Bank of America upgraded Acadia Pharmaceuticals (NASDAQ:ACAD) to 'Buy' from 'Neutral', arguing that a recent pullback in the stock has created a more attractive risk-reward profile for investors.
The analysts maintained a $29 price objective on the shares, which traded up 6% at $22 on Wednesday afternoon, and wrote that the roughly 25% decline in the stock is “not related to fundamentals and more related to YTD macro factors.” They added that they “see no change to our fundamental view of the company.”
Central to the upgrade is Acadia’s Parkinson’s disease psychosis drug Nuplazid, which the firm believes provides a floor to valuation. Bank of America wrote that “stable Nuplazid sales in Parkinson's psychosis (PDP) provides protection against further downside,” highlighting the product’s steady growth a decade after launch and lack of near-term competition, with intellectual property protection extending to 2038.
The bank models Nuplazid generating $888 million in peak sales by 2029, though it noted this estimate “could be conservative if recent field force investments accelerate growth.” Acadia recently expanded its Nuplazid commercial team by about 30% to boost disease awareness, with management expecting benefits to emerge in the second half of the year.
Beyond Nuplazid, the analysts pointed to the company’s broader pipeline as an underappreciated driver of upside. They estimate an $11 billion opportunity across Acadia’s pipeline and said this potential “is currently discounted and could provide upside.”
Particular focus was placed on remlifanserin, a next-generation version of Nuplazid, which is being studied in Alzheimer’s disease psychosis (ADP) and Lewy body dementia psychosis (LBDP). Bank of America views the program as “partially de-risked given prior Nuplazid clinical data,” with a Phase 2 readout in ADP expected between August and October.
The firm models $2.1 billion in peak sales for remlifanserin in Alzheimer’s psychosis, noting that early physician feedback suggests a positive outcome is likely. Acadia estimates a roughly $4 billion opportunity for the ongoing mid-stage studies.
While Acadia’s Daybue treatment for Rett syndrome could contribute to growth, the analysts highlighted it is not central to their upgrade.
Bank of America outlined several risks to its outlook, including slower-than-expected Nuplazid growth, negative pipeline data that could shift valuation reliance back to the core product, and continued stagnation in Daybue sales.