Acasti Pharma Stock Has One Last Chance

Acasti Pharma (NASDAQ:ACST) is running out of time, and running out of chances. Acasti Pharma stock plunged this month after disappointing topline results in a key study of its CaPre cardiovascular drug candidate. Shares now are down over 98% from 2013 highs.

Acasti Pharma Stock Has One Last Chance
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Admittedly, all hope isn’t lost. The cause of the disappointing trial isn’t yet clear to Acasti itself. Results from a second trial are due next month. It’s still possible CaPre has a path to market.

But possible is not the same as likely: ACST stock at this point looks like a ‘Hail Mary’ play. There’s already one winner among omega-3 fish oil-based treatments, and there probably won’t be two.

Acasti Pharma Stock Plunges

On Jan. 13, Acasti disclosed topline results for its TRILOGY 1 Phase 3 trial of CaPre. CaPre is an omega-3 phospholipid derived from fish oil. It aims to treat heart disease by lowering LDL cholesterol, raising HDL (or ‘good’) cholesterol, and reducing triglycerides.

Rival Amarin (NASDAQ:AMRN) has seen its stock soar thanks to strong results for its recently approved Vascepa. Amarin has projected peak annual sales in the “multiple billions“. Investors of late have hoped that CaPre could see similar success. Acasti Pharma touched an 18-month high last year, and after a pullback climbed nicely as Vascepa received its expected approval from the U.S. Food and Drug Administration in December.

But the results from TRILOGY 1 disappointed. Acasti Pharma stock fell 64% on the news, and though shares rallied 24% the following day, the negative trend has persisted. Monday’s close was ACST’s lowest close since 2018.

Reason for Hope

There is some modest cause for hope with CaPre. TRILOGY 1 results didn’t reach statistical significance against placebo. But CaPre actually worked. The issue was that the placebo worked nearly as well. Median triglyceride levels dropped 30.5% for patients receiving CaPre — and 27.5% in the placebo group.

That latter performance doesn’t seem to make much sense. The placebo is just cornstarch, which should have zero effect. (That’s, of course, why cornstarch was chosen as a placebo in the first place.) In similar trials, the effect usually was in a range between -10% and +10%.

Acasti is running “a full audit” of the data to try and understand what happened. That audit will push back results from TRILOGY 2 into February, but results there give the company another chance to prove statistical significance and get CaPre back on track.

As the company itself noted, if Acasti Pharma can find a “plausible explanation” for the placebo performance in TRILOGY 1, and can prove statistical significance in TRILOGY 2, there’s still “a path forward” to a New Drug Application with the FDA.

A Thin Hope Indeed

All that said, those are two big ‘ifs.’ AstraZeneca (NYSE:AZN) abandoned its own fish oil product this month, which shows that not all such products are developed the same. The sell-off in ACST stock isn’t just a short-term issue: this is a company that generally has struggled since being spun off from Neptune Wellness Solutions (NASDAQ:NEPT) over a decade ago.

There’s no guarantee the company can find a way to salvage the TRILOGY 1 study. There’s no guarantee that TRILOGY 2 will be successful. And if Acasti stumbles on either front, there’s little value left. There are no other drugs in the pipeline, and the company had less than $26 million in cash as of Sept. 30. That figure no doubt has come down in the last four months as well.

To be sure, if Acasti can find a way to salvage CaPre, ACST stock is going to soar. But there are challenges in that scenario as well. Acasti likely will need more funding. Amarin has a head start with Vascepa, and Matinas BioPharma (NYSE:MTNB) is targeting the space as well.

All told, this doesn’t seem like a case where the market has ACST wrong, or isn’t paying attention. The results this month were concerning, and the path to approval of CaPre is narrow. Stranger things have happened, and risk-loving investors might see Acasti Pharma stock differently. But even if the chances of success at this point aren’t zero, they’re close.

As of this writing, Vince Martin has no positions in any securities mentioned.

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