CymaBay Therapeutics (CBAY): The company announced first quarter financial results, with management highlighting the fact that enrollment was completed one quarter ahead of schedule in the phase 2b study of seladelpar in NASH patients (52-week, dose-ranging trial). Topline data for changes in liver fat, lipids, and transaminases at Week 12 is expected before the end of Q2. Keep in mind that, a few months ago, the drug candidate was awarded the coveted Breakthrough Therapy designation by the FDA for patients with early-stage PBC (primary biliary cholangitis) and that the company's operational runway was significantly extended with March's secondary offering.
In a prior article, I touched on several keys to the bullish thesis, including data from the ongoing phase 2 study of seladelpar in PBC patients presented at Liver Meeting in November 2018. At 52 weeks mean decreases in AP were -47% and -46% in the 5/10 and 10 mg groups, respectively. Composite responder rate (AP less than1.67 x ULN, greater than or equal to 15% decrease in AP, and total bilirubin less than or equal to ULN) at 52 weeks was 59% and 71% in the 5/10 and 10 mg groups, respectively. Robust anti-inflammatory activity was observed, with median transaminase decreases of -31% and -33% in the 5/10 and 10 mg groups, respectively.
Figure 3: Phase 2 data showed up to 71% of patients achieved composite efficacy endpoint (source: corporate presentation)
While 11 serious adverse events were reported, none were considered related to the study drug. There were three patient discontinuations of which only one was related to seladelpar (Grade 1 gastroesophageal reflux). Also, there were no transaminase safety signals and no evidence of drug-induced pruritus.
All of this to arrive at the conclusion that seladelpar's safety profile gives it a big leg up over the competition (especially when thinking about drug-induced pruritus). To my eyes, seladelpar appears to be the better drug as compared to Intercept Pharmaceuticals' (ICPT) Ocaliva (needs to be confirmed in upcoming results and, of course, later on with phase 3 data as well). Long-time readers are well aware that I'm a fan of valuation gap ideas.
Speaking of Intercept, it seems to me like they are grabbing the money while they can via recent $400 million financing ($200 million secondary offering and $200 million convertible notes).
Bottom line, while I still have my doubts about the NASH space and associated market opportunity living up to the hype (one reason CymaBay no longer appears in my "active ideas" in ROTY), based on the above, for risk-tolerant investors, CymaBay remains a Buy. Data in PBC for seladelpar provides an element of derisking and downside cushion (plus recent financing got dilution out of the way), while NASH data gives investors significant optionality.
Other News of Note
Aimmune Therapeutics (AIMT) - On the company's Q1 conference call, management stated that they are well on track to introducing AR101 as the first-ever approved treatment for peanut allergy, as FDA acceptance of BLA filing allowed them to continue working with the regulatory agency to achieve an "expeditious" review. In parallel, the company continues to ramp up commercial efforts and scale organization to be launch-ready in Q4. Recent market research conducted by the company aided them in finding the 30% of allergists most ready to offer AR101 to patients if approved today (and who see 70% of peanut allergic patients). Efforts continue to submit marketing authorization application to the European Medicine Agency, and investors can also look forward to full ARTEMIS results at EAACI in June. The pipeline continues to progress as well, with a mid-stage trial of AR201 in egg allergy to get underway midyear.
Magenta Therapeutics (MGTA) - The company announced that phase 2 data for cell therapy candidate MGTA-456 was presented at the American Academy of Neurology. MGTA-456 is designed to provide high dose of hematopoietic stem cells that are well matched to patients, and the company plans to enroll 12 patients in ongoing phase 2 study in inherited metabolic disorders (includes cALD, Hurler syndrome, metachromatic leukodystrophy and globoid cell leukodystrophy). Both cALD patients had stable neurological function scores (unchanged six months post-transplant), which suggested disease progress had been arrested, while Loes score (measures severity of brain abnormalities and atrophy on MRI) also remained stable. Both patients also showed resolution of gadolinium enhancement on MRI (brain inflammation indicator) - this is important as it's correlated with long-term disease benefit in these patients (going to give gene therapy competitors a run for their money). All three Hurler syndrome patients achieved normal levels of blood leukocyte IDUA enzyme by Day 42 post-transplant (associated with disease improvement). They also showed substantial decline in urine total glycosaminoglycan (toxic metabolites implicated in disease). Again, this correlated with improved long-term disease outcome.
Sunesis Pharmaceuticals (SNSS) - Traders in ROTY's Trading Room have done well playing the run up on this non-covalent BTK play (speculative and binary, though, so carefully consider risks).
Figure 4: Potential points differentiation versus BTK inhibitors (source: corporate presentation)
For Q1 2019, management reiterated that clinical update is expected at EHA in June, as the phase 1b/2 trial of vecabrutinib has completed the safety evaluation period for the 100mg cohort, allowing investigators to advance into the 200 mg cohort. Recent debt refinancing, along with January's $20 million secondary offering helped shore up the balance sheet to an extent (still wouldn't be surprised to see further financing in Q2 after data).
Paratek Pharmaceuticals (PRTK) - The company's quarterly results remind me yet again of why we've steered clear of the antibiotic sector for quite some time. After early-February launch, Nuzyra generated $1.3 million in net revenues in the United States, with 85% of revenues related to initial inventory build of oral formulation. Approximately one-third of commercial lives in the US had access to the treatment by the end of the quarter. While some on Wall Street are already drawing comparisons to ill-fated Achaogen (NASDAQ:AKAO), it's worth noting that the company has an operational runway beyond Q1 2021 and patent exclusivity until 2030. Specifically, it last reported $257 million in cash and equivalents, and keep in mind the company also has over $220 million in debt as well.
Topline data from phase 2 studies of omadacycline in uncomplicated urinary tract infections and for the treatment of acute pyelonephritis are expected in the second half of the year as well, providing a catalyst for the medium term.
Given the dour outlook on the future of the antibiotic sector (due in part to generic competition), unless important legislation or other means is utilized to spur investment, incentive and advancement of key assets for these companies, shares of Paratek could have significantly farther to fall.
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Disclosure: I am/we are long ARQL. 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.