Zacks Small Cap Research – OTC Markets Hosts Virtual Investor Presentation with Prashant Kohli, CEO of Grace Therapeutics (Acasti Pharma), with John Vandermosten, Senior Analyst at Zacks SCR – Technologist

NASDAQ:GRCE | NASDAQ:ACST

Since the recording of this interview, the company has changed its name to Grace Therapeutics and is now trading under NASDAQ:GRCE.

John Viglotti: Hello, and welcome to Virtual Investor Conferences. My name’s John Viglotti, and on behalf of OTC Markets and our co-host, Zacks Small Cap Research, we’re very pleased you joined us for our next presentation from Acasti Pharma. John Vandermosten will moderate their session. He’s the Senior Biotechnology Analyst with Zacks Small Cap Research. Please note that you can submit questions for the presenter in the box to the left of the slides, and you can also view a company’s availability for one-on-one meetings through the “schedule meetings” tab on the conference platform. At this point, I’m very pleased to welcome Prashant Kohli. He’s the Chief Executive Officer of Acasti Pharma Inc., which trades on NASDAQ under the symbol ACST. Welcome, Prashant and John.

Prashant Kohli: Thank you.

John Vandermosten: Great. Thank you for the intro, John. Acasti is a development-stage biotech company focused on rare diseases. It’s investigating a new formulation of an already approved drug, nimodipine, to treat aneurysmal subarachnoid hemorrhage, or ASAH for short. Prashant, welcome to the OTC Life Sciences Investor Forum.

PK: Thank you, John.

JV: Let’s start with your lead indication because most investors have yet to hear of it. What is ASAH, and how rare is it?

PK: Thank you, John. I’m excited to be here today. ASAH stands for aneurysmal subarachnoid hemorrhage, a rare form of brain bleed. An aneurysm developing deep inside the brain unexpectedly ruptures, spilling blood into the brain, which causes a hemorrhagic stroke. It’s a rare disease, and that’s why it’s called aneurysmal subarachnoid hemorrhage.

JV: What are some of the symptoms that a patient might see if they’ve suffered the ASAH? Can we see it coming, or does it happen unexpectedly?

PK: Yeah, good question. The disease doesn’t have very well-quantified known causal factors. It strikes out of the blue unexpectedly. No disease etiology develops over a period of time like you do with other forms of stroke, ischemic stroke in particular. The patients unexpectedly will experience absolutely the worst headache in their life, typically classified as a thunderclap headache. Most of them might even get unconscious at this point or throw up. It afflicts a younger population for reasons not very well understood; the average age is 59 years old, and slightly more women than men. It’s a disease that afflicts a younger population, carries a very high mortality and morbidity risk, and is a huge cost and burden to not only the patient’s family but also society as a whole.

JV: It sounds expensive when it happens. What does their journey look like after a patient is diagnosed with ASAH? It sounds like it is probably a difficult one because that’s pretty serious: blood in the brain.

PK: Eventually, a third of the patients do not survive the insult—another third end up living with long-term morbidity. You have two-thirds of patients with poor outcomes. As you correctly pointed out, it is one of the most expensive diseases to treat in a hospital setting. A patient, ideally upon the insult, gets to a comprehensive stroke center, or even if they’re triaged at their local, regional hospital, they will invariably be sent to a tertiary hospital, and a CT angiogram is the definitive diagnosis for aneurysmal subarachnoid hemorrhage. There is an active rupture bleed in the brain. As you would expect, there’s nothing that’s going to stop it from a therapeutic standpoint. A neurosurgeon ideally goes in either endovascularly, which is now more of the standard of care in the United States. But there is open brain or craniotomy that’s used as well, where they would go in and clip the aneurysm to stop the bleeding. Endovascularly, they would go in and typically insert a coil again to stabilize the ruptured aneurysm, which eventually leads to the stoppage of the bleeding.

PK: The patients are in a very serious condition, so they are in a neurocritical ICU. The neuro ICUs at these comprehensive stroke centers are some of the best of the best in the country. They have well-trained, skilled, and highly skilled neurosurgeons, neuro intensivists, neuroscience nurses, and the care and support staff, with the appropriate technology to monitor the patient. The only FDA-approved therapy to improve outcomes is a calcium channel blocker called nimodipine, and the patient is put on this nimodipine therapy for up to 21 days. Besides surgical intervention and extensive medical management, this pharmacotherapy of nimodipine is used extensively as the standard of care in the US.

JV: You said 21 days of treatment. Does the patient recover fully, or is there always some loss due to the magnitude of the insult?

PK: As I mentioned earlier, a third of the patients will eventually not survive, and another third end up living with long-term morbidity, and about a third rule of thumb is that they will end up with good recovery. It’s across the spectrum, but it is a serious life-threatening disease with potentially poor outcomes if the patients are not adequately treated on a timely basis. There are about 50,000 ASAH cases a year in the country; that number has been fairly consistent year over year in the US. Even with all the advances that we have made for other kinds of strokes, the incidences in aneurysmal subarachnoid hemorrhage have been fairly consistent year over year, going back several years now.

JV: Okay. So about 50,000. As you mentioned, there is an approved drug for the disease; however, it has some shortcomings. But you and Acasti are using a new formulation of the drug that can be infused, which solves some of the shortcomings of the oral form. Can you explain why the oral form isn’t good enough?

PK: As you rightly pointed out, Nimodipine is available as an oral capsule or solution. Nimodipine, as a molecule, is highly hydrophobic. It has other liabilities, such as clinical liabilities, when given orally. I’ll take a few minutes to explain the challenges with oral nimodipine and then talk about our technology with GTX-104. When the drug is given orally to this patient population, keep in mind that the majority of the patients are unconscious, or they’re obtunded, they’re dysphagic, and they have a hard time swallowing. Now, nimodipine has a very high first-pass metabolism. What that means is the drug has to be administered very frequently, every four hours, so that equates to, what, six times a day for up to 21 days.

PK: It has other cytochrome P450 liabilities. The drug must be metabolized in the liver before it can enter the systemic circulation and bloodstream. It needs to get there to get to the brain, where it’s required to improve outcomes. Nimodipine has been proven to be efficacious in multiple, well-controlled clinical trials. It’s a drug that is critical to make sure that the patients get the oral form. Now, when the patients are unconscious, the only way to get this drug is through a feeding tube, which these patients sometimes have, and nurses have to shove it down the nasogastric tube and wash it down with saline; a lot of times, the full therapeutic dose doesn’t get to the patient.

PK: The oral capsules are the big capsules, one gram each, just 60 milligrams every four hours. It’s 230-milligram capsules, the biggest size approved by the FDA. It’s a challenge even for a normal subject to swallow these two big capsules. In these critically ill patient populations, it becomes a real dosing burden for nurses to get the drug into the patient. The other issue with nimodipine is that it is a well-known vasodilator, acts in the neurovasculature, and causes hypotension, a drop in blood pressure. Now, in this particular patient population, if they become too hypotensive, that becomes a huge safety risk for these patients.

PK: In fact, published literature has shown that in over 55% to 60% of patients, the dose of nimodipine is withheld to prop up and stabilize their blood pressure. In about a third of those patients, they have to be administered highly invasive rescue therapy, again, to stabilize their blood pressure. It could be in tri-arterial vasopressors, angioplasty, very invasive, very risky, and also very expensive rescue therapy to manage their blood pressure in response to nimodipine therapy. In those instances, the only FDA-approved drug is routinely withheld in this patient population to manage the side effect profile better.

PK: In a way, it’s no wonder patients recover poorly because of some of these challenges. Nimodipine also has drug-to-drug interaction and food-effect liabilities. When given orally, patients have gastric motility or ileus issues, which significantly either impedes or exacerbates the absorption rate into the bloodstream. There is, again, well-quantified published literature when the drug is explicitly given through the feeding tube. Often, it’s barely detectable in the blood. If it is not in the blood, it won’t get to the brain, where it needs to do its job. There are some significant clinical liabilities, not to mention a very high dosing burden and potential risk of medication errors, which do occur. In practice, the oral formulation creates unmet medical needs in this particular case.

PK: In response, our scientists figured out a way to solubilize the hydrophobic molecule nimodipine and create an aqueous formulation of nimodipine. This aqueous formulation now allows for an infusion of nimodipine directly into the systemic circulation for these patients, which addresses many of the clinical challenges I outlined a few seconds ago. From a clinical standpoint, the feedback we hear from neurosurgeons, neurointensivists, and physicians is excitement about better managing hypotension with an IV form; as you know, it’s far more easily titratable than someone swallowing…

JV: It can be more precise with the dosing.

PK: Correct. You can be more precise and reduce medication errors and the dosing burden. Some of the benefits of the GTX-104, a novel IV formulation of nimodipine, are also mentioned.

JV: Okay, and as we’ve mentioned, the FDA has already approved the underlying API, the underlying drug nimodipine, which is just in this oral form. With that in mind, what regulatory pathway must you follow to improve this?

PK: To highlight your point exactly, nimodipine is already the standard of care; it’s written in the care guidelines by The American Heart and Stroke Association. Physicians do not have to be convinced to use nimodipine. The Joint Commission routinely monitors hospitals’ usage of nimodipine in this patient population. There’s a self-governance mechanism to ensure the patients get nimodipine in the US. From a regulatory standpoint, we have had extensive conversations with the FDA, and they have consistently guided us on what it would take to get approval or file an NDA application. We met with the agency face-to-face pre-pandemic in early 2020, where we negotiated a path towards an NDA, which was two steps. Step one was to establish a pharmacokinetic bridge in a phase one trial to make sure that, pharmacokinetically, we bridged the IV to the oral dosage form, which we accomplished in 2022. The second step is to conduct a phase three pivotal trial. It’s a 100-patient safety trial. That is what we are currently enrolling for our second and final step towards an NDA application.

JV: Okay. You mentioned the phase two trial, and you’ve named it STRIVE-ON. How’s it designed? It’s a safety trial, so obviously, those will be the endpoints, but maybe you can clarify some of the other endpoints that are part of the STRIVE-ON trial.

PK: It’s not a statistically-powered trial, and the FDA agreed. It’s the design. Nimodipine has already been proven to be efficacious, so once we met the scientific bridge in our phase one trial, it qualified us for the 505(b)(2) pathway. The trial design of STRIVE-ON is safety; all of our endpoints are safety, where we need to demonstrate that GTX-104, the IV formulation of nimodipine, is just as safe as oral in the patient population. 50 patients are being administered GTX-104, are on the 104 arm. Another 50 on the oral arm. It’s a randomized one-to-one open-label safety trial. The primary endpoint is the number of patients that develop hypotension between the two arms. In addition to the other AEs and SAEs we are capturing as part of our trial design, the patients are on treatment for up to 21 days, both IV or oral. There’s a follow-up period, day 30 and day 90. We’re also collecting other health, economic, and outcomes data, including the challenges I mentioned about oral with the dosing burden, therapeutic intensity, rescue therapy use, and length of stay. Additional pharmacoeconomic measures can help us with commercialization, potentially upon approval. It’s a robust trial design. However, it is relatively de-risked. We have done multiple phase-one studies in over 160 subjects where GTX-104 head-to-head with oral has already shown to be comparably safe. We have strong confidence going into the STRIVE-ON trial.

JV: Okay. You provided guidance that your target is to submit an NDA in the first half of ’25. Does that mean we will see the top line from that trial sometime around the end of the year?

PK: Several weeks ago, we announced that we are over 50% enrolled in the trial. We anticipate fully enrolling 100 patients in the next few weeks, which will lead to a data readout very early next year, followed by, if everything goes well, an NDA application soon thereafter by the middle of 2025.

JV: Okay, great. The value that Acasti’s bringing to the table, your platform, is the technology behind your IV formulation, and you gave us a quick peek at it a few minutes ago. Can you provide a more in-depth summary of how that works and how it differs from other IV formulations that may try to do the same thing?

PK: Nimodipine, as I mentioned, is hydrophobic. Many attempts have been made to try and crack the formula to create an aqueous formulation. They have all been either unsuccessful or subpar, creating more patient complications. What our brilliant formulators drug delivery, scientists here in New Jersey used my cellar technology with GRAS excipients, generally regarded as safe excipients, so these are excipients that have already been used in other approved drugs, and create a first-ever aqueous formulation of nimodipine. When we designed the formulation, we wanted to make sure it would be commercially very attractive, both from a manufacturing cost perspective and also from an ease of manufacturing as well. It was going to be not overly complex.

PK: As you know, most sterile injectables require special handling. Refrigeration can be very expensive and tricky to manufacture. Our aqueous formulation is room-temperature-stable and doesn’t require any of those special handling bells and whistles for other sterile injectables, which we believe will create a very competitive differentiation for us and give us a lot of flexibility, even from a pricing standpoint, to not have to carry all that extra cost that comes with an injectable. We’re very proud of the scientific breakthrough that has gone into developing this technology in a life-threatening disease, where we know that there are some very serious clinical challenges and unmet medical needs that GTX-104 is ideally positioned for and then potentially becomes the standard of care.

JV: You commissioned a study not too long ago about some of the benefits the hospitals might see if they shift to your infused IV formulation. Can you summarize the findings of the study that you commissioned? Also, please give us your impression of what hospitals seek in this patient population to improve treatment.

PK: Yeah, so we surveyed hospital P&T committee members. This is the pharmaceutics and therapeutics committee. Hospitals routinely evaluate new technology and new drugs via this P&T process. We wanted to ensure that GTX-104, the target product profile, would be compelling and that hospitals embrace the technology for patient use. A 30-person survey was conducted at these top academic medical centers of P&T committee members; 80% came back highly favorable and did not see any challenges in adopting GTX-104 at their hospitals. We think there are some strong reasons for that: patient safety, making sure that the patients get the full therapeutic dose of the only approved drug for a debilitating disease state, cutting down on hospital resources, reduction in dosing burden, improving outcomes and safety, better compliance and management of hypotension, are some of the strong value proposition and differentiators that were cited as being favorable for GTX-104, relative to the challenges of oral nimodipine.

JV: Okay. The point that you brought up that seemed most interesting to me was that these patients who may be unconscious can receive their treatment. Otherwise, they have to do it orally every four hours. You’ve solved one of the bigger issues there. Well, I will ask you about other things in your portfolio. I know your main focus is on GTX-104, but there are other things you’re doing. There’s GTX-102 for Ataxia-telangiectasia, which is another rare disease. Only symptomatic treatments are now available for that. Tell us about that asset and what the next steps might be.

PK: GTX-102 is our second late-stage clinical asset. It’s for an ultra-rare pediatric neurodegenerative disease called Ataxia-telangiectasia or A-T for short. The prevalence of A-T in the US is about 5000 children. It’s a terrible condition, a genetic defect that children are born with. Patients are usually diagnosed in months 18 or 24 months when parents start noticing poor oculomotor physical development and gait disturbances; there’s a genetic test where that’s a definitive test to flag patients with A-T. The prognosis is dire. These patients use wheelchairs within the first five years of their life. They’re highly prone to infections, cancers, and leukemias and, eventually, unfortunately, succumb to those comorbidities in their 20s.

PK: No FDA-approved therapy is currently available for A-T. Our team identified a proof-of-concept clinical trial at the University of Siena in Italy, where they administered a corticosteroid called betamethasone and found a statistically significant improvement in outcomes with that drug in a patient population. We secured the exclusive worldwide license to that proof-of-concept trial. We created our novel formulation of betamethasone that can be administered directly as a very easy, simple-to-use oromucosal spray by the patient or the caregiver. This program, GTX-102, successfully conducted a phase one trial in 2022. It’s ideally teed up for what we think should be the pivotal phase three efficacy and safety trial for GTX-102. We’re equally excited about our second program, which is also in its late stages, and we are ready for what we believe to be its pivotal trial.

JV: Is that something you might pick up after you file your NDA for 104?

PK: Over a year ago, to ensure that we better stay focused and allocate our capital resources, we prioritized GTX-104, the closest to a potential NDA approval, and allocated our resources to this program. Our plans are to get the second program back online once we have made more progress with GTX-104 and can raise capital on better terms for this program. Opportunistically, we’re also looking at out-licensing or selling the second asset, the GTX-102 program. We want to ensure we preserve, create, and capture shareholder value, but we believe it’s a differentiated program. We’re getting a lot of interest and excited to bring this program back online at the right time.

JV: We haven’t discussed your financial profile yet. What is your cash level and capital structure? Can you spend a minute or two explaining them?

PK: As of June 30th of this year, we announced a little over $19 million in cash. We’re fully funded, and the company has no debt. The STRIVE-ON trial is fully funded with cash on hand, and we will be filing our NDA application mid-next year. If we do not take on any other programs, our cash runway will take us into the calendar of 2026. We have a healthy cash position relative to our core asset and program. The company has no debt and a relatively clean cap table. We’re fully funded. The key point is on our STRIVE-ON and our GTX-104 program.

JV: Okay, great. Well, we’ve come about to end our time today, Prashant. Thank you so much. Again, for our viewers, we had the CEO of Acasti, Prashant Kohli, ticker symbol, ACST. Thanks so much, and I look forward to working with you again.

PK: Thank you, John. I appreciate it and enjoyed our talk today.

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