Acadia Pharmaceuticals saw its stock reach for the stars after it emerged the group stands to gain up to $395 million through a new development pact with Biovail Laboratories International SRL, a subsidiary of Canadian biotechnology group Biovail.

The groups have agreed to work together to develop and commercialise Acadia’s pimavanserin, a new chemical entity currently in Phase III development for Parkinson’s disease psychosis, for multiple neurological and psychiatric indications, sparking a day of frenzied trading which ended with Acadia’s shares closing up 134% at $2.34.

Under the terms of the deal, Biovail has gained rights to the drug in the US and Canada, leaving rights to the rest of the world with the US firm. In return, Acadia could receive up to $395 million in upfront payments and milestones, but also additional future royalties on any indications for which the product wins regulatory approval.

Explaining the rationale behind the move, Uli Hacksell, Chief Executive Officer of Acadia, said the alliance “not only helps us to advance pimavanserin as a potential first-in-class therapy for Parkinson’s disease psychosis, but also enables us to broaden the pimavanserin development program to Alzheimer’s disease psychosis,” and he added that Biovail’s “strong commitment to establishing a leading North American CNS specialty franchise makes them an ideal partner for Acadia”.

And commenting on Biovail’s interest, Chief Executive Bill Wells, said the partnership provides the company with “a late-stage NCE product with strong intellectual property protection” that is “directly on target” with its focus on the central nervous system.