Achieve Life Sciences, Inc.

Achieve Life Sciences, Inc. (NASDAQ: ACHV) is a specialty pharmaceutical company committed to advancing cytisinicline as a smoking cessation aid to address the global tobacco and nicotine addiction epidemic.

Key Highlights 

• Making an entry into new territory:The company focuses on addressing smoking and nicotine addiction methods. They entered a partnership with leading smoking cessation and nicotine addiction experts and have completed the development of Phase 2 clinical trial protocol, ORCA-V1, to evaluate cytisinicline in this rapidly growing population of e-cigarette users. The management believes that cytisinicline could be the first prescription drug to offer a new option for vape and e-cigarette users ready to quit their nicotine addiction.

• Cytisinicline Planned Development Program & Milestones:  Till now, the company has initiated the phase 3 trial of ORCA-2 and expects the results of this initiation in next one year. At present, the company have no products approved for commercial sale and have not generated any revenue. 

Source: Company 

• Lack of liquidity: As per the management, their current resources are insufficient to fund planned operations for the next 12 months. They require substantial additional capital to continue its clinical development activities. As of September 30, 2020, the company had a cash and cash equivalents balance of USD 22.4 million. 

Financial overview of Q3 2020 

Source: Company 

• In Q3 2020, the company’s Research and development expenses increased to USD 1.89 million, compared to USD 1.82 million in Q3 2019. The rise in R&D expenses was due to costs incurred in preparation for the planned initiation of Phase 3 ORCA-2 trial in the fourth quarter of 2020.
• General and administrative expenses declined in Q3 2020, and stood at USD 1.86 million, compared to USD 1.89 million in the previous corresponding period.
• Net loss reported by the company in Q3 2020 stood at USD 3.76 million, against USD 3.67 million in the previous corresponding period.

Risks associated with investment

The company depends on a single company for the manufacture and supply of cytisinicline, its sole product candidate. There is no guarantee that they will be able to develop and commercialize cytisinicline successfully. Furthermore, If the company fails to obtain the necessary regulatory approvals in the United States and/or other countries, they will not be able to sell cytisinicline.

Stock recommendation 

Till now the company has initiated the phase 3 trial of ORCA-2 and expects the results of this initiation in next 1 year. The company’s ability to continue as a going concern is uncertain and dependent on its ability to obtain additional financing. The management has already stated that their current resources are insufficient to fund planned operations for the next 12 months. On top of this, the company depends on a single company for the manufacture and supply of cytisinicline, which is their sole product candidate. There is no guarantee that they will be able to develop and commercialize cytisinicline successfully. Hence, based on the aforementioned facts, we prefer to remain on the sideline and recommend an “Avoid” rating on the stock at the closing price of USD 13.09 on January 26, 2021.

Source: Refinitiv (Thomson Reuters)

Churchill Capital Corp IV

Churchill Capital Corp IV (NASDAQ: CCIV) is a blank-cheque company, which was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

Proposed Merger with Lucid Motors: Recently, CCIV announced its intention to merge with Lucid Motors, an emerging Electronic Vehicle company which aims to produce 400,000 vehicles using just-in-time supply chains. However, the proposed merger is yet to be confirmed by both parties.

Financial Highlights for the quarter ended September 30, 2020:

• CCIV announced its quarterly results, wherein the group posted loss from operations USD 332,427.
• The group reported interest earned on marketable securities held in Trust Account amounting USD 210,782, while Unrealized loss on marketable securities held in Trust Account was reported at USD 42,999.
• Net loss for the three months was recorded at USD 155,614, partially supported by benefits from income taxes amounting USD 9,030.
• At the end of the quarter, the group posted a cash balance of USD 4,218,387, while total assets were recorded at USD 2,075,486,834.

Source: Company Reports

Risks: The group is yet to confirm any potential merger, and hence, the company is yet to report any operational activities, which would lead to higher accumulated deficit.

Stock Recommendation:

Accumulated deficit increased from USD 1,000 in June 2020 to USD 156,614 in September 2020, and we expect an increase in the accumulated deficit if the company fails to lock in any potential merger. The stock saw a higher investor’s interest on the news of its potential merger with Lucid Motors and soared ~143% and ~153% in the last one month and three months, respectively. At the last closing price of USD 24.44, the stock inched closer of the upper band 52-weeks trading range of USD 27.30 and USD 9.60. Due to lack of confirmation of the above merger, we are skeptical about the future operating performance of the group. Hence considering the aforesaid facts, price levels, we prefer to remain on the sidelines and recommend an ‘Avoid’ rating on the stock at the closing price of USD 24.44 on January 26, 2020.

Source: Refinitiv (Thomson Reuters)

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