Achieve Life Sciences Announces Pricing of up to $124.2 Million Registered Direct Offering and Concurrent Private Placement

Rhea-AI Summary

Achieve Life Sciences, Inc. secures $60 million upfront financing with potential for an additional $64.2 million tied to milestone-driven warrants. The funding will support the clinical development of cytisinicline for smoking cessation, aiming for FDA approval by 2025.

Insights

Financial Analyst

From a financial standpoint, Achieve Life Sciences' significant capital raise through a mix of upfront financing and milestone-driven warrants is a strategic move to secure the necessary funds for the clinical development of cytisinicline, a smoking cessation aid. The dual structure of the deal, offering both immediate capital and conditional future funds, provides a safety net for the company, ensuring financial stability through the expensive clinical trial phase and potential FDA approval process.

The initial $60 million in upfront financing is critical as it allows the company to maintain momentum in its ORCA-OL trial without the immediate pressure of further fundraising. The subsequent $64.2 million contingent on reaching certain milestones aligns investor interests with clinical success, effectively managing risk. For stakeholders, this signals confidence in the drug's development path and the management's ability to meet clinical and regulatory targets.

Investors should note that the terms of the warrants, including the exercise price of $4.906 per share, reflect current market valuations and investor expectations. The inclusion of healthcare-dedicated investors and strategic investors like Sopharma indicates sector-specific confidence, while participation from the company's management and board underlines internal commitment to the project's success.

Medical Research Analyst

The clinical development of cytisinicline is a key focus for Achieve Life Sciences, with the aim of addressing the global issue of smoking cessation and nicotine dependence. The ORCA-OL trial is pivotal and its successful completion is essential for the New Drug Application (NDA) submission. The Day 74 Letter from the FDA, which will indicate the FDA's acceptance of the NDA, is a critical milestone for the company.

It's important to understand that the clinical and regulatory pathway for drug approval is fraught with risk and the likelihood of success impacts both the financial health of the company and the potential return on investment for shareholders. The fact that the company has structured milestone-driven warrants suggests a performance-based approach to financing, which can be seen as a vote of confidence in the cytisinicline's potential by the investors.

For the medical community and potential patients, the successful development of cytisinicline could represent a significant advancement in smoking cessation treatment options. The drug's progress through clinical trials and potential FDA approval will be closely watched as it could impact public health and reduce healthcare costs associated with smoking-related illnesses.

Market Research Analyst

The market for smoking cessation aids is competitive, with various products ranging from nicotine patches to prescription medications. Achieve Life Sciences' cytisinicline represents a potential new entrant that could disrupt the market if proven effective and safe. The funding secured by Achieve Life Sciences will not only allow the company to navigate the clinical trials but also to prepare for market entry, should the drug receive FDA approval.

Analyzing the investment from a market perspective, the involvement of specialized healthcare investors suggests a calculated bet on the drug's market potential. The upfront net proceeds and the aggregate net proceeds (assuming full exercise of warrants) are designed to cover the extensive costs associated with bringing a new drug to market, including clinical trials, regulatory compliance and initial marketing efforts.

The stock price set for the registered direct offering and the exercise price for the warrants provide insight into the company's current valuation and the market's future expectations. The successful development and commercialization of cytisinicline could lead to increased market share and revenue for Achieve Life Sciences, which would be a positive outcome for investors and the company alike.

$60 million financing upfront with up to an additional $64.2 million tied to exercise of milestone-driven warrants

Upfront net proceeds to provide funds to conduct clinical development of cytisinicline through New Drug Application submission expected in 1H 2025, including the ORCA-OL trial

Aggregate net proceeds (assuming exercise of all milestone-driven warrants) expected to be sufficient to fund cytisinicline development through potential FDA approval

SEATTLE, Wash. and VANCOUVER, British Columbia, Feb. 29, 2024 (GLOBE NEWSWIRE) -- Achieve Life Sciences, Inc. (Nasdaq: ACHV), a late-stage pharmaceutical company committed to the global development and commercialization of cytisinicline for smoking cessation and nicotine dependence, today announced that it has entered into a securities purchase agreement with new and existing investors to raise up to approximately $124.2 million in gross proceeds that includes initial upfront funding of $60.0 million and up to an additional approximately $64.2 million upon exercise of milestone-driven warrants.

The financing includes participation from healthcare-dedicated investors, including Propel Bio Partners LLC, Nantahala Capital, and a large, life sciences-dedicated investor. The financing also includes participation from strategic investor Sopharma and certain members of the company’s management team and board of directors.

Lake Street Capital Markets, LLC and JonesTrading Institutional Services LLC are acting as joint placement agents for the registered direct offering and concurrent private placement.

The purchase and sale will be completed, in part, via a registered direct offering of 13,086,151 shares of common stock at a price of $4.585 per share. In a concurrent private placement, the company will issue unregistered warrants to purchase up to 13,086,151 shares of common stock at an exercise price of $4.906 per share (provided, however, that the purchaser may elect to exercise the warrants for pre-funded warrants in lieu of shares of common stock at an exercise price of $4.906, minus $0.001, the exercise price of each pre-funded warrant). These warrants will be immediately exercisable for shares of common stock or pre-funded warrants in lieu thereof, and will expire on the earlier of (i) three and one-half years following the date of issuance and (ii) 30 days following Achieve’s public disclosure of the acceptance of a New Drug Application (NDA) for cytisinicline by the U.S. Food and Drug Administration (FDA) in a Day 74 Letter or equivalent correspondence.

The registered direct offering and the concurrent private placement are each expected to close on or about March 4, 2024, subject to customary closing conditions. The aggregate gross proceeds from the issuance of common stock in the registered direct offering are expected to be approximately $60.0 million, prior to deducting placement agent fees and estimated offering expenses. The company intends to use the proceeds from the offering to fund clinical development of cytisinicline through NDA submission, expected in 1H 2025, including the ORCA-OL clinical trial, to fund other cytisinicline related research and clinical development activities and for working capital and general corporate purposes. If the milestone-driven warrants issued in the private placement are exercised in full, the company would receive $64.2 million in additional proceeds. The company expects that the net proceeds from the registered direct offering and concurrent private placement, assuming the exercise of all of the milestone-driven warrants, will be sufficient to fund its development of cytisinicline into 2026 and through potential FDA approval.

The shares of common stock are being offered pursuant to a shelf registration statement on Form S-3 (File No. 333-261811), which was declared effective by the United States Securities and Exchange Commission (“SEC”) on January 5, 2022.

The milestone-driven warrants being issued in the private placement, along with the securities underlying such milestone-driven warrants, are being offered in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and/or Regulation D promulgated thereunder and have not been registered under the Securities Act, or applicable state securities laws. Accordingly, the milestone-driven warrants and underlying securities may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities of Achieve, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. A prospectus supplement relating to the registered shares of common stock will be filed by the company with the SEC. When available, copies of the prospectus supplement, together with the accompanying prospectus, can be obtained at the SEC’s website at www.sec.gov or from Lake Street Capital Markets, LLC, Prospectus Department, 920 Second Avenue South, Suite 700, Minneapolis, Minnesota 55402 or by email at info@lakestreetcm.com or JonesTrading Institutional Services LLC, Attention: Equity Capital Markets, 325 Hudson Street, 6th Floor New York, New York 10013; email: ecm@jonestrading.com.

About Achieve and Cytisinicline 
Achieve’s focus is to address the global smoking health and nicotine addiction epidemic through the development and commercialization of cytisinicline. There are an estimated 28 million adults in the United States alone who smoke combustible cigarettes.¹ Tobacco use is currently the leading cause of preventable death that is responsible for more than eight million deaths worldwide and nearly half a million deaths in the United States annually.^2,3 More than 87% of lung cancer deaths, 61% of all pulmonary disease deaths, and 32% of all deaths from coronary heart disease are attributable to smoking and exposure to secondhand smoke.³

In addition, there are over 11 million adults in the United States who use e-cigarettes, also known as vaping.³ In 2023, approximately 2.1 million middle and high school students in the United States reported using e-cigarettes.⁴ Currently, there are no FDA-approved treatments indicated specifically as an aid to nicotine e-cigarette cessation. 

Cytisinicline is a plant-based alkaloid with a high binding affinity to the nicotinic acetylcholine receptor. It is believed to aid in treating nicotine addiction for smoking and e-cigarette cessation by interacting with nicotine receptors in the brain, reducing the severity of withdrawal symptoms, and reducing the reward and satisfaction associated with nicotine products. Cytisinicline is an investigational product candidate being developed for the treatment of nicotine addiction and has not been approved by the Food and Drug Administration for any indication in the United States.

Forward Looking Statements
This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding the completion of the offering, the expected net proceeds of the offering, the expected net proceeds upon exercise of the warrants, the intended use of the proceeds of the offering and the expected sufficiency of such proceeds to fund the development of cytisinicline through potential FDA approval. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Achieve may not actually achieve its plans or product development goals in a timely manner, if at all, or otherwise carry out its intentions or meet its expectations or projections disclosed in these forward-looking statements. These statements are based on management’s current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements, including, among others, risks regarding Achieve’s ability to satisfy closing conditions related to the offering; risks related to market conditions; the risk that cytisinicline may not demonstrate the hypothesized or expected benefits; the risk that Achieve may not be able to obtain additional financing to fund the development of cytisinicline; the risk that cytisinicline will not receive regulatory approval or be successfully commercialized; the risk that new developments in the smoking cessation landscape require changes in business strategy or clinical development plans; the risk that Achieve’s intellectual property may not be adequately protected; general business and economic conditions; risks related to the impact on Achieve’s business of macroeconomic conditions, including inflation, rising interest rates, instability in the global banking sector, and public health crises, such as the COVID-19 pandemic, and the other factors described in the risk factors set forth in Achieve’s filings with the Securities and Exchange Commission from time to time, including Achieve’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Achieve undertakes no obligation to update the forward-looking statements contained herein or to reflect events or circumstances occurring after the date hereof, other than as may be required by applicable law.

Investor Relations Contact  
Nicole Jones
achv@cg.capital
(404) 736-3838

Media Contact  
Glenn Silver 
Glenn.Silver@Finnpartners.com 
(646) 871-8485 

References
¹Cornelius ME, Loretan CG, Jamal A, et al. Tobacco Product Use Among Adults – United States, 2021. MMWR Morb Mortal Wkly Rep 2023;72:475–483.
²World Health Organization. WHO Report on the Global Tobacco Epidemic, 2019. Geneva: World Health Organization, 2017.
³U.S. Department of Health and Human Services. The Health Consequences of Smoking – 50 Years of Progress. A Report of the Surgeon General, 2014.
⁴Birdsey J, Cornelius M, Jamal A, et al. Tobacco Product Use Among U.S. Middle and High School Students — National Youth Tobacco Survey, 2023. MMWR Morb Mortal Wkly Rep 2023;72:1173–1182.

FAQ

How much upfront financing did Achieve Life Sciences, Inc. secure?

Achieve Life Sciences, Inc. secured $60 million upfront financing.

What is the total gross proceeds expected from the financing including milestone-driven warrants?

The total gross proceeds expected from the financing, including milestone-driven warrants, is approximately $124.2 million.

What is the purpose of the financing for Achieve Life Sciences, Inc.?

The financing will support the clinical development of cytisinicline for smoking cessation through New Drug Application submission expected in 1H 2025.

Which investors are participating in the financing for Achieve Life Sciences, Inc.?

Healthcare-dedicated investors, including Propel Bio Partners LLC, Nantahala Capital, and a large life sciences-dedicated investor, are participating in the financing.

Who are the joint placement agents for the registered direct offering and private placement?

Lake Street Capital Markets, LLC and JonesTrading Institutional Services LLC are acting as joint placement agents for the registered direct offering and private placement.