Acasti Pharma (NASDAQ:ACST) peaked at nearly $3 on two occasions in the last six months. Delaying the CaPre drug data sent the stock to a ~25% drop Dec. 23, 2019. So, when the company posts topline results for the study this month, ACST stock might surge once again.
Acasti said that the trial results for the Trilogy 1 pivotal Phase 3 trial of CaPre come out this month. It explained that “the reporting of Trilogy 1 was postponed due to an unexpected delay in data processing and transfer from the central testing laboratory to the statistical consultants for independent and external validation.”
Given the holiday period slowing activity, markets did not need to react so negatively. The company, which develops innovative drugs for cardiometabolic diseases, is dependent on strong CaPre results to lift ACST stock. CaPre is a formulation of omega-3 (“OM3”) phospholipid for treating Hypertriglyceridemia (“HTG”).
Moat With CaPre Treatment
Acasti has a patent on the formulation, so competitors cannot copy or synthesize CaPre. Results from its Phase 1 and Phase 2 trial suggest the drug’s potential for treatment. According to Acasti, “Based on recent third party outcome data, we believe the potential exists to expand CaPre’s initial indication to the roughly 70 million patients in the United States with elevated triglyceride levels above 150 milligrams per deciliter.”
Should ACST post positive full data, it could get an initial label for treating severe HTG.
Therapeutic OM3 Fish Oil Competitors
Acasti competes with Amarin’s (NASDAQ:AMRN) Vascepa, which was launched in 2013. GlaxoSmithKline’s (NYSE:GSK) Lovaza was launched in 2015 while AstraZeneca (NYSE:AZN) won approval for Epanova but did not launch it yet. All three competitors offer prescription products that lower triglycerides. The biggest differentiation of CaPre over both Lovaza and Epanova is that the latter two increase the “bad” cholesterol (LDL-C).
Vascepa and Lovaza need a high-fat content meal for optimal absorption (per slide 9). The company explained in its Q2/2020 conference call that:
“Almost two-thirds of CaPre’s composition is phospholipids and we believe the phospholipids are all for the reason we see a positive effect on other major blood lipid markers such as VLDL, LDL, cholesterol, and HDL, which is what we refer to as CaPre’s Trifecta Effect.”
The company signed a supply agreement with Aker BioMarine to build up an inventory of CaPre. Acasti will have enough supply of raw materials to produce the product to meet demand until 2021. Knowing the exact cost and units supplied gives the company the advantage of planning ahead.
Acasti ended the quarter (as of Sep. 30, 2019) with $25.8 million in cash and cash equivalents. The exercise of warrants in July added the bulk of the cash on its balance sheet. And now that the Phase 3 activities are mostly complete, the company’s cash burn rate should decline. It has enough cash to fund at least its NDA (new drug application) with the FDA in calendar Q3.
Bottom Line on ACST
At the very least, Acasti could trade back to its 52-week highs as it posts positive news for CaPre. The stock’s fair value is a guess at this time. It could double if revenue grows by 50% annually, in this 5-Year DCF Revenue Exit model.
As of this writing, Chris Lau did not hold a position in any of the aforementioned securities.