NEW YORK - Acadia Pharmaceuticals Inc said on Tuesday its experimental drug for psychosis related to Parkinson's disease failed to meet its primary goal in a late-stage trial, sending its shares down 70 percent.

The drug, pimavanserin, which is being co-developed with Canada's Biovail Corp, failed to significantly cut psychotic episodes, such as hallucinations and delusions, compared to a placebo.

The steep drop in Acadia shares illustrates the risks in biotech investing, after several high-profile clinical successes this year have sent shares of several companies soaring.

As of Monday, shares of Acadia had run up nearly sixfold to $5.84 since late April on hopes for pimavanserin. They fell to $1.73 in premarket trading on Tuesday. New York-traded shares of Biovail were unchanged.

An estimated 600,000 of the 1.5 million Americans with Parkinson's disease are prone to psychotic episodes, according to Acadia. Parkinson's is a progressive neurological condition that causes tremors and other motor problems.

Patients in the 298-patient trial who were taking pimavanserin showed improvement in psychosis measures, but the difference was not statistically significant. Acadia said the lack of a significant difference was primarily due to the larger-than-expected improvement in patients taking the placebo.

The trial did reach a secondary goal related to motor function. Acadia said it was continuing with a second Phase III clinical trial with pimavanserin in patients with Parkinson's disease psychosis.

While we obviously are disappointed with the results of this Phase III study, we continue to believe in the potential of pimavanserin based on our clinical experience to date, Acadia Chief Executive Officer Uli Hacksell said in a statement.

In an interview with Reuters last month, Hacksell said pimavanserin could fetch far bigger sales if it is eventually approved to treat other types of psychosis, including psychosis that often accompanies Alzheimer's disease.

Biovail, Canada's biggest publicly traded pharmaceutical company, last year announced a shift in its focus to central nervous system treatments and away from controlled-release products.

Since then, it has made a string of acquisitions and licensing deals, including the co-development deal struck with Acadia in May.

Biovail CEO Bill Wells said the company would evaluate the data with Acadia over the next several weeks before deciding on next steps. (Reporting by Lewis Krauskopf; additional reporting by Shailesh Kuber in Bangalore and Scott Anderson in Toronto; Editing by Anne Pallivathuckal; Editing by Derek Caney)