Pharmaceutical company Acasti Pharma (NASDAQ:ACST) has a particular focus on developing drugs to help manage cardio-metabolic disorders. Traders might be interested in ACST stock if they like cheap biotech stocks with the potential to make fast moves.
Of course, not every investor will be interested in a penny stock (defined by the U.S. Securities and Exchange Commission (SEC) as a stock that trades under $5 per share) because there’s volatility risk involved.
That’s perfectly understandable. Besides, there’s more even more risk with ACST stock because the company’s business model depends largely on just one product.
On the other hand, there’s no reward in the markets if you don’t take any risks. Upon closer inspection, you may find that this low-priced stock is worthy of a small place in your portfolio.
A Closer Look at ACST Stock
As I alluded to earlier, ACST stock is an inexpensive stock. This makes it affordable for most account sizes, but please be cautious as this stock is prone to outsized moves.
Probably the best strategy would be to accumulate the shares when the price is low, in anticipation of a potential price spike. We’ve seen these types of moves happen a number of times in the past.
An example would be the time in 2019 when the shares catapulted from 81 cents to $2.87. For another example, in early 2021, ACST stock rose from 40 cents to $1.20 in just a few weeks.
The stock will open today at around 70 cents. So, if you catch the stock at the right moment, there’s the possibility that it could double or even more.
By the way, it’s worth noting that the stock has a trailing 12-month price-to-earnings ratio of 26.81. That’s actually quite reasonable. Heck, some biotech stocks don’t even have a P/E ratio because they don’t have any earnings at all.
A Novel Approach
Acasti Pharma’s main product candidate is known as CaPre. One of the most important applications of this product is to treat severe hypertriglyceridemia. (That’s a fancy way of saying really high triglyceride blood levels.)
As InvestorPlace contributor Tom Taulli explained, Acasti uses omega-3 fatty acids derived from krill oil to treat hypertriglyceridemia. That’s certainly a novel approach, I’ll admit.
It’s also an intuitive approach since omega-3 fatty acids have been shown to reduce triglyceride levels.
For this reason, you might have seen omega-3 fatty acids in supplements at your pharmacy.
Yet, I became concerned when Taulli pointed out that CaPre received disappointing results from a clinical trial. I had to investigate and find out what happened.
It took some digging to get the lowdown on the clinical trial. I’ll make your life easier and give you the bullet points right now.
- There was a 30.4% median reduction in triglyceride levels among all patients receiving CaPre during the study.
- The unadjusted, placebo-corrected triglyceride reduction of 12.4% achieved a “p” value of 0.19. Unfortunately, this was not a statistically significant result.
- The primary clinical endpoint was not met during the study under consideration.
- Consequently, Acasti “will not file a New Drug Application (NDA) with the U.S. Food and Drug Administration (FDA) for patients with severe hypertriglyceridemia.
- Also disappointingly, as of Aug. 31, 2020, Acasti did not plan to conduct additional clinical trials for CaPre.
While I was digging, I uncovered Acasti Pharma’s most recently reported fiscal results.
For the third quarter of fiscal 2021, Acasti Pharma reported a $3.2 million net loss, as well as a $2 million loss from operations.
Again, disappointment is the overriding theme here. Therefore, I wouldn’t recommend ACST stock for a long-term buy-and-hold position.
The Bottom Line
Some stocks just aren’t ideally suited for a set-it-and-forget-it investment. Instead, they may be worthy of a short-term trade.
I would put ACST stock in that category. The share price might pop at any moment, so traders might be able to book some quick gains from this stock – if they have extremely good timing.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.