The future of these 7 biotechs hinges on their ability to treat a silent liver disease and capture a $9.6 billion market. Here's exactly what investors should be watching for this year.
- There are about 70 drugs in clinical testing for NASH, a fatty liver disease that affects millions of Americans and is a top cause of liver transplants.
- We identified seven biotechs that have staked their companies - and their stocks - on finding success in NASH in 2020.
- Those seven are: Intercept Pharmaceuticals, Genfit, NGM Biopharmaceuticals, Akero Therapeutics, Viking Therapeutics, Inventiva Pharma, and 89bio
- 2019 crumbled into a "graveyard of failures" in NASH, as one Wall Street analyst put it. But the small biotech Intercept stood alone in success. Now, the company has to convince regulators to approve its drug, which would be the first-ever NASH treatment.
- The other six biotechs we highlight have major clinical trial readouts set for 2020, which could prove transformative for these companies in the hunt for additional NASH therapies.
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Big drugmakers have faced years of costly failures in the fight to come up with treatments for the silent liver disease known as NASH.
Fortunately for patients with the disease, dozens are still working to develop treatments.
"It's been such a graveyard of failures because the biology is so poorly understood," Baird analyst Brian Skorney recently told Business Insider.
The one glaring exception to the string of failures has been Intercept Pharmaceuticals. The small, New York-based biotech was alone in releasing positive late-stage study results last year. It's now working to get its treatment approved by the US Food and Drug Administration. That has teed up a closely watched FDA decision later this year for what could be the first NASH drug to reach market.
Still, there's no shortage of other bets on treating NASH, or nonalcoholic steatohepatitis. The disease is characterized by a buildup of fat in the liver, and can eventually lead the organ to stop working, requiring a transplant. While estimates of the disease's prevalence vary greatly, some researchers have estimated as many as 25 million Americans have NASH.
There are approximately 70 drugs in clinical testing for the liver disease, SVB Leerink estimated in a recent research note. The bank forecasts the NASH market in the US and Europe to grow to $9.6 billion by 2030.
And while big pharma firms and biotechs own a number of those potential treatments, many of the drugs furthest along in testing are being driven by small biotechs staking their futures - and their stocks - on success.
Here are the seven biotechs whose success or failure could turn on their results in fighting NASH this year, and what exactly investors and patients should keep an eye on.
Note: This list doesn't include big pharma companies with notable NASH readouts set for this year, such as Novo Nordisk's test of a diabetes drug against the liver disease. There are also some significant NASH biotechs set for a quiet 2020, such as Madrigal Pharmaceuticals, which is set to reveal data on how well its treatment works in the second part of next year.
Intercept Pharmaceuticals faces an FDA decision in June
This $3 billion biotech solidified its pole position in the race to market in 2019, as potential competition faltered in clinical testing.
Even with positive clinical results in hand, the New York-based company faces a fateful 2020 with its drug, obeticholic acid. US regulators will host a panel of experts to review the drug's application on April 22. That will tee up a Food and Drug Administration approval decision expected in June.
If approved, Intercept is gearing up to break into the NASH market on its own with a narrow sales strategy focused on liver specialists and a group of patients with a more severe form of the disease.
A commercial launch would be closely watched to gauge how interested doctors and patients are in Intercept's drug, particularly given the side effects seen in the trials.
NASH is a disease that progresses slowly and where patients often don't see the illness or feel symptoms from it. How many will put up with itchiness or cholesterol increases that Intercept's pill can cause?
"It's a new space - there are no yardsticks out there," Intercept CEO Mark Pruzanski said in a recent interview with Business Insider. "It's a little bit of a Rorschach test."
Genfit delayed its timeline for sharing results from a crucial trial
The French biotech Genfit will soon release results from a late-stage trial of about 1,000 patients testing its drug, elafibranor.
That data will come later than expected. On February 20, Genfit pushed back the timetable on providing results from the first three months of the year to later in the first half of 2020.
The company said it hasn't yet seen the data, and the delay will allow Genfit to "incorporate the latest FDA insights expected by the end of March."
Whenever the readout does arrive, it will be a fateful day for Genfit. Positive results could tee up a submission for approval from regulators.
Analysts at Evercore ISI recently estimated that success could drive the stock up 70% to 100%, while Genfit shares would plummet by 50% to 75% from a failed trial. Evercore's team views the chances of the study working as a 50-50 proposition.
NGM Biopharmaceuticals looks to build on a positive start to 2020
NGM Biopharmaceuticals got off to a solid start in 2020. It released data on February 24 from a mid-stage clinical trial, which showed that its lead drug, aldafermin had a noticeable clinical benefit in treating NASH compared to patients who got a placebo.
The South San Francisco, California-based biotech saw its stock jump about 20% following those results, and the company reached a $1.2 billion market value.
There will be much more data to come. The company expects to provide results from a study specifically focused on the most severe NASH patients before the end of June.
And these positive results will have to be replicated again in a trial that would tee up an application for approval, although NGM's CEO David Woodhouse suggested that study could be quicker than previously expected given the recent positive data.
Akero Therapeutics is testing 'one of the most interesting NASH drug classes'
Akero Therapeutics is testing a similar idea to NGM Bio - their drugs use the same mechanism called the fibroblast growth factor (FGF).
Jefferies analyst Michael Yee said NGM's results "add to the evidence of FGFs being one of the most interesting NASH drug classes," calling it a "good harbinger" for what to expect from Akero. Their drugs target different receptors, however.
Akero's drug, called AKR-001, is expected to bring two study readouts in the first half of this year. The first, expected by the end of March, will measure how the drug affects patients' livers using non-invasive testing. The latter, slated for the second quarter, will use a biopsy to check the liver's condition.
The $700 million biotech could see its stock jump as much as 90% up with positive results or swing down 75% if it goes south, according to Evercore.
Viking Therapeutics is looking to validate a potential blockbuster treatment
Analysts at SVB Leerink expect more data from Viking Therapeutics in the second half of 2020. They are anticipating it will show strong effectiveness of its drug, VK2809, in mid-stage testing. That would likely result in the biotech starting late-stage trials that could lead to a debut of its treatment in 2025 if all goes well, the analysts said.
These results will come from a trial started in late-2019, testing VK2809 against a placebo. NASH patients were randomly split between five arms for 12 weeks of treatment: one placebo group and four different doses of Viking's drug.
SVB Leerink estimates a 45% chance that Viking will succeed in getting VK2809 all the way to market, and forecast peak sales of $1.2 billion in 2030.
Inventiva Pharma could see its stock triple - or crater - from an upcoming readout
Inventiva Pharma is a tiny French biotech that went public in 2017. The company has a market value of about $120 million, although a clinical readout set for the first half of this year will likely change that, for better or worse.
Evercore ISI analysts project the biotech's stock could double or triple with success, or drop 75% if the study fails. They added that Inventiva's drug, lanifibranor, is "partially correlated" with Genfit, so whichever company produces data first is likely to affect the other one's stock.
Inventiva's trial is testing NASH patients after 24 weeks of treatment at two dosing levels. That study is scheduled to complete in June, according to a clinicaltrials.gov posting.
89bio is riding high after a successful IPO
89bio is the new kid on the block in NASH, but has been moving fast since raising a $60 million Series A round in October 2018. Slightly more than a year after that, the San Francisco biotech went public in November 2019.
The biotech acquired its leading drug candidate, called BIO89-100, from the Israeli pharma giant Teva Pharmaceutical Industries. The drug is similar to those from NGM and Akero.
While 89bio's program is much earlier on in development, SVB Leerink analysts like its potential to best its competition in effectiveness, calling it "a potentially best-in-class asset."
Those ambitions will face a critical hurdle later this year: data. So far, BIO89-100 has been tested primarily only to see whether its safe for people to take.
An ongoing study testing the drug's efficacy in NASH is expected to produce results in the second half of 2020. That trial is testing 83 patients with NASH or at high risk of the disease.
While its stock has more than doubled since going public, 89bio's ultimate test will be those results squaring up with lofty expectations.
- Read more:
- How a $3 billion biotech escaped a 'graveyard of failures' in the race to launch the first-ever drug for a silent disease that strikes millions
- Millions of people are living with a 'silent' disease they've likely never heard of
- The competition's heating up over a $35 billion market to treat NASH, a 'silent disease' millions are living with. But the early results look mixed.
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