CymaBay, GenKyoTex, And Intercept In PBC: The Clinical Differentiation

About: Intercept Pharmaceuticals (ICPT), CBAY
by: First Genesis Consulting


North America and Europe are the largest markets for PBC therapy due to the higher prevalence and incidence of the disease.

FDA approved UDCA and Ocaliva are recognized to delay the progression of cirrhosis in PBC without improving pruritus and fatigue.

Seladelpar, a Phase 3 drug candidate, is proving to be an improved second-line treatment in PBC relative to ocaliva as shown by anti-cholestatic and anti-pruritogenic medical relief.

GKT831 by GenKyoTex, a Phase 2 anti-PBC drug candidate, has been proposed to exert anti-inflammatory and direct anti-fibrotic benefits to delay or regress cirrhosis in PBC.

Seladelpar and GKT831 should benefit from significant differentiation in a market that is expected to grow in upcoming years.

Any man or institution that tries to rob me of my dignity will lose - Nelson Mandela

Investment Thesis

Ocaliva by Intercept (ICPT) was the first FDA approved therapy in twenty years for primary biliary cirrhosis (PBC). Currently, only two drugs, ursodeoxycholic acid (UDCA) and ocaliva, are FDA approved to therapeutically delay the progression of cirrhosis in PBC without improving pruritus (intense itching) and fatigue.

PBC remains an incurable disease and the large number of drugs in clinical trials is expected to propel growth of the PBC drug market in future years. Many of the anti-cholestatic PBC drug candidates in clinical development are expected to mechanistically induce anti-cholestatic benefits mainly by suppressing bile acid synthesis in line with UDCA and ocaliva.

Seladelpar by CymaBay (CBAY) is a PPAR-d agonist that is well positioned to be an improved second-line treatment for PBC relative to ocaliva. Seladelpar is currently in Phase 3 (pending Q4/2018) clinical trial for PBC. The 52-week data from its Phase 2b trial showed that seladelpar induced anti-cholestatic benefits as reflected by normal alkaline phosphatase (AP) levels in more than 50% of the patients. Importantly, seladelpar showed a trend toward anti-pruritogenic relief.

Patients with advanced PBC disease, ductopenia (i.e. loss of bile ducts; Fig. 1), may not benefit medically from anti-cholestatic PBC drugs including ocaliva and seladelpar that increase bile flow. The reason is that the anti-cholestatic mechanism of increasing bile flow in advanced PBC (ductopenia) would lead to increased mechanical pressure in the remaining bile ducts, causing bile infarcts and liver damage. An indication perhaps that anti-cholestatic PBC drugs including ocaliva and seladelpar will therapeutically benefit patients with mild PBC. However, its clinical efficacy in patients with moderate or advanced PBC is unclear or not fully understood (discussed later).

GKT831 by GenKyoTex (GKTX.PA) is a Phase 2 drug candidate in clinical trial for PBC. GKT831 is a potent and selective dual NOX1/4 inhibitor that suppresses reactive oxygen species to induce anti-inflammatory and anti-fibrotic responses in pre-clinical models of NASH and PBC. GenKyoTex's hypothesis is that GKT831 exerts direct anti-fibrotic effects on myofibroblasts in a broad PBC patient population comprising mild, moderate and advanced PBC to regress inflammation and fibrosis that prevents development of cirrhosis.

Biotech/biopharmaceutical industry is characterized by intense competition and ongoing innovation. It is very likely that validation of the clinical efficacy of seladelpar and GKT831 in PBC will financially impact the commercial success of ocaliva in PBC. I anticipate clinical success for seladelpar and GKT831 in PBC since there is significant differentiation in their pharmacological target and phase of PBC disease state that should make each drug candidate therapeutically effective.

All clinical trials are associated with risks including trial delay, negative clinical outcome. Seladelpar is partially clinically de-risked due to positive efficacy in Phase 2b PBC trial. At present, its long-term valuation is being determined by PBC trial because seladelpar is considered an improved second-line therapy for PBC and it will be adversely impacted by a negative clinical outcome of the Phase 3 PBC trial.

Seladelpar efficacy in NASH Phase 2b trial is ongoing and a positive clinical efficacy will definitely increase CymaBay's long-term valuation and keep it competitive Similarly, GenKyoTex's long-term valuation will be assessed by top-line data readout from the Phase 2 PBC its lead trial. The Phase 2 diabetic kidney disease trial is currently ongoing.

The Addressable Market

The addressable market for PBC is set to grow with North America and Europe having the largest market for PBC therapy followed Asia Pacific and China. Asia Pacific and China are expected to observe the fastest growth in PBC drugs market in upcoming years (2017 to 2022) due to rising awareness associated with rare diseases, high incidence and increased diagnosis of liver cirrhosis.

The 2016 industry data analysis anticipates approximately 290,000 individuals with PBC in key target markets, consisting of the United States, certain European countries, Canada, Australia, and New Zealand. Lifetime therapy is currently recommended for all PBC patients. Currently, only two FDA approved drugs (discussed below), UDCA and ocaliva, are available in the market to delay the progression of PBC. Novel drugs are required for PBC due to unresolved and problematic adverse events discussed below.

UDCA, the first approved drug for PBC in 1997, was shown to delay the progression of PBC and improve transplantation-free survival in 60% of the patients without improving cholestasis-associated symptoms such as pruritus and fatigue. However, the 40% of PBC sufferers are deemed UDCA non-responders, have no effective therapeutic option and have an accelerated and increased risk of disease progression to fibrosis, cirrhosis and ultimately liver failure. This group remains at risk for progression of liver disease and development of liver failure. Notably, PBC is one of the leading cause of liver failure and transplant in women (Lasker et. al. Br. J. Health Psychol. 2011) with death or liver transplant occurring in 41% of UDCA treated PBC patients with decompensated liver.

In 2016, ocaliva was approved by the FDA as a breakthrough therapy for PBC as an add-on second-line agent to standard of care (UDCA) for a significant population of PBC patients who are UDCA non-responder and as a monotherapy for PBC patients who are UDCA intolerant. The clinical issue of enhanced pruritus and dyslipidemia remain problematic with ocaliva therapy.

Orphan diseases such as PBC are typically associated with high pricing power. At ~$70,000/year, ocaliva is substantially more expensive than UDCA, which is generically available at a $3,000/year. Lifetime treatment is currently recommended for all PBC patients. It is expected that future drug approvals will also be similarly priced as ocaliva or higher due to their orphan drug status.

The Competition

An overview of PBC, CymaBay, and GenKyoTex are provided before I analyze their different pharmacological therapeutic approach to PBC.

PBC is an incurable disease characterized by initial alteration in the mitochondrial function due to loss of tolerance of a widely expressed subunit of pyruvate dehydrogenase complex (PDC-E2) of mitochondria, followed by immune-mediated injury to intrahepatic bile ductules, resulting in intrahepatic cholestasis and liver injury. Progression of cholestasis is associated with cholangiocyte death, biliary fibrosis, ductopenia, cirrhosis, and hepatocellular carcinoma leading to hepatic failure and death (Fig. 1; CymaBay Therapeutics). The rate of progression varies greatly among individual patients.

Fig.1: Pathogenesis of PBC (CymaBay Therapeutics)

The majority (~90%) of PBC patients are women, with roughly one in 1,000 women over the age of 40 afflicted by the disease with a mean age of diagnosis of 40 years. PBC is diagnosed by the presence of antimitochondrial antibodies (AMAs) in the blood. Although most PBC patients present no symptom at time of initial diagnosis, most develop symptoms over time with fatigue and pruritus (intense itching), the most common. The exact underlying etiology for this cascade of events remains unclear but is most likely multifactorial including genetic and environmental components.

CymaBay Therapeutics

Background and Market Assessment: CymaBay Therapeutics is a small cap ($667M) clinical-stage biopharma developing innovative therapeutics for rare/orphan diseases and diseases with high unmet medical needs. CymaBay has multiple shots on goal and is currently focused on the development of the novel PPAR-d agonist, seladelpar as its lead candidate, to positively regulate bile acid, lipid, and glucose homeostasis during hepatic diseases. Seladelpar was granted orphan designation by FDA and EMA for PBC.

The market has a favorable assessment of seladelpar with 8 analysts rating CymaBay as a strong buy with a 12-month consensus price target of $20. The most recent 13F fillings document a large (82.33%) institutional holdings with 76 holders increased positions, 36 holders decreased positions and 11 held their positions. In June 2018, CymaBay stock was added to the Russell 2000 and 3000 indexes, an affirmation of the Market's confidence in this small market cap biopharma. At the end of Q2/2018, cash, cash equivalents, and marketable securities totaled $212M enough to fund operations into 2021. In Q2/2018, CymaBay had a cash burn of $17.5M relative to Q1/2018. CymaBay also reported a debt-free balance sheet at the end of Q2/2018 due to full settlement of term loan facility.


Background and Market Assessment: GenKyoTex (GKTX.PA) was founded in 2006 by the scientists based in Geneva, Kyoto, and Texas who discovered and characterized most of the nicotinamide adenine dinucleotide phosphate oxidase (NOX) enzymes. GenKyoTex is a small cap ($141M; presented in US$ after conversion from euro€) clinical stage French-Swiss biopharma that is establishing a name for itself in fibrotic diseases with the development of innovative therapeutics, NOX inhibitors. A NOX inhibitor is designed to block NOX enzymatic activity that produces oxygen radicals/ROS which are well-known activators of inflammatory signaling pathways in many disease states.

NOX enzymes are the main source of ROS that controls protein oxidation. They have wide-ranging physiological functions associated with the development and progression of inflammation and fibrosis, respectively (Fig. 2). NOX4 is expressed in both hepatocytes and activated stellate cells.

Fig.2: Diverse effects of NOX enzymes (GenKyoTex)

GKT831, the lead drug candidate, is a potent and selective dual NOX1/4 inhibitor with documented anti-inflammatory and anti-fibrotic effects. GenKyoTex has multiple shots on goal with three current Phase 2 clinical trials for fibrotic diseases, PBC, Diabetic kidney disease and Idiopathic pulmonary fibrosis.

Fibrotic diseases of the liver, lung, and kidney represent a huge addressable market due to huge direct and indirect healthcare costs. It is my opinion that GenKyoTex is a value yielding stock for short and long-term investors in upcoming months/years with a Phase 2 PBC interim readout due Nov./2018 and a complete top-line data expected late Q2/2019. Analyst rating is a buy with a 12-month consensus of $3.90. GKT831 and its generic derivatives have patent exclusivity until 2028/2029.

Cash and cash equivalents amounted to $10.8M (presented in US$ after conversion from euro€) on Q2/2018. In Q2/2018, GenKyoTex had a cash burn of $3.6M (presented in US$ after conversion from euro€) relative to Q1/2018. GenKyoTex expects this cash position to support currently planned operations until the end of Q3/2019. GenKyoTex is entitled to $174M (presented in US$ after conversion from euro€) in upfront payment, development and commercial milestones before royalties from its license agreement with the Serum Institute for Vaxiclase. Vaxiclase is an immunotherapies technology platform against multiple infectious diseases or cancers.

The Differentiation

Pharmacological Mechanism: Anti-Cholestatic (Mild PBC)

AP is an established key biomarker for PBC since elevated AP is associated with cholestasis, ongoing bile duct destruction, and disease progression. Alkaline phosphatase. Conversely, a lower AP level is recognized as a surrogate for reduced bile duct damage and longer transplant-free survival.

CymaBay recently announced the results of the 52-week Phase 2b clinical study of seladelpar in patients with PBC. The 52-week composite responder rates (AP <1.67 ULN) in the 5 mg/10 mg and 10 mg seladelpar groups were 59% and 71%, respectively, a confirmation of the therapeutic efficacy that was reported at 26 weeks. As per their press release, the full data will be reported at the AASLD 2018 conference. In AASLD, we expect to get more information on the number of overall patients that achieved normal AP levels and a clearer understanding of the possible benefit of seladelpar in alleviating pruritus at 52 weeks.

Clinically, UDCA, ocaliva, and seladelpar all induce anti-cholestatic responses through reduced AP levels to provide therapeutic relief to PBC patients. Mechanistically, anti-cholestatic drugs typically work to reduce bile acid levels in bile ducts and in the liver. Reduction of bile acid is achieved via inhibiting/downregulating CYP7A1, the rate-limiting enzyme in bile acids synthesis, and also through increased elimination of bile acids.

In view of the fact that cholestasis is caused by slowing of bile flow, anti-cholestatic drugs increase bile flow (i.e. a choleretic effect) to increase bile acid elimination. This process is very effective in PBC patients with mild disease who have preserved bile ducts. Healthy subjects normally have AP levels (U/L) ~44-147.

Looking at the baseline AP levels in PBC patient population in the seladelpar and ocaliva's trials showed that most patients had mild PBC as reflected by baseline AP level of 265-320 U/L. As a matter of fact, patients with advanced PBC were excluded from ocaliva POISE Phase 3 trial.

In pre-clinical models of advanced PBC disease with ductopenia, both UDCA and ocaliva worsened biochemical and histological disease activity. This is because increased bile flow in the presence of ductopenia leads to increased mechanical pressure in the remaining bile ducts, leading to bile infarcts and liver damage. For this reason, anti-cholestatic drugs could be therapeutically ineffective in patients with moderate PBC disease [moderate ductopenia (loss of bile ducts)] or advanced PBC disease (severe ductopenia). Notably, the FDA issued a black box warning for patients with advanced PBC being treated with ocaliva due to heightened risk of liver decompensation or failure.

The upcoming pivotal Phase 3 trial for seladelpar in PBC will involve patients with mild and moderate PBC (Q2 corporate presentation). The 52-week study will assess the effects of seladelpar on AP levels and pruritus with long-term extension study evaluating its role in delaying or halting histologic disease progression and safety. Seladelpar is also being clinically evaluated in a Phase 2 proof-of-concept trial in NASH.

Pharmacological Mechanism: Anti-Fibrotic (Moderate and Advanced PBC)

Mild PBC (biliary inflammation, cholestasis) progresses to moderate PBC (i.e. mild ductopenia, biliary fibrosis), and severe/advanced PBC (i.e. severe ductopenia, cirrhosis liver failure), and hepatocellular carcinoma leading to hepatic failure and death. For moderate and advanced PBC disease, new therapies to cure or regress the progression are needed. Effective therapy prevents liver failure, reduces the need for transplantation and improves life expectancy.

GKT831, an orally available small molecule drug candidate that is rapidly absorbed and has a half-life of 10-12 hrs, is a potent and selective dual NOX1/4 inhibitor. GKT831 has good safety profile in healthy and disease subjects. As an inhibitor of ROS production, GKT831 has been hypothesized to act upstream of the inflammatory cascade to inhibit stimulation of ROS-mediated molecular pathways to repress subsequent activation of multiple fibrogenic pathways, including TGF-β, MCP-1, and ASK-1 that have been implicated in NASH pathogenesis (Fig. 3).

Pre-clinical data from experimental NASH and liver fibrosis highlight the anti-NASH and anti-fibrotic benefits of GKT831 in liver injury. Fibrosis is the sole histopathological end stage of the many disease states including NASH and PBC that often leads to cancer.

Fig. 3: Proposed fibrogenic pathways of GKT831 in organ systems (GenKyoTex)

Given the therapeutic gap in moderate and advanced PBC, GenKyoTex hypothesized that GKT831 exerts direct anti-fibrotic effects on myofibroblasts in a broad PBC patient population comprising mild, moderate and advanced PBC to regress inflammation and fibrosis that prevents development of cirrhosis. This hypothesis was initially tested in pre-clinical cholestatic liver fibrosis, a murine mimic of advanced PBC. GKT831 via ROS inhibition, markedly improved disease activity as shown by reduced hepatic inflammation, improved liver fibrosis as well as decreased hepatocyte apoptosis.

Data generated in multiple relevant pre-clinical models of advanced PBC provided initial evidence in support of GenKyoTex's hypothesis. GKT831 is currently being evaluated in a 24 week randomized, double-blind, placebo-controlled Phase 2 clinical trial in patients with active disease as denoted by elevated ALP and GGT (i.e. enzyme marker for liver injury and cholestasis).

By choosing GGT as the primary clinical endpoint, GenKyoTex's goal is to emphasize the anti-inflammatory benefit of GKT831 in active PBC disease (cholestasis and associated liver injury). Secondary clinical outcomes will assess AP levels, markers of liver fibrosis, and measure quality of life.

It is well established that high level of ROS generation is associated with activation of several disease inflammatory signalling pathways as well as direct tissue damage in several organ systems including liver. A Phase 2 PBC interim data readout is due Nov/2018 with the complete top-line data expected late Q2/2019. I expect a positive clinical outcome of GKT831. It is notable that interim evaluation of the safety data by DSMB provided a positive recommendation.


For a long time, clinical development of therapeutics for PBC and other non-viral liver diseases remained largely ignored or dormant. With the approval of ocaliva and its persistent adverse effects, seladelpar is positioning itself as the next second-line therapy for mild PBC and possibly moderate PBC pending a positive clinical outcome in Phase 3 trial. Despite the reported regression of biliary fibrosis by ocaliva in some patients with advanced PBC, the FDA black box warning for advanced PBC suggests that ocaliva may not be a favorable therapy for advanced PBC.

GKT831 perceived a therapeutic void in PBC therapeutics for patients with moderate and advanced PBC. GKT831 is being developed as a dual anti-inflammatory and anti-fibrotic therapy that can be used in a broad range of patients encompassing mild, severe and advanced PBC to regress inflammation and fibrosis that prevents development of cirrhosis. Effective therapy will prevent liver failure, reduce the need for transplantation and improve life expectancy.

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Disclosure: I am/we are long CBAY, ICPT.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.