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Fourth Quarter and Fiscal Year 2021 Results
Achieve Life Sciences, Inc. (NASDAQ:ACHV) reported fourth quarter and fiscal year 2021 results in a press release and held a conference call after market close on March 10, 2022. The company concurrently filed its Form 10-K with the SEC. Highlights for Achieve's fourth quarter include FDA acceptance of an IND for e-cigarette cessation, and a $25 million loan facility with Silicon Valley Bank. Post year-end, the last subject held their last follow-up visit for the ORCA-21 trial and the confirmatory Phase III ORCA-3 trial was initiated. Achieve also added three new team members to its roster including a Director of Clinical Operations.
Highlights for the fourth quarter ended December 31st and to-date include:
➢ Presentation at 21st Annual SRNT-E2 Virtual Conference - September 2021
➢ FDA acceptance of IND for e-cigarette cessation - November 2021
➢ ORCA-2 clears final DSMC review - November 2021
➢ KOL panel on smoking and e-cigarette cessation - December 2021
➢ $25 million loan facility from Silicon Valley Bank (SVB) - December 2021
➢ ORCA-2 last subject, last follow up - January 2022
➢ Initiation of ORCA-3 - January 2022
➢ Expansion of clinical operations team - February 2022
➢ Expansion of manufacturing & quality operations team – March 2022
No revenues were reported for 2021. Operating expense was ($33.1) million yielding a net loss of ($33.2) million or ($4.08) per share.
For the year ending December 31, 2021 and versus the same ending December 31, 2020:
➢ Research & development expense totaled $24.0 million, rising 248% from $6.9 million, driven by enrollment and ramp up of Phase 3 ORCA-2 trial that was initiated in 4Q:20 and was fully enrolled by mid-2021;
➢ General & administrative expense was $9.1 million, up 16% from $7.9 million, primarily due to higher employee expenses associated with stock-based compensation, increase in premiums for insurance and clinical trial media and awareness expenses;
➢ Net loss was ($33.2) million vs. ($14.7) million or ($4.08) and ($5.42) per share, respectively.
As of December 31, 2021, cash and equivalents totaled $43.0 million. This amount compares to a $35.9 million balance in cash and equivalents held at the end of 2020. Achieve has taken on $14.9 million of convertible debt stemming from its $25 million loan facility with SVB. Cash used in operations for 2021 was ($29.4) million versus ($13.5) million in the prior year. Cash flows from financing activities totaled $36.6 million, composed of proceeds generated from the May 2021 public offering and December 2021 SVB debt agreement. Achieve entered into an agreement for up to $25 million with Virtu that it has not utilized as of December 31, 2021.
Cytisinicline Clinical Milestones
In November 2021, Achieve announced that the FDA had accepted its IND in e-cigarette cessation, and that in its final review, the Data Safety Monitoring Committee (DSMC) held no concerns with cytisinicline safety or trial conduct for ORCA-2, in smoking cessation. Additionally, the DSMC noted excellent compliance with drug administration procedures and that the study has progressed well despite the impact from the COVID-19 pandemic. On January 4, 2022, Achieve announced completion of the last follow up visit for the last subject for the ORCA-2 trial. The study randomized 810 subjects across 17 clinical sites in the US. Topline data from ORCA-2 is expected in 2Q:22.
On January 25th, Achieve began screening subjects for the ORCA-3 confirmatory Phase III trial required for registrational approval of cytisinicline in the United States. Details for the grant-funded Phase II ORCA-V1 study in nicotine e-cigarette cessation were also provided. Enrollment of 150 subjects for ORCA-V1 should begin in 2Q:22.
Team Expansion
On August 13, 2021, Achieve announced that it had expanded its Clinical Operations Team with the hiring of a Director of Clinical Operations, a Senior Manager of Clinical Trials, and a Senior Director of Biometrics. The additions supported Phase III ORCA-2 and will continue to support cytisinicline development. On February 3, 2022, Achieve announced the hiring of a Director of Clinical Operations. Achieve's Board approved the issuance of incentive stock options for 15,000 shares of Achieve common stock with grant date of January 31, 2022.
On March 11, Achieve announced the addition of team members leading the manufacturing and quality operations function at the company. The vice president of Process Control and Quality Assurance will work with Sopharma to address chemistry, manufacturing and controls (CMC) as it relates to the future NDA filing for cytisinicline.
ORCA-3
ORCA-3 is similar to ORCA-2 in trial design, safety and efficacy evaluations and statistical criteria. The trial will target enrollment of 750 subjects across 15 clinical trial sites, randomized into three arms. Dosing will be 3 mg three times per day (TID). As per FDA requirements, it will be conducted at new sites from ORCA-2 to ensure the statistical robustness of the data. As with the first Phase III trial, the primary outcome measure for ORCA-3 will be biochemically verified continuous abstinence during the last 4 weeks of treatment in the 6 and 12-week cytisinicline treatment arms compared to placebo. Each treatment arm will be compared independently to the placebo arm, and the trial will be considered successful if either or both of the cytisinicline treatment arms show a statistical benefit compared to placebo. Secondary outcome measures will be conducted to assess continued abstinence rates through 6 months from the start of study treatment. We anticipate that the diminishing impacts of COVID, the alignment of the start of the trial with New Year's resolutions to stop smoking and Achieve's extensive experience conducting this type of trial, the enrollment of the planned 750 patients will be at a materially faster pace than in previous studies. On January 25, 2022, Achieve announced that it had initiated ORCA-3.
ORCA-V1
ORCA-V1 trial will enroll 150 subjects that are vaping but not smoking. Randomization will be divided into a 2:1 split with 100 receiving twelve weeks of cytisinicline and 50 on placebo. Dosing is expected to follow the regimen evaluated in ORCA-2: 3 mg TID. The Phase II study will examine vaping cessation as the endpoint at the six week and twelve week point by measuring cotinine levels.4 If the trial is successful, results may be sufficient, along with a successful ORCA-2 trial, to justify only one Phase III to obtain approval. On November 2, 2021, Achieve announced that cytisinicline's investigational new drug (IND) application for e-cigarette cessation had been reviewed and accepted by the FDA. Grant funding of $2.5 million and the start of ORCA-V1 are both expected to begin in 2Q:22.
NIH Vaping Grant
Last year, Achieve announced a collaboration with the FreeMind Group to identify non-dilutive funding to support the launch of a clinical trial that will evaluate the effectiveness of cytisinicline in subjects that are vaping and using e-cigarettes. On July 22, 2021, Achieve announced that it had been awarded a grant from the National Institute on Drug Abuse (NIDA) of the National Institutes of Health (NIH) for the evaluation of cytisinicline in cessation of nicotine e-cigarette use. The grant award commenced on August 1, 2021, in an amount of $320,000. This initial infusion will support the completion of regulatory and clinical activities, namely protocol finalization, clinical site identification, and submission of an IND. Upon completion of the milestones, Achieve will then be subject to NIH assessment for the next stage of grant award of $2.5 million. The second tranche of the award will enable initiation of the Phase II trial designated ORCA-V1, which will target ~150 adult nicotine e-cigarette users in the US. Grant funding is expected to cover approximately 50% of the trial cost. Primary investigators for the grant are Achieve's CMO, Dr. Cindy Jacobs, and Dr. Nancy Rigotti, Professor of Medicine at Harvard Medical School.
$25 Million Loan Facility from Silicon Valley Bank
On December 22, 2021, Achieve announced that it has entered into a $25 million debt agreement with Silicon Valley Bank (SVB). The proceeds are expected to fund the completion of the cytisinicline smoking cessation clinical development program. SVB will fund $15 million in convertible debt on the close of December 22, 2021. Upon mutual consent, Achieve may borrow additional non-convertible term loans of up to $10 million before December 31, 2022. The outstanding loans mature December 22, 2023 (extendable to December 22, 2024) and will accrue interest at 7.0% per year compounding monthly plus the greater of 2.25% or prime minus 1.0%. SVB may convert its debt at $9.34 per share. All outstanding convertible debt will mandatorily convert when Achieve's common stock closing price per share has been equal or greater to $24.00 for thirty consecutive trading days. Finally, Achieve has the right to extinguish its SVB debt completely prior to conversion by payment of a premium of 125% of outstanding principal including interest before 18 months after closing date. After 18 months from the closing date, the premium rises to 150%.
ATM Agreement with Virtu
Achieve informed investors in its 10-K that it had entered into an At-the-Market Offering Sales Agreement (ATM) with Virtu Americas, LLC, as sales agent. Achieve may sell common stock with an aggregate offering price of up to $25 million. Achieve reported that as of December 31, 2021, the company had not utilized the agreement and the full $25 million remains on tap.
ORCA-1 Data Presented at SNRT-E
The SRNT-E 21st Annual Virtual Conference was held September 15-17, 2021. Achieve presented at two sessions during the conference. The first presentation was entitled "Cytisinicline may benefit smokers who previously failed to quit smoking with varenicline: A subgroup analysis of the ORCA-1 trial." It detailed a subgroup analysis based on participants who had previously failed varenicline. The study demonstrated Week 4 abstinence of 51.3% on TID 3 mg cytisinicline versus 15.8% in placebo (p = 0.009). Odds ratios for cessation through Weeks 5-8 were 1.8 and 4.3 for titration and TID regimens, respectively.
The second presentation, "Time to Sustained Abstinence with Cytisinicline in the ORCA-1 trial," revealed new analysis of ORCA-1 showing that smokers treated in the study with cytisinicline showed earlier onset of sustained abstinence compared to placebo. 3 mg TID cytisinicline arm showed the shortest time to sustained abstinence with median of seven days compared to 18 days for placebo.
KOL Panel on Smoking and E-Cigarette Cessation
On December 2, 2021, Achieve hosted a Key Opinion Leader panel discussion, moderated by Thomas Flaten of Lake Street Capital Markets, and featuring Dr. Nancy Rigotti, a physician and professor of medicine at Harvard Medical School and Massachusetts General Hospital, and Dr. Neal Benowitz, professor emeritus at University of California San Francisco and practicing physician in cardiology. Among topics covered were smoking prevalence, sales data for tobacco, quit options including counseling nicotine replacement therapy (NRT) Chantix and bupropion. On average, smokers report 5-7 quit attempts with NRT most widely used (~60%), followed by pharmaceutical options (~30%). Chantix' nitrosamine contamination and recall were also discussed; however, among concerns was not the contamination per se, but availability and logistical complications related to the recall. The conversation also touched on e-cigarettes vs cigarettes, with a variety of outcomes explored for e-cigarette users. E-cigarettes are generally considered safer than smoking, but e-cigarette addiction remains problematic; nicotine itself can have effects during pregnancy, can contribute to cardiovascular problems, drive diabetes complications, and delay brain maturation in younger users. Dr. Rigotti commented that cytisinicline most likely won't be a magic bullet, but there is a need for more tools and more variety to support each smoker's effort to quit. Cytisinicline, with lower incidence of nausea, sleep disturbance and abnormal dreaming should support longer treatment duration, which in turn should drive better quit outcomes. If successful, cytisinicline's reputation in efficacy and minimal side effects could position the compound as a first-line therapy. The market for cytisinicline is significant. There are many smokers in low- and middle-income countries who lack access to the same cessation solutions as US residents.
Key Events
➢ RAUORA Study Publication - March 2021
➢ $23.0 million gross capital raise - May 2021
➢ Completion of enrollment in ORCA-2 - June 2021
➢ NIDA (NIH) grant for ORCA-V1 - July 2021
➢ IND acceptance for ORCA-V1 - November 2021
➢ ORCA-2 last patient, last visit - December 2021
➢ $15 million draw on SVB $25 million debt facility – December 2021
➢ ORCA-V1 IND development - 2H:21
➢ Launch of ORCA-3 - January 2022
➢ Topline readout of ORCA-2 - 2Q:22
➢ ORCA-V1 launch - 2Q:22
➢ Second carcinogenicity study completed - 2022
➢ ORCA-V1 results - 1H:23
➢ ORCA-3 results - 1H:23
Summary
Achieve Life Sciences reported fourth quarter and fiscal year 2021 results. Highlights for Achieve's fourth quarter include FDA acceptance of an IND for e-cigarette cessation, and a $25 million loan facility with Silicon Valley Bank. Following the fourth quarter, the last follow up visit for the last patient in Achieve's pivotal, Phase III ORCA-25 was completed, and the confirmatory Phase III ORCA-3 trial was initiated. Achieve also added new team members to its roster including a Director of Clinical Operations and VP of Manufacturing and Quality Operations. No revenues were reported for the year and operating expense was ($33.1) million yielding a net loss of ($33.2) million or ($4.08) per share and cash and equivalents totaled $43.0 million at year end. Achieve added convertible debt of $14.9 million as a result of its December 2021 agreement with Silicon Valley bank that was used to accelerate the launch of the ORCA-3 trial. Cash burn for 2021 increased to ($29.4) million reflecting the ramp up of the ORCA-2 trial. Cash flows from financing activities totaled $36.6 million, comprised of proceeds generated from the May 2021 public offering and December 2021 SVB debt proceeds.
With the conclusion of ORCA-2 and the initiation of ORCA-3, Achieve makes progress toward the US regulatory finish line with its naturally-derived candidate for smoking cessation. Cytisinicline has a robust historical safety profile with over 10,000 participants in clinical trials to date. In Achieve-led trials, the drug has not only shown a superior side-effect profile compared with standard of care, it has also shown signs of superior efficacy. Furthermore, the leading approved product, Chantix, lost patent protection in 2020 and also faced contamination issues, leaving a billion-dollar hole in Pfizer's portfolio. With more than 34 million smokers in the US and 1.1 billion worldwide there is a substantial market for a superior smoking cessation product with fewer side effects. Furthermore, the rise of e-cigarette and nicotine vaping raises another concern related to addiction which also may be addressed by cytisinicline. The CDC estimates 11 million e-cigarette users in the US in 2019. To address this unmet need, Achieve expects to launch the grant-funded ORCA-V1 in nicotine e-cigarette cessation in the second quarter of 2022.
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1. Ongoing Research of Cytisinicline for Addiction
2. Society for Research on Nicotine & Tobacco
3. Source: Achieve Life Sciences January 2022 Corporate Presentation
4. Cotinine is a metabolite of nicotine. Cotinine urine or blood testing is considered highly accurate for assessing nicotine use, including vaping.
5. Ongoing Research of Cytisinicline for Addiction
