Achieve Life Sciences, Inc. (ACHV) Earnings Call Transcript & Summary

Good morning, everyone. My name is Jeff Ammerman. I'm a Managing Director in the Healthcare Investment Banking Group at Barclays. Thanks for coming today to allow me the honor of introducing Rick Stewart, the CEO of Achieve Life Sciences. Rick is the Co-Founder and CEO. And also prior to Achieve, a serial entrepreneur in the pharma space, he was the Chair and CEO of Huxley Pharma, which was ultimately acquired by BioMarin, the CEO of Brabant Pharma, which was acquired by Zogenix, which ultimately became Fintepla and served as a backbone for its acquisition by UCB and was a Co-Founder and CEO of Amarin, which launched VASCEPA and sold over $3 billion in the cardiovascular space. So with that, Rick?

Thank you, Jeff, and thank you very much for inviting us. Yes. We are at a very exciting time for Achieve. We are on the brink of filing our NDA for cytisinicline as a treatment for nicotine dependence in smoking cessation. We expect that to take place next quarter. So everything remains on track. And I think what we're doing is addressing a major public health crisis not just in the U.S. but globally. There are 29 million smokers here in the U.S. with 11 million vapers. We've completed obviously two Phase III clinical trials successfully. And we have also completed a single Phase II clinical trial in vaping. So without further ado, we have the standard forward-looking statements. And as I said, we are addressing a major public health crisis. The NDA is due to be filed at the end of next quarter and with a launch in around about Q3, Q4 of 2026 with a vaping cessation indication, having already received breakthrough designation from the FDA and priority review. We are highly differentiated insofar as one of the major impediments for success in smoking cessation is actually the overall side effect profile of the former market-leading product. CHANTIX has got a pretty significant side effect profile, which has been a deterrent to compliance. And you'll see in a minute that we don't have that side effect profile. And indeed, we have superior efficacy to CHANTIX itself. So our launch strategy is highly focused. It is data-driven. And we're often asked the question is how is a turning company like Achieve going to be able to access up to 29 million smokers plus a further 11 million vapers here in the U.S., and we'll address that in a minute. So the overall cost of smoking-related disease is over $300 billion a year. And that's not just cost of treatment, but it's also including the loss of productivity. And you're 2 to 4x more likely to suffer from cardiovascular disease from smoking than non-smokers. 80% of deaths from lung cancer and COPD result as a direct impact from smoking itself. But I think if you look at the overall comorbidities associated with smoking, there are some near-term wins potentially for Achieve. And we're focusing very much on respiratory disease. 80% of all COPD patients have the disease as a direct result of smoking. And there are 16 million diagnosed COPD patients here in the U.S., of which 6 million remain current smokers. And they would be a target as we'll describe a little bit later on. E-cigarette use, we're all aware of the stories and certainly in high school of kids who are actually vaping in the bathroom. It is a kind of high-level area of interest. But actually, the majority of people who are smoking are much, much younger than -- who are vaping are much, much younger than those who are cigarette smoking. On average, in our Phase III clinical trials, the age of smokers was about 55 years, whereas for vaping, it was 33 to 35. So the vapers have a much more significant impact on their health, primarily due to the very heavy nicotine load that they are taking. So a single vape can actually have the equivalent of up to 13 packs of cigarettes, and that's not really widely appreciated. And the vaping arena is actually increasing very dramatically at the moment. So this is an area that's primed for innovation. We believe that we have got -- well, we have got the first new treatment for nicotine dependence in nearly 20 years. So as I said, 29 million smokers here in the U.S., 53% of them, nearly 15.3 million people every year attempt to quit, but only 36% use prescription drugs or OTC, but only 9% actually are successful. And that is principally because they don't have the tools to be able to be successful quitters. So I'm going to go through this fairly quickly, but this is a drug that originated in Central and Eastern Europe, has been on the market for many years and Achieve basically redesigned cytisinicline. And certainly, with a 3-milligram 3x daily dosing, it's shown to be very significant in terms of its efficacy and its side effects. So two Phase IIIs in over 1,600 patients plus the vaping study have already demonstrated the success of the drug. It's got a dual mechanism of action. What it actually does is to block the receptor to the uptake of nicotine. And in essence, a smoker or indeed a vaper has got a multitude more alpha 4 beta 2 receptors and nicotinic receptors. And by blocking the uptake of the nicotine, over a period of time, you will actually normalize the number of nicotinic receptors. So cytisinicline provides a positive impact on quitting. And you can see here that in the ORCA-2 and ORCA-3 Phase III clinical trials, with 12 weeks of treatment, we had an odds ratio of 5.3 and 5.8. And that means you're 5.8x more likely to quit smoking than on placebo. And if you can see here that, in fact, CHANTIX had got an overall odds ratio of 2.3; bupropion at 1.4 and nicotine replacement at around about 1.4 as well. So you stand a far better chance of quitting on cytisinicline than you would on placebo or indeed any of the other current treatments that are available. The side effect profile is very benign. What we've seen is that we have -- one of the biggest impediments is nausea and vomiting for CHANTIX patients. On average, there's about 30% experience of nausea and vomiting versus only 6.2%. And frankly, if you're giving up smoking, you get pleasure from it, but then to revert to nausea and vomiting as a side effect is a deterrent for compliance. Insomnia, abnormal dreams and nightmares and headache are often found with CHANTIX as well. And that's because of the different mechanism of action. CHANTIX itself actually hits the 5-HT3 receptor, which causes the nausea and vomiting. It also hits the Alpha-7 receptor, which causes the sleep disturbances. So we believe that our side effect profile is -- along with our efficacy is going to be one of our major drivers of success. So if we look towards the regulatory pathway and launch, as I said, we'll be filing the NDA at the end of next quarter. Our expectation is we'll have an NDA acceptance in the second half with a 12-month review period, which allow an approval in the first half of 2026 and a product launch in the second half of 2026 itself. So a well-defined regulatory pathway and a well-defined product launch. For e-cigarette cessation, we're looking at preparing for the Phase III clinical trial in the second half of this year, initiating the Phase III in the first half of next year and a product launch in the '27 to '28 time period. So key benefits, robust efficacy, an excellent tolerability profile, reduction in craving and urges and broad patient response. What we found particularly pleasing was the patients in the Phase III clinical trials really viewed this as a breakthrough. They believe that, in fact, cytisinicline is potentially the best treatment for cessation that they've actually tried. And one of our classic kind of examples is a patient who is in her 50s. She had been a smoker for around about 30 years, smoking roughly a pack of cigarettes a day. She tried to quit at least 20 times. But on cytisinicline, she was successful, and that is nearly 4 years ago, and she is a pretty robust example of the benefits of the drug. Here, you'll see one of the flexible features of cytisinicline is you can be treated for either 6 weeks or 12 weeks. And you can see on this graph, this is the point prevalence, with a 6-week cytisinicline treatment, we have very robust response out to 6 weeks. And you can see here that once they switched on to placebo at the 6-week time period, they started to relapse. But we were still significantly better than the placebo. The 12-week treatment period again shows a very robust response in terms of overall efficacy. So given the flexibility of a 6- or a 12-week treatment, we believe that, again, is a major differentiating feature of the drug. Looking here at the 12-week and the 6-week treatment, we have a p-value of 0.001 on the ORCA-2 and same on the ORCA-2 treatment period, and that is the 12-week. What we also saw is a robust response with the 6-week treatment period as well. So just reinforcing that flexibility. As far as the NDA submission, the FDA requested that we do an open-label safety study. We announced fairly recently that we'd actually achieved 300 patients with 6 months exposure to the drug, which is the prerequisite for the NDA submission. So at the moment, what we're doing is we're developing the safety database. Everything is on track for that filing, and we will submit the 100 patients with 12-month exposure at the 120-day safety review once the NDA is submitted. The vaping trial is a slightly different trial design. In our discussions with the FDA, we believed, as I mentioned earlier, that there is a much heavier nicotine load. So this is only a 12-week treatment period. So we've got Arm A. This is on the Phase II, we have Arm A of 53 patients and Arm B with 107 to provide us with the positive results in the Phase II study. But again, we demonstrated robust efficacy, the same tolerability, and we believe that with the vaping cessation treatment will be coming through in -- it will be launched in 2027 or 2028. Again, there, we have a p-value of 0.035 and the odds ratio was 2.64. Now it's a fairly small study. So we're expecting with essentially 800 patients in the Phase III trial that we'll get a more robust end result. Moving on in terms of the priority review and for vaping cessation. 400 patients in each arm, 12-week treatment period with plus behavioral support. Again, very similar to what we used in the smoking cessation trial. Now again, looking at how is a small company like Achieve going to access the market, have a successful product launch? There is no question that there is a high unmet medical need, a massive patient population. Importantly, smoking cessation is covered by the Affordable Care Act. So on an annual basis, there should be two free treatments for smoking cessation. Differentiated product profile, the benefit in terms of efficacy and the tolerability is pronounced. The physicians themselves are looking for new treatment options. Our discussions with physicians have said that this is a particularly attractive product. We will be targeting the high-prescribing varenicline physicians as part of our launch profile, but also there is no branded competition. CHANTIX is now generic. It's still -- there is still 1.3 million scripts written every year for generic varenicline. And we believe that given our profile, we'll be able to substitute cytisinicline very successfully. 15.4 million adult smokers attempt to quit annually. There are roughly 6 million vapers who are attempting to quit annually. There are lack of options for motivated quitters, and cytisinicline is well positioned to meet the need of the patients and the physicians. So how are we going to do it? Well, we are going to change the model. Smoking and nicotine dependence is a medical condition. Very much in the way that 5 years ago, obesity was not regarded as a medical condition until the advent of GLP-1s. We view the fact that nicotine dependence or nicotine itself is the third most addictive drug after heroin and cocaine and should be treated as a medical condition. And I think there's an awareness profile that is required. But in targeting the physicians themselves, we're going to be targeting this cessation, prescription enthusiasts and particularly those writers of varenicline itself. And as far as the patients are concerned, we're going to be targeting the highly motivated quitters. These are the -- should we say, the heavily dependent smokers who really haven't had any kind of success in terms of long-term abstinence. So if you look at this kind of triangle here, the physicians, we're going to be communicating the benefits of the drug principally through data-driven access, the consumer pretty much along the same way in terms of driving awareness and the availability of the drug. And as far as the payors are concerned, the Affordable Care Act provides a real benefit. So if you look at this slide here, there's roughly 47,000 physicians who are involved in writing nicotine dependence prescriptions. But we're focusing in on 7,000. We believe that's a manageable kind of target population for us to access. So in our first phase of a product launch, we'll be targeting those 7,000 physicians. And at peak, CHANTIX wrote roughly 2.8 million prescriptions and giving it U.S. revenues in the order of $800 million. Now we believe with a better side effect profile, better efficacy, we can actually exceed those kind of numbers. So the model has changed in terms of accessing physicians really since COVID. This is no longer an opportunity for large primary care physician. Sales force is roughly 75% of all primary care physicians won't actually see medical reps and those that do only see them for 1 to 3 minutes. But they do spend over an hour a day doing online research into the potential for nicotine dependence drugs. So we view this slide as the path to prescription. So from a physician point of view, it's awareness. It's interest in the drug. It's evaluation and it's engagement. And we do that through an HCP toolkit. We do it through e-mail. We do it through online messaging. From a patient point of view, it's awareness again. We -- it's the benefits of the drug. They were -- roughly 40% of all target patients only 40% of all target patients actually have ever taken CHANTIX in our clinical trials. So we believe that by increasing the awareness and the advocacy that will actually drive prescription and interest. So right message in the right channel at the right time. That's the key message. Cost-benefit ratio is significant in terms of our favor. The Affordable Care Act mandate again is a positive driver. And overall, this is a low budget impact as far as the payors are concerned, and we're looking at a value-based pricing strategy as well. So targeted launch strategy in late '26 for high-volume prescribers of nicotine dependence drugs and targeting engaged quitters. Data-driven omnichannel approach to those target audiences. And we -- intentionally, we built it for growth and market expansion because I think if we're just targeting those 7,000, that's the initial phase of the launch. And beyond that, we'll be driving it forward and a favorable payor environment are all positive as far as Achieve is concerned. So IP, well, we've got a pretty pronounced IP portfolio. We've got new chemical entity exclusivity and a 36-month stay giving us roughly 7.5 years of exclusivity, regulatory exclusivity. But we have a pretty extensive IP portfolio around method of extraction, different formulations and overall life cycle management in terms of developing different forms of the drug. So we believe we have an excellent management team with fantastic experience. We've done it before. We can do it again, and I think this is a driven management team who really do want to make this drug available to patients and to physicians. So to summarize, this is a public health priority. We've got the benefit of the Affordable Care Act. We're a near-term solution. We provide new tools for both physicians and patients. We've got a proven leadership team, clear commercial vision with a launch strategy that's well defined, strong IP position and a cash position that takes us through to the third quarter of this year. Thank you. Any questions? That's great. Thank you very much.