The race to develop a treatment for Non-Alcoholic Steatohepatitis (NYSEARCA:NASH) is getting a lot of airtime lately, pointing to the severity of the disease, poor prognosis and desperate need for a treatment. The space has only a handful of competitors, with most seeing rising valuations due to the tremendous peak sales that analysts are projecting for products that make it to market. What is particularly unique to this disease is not only the lack of any approved treatments, but also the influx of attention and growing broad body of research by companies like Intercept Pharmaceuticals (NASDAQ:ICPT), Galmed Pharmaceuticals (NASDAQ:GLMD) and Galectin Therapeutics (NASDAQ:GALT) that shows treatments are on the horizon, which gives these equities considerable upside.
Intercept has been one of the biggest biotech stories of 2014, with shares mushrooming from around $70 to as high as $497 in January. The catalyst was the disclosure that an interim analysis of data from the Phase 2 FLINT trial of obeticholic acid (OCA) for NASH showed the drug to be performing so well that the trial was halted early as the primary endpoints were already met.
The data showed that a once daily 25 mg oral dose of OCA in biopsy-proven adult NASH patients improved the NAFLD activity score (based on fat, ballooning hepatocytes, and inflammation) with no change in fibrosis, a milestone for not only Intercept, but also the industry. It was also a reason to stop giving the trial's placebo group a treatment that did nothing.
Perhaps ironically, NASH is not even Intercept's lead indication for OCA, a bile acid analog and farnesoid X receptor agonist. The drug is also being developed as a second-line treatment for primary biliary cirrhosis (PBC). Data from the Phase 3 POISE trial for this indication was released this month showing that the drug hit its primary and secondary endpoints of reduction in serum alkaline phosphatase and improved liver function, respectively. The stock only rose 3% on the news and gave back all the gains (and then some) the next day. Pressure seemed to come from the need for a confirmatory trial to be conducted and analysts forecasting peak sales of less than $1 billion for PBC, compared to sales of a NASH drug that could be easily top $3 billion, keeping the focus on the NASH indication.
Intercept said in its latest quarterly report that it expects the final results from the Phase 2 FLINT trial for NASH in July and to initiate a Phase 3 trial in the first half of 2015.
Galmed is the newest biotech developing a NASH drug to hit the public domain, conducting its IPO on March 12 by offering 2.8 million shares at $13.50. Shares spiked as high as $18.75 on the first day of trading, but have cooled to around $11.50 currently. The little-known Israel-based company got a buzz going around it because of its oral drug candidate aramchol, a synthetic fatty acid and bile acid (FABC) conjugate scheduled to commence a Phase 2b trial for NASH patients also suffering from obesity and insulin resistance in the second half of this year. As shown by Intercept, positive mid-stage data for a NASH drug can certainly serve as a catalyst for a stock price. On that note, the results from the planned multi-center trial are expected in the second half of 2016.
Clinical studies to date show aramchol to reduce liver fat content without any serious adverse side effects.
Pegging NASH was a bit of an accident for Galmed. Aramchol was originally being developed (and still is) as a once-daily treatment to solubilize bile stones but was discovered to reduce liver fat infiltration in hamsters and mice with high-fat diets, so the target indication was expanded.
NASH is a severe form of Non-Alcoholic Fatty Liver Disease (NAFLD), a condition that has become increasingly common in the United States. NAFLD in its simplest state is essentially benign, but as the condition worsens, NASH arises. The cause of NASH may still remain a mystery, but NAFLD commonly presents in patients with diabetes and obesity. With the skyrocketing diagnosis rate of those diseases, subsequently so goes the incidence rate of NAFLD and NASH. Further, NASH is also linked to increased risk of cardiovascular complications, a leading killer in North America. Sadly, liver fibrosis and NASH are not reversible and often lead to the necessity for a liver transplant, of which only about 6,000 actually happen each year.
These facts make Galectin Therapeutics particularly attractive as early research shows its lead drug candidate GR-MD-02 to actually reverse fibrotic damage. Although the company may trail Intercept and Galmed in stage of human trials at this point, Galectin is only a clinical data set away from a potential leap forward with GR-MD-02. The drug is being developed under a "Fast Track" designation from the FDA, which provides an expedited developmental pathway as well as other benefits.
Galectin is in a Phase 1 trial of GR-MD-02, a complex carbohydrate drug that targets and inhibits galectin-3, a key protein in the pathogenesis of fatty liver disease. A critical difference in the trial protocol is that Galectin is treating patients with NASH and advanced fibrosis, rather than earlier stages of the disease as other biotechs are. Moreover, in animal models, GR-MD-02 was shown to not only stop liver scarring from worsening; it showed the damage to start to be repaired.
Shares of GALT got a brief bump on Tuesday when the company announced that it will be reporting results from the eight patients in the first cohort in the Phase 1 trial on Monday, March 31.
Estimates show that up to 37 million adults in the U.S. have NASH, but this number could be conservatively low because the relatively asymptomatic disease often goes undetected until advanced stages. As estimates stand currently, nearly 10 million NASH patients will progress to develop liver cirrhosis. Halting the progression of fatty liver disease as Intercept has done is certainly a keystone moment in the overall genesis of new therapies, but tackling the disease as it reaches the often-terminal latter stages, as Galectin is aiming to do, will likely capture a far greater market share should regulatory approval be attained by both companies.
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