Shares of Acasti Pharma (NASDAQ:ACST) are dropping after the company reported unsuccessful results in a Phase 3 clinical trial for its CaPre drug. CaPre is an omega-3 phospholipid that is under review by the U.S. Food & Drug Administration (FDA) for treating severe hypertriglyceridemia (i.e. high triglyceride levels).
Sometimes investing is simple. And when it comes to ACST stock, it doesn’t get much simpler than this. Without FDA approval, CaPre will not get into the market. And a larger problem for ACST is that even if CaPre makes it to the market, it will have to compete with similar prescription drugs including Amarin’s (NASDAQ:AMRN) Vascepa, which just was approved for an expanded label.
The hope for Acasti is that if (and that’s a big if) CaPre gets to the market, it comes with a competitive advantage.
CaPre Is Derived from Krill Oil
Unlike fish oil, krill oil comes from tiny shrimp-like shellfish. This is different from fish oil but has many of the same potential health benefits. The common denominator for fish oil and krill oil is that they are both excellent sources of omega-3 fatty acids EPA and DHA. Consuming these fatty acids reduces the potential risk of cardiovascular disease.
According to Celeste Robb-Nicholson, M.D. who is the editor-in-chief of Harvard Women’s Health Watch, the American Heart Association recommends that healthy adults eat at least two servings per week of EPA- and DHA-rich fish (salmon, herring, etc.). However, people with heart disease should consume one gram of EPA and DHA daily from supplements.
And like fish oil, krill oil is available as a supplement. And that leads to the bigger concern for ACST stock.
Prescriptions May Not Be More Effective Than Supplements
The primary market for fish oil (or krill oil) prescriptions are patients with high triglyceride levels. Having elevated triglyceride levels is frequently a precursor to cardiovascular disease and associated cardiovascular events such as a heart attack or stroke.
The question for investors (and patients) is, are prescriptions more effective at lowering the risk? That is an issue that seems to be open to debate. Prescriptions, like Vascepa, have a higher percentage (up to 90%) of omega-3 acids. Supplements typically have between 30% to 50%. However, in an article for Verywellhealth.com, Jennifer Moll, MS, PharmD, wrote that taken in equivalent amounts, prescription omega-3s and supplements should lower triglycerides in the same fashion.
In the last few months, I’ve expressed healthy skepticism about Amarin and its FDA-approved prescription drug Vascepa. The company recently got approval to expand Vascepa’s label. Amarin can now say Vascepa, when used with statins, can reduce the likelihood of cardiovascular events.
But in my mind, it’s still a question of marketing. Can any of these omega-3 drug companies convince patients that a prescription will be more effective than simply increasing their dosage of a readily available, and less expensive, supplement?
ACST Stock Is a Penny Stock for Good Reason
Acasti Pharma is selling for below $1 per share as of this writing. The company must wait for something to come through when the FDA issues its secondary and exploratory endpoints. But that’s a couple of months away. Until then, there is no catalyst that will cause its stock to go higher.
I imagine traders have some success with ACST stock in the past 12 months. The stock has been trading in a range between 51 cents per share and just over $3 per share. With approval, the stock will be a late entrant into what is becoming a crowded field that includes AstraZeneca’s (NYSE:AZN) Epanova (which is approved but not launched) and GlaxoSmithKline’s (NYSE:GSK) Lovaza in addition to Vascepa.
But without FDA approval, there’s no reason to touch this stock right now.
As of this writing, Chris Markoch did not hold a position in any of the aforementioned securities.