Wall Street In and Out of Love with NASH Drug Developers

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Wall Street In and Out of Love with NASH Drug Developers

WHITEFISH, MT / ACCESSWIRE / May 13, 2014 / When Intercept Pharmaceuticals (NASDAQ: ICPT) announced early in January that its mid-stage FLINT trial of obethicholic acid (OCA) for non-alcoholic steatohepatitis (NASH) was stopped early because it had already hit its primary endpoint, the stock went parabolic, shooting from $72 to a high of $497 in less than two days. That’s a move of 590 percent for those keeping track. After a pullback and another run near that high, the stock has been halved to around $240 per share.

At the same time, Wall Street players jumped on board others in the NASH space, namely Galectin Therapeutics (NASDAQ: GALT), and now even Cempra, Inc. (NASDAQ: CEMP) as it expands from its antibiotic-centric pipeline. Galectin shares rode as high as $19.11 in late February and have since consolidated to near $10. The story is the same with Cempra, hitting a high of $15.39 in January before backtracking to around $9 presently.

Wall Street is indeed a fickle creature. The positive takeaway here is that some much-needed attention has come to NASH, a devastating liver disease affecting up to five percent of Americans with no approved treatments. NASH is an advanced disease stemming from non-alcoholic fatty liver disease (NAFLD), which affects up to one-quarter of the U.S. population.

Big pharma has largely shied away from diseases like NASH, mostly as a matter of economics and unfamiliarity. Although drug development and investment are at their core speculative and risky, majors generally practice a streamlined, (somewhat) risk averse business model to stick with making new drugs that have defined pathways of development and commercialization. However, as pioneering and innovative companies like Intercept and Galectin advance their drug candidates, the pathways will be delineated, better diagnostics will emerge and it seems a safe bet that big pharma will enter the NASH scene soon enough. By that time, though, they will have to pay-up big to acquire the drugs in their late stages. In the meantime, ICPT and GALT are still ahead 230% and 31%, respectively, in 2014 (CEMP is down 28%) and it’s only a matter of time before Wall Street is back in love with NASH plays on the next piece of positive clinical data.

So When’s the Catalyst Coming?

Cempra is probably not the place to look for an industry push, although it is worth watching as it enters the space with a novel approach. The company’s flagship drugs are antibiotics, fusidic acid (TAKSTA™, CEM-102), a drug for gram-positive bacteria; and solithromycin, a next-generation oral and intravenous fluoroketolide.

Cempra recently tested solithromycin in a mouse model, which showed the drug to reduce ballooning degeneration and inflammation, which are histological signs of NASH. The tests may only be in the lab right now, but the upside is that solithromycin has been extensively studied in humans, including ongoing phase 3 trials, and built a strong safety profile already, including being well tolerated in hepatic insufficiency patients. This will help kick start clinical trials, should additional lab studies deem it appropriate.

Intercept and Galectin are more likely to put a brighter light on NASH drugs in the near term. Whichever one does, though, look for the other to react with the news as well. Intercept has plenty going on with OCA, including an upcoming new drug application as a treatment for biliary cirrhosis expected in the first half of 2015. Investors have seesawed some on data from Intercept’s FLINT trial, which resulted in 10 serious adverse cardiovascular events in seven patients in the OCA-treated groups. While the independent data safety monitoring board expressed some concerns over potentially problematic elevated lipid levels in the liver, the National Institute of Diabetes and Digestive and Kidney Diseases has recently deemed the SAEs as not statistically significant as compared to the placebo group. With that in mind, investors will be closely watching when the full trial data is released in July.

Galectin’s GR-MD-02, which is being developed under an FDA Fast Track designation, could be the headline player in the space because the company is treating patients with NASH with advanced fibrosis, a subset of NASH patients that are harder to treat than those in the Intercept trial. As of April 23, all 8 patients in the second cohort have been infused with 4 mg/kg of GR-MD-02, doubling the dose of patients in the first cohort. Data collected from the first cohort showed that GR-MD-02 was well tolerated and treatment even with the low dosage resulted in marked improvement in multiple biomarkers, such as reduced fibrosis biomarkers, inflammatory cytokines and cell death biomarkers. Further, no treatment related serious adverse events were reported.

Galectin anticipates reporting the results of the second cohort near the end of July, which could serve as a springboard for share price movement.

That means that clinical data from leading NASH drugs will be squarely in focus again in the coming months. Biotech stocks have a propensity to rise ahead of clinical data, so Wall Street may be ready to hop back on the NASH train in short order. NASH treatments are only in their infancy and offer a compelling opportunity for growth in a lucrative, yet relatively unattended, space. It is foreseeable that a coveted Breakthrough Therapy designation is in the cards for a NASH drug as clinical data is compiled, similar to the way that hepatitis C drugs have garnered 6 of the 39 BTDs to date as liver disease is an area of great unmet medical need. Point being that there are plenty of catalysts on the horizon, which is great news for the medical community, patients and investors all at the same time.

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SOURCE: Emerging Growth LLC