Wednesday, 31 July 2013

Acasti Pharma - Analyst Buy Target + New Manufacturing Agreement

Acasti Pharma
Shares Outstanding: 79.4 million
Fully Diluted: 91.4 million


$4.75 is the “speculative buy” target that analyst Doug Loe has set for Acasti in a very recently released report that was issued by Euro Pacific Canada. Mr. Loe is not new to the story. While he is a recent arrival at Euro Pacific, he published research with his previous firm. 

One of the value drivers for Mr. Loe was the recent acquisition of Omthera Pharmaceuticals by European based pharma firm, AstraZeneca. Omthera, a regulatory-stage omega 3 drug developer has only been listed on NASDAQ since this past April following a $64 million (US) financing.

While we don’t have permission to post the report, we’ll refer to a few excerpts. Mr. Loe wrote, “in a deal valuing the regulatory-stage omega-3 drug developer at total contemplated valuation (including contingent milestone payments predicated on regulatory/commercial success) of US$443 million, or US$17.40/sh, which at the time represented a 157% achievable return over OMTH prior day close of US$6.77.”

He added, “Like Acasti, Omthera is developing a pharmaceutical-grade omega-3 fatty acid formulation, branded as Espanova and distinguished from other omega-3 forms by being formulated as free fatty acids and not as triglyceride-bound oil or as ethyl ester derivatives. Transaction timing was interesting because: (1) Omthera had just completed its US$64 million IPO and NASDAQ listing in Apr/13, and (2) its positive Phase III EVOLVE/ESPRIT data had been in the public domain since Q4/12, with no change in competitive landscape since then (if anything, AstraZeneca might have considered Acasti’s pending COLT data to be worth waiting for, though clearly did not). Like Acasti’s CaPre, Omthera’s Epanova has pharmacologic advantages over other approved omega-3 forms. As free fatty acids, Omthera showed in a few published studies we reviewed that Epanova’s GI absorption is superior to triglyceride- or ethyl ester-bound omega-3s, and superior GI absorption is a key advantage we believe is shared by CaPre’s omega-3 phospholipid ester formulation as well”.

Mr. Loe notes in his pre-amble on Acasti, “The company is developing CaPre, an ultrapure krill oil-derived astaxanthin-containing omega-3 phospholipid ester formulation the firm is testing in two ongoing Phase II studies testing impact of the drug on blood lipid chemistry in patients with high blood triglycerides at enrollment. One of these, the 276-patient Phase I/II open-label COLT trial just completed patient enrollment in May/13 and is on pace to report CaPre impact on blood triglycerides and cholesterol-bound lipoproteins at up to 4g daily dose and at an eight-week time point later in calendar Q3/13. The COLT trial has no placebo arm, but data on how CaPre impacts blood lipid chemistry from baseline measurements at time zero will clearly be available and medically relevant. The other trial is the larger 429-patient Phase II multiarm controlled TRiFECTA study, testing CaPre impact on blood lipid chemistry over a similar dosing regimen but this time over twelve weeks. This study is still enrolling patients but Acasti believes TRiFECTA safety/efficacy data could be available in H1/14, as our model also assumes. CaPre clinical data once available will be compared not only to placebo (in TRiFECTA) or to published norms (in COLT) but to other omega-3 pharmaceutical forms already generating Phase III data – Amarin’s Vascepa and Omthera/AstraZeneca’s Epanova, to name two – and against which CaPre will be directly compared.”

Another important development released today, Acasti issued news that it has signed an agreement with an unnamed, “world leader in natural based specialty chemicals for the manufacturing of CaPre® clinical material in expectation of upcoming Pharmacokinetics (PK) and phase III clinical trials in the USA and to substantiate its upcoming submission of an Investigational New Drug (IND) filing.”

Dr. Harlan Waksal, Executive Vice President, Business and Scientific Affairs was quoted extensively throughout the news release. It’s clear from the news release that the Acasti team is not only looking to the shorter term picture but has the big-picture perspective, as the release also discusses “discussions to manufacture at full plant scale.”

To read the release, click here

For those who may not be familiar with the highly successful Dr. Waksal, link here to the first of a three-part interview that The Howard Group conducted with Dr. Waksal in February, 2012.