Analyst Jeffrey Hung downgraded Acadia to 'equal weight' from 'over weight' as he reallocated ratings and adjusted price targets across his small-to-mid cap biotechnology coverage, according to the Fly.
While he continues to believe sentiment is "overly cautious" and that negative news for dementia-related psychosis are largely priced into the shares, Hung said it is not clear to him what will drive stock appreciation in the next year.
He sees "a relatively low probability" that the U.S. Food and Drug Administration will allow the company to refile pimavanserin for dementia-related psychosis without conducting additional studies, Hung added.
Acadia shares were marked 6.1% lower in late-morning trading Thursday to change hands at $16.75 each, extending their six-month decline to around 21.2%.
The New England Journal of Medicine reported in July that in a trial that was stopped early for efficacy, patients with dementia-related psychosis who had a response to pimavanserin had a lower risk of relapse with continuation of the drug than with discontinuation.
"Longer and larger trials are required to determine the effects of pimavanserin in dementia-related psychosis," the Journal said.
Acadia's shares were pounded in April when the company said the FDA had rejected its application to expand the use of pimavanserin, the company's psychosis treatment.
A letter from the FDA cited "a lack of statistical significance" in some of the subgroups of dementia, and insufficient numbers of patients with certain less common dementia subtypes as lack of substantial evidence of effectiveness to support approval.
CEO Steve Davis said at the time that Acadia "stands behind the robustly positive results" of the study.
Analysts cut their price targets for the company in March after assessing Acadia's regulatory update for pimavanserin.
In August, Acadia reported a narrower-than-expected second-quarter loss, but missed Wall Street's revenue forecast.
Sales of pimavanserin increased 5% from the year ago quarter to $115.2 million, the company said.
The company said it was loweri its financial guidance for 2021 due to the continuing negative impact of the COVID-19 pandemic.