By John Vandermosten, CFA

NASDAQ:ACHV

READ THE FULL ACHV RESEARCH REPORT

Achieve Life Sciences, Inc. (NASDAQ:ACHV) reported 2022 results in a press release and held a conference call after market close on March 16, 2023. The company concurrently filed its Form 10-K with the SEC. Since our previous update, Achieve has announced that the last subjects in both its ORCA-V1 and ORCA-3 have been dosed. It was further reported that the last patient for the ORCA-V1 trial had also had their final visit. A new patent was issued and ORCA-2 results were presented at SRNT. In mid-November Achieve announced and closed a private placement for $18.9 million. Management expects to report topline results from both the ORCA-V1 and the ORCA-3 trial in 2Q:23.

Recent Achievements:

➢ ORCA-2 last subject, last follow up - January 2022

➢ Initiation of ORCA-3 - January 2022

➢ Expansion of clinical operations team - February 2022

➢ Expansion of manufacturing & quality operations team – March 2022

➢ Dr. Vaughn Himes appointed to Board of Directors – March 2022

➢ ORCA-2 clinical results – April 2022

➢ NIDA/NIH grant for vaping trial received – June 2022

➢ Initiation of vaping trial ORCA-V1 – June 2022

➢ Construction of new cytisinicline manufacturing capacity – November 2022

➢ Private placement of $18.9 million – November 2022

➢ Presentation at SRNT Annual Meeting – March 2023

No revenues were reported for 2022. Operating expense was ($40.8) million yielding a net loss of ($42.4) million or ($4.00) per share.

For the year ending December 31, 2022 and versus the same 12-month period ending December 31, 2021:

➢ Research & development expense totaled $30.1 million, rising 26% from $24.0 million, driven by the timing of the Phase III ORCA-3 trial start, which was initiated in January 2022 and the ORCA-V1 trial, which began in June 2022;

➢ General & administrative expense was $10.7 million, up 17% from $9.1 million on higher clinical trial media and awareness expenses, increase in consulting costs for new drug application (NDA) preparedness and strategy, higher legal fees associated with increase in patent activity and increases in premiums for insurance;

➢ Other income was up on interest expense related to the convertible debt which was partially offset by higher interest income in 2022 as a result of higher interest rates.

➢ Net loss was ($42.4) million vs. ($33.2) million or ($4.00) and ($4.08) per share, respectively.

As of December 31, 2022, cash and equivalents stood at $24.8 million. This amount compares to a $43.0 million balance in cash and equivalents held at the end of 2021. Cash burn for the year was ($37.5) million offset by a $18.3 million contribution from a private placement, proceeds from an at-the-money agreement and a small amount from warrant and employee stock purchase plans.

Private Placement

On November 15th, 2022, Achieve announced a private placement of $18.9 million. The financing issued 4,093,141 units at a price of $4.625 per unit. The unit consisted of two shares and a warrant with an exercise price of $4.50. Warrants can be exercised after six months and will have a seven-year term. Proceeds from the capital raise will be used to advance the cytisinicline program and for general corporate purposes.

In a Form 8-K, Achieve reported that the offering had closed as per the initial terms yielding a gross $17.9 million in net proceeds. Investors in the private placement include a new, life sciences focused investment fund, Achieve’s management and other new and existing investors. Lake Street Capital Markets acted as the exclusive placement agent for the offering.

Patent Issued

A new patent was issued to Achieve by the US Patent and Trademark Office (USPTO) entitled Cytisine salts, number 11,459,328, which covers the mesylate salt formulation of cytisinicline and the process for its development. This brings the total number of patents protecting Achieve’s version of cytisinicline to 18, with the most recent issuance extending the period of protection beyond 2040. The announced patent describes the preparation of cytisine salts which includes the addition of acid stock solutions using a process of heating and cooling to produce the desired formulation to treat nicotine addiction. The new formulation will favorably affect shelf life for the underlying active pharmaceutical ingredient (API).

SRNT Presentation

In a recent press release, Achieve announced that it would present ORCA-2 results at the Society for Research on Nicotine and Tobacco (SRNT) annual meeting. The meeting was held in San Antonio, Texas over the first four days in March. Additional analyses reported in the presentation confirm that successful abstinence was observed in subgroups of smokers who received cytisinicline, regardless of age, gender, smoking history, or previous quit attempts. Subjects who received either 6 or 12-weeks of cytisinicline treatment experienced consistently higher rates of abstinence compared with placebo. The improvement was observed by the second week of treatment, maintained weekly throughout study treatment and during the 24- week follow-up period, compared to those who received placebo. Principal investigator, Dr. Nancy Rigotti, reported that study compliance was high with 82% of subjects completing the 12 weeks of treatment. No treatment-related serious adverse events were reported and the majority of adverse events were mild in all subjects.

Cytisinicline Clinical Milestones

On January 25th, 2022 Achieve began screening subjects for the ORCA-3 confirmatory Phase III trial required for registrational approval of cytisinicline in the United States. On January 9th, 2023, Achieve reported that the last subject had been dosed in the Phase III ORCA-3 trial. It ended up randomizing 792 subjects across 20 clinical trial locations in the United States. Management anticipates that the topline results from the ORCA-3 trial will be made available in the late May or June timeframe. ORCA-V1 began in June 2022, dosed its last patient in February 2023 and completed the last visit of the last patient in March. Topline is anticipated in the April or early May timeframe.

ORCA-3

ORCA-3 is similar to ORCA-2 in trial design, safety and efficacy evaluations and statistical criteria. The trial targeted enrollment of 750 subjects across 15 clinical trial sites, randomized into three arms. Dosing was 3 mg three times per day (TID). As per FDA requirements, it will be conducted at sites different from those used in ORCA-2 to ensure the statistical robustness of the data. As with the first Phase III trial, the primary outcome measure for ORCA-3 will be biochemically verified continuous abstinence during the last 4 weeks of treatment in the 6 and 12-week cytisinicline treatment arms compared to placebo. Each treatment arm will be compared independently to the placebo arm and the trial will be considered successful if either or both of the cytisinicline treatment arms show a statistical benefit compared to placebo. Secondary outcome measures will be conducted to assess continued abstinence rates through 6 months from the start of study treatment.

ORCA-V1 Vaping Trial

In early June 2022, Achieve announced the receipt of the National Institutes of Health grant to conduct a vaping study. The $2.5 million grant is sufficient to fund about half the cost the ORCA-V1 trial which enrolled non-smoking vaping subjects. The study began in late June and enrolled subjects at five locations in the United States. Dr. Nancy Rigotti, also the principal investigator for the ORCA-2 trial, will assume this role for ORCA-V1. In a November 8th press release, Achieve announced early completion of target enrollment for the vaping trial. The last vaping subject was dosed in February 2023 and the last subject completed his or her last visit one month later.

The ORCA-V1 trial randomized 160 adult users of nicotine e-cigarettes across five clinical trial locations in the United States. Participants were randomized 2:1 to receive either 3 mg of cytisinicline three times daily or placebo three times daily, for a period of 12 weeks. Dosing followed the same regimen as used in ORCA-2. Patients also received standardized behavioral support throughout the trial. The primary endpoint is continuous abstinence during the final four weeks of treatment. The Phase II study will examine vaping cessation as the endpoint at the six week and twelve week point by measuring cotinine levels.² Dr. Nancy Rigotti, Professor of Medicine at Harvard Medical School and Director, Tobacco Research and Treatment Center, Massachusetts General Hospital is the primary investigator for the ORCA-V1 trial.

During the fourth quarter conference call, management guided the release of topline data for the vaping trial towards April or early May. The faster than expected enrollment suggests there is strong demand for a vaping cessation solution. Management noted that the vaping subjects were generally younger and with a higher proportion of female enrollees as compared to the makeup of the ORCA smoking cessation trials. If the trial is successful, results may be sufficient, along with a successful ORCA-2 trial, to justify only one Phase III pivotal study to obtain approval.

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1. Source: Achieve Life Sciences March 2023 Corporate Presentation

2. Cotinine is a metabolite of nicotine. Cotinine urine or blood testing is considered highly accurate for assessing nicotine use, including vaping.