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On Thursday, Acasti Pharma (NASDAQ:ACST) saw its price target increased to $8.00 from $6.00, while its stock rating was maintained at Buy by Craig-Hallum. The adjustment reflects a positive outlook on the company's lead drug candidate GTX-104, aimed at treating a subset of stroke patients. The new price target is based on a discounted cash flow (DCF) valuation and incorporates a 65% probability of the drug's successful commercialization.
The firm's valuation assumes GTX-104 will achieve a 40% market penetration in the Subarachnoid Hemorrhage (SAH) patient segment, which is estimated to have around 45,000 patients. This level of penetration is expected to generate peak sales of approximately $150 million. The forecast is conservative, only anticipating GTX-104 to match the market reach of Nymalize™ and to be used for a longer duration of therapy rather than solely when patients are in a coma.
The revised price target also takes into account the current fully diluted share count and an anticipated future capital raise to support the drug's commercialization efforts. This leads to an equity value estimation of $150.4 million for Acasti Pharma. The firm's analysis suggests that the equity value could climb to $231.3 million, corresponding to a $13 per share valuation, should the probability of success reach 100% post-commercialization.
The financial model used by Craig-Hallum employs a 15% discount rate that gradually decreases to 10.5%, and it does not assume any terminal value. The firm has expressed confidence in the 65% chance of success, especially considering Acasti Pharma's ongoing pivotal safety trial, which is not designed to demonstrate superiority or non-inferiority but rather to ensure the drug's safety profile.
In other recent news, Acasti Pharma has successfully completed enrollment for its STRIVE-ON trial for GTX-104, an intravenous nimodipine formulation. The trial, which is focused on the safety of GTX-104 in treating aneurysmal subarachnoid hemorrhage (aSAH), has enrolled approximately 100 participants, marking a significant acceleration from the 50% enrollment update provided in late June.
H.C. Wainwright has reaffirmed its Buy rating for Acasti Pharma and set a price target of $12.00. The firm's stance comes in light of these recent developments and anticipates that Acasti Pharma could file a New Drug Application (NDA) by June 2025, with potential FDA approval for GTX-104 by April 2026.
H.C. Wainwright also projects that GTX-104 could become the new standard of care for aSAH in the ICU, with potential peak sales exceeding $130 million. This projection is based on moderate assumptions about the drug's market penetration in the United States, where up to 50,000 cases of aSAH occur annually. The firm also sees additional potential for the drug outside the U.S. market.
InvestingPro Insights
Following the recent optimism from Craig-Hallum regarding Acasti Pharma's lead drug candidate, GTX-104, InvestingPro data provides additional context to the company's financial health and market performance. Acasti Pharma's market capitalization stands at approximately $30.53 million, reflecting the size and potential investor interest in the company. Despite a challenging profitability outlook, with a negative P/E ratio of -2.8, the company has shown impressive short-term returns, with a 10.07% price total return over the last week and a 29.38% return over the last month.
InvestingPro Tips highlight some critical factors for investors to consider. Acasti Pharma holds more cash than debt on its balance sheet, which may provide a cushion for its operations and investment in the commercialization of GTX-104. Additionally, analysts predict that the company will become profitable this year, which could be a turning point for its financial performance. However, potential investors should be aware of the company's quick cash burn and the volatility of its stock price movements. For those seeking a deeper dive into Acasti Pharma's outlook, there are 11 additional InvestingPro Tips available, offering a comprehensive analysis of the company's prospects.
These insights and tips provide a richer understanding of Acasti Pharma's financial standing and market expectations, which could be invaluable for investors considering the company's stock in light of the new developments with GTX-104. For more detailed analysis and tips, investors are encouraged to visit InvestingPro at https://www.investing.com/pro/ACST.
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