Merrill Lynch Sees 4 Top Biotechs With Key Catalysts in 2018

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Acadia Pharmaceuticals

Acadia Pharmaceuticals Inc. (NASDAQ: ACAD) has a Buy rating with a $22 price objective from Merrill Lynch. This company has an FDA-approved product called Nuplazid that treats Parkinson’s disease psychosis (PDP).

Nuplazid sales came in at $57.1 million in the second quarter, noting impact from the negative press on data from the FDA’s FAERS database. Management lowered its full-year guidance to $210 million to $225 million (from $255 million $275 million) but indicated the impact on new scripts had since stabilized. The brokerage firm estimates Nuplazid sales at $216 million (+73% year over year) for 2018 from the PDP indication, with risk-adjusted peak sales of $660 million by 2026.

As for 2018 catalysts, Merrill Lynch detailed:

For the second half of 2018 key catalyst, Acadia is expected to report topline results from the Phase 2 CLARITY trial of Nuplazid in Major Depressive Disorder (MDD) in the fourth quarter of 2018. CLARITY recruited 207 points and treated points for 10 weeks with either placebo or 34mg of Nuplazid. We expect topline results would include improvement of primary endpoint (changes in Hamilton Depression Rating HAM-D score), safety and other exploratory efficacy measurements (not yet disclosed). We currently include MDD in our model as a part of our $200 million pipeline plug (contributing $1/sh). We see positives from the Phase 2 CLARITY study would (1) affirm Nuplazid’s safety; and (2) expand its application into other CNS indications. We also expect updates on enrollment in the second half of 2018 from the ongoing schizophrenia (Phase 3 ENHANCE-1, Phase 2 ADVANCE) and dementia-related psychosis (DRP) studies (Phase 3 HARMONY).

Acadia traded at $13.50 per share, in a 52-week range of $12.77 to $41.20. The consensus price target is $30.56.

Sage Therapeutics Inc. (NASDAQ: SAGE) has a Buy rating from Merrill Lynch with a $209 price objective. This company has several late-stage assets in central nervous system (CNS) diseases.

Merrill Lynch detailed its upcoming catalysts as:

Sage has several upcoming catalysts in the near term: (1) Zulresso (also known as Brexanolone IV) in post-partum depression (PPD). The FDA advisory committee meeting will be held on Nov. 2, with FDA decision by PDUFA date of Dec. 19. We expect more color on site-of-care options and sales force deployment during company calls in the second half of 2018 ahead of Zulresso launch in the first half of 2019. For EU approval, mgmt. expects EMA scientific advice in the fourth quarter of 2018; (2) SAGE-217 programs. We expect topline Phase 2 results of oral ‘217 in PPD in the fourth quarter of 2018. We also expect initiation of studies in major depressive disorder (Phase 3, MDD), MDD points with insomnia (Phase 3) and bipolar disorder in the fourth quarter of 2018; and (3) other earlystage assets. Sage is expected to report data of ‘324 in single ascending dose (SAD) and ‘718 in multiple ascending dose (MAD) studies in the fourth quarter of 2018. ‘217 in MDD contributes the majority of our valuation at $144/sh. We est. MDD launch in 2020 with risk-adj. sales of $102 million (less than 50% likelihood of success) and reaching risk-adj. peak sales of $3.4 billion by 2033. We reiterate our confidence in the potential of its GABA-targeted assets in several CNS disorders, given positive and consistent results in MDD and PPD.

Shares of Sage traded at $154.12, with a consensus price target of $220.64 and a 52-week range of $59.57 to $195.97.

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