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ACHV: Autumn Enrollment Completion for ORCA-3

·10 min read

By John Vandermosten, CFA

NASDAQ:ACHV

READ THE FULL ACHV RESEARCH REPORT

Second Quarter 2022 Results

Achieve Life Sciences, Inc. (NASDAQ:ACHV) reported second quarter 2022 results in a press release and held a conference call after market close on August 11, 2022. The company concurrently filed its Form 10-Q with the SEC. Since its first quarter update, Achieve has begun its long-awaited vaping trial, continued enrollment in its ORCA-3 study and attended several investor conferences. Other highlights for 2022 include impressive topline results from the ORCA-21 trial and launch of the ORCA-3 trial.

Achievements for 2022 include:

➢ 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

Presentation at SRNT Annual Meeting – 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

No revenues were reported for 2Q:22. Operating expense was ($10.1) million yielding a net loss of ($10.5) million or ($1.09) per share.

For the quarter ending June 30, 2022 and versus the same ending June 30, 2021:

➢ Research & development expense totaled $7.2 million, falling 22% from $9.2 million, driven by the timing of the ORCA-2 and ORCA-3 trials which were winding down and ramping up respectively in the quarter;

➢ General & administrative expense was $2.9 million, up 38% from $2.1 million on greater clinical trial media and awareness expenses, employee expenses associated with stock-based compensation, higher legal expenses as a result of increased patent application activities and greater insurance premiums;

➢ Net loss was ($10.5) million vs. ($11.3) million or ($1.09) and ($1.53) per share, respectively.

As of June 30, 2022, cash and equivalents stood at $29.4 million. This amount compares to a $43.0 million balance in cash and equivalents held at the end of 2021. Achieve has assumed $15.5 million of convertible debt related to its $25 million loan facility with SVB. In 2Q:22 Achieve was extended a commitment of an additional $10 million from the SVB loan facility which it may access when needed. Cash used in operations for 2Q:22 was ($8.3) million versus ($9.1) million in the prior year period. Cash flows from financing activities totaled $1.4 million predominantly composed of proceeds from warrant exercise and ATM fundraising.

Start to ORCA-V1 Vaping Trial

One area that has not yet been explored in sponsored clinical trials has been the application of nicotine cessation therapy to electronic cigarette users or vapers. According to a July 2021 Gallup poll, 6% of US adults report having recently vaped, and the number is growing. Many see vaping as a nicotine replacement therapy to help them stop smoking. While using electronic cigarettes does remove the risk from smoke compared to combustible cigarettes, the addiction to nicotine remains as do other risks related to the vaping fluid and the device used, which we have outlined in previous reports. To address this population, Achieve pursued and was awarded a grant from the National Institute on Drug Abuse, or NIDA, of the National Institutes of Health, or NIH, to evaluate the use of cytisinicline as a treatment for cessation of nicotine e-cigarette use in July 2021. The initial grant award was $320,000 which was used to prepare an investigational new drug (IND) application in order to gain clearance to conduct a vaping trial. The IND was accepted in November 2021, and the follow on grant to fund the clinical stage of the work was received in June 2022, adding another $2.5 million to received funds. The total of $2.8 million received in both of the grants is sufficient to support half of the costs required to run the trial. Following receipt of the funding, Achieve launched its Ongoing Research of Cytisinicline for Addiction (ORCA)-V1 in late June and how has four of five intended sites actively screening patients.

ORCA-V1

In early June, 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 will enroll 150 subjects who are vaping but not smoking. The study began in late June which will enroll at five locations in the United States. Dr. Nancy Rigotti, who was the principal investigator for the ORCA-2 trial, will again assume this role for ORCA-V1. During the 2Q:22 conference call, management pointed out that patient recruitment has been going well during the first several weeks of the trial and that enrollment is expected to be complete by 4Q:22. Results should be publicly available in 1H:23.

Randomization for ORCA-V1 will be divided into a 2:1 split with 100 receiving twelve weeks of cytisinicline and 50 on placebo. Dosing is expected to follow the regimen evaluated in ORCA-2: 3 mg TID. The Phase II study will examine vaping cessation as the endpoint at the six week and twelve week point by measuring cotinine levels.2 If the trial is successful, results may be sufficient, along with a successful ORCA-2 trial, to justify only one Phase III to obtain approval.

Video Interview with CEO John Bencich

Chief Executive Officer John Bencich joined us in the studio in July to discuss the opportunity for cytisinicline and how it went from being used in a few geographies in Southeastern Europe to becoming a Phase III candidate for FDA approval. We review the drug’s favorable side effect profile and results from the recently concluded Phase III studies. We also dig into the recently launched vaping trial and hold a fireside chat session where we discuss inflation, regulatory considerations, methods to stop smoking and other industry-related topics.

Topline Data from ORCA-2 Smoking Cessation Trial

Achieve reported topline data from its Phase III Ongoing Research of Cytisinicline for Addiction (ORCA)-2 trial in an April 27th press release. The document was accompanied by a webcast and slide deck.

Topline data was impressive, as shown in subsequent exhibits, with the primary endpoint of biochemically verified continuous abstinence measured during the last four weeks of treatment up until the end of the observation period between a cytisinicline arm of either twelve or six weeks and a matching placebo arm. We summarize the data below showing the cytisinicline arm with a result 20 points higher for a six-week and 26 points higher for a twelve-week dosing period vs. placebo:

For the secondary endpoint of continuous abstinence during the last three weeks of treatment to 24 weeks, we provide summarized results below. Results show a 6.3 percentage point improvement for the six-week group and a 16.3 percentage point improvement for the twelve-week group.

p-values for the primary and secondary endpoints were significant, all falling substantially below the 1% hurdle.

The side effect profile, which we have featured as one of the stronger arguments for cytisinicline over competing products was spectacular. Headaches and nausea were both lower for the cytisinicline arms compared with the placebo arm. This is in contrast to data provided for varenicline in its FDA label which was substantially greater for the active arm vs. the placebo arm.6

The Phase III ORCA-2 clinical trial enrolled 810 adult smokers to evaluate the efficacy and safety of cytisinicline as a treatment for smoking cessation. Participants were randomized into three treatment arms to receive either placebo or 3 mg cytisinicline taken three times daily for a period of either 6 or 12 weeks. The primary endpoints for ORCA-2 were biochemically verified continuous abstinence measured during the last 4 weeks of treatment. Secondary endpoints measured continuous abstinence after treatment up to 24 weeks. Subjects were monitored for smoking abstinence for 24 weeks post randomization and received standard behavioral support for the duration of the trial. ORCA-2 participants were an average age of 54 years, smoked on average 20 cigarettes per day at baseline, and had a median smoking history of 38 years with 4 prior quit attempts.

In our opinion, results were very strong and show the benefit of increasing the dosage of cytisinicline and duration of treatment relative to the upwardly titrating approach that had been previously used. The results exceed our expectations in terms of efficacy and safety and bode well for the confirmatory ORCA-3 trial which is now underway.

Cytisinicline Clinical Milestones

On January 25th, Achieve began screening subjects for the ORCA-3 confirmatory Phase III trial required for registrational approval of cytisinicline in the United States. The grant-funded Phase II ORCA-V1 study in nicotine e-cigarette cessation began in June 2022.

ORCA-3

ORCA-3 is similar to ORCA-2 in trial design, safety and efficacy evaluations and statistical criteria. The trial will target enrollment of 750 subjects across 15 clinical trial sites, randomized into three arms. Dosing will be 3 mg three times per day (TID). As per FDA requirements, it will be conducted at new sites from 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. We anticipate that the diminishing impacts of COVID, the alignment of the start of the trial with New Year’s resolutions to stop smoking and Achieve’s extensive experience conducting this type of trial, the enrollment of the planned 750 patients will be at a materially faster pace than in previous studies.

Key Milestones

➢ Launch of ORCA-3 – January 2022

➢ Topline readout of ORCA-2 – April 2022

➢ Initiation of ORCA-V1 – June 2022

➢ Completion of enrollment for ORCA-3 – Late 3Q:22

➢ Second carcinogenicity study completed – 2022

➢ Produce validation batches of cytisinicline with Sopharma – 2H:22

➢ Completion of enrollment for ORCA-V1 – 4Q:22

➢ Completion of pharmacokinetic and QT/QTc studies for cytisinicline – 2023

➢ SRNT Conference – March 2023

➢ ORCA-V1 results – 1H:23

➢ ORCA-3 results – 1H:23

➢ Cytisinicline NDA filing – 2H:23

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1. Ongoing Research of Cytisinicline for Addiction

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

3. Source: Video Clip from Achieve Life Sciences Interview

4. Source: Zacks analyst compiled exhibit using data provided by Achieve Life Sciences

5. Source: Zacks analyst compiled exhibit using data provided by Achieve Life Sciences

6. According to the FDA label for varenicline, nausea was reported in 16% of the 0.5 mg group, 30% in the 1 mg group and only 10% in the placebo group. Headache was 19% in the 0.5 mg group, 18% in the 1 mg group and 13% in the placebo group. Since the trials were structured differently, direct comparisons are difficult; however, directionally the results suggest that cytisinicline has a better profile for nausea and headache. For insomnia and abnormal dreams, both cytisinicline and varenicline arms showed higher incidence as compared to the placebo arm.

7. Source: Zacks analyst compiled exhibit using data provided by Achieve Life Sciences

8. Source: Achieve Life Sciences Clinical Development Update Corporate Presentation April 2022

9. Source: Achieve Life Sciences Clinical Development Update Corporate Presentation July 2022