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Water Tower Hour Recap

Water Tower Hour hosted Achieve Life Sciences (ACHV). Our guest this week was ACHV CEO John Bencich in a conversation with Matt Borsch, who is the lead analyst for Healthcare Services & Medical Devices at Water Tower Research. A promising new treatment for nicotine addiction. After two decades of failed efforts to develop new treatments for nicotine addiction, ACHV is poised to break the mold by introducing cytisinicline in US and overseas markets. That follows a series of successful clinical trials (as well as existing utilization of the drug in Eastern Europe) showing stronger efficacy and fewer side effects compared with existing products that have been on and off the market over the past 15-20 years. A significant opportunity. We touched on the size of the addressable markets, starting with the 28 million current smokers in the US. Bencich pointed to the Affordable Care Act mandate that insurers cover smoking cessation at no cost to patients. Given that, and the uniqueness of the drug, Bencich expects strong pricing, perhaps above $1,000 per course of treatment. While Bencich is not offering a potential revenue figure, we estimate annual sales could exceed $1 billion in the US alone. Meanwhile, the overall potential is a range of magnitude higher given that there are more than one billion smokers worldwide. FDA approval the next milestone. While we discussed recent accomplishments that have brought the company to where it is today, our focus was the next 12-18 months. At the top of the list, not surprisingly, is regulatory approval where Bencich is optimistic that the drug is well-positioned for FDA approval. While initially for smokers, ACHV is working to show strong efficacy for treatment of those wishing to kick the vaping habit. Bringing the drug to market in 2025. Commercialization is the next priority after regulatory approval. Bencich expects sales of the drug to start in 2025, most likely through partnership with a major biopharma company with the existing infrastructure to efficiently bring the drug to market at scale. We expect this will be accomplished through a sale of the company as has already been implied by management (e.g. when Bencich stated “this asset belongs in the hands of a single global partner” in comments on the recent (November 9) earnings call). Existing capital sufficient into 2H24. Bencich sees existing cash/capital as sufficient to take ACHV into 2H24 without the need for additional funding. While Bencich did not offer speculation on how that factor, along with others, might drive the timing of a potential sale of the company, the circumstances suggest to us that we will see that occur in 2024. Those interested can listen to the episode on Apple Podcasts, Google Podcasts, Spotify, as well as our website. Links are accessible in our full report.