Over the past three months, the Nasdaq Biotechnology index has risen around 41%, thanks largely to the hordes of investors turning their attention to shares of companies with potential coronavirus treatments and vaccines in development.
This pandemic-driven frenzy for drugmaker stocks has made it awfully hard for investors who like to focus on the fundamentals. Luckily, companies such as Acadia Pharmaceuticals (ACAD -2.42%) Y-mAbs (YMAB) have major catalysts unrelated to COVID-19 in their near term future.
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Y-mAbs Therapeutics: Here they come
This late-stage cancer drug developer doesn't have any reliable revenue streams at the moment, but that could change in 2021. Recently, the FDA accepted Y-mAbs' first new drug application, and an application for a second new drug is expected to reach the agency before the end of June.
In April, Y-mAbs finished the rolling submission of an application for naxitamab, a potential new GD2-targeting treatment for neuroblastoma. The first, Unituxin, earned approval in 2015 to treat pediatric neuroblastoma patients that responded to their first treatment regimen.
During a study supporting Y-mAbs' naxitamab application, investigators reported encouraging two-year progression-free survival rates from different groups of patients who relapsed following prior treatment. The company still hasn't released the full dataset, so it's probably a good idea to wait and see if the FDA agrees to review the application before taking a risk on this stock. The agency should issue a response on or before Aug. 1, 2020.
In May, Y-mAbs began submitting pieces of a new drug application for omburtamab and expects to complete the submission by the end of June. Following a meeting with the FDA earlier this year, the company believes it can file for accelerated approval of omburtamab as a treatment for patients with neuroblastoma that has spread from nerve endings to their central nervous systems (CNS).
Patients with tumors that have spread to their CNS have a lousy prognosis, but treatment with omburtamab, an antibody administered directly into the CNS on an outpatient basis, led to dramatically improved survival rates. There's also evidence to suggest omburtamab can help patients with other forms of cancer who have seen tumors metastasize in their central nervous system.
At recent prices, Y-mAbs is a $1.97 billion company without any drugs to sell. While there's a chance the stock could fly higher in response to good news from the FDA, the slightest hint of trouble along the way could lead to a severe market beat-down.
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Acadia Pharmaceuticals: Nuplazid expansion
Unlike Y-mAbs, Acadia Pharmaceuticals already has a drug approved for sale. Acadia's atypical antipsychotic called Nuplazid is currently used to treat psychosis related to Parkinson's disease. First-quarter Nuplazid sales rose 43% year over year to $90.1 million and a potential label expansion to treat a much larger population of patients with dementia-related psychosis (DRP) could make this a blockbuster drug.
A previous failure to prevent patients with schizophrenia from experiencing hallucinations and delusions dimmed expectations for Nuplazid, but it looks like the much larger DRP population will have a new treatment option soon. The supplemental application Acadia sent the FDA is supported by some clearly successful clinical trial results. During the Harmony trial, patients with DRP treated with Nuplazid were 180% less likely to relapse compared to patients given a placebo.
Dementia affects an estimated 8 million Americans at the moment and this figure will rise along with the country's aging population. Symptoms of psychosis make dementia particularly debilitating for an estimated 2.4 million Americans, but just 1.2 million are diagnosed and treated. If Nuplazid can pull these untreated patients out of the woodwork, as is often the case when highly effective treatments become available, annual sales of the atypical antipsychotic in the DRP indication alone could add $2.5 billion to Acadia's top line.
If the FDA agrees to review Acadia's latest application for Nuplazid, the agency will probably end up issuing an approval decision around the middle of 2021.
Stocks to buy now?
Acadia's operations are already close to generating positive cash flows with Nuplazid as a treatment for the limited Parkinson's disease population, and it looks like the market hasn't priced in an unreasonable amount of success as a treatment for the much larger population of people with DRP. Acadia boasts an $8.2 billion market cap at recent prices that could easily double if Nuplazid meets some fairly reasonable long-term expectations over the next several years.
It's probably best to keep an eye on Y-mAbs until we've seen more pivotal trial data instead of putting shares of the risky clinical-stage biotech in any portfolio. Acadia, though, is a stock to buy now and hold for the long run.
