Acasti Pharma Inc. (“
Acasti” or the
“
Company”) (Nasdaq: ACST and TSX-V: ACST) today
announced its operating and financial results for the fiscal year
ended March 31, 2021, and provided an update on its plans to
acquire Grace Therapeutics and the ongoing strategic process for
CaPre.
As part of Acasti’s formal process to explore
and evaluate a range of strategic alternatives to enhance
shareholder value, management and the board evaluated dozens of
companies and conducted an extensive and thorough due diligence
process on several finalist candidates. Acasti’s management and
board believed that Grace Therapeutics (Grace), a privately held
emerging biopharmaceutical company focused on developing innovative
drug delivery technologies for the treatment of rare and orphan
diseases, stood out from the field of acquisition targets because
of several important factors, including their diversified drug
pipeline with multiple, high quality clinical assets; significant
addressable market opportunities; three later stage assets with a
potentially shorter timeline to key milestones; efficient and
low-cost clinical and regulatory pathway; and a strong and growing
intellectual property portfolio. Grace’s novel drug delivery
technologies are designed to enable the rapid development of new
therapies that could improve upon currently marketed compounds with
known safety profiles. Grace’s most advanced drug candidates may
also have a fast path to regulatory approval and commercialization
via the 505(b)(2) pathway.
On May 7, 2021, Acasti announced that it had
entered into a definitive agreement to acquire Grace and their
pipeline of drug candidates addressing critical unmet medical needs
(“Proposed Transaction”). The Proposed Transaction has been
approved by the boards of directors of both companies and is
supported by Grace’s shareholders through voting and lock-up
agreements with Acasti. The transaction remains subject to approval
of Acasti stockholders, as well as applicable stock exchanges.
Jan D’Alvise, Acasti’s chief executive officer
stated, “We are very excited about the planned acquisition of
Grace, as we believe their product portfolio has the potential for
delivering better patient solutions with enhanced efficacy, faster
onset of action, reduced side effects, and more convenient delivery
with the potential to increase patient compliance. The planned
merger with Grace will result in the creation of a rare and orphan
disease company that we believe will allow us to not only rapidly
advance their existing assets through the clinic, but also continue
to develop new innovative therapies that leverage Grace’s novel
drug delivery technologies. Following the merger, we expect to have
more than $60 million in cash, which should provide at least two
years of operating runway and enable us to complete clinical
development and file an NDA for GTX-104, and significantly advance
other key drug candidates in the Grace pipeline.
In connection with the Proposed Transaction,
Acasti will acquire Grace’s entire therapeutic pipeline consisting
of three unique clinical stage and multiple pre-clinical stage
assets supported by an intellectual property portfolio consisting
of more than 40 granted and pending patents in various
jurisdictions worldwide. Grace’s product candidates aim to improve
clinical outcomes by applying proprietary formulation and drug
delivery technologies to existing pharmaceutical compounds to
achieve improvements over the current standard of care, or they
could provide treatment for diseases with no currently approved
therapy. Grace’s three lead programs have all received Orphan Drug
Designation from the U.S. Food & Drug Administration
(FDA), which could provide up to seven years of marketing
exclusivity in the United States upon FDA approval of the New Drug
Application (NDA), provided that certain conditions are met.
The Company has posted a presentation
summarizing key highlights of the transaction, which is available
on both the Acasti and Grace websites.
D’Alvise continued, “In parallel with
progressing the acquisition of Grace, we have received interest and
are evaluating a variety of strategic options for CaPre. We remain
highly encouraged by the outlook for our overall business prospects
and look forward to providing further updates to shareholders on
our strategic processes as it relates to both the Grace acquisition
as well as our plans for CaPre.”
Conference call and Shareholder Meeting
As previously disclosed, Acasti plans to file a
Form S-4 proxy statement with the U.S. Securities & Exchange
Commission (SEC), which will include detailed disclosure regarding
the Proposed Transaction in the next few weeks. Following the SEC
granting the Form S-4 to be effective, Acasti and Grace management
plan to host an investor conference call to further discuss the
anticipated benefits of the acquisition and answer investor
questions. Acasti will call a shareholder meeting, which will be
combined with our FY’21 AGM, to approve the transaction following
the public filing of the Form S-4 proxy statement. More information
will be provided on the timing and logistics for both events as
soon as it is available.
Nasdaq Communication
On May 11, 2021, the Company received notice
from the Nasdaq Listing Qualifications Department indicating that,
based upon the Company’s non-compliance with the $1.00 minimum bid
price requirement set forth in Nasdaq Listing Rule 5550(a) as of
May 10, 2021, the Company’s shares were subject to delisting unless
the Company timely requests a hearing before the Nasdaq Hearings
Panel.
The Company requested and was granted a hearing
before the Nasdaq Hearing Panel on June 17, 2021, which has stayed
any further action by Nasdaq pending the conclusion of the hearing
process. At the hearing, the Company presented a detailed plan of
compliance for the Panel’s consideration, including the Company’s
commitment to implement a share consolidation concurrently with the
completion of its proposed acquisition of Grace. Acasti expects to
receive the Panel’s decision within 30 days of the hearing and is
prepared to take definitive action to regain compliance with
Nasdaq’s minimum bid price rule to ensure the Company’s continued
listing on Nasdaq.
Fiscal Year 2021 Financial Results (US
dollars):
The consolidated financial statements have been
prepared in accordance with generally accepted accounting
principles in the United States of America (“U.S. GAAP”).
- Loss from operating
activities for the year ended March 31, 2021, was $16.4
million, compared to a loss from operating activities of $24.4
million for the year ended March 31, 2020. The change was due
mainly to a reduction in R&D, general and administrative
expenses, and sales and marketing expenses.
- Net loss for the
year ended March 31, 2021, was $19.7 million or $0.17 per share, a
decrease of $5.8 million from the net loss of $25.5 million or
$0.30 per share for the year ended March 31, 2020. The reduction in
net loss resulted in part from a decrease in research and
development expenses as the TRILOGY Phase 3 clinical program for
CaPre was winding down. General and administrative expenses
decreased from the comparative period due to decreased stock-based
compensation. Sales and marketing expenses also decreased as a
result of the termination of any CaPre commercialization activities
due to the TRILOGY 2 Phase 3 clinical trial results. Furthermore,
operational events related to the TRILOGY outcome resulted in an
impairment of equipment, intangible and other assets of $5.7M. The
net loss was also impacted from financial expenses of $3.3 million
for the year ended March 31, 2021, as compared to net financial
expenses of $1.0 million for the year ended March 31, 2020, due
mostly to the change in fair value of the warrant derivative
liability.
- R&D expenses
before depreciation, amortization and stock-based compensation
expenses for the year ended March 31, 2021, totaled $2.9 million
compared to $13.2 million for the year ended March 31, 2020. The
net decrease was mainly attributable to a reduction in research
contracts with the completion of the CaPre R&D activities as
well as a reduction in headcount within the department.
- General and Administration
expenses before stock-based compensation expenses for the
year ended March 31, 2021, were $4.7 million compared to $4.6
million for the year ended March 31, 2020. This increase was mainly
attributable to an increase associated with the Company’s insurance
policies, as well as an increase in legal fees, which was offset by
a decrease in salaries.
- Sales and Marketing
expenses before stock-based compensation expenses were
$1.1 million for the year ended March 31, 2021, compared to $2.4
million for the year ended March 31, 2020. The decrease was mostly
a result of a reduction in headcount, as well as a reduction in
professional fees and other marketing activities resulting from the
termination of the planned pre-launch marketing activities for
CaPre.
- Cash flows Cash
and cash equivalents totaled $50.9 million as of March 31, 2021,
compared to $14.2 million at March 31, 2020.
Financing Activities
As previously disclosed, Acasti entered into an
amended and restated ATM sales agreement on June 29, 2020 (the
“Sales Agreement”) with B. Riley FBR Inc., Oppenheimer & Co.
Inc. and H.C. Wainwright & Co., LLC (collectively, the
“Agents”), to implement an “at-the market” equity offering program
under which Acasti may issue and sell from time to time its common
shares having an aggregate offering price of up to $75 million
through the Agents (the “ATM Program”). Pursuant to the ATM
Program, as required pursuant to the policies of the TSX Venture
Exchange (“TSXV”), since the last distributions reported on March
8, 2021, Acasti issued an aggregate of 8,255,890 common shares (the
“ATM Shares”) over the NASDAQ Stock Market for aggregate gross
proceeds to the Company of US $5,849,567 million. The ATM Shares
were sold at prevailing market prices averaging US $0.71 per share.
No securities were sold through the facilities of the TSXV or, to
the knowledge of the Company, in Canada. The ATM Shares were sold
pursuant to a U.S. registration statement on Form S-3 (No.
333-239538) as made effective on July 7, 2020, as well as the Sales
Agreement. Pursuant to the Sales Agreement, a cash commission of
3.0% on the aggregate gross proceeds raised was paid to the Agents
in connection with their services. As a result of the recent ATM
sales, Acasti has a total of 208,375,549 common shares issued and
outstanding as of June 22, 2021. During the three-month period
ended March 31, 2021, Acasti sold an aggregate of 51,837,057 shares
under the ATM Program at an average price per share of $0.6873 for
total net proceeds of $34,495,532, and for the year ended March 31,
2021, Acasti sold an aggregate of 117,724,769 shares under the ATM
Program at an average price per share of $0.5213 for total net
proceeds of $59,332,476. No additional shares have been sold by
Acasti under the ATM Program since March 2021.
About Acasti
Acasti is a biopharmaceutical innovator that has
historically focused on the research, development and
commercialization of prescription drugs using OM3 fatty acids
delivered both as free fatty acids and bound-to-phospholipid
esters, derived from krill oil. OM3 fatty acids have extensive
clinical evidence of safety and efficacy in lowering triglycerides
in patients with hypertriglyceridemia, or HTG. CaPre, an OM3
phospholipid therapeutic, was being developed for patients with
severe HTG.
Cautionary Statement Regarding Forward-Looking
Statements
Statements in this press release that are not
statements of historical or current fact constitute
“forward-looking information” within the meaning of Canadian
securities laws and “forward-looking statements” within the meaning
of U.S. federal securities laws (collectively, “forward-looking
statements”). Such forward-looking statements involve known and
unknown risks, uncertainties, and other unknown factors that could
cause the actual results of Acasti to be materially different from
historical results or from any future results expressed or implied
by such forward-looking statements. In addition to statements which
explicitly describe such risks and uncertainties, readers are urged
to consider statements labeled with the terms “believes,” “belief,”
“expects,” “intends,” “anticipates,” “potential,” “should,” “may,”
“will,” “plans,” “continue”, “targeted” or other similar
expressions to be uncertain and forward-looking. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this press release.
Forward-looking statements in this press release include, but are
not limited to, statements relating to the timing and completion of
the Proposed Transaction and benefits of the Proposed Transaction;
future product development plans and the efficacy of drug
candidates; the potential market opportunities and value of drug
candidates; other statements regarding future product development
and regulatory strategies, including with respect to specific
indications; statements regarding expectations of continued NASDAQ
listing and compliance; and any other statements regarding Acasti’s
and Grace’s future expectations, beliefs, plans, objectives,
financial conditions, assumptions or future events or performance,
and Acasti’s ability to obtain a further extension from the Panel
and its ability to evidence compliance with the Nasdaq Rule within
any extension period that may be granted by the Panel.
The forward-looking statements contained in this
press release are expressly qualified in their entirety by this
cautionary statement, the “Special Note Regarding Forward-Looking
Statements” section contained in Acasti’s latest annual report on
Form 10-K and quarterly report on Form 10-Q, which are available on
EDGAR at www.sec.gov/edgar/, on SEDAR at www.sedar.com and on the
investor section of Acasti’s website at www.acastipharma.com. All
forward-looking statements in this press release are made as of the
date of this press release. Acasti does not undertake to update any
such forward-looking statements whether as a result of new
information, future events or otherwise, except as required by law.
The forward-looking statements contained herein are also subject
generally to assumptions and risks and uncertainties that are
described from time to time in Acasti’s public securities filings
with the Securities and Exchange Commission and the Canadian
securities commissions, including Acasti’s latest annual report on
Form 10-K and quarterly report on Form 10-Q under the caption “Risk
Factors”.
Neither NASDAQ, the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
Acasti Contact:Jan D’AlviseChief Executive
Officer Tel: 450-686-4555Email: info@acastipharma.com
www.acastipharma.com
Investor Contact:Crescendo
Communications, LLC Tel: 212-671-1020Email:
ACST@crescendo-ir.com
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