Achieve Life Sciences, Inc. (NASDAQ:ACHV) Q4 2023 Earnings Call Transcript

Achieve Life Sciences, Inc. (NASDAQ:ACHV) Q4 2023 Earnings Call Transcript March 28, 2024

Achieve Life Sciences, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Greetings. Welcome to the Achieve Life Sciences Fourth Quarter and Year-End 2023 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would like to hand the call over to Nicole Jones, Investor Relations. Thank you. You may begin.

Nicole Jones: Thank you, operator. Good afternoon, everyone, and thank you for joining us today. From Achieve Life Sciences, we are joined by John Bencich, Chief Executive Officer; Dr. Cindy Jacobs, President and Chief Medical Officer; and Jerry Wan, Principal Accounting Officer. Management will be available for a Q&A session following today’s prepared remarks. I’d like to remind everyone that today’s conference call contains forward-looking statements based on current expectations. These statements are only predictions and actual results may vary materially from those projected. Please refer to Achieve documents available on our website and filed with the SEC concerning factors that may affect the company. At this time, I’ll turn the call over to John.

John Bencich: Thank you, Nicole, and thank you for joining us. As we discuss Achieve’s financial results for the fourth quarter and year ended 2023, along with providing key updates on the cytisinicline development program. 2023 was a transformative year for Achieve, marked by significant clinical, regulatory, and financial milestones. Our commitment to developing cytisinicline for smoking cessation and nicotine dependence has yielded remarkable progress and we’re excited for the year ahead. During 2023, we completed and announced results from the Phase 3 ORCA-3 and Phase 2 ORCA-V1 trials, which have been instrumental in demonstrating cytisinicline’s potential for treating nicotine dependence. The ORCA-3 trial again confirmed the promise of cytisinicline for smoking cessation, with significant efficacy and tolerability benefits observed in treated patients.

Furthermore, the ORCA-V1 trial highlighted cytisinicline’s effectiveness in treating nicotine dependence for vaping cessation, marking a pioneering step in helping to address this emerging public health challenge in which currently over 11 million adults and an additional 2.1 million youth have reported vaping in the United States alone. Late last year, we conducted our pre-NDA meeting with FDA to review NDA submission requirements and timing. During the meeting, agreement was reached on many of the expected requirements, including that we have sufficient data sets from an efficacy perspective to proceed with submission. At that time, the FDA indicated that they would need additional safety exposure data beyond 12 weeks to assess the long-term exposure risk for patients receiving multiple courses of treatment over a lifetime due to the repetitive and chronic nature of smoking cessation attempts.

In February this year, we reached agreement with the FDA that a single open-label study would meet the requirements for long-term cytisinicline exposure data, which clears the path for driving forward the cytisinicline program towards an NDA submission. I will now turn the call over to Cindy to go into further detail on our study design and planned initiation of this open-label safety study, which we are calling the ORCA-OL trial. Cindy?

Cindy Jacobs: Thanks, John. The ORCA-OL study will be a single arm, open-label study that will administer cytisinicline treatment with our novel 3 milligram TID administration to subjects who have already participated in our Phase 2 and Phase 3 cytisinicline trials, either for smoking or vaping cessation. The primary objective of the study will be to obtain longer-term cytisinicline exposure safety data for cytisinicline treatment for up to one year. FDA was clear that the long-term exposure safety data they require as cumulative exposure for the periods of six months and one year. Because this open-label study will enroll subjects who participated in our previous ORCA studies and two-thirds of them have already received up to 6 or 12 weeks cytisinicline treatment, this will allow for faster collection of cumulative exposure data to support the NDA submission.

Based on our discussions with FDA, we have agreed to include safety data on a minimum of 300 subjects exposed to cytisinicline for a cumulative period of six months at the time of NDA submission. And then prior to approval of the NDA, that we will submit safety exposure data on at least 100 subjects with cumulative exposure for one year. This agreement follows the general ICH E1 guidance for products with chronic or repeated intermittent use for longer than six months and the treatment of non-life threatening diseases. We anticipate initiating the ORCA-OL trial in the second quarter of this year at approximately 30 clinical trial locations in the U.S., all of which participated in our prior ORCA studies. All of these clinical sites have now been engaged and are actively conducting outreach to potential participants.

As we have previously stated, there were more than 1,700 subjects who participated in the prior ORCA studies, with over 1,100 that were previously treated with cytisinicline in those trials. We currently have enrollment in the protocol at up to 650 subjects to ensure that we have sufficient subjects to quickly meet the long-term exposure for six months and importantly one year. We will obviously be monitoring enrollment and discontinuation rates closely as the study progresses to make a final determination on study enrollment. We have completed contracting and onboarding with our key contract partners and vendors to execute the ORCA-OL study as quickly and efficiently as possible. These include our CRO, data management, lab services, safety monitoring and drug distribution partners and we are on track to begin enrollment in the second quarter of this year.

And based on our current expectations, believe we will be in a position to submit an NDA in the first half of 2025. Although, the study objectives are specific to assessing for safety results such as the incidence of serious adverse events, overexposure time, we will also assess for cytisinicline efficacy with longer-term exposure. These assessments will be for observation purposes only and are not an FDA requirement or an endpoint to determine success of the trial. In addition to finalizing NDA submission requirements for the smoking cessation indication, we will continue our discussions with FDA regarding cytisinicline’s role as a treatment for e-cigarette cessation. We anticipate conducting our end of Phase 2 meeting and finalizing a Phase 3 protocol this year.

We will be discussing the adequacy of a single Phase 3 trial for obtaining a label expansion for an e-cigarette cessation indication. Since the Phase 2 ORCA-V1 trial received grant support from NIH and NIDA, we will continue to explore non-dilutive funding support as we continue to advance our Phase 3 planning. I will now turn the call back over to John. John?

John Bencich: Thanks, Cindy. In connection with the FDA clarity on NDA requirements, we bolstered our financial strength significantly in February, announcing an equity financing of up to $124.2 million in gross proceeds that includes initial upfront funding of $60 million and up to an additional $64.2 million upon exercise of milestone driven warrants. This initial funding positions us to advance our clinical initiatives, including the ORCA-OL study and targeted NDA submission in the first half of 2025, all while ensuring a robust balance sheet as we continue strategic partnership discussions. I will now turn the call over to Jerry, who will provide additional details on the financing and an overview of our latest financial results.

Jerry Wan: Thank you, John. Good afternoon, everyone. I would like to first provide an update on our recent financing and cash position and then review our fourth quarter results. As of December 31, 2023, the Company’s cash, cash equivalents and restricted cash totaled $15.6 million, down from $24.8 million as of December 31, 2022. Subsequent to the end of the fourth quarter, we announced a registered direct offering of common stock and a concurrent private placement of warrants worth up to $124.2 million that closed earlier this month. This transaction included initial upfront gross proceeds of $60 million and up to an additional $64.2 million upon exercise of milestone driven warrants. After giving effect to the February 2024 equity financing, the Company’s pro forma cash, cash equivalents and restricted cash as of December 31, 2023 would have been approximately $71.8 million.

This equity financing was key for the business and we were pleased with the support of new and existing fundamental healthcare investors such as Propel Bio, Nantahala and Franklin Templeton, to name a few, as well as strategic investor Sopharma. Proceeds from the offering will be used to fund the clinical development of cytisinicline, including the upcoming ORCA-OL clinical trial, which is expected to be initiated in the second quarter of this year, as well as the anticipated NDA submission in the first half of 2025. It will also be used to fund other cytisinicline related research and clinical development activities and for working capital and general corporate purposes. We expect that the initial net proceeds from the financing will fund us into the second half of 2025, including the potential repayment of our outstanding debt obligations under our contingent convertible term loan.

If the milestone warrants issued as part of the recent financing are exercised in full, we would anticipate these proceeds to extend runway into 2026 and through potential approval of cytisinicline in the United States. With respect to our statement of operations, total operating expenses for the fourth quarter and year ended December 31, 2023 were $4.4 million and $27.3 million, respectively. Net loss for the fourth quarter and year ended December 31, 2023 was $5.5 million and $29.8 million, respectively. That concludes my portion of the call. I’ll now turn the call back over to John.

John Bencich: Thank you, Jerry. It has certainly been an eventful and exciting start to the year. In addition to finalizing NDA plans with FDA and completing the financing to ensure we have adequate resources to complete the development of cytisinicline, we were privileged to deliver three presentations at last week’s Society for Research on Nicotine and Tobacco Annual Meeting. Data from our completed Phase 3 and Phase 2 trials were shared with the prestigious audience of nicotine treatment specialists and researchers who share our commitment and dedication to finding new solutions to address nicotine dependence. Cindy presented data highlighting our impressive results from the Phase 3 ORCA-3 trial, which was consistent and reinforced our findings from the Phase 3 ORCA-2 trial.

Doctor Nancy Rigotti, an ORCA primary investigator and Professor of Medicine at Harvard Medical School, reviewed findings from the Phase 2 ORCA-V1 trial for vaping cessation. Additionally, we delivered a presentation highlighting findings from our post trial patient experience survey, which provided insights directly from a small sample of participants in the ORCA-2 and ORCA-3 trials, which showed high levels of reported smoking abstinence, reductions in both cigarettes consumed and cravings for smoking, and a strong willingness to recommend cytisinicline to other smokers looking to quit if approved by FDA. Importantly, almost three quarters of respondents felt the side effects were manageable or that they experience very few side effects. We continue to believe this is one of the key differentiating benefits of cytisinicline.

As we know, side effects remain the key reason that many smokers are not compliant with or are unwilling to take currently available medications. As I wrap up my remarks, I would like to express my appreciation for your continued support and for the collaborative and ongoing efforts of our trial participants and their healthcare providers at our trial sites. So many of us have been personally touched by the devastating consequences of smoking and remain steadfast in our belief that cytisinicline can truly make a profound impact to help the millions of individuals who have not seen any treatment advances in almost two decades. Our priorities for the balance of this year remain clear. Complete the ORCA-OL study, continue NDA submission preparations, finalize the path forward for expansion into e-cigarette cessation, and continue productive dialogue with prospective commercial partners.

Thank you again for joining us today and we will now open the line for questions.

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Q&A Session

Operator: Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] And our first question comes from the line of Thomas Flaten with Lake Street Capital. Please proceed with your question.

Thomas Flaten: Hey, thanks for taking the questions. Cindy, in your comments, there seemed to be an implication that you would not do anything on the vaping program in the absence of non-dilutive funding. Was that a correct read?

Cindy Jacobs: Well, we’re looking at getting additional non-dilutive funding, I don’t think we’re going to be able to complete the Phase 3 trial with only non-dilutive or grant funding. So we’ll probably have to have a mixture of both, but it was very similar to what we had with the Phase 2, half of it was paid with NIDA grant funding and half by us. So there would be some mixture of that.

Thomas Flaten: Got it. And then just two quick ones on the OL study, is there anything being done to monitor compliance of patients with the dosing instructions?

Cindy Jacobs: Oh, you mean as far as making sure they’re compliant? We have the same compliance kind of tactics with the OL study as we did with our Phase 3. We will have text messaging, we will be giving out packets, they will need to bring them in. We’ll review that the tablets were taken. So all of that is being applied. Similarly, that was done in the Phase 3 with the OL study.

Thomas Flaten: And then kind of related to that, what burden is being placed on the patients? How often do they have to come in for visits and follow ups and things like that?

Cindy Jacobs: Well, that is the one nice thing, they are instead of coming in weekly, which they did for the first 12 weeks, and then monthly afterwards, they start out and they’re only coming in monthly through the OL study.

Thomas Flaten: Got it. Appreciate taking the questions. Thank you.

Operator: Thank you. Our next question comes from the line of Francois Brisebois with Oppenheimer and Company. Please proceed with your question.

Francois Brisebois: All right. Thanks for the questions. Can you help us understand the timeline here from first half 2025 NDA filing to potential approval and launch?

John Bencich: Sure. Thanks for the question, Franc. So right now, as Cindy indicated on the call, we’re really driving forward towards initiating the open the ORCA-OL trial in the second quarter of this year. We think, again, depending on enrollment of those subjects. That could put us in a position to have the requirements for NDA submission at least completed in the clinic late this year or early next. And so that would put us in a position to get the NDA on file first half of 2025. Right now, this would be a standard review cycle. So two months to accept, ten months for review, which would put approval first half of 2026.

Francois Brisebois: Okay, great. And in terms of the OL trial, why the push on looking at efficacy here? Is there – what’s the upside of doing that?

John Bencich: Yes. So with respect to the FDA, they specifically told us, they don’t need efficacy out of this trial. This is solely for longer term exposure safety data, which is fine for FDA. But from our perspective, we think efficacy is interesting. We think there’s a lot of data points that could come out of this trial that could be leveraged for publication, for payers, for other future trial planning. For example, if a patient had quit in a previous study, but relapse, how likely are they to quit again going back onto treatment, as well as what happens with longer duration. Does that get to more robust efficacy? That, again, could lead into a lifecycle management play of extending dosing beyond 12 weeks at some point in the future. So I think from an efficacy perspective, there’s some interesting learnings that we could get out of the ORCA-OL trial.

Francois Brisebois: Thanks.

Operator: Thank you. Our next question comes from the line of Michael Higgins with Ladenburg Thalmann. Please proceed with your question.

Michael Higgins: Thanks [indiscernible] Thanks guys for the taking the questions. Congrats again on the agreement with the FDA. So John, if you give us some feedback as to how the patients are responding so far, it sounds like the sites have beyond their outreach. You mentioned 30 U.S. sites, if you give us somefeedback as to how many are opening, how many are reaching out and what the patients are responding like so far.

Cindy Jacobs: John, you want me to get that?

John Bencich: Yes, it’d be great. Cindy.

Cindy Jacobs: Yes. So the 30 sites, they’ve all started to reach out this month to the participants and they are getting a lot of enthusiasm for coming back into an open label study. I guess, we were not surprised by this, because we did do surveys of the Phase 3s afterwards and that’s some of the data that was presented at the SRNT meeting last week that they were very satisfied and they thought the treatment was very helpful. And so with that positive survey probably indicates that, yes, we are getting positive responses for participating in this open label study.

Michael Higgins: That’s great. Yes, we saw that presentation last week and I’m not surprised to hear that. Curious if you’ve had a chance since the news from the FDA last December to have discussions with payers in light of that news and how that may guide, what you’re doing here in the open label trial? What kinds of efficacy information, which apparently the FDA is not looking for, but certainly may help with your reimbursement scenarios post approval. Anything that you can share with us from the discussions as to what you may be looking for in terms of efficacy from this trial.