SAN DIEGO, Calif. ( TheStreet) -- Will Acadia Pharmaceuticals ( ACAD) be the next small drug firm to pull off a resounding clinical trial victory?

Acadia is expected to release results later this quarter from a late-stage study of its drug to treat psychosis related to Parkinson's disease.

Investors are hoping Acadia can duplicate the stock-ripping study results that catapulted Human Genome Sciences ( HGSI) just a couple of weeks ago. Acadia shares closed Tuesday at $4.38, off the year-high of $5.24 set intraday Monday but still double the stock price of two weeks ago.

Acadia's drug is called pimavanserin, which is being studied in two phase III clinical trials for the treatment of Parkinson's disease psychosis (PDP). Canadian drugmaker Biovail ( BVF) is Acadia's marketing partner for pimavanserin.

Results from the first of these late-stage studies will be released by Acadia later this quarter.

To handicap the upcoming pimavanserin results, it's always helpful to look back at the data generated from previous studies. Acadia did run a phase II study of the drug and presented results in April 2008 at a neurology conference.

The phase II study enrolled 60 patients with PDP who were treated for four weeks with either pimavanserin or placebo. Acadia successfully demonstrated that treatment with pimavanserin did not exacerbate the motor impairment typically seen in patients with Parkinson's. So, from a safety perspective, the drug came out okay.

The secondary goal of the phase II study, however, was to determine whether treatment with pimavanserin could significantly decrease psychosis -- mainly hallucinations and delusions - that often afflict Parkinson's patients. On this measure, pimavanserin's performance was mixed.

Treatment with pimavanserin was associated with an approximate four-point decrease in psychosis compared to placebo, as measured by the Scale for the Assessment of Positive Symptoms (SAPS), but the result was not statistically significant.

Two other measures of psychosis in Parkinson's patients used in the phase II study also showed that pimavanserin was an improvement over placebo, although again, the results were not robust enough to be statistically significant.

Based on these data, Acadia designed the phase III studies with enough statistical power so that a repeat of a 4-point improvement on the SAPS score would produce a positive and statistically significant result. Acadia intended to enroll 240 patients in the first phase III study but ended up with 289 patients enrolled.

Will pimavanserin succeed?

In a research note published last week after a face-to-face meeting with Acadia executives, Lehman Brothers biotech analyst Jim Birchenough said Acadia expressed a "high level of confidence in achieving a positive outcome" from the pimavanserin study.

That confidence was based, in part, on the results of the phase II study; the statistical strength and higher-than-expected enrollment of the phase III study; and anectodal evidence that patients who completed treatment in the phase III study are choosing to remain on pimavanserin in an open-label extension, wrote Birchenough. He has an overweight rating on Acadia and a $5 price target.

Working against Acadia, perhaps, is the small size of the phase II study and results that failed to show pimavanserin reducing the psychosis of Parkinson's patients with statistical certainty. Results from larger phase III study are often less robust than those from phase II studies.

An analyst for a healthcare hedge fund who follows psychiatric drug companies closely (but who has no position in Acadia) says a positive result from the pimavanserin study would likely push Acadia shares to $8 to $9. A negative outcome drops Acadia shares back down to net cash, or around $1.50 a share.

He gives the study a 35% chance for success, which means the stock's recent run-up makes shares a bit expensive from a risk-reward perspective.

-- Reported by Adam Feuerstein in Boston.

Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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