Hepatitis C Important, But Investors Should be Focusing on Fatty Liver Disease and Galectin

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Hepatitis C Important, But Investors Should be Focusing on Fatty Liver Disease and Galectin

Shares of Gilead Sciences, Inc. (NASDAQ: GILD) have been trekking upward in 2013, largely on copious optimism surrounding sofosbuvir, the company’s late-stage, all-oral hepatitis C drug candidate.  AbbVie, Inc. (NASDAQ: ABBV) is certainly no stranger to attention either for its hepatitis C drug coming down the pipeline towards a likely New Drug Application filing with the Food and Drug Administration.  Fact is, diseases affecting the liver represent an area of great unmet medical need and justify the awareness surrounding companies like Gilead and AbbVie.  Another fact also is that there are other huge opportunities related to biotechs and liver disease other than just HCV.

Fatty liver disease, the accumulation of fat in liver cells, is the number one liver disease in the United States and a silent killer of epidemic proportion.  The accumulated fat leads to inflammation that eventually leads to fibrosis, or scarring of the liver.  In turn, the fibrosis leads to cirrhosis of the liver, an irreversible disease largely only resolved through transplantation.  There is also an association between advanced fatty liver disease with fibrosis and liver cancer.

The problems with hoping for a liver transplant are that only about 6,300 liver transplants happen in the U.S. each year, it is a major procedure requiring lifelong immune suppression, and those that receive a transplant have a risk of fatty liver disease reoccurring.

Even more problematic, fatty liver disease is essentially asymptomatic until the latter stages.  The disease is usually only diagnosed via routine screening for elevated enzymes, a seasoned physician requesting subsequent imaging tests and then a liver biopsy to confirm.  To that end, fatty liver disease is often times not diagnosed until it has reached more advanced stages, a time when nothing can be done to reverse the damage.

For most, hearing "cirrhosis" brings to mind images of alcohol abuse.  While that is certainly a pathway, fatty liver disease is closely associated with obesity and diabetes, two diseases spiraling out of control in the U.S. and other countries.  Further, nonalcoholic fatty liver disease (NAFLD) is affecting about 30 percent of the U.S. population, without any FDA-approved treatment options.  Marketwatch ran an article on July 10, titled “Youth and health, no longer synonymous” detailing the obesity rate rising to more than one-third of all Americans, while calling teenagers “a time bomb in their 40’s and 50’s” because of escalating rates of obesity and Type 2 diabetes.  In the U.S. alone, more than 25 million people are diagnosed with diabetes, with the number growing.  Worldwide, the number explodes to about 350 million.  According to the Centers for Disease Control and Prevention, 36 percent of U.S. adults and 18 percent of children aged 12 – 19 were clinically obese in 2010.  While more than one-quarter of Americans have fatty liver disease, about 9 out of every 10 clinically obese citizens have the condition.

This explains why investors should be considering biotechs developing novel therapies for fatty liver disease.  The indication and related co-morbidities present an enormous patient population and the competition is relatively thin, leading to potential market valuation appreciation similar to or exceeding the steady climb seen in companies targeting HCV.

Gilead has their hand in the business with simtuzumab, a monoclonal antibody, in mid-stage clinical trials for liver fibrosis resulting from Nonalcoholic Steatohepatitis (NASH), an advanced form of nonalcoholic fatty liver disease.

Raptor Pharmaceutical Corp. (NASDAQ: RPTP) is developing RP103 as a treatment for NASH in children.  NASH is the most common serious complication of childhood obesity.  In June 2012, the first patient of an expected 160 patients was dosed with RP103 in a Phase IIb trial.  The pediatric participants are to receive 52 weeks of RP103 treatment.  Previously, a small-scale Phase IIa trial provided promising results with 7 of 11 patients achieving a greater than 50-percent reduction in alanine transaminase (ALT) and aspartate transaminase (AST) levels, two enzymes that are measured as standards in fatty liver disease care.

Investors will be looking for results from the current clinical research, known as the CyNCh trial, in the second half of 2014.

Galectin Therapeutics Inc. (NASDAQ: GALT) is focusing its carbohydrate technology to develop drug candidates for fibrotic disease and cancer.  Earlier this month, the company submitted a Fast Track application to the FDA, looking to expedite its GR-MD-02 for treatment of NASH in patients with advanced fibrosis.  GR-MD-02 targets inhibiting galectin-3, a key protein in the pathogenesis of NASH and fibrosis.  Outside of fibrosis and cancer, galectin-3 is also known to play a substantial role in the progression of heart disease.

Leading the team at Galectin is Dr. Peter Traber, a man whose resume includes serving as Senior Vice President of Clinical Development and Medical Affairs and Chief Medical Officer of GlaxoSmithKline plc. (NYSE: GSK).

Galectin is in the midst of enrolling for a Phase I trial in NASH/advanced fibrosis patients.  The trial will aim to expand upon and replicate the robust treatment effects of GR-MD-02 in laboratory studies that showed the therapy to not only be able to reduce inflammation, but also reverse established fibrosis and cirrhosis in animal models.  The trial is being conducted at six clinical sites in the U.S. and comprised of approximately 32 patients. 

While termed a Phase I trial, the patient population and the configuration of the protocol has more of the feel of a Phase Ib.  The trial will be comprised of patients with NASH with stage 3 fibrosis and will evaluate four weekly doses of GR-MD-02.  The main goal of an initial trial is to evaluate safety, but the multiple doses in late-stage patients and the monitoring of a variety of biomarkers will possibly open the door for efficacy to be demonstrated, obviously a pleasant secondary endpoint that could act as a significant stock price catalyst if shown.

Galectin is employing a unique strategy to focus on late-stage conditions of fatty liver disease that differentiates the company from Raptor and others that are targeting earlier stages (the onset of fat accumulation and inflammation) of fibrosis and NASH, perhaps giving Galectin a competitive edge.  Why?  It can take a decade or more for NASH to develop into fibrosis and cirrhosis. Simply, the etiology of NASH makes it very difficult to determine which NASH patients will develop fibrosis or cirrhosis, presenting it’s own set of challenges in trying to address the disease at early stages without attention to curative effects for scarred liver tissue.

To date, investors have honed in on hepatitis, but fatty liver disease is more prominent than either hepatitis B or C and growing in numbers.  With no FDA-approved drugs available today, investors would be well served to monitor the “Fast Track” application with the FDA and the future results of the Galectin trial to glean information for the company to potentially pursue all available FDA programs to expedite development of the drug candidate.  GR-MD-02 could prove to be a broad spectrum therapeutic for liver inflammation and related diseases, including cryptogenic cirrhosis (“cryptogenic” meaning the cause is unknown), a leading cause of liver failure and now believed to be a late stage of NASH.  No options for patients today and projections that fatty liver disease will soon become the number one reason for liver transplants seem to be the drivers behind GALT shares rising 120 percent in 2013, but a paltry $75 million market capitalization indicates the company is undervalued compared to peers in the space.

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