Mizuho has upgraded Acadia Pharmaceuticals (NASDAQ:ACAD) to Outperform from Neutral and increased its target price to $35.00 from $29.00. With the stock trading around $23.99, the new target implies considerable upside from current levels.
The firm pointed to valuation metrics it considers supportive of the upgrade. According to the analysis cited by Mizuho, Acadia trades at a price-to-earnings ratio of 15.6 and a price/earnings-to-growth (PEG) ratio of 0.16, which the bank interprets as evidence that the shares are undervalued at present.
Central to Mizuho’s upgrade is the bank’s assessment of remlifanserin (ACP-204), Acadia’s candidate for Alzheimer’s disease psychosis being evaluated in the Phase 2 RADIANT trial. Mizuho said the market is underestimating the asset’s potential and is overly influenced by the disappointing 2019 Phase 3 HARMONY trial results for pimavanserin in the same indication.
The bank argued that HARMONY was under-powered and relied on a 34 mg dose that Mizuho considers suboptimal. In contrast, remlifanserin is characterized by the firm as a more potent and safer, second-generation alternative to pimavanserin. Mizuho highlighted prior Phase 2 evidence for pimavanserin showing a 1.84-point improvement versus placebo on the NPI-NH scale at week 6, a result the bank described as modestly below the 2-to-3 point threshold commonly regarded as clinically meaningful.
Mizuho expects RADIANT to be appropriately powered and to employ a higher 60 mg dose, factors the bank believes will enhance the prospect of demonstrating efficacy and thereby de-risk the program. In its modeling, Mizuho assumes unadjusted peak sales for remlifanserin of $2.5 billion and adjusted peak sales of $1.6 billion. On a risk-adjusted basis, the bank attributes approximately $10 of its price target to the contribution from remlifanserin.
Those valuation benefits are partly offset in Mizuho’s view by two considerations: the removal of potential Daybue sales in the European Union and the possibility of pricing pressure on Nuplazid under an IRA scenario, both of which temper upside in the firm’s model.
Separately, Acadia has reported a regulatory development for its trofinetide program in Rett syndrome. The European Medicines Agency’s Committee for Medicinal Products for Human Use (CHMP) issued a negative trend vote on the company’s marketing authorization application for trofinetide, prompting plans for a re-examination of the filing.
The CHMP outcome has prompted varied responses among sell-side analysts. H.C. Wainwright reiterated a Buy rating, and Citizens maintained a Market Outperform stance. Oppenheimer raised its price target for Acadia to $23 after discussions with management that included future revenue expectations from Nuplazid and Daybue. Conversely, RBC Capital lowered its price target to $31, explicitly citing the CHMP vote and its implications for potential Daybue revenue in Europe.
These developments illustrate a mixed analyst response: Mizuho’s upgrade underscores upside tied to remlifanserin and trial design, while the CHMP action on trofinetide has led some firms to trim European revenue assumptions for Daybue. Investors and market participants are processing both the clinical-trial prospects for ACP-204 and the regulatory uncertainty surrounding trofinetide as they reassess valuation drivers for Acadia.