By Killian McKee, Slingshot contributor
On September 20th, Allergan (NYSE:AGN) brought increased investor attention to the NASH market by buying two treatment developers, Tobira Therapeutics, Inc. (NASDAQ:TBRA) ($1.7 billion) and Akarna Therapeutics Ltd. ($50 million) What could possibly compel AGN to pay a 498% premium for Tobira compared to its $38.91 closing price the day before? NASH is a disease with no FDA approved treatments, a large and perennially increasing market and could represent a serious unmet medical need. This week aims to cut through the noise surrounding recent NASH events (like GALT's September 27th Phase 2a failure) by exploring the potential treatment market opportunity and posing questions for an expert about which companies (including GILD, AGN, ICPT, GNFTF, GLMD and CNAT) deserve the most investor attention.
What is Nonalcoholic Steatohepatitis?
Nonalcoholic steatohepatitis is a common, often undiagnosed liver disease affecting 2-5% of Americans. It bears similarities to alcoholic liver disease, but occurs in individuals who drink little to no alcohol. The most notable feature of NASH is a buildup of fat in the liver, but its underlying cause is still not well understood. Although many patients do not feel sick, NASH can be a serious problem leading to cirrhosis and ultimately liver failure. There are currently no specific treatments for NASH, but reducing weight, increasing physical activity, avoiding alcohol and improving diet have been shown to help control the disease. Some pharmaceutical skeptics suggest lifestyle changes are sufficient to control most instances of NASH and that the hype over the disease may be overblown. Regardless, the incidence of NASH is growing each year in tandem with rising obesity and diabetes rates with some estimates suggesting a market size around $20 billion by 2025.
The NASH Companies You Should Know
Although there are dozens of ongoing trials for NASH, there are six companies developing treatments especially worth discussing before our expert interview: Gilead (NASDAQ:GILD), Allergan, Intercept (NASDAQ:ICPT), Genfit (OTCPK:GNFTF), Galmed (NASDAQ:GLMD) and Conatus (NASDAQ:CNAT).
GILD has 5 drugs in development aimed at treating NASH, in addition to some other liver diseases. The most prominent is simtuzumab, a monoclonal antibody currently in three Phase 2b trials testing its efficacy at treating NASH and Primary Sclerosing Cholangitis (NASDAQ:PSC). Phase 2 data presented early 2016 showed promising signs warranting a Phase 2b trial.
Although many investors question the steep premium paid for Tobira, AGN's recent purchases have certainly given the company a strong interest in the NASH treatment race. Tobira's main NASH treatment is cenicriviroc (CVC). CVC recently missed its primary endpoint in the Phase 2b CENTAUR study, although it did demonstrate an improvement in some NASH symptoms. Plans are underway for a Phase 3 CVC trial in addition to several other Phase 1 trials Tobira has for CVC and evogliptin (EVO). Akarna, the second company AGN purchased, is developing small molecule FXR agonist treatments and expects to initiate human trials in early 2017.
ICPT is currently conducting a Phase 3 research study examining the efficacy of obeticholic acid (OCA) at treating patients with NASH. OCA is a synthetic version of a bile acid compound found in the liver. Notably, OCA was approved earlier this year to treat primary biliary cirrhosis, another serious liver disease.
GNFTF's main NASH candidate, Elafibranor (GFT505), is currently being tested in the Phase 3 RESOLVE-IT. The 1000-person trial was initiated in fall of 2015 and is examining the efficacy of improving NASH symptoms without worsening fibrosis over 72 weeks.
GLMD's primary goal is the development and commercialization of its NASH drug Aramchol. Aramchol is currently in Phase 2b trials assessing its ability to effectively improve the rate of fatty acid/bile metabolism to treat NASH. Phase 2a results demonstrated a significant ability to improve bile metabolism.
CNAT currently has two ongoing Phase 2 trials for its anti-fibrotic drug emricasan. Early 2016 Phase 2 data readouts demonstrated positive directional improvements in liver function. There is one ongoing Phase 2b trial with plans to initiate another, or possibly a Phase 3 trial in early 2017.
What's the Next Step?
Speaking to an expert familiar with NASH and the treatment landscape surrounding the disease. More specifically, a hepatologist or gastroenterologist with significant experience treating serious liver diseases would be ideally qualified to discuss the NASH treatment forerunners and the general market landscape.
Questions for a NASH Expert:
• What is your background treating serious liver diseases? How many patients do you treat with NASH?
• How serious a medical condition is NASH?
• What current recommendations are you making to patients with NASH when there are no FDA approved treatments?
• NASH sounds like it is frequently left undiagnosed. Why do you think this is and do you see this changing at all in the future? What do you think this means for the potential NASH market?
• Generally speaking, what categories of NASH drug do you think hold the most potential? What in the data leads you to believe these will be the most effective treatments?
• What are your thoughts on the NASH drugs being developed by GILD, AGN, ICPT, GLMD, GNFT and CNAT? Are there other major companies you think investors should keep an eye on?
• Overall, what drugs do you think hold the most potential for treating NASH? Why?
• Some estimates have proposed a $20 billion NASH market by 2025. Does this sound plausible in your opinion?
• How much potential do you think NASH drugs have for treating other fatty liver diseases? Do any of the aforementioned companies have a product you think would lend itself especially well to treating other serious liver conditions?
NASH is capturing noteworthy investor attention because of the disease's rapidly growing market, severity and total lack of available treatments. The abundance of companies developing treatments leaves investors sifting through a mountain of data and speculation. Speaking to a hepatology or gastroenterology expert familiar with NASH could help investors more effectively determine the companies most likely to succeed in bringing a treatment to market.
How to Participate in the Expert Call
Users interested in participating in this Expert call on NASH can join the project and add their questions for the expert. The call will be free for current Slingshot Insights members and for Seeking Alpha readers who use the coupon code SeekingAlpha. Users can listen live or to a recording that will be available immediately after the call, on the project page.
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I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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