ETNB - 89bio: Despite Peer Trial Setback Potential Remains In NASH

2023-12-06 18:59:01 ET

Summary

• 89bio, Inc.'s successful end-of-phase 2 meeting with the FDA gained alignment for Potential Accelerated Approval of pegozafermin; such studies to be advanced are ENLIGHTEN-Cirrhosis and ENLIGHTEN-Fibrosis.
• Akero will report 96-week data from the SYMMETRY study of efruxifermin for F4 NASH patients in Q1 of 2024; Success for Akero could mean a boost in value for 89bio.
• The non-alcoholic steatohepatitis market size is projected to reach $24.26 billion by 2028.
• Pegozafermin is also being advanced for the treatment of patients with severe hypertriglyceridemia in the phase 3 ENTRUST study, results from this trial are expected to be released in 2025.

89bio, Inc. ( ETNB ) has made great progress in advancing its pipeline, especially since it has reached an agreement with regulators to advance two clinical studies using its drug pegozafermin to treat patients with NASH with compensated cirrhosis [F4] in the ENLIGHTEN-Cirrhosis study and then patients with Stages F2-F3 NASH in the ENLIGHTEN -Fibrosis trial. Both of these late-stage studies hold potential because the FDA will allow histological endpoints for potential Accelerated Approval of pegozafermin for F2-F3 and F4 NASH patients. The phase 3 studies for both of these NASH subtype patients are expected to begin in Q1 and Q2 of 2024, respectively.

One thing is that Akero Therapeutics, Inc. ( AKRO ) failed to achieve the primary endpoint in its phase 2b SYMMETRY study, which used a drug with a similar mechanism of action known as efruxifermin [EFX] for the treatment of compensated cirrhosis [F4] NASH patients. I believe that there still might be a path forward for 89bio with respect to advancing pegozafermin for NASH for several reasons, which I will be going over below. The thing is that this biotech still has great potential to target this space, especially if it does end up seeing improved efficacy when it recruits patients on background GLP-1 therapy.

Pegozafermin Accelerated Approvals Could Mean A Quicker Approval Timeline

Pegozafermin is the lead clinical drug in 89bio's pipeline, which is being advanced to treat patients with non-alcoholic steatohepatitis [NASH]. As I noted above, it has been able to gain great favor with respect to the FDA and the European Medicines Agency [EMA] in terms of advancing this drug toward phase 3 clinical testing. That's because it had a successful end-of-phase 2 meeting with the FDA in order to advance its NASH program forward. Matter of fact, it gained alignment with the FDA to advance two phase 3 studies of pegozafermin for the treatment of two different NASH patient populations with Accelerated Approval.

These two late-stage NASH studies are as follows:

• ENLIGHTEN-Cirrhosis: phase 3 study targeting compensated cirrhosis [F4] NASH patients.
• ENLIGHTEN-Fibrosis: phase 3 study targeting patients with F2-F3 NASH.

The phase 3 ENLIGHTEN-Fibrosis study is expected to begin in Q1 of 2024, and then the other phase 3 study ENLIGHTEN-Cirrhosis is expected to begin in Q2 of 2024. The Accelerated Approval pathway for each of these studies is going to incorporate histological endpoint/endpoints that will be used. With respect to the ENLIGHTEN-Fibrosis study, it is going to incorporate co-primary endpoints. Such co-primary endpoints to be looked at for the possible Accelerated Approval of pegozafermin for F2-F3 NASH patients are "1-point improvement in fibrosis with no worsening of NASH" and "NASH resolution with no worsening of fibrosis."

The other late-stage study, ENLIGHTEN-Cirrhosis, is going to incorporate an entirely different histological endpoint for a possible Accelerated Approval pathway for this drug for F4 NASH patients, which is "regression of fibrosis from F4 to an earlier stage of fibrosis." There is a very good chance that the primary histological endpoints for ENLIGHTEN-Fibrosis will be met. Not guaranteed to happen, but highly possible based on the fact that 89bio was able to achieve both primary histological endpoints that are guided by the FDA for F2-F3 NASH patients. Both doses of pegozafermin, 44 mg every 2 weeks and 30 mg every one week, met these primary histological endpoints with statistical significance at 24 weeks. The data in terms of the first histological endpoint of "one-stage fibrosis improvement without worsening of NASH" was as follows:

• 44 mg pegozafermin given every 2 weeks - 27% improvement.
• 30 mg pegozafermin given once a week - 26% improvement.
• Placebo - 7% improvement.

Even the other histological endpoint was met with statistical significance as follows:

• 44 mg pegozafermin given every 2 weeks - 26%.
• 30 mg pegozafermin given once a week - 23%.
• Placebo - 2% improvement.

The point here is that there is a good chance for 89bio to achieve statistical significance with respect to the phase 3 ENLIGHTEN-Fibrosis study.

On the other hand, the other phase 3 ENLIGHTEN-Cirrhosis might end up being a toss-up. Why is that? Well, that's because as I noted above, another pharmaceutical company by the name of Akero Therapeutics failed a phase 2b study known as SYMMETRY . It was using its drug efruxifermin [EFX] to treat patients with NASH with compensated cirrhosis. A major problem was that both doses of its EFX drug [28 mg and 50 mg] failed to separate from placebo with respect to seeing at least "one-stage improvement in liver fibrosis with no worsening of NASH by week 36.

This leads me to the first reason on why I believe that there might be a chance for 89bio to build shareholder value and that would be because of additional data to be released by Akero. It is expected that this peer will release 96-week data from its phase 2b SYMMETRY study in Q1 of 2024 . Should this additional time [96 weeks] show that this drug has improved compared to placebo over this period of time, then that brings this program of targeting F4 NASH patients back to the forefront.

The second reason is that data has been great when pegozafermin has been given to F2-F3 patients. Thus, at the very least 89bio could target this patient population successfully. The non-alcoholic steatohepatitis market size is projected to reach $24.26 billion by 2028 .

Lastly , it achieved improved data when it recruited patients who were already taking background GLP-1 based therapies. There is no guarantee, but it's possible that a significant number of patients taking this background therapy might end up improving clinical outcomes.

Financials

According to the 10-Q SEC Filing , 89bio had cash , cash equivalents and short-term available-for-sale securities of $448.3 million as of September 30, 2023. The reason for the cash on hand is because of an underwritten public offering of 16,923,077 shares of its common stock at a public offering price of $16.25 per share. In addition, it also gave the underwriters an option to purchase up to an additional 2,538,461 shares of its common stock at the very same public offering price. The total gross proceeds to be received from this offering are approximately $275 million. The company believes that it has enough cash on hand to fund its operations for at least 1 year from the date of the 10-Q SEC filing, which was filed on November 9th of 2023.

Risks To Business

There are several risks that investors should be aware of before investing in 89bio. The first risk to consider would be with respect to the advancement of pegozafermin for the treatment of patients with NASH. That's because it is advancing the use of this drug for the treatment of patients with F2-F3 NASH and F4 NASH in the ENLIGHTEN-Fibrosis and ENLIGHTEN-Cirrhosis studies, respectively. Both of these trials are expected to begin in the 1st half of 2024, however, there is no guarantee that one or both of these studies are going to meet their respective histological endpoints.

The second risk to consider would be if pegozafermin is ultimately given Accelerated Approval for the treatment of patients with F2-F3 or F4 NASH. That's because in order to keep this drug on the market, it still needs to convert Accelerated Approval to a "Full" one. That will be done with the use of outcome endpoints. For instance, with respect to ENLIGHTEN-Cirrhosis, the decompensation events endpoint achieved would convert "Accelerated approval" to "Full" approval of F2 through F4 patients. There is still an outcomes endpoint being done to convert to "Full" approval of F2-F3 NASH patients as well.

The third risk to consider would be with respect to competition in place for NASH. Obviously, it may have to compete with its peer Akero Therapeutics, whereby it uses efruxifermin [EFX] to treat F2-F3/F4 NASH patients. However, there is another major NASH competitor, which is Madrigal Pharmaceuticals, Inc. ( MDGL ). That's because this biotech had its New Drug Application [NDA] of its drug resmetirom for NASH accepted by the FDA. Not only has its application already been accepted, but it was granted Priority Review by the agency with a PDUFA date of March 14th, 2024 . Even better, the agency is not planning on holding an Advisory Committee at this time to review the drug.

The fourth risk to consider would be with respect to its other phase 3 program in its pipeline. This would be the use of its drug pegozafermin for the treatment of patients with severe hypertriglyceridemia [SHTG]. That's because it is testing the use of this drug to treat this patient population in an ongoing phase 3 study known as ENTRUST. Top line results from this study are expected to be released in 2025, and should the primary endpoint be met, then this would be another way that 89bio could increase shareholder value.

The fifth and final risk to consider would be with respect to its financial position that it is in. That's because as I stated above, it believes that it only has enough cash to fund its operations for at least 1-year following the date of the 10-Q SEC Filing. With roughly one year's worth of cash runway, 89bio, Inc. is likely going to need to raise additional funds in the coming months. I don't believe that biotechs will wait till close to the last minute to search for cash that will be necessary to fund its operations. Thus, I would expect a cash raise at least by the 1st half of 2024.

Where it might be able to raise cash might be if/when Akero Therapeutics releases its 96-week results from its phase 2b SYMMETRY study. That's because if the data is good, it would not only cause Akero's stock to rise, but it would also lift 89bio's stock as well. If the stock price trades significantly higher, then management in the coming days/weeks thereafter might consider raising additional funds.

Conclusion

89bio had made great progress in being able to advance its pipeline. Especially, when you consider that it has been able to gain alignment with the FDA and EMA in advancing pegozafermin for the treatment of patients with F2-F3 and F4 NASH. Having said that, it is gearing up to initiate two phase 3 studies using its drug targeting both of these NASH patient populations in the 1st half of 2024. Again, the names of both of these late-stage studies are ENLIGHTEN-Fibrosis and ENLIGHTEN-Cirrhosis. I don't believe that 89bio, plus Akero Therapeutics should have been punished on the phase 2b SYMMETRY results.

That's because first there is a chance to recover based on the 96-week data to be released in Q1 of 2024. Secondly, the F2/F3 NASH patient population is a bigger target opportunity . While F4 patients definitely need help they don't account for a huge percentage of the entire NASH fibrosis patient population. Besides the targeting of both of these NASH patient populations, there is another item to consider. That is, this biotech has another shot on goal in the pipeline, which is the advancement of pegozafermin for the treatment of patients with SHTG. Again, the use of this drug for the treatment of this patient population is being explored in the phase 3 ENTRUST trial. Despite a peer's setback [Akero Therapeutics], I believe that there is still great potential for 89bio to do well in the NASH space.

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