Today is proving to be a monumentally positive one for Achieve Life Sciences Inc (NASDAQ: ACHV). As of 11:48 AM EDT, the stock was up 60.17% to trade at $4.37 per share after the company announced positive clinical data from its trial of its smoking cessation aid known as cytisine.

What Is Cytisine

Cytisine is a plant-based alkaloid that is being developed by ACHV. The treatment has a high binding affinity to the nicotinic acetylcholine receptor, a key receptor with regard to smoking cessation. Before today’s data, data from two previous, large scale Phase 3 clinical trials ended with positive outcomes with data from more than 2,000 patients.

The first of these trials, known as the TASC trial included 740 patients. The double-blinded placebo controlled trial was funded by the U.K. National Prevention Research Initiative and produced strong data suggesting that the treatment was not only effective, but safe and well tolerated.

The second of these trials, known as the CASCAID trial, included 1,310 patients. The single-blind, non-inferiority trial compared cytisine to nicotine replacement therapy, producing data that suggested that Cytisine was the superior treatment. This trial was funded by the Health Research Council of New Zealand.

Thursday’s News Only Adds To Positive Data

On September 27, 2018, ACHV issued this press release, bringing more positive data to the table. In the release, the company provided data from a clinical study that evaluated the effect of food on the bioavailability of a new formulation of cytisine.

According to Achieve Life Sciences, the study evaluated the bioavailability of a new formulation of 3 mg cytisine. The study included 12 healthy volunteer smokers and randomized them into fed and fasted cohorts.

The data suggest that cytisine was extensively abosrbed after oral administration regardless of whether or not it was taking with food. In fact, through oral administration, the treatment yielded maximum cytisine concentration levels in the blood in less than two hours. This result was the same in both cohorts. As such, the bioavailability of the treatment is not affected by food.

In a statement, Rick Stewart, Chairman and CEO at ACHV, had the following to offer:

We believe this new cytisine formulation will allow for an extended shelf-life and will be used in the upcoming Phase 2b clinical trial as well as the Phase 3 clinical program… We are pleased with the similar results regarding this new formulation in smokers and that the higher dose of 3 mg cytisine continues to demonstrate a good safety profile with or without food.

Looking Into Finances

Before making an investment based on a knee-jerk reaction to news, I like to dig into the company’s most recent financial report to see if there are any red flags. The most recent financial report filed by Achieve Life Sciences was filed with the SEC on August 8, 2018, and included financial data as of June 30, 2018.

In the report, the company said that it had $15.57 million in total current assets. Considering the fact that the company only lost about $2.97 million in the last quarter, that should be plenty of money to get it through several catalysts. While there is always a risk of dilution with clinical-stage biotechnology companies, ACHV seems to be sitting on plenty of funds for the time being, so this risk is minimized here.

Moreover, it’s important to note that due to the company’s target, smoking cessation, it is a shoein for government funding. Governments around the world are working to put an end to smoking. The bad habit leads to an incredible financial burden on medical systems and economies around the globe. Even worse, tobacco products are the only products that kill a large portion of customers that use the product as intended by manufacturers. Considering this, Achieve Life Sciences has received millions in funding from governments around the world, and this trend is likely to continue, further relieving fears of a coming need of funds.

Market Potential

If cytisine is approved in the United States Achieve Life Sciences could be tapping into an overwhelmingly valuable market. The United States is the largest economy in the world, and it’s estimated that around 15% of Americans use tobacco products. This makes for a massive target market. Moreover, globally, it is estimated that the nicotine de-addiction market could climb to be worth $21.8 billion by 2024. So, there’s no question here. Cytisine, if approved by the FDA, could quickly become a major revenue generator.

Risks To Consider

Any time an investment is made, it’s important to consider the risks. In the case of ACHV, here are the risks that I believe are most important to consider:

  • Clinical Risks – Cytisine has proven to be effective, safe and well-tolerated in previous clinical studies. So, the clinical risk is a relatively small one, but it is always there in the biotechnology space. Should the company release negative data from a cytisine clinical trial, it could see large losses.
  • Regulatory Risks – This is another that I believe is a minimal risk, but again, it’s one to consider. At the end of the day, the US is going to be a key market for Achieve Life Sciences. If for any reason the FDA decides not to approve the smoking cessation aid, the stock could fall dramatically. Nonetheless, all data produced through trials to date seems to support an approval with flying colors!
  • Financial Risks – Finally, it’s important to note that Achieve Life Sciences is a company that operates in the red. This means that there are financial risks to consider. The company could dilute shares to get its hands on capital. However, even this risk has a silver lining. At the moment, the more than $15 million in cash on hand will get the company through more than a year of operations. Moreover, with further support likely to come from governments around the world, I don’t believe that the financial risk is a pressing one either.

The Takeaway

The takeaway here is a relatively simple one. Every investment is going to come with risk, and Achieve Life Sciences is no different. However, the company has a product candidate that is producing incredibly promising data. At the same time, it has the support of governments around the world. Although there’s not a ton of money in the bank, the company has plenty of funding to operate for well over a year. All in all, ACHV seems like a great investment. I’m expecting to see further gains ahead.


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