Acadia Pharmaceuticals (NASDAQ:ACAD) is a San Diego-based biopharmaceutical company that focuses on the development and commercialization of innovative medicines that address unmet medical needs in central nervous system (CNS) disorders and rare diseases in the United States. The stock has been hit with major volatility so far in 2024. What is behind its recent plunge? Is there any reason to jump on the dip? Let’s dive in.
Schizophrenia is a serious mental disorder than modern medicine is still learning a lot about. Acadia had been deep into the testing for an antipsychotic drug designed to treat it. On Monday, March 11, 2024, the company said that it did not plan to conduct further clinical trials of its antipsychotic drug pimavanserin. Unfortunately, the drug in question failed to improve negative symptoms of schizophrenia in a late-stage study.
That decision came after two failed attempts to secure regulatory approval for the expanded use of pimavanserin in the treatment of psychosis related to dementia and Alzheimer’s disease in 2021 and 2022, respectively. The study that Acadia moved on from involved 454 adult patients, pimavanserin did not outperform a placebo in reducing negative symptoms of schizophrenia, including poor socialization and lack of motivation.
In fiscal 2023, Acadia delivered net product sales of $726 million – up 40% compared to the previous year. While the failed trial of pimavanserin is a setback, Acadia has other promising drugs like ACP-101 and ACP-204. Shares of Acadia have dropped 35% in 2024 as of late afternoon trading on March 12. The stock looks undervalued compared to its industry peers at the time of this writing.
