Achieve Life Sciences, Inc. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Achieve is a clinical-stage pharmaceutical company developing cytisinicline for smoking cessation and nicotine addiction. It has no approved products and has generated no product revenue.
Key financial metrics
| Metric | Q2 2021 / June 30, 2021 | Comparable period / prior year-end |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $9.2 million for Q2; $14.9 million for six months | $1.1 million and $2.6 million, respectively, in 2020 |
| General and administrative expense | $2.1 million for Q2; $4.4 million for six months | $1.8 million and $3.6 million, respectively, in 2020 |
| Net loss | $11.3 million for Q2; $19.3 million for six months | $2.9 million and $6.2 million, respectively, in 2020 |
| Basic and diluted loss per share | $1.53 for Q2; $2.85 for six months | $1.68 and $3.79, respectively, in 2020 |
| Cash and cash equivalents | $42.0 million | $35.9 million at December 31, 2020 |
| Working capital | $37.8 million | Not stated for the comparable date |
| Operating cash used | $15.5 million for six months | $6.7 million for six months of 2020 |
| Financing cash provided | $21.7 million for six months | $2.1 million for six months of 2020 |
| Total liabilities | $4.7 million, including $0.1 million in current and long-term obligations | $3.0 million at December 31, 2020 |
Margins are not meaningful because the company reported no product revenue. Cash, cash equivalents and restricted cash totaled $42.1 million at June 30, 2021.
Changes versus prior comparable periods
- Q2 R&D expense rose to $9.2 million from $1.1 million; first-half R&D expense increased to $14.9 million from $2.6 million. Management attributed the increase primarily to enrollment and increased activity in the Phase 3 ORCA-2 trial.
- First-half operating cash use increased to $15.5 million from $6.7 million, principally reflecting higher ORCA-2 costs.
- Net loss increased substantially, while loss per share was lower than the prior-year comparison, reflecting a larger weighted-average share count.
- The May 2021 public offering raised approximately $21.3 million net and issued 3,285,714 common shares. Common shares outstanding increased to 9,452,223 at June 30 from 6,111,735 at December 31, 2020.
Outlook, commentary and risks
- Management said existing cash, cash equivalents and restricted cash were expected to fund operating expenses and capital expenditures into 2023. The company remains dependent on future financing, grants, licensing, collaborations or other funding; it expects substantial continuing losses and has an accumulated deficit of $79.7 million.
- ORCA-2, a Phase 3 trial evaluating cytisinicline in adult smokers, reached its enrollment target in June: 810 participants were randomized. Top-line results were expected in the first half of 2022.
- In July 2021, the company announced a NIDA/NIH grant of $320,000 for preparatory work on a proposed e-cigarette cessation study. A further approximately $2.5 million was expected only after specified milestones, NIH assessment and subject to funding availability; the full expected grant would cover about half of the proposed Phase 2 study costs.
- Management reported that COVID-19’s impact on financial condition and operations had been minimal as of the filing date, but warned that the pandemic could disrupt trials, enrollment, supply and regulatory processes.
- Key risks include reliance on Sopharma as the sole cytisinicline supplier, clinical and regulatory uncertainty, continued financing needs and potential dilution, and the fact that cytisinicline is the company’s sole product candidate. Management cautioned that prior clinical results do not ensure future success.
- The company reported no off-balance-sheet financing arrangements, no material change in critical accounting policies, and effective disclosure controls as of quarter-end.
Important facts for investors to verify
- Whether ORCA-2 results were reported on the expected schedule and met the trial’s primary endpoint.
- Actual cash burn and remaining runway relative to the stated expectation of funding into 2023, including any subsequent financing needs or dilution.
- Whether NIH milestone conditions and funding for the proposed ORCA-V1 study were achieved.
- Clinical supply continuity and quality from Sopharma, and any material impact from regulatory, manufacturing or COVID-19-related delays.
- Subsequent share-count changes, warrant exercises and use of the remaining LPC equity-line capacity.