Tuesday, Needham maintained a Buy rating on Acadia Pharmaceuticals (NASDAQ:ACAD) but reduced the price target to $32 from $36. This adjustment follows the announcement that the company's second Phase 3 study did not meet its primary endpoint. The firm had previously acknowledged the risks associated with this study, estimating only a 50% probability of success.
The decision to lower the price target was based on the removal of the NSS indication from financial models, as the recent study's outcome did not support its inclusion. Despite this setback, Needham's positive stance on Acadia is still supported by the strong performance of the drug Daybue.
The firm's confidence is bolstered by the management's reports of a recovery in trends during February and persistency rates that are approximately 10% higher than those observed in clinical trials.
The company's announcement today indicated that the anticipated benefits of the NSS indication would not be realized, prompting the adjustment of the price target. However, the underlying growth drivers for Acadia Pharmaceuticals, particularly the drug Daybue, appear to remain solid.
Needham's outlook for Acadia remains optimistic in the near term, with an emphasis on Daybue's continued growth. The firm's buy rating indicates a belief in the pharmaceutical company's potential despite the recent challenges encountered in its clinical development program.
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