ACP-103 for adjunctive use with
anti-psychotics to achieve a balance between dopamine receptor blockage and 5-
HT 2A inverse antagonism to improve efficacy and reduce side effects. Thus by
administering ACP-103 as an adjunctive therapy, one can potentially reduce the
drug dose while improving the benefits and side-effect profile of anti-
psychotic therapies.
ACP-103 has completed several safety trials in the Parkinson's disease program
and has been found to be safe and well tolerated. ACADIA intends to examine
ACP-103's ability to reduce motor disturbances caused by antipsychotic therapy
in both healthy individuals and schizophrenic patients.
In September 2004, ACADIA reported the results of its clinical trial of ACP-
103 as an adjunctive therapy to haloperidol. 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. Akathisia is a
debilitating side-effect that causes restlessness or spasticity in patients
and can limit effective dosing of haloperidol. Patients were subsequently
administered a 100mg dose of ACP-103 and demonstrated a reduction in therapy-
induced akathisia including elimination of symptoms in 4 subjects. Also,
increased prolactin secretion caused by haloperidol therapy was reduced by a
statistically significant 33%. The study demonstrated no drug-drug
interactions nor severe adverse events observed from the co-administration of
ACP-103 and haloperidol.
Further studies showed that ACP-103 reduces akathisia caused by haloperidol
therapy in schizophrenics. The Phase II placebo-controlled study enrolled 34
schizophrenics. Four patients were excluded for protocol violations. Of the
remaining thirty patients, 14 were given 60 mg of ACP-103 once-daily with
their current dose of haloperidol. The patients were evaluated on Days 1, 3
and 5 using the Barnes Akathisia Score (BAS), the most widely used
comprehensive measurement for assessing the presence and severity of
akathisia. BAS is a four-item scale: Item 1 = objective akathisia, Item 2 =
subjective awareness of restlessness, Item 3 = subjective distress related
restlessness, and Item 4 = global clinical assessment of akathisia.
While the study did not achieve statistical significance for the a priori
defined primary endpoint of BAS Item 4 (global clinical assessment of
akathisia) on day 5 due to a high placebo effect, ACP-103 did reduce BAS Item
1 (objective akathisia) on Day 5 (p=0.04) and demonstrated significant
improvement (p<0.05) and trends (p<0.1) for other BAS Items.
Table 1: ACP-103 Results as measured by the Barnes Akathisia Scale (BAS)
Barnes Akathisia Scale Day ACP-103 (n=14) Placebo (n=16) p-value
1 -0.1 -0.2 n.s.
Item 1: Objective Scale 3 -0.7 -0.3 0.06
5 -1.0 -0.5 0.04
Item 2: Subjective Awareness of 1 -0.3 -0.1 n.s.
Restlessness 3 -1.1 -0.3 0.02
5 -1.1 -0.6 n.s.
Item 3: Subjective Distress Related 1 -0.6 -0.1 0.09
to Restlessness 3 -0.8 -0.3 0.09
5 -0.9 -0.9 n.s.
Item 4: Global Clinical Assessment 1 -0.4 -0.2 n.s.
of Akathisia 3 -1.1 -0.6 n.s.
5 -1.4 -1.1 n.s.
Source: ACADIA Press Release
ACADIA has initiated a larger trial of ACP-103 with haloperidol or risperidone
to further evaluate ACP-103 as adjunctive therapy with a full spectrum of
antipsychotic drugs. The trial should enroll 400 patients in the U.S. and
Brazil. The trial will seek to determine the tolerability and the efficacy of
combination therapy on the positive and negative symptoms of schizophrenia. We
look for interim data analysis of 200 patients expected next year.
Should ACADIA's clinical trials demonstrate that ACP-103 is effective as an
adjunctive therapy in combination with anti-psychotics, we believe ACADIA
could have a potential blockbuster in its hands. ACADIA could potentially
partner the drug with Big Pharma to create new combination therapies and
extend the patent life of the company's CNS portfolios.
SCHIZOPHRENIA
Schizophrenia is a chronic and disabling mental disorder that is characterized
by distorted perceptions of reality, hallucinations, delusions, disorderly
thinking, and diminished emotional expression. Schizophrenics often suffer
paranoia such as hearing voices in their head or believing that other people
are reading their minds, controlling their thoughts, or plotting to harm them.
Scientists are currently unsure as to the exact cause of schizophrenia;
however, it is generally accepted that at least a predisposition toward the
disorder is inherited as family lineage has been observed. Further, the
balance of certain neurotransmitters, including dopamine and serotonin,
appears to be implicated in the disease.
The NIH estimates that approximately 1% of the population develops
schizophrenia, afflicting over 2 million Americans and 25 million people
worldwide. Sadly, the recovery rate is low with fewer than 20% attaining a
full recovery and nearly 10% of patients committing suicide.
Currently approved anti-psychotic therapies for schizophrenia can be
categorized into either first generation (typical) or second generation
(atypical) therapies. The earliest drugs were introduced in the 1950s,
including haldol by Johnson & Johnson. These therapies function by blocking
dopamine (D2) receptors. Side effects of typical therapies include various
movement disorders, sedation, dry mouth, weight gain, photosensitivity,
hypotension, and epileptic fits.
The newer atypical antipsychotics include clozapine (Novartis), geodon
(Pfizer), seroquel (AstraZeneca), risperdal (JNJ), zyprexa (Lilly), and
abilify (Bristol-Myers Squibb). These drugs function by interacting with both
dopamine and serotonin (5-HT 2A ) receptors, and are less likely to cause
movement disorders. However, atypical therapies do not improve the cognitive
disturbances of schizophrenia and are associated with side effects such as
obesity, type II diabetes, and cardiovascular problems.
In 2004, global sales of drugs to treat schizophrenia and psychosis exceeded
$12 billion. Several of the atypical therapies were blockbuster drugs with
more than $1 billion in sales. Many of these drugs face patent expiration.
Further, room remains in this market for new drugs with improved side-effect
profiles and enhanced efficacy. We believe that schizophrenia represents a
large opportunity for ACADIA. The company is currently developing two drugs
for the treatment of this disease: ACP-103 and ACP-104.
Important Research Disclosures
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Analyst Certification - Edward A. Tenthoff, Sr Research Analyst
The views expressed in this report, |
