Tuesday, Mizuho lowered its rating on shares of Acadia Pharmaceuticals (NASDAQ:ACAD) from Buy to Neutral, adjusting the price target to $25 from the previous $39. This change follows the unsuccessful outcome of the ADVANCE-2 trial, leading to the removal of Nuplazid sales forecasts for the treatment of negative symptoms of schizophrenia (NSS).
The new price target of $25 reflects the anticipated value of Nuplazid for Parkinson's disease psychosis (PDP), the potential of Daybue with estimated peak sales of around $1 billion, and the possibility of a Nuplazid intellectual property extension until 2038 for PDP. The firm's decision to downgrade Acadia's stock is based on the absence of significant near-term catalysts expected for the company in 2024.
According to the firm, the next major event that could potentially influence Acadia's stock performance may not occur until late 2025 or early 2026. The revised price target and stock rating reflect the adjusted expectations for the company's product pipeline following the trial results.
The failed ADVANCE-2 trial has notably impacted Acadia's sales outlook, as the anticipated revenue from Nuplazid for NSS, which was previously estimated to contribute $14 per share, has been excluded from forecasts. This has led to a significant reduction in the company's valuation according to Mizuho's analysis.
The downgrade to Neutral indicates a shift in the firm's view on Acadia's investment profile, suggesting a more cautious stance until further developments provide clarity on the company's growth prospects.
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