Top Japanese BioPharma on the Move

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Acadia High Risk-Low Reward

Today, Acadia announced less than favorable results from their Phase III clinical trial for Pimavanserin. You can read about this from Street.com's article Acadia Parkinson's Drug Fails Phase III trial and plans to slash 50% of its workforce according to Marketwatch.com's article. Business Wire has a good look at the news earlier this morning as ACADIA Pharmaceuticals Announces Results from Phase III Trial of Pimavanserin in Parkinsons Disease Psychosis. I don't think anyone really saw this coming with such positive news in the past.

This really is devastating news as it was their primary moneymaking drug. Citi analyst Dr. Lucy Lu downgraded shares of Acadia to "Sell" from "Hold" and reduced her price target to $1.50 from $4.50, citing the study failure. She said slashed 2011 revenue estimates to $8.4 million from $23.3 million and 2012 estimates to $7.6 million from $46.3 million. The stock dropped considerably losing close to 68% of its value in early trading. Yesterday Acadia (ACAD) was trading at 5.84 and at this moment is around 2.00 at closing. But what does Citi know as they are struggling themselves with TARP payments.

Upon reviewing this a little closer it makes sense, and I wish I could have written about the caution of this stock before today. Anyone who has taken Psych classes understands the Placebo effect and how patients suffering from Psychosis sometimes pretend to feel better based on a placebo alone. Just searching google I found a nice Psychosis Placebo effect book and it has a nice excerpt on Understanding the Placebo effect. The mind works in mysterious ways and we can trick ourselves into feeling better or worse. This isn't good for drug companies trying to pass Clinical Trials. Another Placebo effect study done by Columbia University is titled: Researchers Demonstrate How Placebo Effect Works in the Brain. Many psychosis medications are hard to judge their efficacy.

I do think the drug does have some positive effect and did not impair disease-related motor function in patients with PDP. This was their major pipeline drug but they do have options here and look at what went wrong. They will continue with their second Phase III trial on Parkinson's Disease Psychosis or PDP. They still can try clinical trials with Alzheimer's patients and have other drugs in Phase I/II trials. AGN XX/YY is in Phase II, partnered with Allergan, for Chronic Pain, and AC-262271 for Glaucoma in Phase I. Other Programs can be found on there website here.

But the key here is to do your homework. Diversify, Diversify and Diversify. Do not put all your money into 1 biotech stock as these are very high risk, and sometimes low reward. Invest in the Long-Term. 10 years from now this stock might just make it and you just have to wait and see. Look at their financials, see what they have going on if the Clinical Trial Fails. Do they have more than one application for their medication. In this case they do so I see Acadia bouncing back eventually.

This is one of many drugs that fail in Clinical Trials. A nice look at BioPharma investing shows that Failed Trials Can Spell Startup Disasters. Even the big BioPharma companies take huge risks with Clinical Trials. Just look at Pfizer and their struggles to get past the daunting, ever-dreaded Phase III lately. It is a gamble and you shouldn't be in it if you are not prepared to take losses. Other huge setbacks have been felt by Savient, Biogen, Hemispherx, AEterna Zentaris, and Dendreon. Some eventually get past it, some don't.

My advice is this. Diversify to reduce risk. If investing in stocks, only buy around 5-10 percent of your portfolio in each one investment. If you want a higher risk/return ratio invest more but be prepared if the trial fails. Or you can just get out of Clinical trials altogether and just wait for approval. Another way is to invest in Big Pharma. They can take a hit and still move past it.

Don't panic, it happens to everybody in BioPharma investing. Sometimes we fail, get yourself up and "Don't give up, Don't Ever Give Up" Jimmy V. Just look at Steve Jobs. He too once failed, here is a nice speech from his 2005 Stanford commencement address.

Acadia Pharma looks strong so far

So Acadia is moving like a freight-train through its Phase III trial in hope for FDA approval. I luckily got in somewhat early but eager to buy more. I am thinking it is time to re-up and go for another round as they seek approval for their Parkinson's Disease medication Pimavanserin. Here is the info from their website. Current trading is up 15.5% at 6.11 up 0.82 today alone. So look forward to approval soon and happy trading. If approved I see the stock going between the 9-11 point range. Results could be higher or lower but just a hunch as Parkinson's Disease patients do not react well to the anti-psychosis medication currently available.

Pimavanserin
Overview
Pimavanserin is a small molecule product candidate that we discovered and have advanced to Phase III development as a treatment for patients with Parkinson's disease psychosis. Pimavanserin can be taken orally and blocks the activity of the 5-HT2A receptor, a key serotonin receptor that plays an important role in the treatment of various psychiatric disorders. Parkinson's disease psychosis is a debilitating psychiatric disorder that occurs in up to 40 percent of patients with Parkinson's disease. The development of psychosis in patients with Parkinson's disease is associated with increased caregiver burden, nursing home placement, and increased mortality.

Currently there is no therapy in the United States approved to treat Parkinson's disease psychosis. Physicians may attempt to address this disorder initially by decreasing the dose of the dopamine replacement drugs, which are administered to patients to manage the motoric symptoms of Parkinson's disease. However, this approach is generally not effective in alleviating psychotic symptoms in most patients and is often associated with the significant worsening of motor function in these patients.

Despite substantial limitations, currently marketed antipsychotic drugs also may be used off-label to treat patients with Parkinson's disease psychosis. Because antipsychotic drugs block dopamine receptors, which may counteract the dopamine therapy used to manage the motoric symptoms of Parkinson's disease, these drugs are generally not well tolerated by patients with Parkinson's disease at doses required to achieve antipsychotic effects. Current antipsychotic drugs also are associated with a number of side effects, which can be especially problematic for elderly patients with Parkinson's disease. In addition, antipsychotic drugs have a black box warning for use in elderly patients with dementia-related psychosis due to increased mortality and morbidity. We believe that pimavanserin has the potential to be the first-in-class treatment for this disorder, which may effectively treat Parkinson's disease psychosis without impairing motor function, thereby significantly improving the quality of life for patients with Parkinson's disease.

We believe that pimavanserin has the potential to address a range of central nervous system indications with large unmet medical needs. Together with Biovail, we plan to leverage our Phase III program in Parkinson's disease psychosis to develop and commercialize pimavanserin for multiple neurological and psychiatric indications that are underserved by currently marketed antipsychotics, including psychosis in patients with Alzheimer's disease.

Development Status
We are currently conducting a number of studies in our Phase III program with pimavanserin for Parkinson's disease psychosis, including two pivotal trials, an open-label safety extension study, and other NDA supporting studies.

We have completed a Phase II clinical trial in which pimavanserin demonstrated motoric tolerability and antipsychotic effects in patients with Parkinson's disease, and was safe and well tolerated in the study.

In addition, we have reported positive results from a Phase II clinical trial with pimavanserin as a co-therapy in schizophrenia. The results of this trial demonstrated several advantages of co-therapy with pimavanserin and a sub-maximal dose of risperidone, a commonly prescribed antipsychotic drug, including enhanced efficacy, a faster onset of antipsychotic action, and an improved side effect profile. We also have completed a proof-of-concept clinical study in which pimavanserin induced a significant increase in slow wave sleep in older healthy volunteers.

In other news here is a clip from earlier last week.

Acadia Pharma to slash 50% of workforce
Marketwatch Aug 5, 2008, 7:01 p.m. EST

(8:55 AM ET) BOSTON (MarketWatch) -- Acadia Pharmaceuticals /quotes/comstock/15*!acad/quotes/nls/acad (ACAD 6.15, +0.04, +0.66%) said Tuesday that it plans to slash about 50% of its workforce, bringing its headcount down to around 65 employees. The drug developer said that the restructuring will allow it to focus on its lead drug candidate pimavanserin, a treatment for psychosis associated with Parkinson's disease. The product is currently in Phase III testing. Acadia will also continue two early-stage drug development programs that are currently being funded by Allergan Inc. /quotes/comstock/13*!agn/quotes/nls/agn (AGN 54.65, -0.14, -0.26%) . Earlier Tuesday, Acadia reported a second-quarter loss of $18.3 million, or 49 cents a share, compared with a loss of $10.8 million, or 29 cents a share, for the same quarter last year. Revenue fell to $177,000 from $2.1 million, due primarily to the completion of two collaborative agreements and lower revenue from its Allergan partnership.

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