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ACHV: Post Phase II Investor Day

By John Vandermosten, CFA


NASDAQ:ACHV


Achieve Life Sciences, Inc. (NASDAQ:ACHV) held its first investor day following the read out of the ORCA-1 trial on September 20, 2019. The event was introduced by CFO John Bencich and included a roundtable discussion moderated by analysts Michael Higgins of Ladenburg Thalmann and Jason McCarthy of Maxim Group. The key opinion leader (KOL) panel included four distinguished researchers from across the United States. Judith Prochaska of Stanford, Nancy Rigotti of Harvard, Mitchell Nides of UCLA and Scott Leischow of Arizona State University. Chief Medical Officer Cindy Jacobs also participated providing new details regarding the anticipated Phase III trial.


View Exhibit I – Panel Participants1

The presentation began with a historical overview of cytisinicline and Achieve’s development of the candidate to date. Some initial statistics were provided that highlight the magnitude and importance of the need for a better smoking cessation product. There are over one billion smokers in the world and seven million deaths per year. There are 35 million smokers in the United States and smoking is the leading cause of preventable death in the country. No new treatments have been approved for the treatment of smoking since Chantix was approved in 2006. This lack of innovation exists despite the poor success rate of current approaches where 70% of smokers want to quit, 55% attempt to quit and only 7% succeed in quitting.


View Exhibit II – CDC Statistics for Smoking Cessation2

Cytisinicline differentiates itself from other approaches in its short course of treatment, improved side effect profile and natural sourcing. Not only is the product sold over the counter in Eastern Europe, it has also demonstrated favorable safety and efficacy in two Phase III trials and has been used in more than 20 million patients. Achieve has conducted several clinical studies to date, most recently completing the Phase IIb Ongoing Research of Cytisinicline for Addiction (ORCA)-1 trial.

We discuss the ORCA-1 topline results in a June 12th article. This study was a multicenter, double-blind, randomized, placebo-controlled Phase IIb trial of cytisinicline in adult smokers. The 25-day treatment duration was combined with behavioral support and included multiple dosing and titration schedules.


View Exhibit III – Trial Design3

Compliance with treatment was high and over 94% of enrollees completed the 25-day course. Adherence to the course of treatment was highest in the 1.5 mg, three times daily cohort and lowest in the 3.0 mg downward titration cohort. The primary endpoint of reduction in cigarettes smoked was met with statistical significance in three of the four cohorts. However, we note that this data was self-reported, which likely understated the number of reported cigarettes smoked. The more reliable reduction in quit rates as measured by expired carbon monoxide (CO) evinced better than 0.005 statistical significance in each of the cohorts.

Safety and low incidence of adverse events was another hallmark of the trial. Key adverse events were abnormal dreams and nausea of 9% and 6% respectively for the cytisinicline pooled group. While not directly comparable, the Eagles4 trial showed Chantix with nausea incidence ranging from 16 to 30% depending on dose and abnormal dreams ranging from 9 to 13% depending on dose.

Phase III
Now that data has been presented at the Society for Research on Nicotine & Tobacco Europe (SRNT-E) 19th Annual Conference, and ORCA-1 data has been fully analyzed, Phase III efforts are underway and the company is in consultation with the FDA regarding trial design.


View Exhibit IV – Phase III Trial Design5

The first Phase III trial expects to enroll 750 patients spread over three arms. The dosing regimen will use a simplified three times daily (t.i.d.) approach totaling 9 mg. Combined with a placebo arm, there will be two active arms, one with six weeks of treatment followed by six weeks of placebo and twelve weeks of cytisinicline treatment. While the principal goal of the longer treatment period was to assess safety, the 12-week duration arm will also allow the study to examine the effectiveness of longer treatment on relapse. The primary endpoint for the trial is biochemically verified continuous abstinence during the last four weeks of treatment and the secondary endpoint is continuous abstinence from end of treatment through week 24.

Summary
The opportunity for cytisinicline is substantial. Studies conducted to date suggest at least similar efficacy to Chantix but with an improved side effect profile. We believe that many of those who stop treatment of approved peer Chantix may do so due to the negative side effects. If this is so, it suggests a greater number of successful results for those who start cytisinicline treatment. Achieve has completed its Phase IIb study and is in the trial design stage for its two anticipated Phase III studies. These registrational trials are expected to cost $50 million to run to completion. Achieve is currently in discussions with potential partners and also may raise additional capital through a share issuance to complete the work. With a market capitalization below $20 million, we see Achieve Life Sciences as substantially undervalued, especially under a scenario where cytisinicline represents an improved product to the $1.1 billion in revenue peer which will lose patent protection next year. The helpful investor day reinforces our thesis which highlights a de-risked asset with a potentially improved safety profile over current offerings in a large market with consistent demand and a clear pathway to approval. Our risk-adjusted target price is maintained at $6.00.

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1. Achieve Life Sciences KOL Event Corporate Presentation, September 2019.


2. Centers for Disease Control and Prevention (CDC). Quitting Smoking Among Adults – United States, 2000-2015

Achieve Life Sciences KOL Event Corporate Presentation, September 2019.


3. Achieve Life Sciences KOL Event Corporate Presentation, September 2019.


4. Data sourced from Chantix product label


5. Achieve Life Sciences KOL Event Corporate Presentation, September 2019.