Biotech Stock Plummets After FDA Snub

Analysts are pessimistic about the future of the drug in question

Deputy Editor
Jun 21, 2022 at 10:30 AM
facebook twitter linkedin


Acadia Pharmaceuticals Inc (NASDAQ:ACAD) stock is one of the worst stocks on the Nasdaq today, down 35.6% to trade at $12.56 at last check. On Friday, the U.S. Food and Drug Administration (FDA) advisory panel voted 9-3 that the biopharmaceutical name's antipsychotic drug, Nuplazid (pimavanserin), which is used to treat psychosis related to Alzheimer's, is not an effective treatment. Since this decision, analysts have been overwhelmingly negative, with the general consensus being that it is unlikely the FDA will approve the drug in August. 

After the news, J.P. Morgan Securities downgraded ACAD to "neutral" from "overweight," while Jefferies cut its rating to "underperform" from "buy." No fewer than four other analysts slashed their price targets as well, though the 12-month consensus price target of $25.94 is still a 107% premium to current levels. 

This negative price action has ACAD crumbling to a nine-year bottom, earlier trading as low as $12.24 and falling on the Short Sale Restricted (SSR) list. Year-to-date, the equity is now down 45.7%. 

Options traders are eyeing the stock, too, with volume running at four times what's typically seen at this point. The weekly 6/24 16-strike put is the most popular by far, with new positions being opened at the weekly 6/24 17-strike call. 

 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

SCHAEFFER'S JULY STOCKS REPORT AD
 


 


 
Special Offers from Schaeffer's Trading Partners