We believe that the near-term selling is behind for the SPDR S&P Biotech ETF (XBI) on a technical basis as well as fundamentally, suggests John McCamant, biotech sector specialist and editor of The Medical Technology Stock Letter.

Momentum appears to be on our side, believe it or not. The dour sentiment is still out there and the ongoing skepticism since November will, in our view, drive the group higher (before others become bullish again).

Things always change fast in biotech but until recently they’ve been changing consistently to the downside. It’s been a while, but we believe this is finally over. Keep an eye on well financed, leading names, and upcoming catalysts.

In our universe, Acadia Pharmaaceuticals (ACAD) ranks among the pre-approval stocks with the best fundamentally, catalyst rich, wholly owned compounds with no need for any additional financing for at least the next 18 months.

The company has received a target action date of August 4, 2022 from the FDA for its resubmitted supplemental sNDA for pimavanserin for the treatment of hallucinations and delusions associated with Alzheimer’s disease psychosis.

The FDA’s Division of Psychiatry has also advised the company that it is planning to hold an Advisory Committee meeting in connection with its review. Holding an Advisory Committee meeting can be a positive for ACAD particularly the patient testimony portion where both patients and caregivers can discuss the difference the drug makes in preventing Alzheimer’s disease psychosis patients from being institutionalized.

This is very good news for the company and represents a significant catalyst as the ADP market is estimated to be 10 times as large as the Parkinson’s disease psychosis market.

Given the fact that pimavanserin was FDA approved for the treatment of hallucinations and delusions associated with Parkinson’s disease psychosis in April 2016, we know the drug is safe which is an important FDA hurdle for approval.

In our view, with the time the company has had to review previous regulatory questions of the Alzheimer’s disease psychosis data, the drug has a solid chance for FDA approval.

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