One of the reasons I don’t particularly care for speculative healthcare investments is their incredible volatility. Yes, you can potentially gain enormous riches based off a therapy’s successful clinical trials. But on the other hand, if a trial fails to meet results, you incur horrific losses. And that’s the situation we have with Acasti Pharma (NASDAQ:ACST) and Acasti Pharma stock.
Acasti specializes in severe hypertriglyceridemia through its leading drug CaPre. This therapy appeals to many patients because of its naturally sourced ingredients, with the active one being a krill-oil extract. Krill are tiny shrimp-like shellfish. In the healthcare world, their primary claim to fame is their composition of omega-3 fatty acids.
As you might know through names like Amarin (NASDAQ:AMRN) and until recently, AstraZeneca (NYSE:AZN), omega-3-based therapies to address hypertriglyceridemia have been all the rage. Not surprisingly under this context, Acasti Pharma stock enjoyed a remarkable year in 2019. Just in the month of July, for instance, Acasti shares more than doubled in value.
It doesn’t take much to realize that the enthusiasm toward Acasti Pharma stock was based on strong clinical results for CaPre. Just recently, though, Acasti’s management revealed that they’re taking a closer look at their Phase 3 results. Why? Essentially, CaPre couldn’t beat the placebo effect.
For a deeper insight into the placebo phenomenon, I highly recommend Dr. Mario Beauregard’s book “Brain Wars.” In it, Dr. Beauregard details unusual mind-over-matter events that defy scientific explanation.
One of these strange events is the apparent ability for the mind to heal the body. Whether you believe this or not, the implication for Acasti Pharma stock is negative: CaPre is just as effective as wishful thinking or dumb luck.
CaPre Incurs a Credibility Crisis for Acasti Pharma stock
Although omega-3-based therapies have captured the limelight, it’s interesting to note that the medical community was split regarding its potential health benefits. Specifically, omega-3 from krill oil encountered significant skepticism.
For example, Celeste Robb-Nicholson, M.D., editor in chief of Harvard Women’s Health Watch, warned against using krill oil extracts in light of other, more provenanced supplements. In June 2010, Dr. Robb-Nicholson wrote:
There’s little research on krill oil supplements. One product, Neptune Krill Oil, has been shown to improve cholesterol and triglyceride levels and to decrease hs-CRP (a measure of inflammation that’s important in cardiovascular disease). But studies lasted only three months, so long-term effectiveness and safety are unknown.
To be fair, CaPre is not some random krill oil supplement you can get off a retail pharmacy’s shelf. Still, the conventional krill oil and the pharmaceutical version have the same active ingredient. Furthermore, the fact that Acasti cannot beat placebo with its flagship drug raises questions of credibility: were krill oil skeptics right all along?
The shame of it is that CaPre seemed to offer a viable alternative in the ultra-competitive omega-3-based medicinal space. According to Acasti’s website, its leading drug featured “Significant reduction of triglyceride and non-high density lipoprotein cholesterol (non-HDL-C) cholesterol levels in the blood of patients with mild to severe hypertriglyceridemia.” As well, CaPre had “No significant food effect (low fat vs. high fat meal).”
But this doesn’t mean a whole lot if the drug’s effects can be duplicated through people assuming they took a potent therapy. Therefore, I’m not at all surprised that Acasti Pharma stock cratered to the tune of nearly 25% on management’s disclosure. Moreover, on the Jan. 13 session, shares hemorrhaged 65%.
There are too many questions to be comfortable here.
Omega-3 Space Is a Mess
Despite the turmoil – or because of it – I can understand the contrarian appeal. If Acasti somehow gets back on the right track, CaPre offers substantial revenue-generating opportunities.
Elevated triglycerides is a common condition, with three million cases in the U.S. every year. Additionally, an economic incentive exists to address this matter. People with high triglycerides are more likely to have cardiovascular issues, incur higher medical costs and drain resources.
Therefore, a naturally sourced therapy like CaPre offers an attractive solution. Of course, the problem is that it has to work. Until we get confidence in this area, Acasti Pharma stock is extremely speculative.
Making matters worse, we’re not getting a great read in the omega-3 space in general. Amarin, though it’s in a far better position than Acasti, has seen its shares slip nearly 18% for the year. With such reads, I believe it’s best to avoid Acasti Pharma stock for now.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.