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BUSINESS DESCRIPTION OF,
RISK FACTORS RELATING TO,
Dated as of December 5, 2016
In this document, unless the context otherwise requires, references to Acasti , the
Corporation , we , us , it , its or similar terms refer to Acasti Pharma Inc. and references to Neptune refer to Acasti s parent company, Neptune Technologies &
The financial information of the Corporation contained herein are presented in Canadian dollars. All references in this document
to dollars , CDN$ and $ refer to Canadian dollars, and references to US$ refer to United States dollars. Potential purchasers should be aware that foreign exchange rate fluctuations are likely to occur
from time to time and that the Corporation does not make any representation with respect to future currency values. Investors should consult their own advisors with respect to the potential risk of currency fluctuations. On December 2, 2016, the
closing exchange rate for the Canadian dollar, expressed in United States dollars, as quoted by the Bank of Canada was CDN$1.00 = US$0.7528.
document contains company names, product names, trade names, trademarks and service marks of Acasti, Neptune and other organizations, all of which are the property of their respective owners.
Acasti has applied for trademark protection for CaPre . The trademark CaPre is now registered in the United States, Canada, Australia, China, Japan and Europe. Acasti is also the owner of the trademark BREAKING DOWN THE WALLS OF CHOLESTEROL in Canada and the United
Unless otherwise indicated, market data and certain industry data and forecasts included in this document concerning our industry and the
markets in which we operate or seek to operate were obtained from internal company surveys, market research, publicly available information, reports of governmental agencies and industry publications and surveys. Acasti has relied upon industry
publications as its primary sources for third-party industry data and forecasts. Industry surveys, publications and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but that the
accuracy and completeness of such information is not guaranteed. Acasti has not independently verified any of the data from third-party sources, nor has Acasti ascertained the underlying economic assumptions relied upon therein. Similarly, internal
surveys, industry forecasts and market research, which Acasti believes to be reliable based upon management s knowledge of the industry, have not been independently verified. By their nature, forecasts are particularly subject to change or
inaccuracies, especially over long periods of time. In addition, Acasti does not know what assumptions regarding general economic growth were used in preparing the forecasts cited in this document. While Acasti is not aware of any misstatements
regarding Acasti s industry data presented herein, Acasti s estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under Forward-Looking Information and
Risk Factors in this document. While Acasti believes its internal business research is reliable and market definitions are appropriate, neither such research nor definitions have been verified by any independent source. This document may
only be used for the purpose for which it has been published.
All financial information contained in this document is presented in accordance with
International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB, other than certain non-IFRS financial measures which are defined under Non-IFRS operating loss (net loss before
finance costs and income, change in fair value of derivative warrant liabilities, depreciation and amortization, impairment of intangible assets and stock-based compensation), in the Corporation s management s discussion and analysis for
the fiscal years ended February 29, 2016 and February 28, 2015 and 2014.
FORWARD-LOOKING INFORMATION
This document contains certain information that may constitute forward-looking information within the meaning of Canadian securities laws
and forward-looking statements within the meaning of U.S. federal securities laws, both of which Acasti refers to as forward-looking information. Forward-looking information can be identified by the use of terms such as may ,
will , should , expect , plan , anticipate , believe , intend , estimate , predict , potential , continue or other similar
expressions concerning
matters that are not statements about the present or historical facts. Forward-looking information in this document includes, but is not limited to, information or statements about:
forward-looking information in this document is based upon what Acasti believes are reasonable assumptions, no person should place undue reliance on such information since actual results may vary materially from the forward-looking information.
Certain important assumptions by Acasti in making forward-looking statements include, but are not limited to:
In addition, forward-looking information in this document is subject to a number of known and unknown risks, uncertainties and
other factors, including those described in this document under the heading Risk Factors and in the revised annual report on form 20-F of the Corporation for the fiscal year ended February 29, 2016, as filed on SEDAR under Acasti s
profile on May 30, 2016 under the heading Risk Factors , many of which are beyond the Corporation s control, that could cause the Corporation s actual results and developments to differ materially from those that are disclosed
in or implied by the forward-looking information, including, without limitation:
Consequently, all the forward-looking information in this document is qualified by this cautionary statement and there can be no guarantee that the
results or developments that the Corporation anticipates will be realized or, even if substantially realized, that they will have the expected consequences or effects on the Corporation s business, financial condition or results of operations.
Accordingly, you should not place undue reliance on the forward-looking information. Except as required
by applicable law, Acasti does not undertake to update or amend any forward-looking information, whether as a result of new information, future events or otherwise. All forward-looking
information is made as of the date of this document.
BUSINESS DESCRIPTION
incorporated on February 1, 2002 under Part 1A of the Companies Act (Qu bec) under the name 9113-0310 Qu bec Inc. . On February 14, 2011, the Business Corporations Act (Qu bec) came into effect
and replaced the Companies Act (Qu bec). Acasti is now governed by the Business Corporations Act (Qu bec). On August 7, 2008, pursuant to a Certificate of Amendment, the Corporation changed its name to Acasti
Pharma Inc. , its share capital description, the provisions regarding the restriction on securities transfers and the borrowing powers of the Corporation. On November 7, 2008, pursuant to a Certificate of Amendment, the Corporation changed
the provisions regarding its borrowing powers. The Corporation became a reporting issuer in the Province of Qu bec on November 17, 2008.
Acasti s head and registered office is located at 545 Promenade du Centropolis, Suite 100, Laval, Qu bec
H7T 0A3. The Corporation currently employs 12 full-time employees with the majority working out of the Corporation s headquarters in Laval and its laboratory in Sherbrooke. The Corporation s website address is
Intercorporate Relationships
The Corporation has no subsidiaries. As of December 5, 2016, Neptune Technologies and Bioressources Inc. (Neptune) owns 5,064,694
Class A shares in the capital of the Corporation (Common Shares), representing approximately 47.28% of the issued and outstanding Common Shares.
Summary Description of the Business
Acasti is a biopharmaceutical innovator focused on the research, development and commercialization of prescription drugs using omega-3
fatty acids derived from krill oil. Acasti s lead product candidate is CaPre (omega-3 phospholipid), which Acasti is developing initially for the treatment of severe
hypertriglyceridemia, a condition characterized by abnormally high levels of triglycerides in the bloodstream (over 500 mg/dL) (severe hypertriglyceridemia or severe HTG). Acasti believes the potential exists to expand CaPre s
indication to mild to moderate hypertriglyceridemia (200 499 mg/dL) with the likelihood of additional clinical trials being required such as comparative studies and outcome trials, assuming positive outcome study data in the next two years
from two competitors. In addition, Acasti may seek to identify new potential indications for CaPre that may be appropriate for future studies and pipeline expansion. See Risk Factors.
Omega-3 fatty acids have extensive clinical evidence of safety and efficacy in lowering triglycerides in patients with
hypertriglyceridemia. Market research commissioned by Acasti1, suggests there is a significant unmet market need for an effective, safe and well-absorbing omega-3 therapeutic that demonstrates a
positive impact on the major blood lipids associated with cardiovascular disease risk. Acasti believes that, if supported by additional clinical trials, CaPre will address this unmet market need.
In four clinical trials conducted to date, Acasti saw the following beneficial effects with CaPre, and is seeking to demonstrate similar
safety and efficacy in a Phase 3 clinical study:
1 Primary qualitative market research study with Key Opinion Leaders (KOLs), High Volume
Prescribers (HVPs) and Pharmacy commissioned by Acasti in August 2016 by DP Analytics, A Division of Destum Partners, a market research firm (the Destum Market Research).
About Hypertriglyceridemia (HTG)
According to The American Heart Association Scientific Statement on Triglycerides and Cardiovascular Disease (2011), triglyceride levels
provide important information as a marker associated with the risk for heart disease and stroke, especially when an individual also has low levels of HDL-C, and elevated levels of LDL-C. Hypertriglyceridemia can be caused by both genetic and
environmental factors, including obesity, sedentary lifestyle and high-calorie diets. Hypertriglyceridemia is also associated with comorbid conditions such as chronic renal failure, pancreatitis, nephrotic syndrome and diabetes. Multiple genetic
studies suggest that patients with elevated triglyceride levels (greater than or equal to 200 mg/dL) have an increased risk of coronary artery disease (CAD) and pancreatitis, a life-threatening condition, as compared to those with normal
triglyceride levels. Other studies suggest that lowering and managing triglyceride levels may reduce such risks. In addition, the Japan EPA Lipid Intervention Study (JELIS) demonstrated the long term benefit of an omega-3 (EPA) in the prevention of
major coronary events in high risk cardiovascular (CV) patients.2
CaPre is a krill oil derived mixture containing polyunsaturated fatty acids (PUFAs), primarily composed of omega-3 fatty acids,
principally eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA). EPA and DHA are well known to be beneficial for human health, and may promote healthy heart, brain and visual
function3, and may contribute to reducing inflammation, and blood triglycerides4. Krill is a natural source of phospholipids and omega-3 fatty
acids. The EPA and DHA contained in CaPre are delivered as free fatty acids or bound to phospholipid esters, allowing these PUFAs to reach the small intestine where they undergo rapid absorption and transformation into complex fat molecules that are
required for transport in the bloodstream. Acasti believes that EPA and DHA are more efficiently transported by phospholipids sourced from krill oil than the EPA and DHA contained in fish oil that are transported either by triglycerides (as in
dietary supplements) or as ethyl esters in other prescription omega-3 drugs, which must then undergo additional digestion before they are ready for transport in the bloodstream.
CaPre is intended to be used as a therapy in conjunction with positive lifestyle changes including diet, and is to be administered either
alone or with other drug treatment regimens such as statins (a class of drug used to reduce cholesterol levels). CaPre is intended to be taken orally once per day in capsule form.
2 Yokoyama et al, Lancet 2007 and Saito et al, Atherosclerosis 2008.
3 Kwantes and Grundmann, Journal of Dietary Supplements, 2014.
4 Ulven and Holven, Vascular health and risk management, 2015.
Except as otherwise indicated, all of the information under this heading has been
derived from secondary sources including audited U.S. prescribing data and from a qualitative U.S. commercial and primary market research assessment conducted by DP Analytics, A Division of Destum Partners, Inc. (Destum), a
market research firm, for Acasti dated August 19, 2016, which is referred to herein as the Destum Market Research . To conduct this market analysis for CaPre, Destum utilized secondary market data and reports and primary qualitative
market research with physicians and third party payers (pharmacy benefit managers (PBMs)). One-on-one in-depth phone interviews lasting on average 30-60 minutes were conducted with 22 physicians and 5 PBMs, and key qualitative
data was obtained on current clinical practice, unmet medical need, and commercial potential of CaPre. All interviews were conducted by the same individual at Destum and recorded to ensure consistency and collection of key data points. Destum
utilized omega-3 prescription data from 2009-2015 for purposes of estimating the size of the market. Based on the discussions with the PBMs, Destum also assumed CaPre would be viewed favorably by payers at launch (e.g. Tier 2 or 3 depending on payer
plan, which is comparable to VASCEPA ). Of note, upon completion of the screening questionnaire and upon approval for inclusion in the study, KOLs/HVPs were provided with a study
questionnaire and were asked to comment on a target product profile offering a trifecta of cardio-metabolic benefits similar to the potential efficacy and safety benefits demonstrated by CaPre in two Phase 1 pharmacokinetic studies and
two Phase 2 clinical trials (a Target Product Profile). Respondents were told that the unidentified product was being prepared for a Phase 3 study designed to confirm with statistical significance the safety and efficacy in
patients with severe hypertriglyceridemia. Such a Target Product Profile was used by Destum strictly for market research analysis purposes and should not be construed as an indication of future performance and should not be read as any form of
expectation or guarantee of future performance or results, and will not necessarily be an accurate indication of whether or not such results will be achieved by CaPre in any Phase 3
According to The American Heart Association, the prevalence
of HTG in the United States and globally correlates to the aging of the population and the increasing incidence of obesity and diabetes. Market participants, including The American Heart Association, have estimated that one-third of the adult
population in the United States has elevated levels of triglycerides (TGs) (of which only 4% are treated), including over 40 million people diagnosed with mild to moderate hypertriglyceridemia, and 3 to 4 million people diagnosed in
the United States with severe hypertriglyceridemia6. Moreover, according to Ford, Archives of Internal Medicine in a study conducted between 1999 and 2004, 18% of adults in the United States
(approximately 40 million7) had elevated TG levels equal or greater to 200 mg/dl8, of which only 3.6% were treated with TG lowering medication9, providing for a large underserved market opportunity.
target market in the United States for severe HTG was estimated to be approximately $750 million, with approximately 5 million scripts written annually over the past four years10. The total global