Acasti Pharma Inc. (including Acasti Pharma U.S., formerly Grace Therapeutics, Inc.) — Form 10-Q
Reporting period: Three and nine months ended December 31, 2022; filed February 14, 2023. The filing identifies Acasti Pharma Inc. as the registrant, notwithstanding the request metadata naming Grace Therapeutics. Financial amounts below are in U.S. dollars unless otherwise stated; statements present amounts in thousands except per-share data.
Business context and reporting period
Acasti is a development-stage biopharmaceutical company focused on rare and orphan diseases. Its lead programs are GTX-104 for subarachnoid hemorrhage, GTX-102 for Ataxia Telangiectasia, and GTX-101 for postherpetic neuralgia. The company does not expect product revenue unless and until candidates complete development and receive regulatory approval.
Financial performance and position
| Metric | Three months ended Dec. 31, 2022 | Nine months ended Dec. 31, 2022 | Prior comparable period |
|---|---|---|---|
| Revenue | No product revenue reported | No product revenue reported | No product revenue reported |
| Operating loss | $4.245 million | $14.082 million | $4.474 million and $11.186 million, respectively |
| Net loss | $3.889 million; $0.09 per share | $13.342 million; $0.30 per share | $3.778 million and $5.915 million; $0.09 and $0.23 per share |
| Net cash used in operating activities | Not separately presented | $12.587 million | $14.089 million |
For the nine-month comparison, R&D expense rose to $8.332 million from $3.233 million, mainly reflecting development of the three acquired clinical programs. General and administrative expense declined to $5.187 million from $7.441 million, largely due to lower merger-related professional fees. Prior-year nine-month financial income included a $4.908 million gain from changes in warrant fair value; current-period financial income was $0.069 million.
At December 31, 2022, cash and cash equivalents were $26.241 million and short-term investments were $5.015 million, totaling $31.256 million. Working capital was $29.995 million, down from $46.100 million at December 31, 2021. Total assets were $116.801 million; total liabilities were $20.081 million; and shareholders’ equity was $96.720 million. Current liabilities were $3.433 million. Lease liabilities totaled $0.503 million; the filing reports no conventional borrowings. No profit margin is meaningful because the company reported no product revenue and continued to incur operating losses.
Cash declined $4.098 million from March 31, 2022. Investing activities provided $8.161 million, primarily from maturities of short-term investments, while financing activities provided $0.304 million through ATM share sales. The company sold 324,648 shares at an average price of approximately $0.95 during the nine-month period.
Material changes, outlook, and risks
- Management estimated available cash resources would fund its objectives into the second quarter of calendar 2024, approximately 13–16 months from the financial statements’ issuance date. It plans to raise additional capital before then; funding may not be available on acceptable terms or at all.
- GTX-104: A PK bridging study was completed in May 2022. Management expected FDA clarifying guidance on its proposed Phase 3 safety study in the first calendar quarter of 2023; the proposed study was expected to take about 18 months after first-patient enrollment.
- GTX-102: Topline PK bridging results announced December 28, 2022 met the reported primary measures. Management planned to seek FDA guidance on a confirmatory Phase 3 study and expected initiation in the second half of 2023.
- GTX-101: Topline single-dose PK results announced in December 2022 met the reported primary measures. Management planned a multiple-ascending-dose study in 2023 before considering Phase 2 development.
- Acasti discontinued development of CaPre. It classified $0.352 million of krill oil and production equipment as held for sale. The company disputes Aker’s demand for a further $2.8 million under a CaPre-related supply agreement, has recorded no liability, and says the dispute remains unresolved. If payment or product acceptance is required, recoverable value is uncertain.
- Goodwill and in-process R&D intangible assets totaled approximately $82.8 million, about 71% of assets. The August 2022 impairment test found no impairment, but management said reasonably possible changes in assumptions could cause carrying values to exceed fair value.
- Nasdaq granted an additional compliance period through July 24, 2023 to regain the $1.00 minimum bid-price requirement. Failure to regain compliance could threaten listing.
- Management reported disclosure controls were effective as of December 31, 2022 and no material change in internal control over financial reporting during the quarter. It reported no material change to the previously disclosed risk factors and no current legal proceeding it believed likely to have a material adverse effect.
Important facts for investors to verify
- Whether and when additional financing is secured, and how the company’s cash runway changes as clinical spending advances.
- FDA feedback, study designs, enrollment and timelines for GTX-104 and GTX-102, and subsequent GTX-101 study progress.
- Outcome and potential financial exposure of the Aker supply-agreement dispute, including any obligation to pay or accept krill oil.
- Key clinical-success, sales, and discount-rate assumptions underlying the $82.8 million carrying value of goodwill and IPR&D, and whether future events trigger impairment.
- Progress toward Nasdaq minimum-bid-price compliance by July 24, 2023, and any resulting financing or dilution.