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Gemphire - Update To Thesis: The Runup Continues

Jul. 13, 2017 8:18 AM ETGemphire Therapeutics Inc. (GEMP)65 Comments


  • Thesis appeared broken when CEO left
  • Interim CEO is managing director at Excel Venture Management, which owns over 5% of outstanding stock
  • Data from COBALT-1 trial in patients with HoFH was quite promising and indicates a higher probability that readouts in successive trials could be positive
  • Management projects cash runway into late 2018, but in the absence of partnership I'd expect dilution late this year or early 2018
  • NASH indication could come into spotlight as AZURE-1 trial is initiated

Shares of Gemphire Therapeutics (NASDAQ:GEMP) have increased 30% since my initial writeup, in which I suggested shares could runup into multiple data events.

GEMP data by YCharts

To remind readers, their principal asset is gemcabene,a first-in-class once-daily oral drug candidate licensed from Pfizer that has been shown to lower cholesterol, fat, and inflammation. Our thesis was predicated on a runup into data readouts from three phase 2b trials in dyslipidemia patients in the second half of the year, as well as the initiation of a phase 2 trial, dubbed "AZURE-1", in the lucrative NASH indication.

Figure 2: Gemcabene differentiation as a dyslipidemia treatment (source: corporate presentation)

What's Happened Since:

CEO Departure

It's rarely a good sign when the CEO of a company steps down, and when Mina Smooch resigned for personal reasons the stock dipped over 15% and I was beginning to question whether the thesis was still intact, as pessimism generated from such an event could nullify the runup. In all honesty, I believed it was broken.

Interestingly enough, board member Dr. Steven Gullans was named Interim President and Chief Executive Officer. I chose "interesting" as the operative wording due to the fact that he is managing director at Excel Venture Management, which owns over 5% of the company's outstanding stock.

Promising HoFH Data

On June 28th it was announced that gemcabene achieved the primary endpoint in the phase 2b COBALT-1 trial, which evaluated the drug candidate in homozygous familial hypercholesterolemia (HoFH) patients who were on stable maximally tolerated lipid-lowering therapies.

Patients enrolled were clinically or genetically diagnosed as HoFH and on a several standard therapies including high doses of statins and/or ezetimibe and/or PCSK9 inhibitors.

Gemcabene 300 mg lowered LDL-C by a mean of 25% (p=0.0063), while the midrange dose of 600mg lowered LDL-C by a mean of 30% and the

This article was written by

Jonathan Faison profile picture
Community of Biotech Investors Focused on Value & Clinical Momentum

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