ACHV - Achieve Life Sciences: An Excellent Drug Addressing A Large Market Could Drive 5x Returns

2024-04-04 06:30:32 ET

Summary

• Achieve Life Sciences is working to commercialize the smoking cessation drug Cytisinicline, which has shown promising results in clinical trials.
• The drug has a superior safety profile compared to existing treatment options and has the potential to address a large market.
• The company is expected to be sold to a larger entity in 2025, with potential returns of 4-9x for investors.

Achieve Life Sciences ( ACHV ) went public via a shell company in 2017 to commercialize the smoking cessation drug Cytisinicline. Cytisinicline is derived from a plant-based compound and has a long history of use in Eastern Europe, but had not been tested in the U.S. Achieve’s central task is to usher the drug through clinical trials and the FDA approval process. Phase 3 trials are done. The company must complete a long-term safety trial before submitting the New Drug Application (NDA), likely a 1H25 event. I expect the company to be sold to a larger entity with sales and distribution around the same time.

Achieve’s life as a publicly traded company has not been smooth. Company travails are clearly evident in the long-term stock chart. Much of the downside volatility over the last few years has been caused by capitalization issues and how they have been handled. Most recently, the FDA made an unexpected request for data in December 2023 injected further uncertainty regarding timing of the NDA submission and created financial uncertainties as well. The FDA requirements and financing issues have recently been resolved.

The combination of these factors has resulted in what is now a ~$150M market capitalization for the company. Therein lies the opportunity....

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