The Reward Is Not Worth the Risk for Acasti Pharma Stock

Last month, I wrote about the perilous position of Acasti Pharma (NASDAQ:ACST). The company had just received news that its omega-3 phospholipid, CaPre was deemed unsuccessful in a Phase 3 clinical trial. Acasti Pharma stock dropped from $2.18 to under $1 in a single trading session.

The Reward Is Not Worth the Risk for Acasti Pharma Stock
Source: Pavel Kapysh /

Valentine’s Day turned out to be no sweeter for ACST stock. The stock fell further when the company posted a larger loss than expected. For the company’s 2020 fiscal third quarter, it posted a loss of 14 cents per share. That was 6 cents lower than analysts’ estimates.

Acasti Pharma is not throwing in the towel. The company is working with the FDA to better understand the results of the failed trial. The stakes can’t be higher. If they can’t get CaPre approved, it’s difficult to see the company moving forward as a viable interest.

It Was a Race Worth Running

Acasti Pharma was in a two-horse race with Amarin (NASDAQ:AMRN). Each company was trying to be the first to bring a natural omega-3 prescription drug to market. Omega-3 based therapies that address high triglyceride levels are drawing attention.

Amarin’s Vascepa uses fish oil and Acasti Pharma uses krill oil. Both fish oil and krill oil supplements have been around for years. However, the winner of this race would bring credibility to the efficacy of these ingredients. And, unlike a supplement, these drugs would have the FDA seal of approval.

It was a high-stakes race with the winner having a huge advantage as the first to enter a previously unclaimed space. And in this case, Acasti Pharma lost. Not because their drug CaPre was ineffective. But it was not proven to be significantly any better than the placebo used in the blind test. But that’s only the beginning of Acasti Pharma’s troubles

One Is the Loneliest Number

The problem for Acasti Pharma goes beyond an inconclusive (and therefore failed) trial. CaPre is the only drug in the company’s pipeline. So, if Acasti can’t bring CaPre to market, then there is no catalyst for the stock.

According to the company’s internal documents, they have sufficient cash to make it through 2020 (25.7 million CAD). However, if they do get approval for CaPre, which could still happen, the company will have to find a way to raise the cash that will be needed to market this against Vascepa.

Will CaPre Perform as Expected?

And this presumes that CaPre would be accepted even if approved. For those that have read my previous articles about Amarin, I apologize for getting back on my soapbox. There is certainly reason for optimism, but nobody knows how doctors will feel about prescribing a fish oil or krill oil prescription to patients who may already be taking a supplement.

In my previous article about Acasti Pharma I referenced an article from In that article, Jennifer Moll, MS, PharmD, wrote that taken in equivalent amounts, prescription omega-3s and supplements should lower triglycerides in the same fashion.

But don’t take my opinion as gospel. My colleague Josh Enomoto recently wrote about Acasti Pharma’s troubles building credibility . Enomoto referenced Celeste Robb-Nicholson, M.D., editor in chief of Harvard Women’s Health Watch who wrote the following in June 2010:

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.

This is a double whammy for CaPre. First, it has work to do in order to prove that its drug is statistically more effective than a placebo. Now, even if it receives approval, the company may have to spend money it doesn’t have to convince physicians and the public that krill oil can be an effective treatment.

Be Careful What You Wish For

For better or worse, AMRN and ACST stocks will be linked for some time. Complicating matters further is that Amarin’s stock is down about 30% since the company received permission to expand Vascepa’s label. Some of the stock’s trouble is due to pending litigation that, although not expected to go against Amarin, is a temporary roadblock for the company’s stock.

However, to be fair, analysts are bullish about the stock’s direction. Amarin does not expect to be able to show significant revenue from Vascepa until later this year. However, if revenue disappoints, that may be another roadblock for Acasti Pharma.

Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. He has been writing for InvestorPlace since 2019. As of this writing, he did not hold a position in any of the aforementioned securities.

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