Potential Winner Of The First NASH Battle

About: Madrigal Pharmaceuticals, Inc. (MDGL), Includes: AGN, GALT, GNFT, ICPT
by: Mehdi Mehdiyev

NASH is an impregnable fortress for many pharma companies.

The battle for NASH has entered an important stage.

First potential players in the multi-billion-dollar market.

Who is the first wave winner?

Over the past years, many companies have struggled to offer the first NASH cure to the market. Billions of investments have been spent on the study and possible treatments of this complex disease.

So far, no company has been able to get approval for its drug with NASH indication.

But many years of efforts were not in vain, and among the dozens of pharmaceutical companies leading the development of drugs for NASH, there are 5 that are close to the final stage.

What is NASH?

NASH (Non-alcoholic Steatohepatitis) is the most severe form of non-alcoholic fatty liver disease (NAFLD). NAFLD is a condition where excess fat is stored in the liver. There are two types of NAFLD: fatty liver and non-alcoholic steatohepatitis (NASH).

NASH is a severe form of NAFLD, where in addition to fat accumulation, it causes liver cell damage, liver inflammation, fibrosis and scarring. NASH can lead to cirrhosis or liver cancer.

Source: Stanford Medicine Image source: Stanford Medicine

There is no approved medication both for NASH and NAFLD.

According to National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK), 30-40% of adults in United States have NAFLD and 20% of people with NAFLD have NASH.

These figures mean that more than 40 million people in the US have NAFLD and more than 8 million people have NASH accordingly.

According to another study, the global prevalence of NAFLD is 25.24%, with highest prevalence in Middle East and South America. Due to the fact that NASH requires histological diagnosis, we can assume that there are uncountable millions of people with NASH in developing countries. Based on NASH–NAFLD prevalence ratio, the global estimation for NASH is more than 180 million people.

It is a really huge market with unmet need, where several potential drugs can have pretty solid revenue.

Battle for NASH fortress

There are many potential pathways researched for the NASH treatment: medications targeting farnesoid X receptor axis, inhibitors of lipogenesis, ASK1 inhibitors and many more in early stage or preclinical stage.

I personally counted more than 50 drug candidates at the initial or preclinical stages.

“Whoever attacks and reaches the Jebusites first will become commanding general!” – 2 Samuel 5:1-12 / David conquers Jerusalem and becomes the king of Israel

The same often happens in the market. We can assume that companies that are most likely to offer a solution first to the market will make the biggest profit. These companies are often called the companies of “first wave”.

We will not count failed ones. Let’s focus on 5 of them which are at the final Phase-3 or pre-NDA stage now:

Personal table

According to the Tufts Center for the Study of Drug Development (Tufts CSDD), 65% drugs at Phase-3 show positive results and reach NDA stage. Statistically, 90% of NDA gets approval.

Tufts Center study

Image source: Tufts CSDD

Statistically, 3 out of 5 drugs have a chance to get FDA approval. But let's evaluate them first.

1. Intercept Pharmaceuticals (ICPT) with its Farnesoid X receptor agonist OCALIVA (obeticholic acid). OCALIVA is the company’s lead drug approved by FDA for primary biliary cholangitis (PBC) in combination with ursodeoxycholic acid (UDCA) in adults who have not responded well enough to UDCA, or alone for adults who cannot tolerate UDCA.

Intercept intends to get approval for OCALIVA higher dose for NASH indication (5 or 10mg is prescribed for PBC, while 25mg is designed for NASH).

OCALIVA Phase-3 “Regenerate” NASH study results were released in February 2019. For the company's PR, please click here.

Please see below figures shared by the company reflecting OCALIVA efficacy:

Company pr

And of course, safety:

Company PR

There was concern regarding serious cardiovascular events, but it seems balanced between all treatments arms, and can be considered as non-drug related (due to the fact that NASH and NAFLD patients already have a high risk of cardiovascular events).

We can see high dose-related pruritus: 28% in OCA 10mg and 51% in OCA 25mg arms, respectively. 51% pruritus led to 9% of treatment discontinuations and can be a more serious problem in future commercial stage. Due to recent earnings release, Intercept plans to submit NDA for OCALIVA’s NASH indication in the 3rd quarter. Based on previous statistics, there is a 90% probability of FDA approval, but very high probability of “black box” warning which could negatively affect the commercial stage of the drug. So we can expect potential PDUFA date in mid-2020.

2. Genfit S.A. (NASDAQ:GNFT) with its lead candidate Elafibranor. Elafibranor is a dual agonist of the PPARα and PPARδ and potentially can act through two nuclear receptors simultaneously.

Despite other PPAR targeting drugs, Elafibranor does not have any activity regarding PPARy and it eliminates the risks connected with PPARy activation (like heart failure).

Due to PPARα and PPARδ dual mechanism, it potentially improves insulin sensitivity, glucose homeostasis and lipid metabolism. Due to these facts, Elafibranor can have cardioprotective potential as well.

I should emphasize that Elafibranor is being evaluated for PBC indication as well. The company announced positive PBC Phase-2 results in December 2018.

Regarding NASH indication, currently Elafibranor is at Phase-3 (“RESOLVE-IT”).

In May, the Data Safety Monitoring Board (DSMB) issued a recommendation for the continuation, without any modifications, of the RESOLVE-IT Phase 3 trial evaluating Elafibranor in NASH. DSMB reiterated previous positive guidance and saw no safety concerns.

Based on Genfit’s guidance, topline data is expected in the year-end of 2019. Primary endpoint will be NASH resolution without worsening fibrosis. It’s is 2 arms trial evaluating Elafibranor (120mg) vs. placebo.

Let’s review previous Phase-2b “GOLDEN-505” NASH trial results (I should be clear that Phase-3 is not always repeating Phase-2 efficiency, so this is just to have an idea for comparison at the moment):

company PR

Besides efficiency, Elafibranor has shown a pretty nice safety profile both in NASH and PBC trials.

If Phase 3 results confirm previous efficacy, the company can submit NDA in 1H 2020 with potential to get approval in 2H 2020 (due to the fast track designation).

3. Allergan’s (NYSE:AGN) Cenicriviroc (CVC) is also at Phase-3 with expected topline data in Q4 2020 (AURORA: Phase 3 Study for the Efficacy and Safety of CVC for the Treatment of Liver Fibrosis in Adults With NASH):

Company web page Image source: Allergan web page

Cenicriviroc (CVC) is a CCR5/CCR2 receptor antagonist, where CCR2 receptor is associated with inflammatory conditions.

Let’s review Phase-2 CENTAUR results announced by Tobira Therapeutics in 2016 (by the way Tobira later was acquired by Allergan for $1.7 billion):

“CENTAUR demonstrated that significantly more patients treated with CVC for one year saw an improvement in fibrosis by at least one stage without worsening of steatohepatitis compared to placebo (intent-to-treat population; 20% vs 10%, p=0.02). CVC showed anti-fibrotic activity across all three stages of fibrosis (F1-F3) as measured in this key secondary endpoint. The study did not meet the other key secondary endpoint, which was complete resolution of steatohepatitis. Patients remain on therapy in a blinded fashion and all endpoints will be evaluated again at year two of the study with a liver biopsy. All baseline and year one biopsies have been read in a blinded fashion as to study drug assignment by a central pathologist. The safety profile of CVC was comparable to placebo. The most commonly reported drug-related clinical adverse events of at least moderate severity in the CVC arm were fatigue (2.8%) and diarrhea (2.1%). Tobira plans to present detailed results from the CENTAUR study at a major upcoming medical conference.

Regulators have identified ‘improvement in fibrosis by at least one stage without worsening of steatohepatitis,’ or ‘complete resolution of steatohepatitis without worsening of fibrosis’ as two endpoints to support a marketing application. Achieving a two-point reduction in the NAFLD Activity Score is not considered a registrational endpoint.”

In 2018, Allergan started another Phase-2 NASH trial with Novartis (NYSE:NVS) to investigate combination treatment of CVC and Tropifexor (LJN452). Which is still far from final stage.

4. Madrigal Pharmaceuticals (MDGL) with its thyroid hormone receptor (THR) β-selective agonist Resmetirom (MGL-3196). Resmetirom is now at Phase -3 MAESTRO (NASH & fibrosis) trial with estimated data readout in 2021.

Let’s review Phase 2 results released in November 2018:


Later Madrigal shared more detailed presentation of Phase 2 results. (for the details please click here).

5. And finally, our 5th potential competitor is Galectin Therapeutics (NASDAQ:GALT) with its leading candidate Belapectin (GR-MD-02). Belapectin is a small-molecule derived from the apple pectin and developed by GALT as a galectin-3 inhibitor. Currently, Belapectin's Phase-3 is planned to be initiated in Q4 2019 with topline data expected in 2022.

We should emphasize that Phase-2 failed to meet the primary endpoint of a statistically valid reduction in hepatic venous pressure gradient (HVPG) compared to placebo in all subjects (for the company’s press release please click here).

But later analysis has shown that patients without esophageal varices had statistically significant improvement in HVPG vs. placebo.

Now let’s finalize results of 4 out of 5 companies with their drug candidates in one table (it will not be fair to include GALT as Phase-2 was for evaluation of patients with NASH/cirrhosis):

personally created

So, it is obvious that we are still far from strong results in curing NASH. But taking into account unmet need in the market and existence of late stage drug candidates which are closer to a commercial stage than others, we can choose the most efficient one among them.

It is not so easy to state a verdict at the moment, as we should compare also safety profiles, time till potential approval and, of course, financial health of the companies.

Intercept's OCALIVA is the closest to the approval among others, but it has weakest NASH resolution profile. Another issue is the fact that the most efficient dosage (25mg) resulted 51% pruritus which can limit target patient population and bring black-box warning.

The next runner - Genfit with its Elafibranol has better safety & efficacy profile and can potentially grab some market share in case of FDA approval.

Allergan with its CVC seems to focus on a combination with Novartis’ Tropifexor (LJN452) in future as it could not show competitive efficacy profile alone.

I personally lean towards Madrigal, as among the closest competitors it has the best combination of efficacy and safety. I would like to emphasize that Resmetirom (MGL-3196) is far from being ideal as a treatment for NASH, but it’s best among the closest ones to the commercial stage. That can give the company a nice chance to grab serious market share in coming years. In addition, it has robust liver fat reduction profile and promising biomarker data.


As of September 5, 2019, at market opening, Madrigal Pharmaceuticals had $1.47 billion in market capitalization with $95.20 price per share.

Chart: Seeking Alpha

Here are some figures from the recent earnings release:

MDGL SEC filings MDGL SEC filings

Even if we take into account future increase of cash burn due to Phase-3 expenses, it seems that company has enough cash to bring Phase-3 results into the market in 2021.

If Phase-3 proves previous efficacy of Resmetirom in NASH treatment, I am sure that the funding will not be a concern. There are a lot of players in the market who will be seeking for potential partnership or buyout options.


The market size for NASH is forecasted to be $20-$35 billion by 2020. It is obvious that if approved, Resmetirom can grab a serious market share as there are no alternatives at the moment. I would not bet on Madrigal’s potential long leadership in the NASH market, but current capitalization is worth to enter as even 10% of the market share for 3-5 years will be well paid.

My long position in MDGL is opened at $90.

Disclosure: I am/we are long MDGL. 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.