Food and Drug Administration experts voted against recommending Acadia Pharmaceuticals' Alzheimer's disease psychosis drug, leading ACAD stock to plummet Tuesday.
On today's stock market, ACAD stock collapsed 33.3% to 13.01.
The Psychopharmacologic Drugs Advisory Committee voted 9-3, saying the evidence doesn't support the use of Acadia's Nuplazid as a treatment for hallucinations and delusions associated with Alzheimer's disease. The vote followed a lengthy discussion Friday, but Acadia stock was halted.
Patient advocate Colette Johnston was one of the three panelists that endorsed Acadia's drug. But in her closing comments, Johnston said even she was conflicted — a bearish sign for ACAD stock. Her father suffered Alzheimer's disease. Care facility staff members sent him to a psych ward following a fight with another patient.
"If I would have had the opportunity to use this drug, that whole scenario would have changed and the next two months of his life, before he passed, would not have been — could not have been, possibly might not have been — spent in a drug-induced sedation," she said. "I couldn't look at somebody in that position and justify that they couldn't have that drug."
Panelist Dr. Dean Follmann voted no and said he wanted to see a randomized study in Alzheimer's patients. Acadia tested its drug in patients with psychosis due to Parkinson's and Alzheimer's disease. But some suggest positive results in Parkinson's patients could have skewed the results.
ACAD Stock: Is Another Study Necessary?
The FDA doesn't have to follow the panel's recommendation. But it usually does.
One panelist suggested the FDA might approve Nuplazid in Alzheimer's disease psychosis — if Acadia runs another study, RBC Capital Markets analyst Gregory Renza said in a note to clients. Nuplazid already has approval for patients Parkinson's disease psychosis.
"With the negative advisory committee, we see increased likelihood of FDA rejection of the application in August, though we believe the stock implication is limited at current levels given a Parkinson's disease psychosis floor," he said.
He kept his outperform rating on ACAD stock, but dropped his price target to 26 from 32.
Acadia expressed disappointment in the committee's recommendation, noting the FDA hasn't approved any drugs for this use. Patients often receive off-label antipsychotics, which can further damage already poor cognition and motor function.
"We continue to believe there is substantial evidence across multiple independent clinical studies and (goals) that support the (effectiveness) of (Nuplazid) in Alzheimer's disease psychosis," Chief Executive Steve Davis said in a written statement.
ACAD stock opened near a four-year low.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
