Delays at Acasti Pharma (Acasti Pharma Stock Quote, Chart, News TSXV:ACST) have Echelon Wealth Partners analyst Douglas Loe lowering his price target on the stock.
On Monday, after finding what it said were “some unexpected and inconsistent findings that it believes may have negatively contributed to the overall top-line results,” Acasti management said it would face some delays with its trials for CaPre, a prescription drug candidate derived from krill oil thatis being developed to treat severe hypertriglyceridemia, a metabolic condition that contributes to increased risk of cardiovascular disease and pancreatitis.
“Taking into account that the audit is still under way, that the data that we are evaluating is still preliminary, and that any findings will be subject to guidance from the FDA, we look forward to concluding the necessary work, which we hope will help us to better understand the unexpected Trilogy 1 results,” CEO Jan D’Alvise said. “While we regret the additional delay in reporting Trilogy 2 results, given our initial findings, we believe it is critical to conduct a thorough investigation and evaluation of the Trilogy 1 results. Any learnings we can take from this investigation that may allow us to pro-actively adjust the SAP for Trilogy 2, gives us a better chance of accurately reflecting the clinical value that we believe we still see in CaPre. Moreover, we have confirmed that there is established precedent for the FDA accepting posthoc analyses of study results, assuming the analyses are transparent, well justified and well supported. We are moving as quickly as possible to gain a greater understanding of the Trilogy 1 results, and will provide material updates as we learn more information. Furthermore, we project that our current cash position will now last through calendar 2020, giving us the necessary runway to complete our extended analysis of the Trilogy program. We remain fully committed to our goal of gaining NDA approval for CaPre, and appreciate the tremendous support and patience of our shareholders.”
Loe said there is no sidestepping this setback.
“Investigation into the reasons for TRILOGY 1 underperformance continues into next quarter & awaits FDA feedback before sharing updated data details: In so doing, Acasti did provide some additional granularity on TRILOGY 1, for which highly disappointing top-line data were presented last month,” he noted. “The firm indicated at the time that its unusually large serum triglyceride reduction exhibited in control patients was isolated to five seminal clinical sites, and with the firm disclosing that disproportionate number of randomized patients (36%, or
about 87 in total) were treated at those five centers, it seems more arithmetically possible that such a small number of centers (there were 69 centers that were initially identified, and 54 that actually enrolled patients, the vast majority of which were in Florida-California-Georgia-Texas) could have such dramatic impact on final data analysis.
The analyst said there are still some reasons for optimism.
Though there is no denying that TRILOGY 1 failed to achieve its primary endpoint, independent of any explanations of this that would be irrelevant to statistical analysis of data anyway, we remain optimistic that data audit could reveal secondary details that bear more
positively on CaPre’s own triglyceride-lowering activity, activity that has actually been welldocumented in prior clinical studies (specifically the COLT trial completed in Aug/13 & the TRiFECTA trial completed in Sept/14) conducted by Acasti itself.
“Clinical risk remains high though, at least until inconsistent findings in TRILOGY 1 are defined and thus eligible for our independent scrutiny: As importantly, Acasti indicated that its audit of TRILOGY 1 trial logistics has already identified some specific reasons why TRILOGY 1 may have generated such a large control group response, though it did not provide any details on that theme and in so doing, infused additional development risk into its CaPre/hypertriglyceridemia program. Accordingly, we are left to speculate on just what ‘unexpected & inconsistent findings’ actually means within the context of what we initially assumed should have been a fairly straightforward assessment of serum biomarkers during the 26-week trial.”
In a research update to clients Monday, Loe maintained his “Speculative Buy” rating, but lowered his one-year price target on Acasti Pharma from $2.00 to $1.40, implying a return of 37.3 per cent at the time of publication.
Loe thinks Acasti Pharma will post an EBITDA loss of $3.3-million on revenue of $5.0-million in fiscal 2021. He expects those numbers will improve to EBITDA of positive $27.6-million on a topline of $37.2-million the following fiscal year.