10-K: Achieve Life Sciences Reports 2024 Results, Highlights Cytisinicline Development

Achieve Life Sciences provides an update on its clinical development program for cytisinicline and reports its financial results for the year ended December 31, 2024.

Summary

• Achieve Life Sciences is focused on addressing nicotine dependence through the development and commercialization of cytisinicline.
• The company expects to file a New Drug Application (NDA) with the FDA for smoking cessation at the end of the second quarter of 2025.
• A Phase 3 clinical development of cytisinicline for nicotine dependence for e-cigarettes/vaping is intended to be initiated in the first half of 2026, dependent on funding.
• Cytisinicline is a plant-based alkaloid with a dual-acting mechanism, aiming to reduce withdrawal symptoms and the reward associated with nicotine products.
• The company has an exclusive license and supply agreement with Sopharma for cytisinicline outside of Sopharma's territories.
• The FDA granted Breakthrough Therapy Designation for cytisinicline for nicotine e-cigarette cessation.
• The ORCA-OL trial, evaluating the long-term safety of cytisinicline, completed enrollment of 479 subjects and has reached the goal of at least 300 subjects completing six months of cumulative cytisinicline treatment.
• The company incurred a net loss of $39.8 million for the year ended December 31, 2024.
• As of December 31, 2024, the company had cash, cash equivalents, and marketable securities of $34.4 million.
• The company states that substantial doubt exists as to its ability to continue as a going concern and is dependent on its ability to obtain additional financing.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While there are positive developments regarding cytisinicline's clinical development and regulatory progress, the company's financial situation raises concerns about its ability to continue as a going concern.

Positives

• The FDA granted Breakthrough Therapy Designation for cytisinicline for nicotine e-cigarette cessation, which is designed to expedite the development and review of drugs that are intended to treat serious conditions when preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over available therapies.
• The ORCA-OL trial, evaluating the long-term safety of cytisinicline, completed enrollment of 479 subjects and has reached the goal of at least 300 subjects completing six months of cumulative cytisinicline treatment.
• The company expects to file a New Drug Application (NDA) with the FDA for smoking cessation at the end of the second quarter of 2025.

Negatives

• The company incurred a net loss of $39.8 million for the year ended December 31, 2024.
• As of December 31, 2024, the company had cash, cash equivalents, and marketable securities of $34.4 million.
• The company states that substantial doubt exists as to its ability to continue as a going concern and is dependent on its ability to obtain additional financing.

Risks

• The company's ability to continue as a going concern is subject to material uncertainty and dependent on its ability to obtain additional financing.
• The company is dependent on the potential development of a single product candidate, cytisinicline.
• The company is dependent upon a single company for the manufacture and supply of cytisinicline.
• The development and commercialization of the company's product candidate is dependent upon securing sufficient quantities of cytisinicline from trees and other plants, which grow outside of the United States in a limited number of locations.
• There can be no assurance that the data from the company's clinical trials will ultimately support an NDA filing or that the FDA will grant marketing approval of cytisinicline without additional clinical or nonclinical studies, or at all.
• Results of earlier clinical trials of cytisinicline are not necessarily predictive of future results, and any advances of cytisinicline into clinical trials may not have favorable results or receive regulatory approval.
• Cytisinicline may cause undesirable side effects or have other properties that could delay or prevent regulatory approval, limit the commercial viability of an approved label, or result in significant negative consequences following marketing approval, if any.
• If contaminants, or impurities such as nitrosamines, are discovered in quantities above regulators thresholds within the company's supply of cytisinicline, the company may potentially delay product development and approval or have a material adverse impact on its business.
• The company's business may be negatively affected by weather conditions, natural disasters, and the availability of natural resources, as well as by climate change.
• The company conducts clinical trials internationally, which may trigger additional risks.
• The company may use its financial and human resources to pursue a particular research program or product candidate and fail to capitalize on programs or product candidates that may be more profitable or for which there is a greater likelihood of success.
• The company's internal computer systems, or those of its third-party collaborators or other service providers, may fail or suffer security breaches and cyber-attacks, which could result in a material disruption of its development programs.
• The company may rely on third parties to perform many essential services for any of its current or future product candidates that it commercializes, including services related to warehousing and inventory control, distribution, government price reporting, customer service, accounts receivable management, cash collection, and adverse event reporting. If these third parties fail to perform as expected or to comply with legal and regulatory requirements, the company's ability to commercialize any of its current or future product candidates will be significantly impacted and it may be subject to regulatory sanctions.
• The company faces substantial competition and its competitors may discover, develop or commercialize products faster or more successfully than it does.
• The commercial success of cytisinicline will depend upon the degree of market acceptance by physicians, patients, third-party payors, and others in the medical community.
• The company is subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws, and anti-money laundering laws and regulations. Compliance with these legal standards could impair its ability to compete in domestic and international markets.
• If the company is unable to maintain effective proprietary rights for its product candidate or any future product candidates, it may not be able to compete effectively in its proposed markets.
• Third-party claims of intellectual property infringement may prevent or delay the company's development and commercialization efforts.
• The price for the company's common stock is volatile.
• A significant portion of the company's total outstanding shares of common stock may be sold into the public market at any point, which could cause the market price of its common stock to drop significantly, even if its business is doing well, and result in significant dilution to its stockholders.
• If the company raises additional capital, the terms of the financing transactions may cause dilution to existing stockholders or contain terms that are not favorable to it.
• The company is a smaller reporting company and it cannot be certain if the reduced disclosure requirements applicable to smaller reporting companies will make its common stock less attractive to investors.
• If equity research analysts do not publish research or reports, or publish unfavorable research or reports, about the company, its business, or its market, its stock price and trading volume could decline.
• The company is at risk of securities class action litigation.
• The company incurs costs and demands upon management as a result of complying with the laws and regulations affecting public companies.
• Shareholder activists could cause a disruption to the company's business.
• Anti-takeover provisions under Delaware law could make an acquisition of the company more difficult and may prevent attempts by its stockholders to replace or remove its management.
• The company's bylaws provide that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between the company and its stockholders, which could limit its stockholders ability to obtain a favorable judicial forum for disputes with the company or its directors, officers or other employees.
• Failure to maintain effective internal control over financial reporting could have a material adverse effect on the company's reputation, results of operations and financial condition.
• Because the company's merger resulted in an ownership change under Section 382 of the U.S. Internal Revenue Code for OncoGenex, pre-merger net operating loss carryforwards and certain other tax attributes are now subject to limitations.
• U.S. federal tax reform and changes in other tax laws could increase the company's tax burden and adversely affect its business and financial condition.

Future Outlook

Achieve Life Sciences expects to file a New Drug Application (NDA) with the FDA for smoking cessation at the end of the second quarter of 2025 and intends to initiate Phase 3 clinical development of cytisinicline for nicotine dependence for e-cigarettes/vaping in the first half of 2026, dependent on funding.

Management Comments

• The company believes cytisinicline represents a unique opportunity to significantly impact global health by addressing the considerable unmet need among millions of smokers and e-cigarettes users.
• The company believes cytisinicline is differentiated from existing smoking cessation treatments given its combination of efficacy, well-tolerated safety profile, and a shorter therapy duration, as demonstrated in clinical trials.

Industry Context

The document provides an overview of the tobacco epidemic, highlighting that smoking remains the leading cause of preventable death worldwide and in the United States, and discusses the smoking cessation marketplace and treatment options, including prescription treatments, NRTs, and e-cigarettes.

Comparison to Industry Standards

• The document mentions varenicline (Chantix) and bupropion (Zyban) as the only two non-nicotine prescription treatments for smoking cessation currently available in the United States, noting their efficacy and side effects.
• It also references NRTs (nicotine gums, lozenges, and patches) as the most common OTC treatments, stating that they have been shown to be less effective than prescription drugs.
• The document cites a Cochrane Group review comparing varenicline with NRTs, noting that varenicline has been proven to be more effective in head-to-head studies.
• The document mentions that global sales of branded Chantix peaked at $1.1 billion prior to market withdrawal and launch of generic varenicline.

Stakeholder Impact

• Shareholders: The company's financial situation and dependence on additional financing may negatively impact shareholder value.
• Employees: The company's ability to continue as a going concern may impact job security.
• Customers: The successful development and commercialization of cytisinicline could provide a new treatment option for nicotine dependence.
• Suppliers: The company's ability to meet its financial obligations may impact its relationships with suppliers.
• Creditors: The company's ability to repay its debt is dependent on its ability to obtain additional financing.

Next Steps

• File a New Drug Application (NDA) with the FDA for smoking cessation at the end of the second quarter of 2025.
• Initiate Phase 3 clinical development of cytisinicline for nicotine dependence for e-cigarettes/vaping in the first half of 2026, dependent on funding.

Key Dates