Last Updated on June 4, 2019 by Sultan Beardsley
Achieve Life Sciences (Nasdaq: ACHV) is a specialty pharmaceutical company developing a plant-based alkaloid “Cytisinicline (AKA cytisine)” as a smoking cessation drug. What is interesting is that cytisine has been sold in Europe for over 20-years. An estimated 20 million people have used cytisine to help them quit smoking, and another 2000 have used it in clinical trials. ACHV is striving to bring cytisine to smokers in the U.S. and is therefore undergoing the clinical trial process.
Its no secret that smoking is widespread and deadly. In the past year,70% of smokers expressed a desire to quit and over half have tried to quit, but only 7% succeeded. The only treatment FDA approved domestically is nicotine replacement therapy (NRT) that comes in various forms. Cognitive and behavioral therapy is sometimes utilized as well. Cytisine is a partial agonist (stimulator) of the α4β2 nicotine receptor and is purported to aid in smoking cessation by decreasing cravings, withdrawal symptoms, and the satisfaction derived from smoking.
Price Performance & Statistics
ACHV closed June 4th at $3.86, has a market cap of $25.5 million, and a 52-week range between $1.04 and $9.83. Since January 1st, 2019 ACHV has gained over 200%. ACHV has a history of spiking on positive news updates. In September 2018 ACHV jumped 38% in the premarket from an announcement that its new cytisine formulation made to extend the products shelf-life was bio-equivalent in people who ate and did not eat before taking it. On March 15th, 2019 ACHV surged 83% following a positive clinical update for cytisine. On April 2nd, 2019 the Data Safety Monitoring Committee (DSMC) gave thumbs up for a second time for the phase 2b ORCA-1 trial. As we can see from the huge green candle in the chart below something also happened in February. Note that after each surge the stock price quickly returns to baseline.
Because of two-reverse splits (in August 2017 and May 2018) ACHV has an extremely low float of 6.09 M. Furthermore, there is ~5% insider ownership and ~28% institutional ownership with the largest stakeholder being Sio Capital Management, LLC (6.14%). ACHV does not have a great balance sheet. As of March 31st, 2019 the company had $10 million in cash and short-term investments and a burn rate of nearly $6.0 million. The largest expenses were related to research and development which should only increase from here. Thus, management needs to raise money soon in order to continue operations
Previously Reported Clinical Data
The approach I usually take to trading data catalysts is to enter the stock weeks, or sometimes months, before data is due and play the run-up. The reason being is that its hard to predict if a study will hit its primary endpoint. In the case of ACHV, however, we have the unique ability to analyze two phase 3 studies conducted in Europe and New Zealand, respectfully. The trial designs and endpoints used were not identical to the ACHV’s phase 2b study (ORCA-1), but had several parallels. Both studies were published in the New England Journal of Medicine, one in 2011 and the other in 2014. In the rest of this section, I’ll describe the phase 3 studies and then compare them to ACHV’s ongoing ORCA-1 trial.
The 2011 phase 3 study was performed at a single center with 740 smokers (smoked at least 10 cigarettes per day) who were willing to quit, and was double-blinded with a placebo control. Both the placebo and treatment groups received minimal counseling. The Cytisine dosing regimen was as follows:
…six 1.5-mg tablets per day (one tablet every 2 hours) for 3 days (days 1 through 3), five tablets per day for 9 days (days 4 through 12), four tablets per day for 4 days (days 13 through 16), three tablets per day for 4 days (days 17 through 20), and two tablets per day for the final 5 days (days 21 through 25). The target quit date was scheduled for the fifth day.NEJM 2011
The primary outcome for this study was 12-months of abstinence from smoking after treatment stopped with abstinence defined as participants having smoked 5 cigarettes or less in the 6 month periods leading up the 6 and 12-month follow up visits, and no cigarettes in the week before each visit.
Secondary outcomes consisted of sustained abstinence for the first six-months and point prevalence at twelve-months (meaning participants were abstinent for the week prior to the 12-month follow up visit). Abstinence was confirmed with carbon monoxide testing.
Thirty-one people in the cytisine treatment group (8.4%) remained abstinent for 12-months compared to two people (2.4%) in the placebo group. This difference was found to be statistically significant (P=0.001). Moreover, 13.2% of participants in the cytisine group vs. 7.3% in the placebo group stayed abstinent during 7-day period before the 12-month follow up visit (P=.01). Finally, 5.7% more patients in the cytisine group reported gastrointestinal adverse events. The investigators concluded cytisine is more effective than a placebo and potentially provides smokers with an alternative to higher priced smoking cessation drugs.
In the 2013 New Zealand phase 3 study 1310 smokers motivated to quit were randomized 1:1 in either cytisine or nicotine replacement treatment groups. The former group took cytisine for 25-days according to the regimen described above while the latter underwent 8-weeks of nicotine replacement therapy (NRT). All participants received low-intensity behavioral support over the phone. The primary outcome here was continuous abstinence (self-reported with an allowance for 5 cigarettes at most from quit date, inclusive of the week prior to quitting) 1-month after the quit date. The dosing regimen was effectively the same as in the 2011 study.
Forty-percent of participants taking cytisine remained abstinent 1-month after quitting compared to 31% doing NRT (9% difference). This difference was statistically significant (P<.001). Furthermore, cytisine was found to be superior to NRT at the 1-week, 2-month and 6-month time points (P<.001, .001, .002) for promoting continuous abstinence from smoking. Notably, in a specified subgroup analysis cytisine was determined to be superior among women, and non-inferior among men. Similar to the 2011 study, there were more gastrointestinal adverse events (nausea, vomiting, trouble sleeping). Investigators concluded that in combination with light behavioral support cytisine is superior to NRT for helping smokers quit, but also comes with a higher rate of self-reported adverse events.
The Ongoing Research of Cytisinicline for Addiction (ORCA) phase 2b study is a multi-center, 6-arm (25 and 50 participants in each placebo and treatment arm, respectfully), randomized, double-blinded, and placebo-controlled clinical study. The goal of the study is to evaluate cytisine efficacy at reducing the number of cigarettes smoked and compare its safety profile with the placebos. Participants in all study arms will receive 12 behavioral-support sessions with a qualified individual and supportive literature and online resources. Unlike the previous studies, 1.5 mg and 3.0 mg doses are being tested in two different treatment schedules (all use the 25-day titration schedule from the phase 3 studies). The primary endpoint as stated on clinicaltrials.gov is “Percentage of Expected Cigarettes Smoked Per Participant During Study Treatment [ Time Frame: Day 1 through Day 25 ]” and the secondary endpoint is “Number of Participants With Smoking Abstinence Starting at Week 4 and Documented at Weeks 5, 6, 7 and 8 Post-Randomization [ Time Frame: Week 4 through Week 8 ]“. ACHV has told investors to expect top-line data in the 2nd quarter this year, which as we know ends in June.
Based on the fact that cytisine was superior in a placebo controlled phase 3 study and compared to NRT in a second phase 3 study, I am bullish on the upcoming phase 2b data readout. Even though the studies are not identical in design there are enough similarities to warrant optimism. The same study drug was evaluated in adult smokers with a desire and or willingness to quit. In all three studies under discussion participants were allotted counseling of some sort. The biggest concern would be safety because of the greater prevalence of adverse events in cytisine groups. However, these events appear restricted to non-serious/life-threatening symptoms like stomach aches and trouble sleeping. Another difference is in the ongoing ORCA-1 study 1.5 mg and 3 mg doses are being tested. Fortunately, 1.5 mg was the dose used in the two phase 3 studies so we do not have to worry that the dose is insufficient to elicited a treatment response. The dosing schedules are also the same except for the added “a simplified 3 times daily (tid) schedule” in ORCAL-1.
The move here is to get in and out capitalizing on the potential post-data spike. Since Monday ACHV has pulled back to support at $3.83. If it does not hold this level the next stop I see is around $3.50. On a positive note, ACHV insiders bought shares in May at ~$3.60 and $4.02. I recommend buying at these levels and selling on the run-up to data or on a spike elicited by positive topline data. Holding past the data readout is very risky. If the stock does indeed spike I am very confident it will be followed by an offering.
I do not have a position in ACHV but plan to open one in the next 48-hours