Acasti Pharma has a 113 per cent upside, says Echelon Wealth

Echelon Wealth Partners analyst Douglas Loe is staying put on drug developer Acasti Pharma (Acasti Pharma Stock Quote, Chart TSXV:ACST) after the company recently provided an update on its Phase III trial of its omega-3 drug CaPre.

In a Tuesday note to clients, Loe reiterated his “Speculative Buy” rating and $2.50 target for ACST, representing a projected 12-month return of 113 per cent at the time of publication.

Laval, Quebec-based Acasti announced on Tuesday that its six-month 490-patient TRILOGY trial had achieved 100 per cent patient randomization, meaning that top line results for the TRILOGY 1 and 2 trials will likely be released in December 2019 and January 2020, respectively.

Loe says that while advancing to a patient enrolment milestone is more of a logistical accomplishment than a clinical one, he is nonetheless encouraged that Acasti is managing to meet expected timelines, enabling clearer prediction of when CaPre might be ready for FDA filing and potential US launch (Loe is projecting the second half of 2022 for the launch).

“With Acasti’s TRILOGY trials advancing at an expected pace and to what we predict will be approvable data by end-of-F2020, we continue to maintain our Speculative Buy rating and one-year price target of $2.50, with our unalterable view that CaPre’s clinical risk remains low and logically disconnected from the firm’s current market value on that basis alone,” Loe writes.

The analyst notes that Acasti’s competitors are currently helping to enhance the medical profile of omega-3 formulations, led by Amarin, whose Vascepa drug performed well in a five-year cardiovascular trial. Loe continues to value ACST based on net present value with a 25-per-cent discount rate and on multiples ascribed to his fiscal 2023 adjusted EBITDA and fully diluted, fully-taxed EPS forecasts.