Healthcare-focused research firm Encode Ideas has begun coverage on Acasti Pharma Inc (NASDAQ:ACST) (CVE:ACST), which is developing a krill-based omega-3 product called CaPre to treat severe hypertriglyceridemia (HTG), known to contribute to heart disease.
Acasti is currently conducting two virtually identical Phase III studies on the drug - Trilogy I and Trilogy II, and expects to report top-line data from the first in December and the second in January.
Assuming the study results are positive and there is an acceptable safety profile, Acasti intends to file an NDA by mid-2020 to obtain regulatory approval for the drug in the US, initially for the treatment of severe HTG. The firm hopes CaPre will be launched in the US by the second half of 2021.
Encode starts coverage of the firm as a 'high-risk' investment idea.
"The theoretical timing of a CaPre launch in 2021 is ideal, with the Omega-3 market thriving due to the likely label expansion for Amarin’s Vascepa, based on the compelling REDUCE-IT study, and the possible commercial launch of AstraZeneca’s Epanova," says Encode in a research note.
"Even with an inferior label relative to Vascepa, and likely Epanova, we believe that CaPre can carve out a niche in what should be a vibrant omega-3 market," it adds.
While Encode Ideas says it is optimistic about CaPre's commercial potential, it does recommend caution to investors heading into the first Trilogy readout this December.
Acasti has run two Phase II studies with CaPre - COLT and Trifecta - it says, but adds that it finds these studies "challenging to interpret", as they relate to the probability of CaPre meeting the primary TG-lowering endpoint in the Trilogy studies.
"It is apparent from both studies that CaPre reduces TG levels, although it remains unclear whether this is in a dose-dependent manner."
"Acasti has presented limited data on the 4g dose of CaPre being used in the Trilogy studies, and no data at all on how this dose has performed in patients with severe hypertriglyceridemia," it notes.
"We think it is prudent to take a wait-and-see approach towards owning Acasti. The public release of the results of the two Trilogy studies, and subsequent secondary and exploratory endpoints, will occur separately over a period of three to four months, and with each data release the risk profile should improve," said the research firm.
"Even if Acasti announces that CaPre has met the primary endpoint in Trilogy I, we feel the immediate upside may be tempered by Acasti’s capital needs, uncertainty around the street’s expectation for percentage TG lowering, and a lack of key cardiometabolic data until later in 1Q20."