WHITEFISH, MT / June 26, 2014 / Those following the developments of Intercept Pharmaceuticals (NASDAQ:
ICPT), Galectin Therapeutics (NASDAQ: GALT) and Galmed Pharmaceuticals
(NASDAQ: GLMD) are keenly aware of the tendency of fatty liver disease
drug developers to move in unity upon news of clinical research. The
lack of viable treatments, increasing diagnosis rates and the economic
burden associated with fatty livers has put a spotlight on the limited
number of companies pursuing the indication, keeping investors on the
lookout for news with market moving potential.
The Growing Prevalence of Fatty Liver Disease
Thirty years ago, nonalcoholic fatty liver disease (NAFLD) did not even
have a medical name, as physicians and researchers presumed the buildup
of fat in the liver to be essentially benign. With the advent of drugs
to better treat hepatitis C, NAFLD is now the face of liver disease in
the U.S. with a library of research documenting that fat accumulation in
the liver can lead to nonalcoholic steatohepatitis (NASH), cirrhosis of
the liver, eventual liver failure and death. Cases of NAFLD have
doubled in the past two decades, while prevalence of other liver
diseases has remained stable or even decreased, positioning NAFLD to
overtake hepatitis C as the leading case of liver transplants by 2020.
Moreover, there are no approved drugs to treat any of these diseases,
which are generally asymptomatic until advanced stages, resulting in the
dubious distinction of being "silent" killers. Worse yet, a liver
transplant is the only viable treatment option for cirrhosis patients,
but the fact that only about 6,300 liver transplants happen each year in
the U.S. leaves a bleak prognosis.
The growing prevalence of NAFLD, which causes the liver to balloon with
fat, is sounding alarms in the medical community. At first, the disease
was not found in children as it typically takes years and years to
develop, yet today about 10 percent of youths in the U.S. are estimated
to have NAFLD. A conservative estimate is that approximately 20 percent
of adults in the U.S. suffer from NAFLD, with the
World Gastroenterology Organisation Global Guidelines
report in 2012 estimating that NASH affects 30 percent of the
population in developed countries worldwide. Closely ties to obesity,
NAFLD affects at least
50 percent of all obese adult men, with some estimates ranging up to
80 percent. Looking directly at NASH, the
U.S. Department of Health and Human Services shows that up to 5 percent of the population, about 15.7 million people, suffer from the more severe form of NAFLD.
The comorbidities that are linked to the condition, including liver
cancer, heart disease and Type 2 diabetes, have limited effective
therapeutic options as well, creating a vortex of illness and death with
NAFLD at the epicenter. All of this explains the recent surge in
investment interest in companies developing new drugs to treat any stage
of a fatty liver.
Upcoming Catalysts for NASH Players
Intercept Pharma is the most widely heralded biotech pursuing a NAFLD
therapy and its rise in value is nothing shy of impressive, mushrooming
from an IPO price near $20 per share in October 2012 to $70 per share a
year later and then going parabolic to as high as $497 per share in
January. The value driver has been Intercept’s promising drug
obeticholic acid (OCA), which has shown in trials to be effecting in
treating patients with NASH. In January, a 283-patient Phase 2 trial of
OCA for NASH, called the FLINT trial, was stopped one year early
because it had satisfied its primary endpoints of safety and providing a
significant effect on liver damage caused by NASH.
The latest good news for Intercept came in late May when the U.S. Food
and Drug Administration awarded the company “Fast Track” status for OCA,
a first-in-class farnesoid X receptor agonist, for treating patients
suffering from primary biliary cirrhosis (PBC) who do not respond to
ursodiol. Ursodiol is the only drug approved to treat PBC, a disease
characterized by bile ducts in the liver being slowly destroyed, which
can lead to irreversible scarring of the liver. Note, this is not NASH,
but it is promising for OCA in general as Intercept gears up to submit a
New Drug Application to the FDA for the indication in mid-2015.
Those choosing to short ICPT are focused on mumblings that the company
downplayed increased LDL cholesterol levels in its FLINT trial, which
could raise safety concerns, as lipid abnormalities are often associated
with risk of cardiovascular events. ICPT bulls oppose this position,
including Wedbush Capital, saying
much ado is being made about nothing.
All patients stopped dosing in January, when the trial was halted
early, and were put on a pre-specified 24-week observational phase.
This aligns Intercept for a potential sharp move in share value when
final data from the trial, including the observational stage, is
released. To give you an idea of the interest in that data, Intercept’s
stock price dove about 7% yesterday when the company indicated at the
JMP Securities Healthcare Conference that full results would likely not
be released in July as previously anticipated.
Galmed, a newbie in the public domain (IPO in March), joined in the NASH
race unintentionally at first, but has drawn the attention of the
investment community based upon its findings. Galmed’s experimental
oral drug aramchol, a conjugate of Cholic acid and Arachidic acid, was
accidentally discovered to reduce liver fat infiltration in animal
models with high-fat diets during research to solubilize bile stones. A
Phase 2 study showed aramchol to be safe and effective in reducing
liver fat content and improve metabolic parameters associated with
NAFLD.
Galmed was hoping to initiate a 120-patient Phase 2b aramchol study late
in 2013 for NASH in obese patients with insulin resistance, but the FDA
recommended that the Tel Aviv, Israel-based company first run
pharmacokinetic and food effect studies. Patient screening got underway
at the end of April. The Phase 2b study, which is expected to take
about 15 months, is now planned for the fourth quarter of this year.
With about $40 million in cash from raises, Galmed thinks it has enough
cash to get through 2017.
Galectin Therapeutics is the other major player in the NAFLD/NASH space,
developing carbohydrate-based drug candidates for fibrotic liver (and
cancer) conditions. Galectin has chosen to go after a difficult
population of NAFLD patients, those with NASH with advanced fibrosis.
This is an important distinction from Intercept and Galmed, as Galectin
is hoping to show not only a reduction in fat accumulation as its peers
are aiming to demonstrate, but also a reversal to fibrotic damage in the
liver in more advanced patients. There is a further distinction in
tackling the more advanced class of patients in that there is no clear
set of standards in the pathogenesis of NAFLD to determine which
patients will advance to NASH, cirrhosis or related conditions, so while
halting the accumulation of fat is certainly paramount, reversing the
damage is unprecedented.
In 2013, Galectin received a Fast Track designation from the FDA to
expedite development of its drug GR-MD-02 for NASH patients with
advanced hepatic fibrosis.
Galectin disclosed in April that it has completed enrollment in the
second cohort of the trial, good news following a prior announcement
that data from the first cohort showed the therapy to be safe and well
tolerated. The data further showed positive changes in pre-defined
biomarkers for the trial, suggesting efficacy, although that is never a
primary endpoint of early-stage clinical trials. Dosing of GR-MD-02 for
the second cohort was doubled from the first cohort, putting investors
on close watch for results, which are slated for the latter part of next
month.
With more than $36 million in cash on hand at the end of the first
quarter, Galectin is plenty well financed to complete the Phase 1 trial
of its drug, as well as other research throughout 2015. To that point,
Galectin has conducted some compelling lab studies to further support
the potential of GR-MD-02, including
data from a pre-clinical trial in a diabetic mouse model with NASH released on Monday.
In the study, treatment with GR-MD-02 for four weeks significantly
reduced liver weight, liver-to-body weight ratio and plasma triglyceride
levels in mice with induced NASH. Blood biomarkers that are indicative
of liver damage, such as aspartate aminotransferase, plasma alanine
aminotransferase and plasma total bilirubin, also showed reductions back
near normal levels in the treated mice. Further, the backbone of
Galectin research was supported by the study, showing a significant
reduction in fibrosis of the liver. Perhaps the most important aspect of
this trial is that the mice were given oral treatments, as opposed to
the intravenous administration in the Phase 1 human trials. The
potential market for oral delivery is distinct and additive to the
potential market for IV treatments. Every disease has a target product
profile and while IV administration will provide the best results in
some indications, oral delivery can be more appropriate for others, such
as chronic diseases and conditions. This development bears watching
over the long term as Galectin advances their clinical programs.
Adding to the interest in Galectin on Monday, analysts Aegis Capital reiterated their “buy” rating
on the stock. In April, analysts at MLV & Co. put out a “buy”
rating on GALT and boosted their price target from $20 to $27.
Click here to receive updates on Galectin Therapeutics developments: http://www.tdmfinancial.com/emailassets/galt/galt_landing.php
Why Pay Attention Now
Safety and tolerability are obviously imperative in studies, but the
meat and potatoes of a trial is efficacy, something that investors and
analysts will be trying to glean from every data set released by
Galectin. Investors know the value of a drug to treat the growing NAFLD
population that has out of the blue reached epidemic proportion, and
remember the multi-billion-dollar jump in valuation for Intercept on its
trial news in January. The fact that there are few companies
entrenched in NASH research bolsters the interest in each upon
optimistic data.
Galmed has not disclosed the date for completing its PK/food effect
study, but it cannot be too far off in the distance in order to initiate
the mid-stage trial of aramchol that it has planned this year.
Intercept and Galectin both have data anticipated late next month (or
perhaps later in Intercept’s case), the type of data that can have
market-moving potential. The stock prices of the companies have mostly
undulated in unison, including all three trading higher since
Intercept’s PBC Fast Track news late in May and jumping at the opening
bell Monday after Galectin released its pre-clinical data, so upcoming
news in the coming weeks is likely to draw further attention to the
space.
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