Assistant Managing Editor

Any expectations raised in May when Acadia Pharmaceuticals Inc. impressed investors with a potentially lucrative North American partnership for Phase III-stage pimavanserin were dashed when the drug failed to hit its primary endpoint in the first of two pivotal studies in Parkinson's disease psychosis.

News sent the San Diego-based firm's stock (NASDAQ:ACAD), which had run up in the weeks ahead of the data, plunging 66 percent, or $3.84, to close Tuesday at $2.

Top-line data from the six-week, 298-patient trial showed improvements in both treatment arms, according the Scale for the Assessment of Positive Symptoms, but Acadia said a higher-than-expected response in the placebo arm prevented the study from meeting statistical significance. Mean reductions in SAPS scores were 5.8 points in the 10-mg pimavanserin arm, 6.7 points in the 40-mg arm and 5.9 points in the placebo group.

The company plans further analysis, but executives said they were at a loss to explain the high placebo response. While the drug missed the SAPS endpoint in an earlier Phase II study, "we got a very nice separation between the treatment and placebo [groups]," Acadia CEO Uli Hacksell told BioWorld Today.

During the firm's conference call, executives said a previous four-week study had shown a change from baseline of only 1.1 points in the placebo study, and investigators were expecting a similar trend in the Phase III trial, which was 90 percent powered for a 5-point difference between treatment and placebo.

SAPS is the recommended endpoint to describe psychosis in Parkinson's disease, a condition involving hallucinations and delusions that affects about 40 percent of the estimated 1.5 million U.S. patients with Parkinson's, Hacksell said.

All patients enrolled in the study remained on their stable doses of dopamine drugs, and the study met its secondary endpoint of motoric tolerability, as measured by the Unified Parkinson's' Disease Rating Scale, showing that it did not worsen motor symptoms associated with the disease. Pimavanserin also was found to be safe and well tolerated.

Despite the disappointing data, Acadia remains confident that the drug has "considerable potential" in PDP, Hacksell said. And the company is holding out hope that the second Phase III trial of the selective 5-HT2A inverse agonist, which is about a year behind the first, won't be thwarted by a similarly high placebo response.

That trial is designed with the same endpoints but is testing 10-mg and 20-mg doses of pimavanserin.

But a success in that case still won't give Acadia a clear win.

"We do believe we need two pivotal trials" before it can submit a regulatory filing, Hacksell said.

That means Acadia will have to consult with partner Biovail Corp.

Though Acadia funded both Phase III studies, terms of the May licensing deal call for Toronto-based Biovail to pick up the tab for further development and commercialization activities involving pimavanserin in PDP and any other neurological and psychiatric indications the companies decide to pursue.

As Piper Jaffray analyst Edward Tenthoff put it in a research note: "Without funding from Biovail, we believe pimavanserin development will be halted once studies in PDP are complete."

But even if the second PDP study fails, Hacksell said the drug has shown promise in other indications, including Alzheimer's disease psychosis, schizophrenia and insomnia. The companies already selected ADP as the second indication to explore and "we'll decide on a path forward after we analyze the data" from the first PDP study, he added.

Nevertheless, the first Phase III failure marked a setback for the firm, which had been riding high since pleasantly surprising analysts and investors with its potential $395 million Biovail deal. That partnership, coming before the release of Phase III data, sent the company's stock soaring 134 percent and seemed to quell some of the doubt surrounding pimavanserin's efficacy following mixed Phase II data. (See BioWorld Today, May 5, 2009.)

It also offered some reassurance for investors skeptical about the drug's potential in the PDP market. There are no FDA-approved drugs specifically for PDP, but there are generic atypical antipsychotics that are used off-label, with limited efficacy. The most efficacious of those is clozapine, but it carries several well-known side effects.

Acadia, which earned $30 million up front from Biovail in its May licensing deal, had about $66.2 million in the bank as of June 30. The firm said it expects to end this year with more than $40 million, enough to carry it into the first half of 2011.

Beyond pimavanserin, it has an ongoing collaboration with Allergan Inc., of Irvine, Calif., for a Phase II-stage drug for chronic pain and a Phase I program in glaucoma. And it's getting ready to start advancing additional programs from its internal pipeline, starting with ACP-106, a selective 5-HT2A inverse agonist that is in investigational new drug application-track development.