On March 3, Acadia Pharmaceuticals expected the first draft of a new label for review from the FDA, one of the final steps on Nuplazid's way to a lucrative new indication. Instead, it got a deficiency letter. And not much more information from the FDA since then.
Nuplazid, currently approved to treat hallucinations and delusions associated with Parkinson’s disease psychosis, had posted impressive phase 3 data in dementia-related psychosis. Investors and analysts were predicting a slam-dunk approval. The FDA accepted Acadia's approval submission in July and said at the time that it wouldn't need an advisory panel review to make its decision by April 3, 2021.
But Acadia announced Monday it had received a letter from the FDA on March 3 that “identified deficiencies that preclude discussion of labeling and post-marketing requirements/commitments at this time.”
The news startled company executives, investors and analysts alike. And though the FDA stated that this notification is not a final decision on Nuplazid's new use, Acadia’s stock price plummeted from $46 to $26 in after-hours trading Monday and continued the descent Tuesday morning, knocking billions off the company's market cap.
A still-shocked and obviously frustrated Acadia executive team laid out the scenario in an analyst call Monday afternoon after the announcement. They repeated several times that the drugmaker had received no additional information from the FDA, nor did the company have any idea of what the issue might be.
When asked why Acadia had delayed the news about the letter for several days, CEO Steve Davis said Acadia had been trying to get more information from the FDA, but to no avail.
"We just don’t have any feedback from them yet. They’ve told us twice they don’t have any questions for us, and that’s where things stand,” he said.
Davis added, “We’re kind of handicapped right now because we don’t have any information from the FDA. We’re eager to learn what deficiencies are that they have identified and work to try to resolve them as fast as humanly possible.”
Acadia President Serge Stankovic, who heads up R&D, laid out a detailed timeline of filings and follow-ups with the FDA. Its last communication before the letter was in February. On Feb. 11, Acadia asked the FDA if the agency was still on track for March 3 label review, and on Feb. 18, the FDA responded affirmatively.
Financial analysts were just as surprised.
“Acadia’s post-close Nuplazid regulatory update came as a major surprise and disappointment to say the least. Nearly all prevailing discussion on [Acadia] was around anticipated launch trajectory and not approval,” J.P. Morgan analyst Cory Kasimov wrote in an investor note Tuesday morning.
Based on FDA precedent with other drugmakers, Acadia appears to be headed for a complete response letter, Kasimov said, noting two outcomes—a favorable resolution without another trial or an FDA demand for a new study. JPM lowered its target stock price from $60 to $42 but maintained its overweight rating pending comments from the FDA.
Others were not as positive. Jeffrey Preis at Stifel downgraded Acadia to hold, reducing its target price from $68 to $27 and noting "[dementia-related psychosis] prospects seem bleak, tough for us to be confident" in an investor note.
SVB Leerink added its disappointment at the last-minute notice from the FDA, with analyst Marc Goodman predicting the FDA would not likely be able to resolve the issue by the April 3 decision date. But he expects the new indication could still come through.
Acadia executives held out hope for the original April 3 date. Davis said the FDA did “not give us any indication that April 3 would not be met.”
The Nuplazid dementia-related psychosis nod would be a big win for Acadia, which in Dec. 2019 trumpeted the news that it was ending the late-stage trial for Nuplazid in the disorder at a time when the drugmaker was still stinging from a major schizophrenia trial failure.