The week couldn’t have gotten off to a worse start for investors of Acasti Pharma (ACST). Shares cratered by a massive 65% in Monday’s trading following the release of disappointing clinical trial data.
In a second Phase 3 clinical trial (TRILOGY 2), assessing CaPre (omega-3 phospholipid) in patients with extremely high levels of triglycerides (TG) in the blood (hypertriglyceridemia), the study couldn’t achieve the primary endpoint of a statistically meaningful reduction from baseline in TG levels by week 12 when compared to placebo.
Despite the placebo response of -17.9% coming in much lower than the -27.5% exhibited in the Phase 3 TRILOGY 1 study, B Riley FBR analyst Mayank Mamtani points out “these placebo responses remain one of the highest noted in the history of TG reduction trials.”
The 5-star analyst went on to say, “A full data analysis will be performed to better understand this phenomenon, including secondary and exploratory endpoints as well as a pooled analysis to include both TRILOGY 1 and 2... Mgmt. suggest the ‘excellent background standard of care’ that is adopted by most patients today might have caused this high placebo response, as most prior trials were conducted back in pre-2014 phase, e.g., -8% in Lovaza trial conducted in 1999 and -18% noted in Omtryg + Lovaza trial conducted in 2013.”
The company has said it will not file a new drug application (NDA) with the FDA, and no more studies of CaPre are in the pipeline.
Following the trial’s failure and based on Acasti’s decision not to further pursue a U.S. market application, Mamtani downgraded ACST’s rating from Buy to Neutral and lowered the price target from $2 to $0.50. After this week's bloodbath, the new target could yield investors a return of 124%. (To watch Mamtani’s track record, click here)
It remains to be seen whether more analyst downgrades are on the way, although presently the biotech has a Moderate Buy consensus rating based on 2 Buys and Holds, each. With an average price target of $1.52, the intrepid investor could be pocketing gains of 521%, should the figure stays as is, and be met over the next 12 months. (See ACST stock analysis on TipRanks)
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