ACHV: Commercialization in Focus

By John Vandermosten, CFA

NASDAQ:ACHV

READ THE FULL ACHV RESEARCH REPORT

3Q:24 Operational and Financial Results

Achieve Life Sciences, Inc. (NASDAQ:ACHV) reported third quarter 2024 results in a November 7th press release distributed after the market’s close. The company subsequently held a conference call discussing progress with the ORCA OL trial, pre-commercialization activities and the vaping indication. Form 10-Q was filed with the SEC pro-viding additional disclosures. Highlights during the third quarter and to date include addition of Achieve shares to the Russell 3000 and Russell Microcap Indices, a $20 million loan refinancing with Silicon Valley Bank, designation of cytisinicline as a Breakthrough Therapy in vaping, significant changes in management personnel and completion of enrollment in the ORCA-OL trial. Achieve’s management and its representatives also presented at investor and scientific conferences. During the third quarter conference call, management refined its expected timeline and pathway forward to FDA approval of cytisinicline.

Compared with previous quarter’s calls, the tone on the third quarter earnings call leaned more towards self-commercialization versus selling to a strategic partner. Management discussed its efforts towards identifying targetable groups, developing strategies to communicate with stakeholders and prescribers and a rolling out a digital commercialization strategy. While the possibility of a sale to an established pharmaceutical company remains, this reframing of the path forward provides deeper context to the recent switch in management. Achieve’s change to the uppermost ranks of leadership towards executives with greater commercial experience has been placed in relief as the company makes new hires and promotes executives from within that have a clear vision of a commercialization trajectory forward.

Achieve does not want to rely on a third party or strategic transaction to determine its fate and it has accelerated its efforts to develop a strategy to commercialize cytisinicline internally. Since Chantix was launched almost 20 years ago, the environment for addressing nicotine addiction has changed. It is more difficult to access primary care doctors and digital media has penetrated every aspect of our lives. Not only has the structure changed, but marketers of 20 years ago did not pursue many obvious avenues to address the impact of smoking on comorbidities. Conditions directly related to smoking, such as respiratory, cardiovascular, cancer, diabetes, dementia were not directly targeted to offer smoking cessation as a disease modifying therapy, despite smoking being a key contributor.

Hand in hand with a greater focus on navigating the course forward for commercialization using internal resources, Achieve has added a new head of Medical Affairs, Dr. Mark Rubinstein. He offers decades of experience communicating the benefits of smoking cessation and understands the ecosystem sufficiently to guide publication planning, identify platforms where Achieve should submit data and develop a message to demonstrate the value of cytisinicline to prescribers. Jamie Xinos was promoted internally to Chief Commercial Officer to continue her development of a digital strategy to more precisely target patients that can benefit from cytisinicline. The company also anticipates hiring an executive to lead Trade and Market Access who will activate the digital first strategy and help implement a hybrid model to work with partners.

The shift towards more internal commercialization efforts will place Achieve in a better negotiating position if it does accept a deal for cytisinicline. They will have also framed the value of the asset more clearly and provided a head start for whichever team takes cytisinicline to market.

Financial Results

No revenues were reported for 3Q:24. Operating expense was $12.5 million producing a net loss of ($12.5) million or ($0.36) per share. For the quarter ending September 30, 2024 and versus the same comparable period in the prior year:

• Research & development expense totaled $7.6 million, up 112% from $3.6 million, due to the initiation and enrollment of the ORCA-OL open label safety trial in May 2024;
• General & administrative expense was $4.9 million, up 62% from $3.0 million on higher employee expenses, including severance costs, consulting costs and legal expenses associated with patent activities and general corporate activities;
• Net other expense was ($46,000) vs. ($536,000) as interest income was more than offset by interest expense and recognition of a loss on extinguishment of the 2023 SVB convertible term loan;
• Net loss was ($12.5) million vs. ($7.1) million or ($0.36) and ($0.34) per share, respectively.

As of September 30th, 2024, cash and equivalents totaled $42.9 million. This amount compares to a $15.5 million balance in cash and equivalents held at the end of 2023 with the increase due to the February 2024 equity raise. Achieve carries convertible debt of $9.8 million on the balance sheet which includes accrued interest. The company refinanced its debt agreement with Silicon Valley Bank (SVB), extending maturity until the end of 2027. Achieve is eligible to draw an additional $5 million from the facility following FDA acceptance of its new drug application (NDA). Cash used in operations during the first nine months was ($20.6) million versus ($20.1) million in the same prior year period.

New Skipper at the Helm

Achieve announced a shift in its most senior ranks with Richard Stewart resuming his role as CEO and Thomas King taking over as Executive Chairman in late August. Richard Stewart had previously held the CEO role at Achieve changing the mantle of command to John Bencich in Fall of 2020. Mr. Stewart has now returned as future commercialization plans move to the forefront. The co-founder and executive chairman plan to draw upon their skills and experience in transactions and commercialization to illuminate the opportunities that lay ahead for cytisinicline.

Several other personnel changes were subsequently executed including the appointment of Dr. Mark Rubinstein as Head of Medical Affairs and the promotion of Jaime Xinos to Chief Commercial Officer. Both of these moves reflect the new orientation of Achieve towards cytisinicline sales following regulatory approval.

Dr. Rubinstein is a nicotine dependence expert with previous experience as Head of Medical Affairs at Blip, a smoking cessation company and Vice President of Global Scientific Affairs at Juul Labs, where he led efforts to prevent youth usage of nicotine products. He is also professor emeritus at the University of California San Francisco (UCSF) and has been featured in many media outlets as an expert in the field. Dr. Rubinstein will help shape the initiatives at Achieve that seek to reduce nicotine dependence and improve health outcomes.

Jamie Xinos was promoted to Chief Commercial Officer in October, having supported Achieve’s commercial efforts since 2017. Her previous experience at OncoGenex Pharmaceuticals, Pfizer, Novartis and Abbott Laboratories along with her seven years at Achieve have prepared her for her new role. This will encompass the development of strategic partnerships with partners and commercialization experts to ensure a successful market entry for cytisinicline.

ORCA-OL Trial

As 2024 has progressed, Achieve has provided an update on enrollment for the Ongoing Research of Cytisinicline for Addiction Program, Open Label (ORCA-OL) trial. After a launch in May, the trial began with rapid enrollment, high screening success rates and a single digit dropout rate. More than 650 subjects were enrolled with about two thirds already completing six or twelve weeks of treatment in previous ORCA trials. 29 sites actively enrolled for the trial with the objective of obtaining six months of safety data from 300 of these individuals in support of the anticipated filing of the NDA in 1H:25. On October 10th, Achieve completed enrollment with 479 participants. The company also passed its first Data Safety Monitoring Committee (DSMC) review for the trial, which concluded that there were no safety concerns.

The ORCA OL trial arose from the FDA’s desire for additional long-term cytisinicline exposure data to adequately assess safety risk. Despite an initial anticipated treatment duration of six to twelve weeks, cytisinicline could be used for chronic, repeat or intermittent use if a patient relapses. With this possibility guiding its interactions with drug sponsors, the FDA and Achieve reached an agreement that a single, open-label study evaluating long-term safety exposure of cytisinicline will meet the safety requirement. Details of the arrangement were provided in a February 29th press release and are described further below.

The completed study will include safety data on at least 300 subjects that have received cumulative cytisinicline treatment for six months. The most recent guidance from Achieve anticipates that the six months of data for 300 subjects will be complete by late January or early February. The company expects that it will take about three months to collect the data, analyze it and incorporate the safety data into the safety summary document for the new drug application (NDA). This suggests an NDA submission in the May timeframe. Generally, it takes about one year from NDA submission to receive a response from the FDA. While the FDA is reviewing the package, Achieve will submit the final 100 patients with one year of data (we estimate) somewhere around November 2025.

Along with the completion of enrollment, Achieve also announced that the first Data Safety Monitoring Committee (DSMC) review for the ORCA-OL trial has been recently conducted. The DSMC concluded that there are no safety concerns, the overall safety profile appears to be excellent and the study may proceed as planned with no modifications.

Vaping Indication

Breakthrough Therapy Status

At the end of July, Achieve announced that the FDA had granted Breakthrough Therapy status for cytisinicline for the treatment of e-cigarette or vaping nicotine dependence. The designation is designed to expedite the development and review of drugs that are intended to treat a serious condition and preliminary clinical evidence indicates that they may demonstrate substantial improvement over available therapy on a clinically significant endpoint. The status provides for expedited development where Achieve can receive intensive guidance on drug development, have close contact with the senior managers and review staff at the agency, participate in rolling review and potentially be eligible for priority review, which can shave some time off the approval process.

Management would like to leverage this expedited status to obtain a label that allows for adolescent use as this demographic uses vaping products at a much higher rate than older individuals. Since the announcement of the status grant, Achieve has requested a Type B end of Phase II meeting where the groups will begin discussions for designing a pivotal trial. On the third quarter call, the team tightened its estimate for the start of the single required Phase III vaping trial to 3Q:25.

Summary

Achieve has gone through a metamorphosis since the second quarter update with a new management team and a focus on commercialization. The ORCA-OL trial has been progressing well, with very low dropout rates which allowed for a reduced number of subjects than had first been proposed. The company also provided a refined timeline for the cytisinicline NDA submission and is targeting 3Q:25 for the start of its vaping trial. We maintain our valuation of $30 per share.

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