Acadia (ACAD) stock was surging Tuesday as the biopharmaceutical company's Nuplazid drug, which treats hallucinations associated with Parkinson's disease, generated third-quarter sales that more than doubled analysts' estimates.
"In our view, both the greater-than-expected sales and positive sentiment from management support that the launch is progressing well," JMP Securities analysts said in a note.
Wall Street is cheering the results, released late yesterday, with shares up roughly 18% to $27.12 on heavy trading volume Tuesday afternoon.
The company's Nuplazid treatment brought in $5.3 million in revenue during the period, easily topping consensus estimates of $2.6 million.
Bank of America/Merrill Lynch subsequently upgraded the stock to buy from neutral. The firm estimates fiscal 2016 Nuplazid sales of $15 million, and expects sales to accelerate to nearly $180 million in fiscal 2018.
"Our feedback from physicians pre- and post-launch indicate the key reason to use this drug is unlike anti-psychotics that are currently used off label, Nuplazid does not interact with the drugs used to control the motor symptoms associated with [Parkinson's Disease]," the firm wrote in a note.
Acadia reported a net loss of 61 cents per share for the quarter, missing the Factset consensus of a loss of 56 cents per share as R&D expenses rose to $25.8 million from $18.7 million a year ago.
Looking ahead, Acadia's data from its phase II study of Nuplazid in treating Alzheimer's disease psychosis (ADP) are due by year end, and the company recently began a phase II study of Nuplazid in Alzheimer's agitation.
Leerink models a 20% likelihood of success for each study, while BofA/Merrill Lynch sees a 25% likelihood of approval for the ADP trial.
But management indicated that ADP trial results could warrant advancement without being statistically significant. These comments contributed to BofA/Merrill Lynch's decision to upgrade shares, the firm said.