Quebec-based omega-3 drug developer Acasti Pharma (Acasti Pharma Stock Quote, Chart, News TSXV:ACST) is keeping its “Top Pick” status from Echelon Wealth Partners analyst Douglas Loe.
In a research update to clients Tuesday, Loe maintained his “Speculative Buy” rating and $4.00 price target on Acasti, implying a return of 39.4 per cent at the time of publication.
The analyst, however, said there could be more upside than that.
“We continue to ascribe Top Pick status to QC-based omega-3 drug developer Acasti Pharma, with the firm expected to report top-line data from its two pivotal Phase III hypertriglyceridemia trials (the 500-patient TRILOGY I & II trials, with a TRILOGY I update expected imminently) that are collectively testing the firm’s phospholipid ester-based omega-3 drug formulation CaPre,” Loe noted. “ACST shares have performed well in recent quarters, generating T12M return to end-of-2019 of 181%, and specifically generating total return of 31.1% during Q419, which is the financial period relevant to our prior Top Pick designation. Our $4.00 PT implies one-year return from current price levels of 39.4%, but we believe upside from that level exists if TRILOGY I/II data compare favorably on serum triglyceride lowering not just to prior CaPre clinical data published by Acasti itself, but also to Phase III data published by Acasti’s omega-3 development peers, specifically Vascepa developer Amarin (AMRN-Q, NR) & AstraZeneca (AZN-L, NR)/Omthera that we have described before.”
Loe thinks Acasti will post EBITDA of negative $3.33-million on a topline of $5.0-million in fiscal 2021. He expects those numbers will improve to EBITDA of positive $26.0-million on a topline of $36.4-million the following fiscal year.
“Our forecasts are clearly driven primarily by Acasti’s own Phase III data quality and so we are focused in the near term on the firm’s TRILOGY I/II data readouts and specifically on magnitude of serum triglyceride lowering from baseline at three months that 4g/day CaPre dosing confers,” the analyst added. “Assuming CaPre performs to approvable standard –as all prior Phase II clinical data suggests that it could – Acasti’s risk profile shifts to regulatory parameters and on timelines to 505(b)(2) submission and FDA review, for which the agency has a reasonable track record of opining favorably on already-approved omega-3 formulations (Astra’s Epanova is also already FDA-approved, though not yet launched, pending STRENGTH data quality). Though Acasti does have sales & marketing infrastructure already established within its own corporate framework, we do expect the firm to actively seek out US commercialization partners, as opposed to independently funding a transnational omega-3-dedicated sales team as Amarin is with Vascepa. Accordingly, we continue to project downstream CaPre sales based on a royalty revenue model (30% of gross sales), with more modest top-line performance offset by correspondingly more modest SG&A expense projections than would otherwise be reasonable under a direct sales model.”
Shares of Acasti Pharma closed Wednesday down 5.6 per cent to $2.86.
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