Acasti Pharma’s (TSXV:ACST) downstream economics look appealing, says Alex Ruus, portfolio manager with Arrow Capital Management, who says that the company could be tapping into a $2-billion market with its cardiovascular drug CaPre, currently starting Phase 3 trials.
Last month, Laval-Quebec’s Acasti Pharma reported the first patient randomized in its TRILOGY Phase 3 program for CaPre, an omega-3 phospholipid being developed for the treatment of hypertriglyceridemia. Said to affect one-third of the US population, the condition is a contributor to increased risk of cardiovascular disease and pancreatitis.
“We have initiated our pivotal Phase 3 program to demonstrate the effectiveness of CaPre to lower very high levels of triglycerides as well as to potentially improve patients’ broader lipid profile, which could position our product as best in class in the marketplace,” said Jan D’Alvise, president and CEO of Acasti Pharma in a press release. “We continue to execute on our timeline to obtain the topline data from TRILOGY by the end of 2019, which along with data from CaPre’s two Phase 1 and two Phase 2 trials, will support our submission of a new drug application to the FDA.”
Acasti’s share price has been stuck below the two dollar range over the past couple of years, after tumbling from a $41.00 high in 2013. That only adds to its appeal, says Ruus who labelled it one of his top picks.
“This is a company with no revenues today, but the really exciting thing is you see the stock go nothing but down over the last several years but they’re finally into phase three trials. Once they get the patients enrolled you’ll start to see results over the next 12 months,” Ruus said in conversation with BNN. “The beauty is that this is a $30 million market cap company. Easily half of that is sitting in cash on the balance sheet.”
In December, Acasti closed on a round of financing which together with the over-allotment option amounted to $13.6 million, the proceeds of which are being used to progress CaPre through its Phase 3 program.
“The early stage trials say that the drug is more efficacious and has less side effects than the current drugs on the market of which current sales globally are around $2 billion,” says Ruus. “So we think that when this drug gets approved once the phase three trial is finished, it will take a massive share. Frankly I’ll be surprised if the company is still around. It’ll probably get taken out by a bigger pharma company.”
This past November, Acasti announced it had entered into a non-binding term sheet agreement with a leading China-based pharmaceutical company for the commercialization of CaPre in Asia (negotiations still ongoing).
Ruus says the potential upside is big. “You’ll laugh when you hear my target — I’ve got a one-year target of US$2.00 or C$2.60, which is a double, and three years out we’re talking $10.00 because the company should be worth over a billion dollars if things work here,” he says.