With what he describes as a “best in class” Omega-3 drug in development, Mackie Research Capital analyst André Uddin thinks investors should be taking a close look at Acasti Pharma (TSXV, Nasdaq: ACST).
In a research report to clients Wednesday, Uddin initiated coverage of Acasti with a “Speculative Buy” rating and a one-yera price target of $2.00, implying a return of 122 per cent at the time of publication.
Uddin explains where Acasti is in relation to the current market.
“Acasti is currently conducting two Phase 3 trials in North America for CaPre, its omega-3 (OMG3) drug candidate for the treatment of severe hypertriglyceridemia (SHTG),” the analyst notes. “U.S. gross sales of prescription OMG3 therapies in 2017 were over US$1.2BN (with generic Lovaza leading the class – AMRN 10-K). OMG3 drugs have unwanted side effects: GSK’s (GSK-NYSE) Lovaza and Amarin’s (AMRN-NASDAQ) Vascepa have a significant food effect requiring a high fat diet for better absorption due to their formulations and chemical structures; AstraZeneca’s (AZN) Epanova and GSK’s Lovaza both elevate low-density lipoprotein-cholesterol (LDL-C) – which in turn may increase the risk of heart disease. CaPre’s competitive advantages should be differentiated from currently approved OMG3 drugs: should be significant TG lowering, no LDL-C elevation (but lowering), potential positive impact on HDL, no food effects (no high fat diet needed), an excellent safety profile and no fishy taste. We believe CaPre should be able to capture decent market share.”
Uddin thinks Acasti will lose $1.01 a share on revenue of $400,000 in fiscal 2019. He expects those numbers will improve to a loss of $0.54 a share on a topline of $1.7-million the following year.
2022 is the first year Uddin thinks Acasti will turn a profit, generating EPS of $1.42 on revenue of $139.7-million.