Acadia Pharmaceuticals Inc said on Tuesday its drug to treat psychosis in patients suffering from Alzheimer's disease met its main goal in a mid-stage study, sending its shares up as much as 18.5 percent.
The company said the drug, pimavanserin, showed a statistically significant reduction in psychosis with a 3.76 point improvement after six weeks, compared with 1.93 for placebo.
Piper Jaffray analysts said the trial result was a surprise win in terms of demonstrating clean safety profile for psychosis in a broader dementia patient population.
According to the Alzheimer's Association, an estimated 5.4 million people in the United States have the disease.
About 25 to 50 percent of Alzheimer's patients may develop psychosis, including hallucinations and delusions.
Acadia's drug was approved in the United States in April for psychosis linked to Parkinson's disease, the first treatment for the condition to get a nod in the country.
The mid-stage study had 181 patients who got either 34 milligram of pimavanserin or placebo once everyday.
However, the company said the reduction in psychosis was not statistically significant as compared with placebo after 12 weeks.
Needham analysts noted that the secondary endpoint miss is unlikely to be a regulatory concern as antipsychotics are often evaluated at 6 week endpoints.
"We do not believe it is unreasonable to consider Nuplazid (pimavanserin) potentially useful in all dementia patients with psychosis," Needham analysts wrote in a note.
Acadia said the FDA is yet to approve any drug to treat psychosis related to Alzheimer's disease.
The drug's success in the study follows a string of recent setbacks faced by companies that are developing treatments for Alzheimer's or problems associated with the disease.
Eli Lilly and Co said last month that its experimental Alzheimer's treatment, solanezumab, failed to slow declines in mental capacity of patients with even mild symptoms in a late-stage study.
Up to Monday's close, the company's stock had fallen about 29 percent this year. Acadia shares were trading up 8.3 percent at $27.56.
(Reporting by Akankshita Mukhopadhyay in Bengaluru; Editing by Anil D'Silva and Shounak Dasgupta)