Acadia Pharmaceuticals Inc. (ACAD)

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3 Top Biotech Stocks to Buy in October

October 02, 2016, 03:05:00 PM EDT By Brian Feroldi, Sean Williams, and Todd Campbell, Motley Fool

The biotech industry is on pace for a down year: The First Trust NYSE Arca Biotech ETF (NYSEMKT: FBT) , an exchange-traded fund that holds a broad portfolio of biotech stocks, has descended by double digits since the start of 2016, badly lagging the S&P 500 .

That hints at the possibility that there might be bargains to be found in the sector, so we asked some Motley Fool healthcare contributors to highlight stocks they think are great buys right now. Here's what they had to say.

Moving into massive markets

Todd Campbell : Acadia Pharmaceuticals (NASDAQ: ACAD) recently launched its first and only commercial drug, Nuplazid, and the company's third-quarter earnings will give investors their first detailed look at whether or not it's winning traction among doctors as a treatment for hallucinations and delusions in Parkinson's disease patients.

Parkinson's disease psychosis, or PDP, affects about 40% of the 1 million patients with Parkinson's disease, and until now doctors had no other option than to prescribe antipsychotics off-label that can interfere with other Parkinson's medications. Because Nuplazid controls PDP symptoms without that drawback, it could be a top-seller.

If Q3 results show Nuplazid sales are ramping up quickly, then Acadia's stock could enjoy tailwinds in Q4, but an even bigger market-moving event may be the company's upcoming release of data from a trial evaluating Nuplazid in Alzheimer's disease psychosis.

If those results, which are expected prior to year's end, show that Nuplazid works for those with Alzheimer's disease, then they could clear the way for Nuplazid's use by another population of more than 1 million people. At least 25% of the 5 million Americans with Alzheimer's disease suffer from hallucinations and delusions.

Admittedly, there's no guarantee that doctors will flock to Nuplazid, nor that Acadia Pharmaceuticals' Alzheimer's disease trial will pan out. Nevertheless, the potential upside makes me think this is a stock worth buying in October.

Read more: http://www.fool.com/investing/2016/10/02/3-top-biotech-stocks-to-buy-in-october.aspx#ixzz4M3030T4K

ACAD