ACHV: Not So Fast…
NASDAQ:ACHV
READ THE FULL ACHV RESEARCH REPORT
Update to the Timeline
On December 11th, 2023, Achieve Life Sciences, Inc. (NASDAQ:ACHV) filed Form 8-K updating investors on its interactions with the FDA. The company held a pre-new drug application (NDA) meeting with the agency in October regarding cytisinicline, which was followed by additional interaction and written notes from the meeting. Following the receipt of notes and further interaction, Achieve reported that the FDA acknowledged that there was sufficient efficacy data for submission; however, the agency desires additional long-term exposure data beyond 12 weeks. The rationale for this request comes from the agency’s view that smoking cessation drugs are products used in a chronic and intermittent manner due to relapse and subsequent courses of treatment over a lifetime.
During the meeting and the follow-up, Achieve pressed the FDA for further details on what would satisfy the need for long-term safety data in terms of the number of subjects and duration of a study. However, the agency did not respond with specifics and management is seeking another meeting with them to determine what is necessary. Two important elements are outstanding which Achieve expects to define early in 2024: what data is required and when it can be submitted.
For products intended for chronic use, such as schizophrenia, blood pressure, and cholesterol medications, we have seen safety studies require 300 subjects observed for six months and 100 subjects observed for a year. CEO John Bencich also mentioned this as a standard that has been promulgated by the International Conference on Harmonisation of the Technical Requirements for Registration of Pharmaceuticals for Human Use for chronic use products. This organization does not provide guidance but has been relied upon by US, EU, and Japanese regulatory authorities to help design clinical trials. As cytisinicline would not likely be used daily for years but rather intermittently, perhaps with one course of therapy per year, the framework we mention above may represent the upper end of what might be required.
Several considerations are taken into account when determining the size and length of a safety study. The FDA does not explicitly define what is desired or required but rather uses a risk-based approach that considers several elements. Drugs with serious side effects, novelty of the drug and understanding of its mechanism of action, the target population, and data available to date are all considered when determining the design of such a study. Other drug characteristics that are considered when designing a long-term safety study include its immunomodulatory function, potential for addiction or abuse, and whether or not it is intended for long-term use.
As cytisinicline is only expected to be used for up to 12 weeks at a time, the aforementioned 300 for six months and 100 for 12-month structure would likely be a maximum; however, the exact guidance will be unclear until Achieve’s expected meeting in the first quarter.
There may be other options that could allow Achieve to maintain its previously expected timeline including submission of the necessary long-term safety data after the investigational new drug submission. The FDA could also provide provisional approval of cytisinicline and require a Phase IV study to be conducted as post-marketing surveillance. A limited label may also be an option where patients could only use one treatment in a lifetime.
Some of the work required for the long-term exposure data could already be done as there are over 500 subjects that received drugs and participated in the ORCA-1 and ORCA-2 studies. The Phase II ORCA-V1 trial could also contribute to the population. We expect to see an open-label safety study that should be able to draw from the populations of these trials, reducing the burden that might otherwise be placed on the company.
As company management has mentioned, Achieve is speaking with potential acquirors and partners for the commercialization of cytisinicline. The company is looking for a partner with a primary care sales force already in place and is conducting discussions with prospects and expects to get a transaction done in the first part of next year. CEO Bencich does not think that the request for more safety data will materially impact the negotiations, even if there is a delay. We think that the amount of capital and time required to complete the long-term exposure requirement will be small relative to the commercial opportunity.
Virtual Life Sciences Conference Participation
On December 14th, 2023, Achieve Life Sciences’ CEO John Bencich participated in the OTC Markets’ Life Sciences Virtual Investor Forum. He was joined by Zacks Small Cap Research’s Senior Life Sciences Analyst John Vandermosten. The 30-minute CEO Chat presented the investment thesis for Achieve and responded to questions related to the FDA’s recent request for long term exposure data among other topics. Follow the link here for the replay.
Valuation
While the impact of the FDA’s additional request for a long-term safety study is not known, we believe that a reasonable estimate is a six-month delay and $15 million of incremental operating costs which include the expense of running a study. This reduces our valuation of Achieve to $50 per share. When more details are known we will update our price target accordingly.
Summary
Achieve has shown impressive safety and efficacy in its Phase III trials and is in the last stages of preparing for submission of an NDA. The FDA’s request for a long-term safety study was a surprise and unexpected. While we have taken a conservative view on the impact of this change, the FDA may allow for submission of the necessary data after the filing of the NDA or may allow for a post-marketing study. It could also allow for a limited label of one course of treatment until the additional work has been done. Even if the delay matches our incremental estimate of another six months and $15 million of operating costs, the amount is negligible relative to the commercial opportunity for cytisinicline. We update our numbers to reflect the new estimates and generate a valuation of $50 per share.
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1. Screenshot capture from Youtube interview.
