Seeking Alpha • Oct 06
89bio Still Has A Chance As NASH Race Heats Up
Summary
89bio's share price is up >100% over the past three months.
The company is developing Pegozafermin, a potential therapy for NASH and SHTG.
Data released by Akero for its drug Efruxifermin - which has the same mechanism of action as Pego - suggested it would meet the FDA's approval criteria in NASH.
89bio will release Phase 2b NASH data in Q123 - there's a chance its data could be as strong as Akero's.
89Bio is a gamble - this is a small biotech taking on industry giants in a field where no drug has ever been approved. Risk-on investors may sense opportunity, however.
Overview - Akero's Data for FGF21 Mimic EFX Is Best In Class For NASH - 89bio's Pegozafermin Has Same MoA
At the beginning of September, the share price of Akero Therapeutics (AKRO) - a small biotech ~7% owned by Pharma giant Pfizer (PFE) - rose from $12, to $27, and a few days later, from $27, to $40 - an overall gain of 233%.
The reason for the gains was the company's publication of data from a Phase 2b trial - HARMONY - of its lead asset, Efruxifermin ("EFX') in patients with pre-cirrhotic nonalcoholic steatohepatitis ("NASH"), fibrosis stage 2 or 3 ("F2-F3").
In the study, at the 50mg and 28mg dose levels, 41% and 39% of EFX-treated patients respectively experienced at least a one-stage improvement in liver fibrosis with no worsening of NASH by Week 24, compared to 20% within the placebo group.
The secondary goal of the study - achieving NASH resolution without worsening of fibrosis - also was achieved, with 76% of the 50mg arm and 47% of the 28mg arm meeting this criteria, vs. 15% of patients in the placebo arm.
Given that the FDA's approval criteria for a NASH drug is improvement of ≥1 stage in fibrosis with no worsening of NASH, or improvement in NASH resolution with no worsening of fibrosis, hopes are high that Akero could wind up winning the "NASH Dash," the race to be the first drug approved to treat the disease, which has a prevalence of ~16.5m cases, expected to rise to 27m cases by 2030, and is the "fastest growing reason for a liver transplant in the United States," according to the subject of this article - 89bio (ETNB).
Akero's drug EFX is engineered to mimic the biological activity profile of native FGF21. As I explained in my last note on 89bio:
FGF21 is an "endogenous metabolic hormone that regulates energy homeostasis, glucose-lipid-protein metabolism and insulin sensitivity", which is secreted primarily by the liver, and has been clinically proven to reduce liver steatosis by increasing fatty acid oxidation, reducing free fatty acid deposits migrating from peripheral tissue to the liver, and reducing de-novo lipogenesis ("DNL").
89bio has developed its own NASH candidate, now called Pegozafermin, which is a "a specifically engineered glycoPEGylated analog of fibroblast growth factor 21 (“FGF21”)." In other words, it had the same mechanism of action ("MoA") as Akero's EFX. A third company, pharma giant Novo Nordisk (NVO), also has a NASH candidate targeting FGF21.
89bio's share price has also been rising in recent months - by >140% since early July, no doubt due to the progress being made by Akero, but while Akero's market cap valuation currently stands at $1.83bn, 89bio's is just $266m
89bio - Progress to Date
In an expansion cohort of a Phase 1b/2a study, in which 19 of 20 patients received end-of-treatment biopsies, Pegozafermin demonstrated clinically meaningful changes on endpoints including 26% of patients achieving a one-point or more improvement in fibrosis, and 47% achieving NASH resolution or improvement in fibrosis.
The data does not seem quite as strong as Akero's, although there was only one patient withdrawal, out of 81 total patients, vs. five in the EFX study, out of 72 patients, suggesting Pegozafermin may have the superior safety profile.
Pegozafermin also performed well across a host of other endpoints, including NAFLD Activity Score (NAFLD stands for Non-alcoholic Fatty Liver Disease which can lead to NASH) - 63% of patients had a 2-point or more improvement in NASH and no worsening of fibrosis - liver fat reduction - 50% of patients in Cohort 6 achieved a 50% of higher reduction in liver fat, and >70% in Cohort 4 and 7 - and reduction in alanine transaminase ("ALT") levels, with the same cohorts all achieving >40% reduction, versus 4% of the placebo arm.
Based on the positive data, 89bio now has a fully enrolled Phase 2b study - ENLIVEN - ongoing, as shown in the diagram below:
89Bio Phase 2b study design (89Bio)
The study will read out data in Q123, management promises in its Q222 10Q submission, whilst also noting that it has:
completed a pharmacokinetic study of pegozafermin in NASH patients with compensated cirrhosis (fibrosis stage F4) demonstrating that pegozafermin 30 mg has similar single-dose pharmacokinetics and pharmacodynamics in F4 as it does in non-cirrhotic NASH.
In other words, if the drug works in F2 and F3 patients, it could potentially work in F4 stage patients also, who have a more debilitating form of the disease, as shown below.
NASH explained (89Bio)
In short, 89bio's drug Pegozafermin appears to tick a lot of the boxes required to position itself as a genuine contender in the "NASH Dash," an admittedly crowded field, encompassing many different approaches and drug classes.
It's interesting to note a comparison made by 89bio between leading contenders in the race to approval.
NASH contenders compared (89Bio)
Once again, EFX appears to have the slight edge over its competitors at this stage - and bear in mind this table was created by 89bio - but it doesn't seem impossible that Pegozafermin could make up the small differences in a larger trial.
Akero is planning a second Phase B study in NASH patients whose condition is worse than in its HARMONY study, with results expected to be available next year, as well as a Phase 3 study. Meanwhile, Madrigal Pharmaceuticals has reported positive data from a Phase trial in NAFLD, and has a second Phase 3 ongoing that includes some patients with non-cirrhotic NASH.
Sizing Up The Market
NASH is a potentially massive (~$30bn+) market - as mentioned above, close to 30m people in the US may be diagnosed with the disease by 2030 - although it's not necessarily a clearly defined market.
For example, many patients with NASH also have Type 2 diabetes, and two major drugs have recently hit the Type 2 diabetes market - Eli Lilly's (LLY) Mounjaro, and Novo Nordisk's Ozempic, that are also indicated to treat obesity under different brand names - Lilly's Tirzepatide is not yet approved in obesity (it will be approved under a different name to Mounjaro), while Novo Nordisk's once-weekly semaglutide subcutaneous injection is approved in obesity under the brand name Wegovy.
These two drugs are forecast to potentially generate peak sales of >$20bn, and may be prescribed off-label to treat NASH, meaning that drugs approved specifically for NASH, such as Pegozafermin and EFX, could struggle to find a market. Additionally, many physicians have expressed unwillingness to prescribe drugs to treat NASH, preferring to encourage patients to embrace healthier lifestyle choices.
Nevertheless, the response to Akero's data suggests that the market believes a drug approved for NASH could thrive, and in 89bio's case, with its small market cap valuation, it's not hard to see the share price rocketing if data from the Phase 2b is genuinely competitive.
The path to commercial success would be tricky - 89bio reported a cash position of just $139m as of Q222, and management does not have the necessary experience - although the company could raise huge sums if the share price spikes without upsetting its existing shareholders, and make some key hires - who wouldn't want to work on the commercialization of one of the first ever approved NASH drugs?